<Page>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


     [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the Quarterly Period Ended September 30,
          2002 or

     [ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934.

                        Commission File Number: 000-31146

                               724 SOLUTIONS INC.
             (Exact Name of Registrant as Specified in its Charter)

<Table>
      <S>                                             <C>
                       ONTARIO                            INAPPLICABLE
           (State or Other Jurisdiction of              (I.R.S. Employer
           Incorporation or Organization)              Identification No.)

            4101 YONGE STREET, SUITE 702                     M2P 1N6
                  TORONTO, ONTARIO                          (Zip Code)
       (Address of Principal Executive Office)
</Table>

                                 (416) 226-2900
              (Registrant's Telephone Number, Including Area Code)

                         10 YORK MILLS ROAD, THIRD FLOOR
                            TORONTO, ONTARIO, M2P 2G4
                (Former Address, if Changed Since Last Report.)


     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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes   No X
                                               --    --

     Common Shares, no par value - 59,646,642 shares outstanding as of
November 13, 2002.



<Page>


                               724 SOLUTIONS INC.



                                TABLE OF CONTENTS
<Table>
<S>     <C>                                                                                        <C>
Part I.  Financial Information

         Item 1.  Financial Statements

                  a)  Consolidated Balance Sheets ..................................................1

                  b)  Consolidated Statements of Operations ........................................2

                  c)  Consolidated Statements of Shareholders' Equity ..............................3

                  d)  Consolidated Statements of Cash Flows ........................................4

                  e)  Notes to Consolidated Financial Statements ...................................5

         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations .......................................................17

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk ......................30

         Item 4.  Controls and Procedures .........................................................31



Part II.  Other Information

         Item 1.  Legal Proceedings ...............................................................32

         Item 2.  Changes in Securities ...........................................................32

         Item 3.  Defaults Upon Senior Securities .................................................32

         Item 4.  Submission of Matters to a Vote of Security Holders .............................32

         Item 5.  Other Information ...............................................................33

         Item 6.  Exhibits and Report on Form 8-K .................................................33

Signatures ........................................................................................34

Certifications ....................................................................................34
</Table>



<Page>



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
(A) CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

<Table>
<Caption>
                                                 September 30,    December 31,
                                                          2002            2001
                                                 -------------    ------------
                                                   (Unaudited)
<S>                                             <C>              <C>
ASSETS

Current assets:
     Cash and cash equivalents (note 3)              $  26,103       $  60,279
     Short-term investments (note 3)                    16,709          28,857
     Restricted cash (note 3)                              962              --
     Accounts receivable - trade, net of allowance
       of $105 (December 31, 2001 - nil)                 2,304           8,335
     Prepaid expenses and other receivables              1,485           2,630
                                                     ---------       ---------
                                                        47,563         100,101

Fixed assets                                             2,157          12,525
Investments (note 4)                                        67           5,347
Goodwill on business combinations (note 2)               9,097           9,097
Other intangible assets (notes 2 and 5)                  6,042           8,760
                                                     ---------       ---------
                                                     $  64,926       $ 135,830
                                                     ---------       ---------
                                                     ---------       ---------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                $     845       $   2,728
     Accrued liabilities                                12,811          15,667
     Notes payable                                       1,472           3,394
     Deferred revenue                                    1,254           1,386
     Deferred consideration                              1,414           1,414
                                                     ---------       ---------
                                                        17,796          24,589

Leasehold inducements                                        8             284
Notes payable, net of current portion                       --             296
Deferred consideration, net of current portion              --           1,415

Shareholders' equity:
     Share capital (note 7):
       Authorized:
         Unlimited preferred shares
         Unlimited common shares
       Issued and outstanding:
         59,646,642 common shares
           (December 31, 2001 - 58,375,761)            764,429         763,033
     Deferred stock-based compensation                  (4,885)        (19,582)
     Accumulated deficit                              (712,373)       (634,153)
     Cumulative translation adjustment                     (49)            (52)
                                                     ---------       ---------
                                                        47,122         109,246
                                                     ---------       ---------
                                                     $  64,926       $ 135,830
                                                     ---------       ---------
                                                     ---------       ---------
</Table>

See accompanying notes to consolidated financial statements.


                                       1
<Page>


(B) CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except per share amounts)


<Table>
<Caption>
                                            Three months ended         Nine months ended
                                               September 30,              September 30,
                                             2002         2001         2002         2001
                                             ----         ----         ----         ----
                                                  (Unaudited)              (Unaudited)
<S>                                     <C>          <C>          <C>          <C>
Revenue:
   Product                              $   1,743    $   6,614    $   5,870    $  24,717
   Services                                 3,809        3,427        9,203       13,251
                                        ---------    ---------    ---------    ---------
                                            5,552       10,041       15,073       37,968

Operating expenses:
   Cost of revenue                          1,225        4,232        5,597       14,968
   Research and development                 3,761        9,308       13,619       32,225
   Sales and marketing                      3,819        9,751       14,537       29,374
   General and administrative               1,708        2,416        5,654       12,999
   Depreciation                             1,334        2,422        4,494        6,319
   Amortization of intangible assets        1,011       26,964        3,175       78,209
   Stock-based compensation:
      Cost of revenue                          54         (171)         254          266
      Research and development              1,879        8,326        8,876       22,427
      Sales and marketing                     662        2,804        3,129        8,148
      General and administrative              482        2,757        2,275        6,643
   Restructuring costs (note 9)             3,662         --         20,649        3,433
   Write-down of fixed assets and
     goodwill (note 9)                      2,205      321,461        6,339      321,461
                                        ---------    ---------    ---------    ---------
                                           21,802      390,270       88,598      536,472
                                        ---------    ---------    ---------    ---------

Loss from operations                      (16,250)    (380,229)     (73,525)    (498,504)

Interest income, net                           60        1,101          585        5,182

Equity in loss of affiliate                  --           (420)        --         (1,178)
                                        ---------    ---------    ---------    ---------

Loss before write-down of long-term
  investments                             (16,190)    (379,548)     (72,940)    (494,500)

Write-down of long-term investments        (5,280)      (7,750)      (5,280)     (14,000)

                                        ---------    ---------    ---------    ---------
Loss for the period                     $ (21,470)   $(387,298)   $ (78,220)   $(508,500)
                                        ---------    ---------    ---------    ---------
                                        ---------    ---------    ---------    ---------

Basic and diluted loss per share        $   (0.36)   $   (6.64)   $   (1.32)   $   (8.98)
                                        ---------    ---------    ---------    ---------
                                        ---------    ---------    ---------    ---------

Weighted average number of shares
  used in computing basic and diluted
  loss per share (in thousands)            59,647       58,317       59,295       56,624
                                        ---------    ---------    ---------    ---------
                                        ---------    ---------    ---------    ---------
</Table>


See accompanying notes to consolidated financial statements.


                                       2

<Page>


(C) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands of U.S. dollars, except per shares amounts)

Nine months ended September 30, 2002 and September 30, 2001
(Unaudited)

<Table>
<Caption>
                                                       Deferred
                                                    stock-based
                                                   compensation                   Cumulative            Total
                                 Common shares       related to   Accumulated    translation     shareholders'
                              Number       Amount stock options       deficit     adjustment           equity
                              ------       ------ -------------       -------     ----------           ------

<S>                      <C>          <C>           <C>           <C>           <C>               <C>
Balances,
   December 31, 2000      39,112,975   $  357,158    $  (14,946)   $  (79,949)   $     --          $  262,263
Loss for the period             --           --            --        (121,202)         --            (121,202)
Cumulative translation
   adjustment                   --           --            --            --            (203)             (203)
Deferred stock-based
   compensation                 --         53,280       (53,280)         --            --                --
Amortization of
   deferred stock-based
   compensation                 --           --          20,547          --            --              20,547
Issuance on
   exercise of options       844,161          748          --            --            --                 748
Issuance of common
   shares                 18,264,018      356,375          --            --            --             356,375
                          ----------   ----------    ----------    ----------    ----------        ----------
Balances,
   September 30, 2001     58,221,154   $  767,561    $  (47,679)   $ (201,151)   $     (203)       $  518,528
                          ----------   ----------    ----------    ----------    ----------        ----------
                          ----------   ----------    ----------    ----------    ----------        ----------

Balances,
   December 31, 2001      58,375,761   $  763,033    $  (19,582)   $ (634,153)   $      (52)       $  109,246
Loss for the period             --           --            --         (78,220)         --             (78,220)
Cumulative translation
   adjustment                   --           --            --            --               3                 3
Deferred stock-based
   compensation                 --           (163)          163          --            --                --
Amortization of
   deferred stock-based
   compensation                 --           --          14,534          --            --              14,534
Issuance for cash on
   exercise of options       259,191          144          --            --            --                 144
Issuance of common
   shares                  1,011,690        1,415          --            --            --               1,415
                          ----------   ----------    ----------    ----------    ----------        ----------
Balances,
   September 30, 2002     59,646,642   $  764,429    $   (4,885)   $ (712,373)   $      (49)       $   47,122
                          ----------   ----------    ----------    ----------    ----------        ----------
                          ----------   ----------    ----------    ----------    ----------        ----------
</Table>

See accompanying notes to consolidated financial statements.




                                       3

<Page>


(D) CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

<Table>
<Caption>
                                                     Three months ended        Nine months ended
                                                        September 30,             September 30,
                                                        2002         2001          2002        2001
                                                        ----         ----          ----        ----
                                                         (Unaudited)               (Unaudited)
<S>                                                <C>          <C>          <C>          <C>
Cash flows from operating activities:
   Loss for the period                             $ (21,470)   $(387,298)   $ (78,220)   $(508,500)
   Items not affecting cash:
      Depreciation and amortization                    2,345       29,386        7,669       84,528
      Stock-based compensation                         3,077       13,716       14,534       37,484
      Other non-cash expenses                            (54)         512          (40)         133
      Write-down of long-term investments              5,280        7,750        5,280       14,000
      Write-down of fixed assets                       2,205         --          6,339         --
      Write-down of intangible and
         other assets                                   --        321,461         --        321,461
      Equity in loss of affiliate                       --            420         --          1,178
      Foreign exchange loss                             --           --           --             72
   Change in operating assets
     and liabilities:
      Accounts receivable                                418       (2,769)       6,031       (8,664)
      Prepaid expenses and
        other receivables                              1,239         (570)       1,145          (41)
      Accrued interest on short-term
        investments                                      189          706          346        1,872
      Accounts payable                                  (746)      (4,623)      (1,883)      (1,064)
      Accrued liabilities                             (8,422)      (1,723)      (2,856)     (11,519)
      Deferred revenue                                  (773)      (2,441)        (132)        (852)
                                                   ---------    ---------    ---------    ---------
   Net cash flows used in operating activities       (16,712)     (25,473)     (41,787)     (69,912)

Cash flows from financing activities:
   Principal repayment of notes payable                 (884)        (259)      (2,218)        (259)
   Issuance of common shares                            --             97          145          880
                                                   ---------    ---------    ---------    ---------
   Net cash flows from (used in)
     financing activities                               (884)        (162)      (2,073)         621

Cash flows from investing activities:
   Purchase of fixed assets                             (363)      (5,299)        (701)     (10,032)
   Sale of short-term investments                     (3,101)      47,800       11,843       76,156
   Restricted cash                                     1,984         --           (962)        --
   Purchase of intangible and other assets              --           (422)        (457)      (1,014)
   Sale of long-term investments                        --          1,137         --           --
   Purchase of long-term investments                    --           --           --         (7,264)
   Acquisitions                                         --           --           --         30,248
                                                   ---------    ---------    ---------    ---------
   Net cash flows from (used in)
     investing activities                             (1,480)      43,216        9,723       88,094

Foreign exchange loss on cash held
  in foreign currency                                    (48)         229          (39)          68
                                                   ---------    ---------    ---------    ---------

Increase (decrease) in cash and cash equivalents     (19,124)      17,810      (34,176)      18,871

Cash and cash equivalents, beginning of period        45,227       74,959       60,279       73,898
                                                   ---------    ---------    ---------    ---------

Cash and cash equivalents, end of period           $  26,103    $  92,769    $  26,103    $  92,769
                                                   ---------    ---------    ---------    ---------
                                                   ---------    ---------    ---------    ---------

Supplemental cash flow information:
   Interest received                               $     324    $   1,303    $   1,007    $   6,150
   Interest paid                                          51          215           42           42

Supplemental disclosure of non-cash
  investing and financing activities:
   Net assets acquired from acquisitions,
     less cash acquired                                 --           --           --         (6,223)
   Common shares and replacement
     common shares purchase options
     issued upon acquisition of
     TANTAU Software Inc.                               --           --           --        398,349
</Table>

See accompanying notes to consolidated financial statements.




                                       4
<Page>



(E) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------


 1.    BASIS OF PRESENTATION:

       The accompanying consolidated financial statements include the accounts
       of 724 Solutions Inc. and its wholly owned subsidiaries (collectively
       referred to as the "Company"). Intercompany transactions and balances are
       eliminated on consolidation.

       The consolidated financial statements are stated in U.S. dollars, except
       as otherwise noted. They have been prepared in accordance with Canadian
       generally accepted accounting principles, which conform, in all material
       respects, with U.S. generally accepted accounting principles. Unless
       otherwise noted, the interim financial statements follow the same
       accounting polices and methods of application as the most recent annual
       financial statements. For further information, reference should be made
       to the audited annual consolidated financial statements for the year
       ended December 31, 2001 that are included in the Company's Annual Report
       filed with the Canadian Securities Administrators on March 25, 2002 and
       with the Securities and Exchange Commission on Form 10-K on March 29,
       2002. Certain comparative figures have been reclassified to conform to
       the current period's presentation.

       The information furnished for the three and nine months ended September
       30, 2002 and September 30, 2001 reflects, in the opinion of management,
       all adjustments, consisting only of normal recurring adjustments
       necessary for a fair presentation of the results of the interim periods
       presented. Interim results are not necessarily indicative of results for
       a full year.



                                       5
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued) (In thousands
of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------


 2.    SIGNIFICANT ACCOUNTING POLICIES:

       The unaudited interim consolidated financial statements are based upon
       accounting principles consistent with those used and described in the
       Company's audited financial statements for the year ended December 31,
       2001, except the following:

       (a) Business combinations, goodwill and other intangible assets:

           In September 2001, The Canadian Institute of Chartered Accountants
           ("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 and require that goodwill 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 share price for a reasonable period before
           and after the date the terms of the acquisition are agreed to and
           announced. The new standards are substantially consistent with U.S.
           GAAP.

           The Company has adopted these new standards as of January 1, 2002 and
           the Company has discontinued amortization of all existing goodwill.
           The Company has also evaluated existing intangible assets, including
           estimates of remaining useful lives, and have made the necessary
           reclassifications in order to conform with the new criteria.

           In connection with Section 3062's transitional goodwill impairment
           evaluation, the Company is required to assess whether goodwill is
           impaired as of January 1, 2002. Impairment is identified by the
           Company comparing the carrying amount of the Company's reporting
           units with their fair values. To the extent a reporting unit's
           carrying amount exceeds its fair value, the Company must perform a
           second step to measure the amount of impairment in a manner similar
           to a purchase price allocation. Under Canadian GAAP, any transitional
           impairment will be recognized as an effect of a change in accounting
           principle and will be charged to opening retained earnings as of
           January 1, 2002. Under U.S. GAAP, any transitional impairment will be
           charged to operations in the current period. The Company has
           completed the transitional goodwill impairment during the second
           quarter of 2002 and has determined that no impairment existed at the
           date of adoption.




                                       6
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued) (In thousands
of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 2.    SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

           Effective January 1, 2002, the Company had unamortized goodwill of
           $9,097 which is no longer being amortized. This change in accounting
           policy is not applied retroactively and the amounts presented for
           prior periods have not been restated for this change. The impact of
           this change is as follows:

<Table>
<Caption>
                           Three months ended         Nine months ended
                              September 30,              September 30,
                            2002         2001         2002          2001
                            ----         ----         ----          ----
                               (Unaudited)                (Unaudited)
<S>                     <C>           <C>          <C>           <C>
Loss for the period     $  (21,470)   $(387,298)   $  (78,220)   $(508,500)
Goodwill amortization         --         24,255          --         70,597

                        ----------    ---------    ----------    ---------
Loss before goodwill
  amortization          $  (21,470)   $(363,043)   $  (78,220)   $(437,903)
                        ----------    ---------    ----------    ---------
                        ----------    ---------    ----------    ---------

Loss per share          $    (0.36)   $   (6.64)   $    (1.32)   $   (8.98)
                        ----------    ---------    ----------    ---------
                        ----------    ---------    ----------    ---------

Loss per share before
  goodwill amortization $    (0.36)   $   (6.23)   $    (1.32)   $   (7.73)
                        ----------    ---------    ----------    ---------
                        ----------    ---------    ----------    ---------
</Table>



(b) Stock-based compensation and other stock-based payments:

     Effective January 1, 2002, the Company adopted the new CICA Handbook
     Section 3870, "Stock-based compensation and other stock-based payments",
     which requires that a fair value-based method of accounting be applied to
     all stock-based payments to non-employees and to direct awards of stock to
     employees. The requirements of the new standard are consistent with the
     Company's accounting policies for these types of transactions, as disclosed
     in the Company's annual consolidated financial statements. Section 3870,
     however, does require additional disclosures, including pro forma earnings
     and pro forma earnings per share, which are provided in note 7.



                                       7
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued) (In thousands
of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------


 3. CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS:

       All short-term investments are classified as held-to-maturity because the
       Company has the positive intent and ability to hold the securities to
       maturity. Held-to-maturity securities are stated at amortized cost,
       adjusted for amortization of premiums and accretion discounts to
       maturity. The Company owns no short-term investments that are considered
       to be trading securities or available-for-sale securities. The components
       of cash and cash equivalents and short-term investments are summarized as
       follows:

<Table>
<Caption>
                                        September 30,   December 31,
                                                 2002           2001
                                        -------------   ------------
                                          (Unaudited)
<S>                                     <C>            <C>
       Cash and cash equivalents:
          Cash                                $ 9,460        $ 6,922
          Cash equivalents:
             Corporate debt                      --           49,000
             Government treasury bills          5,421          4,357
             Corporate bonds                   11,000           --
             Term deposit                         222           --
                                              -------        -------
                                              $26,103        $60,279
                                              -------        -------
                                              -------        -------

       Short-term investments:
          Held-to-maturity:
          Corporate commercial paper          $  --          $   364
             Term deposit                       1,892          2,285
             Government bond                     --            5,989
             Government treasury bills          5,076         19,119
             Corporate bonds                    9,741          1,100
                                              -------        -------
                                              $16,709        $28,857
                                              -------        -------
                                              -------        -------
</Table>


       The Company has entered into letters of credit in the aggregate amount of
       $962 (December 31, 2001 - $2,285). This letter of credit is secured by
       segregated instruments included in restricted cash on the consolidated
       balance sheets.



                                       8
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued)
(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 4. WRITE-DOWN OF LONG-TERM INVESTMENTS:

       In the three months ended September 30, 2002, the Company performed a
       review of its long-term investments. Due to adverse changes in operating
       market conditions, several of the Company's long-term investments in
       other companies have experienced a significant other than temporary
       decline in their values. In order to determine the amount of the
       write-down, the Company assessed the fair market value of its investments
       and compared it to the investments carrying value. The fair market value
       of these investments were based on a combination of the following:

       (a) values indicated by recent rounds of financing in the investee
       company;

       (b) effects of dilution and loss of liquidation preferences related to
       the Company's holdings resulting from recent rounds of financings for
       which the Company did not participate;

       (c) valuations performed by the investee company or venture capitalists
       if the invested company is seeking a round of financing; and

       (d) changes in the market value of the investment relative to industry
       indices.

       For the three months ended September 30, 2002, the Company recorded
       $5,280 as an other than temporary decline in value.



                                       9
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued)
(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 5.    OTHER INTANGIBLE ASSETS:

       The following table represents details for the Company's total purchased
       intangible assets which are subject to amortization:

<Table>
<Caption>
                                                                             Impairment
                                                            Accumulated     charge taken     Net book
       September 30, 2002 (Unaudited)             Gross    amortization          in 2001        value
       ------------------------------             -----    ------------          -------        -----

<S>                                            <C>         <C>              <C>             <C>
       Technology                              $ 29,120         $11,099         $ 11,979      $ 6,042
                                               --------         -------         --------      -------
                                               --------         -------         --------      -------
</Table>


<Table>
<Caption>

                                                                              Impairment
                                                            Accumulated     charge taken     Net book
       December 31, 2001                          Gross    amortization          in 2001        value
       ------------------------------             -----    ------------          -------        -----

<S>                                            <C>         <C>              <C>             <C>
       Technology                              $ 28,663         $ 7,924         $ 11,979      $ 8,760
       Customer relationships                     7,120           2,301            4,819            -
                                               --------         -------         --------      -------
                                               $ 35,783         $10,225         $ 16,798      $ 8,760
                                               --------         -------         --------      -------
                                               --------         -------         --------      -------
</Table>

 6.    SEGMENTED INFORMATION:

       The Company operates in a single reportable operating segment, that is,
       the design and delivery of an internet infrastructure platform and
       related applications that enable financial institutions and mobile
       operators and other customers to deliver financial information and
       services to a range of internet-enabled devices. The single reportable
       operating segment derives its revenue from the sale of software and
       related services. Information about the Company's geographical net
       revenue and assets is set forth below:

<Table>
<Caption>
                                                     Three months ended             Nine months ended
                                                        September 30,                  September 30,
                                                     2002           2001           2002           2001
                                                     ----           ----           ----           ----
                                                         (Unaudited)                   (Unaudited)
<S>                                               <C>            <C>            <C>            <C>

       Net revenue by geographic location:
       North America                              $ 4,729        $ 8,773        $12,653        $27,008
       Europe                                         642            382          1,569          6,054
       Asia Pacific                                   181            886            851          4,906
                                                  -------        -------        -------        -------
                                                  $ 5,552        $10,041        $15,073        $37,968
                                                  -------        -------        -------        -------
                                                  -------        -------        -------        -------
</Table>


                                       10
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued) (In thousands
of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------

 6.    SEGMENTED INFORMATION (CONTINUED):

<Table>
<Caption>

                              September 30, 2002             December 31, 2001
                              ------------------             -----------------
                                          Goodwill                      Goodwill
                                         and other                     and other
                              Fixed     intangible          Fixed     intangible
                             assets         assets         assets         assets
                             ------         ------         ------         ------
                                   (Unaudited)
<S>                         <C>         <C>              <C>          <C>
       North America        $ 1,233        $15,139        $11,130        $17,857
       Europe                   405           --            1,272           --
       Asia Pacific             519           --              123           --
                            -------        -------        -------        -------
                            $ 2,157        $15,139        $12,525        $17,857
                            -------        -------        -------        -------
                            -------        -------        -------        -------
</Table>


       For the nine months ended September 30, 2002, three customers accounted
       for 11%, 20% and 27%, respectively of revenue. For the nine months ended
       September 30, 2001, one customer accounted for 11% of revenue.


 7.    SHARE CAPITAL:

       (a) Stock options:

           At September 30, 2002 and December 31, 2001, there were options
           outstanding to acquire 6,147,558 and 7,144,314 common shares of the
           Company, respectively.

           On October 4, 2002, the Company granted an additional 1,641,482
           options with an exercise price of Cdn. $0.52 or U.S. $0.34 to its
           employees.

           The Company has excluded, from the calculation of diluted earnings
           per share, all common shares potentially issuable upon the exercise
           of stock options and other potentially convertible instruments that
           could dilute basic per share in the future because to do so would
           have been anti-dilutive.


                                       11
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued)
(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 7.    SHARE CAPITAL (CONTINUED):

       (b) Stock option exchange program:

           In January 2002, the Company announced a voluntary stock option
           exchange program that was offered to a majority of its employees,
           excluding directors, executive officers and other selected senior
           personnel. This new program offered eligible employees the
           opportunity to exchange, on a one-for-one basis, certain stock
           options, with strike prices greater than U.S. $3.00 and Cdn. $4.75,
           for an equal number of new options to be granted on or after August
           29, 2002. This program resulted in 1,403,628 options being tendered,
           accepted and cancelled (1,031,416, 57,212 and 315,000 were granted
           under the 2000 stock options plan, the Canadian stock options plan
           and the TANTAU plan, respectively).

           On August 29, 2002, in connection with the exchange program the
           Company granted 2,428,000 options with an exercise price of Cdn.
           $0.80 or U.S. $0.51. The new options are exercisable for a period of
           10 years from the grant date and vest 25% immediately upon grant and
           25% on each subsequent anniversary of the date of grant.

           The Company also granted options to purchase an aggregate of
           1,066,161 common shares with an exercise price of Cdn. $0.80 or U.S.
           $0.51 to its directors, most of its officers and selected senior
           personnel, none of whom was eligible to participate in the voluntary
           stock option exchange program. The terms of the options are identical
           to the above-mentioned options granted to eligible employees.


                                       12
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued)
(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 8.    PRO FORMA DISCLOSURE FOR STOCK-BASED COMPENSATION AND OTHER STOCK-BASED
       PAYMENTS:

       In addition to the disclosures presented in note 9(b) of the audited
       annual financial statements, the new Canadian stock-based compensation
       standard requires the disclosure of pro forma net earnings and earnings
       per share information as if the Company had accounted for employee stock
       options under the fair value method. The Company has elected to disclose
       pro forma net loss and pro forma net loss per share as if the Company had
       accounted for its stock options issued from inception on July 28, 1997
       under the fair value method. A summary of the pro forma disclosure of the
       impact of the consolidated statement of operations is presented in the
       table below:

<Table>
<Caption>
                                                        Three months ended                 Nine months ended
                                                           September 30,                      September 30,
                                                      2002              2001              2002              2001
                                                      ----              ----              ----              ----
                                                          (Unaudited)                         (Unaudited)

<S>                                              <C>               <C>               <C>               <C>
       Loss for the period                       $  21,470         $ 387,298         $  78,220         $ 508,500
       Compensation expense related
         to the fair value of stock options          2,760             6,496            10,416            17,947
                                                 ---------         ---------         ---------         ---------
       Pro forma loss for the period             $  24,230         $ 393,794         $  88,636         $ 526,447
                                                 ---------         ---------         ---------         ---------
                                                 ---------         ---------         ---------         ---------

       Pro forma loss per share:
          Basic and diluted                      $   (0.41)        $   (6.75)        $   (1.49)        $   (9.30)
                                                 ---------         ---------         ---------         ---------
                                                 ---------         ---------         ---------         ---------
</Table>



       The fair value of each option granted in the period ended September 30,
       2002 has been estimated at the date of grant using the Black-Scholes
       option pricing model with the following assumptions used: dividend yield
       of zero, expected volatility of 100%, risk-free rate of return of 5.45%
       and an expected life of the option of five years. The fair value of each
       option granted prior to January 1, 2002 has been estimated at the date of
       grant using the Black-Scholes option pricing model with the assumptions
       disclosed in note 15(b) of the annual consolidated financial statements.

       The Company has assumed no forfeiture rate, as adjustments for actual
       forfeitures are made in the period they occur. The weighted average grant
       date fair value of options issued in the three months ended September 30,
       2002 was $0.39 (2001 - $5.99).


                                       13
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements (continued)
(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 9.    RESTRUCTURING AND WRITE-DOWN OF FIXED ASSETS:

       In January 2002, the Company continued with its plan to restructure and
       realign its business, which included a reduction of its worldwide
       workforce by approximately 98 people, the additional closure of redundant
       facilities and the write-down of unused fixed assets and inventory.

       In August 2002, the Company further initiated a series of actions to
       reduce its operating costs. As part of this initiative, the Company
       reduced its workforce by approximately 100 people globally in the three
       months ended September 30, 2002. As a result, in the three months ended
       September 30, 2002, the Company recorded $7,380 related to restructuring
       charges and $2,200 related to the write-down of redundant fixed assets.
       This restructuring charge was partially offset in the current period by a
       revision in prior period estimates of the restructuring provision of
       $1,607 related to favourable outcome on a previously provided for lease
       settlement.

       In January 2002, the Company formalized an arrangement with Computer
       Sciences Corporation ("CSC"), located in Austin Texas, in which CSC will
       be providing application hosting services to the Company in order to
       support the Company's current hosting agreements until such time as such
       agreements are assigned to CSC. The initial term of the agreement is
       three years. In addition to the above transaction, CSC will license and
       resell 724 Solutions products to the financial services industry, at
       prices consistent with the Company's other resellers. 724 Solutions
       technology will be integrated with CSC's Hogan Systems and CAMS II (Card
       and Merchant System II) software products. CSC will also provide systems
       integration services, acting as the prime integrator for CSC clients.

                                       14
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements
(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 9.   RESTRUCTURING AND WRITE-DOWN OF FIXED ASSETS (CONTINUED):

       As a result of the following transactions, the Company incurred the
       following charges:

<Table>
<Caption>
                                                               Lease        Hosting     Write-down
                                                                exit           exit             of
       Restructuring charge                 Severance          costs          costs      inventory          Total
       --------------------                 ---------          -----          -----      ---------          -----

<S>                                        <C>             <C>            <C>          <C>              <C>
       Provision, December 31, 2001          $  2,331       $  6,593       $   --         $   --         $  8,924
       Activity during the six months
         ended June 30, 2002:
          Additional provisions                 3,691          4,801          5,747          2,748         16,987
          Cash payments                        (5,417)        (3,053)        (1,892)          --          (10,362)
          Non-cash charges                       --           (1,781)         1,691         (2,748)        (2,838)
                                             --------       --------       ----           ----           --------

       Provision, June 30, 2002                   605          6,560          5,546           --           12,711
       Activity during the three months
         ended September 30, 2002:
          Additional provisions                 4,300            969           --             --            5,269
          Cash payments                        (2,543)        (3,436)        (1,854)          --           (7,833)
          Non-cash charges                       --             (490)          --             --             (490)
          Revision in estimate of
            restructuring accruals               --           (1,607)          --             --           (1,607)
                                             --------       --------       ----           ----           --------

       Provision, September 30, 2002         $  2,362       $  1,996       $  3,692       $   --         $  8,050
                                             --------       --------       ----           ----           --------
                                             --------       --------       ----           ----           --------
</Table>

<Table>
<Caption>
       Write-down of fixed assets           Fixed
       and investments                     assets        Investments
       ---------------                     ------        -----------
                                                            (note 4)

<S>                                       <C>           <C>
       Write-down, six months ended
       June 3, 2002                        $4,134             $ --
       Write-down, three months ended
       September 30, 2002                   2,205              5,280
                                           ------             ------
       Cumulative write-down               $6,339             $5,280
                                           ------             ------
                                           ------             ------
</Table>


                                       15
<Page>

724 SOLUTIONS INC.
Notes to Consolidated Financial Statements
(In thousands of U.S. dollars, except per share amounts)

Three months ended September 30, 2002 and nine months ended September 30, 2002
(Unaudited)
--------------------------------------------------------------------------------



 9.    CANADIAN AND U.S. ACCOUNTING POLICY DIFFERENCES:

       The financial statements of the Company have been prepared in accordance
       with generally accepted accounting principles ("GAAP") as applied in
       Canada, which conform in all material respects with generally accepted
       accounting principles in the United States, except as noted below.

       Statement of comprehensive income:

       U.S. GAAP requires the disclosure of a statement of comprehensive income.
       Comprehensive income generally encompasses all changes in shareholders'
       equity except those arising from transactions with shareholders.

<Table>
<Caption>
                                                    Three months ended               Nine months ended
                                                      September 30,                    September 30,
                                                   2002            2001            2002            2001
                                                   ----            ----            ----            ----
                                                        (Unaudited)                     (Unaudited)

<S>                                           <C>             <C>             <C>             <C>
       Loss based on U.S. GAAP                $ (21,470)      $(387,298)      $ (78,220)      $(508,500)
       Other comprehensive income,
         net of income taxes:
          Cumulative translation adjustment           9            (170)              3              33
                                              ---------       ---------       ---------       ---------
       Comprehensive loss based on
         U.S. GAAP                            $ (21,461)      $(387,468)      $ (78,217)      $(508,467)
                                              ---------       ---------       ---------       ---------
                                              ---------       ---------       ---------       ---------
</Table>





                                       16
<Page>




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


         The following discussion and analysis should be read together with our
audited annual consolidated financial statements for the year ended December 31,
2001 and the accompanying notes included in our annual report filed with the
Canadian Securities Administrators on March 25, 2002 and our annual report on
Form 10-K, which was filed with the Securities and Exchange Commission on March
29, 2002, and the consolidated financial statements and accompanying notes
appearing elsewhere in this report. All financial information is presented in
U.S. dollars.

         Some of the statements set forth in this section are forward-looking
statements relating to our future results of operations. Our actual results
may vary from the results anticipated by these statements. Please see
"Information Regarding Forward-Looking Statements."

OVERVIEW

         We are a leading global provider of Internet infrastructure software
and applications for the mobile Internet. In 1997 we were incorporated and in
1999 we introduced our initial financial services products and solutions. In
2001, we began offering our Alerts and our Mobile Internet Gateway products to
mobile network operators. Since October 2002, our products and solutions for
mobile network operators have been sold as the X-treme family of products. These
products consist of software applications and infrastructure software that
enables the delivery of secure applications and mobile transaction solutions to
a wide range of Internet enabled communications devices.

         Today, our suite of products and services allows mobile network
operators, financial institutions and other companies to capitalize on the
mobile Internet by building and deploying revenue-generating services using our
advanced network infrastructure products and personalized, secure mobile
applications. With critical security features built in, our products and
solutions can be quickly implemented and integrated with existing systems and
scaled or expanded to accommodate future growth.

         Using our solutions, our customers can offer new, easy to use, highly
personalized, value-added services, which leverage the flexibility and
convenience of the mobile Internet in order to build stronger relationships with
their customers. Our customers currently include leading mobile network
operators and financial institutions. With our corporate office in Toronto,
Canada, we have development and sales offices around the world, including, Hong
Kong, Germany, the United Kingdom and the United States.


DEVELOPMENTS IN 2002

     RESTRUCTURING AND OTHER CHARGES

         In January and August 2002, we continued with our cost reduction
initiatives that we began in 2001. These efforts were implemented in order to
reduce our overall operating costs and to realign our operating expenses and
investments with a view to achieving operational profitability. In the January
2002 restructuring, we reduced our worldwide work force by


                                       17
<Page>

approximately 98 people, closed redundant facilities, wrote-down inventory
assets that are no longer part of our future strategy and wrote-down unused
fixed assets. In addition, as part of this reorganization, we formed an alliance
with Computer Sciences Corporation ("CSC").. CSC is now providing us with
application hosting services in order to support our current hosting agreements
and we continue to work with CSC to assist our new customers with their hosting
requirements. As a result of these transactions, we recorded $17.0 million in
restructuring charges and $4.1 million relating to the write-down of redundant
fixed assets.

         In August 2002, we further initiated a series of actions to reduce our
operating costs, which we believe will help accelerate our path to
profitability. These actions were undertaken in part to balance our investment
across our two key markets, the mobile network operator and financial services
markets. As part of this initiative, we reduced our workforce by approximately
100 people globally in the third quarter of 2002. We have re-aligned our
workforce following this latest reduction to allow us to continue to focus on
delivering software applications and infrastructure software to mobile network
operators and servicing our global installed base of financial services clients.
As a result, in the third quarter of 2002, we recorded a $3.7 million of
restructuring charges and a $2.2 million write-down of redundant fixed assets.
This restructuring charge was partially offset in the current period by a
reversal of $400,000 related to a favorable outcome on a previously provided for
lease settlement.



     WRITE-DOWN OF LONG-TERM INVESTMENTS

         In the third quarter of 2002, we reviewed the carrying value of our
long-term investments, which include minority investments in shares of privately
held technology companies, and concluded that nearly all of them had suffered an
other than temporary decline in value. Accordingly, we recorded a $5.3 million
non-cash charge as an other than temporary decline in the value of our long-term
investments.

         In January 2002, because a large percentage of our outstanding options
had exercise prices that were significantly higher than the prices at which our
common shares then traded on the Nasdaq National Market and The Toronto Stock
Exchange, we initiated a voluntary stock option exchange program. This program
was offered to a majority of our employees, but not our directors, executive
officers and selected senior personnel. Approximately 1.4 million options were
tendered, accepted and cancelled under this program. In connection with this
program we made a special grant of options to those employees, directors,
executive officers and senior personnel who were ineligible to participate in
the option exchange program and who were still with the company at the time of
the grant. We recorded approximately $1.4 million in stock compensation expense
during the first quarter of 2002 related to the immediate recognition of
deferred stock-based compensation for those employees who chose to tender their
options. The stock option exchange program is not expected to result in
additional compensation charges or variable award accounting. In August 2002, we
issued 1.1 million options under this program. See note 7 to our interim
quarterly financial statements for the three and nine months ended September 30,
2002, for further details on the stock option exchange program.


                                       18
<Page>


CRITICAL ACCOUNTING POLICIES

         We periodically review our financial reporting and disclosure practices
and accounting policies to ensure that our financial reporting and disclosure
practices and accounting policies provide accurate and transparent information
relative to the current economic and business environment. As part of this
process, we have reviewed our selection, application and communication of
critical accounting polices and financial disclosures. We have determined that
our critical accounting policies relating to our core ongoing business
activities are primarily those that relate to revenue recognition. Other
important accounting polices are described in Note 2 to our interim quarterly
financial statements for the three and nine months ended September 30, 2002,
which is set forth in this report, and Note 2 to our audited annual consolidated
financial statements, which is set forth in our annual report on form 10-K,
which we encourage you to read.

     REVENUE RECOGNITION

     SOURCES OF REVENUE

         We derive revenue from licensing our products and providing related
services, including installation, integration, training, maintenance and
support, and application hosting services. We recognize revenue from our license
agreements when all the following conditions are met:

     - We have an executed license agreement with the customer;
     - We have delivered the software product to the customer;
     - The amount of the fees to be paid by the customer is fixed and
       determinable; and
     - Collection of these fees is deemed probable.

         Typically, software license agreements are multiple element
arrangements as they include related maintenance and implementation fees.
Accordingly, the entire arrangement fee is allocated to each element in the
arrangement based on the respective vendor specific objective evidence of value
(VSOE) of each element. For contracts for which we do not have sufficient VSOE,
we use the residual method to record revenues. Under this method, as long as we
have VSOE for all undelivered elements (typically, services and maintenance) we
can record the remaining value of the contract as license revenue after
allocating full value to the undelivered elements.

     PRODUCT REVENUE

Product revenue consists of the following:

     - Fixed License Fee - a one-time license fee for a fixed number or copies
       of unlimited use of the software, in exchange for a license with a
       perpetual term. We typically recognize the upfront fees in the period the
       contract is executed or shortly thereafter, provided that we have VSOE
       and our revenue recognition criteria are met.

     - Variable License Fee Arrangement - a variable license fee based on a per
       user fee with specified quarterly minimum payments. We recognize revenue
       from these contracts on a quarterly basis as the amount is determined.
       Our revenue under this model will vary with the number of our customer's
       end-users. However, over time, we believe that these fees



                                       19
<Page>

       will grow if our customers roll out services based upon our solution to a
       substantial number of their customers.

     - Fixed License Fee with Future Royalty Payments - these license
       arrangements consist of an up front payment upon execution of the
       contract and an ongoing variable fee based on the number of users or
       transactions. These monthly fees may be subject to minimum quarterly
       payments. We allocate revenue to the software based on vendor specific
       objective evidence of fair value. The portion of revenue that will be
       allocated to the software will be recognized when we meet the four
       revenue recognition criteria listed above. As a result, we anticipate
       that the initial payments under these contracts will tend to be
       recognized as revenue either in the quarter in which the contract is
       executed or shortly thereafter. Revenue from the minimum payments will be
       recognized on a monthly basis. Revenue associated with the monthly fees
       in excess of any minimum payments will be recognized on a monthly basis
       when the amount is determined.

     - Reseller Arrangements - the reseller generally pays either a
       non-refundable licensing fee for our software and/or a royalty fee based
       on the related number of users. We recognize revenue associated with a
       non-refundable license fees when we have met our revenue recognition
       criteria outlined above.

     - Subscription Arrangements - fixed fee licenses in which our customers pay
       us a fixed annual fee and we are required to deliver additional
       technology that we develop during the term of the agreement. These fees
       have been recognized using the subscription method of accounting,
       commencing with the delivery of the first product in the contract. Our
       earlier agreements originally used this model.

         In 2002, our revenues began to include solution sales in addition to
our current software and services sales. There are two key factors that
distinguish what we consider to be a solutions sale versus a software and
services sale. First, in a solution sale, there is initially a higher mix of
revenue for services compared to software than in a software and service sale.
Second, in a solution sale, the contracted services include the development and
implementation of more customized code and more complex interfaces than in a
software and services sale, where the contracted services are mostly
installation services. Recognition of revenue from such contracts will primarily
be based on the percentage of work completed as described below under services
revenue.

         For licensing and services contracts that provide for significant
commitments to refunds and/or penalties on the services and/or license
components should the system not perform according to expectations, we defer
recognition of revenue for the amount subject to refund or penalty until we
achieve contractually defined milestones or until customer acceptance has
occurred, as the case may be for such contracts.

     SERVICE REVENUE

     IMPLEMENTATION AND CUSTOMER SERVICE FEES

         Revenue from implementation and customer services include fees for
implementation of our product offerings, consulting and training services. In
2002, services revenue also included fees earned from consulting projects, which
required us to build customized code and more



                                       20
<Page>

complex interfaces as opposed to installation services. Customers are charged a
fee based on time and expenses. Revenue from implementation and customer service
fees is recognized as the services are performed or deferred until we achieve
contractually defined milestones or until customer acceptance has occurred, as
the case may be for such contracts.

     MAINTENANCE FEES

         We receive revenue from maintaining and servicing our products for
customers. The maintenance fee is typically equal to a specified percentage of
the customer's license fee. If associated with the fixed fee license model, the
maintenance revenues received will be recorded as deferred revenue and
recognized on a straight-line basis over the contract period. When associated
with the variable fee license model, any maintenance payments will be recognized
on a monthly basis as earned.

     HOSTING FEES

         We no longer intend to provide hosting services directly, but instead
have arranged an alliance with CSC, whereby CSC is our preferred hosting partner
for current and future customer deployments where hosting may be required. For
our existing hosting customers, we typically charge customers a monthly flat fee
or a monthly fee based on the number of users. The monthly fees are recognized
on a monthly basis.

         For a more detailed description of revenue recognition polices, refer
to note 2 (c) of our annual audited consolidated financial statements for the
year ended December 31, 2001.


RESULTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2001

         Our consolidated financial statements have been prepared in accordance
with Canadian generally accepted accounting principles. These principles conform
in all material respects with U.S. generally accepted accounting principles.

     REVENUE

     PRODUCT REVENUE

         In the three months ended September 30, 2002, product revenue decreased
to $1.7 million from $6.6 million for the same period in 2001. In the nine
months ended September 30, 2002, product revenue decreased to $5.9 million from
$24.7 million for the corresponding period in 2001. Due to poor economic
conditions, we experienced reluctance in our customers' willingness to make
large upfront commitments on license fees. We expect product revenue to be lower
than in prior periods until our customers roll out their services using our
underlying software and the economy recovers and our customers begin to increase
their level of capital expenditures.

     SERVICE REVENUE

         Service revenue increased to $3.8 million for the three months ended
September 30, 2002 compared to $3.4 million in 2001. Service revenue decreased
to $9.2 million for the nine months ended September 30, 2002 from $13.3 million
in 2001.The increase in the current quarter's



                                       21
<Page>

services revenue is due to the growth in solutions sales as opposed to software
sales. The decrease in the nine-month service revenue is due to the reduced
number of projects our customers were implementing and the continuing general
weakness in the economy.


     OPERATING EXPENSES

     COST OF REVENUE

         Cost of revenue (COR) consists primarily of personnel costs associated
with customer support, training, and implementations as well as amounts paid to
third-party consulting firms for those services, together with an allocation of
expenses for our facilities and administration. Cost of revenue also includes
software licenses paid for third-party software used with our products.

         Cost of revenue was $1.2 million and $5.6 million for the three months
and nine months ended September 30, 2002, respectively, compared to $4.2 million
and $15.0 million for the comparative periods in 2001. COR decreased in the
first nine months of 2002 due to the reduced number of projects that we were
deploying and because we have eliminated certain costs that were not essential
to our focus on our two key markets, the mobile network operator and financial
services markets.

         With our entry into the mobile network operator market, some of our
customer contracts may require us to achieve contractually defined milestones
and/or receive customer acceptance for our solutions. As a result, there may be
an increase in time between when we perform the professional services and when
we recognize the revenue in the manner described above.

     RESEARCH AND DEVELOPMENT

         Research and development expenses include the compensation of software
development teams working on the continuing enhancement of our products as well
as our quality assurance and testing activities. These expenses also include
independent contractors and consultants, software licensing expenses, and
allocated operating expenses.

         Research and development (R&D) decreased to $3.8 million and $13.6
million for the three months and nine months ended September 30, 2002
respectively, compared to $9.3 million and $32.2 million for the comparative
periods in 2001. The decrease in this expense is a result of our 2001 and 2002
restructuring initiatives in which we reduced our R&D headcount and developed a
more streamlined, integrated and focused product road map and reduced
duplication in the R&D process. We continue to evaluate our R&D expenditure
needs based on our new product architecture and services and the current market
environment. R&D expense, as a percentage of revenue, was 68% and 91% for the
three months and the nine months ended September 30, 2002, respectively,
compared to 93% and 85% for the same periods in 2001

     SALES AND MARKETING

         Sales and marketing expenses include compensation of sales and
marketing personnel, public relations and advertising, trade shows, marketing
materials and allocated operating expenses.

         Sales and marketing (S&M) expenses were $3.8 million and $14.5 million
for the three and nine months ended September 30, 2002 respectively, compared to
$9.8 million and $29.4



                                       22
<Page>

million for the comparative periods in 2001. The decrease is a result of our
reduced worldwide sales, fewer marketing personnel and reduced spending on
discretionary marketing programs as part of our restructuring efforts in 2001
and 2002. We continue to monitor our pace of sales and marketing expenditures to
help ensure that they remain aligned with the opportunities that we have
targeted as well as prevailing market conditions.

     GENERAL AND ADMINISTRATIVE

         General and administrative (G&A) expenses include salaries and benefits
for corporate personnel and other general and administrative expenses such as
facilities, travel and professional consulting costs. Our corporate staff
includes several of our executive officers and our business development,
financial planning and control, legal, human resources and corporate
administration staff.

         Our G&A expenses decreased to $1.7 million and $5.7 million for the
three months and nine months ended September 30, 2002 respectively compared to
$2.4 million and $13.0 million for the comparative periods in 2001. The decrease
in G&A expenses reflected our efforts in our restructuring initiatives to reduce
complexity in our business and to make our infrastructure efficient in order to
support our business in the current market environment. G&A expenses as a
percentage of revenues increased slightly to 31% and 38% for the three months
and nine months ended September 30, 2002 from 24% and 34% for the comparative
periods in 2001.

     DEPRECIATION AND AMORTIZATION

         Depreciation expense was $1.3 million and $4.5 million in the three
months and nine months ended September 30, 2002 compared to $2.4 million and
$6.3 million in the comparative periods in 2001. The decrease is a result of the
decommissioning of our redundant fixed assets and reductions in our capital
expenditure budgets as part of our restructuring initiatives.

         Amortization expense decreased to $1.0 million and $3.2 million for the
three and nine months ended September 30, 2002, respectively compared to $27.0
million and $78.2 million in the comparative periods in 2001. The decrease is
attributable to lower amortization as a result of the write-down of intangible
and other assets in fiscal 2001 and the adoption of SFAS No.142 and CICA
Handbook section 3062, which require goodwill to be assessed for impairment
only, rather than being amortized, on a prospective basis starting January 1,
2002. The amortization in 2002 represents the amortization of acquired
technology, which is being amortized over a period of two to five years. See
"Recent Accounting Principles".

     STOCK-BASED COMPENSATION

         Stock-based compensation primarily represents amortization of deferred
stock-based compensation that we recorded as a result of assuming, through the
acquisition of TANTAU, stock option plans that included unvested options and
common shares. This stock based compensation is being amortized on a
straight-line basis over the remaining vesting period of these options, which
will be until January 2003. In addition, included in stock-based compensation is
the immediate recognition of stock compensation expense for those terminated
employees who had options that immediately vested upon their termination, and
the immediate recognition of the unamortized portion of the deferred stock
compensation for those employees who tendered their options as part of our stock
option exchange initiative in January 2002.



                                       23
<Page>

         Stock-based compensation decreased to $3.1 million and $14.5 million
for the three and six months ended September 30, 2002, respectively compared to
$13.7 million and $37.5 million in the comparative periods in 2001. Stock-based
compensation expense decreased in the current year mainly as a result of the
immediate recognition of deferred stock-based compensation related to employees
who were terminated as part of our restructuring plan.

     RESTRUCTURING COSTS

         With the downturn in general economic conditions, in the second quarter
of 2001 we began to identify areas to reduce costs and to implement a
restructuring initiative. In this regard, we eliminated duplicate resources and
positions, narrowed our product offerings and streamlined our operating
processes. As a result of these efforts, in the nine months ended September 30,
2001 we recorded $3.4 million in restructuring costs. We continued with this
restructuring in the second half of 2001 and in August 2002. As a result, for
the nine months ended September 30, 2002, we recorded a restructuring charge of
$20.6 million comprised of fees to be paid to CSC to assume the obligation to
provide services under our hosting contracts, employee severance, lease costs
for the closing of several of our offices and the write-down of inventory assets
that are no longer a part of our current business strategy. In addition, we
recorded $6.3 million relating to the decommissioning of our redundant fixed
assets and $3.2 million relating to the immediate recognition of deferred stock
based compensation expenses relating to employees whose stock options vested
upon termination of their employment. Included in our "Accrued Liabilities" is
approximately $8.1 million in restructuring reserve relating to unpaid severance
costs, lease exit costs and expected fees to be paid to CSC. See note 8 to our
interim consolidated financial statements.

     WRITE-DOWN OF FIXED ASSETS

         For the nine months ended September 30, 2002, we recorded a charge of
$6.3 million related to the write-down of fixed assets, of which $2.2 million
related to the current quarter, that are redundant as a result of our
restructuring.

     INTEREST INCOME

         Interest income decreased to $60,000 and $585,000 for the three and
nine months ended September 30, 2002, respectively, compared to $1.1 million and
$5.2 million in the comparative periods in 2001. Interest was derived from cash
and cash equivalent balances and short-term investments, representing primarily
the unused portion of the proceeds from our issuances of common shares. Interest
income is net of interest expense relating to our notes payable. Interest income
decreased in 2002 compared to 2001 because we have reduced holdings of cash and
cash equivalent balances and short-term investments and a significant decline in
interest rates. We anticipate that we will receive reduced rates of interest,
versus a year ago, on these assets during the current year compared to the year
ended December 31, 2001.

     EQUITY IN LOSS OF AFFILIATE

         We owned 24.9% of the equity of Maptuit, Inc. as at September 30, 2002.
We account for our investment in Maptuit using the equity method, which requires
us to adjust our original cost of investment for our share of post-acquisition
income and losses, less dividends only to the extent that the carrying value of
the investment is no less than zero. As at December 31, 2001, the carrying value
of Maptuit was zero, therefore we did not record additional losses of Maptuit
for the three and nine months ended September 30, 2002, compared to a loss of
$420,000 and



                                       24
<Page>

$1.2 million for the three and nine months ended September 30, 2001. Subsequent
to September 30, 2002, we sold our interest in Maptuit for proceeds of
approximately $150,000.

     NET LOSS

         Our net loss decreased to $21.5 million and $78.3 million for the three
and nine months ended September 30, 2002 respectively, compared to $387.3
million and $508.5 million in the comparative periods in 2001. Our net loss
decreased mainly because we have substantially reduced our operating expenses as
a result of our restructuring initiatives, we have reduced amortization
expenses, and we had a significant write-down of intangible assets in 2001.
Also, we no longer amortize goodwill under SFAS No. 142 and CICA Handbook
section 3062. If SFAS No. 142 and CICA Handbook section 3062 had been adopted
for the period three months and nine months ended September 30, 2001, the loss
would have been $363.0 million and $437.9 million respectively.


LIQUIDITY AND CAPITAL RESOURCES

         Net cash used in operating activities decreased to $16.7 million and
$41.8 million for the three and nine months ended September 30, 2002 compared to
$25.5 million and $69.9 million for the comparative periods in 2001. The main
reason for the decrease is because we have less operating expenses as a result
of our restructuring efforts. Net cash used in operating activities for the
third quarter of 2002 consisted mainly of our net loss of $21.5 million, offset
by non cash items primarily related to depreciation and amortization of $2.3
million, stock-based compensation expense of $3.1 million, and the write-down of
long-term investments and fixed assets of $7.5 million and increased by the cash
outflow from working capital of $8.1 million.

         As at September 30, 2002, we had commitments to make $1.7 million in
minimum lease payments, until the year 2005, relating to our facilities and
equipment rentals. As a result of our restructuring initiative, we have vacated
some of our premises. We have been successful in reducing our total future lease
commitments with our landlords

         Cash used in financing activities was $884,000 in the three months
ended September 30, 2002 compared to $162,000 for the same period in 2001. Cash
used in financing activities was $2.1 million for the nine months ended
September 30, 2002 compared to a cash source of $621,000 in the same period in
2001. The reason for the decrease in cash inflow is because in 2002 we paid more
principal on our outstanding note payable and we received less proceeds from the
exercise of stock options. As at September 30, 2002, we are obligated to pay
approximately $1.5 million in principal and interest related to our note
payable, with the final payment being due on February 1, 2003.

         Cash used in investing activities, before the sale (purchase) of
short-term investments, business acquisitions and restricted cash was $363,000
for the three months ended September 30, 2002 compared to a cash outflow of $4.6
million for the three months ended September 30, 2001. The reason for the
decrease in cash outflow from in the third quarter 2002 compared to the same
period in 2001, is because we acquired less fixed assets. For the nine months
ended September 30, 2002 cash out flow was $1.1 million compared to a cash
outflow of $18.3 million. The reasons for the decrease in cash outflow for the
nine months ended September 30, 2002



                                       25
<Page>

compared to the same period in 2001 is because we acquired less fixed assets in
2002 and made no long-term investments. Included in the cash inflow from
investing activities for the three months September 30, 2002 is a cancellation
of a letter of credit. This cash is no longer restricted and will be used in
operations. Included in cash outflow from investing activities for the nine
months ended September 30, 2002 is $962,000 related to a letter of credit we
entered into to guarantee payments under future contractual lease commitments as
part of our agreement with our landlords to reduce the total payments under the
original lease. We expect to make this payment in January 2003.

         In total, cash used for the three months ended September 30, 2002 was
$19.1 million and $34.1 million for the nine months ended September 30, 2002.
Due to the operational savings that we expect to achieve as a result of our
restructuring, we expect that cash from operations, interest income and our
existing cash and cash equivalents and short-term investments will be sufficient
to cover our cash requirements, including planned capital expenditures, for at
least the next 12 months. We may require additional financing if we expand our
operations at a faster rate than currently expected, or if we seek to effect one
or more significant acquisitions.


RECENT ACCOUNTING PRINCIPLES

     US GAAP

         In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 142 requires that all goodwill no longer be
amortized to earnings, but instead be periodically reviewed for impairment. SFAS
No.142 must be adopted with fiscal years beginning after December 15, 2001.

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses significant
issues relating to the implementation of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
and develops a single accounting method under which long-lived assets that are
to be disposed of by sale are measured at the lower of book value or fair value
less cost to sell. Additionally, SFAS No. 144 expands the scope of discontinued
operations to include all components of an entity with operations that (1) can
be distinguished from the rest of the entity and (2) will be eliminated from the
ongoing operations of the entity in a disposal transaction. SFAS No. 144 is
effective for financial statements issued for fiscal years beginning after
December 15, 2001 and its provisions are to be applied prospectively. We are
currently assessing the impact of SFAS no. 144 on our financial position and
results of operations.

     CANADIAN GAAP

         In September 2001, The Canadian Institute of Chartered Accountants
(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 and
require that goodwill 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 share price for a
reasonable period before and after the date the terms of the acquisition are
agreed to and announced. The new standards are substantially consistent with
U.S. GAAP.

         We have adopted these new standards as of January 1, 2002 and we
have discontinued amortization of all existing goodwill. We have also
evaluated existing intangible assets and have determined that
reclassification in order to conform with the new criteria for recognition of
intangible assets apart from goodwill is not required.

         In connection with Section 3062's transitional goodwill impairment
evaluation, we are required to assess whether goodwill is impaired as of
January 1, 2002. We identify impairment by comparing the carrying amount of
our reporting unit with their fair values. To the extent a reporting unit's
carrying amount exceeds its fair value, we must perform a second step to
measure the amount of impairment in a manner similar to a purchase price
allocation. Under Canadian GAAP, any transitional impairment will be
recognized as an effect of a change in accounting principle and will be
charged to opening retained earnings as of January 1, 2002. Under U.S. GAAP,
any transitional impairment will be charged to operations in the current
period. We have completed the transitional goodwill impairment during the
second quarter of 2002 and have determined that no impairment existed at the
date of adoption.

         Effective January 1, 2002, we adopted the new CICA Handbook Section
3870, "Stock-based Compensation and Other Stock-based Payments", which
requires that a fair value based method of accounting be applied to all
stock-based payments to non-employees and to direct awards of stock to
employees. The requirements of the new standard are consistent with our
accounting policies for these types of transactions and are disclosed in our
audited annual consolidated financial statements. The new section also
requires us to select an accounting methodology for the accounting for
stock-based awards, other than a direct award of stock, granted to employees.
Our existing accounting policy as disclosed in our audited annual financial
statements, which is the application of the intrinsic method for accounting
for employee stock-based awards, is an acceptable methodology under the new
handbook section. Section 3870 also requires additional disclosures including
pro forma earnings and pro forma earnings per share, which are provided in
note 7 of our consolidated financial statements for the period ended
September 30, 2002.

                                       26


<Page>

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

         This report contains statements of a forward-looking nature. These
statements are made under the U.S. Private Securities Litigation Reform Act of
1995. These statements include the statements herein regarding our estimated
cost reductions; our future ability to fund our operations and become
profitable; our development of new products and relationships; our plans to
operate in the mobile operator and financial institutions markets; the rate at
which consumers will adopt wireless applications; our ability to increase our
customer base; the services that we or our customers will introduce and the
benefits that end users will receive from these services; the impact of entering
new markets; our plans to use or not to use certain types of technologies in the
future; our future cost of revenue, gross margins and net losses; our future
restructuring, research and development, sales and marketing, general and
administrative, stock-based compensation, depreciation and amortization
expenses; our future interest income; the value of our goodwill and other
intangible assets; our future capital expenditures and capital requirements; and
the anticipated impact of changes in applicable accounting rules.

         The accuracy of these statements may be impacted by a number of
business risks and uncertainties that could cause actual results to differ
materially from those projected or anticipated. These risks include the risks
described in our SEC filings, including our annual report on Form 10-K. These
risks are also described in our filings with the Canadian Securities
Administrators, including our prospectuses, material change reports, Annual
Information Form and Management Information Circular. We encourage you to
carefully review these risks in order to evaluate an investment in our
securities. Some of the key risks that could cause actual results to differ
materially from those projected or anticipated also include the risks discussed
below. We do not undertake any obligation to update this forward-looking
information, except as required under applicable law.

         GENERAL INDUSTRY, ECONOMIC AND MARKET CONDITIONS. Our future revenues
and operating results are dependent to a large extent upon general economic
conditions, conditions in the wireless market and within that market our primary
target markets of mobile network operators and financial institutions. As
economic activity slowed in these markets beginning in 2001, our customers
deferred their spending on our products and our sales cycle began to lengthen
significantly as potential customers began to reduce their spending commitments,
including their willingness to make investments in new wireless services.
Moreover, adoption of wireless services has not proceeded as rapidly as
previously anticipated. For example, in July 2002, Bank of Montreal, one of our
initial customers, ceased offering its Veev banking and brokerage service. As a
result of these factors, our revenues began to decline in 2001. If general
economic conditions continue to be adverse, if the economies in which our target
customers are located enter into a recession, or if demand for our solutions
does not expand, our ability to increase our customer base may be limited, and
our revenue may decrease further.

         ENTERING NEW MARKETS. We have made mobile network operators an
important focus of our activities. In order to encourage these potential
customers to adopt and implement our solutions, we may incur higher costs than
we have in the past, and we may not be able to attract a large number of these
customers. Mobile network operators may not be successful in rolling out our
services, and subscribers to these services may not seek to use them. Any
developments of



                                       27
<Page>

this kind could limit our ability to sell our solutions to companies in this
industry, may increase our expenses and may damage our reputation.

         INTERNATIONAL MARKETS. Since December 31, 2000, we have begun to
recognize revenues from our sales in international markets. In the past, in
deriving our revenue forecasts, we have expected that sales in these regions
would be a major factor in our growth, particularly since the use of wireless
networks and wireless devices have generally proceeded more rapidly there.
However, some key countries in these regions, have experienced decreasing
economic activity, and our sales to these regions declined beginning in the
third quarter of 2001. Accordingly, our sales to these regions during 2001 may
not be indicative of future trends, and may not expand significantly during the
next several quarters.

         LIQUIDITY. In order to help ensure that we would have sufficient
capital to take advantage of our core business opportunities, we have taken
significant actions since the second quarter of 2001 to reduce our operating
expenses. However, most of our operating expenses, such as employee compensation
and lease payments for facilities and equipment, are relatively stable, and
these expense levels are based in part on our expectations regarding future
revenues. As a result, any shortfall in our revenues relative to our
expectations could cause significant changes in our operating results from
quarter to quarter. Accordingly, if the cost-cutting actions that we have taken
are insufficient, we may not have sufficient capital to fund our operations, and
additional capital may not be available on acceptable terms, if at all. Any of
these outcomes could adversely impact our ability to respond to competitive
pressures or could prevent us from conducting all or a portion of our planned
operations. We may need to undertake additional measures to reduce our operating
expenses in the future.

         INVESTMENTS IN OTHER COMPANIES. For year ended December 31, 2001 we
realized a loss of $4.6 million on sales of our long-term investments and
recorded a loss provision of $10.0 million against these investments as they
have experienced a significant other than temporary decline in their value. In
addition, in the third quarter of 2002, we recorded an additional loss provision
of $5.3 million. Because of the continuing volatility in the financial markets,
as well as other factors, we expect to limit the extent to which we make equity
investments in other non-core companies during the next few fiscal quarters, and
possibly longer. As a result, we may not take advantage of investment
opportunities that could provide significant financial benefits to our company,
or that could provide us with the opportunity to build relationships with other
companies in our industry and target markets.

         INVESTMENTS IN NEW TECHNOLOGIES. During fiscal 2001, we made
significant investments in new technology assets, to help expedite customer
adoption of our solutions, interactive voice response technology, technologies
relating to short messaging services and technology to allow mobile applications
to be executed with real-time interaction. In accordance with our accounting
policy, we review the carrying value of these assets, considering key factors
such as our estimate of customer demand for these assets and the assets' fit
with our product strategy. For nine months ended September 30, 2002, we recorded
a charge of $2.7 million relating to our decision not to use these assets that
we purchased to resell to our customers. In the future, if there are any
circumstances in which there is a decline in the carrying value of these assets,
for example, if we decide not to pursue these technologies if we determine that
customer demand for them is not substantial, we may need to record additional
charges.



                                       28
<Page>

         RECEIVABLES. As our sales to international customers increase, a
significant portion of our receivables are derived from companies in foreign
countries. Due to varying economic conditions and business practices in these
countries, our collections cycle from these customers may be longer than our
past experience. In the third quarter of 2002, we recorded a provision of
$150,000 relating to accounts that we believe to be potential bad debts. There
is risk that this provision is not sufficient. As adverse economic conditions
persist, there is a greater risk that our customers will have difficulties in
paying us in accordance with the terms of their contracts, and our risk of bad
debt may increase substantially in future fiscal periods.

         HOSTING SERVICES. In January 2002, we formalized our plan to transfer
the management of our application hosting services to Computer Sciences
Corporation ("CSC"). We will continue to be dependent on CSC to provide secure
hosting services for our software products. If CSC becomes unable to deliver
these services, or other circumstances occur that affect CSC or its computer
systems, our hosting services may be substantially impaired. If any of these
circumstances occur and cause us to fail to deliver our hosting services, we may
lose customers, our reputation may suffer, and our ability to attract new
customers may be damaged.

         EMPLOYEES. Our ability to execute our business successfully depends in
large part upon our ability to have a sufficient number of qualified employees
to achieve our goals. However, if our workforce is not properly sized to meet
our operating needs, our ability to achieve and maintain profitability is likely
to suffer. As indicated in this report, we have substantially reduced the number
of our employees. This means that we use a smaller number of employees to
conduct some of the operations that were previously performed by a larger
workforce, which could cause disruption of our business. In addition, the morale
of our current employees may have been adversely affected by previous workforce
reductions, reducing their performance. Our ability to attract potential new
employees in the future may suffer if our reputation suffers as a result of
these staffing reductions.

         GROSS MARGINS. We believe that certain factors in the current market
may contribute to the risk that our gross margins will decrease in future fiscal
quarters. We may have to lower our prices, in order to accommodate our
customers. In addition, due to the downturn in the economy, many of our
customers are reluctant to make a commitment to pay a large upfront license fee,
which could also cause our revenues to decrease. With a greater portion of
services revenue mix in the short-term, if we are not successful in reducing our
costs of sales in response to the pricing pressure and any reduced upfront
commitment, we will experience a decrease in our gross margins. In addition, due
to the difficulties in achieving sales in the current economic environment, we
will have less control over the portion of our sales consisting of licenses,
which generally has a higher gross margin than services. Accordingly our current
gross margins may decrease.

         LITIGATION. We and certain of our present and former officers and
directors were named as defendants in a series of purported class actions
relating to our initial public offering. Litigation may be time consuming,
expensive, and distracting from the conduct of our business, and the outcome of
litigation may be difficult to predict. The adverse resolution of any of these
proceedings could have a material adverse effect on our business, results of
operations, and financial condition.



                                       29
<Page>

         NASDAQ LISTING. Our common shares trade on the Nasdaq SmallCap Market,
which has a number of compliance requirements for continued listing. One of
these requirements is that the market price of our common shares must be at
least US$1.00 for a specified period of time. We are not currently in compliance
with this standard. If we do not meet this requirement on or prior to December
9, 2002, the date by which Nasdaq would once again review our compliance, we
would continue to be listed, so long as we continue to meet all of the other
inclusion requirements. If that were the case, we would have until June 9, 2003
to regain compliance (which could possibly be achieved by effecting a
reverse-stock split or otherwise), at which time we would be delisted if we do
not comply with the US$1.00 requirement. It is our intent to maintain our Nasdaq
SmallCap Market listing.

         We continue to meet all requirements for trading on The Toronto Stock
Exchange, and if our listing on the Nasdaq SmallCap Market also does not
continue, we expect to qualify for trading on the Over-the-Counter-Bulletin-
Board. If we are delisted from the Nasdaq SmallCap Market, there would likely
be a reduction in the liquidity of our common shares and a further adverse
effect on their trading price. Lack of liquidity would also make it more
difficult for us to raise capital in the future, effect acquisitions or other
strategic transactions, and to retain our personnel


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

IMPACT OF INTEREST RATE EXPOSURE
         As of September 30, 2002 we had approximately $43.8 million in cash,
cash equivalents, short-term investments and restricted cash of which $16.7
million consisted of short-term investments. A significant portion of the cash
earns interest at variable rates. In addition, although our short-term
investments are fixed-rate instruments, the average term is short. Accordingly,
our interest income is effectively sensitive to changes in the level of
prevailing interest rates. This is partially mitigated by the fact that we
generally do not liquidate our short-term investments before their maturity
dates.



                                       30
<Page>

IMPACT OF FOREIGN EXCHANGE RATE EXPOSURE

         Our functional currency is the U.S. dollar. In the past, the majority
of our non-US dollar denominated expenses were incurred in Canadian dollars. As
a result of our recent restructuring efforts, in the foreseeable future the
majority of our non-US dollar denominated expenses will be incurred in Euros.
Changes in the value of these currencies relative to the U.S. dollar may result
in currency gains and losses, which could affect our operating results. In the
three month period ended September 30, 2002, we incurred unrealized foreign
currency loss relating to the translation of our non-US denominated monetary
assets and liabilities of approximately $93,000.

ITEM 4.  CONTROLS AND PROCEDURES

         During the 90-day period prior to the filing date of this report,
management, including the Company's Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness and operation of the Company's disclosure
controls and procedures. The Chief Executive Officer and Chief Financial Officer
concluded that the disclosure controls and procedures were effective, in all
material respects, to ensure that information required to be disclosed in the
reports the Company files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required. There have been no
significant changes in the Company's internal controls or in other factors which
could significantly affect internal controls subsequent to the date the Company
carried out its evaluation. There were no significant deficiencies or material
weaknesses identified in the evaluation and therefore, no corrective actions
were taken.




                                       31
<Page>

PART II.          OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS

         The Company has been named in several class actions filed in federal
court in the Southern District of New York between approximately June 13, 2001
and June 28, 2001 (collectively the "IPO Allocation Litigation"). The IPO
Allocation Litigation was filed on behalf of purported classes of plaintiffs who
acquired the Company's common shares during certain periods. These lawsuits have
since been consolidated into a single action and an amended complaint was filed
on or about April 19, 2002. Similar actions have or since been filed against
over 300 other issuers that have had initial public offerings since 1998 and all
are included in a single coordinated proceeding in the Southern District of New
York.

         The amended complaint in the IPO Allocation Litigation names as
defendants, in addition to the Company, some or all of the current or former
directors and officers of the Company (the "Individual Defendants") and certain
underwriters of the Company's initial public offering of securities (the
"Underwriter Defendants"). In general, the amended complaint alleges that the
Underwriter Defendants: (1) allocated shares of the Company's offering of equity
securities to certain of their customers, in exchange for which these customers
agreed to pay the Underwriter Defendants extra commissions on transactions in
other securities; and (2) allocated shares of the Company's initial public
offering to certain of the Underwriter Defendants' customers, in exchange for
which the customers agreed to purchase additional common shares of the Company
in the after-market at certain pre-determined prices. The amended complaint also
alleges that the Company and the Individual Defendants failed to disclose these
facts and that the Company and the Individual Defendants were aware of, or
disregarded, the Underwriter Defendants' conduct. In October 2002, the
Individual Defendants were dismissed from the IPO Allocation Litigation without
prejudice.

         The Company intends to vigorously defend itself and the Individual
Defendants against these claims. However, due to the inherent uncertainties of
litigation, and because the IPO Litigation is at a preliminary stage, we cannot
accurately predict the ultimate outcome IPO Allocation Litigation.


ITEM 2.    CHANGES IN SECURITIES
           None.


ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
           None.


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
           None.



                                       32
<Page>

ITEM 5.    OTHER INFORMATION
           None.


ITEM 6.  EXHIBITS AND REPORT ON FORM 8-K


         (A)      EXHIBITS:

         None.

         (B)      REPORT ON FORM 8-K:

         None.




                                       33
<Page>

                                   SIGNATURES


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



<Table>
<Caption>

              SIGNATURES                              TITLES                                         DATE
              ----------                              ------                                         ----
<S>                                     <C>                                                  <C>
 /s/ John J. Sims                        Chief Executive Officer (principal                   November 13, 2002
-----------------------------------      executive officer)
 John J. Sims

 /s/ Glenn Barrett                       Chief Financial Officer (principal                   November 13, 2002
-----------------------------------      financial and accounting officer)
Glenn Barrett
</Table>




                                                  CERTIFICATIONS

I, John Sims, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of 724 Solutions Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
       statement of a material fact or omit to state a material fact necessary
       to make the statements made, in light of the circumstances under which
       such statements were made, not misleading with respect to the period
       covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
       information included in this quarterly report, fairly present in all
       material respects the financial condition, results of operations and cash
       flows of the registrant as of, and for, the periods presented in this
       quarterly report;

4.     The registrant's other certifying officers and I are responsible for
       establishing and maintaining disclosure controls and procedures (as
       defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
       have:

       a)     Designed such disclosure controls and procedures to ensure that
              material information relating to the registrant, including its
              consolidated subsidiaries, is made known to us by others within
              those entities, particularly during the period in which this
              quarterly report is being prepared;



                                       34
<Page>

       b)     Evaluated the effectiveness of the registrant's disclosure
              controls and procedures as of a date within 90 days prior to the
              filing date of this quarterly report (the "Evaluation Date"); and

       c)     Presented in this quarterly report our conclusions about the
              effectiveness of the disclosure controls and procedures based
              on our evaluation as of the Evaluation Date;

5.     The registrant's other certifying officers and I have disclosed, based on
       our most recent evaluation, to the registrant's auditors and the audit
       committee of registrant's board of directors (or persons performing the
       equivalent functions):

       a)     All significant deficiencies in the design or operation of
              internal controls which could adversely affect the registrant's
              ability to record, process, summarize and report financial data
              and have identified for the registrant's auditors any material
              weaknesses in internal controls; and

       b)     Any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal controls; and

6.     The registrant's other certifying officers and I have indicated in this
       quarterly report whether there were significant changes in internal
       controls or in other factors that could significantly affect internal
       controls subsequent to the date of our most recent evaluation, including
       any corrective actions with regard to significant deficiencies and
       material weaknesses.

Date:  November 13, 2002

                                                     /s/  John Sims
                                                     --------------------------
                                                     John Sims
                                                     Chief Executive Officer


I, Glenn Barrett, certify that:

1.     I have reviewed this quarterly report on Form 10Q of 724 Solutions Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
       statement of a material fact or omit to state a material fact necessary
       to make the statements made, in light of the circumstances under which
       such statements were made, not misleading with respect to the period
       covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
       information included in this quarterly report, fairly present in all
       material respects the financial condition, results of operations and cash
       flows of the registrant as of, and for, the periods presented in this
       quarterly report;


                                       35
<Page>

4.     The registrant's other certifying officers and I are responsible for
       establishing and maintaining disclosure controls and procedures (as
       defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
       have:

       a)     Designed such disclosure controls and procedures to ensure that
              material information relating to the registrant, including its
              consolidated subsidiaries, is made known to us by others within
              those entities, particularly during the period in which this
              quarterly report is being prepared;

       b)     Evaluated the effectiveness of the registrant's disclosure
              controls and procedures as of a date within 90 days prior to the
              filing date of this quarterly report (the "Evaluation Date"); and

       c)     Presented in this quarterly report our conclusions about the
              effectiveness of the disclosure controls and procedures based on
              our evaluation as of the Evaluation Date;

5.     The registrant's other certifying officers and I have disclosed, based on
       our most recent evaluation, to the registrant's auditors and the audit
       committee of registrant's board of directors (or persons performing the
       equivalent functions):

       a)     All significant deficiencies in the design or operation of
              internal controls which could adversely affect the registrant's
              ability to record, process, summarize and report financial data
              and have identified for the registrant's auditors any material
              weaknesses in internal controls; and

       b)     Any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal controls; and

6.     The registrant's other certifying officers and I have indicated in this
       quarterly report whether there were significant changes in internal
       controls or in other factors that could significantly affect internal
       controls subsequent to the date of our most recent evaluation, including
       any corrective actions with regard to significant deficiencies and
       material weaknesses.

Date:  November 13, 2002

                                           /s/ Glenn Barrett
                                           ----------------------------------
                                           Glenn Barrett
                                           Chief Financial Officer and Senior
                                           Vice-President, Corporate Services




<Page>

                               724 SOLUTIONS INC.

                                  CERTIFICATION

In connection with the periodic report of 724 Solutions Inc. (the "Company") on
Form 10-Q for the period ended September 30, 2002 as filed with the Securities
and Exchange Commission (the "Report"), I, John Sims, Chief Executive Officer of
the Company, hereby certify as of the date hereof, solely for purposes of Title
18, Chapter 63, Section 1350 of the United States Code, that to the best of my
knowledge:

              (1) the Report fully complies with the requirements of Section
              13(a) or 15(d), as applicable, of the Securities Exchange Act of
              1934, and

              (2) the information contained in the Report fairly presents, in
              all material respects, the financial condition and results of
              operations of the Company at the dates and for the periods
              indicated.

This Certification has not been, and shall not be deemed, "filed" with the
Securities and Exchange Commission.



Date: November 13, 2002                     /s/ John Sims
                                            ------------------------------------
                                            John Sims
                                            Chief Executive Officer



<Page>


                               724 SOLUTIONS INC.

                                  CERTIFICATION

In connection with the periodic report of 724 Solutions Inc. (the "Company") on
Form 10-Q for the period ended September 30, 2002 as filed with the Securities
and Exchange Commission (the "Report"), I, Glenn Barrett, Chief Financial
Officer and Senior Vice-President, Corporate Services of the Company, hereby
certify as of the date hereof, solely for purposes of Title 18, Chapter 63,
Section 1350 of the United States Code, that to the best of my knowledge:

              (1) the Report fully complies with the requirements of Section
              13(a) or 15(d), as applicable, of the Securities Exchange Act of
              1934, and

              (2) the information contained in the Report fairly presents, in
              all material respects, the financial condition and results of
              operations of the Company at the dates and for the periods
              indicated.

This Certification has not been, and shall not be deemed, "filed" with the
Securities and Exchange Commission.



Date: November 13, 2002           /s/  Glenn Barrett
                                  -----------------------------------------
                                  Glenn Barrett
                                  Chief Financial Officer and
                                  Senior Vice-President, Corporate Services