<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

<TABLE>
<C>        <S>
   /X/     Quarterly Report Pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934 for the Quarterly Period
           Ended March 31, 2001

                                  or

   / /     Transition Report Pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934
</TABLE>

                        Commission File Number: 1-15641

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

                               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 Identification No.)
       Incorporation or Organization)

        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)

                                 NOT APPLICABLE
  (Former Name, Former Address, and Former Fiscal Year, 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 / /

  COMMON SHARES, NO PAR VALUE -- 57,741,180 SHARES OUTSTANDING AS OF MARCH 31,
                                     2001.
 (Indicate the number of shares outstanding of each of the issuer's classes of
                common stock, as of the latest practicable date)

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                               724 SOLUTIONS INC.
                               TABLE OF CONTENTS

<TABLE>
<S>        <C>       <C>  <C>                                                           <C>
Part I.    Financial Information
           Item 1.   Financial Statements
                     a)   Condensed Consolidated Balance Sheets.......................    2
                     b)   Condensed Consolidated Statement of Operations..............    3
                     c)   Consolidated Statement of Cash Flows........................    4
                     d)   Consolidated Statements of Shareholders' Equity.............    5
                     e)   Notes to Condensed Consolidated Financial Statements........    6

           Item 2.   Management's Discussion and Analysis of Financial Condition and
                     Results of Operations............................................   11

           Item 3.   Quantitative and Qualitative Disclosures About Market Risk.......   18

Part II.   Other Information

           Item 1.   Legal Proceedings................................................   19

           Item 2.   Changes in Securities............................................   19

           Item 3.   Defaults Upon Senior Securities..................................   19

           Item 4.   Submission of Matters to a Vote of Security Holders..............   19

           Item 5.   Other Information................................................   19

           Item 6.   Exhibits and Report on Form 8-K..................................   20

Signatures............................................................................   21
</TABLE>

                                       1
<PAGE>
                         PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

(A) CONDENSED CONSOLIDATED BALANCE SHEETS

    (IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                               MARCH 31,    DECEMBER 31,
                                                                 2001           2000
                                                              -----------   -------------
                                                              (UNAUDITED)
<S>                                                           <C>           <C>
ASSETS
Current assets:
  Cash and cash equivalents (NOTE 3)........................   $ 88,857       $ 73,898
  Short-term investments (NOTE 3)...........................     79,403         92,726
  Accounts receivable--trade net of allowance of nil
    (December 31, 2000--$52)................................      8,124          4,376
  Prepaid expenses and other receivables....................      3,232          2,260
                                                               --------       --------
                                                                179,616        173,260
Fixed assets................................................     14,759         11,297
Investments (NOTE 4)........................................     15,830         12,196
Intangible and other assets (NOTE 6)........................    396,391         90,563
                                                               --------       --------
                                                               $606,596       $287,316
                                                               ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable........................................   $  2,524       $  2,203
    Accrued liabilities.....................................     21,997         18,198
    Notes payable...........................................      5,009             --
    Deferred revenue........................................      4,401          1,887
    Deferred consideration..................................        998          1,190
                                                               --------       --------
                                                                 34,929         23,478
Leasehold inducements.......................................        346            375
Deferred consideration, net of current portion..............      1,034          1,200
Shareholders' equity:
  Share capital (NOTE 9):
    Authorized:
      Unlimited common shares
      Unlimited preferred shares
    Issued and outstanding:
      57,741,180 common shares
      (December 31, 2000--39,112,975).......................    767,466        357,158
  Deferred stock-based compensation (NOTE 5)................    (58,745)       (14,946)
  Accumulated deficit.......................................   (138,346)       (79,949)
  Cumulative translation adjustment.........................        (88)            --
                                                               --------       --------
                                                                570,287        262,263
                                                               --------       --------
Total liabilities and shareholders' equity..................   $606,596       $287,316
                                                               ========       ========
</TABLE>

                                       2
<PAGE>
(B) CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

    (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                              -----------------------
                                                              MARCH 31,    MARCH 31,
                                                                 2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
REVENUE:
  Product...................................................   $  9,127      $ 2,762
    Less: stock-based compensation related to product.......         --         (248)
  Services..................................................      4,722          597
                                                               --------      -------
Net revenue.................................................   $ 13,849      $ 3,111

OPERATING EXPENSES:
  Cost of revenue...........................................      5,090        1,953
  Research and development..................................     11,189        4,163
  Sales and marketing.......................................      9,029        3,031
  General and administrative................................      6,586        1,896
  Depreciation..............................................      1,742          317
  Amortization of intangibles...............................     23,870           --

  Stock-based compensation:
    Cost of revenue.........................................        207          189
    Research and development................................      6,113          487
    Sales and marketing.....................................      2,529           85
    General and administrative..............................      1,839           82
                                                               --------      -------
  Total operating expenses..................................   $ 68,194      $12,203
                                                               --------      -------
Loss from operations........................................    (54,345)      (9,092)
Interest income.............................................      2,476        2,237
Equity in loss of affiliate.................................       (278)         (66)
                                                               --------      -------
Loss before write-down of long-term investments.............    (52,147)      (6,921)
Write-down of long-term investments (NOTE 4)................     (6,250)          --
                                                               --------      -------
  Net loss for the period...................................   $(58,397)     $(6,921)
                                                               --------      -------
Other comprehensive income:
Unrealized holding gain or (loss) on investments available
  for sale..................................................     (3,500)          --
    Cumulative translation adjustment.......................        (88)          --
                                                               --------      -------
                                                               $(61,985)     $(6,921)
                                                               ========      =======
Basic and diluted net loss per share........................   $  (1.09)     $ (0.20)
Weighted-average number of shares used in computing basic
  and diluted loss per share (in thousands) (NOTE 9)........     53,581       34,037
                                                               ========      =======
</TABLE>

                                       3
<PAGE>
(C) CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

    (IN THOUSANDS OF U.S. DOLLARS, EXCEPT NUMBER OF SHARES)

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                  -----------------------
                                                                  MARCH 31,    MARCH 31,
                                                                     2001         2000
                                                                  ----------   ----------
    <S>                                                           <C>          <C>
    Cash flows from (used in) operating activities:
      Loss for the year.........................................  $  (58,397)   $ (6,921)
      Depreciation and amortization.............................      25,612         317
      Stock-based compensation..................................      10,688       1,091
      Other non-cash expenses...................................        (362)         --
      Write-down of long-term investments.......................       6,250          --
    Equity in loss of affiliate.................................         278          66
    Foreign exchange gain.......................................         (18)         --
      Change in operating assets and liabilities:
          Accounts receivable...................................       1,465       2,104
          Prepaid expenses and other receivables................          10        (898)
          Accrued interest on short term investments............       1,503          --
          Accounts payable......................................        (426)       (344)
          Accrued liabilities...................................      (3,240)      2,630
          Deferred revenue......................................         371         776
                                                                  ----------    --------
      Net cash flows used in operating activities...............     (16,266)     (1,179)

    Cash flows from financing activities:                                             --
      Issuance of common shares for cash........................         618     165,708
                                                                  ----------    --------
      Net cash flows from financing activities..................         618     165,708

    Cash flows from (used in) investing activities:
      Purchase of fixed assets..................................      (3,178)     (1,204)
      Sale of short-term investments............................      11,820          --
      Purchase of intangible and other assets...................        (592)     (1,688)
      Long term investments.....................................      (7,621)       (750)
      Acquisition of Yrless Internet Corporation................          --      (1,272)
      Cash assumed on acquisition of TANTAU Software Inc........      30,248          --
                                                                  ----------    --------
      Net cash flows from (used in) investing activities........      30,677      (4,914)

    Foreign exchange loss on cash held in a foreign currency....         (70)         --
                                                                  ----------    --------
    Net increase in cash and cash equivalents...................      14,959     159,615
    Cash and cash equivalents, beginning of period..............      73,898      65,287
    Cash and cash equivalents, end of period....................  $   88,857    $224,902
                                                                  ----------    --------
    Supplemental disclosures of non-cash investing and
      financing activities:
      Net assets acquired from acquisitions.....................  $   24,025    $    (95)
                                                                  ----------    --------
      Common shares issued upon acquisitions....................  17,119,869          --
                                                                  ==========    ========
</TABLE>

     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
<PAGE>
(D) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

    (IN THOUSANDS OF U.S. DOLLARS, EXCEPT NUMBER OF SHARES)

    THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000

<TABLE>
<CAPTION>
                                                          DEFERRED
                                                        STOCK-BASED
                                  COMMON SHARES         COMPENSATION                   CUMULATIVE        TOTAL
                              ---------------------   RELATED TO STOCK   ACCUMULATED   TRANSLATION   SHAREHOLDERS'
                                NUMBER      AMOUNT        OPTIONS          DEFICIT     ADJUSTMENT       EQUITY
                              ----------   --------   ----------------   -----------   -----------   -------------
    <S>                       <C>          <C>        <C>                <C>           <C>           <C>
    Balances, December 31,
      1999.................   29,402,426   $ 84,762       $ (5,909)       $ (16,685)      $ --         $ 62,168
    Loss for the period....           --         --             --           (6,921)        --           (6,921)
    Deferred stock-based
      compensation.........           --      3,621         (3,621)              --         --               --
    Amortization of
      deferred stock-based
      compensation.........           --         --            843               --         --              843
    Issuance on exercise of
      options..............      248,832        314             --               --         --              314
    Issuance of common
      shares...............    6,900,000    164,294             --               --         --          164,294
                              ----------   --------       --------        ---------       ----         --------
    Balances, March 31,
      2000.................   36,551,258   $252,991       $ (8,687)       $ (23,606)      $ --         $220,698
                              ==========   ========       ========        =========       ====         ========

    Balances, December 31,
      2000.................   39,112,975   $357,158       $(14,946)       $ (79,949)      $ --         $262,263
    Loss for the period....           --         --             --          (58,397)        --          (58,397)
    Cumulative translation
      adjustment...........           --         --             --               --        (88)             (88)
    Deferred stock-based
      compensation.........           --     53,280        (53,280)              --         --               --
    Amortization of
      deferred stock-based
      compensation.........           --         --          9,481               --         --            9,481
    Issuance on exercise of
      options..............      364,187        618             --               --         --              618
    Issuance of common
      shares...............   18,264,018    356,410             --               --         --          356,410
                              ----------   --------       --------        ---------       ----         --------
    Balances, March 31,
      2001.................   57,741,180   $767,466       $(58,745)       $(138,346)      $(88)        $570,287
                              ==========   ========       ========        =========       ====         ========
</TABLE>

     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       5
<PAGE>
(E) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    (ALL TABULAR INFORMATION IS EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT
     PER SHARE AMOUNTS.)

1.  BASIS OF PRESENTATION:

    The accompanying condensed 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 condensed 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 (GAAP), which conform in all material
respects, with U.S. generally accepted accounting principles. The interim
financial statements follow the same accounting policies 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, 2000 that were filed with
the Securities and Exchange Commission with our Form 10-K on March 29, 2001.
Certain comparative figures have been reclassified to conform to the current
year's presentation.

    The information furnished as at March 31, 2001 and for the three month
periods ended March 31, 2001 and March 31, 2000 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.

2.  ACQUISITIONS:

    On January 16, 2001, the Company acquired all of the issued and outstanding
shares and common share purchase options of TANTAU Software, Inc. in exchange
for the issuance of 17,119,869 common shares and 2,011,055 replacement common
share purchase options.

    Of the 17,119,869 common shares issued, 14,276,536 common shares are fully
vested shares with the balance of 2,843,333 subject to future vesting under the
terms of the assumed TANTAU Stock Option Plan. The value of the fully vested
shares has been recorded as a component of the purchase consideration. The value
of the unvested shares has been allocated between purchase consideration and
deferred stock-based compensation. The Company has determined the amount
attributable to deferred stock-based compensation as the proportionate share of
the intrinsic value of the unvested shares pertaining to the service period
subsequent to the date of acquisition. The amount attributable to purchase
consideration represents the fair value of the unvested shares as at the
purchase date less the amount recorded as deferred stock-based compensation
related to these unvested shares.

    The value of the 2,011,055 TANTAU employee stock options assumed on
acquisition has been allocated between purchase consideration and deferred
stock-based compensation. The Company has determined the amount attributable to
deferred stock-based compensation as the proportionate share of the intrinsic
value of the assumed options pertaining to the service period subsequent to the
date of acquisition. The amount attributable to purchase consideration
represents the fair value of the replacement options as at the purchase date
less the amount recorded as deferred stock-based compensation related to the
replacement options.

    The purchase price has been determined to be $407,734, including acquisition
costs of $9,385. The deferred stock-based compensation related to the unvested
shares and replacement stock options has been determined to be $53,280.

    The acquisition has been accounted for by the purchase method with the fair
value of the consideration paid being allocated to the fair value of the
identifiable assets and liabilities assumed on

                                       6
<PAGE>
the closing date as set out below. There are no significant accounting
differences between Canadian and U.S. GAAP in the accounting for the
acquisition.

<TABLE>
<CAPTION>
                                                              FAIR VALUE
                                                              ----------
<S>                                                           <C>
Net tangible assets acquired:
  Cash and cash equivalents.................................   $ 30,248
  Accounts receivable.......................................      5,213
  Prepaid expenses and other receivables....................        721
  Investment in Accrue Software Inc.........................        581
  Capital assets............................................      1,884
  Other assets..............................................        303
  Accounts payable..........................................       (743)
  Accrued liabilities.......................................     (7,039)
  Deferred revenue..........................................     (2,143)
  Notes payable.............................................     (5,000)
                                                               --------
                                                                 24,025
                                                               ========
Allocation of the net purchase price:
  Goodwill..................................................    302,859
  Identifiable assets.......................................     27,570
  Deferred stock-based compensation.........................     53,280
                                                               --------
                                                                383,709
                                                               --------
                                                               $407,734
                                                               ========
Consideration paid:
  Share and stock option consideration......................   $398,349
  Costs of acquisition......................................      9,385
                                                               --------
                                                               $407,734
                                                               ========
</TABLE>

    The table below reflects unaudited pro forma consolidated results of the
Company and TANTAU as if the acquisition had taken place on January 1, 2000 and
January 1, 2001 respectively.

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED
                                                              ---------------------------------
                                                              MARCH 31, 2001    MARCH 31, 2000
                                                              ---------------   ---------------
                                                                (UNAUDITED)       (UNAUDITED)
<S>                                                           <C>               <C>
Pro forma revenue for the period............................      $ 14,053          $  4,426
Pro forma loss for the period...............................       (68,658)          (37,396)
Pro forma loss for the period per common share..............         (1.21)            (0.73)
                                                                  --------          --------
</TABLE>

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

    Cash consists of deposits with major financial institutions. Cash
equivalents consist of short-term deposits and high-grade commercial paper with
an original term to maturity of three months or less at the date of purchase.

    All short-term debt securities 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 nor

                                       7
<PAGE>
available-for-sale securities. The components of cash and cash equivalents and
short-term investments are summarized as follows:

<TABLE>
<CAPTION>
                                                              MARCH 31,    DECEMBER 31,
                                                                 2001          2000
                                                              ----------   -------------
<S>                                                           <C>          <C>
Cash and cash equivalents:
  Cash......................................................    $ 3,705       $ 1,297
  Cash equivalents:
    Money market funds......................................      4,375            --
    Government T-Bills......................................     34,672        32,086
    Corporate bonds.........................................      2,299        33,374
    Corporate commercial paper..............................     43,806         7,141
                                                                -------       -------
                                                                $88,857       $73,898
                                                                =======       =======
Short-term investments:
  Held-to-maturity:
    Corporate commercial paper..............................    $61,822       $90,546
    Corporate bonds.........................................     17,581            --
    Government term deposits................................         --         2,180
                                                                -------       -------
                                                                $79,403       $92,726
                                                                =======       =======
</TABLE>

4.  INVESTMENTS:

    (i) Investment in Webhelp Inc.

    On March 26, 2001, the Company entered into a series of transactions with
Webhelp Inc. (Webhelp), a private company incorporated in Delaware.

    The Company acquired 4,087,193 series C convertible preferred shares of
Webhelp Inc. for cash and share consideration of $7,621 and 196,836 common
shares of the Company. This investment represents a shareholder interest of
approximately 11% in Webhelp. The investment of $9,558 is being accounted for on
a cost basis.

    On March 26, 2001, the Company purchased the right, title and interest in
Webhelp's WAEF. This technology is designed to allow mobile applications to be
executed with real-time interaction. As part of the arrangement, Webhelp
retained a worldwide right to use the WAEF in its current businesses. The
aggregate purchase price consisted of 820,150 common shares of the Company and
additional consideration based on a fixed percentage of future sales of WAEF and
products incorporating WAEF for a period of three years. The value ascribed to
the shares issued on acquisition amounted to approximately $8,070 and has been
recorded as acquired technology. The Company intends to expense, as a selling
cost, any amounts paid under the conditional consideration obligations. Of the
820,150 common shares issued, 369,067 common shares are being held in escrow
pending the completion by Webhelp of certain conditions to the agreement.

    On March 26, 2001, Webhelp purchased, from the Company, a perpetual license
for a fixed number of users of the Company's platform for a non-refundable fee
based on commercial rates that are comparable to rates charged to other
customers.

    (ii) Write-down of long-term investments

    Due to adverse changes in operating market conditions, several of the
Company's long-term investments in other companies have experienced significant
other than temporary declines in their values. As a result, the Company has
taken a one-time write-down of $6,250.

                                       8
<PAGE>
5.  DEFERRED STOCK-BASED COMPENSATION:

    Deferred stock-based compensation related to employee options represents
amounts that the Company recorded as a result of granting stock options to its
employees at less than the fair market value for financial reporting purposes of
the Company's shares on the date of the grant. Deferred stock-based compensation
relating to options issued to employees is recognized as an expense over the
vesting period of the stock option. Deferred stock-based compensation related to
options and unvested shares issued in connection with business acquisitions
amounted to $53,280 for the three months ended March 31, 2001 and relates to the
Company's acquisition of TANTAU (NOTE 2). This amount is recognized as an
expense over a maximum period of two years, which is the maximum vesting period
of the stock options and unvested shares.

6.  INTANGIBLE AND OTHER ASSETS:

<TABLE>
<CAPTION>
                                                              MARCH 31,    DECEMBER 31,
                                                                 2001          2000
                                                              ----------   -------------
<S>                                                           <C>          <C>
Goodwill....................................................   $397,609      $ 87,387
Deferred acquisition costs..................................         --         9,385
Acquired technology and other assets........................     41,520        12,634
                                                               --------      --------
                                                                439,129       109,406
Less: accumulated amortization..............................    (42,738)      (18,843)
                                                               --------      --------
                                                               $396,391      $ 90,563
                                                               ========      ========
</TABLE>

    Goodwill represents the excess of the purchase price over the fair value of
net assets acquired, and is being amortized on a straight-line basis over a
period of up to five years. On an ongoing basis, management reviews the
valuation and amortization of goodwill, taking into consideration any events and
circumstances, which might impair the fair value of the related asset. Goodwill
is written down to fair value when decreases in value are considered to be other
than temporary, based upon expected cash flows of the acquired business.

7.  SEGMENTED INFORMATION:

    The Company operates in a single reportable operating segment, that is, the
design and delivery of an Internet infrastructure platform that enables
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 revenues and assets is set forth below:

<TABLE>
<CAPTION>
                                                              MARCH 31,    MARCH 31,
                                                                 2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
Net revenue by geographic locations:
  North America.............................................    $ 9,750      $3,111
  Europe....................................................      2,185          --
  Asia-Pacific..............................................      1,914          --
                                                                -------      ------
                                                                $13,849      $3,111
                                                                =======      ======
</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                         MARCH 31, 2001              MARCH 31, 2000
                                                    -------------------------   -------------------------
                                                     FIXED     INTANGIBLE AND    FIXED     INTANGIBLE AND
                                                     ASSETS     OTHER ASSETS     ASSETS     OTHER ASSETS
                                                    --------   --------------   --------   --------------
<S>                                                 <C>        <C>              <C>        <C>
North America.....................................  $13,719       $396,391       $3,229        $3,055
Europe............................................      955             --           12            --
Asia-Pacific......................................       85             --           12            --
                                                    -------       --------       ------        ------
                                                    $14,759       $396,391       $3,253        $3,055
                                                    =======       ========       ======        ======
</TABLE>

    For the three months ended March 31, 2001, two customers accounted for 31%
and 11% of revenue, respectively. For the three months ended March 31, 2000,
four customers accounted for 30%, 24%, 22% and 20% of revenue, respectively.

8.  RELATED PARTY TRANSACTIONS:

    The Company transacts with certain shareholders or their affiliates: Bank of
Montreal, Bank of America and Citicorp Strategic Technology Corporation. The
following table sets out the balances and transactions with these shareholders,
which have been recorded at the exchange amount:

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                              -----------------------
                                                              MARCH 31,    MARCH 31,
                                                                 2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
Related party balances:
  Accounts receivable, net of allowance for doubtful
    accounts of nil.........................................    $2,038       $  892
  Deferred revenue..........................................       456        7,056
                                                                ------       ------
Related party transactions:
  Net revenue:
    Product.................................................    $1,716       $2,514
    Service.................................................     1,332          472
                                                                ------       ------
</TABLE>

9.  COMMON SHARES:

    In connection with the acquisition of TANTAU, the Company issued 2,843,333
unvested common shares to TANTAU shareholders who were also employees (Employee
Shareholders). These shares vest over a maximum period of two years. If an
Employee Shareholder ceases to be a Company employee, the Company may repurchase
any unvested common shares from the Employee Shareholder at the original
Employee Shareholder cost.

    At March 31, 2001 and December 31, 2000, there were options outstanding to
acquire 8,344,806 and 3,973,522 common shares of the Company, respectively.

    Common shares issuable upon the exercise of stock options and other
potentially convertible instruments that could dilute basic loss per share in
the future were not included in the computation of diluted loss per share,
because to do so would have been anti-dilutive for the three months ended
March 31, 2001 and March 31, 2000, amounted to 8,621,900 and 2,978,115 shares,
respectively.

                                       10
<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 and the accompanying notes
included in our annual report which was distributed on March 21, 2001 in
connection with our shareholder's annual meeting, and the condensed consolidated
financial statements and accompanying notes appearing elsewhere in this report.
All financial information is presented in U.S. dollars unless otherwise noted.

    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 that
enables the delivery of secure financial services applications and mobile
transaction solutions across a wide range of Internet-enabled devices. We were
incorporated in 1997, and introduced our initial financial services products in
1999. Since that time, we have also begun to offer Brokerage, Aggregation and
Alerts applications, in a variety of languages and currencies around the world.
Our suite of products and services enable companies to capitalize on the mobile
Internet by building, deploying, and integrating personalized and secure mobile
commerce and lifestyle applications. With critical security features built in,
our Wireless Internet Platform and applications can be quickly implemented and
integrated with existing systems and scaled or expanded to accommodate future
growth. We also enable our customers to more rapidly introduce services with
end-to-end customer support through our global hosting and contact center
services.

    Using our platform and suite of applications, our customers can offer new,
easy to use, highly personalized, value-added services, which leverage the
flexibility and convenience of the mobile Internet, while building stronger
relationships with their customers. Our customers currently include leading
financial institutions such as Citigroup, Bank of America, Wells Fargo, Hanvit
Bank and Bank of Montreal. With dual headquarters in Toronto, Canada and Austin,
Texas, we have development and sales offices around the world, including
Australia, Barbados, Finland, France, Germany, Hong Kong, Japan, the
Netherlands, Switzerland, the United Kingdom, and the United States.

TANTAU ACQUISITION

    In January 2001, we completed our acquisition of Austin-based TANTAU
Software, Inc. (TANTAU). TANTAU develops and designs software and related
services that enable enterprises to conduct high-volume, secure m-commerce
transactions. We believe that TANTAU's infrastructure will complement our
724 Solutions applications. By integrating TANTAU's platform with our
724 Solutions applications, we believe that we will be able to offer enhanced
services to our existing and future customers that require a strong
enterprise-wide solution. As consideration for the acquisition, we issued an
aggregate of 17,119,869 of our common shares and assumed options originally
issued by TANTAU, which as of the closing date, became exercisable to purchase
an additional 2,011,055 of our common shares. The calculated acquisition price
is estimated to be approximately $407.7 million, including acquisition costs of
$9.4 million and approximately $53.3 million in deferred stock-based
compensation relating to the assumption of TANTAU's stock option plan. The
acquisition is accounted for by the purchase method. For additional information
regarding our accounting for this acquisition, please see NOTE 2 to our
condensed consolidated financial statements.

SOURCES OF REVENUE

    Our primary sources of revenue are revenues generated from our direct sales
and sales through resellers and other channels of our Banking, Brokerage, Alerts
and Aggregation applications (applications) and Wireless Internet Platform
(platform) products. These revenues are generated

                                       11
<PAGE>
through license agreements, reseller agreements, implementation service fees,
maintenance fees, and hosting fees. In the future, we expect that our service
revenue will also include amounts derived from revenue-sharing arrangements and
commissions on m-commerce transactions.

APPLICATIONS: FIXED FEE LICENSES

    Our two initial license agreements were with Bank of Montreal and Bank of
America, and used a fixed fee license model. Under this model, the customer pays
us a fixed annual license fee in whole or part upon execution of the license
agreement, and/or periodically thereafter during the term of the agreement. The
use of this model helped provide the initial cash flow that was necessary to
fund our development and start-up costs. Our initial fixed fee license contracts
contained provisions that required us to deliver to our customers additional
technology that we developed and made generally available to our customers
during the term of the agreement. As such, these fees have been recognized using
the subscription accounting method commencing with the delivery of the first
product in the contract.

APPLICATIONS: VARIABLE LICENSE FEES

    After raising additional capital in August 1999 through the issuance of
common shares, we had the financial resources to begin to forego the fixed fee
license model in favour of a variable fee license model. Our agreements with
several of our customers, including Citigroup, Wells Fargo, Wachovia and
Claritybank.com, utilize this model. The variable fee license model is based on
a per user fee and specified minimum payments. We expect that the transition of
our revenue model from fixed fee to variable fee will have two significant
consequences: first, we will no longer receive the primary portion of our
license fees as initial payments under our customer agreements; and second, we
expect that our revenue stream will vary with the number of our customers'
end-users. We expect that these variable fees will be subject to a minimum
quarterly payment, and expect to provide incentive discounts and/or maximum
quarterly payments to our customers based on the number of their customers using
our applications. To date, we have not received revenues from the user fees in
excess of any minimum payments. However, over time, we expect these fees to
become a significant portion of our revenue once our customers roll out services
based upon our solutions to a substantial number of consumers.

    We expect that in our future contracts that use the variable fee license
model, the customer will pay us a license fee consisting of an up front payment
upon execution of the contract and an ongoing variable fee based on the number
of users. The monthly user fees may be subject to minimum quarterly payments. We
will 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 as revenue when delivery and acceptance have
occurred, and when the collection of any related receivable is deemed probable.
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 user fees in excess of
any minimum payments will be recognized on a monthly basis when the amount is
determined.

PLATFORM LICENSING FEES

    We sell our platform license using a per seat model, in which the licensee
pays a one-time license fee for a fixed number of copies in exchange for a
license with a perpetual term. The standard perpetual license agreement includes
post-contract customer support for a specified period of time. Thereafter,
post-contract customer support can be renewed annually for an additional fee. We
use the post-contract customer support renewal rate as evidence of the fair
value of this service. Since post-contract customer support is the only
undelivered element in these arrangements, revenue is recognized using the
residual method. The fair value of post-contract customer support is recognized
over the term of the support obligation, and the remaining portion of the
one-time license fee is

                                       12
<PAGE>
recognized after the execution of a license agreement and the delivery of the
product to the customer, provided that there are no uncertainties surrounding
the product acceptance, fees are fixed and determinable, collectibility is
probable, and we have no remaining obligations other than the delivery of the
support.

RESELLER AGREEMENTS

    We have entered into, and expect to continue to enter into, a number of
reseller agreements. While each agreement can be different, 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 fee upon the execution of the contract
when delivery and acceptance have occurred, no significant performance
requirements are remaining, and when the collection of the related receivable is
deemed probable. Royalty fees based upon the number of users are recognized
monthly.

IMPLEMENTATION AND CUSTOMER SERVICE FEES

    Revenue from implementation and customer services includes fees for
implementation of our product offerings, consulting, and training services. We
currently rely, and expect to continue to rely, upon a combination of our own
resources and third-party consulting organizations to deliver these services to
our customers. Customers are charged a fee based on time and expenses. Revenue
from implementation and customer service fees is recognized as the services are
performed.

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

    Since fiscal 2000, some of our existing customers have required us, and we
expect that some of our potential customers will require us, to host and manage
the server infrastructure and software platform as part of the implementation of
our products. We typically charge a customer a one-time set-up fee plus a
monthly flat fee or a monthly fee based on the number of users. The set-up fees
are recognized ratably over the term of the hosting arrangement, and the monthly
fees are recognized on a monthly basis.

RESULTS OF OPERATIONS

    Three months ended March 31, 2001 compared to three months ended March 31,
2000.

REVENUE

PRODUCT REVENUE

    In the first quarter of 2001, product revenue before the offset of
stock-based compensation increased to $9.1 million from $2.8 million in the same
period in 2000. Product revenue increased because of our acquisition of TANTAU
in January 2001 and due to the increased number of customers licensing our
products. In the first quarter of 2000, our product offerings were limited to
our Banking and Brokerage products. Since that time, our product offerings have
expanded to include our Alerts, Aggregation and Platform products. We have also
increased the number of our customers outside of North America. We expect that
our product revenue will increase as we sell more products to new customers and
as customers who have licensed our primary Banking and Brokerage applications
based

                                       13
<PAGE>
upon our variable fee model begin to deliver services to end-users. In
particular, we anticipate that sales of our platform product will represent an
increased portion of our sales during the next several quarters.

SERVICE REVENUE

    Service revenue increased to $4.7 million in the first quarter of 2001 from
$597,000 in the same period last year. As we have grown, the mix in our service
revenue has diversified in response to our customers' needs. In the first
quarter of 2001, the majority of the service revenue was derived from consulting
and implementation fees. However, in the first quarter of 2000, most of our
service revenue was derived from maintenance fees. The increase in consulting
and implementation fees resulted primarily from the additional implementation
services that we performed in connection with our Banking, Brokerage,
Aggregation and Alerts product offerings. In addition, in the three months ended
March 31, 2001, we derived consulting revenue from performing strategic
consulting work relating to assisting a number of customers with their wireless
offerings.

    In the future, we expect that most of the service revenue will be derived
from consulting work related to the implementation of our applications, and
increasingly from service revenue from strategic consulting contracts relating
to m-commerce strategy, as more customers demand our expertise in these areas.

STOCK-BASED COMPENSATION RELATED TO SOFTWARE DEVELOPMENT REVENUE

    Stock-based compensation in the first quarter of 2000 related to the
software development portion of our contract with Bank of Montreal. The
development portion of the contract ended in March 2000.

COST OF REVENUE

    Cost of revenue consists primarily of personnel costs associated with
customer support, training, implementation, consulting, and hosting services, 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 licensing expenses paid for the
integration of third-party software into our products.

    Cost of revenue was $5.1 million in the first quarter of 2001, compared to
$2.0 million in the same period of 2000. The increase is mainly due to the fact
that in the first quarter of 2001, we had more customers for whom we were
performing consulting and implementation work than we did in 2000. Cost of
revenue was 37% of revenue for the first quarter of fiscal 2001, compared to 63%
in the first quarter of 2000. This decrease resulted primarily from our
utilization of the personnel and infrastructure previously hired or built, and
leveraging the experience that we have gained in enabling our customers to
deploy our products. We have also reduced the per customer costs that we incur
in driving the adoption and implementation of our products. In addition, with
the acquisition of TANTAU, we expect that our cost of sales as a percentage of
revenue will decrease as platform sales do not typically require the same level
of services as application sales, and therefore, have relatively higher margins.

RESEARCH AND DEVELOPMENT

    Research and development (R&D) 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.

    R&D expenses increased to $11.2 million in the first quarter of 2001 from
$4.2 million in the same period in 2000. The increase mainly reflects the growth
in R&D personnel and product offerings that

                                       14
<PAGE>
we had since first quarter 2000 as a result of our acquisitions of YRLess
Internet Corp., Ezlogin, Spyonit and TANTAU. This increase also resulted from
our investment in our Mobile Commerce Services Platform (MSP). R&D, as a
percentage of net revenues, was 81% in the first quarter of 2001, compared to
134% in the first quarter of 2000. While we expect our R&D expenditures to
increase in absolute dollars as we continue to invest in new technology to
address potential market opportunities in future periods, we expect R&D as a
percentage of sales to remain stable or decrease marginally as we begin to
leverage the technology that we have previously developed, and as we benefit
from our previous acquisitions.

SALES AND MARKETING

    Sales and marketing (S&M) expenses include compensation of sales and
marketing personnel, public relations and advertising, trade shows, marketing
materials and allocated operating expenses.

    S&M expenses were $9.0 million in the first quarter of 2001, compared to the
$3.0 million in the same period in 2000. These costs increased primarily because
in 2001, with the acquisition of TANTAU, we had additional sales personnel to
manage our relationships with our major customers and to expand our business in
North America, Europe, and the Asia-Pacific region. In addition, the increase in
absolute dollars is attributable to our continuing strategy to expand our reach
to other market segments and increase our efforts to sell our expanding suite of
products. However, S&M expenses, as a percentage of revenues, decreased to 65%
in 2001 from 97% in 2000. We expect this trend to continue as we leverage our
sales infrastructure around the world.

GENERAL AND ADMINISTRATIVE

    General and administrative (G&A) expenses include salaries and benefits for
corporate personnel and other general and administrative expenses such as
professional fees, 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 increased to $6.6 million in the first quarter of 2001 from
$1.9 million in the first quarter of 2000. The increase in G&A expenses
reflected our continued investment in increased staffing and related expenses
for the enhancement of the international infrastructure necessary to support our
growing business. The remainder of the increase was due to one-time integration
and professional fees related to our acquisition of TANTAU, and the realigning
of our business in the first quarter of 2001. G&A as a percentage of revenues
has decreased to 48% in the first quarter of 2001 from 61% in the first quarter
of 2000. We expect to see a decrease in this percentage in the future as we
continue to leverage the infrastructure that we have built across our larger
business.

DEPRECIATION AND AMORTIZATION

    Depreciation expense increased to $1.7 million in the first quarter of 2001
compared to $317,000 in the first quarter of 2000. The increase reflects our
capital spending in computer hardware, office furniture and leasehold
improvements at our facilities to support the additional personnel that we have
hired or acquired through our acquisitions. Additional software development
tools used for R&D and computer hardware purchased for our hosting facilities
accounted for the remainder of the increase.

    Amortization expense increased to $23.9 million in the first quarter of 2001
from nil in the first quarter of 2000. The increase was mainly due to the
goodwill and acquired intangibles relating to the Ezlogin acquisition completed
in June 2000, the Spyonit acquisition completed in September 2000, and the
TANTAU acquisition completed in January 2001. We are amortizing goodwill related
to the Ezlogin, Spyonit and TANTAU acquisitions over 24 months, 60 months and
60 months, respectively.

                                       15
<PAGE>
STOCK-BASED COMPENSATION

    Stock-based compensation represents amortization of deferred stock
compensation that we recorded as a result of granting stock options to employees
at less than the fair market value of our shares, for financial reporting
purposes on the date of grant. This stock-based compensation is being amortized
on a straight-line basis over the vesting periods of these options, which is
generally three years. In addition, included in stock-based compensation expense
is the amortization of deferred stock compensation that arose due to our
acquisition of TANTAU (please see NOTE 2 of our condensed consolidated financial
statements), and compensation expense relating to the contingent consideration
incurred as part of our acquisition of YRLess.

    Stock-based compensation increased to $10.7 million in the first quarter of
2001 from $843,000 in the first quarter of 2000. Most of the increase was
attributed to the amortization of $53.3 million of deferred stock compensation
that we recorded as part of the TANTAU acquisition. This amount will be
amortized over a maximum period of two years.

    A large percentage of our outstanding options have exercise prices that are
significantly higher than the current prices at which our common shares trade on
the Nasdaq National Market and The Toronto Stock Exchange. Although we have not
yet determined how we will address this issue, members of our management team
are currently considering a variety of strategies around issuing additional
options. We may undertake a combination of strategies, or develop new plans for
compensating our personnel. We recently increased the number of common shares
available for awards under our stock option plan in order to enable us to grant
additional options. Some of the strategies could require us to record very large
non-cash compensation expenses. However, because we have not yet determined the
strategy or strategies that we will pursue, we cannot estimate at this time the
impact that these actions will have on our financial condition and results of
operations.

INTEREST INCOME

    Interest income increased to $2.5 million in the first quarter of 2001,
compared to $2.2 million in the first quarter of 2000. 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, including in particular, the proceeds from our initial public offering
in the first quarter of 2000 and the cash obtained as a result of our
acquisition of TANTAU. Given the recent reductions in prevailing interest rates,
we anticipate that we will receive lower rates of interest on these assets
during the current year than we received during the year ended December 31,
2000.

EQUITY IN LOSS OF AFFILIATE

    We currently own 24.9% of the equity of Maptuit. Our investment in Maptuit
is accounted for using the equity method. Our share in the net loss of Maptuit
increased to $278,000 in the first quarter of 2001 compared to $66,000 in the
first quarter of 2000.

WRITE-DOWN OF LONG-TERM INVESTMENTS

    Due to adverse changes in market conditions, several of our long-term
investments in other companies have experienced significant other than temporary
declines in their values. As a result, we have taken a one-time write-down of
$6.3 million.

NET LOSS

    We recorded a net loss of $58.4 million for the quarter ended March 31,
2001, compared to a net loss of $6.9 million for the same period in 2000. Our
loss increased as we invested heavily in building our infrastructure and as we
acquired additional companies. In particular, our R&D expenses and our

                                       16
<PAGE>
S&M expenses increased to meet required product delivery schedules and to gain
market share. In 2001, we have plans in place to manage our costs in order to
help manage our operating expenses.

    Since inception, we have sought to manage our resources and pace of
investment in a manner that is consistent with our business plans and our
current levels of financing. In 2001, having acquired TANTAU, and in light of
our plans to improve our operating performance, we have been very focused on
leveraging the combined infrastructure and maximizing our utilization of the
skilled personnel that we have hired and acquired. In the first quarter of 2001,
we identified core parts of our business in which we expected to gain
efficiencies, given our increased scale and our increased number of employees.
As part of that plan, we identified opportunities for eliminating duplicate
resources and positions and streamlining our operating processes. We expect that
these activities will continue into the second quarter of 2001. As such, we
expect to incur the costs associated with the rationalization and consolidation
of our assets and resources in the second quarter of 2001. We anticipate that we
will see the benefits of those efforts beginning in the third quarter of 2001
with a more streamlined organization, efficient process and integrated
infrastructure. We expect that the magnitude of those savings and benefits from
our increased scale and efficiency will more than offset the costs incurred.
However, notwithstanding these operating savings, our net loss is expected to
increase, largely as a result of non-cash charges, including the amortization
and stock-based compensation resulting from our acquisitions of TANTAU, Spyonit
and Ezlogin, which we purchased in the past 12 months.

LIQUIDITY AND CAPITAL RESOURCES

    Net cash used in operating activities was $16.3 million for the quarter
ended March 31, 2001, compared to $1.2 million in the same period last year. Net
cash used in operating activities in the first quarter of 2001 consisted mainly
of our net loss of $58.4 million, offset by depreciation and amortization
expenses of $25.6 million, stock-based compensation expense of $10.7 million and
a write-down of long-term investments of $6.3 million.

    Cash provided by financing activities was $618,000 in the first quarter of
2001, compared to $165.7 million in the same period in 2000. The funds in 2000
primarily represented the proceeds we raised in connection with our initial
public offering of 6,900,000 common shares. The funds in 2001 represent the
exercise of stock options.

    Cash from investing activities, before the sale of short-term investments,
was $18.9 million for the quarter ended March 31, 2001, compared to a use of
$4.9 million use of cash for the same period in 2000. The change primarily
resulted from the cash we obtained as part of our acquisition of TANTAU, offset
by purchases of capital assets of $3.2 million and the cash portion of our
investment in Webhelp Inc. of $7.6 million. Short-term investments consisted
mainly of corporate debt and commercial paper with terms to maturity of no
greater than one year. The increase in cash from short-term investments was
primarily due to the fact that a significant portion of our short-term
investments had maturity dates during the first quarter of 2001.

    We anticipate capital expenditures will continue to increase as we continue
to implement our data centers worldwide to support our hosting activities. In
addition, as at March 31, 2001, we had commitments to make minimum lease
payments of approximately $4.6 million in 2001. In February 2000, TANTAU
borrowed $5.0 million under a note and a related loan agreement. The note bears
interest at the rate of 10% per annum and is repayable monthly over a three year
term ending in February 2003. To date, under the terms of the note, only
interest payments have been made on the outstanding balance, with principal
payments commencing in monthly installments in September 2001. Aggregate
principal and interest payments are expected to amount to $1.5 million for the
year ending December 31, 2001, of which $125,000 has been paid as of March 31,
2001.

    We expect that cash from operations, interest income and funds provided from
our initial public offering 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.

                                       17
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

IMPACT OF INTEREST RATE EXPOSURE

    As of March 31, 2001, we had approximately $168.2 million in cash, cash
equivalents and short-term investments, of which over $79.4 million were
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 date.

IMPACT OF FOREIGN EXCHANGE RATE EXPOSURE

    Our functional currency is the U.S. dollar. The majority of our non-US
dollar denominated expenses are still incurred in Canadian dollars, although
with the purchase of TANTAU, an increased proportion are incurred in Euros and
other European currencies. 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 period ended March 31, 2001, we incurred foreign
currency losses of approximately $70,000. In the future, we may seek to minimize
this risk by hedging our known exposures, such as salaries, rent and other
payments. We plan to account for any arrangements of this kind according to
Financial Accounting Standards 133.

                                      ***

                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 plans to
expand our distribution channels, enter into new markets and increase the
functionality of our products; the expected benefits from our acquisition of
TANTAU Software, Inc.; our expected new sources of revenue; the consequences of
our shift from a fixed-fee to a variable fee license model; our future cost of
revenue, gross margins and net losses; our future research and development,
sales and marketing, general and administrative, and depreciation and
amortization expenses; our plans to reduce our expenses; and our future capital
expenditures and capital requirements.

    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, including unanticipated trends and
conditions in our industry; any delays or difficulties that we encounter in
rolling out enhanced products and services; the risk that we will not have
sufficient capital to expand our operations; any delay, inability or difficulty
encountered in increasing our revenues from our existing and future contracts;
risks associated with our ability to efficiently integrate the companies that we
have acquired; any inability to effectively develop and manage our combined
international operations; competition in our industry and target markets; and
other 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 do not undertake
any obligation to update this forward-looking information, except as required
under applicable law.

                                       18
<PAGE>
                                    PART II
                               OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    Not applicable.

ITEM 2. CHANGES IN SECURITIES

    On March 26, 2001, we issued 196,836 common shares to Webhelp Inc. as
partial consideration for 4,087,193 of Webhelp's Series C Convertible Preferred
Shares. We also issued 820,150 common shares to Webhelp Inc. on March 26, 2001
as partial consideration for the right, title and interest to Webhelp's "Web
Application Event Framework" technology.

    The issuance of these shares was exempt from registration under the
Securities Act of 1933 under the provisions of Section 4(2) of the Act. For more
information regarding these transactions, see NOTE 4 to our condensed
consolidated financial statements, included elsewhere in this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

    None

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

    None

ITEM 5. OTHER INFORMATION

    None

ITEM 6. EXHIBITS AND REPORT ON FORM 8-K.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                        NAME OF DOCUMENT
-------                 ------------------------------------------------------------
<S>                     <C>
3.1(1)                  Articles of the Registrant.

3.2(1)                  By-laws of Registrant.

10.1(1)(2)              Technology License Agreement, dated as of April 30, 1998,
                          between the Registrant and Bank of Montreal.

10.2(1)                 Mutual Indemnity Agreement, dated April 30, 1998, between
                          the Registrant and Bank of Montreal.

10.3(1)                 Letter Agreement, dated November 27, 1998, between Bank of
                          Montreal and the Registrant.

10.4(1)                 Letter Agreement, dated November 27, 1998, between Bank of
                          Montreal and the Registrant.

10.5(1)                 Letter Agreement, dated July 26, 1999, between Bank of
                          Montreal and the Registrant.

10.6(1)                 Form of Registration Rights Agreement.

10.7(1)(2)              Master Technology License Agreement, dated December 29,
                          1999, between Citicorp Strategic Technology Corporation
                          and the Registrant.

10.8(1)                 Support Agreement, dated December 29, 1999, among Citicorp
                          Strategic Technology Corporation, 724 Solutions
                          International SRL and the Registrant.

10.9(2)(3)              Licensed Affiliate Agreement between the Registrant and
                          Citibank, N.A.
</TABLE>

                                       19
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                        NAME OF DOCUMENT
-------                 ------------------------------------------------------------
<S>                     <C>
10.10(3)                First Amended and Restated Agreement and Plan of Merger and
                          Reorganization among the Registrant, Sapphire Merger
                          Sub, Inc., Ezlogin.com. and Alexandre Balkanski, as
                          Shareholders' Agent, dated as of May 9, 2000.

10.11(3)                Amendment to First Amended and Restated Agreement and Plan
                          of Merger and Reorganization, among the Registrant,
                          Sapphire Merger Sub, Inc., Ezlogin.com, Inc. and
                          Alexandre Balkanski, as Shareholders' Agent, dated as of
                          June 9, 2000.

10.12(4)                Agreement and Plan of Merger and Reorganization among 724
                          Solutions Inc., the Registrant, Serpent Merger Sub, Inc.,
                          Spyonit.com, Inc. and certain stockholders of
                          Spyonit.com, Inc., dated as of September 12, 2000.

10.13(4)                Agreement and Plan of Merger, dated as of November 29, 2000,
                          by and among the Registrant, Saturn Merger Sub, Inc. and
                          TANTAU Software, Inc.

10.14(4)                Form of Resale Restriction Agreement relating to former
                          securityholders of TANTAU Software, Inc.

10.15(4)                Form of Indemnification and Escrow Agreement relating to
                          former securityholders of TANTAU Software, Inc.

10.16.1(5)              Registrant's Canadian Stock Option Plan.

10.17.2(5)              Registrant's U.S. Stock Option Plan.

10.17.3(5)              Registrant's 2000 Stock Option Plan.

10.17.4(5)              Registrant's TANTAU Software, Inc. Stock Option Plan.

10.18.1(5)              Employment Agreement of Gregory Wolfond.

10.18.2(5)              Employment Agreement of John Sims.

10.18.3(5)              Employment Agreement of Christopher Erickson.

10.18.4(5)              Employment Agreement of Karen Basian.

10.18.5(5)              Employment Agreement of Christopher Jarman.
</TABLE>

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

(1) Incorporated by reference to the Registrant's Registration Statement on
    Form F-1, File No. 333-90143.

(2) Confidential treatment has been received with respect to certain portions of
    the Exhibit pursuant to Rule 406 under the Securities Act of 1933, as
    amended. Omitted portions have been filed separately with the Securities and
    Exchange Commission.

(3) Incorporated by reference to the Registrant's Annual Report on Form 20-F,
    Filed on June 29, 2000.

(4) Incorporated by reference to the Registrant's Registration Statement on
    Form F-4, File No. 333-52698.

(5) Incorporated by reference to the Registrant's Form 10-K for the fiscal year
    ended December 31, 2000, filed March 29, 2001.

                                       20
<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
                   ----------                                    ------                     ----
<C>                                               <S>                                   <C>
              /s/ GREGORY WOLFOND
     --------------------------------------       Chairman (principal executive         May 15, 2001
                Gregory Wolfond                     officer)

                 /s/ JOHN SIMS
     --------------------------------------       Chief Executive Officer (principal    May 15, 2001
                   John Sims                        executive officer)

                /s/ KAREN BASIAN
     --------------------------------------       Chief Financial Officer (principal    May 15, 2001
                  Karen Basian                      financial and accounting officer)
</TABLE>

                                       21