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

                           FORM 10-K/A, Amendment No. 3

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

       For The Fiscal Year Ended December 31, 2000

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

       For the transition period:


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


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

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

                      Issuer's telephone number (703) 437-9002

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

         None

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

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

Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.

        Yes   x    				No

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-K contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.  x

<PAGE>

State the aggregate market value of the voting and non-voting common
equity held by non-affiliates, computed by reference to the closing
price for trading of the issuer's stock on the OTC-Bulletin Board as at
January 31, 2001:  $87,606,000.00.

State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:  66,167,167 common
shares without par value, as at March 16, 2001.

EXPLANATORY NOTE

The purpose of this amendment is to amend the following items of
our Annual Report on Form 10-K for the period ended December 31,
2000:  Item 8 - Financial Statements.

This report continues to speak as of March 22, 2001, the date of
our original Form 10-K for the year ended December 31, 2000.  Any
items not changed in this amendment shall be as set forth in our
Original Form 10-K dated March 22, 2001.


<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Appended hereto are the following financial statements:

(1)  Consolidated balance sheets as of December 31, 2000 and December
     31, 1999;
(2)  Consolidated statements of operations and comprehensive loss for
     the fiscal years ended December 31, 2000 and 1999, the eight
     month period ended December 31, 1998, and the fiscal year ended
     April 30, 1998;
(3)  Consolidated statement of stockholders equity for the fiscal
     years ended December 31, 2000 and 1999, the eight month period
     ended December 31, 1998, and the fiscal year ended April 30,
     1998;
(4)  Consolidated statements of cash flows for the fiscal years ended
     December 31, 2000 and 1999, the eight month period ended December
     31, 1998, and the fiscal year ended April 30, 1998; and
(5)  the auditors' report of KPMG LLP thereon.

<PAGE>


                           SIGNATURES

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


Dated: August 8, 2001                 Sideware Systems Inc.

                                      "Grant Sutherland"


                                      By:
                                      W. Grant Sutherland
                                      Director









<PAGE>






                     Consolidated Financial Statements
                     (Expressed in U.S. dollars)

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

                     Years ended December 31, 2000 and 1999
                     Eight months ended December 31, 1998
                     Year ended April 30, 1998









AUDITORS' REPORT TO THE STOCKHOLDERS

We have audited the consolidated balance sheets of Sideware Systems
Inc. as at December 31, 2000 and 1999 and the consolidated
statements of operations and comprehensive loss, stockholders'
equity and cash flows for the years ended December 31, 2000 and
1999, eight months ended December 31, 1998 and year ended April 30,
1998.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is
to express an opinion on these financial statements based on our
audits.

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

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as at December 31, 2000 and 1999 and the results of its
operations and comprehensive loss and its cash flows for the years
ended December 31, 2000 and 1999, eight months ended December 31,
1998 and year ended April 30, 1998 in accordance with generally
accepted accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in
note 1 to the financial statements, the Company has suffered
recurring losses from operations and has had negative cash flows
from operating activities for each of the periods presented which
raise substantial doubt about its ability to continue as a going
concern.  Management's plans in regard to these matters are also
described in note 1.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

On January 26, 2001, except for note 10(b) and 13 which are as of
February 22, 2001, we reported separately to the stockholders of
the Company on consolidated financial statements for the same
period prepared in accordance with Canadian generally accepted
accounting statements.

(signed)  "KPMG LLP"

Chartered Accountants

Vancouver, Canada

January 26, 2001, except for note 10(b) and note 13
 which are as of February 22, 2001

<PAGE>

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

December 31, 2000 and 1999

<TABLE>
<CAPTION>

============================================================================
                                                        2000            1999
----------------------------------------------------------------------------
<S>                                              <C>            <C>
Assets

Current assets:
  Cash and cash equivalents                      $   949,999    $  5,929,801
  Short-term investments (note 7)	           5,982,588	           -
  Accounts receivable (note 4):
    Trade, less allowance for
      doubtful accounts of $142,047
      (1999 - nil)                                   467,783               -
    Other                                            126,842         123,297
  Due from related parties (note 5)                   29,859               -
  Current portion of long-term
    receivables (note 8)                               6,849          14,041
  Inventory                                           46,829          73,895
  Prepaid expenses                                   549,639         243,044
  --------------------------------------------------------------------------
                                                   8,160,388       6,384,078

Deposit on lease                                     129,926          20,212
Long-term receivables (note 8)                       105,587         108,655
Deferred finance charges (note 8)                     95,583         100,763
Fixed assets (note 9)                              1,967,818         923,536
----------------------------------------------------------------------------
                                                $ 10,459,302    $  7,537,244
============================================================================

Liabilities and Stockholders' Equity

Current liabilities
  Accounts payable and accrued liabilities      $  1,246,683    $    623,636
  Due to related parties (note 5)                          -          39,340
  Deferred revenue                                   168,661               -
  --------------------------------------------------------------------------
                                                   1,415,344         662,976

Stockholders' equity:
  Common stock (note 10):
    Authorized:  199,949,375 common shares,
      no par value
    Issued and outstanding:  60,886,415
      (1999 - 51,769,238)	                  40,660,382      21,414,477
  Additional paid-in capital                      12,146,732         315,500
  Deferred stock-based compensation                 (460,895)              -
  Accumulated other comprehensive income            (503,685)        148,479
  Deficit                                        (42,798,576)    (15,004,188)
  --------------------------------------------------------------------------
                                                   9,043,958       6,874,268
----------------------------------------------------------------------------
                                               $  10,459,302    $  7,537,244
============================================================================
</TABLE>

Future operations (note 1)
Commitments (note 12)
Subsequent events (notes 10(a), 10(b) and 14)

The accompanying notes are an integral part of these consolidated
financial statements.


<PAGE>

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

<TABLE>
<CAPTION>

=================================================================================================
                                                                        Eight
                                                                     months ended      Year ended
                                         Year ended December 31,      December 31,      April 30,
                                         -----------------------
                                              2000          1999              1998           1998
-------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>           <C>               <C>

Revenue:
  Licenses                             $   461,962   $         -   $        19,458   $      19,054
  Services                                  96,217             -                 -               -
  Hardware and software resales             27,504         2,533                 -               -
  Hardware resales to related
   parties (note 5(a))                      81,945        30,856            85,524               -
  ------------------------------------------------------------------------------------------------
                                           667,628        33,389           104,982          19,054

Cost of revenues:
  Licenses                                   1,532             -            13,476          12,933
  Services                                  28,843             -                 -               -
  Hardware and software resales	            27,504         2,044                 -               -
  Hardware resales to related
    parties (note 5(a))                     81,945        30,856            79,510               -
  ------------------------------------------------------------------------------------------------
                                           139,824        32,900            92,986          12,933
--------------------------------------------------------------------------------------------------
Gross margin                               527,804           489            11,996           6,121

Operating expenses:
  Sales and marketing (including
    stock-based compensation of
    $5,767,155, $124,479, $13,231,
    and nil)                             16,807,001     2,281,827           491,287         392,367
  Research and development (including
    stock-based compensation of
    $1,131,887, $55,508, $12,349,
    and nil)                              4,526,397     1,490,352           349,434         434,246
  General and administrative (including
    stock-based compensation of
    $4,471,295, $91,921, $3,822,
    and nil)                              7,533,958     1,978,298           481,399         895,705
  -------------------------------------------------------------------------------------------------
                                         28,867,356     5,750,477         1,322,120       1,722,318
---------------------------------------------------------------------------------------------------
Operating loss                          (28,339,552)   (5,749,988)       (1,310,124)     (1,716,197)

Non-operating:
  Interest income                           550,533        98,493            27,637          19,847
  Write-off of fixed assets                       -       (35,973)                -               -
  Proceeds on settlement of legal
    claim (note 6)                          147,651             -                 -               -
  Value assigned to shares issued
    in satisfaction of a legal
    claim (note 6)	                   (153,020)            -                 -         (17,786)
  -------------------------------------------------------------------------------------------------
                                            545,164        62,520            27,637           2,061
---------------------------------------------------------------------------------------------------

Net loss                                (27,794,388)   (5,687,468)       (1,282,487)     (1,714,136)

Other comprehensive income (loss):
  Net unrealized holding gain on
  short-term investments (note 7)	    136,550             -                 -               -
Foreign currency translation
  adjustments                              (788,714)      265,859          (100,935)        (33,889)
  -------------------------------------------------------------------------------------------------
                                           (652,164)      265,859          (100,935)        (33,889)

Comprehensive loss                    $ (28,446,552) $ (5,421,609)    $  (1,383,422)  $  (1,748,025)
====================================================================================================
Basic and diluted loss per share:
  Net loss                            $       (0.48) $      (0.15)    $       (0.05)  $       (0.08)
  Weighted average shares used in
  computing net loss per share,
  basic and diluted                       58,078,005   37,391,211        25,878,357       20,400,346
====================================================================================================
The accompanying notes are an integral part of these consolidated
financial statements.

</TABLE>

<PAGE>


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

<TABLE>
<CAPTION>

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

Balance, April
 30, 1997         17,317,859  $6,064,036  3,450,000   $  948,775  $  14,190   $        -  $     17,444  $(6,320,097)  $   724,348

Shares issued
 on exercise of
 non-transferable
 warrants          4,203,100   1,498,648          -            -          -            -             -            -     1,498,648
Shares issued
 on exercise of
 options             699,000     250,442          -            -          -            -             -            -       250,442
Shares issued in
 satisfaction of
 a royalty claim     100,000      17,786          -            -          -            -             -            -        17,786
Special warrants
 issued                    -           -  1,500,000      853,728          -            -             -            -       853,728
Special warrant
 subscriptions             -           -          -       53,358          -            -             -            -        53,358
Shares issued
 on exercise of
 special warrants  4,450,000   1,489,577 (4,450,000)  (1,489,577)         -            -             -            -             -
Foreign currency
 translation
 adjustment                -           -          -            -          -            -       (33,889)           -       (33,889)
Net loss                   -           -          -            -          -            -             -   (1,714,136)   (1,714,136)
---------------------------------------------------------------------------------------------------------------------------------

Balance, April
 30, 1998         26,769,959   9,320,489    500,000      366,284     14,190            -       (16,445)	 (8,034,233)    1,650,285

Special warrant
 subscriptions             -           -     90,000      647,031          -            -             -            -       647,031
Shares issued
 on exercise of
 special warrant
 subscriptions       500,000     264,883   (500,000)    (264,883)         -            -             -            -             -
Deferred stock-
 based
 compensation              -           -          -            -     29,402      (29,402)            -            -             -
Amortization
 of deferred
 stock-based
 compensation              -           -          -            -          -	  29,402             -            -        29,402
Foreign currency
 translation
 adjustment                -           -          -            -          -            -      (100,935)           -      (100,935)
Net loss                   -           -          -            -          -            -             -   (1,282,487)   (1,282,487)
---------------------------------------------------------------------------------------------------------------------------------

Balance,
 December 31,
 1998             27,269,959   9,585,372     90,000      748,432     43,592            -      (117,380)  (9,316,720)       943,296

Shares issued
 on exercise of
 non-transferable
 warrants         10,434,335   3,418,136          -            -          -            -             -            -      3,418,136
Shares issued
 on exercise of
 options           1,343,500     806,508          -            -          -            -             -            -        806,508
Special warrants
 issued	                   -           -  9,326,332    2,084,911          -            -             -            -      2,084,911
Shares issued
 on exercise of
 special warrants  9,724,611   2,833,343 (9,416,332)  (2,833,343)         -            -             -            -              -
Shares issued
 for cash          2,746,833   4,514,656          -            -          -            -             -            -      4,514,656
Shares issued
 for services
 rendered            250,000     107,686          -            -          -            -             -            -        107,686
Deferred stock-
 based
 compensation              -           -          -            -    271,908     (271,908)            -            -              -
Amortization of
 deferred
 stock-based
 compensation              -           -          -            -         -      271,908              -            -        271,908
Share
 subscriptions
 receivable
 (243,900 common
 shares)                   -     396,619          -            -         -            -	             -            -        396,619
Share issue costs          -     (27,843)         -            -         -            -              -            -       (247,843)
Foreign currency
 translation
 adjustment                -           -          -            -         -            -        265,859            -        265,859
Net loss                   -           -          -            -         -            -              -   (5,687,468)    (5,687,468)
----------------------------------------------------------------------------------------------------------------------------------

Balance, December
 31, 1999,
 carried forward  51,769,238  21,414,477          -            -   315,500            -        148,479  (15,004,188)     6,874,268

</TABLE>

<PAGE>

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

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

Balance, December
 31, 1999,
 brought forward  51,769,238   $21,414,477         -  $      - $   315,500  $         -  $    148,479  $(15,004,188)  $6,874,268

Shares issued
 on exercise of
 non-transferable
 warrants          3,919,702     3,803,797         -         -           -            -             -             -    3,803,797
Shares issued
 on exercise of
 options           1,584,100     1,469,279         -         -           -            -             -             -    1,469,279
Shares issued
 for cash          3,340,100    14,557,888         -         -           -            -             -             -   14,557,888
Shares issued
 for
 subscriptions
 previously
 received            243,900             -         -         -           -            -             -             -            -
Shares issued
 on settlement
 of legal claim       80,000       153,020         -         -           -            -             -             -      153,020
Share issue costs   (738,079)            -         -         -           -            -             -             -     (738,079)
Cancelled shares     (50,625)            -         -         -           -            -             -             -            -
Stock-based
 compensation              -             -         -         -     247,758            -             -             -      247,758
Deferred stock-
 based
 compensation              -             -         -         -  11,583,474  (11,583,474)            -             -            -
Amortization
 of deferred
 stock-based
 compensation              -             -         -         -           -   11,122,579             -             -   11,122,579
Net unrealized
 holding gain
 on short-term
 investments,
 net of tax
 effect of nil             -             -          -        -           -            -       136,550             -      136,550
Foreign currency
 translation
 adjustment                -             -          -        -           -            -      (788,714)            -     (788,714)
Net loss                   -             -          -        -           -            -             -   (27,794,388) (27,794,388)
--------------------------------------------------------------------------------------------------------------------------------
Balance,
 December 31,
 2000             60,886,415   $40,660,382          -  $     - $12,146,732  $  (460,895) $   (503,685) $(42,798,576) $ 9,043,958

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

<PAGE>

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

<TABLE>
<CAPTION>


=================================================================================================
                                                                        Eight
                                                                     months ended      Year ended
                                         Year ended December 31,      December 31,      April 30,
                                         -----------------------
                                              2000          1999              1998           1998
-------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>           <C>               <C>

Cash flows used in operating
 activities:
  Net loss                           $ (27,794,388) $ (5,687,468) $     (1,282,487) $  (1,714,136)
  Items not involving cash:
   Amortization	                           704,044       284,472            90,982        108,377
   Stock-based compensation             11,370,337       271,908            29,402              -
   Write off of fixed assets                     -        35,973                 -              -
   Investment advisory services
    settled by equity instruments                -             -                 -         53,358
  Value assigned to shares
    issued for financial
    advisory services                            -       107,686                 -              -
  Value assigned to shares
    issued in satisfaction of
    legal claim                            153,020             -                 -         17,786
Changes in non-cash operating
 working capital:
  Accounts receivable                     (479,183)       38,514          (121,741)        57,965
  Due (to) from related parties            (68,166)      290,816          (247,055)       123,529
  Inventory                                 24,435       (42,096)          (29,207)         5,443
  Prepaid expenses                        (317,901)     (169,860)           22,976        (65,339)
  Accounts payable and accrued
   liabilities                             650,961       418,197            37,234       (119,026)
  Deferred revenue                         169,793             -                 -              -
-------------------------------------------------------------------------------------------------
Net cash used in operating activities  (15,587,048)   (4,451,858)       (1,499,896)    (1,532,043)

Cash flows from financing activities:
Special warrants issued for cash                 -     2,084,911           647,032        853,728
Shares issued for cash, net of share
 issue costs                             19,092,885    8,494,337                 -      1,749,146
Share subscriptions receivable                    -      396,619                 -              -
-------------------------------------------------------------------------------------------------
Net cash provided by financing
 activities                              19,092,885   10,975,867           647,032      2,602,874

Cash flows from investing activities:
  Purchase of short-term investments
   available for sale                    (6,052,335)           -                 -              -
  Long-term receivables and deferred
   charges                                    7,040     (217,068)                -              -
  Purchase of fixed assets               (1,790,479)    (782,425)         (153,980)      (239,615)
  Deposit on lease, net                    (111,219)     (14,106)                -              -
  -----------------------------------------------------------------------------------------------
  Net cash used in investing activities  (7,946,993)  (1,013,599)         (153,980)      (239,615)
-------------------------------------------------------------------------------------------------
Effect of exchange rates on cash and
 cash equivalents                          (538,646)     212,423           (70,450)       (25,933)
-------------------------------------------------------------------------------------------------
Increase (decrease) in cash and
 cash equivalents                        (4,979,802)   5,722,833        (1,077,294)       805,283

Cash and cash equivalents,
 beginning of period                      5,929,801      206,968         1,284,262        478,979
-------------------------------------------------------------------------------------------------
Cash and cash equivalents,
  end of period                          $  949,999   $5,929,801	$  206,968    $ 1,284,262
=================================================================================================
Supplemental information:

  Non-cash financing and investing
   activities:
    Shares issued in satisfaction
     of legal claim                      $  153,020   $        -        $        -    $	   17,786
    Shares issued for services
     rendered                                     -      107,686                 -              -
    Shares issued on exercise
     of special warrants                          -      657,613                 -              -
    Shares issued for investment
     advisory services                            -            -                 -         53,358
    Net unrealized holdings gain
     on short-term investments              136,550            -                 -              -
=================================================================================================

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

<PAGE>

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

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998


1. DESCRIPTION OF BUSINESS AND FUTURE OPERATIONS:

   Sideware Systems Inc. (the "Company") is a leading provider of
   Electronic Customer Relationship Management ("eCRM") software.
   The Company's collaborative solutions enable companies to better
   manage their customer interactions by providing enhanced
   Internet-based customer service.  The Company operates in one segment
   as the Company's sales are entirely made within the eCRM industry
   and primarily within the United States of America.

   These consolidated financial statements have been prepared on the
   going concern basis under which an entity is considered to be
   able to realize its assets and satisfy its liabilities in the
   ordinary course of business.  Through the date of these
   consolidated financial statements the Company has not generated
   significant revenues, has incurred operating losses and negative
   cash flow from operating activities.  Operations to date have
   been primarily financed by equity transactions.  The Company's
   future operations and its continuation as a going concern are
   dependent upon its ability to obtain market acceptance of its
   product, to increase sales of its product by penetrating markets
   within North America, generating positive cash flows from
   operations and ultimately attaining profitability.

   Depending on the Company's ability to develop sales and related
   cash flows, the Company may need to raise additional capital
   through public or private financings which may not be available
   on reasonable terms.  Subsequent to year-end, the Company secured
   private financing with net proceeds of approximately $3,800,000
   (note 14).  The consolidated financial statements do not include
   any adjustments relating to the recoverability of assets and
   classification of assets and liabilities that might be necessary
   should the Company be unable to continue as a going concern.

2.  BASIS OF PRESENTATION:

   These financial statements have been prepared using generally
   accepted accounting principles in the United States of America.
   They include the financial statements of Sideware Systems Inc.
   and its subsidiaries, all of which are wholly-owned.  All
   material intercompany balances and transactions have been
   eliminated in consolidation.

3.  SIGNIFICANT ACCOUNTING POLICIES:

 (a) Use of estimates:

     The preparation of financial statements in conformity with
     generally accepted accounting principles requires management
     to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and the disclosure of
     contingent assets and liabilities at the date of the financial
     statements and the reported amounts of revenues and expenses
     during the reporting period.  Actual results could differ from
     those estimates.

<PAGE>

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

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998


3.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

 (b) Cash equivalents:

     Cash equivalents consists of highly liquid investments having
     terms to maturity at the date of acquisition of not more than
     three months.

 (c) Short-term investments:

     The Company classifies its investments in marketable
     securities as "available-for-sale." Such investments are
     recorded at fair value based on quoted market prices, with
     unrealized gains and losses recorded as other comprehensive
     income (loss) until realized.

 (d) Fixed assets:

     Fixed assets are carried at cost less accumulated
     amortization.  Amortization is calculated annually as follows:

<TABLE>

<CAPTION>
===============================================================
Asset                                    Basis             Rate
---------------------------------------------------------------
<S>                          <C>                     <C>
Furniture and fixtures	     declining-balance              20%
Computer equipment	         straight-line          33 1/3%
Trade show assets                straight-line          33 1/3%
Computer software                straight-line              50%
Leasehold improvements           straight-line       lease term
===============================================================
</TABLE>

     During the year, the Company changed its amortization policy
     for trade show assets and computer equipment to better
     approximate the useful life of the assets.  The adoption of
     this policy did not have a material effect on the Company's
     financial position or results of operations.

 (e) Deferred charges:

     Deferred charges represent the discount on notes receivable
     and are being recognized by the yield method over the term of
     the note.

 (f) Impairment of long-lived assets:

     In accordance with Statement of Financial Accounting Standards
     ("SFAS") No. 121, "Accounting for the Impairment of Long-
     Lived Assets and for Long-Lived Assets to be Disposed Of",
     the Company monitors the recoverability of long-lived assets,
     which include property and equipment and other assets, based
     on factors such as future asset utilization, business climate
     and future undiscounted cash flows expected to result from the
     use of the related assets.  The Company's policy is to record
     an impairment loss in the period when it is determined that
     the carrying amount of the asset may not be recoverable, at
     which time the asset is written down to fair market value.

<PAGE>

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

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998


3.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

 (g) Income taxes:

     The Company accounts for income taxes under the asset and
     liability method in accordance with SFAS No. 109, "Accounting
     for Income Taxes".  Deferred tax assets and liabilities are
     recognized for the estimated future tax consequences
     attributable to differences between the financial statement
     carrying amounts of existing assets and liabilities and their
     respective tax bases. Deferred tax assets and liabilities are
     measured using enacted tax rates expected to apply to taxable
     income in the years in which those temporary differences are
     expected to be recovered or settled. The effect on deferred
     tax assets and liabilities of a change in tax rates is
     recognized in the statement of operations in the period that
     includes the enactment date. A valuation allowance is recorded
     to reduce deferred tax assets to an amount where realization
     is not considered to be more likely than not.

 (h) Stock-based compensation:

     The Company accounts for its stock-based employee compensation
     arrangements in accordance with the provisions of Accounting
     Principles Board ("APB") Opinion No. 25, "Accounting for
     Stock Issued to Employees" and complies with the disclosure
     provisions of SFAS No. 123, "Accounting for Stock-Based
     Compensation".  Deferred stock-based compensation is recorded
     on the measurement date, which is generally the date of grant,
     when the market value of the underlying common stock exceeds
     the exercise price for stock options or the purchase price for
     the shares of common stock.  Non-employee options are
     accounted for under SFAS No. 123 and are recognized at the
     fair value of the options as determined by an option pricing
     model as the related services are provided.

     As allowed by Issue 7 of EITF 00-23, stock-based compensation
     resulting from employee option grants is recognized on an
     accelerated basis over the vesting period of the individual
     options consistent with FIN 28.  Non-employee grants with future
     service requirements are not recognized until the service is
     performed and the options vest.

 (i) Comprehensive income (loss):

     In accordance with the provisions of SFAS No. 130, "Reporting
     Comprehensive Income", the Company reports comprehensive
     income, which includes net earnings as well as changes in
     equity from other non-owner sources specifically the foreign
     currency cumulative translation adjustments and unrealized
     holding gain on short-term investments.

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 4
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998


3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

 (j) Research and development:

     In accordance with SFAS No. 86, "Accounting for the Costs of
     Computer Software to be Sold, Leased, or Otherwise Marketed",
     software development costs are expensed as incurred until
     technological feasibility of the underlying software product
     is achieved, at which time any additional costs will be
     capitalized and amortized prospectively over their estimated
     economic life.  To date, technological feasibility and general
     availability of such software have occurred simultaneously and
     software development costs qualifying for capitalization have
     been insignificant. Accordingly, the Company has not
     capitalized any software development costs.

 (k) Advertising costs:
     Advertising costs are expensed as incurred and totaled
     $1,044,012, $68,941, nil and $45,185 during the years ended
     December 31, 2000 and 1999, the eight months ended December
     31, 1998 and the year ended April 30, 1998, respectively.

 (l) Revenue recognition:

     SOP 97-2, "Software Revenue Recognition", as amended,
     generally requires revenue from software arrangements
     involving multiple elements to be allocated to each element of
     the arrangement based on the relative fair values of the
     elements, such as software products, post contract customer
     support, installation, or training and recognized as the
     element is delivered and the Company has no significant
     remaining performance obligations.  For multiple element
     contracts where maintenance is bundled with the software license,
     the residual method in accordance with SOP 98-9 is used and
     Vendor Specific Objective Evidence ("VSOE") established for
     the undelivered element, being the maintenance support through
     the sale of separate maintenance agreements, to determine the
     value to be assigned to the software license.  For contracts
     where maintenance is not bundled with the software license, the
     Company uses the sale value of the software license as its fair
     value to record revenue.

     For the year ended December 31, 2000, the Company entered into
     revenue generating sales contracts with 24 customers.  Of the 24
     sales, 18 were multi-element contracts which included both
     delivered elements and an undelivered maintenance support
     element.  In addition, the Company entered 4 separate maintenance
     contracts that had the following characteristics:

     - The maintenance contracts were entered into 30 days or more
       after the initial sale of the software;
     - The different elements of the maintenance and software
       sales contracts were not closely interrelated or
       interdependent in terms of design, technology, or function;
     - The fees for the maintenance contracts and the software
       sales contracts were not subject to refund or forfeiture or
       other concession if the other contract was not completed
       satisfactorily;

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 5
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

 (l) Revenue recognition (continued):

     - None of the elements of the maintenance contracts were
       essential to the functionality of any element of software
       sales contracts; and
     - Payment terms in the maintenance contracts did not coincide
       with, and were not otherwise contingent upon, the
       performance criteria of the software sales contract.

     The Company recognized its first software sales revenue in the
     second quarter of 2000.  For the quarter ended June 30, 2000, the
     Company entered into revenue generating sales with 8 customers, 7
     of which were multi-element contracts and 1 of which included a
     separate maintenance contract.  For the quarter ended September
     30, 2000, the Company entered into revenue generating sales with
     10 customers, 8 of which were multi-element contracts and 2 of
     which included separate maintenance contracts.  For the quarter
     ended December 31, 2000, the Company entered into revenue
     generating sales with 6 customers, 3 of which were a multi-
     element contract, 1 of which included a separate maintenance
     contract and 2 of which that did not contain a maintenance
     element.

     The Company utilized prices charged in the 4 separate maintenance
     contracts as VSOE establishing the fair value of the undelivered
     maintenance support element in the 18 contracts, which included
     both the undelivered element and delivered elements.  The Company
     considered the separate maintenance contracts signed to the end
     of each quarter to constitute VSOE of the fair value of the
     undelivered maintenance support element in the multi-element
     contracts made to the end of that quarter.  If a contract is
     entered into prior to VSOE being established, but VSOE is
     subsequently established, the Company allocates the then
     unrecognized revenue among the various elements in accordance
     with the residual value method described above.

     If evidence of fair value for each element of the arrangement in
     the situations described above does not exist, all revenue from
     the arrangement is deferred until such time as evidence of fair
     value does exist or until all elements of the arrangement are delivered.

     In addition to the establishment of fair value, license revenue is
     recognized when there is persuasive evidence of an arrangement and
     delivery to the customer has occurred, provided the arrangement does
     not require significant customization of the software, the fee is fixed
     and determinable, and collectibility is considered probable.

     Service revenue from maintenance contracts is recognized
     ratably over the term of the maintenance contract, on a
     straight-line basis.  Other service revenue is recognized at the

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 6
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998


3.  SIGNIFICANT ACCOUNTIN POLICIES (CONTINUED):

 (l) Revenue recognition (continued):

     time the service is performed.

     The Company recognizes sales of equipment to external and
     related parties in revenues and the related costs of the sale
     in cost of revenues.  The Company takes title to and holds the
     equipment, bearing all of the risks and rewards of ownership,
     prior to sale.

     As at December 31, 2000, the Company was not involved in any hosting
     arrangements, however it plans to in the future and the guidance in
     EITF 00-3 will be applied.

 (m) Foreign currency translation:

     Effective for the fiscal year ended December 31, 2000, the
     Company adopted the U.S. dollar as its reporting currency.
     Historical figures previously reported in Canadian dollars
     have been translated into U.S. dollars as follows:  assets and
     liabilities are translated into U.S. dollars at the rate of
     exchange in effect at each balance sheet date and revenue and
     expense items are translated at the average rates for the
     applicable period.  Unrealized gains and losses resulting from
     the translation to U.S. dollars are accumulated in a separate
     component of stockholders' equity described as accumulated
     other comprehensive income.

     The Company's functional currency is the Canadian dollar.  The
     Company's financial statements are prepared in Canadian
     dollars before translation to the U.S. dollar reporting
     currency.  Accordingly, foreign currency denominated balances
     of the Company are remeasured in Canadian dollars.  Under this
     method, monetary assets and liabilities denominated in a
     foreign currency are remeasured in Canadian dollars at the
     rate of exchange in effect at the balance sheet date.  Other
     assets, revenue and expense items are measured using the rate
     of exchange prevailing at their respective transaction dates.
     Exchange gains and losses resulting from the remeasurement of
     foreign denominated monetary assets and liabilities in
     Canadian dollars are reflected in earnings for the period.

 (n) Net loss per share:

     Net loss per share is calculated in accordance with SFAS No.
     128, "Earnings per Share".  Under SFAS No. 128, basic net
     loss per share is computed using the weighted-average number
     of outstanding shares of common stock, excluding common stock
     subject to repurchase. Diluted net loss per share is computed
     using the weighted-average number of outstanding shares of
     common stock and, when dilutive, potential common shares from
     options and warrants to purchase common stock and common stock
     subject to repurchase using the treasury stock method, and
     from convertible securities using the as-if converted basis.
     All potential common shares have been excluded from the
     computation of diluted net loss per share for all periods
     presented because the effect would have been anti-dilutive.

     All performance escrow shares as disclosed in note 10(a) are
     excluded from the calculation.

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 7
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

 (o) Recent accounting pronouncements:

     The FASB issued SFAS No. 133, "Accounting for Derivative
     Instruments and Hedging Activities" which established
     standards relating to the recognition and disclosure of all
     aspects of derivative instruments and hedging activities.  To
     date, the Company has not engaged in hedging activities.
     Accordingly, the Company has evaluated the impact of adopting
     SFAS 133 and determined that it will not have a material
     effect on its financial position, results of operations or
     cash flows.  The Company will implement SFAS No. 133 in its
     fiscal year ending December 31, 2001.

 (p) Comparative figures:

     Certain comparative figures have been reclassified to conform
     to the financial statement presentation adopted in the current
     year.

4.  ALLOWANCE FOR DOUBTFUL ACCOUNTS

  The movements in the allowance for doubtful accounts for 2000 and 1999
  are set out below:

<TABLE>
<CAPTION>

=============================================================================
                                                           2000          1999
-----------------------------------------------------------------------------
<S>                                                 <C>           <C>
Balance as at January 1                             $          -  $         -
Expense for the year                                     142,047            -
-----------------------------------------------------------------------------
Balance as at December 31                           $    142,047  $         -
=============================================================================
</TABLE>


5.  RELATED PARTY TRANSACTIONS:

 (a) Transactions with related parties:

     The following table summarizes the Company's related party
     transactions with certain directors of the Company:

<TABLE>
<CAPTION>

=============================================================================
                                                   Eight months
                          Year ended    Year ended        ended    Year ended
                        December 31,  December 31, December 31,     April 30,
                                2000          1999         1998          1998
-----------------------------------------------------------------------------
<S>                       <C>           <C>           <C>          <C>
Services rendered         $  257,860    $  445,296    $  70,776    $  152,672
Settlement of claims               -             -            -        17,786
=============================================================================
</TABLE>

      Hardware resales to related parties are to companies with
      certain common directors to the Company.

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 8
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

5.  RELATED PARTY TRANSACTIONS (CONTINUED):

 (b) Due (to) from related parties:

     At December 31, 2000, the Company was owed $29,859 with
     respect to costs incurred by the Company on behalf of
     BrainTech Inc. and TechWest Management Inc., companies with
     directors in common.

     At December 31, 1999, the Company owed $ 39,340 with respect
     to costs incurred by TechWest Management Inc., a company with
     directors in common, on behalf of the Company.

     These amounts are unsecured, payable on demand and bear no
     interest.

6. SETTLEMENT OF LEGAL CLAIM:

   During the year ended December 31, 2000, the Company settled its
   outstanding legal disputes with former management.  The Company
   made a cash payment of $20,135 and issued 80,000 shares to
   opposing parties.  The Company also received cash payments
   totaling $167,786 from opposing parties.

7. SHORT-TERM INVESTMENTS:

   The amortized cost, gross unrealized holding gain and fair value
   of available-for-sale securities at December 31, 2000 is as
   follows:

<TABLE>
<CAPTION>
===============================================================================
                                                           Gross
                                                      unrealized
                                          Amortized      holding           Fair
                                               cost         gain          value
-------------------------------------------------------------------------------
<S>                                    <C>            <C>          <C>
Available-for-sale commercial paper    $  5,846,038   $  136,550   $  5,982,588
===============================================================================

</TABLE>

   There were no short-term investments in 1999.

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 9
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

8.  LONG-TERM RECEIVABLES:

<TABLE>
<CAPTION>

   ======================================================================
                                                     2000         1999
   ----------------------------------------------------------------------
   <S>                                              <C>        <C>
   Employee loan, maturing September 30, 2024,
    bearing interest at 1% per annum,
    repayable in bi-monthly blended
    instalments of $376, except if employment
    is terminated in which case it is
    repayable immediately, real estate has
    been pledged as security, net of
    unamortized discount of $95,583 (1999 -
    $100,763)                                       $  98,593   $  104,111

   Employee loans, maturing September 30,
    2002, bearing interest at prime plus 1%
    per annum.                                         13,843       18,585
   -----------------------------------------------------------------------
                                                      112,436      122,696
   Current portion                                      6,849       14,041
   -----------------------------------------------------------------------
                                                    $ 105,587   $  108,655
   =======================================================================
</TABLE>

   The employee loan secured by real estate has been discounted to
   fair market value calculated at prime plus 1%, which is the
   prevailing rate of similar financial instruments, over 25 years.

9.	Fixed assets:

<TABLE>
<CAPTION>
===========================================================
                                         2000          1999
-----------------------------------------------------------
<S>                                <C>           <C>
Furniture and fixtures             $  710,518    $  336,234
Computer equipment                  1,553,279       696,195
Trade show assets                     150,193        85,928
Computer software                     289,881        93,592
Leasehold improvements                843,452       626,319
-----------------------------------------------------------
                                    3,547,323     1,838,268
Less accumulated amortization      (1,579,505)     (914,732)
-----------------------------------------------------------
Net book value                     $1,967,818    $  923,536
===========================================================
</TABLE>

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 10
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

10. STOCKHOLDERS' EQUITY:

 (a) Performance shares and escrow securities:

     Included in issued shares at December 31, 2000 are 750,000
     performances and 220,378 escrow securities (December 31, 1999
     and 1998 and April 30, 1998 - 750,000 and 280,378,
     respectively) held in escrow to be released based on
     achievement of a cash flow formula.  If any of the 750,000
     performance shares are not released by September 10, 2001,
     they will be subject to cancellation.  Subsequent to December
     31, 2000, 220,378 escrow securities were subject to
     cancellation on January 11, 2001 due to the conditions in the
     escrow agreement not being fulfilled.

 (b) Stock compensation plans:

     Effective February 8, 2000, the Company adopted its 2000 Stock
     Option Plan ("the 2000 Plan"), which reserved 7,000,000
     shares for issuance pursuant to stock options to be granted to
     directors, officers, employees, and consultants.  The
     Company's Board of Directors have discretion to set the price,
     term, vesting schedules, and other terms and conditions for
     options granted under the 2000 Plan, subject to the
     requirements of any stock exchange on which the Company's
     shares are listed.  In January 2000, 2,000,000 options were
     granted under individual agreements and 6,860,000 options were
     granted under the 2000 plan as follows:  effective April 20, 2000,
     the Company granted 4,912,000 options at $5.10 per share  and
     effective August 30, 2000, the Company granted a further 1,948,000
     options at $2.25 per share pursuant to the 2000 Plan.

     Subsequent to year-end, effective January 18, 2001 and
     February 9, 2001 the Company granted 150,000 and 308,000
     options, respectively, at $1.00 per share pursuant to the 2000
     plan.  All options were for terms of five years and subject to
     vesting schedules up to 24 months.  The 2000 Plan was approved
     by the Company's shareholders at the Company's June 28, 2000
     general meeting.

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 11
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

10.  STOCKHOLDERS' EQUITY (CONTINUED):

 (b) Stock compensation plans (continued):

     Effective December 6, 2000, the Company adopted its 2001 Stock
     Option Plan ("the 2001 Plan"), which reserved 6,000,000
     shares for issuance pursuant to stock options to be granted to
     directors, officers, employees, and consultants.  On February
     9, 2001, the Board of Directors approved an increase of the
     reserved amount to 7,000,000 shares pursuant to the 2001 plan.
     The Company's Board of Directors have discretion to set the
     price, term, vesting schedules, and other terms and conditions
     for options granted under the plan, subject to the
     requirements of any stock exchange on which the Company's
     shares are listed.

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

     As at December 31, 2000, no options granted under either the
     2000 or 2001 Plans have been exercised.

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


<TABLE>
<CAPTION>
================================================================
                                                        Weighted
                                       Number            average
                                    of shares     exercise price
----------------------------------------------------------------
<S>                                 <C>                   <C>
Balance, April 30, 1997             2,065,000             $ 0.36
Options granted                       800,000               0.50
Options exercised                    (699,000)              0.37
Options cancelled / expired           (45,000)              0.48
----------------------------------------------------------------
Balance, April 30, 1998             2,121,000               0.41
Options granted                       555,000               0.24
Options cancelled / expired           (86,000)              0.40
----------------------------------------------------------------
Balance, December 31, 1998          2,590,000               0.37
Options granted                     2,960,000               1.38
Options exercised                  (1,343,500)              0.61
Options cancelled / expired          (100,000)              0.45
----------------------------------------------------------------
Balance, December 31, 1999          4,106,500               1.02
Options granted                     8,860,000               5.55
Options exercised                  (1,584,100)              0.92
Options cancelled / expired          (470,000)              4.60
----------------------------------------------------------------
Balance, December 31, 2000         10,912,400             $ 4.56
================================================================

</TABLE>

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 12
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

10. STOCKHOLDERS' EQUITY (CONTINUED):

 (b) Stock compensation plans (continued):

   (ii) Additional information regarding options outstanding as
        at December 31, 2000 is as follows:

<TABLE>
<CAPTION>
==============================================================================
                                   Outstanding                 Exercisable
------------------------------------------------------------------------------
                                     Weighted
                                      average  Weighted               Weighted
                                    remaining   average                average
Range of                Number    contractual  exercise       Number  exercise
exercise prices      of shares   life (years)     price    of shares     price
------------------------------------------------------------------------------
<S>                  <C>                 <C>     <C>       <C>          <C>
$ 0.24 - $ 0.90      1,171,500           2.06    $ 0.48    1,171,500    $ 0.48
$ 1.55 - $ 2.25      3,053,900           4.25      2.01    1,377,775      1.73
$ 5.10               4,794,500           4.30      5.10    1,946,000      5.10
$ 8.69 - $ 11.08     1,892,500           4.05      9.82      955,000     10.33
------------------------------------------------------------------------------
                    10,912,400           4.00    $ 4.56     5,450,275   $ 4.17
==============================================================================
</TABLE>

 (iii)  Stock-based compensation:

        With respect to the stock options granted from inception
        through December 31, 2000,  the Company recorded stock-based
        compensation of $11,671,647.

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 13
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

10. STOCKHOLDERS' EQUITY (CONTINUED):

 (b) Stock compensation plans (continued):

  (iii) Stock-based compensation (continued):

        Pursuant to SFAS No. 123, the Company is required to
        disclose the pro-forma effects on net loss and net loss per
        share data as if the Company had elected to use the fair
        value approach to account for its employee stock-based
        compensation plans.  If this approach had been applied, the
        Company's net loss and net loss per share would have been as
        indicated below:

<TABLE>
<CAPTION>


=============================================================================
                                                   Eight months
                          Year ended    Year ended        ended    Year ended
                        December 31,  December 31, December 31,     April 30,
                                2000          1999         1998          1998
-----------------------------------------------------------------------------
<S>                    <C>            <C>           <C>            <C>

Net loss:
  As reported          $27,794,388    $5,687,468    $1,282,487     $1,714,136
  Proforma              43,301,838     7,680,247     1,342,505      1,891,150
=============================================================================
Basic and diluted net
 loss per share:
  As reported               $ 0.48        $ 0.15        $ 0.05         $ 0.08
  Proforma                    0.75          0.21          0.05           0.09
=============================================================================
</TABLE>

     The fair value for the options was estimated using the
     Black-Scholes option pricing model assuming no expected
     dividends and the following weighted average assumptions:


<TABLE>
<CAPTION>

======================================================================
                                                    Options
                                               ---------------
                                        Interest
                                            rate      Term  Volatility
----------------------------------------------------------------------
<S>                                        <C>       <C>           <C>
Year ended December 31, 2000               6.55%     3 yrs         70%
Year ended December 31, 1999               5.88%     3 yrs         70%
Eight months ended December 31, 1998       5.42%     3 yrs         70%
Year ended April 30, 1998                  5.34%     3 yrs         70%
======================================================================
</TABLE>

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 14
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

10. STOCKHOLDERS' EQUITY (CONTINUED):

 (b) Stock compensation plans (continued):

  (iii) Stock-based compensation (continued):
        The weighted-average fair value of stock options granted for
        the year ended December 31, 2000 and 1999, the eight months
        ended December 31, 1998 and the year ended April 30, 1998,
        are as follows:

<TABLE>
<CAPTION>

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

                                   Weighted average                                  Weighted average
                                    exercise price                                     fair value
                     ------------------------------------------         ---------------------------------------

                                             Eight                                              Eight
                        Year ended    months ended   Year ended          Year ended      months ended Year ended
                       December 31,   December 31,    April 30,          December 31,    December 31,  April 30,
                      --------------                                    --------------
                     2000        1999         1998         1998         2000       1999          1998       1998
================================================================================================================

<S>                <C>        <C>           <C>        <C>          <C>          <C>         <C>          <C>
Exercise price is
less than market
value on
grant date         $    -      $ 1.30        $   -      $  0.50      $     -      $ 0.62      $    -      $ 0.22
Exercise price
exceeds market
value on
grant date           5.55        1.40          0.24           -         4.12        0.79        0.16           -
----------------------------------------------------------------------------------------------------------------
Total options      $ 5.55      $ 1.38        $ 0.24      $ 0.50       $ 4.12      $ 0.77      $ 0.16      $ 0.22
================================================================================================================
</TABLE>

 (c) Share purchase warrants:

     A summary of the Company's warrant activity for the year ended
     December 31, 2000 is as follows:

<TABLE>
<CAPTION>

================================================================================================================
                                                 Outstanding                                         Outstanding
                                   Exercise     December 31,                                        December 31,
Expiry date                 price per share             1999       Granted     Exercised     Expired        2000
----------------------------------------------------------------------------------------------------------------

<S>                       <C>   <C>               <C>           <C>           <C>           <C>        <C>
July 22, 2000             CDN          0.32          600,000             -      (600,000)          -           -
December 23, 2000         CDN          0.40          286,000             -      (110,000)   (176,000)          -
March 26, 2000/2001       U.S.  0.333/0.383          779,276             -      (581,394)          -     197,882
April 7, 2000/2001        CDN     0.55/0.63        2,700,000             -      (700,000)          -   2,000,000
September 14, 2000/2001	  U.S.    1.64/1.89        2,746,833             -    (1,329,579)          -   1,417,254
December 14, 2000/2001    U.S.    1.64/1.89                -     2,500,000             -    (598,729)  1,901,271
April 13, 2001/2002       U.S.  10.00/11.50                -       274,000             -           -     274,000
April 13, 2001/2002       U.S.    2.82/3.24                -       810,000             -           -     810,000
----------------------------------------------------------------------------------------------------------------
                                                   7,112,109     3,584,000    (3,919,702)   (176,000)  6,600,407
================================================================================================================

</TABLE>

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 15
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

10. STOCKHOLDERS' EQUITY (CONTINUED):

 (c) Share purchase warrants (continued):

     The share purchase warrants issued in consideration for
     financing, outstanding at December 31, 2000 having an exercise
     price of U.S.$2.82 in the first year and U.S.$3.24 in the
     second year expiring April 13, 2001/2001 were repriced from
     U.S.$10.00 in the first year and U.S.$11.50 in the second year
     on September 7, 2000.  The term of the re-priced warrants will
     be reduced to 30 days if, for ten consecutive days, the
     closing trading price of the company's shares exceeds either
     U.S.$2.82 in the first year, or U.S.$3.24 in the second year.
     The 30-day term commences seven days after the ten-day trading
     threshold has been met.

11.	Income taxes:

  Deferred income taxes reflect the tax effects of temporary
  differences between the carrying amount of assets and liabilities
  for financial reporting purposes and the amounts used for income
  tax purposes, as well as net operating loss and tax credit
  carryforwards.

  The Company's deferred income tax assets are comprised of the
  following at December 31:

<TABLE>
<CAPTION>


==========================================================================================
                                                                       2000           1999
------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>
Net deferred tax assets and liabilities:
  Net operating loss carryforwards                             $  10,553,386   $  4,905,941
  Share issue costs                                                 (186,442)       (88,039)
  Excess of amortization recorded for accounting over tax            695,703        391,321
-------------------------------------------------------------------------------------------

Total deferred tax assets                                         11,062,647      5,209,223
Valuation allowances                                             (11,062,647)    (5,209,223)
-------------------------------------------------------------------------------------------
Net deferred tax assets                                        $           -   $          -
===========================================================================================

</TABLE>

  The movement in the valuation allowance for deferred tax assets
  in 2000 and 1999 are as follows:

<TABLE>
<CAPTION>

=============================================================================
                                                           2000          1999
-----------------------------------------------------------------------------
<S>                                                 <C>           <C>
Balance as at January 1                             $  5,209,223  $         -
Increase in operating losses                           5,647,445    4,905,941
Increase in share issue costs                            (98,403)     (88,039)
Increase in amortization recorded in accounting
  over tax                                               304,382      391,321
-----------------------------------------------------------------------------
Balance as at December 31                           $ 11,062,647  $ 5,209,223
=============================================================================
</TABLE>

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 16
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

11.   INCOME TAXES (CONTINUED):

  Deferred income taxes reflect the tax effects of temporary
  differences between the carrying amount of assets and liabilities
  for financial reporting purposes and the amounts used for income
  tax purposes, as well as non-operating losses and tax credit
  carryforwards.

  At December 31, 2000, management believes that sufficient
  uncertainty exists as to whether the deferred tax assets will be
  realized, and accordingly, a valuation allowance is required.
  As of December 31, 2000, the Company had net operating losses of
  $13,468,489 available to offset taxable income earned in Canada
  to 2007 and $10,193,813 available to offset taxable income earned
  in the United States to 2015.

12.  COMMITMENTS:


  The Company has obligations under operating lease arrangements
  which require the following minimum annual payments:

<TABLE>
==================================================================
<S>                                                   <C>
2001                                                  $    997,000
2002                                                       947,000
2003                                                       797,000
2004                                                       531,000
2005                                                       534,000
2006 and thereafter                                      2,850,000
------------------------------------------------------------------
                                                       $ 6,656,000
==================================================================

</TABLE>

13.  FINANCIAL INSTRUMENTS:

 (a) Fair values of financial instruments:

     The Company's short-term financial instruments consist of cash
     and cash equivalents, short-term investments, accounts
     receivable, due from related parties, accounts payable and
     accrued liabilities. The fair value of these financial
     instruments approximate their carrying values due to their
     short term maturity.

     The fair value of the long-term receivables, calculated using
     the current market rate for such instruments of the same
     remaining maturity term and credit risk, approximate their
     carrying value.

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 17
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

13. FINANCIAL INSTRUMENTS (CONTINUED):

 (b) Foreign currency risk:

     Foreign currency risk reflects the risk that the Company's net
     assets or operations will be negatively impacted due to
     fluctuations in exchange rates.  Revenues and expenses of the
     Company denominated in foreign currencies come due in the
     short-term and accordingly, management of the Company believes
     there is no significant exposure to foreign currency
     fluctuations.  The Company does not have foreign currency
     hedges in place.

 (c) Credit risk:

     Financial instruments subjecting the Company to concentrations
     of credit risk consist primarily of cash and cash equivalents,
     short-term investments and trade accounts receivable. The
     Company maintains cash and cash equivalents with high quality
     financial institutions.

     The Company's customers are currently concentrated in the
     United States and Canada.  The Company performs ongoing credit
     evaluations, generally does not require collateral and
     establishes an allowance for doubtful accounts based upon
     factors surrounding the credit risk of customers, historical
     trends and other information.

14. SUBSEQUENT EVENTS:

  Subsequent to December 31, 2000, the Company issued, through a
  private placement, 5,229,752 common shares, for net proceeds of
  approximately $3,800,000.  Additionally, the Company issued
  5,229,752 share purchase warrants.  The Company also issued
  brokers' warrants, permitting the holders to acquire 526,316
  units at a price of $0.76 per unit, with each unit consisting of
  one share and one share purchase warrant.  Each share purchase
  warrant entitles the holder to purchase one additional common
  share of the Company, for a period of three years, at a price of
  $1.00 per share.

<PAGE>

SIDEWARE SYSTEMS INC.
Consolidated Notes to Financial Statements, page 18
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Year ended December 31, 2000 and 1999
Eight months ended December 31, 1998
Year ended April 30, 1998

15.  UNAUDITED QUARTERLY FINANCIAL INFORMATION:

  The following table sets forth selected unaudited quarterly
  information for the Company's last eight fiscal quarters (in
  thousands):

<TABLE>
<CAPTION>
  ==========================================================================================
                                                      Fiscal 2000 Quarter End
                                          --------------------------------------------------
                                          December 31   September 30    June 30     March 31
  ------------------------------------------------------------------------------------------
  <S>                                     <C>            <C>            <C>          <C>

  Revenues                                        288            191         183           6
  Gross margin                                    255            164         109           -
  Net loss for the period                      (4,721)        (7,473)    (12,983)     (2,617)
  Net loss per share                            (0.08)         (0.13)      (0.22)      (0.05)

  ==========================================================================================
                                                      Fiscal 1999 Quarter End
                                          --------------------------------------------------
                                          December 31   September 30    June 30     March 31
  ------------------------------------------------------------------------------------------
  <S>                                     <C>            <C>            <C>          <C>

  Revenues                                          9              -         (21)         46
  Gross margin                                      -              -          (1)          1
  Net loss for the period                      (2,737)        (1,731)     (1,091)       (488)
  Net loss per share                            (0.08)         (0.03)      (0.02)      (0.02)

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

</TABLE>