<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB
(Mark One)

/x/  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 For the quarterly period ended September 30, 1999.

/ /  Transition report under Section 13 or 15(d) of the Exchange Act
     For the transition period from to

                        Commission file number: 33-83526

                              THE IXATA GROUP, INC.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

             DELAWARE                                     95-4453386
-------------------------------------        -----------------------------------
      (State of Incorporation)              (I.R.S. Employer Identification No.)

               8080 DAGGET, SUITE 220 SAN DIEGO, CALIFORNIA 92111
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                  858-677-5580
                 ----------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

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

     Check whether issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 / / State the number of shares outstanding of each of the
     issuer's classes of common equity, as of the latest practicable date:

COMMON STOCK, $0.001 PAR VALUE PER SHARE: 11,938,142 (AS OF FEBRUARY 1, 2000)
--------------------------------------------------------------------------------
     Transition Small Business Disclosure Format (check one):

     Yes / /      No /x/


<PAGE>

                              THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                              THE IXATA GROUP, INC.

                         QUARTERLY REPORT ON FORM 10-QSB
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1999

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

ITEM                                                                                                           Page
----                                                                                                           ----
<S>                                                                                                            <C>
PART I -- FINANCIAL INFORMATION                                                                                   2
     Item 1. Financial Statements.                                                                                2
     Item 2. Management's Discussion and Analysis or Plan of Operations.                                         16
      Overview                                                                                                   16
      Recent Events                                                                                              18
     Results of Operations:                                                                                      19
      Third Quarter of 1999 Compared to Third Quarter of 1998                                                    20
      First Nine Months of 1999 Compared to First Nine Months of 1998                                            21
      Liquidity and Capital Resources                                                                            22
     Related Party Transactions                                                                                  22
     Forward-Looking Statements                                                                                  23
PART II -- OTHER INFORMATION                                                                                     28
     Item 1. Legal Proceedings.                                                                                  28
     Item 2. Changes in Securities and Use of Proceeds.                                                          28
     Item 3. Defaults Upon Senior Securities.                                                                    28
     Item 4. Submission of Matters to a Vote of Security Holders.                                                28
     Item 5. Other Information.                                                                                  28
     Item 6. Exhibits and Reports on Form 8-K.                                                                   28

</TABLE>


--------------------------------------------------------------------------------
                                     Page 1
<PAGE>

                              THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                         PART I -- FINANCIAL INFORMATIOn
<TABLE>
<CAPTION>

ITEM 1.  FINANCIAL STATEMENTS.
<S>                                                                                                          <C>
         Consolidated Balance Sheets..............................................................................3

         Consolidated Statements of Operations....................................................................4

         Consolidated Statements of Stockholders' Equity..........................................................5

         Consolidated Statements of Cash Flows....................................................................6

         Notes to Financial Statements.........................................................................7-15

</TABLE>


--------------------------------------------------------------------------------
                                     Page 2
<PAGE>

                              THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                           CONSOLIDATED BALANCE SHEET
                           SEPTEMBER 30, 1999 AND 1998

<TABLE>
<CAPTION>

                                                              ASSETS
                                                                                                 1999              1998
                                                                                             ------------      ------------
<S>                                                                                         <C>               <C>
CURRENT ASSETS:
      Cash & cash equivalents                                                                $     22,538      $      2,925
      Accounts receivable, net                                                                    165,163            41,383
      Marketable securities                                                                        56,250           490,000
      Prepaid expenses                                                                                ---            70,000
                                                                                             ------------      ------------

          Total current assets                                                                    243,951           604,308

PROPERTY AND EQUIPMENT, net of accumulated depreciation                                           142,275           200,772

OTHER ASSETS:
      Goodwill - net of accumulated depreciation                                                6,369,619               ---
      Intangible assets, net of
          accumulated amortization                                                                  8,833           214,655
      Deposits                                                                                      1,225             1,225
                                                                                             ------------      ------------

          Total other assets                                                                    6,379,676           215,880
                                                                                             ------------      ------------

          Total assets                                                                       $  6,765,903      $  1,020,959
                                                                                             ============      ============

                                          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                                                                                 1999              1998
                                                                                             ------------      ------------
CURRENT LIABILITIES:
      Bank overdraft                                                                         $        ---      $     19,033
      Deferred revenue                                                                            114,856               ---
      Current portion of long term liabilities                                                     94,976            59,236
      Accounts payable                                                                            433,506           368,215
      Accrued interest                                                                            235,783            44,685
      Accrued payroll                                                                             195,262            64,163
      Related parties payable                                                                     269,016               ---
      Accrued acquistion payable                                                                  744,000               ---
      Notes payable                                                                               190,000           315,000
                                                                                             ------------      ------------
          Total current liabilities                                                             2,277,400           870,331
                                                                                             ------------      ------------

LONG-TERM LIABILITIES:
      Advances payable                                                                                ---           140,000
      Notes payable-net of current portion                                                      1,798,250           911,000
      Obligation under capital leases-net of current portion                                       23,131            66,473
                                                                                             ------------      ------------

          Total long term liabilities                                                           1,821,381         1,117,473
                                                                                             ------------      ------------

          Total liabilities                                                                     4,098,780         1,987,805
                                                                                             ------------      ------------

STOCKHOLDERS' EQUITY (DEFICIT)
      Common stock - The IXATA Group, Inc.                                                         10,784             5,930
          $.001 par value, authorized 100,000,000
          shares, outstanding 6,275,169 shares at
          September 30, 1999 and 5,965,216 shares
          at September 30, 1998
      Subscription receivable                                                                      (2,963)              ---
      Additional paid-in capital                                                               10,284,638         4,330,145
      Additional paid-in capital-stock options                                                  2,883,966         2,874,475
      Deficit accumulated during the development stage                                        (10,265,553)       (8,667,395)
      Accumulated other comprehensive income (loss)
          Unrealized holding (loss) on marketable securities                                     (243,750)          490,000
                                                                                             ------------      ------------

          Total stockholders' equity (deficit)                                                  2,667,123          (966,845)
                                                                                             ------------      ------------

      Total liabilities and stockholders' equity (deficit)                                   $  6,765,903      $  1,020,959
                                                                                             ============      ============

</TABLE>

See accompanying notes.


--------------------------------------------------------------------------------
                                     Page 3
<PAGE>

                              THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       FOR THE THREE AND NINE MONTHS ENDED
               SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 20, 1996
                   (DATE OF INCEPTION) TO SEPTEMBER 30, 1999

<TABLE>
<CAPTION>


                                                         1999                         1998                May 20, 1996
                                               -------------------------   --------------------------   (Date of Inception)
                                               Three Months  Nine Months   Three Months   Nine Months    September 30, 1999
                                               ------------  -----------   ------------   -----------    ------------------
<S>                                            <C>           <C>           <C>            <C>            <C>
REVENUES                                       $     86,468  $    86,468   $        ---   $       ---    $     542,922

COST OF GOODS SOLD                                    6,938        6,938            ---           ---          549,678
                                               ------------  -----------   ------------   -----------    -------------

        Gross profit                                 79,531       79,531            ---           ---           (6,755)
                                               ------------  -----------   ------------   -----------    -------------

OPERATING EXPENSES
   Selling, general and administrative              599,280      741,256            ---           ---        5,427,807
   Amortization of goodwill                         335,243      335,243            ---           ---          335,243
   Restructuring charge                                 ---      499,382        679,737     3,509,229       10,002,127
   Stock-based compensation                             ---          ---            ---           ---        5,947,250
                                               ------------  -----------   ------------   -----------    -------------
       Total Operating Expenses                     934,523    1,575,882        679,737     3,509,229       21,712,428

       Income (loss) from continuing operation     (854,992)  (1,496,351)      (679,737)   (3,509,229)     (21,719,183)
                                               ------------  -----------   ------------   -----------    -------------

OTHER INCOME (EXPENSE):
   Gain on disposal of cellular assets                 ---       708,419            ---           ---          708,419
   Realized stock gains                                ---           ---            ---           ---           50,000
   Interest expense                                 (60,938)     (60,938)           ---           ---          (60,938)
   Interest expense - capital lease                    ---           ---            ---           ---          (22,629)
   Interest income                                     ---           ---            ---           ---           14,949
                                               ------------  -----------   ------------   -----------    -------------
       Total other income (expense)                 (60,938)     647,481            ---           ---          689,801
                                               ------------  -----------   ------------   -----------    -------------

       Income (Loss) Before Income Taxes and
            Extraordinary Item                     (915,931)    (848,870)      (679,737)   (3,509,229)     (21,029,382)
                                               ------------  -----------   ------------   -----------    -------------

PROVISION FOR INCOME TAXES                             ---         1,600          1,818         3,467            4,849
                                               ------------  -----------   ------------   -----------    -------------

     Loss before extraordinary items               (915,931)    (850,470)      (681,555)   (3,512,696)     (21,034,231)
                                               ------------  -----------   ------------   -----------    -------------

EXTRAORDINARY ITEMS

     Gain on debt extinguishment
        (less $0.0 income tax)                         ---        43,451            ---           ---           43,451
                                               ------------  -----------   ------------   -----------    -------------

        Net income (loss)                          (915,931)    (807,019)      (681,555)   (3,512,696)     (20,990,780)

OTHER COMPREHENSIVE INCOME (LOSS):
     Unrealized gain (loss) on securities           (93,750)    (243,750)      (280,000)      490,000         (243,750)
                                               ------------  -----------   ------------   -----------    -------------

        Comprehensive income (loss)            $ (1,009,681) $(1,050,769)  $   (961,555)  $(3,022,696)   $ (21,234,530)
                                               ============  ===========   ============   ===========    =============

Net (loss) per share - basic
     Income (loss) from continuing operations  $      (0.08) $     (0.14)  $      (0.11)  $     (0.58)
                                               ============  ===========   ============   ===========
     Gain (loss) on extraordinary Items        $       -     $      -      $       -      $      -
                                               ============  ===========   ============   ===========
     Net income (loss)                         $      (0.08) $     (0.07)  $      (0.11)  $     (0.58)
                                               ============  ===========   ============   ===========

Net (loss) per share - fully diluted
     Income (loss) from continuing operations  $      (0.08) $     (0.14)  $      (0.11)  $     (0.58)
                                               ============  ===========   ============   ===========
     Gain (loss) on extraordinary Items        $       -     $      -      $       -      $      -
                                               ============  ===========   ============   ===========
     Net income (loss)                         $      (0.08) $     (0.07)  $      (0.11)  $     (0.58)
                                               ============  ===========   ============   ===========

</TABLE>

See accompanying notes.


--------------------------------------------------------------------------------
                                     Page 4
<PAGE>

                              THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     MAY 20, 1996 THROUGH SEPTEMBER 30, 1999

<TABLE>
<CAPTION>

                                                                                                                 Additional
                                                                                                                  Paid-In
                                                                                       Stock        Additional    Capital-
                                                                         Common     Subscription     Paid-In       Stock
                                                                          Stock      Receivable      Capital       Options
                                                                         -------    ------------    -----------  ----------
<S>                                                                    <C>         <C>           <C>           <C>
Initial issuance of common stock - May 20, 1996                        $       3   $     ---     $   975,797   $       ---

Stock split 1,333.33 to 1 - March 6, 1997                                 39,970         ---         (39,970)          ---

Sale of stock - 1997                                                       1,200         ---         118,800           ---

Acquisition - August 1, 1997                                             (36,173)        ---          36,173           ---

Stock options granted August-November, 1997                                  ---         ---             ---     1,227,250

Contingent shares issued - December 31, 1997 and March 18, 1998              740         ---       3,099,260           ---

Stock options exercised - March 19, 1998                                     225         ---             ---        22,275

Stock options granted - January 6, 1998                                      ---         ---             ---     1,620,000

Stock issued - May 12, 1998                                                   35         ---         139,965           ---

Stock options exercised - August 6, 1998                                      50         ---             ---         4,950

Stock issued - November 17, 1998                                              42         ---          33,290           ---

Stock issued - May 11-19, 1999                                               122         ---         242,066           ---

Stock issued - June 30, 1999                                                  61         ---         103,757           ---

Stock issued - July 1, 1999                                                4,500      (3,107)      5,575,500           ---

Stock options exercised - August 15, 1999                                      9         ---             ---         9,491

Stock subscription received  - August 25, 1999                               ---         144             ---           ---

Unrealized holding gains on securities - September 30, 1999                  ---         ---             ---           ---

Deficit accumulated during the development stage to September 30, 1999       ---         ---             ---           ---
                                                                         -------    --------    ------------    ----------

Balance September 30, 1999                                             $  10,784  $  (2,963)   $  10,284,638  $  2,883,966
                                                                         =======    ========    ============    ==========

See accompanying notes.

<CAPTION>

                                                                             Deficit
                                                                            Accumulated        Accumulated
                                                                            during the            Other
                                                                            Development       Comprehensive
                                                                              Stage            Income (Loss)              Total
                                                                           ------------         -----------            ----------
<S>                                                                      <C>                 <C>                     <C>
Initial issuance of common stock - May 20, 1996                          $       ---         $       ---             $   975,800

Stock split 1,333.33 to 1 - March 6, 1997                                        ---                 ---                     ---

Sale of stock - 1997                                                             ---                 ---                 120,000

Acquisition - August 1, 1997                                                     ---                 ---                     ---

Stock options granted August-November, 1997                                      ---                 ---               1,227,250

Contingent shares issued - December 31, 1997 and March 18, 1998                  ---                 ---               3,100,000

Stock options exercised - March 19, 1998                                         ---                 ---                  22,500

Stock options granted - January 6, 1998                                          ---                 ---               1,620,000

Stock issued - May 12, 1998                                                      ---                 ---                 140,000

Stock options exercised - August 6, 1998                                         ---                 ---                   5,000

Stock issued - November 17, 1998                                                 ---                 ---                  33,332

Stock issued - May 11-19, 1999                                                   ---                 ---                 242,188

Stock issued - June 30, 1999                                                     ---                 ---                 103,818

Stock issued - July1, 1999                                                       ---                 ---               5,576,893

Stock options exercised - August 15, 1999                                        ---                 ---                   9,500

Stock subscription received  - August 25, 1999                                   ---                 ---                     144

Unrealized holding gains on securities - September 30, 1999                      ---            (243,750)                (243,750)

Deficit accumulated during the development stage to September 30, 1999     (10,265,553)              ---              (10,265,553)
                                                                           ------------         ----------           ------------

Balance September 30, 1999                                              $  (10,265,553)      $  (243,750)            $  2,667,123
                                                                           ============        ==========            ============

</TABLE>

See accompanying notes.


--------------------------------------------------------------------------------
                                     Page 5
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                       FOR THE THREE AND NINE MONTHS ENDED
           SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 20, 1996
                   (DATE OF INCEPTION) TO SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                                                                                                                     May 20, 1996
                                                                                                                        (Date of
                                                                             1999                     1998             Inception)
                                                                 --------------------------    ---------------------   to September
                                                                  Three Months  Nine Months  Three Months Nine Months    30, 1999
                                                                 --------------  -----------  ---------- -----------    -----------
<S>                                                              <C>         <C>           <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                           $(915,931)  $  (807,019)  $  (681,555)  $(3,512,696)  $(10,269,093)
     Adjustments to reconcile net loss to net
        cash used in operating activities:
            Depreciation and amortization                          347,850       375,349        29,623        88,869        564,354
            Sale of subsidiary                                         ---      (708,419)          ---           ---       (708,419)
            Stock options granted and contingent shares issued         ---           ---           ---     1,620,000      4,327,250
            Decrease (increase) in accounts receivable            (157,066)     (154,430)       22,055        (6,268)      (161,568)
            Decrease (increase) in notes receivable                    ---           ---           ---        89,353          5,833
            Decrease (increase) in royalities receivable               ---           ---           ---       100,000            ---
            Decrease (increase) in inventory                           ---           ---           ---        22,153            ---
            Decrease (increase) in prepaid expenses                  3,425        38,425        35,100       (70,000)         3,425
            Decrease (increase) in intangible and other assets         ---           ---           ---           ---        (56,680)
            (Decrease) increase in deferred revenue                104,329       104,329           ---           ---        104,329
            (Decrease) increase in accounts payable,                                                                            ---
               payroll payable and accrued expenses                254,773       199,144        73,922       306,784        880,355
            (Decrease) increase in deferred royalty revenue            ---           ---           ---      (100,000)           ---
                                                                 ----------    ----------    ----------    ----------   ------------

               NET CASH USED IN
                  OPERATING ACTIVITIES                            (362,620)     (952,621)     (520,855)   (1,461,805)    (5,310,214)
                                                                 ----------    ----------    ----------    ----------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net proceeds impact from purchase of subsidiary               (31,930)      (31,930)          ---           ---        (31,930)
     Net proceeds from sale of SecurFone, Inc. and related
       asset                                                           ---       472,257           ---           ---        472,257
     Investment in subsidiary                                          ---      (150,000)          ---           ---       (150,000)
     Purchase of property and equipment                            (47,351)      (47,509)          ---       (12,014)      (361,983)
                                                                 ----------    ----------    ----------    ----------   ------------
               NET CASH PROVIDED BY (USED IN)
                 INVESTING ACTIVITIES                              (79,281)      242,818           ---       (12,014)       (71,656)
                                                                 ----------    ----------    ----------    ----------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Contributions to paid-in capital                                9,491       355,314         5,000       167,500      1,638,323
     Issuance of stock options and contingent shares                   ---           ---           ---           ---      1,647,500
     Issuance of stock for debt                                          9           192           ---           ---            183
     Proceeds from stock subscription receivable                       144           144           ---           ---        159,794
     Proceeds from advances payable                                    ---           ---           ---       140,000            ---
     Proceeds from notes payable                                   400,000       816,221       474,000     1,176,000      2,466,273
     Repayments on advances                                            ---      (338,000)          ---           ---       (338,000)
     Repayments on notes payable                                       ---      (143,095)       (3,942)      (11,641)      (143,095)
     Repayments of capital lease obligations                           ---        (6,946)       (6,266)      (21,487)       (83,206)
                                                                 ----------    ----------    ----------    ----------   ------------
               NET CASH PROVIDED BY (USED IN)
                  FINANCING ACTIVITIES                             409,644       683,830       468,792     1,450,372      5,347,772
                                                                 ----------    ----------    ----------    ----------   ------------

NET DECREASE  IN CASH AND CASH EQUIVALENTS                         (32,258)      (25,973)      (52,063)      (23,447)       (34,098)


BEGINNING CASH AND CASH EQUIVALENTS                                 54,796        48,511        36,123         7,507         48,511
                                                                 ----------    ----------    ----------    ----------   ------------

CASH AND CASH EQUIVALENTS AT SEPTEMBER 30                      $    22,538   $    22,538   $   (15,940)  $   (15,940)  $     14,413
                                                                 ==========    ==========    ==========    ==========   ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     Cash paid during the period for interest                  $     3,839   $    27,806   $    21,718   $    71,569   $    384,114
                                                                 ==========    ==========    ==========    ==========   ============
     Cash paid during the period for income taxes              $       ---   $     1,600   $     1,018   $     3,517   $      2,400
                                                                 ==========    ==========    ==========    ==========   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
     Amortization of prepaid loan fees paid by stock issued    $       ---   $    35,000   $    35,000   $    70,000   $    140,000
                                                                 ==========    ==========    ==========    ==========   ============

     Issuance of stock for operating services                  $       ---   $   346,006           ---           ---   $    346,006
                                                                 ==========    ==========    ==========    ==========   ============

     (Decrease) Increase in fair value of marketable
        securities                                             $   (93,750)  $  (243,750)  $  (280,000)  $   490,000   $   (243,750)
                                                                 ==========    ==========    ==========    ==========   ============

     Conversion of advances payable to notes payable           $       ---   $       ---   $   702,000   $       ---   $        ---
                                                                 ==========    ==========    ==========    ==========   ============

     Purchase of stock and options in exchange
        for sale of subsidiary                                 $       ---   $   300,000           ---           ---   $    300,000
                                                                 ==========    ==========    ==========    ==========   ============

</TABLE>

See accompanying notes.


--------------------------------------------------------------------------------
                                     Page 6
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE THREE AND NINE MONTHS ENDED
      SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 20, 1996 (DATE OF
                        INCEPTION) TO SEPTEMBER 30, 1999

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of The
IXATA Group, Inc. and its wholly owned subsidiaries, SecurFone Services, Inc.
and IXATA, Inc. (collectively referred to as the "Company"). Inter-company
transactions and balances have been eliminated in the consolidated financial
statements.

NATURE OF OPERATIONS

The Company is principally engaged in providing global Internet based
Business-to-Business ("B2B") electronic commerce services for the corporate
travel and hospitality markets. The Company also contracts authorizing certain
strategic partners to sublicense its software.

RFP ExpressSM, the Company's flagship service, is an Internet-based system that
automates the request for proposal ("RFP") process for the hospitality sector.
RFP Express-SM- integrates a user-friendly Internet interface, sophisticated
data-warehousing system, powerful relational database system and e-mail,
interactive telephone and fax technologies to deliver automated solutions for
the RFP process. RFP Express-SM- is a commercial, proven end-to-end, B2B
electronic commerce solution that automates users' RFP business processes and
dramatically reduces costs, eliminates paper-based communications, improves
operations and enhances management control of labor and capital. The Company
currently offers B2B e-commerce solutions to all market participants including:

-   Global Corporate Users
-   Property Management and Hotel Chains, and
-   Mega-Agencies.

The Company was originally organized to develop and market prepaid wireless
products and services in various markets throughout the United States. In late
1998, the Company established a new strategic objective of refocusing the
Company's mission to pursue new complimentary Internet-related and e-commerce
opportunities. In 1999, the Company actively implemented its new mission by,
among other actions, selling a portion of the Company's business no longer
considered essential for the new strategy and purchasing a company whose
business thrust is in line with the new strategy.

On August 1, 1997, SecurFone, Inc. was acquired by Material Technology, Inc.
(formerly Tensiodyne Scientific Corporation) and became a publicly traded
corporation. On August 1, 1997, Material Technology, Inc. was renamed SecurFone
America, Inc. In April of 1999 the name of SecurFone, Inc. was changed to
SecurFone Services, Inc. and a new subsidiary was formed named SecurFone, Inc.
This new subsidiary was subsequently sold. On July 1, 1999, the Company acquired
IXATA, Inc. On January 31, 2000, SecurFone America, Inc. changed its name to The
IXATA Group, Inc.

DEVELOPMENT STAGE OPERATIONS

The Company is organized to develop, market, and provide a global Internet-based
B2B electronic marketplace for the corporate travel and hospitality markets. The
Company invested significant capital and effort in development of its databases,
software and customer base throughout 1999.


--------------------------------------------------------------------------------
                                     Page 7
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

Prior to establishing the Company's objective to pursue opportunities in the
internet and e-commerce market sectors, the Company was organized to develop and
market prepaid wireless products and services in various U.S. markets. The
Company invested significant capital and effort in development of its network,
software, routing and carrier interface technology throughout 1997 and 1998. In
1998, the Company began its initial introduction of services to various U.S.
markets. During development and market testing, the industry experienced price
reductions, new competition and other margin pressures. In late 1998 the Company
revised its business plan to reflect the significant additional funding that
would be required to achieve the business scale needed to create significant
shareholder value. Recognizing the explosive growth of the internet and
e-commerce markets, and the long-term prospects for integrating new wireless and
internet-based services, the Company established a new objective which is to
pursue opportunities in the internet and e-commerce market sectors.

CASH AND CASH EQUIVALENTS

For the purpose of the statement of cash flows, the Company considers all highly
liquid investments with an original maturity of three months or less to be cash
equivalents.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to credit risk
include temporary cash investments and trade receivables. Concentration of
credit risk with respect to trade receivables is limited due to the Company's
large number of customers and wide range of locations served. The Company
maintains its cash accounts in three commercial banks. Accounts are guaranteed
by the Federal Deposit Insurance Company (FDIC) up to $100,000. The Company
occasionally maintains deposits in excess of federally insured limits.
Management believes that the risk is limited by maintaining all deposits in high
quality financial institutions.

PROPERTY AND EQUIPMENT

The cost of property and equipment is depreciated over the estimated useful
lives of the related assets. Depreciation is calculated using the accelerated
depreciation method for both financial reporting and income tax purposes. For
the quarters ended September 30, 1999 and 1998, depreciation expense of $12,107
and $14,077, respectively, was charged to operations. For the nine months ended
September 30, 1999 and 1998, depreciation expense of $35,096 and $42,231,
respectively, was charged to operations.

REVENUE AND EXPENSE RECOGNITION

The Company recognizes revenue from transaction revenues and sales of
subscription . Transaction revenues are recognized, net of an allowance for
uncollectible amounts, when substantially all significant services to be
provided by the Company have been performed. Subscription revenues are
recognized over the period of the subscription. Expenses are recognized in the
period in which they are incurred. An allowance has been provided for
uncollectible accounts based on management's evaluation of the accounts and the
customer's history.

CHANGE IN ACCOUNTING PRINCIPLE

Effective December 1, 1998, the Company retroactively changed its method of
recognizing start-up costs in its consolidated financial statements to conform
with the pronouncement of the AICPA, SOP 98-5 Reporting on the Costs of Start-Up
Activities. The Company previously amortized these costs over a five-year period
beginning January 1, 1997, using the straight-line method. The pronouncement
requires start-up costs to be expensed as incurred. As a result, the cumulative
effect of applying the new method retroactively as of January 1, 1997 was
charged to 1998 earnings as required by the SOP. Amortization in the amount of
$15,546 was charged to expense for the quarter ended September 30, 1998.
Amortization in the amount of $46,638 was charged to expense for the nine months
ended September 30, 1998.


--------------------------------------------------------------------------------
                                     Page 8

<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

USE OF ESTIMATES

In preparing the Company's consolidated financial statements, management is
required to make estimates and assumptions that effect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the consolidated financial statements, and the reported amounts of
revenues and expenses during the reporting period. These estimates are based on
management's knowledge and experience. Accordingly, actual results could differ
from those estimates.

COMPENSATED ABSENCES

The Company does not have a vacation policy as of September 30, 1999. Unpaid
vacation has not been accrued since it is immaterial.

RECLASSIFICATIONS

Certain accounts in the prior year's consolidated financial statements have
been reclassified for comparative purposes to conform with the presentation in
the current year's consolidated financial statements.

Note 2. MARKETABLE SECURITIES

Cost and fair value of marketable securities available for sale at September 30,
1999 and 1998 consisted of equities as follows:

<TABLE>
<CAPTION>
     ------------------------ ------------------ ---------------------------- -------------------
                                     Cost          Unrealized Gain (Loss)         Fair Value
     ------------------------ ------------------ ---------------------------- -------------------
<S>                           <C>                <C>                          <C>
     September 30, 1999           $ 300,000              $(243,750)                $ 56,250
     ------------------------ ------------------ ---------------------------- -------------------
     September 30, 1998              $ 0                  $ 490,000               $ 490,000
     ------------------------ ------------------ ---------------------------- -------------------
</TABLE>

At September 30, 1999 and 1998, the Company held securities that have unrealized
losses and gains of $(243,750) and $490,000, respectively. As a result of the
net loss carry forwards there is no tax expense (benefit) on the realization of
this loss or gain.

Note 3. PROPERTY AND EQUIPMENT

Property and equipment at September 30, 1999 and 1998 is comprised of the
following:

<TABLE>
<CAPTION>
                                                                   1999                 1998
                                                                   ----                 ----
<S>                                                           <C>                  <C>
          Office Furniture and Equipment                      $  40,295            $  35,043

          Computer Software                                       2,172               88,802

          Computer Hardware                                     221,463              190,373
                                                                -------              -------
                                                                263,930              314,118
          Accumulated Depreciation                             (121,655)            (113,346)
                                                               --------             --------
                                                              $ 142,275           $  200,772
                                                                ========             =======
</TABLE>

Note 4. INTELLECTUAL PROPERTY AGREEMENT

On February 16, 1999 and prior to being purchased by the Company, the Company's
wholly-owned subsidiary, IXATA.COM Inc., purchased intellectual property for
$10,000 from a company with substantially the same stockholders of the
subsidiary at that time. The intellectual property consisted of the key software
program used in operations. This asset is being amortized over five years.
Amortization expense of $500 was charged to expense for the quarter ended
September 30, 1999. Amortization in the amount of $1,167 was charged to expense
for the nine months ended September 30, 1999.


--------------------------------------------------------------------------------
                                     Page 9
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

Subsequent to acquiring this software, the Company received approximately
$14,000 of revenue earned by the prior owner. This amount, net of approximately
$4,900 of related expenses, was recorded as additional paid-in capital.

Note 5. SHORT TERM NOTES PAYABLE

As of September 30, 1999 and 1998 notes payable and other short-term obligations
consisted of the following:

<TABLE>
<CAPTION>
                                                                                    1999                1998
                                                                                    ----                ----
<S>                                                                           <C>                  <C>
     Note  payable  to  a  limited  partnership  bearing  15%  interest,
         principal  and  interest  due  November  1, 1999;  secured by a
         Stock Pledge Agreement.                                                  300,000                 --
     Notes  payable   (formerly  treated  as  an  advances  payable)  to
         unrelated  parties for  advances of $35,000 and  $130,000  that
         were due February  18, 1999 and January 30, 1999,  respectively
         with 10% interest. The notes are unsecured.                              130,000            165,000
     Notes  payable  dated  September 1, 1998 for  advances  made to the
         Company by a Nevada  corporation and an individual  bearing 10%
         interest per annum; principal and interest due August 31, 1999.          130,000            130,000
     Note  payable for a  settlement  with the  Company's  former CEO to
         resolve  all  outstanding  Company  obligations  related to his
         employment due April 1, 1999.                                             50,000                 --
     Account  payable  converted to note on June 21,  1999;  interest at
         8%;  payable in $2,000  installments  of principal and interest
         beginning July 1, 1999.                                                   11,365                 --
     Notes  payable  (formerly  treated as an  advances  payable)  to an
         unrelated  party for advances of $100,000 that was due November
         21,  1998,  with  10%  interest.  The  note  was  secured  with
         security  interest  in 50,000  shares of the  Company's  common
         stock.                                                                        --            100,000

     Note payable to Material Technology, Inc.                                  $      --          $  50,000
                                                                                ---------          ---------

                                                                                $ 621,365          $ 445,000
                                                                                =========          =========
</TABLE>

Note 6. LONG TERM DEBT

As of September 30, 1999 and 1998 notes payable and other long-term obligations
consisted of the following:

<TABLE>
<CAPTION>
                                                                                            1999               1998
                                                                                            ----               ----
<S>                                                                                  <C>               <C>
     Convertible debenture in the amount of $1,000,000 issued August
         21, 1998 for advances made to the Company. The debenture has
         12% interest rate payable quarterly. The principal is payable
         on the earlier of (1) the Company's receipt of at least $8
         million proceeds from a public offering of Company securities
         or (2) August 21, 2001. Non-detachable warrants for 500,000
         shares exercisable at $2.72 per share were issued in
         connection with the convertible debenture. The warrants expire
         August 21, 2003.                                                              1,000,000            911,000
     Advances payable to unrelated parties and potential investors who
         have committed the funds on a long term basis. Negotiations
         with various parties have not characterized the debt and
         equity nature of the funds or finalized interest rates,                      $  368,250          $ 140,000


--------------------------------------------------------------------------------
                                    Page 10
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

         maturity dates, repayment terms or other features for the
         advances
     Note payable to a related party; interest at 5%; principal and
         interest are due February 16, 2004 (See Note 4)                                  10,000                ---
     Note payable to a vendor under an agreement dated October, 1997 a
         two-year, unsecured note with an annual interest rate of 6%
         and monthly payments of $1,407 including interest.  The
         balance at September 30, 1999 is payable within twelve months                     6,928             16,356

     CAPITAL LEASE

     In March 1997, the Company entered into a sale-leaseback
         arrangement under which computer equipment capitalized at
         $159,649 is being accounted for as a capital lease. Under the
         agreement, the Company sold certain equipment and leased it
         back for a period of 48 months, at which time the Company will
         repurchase the equipment from the lessor                                         99,814            109,353
                                                                                          ------            -------

     Total                                                                             1,106,742          1,176,709

     Less current portion of notes and other long-term obligations                       (83,611)           (59,236)
                                                                                          -------           -------

              Total long-term liabilities                                           $  1,034,323        $ 1,117,473
                                                                                       =========          =========
</TABLE>

Minimum future lease payments under non-cancelable capital leases \are as
follows:

<TABLE>
<S>                                                                 <C>
               Year Ending September 30,
                         2000                                       $76,683
                         2001                                        23,131
                                                                     ------

                         Total minimum future lease payments        $99,814
                                                                     ======
</TABLE>

         The note payable maturities on long-term debt for the next five years
are as follows:

<TABLE>
<S>                                                                <C>
              Years ending September 30,:
                         2000                                        $ 6,928
                         2001                                      1,000,000
                         2002                                              0
                         2003                                              0
                         2004                                         10,000
                                                                      ------
                         Total                                   $ 1,016,928
                                                                 ===========
</TABLE>

Note 7. COMMON STOCK

At December 31, 1996, 30,000 shares of SecurFone America, Inc.'s stock were
authorized and 3,000 shares were issued and outstanding.

On March 5, 1997, an additional 4,700,000 shares were authorized by the Board of
Directors.


--------------------------------------------------------------------------------
                                    Page 11
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

On March 6, 1997, the shareholders of SecurFone America, Inc. approved a stock
split of 1,333,333 to 1 shares, increasing the 3,000 shares issued and
outstanding to 4,000,000 shares with a par value of $.01 per share. The amount
of $39,970 was transferred from the paid-in capital account to common stock
account to record the split.

Prior to the reorganization between SecurFone America, Inc. and Material
Technology, Inc.; as of July 31, 1997 Material Technology, Inc. had 100,000,000
shares authorized and 5,000,000 shares outstanding with a reverse split of 1 for
10 resulting in 500,216 shares issued and outstanding. Also, Material
Technology, Inc. issued an additional 4,500,000 shares on July 31, 1997 for a
total of 5,000,216 shares issued and outstanding. On August 1, 1997, SecurFone
America, Inc. completed a reorganization with Material Technology, Inc. whereby
4,000,000 shares issued and outstanding common stock of SecurFone, Inc. were
exchanged for 4,500,000 shares issued and outstanding common stock of Material
Technology, Inc. As a result of the reorganization, there were 5,000,216 shares
issued and outstanding and 100,000,000 authorized shares of the Company's common
stock. The amount of $36,173 was transferred from the common stock account to
the additional paid-in capital account to reflect the par value change from $.01
to $.001 per share.

On November 13, 1997, the Company registered with the Securities and Exchange
Commission on Form S-8 (the "S-8 filing") 1,000,000 shares under the 1997 Stock
Option Plan to grant incentive stock options and non-qualified stock options to
officers and key employees. At the same time, a similar registration for 250,000
shares under the 1997 Director Non-qualified Stock Option Plan was made. At
various dates, the Company has granted stock options under the two stock option
plans totaling 830,900 shares consisting of 300,000 shares at an option price of
$1.00 per share, 130,900 shares at an option price of $2.50 per share and
400,000 shares at an option price of $0.10 per share. These options are
exercisable during 1997 and 1998. These shares were recorded as $1,227,250 of
selling, general & administrative (SG&A) expense and additional paid-in capital
- stock options at the grant date in accordance with Statement of Financial
Accounting Standards No. 123 (SFAS 123) "Accounting for Stock-Based
Compensation."

On December 3, 1997, the Company issued 620,000 conditional shares of common
stock with a par value of $.001 per share registered with the S-8 filing. These
shares were issued pursuant to various employment, retainer, consulting and fee
agreements. As of December 31, 1997, all conditions of these shares had been met
and $3,100,000 was recorded as SG&A expense, and additions to the common stock
and additional paid in capital accounts at the issue date.

On January 6, 1998, the Company granted stock options under the 1997 Stock
Option Plan for 400,000 shares at an option price of $.10 per share. These
options are exercisable immediately and are recorded as $1,620,000 of SG&A
expense and additional paid in capital - stock options at the grant date in
accordance with SFAS 123. On February 18, 1999 the 350,000 unexercised options
were returned.

On March 19, 1998, an additional 345,000 shares were issued as a result of the
following transactions: 225,000 shares of stock issued pursuant to warrants
exercised by the individuals providing credit accommodations in connection with
letters of credit issued by the Company and 120,000 shares were issued as the
result of two stock subscriptions in private placements.

On May 12, 1998, 35,000 shares were issued in connection with credit
accommodations provided to the Company by investors (see Note 1).

On August 6, 1998, 50,000 shares were issued on the exercise of stock options.

On November 17, 1998, the Company issued 41,665 unregistered shares common stock
in exchange for investment banking services and bridge funding and a cash
payment of $2,500.

On April 23, 1999 the Company granted a director 20,000 fully-vested stock
options under the 1997 Stock Option Plan that are exercisable at $.125 per share
and expire on April 23, 2009.

On May 11, 1999, the Company satisfied a $50,000 debt for legal services by
issuing of 50,000 unregistered shares of common stock.

On May 12, 1999, the Company converted debt to an unrelated individual in the
amount of $25,000 by issuing of 12,500 unregistered shares of common stock.

On May 19, 1999, the Company converted $118,532 of debt including a note payable
of $115,000 due to Young Management Company by issuing of 59,266 unregistered
shares of common stock.


--------------------------------------------------------------------------------
                                    Page 12
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

On June 30, 1999, the Company settled a dispute with Associated Barter Services,
Inc. ("ABS") for advertising services in the amount of $103,818 by issuing of
61,522 shares of common stock.

On June 30, 1999, the Company granted 50,000 stock options (fully vested June
30, 2000) under the 1997 Directors Stock Option Plan to a director exercisable
at $1.28 per share with an expiration date of June 30, 2009.

On July 1, 1999, the Company executed an agreement to acquire all outstanding
common stock of IXATA.COM, Inc., a privately held provider of Internet-based
e-commerce services in exchange for 4,500,000 shares of common stock.

On August 18, 1999, an individual exercised options under the Directors Option
Plan for 9,500 shares of common stock.

As of September 30, 1999, a total of 100,000,000 shares of common stock were
authorized and 10,784,669 shares were issued and outstanding.

Note 8. RELATED PARTIES

The Secretary of the Company is also a partner in the law firm that represents
the Company in its legal matters.

The accrued payroll is due to officers and directors of the Company. The expense
recognized for the quarters ended September 30, 1999 and 1998 is $57,815 and
$17,499, respectively. The expense recognized for the nine months ended
September 30, 1999 and 1998 is $198,026 and $64,163, respectively.

Prior to being purchased by the Company, the Company's wholly owned subsidiary,
IXATA.COM, Inc., purchased intellectual property and received the proceeds of
accounts receivable generated by the prior owner of the intellectual property,
an entity having substantially the same owners as IXATA.COM at that time. See
Note 4.

The Company has entered into a management and services agreement with a company
that is owned and controlled by shareholders with significant ownership of the
Company. Related expenses for the three and nine months ended September 30, 1999
were $70,020 and $186,720 respectively. Related payables included $170,440 at
September 30, 1999.

The Company has consulting contracts with members of its Board of Directors.
Related expense for the three and nine months ended September 30, 1999 were
$57,000 and $152,000, respectively. Related party payables included $85,000 at
September 30, 1999.

Note 9. LOSS ON SECURFONE NEW YORK

In August 1996, the Company entered into a licensing agreement with SecurFone
New York, Inc (SFNY). In accordance with terms of the agreement, the Company
forwarded monies to SFNY to cover various start up costs. Shortly thereafter,
SFNY fell into default under the term of the licensing agreement and ceased
operations. The monies paid by the Company to SFNY were written off as a
one-time charge to income of $48,980.

Note 10. INCOME TAXES

Income taxes are provided based on earnings reported for financial statement
purposes pursuant to the provisions of Statement of Financial Accounting
Standards No. 109 (FASB 109). The provision for income taxes differs from the
amounts currently payable because of timing differences in the recognition of
certain income and expense items for financial and tax reporting purposes.

FASB 109 uses the asset and liability method to account for income taxes which
requires the recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between tax basis and financial
reporting basis of assets and liabilities.

For the year ended December 31, 1998, the Company had net operating loss
carry-forwards for federal and state income tax purposes. These carry-forwards
may provide future tax benefits. The federal net operating loss carry-forwards
will begin to expire in 2011, if not utilized to offset taxable income. Various
state net operating loss carry


--------------------------------------------------------------------------------
                                    Page 13
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

forwards will begin to expire earlier. Future changes in ownership, as defined
by Section 382 of the Internal Revenue Code, could limit the amount of net
operating loss carry forwards used in any one year.

A valuation allowance has been recorded by the Company that reduced the deferred
tax benefits for the net operating losses to zero. It cannot be determined when,
or if, the tax benefits derived from these losses will materialize. Income taxes
in the amounts of $0 and $1,118 were paid in the quarters ended September 30,
1999 and 1998, respectively. Income taxes in the amounts of $1,600 and $3,711
were paid in the nine months ended September 30, 1999 and 1998, respectively.

Note 11. SALE OF SUBSIDIARY (NET OF TAX EFFECT)

On January 30, 1999, the Company executed an agreement with Teledata World
Services, Inc., a publicly traded company ("TWOS"), whereby certain prepaid
cellular assets would be sold to TWOS for cash and TWOS common stock. On
April 22, 1999, the Company executed a final agreement to sell a wholly-owned
subsidiary, SecurFone, Inc., to TWOS for cash and stock. Under the agreement,
TWOS acquired all outstanding shares of SecurFone, Inc. for $498,000 in cash,
600,000 shares of unregistered TWOS common stock (subject to Rule 144) valued
at $300,000 and the option to sell the stock back to TWOS at a price of $2.50
per share effective one year from the date of the transaction if the market
price of the TWOS stock is less than $2.50 per share. As of September 30,
1999, no value has been recorded for the option. SecurFone, Inc. assets
include certain cellular service resale agreements, the Company's Miami
customer service center, rights to the Buy-The-Minute-TM- product and
selected distribution channels. Under the agreement, the Company could
continue to offer prepaid cellular services and could establish resale and
joint service arrangements to serve selected markets. As a result of the net
operating loss carry-forwards, there are no income taxes arising from this
sale.

Given the B2B e-commerce opportunity presented in conjunction with the IXATA
acquisition, subsequent to the sale of certain prepaid cellular assets to TWOS,
the Company disposed of its prepaid cellular operations in its entirety,
effective June 30, 1999. The loss from operations of the disposed cellular
operations is a reflection of the historic financial performance of this
business line, which the Company has elected not to pursue further. The Company
retains the net operating loss carry-forwards from this disposed business line.

Note 12. EXTRAORDINARY GAIN ON DEBT EXTINGUISHMENT

The extraordinary gain is a result of the settlement agreement with the
Company's former CEO to resolve all outstanding Company obligations related to
his employment with the Company in exchange for a payment of $50,000 payable not
later than April 1,1999. As a result of the net operating losses carry-forwards,
there is no tax effect arising from this gain.

Note 13. COMMITMENTS AND CONTINGENCIES

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company has
sustained losses totaling $9,918,031 since its inception, of which $5,157,131
represents expenses associated with stock-based compensation plans as discussed
in Note 6.

The continuing losses resulting from operations are an indication that the
Company may not be able to continue to operate without an additional cash
infusion. The Company has been and is currently seeking private and public
equity and bridge loans in order to finance operations. The Company has retained
business advisory firms to assist the Company in meeting its financing needs.
See Note 14. Subsequent Events.

Paul Silverman executed an employment agreement assuming the role of Chief
Executive Officer as of November 1, 1998 and was elected to the Board of
Directors on December 11, 1998. Mr. Silverman was also granted options to
acquire 100,000 shares of the Company's stock at $0.10 per share upon execution
of the employment agreement, and qualified incentive stock options to acquire up
to 300,000 additional shares of the Company's stock based on achievement of
Company goals established by the Board of Directors. Mr. Silverman was granted
options to acquire 50,000 shares of the Company's stock at $0.28 per share under
the Company's 1997 Directors Option Plan. Total deferred compensation liability
as of September 30, 1999 is approximately $111,479.


--------------------------------------------------------------------------------
                                    Page 14
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

Note 14. QUARTERLY INFORMATION

Following is computational information for earnings per share information
calculated under Statement of Financial Accounting Standards No. 130, Earnings
Per Share (EPS), which is effective for periods beginning after December 15,
1997.

<TABLE>
<CAPTION>
                                   Quarter Ended September 30, 1999             Quarter Ended September 30, 1998
                                   --------------------------------             --------------------------------
                              Income (Loss)       Shares       Per Share   Income (Loss)      Shares       Per Share
                               (Numerator)     (Denominator)     Amount     (Numerator)    (Denominator)     Amount
                               ----------      -------------     ------     -----------    -------------     ------
<S>                           <C>              <C>             <C>         <C>             <C>             <C>
BASIC EPS
Income (loss) available
to common Stockholders         $ (916,108)      10,784,669       $(.08)      $(681,555)      5,998,549       $(.11)

EFFECT OF DILUTIVE SECURITIES
Stock Options                                            0                                           0*
                                             --------------                               -------------

DILUTED EPS
Income available to
common stockholders and
assumed conversions            $ (916,108)      10,784,669       $(.08)      $(681,555)      5,998,549       $(.11)
</TABLE>

     *SFAS 128 requires the use of weighted averages for stock outstanding
         during the quarter. Although stock options issued under Company plans
         had exercise prices which were below the average market price of the
         common shares, they were not computed in calculating diluted earnings
         per share because SFAS 128 does not include stock dilutions that would
         reduce per share losses. If computed, outstanding stock options would
         have increased outstanding shares by 199,254.

As of September 30, 1999, 1,370,900 stock options were issued, 391,400 were
vested, 500,000 had been forfeited and 59,500 had been exercised.

Note 15. SUBSEQUENT EVENTS

The Company has agreed to pay Global One, Inc. (Global) 600,000 shares of common
stock for brokering services as a part of the purchase of IXATA.COM. Global is
an international business corporation in Nevis, British Virgin Islands. The
Company intends to issue the shares to Global in the first quarter of 2000.

In the fourth quarter of 1999, the Company issued 50,000 unregistered shares of
common stock to eliminate debts to Kohrman Jackson & Krantz P.L.L. ("KJK"), the
Company's legal counsel, in the amount of $50,000.

In November 1999, the Company offered shares of its common stock to investors in
an offering exempt from registration pursuant to Regulation D of the Securities
Act of 1933. As of January 21, 2000, the Company has sold 1,344,651 shares of
common stock for total proceeds to the Company of $1,075,721 after deduction of
the placement agent fee of $0.05 per share.

In connection with this financing, the Company entered into an agreement under
which the placement agent can purchase 643,553 warrants at a price of $0.01 per
warrant. These warrants will be exercisable for 643,553 shares of common stock
at an exercise price of $1.687 per share. The warrants will be excercisable upon
the earlier of a) one year from November 2, 1999, b) a change of control
transaction, or c) the closing of a firmly underwritten public offering of the
Company's equity securities.

Effective January 31, 2000, the Company changed its name to The IXATA Group,
Inc. from SecurFone America, Inc.


--------------------------------------------------------------------------------
                                    Page 15
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

     The following describes certain factors which produced changes in the
results of operations of The IXATA Group, Inc. (the "Company") during the three
and nine months ended September 30, 1999 and as compared with the three and nine
months ended September 30, 1998 as indicated in the Company's Consolidated
Financial Statements. The following should be read in conjunction with the
Consolidated Financial Statements and related notes. Historical results of
operations are not necessarily indicative of results for any future period. All
material inter-company transactions have been eliminated in the results
presented in this Quarterly Report.

     Certain matters discussed in this Quarterly Report constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act") and involve risks and
uncertainties. These forward-looking statements relate to, among other things,
expectations of the business environment in which the Company operates,
projections of future performance, perceived opportunities in the market and
statements regarding the Company's mission and vision. The Company's actual
results, performance or achievements may differ significantly from the results,
performance, or achievements expressed or implied in these forward-looking
statements. See "-- Forward-Looking Statements."

OVERVIEW

THE COMPANY

     The Company was organized to develop and market prepaid wireless products
and services in various markets throughout the United States. In late 1998, the
Company established a new strategic objective of refocusing the Company's
mission to pursue new complimentary Internet-related and e-commerce
opportunities. In 1999, the Company actively implemented its new mission by,
among other actions, selling a portion of the Company's business no longer
considered essential for the new strategy and purchasing a company whose
business thrust is in line with the new strategy. See "The Company's Business
Case for New Electronic Commerce and Internet Business Directions."

     On May 7, 1999, the Company executed an agreement to acquire all
outstanding common stock of IXATA, Inc. ("IXATA.COM"), a privately held provider
of Internet-based information and electronic commerce services servicing the
travel and hospitality market. The acquisition was finalized on July 1, 1999 and
is consistent with the Company's new business objectives of pursuing
Internet-based, business-to-business e-commerce opportunities. The Company is
now operating IXATA.COM as a wholly-owned subsidiary and plans to significantly
expand IXATA.COM's operations to offer new enhanced information services in the
travel market, targeting existing and new corporate clients, hotel and property
management groups, major travel agencies and worldwide strategic partners.

     Upon closing the IXATA.COM acquisition, the Company established itself
as a provider of Internet-based, B2B electronic commerce services in rapidly
growing market for travel information services, serving an expanding base of
more than seventy major Fortune 500 firms and other organizations.
IXATA.COM's principal service, RFP Express-SM-, integrates a user-friendly,
Internet-based interface with a sophisticated data-warehousing system,
interactive telephone and fax technology to deliver automated solutions for
creating, sending, receiving and managing the preferred lodging programs
request for proposal process in the hospitality services market ("RFP
process"), typically involving hundreds or, in some cases, thousands of
properties worldwide. By automating the users' RFP business process, and also
providing user-friendly Internet access to a sophisticated data warehousing
system, RFP Express-SM- provides dramatic cost savings to users, typically
70% or more compared to costs for manual processes. Pricing for RFP Express
includes an annual subscription fee and transaction fees for each RFP
handled. The Internet-based, electronic commerce and operational platforms
developed to support the RFP Express-SM- offering can be used to address
similar needs in other vertical markets.

     Since closing the IXATA.COM transaction on July 1, 1999, the Company has
provided new funding and achieved more than 300 percent growth of its corporate
customer base. The growth of corporate users and hotel


--------------------------------------------------------------------------------
                                    Page 16
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

property clients attests to the Company's increasing market visibility and
acceptance within the global travel community. The Company's Internet-based,
e-commerce services are now being used by more than 70 major corporate users,
1700 hotel properties and four major travel agencies. While there are no
assurances such growth can be sustained or the Company will have sufficient
funding to meet future needs, management believes the Company's growth and
performance to date is consistent with the Company's objective of attaining a
leadership position in the market for Internet-based, business-to-business
e-commerce services.

     Subsequent to the sale of selected prepaid cellular assets in the second
quarter of 1999 to Teledata World Services, Inc. ("Teledata") (OTC/BB:TWOS), the
Company had planned to continue to offer prepaid wireless services, focusing on
higher margin opportunities, primarily through resale. Given the opportunities
available through IXATA.COM and the associated resources required, the Company
has discontinued its prepaid cellular operations. The discontinuing of
operations was consistent with the Company's planned strategy of refocusing its
business objectives to pursue new e-commerce and Internet-based business
opportunities to create significant shareholder value.

     Effective January 31, 2000, the Company changed its name to The IXATA
Group, Inc. from SecurFone America, Inc. The Company believed it was in the best
interest of the Company to change its corporate name to "The IXATA Group, Inc."
to capitalize upon the success of the Company's IXATA.COM subsidiary and to
establish an image that is consistent with the Company's focus on
Internet-related and e-commerce solutions. The Company believes that the name
change will act as a critical facilitator in the expansion of its business
objective to pursue new opportunities in Internet-based business offerings and
e-commerce markets.

     The Company's principal executive offices are located at 8080 Dagget
Street, Suite 220, San Diego, California 92111, and its telephone number is
(800) 473-6748.

THE COMPANY'S BUSINESS CASE FOR NEW ELECTRONIC COMMERCE AND INTERNET BUSINESS
DIRECTIONS

     Since inception, the Company has primarily pursued opportunities in the
prepaid wireless services market. The Company developed several unique products
to address the prepaid wireless services market and had achieved some success in
1998. However, the emergence of new competition, industry price reductions and
other margin pressures in the prepaid wireless services market suggested that
significant additional investment would be required to achieve the business
scale required to create substantial shareholder value.

     Recognizing the explosive growth of the Internet, and the long term
prospects for integrating new wireless and Internet-based services, in late 1998
the Company established a new business objective to pursue new opportunities in
the Internet and business-to-business ("B2B") electronic commerce markets. In
1998, the consumer segment of electronic commerce consumer retailing revenues
totaled $7.8 billion, with business-to-business e-commerce service revenues
estimated at $43 billion, according to a recent study by Forrester Research, a
leading information industry consulting firm. By the year 2003, B2B e-commerce
is expected to increase to $1.3 trillion, representing about 9% of all projected
US trade in the year 2003. The recently-closed acquisition of IXATA.COM is the
Company's initial step in entering the market for B2B, Internet-based electronic
commerce services, which management believes is the optimum strategy to deliver
substantial value to the Company's shareholders.

     Another key element in the Company's new growth strategy is to focus on
next generation, "pro-active" B2B electronic commerce solutions which employ
e-commerce solutions to address labor intensive processes, rather than to solely
displace paper-based solutions. Management believes such pro-active e-commerce
solutions, which go well beyond today's basic electronic cataloging, web portals
and web-based ordering services, will change users' business processes, create
significant operating efficiencies and dramatically reduce users' costs. More
importantly, management believes such pro-active e-commerce services will play a
key role in the future market for B2B e-commerce services described above.
IXATA.COM's RFP Express-SM- Service represents a pro-active e-commerce service
which, in management's view, is ideally positioned to meet the needs of the
travel services market. IXATA.COM's expanding corporate user base demonstrates
strong, growing market acceptance for the Company's e-commerce services. Since
acquiring the new IXATA.COM subsidiary, the total base of major corporate users
has


--------------------------------------------------------------------------------
                                    Page 17
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

increased to more than 70 firms as of January 2000, further attesting to the
growing acceptance of the Company's RFP Express service.

     The Company is expanding its management team and plans to secure new
financing to support both expansion of the IXATA.COM revenue base, as well as
development of new enhancements and related Internet-based services targeting
the travel and hospitality sectors. See "Recent Events - Management Additions."

     While the outlook for Internet-based, electronic commerce services is
impressive, there can be no assurances that the Company will secure the
additional investment capital needed to succeed in this highly competitive,
rapidly changing and technology driven market, nor are there any assurances that
the Company's initial acquisition of IXATA.COM will be successful. Investors
should carefully review the risk factors described in this document and other
documents filed by the Company with the Securities and Exchange Commission. See
"Management Discussion and Analysis of Financial Condition and Results of
Operations - Forward Looking Statements."

PRODUCTS AND CUSTOMERS

     RFP Express-SM- , is the Company's current flagship service and is the
first of a family of new Intenet-based e-commerce services developed to meet
the needs of the Company's customers and strategic partners. RFP Express -SM-
is an Internet-based system that automates the RFP process for the travel and
hospitality sector. RFP Express-SM- integrates a user-friendly Internet
interface, sophisticated data-warehousing system, powerful relational database
system and e-mail, interactive telephone and fax technologies to deliver
automated solutions for the RFP process. RFP Express-SM- is a commercial,
proven end-to-end, B2B electronic commerce solution that automates users' RFP
business processes and dramatically reduces costs, eliminates paper-based
communications, improves operations and enhances management control of labor
and capital.

     The Company currently offers B2B e-commerce solutions to all market
participants including:

     - Global Corporate Users
     - Property Management and Hotel Chains, and
     - Mega-Agencies.

     As of February 2000, the Company is providing Internet-base e-commerce
services to more than 70 major corporations, 1700 hotel properties and four
major travel agencies.

RECENT EVENTS

ISSUANCE OF SECURITIES

     For rendering brokering services and as a part of the transaction to
purchase IXATA.COM, the Company agreed to pay Global One, Inc. ("Global")
600,000 shares of common stock of the Company. Global is an international
business corporation in Nevis, British Virgin Islands. The Company intends to
issue the shares to Global in the first quarter of 2000.

     In 1999, agreement was secured from Kohrman Jackson & Krantz P.L.L.
("KJK"), the Company's legal counsel, to convert existing debt to unregistered
shares of the Company's common stock. On October 19, 1999, KJK agreed to receive
50,000 unregistered shares of the Company's common stock to eliminate total
debts of $50,000. The Company issued the shares to KJK in the fourth quarter of
1999.

     In November of 1999, the Company offered equity investments to private
parties in an offering exempt from registration pursuant to Regulation D of the
Securities Act of 1933. As of February 23, 2000, the Company had sold 1,791,713
shares of its unregistered common stock for $0.85 a share in connection with the
offering. Proceeds to the Company were $1,433,369 after the deduction of Scott &
Stringfellow, Inc.'s ("S&S") placement agent fee of $0.05 per share. The
purchasers in the offering were granted the right in certain instances to
include their shares in future offerings of registered stock by the Company.


--------------------------------------------------------------------------------
                                    Page 18
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

     For rendering investment banking services, the Company agreed to issue
643,553 warrants to S&S for the price of $0.01 per warrant. These warrants
expire in October of 2004. The exercise price of the warrants is $1.687 per
warrant. The warrants will be exercisable after the earlier of a) one year from
November 2, 1999, b) immediately upon change of control of the Company, or c)
upon closing of a firmly underwritten public offering of the Company's equity
securities.

MANAGEMENT ADDITIONS

     In October of 1999, the Company appointed Robert Steiner President of the
Company's IXATA.COM subsidiary. Mr. Steiner, one of the co-founders of the
IXATA.COM subsidiary, is also acting Executive Vice President, Marketing of
IXATA.COM. Mr. Steiner is a co-founder of IXATA.COM and was appointed a Director
of the Company, Inc. on July 1, 1999.

     Mr. John P. Yzaguirre joined the Company in October of 1999 as Operations
Director of IXATA.COM. Prior to joining IXATA.COM, Mr. Yzaguirre has held
management positions with several leading hotel and property groups. Mr.
Yzaguirre is former General Manager of the Chase Hospitality L.L.C. group, where
he managed systems implementation, staffing, services, sales and operations for
a new hotel launch, and supported existing properties. Mr. Yzaguirre has
experience in the meeting planning industry, having worked for American General
Hospitality Corporation and Chateau Magdelena Catering Company where he held
positions of increasing management responsibility in the areas of developing and
managing operations, processes and financial controls for large scale meetings,
catering and related support services.

     Ms. Sheila A. Leaming joined the Company in November of 1999 as Controller
of IXATA.COM. Prior to joining the Company, Ms. Leaming has held various
financial management and accounting, including a background in public company
accounting and in the hospitality industry. Ms. Leaming's previous positions
include Senior Underwriter/Financial Analyst for JT Capital and a Senior for
Ernst & Young. In her role as Controller, Ms. Leaming is be responsible for
general and overall day-to-day accounting administration, payroll, accounts
payable, overseeing billing, and other financial management functions, including
budget preparation and financial analysis.

RESULTS OF OPERATIONS:

The Company, in the second quarter of 1999, sold the Company's
Buy-The-Minute-TM- ("BTM") product and the Company discontinued operation of
the Company's SFA Local Network Solution ("SFN"). As a result of these
transactions, certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation in the
current-year financial statements. Revenue, cost of goods sold and operating and
other expenses relating to the prepaid cellular product line have been
reclassified as a restructuring charge, resulting in these items being reported
as $0 for periods prior to the sale and discontinuance of the prepaid cellular
products.

     The loss from continuing operations in the first three quarters of 1999
decreased to $1,575,882 from $3,509,229 in the first three quarters of 1998 due
to the reduction in the restructuring charge associated with the cellular
operation.

     The Company purchased its IXATA.COM subsidiary as of July 1, 1999, and has
consolidated financial results for the IXATA.COM subsidiary commencing in the
third quarter of 1999. Therefore, detailed comparison of financial results of
the current financial with those of a year earlier are not meaningful.


--------------------------------------------------------------------------------
                                    Page 19
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

THIRD QUARTER OF 1999 COMPARED TO THIRD QUARTER OF 1998

REVENUES

     The Company only obtained the operations of its Internet-based
information and electronic commerce services servicing the travel and
hospitality market in the third quarter of 1999. B2B e-commerce revenues for
the third quarter of 1999 increased to $86,468 from $0 in the third quarter
of 1998. The increase was from the launch of its RFP Express-SM- product for
the travel and hospitality sectors. The Company expects that revenues from
RFP Express-SM- will continue to grow at an accelerated rate on a long-term
basis.

COST OF GOODS SOLD

     Total cost of goods sold for the third quarter of 1999 increased to $6,938
from $0 in the third quarter of 1998 primarily due to the Company introducing
its its RFP Express-SM- product.

 GROSS PROFIT/MARGIN

     Gross profit for the third quarter of 1999 increased to $79,531 from $0 in
the third quarter of 1998. The gross profit margin for the third quarter of 1999
of 92% is expected to decrease in the future as the company's strategic partners
initiate selling the product and collect their commissions due for such sales.
The Company does not expect the variable portion of cost of goods sold to
increase for 1999 due to the fact that telecommunications costs are decreasing
in the marketplace.

OPERATING EXPENSES

     Selling, general and administrative expenses increased to $599,280 in the
third quarter of 1999 from $0 in the third quarter of 1998. The increase in
selling, general and administrative expenses was due to the hiring and
development of an experienced management and operations team. Wages and
associated taxes increased in the third quarter of 1999 to $318,300 from $0 in
the third quarter of 1998. An increase in expenses related to consultant
required while the Company was building its internal capabilities rose to
$106,155 in the third quarter of 1999 from $0 in the third quarter of 1998. The
Company expects to reduce its expenditures for external consultants in the
future. Legal and professional fees increased to $74,396 in the third quarter of
1999 from $0 in the third quarter of 1998.

     Operating expenses increased to $934,523 in the third quarter of 1999 from
$0 in the third quarter of 1998. In addition to the increase in selling, general
and administrative expenses discussed above, the increase in operating expenses
was due to amortization of goodwill in association with the IXATA.COM purchase.
According to generally accepted accounting principles, the amortization expense
of $335,243 was recorded in the third quarter of 1999.

     The net loss before extraordinary items in the third quarter of 1999
increased to $916,108 from $0 in the third quarter of 1998. This increase was
due to the declaration of discontinued operation effective June 30, 1999
resulting in negligible ongoing operating expenses from continuing operations in
the third quarter of 1998 due to the Company's direction was being refocused.
See "The Company's Business Case for New Electronic Commerce and Internet
Business Directions."

OTHER EXPENSES

     Interest expense increased to $61,834 in the third quarter of 1999 from $0
in the third quarter of 1998 due to the Company's obligations to lenders whom
have extended the Company funds for operations since inception.


--------------------------------------------------------------------------------
                                    Page 20
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

FIRST NINE MONTHS OF 1999 COMPARED TO FIRST NINE MONTHS OF 1998

REVENUES

     The Company only obtained the operations of its Internet-based information
and electronic commerce services servicing the travel and hospitality market in
the third quarter of 1999. B2B e-commerce revenues for the first three quarters
of 1999 increased to $86,468 from $0 in the first three quarters of 1998. The
increase was from the launch of its RFP Express-SM- product for the travel and
hospitality sectors in July 1999. The Company expects that revenues from RFP
Express-SM- will continue to grow at an accelerated rate on a long-term basis.

COST OF GOODS SOLD

     Total cost of goods sold for the first three quarters of 1999 increased to
$6,938 from $0 in the first three quarters of 1998 primarily due to the Company
introducing its RFP Express-SM- product.

 GROSS PROFIT/MARGIN

     Gross profit for the first three quarters of 1999 increased to $79,531 from
$0 in the first three quarters of 1998. The gross profit margin for the third
quarter of 1999 of 92% is expected to decrease in the future as the Company's
strategic partners initiate selling the product and collect their commissions
due for such sales. The Company does not expect the variable portion of cost of
goods sold to increase for 1999 due to the fact that telecommunications costs
are decreasing in the marketplace.

OPERATING EXPENSES

     Selling, general and administrative expenses increased to $741,256 in the
first three quarters of 1999 from $0 in the first three quarters of 1998. The
increase in selling, general and administrative expenses was due to the hiring
and development of an experienced management and operations team. Wages and
associated taxes increased in the first three quarters of 1999 to $460,276 from
$0 in the first three quarters of 1998. An increase in expenses related to
consultant required while the Company was building its internal capabilities
rose to $106,155 in the first three quarters of 1999 from $0 in the first three
quarters of 1998. The Company expects to reduce its expenditures for external
consultants in the future. Legal and professional fees increased to $74,396 in
the first three quarters of 1999 from $0 in the first three quarters of 1998.

     The Company previously engaged in the sale of prepaid cellular phone
services. The Company provided these services in some markets and, in other
markets, licensed the Company's resources to unrelated parties. In a limited
number of instances, certain distribution rights were offered in various markets
for a license fee. As of June 30, 1999, the Company effectively ceased these
operations and restructured the basic company focus. Net loss for discontinued
operations decreased to $499,382 in the first three quarters of 1999 from
$3,509,229 in the first three quarters of 1998. This was due to the Company's
effort to control its financial exposure in a business that was under increasing
revenue and profitability pressure and the Company limiting its operations as it
transitioned to its new B2B e-commerce focus.

     Operating expenses increased to $1,575,882 in the first three quarters of
1999 from $3,509,229 in the first three quarters of 1998. In addition to the
increase in selling, general and administrative expenses discussed above, the
increase in operating expenses was due to amortization of goodwill in
association with the IXATA.COM purchase. According to generally accepted
accounting principles, the amortization expense of $335,243 was recorded in the
first three quarters of 1999.

     The loss from continuing operations in the first three quarters of 1999
decreased to $1,575,882 from $3,509,229 in the first three quarters of 1998 due
to the reduction in the restructuring charge associated with the cellular
operation.


--------------------------------------------------------------------------------
                                    Page 21
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

OTHER EXPENSES

     The Company recorded a gain on the sale of a product line of $708,419 in
the first half of 1999. The Company did not sell any assets in the first half of
1998. The Company does not foresee selling any additional assets in the near
future.

     The Company recorded an extraordinary gain on debt of $43,451 in the first
half of 1999. This was related to a settlement to the Company's former CEO to
resolve all outstanding Company obligations related to his employment.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has incurred significant operating and net losses as a result
of the development and operation of its service platform and supporting
networks. The Company expected that such losses would continue to increase as
the Company focused on the development, construction and expansion of its
service platform and underlying networks and expands its customer base. Cash
provided by operations would not be sufficient to fund the expansion of the
product offerings and resultant subscriber base. The Company is continually
reviewing various sources of additional financing to fund its growth. As of
September 30, 1999, the Company had received advances in the amount of
$1,798,250 from private investors.

     At September 30, 1999, the Company had cash and cash equivalents of
$22,538. In addition, the Company had accounts receivable totaling $165,163 from
the sale of the Company's B2B e-commerce services. Net cash used by operating
activities was $952,621 in the first three quarters of 1999 compared to
$1,674,588 in the first three quarters of 1998. Net cash provided by investing
activities in the first three quarters of 1999 was $242,818, consisting of
$472,257 provided by the sale of a subsidiary and related assets, $150,000 used
for investment in subsidiary, and $47,509 used to purchase equipment as compared
with the use of $12,014 to purchase equipment in the first three quarters of
1998. Net cash provided by financing activities in the first three quarters of
1999 totaled $683,830 which consisted primarily of $816,221 in proceeds from
notes payable to the Company from private investors as compared with $1,450,372
in the first three quarters of 1998 which consisted primarily of proceeds from
advances payable of $1,176,000.

     On October 12, 1999, the Company entered into a relationship with Scott &
Stringfellow, Inc., an investment banker, to act as the exclusive financial
advisor to the Company, in connection with the exploration of potential
alternative strategic transactions, including without limitation one or more
private equity offerings, mergers and acquisitions and a public equity offering.
See "-Overview - Recent Events - Issuances of Securities."

RELATED PARTY TRANSACTIONS

     On February 1, 1999, IXATA.COM and Tel.n.Form, Inc. ("Tel.n.Form") entered
into a management and support agreement whereby Tel.n.Form agreed to provide
selected consulting services to support IXATA.COM's business development through
December 31, 1999. The agreement also provided that IXATA.COM would reimburse
Tel.n.Form for use of certain shared expenses such as office space and computer
facilities. After completion of the acquisition of IXATA.COM by the Company on
July 1, 1999, the Company continued the Tel.n.Form agreement to minimize any
potential disruption of IXATA.COM's operations and support the transition to the
Company. For support services provided by Tel.n.Form, the Company incurs total
costs of approximately $23,840 per month. The Company believes costs incurred
under the agreement are reasonable and no more than it would incur under an
agreement with an unaffiliated third party. The support services agreement
expired on December 31, 1999 and to minimize any disruption of operations, the
Company continued selected support services, such as office space and shared
computer facilities, as needed, on a month-by-month basis consistent with the
agreement. Since the Company has added additional IXATA.COM management
personnel, expanded the IXATA.COM staff and has now fully incorporated IXATA.COM
into the Company, it no longer requires the services provided by Tel.n.Form. The
Company has notified Tel.n.Form that the agreement will be terminated in its
entirety as of March 31, 2000.


--------------------------------------------------------------------------------
                                    Page 22
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

     The majority owner of Tel.n.Form is the Gluckman Family Trust, which is a
significant shareholder of the Company. Fred Gluckman, who currently serves as
Executive Vice President - Technology and Automation of IXATA.COM, and as a
Director of the Company, is the Chairman of the Board of Tel.n.Form. Mr.
Gluckman also serves as a trustee of the Gluckman Family Trust. Vera Ellen
Andreoli is the Trustee of the Andreoli Family Trust, which is a significant
shareholder of the Company. Mrs. Andreoli also provides consulting services to
Tel.n.Form, and Mrs. Andreoli's husband is a significant owner of Tel.n.Form and
a Tel.n.Form employee and provided selected consulting services to IXATA.COM
under the management services agreement.

     In October 1999, the Company appointed Robert Steiner President of the
Company's IXATA.COM subsidiary. Mr. Steiner, one of the co-founders of
IXATA.COM, provides services to IXATA.COM under a consulting contract entered
into prior to the Company purchasing the subsidiary. The Company is currently
negotiating an employment contract with Mr. Steiner. The consulting contract is
a renewable, one-year contract in an amount of $9,000 per month to be paid to
Mr. Steiner. The Company expects to finalize the employment agreement in March
of 2000.

     Fred Gluckman currently serves as Executive Vice President - Technology and
Automation of IXATA.COM. Mr. Gluckman, one of the co-founders of IXATA.COM,
provides services to IXATA.COM under a consulting contract entered into prior to
the Company purchasing the subsidiary. The Company is currently negotiating an
employment contract with Mr. Gluckman. The consulting contract is a renewable,
one-year contract in an amount of $10,000 per month to be paid to Mr. Gluckman.
The Company expects to finalize the employment agreement in March of 2000.

     Mr. Wasserman, the Company's Secretary, is also a partner in Kohrman
Jackson & Krantz P.L.L., which provides legal services to the Company.

FORWARD-LOOKING STATEMENTS

     Statements that are not historical facts, including statements about the
Company's confidence in its prospects and strategies and its expectations about
expansion into new markets, growth in existing markets, and the Company's
ability to attract new sources of financing, are forward-looking statements that
involve risks and uncertainties. These risks and uncertainties include, but are
not limited to:

-    THE COMPANY HAS A SHORT OPERATING HISTORY UPON WHICH TO BASE AN INVESTMENT
     DECISION. The Company established a new strategic objective of refocusing
     the Company's mission to pursue Internet-related and e-commerce
     opportunities in the travel and hospitality service markets in late 1998.
     As a result, its business plan is currently in the early stage and,
     accordingly, the Company has a limited operating history on which to base
     an evaluation of its business and prospects. The Company's prospects must
     be considered in light of the risks, expenses and difficulties frequently
     encountered by companies in their early stage of development. To address
     these risks, the Company must, among other things, attract a number of
     major corporate clients/customers and strategic alliance partners,
     implement and successfully execute its marketing and sales strategy, and
     successfully recruit and motivate qualified sales and technical personnel.
     There can be no assurance that the Company will be successful in addressing
     such risks, and the failure to do so could have a material adverse effect
     on the Company. The likelihood of success of the Company must be considered
     in light of the problems, expenses, complications and delays frequently
     encountered in connection with the development of an early stage business.
     It is impossible to predict the degree of success the Company will have in
     achieving its objectives.

-    THE COMPANY REQUIRES SIGNIFICANT ADDITIONAL CAPITAL, WHICH IT MAY NOT BE
     ABLE TO OBTAIN. As the Company continues to implement its business plan,
     present sources of financing will not be adequate to support the Company's
     increased cash needs. Furthermore, the Company's entry into new Internet
     and electronic commerce business areas will create additional demands for
     investment capital. The Company may not be able to obtain future equity or
     debt financing on satisfactory terms or at all. If the Company fails to
     obtain necessary short-term financing, it will not be able to continue
     operations. Long-term liquidity will depend on the Company's ability to
     obtain long-term financing and attain profitable operations. The Company's
     auditors issued an opinion


--------------------------------------------------------------------------------
                                    Page 23
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

     with its most recent audit of the Company's financial statements raising
     doubt about the Company's ability to continue as a going concern if it does
     not obtain additional debt or equity financing.

-    IF THE COMPANY IS UNABLE TO SUCCESSFULLY INTEGRATE IXATA.COM, ITS FINANCIAL
     RESULTS WILL SUFFER. The Company completed its acquisition of IXATA.COM on
     July 1, 1999. Its future profitability will depend heavily on its ability
     to integrate IXATA.COM. Failure to successfully integrate the companies may
     cause significant operating inefficiencies and adversely affect
     profitability. To successfully integrate the companies, the Company must,
     among other things, install and standardize adequate operational, financial
     and control systems.

     Although the Company has no definitive plans to acquire any business in the
     near future, if it does acquire additional companies, it will face business
     integration risks similar to those described above. In addition, during the
     beginning stage of development and operation, the Company may encounter
     expenses and difficulties that it may not expect or are beyond its control.
     As a result, it may not be able to achieve or maintain profitability.

-    THE COMPANY'S FAILURE TO PROTECT OR MAINTAIN ITS INTELLECTUAL PROPERTY
     RIGHTS COULD PLACE IT AT A COMPETITIVE DISADVANTAGE AND RESULT IN LOSS OF
     REVENUE AND HIGHER EXPENSES. The Company's performance and ability to
     compete are dependent to a significant degree on its proprietary electronic
     commerce system and services. The steps the Company has taken to protect
     its proprietary intellectual property rights may not prevent or deter
     someone else from using or claiming rights to its intellectual property.
     Third party infringement or misappropriation of trade secrets, copyrights,
     trademarks or other proprietary information could seriously harm the
     Company's business. The Company also cannot assure that it will be able to
     prevent the unauthorized disclosure or use of its proprietary knowledge,
     practices and procedures if its senior managers or other key personnel
     leave it. In addition, although the Company believes that its proprietary
     rights do not infringe on the intellectual property rights of others, other
     parties may claim that it has violated their intellectual property rights.
     These claims, even if not true, could result in significant legal and other
     costs and may distract management.

-    THE COMPANY'S BUSINESS PROSPECTS DEPEND ON DEMAND FOR AND MARKET ACCEPTANCE
     OF THE INTERNET. The Company is currently dependent on the Internet as an
     access and transmission medium to provide its services. Although the
     Company believes that the acceptability and usability of the Internet will
     increase over time, any increase in the rates charged by Internet service
     providers resulting in a decreased usage of the Internet or decreased use
     of the Internet for electronic commerce transactions, would have a
     materially adverse effect on the Company's operating margins. Failure to
     promote Internet access as the preferred means of accessing the Company's
     service could also have a materially adverse effect on the Company,
     including the possibility that the Company may need to significantly
     curtail or cease its Internet based e-commerce operations or to develop its
     own capabilities at a cost in excess of the Company's ability to fund such
     undertakings.

-    IF THE COMPANY'S MARKET DOES NOT GROW AS EXPECTED, ITS REVENUES WILL BE
     BELOW ITS EXPECTATIONS AND ITS BUSINESS AND FINANCIAL RESULTS WILL SUFFER.
     The Company is engaging in a developing business with an unproven market.
     Accordingly, it cannot accurately estimate the size of its market or the
     potential demand for its services. If its customer base does not expand or
     if there is not widespread acceptance of its products and services, its
     business and prospects will be harmed. The Company believes that its
     potential to grow and increase its market acceptance depends principally on
     the following factors, some of which are beyond its control:

          (a) the effectiveness of its marketing strategy and efforts;
          (b) its product and service quality;
          (c) its ability to provide timely, effective customer support;
          (d) its distribution and pricing strategies as compared to its
              competitors;
          (e) its industry reputation; and
          (f) general economic conditions.

-    ANY FAILURE OF THE COMPANY'S INTERNET AND E-COMMERCE INFRASTRUCTURE COULD
     LEAD TO SIGNIFICANT COSTS AND DISRUPTIONS WHICH COULD REDUCE REVENUES AND
     HARM BUSINESS AND FINANCIAL RESULTS. The Company's success,


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                                    Page 24
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

     in particular its ability to automate the RFP process successfully, largely
     depends on the efficient and uninterrupted operation of its computer and
     communications hardware and software systems. The Company's systems and
     operations are vulnerable to damage or interruption from fire, flood, power
     loss, telecommunications failure, break-ins, earthquake and similar events.
     The Company presently has very limited redundant systems. It does not have
     a formal disaster recovery plan and carries no business interruption
     insurance to compensate it for losses that may occur. Temporary or
     permanent loss of data or systems through casualty or operating malfunction
     could have a materially adverse effect on the Company's business.

-    THE COMPANY COULD LOSE CUSTOMERS AND EXPOSE ITSELF TO LIABILITY IF BREACHES
     OF ITS NETWORK SECURITY DISRUPT SERVICE TO ITS CUSTOMERS OR JEOPARDIZE THE
     SECURITY OF CONFIDENTIAL INFORMATION STORED IN ITS COMPUTER SYSTEMS.
     Despite the implementation of network security measures, the Company's
     network infrastructure is vulnerable to computer viruses, break-ins and
     similar disruptive problems caused by its customers or Internet users. Any
     of these acts could lead to interruptions, delays or cessation in service
     to the Company's customers and subscribers. Furthermore, such inappropriate
     use of the network by third parties could also potentially jeopardize the
     security of confidential information stored in the computer systems and the
     Company's customers' computer systems, which may result in liability to
     existing customers and may also deter potential customers. Any security
     measures the Company implements may be circumvented in the future. The
     costs and resources required to eliminate computer viruses and alleviate
     other security problems may result in interruptions or delays to the
     Company's customers that could cause harm to the Company's reputation as
     well as its business and financial results.

-    RAPID GROWTH IN THE COMPANY'S BUSINESS COULD STRAIN ITS RESOURCES AND HARM
     ITS BUSINESS AND FINANCIAL RESULTS. The planned expansion of the Company's
     operations will place a significant strain on its management, financial
     controls, operations systems, personnel and other resources. The Company
     expects that its customers increasingly will demand additional information,
     reports and services related to the services and products the Company
     currently provides. If the Company is successful in implementing its
     marketing strategy, it also expects the demands on its network
     infrastructure and technical support resources to grow rapidly, and it may
     experience difficulties responding to customer demand for its services and
     providing technical support in accordance with its customers' expectations.
     The Company may not be able to keep pace with any growth, successfully
     implement and maintain its operational and financial systems or
     successfully obtain, integrate and utilize the employees, facilities,
     third-party vendors and equipment, or management, operational and financial
     resources necessary to manage a developing and expanding business in an
     evolving industry. If the Company is unable to manage growth effectively,
     it may lose customers or fail to attract new customers and its business and
     financial results will suffer.

-    THE COMPANY MAY NOT BE ABLE TO COMPETE IN ITS MARKET SINCE THIS MARKET IS
     HIGHLY COMPETITIVE. The Internet-based electronic commerce market has
     become increasingly competitive due to the entry of large, well-financed
     service providers into the market. Other potential competitors in the
     market for Internet-based electronic commerce services for the travel and
     hospitality industry may include companies with substantially greater
     financial and marketing resources than those of the Company. No assurance
     can be given that competitors possessing greater financial resources than
     the Company will not be able to develop a product which is more appealing
     or offer similar products at lower prices than those of the Company. The
     Company may not be able to operate successfully in this competitive
     environment. Direct competitors today include JBH and Lanyon, among others
     seeking to enter the market for e-commerce services targeting the travel
     and hospitality sectors. Other potential competitors, such as Ariba, Inc.,
     have existing, well-established e-commerce platforms and have also
     indicated an interest in pursuing IXATA.COM's target market. While to date
     the market reaction to the Company's service has been positive vis-a-vis
     competitive services, there is no assurance this will continue in the
     future.

-    THE COMPANY DEPENDS ON THE SERVICES OF SENIOR MANAGEMENT AND OTHER KEY
     PERSONNEL AND THE ABILITY TO HIRE, TRAIN AND RETAIN SKILLED EMPLOYEES. The
     success of the Company will be dependent on the skill and experience of
     certain key employees. The Company believes that the loss of Paul B.
     Silverman, CEO, or Andrew H. Kent, CFO, Robert Steiner, President and
     Vice-President - Marketing of IXATA.COM, or Fred Gluckman Vice-President
     -Technology of IXATA.COM, could disrupt or delay the Company's business or
     would otherwise


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                                    Page 25
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

     have a material adverse effect on the Company's business. The Company's
     future success also depends on its ability to identify, attract, hire,
     retain and motivate other well qualified managerial, sales and marketing
     personnel. There can be no assurance that these professionals will be
     available in the market or that the Company will be able to meet their
     compensation requirements.

-    RISKS ASSOCIATED WITH OPERATING IN INTERNATIONAL MARKETS COULD RESTRICT THE
     COMPANY'S ABILITY TO EXPAND GLOBALLY AND HARM ITS BUSINESS AND PROSPECTS.
     The Company markets and sells its services and products in the United
     States and internationally. The Company's failure to manage its
     international operations effectively could limit the future growth of its
     business. There are certain risks inherent in conducting the Company's
     business internationally, such as:

         (a)  changes in international regulatory requirements could restrict
              the Company's ability to deliver services to its international
              customers;
         (b)  differing technology standards across countries that may impede
              the Company's ability to integrate its product offerings across
              international borders;
         (c)  difficulties collecting accounts receivable in foreign
              jurisdictions;
         (d)  political and economic instability could lead to appropriation of
              the Company's physical assets, its ability to deliver its services
              to customers and harm its financial results;
         (e)  protectionist laws and business practices favoring local
              competitors; and
         (f)  potentially adverse tax consequences due to unfavorable changes
              in tax laws.

-    GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD LIMIT THE COMPANY'S
     BUSINESS OR SLOW ITS GROWTH. Although Internet-based electronic commerce is
     not currently subject to government regulation, it is under increased
     scrutiny by regulatory agencies and may undergo rapid and drastic
     regulatory changes. There can be no assurances that one or more services
     currently offered by the Company will not be negatively impacted by
     newly-created or interpreted regulations.

-    THE COMPANY'S OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS WHICH MAY
     CAUSE VOLATILITY OR A DECLINE IN THE PRICE OF ITS COMMON STOCK. The Company
     may experience significant fluctuations in its future quarterly operating
     results due to a variety of factors, many of which are outside the
     Company's control. Such fluctuations may cause the price of its common
     stock to fall. Factors that may adversely affect the Company's quarterly
     operating results include, without limitation:

         (a) the Company's ability to retain existing customers, attract new
             customers at a steady rate and maintain customer satisfaction;
         (b) the mix of products and services sold by the Company;
         (c) the announcement or introduction of new products and services by
             the Company and its competitors;
         (d) price competition in the industry;
         (e) the amount and timing of operating costs and capital expenditures
             relating to any expansion of the Company's business, operations and
             infrastructure;
         (f) governmental regulation; and
         (g) general economic conditions and economic conditions specific to the
             travel and hospitality industry.

     Further, stock prices and trading volumes for many Internet companies
     fluctuate widely for a number of reasons, including some reasons which may
     be unrelated to their businesses or results of operations. This market
     volatility, as well as general domestic or international economic, market
     and political conditions, could materially adversely affect the price of
     the Company's stock without regard to the Company's operating performance.
     In addition, the Company's operating results may be below the expectations
     of public market analysts and investors. If this were to occur, the market
     price of the stock would likely significantly decrease.

-    THE COMPANY'S EXECUTIVE OFFICERS, DIRECTORS, AND PARTIES RELATED TO THEM,
     IN THE AGGREGATE, CONTROL 53% OF THE COMPANY'S COMMON STOCK AND MAY HAVE
     THE ABILITY TO CONTROL MATTERS REQUIRING STOCKHOLDER APPROVAL. The
     Company's executive officers, directors and parties related to them own a
     large enough stake in the Company to determine matters presented to
     stockholders, the approval of significant corporate transactions, such as
     any


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                                    Page 26
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

     merger, consolidation or sale of all or substantially all of the Company's
     assets, and the control of the management and affairs of the Company. In
     addition, certain executive officers, directors and other shareholders,
     representing 65% of the Company's outstanding common stock, have entered
     into a Voting Agreement in which the parties agree to vote their shares for
     certain directors. As a result, these stockholders may have the ability to
     control the election and removal of directors. Accordingly, such
     concentration of ownership may have the effect of delaying, deferring or
     preventing a change in control of the Company, impede a merger,
     consolidation, takeover or other business combination involving the Company
     or discourage a potential acquirer from making a tender offer or otherwise
     attempting to obtain control of the Company, which in turn could have an
     adverse effect on the market price of the Company's common stock.

-    THE COMPANY'S COMMON STOCK MAY BE DELISTED FROM THE NASDAQ OVER-THE-COUNTER
     BULLETIN BOARD SERVICE. Because of recent changes in the Nasdaq listing
     rules, the Company's common stock could be delisted from trading on the
     Nasdaq Over-the-Counter Bulletin Board Service, unless the Company makes
     required filings with the Securities and Exchange Commission by April 5,
     2000. If the Company's stock were to be delisted, there would be no public
     market for the Common Stock and stockholders would have difficulty
     liquidating their investment. On March 10, 2000, Nasdaq appended an "E" to
     the Company's trading symbol, indicating it is not in compliance with its
     filing requirements. Although the Company believes that the filing of this
     Quarterly Report with the Securities and Exchange Commission brings the
     Company into compliance, allowing it to retain its stock listing on the
     Nasdaq Bulletin Board, there can be no assurance that it will be able to do
     so.

These and other risks described in this Quarterly Report must be considered by
any investor or potential investor in the Company.


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                                    Page 27
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                          PART II -- OTHER INFORMATIOn

ITEM 1.  LEGAL PROCEEDINGS.

     From time to time, the Company is involved in legal matters which are
incidental to its operations. In the opinion of management, the ultimate
resolution of these matters has not had a material adverse effect on the
Company's financial condition or results of operations.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

     On July 1, 1999, the Company issued 4,500,000 unregistered shares of common
stock in exchange for all of the stock outstanding of IXATA.COM. The Company
believes the issuance to be exempt under Section 4(2) of the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

     No defaults upon senior securities occurred during the third quarter of
1999.

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

     No matters were submitted to a vote of the Company's security holders
during the third quarter of 1999.

ITEM 5.  OTHER INFORMATION.

     None.

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

     (a) Exhibits being filed with this Quarterly Report:

        27        Financial Data Schedule

     (b) The Company filed a Report on Form 8-K dated July 1, 1999 on July
         19, 2000, relating to the Company's acquisition of IXATA, Inc.


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                                    Page 28
<PAGE>

                             THE IXATA GROUP, INC.
                         Quarterly Report on Form 10-QSB
                    For the Quarter Ended September 30, 1999
--------------------------------------------------------------------------------

                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the Company caused
this Quarterly Report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                              The IXATA Group, Inc.

Date: March 14, 2000           /s/ Paul B. Silverman
                               ---------------------
                               By Paul B. Silverman, Chief Executive Officer


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