EXHIBIT 13.3

FINANCIAL STATEMENTS

Catalyst International, Inc.
Consolidated Financial Statements
Years ended December 31, 1999, 1998, and 1997


Contents


* Report of Ernst & Young LLP, Independent Auditors
* Consolidated Financial Statements
* Consolidated Statements of Operations
* Consolidated Balance Sheets
* Consolidated Statements of Shareholders' Equity
* Consolidated Statements of Cash Flows
* Notes to Consolidated Financial Statements


REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Catalyst International, Inc.

We have audited the accompanying consolidated balance sheets of
Catalyst International, Inc. (the Company) as of December 31,
1999 and 1998, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1999.  These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of the Company at December 31, 1999 and 1998, and the
results of its operations and its cash flows for each of the
three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United
States.

/s/ Ernst & Young LLP

Milwaukee, Wisconsin
January 28, 2000

                    1999 Annual Report - Page 22

<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

Years ended December 31,                   1999           1998         1997
-----------------------------------------------------------------------------
<S>                                 <C>            <C>          <C>
Revenues:
  Software license fees             $ 7,575,529    $ 8,740,730  $ 7,006,776
  Services and post-contract
    customer support                 25,598,635     21,890,275    14,637,35
  Hardware                            7,385,996      3,281,596      880,994
-----------------------------------------------------------------------------
    Total revenues                   40,560,160     33,912,601   22,525,128

Operating expenses:
  Cost of software license fees         606,429        524,754      523,894
  Cost of services and post-
    contract customer support        14,921,412     14,583,554   13,744,466
  Cost of hardware                    6,259,894      2,758,838      765,755
  Product development                 7,637,636      3,412,217    2,731,489
  Sales and marketing                 7,158,726      5,493,319    5,291,116
  General and administrative          6,574,804      4,177,175    3,975,087
  Restructuring and other
    charges (Note 10)                 3,587,665              -            -
-----------------------------------------------------------------------------
    Total operating expenses         46,746,566     30,949,857   27,031,807
-----------------------------------------------------------------------------
Income (loss) from operations        (6,186,406)     2,962,744   (4,506,679)

Other income (expense):
  Interest expense                      (63,057)       (54,313)     (26,219)
  Investment income                     685,692        266,297      309,007
  Miscellaneous, net                    (49,560)         5,271       24,597
-----------------------------------------------------------------------------
Total other income, net                 573,075       217,255     4 307,385

Income (loss) before provision
  for income taxes                   (5,613,331)    3,179,999    (4,199,294)
Provision for income taxes (Note 8)           -       100,000             -
-----------------------------------------------------------------------------
Net income (loss)                  $ (5,613,331)  $ 3,079,999  $ (4,199,294)
-----------------------------------------------------------------------------
Earnings (loss) per share (Note 1):
  Basic                            $      (0.77)  $      0.45  $      (0.63)
  Diluted                                 (0.77)         0.42         (0.63)
-----------------------------------------------------------------------------

</TABLE>

See accompanying notes.

                    1999 Annual Report - Page 23

<PAGE>

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

December 31,                                           1999           1998
-----------------------------------------------------------------------------
<S>                                             <C>            <C>
ASSETS
Current assets:
 Cash and cash equivalents                      $21,169,179    $ 8,555,205
 Accounts receivable, net of allowance
  for doubtful accounts of $1,256,137
  in 1999 and $533,615 in 1998                   10,106,808      9,738,934
 Prepaid expenses                                   778,016        502,656
-----------------------------------------------------------------------------
    Total current assets                         32,054,003     18,796,795

Equipment and leasehold improvements:
 Computer hardware and software                   6,246,910      5,420,970
 Office equipment                                 2,208,819      2,330,061
 Leasehold improvements                             852,767        871,541
-----------------------------------------------------------------------------
                                                  9,308,496      8,622,572
 Less accumulated depreciation and amortization   5,799,367      4,532,967
-----------------------------------------------------------------------------
    Total equipment and leasehold improvements    3,509,129      4,089,605

Purchased software and capitalized
 software development costs                               -      1,024,980
Intangible assets, net of accumulated
 amortization of $53,855 in 1998                          -        559,145
Goodwill, net of accumulated
 amortization of $43,567 in 1998                          -      1,086,406
-----------------------------------------------------------------------------
    Total assets                                 $35,563,132   $25,556,931
-----------------------------------------------------------------------------

</TABLE>

                1999 Annual Report - Page 24

<PAGE>

<TABLE>
<CAPTION>

December 31,                                           1999           1998
-----------------------------------------------------------------------------
<S>                                             <C>            <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable                               $ 2,236,886    $ 1,743,990
 Income taxes payable                                     -        100,000
 Accrued liabilities                              2,528,806      2,235,276
 Deferred software license fees                     969,369        342,345
 Deferred services and post-contract
  customer support                                5,597,600      4,457,140
 Current portion of long-term debt (Note 4)         333,702        388,074
-----------------------------------------------------------------------------
    Total current liabilities                    11,666,363      9,266,825

Long-term debt (Note 4)                             181,225        411,531
Deferred services and post-contract
 customer support                                   168,813        190,052
Deferred rent (Note 4)                              265,621        285,153
-----------------------------------------------------------------------------
    Total noncurrent liabilities                    615,659        886,736

Commitments and contingencies (Notes 4 and 11)

Shareholders' equity (Notes 5 and 6):
 Preferred stock, $.01 par value; 2,000,000
  shares authorized; none issued or outstanding           -              -
 Common stock, $.10 par value; 25,000,000 s
  authorized; shares issued: 8,939,264 in 1999
  and 8,767,373 in 1998                             893,926        876,737
 Additional paid-in capital                      42,609,592     32,743,264
 Accumulated deficit                            (15,458,834)    (9,845,503)
 Treasury stock, at cost-1,063,263 shares of
  common stock in 1999 and 1,822,748 shares
  of common stock in 1998                        (4,763,574)    (8,371,128)
-----------------------------------------------------------------------------
    Total shareholders' equity                   23,281,110     15,403,370
-----------------------------------------------------------------------------
    Total liabilities and shareholders' equity  $35,563,132    $25,556,931
-----------------------------------------------------------------------------

</TABLE>

See accompanying notes.

                   1999 Annual Report - Page 25

<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                     Additional
                                Common Stock          Paid-in    Accumulated
                              Shares      Dollars     Capital      Deficit
-----------------------------------------------------------------------------
<S>                           <C>        <C>       <C>          <C>
Balances at December 31, 1996 8,501,217  $850,122  $31,074,917  $ (8,726,208)
  Purchase of common stock
    for treasury                      -         -            -             -
  Stock options exercised       120,812    12,081        7,946             -
  Compensation expense
    on stock options                  -         -       29,216             -
  Net loss                            -         -            -    (4,199,294)
-----------------------------------------------------------------------------
Balances at December 31, 1997 8,622,029   862,203   31,112,079   (12,925,502)
  Purchase of
    Kearney Systems, Inc.             -         -    1,285,588             -
  Stock options exercised       145,344    14,534      320,259             -
  Compensation expense
    on stock options                  -         -       25,338             -
  Net income                          -         -            -     3,079,999
-----------------------------------------------------------------------------
Balances at December 31, 1998 8,767,373   876,737   32,743,264    (9,845,503)
  Sale of common stock
    (Note 5)                          -         -    8,770,815             -
  Stock options exercised       171,891    17,189      754,089             -
  Compensation expense
    on stock options                  -         -      341,424             -
  Net loss                            -         -            -    (5,613,331)
-----------------------------------------------------------------------------
Balances at December 31, 1999 8,939,264  $893,926  $42,609,592  $(15,458,834)
-----------------------------------------------------------------------------

</TABLE>

See accompanying notes.

                    1999 Annual Report - Page 26

<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (continued)

<TABLE>
<CAPTION>

                                                   Common
                                                 Stock to be
                                   Treasury       Redeemed
                                     Stock      for Treasury        Total
-----------------------------------------------------------------------------
<S>                              <C>             <C>             <C>
Balances at December 31, 1996    $(7,978,885)    $(1,073,239)    $14,146,707
  Purchase of common stock
    for treasury                  (1,073,239)      1,073,239               -
  Stock options exercised                  -               -          20,027
  Compensation expense
    on stock options                       -               -          29,216
  Net loss                                 -               -      (4,199,294)
-----------------------------------------------------------------------------
Balances at December 31, 1997     (9,052,124)              -       9,996,656
  Purchase of
    Kearney Systems, Inc.             680,996              -       1,966,584
  Stock options exercised                   -              -         334,793
  Compensation expense
    on stock options                        -              -          25,338
  Net income                                -              -       3,079,999
-----------------------------------------------------------------------------
Balances at December 31, 1998      (8,371,128)             -      15,403,370
  Sale of common stock
    (Note 5)                        3,607,554              -      12,378,369
  Stock options exercised                   -              -         771,278
  Compensation expense
    on stock options                        -              -         341,424
  Net loss                                  -              -      (5,613,331)
-----------------------------------------------------------------------------
Balances at December 31, 1999     $(4,763,574)   $         -     $23,281,110
-----------------------------------------------------------------------------

</TABLE>

See accompanying notes.

                1999 Annual Report - Page 26 (continued)

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

Years ended December 31,                    1999          1998          1997
-----------------------------------------------------------------------------
<S>                                 <C>            <C>          <C>
OPERATING ACTIVITIES
Net income (loss)                   $ (5,613,331)  $ 3,079,999  $ (4,199,294)
Adjustments to reconcile net
  income (loss) to net cash
  provided by (used in)
  operating activities:
  Depreciation and amortization        1,660,703     1,351,947     1,161,845
  Compensation expense on
    stock options                        341,424        25,338        29,216
  Loss on disposal of equipment and
    leasehold improvements                87,436             -        27,175
  Provision for restructuring and
    other charges                      3,587,665             -             -
  Changes in operating assets and
    liabilities, net of acquisition:
    Accounts receivable                 (392,491)   (1,552,134)   (2,129,338)
    Prepaid expenses                    (284,000)       85,149      (170,991)
    Accounts payable                     492,896      (395,422)      877,156
    Income taxes                        (100,000)      100,000       212,642
    Accrued liabilities                 (197,014)      119,692      (351,920)
    Deferred software license fees       627,024       690,770      (360,878)
    Deferred services and post-
      contract customer support        1,119,221     1,558,319     1,745,543
    Deferred rent                        (19,532)      (19,532)      (19,532)
-----------------------------------------------------------------------------
Total adjustments                      6,923,332     1,964,127     1,020,918
-----------------------------------------------------------------------------
Net cash provided by (used in)
  operating activities                 1,310,001     5,044,126    (3,178,376)

INVESTING ACTIVITIES
Capital expenditures                    (837,446)     (504,951)     (769,886)
Capitalized software development costs  (566,119)     (301,980)            -
-----------------------------------------------------------------------------
Net cash used in investing activities (1,403,565)     (806,931)     (769,886)

FINANCING ACTIVITIES
Payments on long-term debt              (442,109)     (273,027)      (63,733)
Proceeds from exercise of stock options  771,278       334,793        20,027
Proceeds from sale of common stock    12,378,369             -             -
Purchase of common stock for treasury          -             -    (1,073,239)
-----------------------------------------------------------------------------
Net cash provided by (used in)
  financing activities                12,707,538        61,766    (1,116,945)
-----------------------------------------------------------------------------
Net increase (decrease) in cash
  and cash equivalents                12,613,974     4,298,961    (5,065,207)
Cash and cash equivalents at
  beginning of year                    8,555,205     4,256,244     9,321,451
-----------------------------------------------------------------------------
Cash and cash equivalents at
  end of year                        $21,169,179   $ 8,555,205   $ 4,256,244

Supplemental disclosure:
Cash paid for interest               $    63,057   $    54,313   $    33,062
Cash paid (received) for income taxes     74,950             -      (286,697)
-----------------------------------------------------------------------------

</TABLE>

Noncash investing and financing activities:
During 1999 and 1998, the Company acquired $157,431 and
$388,017, respectively, of computer hardware under capital
leases.

During 1998, the Company issued 143,342 shares of the Company's
common stock previously held in treasury with a fair value of
$1,966,584 for the acquisition of Kearney Systems, Inc.

See accompanying notes.

                 1999 Annual Report - Page 27

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1999

1. SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The accompanying consolidated financial statements include the
accounts of Catalyst International, Inc. (the Company) and its
subsidiaries.  All significant intercompany accounts and
transactions have been eliminated in consolidation.

BUSINESS AND CONCENTRATION OF CREDIT RISK

The Company develops, markets, and supports advanced warehouse
management software solutions.  The Company also provides
related services, including software modification and
configuration, project management, rapid prototyping, training,
and implementation support for customers throughout the
United States and certain foreign countries.  The Company
performs periodic credit evaluations of its customers' financial
condition and does not require collateral.

USE OF ESTIMATES

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the accompanying financial statements and notes.  Actual
results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.  Cash equivalents consist principally of
investments in corporate debt securities and commercial paper.
The cost of these securities, which are considered as "available
for sale" for financial reporting purposes, approximates fair
value at both December 31, 1999 and 1998.  There were no
realized gains or losses during any of the three years in the
period ended December 31, 1999.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements are recorded at cost and
are depreciated on the straight-line basis over their estimated
useful lives as follows: computer hardware and software-5 years;
office equipment-7 years; and leasehold improvements-10 years.

CAPITALIZED SOFTWARE DEVELOPMENT COSTS

As required by generally accepted accounting principles, the
Company capitalizes costs incurred to develop new software
products upon determination that technological feasibility has
been established for the product, whereas costs incurred prior
to the establishment of technological feasibility are charged to
expense.  When the software product is available for general
release to customers, capitalization ceases and such costs are
amortized on a product-by-product basis based on current and
anticipated future revenue.  Development of the Company's UNIX
product focuses on enhancing the features and functionality of
the existing core software and a working model of the
enhancement does not exist until the product is ready for
general release.  Therefore, the Company has not capitalized any
software development costs related to its UNIX-based product.
Capitalized software development costs related to the Company's
NT-based product were $566,119 and $301,980 in 1999 and 1998,
respectively.  The NT-based product was discontinued in 1999 and
all amounts previously capitalized were written off (see Note
10).

                   1999 Annual Report - Page 28

<PAGE>

REVENUE RECOGNITION

The Company derives revenue from software license fees, services
and post-contract customer support (PCS), and the sale of
implementation-related hardware.  PCS includes telephone
support, bug fixes, and rights to upgrades on a when-and-if-
available basis.  Services range from installation, training,
and basic consulting to software modification and customization
to meet specific customer needs.  In software arrangements that
include rights to multiple software products, specified
upgrades, PCS, and/or other services, the Company allocates the
total arrangement fee to each deliverable based on the relative
fair value of each of the deliverables determined based on
vendor-specific objective evidence.

SOFTWARE LICENSE FEES

For software license fees with insignificant modifications, the
Company recognizes that portion of the revenue allocable to
software licenses and specified upgrades upon delivery of the
software product or upgrade to the end user, provided that the
fee is considered collectable.  For software licenses with
significant modifications, the Company recognizes the revenue
allocable to the software licenses on a percentage of completion
method with progress to completion measured based upon labor
time expended.

POST-CONTRACT CUSTOMER SUPPORT (PCS)

Revenue allocable to PCS is recognized on a straight-line basis
over the period the PCS is provided.

SERVICES

Arrangements that include software services are evaluated to
determine whether those services are for modification of the
software product or for the normal implementation of the WMS
system.  When software services are considered part of the
normal implementation process, revenue is recognized monthly, as
these services are invoiced.  When software services are for an
individual modification of the software itself, an evaluation is
made to determine if the modification will take more than 50
person-days of work.  If the work will exceed 50 days of effort,
revenue is recognized using contract accounting.  When the work
is estimated to be fewer than 50 days, the revenue allocable to
the software services is recognized as the services are
invoiced.

HARDWARE

Revenue on hardware is recognized when the hardware is shipped
by the hardware vendor.

CONTRACT ACCOUNTING

For arrangements that include significant customization or
modification of the software, revenue is recognized using
contract accounting.  Revenue from these software arrangements
is recognized on a percentage-of-completion basis with progress-
to-completion measured based upon labor time expended.  The
Company reserves for project cost overruns when such overruns
are identified.  Included in accrued liabilities are reserves
for project cost overruns of $610,000 and $700,000 at December
31, 1999 and 1998, respectively.

ADVERTISING

Advertising costs are expensed as incurred and amounted to
approximately $739,000, $363,000, and $267,000 in 1999, 1998,
and 1997, respectively.

INCOME TAXES

Deferred income taxes are provided for temporary differences
between the financial reporting and income tax basis of assets
and liabilities and are measured using currently enacted tax
rates and laws.

                 1999 Annual Report - Page 29

<PAGE>

EARNINGS (LOSS) PER SHARE

The numerator for the calculation of basic and diluted earnings
per share is net income (loss) in each year.  The following
table sets forth the computation of basic and diluted weighted
average shares used in the per share calculations:

<TABLE>

                                                   1999       1998      1997
-----------------------------------------------------------------------------
<S>                                           <C>        <C>        <C>
Denominator for basic earnings per share -
weighted average shares outstanding           7,288,157  6,786,728  6,630,200
Effect of dilutive options and warrants               -    596,159          -
-----------------------------------------------------------------------------
Denominator for diluted earnings per share    7,288,157  7,382,887  6,630,200
-----------------------------------------------------------------------------
Options that could potentially dilute earnings
per share in the future that are not included
in the computation of diluted loss per share
as their impact is antidilutive                 653,203        N/A        N/A
-----------------------------------------------------------------------------

</TABLE>

ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which was amended by Statement No. 137.
The provisions of these standards are required to be adopted in
years beginning after June 15, 2000.  Because of the Company's
minimal use of derivatives, management does not anticipate that
the adoption of the Statement will have a significant effect on
the results of operations or on the financial position of the
Company.

2. ACQUISITIONS

In August 1998, the Company acquired all of the outstanding
common stock of Kearney Systems, Inc. (KSI), a Windows NT-based
developer of warehouse management system software.  Aggregate
consideration for the acquisition consisted of 143,342 shares of
the Company's common stock previously held in treasury.  The
acquisition was accounted for as a purchase and, accordingly,
the purchase price was allocated to assets acquired and
liabilities assumed based upon fair value at the date of
acquisition.  The results of operations of KSI have been
included in the consolidated statements of operations since the
date of acquisition. In September 1999, the Company discontinued
development of its Windows NT-based product (see Note 10).

3. BANK LINE OF CREDIT

The Company has a $5,000,000 bank line of credit.  The line of
credit, which is due on demand, requires monthly interest
payments at rates tied to the prime rate or LIBOR and is secured
by substantially all of the Company's assets. The line of credit
agreement requires the Company to maintain a ratio of debt to
tangible net worth of less than 1.50 to 1.00. No amounts were
outstanding under the line of credit at December 31, 1999 or
1998.

4. LONG-TERM DEBT AND LEASE COMMITMENTS

<TABLE>

Long-term debt consisted of the following at December 31:
                                                      1999             1998
-----------------------------------------------------------------------------
<S>                                              <C>              <C>
Capital lease obligations                        $ 514,927        $ 799,605
Less current portion                              (333,702)        (388,074)
-----------------------------------------------------------------------------
                                                 $ 181,225        $ 411,531
-----------------------------------------------------------------------------

</TABLE>

                    1999 Annual Report - Page 30

<PAGE>

The Company leases computer equipment and a telephone system
under capital leases requiring monthly payments in varying
amounts through April 2004 with effective interest rates ranging
from 7.5% to 10.5%.  At December 31, 1999, the gross amount of
office equipment recorded under capital leases and related
accumulated amortization was approximately $1,270,000 and
$572,000, respectively.

The Company also leases its corporate office space under an
operating lease which extends through January 2006.  The Company
is recognizing rent expense on a straight-line basis, which
differs from the pattern of payments required by the lease.  The
Company is required to pay real estate taxes, maintenance,
utilities, and insurance on the leased building.

At December 31, 1999, future payments under capital and
operating leases with remaining terms in excess of one year were
as follows:

<TABLE>

                                    Capital Leases        Operating Leases
-----------------------------------------------------------------------------
<S>                                    <C>                   <C>
2000                                   $ 364,554             $   618,000
2001                                     156,966                 616,000
2002                                      20,256                 613,000
2003                                      12,413                 559,000
2004                                       4,541                 504,000
Thereafter                                     -                 583,000
-----------------------------------------------------------------------------
Total minimum lease obligations          558,730             $ 3,493,000
Amounts representing interest            (43,803)
-----------------------------------------------------------------------------
Capital lease obligation               $ 514,927
-----------------------------------------------------------------------------

</TABLE>

Total rent expense, including executory costs, on all operating
leases was approximately $1,148,000, $1,150,000 and $1,310,000,
in 1999, 1998 and 1997, respectively.

5. SHAREHOLDERS' EQUITY

In September 1999, the Company sold 759,485 shares of its common
stock to SAP America, Inc. (SAP) for $12,378,369, net of
issuance costs of $532,876.  In addition, the Company and SAP AG
(the parent company of SAP) entered into a Strategic Alliance
Agreement to integrate the Company's warehouse management system
with software systems already sold by SAP, and form a support
center to help customers implement the Company's software and
SAP's Logistics Execution Solution Software.

In January 1997, the Company repurchased 225,945 shares of the
Company's stock held by its former president and chief executive
officer at $4.75 per share.

6. STOCK OPTIONS AND WARRANTS

The 1993 Stock Option Plan, as amended (Employee Plan), allows
the Company to grant up to 3,000,000 incentive stock options
and/or nonqualified stock options to employees.  Each option
entitles the holder to purchase one share of common stock at the
specified option price. The option term is ten years.  With
certain exceptions, options vest 20% on the first anniversary of
either the date of employment or the date of grant and then
ratably over the following 48 months. For all options granted to
date, the exercise price was equal to the market price (or
estimated fair value prior to the Company's IPO in November
1995) of the underlying stock on the date of grant.

The Company has a 1997 Director Stock Option Plan (Director
Plan) whereby each director was granted options to purchase
10,000 shares of common stock on the effective date of the
Director Plan and is entitled to be granted options to purchase
5,000 shares of common stock on each anniversary of the

                  1999 Annual Report - Page 31

<PAGE>

Director Plan.  The exercise price of each grant is equal to the
market price of the Company's common stock on the date of grant.
The Director Plan provides for the issuance of 250,000
nonqualified stock options to directors.  The options are
exercisable for ten years from the date of grant.

The following table summarizes information with respect to the
Company's Employee and Director Plans for the three years ended
December 31, 1999:

<TABLE>

                                                  Weighted         Number
                                    Number of   Average Option   of Options
                                     Options   Price per Share   Exercisable
-----------------------------------------------------------------------------
<S>                                 <C>            <C>             <C>
Outstanding at December 31, 1996    1,818,127      $ 5.75
Granted                               544,520        3.62
Exercised                            (120,810)       0.17
Canceled                             (561,706)       6.78
-----------------------------------------------------------------------------
Outstanding at December 31, 1997    1,680,131        3.28          309,865
Granted                               401,355        8.55
Exercised                            (145,344)       2.30
Canceled                             (131,045)       4.06
-----------------------------------------------------------------------------
Outstanding at December 31, 1998    1,805,097        4.47          770,142
Granted                               547,086       11.82
Exercised                            (171,891)       4.49
Canceled                             (126,915)       8.62
-----------------------------------------------------------------------------
Outstanding at December 31, 1999    2,053,377      $ 6.18          967,312
-----------------------------------------------------------------------------

</TABLE>

At December 31, 1999, 531,612 options were available for grant
under the Employee and Director Plans.  As of December 31, 1999,
the range of exercise prices on outstanding options is as
follows:

<TABLE>

                                                  Weighted         Number
                                     Number of     Average       of Options
                                      Options   Exercise Price   Exercisable
-----------------------------------------------------------------------------
<S>                                  <C>           <C>             <C>
Price range $0.10 to $3.50,
weighted average contractual
life of 6.89 years                   1,046,964     $ 3.00          725,838
Price range $3.88 to $8.50,
weighted average contractual
life of 8.68 years                     629,244     $ 6.82          198,922
Price range $10.00 to $13.94,
weighted average contractual
life of 9.08 years                     250,277     $13.09           41,910
Price range $14.00 to $17.88,
weighted average contractual
life of 9.44 years                     126,892     $15.62              642
-----------------------------------------------------------------------------

</TABLE>

The Company has an outstanding warrant for the purchase of
10,000 shares of its common stock at $3.50 per share, the market
price of the underlying stock as of the modification date in
1997.  The term was extended to ten years after the modification
date, and the vesting period was reset so that the warrant
vests 20% one year after the modification date and then ratably
over the following 48 months.  The Company has reserved
2,594,989 shares of common stock at December 31, 1999, to
provide for the exercise of outstanding stock options and
warrants and the granting of stock options.

                  1999 Annual Report - Page 32

<PAGE>

As permitted by Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (Statement No.
123), the Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to
Employees," in accounting for its employee stock option plan.
Had the Company accounted for its employee stock option plan
based upon the fair value at the grant date as set forth in
Statement No. 123, the Company's pro forma net income (loss) and
Pro forma income (loss) per share would have been as follows
(for purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options' vesting
period):

<TABLE>

                                           1999          1998          1997
-----------------------------------------------------------------------------
<S>                                <C>            <C>          <C>
Pro forma net income (loss)        $ (6,518,779)  $ 2,340,594  $ (4,395,991)
Pro forma income (loss) per share  $      (0.89)  $      0.32  $      (0.66)
-----------------------------------------------------------------------------

</TABLE>

The weighted average grant date fair values used in the above
pro forma disclosures were $9.99, $7.55, and $1.99 per share for
1999, 1998, and 1997 option grants, respectively.  It should be
noted that the effects of applying Statement No. 123 for
providing pro forma disclosure may not be indicative of future
amounts until the new rules are applied to all outstanding
nonvested awards.

As required by Statement No. 123, the Company has determined the
pro forma information as if the Company had accounted for stock
options granted since January 1, 1995, under the Statement No.
123 fair value method.  For grants made prior to the Company
becoming a public company, the minimum value method was used to
estimate the fair value of the options.  For grants made after
the Company's initial public offering in November 1995, the
Black-Scholes method was used. With the exception of volatility
(which is ignored in the case of the minimum value method), the
following weighted average assumptions were used for 1999, 1998,
and 1997, respectively: risk-free interest rates of 5.9%, 5.5%,
and 5.4%; dividend yields of 0%; expected common stock market
price volatility factors of 0.94, 0.87, and 0.53, and a weighted
average expected life of the options of five years.

7. RETIREMENT PLAN

The Company sponsors an employee savings and retirement plan in
which all employees over 21 years of age with one month of
service are eligible to participate. Participants can elect to
defer up to 15% of their compensation in accordance with Section
401(k) of the Internal Revenue Code.  The Company, at its
discretion, can match up to 100% of the employees'
contributions.  Company contributions to the plan were
approximately $293,000, $219,000, and $69,000 in 1999, 1998, and
1997, respectively.

8. INCOME TAXES

The provision for income taxes consisted of the following:

<TABLE>

Years ended December 31,                   1999          1998          1997
-----------------------------------------------------------------------------
<S>                                 <C>            <C>          <C>
Current:
  Federal                           $         -    $   38,000   $         -
  State                                       -        30,000             -
  Foreign                                     -        32,000             -
-----------------------------------------------------------------------------
                                              -       100,000             -
Deferred                              2,554,000      (735,000)    1,814,000
Change in valuation allowance        (2,554,000)      735,000    (1,814,000)
-----------------------------------------------------------------------------
                                    $         -    $  100,000   $         -
-----------------------------------------------------------------------------

</TABLE>

                   1999 Annual Report - Page 33

<PAGE>

The provision for income taxes differs from the statutory U.S.
federal income tax rate due to the following:

<TABLE>

Years ended December 31,                    1999          1998          1997
-----------------------------------------------------------------------------
<S>                                 <C>            <C>          <C>
Provision (benefit) at U.S.
  statutory rate                    $ (1,908,000)  $ 1,081,000  $ (1,428,000)
State income taxes, net of
  federal tax                                  -        30,000             -
State effect of change in
  deferred tax assets                   (216,000)            -      (208,000)
Foreign income taxes                           -        32,000             -
General business credits                (478,000)     (329,000)      (54,000)
Change in valuation allowance          2,554,000      (735,000)    1,814,000
Permanent differences, net                48,000        21,000      (124,000)
-----------------------------------------------------------------------------
                                    $          -   $   100,000  $          -
-----------------------------------------------------------------------------

</TABLE>

At December 31, 1999, the Company had net operating loss
carryforwards of approximately $12,273,000 and $10,240,000 for
federal and state income tax purposes, respectively, which
expire between 2008 and 2019.  Of these net operating loss
carryforwards, $4,456,000 were created by deductions from the
exercise of nonqualified stock options from 1995 through 1999.
The tax benefit realized upon the use of net operating loss
carryforwards in future years related to such deductions will be
credited directly to additional paid-in capital.  At December
31, 1999, the Company had general business credit carryforwards
of $983,000 and $384,000 for federal and state income tax
purposes, respectively, which expire from 2006 through 2019.  At
December 31, 1999, the Company had $96,000 of alternative
minimum tax (AMT) credits which do not expire.

Annual limitations on the use of these loss and credit
carryforwards due to changes in ownership are not expected to
materially impact the Company.

The tax effects of temporary differences between financial
reporting and income tax bases of assets and liabilities were as
follows:

<TABLE>

Years ended December 31, 1999 1998
-----------------------------------------------------------------------------
<S>                                                 <C>          <C>
Deferred tax assets:
  AMT and general business credits                  $ 1,463,000  $   985,000
  Net operating loss carryforwards                    4,706,000    3,051,000
  Deferred revenues and accrued project costs           387,000      404,000
  Allowance for doubtful accounts                       489,000      208,000
  Deferred rent                                         103,000      111,000
  Accrued compensation                                   68,000       72,000
  Other                                                  43,000        8,000
-----------------------------------------------------------------------------
                                                      7,259,000    4,839,000

Deferred tax liabilities:
  Depreciation                                         (302,000)    (312,000)
  Capitalized software costs                                  -     (118,000)
  Other                                                       -       (6,000)
-----------------------------------------------------------------------------
                                                       (302,000)    (436,000)
-----------------------------------------------------------------------------
Net deferred tax assets                               6,957,000    4,403,000
Valuation allowance                                  (6,957,000)  (4,403,000)
-----------------------------------------------------------------------------
                                                    $         -  $         -
-----------------------------------------------------------------------------

</TABLE>

The valuation allowance at December 31, 1999 and 1998 was
provided because of uncertainty based on the Company's
historical operating results, with respect to realization of
deferred tax assets.

                 1999 Annual Report - Page 34

<PAGE>

9. SEGMENT DISCLOSURE AND MAJOR CUSTOMERS

The Company operates in one industry segment.  Sales to one
customer in the year ended December 31, 1999, totaled 10% of
revenues.  There were no sales to individual customers that
exceeded 10% of revenues in the years ended December 31, 1998 or
1997.

International revenues accounted for 19% of total revenues in
1999, 1998, and 1997.  Revenues by geographic area for the years
ended December 31, 1999, 1998, and 1997, were as follows:

<TABLE>

Years ended December 31,            1999          1998          1997
-----------------------------------------------------------------------------
<S>                          <C>           <C>           <C>
United States                $32,988,868   $27,376,159   $18,337,385
United Kingdom                 2,580,679     2,252,045     3,093,201
Canada                         1,276,174     2,041,276             *
Holland                        1,834,100     1,024,019             *
Countries which did not
  exceed $1 million            1,880,339     1,219,102     1,094,542
-----------------------------------------------------------------------------
                             $40,560,160   $33,912,601   $22,525,128
-----------------------------------------------------------------------------
*Revenues did not exceed $1 million.

10. RESTRUCTURING AND OTHER CHARGES

During the third quarter of 1999, the Company initiated a
restructuring plan to discontinue development of its Windows NT-
based product and close its Orlando, Florida office.  The
restructuring plan was put in place due to the Strategic
Alliance Agreement with SAP AG (see Note 5).  Because of
the Strategic Alliance Agreement, the Company made significant
management changes and plans to further expand its marketing
efforts to increase exposure of its UNIX WMS products and
services.

Restructuring charges during the year ended December 31, 1999,
amounted to $3,587,665 and included severance payments made to
seven employees ($325,000); office and equipment lease
cancellations ($25,000); write-off of intangible assets,
including purchased software and capitalized software
development costs, assembled workforce, customer list and
goodwill ($3,190,000); and other miscellaneous expenses
($48,000).  All amounts were disbursed in the year ended
December 31, 1999.

11. CONTINGENCIES

On October 8, 1999, a former customer (the Claimant) instituted
an arbitration proceeding against the Company with the American
Arbitration Association in Milwaukee, Wisconsin.  The Claimant
is  seeking to revoke its 1998 acceptance of the Company's
software product and alleges that the Company breached its
warranty obligations.  The Claimant seeks relief in the form of
monetary damages totaling approximately $1.9 million.  The
Company believes that the allegations of the Claimant are
Without merit and intends to vigorously defend against them.
The potential outcome of this legal proceeding cannot be
determined at this time and accordingly, no estimate for
potential settlement and arbitration costs have been included in
the accompanying financial statements.

The Company guarantees borrowings under a bank line of credit in
the amount of $600,000 for an officer of the Company.

                  1999 Annual Report - Page 35

<PAGE>

</TABLE>