<PAGE>
                    U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2000

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

               FOR THE TRANSITION PERIOD FROM ________TO________

                        COMMISSION FILE NUMBER 000-25249

                                INTRAWARE, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

             DELAWARE                                      68-0389976
  (STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NUMBER)
                                    25 ORINDA WAY
                                   ORINDA, CA 94563
                     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                    (925) 253-4500
                (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

                  Yes  X            No

        As of January 5, 2001 there were 27,565,399 shares of the
registrant's Common Stock outstanding.

<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                          <C>
PART I FINANCIAL INFORMATION.................................................................................  1


ITEM 1.        FINANCIAL STATEMENTS..........................................................................  1

               BALANCE SHEETS................................................................................  1

               STATEMENTS OF OPERATIONS......................................................................  2

               STATEMENTS OF CASH FLOWS......................................................................  3

               NOTES TO UNAUDITED INTERIM FINANCIAL INFORMATION..............................................  4

ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS........ 10

               RISK FACTORS.................................................................................. 17

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.................................... 25

PART II OTHER INFORMATION.................................................................................... 25


ITEM 1.        LEGAL PROCEEDINGS............................................................................. 25

ITEM 2.        CHANGES IN SECURITIES AND USE OF PROCEEDS..................................................... 25

ITEM 3.        DEFAULTS UPON SENIOR SECURITIES............................................................... 25

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS......................................... 25

ITEM 5.        OTHER INFORMATION............................................................................. 26

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K.............................................................. 26

               SIGNATURES.................................................................................... 27
</TABLE>


<PAGE>

PART I
FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                 INTRAWARE, INC.
                                 BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                       November 30, 2000  February 29, 2000
                                                                       -----------------  -----------------
                                                                           (unaudited)       (audited)
<S>                                                                         <C>               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                $  15,123         $  16,013
   Short-term investments                                                       5,057            11,046
   Accounts receivable, net                                                    22,304            35,381
   Prepaid licenses, services, and cost of deferred revenue                    19,961            21,006
   Other current assets                                                         3,871             2,477
                                                                            ---------         ---------
      Total current assets                                                     66,316            85,923
Long-term investments                                                            --              19,826
Long-term cost of deferred revenue                                              7,699             7,500
Property and equipment, net                                                    21,800             8,411
Intangible assets, net                                                         23,857             9,050
Other assets                                                                      468               402
                                                                            ---------         ---------
                Total assets                                                $ 120,140           131,112
                                                                            =========         =========

LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
  STOCK & STOCKHOLDERS' EQUITY
Current liabilities:
   Bank borrowings                                                          $   3,261         $     500
   Accounts payable                                                            21,062            43,436
   Accrued expenses                                                             3,986             4,489
   Deferred revenue                                                            26,566            23,550
   Short-term obligations                                                       2,779               384
                                                                            ---------         ---------
      Total current liabilities                                                57,654            72,359
Long-term deferred revenue                                                     11,103             7,751
Other long term obligations                                                     4,084               399
                                                                            ---------         ---------
                Total liabilities                                              72,841            80,509
                                                                            ---------         ---------
Commitments and contingencies
Mandatorily redeemable convertible preferred stock,
   10,000,000 shares authorized, $.0001 par value;
   916 and zero shares issued and outstanding at November 30,
   2000 and February 29, 2000, respectively (aggregate
   liquidiation preference of $9,640 at
   November 30, 2000)                                                           9,640                -
                                                                            ---------         ---------
Stockholders' equity:
   Common stock; $0.0001 par value; 250,000,000
   shares authorized, 27,563,393 and 25,993,450
   shares issued and outstanding at November 30, 2000 and
   February 29, 2000, respectively                                                  3                3
Additional paid-in-capital                                                    128,117           107,037
Unearned compensation                                                          (5,474)           (6,954)
Accumulated, other comprehensive gain (loss)                                        6              (136)
Accumulated deficit                                                           (84,993)          (49,347)
                                                                            ---------         ---------
   Total stockholders' equity                                                  37,659            50,603
             Total liabilities, mandatorily redeemable convertible
             preferred stock and stockholders' equity                       $ 120,140         $ 131,112
                                                                            =========         =========

</TABLE>
              See notes to unaudited interim financial information.


                                       1
<PAGE>



                                 INTRAWARE, INC.
                            STATEMENTS OF OPERATIONS
                  (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                    For the Three Months Ended November 30,   For the Nine Months Ended November 30,
                                                    ---------------------------------------   --------------------------------------
                                                            2000                1999                2000               1999
                                                         ---------           ---------           ---------           ---------
                                                        (unaudited)         (unaudited)         (unaudited)         (unaudited)

<S>                                                      <C>                 <C>                 <C>                 <C>
Revenues:
     Software product sales                              $  19,366           $  21,312           $  81,843           $  51,587
     Online services and technology                          6,815               3,658              18,403               9,182
                                                         ---------           ---------           ---------           ---------
          Total revenues                                    26,181              24,970             100,246              60,769
                                                         ---------           ---------           ---------           ---------
Cost of revenues:
     Software product sales                                 14,144              17,263              66,368              43,634
     Online services and technology                          1,373                 817               3,594               1,496
                                                         ---------           ---------           ---------           ---------
          Total cost of revenues                            15,517              18,080              69,962              45,130
                                                         ---------           ---------           ---------           ---------
               Gross profit                                 10,664               6,890              30,284              15,639
                                                         ---------           ---------           ---------           ---------
Operating expenses:
     Sales and marketing                                     8,647               8,133              30,699              20,594
     Product development                                     6,006               2,126              14,387               5,097
     General and administrative                              4,565               2,291              12,716               5,282
     Stock option compensation                                 838                 812               2,403               2,567
     Merger & acquisition related costs
          including amortization of intangibles              2,707                 953               5,877                 970
                                                         ---------           ---------           ---------           ---------
          Total operating expenses                          22,763              14,315              66,082              34,510
                                                         ---------           ---------           ---------           ---------
Loss from operations                                       (12,099)             (7,425)            (35,798)            (18,871)

Interest expense                                              (305)                (27)               (416)                (85)

Interest and other income                                      202                 767                 681               2,238
Provision for income taxes                                     (35)               --                  (113)               --
                                                         ---------           ---------           ---------           ---------
Net loss                                                   (12,237)             (6,685)            (35,646)            (16,718)
Mandatorily redeemable convertible
  preferred stock accrued dividends and
  accretion to liquidation value                            (4,894)               --                (5,287)               --
                                                         ---------           ---------           ---------           ---------
Net loss attributable to common
  stockholders                                           $ (17,131)          $  (6,685)          $ (40,933)          $ (16,718)
                                                         =========           =========           =========           =========
Basic and diluted net loss per share
  attributable to common stockholders                    $   (0.63)          $   (0.27)          $   (1.56)          $   (0.68)
                                                         =========           =========           =========           =========
Weighted average shares - basic and diluted                 27,121              24,506              26,283              24,600
                                                         =========           =========           =========           =========
</TABLE>

              See notes to unaudited interim financial information.

                                       2

<PAGE>
                                 INTRAWARE, INC.
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                 For the Nine Months Ended November 30,
                                                                 --------------------------------------
                                                                         2000             1999
                                                                       --------         --------
                                                                      (unaudited)     (unaudited)


<S>                                                                    <C>              <C>
Cash flows from operating activities:
  Net loss                                                             $(35,646)        $(16,718)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
     Depreciation and amortization                                        9,387            1,739
     Amortization of unearned compensation                                2,403            2,567
     Provision for doubtful accounts                                      1,229              205
     Changes in assets and liabilities:
        Accounts receivable                                              12,631          (17,975)
        Prepaid licenses and services                                     2,028            1,327
        Other current assets                                             (1,300)             796
        Other assets                                                        (66)             152
        Accounts payable                                                (22,547)           3,720
        Accrued expenses                                                 (1,549)           1,089
        Deferred revenue                                                  5,744            5,872
                                                                       --------         --------
Net cash used in operating activities                                   (27,686)         (17,226)
                                                                       --------         --------
Cash flows from investing activities:
     Purchase of property and equipment                                 (10,478)          (3,946)
     Cash from acquisition of Janus Technologies, Inc.                      187             --
     Purchase of investments                                             (9,786)         (38,532)
     Proceeds from sales of investments                                  35,743             --
                                                                       --------         --------
Net cash  provided by (used in)  investment
  activities                                                             15,666          (42,478)
                                                                       --------         --------
Cash flows from financing activities:
     Borrowings (payments) on bank borrowings                             1,641             (871)
     Proceeds from initial public offering                                 --             59,520
     Net proceeds from issuance of preferred stock and warrants          24,935             --
     Redemption of preferred stock                                      (15,840)            --
     Proceeds from payment of stockholder
       note receivable                                                     --                 35
     Proceeds from issuance common stock                                  2,178            6,701
     Dividends paid to preferred
       stockholders                                                        (445)            --
     Principal proceeds (payments) on capital lease
       obligations                                                       (1,339)             152
                                                                       --------         --------
Net cash provided by financing activities                                11,130           65,537
                                                                       --------         --------
Net increase (decrease) in cash and cash equivalents                       (890)           5,833
Cash and cash equivalents at beginning of period                         16,013            3,286
                                                                       --------         --------
Cash and cash equivalents at end of period                             $ 15,123         $  9,119
                                                                       ========         ========
Supplemental disclosure of cash flow information:
  Cash paid for interest                                               $    416         $     85
Supplemental non-cash activity:
  Property and equipment leases                                        $  5,834         $   --
  Prepaid maintenance leases                                           $  1,154         $   --
  Common stock issued in  conjunction  with acquisition
     of Janus Technologies, Inc.                                       $ 20,600         $   --
</TABLE>


              See notes to unaudited interim financial information.


                                       3

<PAGE>


                                 INTRAWARE, INC.
                NOTES TO UNAUDITED INTERIM FINANCIAL INFORMATION

NOTE 1.  BASIS OF PRESENTATION

INTRAWARE

         The accompanying financial statements for the three months and nine
months ended November 30, 2000 and 1999 are unaudited and reflect all normal and
recurring adjustments which are, in the opinion of the management of Intraware,
Inc., necessary for fair presentation of the balance sheets, statements of
operations, and statements of cash flows for the periods presented.

         These financial statements should be read in conjunction with our
financial statements and notes thereto included in our Annual Report on Form
10-K for the fiscal year ended February 29, 2000 and the Forms 10-Q for the
fiscal quarters ended May 31 and August 31, 2000. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted as permitted by rules and regulations of the
Securities and Exchange Commission (the "SEC"). The results of operations for
the interim period ended November 30, 2000 are not necessarily indicative of
results to be expected for the full year.

NOTE 2.  NET LOSS PER SHARE

         We compute net loss per share in accordance with Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share" and SEC Staff
Accounting Bulletin No. 98 ("SAB 98"). Basic net loss per common share is
computed by dividing the net loss for the period by the weighted average number
of common shares outstanding during the period. Diluted net loss per common
share is computed by dividing the net loss for the period by the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares, composed of common shares issuable upon the
exercise of stock options and warrants and upon conversion of convertible
preferred stock, are included in the diluted net loss per common share
calculation to the extent these shares are dilutive. A reconciliation of the
numerator and denominator used in the calculation of the basic and diluted net
loss per common share follows:


                                       4



<PAGE>

<TABLE>
<CAPTION>
                                               For the Three Months Ended November 30,       For the Nine Months Ended November 30,
                                               ---------------------------------------       --------------------------------------
                                                        2000                  1999                  2000                  1999
                                                      --------              --------              --------              --------
                                                                     (in thousands, except per share amounts)
<S>                                                   <C>                   <C>                   <C>                   <C>
Numerator
     Net loss                                         $(12,237)             $ (6,685)             $(35,646)             $(16,718)
     Mandatorily redeemable convertible
        preferred stock accrued dividend
        and accretion to liquidation value              (4,894)                 --                  (5,287)                 --
                                                      --------              --------              --------              --------
     Net loss attributable to common
         stockholders                                 $(17,131)             $ (6,685)             $(40,933)             $(16,718)
                                                      ========              ========              ========              ========
Denominator
     Weighted average shares                            27,501                25,948                26,822                25,777
     Weighted average unvested common
        shares subject to repurchase                      (380)               (1,442)                 (539)               (1,177)
                                                      --------              --------              --------              --------
     Denominator for basic and diluted
       calculation                                      27,121                24,506                26,283                24,600
                                                      ========              ========              ========              ========
Basic and diluted net loss per share
     attibutable to common stockholders               $  (0.63)             $  (0.27)             $  (1.56)             $  (0.68)
                                                      ========              ========              ========              ========
</TABLE>

         The following table summarizes common stock equivalents that are not
included in the denominator used in the diluted net loss per share
attributable to common stockholders calculation above because to do so would
be antidilutive for the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                                    For the Three Months Ended          For the Nine Months Ended
                                                           November 30,                        November 30,
                                                    ---------------------------         -------------------------
                                                     2000             1999               2000              1999
                                                    -----             -----             -----             -----
<S>                                                 <C>               <C>               <C>               <C>
WEIGHTED AVERAGE EFFECT OF COMMON STOCK
   EQUIVALENTS:
Series A mandatorily redeemable
   convertible preferred stock                        559              --                 559              --
Series B mandatorily redeemable
   convertible preferred stock                         48              --                  48              --
Series C mandatorily redeemable
  convertible preferred stock                          28              --                  28              --
Options to purchase common stock                    5,668             3,692             5,668             3,692
Warrants to purchase common stock                     347              --                 347              --
Weighted average unvested common shares
       subject to repurchase                          380             1,442               539             1,177
                                                    -----             -----             -----             -----
     Total                                          7,030             5,134             7,189             4,869
                                                    =====             =====             =====             =====

</TABLE>

NOTE 3.  RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activity," which was subsequently amended by Statement No. 137 ("SFAS
137"), "Accounting for Derivative Instruments and Hedging Activities: Deferral
of Effective Date of FASB 133" and Statement No.138 ("SFAS 138"), "Accounting
for Certain Derivative Instruments and Certain Hedging Activities: an amendment
of FASB Statement No. 133." SFAS 137 requires adoption of SFAS 133 in years
beginning after June 15, 2000. SFAS 138 establishes accounting and reporting
standards for derivative instruments and addresses a limited number of issues
causing implementation difficulties for numerous entities. The Statement
requires us to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be recorded at fair value through earnings.
If the derivative qualifies as a hedge, depending on the nature of the exposure
being hedged, changes in the fair value of derivatives are either offset against
the change in fair value of hedged assets, liabilities, or firm commitments
through earnings or are


                                       5

<PAGE>

recognized in other comprehensive income until the hedged cash flow is
recognized in earnings. The ineffective portion of a derivative's change in fair
value is recognized in earnings. The Statement permits early adoption as of the
beginning of any fiscal quarter. SFAS 133 will become effective for our first
fiscal quarter of fiscal year 2002 and we do not expect adoption to have a
material effect on our financial statements.

         In December 1999, the SEC issued Staff Accounting Bulletin No. 101
("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 summarizes
certain aspects of the staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. On March 24, 2000 and
June 26, 2000, the SEC issued Staff Accounting Bulletin No. 101A and No. 101B,
respectively, which extend the transition provisions of SAB 101 until no later
than the fourth quarter of fiscal years beginning after December 15, 1999, which
would be December 1, 2000 for us. We chose to adopt the provisions of SAB 101
early, beginning with the fiscal year ended February 29, 2000.

         In March 2000, the FASB issued Interpretation No. 44, ("FIN 44"),
Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of Accounting Principles Board ("APB") No. 25, "Accounting for
Stock Issued to Employees". This Interpretation clarifies (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (c) the accounting
consequences of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. This Interpretation is effective July 1, 2000,
but certain conclusions in this Interpretation cover specific events that occur
after either December 15, 1998, or January 12, 2000. To the extent that this
Interpretation covers events occurring during the period after December 15,
1998, or January 12, 2000, but before the effective date of July 1, 2000, the
effects of applying this Interpretation are recognized on a prospective basis
from July 1, 2000.

         In September 2000, FASB issued Statement No. 140 ("SFAS 140"),
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities". SFAS 140 revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures. SFAS 140 will become effective for extinguishments
of liabilities occurring after March 31, 2001. We do not expect adoption to have
a material effect on our financial statements.

NOTE 4.  CHANGES IN STOCKHOLDERS' EQUITY

         During the nine months ended November 30, 2000, our mandatorily
redeemable convertible preferred stock ("preferred stock") and stockholders'
equity changed as follows (in thousands):



                                       6
<PAGE>


<TABLE>
<CAPTION>
                                                                                  *
                                                            Preferred Stock       *       Common Stock         Additional
                                                        ------------------------  *  ----------------------     Paid-In
                                                          Shares        Amount    *   Shares        Amount      Capital
                                                        ----------     ---------  *  ---------    ---------    ---------
<S>                                                     <C>            <C>        *  <C>          <C>          <C>
Balance at February 29, 2000                                  --       $    --    *     25,993    $     3      $ 107,037
Exercise of stock options                                     --            --    *        151         --            459
Issuance of common stock for employee stock                                       *
  purchase program                                            --            --    *        250         --          1,719
Issuance of common stock for Janus Technologies, Inc.                             *
  including deferred stock-based compensation                 --            --    *      1,169         --         20,600
Issuance of preferred stock with warrants, net of                                 *
  issuance costs of $65                                          3        20,769  *       --           --          4,166
Redemption of Series B preferred stock                          (1)       (7,920) *       --           --           --
Redemption of Series C preferred stock                          (1)       (7,920) *       --           --           --
Dividends for preferred stock                                 --            --    *       --           --           (576)
Accretion of preferred stock to liquidation value             --           4,711  *       --           --         (4,711)
Deferred stock-based compensation for options                                     *
  forfeited                                                   --            --    *       --           --           (577)
Amortization of unearned compensation                         --            --    *       --           --           --
Unrealized investment gain                                    --            --    *       --           --           --
Net loss                                                      --            --    *       --           --           --
                                                                                  *
Other comprehensive loss                                                          *
                                                                                  *
                                                        ----------     ---------  *  ---------    ---------    ---------
Balance at November 30, 2000                                     1     $   9,640  *     27,563    $       3    $ 128,117
                                                        ==========     =========  *  =========    =========    =========



<CAPTION>

                                                         Accumulated
                                                           Other
                                                        Comprehensive    Unearned   Accumulated   Stockholders'  Comprehensive
                                                         Gain (Loss)   Compensation   Deficit        Equity          Loss
                                                        -------------  ------------  ---------     ---------    -------------
<S>                                                     <C>            <C>           <C>           <C>          <C>
Balance at February 29, 2000                              $   (136)    $  (6,954)    $ (49,347)    $  50,603
Exercise of stock options                                      --           --            --             459
Issuance of common stock for employee stock
  purchase program                                             --           --            --           1,719
Issuance of common stock for Janus Technologies, Inc.
  including deferred stock-based compensation                  --         (1,500)         --          19,100
Issuance of preferred stock with warrants, net of
  issuance costs of $65                                        --           --            --           4,166
Redemption of Series B preferred stock                         --           --            --            --
Redemption of Series C preferred stock                         --           --            --            --
Dividends for preferred stock                                  --           --            --           (576)
Accretion of preferred stock to liquidation value              --           --            --         (4,711)
Deferred stock-based compensation for options
  forfeited                                                    --            577          --            --
Amortization of unearned compensation                          --          2,403          --           2,403
Unrealized investment gain                                      142         --            --             142     $     142
Net loss                                                       --           --         (35,646)      (35,646)      (35,646)
                                                                                                                 ---------
Other comprehensive loss                                                                                         $ (35,504)
                                                                                                                 =========
                                                          ---------    ---------     ---------     ---------
Balance at November 30, 2000                              $       6    $  (5,474)    $ (84,993)    $  37,659
                                                          =========    =========     =========     =========
</TABLE>

                                       7
<PAGE>

NOTE 5.  ACQUISITION OF JANUS TECHNOLOGIES, INC.

         On July 12, 2000, we acquired substantially all of the assets and
liabilities of Janus Technologies, Inc., in exchange for 1,169,000 shares of our
common stock with an estimated fair value of $20.6 million. These financial
statements include the results of Janus Technologies, Inc., since the date of
acquisition.

         The Janus Technologies, Inc., acquisition has been accounted for as a
purchase. The total purchase price of approximately $20.6 million was assigned,
based on independent appraisal, to the fair value of the assets acquired,
including $1.3 million of net tangible liabilities acquired, $12.0 million of
identified intangible assets, and $1.5 million of unvested deferred stock-based
compensation, with the excess purchase price of $8.4 million assigned to
goodwill. Amortization of the intangible assets acquired and goodwill is
computed using the straight-line method over the estimated useful life of the
assets, two to five years.

         The following unaudited pro forma consolidated financial information
reflects the results of operations for the nine months ended November 30, 2000
and 1999 as if the acquisition had occurred on March 1, 2000 and 1999,
respectively, and after giving effect to purchase accounting adjustments. The
pro forma net loss includes $5.7 million for stock option compensation and
merger and acquisition related costs including amortization of intangibles for
both periods presented. These pro forma results have been prepared for
comparative purposes only and do not purport to indicate what operating results
would have been had the acquisition actually taken place on March 1, 2000 and
1999 and may not be indicative of future operating results.


<TABLE>
<CAPTION>
                                             Nine months ended November 30,
                                             ------------------------------
                                                  2000         1999
                                                --------      -------
                                      (in thousands, except per share amounts)
<S>                                           <C>           <C>
Pro forma revenue                             $ 101,329     $  62,429
Pro forma net loss                              (39,803)      (21,285)
Pro forma basic and diluted loss per share    $   (1.45)    $   (0.87)
</TABLE>

NOTE 6.  MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

         On June 30, 2000 we completed a mandatorily redeemable convertible
preferred stock ("preferred stock") financing with institutional investors.
Through the issuance of preferred stock, we raised $25,000,000.

         We issued three classes of preferred stock in connection with this
financing: 834 shares of Series A preferred stock for $8.34 million, 833 shares
of Series B preferred stock for $8.33 million, and 833 shares of Series C
preferred stock for $8.33 million. All of the preferred stock that is not
redeemed is convertible into our common stock. The preferred stock has a term of
two years, after which it must either be converted into common stock or
redeemed, at our option.

         The conversion prices for the three series of preferred stock were set
during three 20-trading day pricing periods, which occurred between July 5 and
September 5, 2000. The transaction was structured so that, if at any time during
a pricing period the average closing bid price of our common stock fell below
$12.50 per share, that pricing period would terminate. Upon termination of a
pricing period, we would be



                                       8
<PAGE>

required to redeem approximately 41.7 shares of the preferred stock we had
issued, and repay approximately $416,800 to the preferred stockholders, for each
trading day that the pricing period had been shortened due to the early
termination. The conversion price for each respective series of preferred stock
may be adjusted downward, and the number of shares of common stock into which
that preferred stock is convertible may increase proportionally, to the extent
the average closing bid price of our common stock during the 20 trading days
before June 30, 2002 is lower than the current conversion price for each
respective series of preferred stock, and in certain other circumstances which
are described more fully in the Form 8-K that we filed with the SEC on July 3,
2000.

         In addition, we are required to make quarterly dividend payments on the
preferred stock, at an annual rate of 9%. The dividends are payable in cash or
registered common stock. We also issued warrants to purchase up to 346,967
shares of common stock at an exercise price of $12.68 in connection with the
financing. That exercise price may be adjusted downward in certain circumstances
which are described in the Form 8-K that we filed with the SEC on July 3, 2000.

         In accordance with the pricing structure noted above, we redeemed
substantially all of the Series B and Series C preferred stock and repaid
approximately $7.9 million and $7.9 million to the preferred stockholders on
August 17 and September 5, 2000, respectively.

         At November 30, 2000, the conversion price of the Series A preferred
stock into common stock was $14.91 per share, which would allow that series of
preferred stock to be converted into 559,355 shares of common stock. The
conversion price of the Series B preferred stock into common stock was $8.51 per
share at November 30, 2000, which would allow that series of preferred stock to
be converted into 48,164 shares of common stock. The conversion price of the
Series C preferred stock into common stock was approximately $14.63 per share at
November 30, 2000, which would allow that series of preferred stock to be
converted into approximately 28,034 shares of common stock.

         On January 12, 2001, we redeemed all of the outstanding Series A,
Series B, and Series C preferred stock, in exchange for the payment of $7.5
million, the issuance of 750,000 shares of common stock to the preferred
stockholders, and the reset of the exercise price of the warrants that were
previously issued to the preferred stockholders to purchase up to 346,967
shares of our common stock from $12.68 to $2.0625, which was the closing bid
price of our common stock on Nasdaq on the trading day immediately preceding
the January 12, 2001 closing date of the redemption. We have agreed to file
with the SEC by January 17, 2001 a registration statement to register the
resale of the common stock issued pursuant to the redemption or issuable upon
exercise of the warrants. We have further agreed to have that registration
statement declared effective by the SEC within 60 days after that mandatory
filing date. Had we not redeemed the Series A, Series B and Series C
preferred stock, we may have been obligated to make additional dividend
payments, pay additional cash penalties and potentially redeem the
outstanding preferred stock at 120% of the stated value or approximately $11
million, due to our failure to meet certain financial requirements set forth
in the agreements governing the Series A, Series B and Series C preferred
stock.

NOTE 7.  NON-MONETARY TRANSACTION

         During the quarter ended November 30, 2000, we entered into a
non-monetary exchange transaction for software with a company whose software
we resell, Bluestone Software, Inc. We recorded revenue with an estimated
fair value of approximately $680,000, which is included in Online Services
and Technology Revenue. We negotiated an additional $668,000 in fees under an
Intraware SubscribeNet service agreement; that revenue will be recognized
over the service period from November 2000 through October 2001. We are
deploying the Bluestone software received in this exchange for internal use.
The software has been capitalized in the amount of $1.2 million and will be
amortized over the estimated useful life of three years.

NOTE 8.  SUBSEQUENT EVENTS

         On December 1, 2000, we announced a restructuring directed toward
strengthening our competitive and financial position. This restructuring
reduced our total headcount to approximately 200, from 380 at November 30,
2000. In addition, we plan to consolidate our three San Francisco Bay Area


                                       9
<PAGE>

offices into two and reduce our number of outside sales offices from eleven
to seven. As part of this restructuring, we have focused our product strategy
to emphasize our proven products and services, including our INTRAWARE
PROCUREMENT electronic software delivery, INTRAWARE SUBSCRIBENET electronic
software updating, and INTRAWARE IT ASSET MANAGEMENT offerings. While we will
continue to provide and support our research and evaluation services
(including our INTRAWARE COMPARISCOPE service) and our INTRAWARE DEPLOYMENT
service in accordance with existing contractual obligations, we do not intend
to further develop or enhance these services. We expect to take a one-time
charge relating to this restructuring in our fourth quarter ending February
28, 2001.

         On January 12, 2001, we entered into an agreement to raise $5.2 million
in additional financing through the sale of a new class of Series A preferred
stock and warrants to investors. The investors include the chairman of our Board
of Directors, Mark B. Hoffman, and two other members of our Board of Directors,
John V. Balen, and Ronald E. F. Codd. Under the terms of this financing, we will
issue an aggregate of 2,872,922 shares of preferred stock at a per share price
of $1.81 and warrants to purchase 287,284 shares of common stock at an exercise
price of $1.99, or 110% of the purchase price of the preferred stock. The
purchase price for the preferred stock is the average closing price of our
common stock during the ten trading-day period ending January 11, 2001, plus a
15% premium. Each share of preferred stock will be convertible into one share of
common stock at the election of the holder and will entitle the holder to a
liquidation preference equal to the amount of the original investment, in the
event of a liquidation, winding-up or dissolution of the company. The preferred
stock will not have a dividend and will not be subject to adjustments to the
conversion ratio, except for proportional adjustments in the event of a split or
combination of the common stock. We have agreed not to close any additional
financing before February 12, 2001, without the consent of the holders of at
least 50 percent of the Series A preferred shares issued to these investors
under the January 12, 2001 agreements. We have also agreed to file with the SEC,
within 180 days of the closing of the financing, a registration statement to
register the resale of the common stock issuable upon conversion of the
preferred stock or exercise of the warrants. We expect this financing to close
on or about January 16, 2001. The offering of the preferred stock and warrants
has not been registered under the Securities Act of 1933. These securities and
the common stock into which they are convertible or for which they are
exercisable may not be offered or resold absent registration or the availability
of an applicable exemption from registration.


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

         The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes. This discussion contains forward-looking statements that involve
risks and uncertainties. Forward-looking statements include statements regarding
our future cash and liquidity position, the extent and timing of future revenues
and expenses and customer demand, the deployment of our products, and our
reliance on third parties. All forward-looking statements included in this
document are based on information available to us as of the date hereof, and we
assume no obligation to update any forward-looking statement. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including but not limited to, those
discussed in "Risk Factors" below and elsewhere in this quarterly report on Form
10-Q.

INTRAWARE OVERVIEW

         Intraware, Inc. was incorporated in Delaware on August 14, 1996. We are
a leading provider of information technology management solutions. Our services
allow information technology professionals to purchase, update and manage their
software online. We provide an extensive selection of business software and
industry-leading electronic software delivery, update and asset management
systems.

         Software product revenue results from the licensing of third party
software products to customers and is recognized when there is evidence of an
arrangement for a fixed and determinable fee that is probable of collection and
the software is available for customer download through our web site. Software
maintenance revenue results from the sale of third-party software maintenance
agreements and is recognized ratably over the service period.

         Online services and technology revenue results primarily from three
types of arrangements. First, it results from the licensing of Intraware's
proprietary software products to companies that use those products to provide
web-based services to their customers or that use the products internally;
such revenue is recognized when there is evidence of an arrangement for a
fixed and determinable fee that is probable of collection and the software is
available for customer download through our web site. Second, it results from
software maintenance outsourcing arrangements with third-party software
vendors delivered through INTRAWARE SUBSCRIBENET, and from various fee-based
subscription research and evaluation services that we offer; such revenues
are recognized ratably over the service period. Third, it results from
professional services from proprietary software integration and data
conversion; such revenues are recognized as services are performed.

         On December 1, 2000, we announced a restructuring of our business
operations that entailed a reduction of our work force to approximately 200
employees from 380 employees, the consolidation of our three local offices to
two, and the reduction of the number of outside sales offices from eleven to
seven. As part of this restructuring, we have focused our product strategy to
emphasize our proven product and service lines, including our INTRAWARE
PROCUREMENT electronic software delivery, INTRAWARE SUBSCRIBENET electronic
software updating, and INTRAWARE IT ASSET MANAGEMENT offerings. While we will
continue to provide and support our research and evaluation services
(including our INTRAWARE COMPARISCOPE service) and our INTRAWARE DEPLOYMENT
service in accordance with existing contractual obligations, we do not intend
to further develop or enhance these services.

         On January 12, 2001, we redeemed all of the outstanding Series A,
Series B, and Series C preferred stock, in exchange for the payment of $7.5
million, the issuance of 750,000 shares of common stock to the preferred
stockholders, and the reset of the exercise price of the warrants that were
previously issued to the preferred stockholders to purchase up to 346,967
shares of our common stock from $12.68 to $2.0625, which was the closing bid
price of our common stock on Nasdaq on the trading day immediately preceding
the January 12, 2001 closing date of the redemption. We have agreed to file
with the SEC by January 17, 2001 a registration statement to register the
resale of the common stock issued pursuant to the redemption or issuable upon
exercise of the warrants. We have further agreed to have that registration
statement declared effective by the SEC within 60 days after that mandatory
filing date. Had we not redeemed the Series A, Series B and Series C
preferred stock, we may have been obligated to make additional dividend
payments, pay additional cash penalties and potentially redeem the
outstanding preferred stock at 120% of the stated value or approximately $11
million, due to our failure to meet certain financial requirements set forth
in the agreements governing the Series A, Series B and Series C preferred
stock.

         On January 12, 2001, we entered into an agreement to raise $5.2 million
in additional financing through the sale of a new class of Series A preferred
stock and warrants to investors. The investors include the chairman of our Board
of Directors, Mark B. Hoffman, and two other members of our Board of Directors,
John V. Balen, and Ronald E. F. Codd. Under the terms of this financing, we will
issue an aggregate of 2,872,922 shares of preferred stock at a per share price
of $1.81 and warrants to purchase 287,284 shares of common stock at an exercise
price of $1.99, or 110% of the purchase price of the preferred stock. The
purchase price for the preferred stock is the average closing price of our
common stock during the ten trading-day period ending January 11, 2001, plus a
15% premium. Each share of preferred stock will be convertible into one share of
common stock at the election of the holder and will entitle the holder to a
liquidation preference equal to the amount of the original investment, in the
event of a liquidation, winding-up or dissolution of the company. The preferred
stock will not have a dividend and will not be subject to adjustments to the
conversion ratio, except for proportional adjustments in the event of a split or
combination of the common stock. We have agreed not to close any additional
financing before February 12, 2001, without the consent of the holders of at
least 50 percent of the Series A preferred shares issued to these investors
under the January 12, 2001 agreements. We have also agreed to file with the SEC,
within 180 days of the closing of the financing, a registration statement to
register the resale of the common stock issuable upon conversion of the
preferred stock or exercise of the warrants. We expect this financing to close
on or about January 16, 2001. The offering of the preferred stock and warrants
has not been registered under the Securities Act of 1933. These securities and
the common stock into which they are convertible or for which they are
exercisable may not be offered or resold absent registration or the availability
of an applicable exemption from registration.

                                       10
<PAGE>

         We have a limited operating history upon which investors may
evaluate our business and prospects. Since inception, we have incurred
significant losses, and, as of November 30, 2000, had an accumulated deficit
of approximately $85.0 million. We intend to expend significant financial and
management resources on the development and enhancement of our services, on
sales and marketing, and on technology and operations to support larger-scale
operations and enhanced service offerings. We expect to incur additional
losses and continued negative cash flow from operations at least through the
quarter ending February 28, 2001. In light of reductions made in our sales
and marketing budget in December 2000, as well as weakening demand for
certain types of business software among corporate information technology
departments, we expect sales of third-party software products, and
accordingly overall sales, to decline for the foreseeable future. In
addition, there can be no assurances that we will achieve or maintain
profitability or generate cash from operations in future periods. Our future
must be considered in light of the risks frequently encountered by companies
in their early stage of development, particularly companies in new and
rapidly evolving markets such as e-commerce which have negative cash flow and
working capital constraints. To address these risks, we must, among other
things, maintain sufficient liquidity to effectively manage our working
capital and fund our operations, continue to improve existing products and
services, develop and acquire new products and services, maintain existing
and develop new relationships with software publishers, implement and
successfully execute our business and marketing strategy, continue to develop
and upgrade our technology and transaction-processing systems, provide
superior customer service, respond to competitive developments and attract,
retain and motivate qualified personnel. There can be no assurance that we
will be successful in addressing those risks and the failure to do so would
have a material adverse effect on our business, financial condition and
results of operations. Our current and future expense levels are based
largely on our planned operations and estimates of future sales and
collections. Sales and operating results generally depend on the volume and
timing of orders received, which are difficult to forecast. Collections often
depend on customers' internal financial conditions and on their satisfaction
with third-party software we have licensed to them, both of which are
difficult for us to control. We may be unable to adjust spending in a timely
manner to compensate for any unexpected revenue or collections shortfall.
Accordingly, any significant shortfall in sales or collections would have an
immediate adverse effect on our business, financial condition and results of
operations. In view of the rapidly evolving nature of our business and our
limited operating history, we are unable to accurately forecast our sales or
collections and believe that period-to-period comparisons of our operating
results and days sales outstanding (DSO's) are not necessarily meaningful and
should not be relied upon as an indication of future performance.

RESULTS OF OPERATIONS

TOTAL REVENUE

         Revenue for the three months ended November 30, 2000 was $26.2 million,
which represents a 4.8% increase over revenue for the three months ended
November 30, 1999 of $25.0 million. In addition, for the three months ended
November 30, 2000, product revenue accounted for $19.4 million or 74.0% of
revenue, while online service and technology revenue accounted for $6.8 million
or 26.0% of revenue. For the three months ended November 30, 1999, product
revenue accounted for $21.3 million or 85.4% of revenue, while online service
and technology revenue accounted for $3.7 million or 14.6% of revenue.

         Revenue for the nine months ended November 30, 2000 was $100.2 million,
which represents a 65.0% increase over revenue for the nine months ended
November 30, 1999 of $60.8 million. In addition, for the nine months ended
November 30, 2000, product revenue accounted for $81.8 million or 81.6% of
revenue, while online service and technology revenue accounted for $18.4 million
or 18.4% of revenue. For the nine months ended November 30, 1999, product
revenue accounted for $51.6 million or 84.9% of revenue, while online service
and technology revenue accounted for $9.2 million or 15.1% of revenue.


                                       11
<PAGE>

         While revenue for the three-month and nine-month periods ended
November 30, 2000 increased over the corresponding year-earlier periods,
revenue for the three-month period ended November 30, 2000 declined by 19.7%
from the preceding three-month period ended August 31, 2000. Revenue growth
over the prior-year periods was due to our expanding vendor base, experienced
sales force and increasing customer demand for products and services. The
decline in revenue from the preceding three-month period was due to our
increased focus on selling our proprietary products and services, which tend
to generate lower total revenue but higher gross margins than our sales of
third-party software, as well as weakening demand for certain types of
business software among corporate information technology departments.

COST OF REVENUES

         Total cost of revenues decreased to $15.5 million for the three months
ended November 30, 2000 from $18.1 million for the three months ended November
30, 1999. Our gross margin increased to 40.7 % for the three months ended
November 30, 2000 from 27.6% for the three months ended November 30, 1999.

         Total cost of revenues increased to $70.0 million for the nine months
ended November 30, 2000 from $45.1 million for the nine months ended November
30, 1999. Our gross margin increased to 30.2% for the nine months ended November
30, 2000 from 25.7% for the nine months ended November 30, 1999.

         Costs of revenue primarily consists of the cost of third-party
products sold, content development and acquisition, Internet connectivity and
allocated overhead charges. We purchase third-party products at a discount to
the third-party's established list prices according to standard reseller
terms. The increase in the cost of revenue dollars for the nine months ended
November 30, 2000 was primarily due to higher product and service sales. The
decrease in the cost of revenue dollars for the three months ended November
30, 2000 and the margin percentage increases primarily reflect our focus on
the sale of our own services and technology, and also reflect our focus on
higher-margin sales of third-party software.

SALES AND MARKETING EXPENSES

         For the three months ended November 30, 2000, sales and marketing
expenses were $8.6 million or 33.0% of revenue, an increase from $8.1 million or
32.6% of revenue for the three months ended November 30, 1999.

         For the nine months ended November 30, 2000, sales and marketing
expenses were $30.7 million or 30.6% of revenue, an increase from $20.6 million
or 33.9% of revenue for the nine months ended November 30, 1999.

         Sales and marketing expenses consist primarily of employee salaries,
benefits and commissions, advertising, promotional materials and trade show
expenses. The increase is primarily the result of additional advertising and
marketing expenditures and the addition of personnel and external sales offices.
A significant part of those increased expenses stems from our acquisition of
Janus Technologies, Inc.

          We plan to continue investing in sales and marketing, and continue
developing strategic relationships to sell our products and services directly to
our customer base as well as through our growing network of distributor
relationships. However, we expect sales and marketing expenses to decrease in
the near term, due to our workforce reductions and office consolidations in
December 2000. The previous two sentences are forward-looking statements and
actual results could differ materially from those anticipated.


                                       12
<PAGE>

PRODUCT DEVELOPMENT EXPENSES

         For the three months ended November 30, 2000, product development
expenses were $6.0 million or 22.9% of revenue, an increase from $2.1 million or
8.5% of revenue for the three months ended November 30, 1999.

         For the nine months ended November 30, 2000, product development
expenses were $14.4 million or 14.4% of revenue, an increase from $5.1 million
or 8.4% of revenue for the nine months ended November 30, 1999.

         Product development expenses primarily consist of personnel, consulting
and equipment depreciation expenses. Costs related to research, design and
development of products and services have also been charged to product
development expense as incurred. The increase was primarily due to the
integration of Janus Technologies, Inc. and the associated growth of our
development team in Pittsburgh, Pennsylvania. We expect product development
expenses to decrease in the near term, due to our workforce reductions and
office consolidations in December 2000. The previous sentence is a
forward-looking statement and actual results could differ materially from those
anticipated.

GENERAL AND ADMINISTRATIVE EXPENSES

         For the three months ended November 30, 2000, general and
administrative expenses were $4.6 million or 17.4% of revenue, an increase from
$2.3 million or 9.2% of revenue for the three months ended November 30, 1999.

         For the nine months ended November 30, 2000, general and administrative
expenses were $12.7 million or 12.7% of revenue, an increase from $5.3 million
or 8.7% of revenue for the nine months ended November 30, 1999.

         General and administrative expenses consist primarily of compensation
for administrative and executive personnel, facility costs and fees for
professional services. A significant part of our increased general and
administrative expenses in the three months ended November 30, 2000, stems from
our acquisition of Janus Technologies, Inc. Also included in general and
administrative expenses is bad debt expense of $79,000 and $1.2 million for the
three and nine month periods ended November 30, 2000, respectively, which is a
result of our continued focus on and assessment of the collectibility of
outstanding accounts receivable. We expect general and administrative expenses
to remain at or near these levels for at least the next three quarters. The
previous sentence is a forward-looking statement and actual results could differ
materially from those anticipated.

STOCK-BASED COMPENSATION

         For the three months ended November 30, 2000, stock-based compensation
expenses were $838,000 or 3.2% of revenue, an increase from $812,000 or 3.3% of
revenue for the three months ended November 30, 1999.

         For the nine months ended November 30, 2000, stock-based compensation
expenses were $2.4 million or 2.4% of revenue, a decrease from $2.6 million or
4.2% of revenue for the nine months ended November 30, 1999.


                                       13
<PAGE>

         Stock compensation expense is an ongoing charge through April 2005 that
is related to employee stock options granted to our employees before we became a
public company, as well as to unvested employee stock options granted by
non-public companies we have acquired.

AMORTIZATION OF INTANGIBLES

         For the three months ended November 30, 2000, merger and acquisition
related costs including amortization of intangibles were $2.7 million or 10.3%
of revenue, an increase from $1.0 or 3.8% of revenue for the three months ended
November 30, 1999.

         For the nine months ended November 30, 2000, merger and acquisition
related costs including amortization of intangibles were $5.9 million or 5.9% of
revenue, an increase from $1.0 or 1.6% of revenue for the nine months ended
November 30, 1999.

         Merger and acquisition related costs including amortization of
intangibles is a charge related to our acquisitions of BITSource, Inc. and Janus
Technologies, Inc. This expense is an ongoing charge through June 2005.

INTEREST EXPENSE

         For the three months ended November 30, 2000, interest expenses were
$305,000 or 1.2% of revenue, an increase from $27,000 or 0.1% of revenue for the
three months ended November 30, 1999.

         For the nine months ended November 30, 2000, interest expenses were
$416,000 or 0.4% of revenue, an increase from $85,000 or 0.1% of revenue for the
nine months ended November 30, 1999.

         Interest expense relates to obligations under capital leases and
borrowings on a bank line. The increase in interest expense is primarily the
result of increased borrowings on a bank line of credit as well as new lease
agreements.

INTEREST AND OTHER INCOME, NET

         For the three months ended November 30, 2000, interest and other
income, net were $202,000 or 0.8% of revenue, a decrease from $767,000 or 3.1%
of revenue for the three months ended November 30, 1999.

         For the nine months ended November 30, 2000, interest and other income,
net were $681,000 or 0.7% of revenue, a decrease from $2.2 million or 3.7% of
revenue for the nine months ended November 30, 1999.

         The decrease in interest income is primarily the result of a reduction
in our invested cash due to the use of that cash in our operations.

INCOME TAXES

         From inception through November 30, 2000, we incurred net losses for
federal and state tax purposes. We have recognized approximately $113,000 of
state income taxes for the nine months ended November 30, 2000. We recognized no
state or federal taxes for the nine months ended November 30, 1999. As of
November 30, 2000, Intraware had approximately $42 million of federal and $26
million of state net operating loss carryforwards available to offset future
taxable income which expire in varying amounts between 2005 and 2012. Given our
limited operating history, losses incurred to date and the difficulty in


                                       14
<PAGE>

accurately forecasting our future results, management does not believe that the
realization of the related deferred income tax asset meets the criteria required
by generally accepted accounting principles. Accordingly, we have recorded a
100% valuation allowance against our deferred tax asset. Furthermore, as a
result of changes in our equity ownership from our convertible preferred stock
financing and our initial public offering, utilization of the net operating
losses and tax credits is subject to substantial annual limitations. This is due
to the ownership change limitations provided by the Internal Revenue Code of
1986, as amended, and similar state provisions. The annual limitation may result
in the expiration of net operating losses and tax credits before utilization.

LIQUIDITY AND CAPITAL RESOURCES

         As of November 30, 2000, we had approximately $15.1 million of cash
and cash equivalents and $5.1 million in short-term marketable securities. In
January 2001, we paid $7.5 million as part of our redemption of the Series A,
Series B and Series C preferred stock. In January 2001, we are also due to
receive $5.2 million as part of our issuance of new Series A preferred stock.
In addition, we expect to be required to maintain $1.8 million as
non-available funds as a condition of any renewal of our commercial bank line
of credit.

         Our principal cash commitments consist of obligations outstanding under
bank credit lines, capital and operating leases, accounts payable and accrued
expenses.

         We believe we have adequate resources for working capital and
capital expenditures for at least 12 months from the date of this report.
This forecast is based on certain assumptions regarding our operations over
the next 12 months. Those assumptions concern the future performance of and
our ability to manage our business in several areas, including but not
limited to our working capital, especially the timeliness of collections of
our accounts receivable; our online services and technology revenue; our
software product revenue; our gross margins on both of those lines of
revenue; and our operating expenses. These assumptions also include the
prompt renewal of our commercial bank line of credit, which expired on
January 12, 2001, and under which we currently owe $3.2 million in callable
debt as well as $1.8 million under irrevocable letters of credit. Our
forecast of the period of time through which our financial resources will be
adequate to support our operations is a forward-looking statement that
involves risks and uncertainties. Factors that could cause actual results to
differ materially from that forecast include our failure to negotiate
sufficiently favorable payment terms or to collect receivables in a
sufficiently timely manner, the failure of our commercial line of credit to
be timely renewed, lack of sufficient demand for our products and services to
maintain adequate online services and technology revenue growth and adequate
gross margins on that revenue, lack of sufficient demand for our third-party
vendors' software to maintain adequate software product revenue growth or
gross margins on that revenue, failure to meet contractual or internal
product or service delivery deadlines or quality standards in a timely
fashion, and the factors described in the section titled "Risk Factors"
below. The above assumptions will also prove to be incorrect if we need to
significantly expand our operations, substantially increase investment in
product development, or acquire complementary businesses or technologies, in
order to respond to competitive pressures. Any of the factors in the
preceding sentence will require us to raise additional capital.

         We intend to seek additional capital financing. If any of our
assumptions underlying our forecast in the first sentence of the preceding
paragraph proves incorrect, and we cannot raise additional funds in a timely
manner, we may be required to implement contingency plans involving substantial
reduction of our expenses or our expense growth. A failure to raise additional
capital on reasonable terms or the implementation of our contingency plans would
have a material adverse effect on our business and prospects for growth.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activity," which was subsequently amended by SFAS 137,
"Accounting for Derivative Instruments and Hedging Activities: Deferral of
Effective Date of FASB 133" and Statement No.138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities: an amendment of FASB
Statement No. 133." SFAS 137 requires adoption of SFAS 133 in years beginning
after June 15, 2000. SFAS 138 establishes accounting and reporting standards for
derivative instruments and addresses a limited number of issues causing

                                       15
<PAGE>

implementation difficulties for numerous entities. The Statement requires us to
recognize all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be recorded at fair value through earnings. If the
derivative qualifies as a hedge, depending on the nature of the exposure being
hedged, changes in the fair value of derivatives are either offset against the
change in fair value of hedged assets, liabilities, or firm commitments through
earnings or are recognized in other comprehensive income until the hedged cash
flow is recognized in earnings. The ineffective portion of a derivative's change
in fair value is recognized in earnings. The Statement permits early adoption as
of the beginning of any fiscal quarter. SFAS 133 will become effective for our
first fiscal quarter of fiscal year 2002 and we do not expect adoption to have a
material effect on our financial statements.

         In December 1999, the SEC issued SAB 101, "Revenue Recognition in
Financial Statements." SAB 101 summarizes certain aspects of the staff's views
in applying generally accepted accounting principles to revenue recognition in
financial statements. On March 24, 2000 and June 26, 2000, the SEC issued Staff
Accounting Bulletin No. 101A and No. 101B, respectively, which extend the
transition provisions of SAB 101 until no later than the fourth quarter of
fiscal years beginning after December 15, 1999, which would be December 1, 2000
for us. We chose to adopt the provisions of SAB 101 early beginning with the
fiscal year ended February 29, 2000.

         In March 2000, the FASB issued FIN 44, Accounting for Certain
Transactions Involving Stock Compensation - an Interpretation of APB No. 25,
"Accounting for Stock Issued to Employees". This Interpretation clarifies (a)
the definition of employee for purposes of applying Opinion 25, (b) the criteria
for determining whether a plan qualifies as a non-compensatory plan, (c) the
accounting consequences of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. This Interpretation is effective
July 1, 2000, but certain conclusions in this Interpretation cover specific
events that occur after either December 15, 1998, or January 12, 2000. To the
extent that this Interpretation covers events occurring during the period after
December 15, 1998, or January 12, 2000, but before the effective date of July 1,
2000, the effects of applying this Interpretation are recognized on a
prospective basis from July 1, 2000.

         In September 2000, FASB issued Statement No. 140 ("SFAS 140"),
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities". SFAS 140 revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures. SFAS 140 will become effective for extinguishments
of liabilities occurring after March 31, 2001. We do not expect adoption to have
a material effect on our financial statements.




                                       16
<PAGE>

                                  RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING A DECISION
TO INVEST IN INTRAWARE. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE
ONLY ONES FACING INTRAWARE. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY
KNOWN TO US OR THAT WE DO NOT CURRENTLY BELIEVE ARE IMPORTANT TO AN INVESTOR MAY
ALSO HARM OUR BUSINESS OPERATIONS. IF ANY OF THE EVENTS, CONTINGENCIES,
CIRCUMSTANCES OR CONDITIONS DESCRIBED IN THE FOLLOWING RISKS ACTUALLY OCCUR, OUR
BUSINESS, FINANCIAL CONDITION OR OUR RESULTS OF OPERATIONS COULD BE SERIOUSLY
HARMED. IF THAT OCCURS, THE TRADING PRICE OF INTRAWARE COMMON STOCK COULD
DECLINE, AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT.

WE HAVE NEGATIVE CASH FLOW AND MAY NOT HAVE SUFFICIENT CASH TO EFFECTIVELY
MANAGE OUR WORKING CAPITAL REQUIREMENTS AND FUND OUR OPERATIONS FOR THE PERIOD
REQUIRED TO ACHIEVE PROFITABILITY

         We have limited cash and credit available, and may be unable to
raise additional financing or establish additional lines of credit. As of
November 30, 2000, we had approximately $15.1 million of cash and cash
equivalents and $5.1 million in short-term marketable securities. In January
2001, we paid $7.5 million as part of our redemption of the Series A, Series
B and Series C preferred stock. In January 2001, we are also due to receive
$5.2 million as part of our issuance of new Series A preferred stock. In
addition, we expect to be required to maintain $1.8 million as non-available
funds as a condition of any renewal of our commercial bank line of credit. As
of November 30, 2000, our available credit under existing lines of credit was
$1.7 million. Our commercial bank line of credit expired on January 12, 2001,
and we currently owe to that bank $3.2 million in callable debt as well as
$1.8 million under irrevocable letters of credit. There can be no assurance
that this line of credit will be timely renewed or that the bank will not
require immediate repayment of the callable debt. There also can be no
assurance that we will be able to achieve the revenue and gross margin
objectives necessary to achieve positive cash flow or profitability without
obtaining additional financing.

WE HAVE A HISTORY OF LOSSES, WE EXPECT FUTURE LOSSES AND WE MAY NOT EVER BECOME
PROFITABLE.

         We have not achieved profitability, expect to incur net losses at
least through our fiscal quarter ending November 30, 2001, and may not ever
become profitable in the future. We incurred net losses attibutable to common
stockholders of $28.0 million for the year ended February 29, 2000, $15.0
million for the year ended February, 28, 1999, $6.0 million for the year
ended February 28, 1998 and $1.5 million for the period from August 14, 1996
through February 28, 1997. In addition, we incurred net losses attibutable to
common stockholders of $12.2 million and $35.7 million for the three months
and nine months ended November 30, 2000, respectively. As of November 30,
2000, we had an accumulated deficit of approximately $85.0 million. Net
losses have increased for most of our quarters since inception and we cannot
assure you this trend will not continue. We will need to generate significant
additional revenues to achieve and maintain profitability.

         We were founded in August 1996 and are an early stage company. We have
a limited operating history that makes it difficult to forecast our future
operating results. Although our gross profit has grown in most of our recent
quarters, we cannot be certain that such growth will continue or that we will
achieve sufficient revenues for profitability. If we do achieve profitability in
any period, we cannot be certain that we will sustain or increase such
profitability on a quarterly or annual basis. For more detailed information
regarding our operating results and financial condition, please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

WE ARE SUBSTANTIALLY DEPENDENT ON THE SUN/NETSCAPE ALLIANCE AND THE TERMINATION
OF THIS RELATIONSHIP WOULD HAVE A SUBSTANTIAL, IMMEDIATE ADVERSE EFFECT ON OUR
BUSINESS.



                                       17
<PAGE>

         For the three months ended November 30, 2000, we generated
approximately 81.6% of our software product revenues from the sale of the
Sun/Netscape Alliance's iPlanet software, and approximately 25.4% of our
online service revenues from the outsourcing of INTRAWARE SUBSCRIBENET
services to the Sun/Netscape Alliance. As a result, transactions with the
Sun/Netscape Alliance and the sale of iPlanet products accounted for
approximately 70.3% of our total net revenues in the three months ended
November 30, 2000. Our agreement for resale of iPlanet products will expire
on February 28, 2001, and we cannot assure you that the term of that
agreement will be extended or that a replacement agreement will be executed.
If the existing agreement for resale of iPlanet products were not extended or
replaced, or the Sun/Netscape Alliance otherwise limited or discontinued
selling its software through us, our business would be materially adversely
affected.

         We provide online software update and license management services to
Sun/Netscape Alliance customers through our INTRAWARE SUBSCRIBENET service under
an agreement that expires on June 30, 2003 and that can be terminated without
cause after June 30, 2002. We cannot assure you that this agreement will be
extended after June 30, 2003 or that it will not be terminated after June 30,
2002. Substantially all of our INTRAWARE SUBSCRIBENET revenues to date have been
generated through this Sun contract, and our failure to extend this contract at
the end of its current term could have a material adverse effect on our
INTRAWARE SUBSCRIBENET revenues and on our business as a whole.

         If Sun and/or Netscape chose to offer its own electronic software
delivery, tracking, maintenance or other services, which it is permitted to do
under the current agreements, it would have a substantial and immediate adverse
effect on our business, results of operations and financial condition.

THE LOSS OF ONE OR MORE OF OUR KEY CUSTOMERS COULD ADVERSELY AFFECT OUR
REVENUES.

         We believe that a substantial amount of revenue from software product
sales in any given future period may come from a relatively small number of
customers. If one or more major customers were to substantially cut back
software purchases or stop using our products or services, our operating results
could be materially adversely affected. We do not have long-term contractual
relationships with most of these customers because they purchase software on a
transaction by transaction basis. As a result, we cannot assure you that any of
our customers who purchase software through us will purchase from us in future
periods.

OUR QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS BECAUSE
OF MANY FACTORS AND ANY OF THESE COULD ADVERSELY AFFECT OUR STOCK PRICE.

         We believe that quarter-to-quarter comparisons of our operating results
are not a good indication of our future performance. It is likely that in some
future quarter our operating results will be below the expectations of public
market analysts and investors and as a result, the price of our common stock
will fall. Our operating results have varied widely in the past, and we expect
that they will continue to vary significantly from quarter to quarter due to a
number of risk factors, including:

          -    demand for our online services and technology and the products of
               our software vendors;

          -    the timing of sales of our online services and technology and the
               products of our software vendors;

          -    aggressive cost management in the sales, marketing, product
               development and support areas;


                                       18
<PAGE>


          -    loss of strategic relationships with major software vendors;

          -    the mix of our proprietary online services vs. software products
               sold;

          -    delays in introducing our online services or our vendors'
               software products according to planned release schedules;

          -    our ability to retain existing customers and attract new
               customers;

          -    changes in our pricing policies or the pricing policies of our
               software vendors;

          -    changes in the growth rate of Internet usage and acceptance by
               customers of electronic software delivery for large software
               purchases, particularly for international customers;

          -    technical difficulties, system failures or Internet downtime;

          -    the mix of domestic and international sales;

          -    certain government regulations;

          -    our ability to upgrade and develop our information technology
               systems and infrastructure;

          -    costs related to acquisitions of technology or businesses; and

          -    general economic conditions as well as those specific to the
               Internet and related industries.

         While we have recently experienced increasing gross margins on revenues
derived from software product sales, there can be no assurance that such
increases will continue. Also, as we have shifted a larger proportion of our
sales and marketing resources toward our higher-margin INTRAWARE ASSET
MANAGEMENT products and INTRAWARE SUBSCRIBENET services, we have experienced and
may continue to experience one or more quarters of reduced sales of third-party
software products. Any shortfall in our gross revenues could affect the market
price of our common stock.

         We plan to increase our operating expenses to fund greater levels of
product development. Our operating expenses, which include sales and marketing,
product development and general and administrative expenses, are based on our
expectations of future revenues and are relatively fixed in the short term. If
revenues fall below our expectations and we are not able to quickly reduce our
spending in response, our operating results would be adversely affected.

OUR HIGHER-MARGIN ONLINE SERVICES AND TECHNOLOGY MAY NOT BE ABLE TO GENERATE
ANTICIPATED REVENUES.

         Our strategy for achieving profitability assumes significant revenue
growth from our online services and technology, principally our INTRAWARE ASSET
MANAGEMENT products and INTRAWARE SUBSCRIBENET service. However, we have only
recently acquired our INTRAWARE ASSET MANAGEMENT products, and therefore have a
limited history on which to base sales projections for these products. We cannot
assure you that these products will result in additional customers and customer
loyalty, significant additional revenues or improved operating margins in future
periods. Additionally, we cannot assure you that software vendors will continue
to find it strategically or economically justifiable for us to deliver the
INTRAWARE SUBSCRIBENET service to their customers.


                                       19
<PAGE>

         For the three months ended November 30, 2000, revenues from online
services and technology totaled only $6.8 million, which constituted 26% of our
total revenues for that period. These products and services are not only
important to improving our operating results but also to continuing to attract
and retain both our software vendor and corporate information technology
professional customers, and in differentiating our online service offerings from
those of our competitors.

OUR INDUSTRY IS HIGHLY COMPETITIVE AND WE CANNOT ASSURE YOU THAT WE WILL BE ABLE
TO EFFECTIVELY COMPETE.

         The market for selling software products and related online services is
highly competitive. We expect competition to intensify as current competitors
expand their product offerings and new competitors enter the market. We have
recently experienced, and expect to continue to experience, price competition on
our software sales, particularly on large sales transactions. We cannot assure
you that we will be able to compete successfully against current or future
competitors, or that competitive pressures faced by us will not adversely affect
our business and results of operations.

         Our current competitors include a number of companies offering one or
more solutions for the purchase, delivery, and maintenance of business software,
and for management of information technology assets. Because there are
relatively low barriers to entry in the software and Internet services markets,
we expect additional competition from other established and emerging companies.
Increased competition is likely to result in price reductions, reduced gross
margins and loss of market share, any of which could have a significant adverse
effect on our business and results of operations.

         Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical, marketing and other
resources, better name recognition, and a larger installed base of customers
than we do. Many of our competitors may also have well-established relationships
with our existing and prospective customers.

         Our current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their products to address customer needs and compete with our
products. We also expect that the competition will increase as a result of
software industry consolidations. As a result, we may not be able to effectively
compete for customers.

WE ARE DEPENDENT ON MARKET ACCEPTANCE OF ELECTRONIC SOFTWARE DELIVERY, AND IF IT
DOES NOT ACHIEVE WIDESPREAD ACCEPTANCE, OUR BUSINESS WILL BE ADVERSELY AFFECTED.

         Our success will depend in large part on acceptance by information
technology professionals of electronic software delivery as a method of buying
business software. If electronic software delivery does not achieve widespread
market acceptance, our business will be adversely affected. Electronic software
delivery is a relatively new method of selling software products and the growth
and market acceptance of electronic software delivery is highly uncertain and
subject to a number of risk factors. These factors include:

          -    the potential for state and local authorities to levy taxes on
               Internet transactions;

          -    the availability of sufficient network bandwidth to enable
               purchasers to rapidly download software;

          -    the number of software packages that are available for purchase
               through electronic software delivery as compared to those
               available through traditional delivery methods;


                                       20
<PAGE>

          -    the level of customer confidence in the process of downloading
               software; and

          -    the relative ease of such a process and concerns about
               transaction security.

         Even if electronic software delivery achieves widespread acceptance, we
cannot be sure that we will overcome the substantial technical challenges
associated with electronically delivering software reliably and consistently on
a long-term basis. Furthermore, the proliferation of software viruses poses a
risk to market acceptance of electronic software delivery. Any well-publicized
transmission of a computer virus by us or another company using electronic
software delivery could deter information technology professionals from
utilizing electronic software delivery technology and our business could be
adversely affected.

CONTINUED ADOPTION OF THE INTERNET AS A METHOD OF CONDUCTING BUSINESS IS
NECESSARY FOR OUR FUTURE GROWTH.

         The widespread acceptance and adoption of the Internet by traditional
businesses for conducting business and exchanging information is likely only in
the event that the Internet provides these businesses with greater efficiencies
and improvements. The failure of the Internet to continue to develop as a
commercial or business medium would adversely affect our business.

FAILURE TO EXPAND INTERNET INFRASTRUCTURE COULD LIMIT OUR FUTURE GROWTH.

         The recent growth in Internet traffic has caused frequent periods of
decreased performance, and if Internet usage continues to grow rapidly, its
infrastructure may not be able to support these demands and its performance
and reliability may decline. If outages or delays on the Internet occur
frequently or increase in frequency, overall web usage including usage of our
web site in particular could grow more slowly or decline. Our ability to
increase the speed and scope of our services to customers is ultimately
limited by and dependent upon the speed and reliability of both the Internet
and our customers' internal networks. Consequently, the emergence and growth
of the market for our services is dependent on improvements being made to the
entire Internet as well as to our individual customers' networking
infrastructures to alleviate overloading and congestion.

INCREASED SECURITY RISKS OF ONLINE COMMERCE MAY DETER FUTURE USE OF OUR
SERVICES.

         Concerns over the security of transactions conducted on the Internet
and the privacy of users may also inhibit the growth of the Internet and
other online services generally, and online commerce in particular. Our
failure to prevent security breaches could significantly harm our business
and results of operations. We cannot be certain that advances in computer
capabilities, new discoveries in the field of cryptography, or other
developments will not result in a compromise or breach of the algorithms we
use to protect our customers' transaction data or our software vendors'
products. Anyone who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our
operations. We may be required to incur significant costs to protect against
security breaches or to alleviate problems caused by breaches. Any
well-publicized compromise of security could deter people from using the web
to conduct transactions that involve transmitting confidential information or
downloading sensitive materials.

                                       21
<PAGE>

WE NEED TO EXPAND OUR MANAGEMENT SYSTEMS AND CONTROLS IN ORDER TO SUPPORT OUR
ANTICIPATED GROWTH.

         Our growth has placed, and our anticipated future growth will continue
to place, a significant strain on our management systems and controls. We cannot
assure you that we will be able to adequately expand our technology resources to
support our anticipated growth. We expect that we will need to continue to
improve our financial and managerial controls and reporting systems and
procedures. Furthermore, we expect that we will be required to manage multiple
relationships with various software vendors, customers and other third parties.

WE MAY NOT BE ABLE TO RETAIN SUFFICIENT SALES, MARKETING AND SUPPORT PERSONNEL
THAT WE NEED TO SUCCEED.

         If we fail to retain sufficient numbers of sales, marketing and support
personnel, our business and results of operations would be adversely affected.
Competition for qualified sales and marketing and support personnel is intense,
and we might not be able to retain sufficient numbers of qualified sales and
marketing and support personnel. The products and services we offer require a
sophisticated sales effort targeted at several people within the information
technology departments of our prospective customers. Retaining a sufficient
number of qualified sales personnel to complete these sales cycles will be
critical to our success.

OUR EXECUTIVE OFFICERS AND CERTAIN KEY PERSONNEL ARE CRITICAL TO OUR BUSINESS
AND THESE OFFICERS AND KEY PERSONNEL MAY NOT REMAIN WITH US IN THE FUTURE.

         Our future success depends upon the continued service of our executive
officers and other key technology, sales, marketing and support personnel and
none of our officers or key employees is bound by an employment agreement for
any specific term. If we lost the services of one or more of our key employees,
or if one or more of our executive officers or employees decided to join a
competitor or otherwise compete directly or indirectly with us, this could have
a significant adverse effect on our business. In particular, the services of
Peter Jackson, Chief Executive Officer, Frost Prioleau, President, Paul
Martinelli, Chief Technology Officer, and James Brentano, Executive Vice
President of Technology, would be difficult to replace.

OUR ACQUISITIONS COULD BE DIFFICULT TO INTEGRATE, DISRUPT OUR BUSINESS, DILUTE
STOCKHOLDER VALUE AND ADVERSELY AFFECT OUR OPERATING RESULTS.

         We may make additional investments in complementary companies, services
and technologies. These acquisitions and investments could disrupt our ongoing
business, distract our management and employees and increase our expenses. If we
acquire another company, we could face difficulties in assimilating that
company's personnel and operations. In addition, the key personnel of the
acquired company may decide not to work for us. Acquisitions of additional
services or technologies also involve risks of incompatibility and the need for
integration into our existing services and marketing, sales and support efforts.
We may be required to spend additional time or money on integration which would
otherwise be spent on developing our business and services. If we do not
integrate our technology effectively or if management and technical staff


                                       22
<PAGE>

spend too much time on integration issues, it could harm our business, financial
condition and operating results. Also, if we finance the acquisitions by
incurring debt or issuing equity securities, this could dilute our existing
stockholders. Any amortization of goodwill or other assets, or other charges
resulting from the costs of such acquisitions, could adversely affect our
operating results.

WE FACE RISKS OF CLAIMS FROM THIRD PARTIES FOR INTELLECTUAL PROPERTY
INFRINGEMENT THAT COULD ADVERSELY AFFECT OUR BUSINESS.

         Our services operate in part by making software products and other
content available to our customers. This creates the potential for claims to be
made against us, either directly or through contractual indemnification
provisions with vendors. Any claims could result in costly litigation and be
time-consuming to defend, divert management's attention and resources, cause
delays in releasing new or upgrading existing services or require us to enter
into royalty or licensing agreements. These claims could be made for defamation,
negligence, copyright or trademark infringement, personal injury, invasion of
privacy or other legal theories based on the nature, content or copying of these
materials.

         Litigation regarding intellectual property rights is common in the
Internet and software industries. We expect that Internet technologies and
software products and services may be increasingly subject to third-party
infringement claims as the number of competitors in our industry segment grows
and the functionality of products in different industry segments overlaps. There
can be no assurance that our services do not infringe on the intellectual
property rights of third parties.

         In addition, we may be involved in litigation involving the software of
third party vendors that we electronically distribute. Royalty or licensing
agreements, if required, may not be available on acceptable terms, if at all. A
successful claim of infringement against us and our failure or inability to
license the infringed or similar technology could adversely affect our business.
Although we carry general liability insurance, our insurance may not cover all
potential claims or may not be adequate to protect us from all liability that
may be imposed.

         We take steps to verify that end-users who use our INTRAWARE
SUBSCRIBENET service to download third-party software from our web site are
entitled to deploy and use that software. However, there can be no assurance
that this verification procedure will help us defend against claims by, or
protect us against liability to, the owners of copyrights in that third-party
software.

         Our success and ability to compete are substantially dependent upon our
internally developed technology, which we protect through a combination of
patent, copyright, trade secret and trademark law. We are aware that certain
other companies are using or may have plans to use the name "Intraware" as a
company name or as a trademark or service mark. While we have received no notice
of any claims of trademark infringement from any of those companies, we cannot
assure you that certain of these companies may not claim superior rights to
"Intraware" or to other marks we use. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or otherwise obtain
and use our services or technology and we cannot be certain that the steps we
have taken will prevent misappropriation of our technology.



                                       23
<PAGE>

OUR MARKET MAY UNDERGO RAPID TECHNOLOGICAL CHANGE AND OUR FUTURE SUCCESS WILL
DEPEND ON OUR ABILITY TO MEET THE CHANGING NEEDS OF OUR INDUSTRY.

         Our market is characterized by rapidly changing technology, evolving
industry standards and frequent new product announcements. To be successful, we
must adapt to our rapidly changing market by continually improving the
performance, features and reliability of our services. We could incur
substantial costs to modify our services or infrastructure in order to adapt to
these changes. Our business could be adversely affected if we incur significant
costs without adequate results, or find ourselves unable to adapt rapidly to
these changes.

A DISASTER COULD SEVERELY DAMAGE OUR OPERATIONS.

         We do not have a complete disaster recovery plan in effect and do not
have fully redundant systems for our service at an alternate site. A disaster
could severely damage our business and results of operations because our service
could be interrupted for an indeterminate length of time. Our operations depend
upon our ability to maintain and protect our computer systems, all of which are
located in our principal headquarters in Orinda, California and at an offsite
location managed by a third party in Santa Clara, California. Orinda and Santa
Clara exist on or near known earthquake fault zones. Although the outside
facility, which hosts our primary web and database servers, is designed to be
fault tolerant, the system is vulnerable to damage from fire, floods,
earthquakes, power loss, telecommunications failures, and similar events.
Although we maintain insurance against fires, floods, earthquakes and general
business interruptions, there can be no assurance that the amount of coverage
will be adequate in any particular case.

ADDITIONAL GOVERNMENT REGULATIONS MAY INCREASE OUR COSTS OF DOING BUSINESS.

         The law governing Internet transactions remains largely unsettled, even
in areas where there has been some legislative action. The adoption or
modification of laws or regulations relating to the Internet could adversely
affect our business by increasing our costs and administrative burdens. It may
take years to determine whether and how existing laws such as those governing
intellectual property, privacy, libel and taxation apply to the Internet.

         Laws and regulations directly applicable to communications or commerce
over the Internet are becoming more prevalent. It appears that additional laws
and regulations regarding protection of privacy on the Internet will be adopted
at the state and federal levels in the United States. The European Union has



                                       24
<PAGE>

enacted its own data protection and privacy directive, which required all 15
European Union Member States to implement laws relating to the processing and
transmission of personal data by October 25, 1998. We must comply with these new
regulations in both Europe and the United States, as well as any other
regulations adopted by other countries where we may do business. We must also
comply with U.S. export controls on software generally and encryption technology
in particular. The growth and development of the market for online commerce may
prompt calls for more stringent consumer protection laws, both in the United
States and abroad. Compliance with any newly adopted laws may prove difficult
for us and may negatively affect our business.

YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN.

         You should not rely on forward-looking statements in this quarterly
report. This quarterly report also contains forward-looking statements that
involve risks and uncertainties. We use words such as "anticipates," "believes,"
"plans," "expects," "future," "intends" and similar expressions to identify such
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this quarterly
report. Our actual results could differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by
us described below and elsewhere in this quarterly report.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our exposure to market risk for changes in interest rates relate
primarily to our investment portfolio. We have not used derivative financial
instruments in its investment portfolio. We place our investments with high
quality issuers and, by policy, limit the amount of credit exposure to any one
issue or issuer. At November 30, 2000 $2.4 million of our cash, cash equivalents
and investment portfolio carried maturity dates of less than 90 days, $5.1
million carried maturity dates of less than one year. We have the ability to
hold the portfolio to maturity, if deemed necessary. The effect of changes in
interest rates of +/- 10% over a six-month horizon would not have a material
effect on the fair market value of the portfolio.

PART II
OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         As of the date hereof, there is no material litigation pending against
us. From time to time, we may be a party to litigation and claims incident to
the ordinary course of our business. Although the results of litigation and
claims cannot be predicted with certainty, we believe that the final outcome of
such matters will not have a material adverse effect on the results of
operations, financial condition or prospects.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

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


                                       25
<PAGE>

         On September 25, we held our Annual Meeting of Stockholders. At the
meeting, the stockholders elected as Class II directors Lawrence M. Baer
(with 22,194,753 affirmative votes and 78,345 votes withheld), John V. Balen
(with 22,196,694 affirmative votes and 76,404 votes withheld), and Ronald E.
F. Codd (with 22,196,294 affirmative votes and 76,804 votes withheld). Mr.
Charles G. Davis, Jr., Ms. Mary Ann Byrnes, Mr. Mark B. Hoffman, and Mr.
Peter H. Jackson continued as directors after the Annual Meeting. Mr. Davis
and Ms. Byrnes subsequently resigned from the Board of Directors. Mr. Frost
R. R. Prioleau has become a member of our Board of Directors.

         In addition, the stockholders approved an amendment to our 1996
Stock Option Plan to increase the number of shares available for grant
thereunder from 6,719,869 shares to 7,719,869 shares (with 9,859,010
affirmative votes, 2,033,240 negative votes, 10,364,531 broker non-votes, and
16,307 abstentions).

         The stockholders also approved an amendment to our 1996 Stock Option
Plan to change the annual automatic increase in the number of shares
available for grant thereunder from (a) the lesser of 750,000, or 2% of our
total shares outstanding, or a lesser amount determined by the Board of
Directors, to (b) the lesser of 3 million, or 6% of our total shares
outstanding, or a lesser amount determined by the Board of Directors (with
9,862,785 affirmative votes, 2,021,834 negative votes, 10,364,531 broker
non-votes, and 23,948 abstentions).

         The stockholders also approved an amendment to our 1998 Director
Option Plan to increase the number of shares available for grant thereunder
from 150,000 shares to 350,000 shares (with 9,934,875 affirmative votes,
1,952,719 negative votes, 10,364,531 broker non-votes, and 20,973
abstentions).

         The stockholders also approved the issuance of common shares upon
conversion of our Series A Convertible Preferred Shares, Series B Convertible
Preferred Shares, and Series C Convertible Preferred Shares, or as dividends
on those preferred shares, and upon exercise of the related warrants, if and
to the extent those common shares exceed 19.99% of the number of shares of
common stock that were outstanding on June 30, 2000 (with 11,562,694
affirmative votes, 308,683 negative votes, 10,364,531 broker non-votes, and
37,190 abstentions).

         The stockholders also ratified the appointment of
PricewaterhouseCoopers LLP as our independent public accountants for the current
fiscal year (with 22,197,370 affirmative votes, 41,513 negative votes, and
34,215 abstentions).

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a)       Exhibits

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER

<S>                <C>
                   None
</TABLE>

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

          b)   Reports on Form 8-K

               None.


                                       26
<PAGE>

                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

                                       INTRAWARE, INC.

Dated: January 16, 2001                By:  /s/ Donald M. Freed
                                            --------------------------------
                                            Donald M. Freed
                                            EXECUTIVE VICE PRESIDENT AND
                                            CHIEF FINANCIAL OFFICER



                                       27