<PAGE>   1
===============================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549

                                ---------------
                                   FORM 10-K
                      FOR ANNUAL AND TRANSITIONAL REPORTS
                    PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

        (MARK ONE)
          (X)      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                     OR

        ( )        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: 0-22317

                           ESHARE TECHNOLOGIES, INC.
              (Exact Name of Registrant Specified in Its Charter)

                        GEORGIA                               58-1378534
             (State or other jurisdiction of               (I.R.S. Employer
             incorporation or organization)              Identification No.)
             5051 PEACHTREE CORNERS CIRCLE
                   NORCROSS, GEORGIA                            30092
        (Address of principal executive offices)              (Zip Code)

              Registrant's telephone number, including area code:
                                 (770) 239-4000

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

   TITLE OF EACH CLASS                    NAME OF EXCHANGE ON WHICH REGISTERED
   -------------------                    ------------------------------------
         None                                            N/A

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

                              TITLE OF EACH CLASS

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

                      Common Stock, no par value per share

        Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

        Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]



                                      A-1
<PAGE>   2
         The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based upon the closing price for the Common Stock on March
22, 2000 as reported by the Nasdaq Stock Market, was $97,307,434. The shares of
Common Stock held by each officer and director and by each person known to the
company who owns 5% or more of the outstanding Common Stock have been excluded
in that such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes. As of March 22, 2000, Registrant had 21,207,142 outstanding shares of
Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

        The Registrant's definitive Proxy Statement for the 2000 Annual Meeting
of Shareholders, currently expected to be held on or about May 23, 2000, is
incorporated by reference in Part III of this Form 10-K to the extent stated
herein.

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



                                      A-2
<PAGE>   3

                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

We are a leading provider of Electronic Customer Relationship Management (eCRM)
collaboration solutions. Our offering consists of a suite of Customer
Interaction Management (CIM) applications that enable our customers to
effectively manage their customer interactions across multiple communication
channels, including traditional voice, e-mail, interactive Web chat and Voice
over IP. Our customers use our solutions to improve customer relationships,
increase revenues and improve their earnings due to effective utilization of
resources.

We provide a comprehensive, feature-rich web-based, automated customer support
solution for companies that engage in electronic commerce. Our software and
services enable real-time interactive communications and services over the
Internet and include Web-based customer service and support, customer
self-service, instant messaging, live conferencing and events, distance
learning, community chat, threaded discussion forums, a variety of custom
integration tools, web hosting and top quality professional services. Our
Internet solution integrates legacy systems, eSales, eMarketing, eSupport and
other commercial applications and provides a service enabling and provisioning
platform through our award winning products and applications.

Additionally, our suite supports voice/telephony applications designed for
companies that operate blended contact centers. Organizations use our solution
to implement strategies for personalized customer interactions that enhance
customer relationships, increase agent productivity and effectiveness, and
reduce the overall operational costs via patented multi-media contact
management technology.

We serve more than 2,000 customers in over 30 countries, with our headquarters
in Norcross, Georgia and major offices in Commack, New York; Irvine,
California; London; Paris; and Mexico City.

INDUSTRY BACKGROUND

         According to International Data Corporation, or IDC, the consolidated
worldwide Web-based Collaborative Service and Support Technologies (CSST)
product market segment of the Electronic Customer Relationship Management (eCRM)
market is projected to grow from $4.3 billion in 1998 to $10.7 billion in 2003,
representing a 20.0% Compound Annual Growth Rate (CAGR). According to IDC, the
top three fastest-growing market sub-segments are two-way multimedia interaction
(89.4% CAGR), Web-based voice interaction (89.0% CAGR) and real-time text
interaction (45.5% CAGR), which are markets eShare is focused on serving. The
rapid increase in electronic commerce and the use of customer services and
support as a revenue enhancement model drive this growth. As more businesses
conduct electronic commerce, there is an increasing need for online live,
customer service and support, e-mail response management and integrated
solutions capabilities that enable companies to communicate with their customers
through multiple communication channels. Additionally, the movement towards CSST
reflects utilization of customer service and support as a means to achieve
revenue enhancement versus as a means to cut costs.

        While Web-based CSST solutions have emerged as a rapidly growing
market, it is anticipated that these solutions will be integrated with existing
contact center and legacy customer contact solutions. Like Web-based CSST, the
Computer Telephony Integration (CTI) industry is currently experiencing strong
growth. The CTI outbound and blended call center market segments were
approximately $1.2 billion worldwide in 1998 and are together expected to grow
at a CAGR of 25.2% to $2.4 billion by 2001.


                                      A-3
<PAGE>   4
    The Internet explosion is dramatically altering the essence of customer
relationship management. Customer expectations are changing and companies must
recognize and adapt to this shift if they are to be successful. When
communications between businesses and customers were conducted solely by
telephone, the management of customer relationships was a relatively
straightforward matter. With a single primary communications channel, plus the
occasional fax, service agents were generally able to give customers the feeling
that they were receiving personal attention. With the rise of the Internet,
businesses have rushed to offer their customers Web forms and e-mail as
additional communications channels, and wired consumers have begun relying on
these channels as viable means of contact. The Internet as a communications
channel is often disassociated from telephony resources in the typical call
center. As a result, a severe disconnect can occur between types of customer
contact. Having two such disparate systems has serious customer satisfaction
implications.

    Customers contacting a business expect a unified front in which all
communications channels supported by the business work in concert. When a
customer picks up the telephone to dial an 800 number, an emerging expectation
is for the agent to have access to previous e-mails, faxes, and other customer
transaction and communication history. Similarly, a customer who prefers to
contact a business via e-mail or the Web expects that communication to be as
effective as a phone call. Meeting these expectations is key to customer
satisfaction, and failure can effectively drive customers away.

    Moving forward, quality customer relationship management requires
integrating live, telephony-based customer service with the ability to process
Web-based and e-mail transactions. This dynamic applies equally to traditional
bricks and mortar businesses that have embraced the Web and to the newer breed
of e-commerce players whose customers still require contact via traditional
means. For both, the integration must be as seamless and transparent to the
customer as possible.

    The Web-based Customer Relationship Management, or CRM market represents a
tremendous growth opportunity in light of the rapid increase in electronic
commerce. According to Forrester Research, worldwide e-commerce transactions
are projected to grow at a CAGR of 88.0% from $32 billion in 1998 to over $400
billion by 2002. As e-commerce continues to grow, businesses have increasingly
recognized the need to provide online customer support. As Web users continue
to purchase online, they demand live and interactive customer service and
support that can enhance their online shopping experience. Similarly, online
businesses are increasingly using online customer support as a means to retain
traffic, generate repeat purchases, enhance customer satisfaction and build
brand loyalty.

    The CRM market will also be impacted by the adoption of Web-based solutions
by the business to business (B2B) market. This market is now estimated by Bank
of America at $50 trillion annually in the U.S. alone and some $250 trillion
globally. In addition, recent research by Legg Mason Equity Research -
Technology Group, a leading market maker for B2B software firms suggests that,
"CRM software vendors participate in a large and growing market; [estimated at]
$1.3 trillion in 1998 and estimated to grow to $13 trillion [by 2003], a CAGR of
46%."

    The traditional means of providing customer service and support has been
primarily through telephone call centers. Many early customer service
applications were built on the traditional voice telecommunications platform,
such as customer call centers, and only sought to integrate the Web as a
secondary communications channel. To effectively realize the potential of the
Web, companies must be able to offer a comprehensive solution that can offer
real-time interactive customer service and support that integrates with
traditional call center solutions.

PRODUCTS AND SERVICES

    The optimum customer interaction management solution that will maximize
customer satisfaction and company investments consists of a blend of
traditional contact center, e-commerce, and CRM approaches capable of

                                      A-4

<PAGE>   5

providing fully integrated customer care and consistent quality across all
contact channels. In particular, this solution should include:

         -        Flexible and customizable communication capabilities to enable
                  businesses and consumers to define when and how to
                  communicate. Customers should be able to choose any available
                  communications channel according to preference, and receive
                  consistently high-quality service regardless of the medium
                  chosen. For maximum return on investment, the system should
                  offer self-service wherever practical.

         -        Skill- and preference-based interaction routing to process
                  customer requests based on predefined agent skill sets and
                  customer preferences and needs via automated or human agents.
                  As communications channels and means of contact multiply,
                  specialization will become even more pronounced among agents,
                  and matching agent skill sets to customer situations and
                  communications media will be critical.

         -        Round-trip communication capabilities via a combination of
                  telephone, e-mail, fax, Internet messaging, interactive chat,
                  self-service Web pages, and wireless messaging. Regardless of
                  the communications channel used to establish contact, each
                  agent should have complete access to every customer's
                  communications and transaction history associated to active or
                  inactive business processes.

         -        Implementation of best-of-breed solutions via a
                  standards-based framework for integration of components from
                  diverse vendors. The ideal integrated customer care solution
                  should employ open standards and a flexible architecture to
                  accommodate investments in legacy solutions and provide for
                  integration with the newest technologies.

    The following sections describe some of the major elements of eShare's
applications and services that help businesses manage the complete customer
lifecycle from acquiring new customers to servicing and retaining existing
customers, to maximizing each customer's value to the business.

Web-based Customer Service

    Designed to enhance communication between agents and Web site visitors, Web
based communication is provided by eShare NetAgent(TM), a customer care tool
that also integrates inbound/outbound e-mail traffic and directs questions and
comments to the appropriate personnel. Customer care agents can monitor web
visitor activity, proactively engage visitors in real time discussions and
interactions, respond to customer e-mail, and manage multiple sessions
concurrently.

    To allow agents to interact knowledgeably with customers, NetAgent provides
immediate access to complete customer interaction histories, including listings
of previous e-mail exchanges and transcripts of live chat interactions. Agents
can assist in two-way, dynamic form preparation and can add notes from voice
calls and access other records from telephony-based interactions.

    Our Internet solutions are highly scaleable, require no additional
software or other downloads for visitor use and integrate seamlessly with most
leading conference, PBX, ACD, customer care and legacy systems. These solutions
currently support Windows NT operating environment.

    A critical component of any e-commerce application, eShare NetAgent enables
agents to maximize online revenues, improve service levels, and earn customer
loyalty, all while reducing the costs of managing the total customer service
experience.

E-mail Management

eShare Re:sponse(TM) helps companies to manage the large volume of e-mail that
Web sites typically generate and minimizes the agent time required to handle
it. Re:sponse can determine if the message can be addressed automatically and,
in this case, can send an automated acknowledgement message while the original
message is being processed. As with NetAgent, Re:sponse provides agents with
immediate access to complete customer interaction histories.


                                      A-5

<PAGE>   6

    eShare Re:sponse enables agents to answer customer e-mail inquiries
responsively and cost-effectively, allowing companies to retain satisfied,
loyal customers, increase service levels, and generate incremental revenue.

Community Chat

    A turnkey solution for adding chat capability, threaded discussion forums,
and online presentations to Web sites is provided by eShare Expressions (TM).
Expressions promotes community collaboration, and dynamic interaction between
users by providing the means for conducting virtual meetings, moderated events,
live training, conferencing, distance learning, and chat sessions.

    eShare Expressions helps companies build community, increase customer
loyalty, and facilitates business to business, business to employee, business
to consumer and consumer to consumer collaborations.

Instant Messaging

    eShare Connections(TM) provides a company the power to customize and create
its own branded Instant Messenger for its Web site's community of users. As an
organization-centric Instant Messaging application, eShare Connections enables
user communities to interact directly in a chat-like process. Connections allows
users to search for and communicate with one another in real time, bookmark Web
pages, store conversation notes, and provides alerts when specific associates
log on.

    With Connections Instant Messaging, businesses and organizations can
achieve greater productivity and time savings, and can build customer loyalty,
thereby increasing its Web site traffic.

Customer Self-service

    The initial focus of Internet-based commerce was to be a self-service
mechanism for the consumer to purchase goods and services. This strategy worked
well for the dot.com startups. However, the traditional bricks and mortar
companies wishing to adopt this strategy have been challenged by its customers
accustomed to an assisted service model. eShare NetAgent provides the
capability to transition those customers accustomed to assisted service to
self-service. This is accomplished in part by Web enabling current business
processes and then migrating them to the company Web as self-service pages.
NetAgent is integrated with both Primus and Inference, industry leading
KnowledgeBases which facilitate Web-based customer self service. NetAgent also
includes features such as Auto-Pilot and Frequently Used Pages that enable a
company to push information to on-line customers, using this opportunity to
train them on how to use the site's self-service capabilities.

Inbound/Outbound Voice Contact Management

    eShare provides leading voice-based contact management solutions. Customers
worldwide use eShare Contact Management solutions to manage their inbound and
outbound voice-based contacts for proactive customer service, collections,
teleservice, mortgage services, fund raising and in many other areas. These
contact solutions help business manage the complete customer lifecycle from
acquiring new customers, to servicing and retaining existing ones, maximizing
each customers value to the business.

    eShare was one of the first companies to introduce inbound/ outbound
contact blending so that both inbound and outbound voice calls could be handled
by the same group of agents. Contact blending provides for higher levels of
agent productivity and increases agent response times for improved customer
service levels. Additionally, contact blending provides companies with the
ability to better manage customer needs in situations where inbound and
outbound calls are part of a multi-sequence transaction. eShare Contact
Management Solutions are highly integrated with other key components of a
typical contact center, including hosts/data bases, PBX/ACDs, digital recording
devices, reader board display devices, etc.


                                      A-6


<PAGE>   7

    Our contact center solutions support IBM RISC/6000, NT platforms and AIX &
Windows NT operating systems. Our Mixed Media Server platform supports both CTI
links to leading PBX/ACDs (software only solutions) and telephony links through
industry standard call processing hardware/software to perform call processing
across multiple protocols for multiple countries.


Multi-Channel Administrator and Agent Desktops

    As contact channels are added to the telephony or Web-based call center,
these customer interaction channels must be capable of being
administered/managed from a single desktop. Additionally, agent desktops must
be able to switch between the various duty modes, supporting live
collaborations, live chat, e-mail, assisted forms, etc.

    Our e360 CIM Suite enables customers who have an eShare Voice Contact
Management application, NetAgent, Re:sponse, or Connections applications to
administer these from a single desktop. The e360 CIM suite allows agents to
easily switch between the various interactive chat/e-mail/messaging duty modes.

PROFESSIONAL SERVICES

    eShare provides professional services including comprehensive business
analysis, solutions planning, implementation, training, application integration,
staff augmentation, and project management. We also offer other special customer
services such as custom application development and scripting. These services
enable our customers to develop, maintain and grow their customer contact
centers while increasing contact center productivity and reducing operational
costs.

    Installation and integration services consist of configuration and
documentation, along with the physical installation and integration of the
suite. In many instances, the installation of our Internet applications is
completed electronically without the need for on-site work. Introductory
training classes are provided for a fee as part of each initial suite purchase,
and additional advanced classes may be delivered for additional fees.

    We also supplement our applications offerings with maintenance services
including help desk support. Customers that receive maintenance services are
entitled to customer and technical support 24 hours a day, seven days a week.
Maintenance customers also receive ongoing system support and baseline software
upgrades.

    Our customer service group is composed of a Professional Services group,
which provides services for a fee when contracted for by a customer, and a
Global Support Services group, which manages the help desk, tech-support, spare
parts inventory, purchasing, testing and ongoing relations with customers.
Services personnel are located throughout the United States and in the United
Kingdom, France, Singapore, Mexico, Brazil and Canada. Additional services are
provided by the company's VARs and distribution partners. We contract with
third parties to provide local hardware support.

    As of December 31, 1999, we employed 172 people in our Professional
Services and Global Support Services groups.


WEB CUSTOMER SERVICE HOSTING

    NetAgent Live (SM), the industry's first hosted Internet customer
interaction solution, enables our customers to eliminate costly hardware and
configuration from their Internet customer service strategy.

    Using NetAgent Live, our customers can minimize up-front costs and maximize
the return on their investment. The NetAgent Live service gets eShare NetAgent,
and other software up and running on a dedicated server within 24 hours of
order. With remote access to our applications data and reports, the customer can
configure services 24 hours a day, seven days a week. Unlimited bandwidth and
security gives our customers the availability and protection they require.



                                      A-7


<PAGE>   8

SALES AND MARKETING

    We primarily license our products and services to companies that engage in
e-commerce/e-business and Customer Relationship Management (CRM). Our products
are licensed to leading companies in a variety of industries including
financial services, banks, telecommunications and technology, electronic
commerce and Web-communities as well as government/education. We provide
solutions to Portals, Application Service Providers (ASPs), Internet Service
Providers (ISPs), Dot.coms, Web Exchanges, and Interactive Contact Centers.

INTERNET PRODUCTS - The Internet Business has a customer base of over 200
eShare NetAgent/Re:Sponse customers and over 1,500 eShare Expressions
customers.

    eShare NetAgent/Re:Sponse and eShare Expressions are licensed through a
direct/indirect telemarketing sales force and over 20 channel partnerships. We
maintain strategic relationships with companies such as Snickleways Interactive
and Linkshare Corporation to make eShare NetAgent/Re:Sponse available to over
200 online merchants, as well as relationships with America Online and StarMedia
to assist in marketing eShare NetAgent/Re:Sponse to their merchant partners.

VOICE CONTACT MANAGEMENT PRODUCTS - Through our extensive market knowledge and
technological strength, we have built a large blue-chip customer base of over
600 contact center sites in over 30 countries.

    We license our Voice Contact Management solutions through a direct sales
organization with offices worldwide. Additionally, we maintain a network of
distributors and Value Added Resellers (VARs) to re-license our products. We do
business in the United States, Mexico, Canada, France and the United Kingdom
primarily through direct channels, while products and services are licensed in
other countries through indirect channels. We maintain strategic relationships
with companies such as, Cable & Wireless/Mercury Communications, Manta Systems,
Mitsubishi, Lucent Technologies, and Williams Communications.

THIRD-PARTY DISTRIBUTION - Our VARs and distributors are independent
organizations that perform some or all of the following functions for our
products: sales and marketing, systems implementation and integration, and
ongoing consulting and technical support. We believe that our VARs and
distributors have a significant influence over product choices made by our
customers and that our VAR and distributor relationships are an important
element in our marketing, sales and implementation efforts.

OTHER MARKETING ACTIVITIES - Our marketing activities include product
management, product marketing, direct marketing, public relations, press and
analyst communications, event support and management of our Website. Our
Business Development Group is responsible for creating distribution
relationships, strategic alliances, joint-marketing agreements and
co-development relationships with B2B, B2C and C2B industry providers.

    Our customers independently operate domestic and international user groups.
Each group conducts annual as well as regional user group meetings typically
focused on common applications and business opportunities. We participate as
invited in the user group conferences generally by conducting seminars, product
demonstrations and educational sessions.

    As of December 31, 1999, eShare employed 146 people world-wide in our Sales
and Marketing groups.

STRATEGY

    Our primary objective is to be the leading provider of eCRM Collaboration
Solutions with emphasis on multi-channel Customer Interaction Management (CIM),
enabling businesses to integrate their customer contact strategies with their
front and back office operations. Our strategy to achieve this objective
includes the following key elements:


                                      A-8


<PAGE>   9

Significantly Expand internet solutions penetration: We believe that our suite
of Internet based customer interaction applications is well positioned to
participate in the explosive growth in e-commerce spending, serving business to
consumer (B2C), consumer to business (C2B), and consumer to consumer (C2C)
interactions and transactions. We also believe that our solutions are equally
applicable to supporting interactions and transactions in the huge business to
business (B2B) market. We believe that in this market dynamic, gaining market
share is a key to future growth and viability. We will continue to invest
heavily in people, processes, partnerships and technologies to capture
significant market share.

Leverage Installed Base of Customers: We believe that our global installed
customer base represents significant potential market for future sales of our
products and services. We will continue to use our customer relationships:

         -        to sell new suites and applications and cross-sell to multiple
                  divisions, offices and business units of a customer's
                  organization.

         -        as a reference to gain new customers for our suite of Customer
                  Interaction Management (CIM) applications and services.

         -        to leverage our penetration of targeted vertical markets.


Leverage Technology Leadership and Software Focus: We believe we are a global
technology leader in the field of Customer Interaction Management (CIM)
software, having pioneered many of the industry's fundamental technologies. We
hold a comprehensive U.S. and foreign-based patent portfolio covering numerous
processes and technologies utilized in multi-media contact management systems.
We have based our products on a software architecture, which is distributed,
object-oriented, and standards-based. Our software-focused solution is
compatible with standard Web/Internet, telephony and computing infrastructures,
allowing businesses to leverage all of these technologies. We are leveraging
our technological expertise to develop solutions to incorporate multi-channel
customer contact across the enterprise, including inbound and outbound calling,
the Internet, fax and e-mail.

Continue to Focus on Enhancing and Complementing Customer Relationship
Management Solutions: We provide system design, application configuration,
integration and training and consulting services in conjunction with the
installation of our products. We believe our ability to integrate Customer
Relationship Management (CRM) solutions with our CIM suite and, existing
systems and applications, is an important factor in the purchasing decisions of
customers, and we intend to continue our emphasis on providing these design and
integration services.

Continue to Leverage and Expand Sales and Marketing: We intend to pursue an
increased share of the market for customer interaction management systems by
leveraging our existing customer base and global sales team. We will also add
additional sales and marketing personnel. We intend to aggressively market our
applications through expanded public relations, web site expansion, and
marketing communications activities, through select trade shows, direct
advertising, and industry presentations.

Increase Penetration of International Markets: We currently have relationships
with VARs in Europe, Latin America and the Pacific Rim. We intend to commit
additional resources to these relationships in selected international markets.
We also intend to expand our international operations through hiring additional
personnel and forming additional relationships with VARs and distributors in
Europe, Latin America and the Pacific Rim.

Continue to Develop Domestic Distribution Channels: We have historically relied
on our direct sales channel domestically. We intend to increase support of
distribution channels in North America with additional channel programs and
personnel. We also plan to strengthen existing joint marketing and distribution
relationships.

Transferring Call Center Knowledge and Expertise to Internet Solutions:
Implementation of our CIM strategy is significantly enhanced by our ability to
transfer and combine our data management, suite integration knowledge and
expertise to internet solutions research and development and sales and
marketing activities.

                                      A-9

<PAGE>   10

TECHNOLOGY AND PRODUCT DEVELOPMENT

    eShare's CIM architecture uses a standards-based framework to provide open
solution implementations for best-of-breed products. Our open approach also
helps assure that CIM applications/components integrate easily with other
applications and services, when provided by third-parties.

    In particular, the eShare CIM architecture offers the following benefits:

       -      Proven, tested, robust business services and application
              components
       -      Off-the-shelf component development from heterogeneous
              technologies
       -      Reusable common application elements to shorten development
              cycles
       -      Lower application development and implementation costs
       -      Faster development and deployment across multiple platforms
       -      Interoperability with legacy systems and new emerging
              applications

    Our applications are based on an open architecture utilizing industry
standards and provide seamless integration with third-party systems or
customers' existing technology infrastructure. Our commitment to open
architecture leverages customers' investments in other customer interaction
management components by ensuring that these systems are adaptable for future
needs. We will seek to continue to develop products that adhere to existing and
emerging standards. Still, there can be no assurance that eShare will be able
to successfully develop new products to address new customer requirements and
technological changes, or that such products will achieve market acceptance.

    We intend to continue investment in research and development to maintain
our position as a leader in Customer Relationship Management collaboration
solutions. In fiscal 1999, 1998, and 1997, the Company's research and
development expenditures were approximately $14.2 million, $11.8 million, and
$8.0 million. All of the Company's expenditures for research and development
costs have been expensed as incurred. As of December 31, 1999, we employed 90
people in our Research and Development groups.


COMPETITION

    We compete in the Customer Relationship Management market, which includes
both voice based and Internet based solutions. This market is characterized by
rapid growth and converging technologies. These market dynamics represent both
an opportunity and a competitive threat to eShare.

    The Company competes with numerous companies in each product category.
Several of the Company's competitors compete across many of our product lines,
while others offer a more narrow solution. Some of our competitors include, in
alphabetic order, Cisco Systems, eGain Communications, FaceTime, Genesys, Kana
Communications, LivePerson, Lucent Technologies, PeopleSupport, Quintus, and
Siebel Systems.

    Several of the company's current and potential competitors have greater
financial, marketing and technical resources than the Company. As a result,
they may be able to respond more quickly to new or emerging technologies and
changes in customer requirements, or to devote greater resources to the
development, promotion and sale of their products than we could.

    We believe that the primary competitive factors affecting our markets
include the speed of application adaptability based on, flexibility,
scaleability, interoperability, functionality and ease of use, as well as
reputation, quality, performance, price and customer service and support.


                                      A-10


<PAGE>   11

REGULATORY ENVIRONMENT

    Certain uses of outbound call management systems are regulated by federal,
state and foreign law. The Federal Telephone Consumer Protection Act, or TCPA,
prohibits the use of automatic dialing equipment to call emergency telephone
lines, health care and similar facility patient telephone lines, and telephone
lines where the called party is charged for incoming calls, such as those used
by pager and cellular phone services. The TCPA prohibits use of such equipment
to engage two or more lines of a multi-line business simultaneously, and
restricts the use of artificial or prerecorded voice messages in calls to
residential lines. Among other things, the TCPA required the Federal
Communications Commission, or FCC, to create regulations protecting residential
telephone subscribers from unwanted telephone solicitations. In addition, the
Telemarketing and Consumer Fraud and Abuse Prevention Act authorized the
Federal Trade Commission, or FTC, to prohibit a variety of deceptive and/or
abusive telemarketing practices, including, among other things, repetitive or
harassing calls and requests by telemarketers for payments before certain types
of services are provided. The rules adopted by the FCC and FTC prohibit calls
to persons who have indicated that they do not wish to be contacted, and the
FCC specifically requires telemarketers to maintain a company-specific
"do-not-call list" that contains the names and numbers of residential
subscribers who do not want to receive calls. The rules also require that
telemarketers may call consumers only after 8:00 a.m. and before 9:00 p.m.,
local time. The FCC rules do not restrict calls made to parties that have an
"established business relationship" with the caller or calls placed by
tax-exempt nonprofit organizations. The Telemarketing Fraud Prevention Act, or
TFPA, adopted in June 1998, imposes severe criminal penalties, including
forfeiture of property, for fraud committed through telemarketing calls.
Certain states have enacted similar laws limiting access to telephone
subscribers who object to receiving solicitations. The Fair Debt Collection
Practices Act, or FDCPA, limits communication by certain debt collectors with
consumers only after 8:00 a.m. and before 9:00 p.m., local time, and not at the
consumer's place of business. Many of our customers are exempt from the FDCPA.
In addition, certain states have enacted laws regarding debt collection
practices, which in some cases may impose restrictions on telephonic collection
activities in addition to those of the FDCPA. Although compliance with these
laws may limit the potential use of our products in some respects, we believe
our systems can be programmed to operate automatically in full compliance with
these laws through the use of appropriate calling lists and calling campaign
time parameters.

THE APPLICATION OF SALES AND OTHER TAXES TO ONLINE COMMERCE COULD ADVERSELY
AFFECT DEMAND FOR OUR PRODUCTS AND SERVICES.

    The application of sales and other taxes by state and local governments to
online commerce is uncertain and may take years to resolve. In particular, the
federal government and a number of states are currently reviewing the
appropriate tax treatment of online commerce, and new federal laws or state tax
regulations may subject online commerce to additional state sales and income
taxes. Any adverse impact on the growth of online commerce may reduce the sales
of our software and adversely affect our revenues and earnings.

PROPRIETARY RIGHTS

    We rely on a combination of patent, copyright, trade secret and trademark
laws, confidentiality procedures and contractual provisions to protect our
proprietary rights in our products and technology. We hold numerous U.S. and
foreign patents covering various processes and technologies utilized in
telephony based call management systems. These patents cover our proprietary
implementations of applications such as inbound/outbound call blending, call
progress analysis, screen pops of the called person's account information,
Cancel Dial and Single System Image View. We also have a number of pending
patent applications on customer interaction management innovations for which
patents have not yet issued. In many cases, we have also received or applied
for patents in other countries covering the innovations covered by existing
U.S. patents or patent applications. We have an extensive portfolio of
seventeen US patents and twenty-four foreign patents worldwide, and another
sixty-four patents pending in over 20 countries.

EMPLOYEES

    As of December 31, 1999, we had 478 full-time employees, (172 in
professional services and global support services, 146 in sales and marketing,
90 in research and development and 70 in administration), of whom 419 were
based in the United States and 59 were based in other countries. With the
exception of eight employees of our Mexico City subsidiary, none of our
employees are covered by a collective bargaining agreement. We consider our
employee relations to be good.


                                      A-11


<PAGE>   12

    We believe our future success will depend in large part on our ability to
recruit and retain qualified employees, especially experienced software
engineering personnel. The competition for such personnel is intense, and we
cannot assure that we will be successful in retaining or recruiting key
personnel.

EXECUTIVE OFFICERS AND DIRECTORS

    Our executive officers and directors, and their ages as of January 31, 2000
are as follows:

<TABLE>
<CAPTION>

NAME                                                AGE                  POSITION
----                                                ---                  --------
<S>                                                 <C>  <C>
Aleksander Szlam............................        48   Chairman of the Board and Chief Executive
                                                         Officer
James Tito..................................        43   Vice Chairman of the Board and President
George W. Landgrebe.........................        58   Chief Operating Officer, Chief Financial
                                                         Officer and Chief Administrative Officer
William K. Dumont...........................        50   Executive Vice President
Andrew J. Filipowski (1)....................        48   Director
Donald L. House(1)..........................        58   Director
</TABLE>
----------

(1) Member of the Audit Committee and the Compensation Committee.

    ALEKSANDER SZLAM founded eShare in 1979 and has served as our Chairman of
the Board and Chief Executive Officer since its inception. Prior to founding
the Company, Mr. Szlam worked as a design engineer and scientist at Lockheed
Corporation, NCR and Solid State Systems.

    JAMES TITO has served as our president since October 1999. Mr Tito was a
co-founder of eShare.com (formerly eShare Technologies, Inc.), and served as
the Chairman and Chief Executive Officer of eShare.com from its inception in
October 1996 until its acquisition by eShare. Prior to co-founding eShare.com,
Mr. Tito served as the president of its predecessor, Interactive Marketing
Technologies (IMT), a database marketing, consulting and services firm, since
1988. Mr. Tito serves as a director of LISTNet, Long Island's Software
Technology Network.

    GEORGE W. LANDGREBE has served as our Chief Operating Officer since
December 1999, and as our Chief Financial Officer since February 2000. Mr.
Landgrebe was a Director of eShare.com from its inception until its merger with
us. Prior to joining eShare, Mr. Langrebe was managing partner in Performance
Leadership, LLC, a human resources consulting group. Mr. Landgrebe has also
held executive positions with AutEx Systems, an online, real time interactive
equity block trading firm, Thomson Financial Information (American Banker/Bond
Buyer), Robbins Research International & Infinite Possibilities LLC, WorkLife
Solutions, and Xerox Corporation.

    WILLIAM K. DUMONT has served as Executive Vice President, Business
Development, since January 2000. Mr. Dumont was Chief Operating Officer of
eShare from January 1999 until December 1999. He was Senior Vice President,
Worldwide Sales from August 1998 until December 1999. Mr. Dumont also served as
Vice President, Sales from December 1996 until August 1998. Prior to joining
eShare, Mr. Dumont served as Regional Manager for Octel Communications
Corporation from 1994 to 1996, and from 1990 to 1994 he served as Regional Vice
President of VMX, Inc., both of which are voice-processing companies.

    DONALD L. HOUSE has served as a Director since June 1997. Mr. House has
served as Chairman of the Board of Directors of Clarus Corporation (formerly
known as SQL Financials International, Inc.), a client/server software company,
since January 1993. From September 1991 until December 1992, Mr. House served
as President of Prentice Hall Professional Software, Inc., a subsidiary of
Simon and Schuster, Inc. Since 1988, he has been a



                                      A-12


<PAGE>   13

business advisor, director and investor in a number of emerging growth high
technology companies. From 1968 through 1987, Mr. House served in a number of
positions with Management Science America, Inc., a provider of application
software.

    ANDREW J. FILIPOWSKI has served as a Director since April 1999. He is
President, CEO and Chairman of divine interVentures, Inc, a technology
investment group. Mr. Filipowski was Founder/Chairman/President of Platinum
Technology, Inc., from its founding in 1987 until its sale to Computer
Associates, Inc. in 1999. Platinum Technology developed and marketed a wide
array of distributed computing systems software products and data warehousing
solutions

    There are no family relationships between any of our directors or executive
officers.

CERTAIN FORWARD LOOKING STATEMENTS

    In this report (including the documents incorporated herein by reference),
we have made certain forward-looking statements that are based on our current
beliefs and the information currently available to us, as well as estimates and
assumptions we have made. Words such as "anticipate," "believe," "estimate,"
"expect," "future," "intend," "plan" and similar expressions, as they relate to
us or our management, identify forward-looking statements. Such statements
reflect our current views with respect to future events and are subject to
certain risks, uncertainties and assumptions relating to our operations and
results of operations, competitive factors and pricing pressures, shifts in
market demand, the performance and needs of the industries we serve, the costs
of product development and other risks and uncertainties, including the risk
and uncertainties identified above under "Risk Factors." Should one or more of
these risks or uncertainties materialize, or should the underlying assumptions
prove incorrect, actual results or outcomes may vary significantly from those
anticipated, believed, estimated, expected, intended or planned. Please see
Exhibit 99.1 "Safe Harbor Compliance Statement for Forward Looking Statements",
the terms of which are incorporated herein, for additional factors to be
considered by shareholders and prospective shareholders.

ITEM 2.  PROPERTIES

    Our corporate headquarters, which include our principal administrative
offices are located in approximately 100,000 square feet of modern office space
in Norcross, Georgia. This facility is leased to us through 2005. Subsequent to
entering into this lease, the facility was acquired by a partnership controlled
by our Chairman of the Board, Chief Executive Officer and principal
shareholder. We lease through our English subsidiary eShare Technologies
Limited, approximately 14,000 square feet of modern office space outside
London. The facility is owned by a corporation controlled by our Chairman of
the Board, Chief Executive Officer and principal shareholder.

    Our marketing, support, sales and research and development activities are
undertaken in our corporate headquarters and a 10,000 square foot leased
facility in Commack, N.Y. We also lease space for several sales and support
centers located in the United States and in London, Mexico City, Paris and
Toronto. We believe we will require significant additional office space within
the next 12 months and that suitable space will be available to accommodate
expansion of our operations on commercially reasonable terms. We anticipate
leasing approximately 30,000 additional square feet of general office space at
market rates near our current office in Commack, NY.

ITEM 3.  LEGAL PROCEEDINGS

    The Company is from time to time, subject to legal proceedings and claims
which have arisen in the ordinary course of business. We are not currently a
party to any legal proceedings which we believe to be material with respect to
the financial position or results of operations of the Company.

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

    There were no matters brought to a vote of security holders during the
fourth quarter of FY 1999.


                                      A-13


<PAGE>   14

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

    Our common stock is listed on the Nasdaq National Market, or Nasdaq, under
the symbol "ESHR." The following table sets forth the range of high and low
sale prices for our common stock on Nasdaq during the periods indicated
commencing June 4, 1997, the date of our initial public offering.

<TABLE>
<CAPTION>
                                                                           HIGH       LOW

<S>                                                               <C>              <C>
1997:
 Second Quarter (from June 4, 1997)........................       $   13           $  10
  Third Quarter.............................................          12 7/8          7 5/8
  Fourth Quarter............................................          12 7/8          7 3/4
1998:
  First Quarter.............................................          19 1/8          8 1/2
  Second Quarter............................................          19 1/8          11 3/4
  Third Quarter.............................................          17 3/8           8
  Fourth Quarter............................................          21 1/4          7 1/4
1999:
  First Quarter.............................................          25 1/8          11
  Second Quarter............................................          16 7/8          9 3/8
  Third Quarter.............................................          13 1/2          7 3/4
  Fourth Quarter............................................          28 7/16         3 7/16
2000
  First Quarter (through  March 17, 2000)...................          25 3/4          13
</TABLE>


    On March 22, 2000, the last sale price of the common stock on Nasdaq was
$13.625 per share. As of March 22, 2000, there were 130 holders of record of our
common stock.

    We have never declared or paid any cash dividends on our common stock. We
currently anticipate that we will retain all future earnings for use in our
business and do not anticipate paying cash dividends in the foreseeable future.


ITEM 6.  SELECTED FINANCIAL DATA

    You should read the following selected consolidated financial data in
conjunction with our consolidated financial statements and the related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in this report. We have derived the statement of operations data for
the years ended December 31, 1995, 1996, 1997, 1998 and 1999 from our financial
statements. On September 1, 1999, we completed the acquisition of eShare.com,
Inc. The acquisition was accounted for as a pooling of interest; therefore, all
prior period amounts have been restated.



                                      A-14



<PAGE>   15
<TABLE>
<CAPTION>

                                                                                       YEAR ENDED DECEMBER 31,
                                                                    -------------------------------------------------------
                                                                    1995        1996        1997          1998         1999
                                                                    ----        ----        ----          ----         ----
                                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
               CONSOLIDATED STATEMENT OF OPERATIONS DATA:
               <S>                                                 <C>         <C>         <C>           <C>         <C>
               Net revenues:
                  Product ....................................     $24,620     $32,077     $ 46,481      $71,333     $ 63,063
                  Service ....................................      10,662      15,944       20,039       25,748       31,792
                                                                   -------     -------     --------      -------     --------
                         Total revenues ......................      35,282      48,021       66,520       97,081       94,855
                Cost of revenues:
                  Product ....................................       8,730      11,494       15,577       21,680       19,398
                  Service ....................................       5,282       6,994        9,642       13,346       16,765
                                                                   -------     -------     --------      -------     --------
                         Total cost of revenues ..............      14,012      18,488       25,219       35,026       36,163
                                                                   -------     -------     --------      -------     --------
                Gross margin .................................      21,270      29,533       41,301       62,055       58,692
                Operating expenses:
                  Engineering, research and development ......       4,050       5,158        8,003       11,798       14,213
                  Selling, general and administrative ........      12,559      17,655       26,080       36,208       46,467
                  Write off of purchased software ............          --          --          268           --           --
                  Amortization of intangible assets ..........          --          --           --           --          542
                  Acquisition and restructuring related
                     charges .................................          --          --           --           --        6,990
                  Deferred compensation expense ..............          --          --           --           --        2,271
                                                                   -------     -------     --------      -------     --------

                         Total operating expenses ............      16,609      22,813       34,351       48,006       70,483
                                                                   -------     -------     --------      -------     --------
                Income (loss) from operations ................       4,661       6,720        6,950       14,049      (11,791)
                Other income, net ............................          88         178          417        1,067          756
                                                                   -------     -------     --------      -------     --------
                Income (loss) before income taxes ............       4,749       6,898        7,367       15,116      (11,035)

                Income tax provision (benefit):
                  Tax provision (benefit) ....................          --           2        3,024        6,576       (1,077)
                  Deferred tax adjustment ....................          --          --       (1,473)          --           --
                                                                   -------     -------     --------      -------     --------
                Net income (loss) ............................     $ 4,749     $ 6,896     $  5,816      $ 8,540     $ (9,958)
                Preferred stock preference ...................          --          --           --           --       (5,850)
                                                                   -------     -------     --------      -------     --------
                Net income (loss) applicable to common
                shareholders .................................     $ 4,749     $ 6,896     $  5,816      $ 8,540     $(15,808)
                                                                   =======     =======     ========      =======     ========

                Income before pro forma income taxes .........     $ 4,749     $ 6,896     $  7,367
                Pro forma income taxes .......................       1,794       2,827        4,469
                                                                   -------     --------     -------
                Pro forma net income .........................     $ 2,955     $ 4,069     $  2,898
                                                                   =======     ========    ========
                Earnings (loss) per share:
                  Diluted earnings (loss) per share ..........     $  0.38     $  0.39     $   0.29      $  0.40     $  (0.76)
                  Pro forma diluted earnings (loss) per share.     $  0.24     $  0.23     $   0.14      $  0.40     $  (0.76)

                Weighted average shares outstanding:
                  Diluted ....................................      12,338      17,475       20,049       21,575       20,758
</TABLE>


<TABLE>
<CAPTION>

                                                                                          DECEMBER 31,
                                                                   -------------------------------------------------------
                                                                     1995        1996        1997        1998        1999
                                                                   -------     -------     -------     -------     -------
                                                                                        (IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
<S>                                                                <C>         <C>         <C>         <C>         <C>
Cash, cash equivalents and marketable securities..............     $ 5,959     $10,973     $32,116     $30,783     $14,872
Working capital ..............................................       6,904       9,474      32,909      42,656      38,596
Total assets .................................................      20,928      29,167      58,861      78,484      70,551
Long-term debt, net of current portion .......................       2,644          --         185       2,726          74
Total shareholders' equity ...................................       6,657      12,786      38,649      48,394      53,837
</TABLE>





ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS


    We are a leading provider of Customer Relationship Management solutions
focusing on Customer Interaction Management. Our solutions support voice,
e-mail, live interaction/chat and hosting services for more than 2,000 major
e-businesses, Application Service Providers (ASP's), Internet Service Providers
(ISP's) and Portals in more than 30 countries. Our solutions enable real-time
interactive communications and services, both voice based and over the
Internet, and include customer service and support, customer self-service,
instant messaging, live conferencing and events, distance learning, community
chat, threaded discussion forums and a variety of custom integration tools.
Organizations use our applications and services to implement strategies for
customer interaction that increase the value derived from their customers by
enhancing customer acquisition and retention activities, while reducing costs
and improving agent productivity and effectiveness. We offer ongoing
maintenance support of our products. We also offer fee-based installation,
integration, training and consulting services.

    Our revenues are derived primarily from three sources: (i) product license
fees for the use of our software applications and sales of related computer and
telephony hardware to utilize the software, (ii) service fees for ongoing
system support, maintenance, installation, integration, training and consulting
services, and (iii) fees for hosting applications for our customers. We
recognize product revenue upon shipment of the product if there are no
significant post-delivery obligations, if collection is probable and if the
agreement requires payment within one


                                      A-15


<PAGE>   16

year. Revenues from post-contract maintenance support and revenues from hosting
applications are recognized ratably over the term of the support or hosting
period. Post-contract maintenance support revenues accounted for 21.7% of total
revenues in 1999. Revenues from consulting, installation, integration, and
training services are recognized as the services are performed. In any given
period, a significant portion of our revenues may be derived from large sales to
a limited number of customers. During 1999, no customer accounted for more than
10% of our total revenues. During 1998, CitiGroup accounted for 13.1% of our
total revenues. During 1997, BancOne Services Corp. (now First USA) accounted
for 11.8% of our total revenues. Revenues from our five largest customers
represented 27.9%, 23.2%, and 28.2% of our total revenues for 1997, 1998 and
1999, respectively.

    We currently market our products in the United States, Canada, Mexico,
France, and the United Kingdom through a direct sales force and through select
distributors. We rely on Value Added Resellers (VARs) and distributors to sell,
install and support our products in other countries. Revenues from sales to
customers outside the United States accounted for 18.4%, 23.8%, and 31.7% of
our total revenues for 1997, 1998 and 1999, respectively. We believe that our
continued growth and future profitability will require further expansion of our
international operations. To successfully expand international sales, we may
establish additional foreign operations and we will hire additional personnel
and recruit additional VARs and distributors. To the extent that we are unable
to do so on a timely basis, our revenue growth, if any, may be slowed, and
profitability may be adversely affected. Our international revenues are
denominated primarily in U.S. dollars or British pounds. Our expenses incurred
in foreign countries are typically denominated in local currencies. We have
recognized pre-tax foreign exchange gains (losses) of approximately ($20,000),
$(23,000), and $24,000 in 1997, 1998 and 1999, respectively. There can be no
assurance that future fluctuations in currency exchange rates will not have a
material adverse impact on our future international operations.

    In June 1999 we acquired smallwonder softworks, a provider of multi-media,
web enabled contact center software solutions. The acquisition was accounted
for as a purchase. Under purchase accounting, the total purchase cost and fair
value of liabilities assumed were allocated to the tangible and intangible
assets of smallwonder softworks based upon their respective fair values as of
the closing. The remainder of the excess of the purchase price over the
tangible assets acquired of approximately $4.7 million was assigned to trade
names, workforce, and goodwill and is being amortized over a period of five
years.

    In September 1999 we merged with eShare Technologies, Inc., a provider of
internet-based software solutions. The merger was designed to expand our
addressable market to include the emerging market of customer interaction
management over the Internet, which is being driven by the explosive growth in
e-commerce. All historical financial information and analysis have been
restated to reflect the acquisition, which was accounted for as a pooling of
interests. With the merger, we are currently operating in two segments, call
center and Internet. Segment information is detailed in the notes to the
consolidated financial statements.

    We anticipate the integration and consolidation of smallwonder softworks
and eShare Technologies will require substantial management, financial, and
other resources. The acquisitions involve a number of significant risks
including potential difficulties in assimilating the technologies, services,
and products, or in achieving the expected synergies and cost reductions, as
well as other unanticipated risks and uncertainties. As a result, there can be
no assurance as to the extent to which the anticipated benefit with respect to
the acquisitions will be realized, or the timing of any such realization.

RESULTS OF OPERATIONS

    The following table sets forth items shown in our statement of operations
as a percentage of total revenues for the periods indicated. The table should
be read in conjunction with our financial statements and notes thereto
contained elsewhere in this report.


                                      A-16


<PAGE>   17
<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                             ----------------------------
                                                                              1997       1998       1999
                                                                              ----       ----       ----
                            <S>                                              <C>         <C>        <C>
                            Net revenues:
                              Product ..................................      69.9%       73.5%      66.5%
                              Service ..................................      30.1        26.5       33.5
                                                                             -----       -----      -----
                                      Total revenues ...................     100.0       100.0      100.0
                            Cost of revenues:
                              Product ..................................      23.4        22.3       20.4
                              Service ..................................      14.5        13.8       17.7
                                                                             -----       -----      -----
                                      Total cost of revenues ...........      37.9        36.1       38.1
                                                                             -----       -----      -----
                            Gross margin ...............................      62.1        63.9       61.9
                            Operating expenses:
                              Engineering, research and development ....      12.0        12.2       15.0

                              Selling, general and administrative ......      39.2        37.3       49.0

                              Write off of purchased software ..........       0.4          --         --
                              Amortization of intangible assets ........        --          --        0.6
                              Acquisition and restructuring related
                                charges ................................        --          --        7.3
                              Deferred compensation expense.............        --          --        2.4
                                                                             -----       -----      -----
                                      Total operating expenses .........      51.6        49.5       74.3
                                                                             -----       -----      -----
                            Income (loss) from operations ..............      10.5        14.4      (12.4)
                            Other income, net ..........................       0.6         1.1        0.8
                                                                             -----       -----      -----
                            Income (loss) before income taxes ..........      11.1        15.5      (11.6)
                            Income tax provision (benefit):
                              Tax provision (benefit) ..................       4.5         6.7       (1.1)

                              Deferred tax adjustment ..................      (2.2)         --         --
                                                                             -----       -----      -----
                            Net income (loss) ..........................       8.8%        8.8%      10.5%

                            Preferred stock preference .................        --          --       (6.2)
                                                                             -----       -----      -----
                            Net income (loss) applicable to common
                              shareholders .............................       8.8%        8.8%     (16.7)%
                                                                             ======      ======     ======
                            Income before pro forma income taxes .......      11.1%

                            Pro forma income taxes .....................       6.7

                            Pro forma net income .......................       4.4%

</TABLE>



    The following table sets forth, for each component of net revenues, the
cost of such revenues as a percentage of such revenues for the periods
indicated:


<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                                    -----------------------------
                                                                      1997      1998       1999
                                                                    -------    -------    -------
                             <S>                                    <C>        <C>        <C>
                             Cost of product revenues............    33.5%      30.4%      30.8%
                             Cost of service revenues............    48.1%      51.8%      52.7%
</TABLE>


YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

    Revenues

    Product. Our product revenues declined by 11.6% from $71.3 million in 1998
to $63.1 million in 1999. The decrease in product revenues was due to reduced
demand for our call center products, primarily in the United States, and to a
reduction in hardware content in our products. Total call center product
revenue dropped 18.3% from $67.9 million in 1998 to $55.5 million in 1999. The
reduced demand related to Y2K slowdowns in purchasing as well as increased
pricing pressures within the call center industry. Internet product revenue
increased 123.1% from $3.4 million in 1998 to $7.6 million in 1999 due to
increased demand for Internet customer interaction solutions. In addition, our
Internet product suite was expanded with the introduction of NetAgent 2.0 in
the fourth quarter of 1998, Expressions 4.0 in the first quarter of 1999,
Connections and Re:sponse in the third quarter of 1999, and NetAgent 3.0 in the
fourth quarter of 1999.

    Service. We increased our service revenues by 23.5% from $25.7 million in
1998 to $31.8 million in 1999. Service revenues increased primarily due to an
increase in the number of post-contract maintenance support agreements and
growing demand for post-implementation consulting services.

    Cost of Revenues

    Product. The cost of product revenues includes the cost of material, the
cost of sublicensing third-party software, personnel-related costs for internal
product assembly and fees paid to third parties for outsourced product
assembly. Cost of product revenues decreased from $21.7 million, or 30.4% of
related product revenues, in 1998, to $19.4



                                      A-17


<PAGE>   18

million, or 30.8% of related product revenues, in 1999. Cost of product revenues
for the contact center segment decreased from $21.3 million, or 31.4% of related
product revenues in 1998, to $19.0 million, or 34.3% of related product
revenues, in 1999. The decrease in absolute dollars in the cost of product
revenues was due to the decline in the volume of shipments of our contact center
products. The increase as a percentage of product revenues was primarily due to
the impact of personnel and other fixed costs on a reduced base of contact
center product revenues. Cost of product revenues for the Internet segment
increased from $344,000, or 10.2% of related product revenues in 1998, to
$392,000, or 5.2% of related product revenues, in 1999. The increase in absolute
dollars in cost of product revenues was related to the increase in volume of
shipments of our Internet products. The decrease as a percentage of product
revenues was primarily due to the impact of an increased base of Internet
product revenues in relation to personnel and other fixed costs.

    Service. The cost of service revenues primarily consists of
employee-related costs for customer support, consulting and field service
personnel and fees paid to third parties for installation services and post-
installation hardware maintenance services. Cost of service revenues increased
from $13.3 million, or 51.8% of related service revenues, in 1998, to $16.8
million, or 52.7% of related service revenues, in 1999. The increase in
absolute dollars in the cost of service revenues was primarily due to the
increase in service personnel to support the larger installed customer base,
and the expansion of our post-implementation consulting practice. The increase
as a percentage of service revenues was primarily due to the creation of a
NetAgent support staff and infrastructure to support the expected growth in
NetAgent customers.

    Operating Expenses

    Engineering, research and development. Engineering, research and
development expenses primarily consist of employee-related costs for
engineering personnel involved with Internet and voice/CTI software
development. Also included are outside contractor costs for development
projects and expendable equipment purchases. Engineering, research and
development costs increased from $11.8 million, or 12.2% of total revenues, in
1998, to $14.2 million, or 15.0% of total revenues, in 1999. The increase in
absolute dollars resulted primarily from the addition of developers and outside
contractors to support our new Internet product development efforts. The
increase as a percentage of total revenues was primarily a factor of the
reduced contact center product revenues. We expect to transfer a significant
number of contact center developers to our Internet product development efforts
in the near future, in order to expand our multi-channel CIM offerings.

    Selling, general and administrative. Selling, general and administrative
expenses consist primarily of employee-related costs for sales, marketing,
administrative, finance and human resources personnel. Also included are
marketing expenditures for trade shows, advertising and other promotional
expenditures. Selling, general and administrative costs increased from $36.2
million, or 37.3% of total revenues, in 1998, to $46.5 million, or 49.0% of
total revenues, in 1999. This increase in absolute dollars was primarily
related to the expansion of our sales and marketing resources, and increased
levels of marketing activities. The increase as a percentage of total revenues
was primarily a result of the reduction in total revenues, and the duplicate
costs of supporting two businesses. We will consolidate general and
administrative costs as we more fully integrate the businesses.

    Acquisition and Merger-Related Expenses

In connection with the acquisition of smallwonder softworks and the merger with
eShare Technologies, Inc., the Company incurred direct merger and restructuring
related expenses of approximately $7.0 million, comprised primarily of
investment bankers, attorneys, accountants and other professional fees. In
addition, the Company incurred $2.3 million (non-cash) of indirect deferred
compensation expenses related to the conversion of the eShare stock option
plan. The Company also incurred $542,000 in amortization of intangible assets
related to the purchase of smallwonder softworks.

    Other Income, Net

    Other income, net decreased from $1.1 million in 1998 to $756,000 in 1999.
The decrease was primarily due to interest income earned on our investments in
marketable securities, which decreased due to lower cash levels caused by
negative cash flows from operating activities in the second half of the year.

                                      A-18

<PAGE>   19

    Income Tax Provision (Benefit)

    We recorded an income tax provision of $6.6 million in 1998 and an income
tax benefit of approximately $1.1 million in 1999. Our effective tax rate was
43.3% in 1998 primarily due to the effect of permanent differences between book
and tax and due to the effect of not recording the benefit on the losses
incurred by eShare due to the uncertainty of realizing those losses. Our
effective tax rate was (9.7)% for 1999 primarily due to the effect of not
recording the majority of the benefit on the losses incurred by eShare due to
the uncertainty of realizing those losses.

    Preferred Stock Preference

    Included in results of operations for the year ended December 31, 1999, is
a non-recurring, non-cash charge of $5.8 million which represents the
difference between the estimated fair value of common stock of eShare at
February 19, 1999 and the purchase price of certain Series C Preferred Stock
issued on that date. As part of the acquisition, the Series C Preferred Stock
was converted to common stock.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

    Revenues

    Product. We increased our product revenues by 53.5% from $46.5 million in
1997 to $71.3 million in 1998. The increase in product revenues was due to
continued strong demand for our products, increased marketing and sales
efforts, increased international sales through the direct channel and increased
sales through distribution channels. Over this period, we expanded our Internet
solutions with the introduction of Expressions 3.0 in the fourth quarter of
1997, NetAgent 1.0 in the second quarter of 1998. We expanded our contact
center solutions with the introduction of PhoneFrame Explorer in the fourth
quarter of 1997.

    Service. We increased our service revenues by 28.5% from $20.0 million in
1997 to $25.7 million in 1998. Service revenues increased primarily due to an
increase in the number of maintenance and support agreements and, to a lesser
degree, from revenues generated by installation of new systems, upgrades to
existing systems and consulting services. We introduced consulting services in
the fourth quarter of 1997.

    Cost of Revenues

    Product. The cost of product revenues includes the cost of material, the
cost of sublicensing third-party software, personnel-related costs for internal
product assembly and fees paid to third parties for outsourced product
assembly. Cost of product revenues increased from $15.6 million, or 33.5% of
related product revenues, in 1997, to $21.7 million, or 30.4% of related
product revenues in 1998. The increase in absolute dollars in the cost of
product revenues was due to the increase in the volume of shipments of our
products. The decrease, as a percentage of product revenues, was primarily due
to product design improvements, reduced material purchase costs, and lower
hardware content of the systems.

    Service. The cost of service revenues primarily consists of
employee-related costs for customer support, consulting and field service
personnel and fees paid to third parties for installation services and post-
installation hardware maintenance services. Cost of service revenues increased
from $9.6 million, or 48.1% of related service revenues, in 1997, to $13.3
million, or 51.8% of related services revenues, in 1998. The increase in
absolute dollars in the cost of service revenues was primarily due to the
increase in service personnel to support the larger installed customer base and
higher volume of installations. The increase as a percentage of service
revenues, was primarily due to increased infrastructure spending for
international operations and to support expansion of domestic indirect
distribution channels.


                                      A-19

<PAGE>   20

    Operating Expenses

    Engineering, research and development. Engineering, research and
development expenses primarily consist of employee-related costs for
engineering personnel involved with software, voice processing and CTI
technology development. Also included are outside contractor costs for
development projects and expendable equipment purchases. Engineering, research
and development costs increased from $8.0 million, or 12.0% of total revenues,
in 1997, to $11.8 million, or 12.2% of total revenues, in 1998. The increase in
absolute dollars resulted primarily from the addition of developers and outside
contractors to support our new product development efforts, which were focused
on continued enhancements to PhoneFrame Explorer and ongoing development of
future products, including Enterprise Explorer. We intend to continue to invest
heavily in product development activities. As a result, we expect that
engineering, research and development costs will increase in absolute dollars
and may increase as a percentage of revenues in the future.

    Selling, general and administrative. Selling, general and administrative
expenses consist primarily of employee-related costs for sales, marketing,
administrative, finance and human resources personnel. Also included are
marketing expenditures for trade shows, advertising and other promotional
expenditures. Selling, general and administrative costs increased from $26.1
million, or 39.2% of total revenues, in 1997, to $36.2 million, or 37.3% of
total revenues, in 1998. This increase in absolute dollars was primarily
related to the expansion of our sales and marketing resources, increased
commission expenses due to higher sales, and increased levels of marketing
activities. The decrease as a percentage of total revenues was primarily a
result of leveraging the infrastructure and improvements to operating
efficiencies.

    Other Income, Net

    Other income, net increased from $417,000 in 1997 to $1.1 million in 1998.
The increase was primarily due to interest income earned on our investments in
marketable securities and the elimination of interest expense attributable to
the receipt of proceeds from our initial public offering in June 1997.

    Income Tax Provision (Benefit)

    In connection with the initial public offering on June 4, 1997, we
converted our U.S. taxable status from an S corporation to a C corporation and,
accordingly, we are subject to federal and state income taxes. As a result, we
recorded a one time tax benefit of $1.5 million in 1997 for the change in our
tax status. We recorded an income tax provision of $6.6 million in 1998. Our
effective tax rate was 43.3% in 1998 primarily due to the effect of permanent
differences between book and tax and due to the effect of not recording the
benefit on the losses incurred by eShare due to the uncertainty of realizing
those losses.

FINANCIAL CONDITION

    Total assets as of December 31, 1999, were $70.6 million, a decrease of
$7.9 million from December 31, 1998. The decrease was primarily due to the
reduction in cash and cash equivalents and marketable securities due to net
operating losses experienced during the year, and a reduction in accounts
receivable, offset by an increase in property and equipment. Cash, cash
equivalents and marketable securities decreased by $15.9 million. Accounts
receivable decreased $925,000. Net property and equipment increased by $3.1
million primarily due to the purchase and implementation of enterprise resource
planning software and equipment and purchases of software and equipment used
for development purposes.

    Current liabilities as of December 31, 1999 were $16.6 million, a decrease
of $10.7 million from December 31, 1998. The decrease was primarily due to a
decrease in accounts payable and accrued liabilities, offset by an increase in
deferred revenue.

LIQUIDITY AND CAPITAL RESOURCES

    We have funded our operations to date primarily through internally
generated cash flow and funds generated

                                      A-20



<PAGE>   21

from our initial public offering. Our operating activities generated cash of
$7.5 million in 1997, used cash of $161,000 in 1998, and used cash of $12.3
million in 1999. In 1999, our use of cash was caused by net operating losses and
a decrease in accounts payable and accrued liabilities. In 1998, our use of cash
resulted from net income, an increase in accounts payable and accrued
liabilities and deferred revenue, primarily offset by an increase in accounts
receivable, and a decrease in customer deposits. In 1997, our cash was generated
by net income, an increase in accounts payable and accrued liabilities,
partially offset by an increase in accounts receivable and a decrease in
customer deposits.

    Our investing activities used cash of $28.2 million in 1997, $3.3 million
in 1998, and generated cash of $1.0 million in 1999. Our use of cash in 1997
was primarily for the purchase of capital equipment and software to support our
growth and for investments in marketable securities. The use of cash in 1998
was primarily for the purchase of capital equipment and software to support our
growth and was partially offset by a reduction in investments in marketable
securities. The generation of cash in 1999 was primarily from a reduction in
investments in marketable securities partially offset by purchases of capital
equipment and software to support our growth and the purchase of smallwonder
softworks.

    Our financing activities generated $17.6 million in 1997, $3.3 million in
1998, and $6.6 million in 1999. The cash generated in 1997 was primarily from
the proceeds of our initial public offering, offset by payments to a
stockholder. Our cash in 1998 was primarily a result of the issuance of
convertible notes and the sale of common stock. Our cash in 1999 was primarily
from the sale of common stock and preferred stock.

    As of December 31, 1999, we had working capital of $38.6 million. Cash,
cash equivalents and marketable securities were $14.9 million. We estimate that
we will incur capital expenditures of approximately $2.0 million in 2000,
related to anticipated increased capital needs of technology and facility
upgrades, and support of increased staffing. We believe that existing cash,
cash equivalents and marketable securities and potential cash flow from
operations will be sufficient to meet our cash requirements for at least the
next twelve months.

YEAR 2000 READINESS



                                      A-21


<PAGE>   22

    The Risks of Our Year 2000 Issues

    We do not currently believe that the effects of any Year 2000 non-compliance
in our installed base of software will adversely affect our business, financial
condition and results of operations. However, no assurance can be given that we
will not be exposed to potential claims resulting from system problems
associated with the century change which have not manifested themselves.

    We developed contingency plans for business functions that are susceptible
to a substantive risk of disruption resulting from a Year 2000 related event,
including installation of backup power generation capability at our corporate
headquarters. We did not experience any material failures in business functions
as a result of Year 2000.

NEW ACCOUNTING PRONOUNCEMENT

    In 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 will be effective for our fiscal year ending December 31, 2001. We do not
believe that the adoption of this pronouncement will have a material impact on
our financial position or results of operations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We are exposed to a number of market risks in the ordinary course of
business, such as foreign currency exchange risk resulting from our
international operations. These risks arise in the normal course of business
rather than from trading. In addition, some of our traded assets are exposed to
market risks such as interest rate fluctuations. Primarily securities owned by
us through Melita Finance Corporation, our wholly-owned investment subsidiary,
are sensitive to all of these risks and has concluded that none of our
exposures in these areas is material to fair values, cash flows or earnings.

    The following table provides information about securities owned by us
through Melita Finance Corporation that are sensitive to markets risks:

<TABLE>
<CAPTION>
                      Securities Sensitive to Market Risk by Maturity

                                  As of December 31, 1999
                                      (In thousands)
                                2000       2001       Total
                               ------     ------     -------

<S>                            <C>        <C>        <C>
Fixed Rate ($US)               $5,970     $5,306     $11,276
  Average Interest Rate          4.13%      3.87%       4.00%
</TABLE>

                                      A-22

<PAGE>   23


ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                        CONSOLIDATED FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 1998 AND 1999
                                  TOGETHER WITH
                                AUDITORS' REPORT

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


                                                                                                         PAGE
                                                                                                         ----
       <S>                                                                                               <C>
       Report of Independent Public Accountants..................................................         24
       Consolidated Balance Sheets as of December 31, 1998 and 1999..............................         25
       Consolidated Statements of Operations for the three years in the period ended
       December 31, 1999.........................................................................         26
       Consolidated Statements of Shareholders' Equity for the three years in the period ended            27
       December 31, 1999.........................................................................
       Consolidated Statements of Comprehensive Income for the three years in the period ended
       December 31, 1999.........................................................................         28
       Consolidated Statements of Cash Flows for the three years in the period ended
       December 31, 1999.........................................................................         29
       Notes to Consolidated Financial Statements................................................         30
</TABLE>


                                      A-23


<PAGE>   24




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To eShare Technologies, Inc. and Subsidiaries:


We have audited the accompanying consolidated balance sheets of ESHARE
TECHNOLOGIES, INC. (a Georgia corporation, and formerly Melita International
Corporation) AND SUBSIDIARIES as of December 31, 1998 and 1999 and the related
consolidated statements of operations, shareholders' equity, comprehensive
income (loss), and cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the responsibility of eShare
Technologies, Inc.'s management. Our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the financial
statements as of and for the years ended December 31, 1997 and 1998 of
eShare.com, Inc. (a Delaware corporation, and formerly eShare Technologies,
Inc.) a company acquired during 1999 in a transaction accounted for as a pooling
of interests, as discussed in Note 2. Such statements are included in the
financial statements of eShare Technologies, Inc. and subsidiaries and reflect
total assets and total revenues of 4% and 1% in 1997, respectively, and reflect
total assets and total revenues of 4% and 4% in 1998, respectively, of the
related totals. Such statements also reflect total net loss of $(4,713,000) in
1997 and $(3,145,000) in 1998. These statements were audited by other auditors
whose report has been furnished to us and our opinion, insofar as it relates to
amounts included for eShare.com, Inc., is based solely upon the report of the
other auditors.

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

In our opinion, based on our audits and the report of the other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of eShare Technologies, Inc. and subsidiaries
as of December 31, 1998 and 1999 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.


Arthur Andersen LLP


Atlanta, Georgia
February 15, 2000


                                      A-24

<PAGE>   25



                   ESHARE TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1999
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>

                                           ASSETS                                   1998       1999
                ----------------------------------------------------------        --------   --------
                <S>                                                               <C>        <C>
                CURRENT ASSETS:
                   Cash and cash equivalents                                      $  8,027   $  3,558
                   Marketable securities                                            22,756     11,315
                   Accounts receivable, net of allowance for doubtful
                      accounts of $2,600 and $3,014 at December 31, 1998 and
                      1999, respectively                                            33,788     32,863
                   Inventories, net                                                  1,260      1,967
                   Deferred taxes                                                    3,731      4,921
                   Prepaid expenses and other                                          458        612
                                                                                  --------   --------
                            Total current assets                                    70,020     55,236
                                                                                  --------   --------
                PROPERTY AND EQUIPMENT, AT COST:
                   Furniture and fixtures                                            2,466      3,122
                   Equipment                                                        12,650     17,436
                   Leasehold improvements                                            1,198      1,390
                                                                                  --------   --------
                            Total property and equipment                            16,314     21,948
                   Less accumulated depreciation                                     8,413     10,985
                                                                                  --------   --------
                            Net property and equipment                               7,901     10,963
                                                                                  --------   --------
                   Intangible assets, net                                                -      4,254
                   Other assets                                                        563         98
                                                                                  --------   --------
                                                                                   $78,484    $70,551

                                                                                  ========   ========
</TABLE>


<TABLE>
<CAPTION>

                            LIABILITIES AND SHAREHOLDERS' EQUITY                    1998       1999
                ----------------------------------------------------------        --------   --------
                <S>                                                               <C>        <C>
                CURRENT LIABILITIES:
                   Accounts payable                                               $  7,265   $  3,343
                   Accrued liabilities                                              12,516      4,879
                   Deferred revenue                                                  6,574      8,265
                   Customer deposits                                                   815         12
                   Current portion of notes payable                                    194        141
                                                                                  --------   --------
                            Total current liabilities                               27,364     16,640
                                                                                  --------   --------
                COMMITMENTS AND CONTINGENCIES (NOTE 7)
                   Notes payable, excluding current portion                            226         74
                   Convertible notes payable                                         2,500          -
                                                                                  --------   --------
                SHAREHOLDERS' EQUITY:
                   Preferred stock, no par value: 20,000,000 shares
                      authorized, no shares issued and outstanding
                      at December 31, 1998 and 1999                                       -          -
                   Common stock, no par value; 100,000,000 shares
                      authorized; 20,337,183 shares issued and
                      outstanding at December 31, 1998 and 21,386,714
                      shares issued and outstanding at December 31, 1999                69         69
                   Additional paid-in capital                                       44,282     61,439
                   Deferred compensation                                              (303)    (1,935)
                   Accumulated other comprehensive income                               96        (28)
                   Retained earnings(deficit)                                        4,250     (5,708)
                                                                                  --------   --------
                            Total shareholders' equity                              48,394     53,837
                                                                                  --------   --------
                                                                                   $78,484    $70,551
                                                                                  ========   ========
</TABLE>






     All prior period amounts have been restated to reflect the acquisition
                  of eShare.com, Inc. in a pooling transaction.

              The accompanying notes are an integral part of these
                          consolidated balance sheets.



                                      A-25

<PAGE>   26


                   ESHARE TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                  1997         1998          1999
                                                                -------      --------       -------

   <S>                                                          <C>           <C>         <C>
NET REVENUES:
   Product ................................................     $ 46,481      $71,333     $ 63,063
   Service ................................................       20,039       25,748       31,792
                                                                --------      -------     --------
            Total revenues ................................       66,520       97,081       94,855
                                                                --------      -------     --------
COST OF REVENUES:
   Product ................................................       15,577       21,680       19,398
   Service ................................................        9,642       13,346       16,765
                                                                --------      -------     --------
            Total cost of revenues ........................       25,219       35,026       36,163
                                                                --------      -------     --------
GROSS MARGIN ..............................................       41,301       62,055       58,692
                                                                --------      -------     --------
OPERATING EXPENSES:
   Engineering, research, and development .................        8,003       11,798       14,213
   Selling, general, and administrative ...................       26,080       36,208       46,467
   Write-off of purchased software ........................          268           --           --
   Amortization of intangible assets ......................           --           --          542
   Acquisition and restructuring related charges ..........           --           --        6,990
   Deferred compensation expense ..........................           --           --        2,271
                                                                --------      -------     --------
            Total operating expenses ......................       34,351       48,006       70,483
                                                                --------      -------     --------
INCOME FROM OPERATIONS ....................................        6,950       14,049      (11,791)

OTHER INCOME, NET .........................................          417        1,067          756
                                                                --------      -------     --------
INCOME BEFORE INCOME TAXES ................................        7,367       15,116      (11,035)
INCOME TAX PROVISION (BENEFIT):
   Tax provision (benefit) as C corporation ...............        3,024        6,576       (1,077)
   Deferred tax adjustment ................................       (1,473)          --           --
                                                                --------      -------     --------
NET INCOME (LOSS) .........................................        5,816        8,540       (9,958)

Preferred stock preference ................................           --           --       (5,850)
                                                                --------      -------     --------
NET INCOME (LOSS) APPLICABLE TO
 COMMON SHAREHOLDERS ......................................     $  5,816      $ 8,540     $(15,808)
                                                                ========      =======     ========

PRO FORMA NET INCOME:
   Income before income taxes .............................     $  7,367
   Pro forma income taxes .................................        4,469
                                                                --------
                                                                $  2,898
                                                                =======
EARNINGS PER SHARE:
   Basic earnings (loss) per share ........................     $   0.31      $  0.42     $  (0.76)
                                                                ========      =======     ========
   Diluted earnings (loss) per share ......................     $   0.29      $  0.40     $  (0.76)
                                                                ========      =======     ========
   Pro forma basic earnings per share .....................     $   0.15
                                                                ========
   Pro forma diluted earnings per share ...................     $   0.14
                                                                ========

WEIGHTED AVERAGE SHARES OUTSTANDING:
   Basic ..................................................       18,898       20,259       20,758
                                                                ========      =======     ========

   Diluted ................................................       20,049       21,575       20,758
                                                                ========      =======     ========
</TABLE>



     All prior period amounts have been restated to reflect the acquisition
                  of eShare.com, Inc. in a pooling transaction.

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


                                      A-26
<PAGE>   27



                   ESHARE TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999
                        (IN THOUSANDS, EXCEPT SHARE DATA)




<TABLE>
<CAPTION>




                                        COMMON STOCK                  OTHER
                                       ---------------  ADDITIONAL    COMPREHEN-   RETAINED
                                                          PAID-IN       SIVE       DEFERRED     EARNINGS
                                       SHARES   AMOUNT   CAPITAL       INCOME    COMPENSATION   (DEFICIT)     TOTAL
                                      --------- ------  ----------    ---------  ------------  ---------     -------

<S>                                  <C>          <C>     <C>          <C>           <C>        <C>          <C>
BALANCE, DECEMBER 31, 1996            13,097,873  $49     $ 2,656      $ 35           --        $ 10,047     $12,787
   Net income                                --    --         --         --           --           5,816       5,816
   Issue of warrants                         --    --        157         --           --              --         157
   Exercise of warrants                      --    --          1         --           --              --           1
   Deferred compensation                     --    --         12         --          (12)             --          --
   Amortization of deferred
    compensation                             --    --         --         --            4              --           4
   Proceeds from the issuance
    of common stock                   4,025,000    --     40,042         --           --              --      40,042
   Combination transaction            3,111,967    20        (20)        --           --              --          --
   Note and cash distribution
    to shareholders                          --    --         --         --           --         (20,153)    (20,153)
   Unrealized gain on
    marketable securities                    --    --         --         15           --              --          15
   Foreign currency
    translation adjustment                   --    --          0        (20)          --              --         (20)
                                     ----------   ---   --------      -----      -------         --------    --------
BALANCE, DECEMBER 31, 1997           20,234,840   $69   $ 42,848      $  30      $    (8)        $ (4,290)   $ 38,649

   Net income                                --    --         --         --           --            8,540       8,540
   Exercise of warrants                      --    --          1         --           --               --           1
   Deferred compensation                     --    --        394         --         (394)              --          --
   Amortization of deferred
    compensation                             --    --         --         --           99               --          99
   Proceeds from the issuance
    of common stock                     102,343    --      1,039         --           --               --       1,039
   Unrealized gain on
    marketable securities                    --    --         --         89           --               --          89
   Foreign currency translation
    adjustment                               --    --         --        (23)          --               --         (23)
                                     ----------   ---   --------      -----      -------         --------    --------
BALANCE, DECEMBER 31, 1998           20,337,183   $69   $ 44,282      $  96      $  (303)        $  4,250    $ 48,394

   Net loss                                  --    --         --         --          --            (9,958)     (9,958)
   Proceeds from issuance of
    common stock                      1,049,531    --      6,292         --           --               --       6,292
   Non-cash stock issuance costs             --    --        119         --           --               --         119
   Tax benefit from exercise
    of options                               --    --      3,598         --           --               --       3,598
   Conversion of convertible notes           --    --      3,000         --           --               --       3,000
   Issuance of warrants                      --    --        244         --           --               --         244
   Deferred compensation with
    granting of options                      --    --      3,904         --       (1,830)              --       2,074
   Amortization of deferred
    compensation                             --    --         --         --          198               --         198
   Unrealized loss on marketable
    securities                               --    --         --       (148)          --               --        (148)
   Foreign currency
    translation adjustment                   --    --         --         24           --               --          24
                                     ----------   ---   --------      -----      -------         --------    --------
BALANCE, DECEMBER 31, 1999           21,386,714   $69   $ 61,439      $ (28)     $(1,935)        $ (5,708)   $ 53,837
                                     ==========   ===   ========      =====      =======         ========    ========
</TABLE>


     All prior period amounts have been restated to reflect the acquisition
             of eShare.com, Inc. in a pooling transaction.

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




                                      A-27
<PAGE>   28






                   ESHARE TECHNOLOGIES, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999
                                 (IN THOUSANDS)









<TABLE>
<CAPTION>

                                                         1997          1998          1999
                                                        -------       -------       ------
<S>                                                     <C>           <C>           <C>
NET INCOME (LOSS)                                       $ 5,816       $ 8,540       $ (9,958)
                                                        -------       -------       --------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
    Foreign currency translation adjustment                 (20)          (23)            24
    Unrealized gain(loss) on marketable securities           15            89           (148)
                                                        -------       -------       --------
              Other comprehensive income (loss)              (5)           66           (124)
                                                        -------       -------       --------
COMPREHENSIVE INCOME (LOSS)                             $ 5,811       $ 8,606       $(10,082)
                                                        =======       =======       ========
</TABLE>










     All prior period amounts have been restated to reflect the acquisition
                  of eShare.com, Inc. in a pooling transaction.

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




                                      A-28
<PAGE>   29



                   ESHARE TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           1997        1998        1999
                                                         --------   ---------    --------
<S>                                                      <C>        <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                      $  5,816    $  8,540    $ (9,958)
  Adjustments to reconcile net income (loss)
    to net
   Cash provided by operating activities:
     Deferred taxes                                        (2,035)     (1,695)     (1,190)
     Depreciation and amortization                          1,816       2,463       3,120
     Noncash financing & compensation expense                 140         197          --
     Noncash compensation expense                              --          --       2,271
     Changes in assets and liabilities, net of effects
       of acquisition:
       Accounts receivable, net                            (4,164)    (17,723)      1,322
       Inventories                                            (19)      1,201        (595)
       Prepaid expenses and other assets                      (79)       (201)       (154)
       Accounts payable and accrued liabilities             6,943       5,904      (7,961)
       Deferred revenue                                     1,080       2,429       1,691
       Customer deposits                                   (1,861)     (1,173)       (803)
       Other, net                                            (126)       (103)        471
                                                         --------    --------    --------
         Total adjustments                                  1,695      (8,701)     (1,828)
                                                         --------    --------    --------
         Net cash provided by (used in)
           operating activities                             7,511        (161)    (11,786)
                                                         --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property equipment                          (4,273)     (4,585)     (6,106)
  Purchased software                                          (22)         --          --
  Purchases (sale) of marketable securities               (23,954)      1,302      11,441
  Acquisition, net of cash acquired                            --          --      (4,605)
                                                         --------    --------    --------
         Net cash provided by (used in) investing
           activities                                     (28,249)     (3,283)        730
                                                         --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of convertible notes                             1,000       2,500         500
  Deferred offering costs                                      --        (335)         --
  Repayment of capital lease obligations                      (19)         --          --
  Net proceeds from issuance of common stock               39,046       1,039       6,292
  Exercise of warrants                                         --           1          --
  Proceeds from issuance of debt                            1,162         673          --
  Repayment of debt                                          (860)       (554)       (205)
  Repayment of notes payable to stockholder                (2,625)         --          --
  Repayment of notes payable to stockholder
     representing distributions                           (12,900)         --          --
  Distributions to stockholder                             (7,253)         --          --
                                                         --------    --------    --------
         Net cash (used in) provided by
           financing activities                            17,551       3,324       6,587
                                                         --------    --------    --------
NET CHANGE IN CASH AND CASH EQUIVALENTS                    (3,187)       (120)     (4,469)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR               11,334       8,147       8,027
                                                         --------    --------    --------
CASH AND CASH EQUIVALENTS, END OF YEAR                   $  8,147    $  8,027    $  3,558
                                                         ========    ========    ========
MARKETABLE SECURITIES                                    $ 23,969    $ 22,756    $ 11,315
                                                         ========    ========    ========
CASH, CASH EQUIVALENTS, AND MARKETABLE
 SECURITIES                                              $ 32,116    $ 30,783    $ 14,873
                                                         ========    ========    ========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest during the year                 $    400    $     34    $     44
                                                         ========    ========    ========
  Income taxes paid                                      $  3,199    $  6,395    $  4,042
                                                         ========    ========    ========
  Conversion of convertible notes to
    common stock                                         $  1,000    $     --    $  3,000
                                                         ========    ========    ========
</TABLE>
     All prior period amounts have been restated to reflect the acquisition
                  of eShare.com, Inc. in a pooling transaction.

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



                                      A-29

<PAGE>   30
                            ESHARE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1998, AND 1999


1.       DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         eShare Technologies, Inc. (the "Company") is a leading provider of
         Electronic Customer Relationship Management (eCRM) collaboration
         solutions supporting voice, e-mail, live interaction/chat and hosting
         services for over 2,000 major eBusinesses, Application Service
         Providers (ASPs), Internet Service Providers (ISPs) and Portals. Prior
         to October 4, 1999, the Company was named Melita International
         Corporation.

         COMPLETION OF INITIAL PUBLIC OFFERING

         On June 4, 1997, the Company completed an initial public offering (the
         "Offering") of 4,025,000 shares of common stock at $10 per share
         resulting in net proceeds of $36,046,000.

         BASIS OF COMBINATION

         Prior to June 4, 1997, the financial statements are presented on a
         combined basis and include the accounts of the Company, Melita Europe
         Limited ("eShare Europe"), and Inventions, Inc. ("Inventions") since
         all were under common control. All significant intercompany accounts
         and transactions have been eliminated in combination.

         Concurrent with the Offering, the shareholders of eShare Europe and
         Inventions contributed their respective shares in exchange for
         3,143,395 shares of the Company. The combination was treated similar to
         a pooling of interests and no step-up basis was recorded as the
         entities involved were under common control.

         PRINCIPLES OF CONSOLIDATION

         The accompanying financial statements since June 4, 1997 include the
         accounts of the Company and its wholly owned subsidiaries. All
         significant intercompany balances have been eliminated in
         consolidation. All prior period amounts have been restated to reflect
         the acquisition of eShare.com, Inc. in a pooling of interests
         transaction.

         REVENUE RECOGNITION

         The Company generates product revenues from sales of both hardware and
         software. The Company's service revenues are generated from maintenance
         contracts which include support, parts and labor, and software update
         rights. Service revenues also include fee-based installation, training,
         and consulting services.

         The Company recognizes revenue in accordance with the American
         Institute of Certified Public Accountants Statement of Position
         ("SOP")97-2, "Software Revenue Recognition," as amended by SOP 98-9.

         The Company recognizes product revenues when a contract has been
         executed, the product has been shipped, the Company has no significant
         obligations yet to be satisfied, the fee is fixed and determinable, and
         collection of the resulting receivable is deemed to be probable.
         Software delivered on a trial basis is not recorded as revenue until a
         permanent key is delivered to the customer. Certain of the Company's
         sales contracts provide for certain payment terms normally based upon
         signing the contract, customer receipt of the product, and commencement
         of operation of the customer's system.

         Revenues from maintenance contracts are deferred and recognized ratably
         over the term of the contractual support period. If maintenance is
         included in the original contract, such amounts are unbundled from the
         license fee based on the value established by the independent sale of
         such maintenance to customers. Consulting revenues are primarily
         related to implementation services performed under separate service
         arrangements related to the installation of the Company's hardware and
         software products. Revenues from consulting, installation, and training
         services are recognized as the services are performed.


                                      A-30
<PAGE>   31

         Deferred revenues primarily relate to products that have not yet been
         delivered and maintenance services which have been paid by the
         customers prior to the performance of those services. Deferred revenue
         amounted to $6,574,000 and $8,265,000 at December 31, 1998 and 1999,
         respectively.

         CAPITALIZED SOFTWARE DEVELOPMENT COSTS

         Research and development expenditures are charged to expense as
         incurred. Software development costs are charged to research and
         development expense until technological feasibility is established,
         after which remaining software production costs are capitalized in
         accordance with Statement of Financial Accounting Standards ("SFAS")
         No. 86, "Accounting for Costs of Computer Software to Be Sold, Leased,
         or Otherwise Marketed." The Company has defined technological
         feasibility of its products as the point in time at which the Company
         has a working model of the related product, which is when the product
         has achieved "beta" status. Historically, the development costs
         incurred during the period between the achievement of beta status by a
         product and the point at which the product is available for general
         release to customers have not been material. Accordingly, the Company
         has concluded that the amount of development costs capitalizable under
         the provisions of SFAS No. 86 was not material to the financial
         statements for the years ended December 31, 1997, 1998, and 1999.
         Therefore, the Company charged all software development costs to
         expense as incurred for the years ended December 31, 1997, 1998, and
         1999.

         During 1997, based on the Company's evaluation of the future market
         potential and recoverability of one of its purchased software products,
         which was made available to customers in 1996, the Company wrote off
         the unamortized costs of $268,000.

         CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments purchased with an
         original maturity of three months or less to be cash or cash
         equivalents.

         MARKETABLE SECURITIES

         The Company's marketable securities are categorized as
         available-for-sale securities, as defined by the SFAS No. 115,
         "Accounting for Certain Investments in Debt and Equity Securities."
         Unrealized holding gains and losses are reflected as a net amount in a
         separate component of shareholders' equity until realized. For the
         purpose of computing realized gains and losses, cost is identified on a
         specific identification basis.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The book values of accounts receivable, accounts payable, and other
         financial instruments approximate their fair values at December 31,
         1997, 1998, and 1999 principally because of the short-term maturities
         of these instruments.

         PROPERTY AND EQUIPMENT

         Property and equipment are recorded at cost. The straight-line method
         of depreciation was adopted for property placed in service after
         September 30, 1997. Prior to September 30, 1997, an accelerated method
         was used. The difference between the accelerated method and the
         straight-line method was immaterial. The estimated useful lives are as
         follows:

         Furniture and fixtures             Five to seven years
         Equipment                          Three to seven years
         Leasehold improvements             Remaining life of lease

         LONG-LIVED ASSETS

         The Company reviews its long-lived assets for impairment whenever
         events or changes in circumstances indicate that the


                                      A-31
<PAGE>   32

         carrying amount of asset may not be recoverable. The Company uses the
         undiscounted future cash flow to determine if an impairment loss is to
         be recognized.

         WARRANTY COSTS

         The Company generally warranties its products for 90 days and provides
         for estimated warranty costs upon shipment of such products. Warranty
         costs have not been and are not anticipated to be significant.

         FOREIGN CURRENCY TRANSLATION

         The financial statements of eShare Europe are translated into U.S.
         dollars in accordance with SFAS No. 52, "Foreign Currency Translation."
         Net assets of eShare Europe are translated at the current rates of
         exchange at December 31. Income and expense items are translated at the
         average exchange rate for the year. The resulting translation
         adjustments are recorded in shareholders' equity. The Company has
         recognized foreign exchange gains (losses) of approximately $(20,000),
         and $(23,000) and 24,000 in 1997, 1998, and 1999, respectively.

         INCOME TAXES

         Prior to June 4, 1997, the Company and Inventions were organized as S
         corporations under the Internal Revenue Code and, therefore, were not
         subject to federal income taxes. The income or loss of the Company and
         Inventions was included in the shareholders' individual federal and
         state tax returns, and as such, no provision for income taxes was
         recorded in the accompanying consolidated statements of operations. The
         Company historically made distributions to cover the shareholders'
         anticipated tax liability.

         In connection with the Offering, the Company converted its U.S. taxable
         status from an S corporation to a C corporation, and accordingly,
         became subject to federal and state income taxes. Upon the conversion,
         the Company recognized a one-time benefit by recording deferred tax
         assets of $1,473,000.

         The accompanying financial statements prior to June 4, 1997 reflect a
         provision for income taxes on a pro forma basis as if the Company were
         liable for federal and state income taxes as a taxable corporate entity
         throughout the years presented. The pro forma income tax provision has
         been computed by applying the Company's anticipated statutory tax rate
         to pretax income, adjusted for permanent tax differences and valuation
         allowances (Note 10).

         BASIC AND DILUTED NET EARNINGS PER SHARE

         Basic earnings per share and pro forma basic earnings per share are
         computed using net income or pro forma net income divided by the sum of
         (i) the weighted average number of shares of common stock outstanding
         ("Weighted Shares") for the period presented including the number of
         shares issued in the combination of the Company, eShare Europe, and
         Inventions discussed in Note 1 and (ii) for periods prior to the
         Offering, the number of shares pursuant to Staff Accounting Bulletin
         1B.3 that at the assumed public offering price would yield proceeds in
         the amount necessary to pay the distribution to the majority
         stockholder as a result of the Offering that are not covered by the
         earnings for the year ("Distribution Shares").

         The only difference between basic and diluted net earnings per share is
         the result of the treasury stock method effect of common equivalent
         shares ("CESs"). Diluted earnings per share and pro forma diluted
         earnings per share are computed using net income or pro forma net
         income divided by the sum of (i) Weighted Shares, (ii) the Distribution
         Shares, and (iii) the treasury stock method effect of CESs outstanding
         of 1,151,000 and 1,316,000 for the years ended December 31, 1997 and
         1998 respectively. The CESs for 1999 were antidilutive and not
         considered in the calculation of loss per share.

         USE OF ESTIMATES

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


                                      A-32
<PAGE>   33

         NEW ACCOUNTING PRONOUNCEMENTS

         In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
         "Accounting for Derivative Instruments and Hedging Activities." SFAS
         No. 133 is effective for the year ending December 31, 2001. The
         adoption of this statement is not expected to have a significant impact
         on the Company's financial statements.

         RECLASSIFICATIONS

         Certain reclassifications have been made to the prior years' financial
         statements to conform to the current year presentation.

         PREFERRED STOCK PREFERENCE

         Included in the results of operations for the year ended December 31,
         1999 is a nonrecurring, non cash charge of $5.8 million which
         represents the difference between the estimated fair value of common
         stock of eShare.com, Inc. at February 19, 1999 and the purchase price
         of certain Series C preferred stock issued on that date. As part of the
         acquisition discussed below, the Series C preferred stock was converted
         to common stock.

2.       ACQUISITIONS

         On September 1, 1999, the Company completed the acquisition of
         eShare.com, Inc., a leading provider of real-time customer service and
         interactive communication solutions for e-commerce and online
         communities. The shareholders of eShare.com, Inc. received 6,050,000
         shares of the Company's common stock. The new combined company was
         renamed eShare Technologies, Inc. on October 4, 1999. The acquisition
         was accounted for as a pooling of interests, therefore, all prior
         period amounts have been restated. A reconciliation between revenue and
         net income as previously reported and as restated follows:


<TABLE>
                              FOR THE YEAR ENDED
                                  DECEMBER 31

                              1997           1998
                              ----           ----
                                 (In Thousands)
<S>                         <C>            <C>

Revenue:
As previously reported      $ 65,790       $ 93,410
eShare                           730          3,671
                            --------       --------
As restated                 $ 66,520       $ 97,081
                            ========       ========

Net Income (loss):
As previously reported      $ 10,529       $ 11,685
eShare                        (4,713)        (3,145)
                            --------       --------
As restated                 $  5,816       $  8,540
                            ========       ========
</TABLE>

         On June 15, 1999, the Company purchased smallwonder! softworks, Inc. of
         Leesburg, Virginia for $4.6 million in cash and a prospective earnout
         of up to an additional $3 million, based on achievement of certain
         defined criteria. During 1999, the Company did not pay out anything
         related to the earnout. The operations of smallwonders! softworks, Inc.
         are included in the accompany statements from June 15, 1999.


                                      A-33
<PAGE>   34

3.       INVENTORIES

         Inventories are stated at the lower of cost (first-in, first-out
         method) or market. Cost includes raw materials, labor, and overhead.
         Market is defined as replacement cost for work in progress and raw
         materials and net realizable value for finished goods. Inventories
         consist of the following at December 31, 1998 and 1999 (in thousands):

<TABLE>
<CAPTION>
                       1998        1999
                       ----        ----
<S>                   <C>         <C>

Raw materials         $  143      $  212
Work in progress          37         920
Finished goods         1,080         835
                      ------      ------
                      $1,260      $1,967
                      ======      ======
</TABLE>

4.       INTANGIBLE ASSETS

         The Company allocated the intangible assets of approximately $4.7
         million from the acquisition of smallwonder! softworks, Inc. to
         tradenames, workforce and goodwill. The intangible assets are being
         amortized over a five year period. Total amortization expense for the
         year ended December 31, 1999 was $542,000.

5.       ACCRUED LIABILITIES

         Accrued liabilities at December 31, 1998 and 1999 include the following
         (in thousands):

<TABLE>
<CAPTION>
                                         1998        1999
                                         ----        ----
<S>                                    <C>          <C>

Accrued salaries and wages             $ 4,935      $3,771
Other current liabilities                7,289         784
Accrued rent                               292         324
                                       -------      ------
                                       $12,516      $4,879
                                       =======      ======
</TABLE>

6.       NOTES PAYABLE

         NOTES PAYABLE TO SHAREHOLDERS

         In 1997, the Company issued to a shareholder notes payable in the
         amount of $12,900,000 representing undistributed earnings through
         December 31, 1996. The note was paid to the shareholder in June 1997
         with proceeds from the Company's initial public offering.

         Interest paid to the shareholder was $335,000 year ended December 31,
         1997. No interest was paid in 1998 or 1999.

         NOTES PAYABLE TO BANK

         The Company had outstanding notes payable of approximately $420,000 and
         $215,000 as of December 31, 1998 and 1999, respectively. These notes
         are payable over 36 months and require the Company to maintain certain



                                      A-34
<PAGE>   35

         financial covenants. In August and September of 1998, the Company
         issued three 10% convertible notes due February 1, 1999 for an
         aggregate amount of $2,500,000. These notes were converted to equity in
         February of 1999 and are therefore classified as long term in the
         accompanying balance sheets. In February of 1999, the Company issued
         10% convertible notes for an aggregate amount of $500,000. These notes
         were converted to equity in February of 1999.

7.       COMMITMENTS AND CONTINGENCIES

         LEASE COMMITMENTS

         At December 31, 1999, the future minimum operating lease payments
         (including leases with related parties) under noncancellable operating
         leases were as follows (in thousands):

                <TABLE>
                <S>                                      <C>
                2000                                     $ 1,794
                2001                                       1,540
                2002                                       1,347
                2003                                       1,178
                Thereafter                                 7,137
                                                         -------
                Total future minimum lease payments      $12,996
                                                         =======
               </TABLE>

         The Company's leases are primarily for equipment and facilities. Total
         rental expense for operating leases was $859,000, $1,029,000, and
         $1,385,000 in 1997, 1998, and 1999, respectively.

         In August 1994, the Company entered into a lease agreement with an
         unrelated party to lease land and buildings commencing April 1994. The
         agreement provides for annual rentals of approximately $542,000 to
         $636,000 per year over a ten-year term. In November 1995, the Company's
         majority shareholder purchased the land and buildings and now rents
         them to the Company under the terms of the original lease. Rent expense
         paid to the shareholder was $554,000, $555,000 and $566,000 in 1997,
         1998, and 1999, respectively.

         In August 1999, the Company entered into a lease agreement with a
         related party to lease land and buildings commencing December 1999 for
         a new facility in the United Kingdom. The agreement provides for annual
         rentals of approximately $565,000 per year over a fifteen-year term.
         The Company expects to offset a portion of this cost by subletting two
         of the four floors under lease.

         LEGAL MATTERS

         Many of the Company's installations involve products that are critical
         to the operations of its clients' businesses. Any failure in a Company
         product could result in a claim for substantial damages against the
         Company, regardless of the Company's responsibility for such failure.
         Although the Company attempts to limit contractually its liability for
         damages arising from product failures or negligent acts or omissions,
         there can be no assurance the limitations of liability set forth in its
         contracts will be enforceable in all instances.

         The Company is subject to legal proceedings and claims which have
         arisen in the ordinary course of business. In the opinion of
         management, the amount of potential liability with respect to these
         actions will not materially affect the financial position or results of
         operations of the Company.


8.       STOCK OPTION PLANS

         During 1992, the Company approved a stock option plan (the "1992 Plan")
         for key employees for which 640,000 shares of common stock were
         authorized for use in the Plan. During 1995, the number of authorized
         shares was increased to 1,000,000 shares of common stock. Options are
         granted at the fair market value and are exercisable based on the
         specific terms of the grant up to ten years from the grant date.
         Options granted primarily vest ratably over a four- or five-year
         employment period.


                                      A-35
<PAGE>   36

         On February 6, 1997, the Company approved the 1997 Stock Option Plan
         (the "1997 Plan") for which 1,350,000 shares of common stock were
         authorized for issuance, less any options issued under the 1992 Plan.
         In October of 1997, the Company increased the number of shares
         available under the 1997 Plan to 1,850,000. On May 11, 1998, the
         shareholders approved an amendment to the 1997 Plan whereby the number
         of shares of common stock available for issuance under the 1997 Plan
         will automatically be adjusted on the first day of each fiscal year,
         beginning with 1998, by a number of shares such that the total number
         of shares reserved for issuance under the 1997 Plan equals the sum of
         (i) the aggregate number of shares previously issued under the 1997
         Plan and the 1992 Plan, (ii) the aggregate number of shares subject to
         then outstanding options granted under the 1997 Plan and the 1992 Plan,
         and (iii) 5% of the number of shares of common stock outstanding on the
         last day of the preceding fiscal year. Options are granted at the fair
         market value and are exercisable based on the specific terms of the
         grant up to ten years from the grant date. The options vest primarily
         over a four-year period subject to acceleration upon the achievement of
         certain performance measures.

         In 1997 and 1998, eShare.com, Inc. granted options at exercise prices
         below the fair market value on the date of grant. The excess of the
         fair value of the common stock over the exercise price was
         approximately $12,000 and $394,000, respectively, which was recorded as
         deferred compensation and was amortized over the vesting period. These
         options vested immediately upon the change in control of the Company on
         September 1, 1999.

         Activity for the 1992 Plan and 1997 Plan is as follows (number of
         shares in thousands):


<TABLE>
<CAPTION>
                                                     OPTION

                                      OPTIONS         PRICE
                                      -------         -----
<S>                                   <C>          <C>

Outstanding at December 31, 1996         989       $0.43-$ 4.07
    Granted                              736       $0.43-$10.00
    Exercised                             --
    Forfeited/repurchased               (120)      $2.91-$10.00
                                      ------
Outstanding at December 31, 1997       1,605       $0.43-$10.00
    Granted                            1,287       $0.02-$14.50
    Exercised                           (103)
    Forfeited/repurchased               (534)      $0.43-$14.50
                                      ------
Outstanding at December 31, 1998       2,255       $0.02-$14.50
    Granted                            2,328       $0.43-$20.88
    Exercised                         (1,093)
    Forfeited/repurchased               (564)      $2.81-$20.88
                                      ------
Outstanding at December 31, 1999       2,926       $0.02-$20.88
                                      ======
</TABLE>

         At December 31, 1999, options to purchase 135,623 shares were available
         for future grant and options were exercisable to purchase 913,000
         shares, as discussed in the following table (number of shares in
         thousands):

<TABLE>
<CAPTION>
                      NUMBER OF SHARES         WEIGHTED           NUMBER          WEIGHTED
                       OUTSTANDING AT           AVERAGE       EXERCISABLE AT       AVERAGE
 EXERCISE               DECEMBER 31,           EXERCISE        DECEMBER 31,       EXERCISE
  PRICES                    1999                 PRICE             1999              PRICE
 --------               ------------           --------        ------------        ---------
<S>                   <C>                      <C>            <C>                 <C>

  $0.02-$3.00                 515                $0.91             494             $ 0.82
  $4.00-$4.00               1,060                 4.00              15               4.00
 $4.07-$10.00                 593                 8.02             282               7.44
$10.06-$20.00                 485                11.28             122              12.26
$20.88-$20.88                 273                20.88               0                  0
                            2,926                 7.05             913               4.45
</TABLE>


                                      A-36
<PAGE>   37

         During, 1995, the Financial Accounting Standards Board issued SFAS No.
         123, which defines a fair value-based method of accounting for an
         employee stock option plan or similar equity instrument. However, it
         also allows an entity to continue to measure compensation cost for
         those plans using the method of accounting prescribed by Accounting
         Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
         to Employees." Entities electing to remain with the accounting in APB
         No. 25 must make pro forma disclosures of net income and, if presented,
         earnings per share, as if the fair value-based method of accounting
         defined in the statement had been applied.

         The Company has elected to account for its stock-based compensation
         plan under APB No. 25; however, the Company has computed for pro forma
         disclosure purposes the value of all options granted during 1996 and
         1997 using the Black-Scholes option pricing model as prescribed by SFAS
         No. 123 using the following weighted assumptions used for grants in
         1996, 1997, and 1998:

<TABLE>
<CAPTION>
                                               1997              1998            1999
                                               ----              ----            ----
<S>                                          <C>               <C>             <C>

Risk-free interest rate                      5.7%-6.5%         4.0%-5.5%       4.3%-5.4%
Expected dividend yield                         --                --               --
Expected lives                               Five years        Five years      Five years
Expected volatility                          65%               65%             65%
</TABLE>

         The total value of the options granted during the years ended December
         31, 1997, 1998, and 1999 were computed as approximately $4,506,000,
         $8,592,000 and $13,978,000, respectively, which would be amortized over
         the vesting period of the options. If the Company had accounted for
         these plans in accordance with SFAS No. 123, the Company's reported
         earnings and pro forma earnings and net income per share and pro forma
         net income per share for the years ended December 31, 1997, 1998, and
         1999 would have decreased in the following amounts (in thousands,
         except per share amounts):

<TABLE>
<CAPTION>
                                                              Pro
                                                             Forma             Actual
                                                            -------      -------------------
                                                              1997         1998        1999
                                                              ----       ------      -------
<S>                                                         <C>          <C>         <C>

Net income (loss) or pro forma net income (loss):
  As reported in the financial statements                   $ 2,898      $8,540      $(15,808)
  Pro forma in accordance with SFAS No. 123                   2,531       6,578       (24,306)
Basic earnings (loss) per share:
  As reported in the financial statements                   $  0.15      $ 0.42      $  (0.76)
  Pro forma in accordance with SFAS No. 123                    0.13        0.32         (1.17)
Diluted earnings (loss) per share:
  As reported in the financial statements                   $  0.14      $ 0.40      $  (0.76)
  Pro forma in accordance with SFAS No. 123                    0.12        0.30         (1.17)
</TABLE>

9.       BENEFIT PLAN

         The Company has a defined contribution profit-sharing plan (the
         "Plan")for substantially all employees meeting the eligibility



                                      A-37
<PAGE>   38

         requirements as defined in the plan agreement. The Plan provides for
         annual contributions by the Company at the discretion of the board of
         directors. The Plan also contains a 401(k) feature which allows
         participants to contribute up to 15% of their eligible compensation, as
         defined, and provides for discretionary employer matching
         contributions. Total contributions by the Company to the Plan were
         $429,000, $391,000, and $434,000 for the years ended December 31, 1997,
         1998, and 1999, respectively.

10.      INCOME TAXES

         In connection with the Offering, the Company converted from an S
         corporation to a C corporation and, accordingly, became subject to
         federal and state income taxes. eShare.com, Inc. incurred pretax losses
         in 1997, 1998 and 1999. The components of the total deferred tax assets
         as of December 31, 1998, and 1999 are as follows (in thousands):


<TABLE>
<CAPTION>
                                                     1998          1999
                                                     ----          ----
<S>                                                 <C>           <C>

Deferred tax assets and liabilities
   Deferred revenue                                 $ 1,866       $ 1,930
   Net operating loss carryforwards                   3,000         4,923
   Accrued liabilities                                  643           527
   Allowance for doubtful accounts                      840         1,020
   Foreign tax credits                                   --           561
   Depreciation                                          (4)           40
   Inventory                                            394           366
                                                    -------       -------
                 Total deferred tax assets            6,739         9,367
                                                    -------       -------
Valuation allowance                                  (3,008)       (4,446)
                                                    -------       -------
                 Total net deferred tax assets      $ 3,731       $ 4,921
                                                    =======       =======
</TABLE>

         The following summarizes the components of the income tax provision for
         the years ended December 31, 1997, 1998, and 1999 (in thousands):


<TABLE>
<CAPTION>
                                Pro Forma      ------ACTUAL-------
                                  1997         1998          1999
                                  ----         ----          ----
<S>                             <C>          <C>           <C>

Current domestic taxes:
    Federal                      $2,803      $ 6,304       $(1,136)
    State                           329          552          (327)
Foreign taxes                       109        1,143         1,576
Deferred taxes                    1,228       (1,423)       (1,190)
                                 ------      -------       -------
              Tax provision      $4,469      $ 6,576       $(1,077)
                                 ======      =======       =======
</TABLE>



         A reconciliation from the federal statutory rate to the tax provision
         (benefit) for the years ended December 31, 1997, 1998, and 1999 is as
         follows:


                                      A-38
<PAGE>   39

<TABLE>
<CAPTION>
                                                     Pro Forma     ------ACTUAL----
                                                       1997        1998        1999
                                                       ----        ----        ----
<S>                                                  <C>          <C>        <C>

Statutory federal tax rate                            34.0%       35.0%      (35.0)%
State income taxes, net of federal tax benefit         4.0         2.4        (3.0)
Foreign operations                                    (1.2)       (0.8)       30.6
Valuation allowance                                    0.2        (0.6)       --
Other                                                 23.7         7.3        (2.3)
                                                      ----        ----        ----
              Effective tax rate                      60.7%       43.3%       (9.7)%
                                                      ====        ====        ====
</TABLE>

         As of December 31, 1999, the Company has net operating loss
         carryforwards of approximately $12,800,000 which expire through 2019.
         At December 31, 1999, the Company has established a valuation allowance
         against its net deferred tax assets since a significant portion of
         these tax loss carryforwards may be subject to substantial annual
         limitations under the change in stock ownership imposed by Internal
         Revenue Code Section 382.


11.      CONCENTRATION OF CREDIT RISK

         Concentrations of credit risk with respect to accounts receivable are
         limited due to the wide variety of customers and markets for which the
         Company's services are provided as well as their dispersion across many
         different geographic areas. As a result, as of December 31, 1998 and
         1999, the Company did not consider itself to have any significant
         concentrations of credit risk. During 1998, only CitiGroup, at 13.1%,
         accounted for greater than 10% of total revenues. During 1999, only
         First USA Bank, at 11.0%, accounted for greater than 10% of total
         revenues. In 1997, 1998, and 1999, the Company's five largest customers
         accounted for approximately 27.9%, 23.2% and 28.2%, respectively, of
         total revenues. These sales were predominantly to customers in the
         financial services industry. Although the particular customers may
         change from period to period, the Company expects that large sales to a
         limited number of customers will continue to account for a significant
         percentage of its revenues in any particular period for the foreseeable
         future.

12.      SEGMENT INFORMATION

         The Company is a multinational business operating in two segments. The
         Company has adopted Statement of Financial Accounting Standards No.
         131, "Disclosure about Segments of an Enterprise and Related
         Information" (SFAS 131). The adoption of SFAS 131 requires the
         presentation of descriptive information about reportable segments which
         is consistent with that made available to the management of the Company
         to assess performance. The reportable business segments are telephony
         and internet. The results of these segments are as follows (in
         thousands):

<TABLE>
<CAPTION>
                                                     FOR THE YEAR ENDED DECEMBER 31,
                                                   1997            1998            1999
                                                   ----            ----            ----
<S>                                              <C>            <C>            <C>
       Revenues:
            Telephony                            $ 65,790       $ 93,410       $ 85,887
            Internet                                  730          3,671          8,968
                                                 --------       --------       --------
        Total Revenues                           $ 66,520       $ 97,081       $ 94,855

       Income (Loss) from operations:
         Telephony                               $ 11,417       $ 17,065       $ (5,361)
         Internet                                  (4,467)        (3,016)        (6,430)
                                                 --------       --------       --------
       Total income (loss) from operations:      $  6,950       $ 14,049       $(11,791)

       Depreciation & amortization:
         Telephony                               $  1,279       $  2,212       $  2,775
         Internet                                     537            251            345
                                                 --------       --------       --------
       Total depreciation & amortization:        $  1,816       $  2,463       $  3,120

       Deferred compensation expense:
         Telephony                               $     --       $     --       $     --
         Internet                                      --             --          2,271
                                                 --------       --------       --------
       Total deferred compensation expense:      $     --       $     --       $  2,271
</TABLE>


                                      A-39
<PAGE>   40

         The following represents total revenues and long-lived assets of the
         Company based on geographic location representing over 10% of the
         combined totals for the years ended December 31, 1997, 1998, and 1999:


<TABLE>
<CAPTION>
                                     FOR THE YEAR ENDED DECEMBER 31,
                                     1997         1998         1999
                                     ----         ----         ----
<S>                                <C>          <C>          <C>
       United States:
            Total revenues         $54,424      $73,960      $64,784
            Long-lived assets        5,549        7,608       10,494
       Europe:
            Total revenues           7,347        9,939       14,350
            Long-lived assets          131          234          435
       Latin America:
            Total revenues           2,346        7,381       10,580
            Long-lived assets           90           58           33
       Other:
            Total revenues           2,403        5,801        5,141
            Long-lived assets            0            1            1
</TABLE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information concerning the directors of the Company required under
this item is incorporated herein by reference to the Company's definitive proxy
statement pursuant to Regulation 14A, to be filed with the Commission not later
than 120 days after the close of the Company's 1999 fiscal year ended December
31, 1999 under the heading "Election of Directors". Certain information
regarding directors and executive officers of the Company is included in Part I,
Item 1 of this report on Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

         The information concerning the directors of the Company required under
this item is incorporated herein by reference to the Company's definitive proxy
statement pursuant to Regulation 14A, to be filed with the Commission not later
than 120 days after the close of the Company's 1999 fiscal year ended December
31, 1999 under the heading "Compensation and Other Information Concerning
Directors and Officers."


                                      A-40
<PAGE>   41

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information concerning the directors of the Company required under
this item is incorporated herein by reference to the Company's definitive proxy
statement pursuant to Regulation 14A, to be filed with the Commission not later
than 120 days after the close of the Company's 1999 fiscal year ended December
31, 1999 under the heading "Security Ownership of Certain Beneficial Owners and
Management."

ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS

         The information concerning the directors of the Company required under
this item is incorporated herein by reference to the Company's definitive proxy
statement pursuant to Regulation 14A, to be filed with the Commission not later
than 120 days after the close of the Company's 1999 fiscal year ended December
31, 1999 under the heading "Certain Transactions."

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a)      The following documents are filed as part of this report:

         1.       Financial Statements

                  See the index to Consolidated Financial Statements on page 20
         for a list of the financial statements and supplementary data filed
         herewith.

         2.       Financial Statement Schedule

                  (i)      The following Financial Statement Schedule of eShare
         Technologies, Inc. for the Years Ended December 31, 1999, 1998 and 1997
         is filed as a part of this Report on Form 10-K and should be read in
         conjunction with the Financial Statements, and related notes thereto,
         of eShare Technologies, Inc.

                            ESHARE TECHNOLOGIES, INC.
                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                           BALANCE AT     CHARGED TO                      BALANCE AT
                                          BEGINNING OF    COSTS AND                         END OF
                                              YEAR         EXPENSES       DEDUCTIONS         YEAR
                                          ------------    ----------      ----------      ----------
<S>                                       <C>             <C>             <C>             <C>
1997:
Allowance for doubtful accounts ....      $  494,000      $1,152,000      $  760,000      $  886,000
Allowance for inventory obsolescence      $  485,000      $  986,000      $  596,000      $  875,000
1998:
Allowance for doubtful accounts ....      $  886,000      $1,837,000      $  123,000      $2,600,000
Allowance for inventory obsolescence      $  875,000      $  922,000      $  840,000      $  957,000
1999:
Allowance for doubtful accounts ....      $2,600,000      $1,902,000      $1,488,000      $3,014,000
Allowance for inventory obsolescence      $  957,000      $  712,000      $  593,000      $1,076,000
</TABLE>

                  (ii)     Report of Independent Public Accountants on Financial
         Statement Schedule.


                                      A-41
<PAGE>   42

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                         ON FINANCIAL STATEMENT SCHEDULE

To eShare Technologies, Inc.:

         We have audited in accordance with auditing standards generally
accepted in the United States, the financial statements of eShare Technologies,
Inc. and subsidiaries included in this Form 10-K and have issued our report
thereon dated February 15, 2000. Our audits were made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The foregoing
schedule is the responsibility of the company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
February 15, 2000


                                      A-42
<PAGE>   43

         (b)      Reports on Form 8-K Filed during the Fourth Quarter of 1999.

                  (i)      Reports on Form 8-K with respect to historical effect
         on financial statements of a pooling of interests basis of the
         acquisition by eShare of eShare.com on September 1, 1999, as filed
         December 20, 1999.

         (c)      Exhibits. The following exhibits are filed as part of, or are
incorporated by reference into, this report on Form 10-K:

<TABLE>
<CAPTION>
                             EXHIBIT
                             NUMBER                                 DESCRIPTION
                             -------                                -----------

                              <S>       <C> <C>
                              3.1       --  Amended and Restated Articles of Incorporation of the Company
                                            (incorporated by reference to Exhibit 3.3 to Amendment No. 1
                                            to the Company's Registration Statement on Form S-1 (File
                                            No. 333-22855) filed March 28, 1997).

                              3.2       --  Amended and Restated Bylaws of the Company (incorporated by
                                            reference to Exhibit 3.4 to Amendment No. 1 to the
                                            Company's Registration Statement on Form S-1 (File No. 333-22855)
                                            filed March 28, 1997).

                              4.1       --  See Exhibits 3.1 and 3.2 for provisions of the Amended and
                                            Restated Articles of Incorporation and Amended and Restated Bylaws of
                                            the Company defining rights of the holders of Common
                                            Stock of the Company.

                              4.2       --  Specimen Stock Certificate (incorporated by reference to
                                            Exhibit 4.2 to the Company's Registration Statement on Form S-1
                                            (File No. 333-22855) filed March 6, 1997).

                             10.1       --  Lease Agreement between the Company and 5051 Peachtree Corners
                                            Circle, L.L.C. (incorporated by reference to Exhibit 10.1 to the
                                            Company's Registration Statement on Form S-1 (File No. 333-22855) filed
                                            on March 6, 1997).

                             10.2       --  Lease Agreement between eShare Technologies Limited (formerly
                                            Melita Europe Limited )and Melita House Inc. dated August 15, 1999.

                             10.3       --  1992 Stock Option Plan effective June 4, 1992, as amended March 1,
                                            1997 (incorporated by reference to Exhibit 10.2 to the Company's
                                            Registration Statement on Form S-1 (File No. 333-22855) filed on March
                                            6, 1997).

                             10.3       --  1997 Stock Option Plan effective February 6, 1997, as amended October
                                            21, 1997 (incorporated by reference to Exhibit 10.3 to the Company's
                                            Annual Report on Form 10-K (File No. 0-22317) filed on March 31, 1998).

                             10.4       --  Employee Stock Purchase Plan adopted March 1, 1997 (incorporated
                                            by reference to Exhibit 10.4 to Amendment No. 1 to the Company's
                                            Registration Statement on Form S-1 (File No. 333-22855) filed March 28,
                                            1997).

                             10.5       --  401(k) Profit Sharing Plan as amended effective January 1, 1993
                                            (incorporated by reference to Exhibit 10.5 filed to the Company's
                                            Registration Statement on Form S-1 (File 333-22855)
                                            filed March 6, 1997).

                             10.6       --  Employment Agreement between the Company and Aleksander
                                            Szlam dated March 5, 1997 (incorporated by reference to Exhibit
                                            10.6 to Amendment No. 1 to the Company's Registration Statement
                                            on Form S-1 (File 333-22855) filed March 28, 1997).

                             10.7       --  Form of Tax Indemnification Agreement between the Company and
                                            certain shareholders of the Company (incorporated by reference to
                                            Exhibit 10.8 to the Company's Registration Statement on Form S-1
                                            (File 333-22855) filed March 6, 1997).
</TABLE>


                                      A-43
<PAGE>   44

<TABLE>

                              <S>       <C> <C>
                             10.8       --  Form of Tax Indemnification Agreement between Inventions, Inc.
                                            and certain shareholders of Inventions, Inc. (incorporated by
                                            reference to Exhibit 10.9 to the Company's Registration
                                            Statement on Form S-1 (File 333-22855) filed March 6, 1997).

                             10.9       --  Employment Agreement of George Landgrebe dated December 16, 1999,
                                            as amended.

                             21.1       --  List of Subsidiaries of the Company.

                             23.1       --  Consent of Arthur Andersen LLP.

                             23.2       --  Report of Independent Auditors.

                             23.3       --  Consent of KPMG LLP.

                             27.1       --  Financial Data Schedule (SEC use only).

                             99.1       --  Private Securities Litigation Reform Act of 1995 Safe Harbor
                                            Compliance Statement for Forward-Looking Statements
</TABLE>


                                      A-44
<PAGE>   45

                                   SIGNATURES

         Pursuant to the requirements of Section 12 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                        ESHARE TECHNOLOGIES, INC.

                                        By:  /s/ ALEKSANDER SZLAM
                                             -------------------------
                                               Aleksander Szlam
                                             Chairman of the Board and
                                             Chief Executive Officer

March 30, 2000

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                   SIGNATURE                                TITLE                               DATE
                   ---------                                -----                               ----
<S>                                               <C>                                       <C>


              /s/ ALEKSANDER SZLAM                Chairman of the Board and                 March 30, 2000
--------------------------------------------      Chief Executive Officer
                Aleksander Szlam                    (Principal Executive
                                                     Officer)

                 /s/ JAMES TITO                   Vice Chairman of the Board and            March 30, 2000
--------------------------------------------      President
                   James Tito

            /s/ GEORGE W. LANDGREBE               Chief Operating Officer,  Vice            March 30, 2000
--------------------------------------------      President, Administration and
                George w. Landgrebe                 Chief Financial Officer
                                                     (Principal Financial and
                                                      Accounting Officer)

            /s/ ANDREW J. FILIPOWSKI              Director                                  March 30, 2000
--------------------------------------------
              Andrew J. Filipowski

              /s/ DONALD L. HOUSE                 Director                                  March 30, 2000
--------------------------------------------
                Donald L. House
</TABLE>


                                      A-45