<PAGE>

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

                                    FORM 20-F/A
                (AS AMENDED BY CHANGES FILED WITH THE COMMISSION
                        ON FORM 20-F/A, AMENDMENT NO. 2)


[   ]      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
           OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

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

                                       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:  0-30610
                         -------


                              SOFTCARE EC.COM INC.
                              --------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                            BRITISH COLUMBIA, CANADA
                            ------------------------
                 (Jurisdiction of incorporation or organization)

SUITE 107, 980 WEST 1ST STREET, NORTH VANCOUVER BRITISH COLUMBIA, CANADA V7P 3N4
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Securities to be registered pursuant to Section 12(b) of the Act: N/A

      SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: N/A

                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common shares as of the close of the period covered by the annual
report. October 4, 2000: 16,989,728 common shares without par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 12 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 ninety days.
                     Yes  [X]  No [ ]

Indicate by check mark which financial statement item the registrant has elected
to follow:           Item 17 [X] Item 18 [ ]

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                                TABLE OF CONTENTS

PART I
                                                                            Page
                                                                            ----

Item 1.    Description of Business                                            3

Item 2.    Description of Property                                           29

Item 3.    Legal Proceedings                                                 29

Item 4.    Control of Registrant                                             30

Item 5.    Nature of Trading Market                                          31

Item 6.    Exchange Controls and Other Limitations                           32
           Affecting Security Holders

Item 7.    Taxation                                                          33

Item 8.    Selected Financial Data                                           38

Item 9.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                     40

Item 9a.   Qualitative and Quantitative Disclosure of Market Risk            41

Item 10.   Directors and Officers of Registrant                              43

Item 11.   Compensation of Directors and Officers                            44

Item 12.   Options to Purchase Securities from Registrant
or Subsidiaries                                                              47

Item 13.   Interest of Management in Certain Transactions                    49


PART II

Item 14.   Description of Securities to be Registered                        49

PART III

Item 15.   Defaults Upon Senior Securities                                   49

Item 16.   Changes in Securities and Changes in Security
for Registered Securities                                                    49

PART IV

Item 17.   Financial Statements                                              49

Item 18.   Financial Statements                                              50

Item 19.   Financial Statements and Exhibits                                 50

                                       2
<PAGE>

PART I

THIS REPORT ON FORM 20-F CONTAINS FORWARD-LOOKING STATEMENTS. THESE STATEMENTS
RELATE TO FUTURE EVENTS OR FUTURE FINANCIAL PERFORMANCE OF SOFTCARE EC.COM INC.
AND ITS SUBSIDIARIES (COLLECTIVELY, THE "COMPANY"). IN SOME CASES, INVESTORS CAN
IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS THE WORDS MAY, WILL,
SHOULD, EXPECT, PLAN, ANTICIPATE, BELIEVE, ESTIMATE, PREDICT, POTENTIAL OR
CONTINUE, OR THE NEGATIVES OF SUCH WORDS OR OTHER COMPARABLE TERMINOLOGY. THESE
STATEMENTS ARE ONLY PREDICTIONS. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY.
IMPORTANT FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS ARE DESCRIBED IN THE SECTION ENTITLED "RISK FACTORS"
IN ITEM 1 IN THIS REPORT, AND OTHER RISKS IDENTIFIED FROM TIME TO TIME IN THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, CANADIAN
REGULATORY AGENCIES, PRESS RELEASES AND OTHER COMMUNICATIONS.

ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN THE
FORWARD-LOOKING STATEMENTS ARE REASONABLE, THE COMPANY CANNOT GUARANTEE FUTURE
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS. THE COMPANY IS UNDER
NO OBLIGATION TO UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS AFTER THE FILING
OF THIS REPORT TO CONFORM SUCH STATEMENTS TO ACTUAL RESULTS OR TO CHANGES IN
EXPECTATIONS.


ITEM 1. DESCRIPTION OF BUSINESS

                          NOTE ON FINANCIAL CONVENTIONS

The Company's consolidated financial statements are stated in Canadian Dollars
("CDN$") and are prepared in accordance with Generally Accepted Accounting
Principles ("GAAP") in Canada, the application of which, in the case of the
Company, conforms in all material respects for the periods presented with U.S.
GAAP, except as noted in the notes to the consolidated financial statements
included herein.

In this Report, unless otherwise specified, all dollar amounts are expressed in
Canadian Dollars. References in this document to "$" and "CDN$" refer to
Canadian dollars, unless otherwise specified; references to "U.S.$" refer to
U.S. dollars.

The Government of Canada permits a floating exchange rate to determine the value
of the Canadian Dollar against the U.S. Dollar.

The following table sets forth the rate of exchange for the Canadian Dollar. For
the purposes of this table, the rate of exchange means the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York. The table sets forth the
number of Canadian Dollars required under that formula to buy one U.S. Dollar.
The average rate means the average of the exchange rates on the last day of each
month during the period.


                           U.S. Dollar/Canadian Dollar


                                     Average      Close       High        Low
                                     -------      -----       ----        ---
Twelve Months Ended 05/31/00         1.4688       1.4949      1.4991      1.4458
Five Months Ended 05/31/99           1.4970       1.4621      1.5238      1.4579
Twelve Months Ended 12/31/98         1.4791       1.5424      1.5452      1.4134
Twelve Months Ended 12/31/97         1.3805       1.4266      1.4283      1.3467
Seven Months Ended 12/31/96          1.3575       1.3619      1.3793      1.3367
Twelve Months Ended 05/31/96         1.3675       1.3690      1.3775      1.3427
Twelve Months Ended 05/31/95         1.3996       1.3604      1.4160      1.3588

                                       3
<PAGE>


                           DEVELOPMENT OF THE BUSINESS

INCORPORATION DATA

The Company was incorporated under the laws of the Province of British Columbia
on March 30, 1981, under the name Burmac Energy Corporation. In February 1991,
the Company changed its name to Bus Holdings Corp. The name was changed to
Savannah Ventures Ltd., effective November 17, 1997, and to International
Savannah Ventures Ltd., effective December 1, 1998. In June 1999, the Company
acquired all of the issued and outstanding shares of SoftCare Electronic
Commerce Inc. ("SoftCare"), a private company incorporated in British Columbia,
Canada. The name of the Company was changed to SoftCare EC.com Inc., effective
June 10, 1999. Readers are referred to "Note 2 Reverse Takeover" to the
Company's May 31, 2000 audited financial statements concerning particulars of
the reverse take over that completed on June 18, 2000.

HISTORICAL CORPORATE DEVELOPMENT

>From the date of incorporation to mid-1997, the Company was involved in the
exploration and development of natural resource properties. In mid-1997, the
Company abandoned its mineral properties and began seeking alternate business
opportunities. The Company wrote-off its six mineral properties in Indonesia and
related deferred exploration costs in the fiscal year ended December 31, 1998.
In June 1999, the Company's efforts to shift its business focus to electronic
commerce culminated in the reverse takeover of the Company by SoftCare.
Consequently, the business of the Company adopted and continued the development,
manufacture and marketing of electronic commerce and electronic data interchange
software that SoftCare had been engaged in for the previous 10 years.

The Company carries on its business primarily through direct and indirect
subsidiaries. The subsidiaries of the Company are:

1.       SOFTCARE ELECTRONIC COMMERCE INC. ("SoftCare"), a wholly owned
         subsidiary, that resulted from the amalgamation, effective February 1,
         1997, of SoftCare Consulting Inc. and Norgate Holdings Inc. Norgate
         Holdings Inc., incorporated November 30, 1989, and SoftCare Consulting
         Inc., incorporated December 11, 1989, were both private British
         Columbia companies. The Company and SoftCare carry on business from the
         office at Suite 107-980 West 1st Street, North Vancouver, British
         Columbia Canada V7P 3N4.

2.       SCEC HOLDINGS LTD. ("SCEC Holdings"), a wholly owned subsidiary of
         SoftCare, incorporated on February 6, 1998, under the laws of the
         Province of British Columbia, having an office at Suite 107-980 West
         1st Street, North Vancouver, British Columbia V7P 3N4.

3.       SCC HOLDINGS LTD. ("SCC Holdings"), a wholly owned subsidiary of
         SoftCare, incorporated on June 13, 1995, under the laws of the Province
         of British Columbia, having an office at Suite 107-980 West 1st Street,
         North Vancouver, British Columbia V7P 3N4.

4.       SOFTCARE ELECTRONIC COMMERCE (U.S.A.) INC. ("SoftCare U.S.A."), a
         wholly owned subsidiary of SoftCare, incorporated on August 7, 1998,
         under the laws of the State of Washington, having an office at 1022
         North G Street Tacoma, Washington 98403.

The Company also owns 100 percent of Bus Holdings Corporation, a company
incorporated under the laws of Anguilla. Bus Holdings Corporation is inactive
and has no assets or liabilities.

                                       4
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<TABLE>
<CAPTION>
  <S>                                       <C>                                          <C>
                                             DIAGRAM OF LEGAL PARENT AND SUBSIDIARIES

                -----------------------------------------------------------------------------------------------------
                                                      SOFTCARE EC.COM INC. (1)
                                                  (a British Columbia corporation)
                -----------------------------------------------------------------------------------------------------
                                                                 |
                                                                 |
                -----------------------------------------------------------------------------------------------------
                                               SOFTCARE ELECTRONIC COMMERCE INC. (2)
                                                  (a British Columbia corporation)
                -----------------------------------------------------------------------------------------------------
                |                                                |                                                   |
                |                                                |                                                   |
---------------------------------------     ----------------------------------------     -------------------------------------------
        SCEC HOLDINGS LTD.                             SCC HOLDINGS LTD.                  SOFTCARE ELECTRONIC COMMERCE (U.S.A.) INC.
 (a British Columbia corporation)              (a British Columbia corporation)                   (a Washington corporation)
---------------------------------------     ----------------------------------------     -------------------------------------------
</TABLE>

(1)      On June 18, 1999, the Company acquired SoftCare and SoftCare's three
         wholly owned subsidiaries: SCEC Holdings, SCC Holdings and SoftCare
         U.S.A.

(2)      By Articles of Amalgamation dated February 1, 1997, Norgate Holdings
         Inc. and SoftCare Consulting Inc. amalgamated and continued under the
         name SoftCare Electronic Commerce Inc.


ACQUISITION OF SOFTCARE ELECTRONIC COMMERCE INC. (SOFTCARE)

Effective April 15, 1999, the Company entered into an agreement (the "Share
Purchase Agreement") with SoftCare, the shareholders of SoftCare and Sedun
DeWitt Capital Corporation ("SDW"). Under the terms of the Share Purchase
Agreement, the SoftCare shareholders agreed to sell all of the issued and
outstanding common shares in SoftCare to the Company in exchange for 11,000,000
special warrants ("Special Warrants") issued by the Company. Each Special
Warrant was exercisable, for no additional consideration, into one common share
of the Company.

The transactions contemplated under the Share Purchase Agreement, including the
issuance of the Special Warrants, completed in June 1999. Of the 11,000,000
Special Warrants, 10,000,000 were issued to the SoftCare shareholders and
1,000,000 were issued, in trust, to Martyn Armstrong, the President of SoftCare,
and Wayne Zielke, the Chief Financial Officer of SoftCare, as trustees (the
"Trustees") for certain SoftCare employees pursuant to a trust agreement. The
Special Warrants were exercised into common shares after the British Columbia
Securities Commission (the "Commission") issued a receipt, on October 21, 1999,
for the Company's Annual Information Form. The common shares issued to Martyn
Armstrong and Wayne Zielke as Trustees will not be distributed to the employees
until certain sales/engineering performance targets are achieved. On July 4,
2000, Trustees, under direction of the Board, transferred 106,200 trust shares
to five employees. Concurrently an allocation of 118,810 trust shares was
approved. The latter shares will be distributed to employees, subject to trust
requirements, on May 31, 2001.

The acquisition and the related transactions (together, the "Acquisition")
described in the Share Purchase Agreement constituted a "reverse takeover" under
the rules of the former Vancouver Stock Exchange ("VSE"). Pursuant to the Share
Purchase Agreement, the Company entered into the following agreements:

1.       A sponsorship agreement dated April 15, 1999 between the Company and
         Canaccord Capital Corporation (the "Agent") setting out the terms upon
         which the Agent agreed to provide member sponsorship services to the
         Company.

2.       A voluntary pooling agreement dated effective June 28, 1999 between the
         Company, the SoftCare shareholders, SDW and Pacific Corporate Trust
         Company. The pooling agreement is described below.

                                       5
<PAGE>

3.       A corporate advisory agreement made as of June 18, 1999 between the
         Company and SDW pursuant to which SDW agreed to provide the Company
         with certain corporate and advisory services. The Company agreed to pay
         SDW a fee of $10,000 per month for a term of 12 months. The corporate
         advisory agreement terminated in June 2000.

4.       An employment agreement dated April 15, 1999 between the Company and
         Martyn Armstrong. See Item 11 -- "Compensation of Directors and
         Officers."

5.       A corporate advisory agreement dated May 19, 1999 between the Company
         and Golden Capital Securities Ltd. ("Golden") pursuant to which Golden
         agreed to provide the Company certain corporate and advisory services
         with respect to the Acquisition and the Company agreed to pay to Golden
         the sum of $25,000 plus 16,666 special warrants (the "Golden Special
         Warrants"), exercisable, without any additional consideration, into
         16,666 common shares of the Company.

6.       A finder's fee agreement dated May 19, 1999 between the Company and
         Michael Townsend pursuant to which the Company agreed to issue 35,000
         special warrants (the "Townsend Special Warrants") to Michael Townsend
         exercisable, without any additional consideration, into 35,000 common
         shares of the Company as a finder's fee upon the completion of the
         Acquisition.

7.       Stock option agreements made between the Company and each of Martyn
         Armstrong, Gregg Sedun, David De Witt, Wayne Zielke, and Doug
         Sarkissian each dated June 18, 1999. See Item 12 -- "Options to
         Purchase Securities from Registrant or Subsidiaries."

PRIVATE PLACEMENT. Concurrent with the closing of the Acquisition on June 18,
1999, the Company completed a brokered private placement (the "Private
Placement") with the Agent of 2,000,000 special warrants (the "Private Placement
Special Warrants") at $1.50 cash per Private Placement Special Warrant. Each
Private Placement Special Warrant was exercisable, for no additional
consideration, into a unit (a "Private Placement Unit"). Each Private Placement
Unit consisted of one share and one share purchase warrant (a "Private Placement
Warrant") which entitled the holder to purchase one additional common share for
$2.50 cash. The Private Placement Warrants were non-transferable and expired on
June 18, 2000. As at June 18, 2000, 797,000 of the Private Placement Warrants
had been exercised for net cash proceeds of $1,992,500. The remaining 1,203,000
special warrants expired on June 18, 2000.

In order to complete the Private Placement, the Company entered into an agency
agreement (the "Agency Agreement") dated April 23, 1999 between the Company and
the Agent. Under the terms of the Agency Agreement, the Agent received a cash
commission of $167,670, plus 186,300 special warrants (the "Agent's Special
Warrants"), a sponsorship fee of $15,000 cash and a corporate finance fee of an
additional 10,000 Agent's Special Warrants. Each Agent's Special Warrant was
convertible, for no additional consideration, into a share purchase warrant
entitling the Agent to purchase one common share of the Company at $1.50 and
expired on June 18, 2000. All 196,300 of these share purchase warrants have been
exercised for net cash proceeds of $294,450.

ANNUAL INFORMATION FORM. The Company filed an Annual Information Form ("AIF")
for the fiscal period ended June 30, 1999, with the British Columbia Securities
Commission (the "Commission") and received a receipt from the Commission on
October 21, 1999. After a receipt was issued for the Company's AIF, the Special
Warrants and the Private Placement Special Warrants were converted into common
shares and Units respectively. 51,666 common shares of the Company were issued
upon the conversion of Special Warrants issued for services rendered, 11,000,000
common shares were issued upon the conversion of Special Warrants issued in the
Acquisition and 2,000,000 Units, each consisting of one common share of the
Company and one Private Placement Warrant, were issued upon conversion of the
Private Placement Special Warrants.

As a result of a further financing completed on March 29, 2000, the Company
filed an AIF with the Alberta Securities Commission and a revised AIF with the
British Columbia Securities Commission in June 2000. This was accepted for
filing in July 2000. As a result of acceptance 1,495,000 Financing Special
Warrants, issued in the March 30, 2000 financing, were converted to 1,495,000
common shares and 747,500 Warrants. The Warrants permit holders to purchase one
additional common share for $4.25 until March 29, 2001.

                                       6
<PAGE>

POOLING AGREEMENT. Under the terms of the Share Purchase Agreement, the common
shares issued upon the exercise or deemed exercise of the Special Warrants,
other than those issued to the Trustees in their role as trustees, are subject
to the voluntary pooling agreement ("Pooling Agreement"). The Pooling Agreement
restricts the holders from trading their shares in the Company on any stock
exchange until such time as they are released from the pool. Pursuant to the
terms of the Pooling Agreement, approximately 8,400,000 of the common shares are
to be released on the following basis: 10% were released December 18, 1999, and
30% were released on June 18, 2000; a further 30% are to be released on each of
June 18, 2001 and December 18, 2001. The balance of approximately 1,600,000
common shares are to be released on the following basis: 25% were released on
each of December 18, 1999 and June 18, 2000. An additional 25% will be released
on each of December 18, 2000 and June 18, 2001.

To October 5, 2000, 4,164,961 common shares have been released and are no longer
subject to the terms of the Pooling Agreement. It is in the discretion of
certain parties to the Pooling Agreement to agree to terminate the Pooling
Agreement.

LOANS. Pursuant to the Share Purchase Agreement, the Company loaned SoftCare a
total of $500,000. Upon completion of the Acquisition, these became
inter-company loans without repayment terms.

ESCROW SHARES. As part of its consent to the Acquisition, the VSE agreed that
124,998 previously issued common shares of the Company could be released from
certain escrow provisions. These shares were released from escrow on June 18,
1999. No shares of the Company are currently held in escrow.

MANAGEMENT CHANGES. Also under the terms of the Share Purchase Agreement, the
Company's board of director and the officers of the Company, other than Gregg
Sedun, resigned their positions. The Company's board of directors is now
comprised of Martyn Armstrong, President and Director, Wayne Zielke, Director,
Gregg Sedun, Director, and Randall M. Pierson, Director.

OPTIONS. The Company also agreed in the Share Purchase Agreement to grant
options to purchase a total of 800,000 common shares at $1.50 per share to four
executive officers and directors of SoftCare in exchange for outstanding options
in SoftCare. See Item 12 - - "Options to Purchase Securities from Registrant or
Subsidiaries."

                              BUSINESS OF SOFTCARE

                                    GLOSSARY


"ASP" (APPLICATION SERVICE PROVIDER) means an online outsourcer or hosting
service for applications, letting Net market makers rent instead of buying
applications and services such as auctions, exchanges and catalog aggregation.
Many application vendors are moving to a hosting model, but ASPs are often
application-agnostic, plugging a feature of one application into a marketplace
when appropriate and using another feature from another vendor elsewhere.

"EC" (ELECTRONIC COMMERCE) means the direct electronic interaction between two
computer applications, or between a person using a computer (typically a Web
Browser) and a computer (typically a server), where the interaction involves the
completion of a transaction or part of a transaction, and where the transaction
crosses enterprise boundaries (either business to business or business to
consumer).

"EDI" (ELECTRONIC DATA INTERCHANGE) is a direct application to application
exchange of information, using well-defined, tightly specified message formats
and industry standards. It is usually completed using a store-and-forward
messaging system through an intermediary or Value Added Network ("VAN").
Traditional business to business transactions such as delivery of invoices, late
payment notices and purchase orders are carried out using EDI.

"IDE" (INTERNET DEVELOPMENT ENVIRONMENT) is a software tool and an environment
that simplifies the development and deployment of Internet based applications.

"LEGACY APPLICATIONS" means applications that are significant to the operation
of a business, but which lack the features or ability to take advantage of
current technologies.

                                       7
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"OBJECT LIBRARY" means a consolidation of the components of all developed
program code, which is to be shared and re-used by other software engineers.

"PORTABLE", when used with respect to software code, means software code written
on a specific operating system and which can be used, without modification, in
different operating systems.

"SDK" (SOFTWARE DEVELOPER'S KIT) is a series of tools used by software
developers to assist in the integration of various product solutions. These
tools can include other products, documentation, sample programs and templates.

OVERVIEW AND RECENT DEVELOPMENTS

SoftCare was founded in 1989 by Martyn Armstrong, President of the Company, to
provide EDI software and services to businesses of all sizes. SoftCare has grown
from a small EDI consulting group to, in the early 1990s, an EDI software vendor
with approximately 150 customers across Canada, the United States and Asia. More
recently, SoftCare has adapted its experience and advanced software engineering
to focus on e-commerce. SoftCare continues to service its EDI customers. As
acceptance of web based applications develop these customers provide SoftCare
with a market for enhance products and services.

In 1992, SoftCare developed and began marketing its first EDI product,
TradeLink, which enables the electronic transmission of business documents.
TradeLink has been installed in more than 150 companies in six countries. Some
of SoftCare's largest customers from around the world include:

         o        Credit Union Central of British Columbia, Canada (Canadian)
         o        Radio Shack (a Division of InterTan Canada, Ltd.) (Canadian)
         o        Konings Warehouse Sysco (U.S.)
         o        Deluxe Electronic Payment Systems, Inc. (U.S.)
         o        Korean Development Bank (Korea)
         o        Korean Trade Network (Korea)

In July 1996, SoftCare entered into a Cooperation Agreement with TRW Inc.
("TRW"), an Ohio-based manufacturer of products and services for the automotive,
space, defense and information management markets. Pursuant to the Cooperation
Agreement, SoftCare developed and completed an Intranet and Internet electronic
commerce software product family for communications, message switching, e-mail,
fax, EDI, audit and service billing, known as OpenEC. The product was supplied
by TRW to ADFIAP Global Data Interchange Network ("ANET"), a Southeast Asian
communications network for approximately 78 banks and their customers. The
Cooperation Agreement terminated in May 1999.

After completion of the ANET project, SoftCare developed a new line of
electronic commerce software packaged as the OpenEC Electronic Commerce
Platform. SoftCare began shipping this product in April 1999. As of October 31,
2000, OpenEC has been installed in two customer sites.

In May 2000, the Company and Global Network Privacy Inc. ("GNP") entered into a
business arrangement to develop e-business/industry portal solutions for GNP's
and the Company's customers. The Company's OpenEC platform combined with GNP's
hardware and operating systems will provide a technologically advanced, highly
secure business to business EC platform to the EDI marketplace.

The business arrangement consists of two agreements. The first agreement
specifies that GNP will pay the Company license, maintenance and consulting fees
aggregating to a minimum of $1,600,000 over three years. The second agreement
specifies the terms for hosting of the Company's customers on GNP's Application
Service Providers ("ASP") portal. Additionally, the Company is entitled to
transaction fees generated by users of the GNP ASP portal. Each of the
agreements have an initial term of three years with provisions for renewals
thereafter. Both the initial term and renewals are subject to contingencies for
minimum levels of commercial activity on the GNP site.

                                       8
<PAGE>

In September 2000, the Company signed a letter of intent with SRI Strategic
Resources ("SRI") of Burnaby, British Columbia, Canada, a division of TELUS
Services Inc. ("Telus"). TELUS is Canada's second largest telecommunications
company and provides a full range of advanced communication services and
products across Canada. SRI specializes in custom e-business solutions for
municipal governments, parks and recreation, education, finance, wholesale
distribution, and retail industries. Under the initiative outlined by the letter
of intent, the Company's OpenEC platform would be combined with SRI's technology
integration expertise to develop a business to business e-commerce portal for
forest industry procurements.

The portal will be provided to the British Columbia forest sector as a tool for
electronic management of forest industry purchases of goods and services. While
initially targeting the British Columbia forest industry, the portal will be
designed to meet the needs of forest companies throughout North America.

Under terms contemplated by the letter of intent, SRI will provide expertise in
the integration of databases, electronic commerce, Internet and multimedia tools
for the portal. SRI will also provide customer assistance, consulting and
systems integration services to forestry portal customers. TELUS Advanced
Communications (a division of Telus) will contribute sales, marketing and ASP
design and outsourcing services for the forestry portal and future portals SRI
and the Company may pursue. The Company will provide EC software, portal design,
custom software development and technical and sales support. The Company's
business development resources will also be utilized in the development of the
forestry and other industry portals.

The letter of intent schedule provides for the finalization of a definitive
agreement, subject to contingencies, in December 2000. Until execution of a
definitive agreement, either party may determine not to proceed with the project
as envisaged in the letter of intent.

INDUSTRY OVERVIEW

EC and EDI are important elements of corporate interaction and communication in
today's global electronic marketplace. Companies interact daily with
geographically diverse customers, suppliers, trading partners and divisions.
These organizations increasingly need to exchange information and require their
computer systems to effect the information exchange.

Facilitating the exchange of electronic information between diverse computer
systems is a highly complex process. Computers running different software
programs, created by different vendors, at different times, for different
purposes, and in different languages, will not communicate unless specialized
software and systems are created that will allow seamless electronic interchange
to take place. This need to communicate between incompatible systems is being
answered through the implementation of new EC and EDI standards, software and
systems. EC essentially involves conducting business transactions electronically
using computers and telecommunication networks. EDI is an essential component of
EC that involves the electronic exchange of information in structured formats
that enable dissimilar systems to communicate accurately.

EC and EDI are important to large companies and have resulted in tremendous cost
and time efficiencies. Proponents and users of EDI range from small domestic and
multinational businesses, to large banking and financial institutions, retail
chains and the United States government.

The traditional focus of EDI programs has been the replacement of paper business
forms, such as purchase orders and invoices, with similar electronic forms. More
recently, the focus of EDI programs has been evolving to include more strategic
uses among multiple companies such as supply chain management, just-in-time
manufacturing, efficient customer response and vendor managed inventory. EDI is
no longer merely a mechanism to transmit electronic documents -- EDI can now
move information between computer systems allowing them to automatically perform
core business functions, both intra- and inter-company. The advantages of EDI
include:

         o        one-time data entry;
         o        reduced clerical workload and elimination of paper records;
         o        rapid, accurate and secure exchange of business data; and
         o        reduced operating and inventory carrying costs.

                                       9
<PAGE>

The EDI market predates the mass acceptance of the Internet, primarily in EDI
Value Added Networks ("VAN"). Over the last several years, the EDI software and
network industry has been going through gradual consolidation, primarily driven
by the need for the EDI VANs to increase network traffic. Many smaller EDI
companies are now resellers, consultants and integrators using EDI software from
the VANs.

THE EFFECT OF THE INTERNET ON THE EC AND EDI INDUSTRIES

More and more businesses today are using the Internet as an electronic
communication highway for business to business and business to consumer
transactions, and to access industry data and research. Internet protocols are
used in networks of all sizes, from private intranets to shared extranets to the
public Internet. The Internet brings together customers, vendors, suppliers and
employees in ways never before possible. In short, the Internet efficiently
connects valuable information to the people who need it.

Electronic business offers the potential of increased profits by extending the
benefits of internal information technology processes, simplified sharing of
critical data and lower organizational barriers, beyond a company's walls and
into the operations of its customers, suppliers and business partners.
Electronic business involves reinventing business processes, redefining business
models, changing corporate cultures and establishing new levels of intimacy with
suppliers and customers. Electronic business success requires, and is causing,
fundamental changes in organizations, corporate behavior and business thinking,
both inside and outside the company.

Doing business on the Internet involves new challenges, including problems with
security, scalability and reliability. Opportunities exist for those companies
which can help businesses manage and surmount these problems.

The Internet is a major challenge for EDI VAN companies because most of their
revenue is based on transaction fees from their propriety networks. The open
protocols of the Internet are challenging this revenue model, as flat rate
pricing for software licenses becomes more common. Many VANs have addressed the
Internet by offering Internet gateways to their network service; however, the
transactions are still processed through the expensive propriety networks at
premium rates. The VANs have reduced fees in response to Internet competition,
but many have increased fees for related services and software to make up lost
revenues.

Many business to business EC solutions provide only a very basic framework built
on top of business to consumer electronic commerce technology. These solutions
are often unable to deal with the more complex requirements of business
processes in business to business commerce. End users must often spend
substantial amounts of money to further customize the offered solutions.

INDUSTRY MARKET OPPORTUNITIES

         o        FINANCIAL SERVICES. Because money is not a physical good,
                  money and all information regarding money can be moved around
                  the Internet very efficiently.

         o        EC SOFTWARE AND SERVICES. The Company perceives a strong
                  demand for software and services that will enable businesses
                  to take advantage of electronic commerce.

         o        DEVELOPMENT OF ELECTRONIC COMMERCE INFRASTRUCTURES.
                  Applications are needed which allow companies to rapidly
                  implement and manage electronic commerce programs that connect
                  customers, vendors, distribution channels and internal company
                  resources. Key applications include order processing,
                  purchasing, distribution, logistics and payments and cash
                  management.

         o        BUSINESS TO BUSINESS ELECTRONIC COMMERCE. The business to
                  business sector of electronic commerce enables the building of
                  electronic business relationships between companies. These
                  include EDI, electronic funds transfer, online catalogs, order
                  entry, order fulfillment and order management along with
                  dissemination of a wide range of business information through
                  the distribution channels.

         o        RETAIL SUPPLY CHAIN MANAGEMENT. Many retailers have integrated
                  elements of EDI programs for larger volume purchasing from
                  their major suppliers. Combining existing EDI business
                  processes with new Web technologies allows for cost effective
                  expansion of EDI to all supplier relationships.

                                       10
<PAGE>

INDUSTRY IMPLEMENTATION

Most medium and smaller businesses have not incorporated EDI systems into their
operations because of the complexity and high cost of setting up EDI systems.
The EDI Group, Ltd. estimates that, of the three million U.S. companies with
five or more employees, approximately 120,000 are using EDI. Forrester Research,
Inc. reported that, of two million companies with ten or more employees, 100,000
chose to implement EDI, leaving the remaining 1.9 million companies as potential
EDI participants(1). To facilitate EDI use by these smaller companies, software
systems are needed which can automatically configure and deliver accurate
communications with a minimum of user attention. To date, these solutions have
been available only to large companies that can afford the costs associated with
the custom design requirements. Additionally, smaller companies need open
systems standards, low cost software solutions and service providers with the
expertise to expand market acceptance rapidly.

                               SOFTCARE'S PRODUCTS

SoftCare's products focus on EC and EDI, and are marketed as a suite of software
modules within the Company's OpenEC Electronic Commerce platform.

In recent years, technology and telecommunications infrastructures have become
available and affordable in many locations enabling EC and EDI for smaller
businesses that could not previously afford implementation of EC and EDI. The
Company's OpenEC products extend EDI business processes to non-EDI business
partners, allowing companies to conduct business to business electronic
commerce, regardless of whether one or both is EDI enabled.

FEATURES OF THE COMPANY'S OPENEC PRODUCTS INCLUDE:

         o        FLEXIBLE SOLUTIONS. OpenEC products will grow with the
                  customer, are cost effective for entry level businesses, and
                  can be upgraded to a full-featured solution.

         o        SCALEABLE PRODUCTS. OpenEC products will "scale" easily to a
                  wide range of applications and platforms, from stand alone
                  entry level Web forms to high volume clearing house operations
                  and value added networks.

         o        UPGRADEABLE TECHNOLOGY. OpenEC products are compatible and
                  upgradeable to meet changing product technology and customer
                  demands.

         o        OPEN SYSTEMS TECHNOLOGY. OpenEC products are designed to run
                  on a wide range of industry standard hardware and software
                  platforms, including Java, COBA, OBI, XML, X12, UNIX, Windows,
                  and NT.

OPENEC - THE OPEN ELECTRONIC COMMERCE PLATFORM

The OpenEC Electronic Commerce Platform is software that integrates the
following EC products and technologies, allowing them to co-exist under common
management, audit and operations:

         o        EC APPLICATIONS. Applications to conduct electronic business
                  including order processing, catalogs and purchasing.

         o        EC CLEARING. Management, routing and controlling EC
                  transactions.

         o        EC TECHNOLOGIES. Web servers, EC tools, security, payment
                  systems, EDI, fax and other technologies.

--------
(1)      Technology Forecast: 1997, Price Waterhouse World Firm Services BV,
         Inc., 1997, at ss.6.1 ("Electronic Commerce"), page 369.

                                       11
<PAGE>

         o        EC INTEGRATION. Tools and processes to integrate Legacy
                  Applications and third party services.

         o        DEVELOPMENT TOOLS. IDE, web development, SDK and Object
                  Library.

TECHNOLOGY PLATFORM

OpenEC software components are primarily compatible with EC Applications and EC
Clearing layers of EC products and technologies. The EC Applications level
software is marketed as vertical applications such as "OpenEC Retail Orders",
"OpenEC Warehouse Orders" and "OpenEC Buying Group Purchasing". The EC Clearing
layer software is marketed as the "OpenEC Electronic Commerce Management
Center". The EC Technologies and EC Integration layers are a technical
infrastructure for rapid integration of best of breed and market leading
technologies, such as Microsoft and Netscape Internet Web servers. The OpenEC
development tools are Object Oriented, Java, C++, SQL and CORBA compatible.
Supported databases are SQL Server, Oracle, Sybase, SQL Anywhere, Access and
ODBC. Initial releases support the Microsoft NT and Unix Servers.

The EC Applications enable trading groups to conduct electronic business within
specific functional business processes. SoftCare initially defined three
business processes: order processing, catalogs and purchasing. These
applications sit on the top of the OpenEC Electronic Commerce Platform and are
integrated with the EC Clearing layer. Each application can operate
independently or together as an integrated business EC solution. The
applications being developed are driven by customer specific implementation
needs built on a base EC Applications framework. The EC Applications framework
allows for rapid custom deployment and ongoing maintenance for each customer
specific requirement.

OpenEC Application development tools enable customers to create their own
advanced electronic business applications. OpenEC has four turnkey electronic
business applications that can be run out of the box or used as a base for
customized development. Each application sits on the OpenEC Platform and uses
all common services available in the system. These Java based applications can
be rapidly and widely deployed with centralized audit, control and security
located on the OpenEC Platform.

SYSTEM FEATURES

         o        single integration for all EC Technologies through existing
                  EDI system;
         o        common security and access control for all EC Applications;
         o        reliability and security using open electronic commerce
                  standards and best of breed EC technologies;
         o        simplified development, integration and operations;
         o        common audit and management of all transactions through the EC
                  Clearing Center;
         o        transaction acknowledgement;
         o        EDI to EDI, EDI to FAX or EDI to Web routing;
         o        trading partner validation and relationship maintenance;
         o        open platform to easily adopt any existing or new EC
                  technology;
         o        single interface to Legacy Applications that use existing EDI
                  System as the single point of integration;
         o        EC Clearing Center which routes and converts EDI transactions
                  into Web or fax transactions;
         o        switching of EDI destined transactions to use the Internet or
                  EDI VAN;
         o        Web forms for non-EDI users to send and receive without
                  complex EDI technology;
         o        Data Archive and Warehousing for expert reporting; and
         o        common platform for any EC Application or customized system.

SoftCare's TradeLink EDI Management System is sold as a separate software
solution as well as an integrated part of the OpenEC Electronic Commerce
Platform. TradeLink's EDI Management System, is different from other EDI
translators in the as TradeLink is Network-Independent. It will support any
public Value Added Network (VAN), private Network or the Internet. TradeLink
includes a large pre-built network script library with user scripting
capabilities for any custom network or communications. Some other distinguishing
features of TradeLink's EDI Management System are:

                                       12
<PAGE>

         o        Provides more productivity and management features - EDI tasks
                  are completely integrated using the unattended operations
                  features.
         o        A highly flexible directory structure.
         o        Easier to integrate - TradeLink makes it easier to integrate
                  with its use of exception notification and superior data
                  management.
         o        Easier and faster partner mapping - Using super-set and
                  sub-set partner maps, this mapping technique produces a single
                  flat file format for easy integration to your application.
         o        Minimal key entry required to set up partner specific maps
         o        Auto trading partner set up - This automatic process builds a
                  trading partner profile based on an incoming business
                  documents. This feature can be used to facilitate setting up
                  of trading partners, especially when many trading partners are
                  involved.
         o        Ability to create implementation guidelines - TradeLink allows
                  the user the ability to create implementation guidelines based
                  on the maps specified on your system. This enables the user to
                  quickly provide your specification requirements to a potential
                  trading partner.
         o        Complete re-processing capability - Incoming and outgoing
                  documents are registered within TradeLink's audit system,
                  allowing them to be recalled.
         o        Job scheduler - TradeLink's job scheduler allows tasks to be
                  scheduled with user-defined parameters.
         o        Analysis tool - The EDI standards analysis tool helps identify
                  differences in various versions of EDI documents, making
                  upgrades to newer versions easier.
         o        Works across multiple platforms - As TradeLink will work
                  across multiple platforms (UNIX or NT), there is almost no
                  learning curve involved in switching platforms.
         o        Full audit trails - TradeLink has full audit trails and
                  reports that register all activities of the system.
         o        Support more Unix ports - TradeLink supports more Unix ports
                  than any other EDI product on the market, and
         o        Supports multi-standards - TradeLink supports ANSI X.12,
                  UN/EDIFACT and Korean EDIFACT standards.


                               MARKETING STRATEGY

OVERVIEW

The Company's target market is small to mid size retailers and their supply
chain trading partners. This market is a substantial portion of the estimated
150,000 North American companies that have a substantial investment in EDI and
the integration to their legacy computer systems. The Company has targeted
consulting and counseling industries to provide a large user base with enhanced
common access to the services offered by companies in their field. The Company
is particularly focused on supply chain internet portals in the food supply,
manufacturing, financial and British Columbia forest products industries.

The Company's promotional efforts focus on EC and EDI for business to business
as opposed to business to consumer relationships. The Company's products have
been placed in the banking, distribution and retail industries. However, these
products are not industry specific or geography specific, and the Company
proposes to market its products horizontally into other industries and
vertically into other markets.

The Company's sales and marketing strategy for its OpenEC product family and
other EC and EDI products and services has been conducted through direct sales
and indirect Value Added Partners ("VAP") sales.

The Company prices its OpenEC products based on prices established and
determined by management. Tradelink EDI is sold at a price established by market
forces. The Company's typical per-customer revenue has ranged from $10,000 to
$20,000 over the last three years.

                                       13
<PAGE>

DIRECT SALES

The Company expanded its direct sales force during the past two years. Senior
sales executives and support staff with strong industry knowledge and contacts
have been recruited and deployed regionally in strategic locations. These
locations included the Pacific Northwest of North America and the state of
California. California based staff service southeastern USA markets.

VALUED ADDED PARTNERS ("VAP")

The Company defines VAPs as strategic partners that integrate one or more of the
Company's OpenEC products into their own application software. VAPs are
typically in the fields of system integration, application software development,
vertical software niches, telecommunications, Value Added Networks and Internet
service.

The Company has been highly selective in its alliances with VAPs, requiring each
of them to satisfy the following general criteria:

         o        ability to gain a leading share of their core market niches;
         o        a long-term vision of the EC industry as it relates to their
                  customer base and application areas;
         o        ability to demonstrate the strategic positioning of the OpenEC
                  product set within their markets;
         o        a commitment to market and support the OpenEC products within
                  their markets; and
         o        a commitment to invest in the training and education required
                  to implement and support the OpenEC products.

                            RESEARCH AND DEVELOPMENT

The Company has made substantial investments in research and development. The
Company expects most enhancements to its software will continue to be developed
internally. The Company also intends to rely on strategic partners to provide
complementary technologies such as database integration and multimedia tools for
complete vertical market solutions to be offered jointly by the Company and
strategic partners. The Company anticipates that the majority of its research
and development activity will consist of developing new applications and
enhancements to its OpenEC platform.

The Company has several EC user applications planned or in development. Some of
these projects include:

         o        Retail Centralized Purchasing
         o        Retail Buying Group
         o        Wholesale Distribution
         o        Business Catalog Sales
         o        Warehouse Logistics, and
         o        Centralized Credit Counseling and related services

These products will enable a subset of a customer's back-end applications to be
deployed on the Web to meet the specific needs of the trading partners. This
approach will allow a rapid deployment of software applications without
modifications to the customer's other software applications.


                                   COMPETITION

The market for EC and EDI solutions is complex and rapidly changing. The current
market is intensely competitive and is likely to become more competitive as the
number of entrants and new technologies increases. While none of the Company's
competitors or potential competitors currently produces a solution that is
identical to OpenEC, the Company is subject to current or potential competition
from large software vendors, online trading exchanges that develop their own
business to business solutions, other EDI vendors. The Company's primary
competitors in the EDI market are GE Information Services, Inc., Sterling Inc.,
Harbinger Corp. and St. Paul Software Inc. The Company's primary competitors in
the EC market are Ariba Inc., Commerce One Inc., Actra, a division of Netscape
Communications Corp., Order Trust L.L.C., Data Dimensions, Inc., and Ironside
Technologies Inc., along with many smaller alternative technology companies and
system integrators. In addition, the Company's customers and strategic partners
may also become competitors in the future.

                                       14
<PAGE>

Most of the Company's competitors have larger customer bases, greater brand
recognition, and significantly greater financial, marketing and other resources
than the Company. Some of the Company's competitors have longer operating
histories than the Company. The Company's competitors may enter into strategic
or commercial relationships with larger, more established and well-financed
companies, and may be able to secure alliances with customers and affiliates on
more favorable terms, devote greater resources to marketing and promotional
campaigns and devote substantially more resources to systems development than
the Company can. In addition, new technologies and the expansion of existing
technologies may increase competitive pressures on the Company. Competitive
pressures could harm the Company's business, operating results and financial
condition.

Many of the Company's existing and potential customers evaluate on an on-going
basis whether to develop their own electronic commerce software solution or to
purchase it from outside suppliers. As a result, the Company must, on an
on-going basis, educate existing and potential customers on the advantages of
the Company's solutions over internally developed software as well as
competitors' products. The Company believes that the principal competitive
factors affecting its market include breadth and depth of solutions, price,
speed and ease of deployment, interoperability with existing applications, core
technology, product quality and performance, product features (including
security), and customer service. The Company believes its solutions currently
compete favorably with respect to these factors in its target markets.

The Company's competitive advantage is in its ability to offer to customers
cost-effective solutions for small and medium-sized businesses which are not
currently well served by the costly and complex products offered by many of the
Company's competitors. As well, the Company's ability to design, develop and
implement sophisticated vertical portal for specific industries in a focused
manner is a distinct advantage to certain customer groups. Some of the Company's
competitors are in or are entering this market, and the Company believes its
advantages over these competitors and potential competitors are the
functionality and scalability of its products, and their ability to operate on a
broad range of hardware and software platforms. However, the market is
relatively new and evolving rapidly. The Company may not be able to maintain its
competitive position against current and potential competitors, especially those
with significantly greater financial, marketing, service, support, technical and
other resources.

                               PROPRIETARY RIGHTS

The Company depends on proprietary rights and technology. The Company's success
and ability to compete depends in part on its ability to develop and maintain
the proprietary aspects of its technologies. The Company relies on a combination
of copyright, trade secret and trademark laws, and nondisclosure and other
contractual provisions, to protect its various proprietary products and
technologies. The Company seeks to protect its source code, documentation and
other written materials under copyright and trade secret laws. The Company
licenses its software under license agreements that impose restrictions on the
ability of the customer to use and copy the software. The Company generally
requires its employees to sign agreements that require them to assign to the
Company any proprietary information, inventions or other intellectual property
they generate while employed by the Company. The Company implements other
procedures designed to avoid the disclosure of its trade secrets and technology,
such as restricting access to its source code and executing confidentiality
agreements with consultants, customers and other persons with access to the
Company's proprietary information. These safeguards may not prevent competitors
from imitating the Company's products and services or from independently
developing competing products and services, especially in foreign countries
where legal protections of intellectual property may not be as strong or
consistent as in Canada and the United States.

The Company holds no patents. Consequently, others may develop, market and sell
products substantially equivalent to the Company's products, or utilize similar
technologies, so long as they do not directly copy the Company's products or
otherwise infringe its intellectual property rights.

                                       15
<PAGE>

The Company licenses and integrates technology from third parties in certain of
its software products. For example, the Company licenses Oracle. These
third-party licenses generally require the Company to pay royalties and fulfill
confidentiality obligations. Any termination of, or significant disruption in,
the Company's ability to license these products could cause delays in the
releases of software until equivalent technology can be obtained and integrated
into the software products. These delays, if they occur, could have a material
adverse effect on the Company's business, operating results and financial
condition.

In Canada, the Company has registered its business name "SoftCare". The Company
has also filed and received a trademark on the product name "OpenEC" in Canada
and the United States. TRW, Inc. had the right to use the "OpenEC" trademarks in
association with products developed under the Cooperation Agreements. The
Company has no reason to believe that TRW has any use for the trademark as
termination of the Co-operation Agreement ended TRW's pursuit of the projects.
Further, the software currently used by the Company is not the software that was
subject to the Co-operation Agreement. Accordingly to the best of the knowledge
of the Company no development or marketing of any software under the OpenEC
market has been undertaken by TRW.

The Company has not filed a trademark application on the product name
"TradeLink" in Canada, the United States, or elsewhere and does not intend to do
so. The Company has not filed a trademark application in Canada or the United
States for its business name "SoftCare. A competitor of the Company has filed
for a trademark in the United States on the business name "SoftCare." The
Company believes that the competitor has never done business under the name
"SoftCare" and that the Company has a prior right to such name. However, the
Company may not be able to protect its business name through trademark
registrations in Canada and the United States, and until it files such
registrations, must resort to its common law rights from prior use of the name.

Consequently, the Company has not fully protected its rights to the "OpenEC"
product name, the "TradeLink" product name or the "SoftCare" business name. In
the event the Company is forced to cease using any of such names, it will be
required to select new names for either its products or its business, or both.
Likely material consequences of changing such names include loss of the
Company's goodwill attached to the names and additional expenses in re-labeling
products, changing business forms and costs and expenses incurred in disputes
with third parties over rights to the names.

Intellectual property rights are often the subject of large-scale litigation in
the software and Internet industries. The Company may find it necessary to bring
claims or litigation against third parties for infringement of the Company's
proprietary rights or to protect trade secrets. These actions would likely be
costly and divert management resources. These actions could also result in
counterclaims challenging the validity of the Company's proprietary rights or
alleging infringement by the Company. The Company cannot guarantee the success
of any litigation it might bring to protect its proprietary rights.

Although the Company believes that its products do not infringe on any
third-party's patents or proprietary rights, the Company cannot be certain that
it will not become involved in litigation involving proprietary rights.
Proprietary rights litigation entails substantial legal and other costs, and the
Company does not know if it will have the necessary financial resources to
defend or prosecute its rights in connection with any such litigation.
Responding to, defending or bringing claims related to intellectual property
rights may require management to redirect the Company's human and monetary
resources to address these claims. In addition, these actions could cause
product shipment delays or require the Company to enter into royalty or license
agreements. Royalty or license agreements, if required, may not be available on
terms acceptable to the Company, if they are available at all. Any or all of
these outcomes could have a material adverse effect on the Company's business,
operating results and financial condition.

                                       16
<PAGE>

                                    EMPLOYEES

As of October 31, 2000, the Company had 37 full and part-time employees. The
following table shows the breakdown of employees by function and by offices:

<TABLE>
<CAPTION>
------------------------------------- ------------------ ------------------ ----------------- ------------------ ----------------
              OFFICE LOCATION          MGMT. & ADMIN.    SALES & MARKETING    ENGINEERING        OPERATIONS           TOTAL
------------------------------------- ------------------ ------------------ ----------------- ------------------ ----------------
<S>                                          <C>                 <C>               <C>               <C>               <C>
North Vancouver                               9                  1                 18                 3                 31
Washington, Arizona & California              1                  2                  2                 1                  6
                                         ==========      ==============     ===============   ===============    ================

Totals:                                      10                  3                 20                 4                 37

Percentages                                  27%                 8%                54%               11%               100%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company uses its own employees and a network of Value Added Partners for
sales and installations of its products. The Company's partners include
electronic commerce service providers, business application software companies
and EDI consultants located in Canada, the US and Korea.

None of the Company's employees are covered by a collective bargaining
agreement. The Company believes its relationships with its employees are good.

                  REVENUES BY CATEGORY AND GEOGRAPHICAL REGION

Substantially all of the Company's operations, assets and employees are located
in Canada. The following table shows the breakdown of total revenues by
categories of activities and into geographical markets.

<TABLE>
<CAPTION>
                               YEAR ENDED         FIVE MONTHS ENDED          YEAR ENDED              YEAR ENDED
REVENUES BY CATEGORY          MAY 31, 2000           MAY 31, 1999           Dec. 31, 1998           Dec. 31, 1997
--------------------          ------------           ------------           -------------           -------------
<S>                                <C>                     <C>                    <C>                    <C>
Software sales                      64%                     60%                    69%                    89%
Consulting services                  2%                     14%                    14%                     7%
Training services                    2%                      4%                     1%                     1%
Maintenance fees                    32%                     22%                    16%                     3%
                              ============           ============           =============           =============
Total                              100%                    100%                   100%                   100%

REVENUES BY                     YEAR ENDED          FIVE MONTHS ENDED         YEAR ENDED             YEAR ENDED
GEOGRAPHICAL MARKETS           MAY 31, 2000           MAY 31, 1999           DEC. 31, 1998          DEC. 31, 1997
--------------------           ------------           ------------           -------------          -------------
Canada                              34%                     40%                    25%                    11%
United States                       60%                     52%                    74%                    86%
Other countries                      6%                      8%                     1%                     3%
                              ============           ============           =============           =============
Total                              100%                    100%                   100%                   100%

</TABLE>

                                       17
<PAGE>

                                  RISK FACTORS

INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER
INFORMATION CONTAINED IN THIS REPORT ON FORM 20-F. INVESTING IN THE COMPANY'S
COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THOSE DESCRIBED
BELOW, RISKS AND UNCERTAINTIES THAT ARE NOT PRESENTLY KNOWN TO THE COMPANY OR
THAT THE COMPANY CURRENTLY BELIEVES ARE IMMATERIAL MAY ALSO IMPAIR THE COMPANY'S
BUSINESS OPERATIONS. IF ANY OF THE FOLLOWING RISKS OCCUR, IT MAY ADVERSELY
AFFECT THE COMPANY'S BUSINESS AND THE PRICE OF THE COMPANY'S COMMON SHARES, AND
THE COMPANY'S INVESTORS COULD LOSE ALL OR PART OF THEIR INVESTMENT. SEE ALSO THE
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS INCLUDED AT THE BEGINNING OF
THIS REPORT.

LIMITED OPERATING HISTORY

The Company began shipping its OpenEC products, which are its current focus, in
April 1999. It has placed OpenEC products with only two customers as of October
31, 2000. Accordingly, the Company has only a limited operating history with
which management and investors can evaluate the Company's business and
prospects. The Company's prospects must be considered in light of the risks
encountered by companies in the early stages of development in new and rapidly
evolving markets, especially the market for Internet-based business to business
software. Some of the risks the Company faces include its potential inability
to:

         o        attract and retain a broad base of customers that can serve as
                  reference accounts for ongoing sales efforts;
         o        manage competition;
         o        hire and retain qualified personnel;
         o        develop new technology;
         o        negotiate and maintain favorable strategic relationships; and
         o        plan and manage effectively the growth expected in the
                  Company's business.

If the Company fails to address these risks successfully, its business will
likely suffer and the price of its common shares may decline.

HISTORY OF LOSSES

The Company has incurred significant operating and net losses and negative cash
flow in each of its last three fiscal years. The Company has spent significant
funds to date to develop and refine its current software applications and to
develop its sales and marketing resources. The Company incurred net losses of
approximately $3.9 million in the year ended May 31, 2000, approximately $1.4
million in the five months ended May 31, 1999, and approximately $1.1 million in
the year ended December 31, 1998. The Company reported profit of approximately
$417,000 for the year ended December 31, 1997.

The Company expects to continue to invest significantly in its direct and
indirect sales and distribution efforts, both domestically and internationally,
in order to increase market awareness and sales of software solution and related
services. The Company also plans to continue to grow its research and
development efforts to enhance its current software products and to expand its
software applications suite. The Company expects to continue to hire additional
personnel in all other areas of the Company in order to support its growing
business. In addition, the Company expects to continue to incur significant
fixed and other costs associated with customer acquisitions and with the
implementation of software applications for customers.

In order to achieve operating profitability, the Company will need to increase
its customer base, decrease its customer acquisition costs and increase its
number of licensed users and its revenues per customer. The Company may not be
able to increase its revenues or increase its operating efficiencies in this
manner. Moreover, because the Company expects to continue to increase its
investment in its business faster than it anticipates growth in revenues,
management expects that the Company will continue to incur significant operating
losses and negative cash flow for the foreseeable future. The Company may not
become profitable.

                                       18
<PAGE>

FLUCTUATION OF RESULTS

The Company's quarterly financial results fluctuate due to a number of factors
and are difficult to predict. If the Company's future results are below the
expectations of public market analysts and investors, the price of the Company's
common shares may decline.

The Company has experienced, and expects to continue to experience, fluctuations
in revenues and operating results from quarter to quarter due to a number of
factors, many of which are beyond the Company's control. As a result, the
Company believes that quarter-to-quarter comparisons of its revenues and
operating results may not be accurate indicators of future performance. The
reasons for these fluctuations include, but are not limited to:

         o        market acceptance of the Company's products;
         o        budgetary constraints of customers and potential customers;
         o        the amount and timing of orders;
         o        the amount and timing of operating costs relating to expansion
                  of the Company's business, operations and infrastructure;
         o        the number and timing of new hires;
         o        the Company's utilization rate for its service professionals;
         o        changes in the Company's pricing policies or competitors'
                  pricing policies;
         o        entry of new competition into the market;
         o        variability in the mix of license fees, software royalties and
                  fees-for-use; and
         o        costs related to potential acquisitions of technology or other
                  businesses.

The Company plans to increase its operating expenses significantly in order to
expand its sales and marketing operations and fund greater levels of research
and development. The Company's operating expenses, which include sales and
marketing, research and development and general and administrative expenses, are
based on expectations of future revenues and are relatively fixed in the short
term. If revenues fall below expectations in a quarter and the Company is not
able to quickly reduce its spending in response, the Company's operating results
for that quarter will be harmed. It is likely that in some future quarter the
Company's operating results will be below the expectations of public market
analysts and investors, and, as a result, the price of the Company's common
shares may fall.

LONG SALES CYCLES

The Company's sales cycles are lengthy, which makes it difficult to predict
revenues and budget expenses. The length of the Company's sale cycles results in
fluctuations in operating results, which could cause the Company's share price
to decline. Sales cycles vary substantially from customer to customer, but
typically range from three to ten months. The Company's software products are
complex and perform or directly affect mission-critical functions across many
different functional and geographic areas of the customer's enterprise.
Potential customers tend to engage in extensive internal reviews before making
purchase decisions. In many cases, customers must change established business
practices when they install the Company's software. The Company's sales staff or
its Value Added Partners must dedicate significant time consulting with a
potential customer concerning the substantial technical and business concerns
associated with implementing the Company's products. The purchase of the
Company's products is often discretionary, so lengthy sales efforts may not
result in a sale.

UNCERTAINTY OF MARKET ACCEPTANCE

To achieve its financial projections, the Company's OpenEC products must achieve
a significant degree of market acceptance, especially among larger companies
that will purchase the OpenEC products. The Company must overcome historical
perceptions as to the lack of security of EDI conducted on the Internet. In
addition, because commerce on the Internet is a relatively new development,
there has not been a proven commitment to electronic commerce, and mass-market
acceptance has not been reached to the degree needed to reasonably predict
future demands for electronic commerce products. Finally, the pricing and
revenue model for the OpenEC products is unproven and customers and potential
customers may not accept this model. Any of these factors could prevent the
Company's products from gaining a significant level of market acceptance.
Without such acceptance in the market, the Company will not realize the full
potential of its assets and its revenues will not grow.

                                       19
<PAGE>

LIMITED PRODUCT BASE

The OpenEC product is the Company's primary product focus, and the Company may
not be successful at developing or marketing its OpenEC products. If OpenEC does
not achieve market acceptance, the Company may be required to develop
alternative products. The Company does not currently have alternative products
that are readily available for marketing and distribution at levels necessary to
produce the revenues projected for OpenEC. Accordingly, delays in developing an
alternative product line are likely. New product development may require
additional capital, and it may not be possible to develop new products quickly
enough to respond to the rapidly evolving electronic commerce marketplace.

NEED TO MANAGE GROWTH

The Company intends to grow its operations significantly in the future. The
Company may not be able to manage future growth successfully. Future expansion
efforts could be expensive and may strain the Company's managerial and other
resources. To manage future growth effectively, the Company must maintain and
enhance its management, financial and accounting systems and controls, hire and
integrate new personnel and manage expanded operations. If the Company does not
manage growth properly, it could harm the Company's business, operating results
and financial condition.

DEPENDENCE ON FEW CUSTOMERS

To October 31, 2000, only two customers have implemented the Company's OpenEC
products. The majority of the Company's revenues for the periods reported in the
consolidated financial statements in this report continue to derive from the
older TradeLink product. Revenues from relatively few customers have accounted
for a significant portion of the Company's revenues. The Company expects to
continue to derive a significant portion of its revenues from relatively few
customers in the future. To become profitable, the Company will need to expand
its base of customers significantly. If the Company loses any of its key
customers, or if it is unable to attract new customers once work for its present
key customers is completed, the Company's revenues may decline, and the Company
will likely be unable to achieve profitability.

NEED TO GROW SERVICE AND CONSULTING ORGANIZATION

The Company's customers typically engage the Company to assist them with
implementation, education and training, and maintenance and support. The
Company's success depends on its ability to provide customers with these
services and to attract and educate VAP to provide similar services to
customers. The Company may not be able to attract or retain a sufficient number
of service professionals and partners. Competition for qualified personnel is
intense. In addition, new personnel will require training and education and will
take time to reach full productivity. If the Company is unable to attract and
maintain these service professionals and VAP, it would likely be unable to meet
customer demands for its implementation services, which could hinder the
Company's ability to grow.

Deploying the Company's products is a complex process involving integration with
customers' business systems. In some cases, the Company deploys the products
itself, and in other cases, it relies on VAP for deployment. The Company or its
VAP may fail to meet customer expectations regarding the timing or manner of
deployment of products, which could result in a loss of customers, negative
publicity and an inability to attract new customers. In addition, complex
deployments may also increase the amount of professional services allocated to
each customer, thereby increasing the Company's costs and adversely affecting
operating results.

DEPENDENCE ON DISTRIBUTION AND MARKETING RELATIONSHIPS

The Company's strategy for the development, production and commercialization of
OpenEC products is to enter into collaborations with various strategic
collaborators, licensors, licensees and others that market software products and
related services. The Company has entered into Value Added Integrator ("VAI")
co-marketing, cooperation and other agreements with a number of such companies.
Many of these agreements are non-exclusive, and many of these other companies
have or will have similar agreements with the Company's competitors. The Company
believes that its success in penetrating markets for EDI and electronic commerce

                                       20
<PAGE>

products and services depends in large part on its ability to maintain
relationships and to cultivate additional relationships as distribution channels
change. To the extent that the Company is not able to add to and maintain such
arrangements, it would face increased capital requirements to undertake such
activities at its own expense and might encounter significant delays in
introducing its products into certain markets, or find that the development,
manufacture or sale of its products in such markets is adversely affected.

The Company's agreements with its strategic collaborators are complex. There may
be provisions within such agreements that give rise to disputes regarding the
rights and obligations of the parties. These and other possible disagreements
could lead to delays in research, development, or commercialization of certain
products, or could result in litigation or arbitration, which could be
time-consuming and expensive, and could have a material adverse effect on the
Company's business, financial condition, results of operations, and
relationships with its corporate partners. There can be no assurance that the
Company will be able to maintain or expand its relationships with its existing
collaborators or to replace its existing collaborators in the event any such
relationship are terminated. This reliance on parties external to the Company
also limits the shareholders' control over this aspect of the Company's business
plan.

RELIANCE ON THIRD PARTY VENDORS

The Company incorporates into its products certain software licensed to it by
other software developers. In particular, the Company is dependent on suppliers
for the database software and the graphical user interface software used in its
EDI products. Any termination of, or significant disruption in, the Company's
ability to license these products would adversely affect the Company's products
and its revenues. The licenses for most of these products are non-exclusive. Any
technical problems or errors with current or future versions of these licensed
products could cause errors or technical problems in the Company's products,
which could result in loss of sales, delays in or elimination of market
acceptance, damage to the Company's brand and its reputation, product returns,
increased costs, and diversion of development resources, product redesigns and
increased warranty and servicing costs.

Because the Company's products incorporate software developed and maintained by
third parties, the Company is also dependent to a certain extent upon such third
parties' abilities to enhance their current products, to develop new products on
a timely and cost-effective basis and to respond to emerging industry standards
and other technological changes. There can be no assurance that the Company
would be able to replace the functionality provided by the third-party software
currently offered in conjunction with the Company's products in the event that
such software becomes obsolete or incompatible with future versions of the
Company's products or is otherwise not adequately maintained or updated. The
absence of or any significant delay in the replacement of, that functionality
could have a material adverse effect on the Company's sales, and shareholders'
interests.

POSSIBLE NEED FOR ADDITIONAL CAPITAL

The Company has principally financed its operations to date through debt and
equity financing. The Company believes that the proceeds received from its
Financing in March 2000 will be sufficient to meet its anticipated working
capital and capital expenditure requirements through at least October 2001.
However, the time period for which the Company believes its capital is
sufficient is an estimate; the actual time period may differ materially as a
result of a number of factors, risks and uncertainties. If the Company cannot
generate sufficient cash resources from its business to fund its operations in
the future, it may need to raise additional funds through public or private
equity or debt financings in order to:

         o        take advantage of opportunities to grow the business,
                  including through accelerating international expansion plans
                  or through acquisitions of complementary businesses or
                  technologies;
         o        develop new and enhance existing products or services; or
         o        respond to competition.

If the Company raises additional funds through the issuance of equity or
convertible debt securities, it will reduce the percentage ownership of the
existing shareholders. In addition, the equity may have rights, preferences or
privileges senior to those of existing shareholders. Additional financing may
not be available on terms favorable to the Company, or at all. If the Company

                                       21
<PAGE>

raises additional funds through the issuance of debt securities, these new
securities would have rights, preferences and privileges senior to those of
common shares. The terms of these securities could also impose restrictions on
the Company's operations. If adequate funds are not available or are not
available on acceptable terms, the Company's ability to fund operations, take
advantage of unanticipated opportunities, develop or enhance its products and
services or otherwise respond to competitive pressures would be significantly
limited.

LIMITED MANUFACTURING EXPERIENCE

To be successful, the Company must be able to manufacture its products at
acceptable costs in compliance with contractual and regulatory requirements. The
OpenEC products are at an early stage of development and the Company has only
limited experience manufacturing these products. As the Company increases its
production of OpenEC products to meet expected demands, it may experience lower
than anticipated production yields or production constraints from time to time
that may adversely affect its ability to satisfy customer orders. Any sustained
inability to satisfy demand may have a material adverse effect on the Company's
business, financial condition, results of operations and its relationships with
its strategic collaborators. The possible inability to overcome these issues
could result in a marked financial decline in the Company's ongoing business,
and adversely affect shareholders' value.

HIGHLY COMPETITIVE MARKET

The EDI/EC market is highly competitive and subject to rapid technological
change and evolving industry standards and customer demands. The Company's
competitors include large international companies with significantly greater
financial, management, manufacturing, technological, marketing and distribution
resources and customer bases than the Company, as well as, in some cases,
worldwide reputations and dominant market shares.

The existence of products of which the Company is not aware, or products that
may be developed in the future, may adversely affect the marketability of the
Company's products. There can be no assurance that existing and future
competitors will not offer products superior to or lower in price than those of
the Company, or that the Company's efforts to differentiate its products from
competing products will prove successful. Failure by the Company to keep pace in
its marketplace could lead to recurring financial losses which could adversely
affect the value of shareholders' investments.

NEW PRODUCTS AND TECHNOLOGICAL CHANGE

Rapidly changing technology, evolving industry standards, and the introduction
into the marketplace of new products and Web-enabled variations of popular
products characterize the market for the Company's products. The Company expects
that the continuing growth of companies connecting to the Internet will cause
the market to continue its rapid evolution. The Company's success will therefore
depend in part upon its ability to enhance its existing products and to
introduce new products and features to meet the expected changing customer
requirements and industry standards. The Company may not be successful in
identifying, developing, manufacturing and marketing new products or enhancing
its existing products, either at all or quickly enough to keep up with the
Company's competitors. The Company's business would be adversely affected if it
incurs delays in developing and implementing new products or enhancements to its
existing products, as could happen due to insufficient capital and human
resources, product development difficulties and inaccurate assessments of market
changes. In addition, there can be no assurance that products or technologies
developed by others will not render the Company's products or technologies
non-competitive or obsolete. Delays in developing new products or the
obsolescence of current products could lead to uncertainty as to the Company's
ability to maintain operations over the long term. Investors may see the value
of the Company and their interest therein decline as a result.

                                       22
<PAGE>

LACK OF UNIFORMITY IN EDI/EC STANDARDS

EDI/EC utilize numerous standards in the Internet, VANs, EDI, Electronic Finance
Payments, user interface and security. EDI/EC software producers must provide
products that utilize standards that have wide acceptance in these markets.
Accordingly, OpenEC may not achieve market acceptance and the Company may be
required to develop EDI/EC software that utilizes other standards, possibly
resulting in increased research and development costs and loss of sales
revenues. Any of these factors would negatively affect the financial results of
the Company, and may cause the price of the Company's common shares to decline.

RISK OF INTERNET SECURITY BREACHES

A fundamental requirement to conduct Internet-based business to business
electronic commerce is the secure transmission of confidential information over
public networks. Advances in computer capabilities, new discoveries in the field
of cryptography, the development of new computer viruses or other developments
may result in a compromise or breach of the security features contained in the
Company's software or the algorithms used by customers and their business
partners to protect content and transactions on online trading exchanges or
proprietary information in customers' and their business partners' databases.
Anyone who is able to circumvent security measures could misappropriate
proprietary, confidential customer information or cause interruptions in
customers' and their business partners' operations. The Company's customers and
their business partners may be required to incur significant costs to protect
against security breaches, including computer viruses, or to alleviate problems
caused by security breaches, reducing their demand for the Company's software.
Further, a well-publicized compromise of security could deter businesses from
using the Internet to conduct transactions that involve transmitting
confidential information. The failure of the security features of the Company's
software to prevent security breaches, or well publicized security breaches
affecting the Internet in general, could significantly harm the Company's
business, operating results and financial condition.

DEPENDENCE ON INTERNET INFRASTRUCTURE AND SPEED

The recent growth in Internet traffic has caused frequent periods of decreased
performance. If Internet usage continues to grow rapidly, its infrastructure may
not be able to support these demands and its performance and reliability may
decline. If outages or delays on the Internet occur frequently or increase in
frequency, business to business electronic commerce could grow more slowly or
decline, which may reduce the demand for the Company's products. The ability of
the Company's products to satisfy customers' needs is ultimately limited by and
depends upon the speed and reliability of both the Internet and customers'
internal networks. Consequently, the emergence and growth of the market for the
Company's software depends upon improvements being made to the entire Internet
as well as to individual customers' networking infrastructures to alleviate
overloading and congestion. If these improvements are not made, the ability of
customers to utilize the Company's products will be hindered, and the Company's
business, operating results and financial condition may suffer.

RISK OF GOVERNMENT REGULATION OF THE INTERNET

Increasing government regulation, including the imposition of sales taxes on
electronic commerce transactions, could limit the market for the Company's
products and services. As Internet commerce evolves, the Company expects that
federal, state or foreign agencies will adopt regulations covering issues such
as user privacy, pricing, content and quality of products and services. It is
possible that legislation could expose companies involved in electronic commerce
to liability, which could limit the growth of electronic commerce generally.
Legislation could dampen the growth in Internet usage and decrease its
acceptance as a communications and commercial medium. If enacted, these laws,
rules or regulations could limit the market for the Company's products and
services.

Current regulations do not require the Company to collect sales or other similar
taxes in respect of the exchange of goods and services through OpenEC
applications. However, one or more states may seek to impose sales tax
collection obligations on out-of-state companies that engage in or facilitate
electronic commerce. A number of proposals have been made at the state and local
level that would impose additional taxes on the sale of goods and services over
the Internet. These proposals, if adopted, could substantially impair the growth
of electronic commerce and could adversely affect the Company's opportunity to
derive financial benefit from such activities. Moreover, a successful assertion
by one or more states or any foreign country that the Company should collect
sales or other taxes on the exchange of goods and services through OpenEC
applications could seriously harm the Company's business.

                                       23
<PAGE>

Legislation limiting the ability of the states to impose taxes on Internet-based
transactions has been proposed in the U.S. Congress. This legislation could
ultimately be enacted into law or this legislation could contain a limited time
period in which this tax moratorium will apply. In the event that the tax
moratorium is imposed for a limited time period, legislation could be renewed at
the end of this period. Failure to enact or renew this legislation could allow
various states to impose taxes on electronic commerce, and the imposition of
these taxes could seriously harm the Company's business.

CODING AND TESTING PROCEDURES

The design and development of software code to ensure ease of maintenance and
upgrade tasks is an important element in controlling future development costs.
Software code, particularly in new product introductions, can be susceptible to
error routines or "bugs" that can affect system performance. The Company will
need to continually develop and refine appropriate coding and testing procedures
to enhance the effectiveness of its product installations. To the extent any
coding errors or deficiencies are not uncovered during its testing procedures,
the Company's software products could fall short of customers' expectations. If
this should occur and any errors or deficiencies are not corrected in a timely
manner, the Company's product could fail to achieve or lose market acceptance.

RISK OF PRODUCT LIABILITY CLAIMS

If the Company becomes subject to product liability claims, they could be time
consuming and costly to defend. Errors, defects or other performance problems in
the Company's software could result in financial or other damages to customers.
Customers could seek damages for losses that, if successful, could harm the
Company's business significantly. Although the Company's license agreements
typically contain provisions designed to limit exposure to product liability
claims, existing or future laws or unfavorable judicial decisions could negate
these limitations of liability provisions. The Company has not experienced any
product liability claims to date. However, a product liability claim brought
against the Company, even if not successful, could be time consuming and costly
to defend and could harm the Company's reputation.

RISK OF INACCURATE DATA

The accuracy of product information and prices is critical to the businesses of
the Company's customers. The Company's products extract and process data from
sellers' internal applications and facilitate the delivery of this data to
buyers. The failure of the Company's products to accurately extract, translate,
process or deliver data could deter businesses from using the Company's
products, damage the Company's business reputation, harm its ability to attract
new customers and expose the Company to legal liability. In addition, from time
to time the systems of the Company's customers may contain inaccurate pricing or
other product information. Even though such inaccuracies are not caused by the
Company's product and are not within its control, similar consequences could
occur. The Company currently does not carry insurance that would adequately
cover losses that may be incurred as a result of the delivery of inaccurate
data.

RISKS OF ACQUISITIONS

The Company regularly reviews acquisition prospects that would complement its
existing product offerings, augment market coverage, or enhance technological
capabilities. Acquisitions or investments could result in a number of financial
consequences, including:

         o        potentially dilutive issuances of equity securities;
         o        large one-time write-offs;
         o        reduced cash balances and related interest income;
         o        higher fixed expenses which require a higher level of revenues
                  to maintain gross margins;
         o        the incurrence of debt and contingent liabilities; and
         o        amortization expenses related to goodwill and other intangible
                  assets.

Furthermore, acquisitions involve numerous operational risks, including:

                                       24
<PAGE>

         o        difficulties in the integration of operations, personnel,
                  technologies, products and the information systems of the
                  acquired companies;
         o        diversion of management's attention from other business
                  concerns;
         o        diversion of resources from our existing businesses, products
                  or technologies;
         o        risks of entering geographic and business markets in which the
                  Company has no or limited prior experience; and
         o        potential loss of key employees of acquired organizations.

The Company's inability to overcome problems encountered in connection with such
acquisitions could divert the attention of management, utilize scarce corporate
resources and harm the Company's business. In addition, the Company is unable to
predict whether or when any prospective acquisition candidate will become
available or the likelihood that any acquisition will be consummated.

DEPENDENCE ON SENIOR MANAGEMENT

The Company's success is dependent on the services of a number of members of
senior management, particularly Martyn Armstrong, the Company's founder and
President. The experience of these individuals will be a key contributing factor
to the Company's continued success and growth. The loss of one or more of these
individuals could have a material adverse effect on the Company's operations and
business prospects. The Company presently carries key-man life insurance on the
life of Martyn Armstrong. This reliance on a few key people presents an inherent
risk to the value of the shares and the interests of the Company's shareholders.

DEPENDENCE ON SALES AND MARKETING PERSONNEL

The Company's products require a sophisticated sales and marketing effort
targeted at multiple departments within an organization. Competition for
qualified sales and marketing personnel is intense, and the Company might not be
able to hire and retain adequate numbers of such personnel to maintain its
growth. New hires will require training and take time to achieve full
productivity. Also, the Company's competitors may attempt to hire away the
Company's employees. If the Company is unable to hire or retain qualified sales
personnel, or if newly hired personnel fail to develop the necessary skills or
reach productivity when anticipated, the Company may not be able to expand its
sales organization and increase sales of its products and services.

LACK OF TRADEMARK PROTECTIONS

The Company has not filed trademark applications in the United States or Canada
for the name "SoftCare." A competitor of the Company holds a registered
trademark for the name "SoftCare" in the United States. TRW retains rights to
use the name "OpenEC" in connection with products developed under the
Cooperation Agreement between the two companies that terminated in May 1999. The
deliverable was presented to and accepted by TRW in February 1998. TRW then
determined not to proceed with implementation of the Asian project. That
software has not been subsequently used by SoftCare or TRW. The Company may be
required to cease using one or both names if another user enjoins the Company
from using such name, or if the Company determines that it cannot effectively
differentiate its products using these names. Any litigation involving these
names would have all of the risks and costs associated with proprietary rights
litigation. In the event the Company is forced to cease using either name, it
will be required to select new names for either its products or its business, or
both. This could in turn lead to a loss of the Company's goodwill attached to
those names and additional expenses in re-labeling products, changing business
forms and promoting the new names.

DEPENDENCE ON INTELLECTUAL PROPERTY

The Company's success is heavily dependent upon proprietary technology. To
protect its proprietary technology, the Company relies principally upon
copyright and trade secret protection and confidentiality agreements and
contractual provisions. There can be no assurance that the steps taken by the
Company in this regard will be adequate to prevent misappropriation or
independent third-party development of its technology. Further, the laws of
certain countries in which the Company sells or will sell its products do not

                                       25
<PAGE>

protect software and intellectual property rights to the same extent as the laws
of Canada or the United States. The Company does not include in its software any
mechanism to prevent or inhibit unauthorized use, but generally requires the
execution of an agreement that restricts copying and use of its products. If
unauthorized copying or misuse of the Company's products were to occur to any
substantial degree, the Company's business and results of operations could be
materially adversely affected.

POSSIBLE INFRINGEMENT CLAIMS BY THIRD PARTIES

There can be no assurance that third parties will not claim that the Company's
current or future products infringe patents or other proprietary rights of third
parties. The Company expects that software developers will increasingly be
subject to such claims as the number of products and competitors providing
EDI/EC software and services grows and overlaps occur. Any such claim, with or
without merit, could result in costly litigation or might require the Company or
its strategic collaborators to enter into royalty or licensing agreements in
order to obtain a license to continue to manufacture and market the affected
products. There can be no assurance that the Company or its strategic
collaborators would prevail in any such action or that any license (including
licenses proposed by third parties) would be made available on commercially
acceptable terms, if at all. If the Company becomes involved in litigation over
proprietary rights, such action could assume a substantial portion of its
managerial and financial resources, which could have a material adverse effect
on the Company's business, financial condition, results of operations and
relationships with its strategic collaborators. These factors could cause the
Company's share price to decline.

POSSIBLE LITIGATION ARISING OUT OF TERMINATED ACQUISITION

The Company has received a demand for alleged damages arising out of the
Company's employment of the two principals of Financial Management Group LLC
("FMG"). The Company entered into an agreement to purchase FMG in April 2000 and
simultaneously entered into two-year employment agreements with FMG's two
principals. In July 2000, the Company terminated the employment of these two
persons. In October 2000, the Company determined to terminate the acquisition of
FMG. The Company intends to vigorously defend any litigation that might be
brought against it concerning these matters, and the Company is assessing the
possibility of counterclaims against the two former principals, FMG and its
parent company. However, litigation is subject to inherent uncertainties, and an
adverse result in any such proceedings could have a material adverse effect on
the Company's business or financial position.

In addition, litigation currently pending against FMG could adversely affect the
Company's ability to exploit fully the java based credit counseling application
developed by the Company during April - July 2000. See Item 3 -- "Legal
Proceedings."

RISKS OF ENTERING INTERNATIONAL MARKETS

The Company currently has operations only in the United States and Canada. The
Company has EDI customers in other jurisdictions and has considered expanding
its international sales efforts. The Company has only limited experience in
marketing, selling and supporting its products and services abroad. Expansion of
international sales efforts will require a significant amount of attention from
management and substantial financial resources. If the Company is unable to grow
its international operations successfully and in a timely manner, its business
and operating results could be harmed. In addition, doing business
internationally involves additional risks, particularly:

         o        unexpected changes in regulatory requirements, taxes, trade
                  laws, export controls and tariffs;
         o        longer accounts receivable collection cycles;
         o        expenses associated with localizing products for foreign
                  markets;
         o        restrictions on repatriation of earnings;
         o        differing intellectual property rights;
         o        differing labor regulations;
         o        changes in a specific country's or region's political or
                  economic conditions;
         o        burdens of complying with foreign laws;
         o        greater difficulty in staffing and managing foreign
                  operations; and
         o        fluctuating currency exchange rates.

                                       26
<PAGE>

FOREIGN EXCHANGE RISK

The Company carries on a significant portion of its business outside Canada.
Virtually all of its sales outside of Canada are made in U.S. dollars and may be
affected by fluctuating foreign exchange rates. Any weakening in the value of
the U.S. dollar against the Canadian dollar would result in lower revenues for
the Company when stated in Canadian dollars. To the extent the Company continues
to present its financial statements in its domestic Canadian dollar currency
when a substantial amount of its revenues are earned in U.S. dollars, foreign
exchange fluctuations will affect the reported profitability of the Company. Any
severe fluctuations will affect shareholder value.

PRICE FLUCTUATIONS, SHARE PRICE VOLATILITY

Currently, the Company's common shares trade only on the Canadian Venture
Exchange. There is currently no U.S. market for the Company's common shares. The
market for technology companies generally, and specifically the stock prices of
Internet-related software companies, has been highly volatile in both the United
States and Canada. The market price of the Company's common shares may fluctuate
significantly in response to a number of factors, some of which are beyond the
Company's control and unrelated to the Company's performance, such as changes in
accounting rules and regulations, market trends and industry performance. The
price of the Company's common shares has fluctuated significantly. See Item 5 --
"Nature of Trading Market." If a market for the Company's common shares develops
in the United States, the price of the Company's common shares on that market is
likely to be volatile.

Securities class action litigation has often been brought against companies that
experience volatility in the market price of their securities. Litigation
brought against the Company could result in substantial costs in defending
against a lawsuit and management's attention could be diverted from the
Company's business.

CONTROL BY MANAGEMENT

The Company's executive officers and directors currently maintain substantial
voting control over the Company. The Company's executive officers and directors
beneficially own, in the aggregate, approximately 41% of our outstanding common
shares, including shares currently held in trust for employees, for which
executive officers serve as trustees. As a result, these stockholders (or
subgroups of them) retain substantial control over matters requiring approval by
stockholders, such as the election of directors and approval of significant
corporate transactions. This concentration of ownership may also have the effect
of delaying or preventing a change in control.

NO ACTIVE TRADING MARKET IN U.S. AND RISKS OF PENNY STOCK CLASSIFICATION

The Company's common shares trade only on the Canadian Venture Exchange.
Typically, the volume of the Company's shares traded on such exchange is low. As
a result, it may be difficult to sell the Company's common shares without
affecting the market price. U.S. holders may also have to incur higher
commissions than they would have to pay for transactions in U.S. markets in
order to sell the Company's common shares on the Canadian Venture Exchange. The
Company has not yet determined whether it will attempt to establish a U.S.
trading market in its common shares. The Company's share price is not currently
high enough to qualify for listing on the Nasdaq market or on any U.S. national
exchange. If the Company decides to pursue having its common shares quoted on
the OTC Bulletin Board, there can be no guarantee that the Company will be able
to attract or maintain good-quality market makers, or that the NASD, which must
approve a market maker's application to quote shares on the OTC Bulletin Board,
will approve quotation of the Company's common shares. Moreover, there can be no
guarantee that any significant market interest or liquidity will develop in such
market. In the event a market for the Company's common shares does develop,
there can be no assurance that the market will be strong enough to absorb all of
the common shares currently owned by the Company's stockholders. In addition,
subsequent issuances of equity or equity-linked securities may further saturate
the market for the Company's common shares. The resale of substantial amounts of
the Company's common shares will have a depressive effect on the market in
Canada and on any market that develops in the United States.

                                       27
<PAGE>

The Company's common shares may become subject to "penny stock" rules in the
U.S. Transaction costs associated with purchases and sales of penny stocks are
likely to be higher than those for other securities, and as a result, the
markets in penny stocks tend to be less liquid. Penny stocks generally are
equity securities with a price of less than U.S.$5.00 which are not registered
on certain national securities exchanges or quoted on the Nasdaq system and
whose issuers do not meet certain assets or revenue tests. At this time, the
Company believes it is exempt from the penny stock rules as a result of an
exemption for issuers whose net tangible assets exceed certain thresholds.
However, the Company could become subject to penny stock rules in the future.

The penny stock rules require brokers who sell penny stocks to persons other
than established customers and "accredited investors" to complete certain
documentation, make suitability inquiries of investors, and provide investors
with certain information concerning the risks of trading in penny stocks. These
rules may discourage or restrict the ability of brokers to sell the Company's
common shares and may affect the secondary market for the Company's common
shares if one develops. These rules could also hamper the Company's ability to
raise funds by selling common shares. See Item 5 -- "Nature of Trading Market."

DIFFICULTY OF ENFORCING CIVIL LIABILITIES AGAINST COMPANY

Because the Company is a Canadian company, it may be difficult for U.S.
investors to enforce civil liability claims against the Company or its
management. Company auditors and a majority of directors and officers are
located in Canada. It may be difficult for U.S. investors to effect service of
process on these individuals. In addition, a substantial portion of the
Company's assets and the assets of these individuals may be located in Canada.
Therefore, it may be difficult for U.S. investors to satisfy a judgment against
the Company or any of these individuals in the United States.

In addition, a Canadian court may not permit a U.S. investor to bring an
original action in Canada or to enforce in Canada a U.S. court judgment based
upon civil liability provisions of U.S. federal securities laws.

RISKS OF CLASSIFICATION AS A PASSIVE FOREIGN INVESTMENT COMPANY

If at any time the Company is classified as a passive foreign investment company
under U.S. tax laws, U.S. investors may be subject to adverse tax consequences.
The Company could be a passive foreign investment company if 75% or more of the
Company's gross income in any year is considered passive income for U.S. tax
purposes. For this purpose, passive income generally includes interest,
dividends, some types of rents and royalties, and gains from the sale of assets
that produce these types of income. In addition, the Company could be classified
as a passive foreign investment company if the average percentage of the
Company's assets during any year that produced passive income or that were held
to produce passive income, is at least 50%. If the Company is classified as a
passive foreign investment company, and if a U.S. investor sells any of the
Company's common shares or receives some types of distributions from the
Company, it may have to pay taxes that are higher than if the Company were not
considered a passive foreign investment company. It is impossible to predict how
much an individual investor's taxes would increase, if at all.

The Company does not anticipate classification as a passive foreign investment
company in current or future periods, the tests for such classification are
complex and fact-dependent and management cannot determine whether these tests
will be met for the year 2001 fiscal year or for future years. The Company urges
U.S. investors to consult their own tax advisors to discuss the potential
consequences if at any time the Company qualifies as a passive foreign
investment company. See also Item 7 -- "Taxation."

DILUTION FROM STOCK OPTIONS

In order to provide incentives to current employees and induce prospective
employees and consultants to work for the Company, the Company has offered and
issued options to purchase its common shares. As of October 31, 2000, there were
options outstanding to purchase 1,230,000 common shares. In November 2000, the
Board of Directors adopted a stock option plan reserving a further 2,167,945
common shares for issuance under stock options. The Company will continue to
issue options to purchase sizable numbers of shares of stock to new and existing
employees, directors, advisors, consultants or other individuals as the Company
deems appropriate and in its best interests. The grant and subsequent exercise
of such options could result in substantial dilution to all stockholders.

                                       28
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

The Company occupies approximately 16,581 square feet of leased space in its
current headquarters at Suite 107, 980 West 1st Street, North Vancouver, British
Columbia V7P 3N4. The lease expires on March 31, 2003. A total of 31 employees
operate out of this office. To accommodate future growth, the Company has
secured options for expansion within the business park at its current location.

The Company also occupies approximately 500 square feet of space in Tacoma,
Washington and 500 square feet of space in Pleasanton, California. These spaces
are leased on a month-to-month basis. The Company also leases approximately
1,000 square feet in Garden Grove, California, which lease terminates in July
2001. The Company intends to move the operations conducted out of this office to
its Pleasanton office, and to sublet the space for the remaining term of the
lease.


ITEM 3. LEGAL PROCEEDINGS

On April 10, 2000, the Company executed a definitive purchase agreement to (the
"FMG Agreement") to acquire, subject to regulatory approval, Financial
Management Group LLC ("FMG"). FMG, based in Garden Grove, California, developed
and marketed PC-based software for the credit counseling industry. The Company
purchased FMG in order to facilitate development of a credit-counseling portal
using its OpenEC technology.

Under the terms of the FMG Agreement, the Company was to issue 100,000 common
shares (the "Purchase Shares") to the vendor, Patagonia Corp., in consideration
for the acquisition of FMG. The Purchase Shares were to be held in escrow for
two years. The Company also agreed to issue up to 200,000 additional common
shares upon the achievement of certain milestones related to the
credit-counseling portal to be developed by the Company in conjunction with FMG
employees. Closing of the Purchase Agreement was conditioned upon approval from
the Canadian Venture Exchange and certain other conditions precedent.

Also on April 10, 2000, the Company entered into employment agreements with the
two principals of FMG. These principals had personally covenanted as to, inter
alia, the covenants of the vendor contained in the FMG Agreement. The Company
agreed to employ each of them for two years at base salaries of U.S.$120,000 and
U.S.$96,000, respectively. The agreements also called for payments of sales
commissions and certain other fringe benefits. The principals were also entitled
to cash bonuses of U.S.$75,000 and U.S.$30,000, respectively, if the Company's
annual revenues exceeded U.S.$11 million by May 31, 2001. Through these
employment agreements, the Company assumed control of FMG and recorded the
transaction for accounting purposes on April 10, 2000.

The Company promptly filed an application to the Canadian Venture Exchange for
regulatory approval of the transaction. Prior to receiving such approval, the
Company discovered pending legal claims and actions commenced by and against FMG
relating to FMG's ownership of its credit counseling software. These claims and
actions were not disclosed to the Company at the time of execution of the FMG
Agreement or thereafter, and constituted material breaches of the agreement. The
Company further discovered that the two FMG principals had materially breached
their employment agreements and the Company terminated their respective
employments for cause in July 2000.

After these discoveries, the Company continued to investigate and evaluate its
options concerning the acquisition of FMG. In August and September 2000, further
material breaches of the FMG Agreement were discovered and the Company
terminated the acquisition of FMG. As at October 31 2000 the Company is not in a
position to specify the materiality of impact that the termination of the FMG
acquisition will have on the Company's financial results. The Company is
exploring opportunities to further capitalize on the technology developed as a
result of its entry into the credit-counselling marketplace.

The two FMG principals have retained counsel who has in turn presented the
Company with a demand alleging wrongful termination of employment and other
claims. The two principals, through their counsel, have further threatened
actions against the Company for libel, defamation and slander arising out of the
Company's public disclosures concerning the progress of the acquisition and the
credit counseling portal business. The Company believes these claims are without
merit, and intends to vigorously defend any action that might be brought against
it relating to these matters. The Company is further evaluating whether to
pursue rights and remedies available to it for the various breaches of the
purchase agreement by FMG, its parent company and the two principals.

                                       29
<PAGE>

As indicated above, the credit counseling software marketed by FMG is currently
the subject of pending legal actions. The Company is not a party to any such
action. Some of these actions seek to enjoin certain persons, including FMG and
the principals of FMG, from using the software marketed by FMG. The Company is
not marketing this software and claims no rights to it. Nonetheless, it is
possible that the Company could become involved in the litigation involving
FMG's software. It is also possible that the existence of this litigation will
impair the Company's ability to exploit fully its credit counseling portal
business plan. The Company intends to vigorously defend its ownership rights in
its credit counseling software if the Company is named in any of the actions
involving FMG's software, or if the Company otherwise deems it to be in its best
interest to intercede in such an action.

Except as stated above, the Company is not involved in any material pending
legal proceedings involving it or any of its properties.

ITEM 4. CONTROL OF REGISTRANT

The Registrant is a publicly owned Canadian corporation, the shares of which are
owned by Canadian residents, U.S. residents, and residents of other countries.
The Registrant is not controlled directly or indirectly by another corporation
or any foreign government, except as described below.

The following table shows, as of October 31, 2000, the holdings of (1) any
person who is known to the Registrant to be the owner of more than 10% of any
class of the Registrant's voting securities; (2) each of the Registrant's
directors and executive officers and (3) the executive officers and directors as
a group.

<TABLE>
<CAPTION>

                                            PRINCIPAL SHAREHOLDINGS

                                                                            CURRENTLY
                                                                            EXERCISABLE                       PERCENT OF
                                                       COMMON SHARES        OPTIONS AND       PERCENT OF   CLASS, INCLUDING
TITLE OF CLASS           NAME OF BENEFICIAL OWNER           HELD         WARRANTS HELD(1)      CLASS(2)       OPTIONS(3)
--------------           ------------------------           ----         ----------------     ---------       ----------
<S>                      <C>                               <C>                <C>              <C>               <C>
Common                   Martyn Armstrong                  5,112,542          200,000          30.00             29.85
Common                   Wayne Zielke                      429,629            200,000           2.52              3.53
Common                   Gregg Sedun                       233,333            100,000           1.37              1.87
Common                   Douglas Sarkissian                52,715             202,000           0.03              1.43
Common                   Sted Chen                         80,000               2,000           0.04              0.04
Common                   Randall M. Pierson                Nil                100,000           0.00              0.05
Total Directors/Officers                                   5,908,219          804,000          33.96             36.77
</TABLE>

----------
1        Shares subject to pooling: 6.3 million approximately

2        Based on 16,989,728 common shares outstanding as of October 31, 2000.
         Calculated without giving effect to options and warrants held.

3        Calculated on the assumption that all currently exercisable outstanding
         options and warrants of the named owner were exercised, but no other
         options or warrants were exercised.

                                       30
<PAGE>

ITEM 5.    NATURE OF TRADING MARKET

The Company's common shares trade on the Canadian Venture Exchange ("CDNX") in
Vancouver, British Columbia, Canada, having the trading symbol "SCE" and CUSIP
number 83402E109. The following table shows the volume of trading and high, low
and closing sales prices on the CDNX for the Company's common shares.

                            Canadian Venture Exchange
                             Stock Trading Activity

DATE            DAY'S VOLUME       DAY'S HIGH      DAY'S LOW       DAY'S CLOSE
----            ------------       ----------      ---------       -----------
09/29/00              1,200         $2.15            $2.00           $2.10
06/30/00              2,500         $2.35            $2.25           $2.25
03/30/00             17,600         $4.00            $3.65           $3.75
01/31/00             93,844         $4.20            $3.71           $3.84
12/30/99             40,100         $2.00            $1.75           $2.00
09/30/99              4,700         $1.80            $1.60           $1.70
06/30/99(1)          20,500         $1.87            $1.85           $2.25
12/31/98                400         $1.20            $1.20           $1.20
09/16/98                223         $0.72            $0.72           $0.72
06/30/98             16,667         $1.74            $1.74           $1.74
04/30/98(2)             417         $1.00            $1.00           $1.80


QUARTER ENDED        HIGH              LOW
-------------        ----              ---
2000 August          2.50              1.51
2000 May             5.80              1.65
2000 February        6.75              1.25
1999 November        2.45              1.10
1999 August          2.65              2.10
1999 May             1.10              1.10
1999 February        1.20              0.31
1999 November        0.96              0.60
1999 August          1.14              1.08

The Company's common shares are issued in registered form and the following
information is from the Company's registrar and transfer agent, Pacific
Corporate Trust Company, located in Vancouver, British Columbia, Canada at 830 -
625 Howe Street Vancouver BC V6C 3B8.

On October 31, 2000, the shareholders' list for the Company's common stock
showed 117 registered shareholders and 16,989,728 shares issued and outstanding.
Of these, two shareholders were U.S. residents, owning 127,370 shares
representing less than 1% of the issued and outstanding shares of common stock.

The Company is unaware of any active market in the United States for its common
shares. The Company's common shares are not registered to trade in the United
States in the form of American Depository Receipts ("ADR's") or similar
certificates.

If a trading market develops in the U.S. for the Company's common shares, the
Company may become subject to "penny stock" rules as defined in 1934 Securities
and Exchange Act Rule 3a51-1. Penny stocks generally are equity securities with
a price of less than U.S.$5.00 which are not registered on certain national
securities exchanges or quoted on the Nasdaq system and whose issuers do not
meet certain assets or revenue tests. At this time, the Company believes it is
exempt from the penny stock rules due to meeting the exemption test for net
tangible assets. However, the Company could in the future become subject to
penny stock rules if its net tangible assets fall below U.S.$2 million.

----------
(1)      The Company's shares were halted for trading between March 2, 1999 and
         June 21, 1999 subject to the reverse takeover transaction and the
         broker-assisted private placement being completed.

(2)      The Company consolidated its share capital on a 6:1 basis effective as
         of December 1, 1998. The trading history information has been adjusted
         to provide for that consolidation.

                                       31
<PAGE>

Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities, and as a result, the markets in
penny stocks tend to be less liquid. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation.

In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from such rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the common shares in the United
States, and U.S. shareholders may find it more difficult to sell their shares.

The Company has not declared any dividends for the last five years and does not
anticipate that it will do so in the foreseeable future. The present policy of
the Company is to retain future earnings for use in its operations and the
expansion of its business.

ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There is no law, government decree or regulation in Canada restricting the
export or import of capital or affecting the remittance of dividends, interest
or other payments to a non-resident holder of common shares, other than
withholding tax requirements.

There is no limitation imposed by Canadian law or by the articles or other
charter documents on the right of a non-resident to hold or vote common shares,
other than as provided in the Investment Canada Act, as amended by the World
Trade Organization Agreement Implementation Act. The Investment Canada Act
generally prohibits implementation of a reviewable investment by an individual,
government or agency thereof, corporation, partnership, trust or joint venture
that is not a "Canadian," as defined in the Investment Canada Act (a
"non-Canadian"), unless, after review, the minister responsible for the
Investment Canada Act is satisfied that the investment is likely to be a net
benefit to Canada.

An investment in the Company's common shares by a non-Canadian (other than a
"World Trade Organization Investor," as defined below) would be reviewable under
the Investment Canada Act if it were an investment to acquire direct control of
the Company, and the value of the Company's assets were $5 million or more. An
investment in the Company's common shares by a World Trade Organization Investor
would be reviewable under the Investment Canada Act if it were an investment to
acquire direct control of the Company, and the value of the Company's assets
equaled or exceeded $192 million. A non-Canadian, whether a World Trade
Organization Investor or otherwise, would acquire control of the Company for
purposes of the Investment Canada Act if it acquired a majority of the Company's
voting shares. The acquisition of less than a majority, but at least one-third
of the voting shares, would be presumed to be an acquisition of control of the
Company, unless it could be established that the Company was not controlled in
fact by the acquirer through the ownership of voting shares. In general, an
individual is a World Trade Organization Investor if he or she is a "national"
of a country (other than Canada) that is a member of the World Trade
Organization ("World Trade Organization Member") or has a right of permanent
residence in a World Trade Organization Member. A corporation or other entity
will be a World Trade Organization investor if it is a "World Trade Organization
investor-controlled entity" pursuant to detailed rules set out in the Investment
Canada Act. The United States is a World Trade Organization Member.

                                       32
<PAGE>

Certain transactions involving the Company's voting shares would be exempt from
the Investment Canada Act, including: (a) an acquisition of voting shares if the
acquisition were made in connection with the person's business as a trader or
dealer in securities; (b) an acquisition of control of the Company in connection
with the realization of a security interest granted for a loan or other
financial assistance and not for any purpose related to the provisions of the
Investment Canada Act; and (c) an acquisition of control of the Company by
reason of an amalgamation, merger, consolidation or corporate reorganization,
following which the ultimate direct or indirect control in fact of the Company,
through the ownership of voting interests, remains unchanged.

ITEM 7. TAXATION

                   CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following summary describes material Canadian federal income tax
consequences generally applicable to a holder of the Company's common shares who
is not a resident of Canada, and who, for purposes of the Income Tax Act
(Canada), (i) holds such shares as capital property and (ii) deals at arm's
length with the Company. Generally, common shares will be considered capital
property to a holder provided that such holder does not hold such securities in
the course of carrying on a business and has not acquired such securities in a
transaction or transactions considered to be an adventure or concern in the
nature of trade which includes a transaction or transactions of the same kind
and carried on in the same manner as a transaction or transactions of an
ordinary trade or dealer in property of the same kind.

This summary is based upon the current provisions of the Income Tax Act and the
regulations thereunder and on an understanding of the published administrative
practices of the Canadian Customs and Revenue Agency. This summary does not take
into account or anticipate any possible changes in law, or the administration
thereof, whether by legislative, governmental or judicial action, except
proposals for specific amendment thereto which have been publicly announced by
the Canadian Minister of Finance prior to the date hereof.

This summary does not address all aspects of Canadian federal income tax law
that may be relevant to shareholders based upon their particular circumstances,
and does not deal with provincial, territorial or foreign income tax
consequences, which might differ significantly from the consequences under
Canadian federal income tax law.

Shareholders are advised to consult their tax advisors regarding the application
of the Canadian federal income tax law to their particular circumstances, as
well as any Canadian provincial, territorial or other tax consequences or any
U.S. federal, state or local tax consequences or other foreign income tax
consequences of the acquisition, ownership and disposition of the Company's
common shares.

TAXATION OF DIVIDENDS

A holder of a common share who is not resident in Canada for purposes of the
Income Tax Act will be subject to Canadian withholding tax on dividends paid or
credited, or deemed under the Income Tax Act to be paid or credited, to the
holder of the common share. The rate of withholding tax under the Income Tax Act
on dividends is 25% of the amount of the dividend. Such rate may be reduced
under the provisions of an applicable international tax treaty to which Canada
is a party. Under the tax treaty that Canada has entered into with the United
States, the rate of Canadian withholding tax applicable in respect of dividends
paid or credited by a Canadian corporation to a shareholder resident in the
United States, is generally reduced to 15%, or 5% in the case of a corporate
holder which owns 10% or more of the voting shares. A foreign tax credit for the
tax withheld may be available to a holder resident in the United States against
U.S. federal income taxes. Moreover, pursuant to Article XXI of the Canada-U.S.
Treaty, an exemption from Canadian withholding tax generally is available in
respect of dividends received by certain trusts, companies and other
organizations whose income is exempt from tax under the laws of the United
States.

                                       33
<PAGE>

DISPOSITION OF COMMON SHARES

A non-resident holder of a common share will not be subject to tax under the
Income Tax Act in respect of a capital gain realized on the disposition of a
common share unless the common share constitutes or is deemed to constitute
"taxable Canadian property" (as defined in the Income Tax Act). Shares of a
corporation that are listed on a prescribed stock exchange (which includes
shares traded on a U.S. stock exchange and the Nasdaq, but not the OTC Bulletin
Board are generally not considered to be taxable Canadian property. However,
such shares can be taxable Canadian property if, at any time during the 60 month
period immediately preceding their disposition, 25% or more of the Company's
issued shares of any class belong to the non-resident together with persons with
whom the non-resident did not deal at arm's length.

An option to acquire common shares or other securities convertible into or
exchangeable for common shares, or otherwise having an interest in common
shares, could constitute taxable Canadian property in certain circumstances.
Taxable Canadian property also includes any common share held by a non-resident
if the non-resident used the common share in carrying on a business (other than
an insurance business) in Canada, or, if the Non-Resident is a non-resident
insurer, any common share that is its "designated insurance property" for the
year. A non-resident whose common shares constitute or are deemed to constitute
taxable Canadian property will realize upon the disposition or deemed
disposition of a common share, a capital gain (or a capital loss) to the extent
that the proceeds of disposition are greater than (or less than) the aggregate
of the adjusted cost base to the holder of a common share and any reasonable
costs of disposition.

Two-thirds of any capital gain realized by a holder (a taxable capital gain)
will be included in computing the holder's income. Two-thirds of any capital
loss realized by a holder may, subject to certain restrictions applicable to
holders that are corporations, normally be deducted from the holder's taxable
capital gains realized in the year of disposition, the three preceding taxation
years or any subsequent taxation years, subject to detailed rules contained in
the Income Tax Act.

A purchase by the Company of its own common shares (other than a purchase of
common shares on the open market in a manner in which shares would normally be
purchased by any member of the public in the open market) will give rise to a
deemed dividend under the Income Tax Act equal to the difference between the
amount the Company paid on the purchase and the paid-up capital of such shares
determined in accordance with the Income Tax Act. The paid-up capital of such
shares may be less than the cost of such shares to the holder. The amount of any
such deemed dividend will reduce the proceeds of disposition of the common
shares to the holders for the purpose of computing the amount of the capital
gain or loss under the Income Tax Act of the holder. Any such dividend deemed to
have been received by a non-resident holder will be subject to non-resident
withholding tax as described above. The amount of any such deemed dividend will
reduce the proceeds of disposition of the common share to the non-resident
holder for the purpose of computing the amount of the non-resident holder's
capital gain or loss under the Income Tax Act.

Even if the common shares constitute taxable Canadian property to a non-resident
holder and their disposition would give rise to a capital gain, an exemption
from tax under the Income Tax Act may be available under the terms of an
applicable international tax treaty to which Canada is a party. A holder
resident in the United States for purposes of the Canada-U.S. Treaty will
generally be exempt from Canadian tax in respect of a gain on the disposition of
common shares provided that the value of the common shares is not derived
principally from real property situated in Canada. Article XIII paragraph 5 of
the Canada-U.S. Treaty provides that the treaty provision which normally exempts
U.S. residents from Canadian tax on the sale of property (paragraph 4) such as
shares does not apply where the U.S. resident was a Canadian resident for 120
months during any period of 20 consecutive years preceding the time of the sale
and the individual was resident in Canada at any time during the ten years
immediately preceding the sale. If the exemption from such Canadian tax in
respect of such gain is not available under the Canada-U.S. Treaty, a foreign
tax credit may be available for U.S. federal income tax purposes. Non-residents
are advised to consult their tax advisers with regard to the availability of a
treaty exemption.

                     U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following summary describes material United States federal income tax
consequences arising from the purchase, ownership and sale of the Company's
common shares. This summary is based on the provisions of the Internal Revenue
Code of 1986, as amended, final, temporary and proposed United States Treasury
Regulations promulgated thereunder, and the administrative and judicial
interpretations thereof, all as in effect as of the date of this Report and all
of which are subject to change, possibly on a retroactive basis. The

                                       34
<PAGE>

consequences to any particular investor may differ from those described below by
reason of that investor's particular circumstances. This summary does not
address the considerations that may be applicable to any particular taxpayer
based on such taxpayer's particular circumstances (including potential
application of the alternative minimum tax), to particular classes of taxpayers
(including financial institutions, broker-dealers, insurance companies,
taxpayers who have elected market-to-market accounting, tax-exempt
organizations, taxpayers who hold ordinary shares as part of a straddle, "hedge"
or "conversion transaction" with other investments, investors who own (directly,
indirectly or through attribution) 10% or more of our company's outstanding
voting stock, taxpayers whose functional currency is not the U.S. dollar,
persons who are not citizens or residents of the United States, or persons which
are foreign corporations, foreign partnerships or foreign estates or trusts as
to the United States) or any aspect of state, local or non-United States tax
laws. Additionally, the discussion does not consider the tax treatment of
persons who hold common shares through a partnership or other pass-through
entity or the possible application of United States federal gift or estate tax.
This summary is addressed only to a holder of common shares who is (i) a citizen
or resident of the United States who owns less than 10% of the Company's
outstanding voting stock, (ii) a corporation organized in the United States or
under the laws of the United States or any state thereof, (iii) an estate, the
income of which is includable in gross income for United States federal income
tax purposes regardless of source, or (iv) a trust, if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to control all substantial
decisions of the trust (any of which, a "U.S. Holder"). This summary is for
general information purposes only and does not purport to be a comprehensive
description of all of the tax considerations that may be relevant to a decision
to purchase common shares. This summary generally considers only U.S. Holders
that will own their common shares as capital assets.

Each shareholder should consult with such shareholder's own tax advisor as to
the particular tax consequences to such shareholder of the purchase, ownership
and sale of their common shares including the effects of applicable state,
local, foreign or other tax laws and possible changes in the tax laws.

TREATMENT OF DIVIDEND DISTRIBUTIONS

Subject to the discussion below under "Tax Status of the Company - Passive
Foreign Investment Companies", a distribution by the Company to a U.S. Holder in
respect of the common shares (including the amount of any Canadian taxes
withheld thereon) will generally be treated for United States federal income tax
purposes as a dividend to the extent of the Company's current and accumulated
earnings and profits, as determined under United States federal income tax
principles. To the extent, if any, that the amount of any such distribution
exceeds the Company's current and accumulated earnings and profits, as so
computed, it will first reduce the U.S. Holder's tax basis in the common shares
owned by it, and to the extent it exceeds such tax basis, it will be treated as
capital gain from the sale of common shares.

While it is not anticipated that the Company will pay dividends in the
foreseeable future, the gross amount of any distribution from the Company
received by a U.S. Holder which is treated as a dividend for United States
federal income tax purposes (before reduction for any Canadian tax withheld at
source) will be included in such U.S. Holder's gross income, will be subject to
tax at the rates applicable to ordinary income and generally will not qualify
for the dividends received deduction applicable in certain cases to United
States corporations. For United States federal income tax purposes, the amount
of any dividend paid in Canadian dollars by the Company to a U.S. Holder will
equal the U.S. dollar value of the amount of the dividend paid in Canadian
dollars, at the exchange rate in effect on the date of the distribution,
regardless of whether the Canadian dollars are actually converted into United
States dollars at that time. Canadian dollars received by a U.S. Holder will
have a tax basis equal to the U.S. dollar value thereof determined at the
exchange rate on the date of the distribution. Currency exchange gain or loss,
if any, recognized by a U.S. Holder on the conversion of Canadian dollars into
U.S. dollars will generally be treated as U.S. source ordinary income or loss to
such holder. U.S. Holders should consult their own tax advisors concerning the
treatment of foreign currency gain or loss, if any, on any Canadian dollars
received which are converted into dollars subsequent to distribution.

                                       35
<PAGE>

A U.S. Holder generally will be entitled to deduct any Canadian taxes withheld
from dividends in computing United States taxable income, or to credit such
withheld taxes against the United States federal income tax imposed on such U.S.
Holder's dividend income. No deduction for Canadian taxes may be claimed,
however, by a noncorporate U.S. Holder that does not itemize deductions. The
amount of foreign taxes for which a U.S. Holder may claim a credit in any year
is subject to complex limitations and restrictions, which must be determined on
an individual basis by each shareholder. Distributions with respect to common
shares that are taxable as dividends will generally constitute foreign source
income for purposes of the foreign tax credit limitation. The limitation on
foreign taxes eligible for credit is calculated separately with respect to
specific classes of income. For this purpose, dividends distributed by the
Company with respect to the common shares will generally constitute "passive
income." Foreign income taxes exceeding a shareholder's credit limitation for
the year of payment or accrual of such tax can be carried back for two taxable
years and forward for five taxable years, subject to the credit limitation
applicable in each of such years. Additionally, the foreign tax credit in any
taxable year may not offset more than 90% of a shareholder's liability for
United States individual or corporate alternative minimum tax. The total amount
of allowable foreign tax credits in any year generally cannot exceed regular
U.S. tax liability for the year attributable to foreign source taxable income. A
U.S. Holder will be denied a foreign tax credit with respect to Canadian income
tax withheld from dividends received on the common shares to the extent such
U.S. Holder has not held the ordinary shares for at least 16 days of the 30-day
period beginning on the date which is 15 days before the ex-dividend date or to
the extent such U.S. Holder is under an obligation to make certain related
payments with respect to substantially similar or related property. Any days
during which a U.S. Holder has substantially diminished its risk of loss on the
common shares are not counted toward meeting the 16 day holding period required
by the statute.

SALE OR EXCHANGE OF A COMMON SHARE

Subject to the discussion below under "Tax Status of the Company - Passive
Foreign Investment Companies," the sale or exchange by a U.S. Holder of a common
share generally will result in the recognition of gain or loss by the U.S.
Holder in an amount equal to the difference between the amount realized and the
U.S. Holder's basis in the common share sold. Such gain or loss will be capital
gain or loss provided that the common share is a capital asset in the hands of
the holder. The gain or loss realized by a noncorporate U.S. Holder on the sale
or exchange of a common share will be long-term capital gain or loss subject to
tax at a maximum tax rate of 20% if the common share had been held for more than
one year. If the common share had been held by such noncorporate U.S. Holder for
not more than one year, such gain will be short-term capital gain subject to tax
at a maximum rate of 39.6%. Finally, gain realized by a noncorporate U.S. Holder
with respect to common shares acquired after December 31, 2000 and held for more
than five years, will be taxed at a maximum rate of 18%. Gain realized by a
corporate U.S. Holder will be subject to tax at a maximum rate of 35%. Gains
recognized by a U.S. Holder on a sale, exchange or other disposition of common
shares generally will be treated as United States source income for United
States foreign tax credit purposes. A loss recognized by a U.S. Holder on the
sale, exchange or other disposition of common shares generally is allocated to
U.S. source income under recently finalized regulations. However, those
regulations require such loss to be allocated to foreign source income to the
extent certain dividends were received by the taxpayer within the 24-month
period preceding the date on which the taxpayer recognized the loss. The
deductibility of a capital loss recognized on the sale, exchange or other
disposition of common shares is subject to limitations. A U.S. Holder that
receives foreign currency upon disposition of common shares and subsequently
converts the foreign currency into U.S. dollars generally will have foreign
exchange gain or loss based on any appreciation or depreciation in the value of
the foreign currency against the U.S. dollar. U.S. Holders should consult their
own tax advisors regarding treatment of any foreign currency gain or loss on any
Canadian dollars received in respect of the sale, exchange or other disposition
of common shares.

TAX STATUS OF THE COMPANY

PERSONAL HOLDING COMPANIES. A non-U.S. corporation may be classified as a
personal holding company for United States federal income tax purposes if both
of the following two tests are satisfied: (i) if at any time during the last
half of the company's taxable year, five or fewer individuals (without regard to
their citizenship or residency) own or are deemed to own (under certain
attribution rules) more than 50% of the stock of the corporation by value and
(ii) 60% or more of such non-U.S. corporation's gross income derived from U.S.
sources or effectively connected with a U.S. trade or business, as specifically
adjusted, is from certain passive sources such as dividends and royalty
payments. Such a corporation generally is taxed (currently at a rate of 39.6% of
"undistributed personal holding company income") on the amounts of such passive
source income, after making adjustments such as deducting dividends paid and
income taxes, that are not distributed to shareholders. The Company believes
that it was not a personal holding company in the fiscal year ended May 31, 2000
and is not currently a personal holding company. However, no assurance can be
given that such tests will not be satisfied in the future.

                                       36
<PAGE>

FOREIGN PERSONAL HOLDING COMPANIES. A non-U.S. corporation will be classified as
a foreign personal holding company for United States federal income tax purposes
if both of the two following tests are satisfied: (i) five or fewer individuals
who are United States citizens or residents own or are deemed to own (under
certain attribution rules) more than 50% of all classes of the corporation's
stock measured by voting power or value and (ii) the corporation receives at
least 60% (50% if previously a foreign personal holding company) of its gross
income (regardless of source), as specifically adjusted, from certain passive
sources. If such a corporation is classified as a foreign personal holding
company, a portion of its "undistributed foreign personal holding company
income" (as defined for United States federal income tax purposes) would be
imputed to all of its shareholders who are U.S. Holders on the last taxable day
of the corporation's taxable year, or, if earlier, the last day on which it is
classifiable as a foreign personal holding company. Such income would be taxable
as a dividend, even if no cash dividend is actually paid. U.S. Holders who
dispose of their shares prior to such date would not be subject to tax under
these rules. The Company believes that it was not a personal holding company in
the fiscal year ended May 31, 2000, and is not currently a personal holding
company. However, no assurance can be given that the Company will not qualify as
a foreign personal holding company in the future.

PASSIVE FOREIGN INVESTMENT COMPANIES. A company will be a passive foreign
investment company if 75% or more of its gross income (including the pro rata
share of the gross income of any company (United States or foreign) in which the
company is considered to own 25% or more of the shares (determined by market
value)) in a taxable year is passive income. Alternatively, the company will be
considered to be a passive foreign investment company if at least 50% of the
value of the company's assets (averaged over the year) (including the pro rata
share of the value of the assets of any company in which the company is
considered to own 25% or more of the shares (determined by market value)) in a
taxable year are held for the production of, or produce, passive income. For
these purposes, the value of assets is calculated based on the company's market
capitalization. Passive income generally includes, among others, interest,
dividends, royalties, rents and annuities.

If the Company is a passive foreign investment company for any taxable year, a
U.S. Holder, in the absence of an election by such U.S. Holder to treat the
Company as a "qualified electing fund" (a "QEF election"), as discussed below,
would, upon certain distributions by the Company and upon disposition of the
common shares at a gain, be liable to pay tax at the highest tax rate on
ordinary income in effect for each period to which the income is allocated, plus
interest on the tax, as if the distribution or gain had been recognized ratably
over the days in the U.S. Holder's holding period for the common shares during
which the Company was a passive foreign investment company. Additionally, if the
Company is a passive foreign investment company, U.S. Holders who acquire
ordinary shares from decedents would be denied the normally available step-up of
the income tax basis for such common shares to fair market value at the date of
death and instead would have a tax basis equal to the decedent's basis, if
lower.

If the Company is treated as a passive foreign investment company for any
taxable year, U.S. Holders should consider whether to make a QEF election for
United States federal income tax purposes. If a U.S. Holder has a QEF election
in effect for all taxable years that such U.S. Holder has held the common shares
and the Company was a passive foreign investment company, distributions and gain
will not be recognized ratably over the U.S. Holder's holding period or subject
to an interest charge, gain on the sale of common shares will be characterized
as capital gain and the denial of basis step-up at death described above would
not apply. Instead, each such U.S. Holder is required for each taxable year that
the Company is a qualified electing fund to include in income a pro rata share
of the ordinary earnings of the Company as ordinary income and a pro rata share
of the net capital gain of the Company as long-term capital gain, subject to a
separate election to defer payment of taxes, which deferral is subject to an
interest charge. Consequently, in order to comply with the requirements of a QEF
election, a U.S. Holder must receive from the Company certain information. The
Company intends to supply U.S. Holders with the information needed to report
income and gain pursuant to a QEF election in the event the Company is
classified as a passive foreign investment company. The QEF election is made on
a shareholder-by-shareholder basis and can be revoked only with the consent of
the Internal Revenue Service. A shareholder makes a QEF election by attaching a
completed IRS Form 8621 (including the passive foreign investment company annual
information statement) to a timely filed United States federal income tax return
and by filing such form with the IRS Service Center in Philadelphia,
Pennsylvania. Even if a QEF election is not made, a shareholder in a passive
foreign investment company who is a U.S. Holder must file a completed IRS Form
8621 every year.

                                       37
<PAGE>

As an alternative to making a QEF election, a U.S. Holder may elect to make a
market-to-market election with respect to the common shares owned by it. If the
market-to-market election were made, then the rules set forth above would not
apply for periods covered by the election. Under such election, a U.S. Holder
includes in income each year an amount equal to fair market value of the common
shares owned by such U.S. Holder as of the close of the taxable year over the
U.S. Holder's adjusted basis in such shares. The U.S. Holder would be entitled
to a deduction for the excess, if any, of such U.S. Holder's adjusted basis in
his common shares over the fair market value of such shares as of the close of
the taxable year; provided however, that such deduction would be limited to the
extent of any net market-to-market gains with respect to the common shares
included by the U.S. Holder under the election for prior taxable years. The U.S.
Holder's basis in his common shares is adjusted to reflect the amounts included
or deducted pursuant to this election. Amounts included in income pursuant to
the market-to-market election, as well as gain on the sale or exchange of the
common shares, will be treated as ordinary income. Ordinary loss treatment
applies to the deductible portion of any mark-to-market loss, as well as to any
loss realized on the actual sale or exchange of the common shares to the extent
that the amount of such loss does not exceed the net mark-to-market gains
previously included with respect to such common shares.

The market-to-market election applies to the tax year for which the election is
made and all later tax years, unless the common shares cease to be marketable or
the IRS consents to the revocation of the election.

The Company does not believe it was a passive foreign investment company during
the fiscal year ended May 31, 2000. The Company does believe it was a foreign
passive investment company during the fiscal year ended April 30, 1997 and 1998.
While the Company does not believe it will be a passive foreign investment
company in fiscal 2001 or thereafter, there can be no assurance of this because
the tests for determining passive foreign investment company status are applied
annually and it is difficult to make accurate predictions of future income and
assets, which are relevant to this determination. U.S. Holders who hold common
shares during a period when the Company is a passive foreign investment company
will be subject to the foregoing rules, even if the Company ceases to be a
passive foreign investment company, subject to certain exceptions for U.S.
Holders who made a QEF election. U.S. Holders are urged to consult with their
own tax advisors about making a QEF election or market-to-market election and
other aspects of the passive foreign investment company rules.

BACK-UP WITHHOLDING AND INFORMATION REPORTING

U.S. Holders generally are subject to information reporting requirements with
respect to dividends paid in the United States on common shares. Under existing
regulations, such dividends are not subject to back-up withholding. U.S. Holders
generally are subject to information reporting and back-up withholding at a rate
of 31% on proceeds paid from the disposition of common shares unless the U.S.
Holder provides IRS Form W-9 or otherwise establishes an exemption.

Treasury regulations generally effective January 1, 2001 may alter the rules
regarding information reporting and back-up withholding. In particular, those
regulations generally would impose back-up withholding on dividends paid in the
United States on common shares unless the U.S. Holder provides IRS Form W-9 or
otherwise establishes an exemption. Prospective investors should consult their
tax advisors concerning the effect, if any, of these Treasury regulations on an
investment in common shares. The amount of any back-up withholding will be
allowed as a credit against a U.S. or Non-U.S. Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that
certain required information is furnished to the IRS.

ITEM 8. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the
Company's consolidated financial statements and related notes and with Item 9 --
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

                                       38
<PAGE>

The Company's acquisition of SoftCare was completed at the close of business on
June 18, 1999 and was accounted for as a reverse takeover. SoftCare was
considered the accounting acquiror for financial statement purposes.
Accordingly, the net assets of SoftCare have been included in the selected
financial data at book values, and the net assets of the Company (pre-reverse
takeover) have been recorded at fair market value at the date of acquisition.
The historical shareholders' equity gives effect to the shares issuable to the
shareholders of SoftCare upon exercise of the 11,000,000 Special Warrants. The
consolidated operations of the Company for the five months ended May 31, 1999,
the years ended December 31, 1998 and 1997, seven months ended December 31, 1996
and the years ended May 31, 1996 and 1995 are those of SoftCare and its
subsidiaries and exclude the accounts of the Company (pre-reverse takeover). The
results of the Company (pre-reverse takeover) are included in the consolidated
statements of operations from the date of acquisition.

The selected financial data set forth for the year ended May 31, 2000, the five
months ended May 31, 1999, and the years ended December 31, 1998 and 1997 are
derived from the Company's audited consolidated financial statements included in
this Report. The selected financial data of the Company for the seven months
ended December 31, 1996 and the years ended May 31, 1996 and 1995 are derived
from SoftCare's Unaudited financial statements not included herein.

Reference is made to Note 23 of the audited consolidated financial statements of
the Company included herein for a discussion of the differences between Canadian
GAAP and U.S. GAAP, and their effect on the Company's consolidated financial
statements.

<TABLE>
<CAPTION>
                                 Year Ended  5 Months Ended    Year Ended    Year Ended  7 Months ended   Year Ended    Year ended
                                  May 31/00     May 31/99      Dec. 31/98   Dec. 31/97(1)  Dec. 31/96      May 31/96     May 31/95
                               -------------  -------------  -------------  ------------- -------------  ------------- -------------
<S>                            <C>            <C>            <C>            <C>                    <C>            <C>           <C>
Revenue                        $        547   $        351   $        849   $      1,998           268            604           616
Net Earning (loss)             $     (3,867)  $     (1,387)  $     (1,131)  $        423          (288)          (159)            5
Pro Forma Basic Earnings
  (Loss) Per Share(2)          $      (0.28)  $      (0.13)  $      (0.13)  $       0.05         (0.00)         (0.00)        (0.00)
Dividends per Share            $          -   $          -   $          -   $          -
Weighted Average Number of
  Shares, CDN GAAP(2)            13,838,197     11,000,000     11,000,000     11,000,000    11,000,000     11,000,000    11,000,000
Working Capital                $      7,301   $       (430)  $        519   $      1,753          (600)          (236)         (199)
Long Term Debt(4)              $        105   $        164   $        204   $        281           348            151             -
Shareholders' Equity CDN GAAP  $     (7,468)  $       (465)  $        475   $      1,606          (829)          (316)         (157)
Total Assets CDN GAAP          $      8,179   $        584   $      1,035   $      2,217           417            249           217
Net Earnings (Loss) U.S. GAAP  $     (3,959)  $     (1,387)  $     (1,131)  $        423          (288)          (159)            5
Pro Forma Basic Earnings (Loss)
  Per Share, U.S. GAAP(2,3)    $      (0.31)  $      (0.14)  $      (0.13)  $       0.05         (0.00)         (0.00)        (0.00)
Weighted Average Number of
  Shares U.S. GAAP(2,3)          12,838,197     10.000,000     10,000,000     10,000,000    10,000,000     10,000,000    10,000,000
Shareholders' Equity U.S. GAAP $      7,468   $        465   $        475   $      1,606          (829)          (316)         (157)
Total Assets U.S. GAAP         $      8,179   $        584   $      1,035   $      2,217           417            249           217
</TABLE>

----------
(1)      By Articles of Amalgamation dated February 1, 1997, Norgate Holdings
         Inc. and SoftCare Consulting Inc. amalgamated and continued under the
         name SoftCare Electronic Commerce Inc. from that date.

(2)      Pro forma earnings (loss) per share calculations for the periods
         presented give retroactive effect to the exercise of the 11,000,000
         Special Warrants and the issuance of common shares on the June 18, 1999
         acquisition date. Stock options and warrants in addition to those
         issued as a result of the Acquisition are anti-dilutive for the period
         ended September 30, 1999 and the year ended December 31, 1998,
         accordingly, pro forma fully diluted earnings (loss) per share does not
         differ from pro forma basic earnings (loss) per share for the periods
         presented. There were no options or warrants outstanding for the year
         ended December 31, 1997, and prior.

(3)      Under U.S. GAAP, the weighted average number of shares used in the
         calculation of pro forma basic and fully diluted earnings (loss) per
         share exclude performance-based common shares under the Company's
         Employee Share Bonus Plan.

         Under U.S. GAAP, the weighted average number of shares used in the
         calculation of diluted earnings (loss) per share would be calculated by
         the treasury stock method whereby it is assumed that proceeds received
         from the Company from the exercise of dilutive securities are used to
         repurchase outstanding shares in the market. As the effect of options
         and common share purchase warrants are anti-dilutive, diluted loss per
         share does not differ from basic loss per share.

(4)      Long Term Debt includes long-term debt, obligations under capital
         leases and redeemable Class A Preference share obligations with a
         maturity greater than one year. The current portion of these
         obligations, which is due in less than one year, has not been included
         herein.

                                       39
<PAGE>

ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

The following discussion relates to the financial condition, changes in
financial condition and results of operations of the Company and its
subsidiaries SoftCare, SCEC Holdings, SCC Holdings, SoftCare U.S.A. and
Financial Management Group LLC for the year ended May 31, 2000 and the five
months ended May 31, 1999, and the years ended December 31, 1998 and 1997. The
results of Financial Management Group LLC were included from April 10, 2000 to
May 31, 2000 as a result of the Company exercising control over FMG during that
period, but were not material to our financial condition or results of
operations. The discussion should be read in conjunction with the consolidated
financial statements included in this Report and related notes included therein.

                                    OVERVIEW

The Company's goal is to become a leading business to business electronic
commerce platform and portal provider. The Company has a strong history in the
provision of software, which enables business to business electronic commerce.
The operating company, SoftCare, was founded in 1990 and developed software to
facilitate business to business electronic exchange of documents. The Company's
first product, Tradelink, has been recognized as a significant participant in
the EDI market. The Company embarked on the development of an Internet based
business to business electronic commerce platform in 1997. In June of 1999, the
first version of OpenEC was installed and the Company began selling the OpenEC
platform and related services. The Company currently markets both OpenEC and
Tradelink primarily in the United States and Canada through its direct sales
force and to a lesser extent through indirect sales channels. The Company
believes its OpenEC platform has been well received by small to medium sized
businesses. The Company is proceeding with development and market efforts
focused on establishing vertical EC portals for specific market segments such as
private label manufacturing, forestry, finance and others.

The OpenEC product is currently the Company's primary product focus. The Company
has developed and continues to develop certain applications to support its
OpenEC platform. While the Company may develop these applications, there can be
no assurance that such products, once completed, will meet customer
requirements, overall market requirements, or that the products will perform in
a satisfactory manner.

The Company generated revenue through software sales, consulting services,
training services and maintenance fees. The total fee for a multiple element
arrangement is allocated to each element based upon objective evidence of the
fair value of each element. Fair value is established through the Company's
policy to charge to customers the same price as when the element is sold
separately. Revenue from sales made to re-sellers is recognized after the third
party sale occurs and the revenue is determinable. Consulting services offered
by the Company are not considered essential to the functionality of the software
arrangement. As a result, consulting and training service revenues are
recognized as the work is performed. Maintenance contract revenue is deferred
and recognized over the respective contract periods. Revenue from direct
software sales is recognized when the product has been delivered, as no
significant obligations remain, fees are fixed and determinable, collectibility
is probable, and persuasive evidence of an arrangement exists. If software sales
are contingent upon successful installation and subsequent customer acceptance,
the revenue and work in progress costs are deferred until customer acceptance is
achieved.

Software sales revenues are generated through licensing fees, software royalties
and fee-for-use.

1.         LICENSING FEES. Licensing fees provide initial sale and ongoing
           revenue from software maintenance, servicing, and upgrades. As a part
           of the license, the Company offers a fixed price contract for the
           license fee that spreads the fee over twelve months. The software is
           sold by user blocks allowing for low cost pilot systems to be
           implemented for proof of concept and providing an ongoing upgrade
           business.

2.         SOFTWARE ROYALTY. A royalty is a fee paid each time the software is
           sold by an OEM that packages the Company's software into another
           software product. The OEM private labels the software and sells,
           ships and supports the product to its customers. OEM relationships
           have generally had a life cycle of approximately three years and have
           tended to be slow to generate revenue in the first year, with most
           revenue earned in the second and third year.

                                       40
<PAGE>

3.         FEE-FOR-USE. A fee-for-use is a fee based on product usage and is
           generally more profitable for the Company than the licensing fees
           described above. An example of this fee model would be a transaction
           with an EDI/EC outsourcing partner where the Company would provide
           the technology and implementation and the partner would provide the
           service operations and marketing. The resulting revenue stream would
           be split based on the business case. Fee-for-use projects result in
           low short-term revenue in the first year, with continued growth the
           following years.

The Company's business is not seasonal.

                                RECENT FINANCING

During the year ended May 31, 2000, the Company issued 11,000,000 Special
Warrants in exchange for all of the issued and outstanding common shares of
SoftCare pursuant to the reverse takeover agreement effective June 18, 1999, for
net assets with an estimated fair market value of $1,159,916. Concurrent with
the reverse takeover, the Company issued 2,000,000 Special Warrants for net
proceeds after commissions and issuance costs of $2,720,000. Of the 2,000,000
Share Purchase Warrants that comprised part of the units issued on the
conversion of the Special Warrants, 797,000 were exercised during the year for
net proceeds of $1,992,500.

The Company completed a second financing in March 2000, issuing 1,495,000
Financing Special Warrants for net proceeds after commissions and issuance costs
of $5,087,468.

Both of these financings were conducted as broker-assisted private placements.
The exercise of Agents Warrants and Stock Options during the year resulted in
additional net cash proceeds of $178,497. These activities resulted in total net
proceeds to the Company of $9,978,465 for the year ended May 31, 2000.

The proceeds from the Special Warrant financing and the Financing Special
Warrant financing will be used for working capital as the Company develops its
business plans.

                            OTHER RECENT DEVELOPMENTS

GLOBAL NETWORK PRIVACY AGREEMENT

In May 2000, the Company and Global Network Privacy Inc. ("GNP") entered into a
business arrangement to develop industry portal solutions for GNP's and the
Company's customers. The Company's OpenEC platform combined with GNP's hardware
and operating systems will provide a technologically advanced, highly secure
business to business electronic commerce platform to the EDI marketplace.

The business arrangement consists of two agreements. The first agreement
specifies that GNP will pay the Company license, maintenance and consulting fees
aggregating to a minimum of $1,600,000 over three years. The second agreement
specifies the terms for hosting of the Company's customers on GNP's Application
Service Providers ("ASP") portal. Additionally, the Company is entitled to
transaction fees generated by users of the GNP ASP portal. Each of the
agreements has an initial term of three years with provisions for renewals
thereafter. Both the initial term and renewals are subject to contingencies for
minimum levels of commercial activity on the GNP site.

In September 2000, the Company signed a non-binding letter of intent with SRI
Strategic Resources ("SRI") of Burnaby, British Columbia, Canada, a division of
TELUS Services Inc. TELUS is Canada's second largest telecommunications company
and provides a full range of advanced communication services and products across
Canada. SRI specializes in custom electronic commerce solutions for municipal
governments, parks and recreation, education, finance, wholesale distribution,
and retail industries. Under the initiative outlined by the letter of intent,
the Company's OpenEC platform would be combined with SRI's technology
integration expertise to develop a business to business electronic commerce
portal for forest industry procurements. Under terms contemplated by the letter
of intent, SRI will provide expertise in the integration of databases,
electronic commerce, Internet and multimedia tools for the portal. SRI will also
provide customer assistance, consulting and systems integration services to

                                       41
<PAGE>

forestry portal customers. TELUS Advanced Communications, a division of Telus,
will contribute sales, marketing and Application Service Provider design and
outsourcing services for the forestry portal and future portals SRI and the
Company may pursue. The Company will provide electronic commerce software,
portal design, custom software development and technical and sales support. The
Company's business development resources will also be utilized in the
development of the forestry and other industry portals.

The letter of intent schedule provides for the finalization of a definitive
agreement, subject to contingencies, in December 2000. Until execution of a
definitive agreement, either party may determine not to proceed with the
project.

FINANCIAL MANAGEMENT GROUP LLC

In October 2000, the Company announced that it was terminating the acquisition
of FMG due to material misrepresentations and omissions by the vendor and the
principals of such company, and the resulting inability to obtain regulatory
approval for the transaction. The Company terminated the employment of the two
principals of FMG in July 2000.

Since the acquisition of FMG, the Company developed a Java based software
product to service the credit counseling industry. The costs of developing this
product were expensed when incurred. Most of these expenses were incurred during
the fourth quarter of fiscal 2000. The Company is currently reevaluating the
business opportunity for its Java credit counseling software.

                              RESULTS OF OPERATIONS

Revenue for the year ended May 31, 2000 was $547,317, compared with $350,774 for
the five months ended May 31, 1999 and $849,433 and $1,997,565 for the years
ended December 31, 1998 and 1997, respectively. The decrease in revenue in the
2000 period is primarily due to a change in sales efforts from the Company's
Tradelink product towards its Open EC product that commenced in June 1999. The
decrease in revenue from the 1997 period to the 1998 period was primarily due to
contract revenue of approximately $1,300,000 earned in 1997 under the
Cooperation Agreement with TRW, which was not repeated in 1998 due to the
cancellation of the Cooperation Agreement. The TRW contract revenue was
approximately $100,000 during the year ended December 31, 1998.

Salaries and wages for the year ended May 31, 2000 were $1,821,014 compared with
$816,204 for the five months ended May 31, 1999 and $1,209,298 and $756,585 for
the years ended December 31, 1998 and 1997, respectively. The increases have
been due to the Company's increased research and development efforts to complete
the initial OpenEC platform and to expand its marketing and sales efforts.

Other compensation relates to the estimated fair value of options granted to
employees of the Company in April 1999. Prior to and in anticipation of the
reverse takeover transaction, options to acquire 1,006,006 common shares of
SoftCare, valued at $1,280,000, were granted to employees. These options were
exercised on the reverse takeover date for cash proceeds of $247 resulting in a
charge to income equal to the excess value of common shares over cash received
of $1,279,753. The Company recorded $418,220 of this charge during the five
month period ended May 31, 1999, and the remainder totaling $861,533 during the
year ended May 31, 2000.

Selling expenses for the year ended May 31, 2000 were $112,396 compared with
$56,219 for the five months ended May 31, 1999 and $160,476 and $127,472 for the
years ended December 31, 1998 and 1997, respectively. Selling expenses decreased
in the 2000 period reflecting the Company's reduced sales efforts for its older
TradeLink EDI product set. The increase in selling expenses from the 1997 period
to the 1998 period was primarily as a result of SoftCare's increased trade show
participation and advertising.

General and administrative expenses for the year ended May 31, 2000 were
$1,659,791 compared with $408,323 for the five months ended May 31, 1999 and
$537,211 and $627,100 for the years ended December 31, 1998 and 1997,
respectively. The increases in the 1999 and 2000 periods were primarily due to
increased administration and professional fees required to investigate possible
financing arrangements.

                                       42
<PAGE>

Depreciation and amortization for the year ended May 31, 2000 were $113,089
compared with $31,716 for the five months ended May 31, 1999 and $76,887 and
$52,603 for the years ended December 31, 1998 and 1997, respectively. The
increase in the 2000 period reflects the Company's continuous upgrading of its
computer hardware, software and related equipment.

                         LIQUIDITY AND CAPITAL RESOURCES

The Company had negative cash flow from operations of $2,982,023, $677,658,
$294,191 and $630,846 for the year ended May 31, 2000, the five months ended May
31, 1999, and the years ended December 31, 1998 and 1997, respectively.
Accordingly, the Company has had to rely on various debt and equity financings
for cash required for operations.

As of May 31, 2000, the Company had $2,447,172 in cash and cash equivalents
compared with $141,637 as of May 31, 1999. The Company's working capital at the
end of the year was $7,300,667 compared with a working capital deficiency of
$430,321 as at May 31, 1999. Capital assets, which represents net book value of
computer and testing equipment, computer software and office equipment were
$229,947 at May 31, 2000 compared with $129,492 as at May 31, 1999. The Company
has a $150,000 revolving credit facility with Toronto Dominion Bank, of which
NIL was advanced at May 31, 2000 compared with $155,000 as at May 31, 1999. The
Company had a short-term loan of $13,241 as at May 31, 2000.

The Company has no commitments for capital expenditures other than capital
leases and subsidiary redeemable Class A preference shares. The Company believes
it will have sufficient working capital to meet these commitments and to fund
its anticipated operations for at least the next twelve months.

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

The following table lists the names of the directors of the Company as at
October 31, 2000. The directors serve until the next Annual General Meeting or
until a successor is duly elected.

                                    DIRECTORS
                                                                    DATE FIRST
                                                                    ELECTED OR
DIRECTOR'S NAME                AGE                                  APPOINTED
--------------------------------------------------------------------------------
Martyn Armstrong               43                                   June 1999
Wayne Zielke (1)               46                                   June 1999
Randall M. Pierson (1)         54                               February 2000
Gregg Sedun (1)                42                               February 1997

(1) Also a member of the Audit Committee

The following table lists the names of the executive officers of the Company as
at October 31, 2000. The executive officers serve at the pleasure of the Board
of Directors and may be removed with or without cause, subject to any
contractual rights they may have as employees.

                                       43
<PAGE>

                               EXECUTIVE OFFICERS

NAME                      AGE      TITLE                   DATE FIRST AFFILIATED
--------------------------------------------------------------------------------
Martyn Armstrong          43       President                           June 1999
Douglas Sarkissian        48       Secretary                           June 1999
Wayne Zielke              46       Chief Financial Officer             June 1999
Sted Chen                 34       VP Engineering                      June 1999
Herb Williamson           55       VP Marketing                        June 2000

No director or executive officer has been the subject of any order, judgment, or
decree of any governmental agency or administrator or of any court of competent
jurisdiction, revoking or suspending for cause any license, permit or other
authority of such person or of any corporation of which he is a director and/or
executive officer, to engage in the securities business or in the sale of a
particular security or temporarily or permanently restraining or enjoining any
such person or any corporation of which he is an officer or director from
engaging in or continuing any conduct, practice, or employment in connection
with the purchase or sale of securities, or convicting such person of any felony
or misdemeanor involving a security or any aspect of the securities business.

There are no family relationships between any two or more directors or executive
officers. There are no material arrangements or understandings between any
directors or executive officers pursuant to which any of them were selected as a
director or executive officer.

ITEM 11. COMPENSATION OF OFFICERS AND DIRECTORS

During the fiscal year ended May 31, 2000, the Company paid a total of $463,692
to directors/officers of the Company for legal, accounting and advisory services
and $220,000 in salary.

The Company employs Martyn Armstrong to act as President of the Company pursuant
to an employment agreement dated April 15, 1999. Mr. Armstrong receives a gross
annual salary of $220,000 per annum payable in equal monthly installments. The
agreement has a three year term and is automatically renewed thereafter from
year to year, subject to the ability of either the Company or Mr. Armstrong to
decline to renew by giving written notice thirty days prior to the renewal date.
The agreement includes confidentiality provisions and non-competition clauses.
The Company may terminate the agreement upon 18 months written notice to Mr.
Armstrong, or upon payment of salary in lieu of such notice.

Set out below are particulars of compensation paid to the following persons (the
"Named Executive Officers"): (a) the Company's chief executive officer; (b) each
of the Company's four most highly compensated executive officers who were
serving as executive officers at the end of the most recently completed fiscal
year and whose total salary and bonus exceeds $100,000 per year; and (c) any
additional individuals for whom disclosure would have been provided under (b)
but for the fact that the individual was not serving as an executive officer of
the Company at the end of the most recently completed fiscal year.

As at May 31, 2000, the end of the most recently completed fiscal year of the
Company, the Company had three Named Executive Officers, whose names and
positions held within the Company are set out in the summary of compensation
table below. In addition, Robert Thast, a former President of the Company, also
acted as a Named Executive Officer for a portion of the most recently completed
fiscal year of the Company.

                                       44
<PAGE>

                             SUMMARY OF COMPENSATION

The following table is a summary of compensation paid to the Named Executive
Officers for each of the Company's three most recently completed fiscal years.

<TABLE>
<CAPTION>
                                                   Annual Compensation                        Long Term Compensation
                                        ------------------------------------------- ----------------------------------------
                                                                                              Awards              Payouts
                                                                                    ---------------------------- ----------
                                                                                    Securities    Restricted                All
                          Fiscal                                       Other        Under         Shares or                 Other
Name and                  Year                                         Annual       Options       Restricted     LTIP       Compen-
Position                  Ending        Salary             Bonus       Compensation Granted       Share Units    Pay-Outs   sation
------------------------- ------------- ------------------ ----------- ------------ ------------- -------------- ---------- --------
<S>                       <C>           <C>                <C>         <C>          <C>           <C>            <C>        <C>
Martyn Armstrong          5/31/00       $220,000           Nil         Nil          200,000       Nil            Nil        Nil
President                 5/31/99       Nil                Nil         Nil          Nil           Nil            Nil        Nil
                          12/31/98      Nil                Nil         Nil          Nil           Nil            Nil        Nil
------------------------- ------------- ------------------ ----------- ------------ ------------- -------------- ---------- --------
Sted Chen,                5/31/00       $120,000 (1)       Nil         Nil          Nil           Nil            Nil        Nil
Vice-President            5/31/99       Nil                Nil         Nil          Nil           Nil            Nil        Nil
Engineering               12/31/98      Nil                Nil         Nil          Nil           Nil            Nil        Nil
------------------------- ------------- ------------------ ----------- ------------ ------------- -------------- ---------- --------

Herb Williamson           5/31/00       $150,000 (US)(1)   Nil         Nil          Nil           Nil            Nil        Nil
Vice-President Marketing  5/31/99       Nil                Nil         Nil          Nil           Nil            Nil        Nil
                          12/31/98      Nil                Nil         Nil          Nil           Nil            Nil        Nil
------------------------- ------------- ------------------ ----------- ------------ ------------- -------------- ---------- --------
Robert L. Thast (2)       5/31/00       Nil                Nil         Nil          Nil           Nil            Nil        Nil
Former President          5/31/99       Nil                Nil         Nil          Nil           Nil            Nil        Nil
                          12/31/98      Nil                Nil         Nil          20,834 (3)    Nil            Nil        Nil
------------------------- ------------- ------------------ ----------- ------------ ------------- -------------- ---------- --------
</TABLE>

(1)      These monies were paid to Messrs. Chen and Williamson pursuant to
         employment contracts entered into by them with the Company. Refer to
         "Termination of Employment, Change in Responsibilities and Employment
         Contracts" for further details.

(2)      Mr. Thast acted as President of the Company from January 20, 1997 until
         his resignation on June 18, 1999.

(3)      Upon his resignation, all of these incentive stock options were
         exercised by Mr. Thast.

    LONG-TERM INCENTIVE PLANS - AWARDS IN MOST RECENTLY COMPLETED FISCAL YEAR

The Company has an employee trust managed by two trustees under the direction of
the Board of Directors. It is intended to provide stock based incentives to
employees. During the fiscal year ended May 31, 2000, no distributions were made
from the trust. The Company has no other long-term incentive plans in place and
therefore there were no awards made under any long-term incentive plan to the
Named Executive Officers or to any other executive officers or directors during
the Company's most recently completed fiscal year. A "Long-Term Incentive Plan"
is a plan under which awards are made based on performance over a period longer
than one fiscal year, other than a plan for options, stock appreciation rights
("SAR's") or restricted share compensation.

       OPTIONS/SARS GRANTED DURING THE MOST RECENTLY COMPLETED FISCAL YEAR

During the most recently completed fiscal year, the following incentive stock
options were granted to one of the Named Executive Officers. No SARs were
granted during this period.

                                       45
<PAGE>
<TABLE>
<CAPTION>
                                                                                           Market Value of
                                           Securities                      % of Total        Securities
                                             Under                           Options         Underlying
                                            Options       Exercise or      Granted to      Options on the
                                            Granted       Base Price      Employees in      Date of Grant
Name                    Date of Grant         (#)        ($/ Security)     Fiscal year    ($/Security) (1)        Expiration Date
-------------------- -------------------- ------------- ---------------- ---------------- ------------------ -----------------------
<S>                   <C>                   <C>              <C>               <C>               <C>         <C>
Martyn Armstrong     June 18, 1999          200,000          1.50              25                (1)         June 18, 2004
==================== ==================== ============= ================ ================ ================== =======================
</TABLE>

(1)      The Company's shares did not trade on the date of grant. The exercise
         price was based upon the price of a new issue of securities offered by
         the Company to the public.

 AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY COMPLETED FISCAL YEAR
                     AND FISCAL YEAR END OPTION/SAR VALUES

The following table sets out incentive stock options exercised by the Named
Executive Officers, during the most recently completed fiscal year as well as
the fiscal year end value of stock options held by the Named Executive Officers.
During this period, no outstanding SARs were held by the Named Executive
Officers.

<TABLE>
<CAPTION>
                                                                                                       Value of Unexercised
                             Securities                               Unexercised Options at          In-the-Money Options at
                             Acquired on                                  Fiscal Year-End               Fiscal Year-End ($)
                              Exercise        Aggregate Value        Exercisable/Unexercisable             Exercisable/
Name                             (#)          Realized ($) (1)                  (#)                      Unexercisable (2)
------------------------- ------------------ ------------------- ---------------------------------- ----------------------------
<S>                            <C>                 <C>                     <C>                            <C>
Martyn Armstrong                 Nil                N/A                    200,000 / Nil                  $200,000 / Nil
------------------------- ------------------ ------------------- ---------------------------------- ----------------------------
Robert L. Thast                20,834              11,875                    Nil / Nil                       Nil / Nil
========================= ================== =================== ================================== ============================
</TABLE>

(1)      Based on the difference between the option exercise price and the
         closing market price of the Company's shares, on the date of exercise.

(2)      In-the-Money Options are those where the market value of the underlying
         securities as at the most recent fiscal year end exceeds the option
         exercise price. The closing market price of the Company's shares as at
         May 31, 2000, was $2.50.

 TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS

The Company entered into employment contracts (the "Contracts") with Sted Chen
and Herb Williamson, pursuant to which the Company agreed to pay monthly sums of
CDN$10,000 and U.S.$12,500, respectively. The Contracts may be terminated by the
employees upon one month's written notice and by the Company pursuant to terms
provided for in the Employment Standards Act British Columbia.

The Company entered into an employment agreement dated April 15, 1999 with
Martyn Armstrong pursuant to which the Company employs Mr. Armstrong to act as
President of the Company. Under the agreement, Mr. Armstrong is entitled to a
gross salary of $220,000 per annum payable in equal monthly installments. The
agreement has a three year term and is automatically renewed thereafter from
year to year, subject to the right of either the Company or Mr. Armstrong to
decline to renew by giving written notice thirty days prior to the renewal date.

                                       46
<PAGE>

The agreement also includes confidentiality and non-competition provisions
limiting Mr. Armstrong from involvement in a business competitive to that of
SoftCare for 24 months from the date of termination of his employment. The
Company may also terminate the agreement upon 18 months prior written notice, or
upon payment of salary in lieu of such notice.

Except as set forth above, the Company has no plans or arrangements in respect
of remuneration received or that may be received by executive officers of the
Company to compensate such officers in the event of termination of employment
(as a result of resignation, retirement, change of control) or a change of
responsibilities following a change of control, where the value of such
compensation exceeds U.S.$60,000 per executive officer.

                            COMPENSATION OF DIRECTORS

No cash compensation was paid to any director of the Company for the director's
services as a director during the fiscal year ended May 31, 2000. Directors are
entitled to reimbursement for reasonable travel and other out-of-pocket expenses
incurred in connection with attendance at meetings of the Board of Directors.
The Board of Directors may award special remuneration to any director
undertaking any special services on behalf of the Company other than services
ordinarily required of a director.

The Company has no standard arrangement pursuant to which the Company
compensates directors for their services in their capacity as directors except
for the granting from time to time of incentive stock options in accordance with
the policies of the Canadian Venture Exchange. During the most recently
completed financial year, the Company granted incentive stock options to
purchase an aggregate 900,000 common shares to directors. Of these options,
100,000 were granted to Randall Pierson February 1, 2000 and the balance arose
from the conversion of options in SoftCare as a result of the completion of the
reverse takeover.


ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

Stock options to purchase securities from the Company are granted to directors
and employees of the Company on terms and conditions acceptable to the
regulatory authorities in Canada, notably the British Columbia Securities
Commission and the Canadian Venture Exchange. Stock options must be approved by
the Company's shareholders at an Annual General Meeting.

Under the Canadian Venture Exchange (formerly the Vancouver Stock Exchange)
guidelines, stock options for up to 10% of the number of issued and outstanding
common shares may be granted from time to time, provided that stock options in
favor of any one individual may not exceed 5% of the total issued and
outstanding common shares of the Company. No stock option granted under the
stock option program is transferable by the optionee other than by will or the
laws of descent and distribution, and each stock option is exercisable for a
maximum of five years only by such optionee, and only while the optionee remains
a director or employee of the Company.

The exercise price of all stock options granted under the stock option program
must be at least equal to the Discounted Market Price, as defined by the
Canadian Venture Exchange, of the Company's common shares on the day immediately
preceding the day on which the Board of Directors granted and publicly announced
the stock options.

The names and titles of all persons to whom outstanding stock options have been
granted and the number of common shares subject to such options as of October
31, 2000 as well as the number of options granted to directors and all employees
as a group are set forth in the following table. The exercise price of the
options is stated in Canadian Dollars.

                                       47
<PAGE>
<TABLE>
<CAPTION>
                                     STOCK OPTIONS GRANTED TO OFFICERS AND DIRECTORS

                                                              No. Shares of
Name                                 Title                    Common Stock      Exercise Price      Expiry Date
----                                 -----                    ------------      --------------      -----------
<S>                                  <C>                       <C>                  <C>              <C>
Martyn Armstrong                     President, Director          200,000           $  1.50          04/15/2004
Wayne Zielke                         Director                     200,000           $  1.50          04/15/2004
Douglas Sarkissian                   Secretary                    200,000           $  1.50          04/15/2004
Gregg Sedun                          Director                     100,000           $  1.50          04/15/2004
David DeWitt                         Employee                     100,000           $  1.50          04/15/2004
Randall M. Pierson                   Director                     100,000           $  3.90          02/01/2005
Clive Massey                         Consultant                    90,000           $  1.50          11/15/2004
Michael Sherry(1)                    Consultant                   200,000           $  1.75          08/28/2005
John Frostad                         Consultant                    40,000           $  2.00          08/31/2005
                                                            -------------
Total Officers/Directors/Employees                              1,230,000
                                                            =============
Total Officers/Directors (5 persons)                              800,000
                                                            =============
Total Employees (4 persons)                                       430,000
                                                            =============
</TABLE>

(1)      40,000 shares expire at the end of each 12 month period. The first
         40,000 shares are exercisable until August 28, 2001 and the last 40,000
         shares are exercisable until August 28, 2005.

                                STOCK OPTION PLAN

On October 19, 2000, the Board of Directors adopted a Stock Option Plan (the
"Plan"). The Plan was approved of by the stockholders of the Company at the
Annual General Meeting November 10, 2000. The Board of Directors has reserved a
total of 3,953,646 common shares for issuance under the Plan, subject to
standard anti-dilution adjustments. The Plan is administered by an officer of
the Company, designated as the "Administrator," under the direction of the Board
of Directors. Options under the Plan may be issued to directors, officers,
employees, consultants and those who provide services to the Company, all in
compliance with the regulatory requirements applicable to the Company from time
to time. The Administrator, under the supervision of the Board of Directors,
will determine which eligible persons will receive stock options. However, the
following limitations apply to options and shares issued to senior officers,
directors and stockholders who hold more than 10% of the common shares of the
Company ("Insiders"):

o        The number of shares reserved for issuance to Insiders upon the
         exercise of all stock options pursuant to stock options may not exceed
         10% of the Company's issued and outstanding share capital;
o        The number of shares issued to Insiders within a one year period may
         not exceed 10% of the Company's issued and outstanding share capital;
o        No person may be granted options within a one year period for a number
         of shares in excess of 5% of the Company's issued and outstanding share
         capital at the time of granting; and
o        No person engaged in investor relations activities may be issued
         options for more than 2% of the Company's issued and outstanding
         shares.

The Plan will terminate October 19, 2010, if not sooner terminated by the Board
of Directors in its discretion. If an option expires or otherwise terminates
without having been fully exercised, the unexercised shares will again be
available for issuance under the Plan. Options outstanding when the Plan
terminates will remain effective until they are exercised or expire in
accordance with their terms.

Options issued pursuant to the Plan may have terms up to five years. Options
will generally vest over a minimum period of 18 months and a maximum period of
60 months, unless otherwise approved by regulatory authorities. Options issued
to employees who are not executive officers or directors of the Company must
vest at the rate of at least 20% per year. Options issued to investor relations
consultants will vest in stages over 12 months with no more than 25% of the
options vesting any three month period. Employee or consultant options will
terminate 30 days following the termination of an employee's service to the
Company and director options will terminate 90 days following termination of
service as a director, unless such termination is due to death or disability of
the optionee, in which case the vested portion of an option may be exercised for
one year following death or six months following disability. Options will
terminate immediately upon termination of an optionee for cause. The exercise
price of options will be at least the greater of the Discounted Market Price (as

                                       48
<PAGE>

defined under the rules of the Canadian Venture Exchange) or 85% of the fair
market value of the common shares on the date of grant. In the case of options
issued to persons who hold 10% or more of the outstanding common shares, the
exercise price must be at least 110% of the fair market value of the Company's
shares on the date of grant. Options issued to U.S. employees intended to
qualify as incentive stock options must have an exercise price no less than the
fair market value on the date of grant. Options granted under the Plan are
non-assignable except to the optionee's personal representative upon the
optionee's death. Options must be exercised in cash, and the Company will not
offer loans or other financial assistance to optionees for the exercise of
options.


ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Except as disclosed herein since the commencement of the last completed fiscal
year, no director or officer of the Company, holder of ten percent or more of
the common shares, or any relative or spouse of such person had any material
interest, direct or indirect, in any transaction or any proposed transaction
with the Company.

On March 3, 2000, the Company announced that it had entered into an engagement
letter with certain agents (the "Agents") pursuant to which the Agents would
offer and sell to investors up to 1,300,000 special warrants (the "Financing
Special Warrants") at a price of $3.75 per Financing Special Warrant. Each
Financing Special Warrant is exercisable, without further payment, into one
common share of the Company and one half of a share purchase warrant. Each whole
share purchase warrant will entitle the holder to purchase one additional common
share of the Company at a price of $4.25 per share for one year. On March 20,
2000 the Company announced the closing of this brokered private placement.
Insider participants in the offering were Sted Chen, Vice President, Engineering
of the Company, and Douglas Sarkissian, the Secretary of the Company, each as to
4,000 Financing Special Warrants.

Effective July 14, 1999, the Company entered into a corporate advisory agreement
with Sedun De Witt Capital Corp. ("SDW"). Mr. Gregg Sedun, a director of the
Company, and Mr. David De Witt, a former officer of the Company, are affiliated
with SDW. Pursuant to the agreement, SDW provided the Company with certain
corporate and advisory services in consideration for $10,000 per month for a
term of 12 months. The agreement terminated by its terms in July 2000.

PART II

ITEM 14. Description of Securities to be Registered

Not Applicable.

PART III

ITEM 15. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES

Not Applicable.

PART IV

ITEM 17. FINANCIAL STATEMENTS

The Company's consolidated financial statements are stated in Canadian Dollars
("CDN$") and are prepared in accordance with Generally Accepted Accounting
Principles ("GAAP") in Canada, the application of which, in the case of the
Company, conforms in all material respects for the periods presented with United
States GAAP except as noted in the notes to the consolidated financial
statements.

                                       49
<PAGE>

The consolidated financial statements as required under Item 17 are included
immediately following the text of this Report. The Company's consolidated
financial statements for the twelve months ended May 31, 2000 were audited by
Ernst & Young LLP, independent chartered accountants. The statements for five
months ended May 31, 1999 and years ended December 31, 1998 and 1997 were
audited by KPMG LLP, independent chartered accountants.

ITEM 18. FINANCIAL STATEMENTS

The Company has elected to provide financial statements pursuant to Item 17.

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

(A) The financial statements as required under Item 17 are included immediately
following the text of this Report.

Auditor's Report of Ernst & Young LLP

Auditor's Report of KPMG

Consolidated Balance Sheets As At May 31, 2000 and 1999

Consolidated Statements of Operations for the Year Ended May 31, 2000, the Five
Months Ended May 31, 1999, and the Years Ended December 31, 1998 and 1997

Consolidated Statements of Shareholders' Equity (Deficit) for the Year Ended May
31, 2000, the Five Months Ended May 31, 1999, and the Years Ended December 31,
1998 and 1997

Consolidated Statements of Cash Flows for the Year Ended May 31, 2000, the Five
Months Ended May 31, 1999, and the Years Ended December 31, 1998 and 1997

Notes to Consolidated Financial Statements


(B) Exhibits

Number:              Description:
-------              ------------
10.1                 Softcare 2000 Stock Option Plan


                                 SIGNATURE PAGE

Pursuant to the requirements of Section 12g of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this amended Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.



                              SOFTCARE EC.COM INC.
                              --------------------
                                   REGISTRANT



Dated: December 8, 2000                    By: /s/ Martyn Armstrong
       ----------------                        --------------------
                                               Martyn Armstrong
                                               CEO/Director


                                       50

<PAGE>

Consolidated Financial Statements

SOFTCARE EC.COM INC.
(Expressed in Canadian dollars)
May 31, 2000

<PAGE>

                                AUDITORS' REPORT



To the Shareholders of
SOFTCARE EC.COM INC.

We have audited the consolidated balance sheet of SOFTCARE EC.COM INC. as at May
31, 2000 and the consolidated statements of operations, shareholders' equity
(deficit) and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at May 31, 2000 and
the results of its operations and its cash flows for the year then ended in
accordance with accounting principles generally accepted in Canada. As required
by the British Columbia Company Act we report that, in our opinion, these
principles have been applied on a basis consistent with that of the preceding
periods, except for the change in the method of accounting for income taxes, as
explained in note 4 to the consolidated financial statements.

The consolidated financial statements as at May 31, 1999 and for the five months
ended May 31, 1999 and for the years ended December 31, 1998 and 1997 were
audited by other auditors who expressed an opinion without reservation on those
consolidated statements in their respective reports dated December 2, 1999.

/s/ Ernst & Young LLP

Vancouver, Canada,
August 11, 2000.                                           Chartered Accountants

                                      F-1
<PAGE>

                                AUDITORS' REPORT



To the Directors of Softcare EC.com Inc.

We have audited the consolidated balance sheets of Softcare EC.com Inc.
(formerly International Savannah Ventures Ltd.) as at September 30, 1999 and
December 31, 1998 and the consolidated statements of operations, shareholders'
equity (deficit) and cash flows for the nine months ended September 30, 1999 and
the years ended December 31, 1998 and 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at September 30,
1999 and December 31, 1998 and the results of its operations and its cash flows
for the nine months ended September 30, 1999 and the years ended December 31,
1998 and 1997, in accordance with Canadian generally accepted accounting
principles.

Significant differences between Canadian and United States accounting principles
are explained and quantified in note 20 to the consolidated financial
statements.



KPMG LLC

Chartered Accountants


Vancouver, Canada
December 2, 1999, except as to Note 22(b) which is as of February 24, 2000

                                      F-2
<PAGE>

                                AUDITORS' REPORT



To the Directors of Softcare Electronic Commerce Inc.

We have audited the consolidated balance sheet of Softcare Electronic Commerce
Inc. as at May 31, 1999 and the consolidated statement of operations,
shareholders' equity (deficit) and cash flows for the five months then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at May 31, 1999 and
the results of its operations and its cash flows for the five months then ended
in accordance with Canadian generally accepted accounting principles.



KPMG LLC

Chartered Accountants


Vancouver, Canada
December 2, 1999, except as to Note 18(e) which is as of February 24, 2000

                                      F-3
<PAGE>

SOFTCARE EC.COM INC.
Incorporated under the laws of British Columbia

<TABLE>
                                CONSOLIDATED BALANCE SHEETS
                              (Expressed in Canadian dollars)
<CAPTION>

As at May 31

                                                                    2000            1999
                                                                     $               $
-------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>
ASSETS [NOTE 14]
CURRENT
Cash and cash equivalents                                         2,447,172        141,637
Cash held in escrow [NOTE 5]                                      2,049,779             --
Accounts receivable, less allowance for doubtful accounts of
   $41,687 and $23,917, respectively [NOTE 6]                       202,675        252,376
Short-term investments [NOTE 7]                                   2,996,509             --
Prepaid expenses and other                                          152,585         10,080
Investment tax credits receivable [NOTE 8]                               --         50,231
Work in progress [NOTE 9]                                            57,571             --
-------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                              7,906,291        454,324
-------------------------------------------------------------------------------------------
Capital assets [NOTE 10]                                            229,947        129,492
Goodwill, net of amortization of $769 [NOTE 3]                       42,301             --
-------------------------------------------------------------------------------------------
TOTAL ASSETS                                                      8,178,539        583,816
===========================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT
Bank indebtedness [NOTE 11]                                          13,241        155,000
Accounts payable and accrued liabilities [NOTES 12 AND 21]          336,994        283,228
Advance from proposed acquiror [NOTE 13]                                 --        250,000
Current portion of long-term debt [NOTE 14]                          36,850         40,200
Current portion of obligations under capital leases [NOTE 15]        30,397         35,102
Current portion of subsidiary redeemable Class A preference
  shares [NOTE 16]                                                   30,000         30,000
Deferred revenue                                                    158,142         91,115
-------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                           605,624        884,645
-------------------------------------------------------------------------------------------
Long-term debt [NOTE 14]                                                 --         36,850
Obligations under capital leases [NOTE 15]                           32,073         24,332
Subsidiary redeemable Class A preference shares [NOTE 16]            72,500        102,500

Commitments and contingencies [NOTES 3 AND 19]

SHAREHOLDERS' EQUITY (DEFICIT)
Common stock [NOTE 18]                                           10,452,670             --
Special Warrants [NOTE 17]                                        5,087,468      3,321,604
Additional paid-in capital                                               --      1,279,753
Deferred stock compensation                                              --       (861,533)
Unearned Employee Stock Bonus Plan [NOTE 18]                     (1,279,975)    (1,279,975)
Deficit                                                          (6,791,821)    (2,924,360)
-------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                              7,468,342       (464,511)
-------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)              8,178,539        583,816
===========================================================================================

SEE ACCOMPANYING NOTES

On behalf of the Board:

/S/ Martyn Armstrong                              /S/ Wayne Zielke
----------------------------------------          -----------------------------------------
Martyn Armstrong, Director                        Wayne Zielke, Director
</TABLE>

                                            F-4
<PAGE>


SOFTCARE EC.COM INC.

<TABLE>
                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Expressed in Canadian dollars)
<CAPTION>

                                                                                    YEAR ENDED
                                                YEAR ENDED     FIVE MONTHS          DECEMBER 31,
                                                  MAY 31,     ENDED MAY 31,   ----------------------
                                                   2000          1999           1998         1997
                                                    $             $              $            $
----------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>           <C>            <C>
REVENUE
Software sales                                    348,537       210,852       584,154     1,777,791
Consulting services                                13,278        49,938       117,658       146,222
Training services                                  11,907        14,500         9,708         6,862
Maintenance fees                                  173,595        75,484       137,913        66,690
----------------------------------------------------------------------------------------------------
TOTAL REVENUES                                    547,317       350,774       849,433     1,997,565
----------------------------------------------------------------------------------------------------

EXPENSES
Salaries and wages                              1,821,014       816,204     1,209,298       756,585
Other compensation [NOTE 18]                      861,533       418,220            --            --
Selling expenses                                  112,396        56,219       160,476       127,472
General and administrative expenses
   [NOTES 19 AND 21]                            1,659,791       408,323       537,211       627,100
Depreciation and amortization                     113,089        31,716        76,887        52,603
----------------------------------------------------------------------------------------------------
                                                4,567,823     1,730,682     1,983,872     1,563,760
----------------------------------------------------------------------------------------------------
Operating income (loss) for the period         (4,020,506)   (1,379,908)   (1,134,439)      433,805
Other income (expense)
   Interest income                                179,533         4,998        42,246        26,912
   Interest expense - long-term                   (26,488)      (12,369)      (38,821)      (43,715)
----------------------------------------------------------------------------------------------------
Total other income (expense)                      153,045        (7,371)        3,425       (16,803)
----------------------------------------------------------------------------------------------------

Net income (loss) before income tax recovery   (3,867,461)   (1,387,279)   (1,131,014)      417,002
Income tax recovery                                    --            --            --         5,749
----------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FOR THE PERIOD               (3,867,461)   (1,387,279)   (1,131,014)      422,751
====================================================================================================

Basic and diluted (loss) per share [NOTE 4]         (0.40)           --            --            --
====================================================================================================
</TABLE>

SEE ACCOMPANYING NOTES

                                                F-5
<PAGE>

SOFTCARE EC.COM INC.

<TABLE>
                                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                                   (Expressed in Canadian dollars)
<CAPTION>

                                                                    COMMON STOCK              SPECIAL WARRANTS        ADDITIONAL
                                                             -------------------------- --------------------------     PAID-IN
                                                                SHARES         AMOUNT       SHARES         AMOUNT      CAPITAL
                                                                  #              $            #              $            $
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>           <C>          <C>             <C>            <C>
BALANCE, DECEMBER 31, 1996                                         --            --           405            134             --
Deemed Special Warrants issued on amalgamation                     --            --     8,098,579             --             --
Deemed Special Warrants issued for cash on private
   placement, net of issue costs of $68,125                        --            --       842,294      2,011,875             --
Deemed Special Warrants issued pursuant to exercise
   of Share purchase options for cash                              --            --        20,248             50             --
Net income for the year                                            --            --            --             --             --
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997                                         --            --     8,961,526      2,012,059             --
Net loss for the year                                              --            --            --             --             --
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                                         --            --     8,961,526      2,012,059             --
Deemed Special Warrants issued to an employee for
   services rendered                                               --            --        38,470         29,545             --
Deemed Special Warrants issued to Employee Stock
   Bonus Plan [NOTE 18]                                            --            --       999,998      1,280,000             --
Deferred stock based compensation [NOTE 18]                        --            --            --             --      1,279,753
Net loss for the period                                            --            --            --             --             --
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 1999                                              --            --     9,999,994      3,321,604      1,279,753
Deemed Special Warrants issued for services pursuant
   to exercise of options [NOTE 18]                                --            --     1,000,006      1,280,000     (1,279,753)
Amortization of deferred stock compensation [NOTE 18]              --            --            --             --             --
Adjustments to effect June 18, 1999 reverse takeover
   accounting:
     Value attributed to the share capital of EC.com        1,391,428       960,316            --             --             --
Special Warrants issued for services rendered [NOTE 17]            --            --        51,666             --             --
Special Warrants issued in private placement, net of
   costs of $280,000 [NOTE 17]                                     --            --     2,000,000      2,720,000             --
Shares issued pursuant to exercise of stock options
   [NOTE 18]                                                   33,334        54,200            --             --             --
Shares issued on exercise of Special Warrants              13,051,666     7,321,604   (13,051,666)    (7,321,604)            --
Shares issued on exercise of Agents' Warrants                  82,700       124,050            --             --             --
Shares issued on exercise of Share Purchase Warrants          797,000     1,992,500            --             --             --
Special Warrants issued in private placement, net of
   costs of $518,782 [NOTE 17]                                     --            --     1,495,000      5,087,468             --
Net loss for the year                                              --            --            --             --             --
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2000                                      15,356,128    10,452,670     1,495,000      5,087,468             --
==================================================================================================================================
</TABLE>

(CONTINUED BELOW)

<PAGE>
<TABLE>
                                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                                   (Expressed in Canadian dollars)
                                                            (CONTINUED)
<CAPTION>

                                                             DEFERRED         UNEARNED                     TOTAL
                                                              STOCK       EMPLOYEE STOCK               SHAREHOLDERS'
                                                           COMPENSATION     BONUS PLAN     DEFICIT   EQUITY (DEFICIT)
                                                                 $               $            $             $
---------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>            <C>
BALANCE, DECEMBER 31, 1996                                           --             --       (828,818)      (828,684)
Deemed Special Warrants issued on amalgamation                       --             --             --             --
Deemed Special Warrants issued for cash on private
   placement, net of issue costs of $68,125                          --             --             --      2,011,875
Deemed Special Warrants issued pursuant to exercise
   of Share purchase options for cash                                --             --             --             50
Net income for the year                                              --             --        422,751        422,751
---------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997                                           --             --       (406,067)     1,605,992
Net loss for the year                                                --     (1,131,014)    (1,131,014)
---------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                                           --             --     (1,537,081)       474,978
Deemed Special Warrants issued to an employee for
   services rendered                                                 --             --             --         29,545
Deemed Special Warrants issued to Employee Stock
   Bonus Plan [NOTE 18]                                              --     (1,279,975)            --             25
Deferred stock based compensation [NOTE 18]                    (861,533)            --             --        418,220
Net loss for the period                                              --             --     (1,387,279)    (1,387,279)
---------------------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 1999                                          (861,533)    (1,279,975)    (2,924,360)      (464,511)
Deemed Special Warrants issued for services pursuant
   to exercise of options [NOTE 18]                                  --             --             --            247
Amortization of deferred stock compensation [NOTE 18]           861,533             --             --        861,533
Adjustments to effect June 18, 1999 reverse takeover
   accounting:
     Value attributed to the share capital of EC.com                 --             --             --        960,316
Special Warrants issued for services rendered [NOTE 17]              --             --             --             --
Special Warrants issued in private placement, net of
   costs of $280,000 [NOTE 17]                                       --             --             --      2,720,000
Shares issued pursuant to exercise of stock options
   [NOTE 18]                                                         --             --             --         54,200
Shares issued on exercise of Special Warrants                        --             --             --             --
Shares issued on exercise of Agents' Warrants                        --             --             --        124,050
Shares issued on exercise of Share Purchase Warrants                 --             --             --      1,992,500
Special Warrants issued in private placement, net of
   costs of $518,782 [NOTE 17]                                       --             --             --      5,087,468
Net loss for the year                                                --             --     (3,867,461)    (3,867,461)
---------------------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2000                                                --     (1,279,975)    (6,791,821)     7,468,342
=====================================================================================================================
</TABLE>

SEE ACCOMPANYING NOTES

                                                                F-6
<PAGE>

SOFTCARE EC.COM INC.

<TABLE>
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (Expressed in Canadian dollars)
<CAPTION>

                                                                                              YEAR ENDED
                                                           YEAR ENDED   FIVE MONTHS          DECEMBER 31,
                                                             MAY 31,    ENDED MAY 31, -------------------------
                                                              2000          1999          1998         1997
                                                               $             $             $            $
---------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>           <C>            <C>
OPERATING ACTIVITIES
Net income (loss) for the period                          (3,867,461)   (1,387,279)   (1,131,014)      422,751
Items not affecting cash:
   Depreciation and amortization                             113,089        31,716        76,887        52,603
   Provision for doubtful accounts                            41,323        10,000        21,250        28,598
   Stock based compensation                                  861,533       447,765            --            --
   Special Warrants issued for services rendered              66,132            --            --            --
   Changes in non-cash working capital:
     Accounts receivable                                      31,869       (96,166)      781,248      (840,779)
     Prepaid expenses and other                             (139,213)       36,677         2,758        18,881
     Investment tax credits receivable                        50,231       124,376       (85,908)      (88,699)
     Work in progress                                        (57,571)           --            --            --
     Accounts payable and accrued liabilities (148,982)      164,443        39,809      (220,181)
     Deferred revenue                                         67,027        (9,190)          779        (4,020)
---------------------------------------------------------------------------------------------------------------
NET CASH (USED IN) OPERATING ACTIVITIES                   (2,982,023)     (677,658)     (294,191)     (630,846)
---------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of capital assets                                  (107,306)       (1,033)      (61,581)      (30,400)
Cash acquired in reverse takeover                             73,102            --            --            --
Issuance costs paid in reverse takeover                      (22,956)           --            --            --
Cash paid in FMG acquisition, net of cash received           (13,528)           --            --            --
Cash received from shareholder                               448,517            --            --            --
Advances from proposed acquiror                              250,000       250,000            --            --
Purchase of short-term investments                        (2,996,509)           --            --            --
---------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES       (2,368,680)      248,967       (61,581)      (30,400)
---------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness                    (155,832)      130,000       (27,602)     (354,346)
Redemption of Subsidiary redeemable
   Class A preference shares                                 (30,000)      (12,500)      (30,000)      (30,000)
Repayment of long-term debt                                  (40,200)      (16,750)      (40,200)      (40,200)
Repayment of obligations under capital leases                (46,416)      (17,645)      (36,900)      (20,861)
Special Warrants issued for cash                           7,807,468            --            --            --
Common stock issued on exercise of stock options              54,447            --            --            50
Common stock issued on exercise of Agents' Warrants          124,050            --            --            --
Common stock issued on exercise of
   Share Purchase Warrants                                 1,992,500            25            --     2,011,875
Cash held in escrow                                       (2,049,779)           --            --            --
---------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES        7,656,238        83,130      (134,702)    1,566,518
---------------------------------------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           2,305,535      (345,561)     (490,474)      905,272
Cash and cash equivalents, beginning of period               141,637       487,198       977,672        72,400
---------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                   2,447,172       141,637       487,198       977,672
===============================================================================================================

SUPPLEMENTAL DISCLOSURE
Interest paid                                                 26,488        12,369        38,821        43,715
===============================================================================================================
</TABLE>

SEE ACCOMPANYING NOTES

                                                      F-7
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



1.  NATURE OF OPERATIONS

SoftCare EC.com Inc. (the "Company") was incorporated pursuant to the Company
Act of the Province of British Columbia on March 30, 1981. The Company changed
its name from International Savannah Ventures Ltd. to SoftCare EC.com Inc.
("EC.com") on June 10, 1999 prior to the reverse takeover as described in note
2.

The Company and its subsidiary companies develop and market Electronic Data
Interchange (EDI) software primarily to retailers, financial and public
institutions, utility companies, pharmaceutical companies and wholesalers across
Canada, the United States and Asia. The Company and its subsidiary companies
also develop and market e-commerce software, providing licenses, consulting and
support services to both domestic and international markets. Prior to the
reverse takeover, the Company had been involved in mining exploration.

The Company has experienced operating losses and negative cash flows from
operations and has had to rely primarily on debt and equity financing for cash
required for operations. The Company's ability to achieve profitability and
positive cash flows from operations will depend upon numerous factors. These
factors include its ability to attract strategic corporate partners for the
development, marketing, distribution, and sale of its software products, the
progress of its research and development programs and its ability to protect its
proprietary rights over product names and trademarks.

As at May 31, 2000, the Company had $2,447,172 in cash and cash equivalents,
$2,049,779 in cash held in escrow and $2,996,509 in short-term investments. The
Company had working capital of $7,300,667 at May 31, 2000. The Company also has
the potential to raise future capital through the exercise of Special Warrants,
employee stock options and Agent's Special Warrants. There is no assurance that
the exercise of Special Warrants or Agent's Special Warrants will occur or that
employees will exercise their stock options. The Company believes that existing
cash and other working capital will be sufficient to carry out operations for at
least the next twelve months.

                                      F-8
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



2.  REVERSE TAKEOVER

On June 18, 1999, EC.com completed an agreement with the shareholders of
SoftCare Electronic Commerce Inc. ("SoftCare") pursuant to which EC.com issued
11,000,000 Special Warrants to acquire all of the issued and outstanding common
shares of SoftCare. At the date of acquisition, EC.com was substantially
inactive. As a result of the acquisition, the former shareholders of SoftCare
acquired 88.8 percent of the Company as a group. SoftCare is considered the
accounting acquirer for financial statement purposes. In conjunction with this
transaction, SoftCare changed its fiscal year-end from December 31 to May 31 and
EC.com changed its year-end from March 31 to May 31.

The acquisition has been accounted for as a reverse takeover using the purchase
method, and accordingly, for financial statement reporting purposes, the net
assets of SoftCare have been included in the consolidated balance sheet at book
values, and the net assets of EC.com have been recorded at fair market value at
the date of acquisition. The historical shareholders' equity gives effect to the
shares issuable to the shareholders of SoftCare upon exercise of the 11,000,000
Special Warrants. The consolidated operations of the Company for the five months
ended May 31, 1999 and the years ended December 31, 1998 and 1997 are those of
SoftCare and its subsidiaries and exclude the accounts of EC.com. The results of
EC.com are included in the consolidated statements of operations from the date
of acquisition, June 18, 1999.

The cost of the acquisition is the estimated fair market value of the net assets
of EC.com acquired on June 18, 1999 and consists of:
                                                                         $
-----------------------------------------------------------------------------

Cash and cash equivalents                                             73,102
Shareholder receivable                                               448,517
Prepaid expenses and other                                           242,776
Cash advances to SoftCare                                            500,000
Accounts payable and accrued liabilities                            (104,479)
-----------------------------------------------------------------------------
Total acquisition cost                                             1,159,916
=============================================================================

The reverse takeover was approved by the Vancouver Stock Exchange (now known as
the Canadian Venture Exchange) on June 18, 1999.

                                      F-9
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



3.  BUSINESS COMBINATION

Effective April 10, 2000, the Company acquired a 100% interest in the issued and
outstanding common shares of Financial Management Group LLC ("FMG"), a developer
of a credit counseling software program used by credit counseling agencies, for
cash consideration of $13,528 net of cash acquired. The acquisition has been
accounted for using the purchase method of accounting and the amount of the
acquisition cost in excess of the fair value of the identifiable assets and
liabilities has been recorded as goodwill, which will be amortized on a
straight-line basis over a seven year period. The results of operations of FMG
are included in the consolidated statement of operations from the date of
acquisition, April 10, 2000. The fair values of the identifiable assets and
liabilities acquired on April 10, 2000 are as follows:

                                                                      $
--------------------------------------------------------------------------

Cash and cash equivalents                                           6,855
Accounts receivable                                                23,491
Prepaid expenses and other                                          3,292
Capital assets                                                     56,017
Bank indebtedness                                                 (14,073)
Accounts payable and accrued liabilities                          (98,269)
--------------------------------------------------------------------------
Net (liabilities) acquired                                        (22,687)
Goodwill and intangible assets                                     43,070
--------------------------------------------------------------------------
Total acquisition cost                                             20,383
==========================================================================

Under the original terms of the agreement, the Company was to issue 100,000
common shares in consideration for the acquisition of FMG that would have been
subject to a hold period of two years from the date of issuance. The Company was
required to issue an additional 95,000 common shares when portal design and
engineering was completed. The Company was required to issue 50,000 common
shares upon the portal generating revenues of U.S. $300,000 in any month
subsequent to the purchase, as described in the agreement. In addition, the
Company was required to issue 55,000 common shares upon the portal generating
revenues of U.S. $1,000,000 in any month, subsequent to the purchase, as
described in the agreement. Regulatory approval of this transaction is required
and has not yet been obtained.

                                      F-10
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



3.  BUSINESS COMBINATION (CONT'D.)

The issuance of the above noted common shares is subject to final adjustment,
pending the resolution of various disputes between the sellers of FMG and the
Company. The outcome of this matter is currently not determinable. Accordingly,
the above shares have not been issued and no amounts with respect to the above
noted shares have been recorded in the consolidated financial statements, other
than the net cash consideration of $13,528. Management believes any adjustment
to the purchase price will not result in additional liability to the Company.
Accordingly, the cash purchase price has been disclosed on a preliminary basis
and may be adjusted upon the final resolution of these matters.


4.  SIGNIFICANT ACCOUNTING POLICIES

These audited consolidated financial statements have been expressed in Canadian
dollars and in accordance with accounting principles generally accepted in
Canada. A reconciliation of amounts presented in accordance with United States
generally accepted accounting principles is detailed in note 23. The following
is a summary of the significant accounting policies used in the preparation of
these consolidated financial statements:

PRINCIPLES OF CONSOLIDATION

These consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Financial Management Group LLC (a Nevada
corporation), SoftCare (a Canadian company) and Bus Holdings Corporation (an
Anguilla corporation), and SoftCare's wholly owned subsidiaries, SCC Holdings
Ltd. (a Canadian company), SCEC Holdings Ltd. (a Canadian company) and SoftCare
Electronic Commerce (U.S.A.) Inc. (a Washington corporation). Bus Holdings
Corporation is inactive and has no assets or liabilities. All significant
intercompany balances and transactions have been eliminated on consolidation.

TRANSLATION OF FOREIGN CURRENCIES

The Company follows the temporal method of accounting for the translation of
integrated foreign subsidiary operations. Monetary assets and liabilities of
foreign subsidiaries denominated in foreign currencies are translated into
Canadian dollars at the exchange rate in effect at the balance sheet date. Other
balance sheet items are translated at exchange rates in effect when the assets
are acquired or obligations are incurred. Revenue and expense items are
translated at the average rate of exchange for the period. Foreign exchange
gains and losses resulting from these translations are reflected in the
consolidated statement of operations.

                                      F-11
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



4.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid financial instruments purchased with an
original maturity of three months or less to be cash equivalents. Cash
equivalents are recorded at cost, which approximates market value.

SHORT-TERM INVESTMENTS

Short-term investments are typically held to maturity and are carried at
amortized cost. In the event there has been a decline in value that is other
than temporary, the investment will be written down to recognize the loss.
Short-term investments consist of investments in term deposits with an original
maturity of more than three months.

INVESTMENT TAX CREDITS

Investment tax credits resulting from eligible Scientific Research and
Experimental Development expenditures, pursuant to the Canadian Income Tax Act,
are recorded as a reduction of related wage costs in the period in which they
are received or in the period in which recoverability is certain.

LEASES

Leases are classified as either capital or operating leases. Leases which
transfer substantially all the benefits and risks of ownership of the property
to the Company are accounted for as capital leases. Capital lease obligations
reflect the present value of future lease payments, discounted at the
appropriate interest rate.

All other leases are accounted for as operating leases wherein rental payments
are expensed as incurred.

                                      F-12
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



4.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

CAPITAL ASSETS

Capital assets are stated at cost less accumulated depreciation. Capital assets
are depreciated at rates sufficient to write off their cost over their estimated
useful lives on a declining balance method, after taking into account their
estimated residual values, at the following annual rates:

     Computer and testing equipment                                     30%
     Computer software                                                 100%
     Office equipment                                                   20%
     Office furniture                                                   20%
     Display booths                                                     30%
     Leasehold improvements                 Lesser of the term of the lease
                                                 or the remaining estimated
                                                   useful life of the asset

Computer equipment acquired under capital leases is depreciated on a
straight-line basis over the lesser of the term of the lease or the remaining
estimated economic life of approximately three years.

SOFTWARE DEVELOPMENT COSTS

Software development costs are charged to expense as incurred unless the
development project meets the criteria under generally accepted accounting
principles for deferral and amortization. The Company has not deferred any
software development costs to date.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company monitors the recoverability of long-lived assets, including capital
assets and goodwill, based upon estimates using factors such as future asset
utilization, business climate and future non-discounted cash flows expected to
result from the use of the related assets or to be realized on sale. The
Company's policy is to write down assets to their net recoverable amount using
undiscounted cash flows, in the period when it is likely that the carrying
amount of the asset will not be recovered.

                                      F-13
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



4.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

REVENUE RECOGNITION

A software arrangement entered into by the Company may encompass multiple
elements, including software sales, consulting services, training services and
maintenance fees. The total fee for a multiple element arrangement is allocated
to each element based upon objective evidence of the fair value of each element.
Fair value is established through the Company's policy to charge to customers
the same price as when the element is sold separately. Revenue from sales made
to re-sellers is recognized after the third-party sale occurs and the revenue is
determinable. Consulting services offered by the Company are not considered
essential to the functionality of the software arrangement. As a result,
consulting and training services revenues are recognized as the work is
performed. Maintenance contract revenue is deferred and recognized over the
respective contract periods. Revenue from direct software sales is recognized
when the product has been delivered, as no significant obligations remain, fees
are fixed and determinable, collectibility is probable, and persuasive evidence
of an arrangement exists. If software sales are contingent upon successful
installation and subsequent customer acceptance, the revenue and work in
progress costs are deferred until customer acceptance is achieved.

ADVERTISING EXPENSE

Advertising costs are charged to expense as incurred. Advertising expense for
the year ended May 31, 2000 amounted to approximately $17,400 [Five months ended
May 31, 1999 - $500; year ended December 31, 1998 - $34,100; year ended December
31, 1997 - $14,400].

INCOME TAXES

Effective June 1, 1999, the Company adopted the new recommendations of The
Canadian Institute of Chartered Accountants with respect to accounting for
income taxes. There was no effect of adopting the liability method of tax
allocation on the consolidated financial statements as at May 31, 2000 and for
the year then ended. Prior year financial statements have not been restated as
there was no cumulative effect on the opening deficit, as of June 1, 1999, of
adopting the recommendations.

                                      F-14
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



4.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

Under the new recommendations, the liability method of tax allocation is used in
accounting for income taxes. Under this method, future tax assets and
liabilities are determined based on differences between the financial reporting
and tax bases of assets and liabilities, and measured using the substantially
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.

STOCK BASED COMPENSATION

The Company has granted stock options which are described in note 18. The
Company accounts for employee stock-based compensation arrangements using the
intrinsic value method, whereby compensation expense is calculated based on the
difference, on the date of grant, between the fair market value of the Company's
stock and the exercise price and is recorded over the vesting period of the
options. Any consideration paid by the option holders on the exercise of stock
options is credited to common stock. The Company accounts for stock-based
compensation arrangements to non-employees using the Black Scholes fair value
method.

EMPLOYEE STOCK BONUS PLAN

Equity instruments contributed to the Employee Stock Bonus Plan ("Plan") by the
Company are recorded at their estimated fair value at the date of their
contribution and are recorded as a credit in shareholders' equity. A contra
equity account is recognized until allocations to participants are made and
compensation expense is recognized.

Compensation expense is measured using the intrinsic value method and is
recorded in the period when it is likely that performance criteria will be met
and/or the equity instruments allocated to participants will be released. Common
shares held by the Plan are considered to be issued and outstanding for the
purpose of calculating basic and fully diluted income (loss) per share.

                                      F-15
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



4.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

INCOME (LOSS) PER SHARE

Generally accepted accounting principles applicable to reverse takeovers
requires the income (loss) per share figures to be calculated on the following
basis:

o    the number of shares outstanding from the beginning of the fiscal period to
     the date of the reverse takeover on June 18, 1999 and for the comparative
     periods, are deemed to be the number of shares issued by EC.com to the
     shareholders of SoftCare.

o    the number of shares outstanding from the date of the reverse takeover to
     the end of the fiscal period is deemed to be the actual number of shares of
     EC.com outstanding in the period.

EC.com issued 11,000,000 Special Warrants, each of which was convertible into
one common share. However, no common shares were issued to effect this reverse
takeover. Accordingly, the deemed number of common shares of EC.com outstanding
prior to June 18, 1999 is nil.

<TABLE>
<CAPTION>
                                      YEAR ENDED       FIVE MONTHS     YEAR ENDED       YEAR ENDED
                                        MAY 31,       ENDED MAY 31,   DECEMBER 31,     DECEMBER 31,
                                         2000             1999            1998             1997
----------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>              <C>                <C>
Net income (loss)                    $(3,867,461)    $(1,387,279)     $(1,131,014)       $422,751
Weighted average number of
   common shares outstanding           9,558,745              --               --              --
----------------------------------------------------------------------------------------------------
Basic (loss) per common share              (0.40)             --               --              --
====================================================================================================
</TABLE>

                                      F-16
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



4.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

INCOME (LOSS) PER SHARE (CONT'D.)

Pro forma basic income (loss) per share for each of the periods presented gives
retroactive effect to the exercise of the 11,000,000 Special Warrants received
by the shareholders of SoftCare for all periods presented.

<TABLE>
<CAPTION>
                                      YEAR ENDED       FIVE MONTHS     YEAR ENDED       YEAR ENDED
                                        MAY 31,       ENDED MAY 31,   DECEMBER 31,     DECEMBER 31,
                                         2000             1999            1998             1997
---------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>              <C>              <C>
Net income (loss)                    $(3,867,461)    $(1,387,279)     $(1,131,014)       $422,751
Weighted average number of
   common shares outstanding          13,838,197      11,000,000       11,000,000      11,000,000
Pro forma basic income (loss)
   per common share                        (0.28)          (0.13)           (0.10)           0.04
===================================================================================================
</TABLE>

Diluted income (loss) per share reflects the potential dilution of securities
that could result from the exercise of dilutive options and warrants. Fully
diluted loss per share is not presented since the issue of shares upon the
exercise of stock options and warrants would be anti-dilutive.

                                      F-17
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



4.  SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, cash held in escrow, accounts
receivable, investment tax credits receivable, bank indebtedness, accounts
payable and accrued liabilities and advance from proposed acquiror approximate
their fair values due to the relatively short periods to maturity of the
instruments. The fair value of short-term investments has been determined based
on quoted market sources. The carrying value of long-term debt approximates fair
value due to variable market interest rates being charged on outstanding
balances. The carrying value of capital lease obligations approximates fair
value as the effective interest rate on this instrument approximates current
market rates. The carrying value of subsidiary redeemable Class A preference
shares approximates fair value based on discounted cash flows.

USE OF ESTIMATES

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

COMPARATIVE FIGURES

Certain comparative figures have been reclassified from statements previously
presented to conform to the presentation adopted in the current year.


5.  CASH HELD IN ESCROW

Cash held in escrow includes funds held in trust by the Company's transfer agent
pending receipt of regulatory approval of either the Company's prospectus with
respect to the issuance of 1,495,000 Special Warrants or the approval of the
Annual Information Form ("AIF") [note 17]. The Company filed its AIF in June
2000 and received regulatory approval on August 4, 2000. The cash held in escrow
has been recorded at cost which approximates market value and earns interest at
approximately 5% per annum.

                                      F-18
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



6.  CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash and cash equivalents which are held
with one financial institution, cash held in escrow which is held with one
financial institution, short-term investments which are held with one financial
institution, and accounts receivable.

The Company operates internationally, which gives rise to the risk that cash
flows may be adversely impacted by
exchange rate fluctuations. The Company's operations are in the field of
supplying electronic commerce computer software licenses and support services to
domestic and international markets. Many of its customers are outside of Canada
and therefore a significant percentage of its revenues are derived from, and are
paid in, U.S. dollars [note 22]. The Company has not entered into contracts for
foreign exchange hedges.

The Company performs ongoing credit evaluations of its customers and maintains
allowances for potential credit losses which, when realized, have been within
the range of management's expectations. To reduce credit risk, management
performs ongoing credit evaluations of its customers' financial condition. The
Company maintains reserves for potential credit losses.

At May 31, 2000, five customers represented 96% of the accounts receivable
balance. Two customers represented approximately 51% of the accounts receivable
balance at May 31, 1999. Sales to two [five months ended May 31, 1999 - one;
year ended December 31, 1998 - one; year ended December 31, 1997 - one] major
customers comprised 29% of revenue for the year ended May 31, 2000 [Five months
ended May 31, 1999 - 21%; year ended December 31, 1998 - 17%; year ended
December 31, 1997 - 70%].


7.  SHORT-TERM INVESTMENTS

Short-term investments, which consist of Government of Canada Treasury Bills,
have a market value of $3,019,614 at May 31, 2000, as determined by quoted
market sources, earn interest at a rate of 5.55% per annum and mature in
September 2000. The Company did not hold any short-term investments at May 31,
1999.

                                      F-19
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



8.  INVESTMENT TAX CREDITS RECEIVABLE

The Company has investment tax credits receivable at May 31, as follows:

                                                2000            1999
                                                 $               $
-----------------------------------------------------------------------

1997                                             --             88,699
1998                                             --             85,908
-----------------------------------------------------------------------
                                                 --            174,607
Less:  Valuation allowance                       --           (124,376)
-----------------------------------------------------------------------
Investment tax credits receivable                --             50,231
=======================================================================

Any final adjustments between the amounts recorded and the amounts ultimately
realized will be recorded in the year they occur. During the five months ended
May 31, 1999, the Company provided a valuation allowance of $124,376 against
investment tax credits receivable of $174,607, resulting in an investment tax
credit receivable of $50,231. During the year ended May 31, 2000, the Company
received $174,607 following the assessment of the Company's claim by the
governing agency. Accordingly, $124,376 of the $174,607 has been recorded as a
reduction of related wages costs during the year ended May 31, 2000. The
remaining $50,231 of the $174,607 was recorded as a reduction of related wage
costs in prior periods. At May 31, 2000, the Company is not eligible to receive
an investment tax credit refund, as it is no longer a private company.


9.  WORK IN PROGRESS

Included in work in progress are direct labour costs incurred by the Company in
connection with an agreement the Company entered into with a customer to provide
software and services for a period of three years for approximately $1,600,000.
Revenue and related work in progress will be recognized in the accompanying
statement of operations once the revenue recognition criteria for the agreement
have been met.

                                      F-20
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



10.  CAPITAL ASSETS
                                                   ACCUMULATED        NET BOOK
                                     COST         DEPRECIATION          VALUE
                                       $                $                 $
-------------------------------------------------------------------------------

2000
Computer and testing equipment     311,425           217,129           94,296
Computer software                  125,758            89,961           35,797
Office equipment                    71,222            12,799           58,423
Office furniture                    46,861            19,234           27,627
Display booths                      21,755            17,054            4,701
Leasehold improvements              13,122             4,019            9,103
-------------------------------------------------------------------------------
                                   590,143           360,196          229,947
===============================================================================

1999
Computer and testing equipment     235,349           156,920           78,429
Computer software                   54,164            49,129            5,035
Office equipment                    20,418            10,071           10,347
Office furniture                    36,560            14,588           21,972
Display booths                      21,755            15,040            6,715
Leasehold improvements               9,122             2,128            6,994
-------------------------------------------------------------------------------
                                   377,368           247,876          129,492
===============================================================================

Capital assets include assets acquired under capital lease having a gross book
value of $181,607 [1999 - $132,155] and accumulated depreciation of $125,737 at
May 31, 2000 [1999 - $76,291].

                                      F-21
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



11.  BANK INDEBTEDNESS

As part of the FMG acquisition [note 3], the Company acquired a bank loan with a
U.S. financial institution of which $13,241 was outstanding at May 31, 2000
[1999 - $nil]. Amounts outstanding on the bank loan are payable in equal monthly
installments of approximately $500 through November 2003 and bear interest at 7%
per annum.

The Company also has a revolving line of credit with a Canadian chartered bank
for a maximum of $150,000 based on the required margin calculations as noted in
the loan agreement. At May 31, 2000, the Company had no amounts outstanding
[1999 - $155,000] under the line of credit. Amounts outstanding on the line of
credit are payable on demand and bear interest at the bank's prime lending rate
plus 1.5%. The bank's prime lending rate at May 31, 2000 was 9.5%. At May 31,
2000, the Company had not pledged any of its assets as collateral for the line
of credit, however the bank has the right to request security at any time.


12.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The Company has accounts payable and accrued liabilities that consist of the
following at May 31:

                                                      2000              1999
                                                       $                 $
------------------------------------------------------------------------------

Accounts payable                                    228,340           247,270
Accrued professional fees                            40,000                --
Accrued vacation                                     68,654            35,958
------------------------------------------------------------------------------
                                                    336,994           283,228
==============================================================================


13.  ADVANCE FROM PROPOSED ACQUIROR

Pursuant to the reverse takeover [note 2], EC.com agreed to provide a bridge
loan to SoftCare amounting to $500,000, of which $250,000 was advanced at May
31, 1999. The loan was secured by a convertible promissory note bearing interest
at the Royal Bank of Canada prime lending rate plus 2% per annum and was to be
repaid on or before July 10, 1999. On completion of the reverse takeover, the
Company transferred this loan to its intercompany payable account, which was
eliminated in consolidation at May 31, 2000.

                                      F-22
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



14.  LONG-TERM DEBT

The Company has long-term debt outstanding at May 31, as follows:

                                                               2000       1999
                                                                $          $
--------------------------------------------------------------------------------

Bank loan agreement with Business Development Bank of
Canada, bearing interest at bank prime rate plus 4% and
repayable in equal monthly principal installments of $3,350
through April 2001.  The Company also pays interest on this
loan at a rate of 0.0821% of the Company's gross sales per
month through April 2001, based on annual sales goals that
are defined in the loan agreement.  The bank prime rate was
9.5% at May 31, 2000.                                          36,850    77,050

Less: current portion                                         (36,850)  (40,200)
--------------------------------------------------------------------------------
                                                                   --    36,850
================================================================================

The loan is collateralized by a general security agreement providing a first
security interest in substantially all of the Company's assets, personal
guarantees from several of the Company's executives and the assignment of a life
insurance policy on the Company's president. The loan agreement contains certain
covenants that impose limitations restricting the Company's dividend paying
ability and changes in ownership.

                                      F-23
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



15.  OBLIGATIONS UNDER CAPITAL LEASES

The Company leases certain of its computer and office equipment under capital
leases. The future minimum lease payments required under capital leases expiring
May 2004 are as follows:

                                                                         $
-----------------------------------------------------------------------------

2001                                                                  35,502
2002                                                                  24,718
2003                                                                   5,298
2004                                                                   5,129
-----------------------------------------------------------------------------
                                                                      70,647
Less amount representing interest (approximately 13% per annum)       (8,177)
-----------------------------------------------------------------------------
Present value of future minimum lease payments                        62,470
Less: current portion                                                (30,397)
-----------------------------------------------------------------------------
Long term obligations under capital leases                            32,073
=============================================================================


16.  SUBSIDIARY REDEEMABLE CLASS A PREFERENCE SHARES

225,000 Subsidiary redeemable Class A preference non-voting shares, par value
$1.00 per share.

The Company's subsidiary, SoftCare, has outstanding redeemable Class A
preference shares as follows:
                                              SUBSIDIARY
                                          REDEEMABLE CLASS A
                                           PREFERENCE SHARES       AMOUNT
                                                   #                  $
--------------------------------------------------------------------------

BALANCE, DECEMBER 31, 1998                     145,000            145,000
Redemption of shares for cash                  (12,500)           (12,500)
--------------------------------------------------------------------------
BALANCE, MAY 31, 1999                          132,500            132,500
Redemption of shares for cash                  (30,000)           (30,000)
--------------------------------------------------------------------------
BALANCE, MAY 31, 2000                          102,500            102,500
Less: current portion                          (30,000)           (30,000)
--------------------------------------------------------------------------
Subsidiary redeemable Class A
  preference shares                             72,500             72,500
==========================================================================

                                      F-24
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



16.   SUBSIDIARY REDEEMABLE CLASS A PREFERENCE SHARES (CONT'D.)

Under an agreement between SoftCare and one of its shareholders, SoftCare agreed
to issue 225,000 Redeemable Class A preference shares to the shareholder in
exchange for 665 common shares in SoftCare. The subsidiary redeemable Class A
preference shares are mandatorily redeemable based upon the Company's gross
quarterly sales at a redemption price of $1 per share. The Company has the
option of accelerating the redemption of these shares at a redemption price of
$1 per share. In the event the Company is unable to redeem the shares for cash,
the Company is required to settle this obligation with common shares of its
subsidiary SoftCare. Common shares of the subsidiary are to be issued at a ratio
equal to the proportion of the capital of SoftCare that such preference shares
represented when they were created.

The holder of the subsidiary redeemable Class A preference shares receives a
cumulative dividend calculated at the bank prime rate. The bank prime rate at
May 31, 2000 was 9.5%. The cumulative dividends have been recorded as interest
expense in the consolidated statements of operations.


17.  SPECIAL WARRANTS

The following table summarizes the Special Warrant transactions for the
following periods:

                                                        SPECIAL
                                                        WARRANTS       AMOUNT
                                                            #             $
--------------------------------------------------------------------------------

SPECIAL WARRANTS OUTSTANDING, MAY 31, 1999             9,999,994      3,321,604
Deemed Special Warrants issued for services
   pursuant to exercise of options [NOTE 18]           1,000,006      1,280,000
--------------------------------------------------------------------------------
SPECIAL WARRANTS OUTSTANDING, JUNE 17, 1999           11,000,000      4,601,604
Special Warrants issued for services rendered [b]         51,666             --
Special Warrants issued in private placement,
   net of costs [c]                                    2,000,000      2,720,000
Special Warrants exercised for common
   shares, net of costs                              (13,051,666)    (7,321,604)
Special Warrants issued in private placement,
   net of costs [d]                                    1,495,000      5,087,468
--------------------------------------------------------------------------------
SPECIAL WARRANTS OUTSTANDING, MAY 31, 2000             1,495,000      5,087,468
================================================================================

                                      F-25
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



17.  SPECIAL WARRANTS (CONT'D.)

[a]   EC.com issued 11,000,000 Special Warrants in exchange for all of the
      issued and outstanding common shares of SoftCare pursuant to a reverse
      takeover agreement effective June 18, 1999 [note 2]. Each of the Special
      Warrants is exercisable for one common share of the Company without any
      additional consideration. In these financial statements, the Special
      Warrants issued to the shareholders of SoftCare, the accounting acquiror,
      have been presented as if they were outstanding prior to the reverse
      takeover on the basis such deemed Special Warrants were exchanged for
      common shares.

      Of the 11,000,000 Special Warrants issued, 10,000,000 were issued to the
      existing shareholders of SoftCare. These 10,000,000 Special Warrants were
      exercised into common shares and are subject to a voluntary pooling
      agreement which restricts the holders from trading the common shares on
      any stock exchange until such time as they are released from the pool.
      Pursuant to the terms of the voluntary pooling agreement, 8,350,386 of the
      common shares will be released on the following basis: 10% were released
      six months after completion of the acquisition on June 18, 1999; 30% will
      be released twelve months after completion of the acquisition; 30% will be
      released 24 months after completion of the acquisition; and 30% will be
      released 36 months after completion of the acquisition. In addition,
      1,649,614 common shares will be released on the following basis: 25% were
      released six months after completion of the acquisition on June 18, 1999;
      25% will be released twelve months after completion of the acquisition;
      25% will be released 18 months after completion of the acquisition; and
      25% will be released 24 months after completion of the acquisition.

      The remaining 1,000,000 Special Warrants which were issued to the
      SoftCare Employee Stock Bonus Plan Trust ("SESB Trust") to provide
      employee bonus shares were exercised into 1,000,000 common shares. Two
      of the Directors of the Company are also the Trustees of the SESB Trust
      and may only release such shares from the Trust to employees in
      accordance with regulatory approval and the achievement of certain
      performance criteria [note 18].

[b]   The Company issued 51,666 Special Warrants as a finder's fee and corporate
      advisory fee upon completion of the reverse takeover. Each Special Warrant
      is exercisable for one common share of the Company without any additional
      consideration.

[c]   On June 18, 1999, pursuant to an offering memorandum, the Company issued
      2,000,000 Special Warrants for gross cash proceeds of $3,000,000 pursuant
      to a broker-assisted private placement. Costs incurred to effect the
      private placement include a commission and other cash costs totaling
      $280,000.

                                      F-26
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



17.  SPECIAL WARRANTS (CONT'D.)

      Each Special Warrant is exercisable, without any additional consideration,
      into one common share and one Share Purchase Warrant ("Underlying
      Warrant"), which is transferable upon regulatory approval. Each Underlying
      Warrant entitles the holder to purchase one common share at a price of
      $2.50 and is exercisable until June 18, 2000, at which time the Underlying
      Warrant will expire. Notwithstanding the foregoing, if at any time before
      the expiry date, the common shares of the Company trade on any securities
      exchange over a period of ten consecutive trading days at a weighted
      average price of not less than $3.00 per common share, then at the option
      of the Company, any Underlying Warrants not exercised within 30 days of
      written notice to the holder by the Company will expire.

      Pursuant to this Special Warrant private placement, the Company issued
      196,300 Agent's Special Warrants. Each Agent's Special Warrant is
      exercisable, without any additional consideration, for one Agent's Warrant
      for a period of one year from June 18, 1999. Each Agent's Warrant is
      exercisable for one common share of the Company at $1.50 for a period of
      one year from the closing date of the financing.

      One half of the Agent's Warrants and/or common shares are subject to
      resale restrictions which expire three months from the date the shares are
      released from hold periods.

      The net proceeds of the above-noted offering were $2,720,000.

[d]   On March 29, 2000, the Company issued 1,495,000 Special Warrants for gross
      cash proceeds of $5,606,250 pursuant to a broker-assisted private
      placement. Costs incurred to effect the private placement include
      commissions and other cash costs totaling $518,782.

      Each Special Warrant is exercisable, without any additional consideration,
      into one common share and one half of one Share Purchase Warrant. Each
      Share Purchase Warrant entitles the holder to purchase one common share at
      an exercise price of $4.25 and is exercisable one year from the closing
      date of the financing on March 30, 2000, at which time the Share Purchase
      Warrant will expire. Each common share issued is subject to a hold period
      and may not be traded until July 30, 2000.

      Pursuant to this Special Warrant private placement, the Company issued
      174,500 Agent's Special Warrants. Each Agent's Special Warrant is
      exercisable for one common share at an exercise price of $3.75 and is
      exercisable one year from the closing date of the financing on March 30,
      2000, at which time the Agent's Special Warrants will expire.

      The net proceeds of the above-noted offering were $5,087,468.

                                      F-27
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



17.  SPECIAL WARRANTS (CONT'D.)

[e]   As at May 31, 2000, exercise of the Company's Special Warrants, Share
      Purchase Warrants, Agent's Special Warrants and Agent's Warrants would
      result in the issuance of the following common shares:

            COMMON                                             EXERCISE
        SHARES ISSUABLE                                          PRICE
               #                  EXPIRY DATE                      $
      -----------------------------------------------------------------

          1,203,000              June 18, 2000                   2.50
            113,600              June 18, 2000                   1.50
          1,495,000              March 30, 2001                   nil
            747,500              March 30, 2001                  4.25
            174,500              March 30, 2001                  3.75
      -----------------------------------------------------------------
          3,733,600
      -----------------------------------------------------------------


18.  COMMON STOCK

[a]  AUTHORIZED

100,000,000 [1999 - 100,000,000] Common voting shares without par value.

On September 21, 1998, the authorized share capital of the Company was
consolidated on a basis of six shares of the Company for one new share of the
Company, resulting in the authorized share capital of the Company being reduced
to 16,666,667 common shares without par value after the consolidation. The
authorized share capital of the Company was subsequently increased from
16,666,667 common shares to 100,000,000 common shares without par value.

                                      F-28
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



18.  COMMON STOCK (CONT'D.)

[b]  ISSUED AND OUTSTANDING COMMON STOCK

<TABLE>
<CAPTION>
                                                                    COMMON SHARES         AMOUNT
                                                                          #                  $
--------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>
BALANCE, MAY 31, 1999                                                       --                 --
Issued share capital of EC.com                                       1,391,428            960,316
Common stock issued pursuant to exercise of stock options               33,334             54,200
Shares issued on exercise of Special Warrants [NOTE 17]             13,051,666          7,321,604
Shares issued on exercise of Agents' Warrants [NOTE 17]                 82,700            124,050
Shares issued on exercise of Share Purchase Warrants [NOTE 17]         797,000          1,992,500
--------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2000                                               15,356,128         10,452,670
==================================================================================================
</TABLE>

Prior to and in anticipation of the reverse takeover [note 2], options to
acquire 1,000,006 common shares of SoftCare, with a fair value of $1,280,000,
were granted to employees. The options were only exercisable concurrent with the
completion of any reverse takeover, sale or other disposition of the shares of
the Company that occurred on or before September 30, 1999, their expiry date.
The options were granted to employees in lieu of salaries and were given in
exchange for general financing services to be performed over a five month period
ended September 15, 1999. These options were exercised on June 18, 1999 for
nominal cash proceeds of $247. Accordingly, $861,533 of the excess value of
common shares over cash received has been recorded as compensation expense in
the consolidated financial statements in the year ended May 31, 2000 and
$418,220 was recorded as compensation expense in the consolidated financial
statements in the five months ended May 31, 1999.

During the year ended May 31, 2000, 23,334 stock options held by a former
Director and a former officer were exercised into 23,334 common shares at an
exercise price of $1.68 per option, and 10,000 stock options held by a
consultant were exercised into 10,000 common shares at an exercise price of
$1.50 per option.

                                      F-29
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



18.  COMMON STOCK (CONT'D.)

[c]  STOCK OPTIONS

The following table summarizes stock option transactions:

<TABLE>
<CAPTION>
                                                                               WEIGHTED
                                                                                AVERAGE
                                                                               EXERCISE
                                                          STOCK OPTIONS          PRICE
                                                                #                  $
----------------------------------------------------------------------------------------

<S>                                                       <C>                     <C>
BALANCE, MAY 31, 1999                                      1,000,006                 --
Options exercised for deemed Special Warrants             (1,000,006)                --
Options granted to directors                                 800,000               1.50
----------------------------------------------------------------------------------------
BALANCE, JUNE 17, 1999                                       800,000               1.50
Issued options of EC.com                                      23,334               1.68
Options granted to directors, employees
   and consultants                                           550,000               1.94
Options exercised for common shares on June 18, 1999
   pursuant to reverse takeover                             (250,000)             (1.50)
Options exercised for common shares                          (33,334)             (1.63)
Options cancelled                                           (100,000)             (1.50)
----------------------------------------------------------------------------------------
BALANCE, MAY 31, 2000                                        990,000               1.74
========================================================================================
</TABLE>

On June 18, 1999, 800,000 stock options, exercisable at $1.50, were granted to
Directors of the Company in exchange for 197,557 stock options of SoftCare as
part of the reverse takeover [note 2]. These stock options expire in April 2004.

On June 18, 1999, 250,000 stock options were granted to officers, directors, and
a consultant, at an exercise price of $1.50. These stock options expire in June
2004. These stock options were exercised on June 18, 1999 and were included in
the issued share capital of EC.com on the date of the reverse takeover, June 18,
1999.

On June 18, 1999, 100,000 stock options were granted to an individual pursuant
to a consulting agreement, at an exercise price of $1.50. These options were not
exercised and were canceled concurrent with the termination of the consulting
agreement in 1999.

                                      F-30
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



18.  COMMON STOCK (CONT'D.)

In November 1999, 100,000 stock options were granted to a consultant at an
exercise price of $1.50. These stock options expire on November 2004 or on the
termination of the consulting contract. 10,000 of these options were exercised
on February 15, 2000.

In February 2000, 100,000 stock options were granted to a Director of the
Company, at an exercise price of $3.90. These stock options expire in February
2005.

At May 31, 2000, the Company has the following stock options outstanding:

<TABLE>
<CAPTION>
                                  OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE
                     ------------------------------------------------------------------------------
                                        WEIGHTED
                                        AVERAGE        WEIGHTED                       WEIGHTED
                                       REMAINING        AVERAGE        OPTIONS         AVERAGE
     EXERCISE PRICE    OUTSTANDING    CONTRACTUAL   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
            $               #             LIFE             $              #               $
     ----------------------------------------------------------------------------------------------
          <S>            <C>              <C>            <C>           <C>              <C>
          $1.50          890,000          4.0            1.50          890,000          1.50
          $3.90          100,000          4.8            3.90          100,000          3.90
     ----------------------------------------------------------------------------------------------
                         990,000          4.1            1.74          990,000          1.74
     ==============================================================================================
</TABLE>

In these financial statements, the options issued to shareholders of SoftCare,
the accounting acquirer, have been presented as if they were outstanding prior
to the reverse takeover on the basis such deemed options were exercised for
deemed special warrants or common shares.

[d]  EMPLOYEE STOCK BONUS PLAN

In the five month period ended May 31, 1999, SoftCare established a
non-leveraged Employee Stock Bonus Plan which covers directors, officers,
consultants and employees who have completed six months or more service with the
Company and contributed 999,998 common shares of SoftCare to the Plan. Upon the
reverse takeover, the Plan exchanged its common shares in SoftCare for 1,000,000
common shares of EC.com.

Under the terms of the Plan, common shares held by the Plan will be allocated to
participants when the annual revenue target is met or exceeded. However, the
Company's Board of Directors has the discretion to allocate shares even if the
milestones are not achieved if it is in the best interest of the Company. Common
shares allocated will vest irrevocably for participants in the Plan when sales
targets are achieved or the directors otherwise resolve that they are vested.

                                      F-31
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



18.  COMMON STOCK (CONT'D.)

Upon the termination of an employee, shares that are not vested will be returned
to the treasury of the Company. Any shares placed in escrow shall be subject to
mandatory repurchase by the Company at a price of US$0.01 per share should the
participant terminate. Five years after establishment of the Plan, there shall
be an exchange of unvested shares granted under the Plan and placed and
remaining in escrow for a new class of redeemable non-voting preferred shares.
Each common share will be exchanged for one new preferred share.

No compensation expense has been recognized in the statement of operations for
the year ended May 31, 2000 or the five month period ended May 31, 1999, as no
shares have been released or committed to be released. Compensation expense will
be recorded at fair value once the shares have been committed to be released. At
May 31, 2000, the fair value of the 1,000,000 unallocated common shares based on
quoted market sources was $2,500,000.


19.  COMMITMENTS

The Company leases its premises and certain automobiles under operating leases
expiring through 2003. The approximate future minimum lease commitments under
operating lease agreements for the next three years ending May 31 are as
follows:

                                                                   $
-----------------------------------------------------------------------

2001                                                           174,000
2002                                                           192,000
2003                                                           154,000
-----------------------------------------------------------------------
                                                               520,000
=======================================================================

Rent expense for the year ended May 31, 2000 amounted to approximately $131,000
[five months ended May 31, 1999 - $49,000; year ended December 31, 1998 -
$96,000; year ended December 31, 1997 - $68,000].

                                      F-32
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



20.  INCOME TAXES

At May 31, 2000, for Canadian tax purposes, the Company has approximately
$1,715,000 of undeducted expenditures for tax purposes relating primarily to
share issue costs and approximately $3,298,000 of non-capital losses available
for income tax purposes to reduce taxable income of future years that expire as
follows:
                                                                NON-CAPITAL
                                                                     LOSSES
                                                                       $
---------------------------------------------------------------------------

May 31, 2001                                                        81,000
May 31, 2003                                                       328,000
May 31, 2005                                                       829,000
May 31, 2006                                                       412,000
May 31, 2007                                                     1,648,000
---------------------------------------------------------------------------
                                                                 3,298,000
===========================================================================

The potential income tax benefits relating to these losses and tax balances have
not been recognized in the accounts.

Future income taxes reflect the net tax effects of the temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's future tax assets as of May 31 are as follows:

                                                          2000         1999
                                                            $            $
-----------------------------------------------------------------------------

Non-capital loss carryforwards                        1,472,000      753,000
Share issue costs                                       775,000       17,000
Unused capital cost in excess of net book value         281,000           --
Other                                                    14,000       11,000
-----------------------------------------------------------------------------
Total future assets                                   2,542,000      781,000
Valuation allowance                                  (2,542,000)    (744,000)
-----------------------------------------------------------------------------
Net future assets                                            --       37,000
Future liabilities                                           --      (37,000)
-----------------------------------------------------------------------------
Net future assets                                            --           --
=============================================================================

                                      F-33
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



20.  INCOME TAXES (CONT'D.)

A reconciliation of the Company's effective income tax rate to the federal
statutory rate follows:

                                                                        2000
                                                                          $
-------------------------------------------------------------------------------

Tax at statutory rate                                               (1,731,000)
Foreign tax rate differentials                                          75,000
Expenses not deductible for tax                                        615,000
Unrecognized future tax asset                                          410,000
Amortization of share issue costs for tax and accounting              (159,000)
Unrecognized benefit of loss carryforwards                             735,000
Other                                                                   55,000
-------------------------------------------------------------------------------
                                                                            --
===============================================================================


21.  RELATED PARTY TRANSACTIONS

Directors and officers of the Company provide legal, accounting and advisory
services to the Company. During the year ended May 31, 2000, the Company paid
$463,692 [five months ended May 31, 1999 - $170,597; year ended December 31,
1998 - $33,958; year ended December 31, 1997 - $118,328] for these services
which were charged to general and administrative expenses. At May 31, 2000,
$36,690 [1999 - $154,411] is included in accounts payable and accrued
liabilities. All transactions are in the normal course of operations and are
recorded at exchange amounts established and agreed upon between the related
parties.

                                      F-34
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



22.  SEGMENTED INFORMATION

Substantially all of the Company's operations, assets and employees are located
in Canada. The following table represents sales based on the location of the
customer.

                    YEAR ENDED      FIVE MONTHS      YEAR ENDED      YEAR ENDED
                      MAY 31,      ENDED MAY 31,     DECEMBER 31,    DECEMBER 31
                       2000            1999             1998            1997
                         %               %                %               %
--------------------------------------------------------------------------------

Canada                  34              40                25             11
U.S.                    60              52                74             86
Other                    6               8                 1              3
================================================================================

                                      F-35
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



23.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The Company prepares its consolidated financial statements in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP"), which as
applied in these consolidated financial statements conform in all material
respects to those accounting principles generally accepted in the United States
("U.S. GAAP"), except as follows:

<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>

                                                                                YEAR ENDED
                                            YEAR ENDED    FIVE MONTHS          DECEMBER 31,
                                             MAY 31,     ENDED MAY 31,   -------------------------
                                               2000          1999            1998         1997
--------------------------------------------------------------------------------------------------
                                                $             $               $            $
--------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>           <C>           <C>
Net income (loss) in accordance with
   Canadian GAAP                            (3,867,461)    (1,387,279)   (1,131,014)      422,751
Effects of differences in accounting for:
   Compensation expense [i]                    (91,975)            --            --            --
--------------------------------------------------------------------------------------------------
Net income (loss) in accordance with
   U.S. GAAP                                (3,959,436)    (1,387,279)   (1,131,014)      422,751
Income (loss) per share [ii]                    (0.44)             --            --            --
Weighted average number of common shares
   outstanding under U.S. GAAP               8,947,786             --            --            --
==================================================================================================

Proforma income (loss) per share [ii]            (0.31)         (0.14)        (0.11)         0.04
Proforma weighted average number of
   common shares outstanding under
   U.S. GAAP                                12,838,197     10,000,000    10,000,000    10,000,000
==================================================================================================
</TABLE>

The impact of significant variations to U.S. GAAP on the Consolidated Balance
Sheet items at May 31, 2000 are as follows:

CONSOLIDATED BALANCE SHEETS
                                                      2000                1999
                                                        $                   $
--------------------------------------------------------------------------------

Common stock                                      10,544,645                 --
Deficit                                           (6,883,796)        (2,924,360)
================================================================================

                                      F-36
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



23.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D.)

[i]  COMPENSATION EXPENSE

For U.S. GAAP purposes, the Company has elected under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123") to continue to apply the intrinsic value based method of accounting for
stock-based compensation under APB 25 "Accounting for Stock Issued to
Employees." Under the intrinsic value method, stock compensation is the excess,
if any, of the quoted market value of the stock at the measured date of the
grant over the amount an optionee must pay to acquire the stock.

Under U.S. GAAP, the issue of stock options to non-employees is accounted for
under SFAS 123. The fair value of the stock options granted to non-employees
during the year ended May 31, 2000 was estimated using the Black-Scholes option
pricing model and the following weighted-average assumptions: dividend yield
0.0%, expected volatility 1.25, risk-free interest rate 5.5% and expected
average option life of 3.5 years. The fair value of the options granted to
non-employees was $1.17 per option. Accounting for the non-employee options,
that have vested, on this basis would result in the recognition of additional
compensation expense of $91,975 for the year ended May 31, 2000 [five months
ended May 31, 1999 - $nil; year ended December 31, 1998 - $nil; year ended
December 31, 1997 - $nil].

[ii] INCOME (LOSS) PER SHARE

Under U.S. GAAP, the weighted average number of common shares used in the
calculation of basic and fully diluted income (loss) per share excludes
performance based common shares under the Company's Employee Stock Bonus Plan
[note 18]. The weighted average number of common shares used in the calculation
of diluted income (loss) per share would be calculated by the treasury stock
method whereby it is assumed that proceeds received from the Company from the
exercise of dilutive securities are used to repurchase outstanding shares in the
market. As the effect of options and common share purchase warrants are
anti-dilutive, diluted loss per share does not differ from basic loss per share.

Proforma income (loss) per share gives retroactive effect, for the years
presented, to the exercise of the 11,000,000 Special Warrants and issuance of
common shares related to the reverse takeover [note 2]. The Special Warrants are
considered residual equity securities.

                                      F-37
<PAGE>

SOFTCARE EC.COM INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (Expressed in Canadian dollars)


May 31, 2000 and 1999



23.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D.)

[iii] RECENT PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101), which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements of all public registrants. The provisions of SAB 101 are
effective for transactions beginning in the Company's fiscal year 2001. The
implementation of SAB 101 has been deferred to the fourth quarter of the
Company's fiscal year 2001. The Company has not determined the impact of SAB
101, if any, on the consolidated financial statements.

On March 31, 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation" (FIN No. 44). This statement is effective for certain transactions
from December 15, 1998 and is to be applied commencing July 1, 2000. The Company
believes its existing stock based compensation policies are in compliance with
FIN No. 44 and therefore, the adoption of FIN No. 44 will have no material
impact on the Company's financial condition, results of operations or cash
flows.


24.  SUBSEQUENT EVENTS

On June 13, 2000, 113,600 Agents' Special Warrants were exercised for gross
proceeds of $170,400. On June 18, 2000, 1,203,000 Share Purchase Warrants
expired.

On July 4, 2000, the Board of Directors approved the allocation of 187,030
common shares to employees, under the SESB Trust.

                                      F-38