Traditional business planning generally involves the creation and implementation of an annual budget by the organization's financial department. Typically, an organization collects information once a year from managers regarding their expectations of revenues and costs for the coming year. Senior management then combines this information with overall financial targets to generate a company-wide plan and operating budget. Management then compares this plan or budget to actual results, typically on a monthly basis.

Although this type of business planning process is still widely used, it has a number of limitations. The accuracy of plans is impaired because they are based on management-level financial estimates rather than on detailed input collected from individuals with actual operating information. Since organizations do not typically have an effective way to collect information, the traditional planning process is labor-intensive, difficult to organize and frustrating for those employees contributing to the process. Consequently, these plans are updated infrequently and become obsolete quickly. Furthermore, organizations' traditional reliance on spreadsheet software significantly reduces the flexibility of the business planning process because spreadsheets are designed for a single user rather than for collaboration among a large number of participants.

The Internet has emerged as a worldwide communications medium and has become a catalyst for change for companies of all sizes and in all industries. The efficient, pervasive and interactive nature of the Internet has made it a valuable platform for content exchange and commercial transactions. In the intensely competitive global business environment, companies are increasingly turning to the Internet to streamline their business processes and to enhance productivity and profitability. Businesses are using the Internet to collect and disseminate information both internal and external to the enterprise, requiring flexibility in business systems to leverage this information. As a result, businesses are rapidly adopting software applications to leverage the capabilities of the Internet.

The Company’s applications are standards-based, designed for broad Internet deployment, and are built on the Adaytum Component Engine, or ACE, architecture, which is an open systems environment built in C, C++ and other languages that express the Company’s complex mathematical notations. The Company’s applications run on standard web browsers and Microsoft operating systems and Microsoft servers and support leading relational database management systems, or RDBMS, including Microsoft SQL Server and Oracle. The Company’s multi-tier architecture connects browser and Windows-based applications to application servers and the RDBMS via local area networks, wide area networks, intranets and secure Internet connections. The Company provides a sophisticated messaging and workflow environment that manages the interaction of users and their work across widely distributed organizations, including synchronization and status.

Starting with a standards-based foundation, the Company has designed a component-based environment composed of easily configured and extremely powerful calculation, data management, business rules and workflow components. Each of these elements is integral in creating an enterprise-wide, globally deployed solution that can model an entity's business operations and organization to provide real-time planning.

In addition to licensing its e.Planning software, the Company maintains a professional services organization that provides consulting services, education and training and customer support. The Company offers a variety of consulting services related to the deployment and use of its software, including project management, in-depth application design and implementation. The Company offers extensive education and training programs to its customers.

Sales and marketing expenses increased 130.6% to approximately $10.4 million for the six months ended June 30, 2000 from approximately $4.5 million for the six months ended June 30, 1999.

Research and development expenses increased 46.6% to approximately $3.6 million for the six months ended June 30, 2000 from approximately $2.5 million for the six months ended June 30, 1999.

Amortization of intangible assets increased 225.0% to approximately $286.0 thousand for the six months ended June 30, 2000 from approximately $88.0 thousand for the six months ended June 30, 1999.

Stock-based compensation increased to approximately $773.0 thousand for the six months ended June 30, 2000 from approximately $3.0 thousand for the six months ended June 30, 1999.