8-K/A

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

Amendment Number 1

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): AUGUST 15, 2001

HNC SOFTWARE INC.

(Exact name of Registrant as Specified in its Charter)

DELAWARE
(State or Other Jurisdiction of Incorporation)

0-26146
(Commission File Number) 33-0248788
(I.R.S. Employer Identification Number)

5935 CORNERSTONE COURT WEST, SAN DIEGO, CA 92121
(Address of Principal Executive Offices)

(858) 546-8877
(Registrant’s Telephone Number, Including Area Code)

TABLE OF CONTENTS

	ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
SIGNATURES
INDEX TO EXHIBITS
Exhibit 23.01
Exhibit 99.01
Exhibit 99.02
Exhibit 99.03

ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.

     On August 30, 2001, HNC Software Inc. filed a Form 8-K to report its acquisition of the assets of the Blaze business unit from Brokat Technologies, Inc. In that report, HNC indicated that it would file the information required by this Item 7 of Form 8-K no later than the date required by this item. HNC is filing this Amendment Number 1 to provide this financial information.

(a)	FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
	The following financial statements of the Blaze business unit of Brokat Technologies, Inc. are filed with this report as Exhibit 99.01 and are incorporated into this report by this reference:

(i)	Audited consolidated balance sheets as of March 31, 2000 (predecessor basis) and December 31, 2000 (successor basis).
(ii)	Audited consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the years ended March 31, 1999 and 2000 (predecessor basis), for the period from April 1, 2000 to September 29, 2000 (predecessor basis) and for the period from September 30, 2000 to December 31, 2000 (successor basis).
(iii)	Unaudited consolidated balance sheet as of June 30, 2001 (successor basis).
(iv)	Unaudited consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the six months ended June 30, 2000 (predecessor basis) and 2001 (successor basis).

(b)	PRO FORMA FINANCIAL INFORMATION.
	The following unaudited pro forma financial information is filed with this report as Exhibit 99.02 and is incorporated into this report by this reference.

(i)	Unaudited pro forma condensed consolidated balance sheet of HNC Software Inc. as of June 30, 2001.
(ii)	Unaudited pro forma condensed consolidated statement of operations of HNC Software Inc. for the six months ended June 30, 2001.
(iii)	Unaudited pro forma condensed consolidated statement of operations of HNC Software Inc. for the year ended December 31, 2000.
(iv)	Notes to unaudited pro forma condensed consolidated financial information

(c)	EXHIBITS.
	The following exhibits are filed herewith:

23.01	Consent of PricewaterhouseCoopers LLP
99.01	Historical financial statements of the Blaze business unit of Brokat Technologies, Inc.:

i)	Audited consolidated balance sheets as of March 31, 2000 (predecessor basis) and December 31, 2000 (successor basis).
ii)	Audited consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the years ended March 31, 1999 and 2000 (predecessor basis), for the period from April 1, 2000 to September 29, 2000 (predecessor basis) and for the period from September 30, 2000 to December 31, 2000 (successor basis).
iii)	Unaudited consolidated balance sheet as of June 30, 2001 (successor basis).

2

iv) Unaudited consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the six months ended June 30, 2000 (predecessor basis) and 2001 (successor basis).

99.02 Unaudited pro forma condensed consolidated financial information:

i)	Unaudited pro forma condensed consolidated balance sheet of HNC Software Inc. as of June 30, 2001.
ii)	Unaudited pro forma condensed consolidated statement of operations of HNC Software Inc. for the six months ended June 30, 2001.
iii)	Unaudited pro forma condensed consolidated statement of operations of HNC Software Inc. for the year ended December 31, 2000.
iv)	Notes to unaudited pro forma condensed consolidated financial information

99.03 Bylaws, as amended August 31, 2001

3

SIGNATURES

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

HNC SOFTWARE INC.

Dated: October 29, 2001

By: /s/   Kenneth J. Saunders Kenneth J. Saunders,
Chief Financial Officer and Secretary

By: /s/   Russell C. Clark Russell C. Clark,
Vice President, Corporate Finance and Assistant Secretary

4

INDEX TO EXHIBITS

EXHIBIT NO.	DESCRIPTION
23.01	Consent of PricewaterhouseCoopers LLP
99.01	Historical financial statements of the Blaze business unit of Brokat Technologies, Inc.:
	i)	Audited consolidated balance sheets as of March 31, 2000 (predecessor basis) and December 31, 2000 (successor basis).
	ii)	Audited consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the years ended March 31, 1999 and 2000 (predecessor basis), for the period from April 1, 2000 to September 29, 2000 (predecessor basis) and for the period from September 30, 2000 to December 31, 2000 (successor basis).
	iii)	Unaudited consolidated balance sheet as of June 30, 2001 (successor basis).
	iv)	Unaudited consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the six months ended June 30, 2000 (predecessor basis) and 2001 (successor basis).
99.02	Unaudited pro forma condensed consolidated financial information:
	i)	Unaudited pro forma condensed consolidated balance sheet of HNC Software Inc. as of June 30, 2001.
	ii)	Unaudited pro forma condensed consolidated statement of operations of HNC Software Inc. for the six months ended June 30, 2001.
	iii)	Unaudited pro forma condensed consolidated statement of operations of HNC Software Inc. for the year ended December 31, 2000.
	iv)	Notes to unaudited pro forma condensed consolidated financial information
99.03	Bylaws, as amended August 31, 2001

5 EX-23.01 3 a76577a1ex23-01.txt EXHIBIT 23.01 EXHIBIT 23.01 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-92902, No. 333-14323, No. 333-18871, No. 333-42819, No. 333-46875, No. 333-50623, No. 333-62195, No. 333-71923, No. 333-80965, No. 333-87953, No. 333-89165, No. 333-33952, No. 333-40344, No. 333-41388, No. 333-45442, No. 333-55398 and No. 333-62492) of HNC Software Inc. of our report dated October 26, 2001 relating to the financial statements of Blaze Software, Inc., which appears in the Current Report on Form 8-K/A of HNC Software Inc. dated October 29, 2001. PricewaterhouseCoopers LLP San Jose, California October 29, 2001 EX-99.01 4 a76577a1ex99-01.txt EXHIBIT 99.01 EXHIBIT 99.01 BLAZE SOFTWARE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page ---- Report of Independent Accountants......................................... 2 Consolidated Balance Sheets............................................... 3 Consolidated Statements of Operations..................................... 4 Consolidated Statements of Net Parent Investment /Stockholders' Equity (Deficit)......................................... 5 Consolidated Statements of Cash Flows..................................... 7 Notes to Consolidated Financial Statements................................ 8

1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders/Owners of Blaze Software, Inc. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of net parent investment/stockholders' equity (deficit) and of cash flows present fairly, in all material respects, the financial position of Blaze Software, Inc. and its subsidiaries at March 31, 2000 and December 31, 2000, and the results of their operations and their cash flows for the years ended March 31, 1999 and March 31, 2000 and for the periods from April 1, 2000 to September 29, 2000 and September 30, 2000 to December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 1 to the consolidated financial statements, on September 29, 2000, Brokat AG acquired the outstanding common stock of Blaze Software, Inc. The consolidated financial statements for the period subsequent to September 29, 2000 have been prepared on the basis of accounting arising from the acquisition (successor period). The financial statements for the period from April 1, 2000 to September 29, 2000 are presented on Blaze Software, Inc.'s previous basis of accounting (predecessor period). PricewaterhouseCoopers LLP San Jose, California October 26, 2001 2 BLAZE SOFTWARE, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

PREDECESSOR SUCCESSOR ----------- -------------------------- MARCH 31, DECEMBER 31, JUNE 30, 2000 2000 2001 ----------- ------------ --------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 57,295 $ 23,722 $ -- Short-term investments 11,998 -- -- Accounts receivable, net of allowance for doubtful accounts of $512, $520 and $247 at March 31, 2000, December 31, 2000 and June 30, 2001, respectively 4,939 6,995 3,750 Prepaid expenses and other current assets 1,108 2,105 961 --------- --------- --------- Total current assets 75,340 32,822 4,711 Property and equipment, net 1,933 4,114 1,996 Goodwill and other intangible assets, net -- 441,755 -- Restricted cash 702 741 763 Deposits and other assets 384 406 421 --------- --------- --------- Total assets $ 78,359 $ 479,838 $ 7,891 ========= ========= ========= LIABILITIES AND NET PARENT INVESTMENT/ STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 1,972 $ 796 $ 2,058 Accrued expenses and other current liabilities 7,446 9,245 5,782 Current portion of capital lease obligations 176 186 217 Deferred revenue 2,728 2,549 2,766 --------- --------- --------- Total current liabilities 12,322 12,776 10,823 Long-term liabilities: Capital lease obligations, net of current portion 256 116 28 Other long-term liabilities 12 78 -- --------- --------- --------- Total liabilities 12,590 12,970 10,851 --------- --------- --------- Commitments and contingencies (Note 12) Net parent investment/stockholders' equity (deficit): Common Stock, $0.0001 par value Authorized: 200,000 shares at March 31, 2000 Issued and outstanding: 22,020 at March 31, 2000 2 -- -- Additional paid-in capital 144,642 -- -- Accumulated other comprehensive income (loss) 489 189 (508) Unearned stock-based compensation (21,207) -- -- Net parent investment/accumulated deficit (58,157) 466,679 (2,452) --------- --------- --------- Total net parent investment/stockholders' equity (deficit) 65,769 466,868 (2,960) --------- --------- --------- Total liabilities and net parent investment/stockholders' equity (deficit) $ 78,359 $ 479,838 $ 7,891 ========= ========= =========

The accompanying notes are an integral part of these consolidated financial statements. 3 BLAZE SOFTWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)

PREDECESSOR SUCCESSOR ----------------------------------------------- ------------------------- FOR THE FOR THE FOR THE FOR THE PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM FOR THE YEAR ENDED APRIL 1, JANUARY 1, SEPTEMBER 30, JANUARY 1, MARCH 31, 2000 TO 2000 TO 2000 TO 2001 TO --------------------- SEPTEMBER 29, JUNE 30, DECEMBER 31, JUNE 30, 1999 2000 2000 2000 2000 2001 --------- --------- ------------ ---------- ----------- ------------ (UNAUDITED) (UNAUDITED) Net revenues: Product licenses $ 3,722 $ 8,486 $ 5,514 $ 6,435 $ 6,206 $ 5,853 Service and maintenance 5,332 9,710 8,424 7,246 5,322 9,244 --------- --------- --------- --------- --------- --------- Total revenues 9,054 18,196 13,938 13,681 11,528 15,097 --------- --------- --------- --------- --------- --------- Cost of revenues: Product licenses 40 67 28 22 5 22 Services and maintenance 2,892 6,808 7,921 6,680 5,741 6,895 --------- --------- --------- --------- --------- --------- Total cost of revenues 2,932 6,875 7,949 6,702 5,746 6,917 --------- --------- --------- --------- --------- --------- Gross profit 6,122 11,321 5,989 6,979 5,782 8,180 Operating expenses: Research and development 3,843 8,730 6,161 5,619 3,968 6,219 Sales and marketing 5,586 16,526 18,783 14,974 8,610 13,948 General and administrative 2,205 12,234 11,236 5,638 3,585 5,816 Restructuring expense -- -- -- -- -- 1,393 Intangible amortization and impairment expense -- -- -- -- 25,429 443,754 --------- --------- --------- --------- --------- --------- Total operating expenses 11,634 37,490 36,180 26,231 41,592 471,130 --------- --------- --------- --------- --------- --------- Operating loss (5,512) (26,169) (30,191) (19,252) (35,810) (462,950) Interest expense (300) (377) (62) (96) (35) (1) Other income (expense), net 51 275 1,952 1,233 433 (27) --------- --------- --------- --------- --------- --------- Net loss from continuing operations before income taxes (5,761) (26,271) (28,301) (18,115) (35,412) (462,978) Provision for income taxes (87) (153) (14) (51) (7) -- --------- --------- --------- --------- --------- --------- Net loss from continuing operations (5,848) (26,424) (28,315) (18,166) (35,419) (462,978) Discontinued operations (Note 3): Income from operations of discontinued user interface business (net of income taxes) 248 2,657 76 769 -- -- Gain (loss) on disposal of user interface business (net of income taxes) -- -- (197) -- -- -- --------- --------- --------- --------- --------- --------- Net loss (5,600) (23,767) (28,436) (17,397) (35,419) (462,978) Accretion of mandatorily redeemable preferred stock to redemption value (1,258) (442) -- -- -- -- Beneficial conversion feature -- (11,739) -- -- -- -- --------- --------- --------- --------- --------- --------- Net loss attributable to common stockholders (6,858) (35,948) (28,436) (17,397) (35,419) (462,978) Other comprehensive income (loss): Unrealized loss on investments -- (20) -- (20) -- -- Translation adjustments 180 219 742 (185) 583 (697) --------- --------- --------- --------- --------- --------- Comprehensive loss $ (6,678) $ (35,749) $ (27,694) $ (17,602) $ (34,836) $(463,675) ========= ========= ========= ========= ========= ========= Basic and diluted net loss per common share attributable to common stockholders: Loss from continuing operations $ (19.15) $ (6.68) Earnings/(loss) from discontinued operations 0.66 0.46 --------- --------- Basic and diluted net loss per common share attributable to common stockholders $ (18.49) $ (6.22) ========= ========= Number of shares used in the calculation of basic and diluted net loss per share 371 5,781 ========= =========

The accompanying notes are an integral part of these consolidated financial statements. 4 BLAZE SOFTWARE, INC. CONSOLIDATED STATEMENTS OF NET PARENT INVESTMENT/STOCKHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS)

MANDATORILY REDEEMABLE SERIES B CONVERTIBLE CONVERTIBLE CONVERTIBLE PREFERRED AND PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL ------------------ ---------------- ----------------- PAID-IN SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL ------ ------ ------ ------ ------ ------ ---------- PREDECESSOR Balance at April 1, 1998 3,179 $ 19,624 2,272 $ -- 403 $ -- $ (552) Issuance of Common Stock pursuant to exercise of options -- -- -- -- 98 -- 56 Issuance of Common Stock -- -- -- -- 1 -- -- Repurchase of Common Stock -- -- 1 -- (158) -- (88) Accretion of Mandatorily Redeemable Convertible Preferred Stock to redemption value -- 1,258 -- -- -- -- (1,258) Net loss -- -- -- -- -- -- -- Cumulative translation adjustment -- -- -- -- -- -- -- ----- --------- ----- ---- ------ ------- --------- Balance at March 31, 1999 3,179 20,882 2,273 -- 344 -- (1,842) Issuance of Common Stock pursuant to exercise of options -- -- -- -- 1,486 -- 755 Issuance of Common Stock pursuant to conversion of warrants -- -- -- -- 362 -- 67 Accretion of Mandatorily Redeemable Preferred Stock to redemption value -- 442 -- -- -- -- (442) Beneficial conversion feature -- -- -- -- -- -- 11,739 Adjustment of Mandatorily Redeemable Preferred Stock Series C per anti-dilution provision 20 -- -- -- -- -- -- Conversion of Mandatorily Redeemable -- -- -- -- -- Preferred Stock to Common Stock (3,199) (21,324) -- -- 3,199 1 21,323 Conversion of Series B Stock to Common Stock -- -- (2,273) -- 2,273 -- -- Issuance of Series AA Preferred Stock, net of issuance costs -- -- -- -- -- -- 4,403 Issuance of Series BB Preferred Stock -- -- -- -- -- -- 13,943 Conversion of Series AA Preferred Stock to Common Stock -- -- -- -- 8,416 1 -- Conversion of Series BB Preferred Stock to Common Stock -- -- -- -- 1,953 -- -- Issuance of Common Stock pursuant initial public offering -- -- -- -- 4,000 -- 57,090 Unearned compensation -- -- -- -- -- -- 37,607 Amortization of unearned compensation -- -- -- -- -- -- -- Repurchase of Common Stock -- -- -- -- (13) -- (1) Net loss -- -- -- -- -- -- -- Unrealized loss on investments -- -- -- -- -- -- -- Cumulative translation adjustment -- -- -- -- -- -- -- ----- --------- ----- ---- ------ ------- --------- Balances at March 31, 2000 -- -- -- -- 22,020 2 144,642 ----- --------- ----- ---- ------ ------- ---------

TOTAL NET PARENT NOTES ACCUMULATED NET PARENT INVESTMENT/ RECEIVABLE OTHER UNEARNED INVESTMENT/ STOCKHOLDERS' FROM COMPREHENSIVE STOCK-BASED ACCUMULATED EQUITY STOCKHOLDERS INCOME (LOSS) COMPENSATION DEFICIT (DEFICIT) ------------ ------------- ------------ ------------ ------------- PREDECESSOR Balance at April 1, 1998 $ (70) $ 110 $ -- $ (17,051) $ (17,563) Issuance of Common Stock pursuant to exercise of options -- -- -- -- 56 Issuance of Common Stock -- -- -- -- -- Repurchase of Common Stock 70 -- -- -- (18) Accretion of Mandatorily Redeemable -- Convertible Preferred Stock to redemption value -- -- -- -- (1,258) Net loss -- -- -- (5,600) (5,600) Cumulative translation adjustment -- 180 -- -- 180 ------- ------- --------- --------- --------- Balance at March 31, 1999 -- 290 -- (22,651) (24,203) Issuance of Common Stock pursuant to exercise of options -- -- -- -- 755 Issuance of Common Stock pursuant to conversion of warrants -- -- -- -- 67 Accretion of Mandatorily Redeemable Preferred Stock to redemption value -- -- -- -- (442) Beneficial conversion feature -- -- -- (11,739) -- Adjustment of Mandatorily Redeemable Preferred Stock Series C per anti-dilution provision -- -- -- -- -- Conversion of Mandatorily Redeemable -- -- -- -- -- Preferred Stock to Common Stock -- -- -- -- 21,324 Conversion of Series B Stock to Common Stock -- -- -- -- -- Issuance of Series AA Preferred Stock, net of issuance costs -- -- -- -- 4,403 Issuance of Series BB Preferred Stock -- -- -- -- 13,943 Conversion of Series AA Preferred Stock to Common Stock -- -- -- -- 1 Conversion of Series BB Preferred Stock to Common Stock -- -- -- -- -- Issuance of Common Stock pursuant initial public offering -- -- -- -- 57,090 Unearned compensation -- -- (37,607) -- -- Amortization of unearned compensation -- -- 16,400 -- 16,400 Repurchase of Common Stock -- -- -- -- (1) Net loss -- -- -- (23,767) (23,767) Unrealized loss on investments -- (20) -- -- (20) Cumulative translation adjustment -- 219 -- -- 219 ------- ------- --------- --------- --------- Balances at March 31, 2000 -- 489 (21,207) (58,157) 65,769 ------- ------- --------- --------- ---------

The accompanying notes are an integral part of these consolidated financial statements. 5 BLAZE SOFTWARE, INC. CONSOLIDATED STATEMENTS OF NET PARENT INVESTMENT/STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED) (IN THOUSANDS)

MANDATORILY REDEEMABLE SERIES B CONVERTIBLE CONVERTIBLE CONVERTIBLE PREFERRED AND PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL ---------------- --------------- ------------------- PAID-IN SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL ------ ------ ------ ------ ------ ------ ---------- Balances at March 31, 2000 -- -- -- -- 22,020 2 144,642 Issuance of common stock pursuant to exercise of options -- -- -- -- 370 -- 313 Issuance of common stock pursuant to Employee Stock Purchase Agreement Plan -- -- -- -- 60 -- 669 Repurchase of common shares -- -- -- -- (20) -- (32) Repurchase of shares related to the Rabbi Trust -- -- -- -- (440) -- (372) Issuance of shares related to over- allotment in connection with the IPO -- -- -- -- 600 -- 8,728 Acceleration of options -- -- -- -- -- -- -- Unrealized gain/loss on investments -- -- -- -- -- -- -- Cumulative translation adjustment -- -- -- -- -- -- -- Amortization of unearned compensation -- -- -- -- -- -- (585) Net loss -- -- -- -- -- -- -- ---- ---- ---- ---- ------ ------- --------- Balance at September 29, 2000 -- $ -- -- $ -- 22,590 $ 2 $ 153,363 ==== ==== ==== ==== ====== ======= ========= SUCCESSOR Balance at September 30, 2000 -- $ -- -- $ -- -- $ -- $ -- Amortization of unearned compensation -- -- -- -- -- -- -- Cumulative translation adjustment -- -- -- -- -- -- -- Parent (distribution)/contribution, net -- -- -- -- -- -- -- Net loss -- -- -- -- -- -- -- ---- ---- ---- ---- ------ ------- --------- Balance at December 31, 2000 -- -- -- -- -- -- -- Amortization of unearned compensation -- -- -- -- -- -- -- Cumulative translation adjustment -- -- -- -- -- -- -- Parent (distribution)/contribution, net -- -- -- -- -- -- -- Net loss (unaudited) -- -- -- -- -- -- -- ---- ---- ---- ---- ------ ------- --------- Balance at June 30, 2001 (unaudited) -- $ -- -- $ -- -- $ -- $ -- ==== ==== ==== ==== ====== ======= =========

TOTAL NET PARENT NOTES ACCUMULATED NET PARENT INVESTMENT/ RECEIVABLE OTHER UNEARNED INVESTMENT/ STOCKHOLDERS' FROM COMPREHENSIVE STOCK-BASED ACCUMULATED EQUITY STOCKHOLDERS INCOME (LOSS) COMPENSATION DEFICIT (DEFICIT) ------------ ------------- ------------ ----------- ------------- Balances at March 31, 2000 -- 489 (21,207) (58,157) 65,769 Issuance of common stock pursuant to exercise of options -- -- -- -- 313 Issuance of common stock pursuant to Employee Stock Purchase Agreement Plan -- -- -- -- 669 Repurchase of common shares -- -- -- -- (32) Repurchase of shares related to the Rabbi Trust -- -- -- -- (372) Issuance of shares related to over- allotment in connection with the IPO -- -- -- -- 8,728 Acceleration of options -- -- 1,763 -- 1,763 Unrealized gain/loss on investments -- 20 -- -- 20 Cumulative translation adjustment -- (115) -- -- (115) Amortization of unearned compensation -- -- 8,684 -- 8,099 Net loss -- -- -- (28,436) (28,436) ---- --------- --------- --------- --------- Balance at September 29, 2000 $ -- $ 394 $ (10,760) $ (86,593) $ 56,406 ==== ========= ========= ========= ========= SUCCESSOR Balance at September 30, 2000 $ -- $ -- $ -- $ 526,223 $ 526,223 Amortization of unearned compensation -- -- -- 5,061 5,061 Cumulative translation adjustment -- 189 -- -- 189 Parent (distribution)/contribution, net -- -- -- (29,186) (29,186) Net loss -- -- -- (35,419) (35,419) ---- --------- --------- --------- --------- Balance at December 31, 2000 -- 189 -- 466,679 466,868 Amortization of unearned compensation -- -- -- 3,677 3,677 Cumulative translation adjustment -- (697) -- -- (697) Parent (distribution)/contribution, net -- -- -- (9,830) (9,830) Net loss (unaudited) -- -- -- (462,978) (462,978) ---- --------- --------- --------- --------- Balance at June 30, 2001 (unaudited) $ -- $ (508) $ -- $ (2,452) $ (2,960) ==== ========= ========= ========= =========

The accompanying notes are an integral part of these consolidated financial statements. 6 BLAZE SOFTWARE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)

PREDECESSOR --------------------------------------------------- FOR THE FOR THE PERIOD FROM PERIOD FROM FOR THE YEAR ENDED APRIL 1, JANUARY 1, MARCH 31, 2000 TO 2000 TO ---------------------- SEPTEMBER 29, JUNE 30, 1999 2000 2000 2000 ---------- -------- ------------- ----------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (5,600) $(23,767) $(28,436) $(17,397) Income from discontinued operations (248) (2,657) 121 (769) -------- -------- -------- -------- Loss from continuing operations (5,848) (26,424) (28,315) (18,166) Adjustments to reconcile net loss to net cash used in operating activities: Bridge loan interest converted to equity 96 -- -- -- Depreciation and amortization 899 597 518 -- Amortization of stock-based compensation -- 16,400 9,862 412 Loss on write-off of equipment 129 71 -- 8,680 Goodwill and other intangible assets -- -- Write-off of in process research & development -- -- -- -- Capital lease for construction-in-progress -- 40 -- -- Changes in assets and liabilities: Accounts receivable (557) (1,779) (830) (1,727) Income taxes refund receivable 27 -- -- -- Prepaid expenses and other (533) (144) (504) (873) Accounts payable 7 492 149 (540) Accrued expenses (757) 4,573 (154) 2,642 Deferred revenue (95) (503) 75 (1,007) Deposits and other assets 260 (156) 26 (101) Other long-term liabilities -- 12 44 34 -------- -------- -------- -------- Net cash used in continuing operations (6,372) (6,821) (19,129) (10,646) Net cash provided by discounted operations 2,061 3,109 412 1,821 -------- -------- -------- -------- Net cash used in operating activities (4,311) (3,712) (18,717) (8,825) -------- -------- -------- -------- FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (779) (1,388) (1,938) (2,850) Purchases of short-term investments -- (12,018) -- (22,876) Proceeds and maturities of short-term investments -- -- 12,018 -- -------- -------- -------- -------- Net cash provided by (used in) investing activities (779) (13,406) 10,080 (25,726) -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from note payable 129 -- -- -- Repayment of note payable -- (129) -- -- Payments of principal under capital lease financing (172) (136) (88) 31 Bank borrowings, net (1,047) (1,631) -- (2,658) Repayment of note payable to stockholder -- -- -- -- Proceeds from issuance of Common Stock 56 57,847 9,710 66,444 Repurchase of Common Stock (18) (1) (32) (27) Repurchase of Common Stock related to Rabbi Trust -- -- (372) -- Proceeds from issuance of Preferred Stock, Series D and Series E warrants (net of issuance costs) -- 67 -- 31 Proceeds from issuance of Preferred Stock, Series AA (net of issuance costs) -- 2,807 -- (53) Proceeds from issuance of Preferred Stock, Series BB -- 13,943 -- -- Proceeds from bridge loan 1,500 -- -- -- Increase in restricted cash -- (702) (27) -- Parent (distributions)/contributions, net -- -- -- (282) -------- -------- -------- -------- Net cash provided by (used in) financing activities 448 72,065 9,191 63,486 -------- -------- -------- -------- Effect of exchange rate changes on cash 180 219 (115) (162) Net increase (decrease) in cash and cash equivalents (4,462) 55,166 439 28,773 Cash and cash equivalents at beginning of period 6,591 2,129 57,295 16,326 -------- -------- -------- -------- Cash and cash equivalents at end of period $ 2,129 $ 57,295 $ 57,734 $ 45,099 ======== ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year: Interest $ 202 $ 313 $ 62 $ 124 ======== ======== ======== ======== Cash paid during the year: Income taxes $ 49 $ 11 $ 14 $ 17 ======== ======== ======== ======== SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Cancellation of stockholder note in exchange for Common Stock $ 70 $ -- $ -- $ -- ======== ======== ======== ======== Assets acquired under capital lease obligations $ -- $ 468 $ -- $ -- ======== ======== ======== ======== Accretion of cumulative dividends on Preferred Stock $ 1,258 $ 442 $ -- $ -- ======== ======== ======== ======== Unearned compensation related to stock option grants $ -- $ 37,607 $ -- $ 4,874 ======== ======== ======== ======== Conversion of bridge loan to Preferred Stock $ -- $ 1,596 $ -- $ -- ======== ======== ======== ======== Conversion of Mandatorily Redeemable Preferred Stock to Common Stock $ -- $ 20,882 $ -- $ -- ======== ======== ======== ======== Beneficial conversion feature $ -- $ 11,739 $ -- $ 11,739 ======== ======== ======== ======== Write-off of property and equipment $ 3,761 $ 776 $ -- $ 304 ======== ======== ======== ======== Parent permanent investment, net $ -- $ -- $ -- $ -- ======== ======== ======== ======== Goodwill from acquisition $ -- $ -- $ -- $ -- ======== ======== ======== ========

SUCCESSOR --------------------------------------- FOR THE FOR THE PERIOD FROM PERIOD FROM SEPTEMBER 30, JANUARY 1, 2000 TO 2001 TO DECEMBER 31, JUNE 30, 2000 2001 ---------------- ----------------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (35,419) $(462,978) Income from discontinued operations -- -- ---------- --------- Loss from continuing operations (35,419) (462,978) Adjustments to reconcile net loss to net cash used in operating activities: Bridge loan interest converted to equity -- -- Depreciation and amortization 337 621 Amortization of stock-based compensation 5,061 3,677 Loss on write-off of equipment -- 27 Goodwill and other intangible assets 23,250 443,755 Write-off of in process research & development 2,179 -- Capital lease for construction-in-progress -- -- Changes in assets and liabilities: Accounts receivable (1,783) 3,245 Income taxes refund receivable -- -- Prepaid expenses and other (493) 1,144 Accounts payable (1,301) 1,262 Accrued expenses 1,953 (3,463) Deferred revenue (254) 217 Deposits and other assets (48) (15) Other long-term liabilities 22 (78) ---------- --------- Net cash used in continuing operations (6,496) (12,586) Net cash provided by discontinued operations -- -- ---------- --------- Net cash used in operating activities (6,496) (12,586) ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1,098) (530) Purchases of short-term investments -- -- Proceeds and maturities of short-term investments -- -- ---------- --------- Net cash provided by (used in) investing activities (1,098) (530) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from note payable -- -- Repayment of note payable -- -- Payments of principal under capital lease financing (42) (57) Bank borrowings, net -- -- Repayment of note payable to stockholder -- -- Proceeds from issuance of Common Stock -- -- Repurchase of Common Stock -- -- Repurchase of Common Stock related to Rabbi Trust Proceeds from issuance of Preferred Stock, Series D and Series E warrants (net of issuance costs) -- -- Proceeds from issuance of Preferred Stock, Series AA (net of issuance costs) -- -- Proceeds from issuance of Preferred Stock, Series BB -- -- Proceeds from bridge loan -- -- Increase in restricted cash (12) (22) Parent (distributions)/contributions, net (26,553) (9,830) ---------- --------- Net cash provided by (used in) financing activities (26,607) (9,909) ---------- --------- Effect of exchange rate changes on cash 189 (697) Net increase (decrease) in cash and cash equivalents (34,012) (23,722) Cash and cash equivalents at beginning of period 57,734 23,722 ---------- --------- Cash and cash equivalents at end of period $ 23,722 $ -- ========== ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year: Interest $ 35 $ 52 ========== ========= Cash paid during the year: Income taxes $ 7 $ 105 ========== ========= SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Cancellation of stockholder note in exchange for Common Stock $ -- $ -- ========== ========= Assets acquired under capital lease obligations $ -- $ -- ========== ========= Accretion of cumulative dividends on Preferred Stock $ -- $ -- ========== ========= Unearned compensation related to stock option grants $ -- $ -- ========== ========= Conversion of bridge loan to Preferred Stock $ -- $ -- ========== ========= Conversion of Mandatorily Redeemable Preferred Stock to Common Stock $ -- $ -- ========== ========= Beneficial conversion feature $ -- $ -- ========== ========= Write-off of property and equipment $ -- $ 27 ========== ========= Parent permanent investment, net $ (523,590) $ -- ========== ========= Goodwill from acquisition $ 467,184 $ -- ========== =========

The accompanying notes are an integral part of these consolidated financial statements. 7 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: THE COMPANY Blaze Software, Inc. (together with its wholly-owned subsidiaries, "Blaze Software" or the "Company), formerly a NASDQ publicly traded company ("Predecessor") (commission file number: 000-29817), was acquired by Brokat AG ("Brokat") on September 29, 2000 and Brokat subsequently sold Blaze Software to HNC Software, Inc. ("HNC"). On August 15, 2001, HNC purchased from Brokat substantially all of the assets and certain liabilities of Brokat's Blaze Advisor business unit for approximately $18.5 million in cash. The accompanying consolidated financial statements reflect Blaze Software as a Brokat owned company ("Successor") from September 30, 2000 through June 30, 2001. The Company's principal activities include the development and licensing of infrastructure software that enables adaptable and personalized interactions that are consistent across all company communication channels, or touch points. This software enables companies to implement their policies, practices and procedures, or business rules, in e-business applications across multiple touch points. Blaze Software also provides related maintenance and consulting services. Blaze Software markets its products to a wide range of customers mainly in North America, Europe and the Pacific Rim primarily through a direct sales force. BASIS OF PRESENTATION Successor The nine months ended December 31, 2000 is presented in two separate periods in these consolidated financial statements due to the acquisition of Blaze Software on September 29, 2000 by Brokat, which established a new basis of accounting for certain assets and liabilities of Blaze Software. The purchase method of accounting was used to record assets acquired and liabilities assumed by Brokat. For the period from September 30, 2000 to December 31, 2000, Blaze Software maintained separate financial statements, with the exception of equity transactions. From the period beginning January 1, 2001, Blaze Software did not maintain separate cost of sales, research and development, sales and marketing, and general and administrative functions. The accompanying consolidated financial statements for the period from January 1, 2001 to June 30, 2001 (unaudited) reflect the carve-out historical results of operations and financial position of Blaze Software as if Blaze Software had been operating as a separate business. For the purposes of preparing the accompanying consolidated financial statements, costs were allocated to Blaze Software using the following allocation method: All costs and expenses directly attributable to Blaze Software are included in the financial statements. No Brokat corporate cost allocations for legal, human resources, other administrative functions and services, rent and utilities were required as the Company operated autonomously of the Brokat parent entity for all periods presented. The Blaze Software financial statements costs and expenses were prepared on a carve-out basis from the other entities within that subsidiary. The statements contain all expenses directly attributable to services, rent, utilities, and interest related to average working capital levels from the Company and Brokat. Brokat's management believes that the allocation methods used are reasonable and reflective of Blaze Software's proportionate share of such expenses. However, the financial information included herein may not reflect the financial position, operating results, changes in equity and cash flows of the Company in the future or what they would have been had Blaze Software been a separate, stand-alone entity from January 1, 2001 to June 30, 2001. No interdivision interest income or expense has been allocated to, or included in, the accompanying unaudited interim consolidated carve-out financial statements. Accordingly, the accompanying consolidated statement of operations for the period from April 1, 2000 to September 29, 2000 and for the period from September 30, 2000 to December 31, 2000 and the period from January 1, 2001 to June 30, 2001 are not comparable in all material respects, since those consolidated financial statements report financial position, results of operation, and cash flows on a different basis of accounting. 8 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Predecessor and carve-out presentation The financial results for the years ended March 31, 1999 and March 31, 2000 and the period from April 1, 2000 to September 29, 2000 reflect Blaze Software as a stand-alone public company. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Blaze Software, Inc. and its wholly owned subsidiaries, Blaze Software GmbH, Blaze Software S.A.R.L., Blaze Software Canada, Blaze Software (UK) Ltd, Blaze Software Japan, Inc., and Blaze Software Australia Pty Ltd (together, "Blaze Software" or the "Company"). All material intercompany balances and transactions have been eliminated. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. INTERIM FINANCIAL STATEMENTS (UNAUDITED) The consolidated financial statements as of June 30, 2001 and for the six months ended June 30, 2000 and 2001 are unaudited but have been prepared in accordance with generally accepted accounting principles for interim financial statements and the rules of the Securities and Exchange Commission and do not include all disclosures required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for a full year. IMPAIRMENT Brokat incurred a net loss during the first six months of 2001 and in prior years. As of June 30, 2001, Brokat had a substantial shareholders' deficit and had limited financial resources available to support its ongoing operations, fund product development programs and pay its obligations as they become due. As a result of the aforementioned factors, Brokat announced and began to implement a restructuring program, aimed at reducing operating costs and improving organizational and operating efficiency. The cost reduction program includes a hiring freeze and lower levels of external spending, as well as a reduction in overall staffing levels. Brokat management currently believes that Brokat's existing capital resources and cash from operations will not be sufficient to satisfy Brokat's expected cash funding and working capital requirements through the end of 2001. Brokat management is evaluating available opportunities to finance the Company's cash needs. 9 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) These or other sources of additional funding may not be available to Brokat on a timely basis, at acceptable terms or at all. Pursuant to SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" the Company evaluated the recoverability of the long-lived assets, including the identifiable intangible assets, goodwill and other long lived assets recorded in connection with all of its various acquisitions. These actions contemplate a plan to consider disposal of certain of the Brokat assets, including Blaze. Those assets are expected to be sold or abandoned, depending on resale market conditions. Due to the uncertainty regarding the ultimate outcome of the actions steps within its restructuring program the accompanying financial statements reflect an impairment loss of approximately $395.3 million. Impairment expense has been classified within the operating statement caption "Intangible Amortization and Impairment Expense." The impairment expense was determined by comparing the carrying amounts of the respective assets to their estimated fair value as of June 30, 2001. The estimated fair values of assets held for sale are based on estimates of the expected sales price less costs to sell. The estimated fair values for assets held for use are based on Brokat's best estimates of discounted future cash flows. Brokat's estimates of expected future cash flows and related fair values are based on the best information that is currently available, but may change in subsequent periods based on a variety of factors such as market conditions, Brokat's continuing negotiations related to the disposal of certain assets and Brokat's continuing evaluation of the recoverability of long-lived assets. RESTRUCTURING The restructuring program contemplates mainly a reduction of workforce within Blaze. The workforce reductions commenced in the second quarter of 2001. Blaze recorded restructuring charges of approximately $1.4 million. Restructuring charges are disclosed separately in the consolidated statement of operations. The restructuring charge relates primarily to severance benefits accrued in accordance with Emerging Issues Task Force ("EITF") 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." FOREIGN CURRENCY TRANSLATION The functional currency of Blaze Software's subsidiaries is the respective local currency. Accordingly, Blaze Software applies the current exchange rate to translate the subsidiaries' assets and liabilities and the weighted average exchange rate to translate the subsidiaries' revenues, expenses, gains and losses into U.S. dollars. Translation adjustments are included as a separate component of comprehensive income within divisional surplus (deficit)/stockholders' equity in the accompanying consolidated financial statements. BUSINESS RISK AND CONCENTRATION OF CREDIT RISK Blaze Software currently operates in a single business segment and revenue from continuing operations is principally attributable to the sale of software products and related maintenance, consulting and training services which are characterized by rapid technological advances, changes in customer requirements and industry standards. Any failure by Blaze Software to anticipate or to respond adequately to technological changes in its industry, changes in customer requirements or changes in industry standards, could have a material adverse effect on Blaze Software's business and operating results. Financial instruments which potentially subject Blaze Software to concentrations of credit risk consist primarily of temporary cash investments, including money market accounts and accounts receivable. Blaze Software placed its temporary cash investments with one major financial institution at December 31, 2000 and two major financial institutions at March 31, 2000. Blaze Software performs ongoing credit evaluations of its customers' financial condition and does not require collateral. Blaze Software maintains allowances for potential credit losses and such losses have been within management's expectations. 10 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) At June 30, 2001, one customer accounted for approximately 15% (unaudited) of the aggregate accounts receivable balance. At December 31, 2000, no customer accounted for 10% or more of the aggregate accounts receivable balance. At March 31, 2000, two customers accounted for approximately 18% and 15% of the aggregate accounts receivable balance. For the years ended March 31, 1999 and 2000, one customer accounted for approximately 19% and 23% of total revenues, respectively. For the periods from April 1, 2000 to September 29, 2000, September 30, 2000 to December 31, 2000, January 1, 2000 to June 30, 2000 and January 1, 2001 and June 30, 2001, one customer accounted for approximately 11%, no customer accounted for more than 10%, one customer accounted for 17% and one customer accounted for 14% of total revenues, respectively. FAIR VALUE OF FINANCIAL INSTRUMENTS Carrying amounts of certain Blaze Software's financial instruments approximate fair value due to their short maturities. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS For the years ended March 31, 1999 and 2000 and for the period from April 1, 2000 to September 29, 2000 and the period from September 30, 2000 to December 31, 2000, Blaze Software invested its excess cash in money market accounts and debt instruments and considered all highly liquid investments with an original or remaining maturity of three months or less at the time of purchase to be cash equivalents. Investments with an original or remaining maturity at the time of purchase of over three months are classified as short-term investments as all investments are classified as available-for-sale and can be readily liquidated to meet current operational needs. The securities are carried at amortized cost, which approximates fair value. Fair value is based upon market prices quoted on the last day of the fiscal year. Beginning January 1, 2001, Brokat has managed cash and cash equivalents on a centralized basis. All changes in cash and cash equivalents have been included as an advance from Brokat. Unrealized gains and losses are reported as a separate component of stockholders' equity. The amortized cost of the debt securities is adjusted for the amortization of premiums and accretion of discounts to maturity. Such amortization, as well as any interest on the securities, is included in interest expense, net. Realized gains and losses and declines in value judged to be other-than-temporary are also included in interest expense, and have not been material. The cost of securities sold is based on the specific identification method. PROPERTY AND EQUIPMENT Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets, generally three to five years for both the predecessor period and the successor period. Leased assets are amortized on a straight-line basis over the lesser of the estimated useful life or the lease term. Maintenance and repairs are charged to expense as incurred. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill represents the excess of the purchase price of the acquired business over the fair value of the identifiable net assets acquired and is amortized using the straight-line method over an estimated useful life of five years. Acquired in-place workforce is amortized over the period of benefit of five years. Acquired customer base and trade name are amortized over the period of benefit of five years. Acquired technology is amortized over the periods of benefit of five years. Amortization of goodwill and other intangible assets is reflected in a separate line item on the consolidated statement of operations. 11 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) VALUATION OF LONG-LIVED ASSETS Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of its long-lived assets, including, but not limited to, property and equipment, goodwill and certain other assets has changed. The carrying value of a long-lived asset is considered impaired when the undiscounted cash flow from such asset is separately identifiable and is estimated to be less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the involved asset. Losses on long-lived assets to be disposed of would be determined in a similar manner, except that fair values would be reduced by the cost of disposal. REVENUE RECOGNITION Blaze Software's revenues are derived from two sources; product license revenues and service revenues. Product license revenues are derived from product sales to end users and independent software vendors as well as royalties from independent software vendors. Service revenues are derived from providing consulting and training, maintenance and support services to end users. Blaze Software recognizes revenue in accordance with the American Institute of Certified Public Accountants Statement of Position No. 97-2, Software Revenue Recognition, as amended. License revenues from sales to end users and systems integrators are recognized upon shipment of the product, if an executed agreement or purchase order has been received, the fee is fixed and determinable and collection is deemed probable. If an acceptance period is provided, revenue is recognized upon the earlier of customer acceptance or the expiration of that period. For enterprise application vendors, Blaze Software receives quarterly reports from these vendors on sell-through of Blaze Software products to end users. Blaze Software recognizes royalty revenues upon receipt of the quarterly reports from vendors. For sales made through distributors, Blaze Software recognizes revenues upon shipment of the product, if an executed agreement or purchase order has been received, the fee is fixed and determinable and collection is deemed probable. Distributors have no right of return. For contracts with multiple obligations (e.g., product licenses, maintenance and other services), Blaze Software allocates revenue to each component of the contract based on vendor specific objective evidence of its fair value, which is based on the price when each component is sold separately, or when not yet sold separately, the price established by management. Blaze Software recognizes revenue allocated to undelivered products when the criteria for product revenue set forth above are met. Service revenues from consulting, installation and training are recognized as the related services are performed and collectibility is reasonably assured. Revenues from maintenance and support agreements, which include product updates, are deferred and recognized on a straight-line basis over the term of the related agreement. Payments of maintenance fees are generally made in advance and are nonrefundable. ADVERTISING Blaze Software expenses advertising costs as they are incurred. Advertising expense for the years ended March 31, 1999 and 2000, for the period from April 1, 2000 to September 29, 2000, for the period from September 30, 2000 to December 31, 2000, for the period from January 1, 2000 to June 30, 2000 and for the period from January 1, 2001 to June 30, 2001 was $431,000, $1,517,000, $1,187,000, $517,000, $2,178,000 (unaudited) and $517,000 (unaudited), respectively. 12 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) INCOME TAXES Blaze Software accounts for income taxes in accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. This statement prescribes the use of the liability method whereby deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and measured at tax rates that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not the deferred tax asset will not be realized. As of December 31, 2000, Blaze Software was not a separate taxable entity for federal, state or local income tax purposes and its operations are included in the Brokat income tax returns. The provision, if any, is computed using the separate return method. STOCK-BASED COMPENSATION Blaze Software has elected to adopt the disclosure provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-based Compensation ("SFAS No. 123"). Blaze Software accounts for stock-based compensation using Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, ("APB No. 25") and, accordingly, pro forma disclosures required under SFAS No. 123 have been presented (See Note 10). Under APB No. 25, compensation expense is based on the difference, if any, on the date of the grant, between the deemed fair value of Blaze Software's common stock and the exercise price. Additionally, pursuant to SFAS No. 123, common stock issued to non-employees is accounted for at the fair value of the equity instruments issued, or at the fair value of the consideration received, whichever is more reliably measurable. RESEARCH AND DEVELOPMENT EXPENDITURES Costs related to research, design and development of products are charged to research and development expense as incurred. Under Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed," software development costs are capitalized beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. To date, attaining technological feasibility of Blaze Software's products and general release have substantially coincided. As a result, Blaze Software has not capitalized any software development costs. NET LOSS PER SHARE Blaze Software computes net loss in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS No. 128"). Under the provisions of SFAS No. 128, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares outstanding during the period. Options, warrants, mandatorily redeemable convertible preferred stock and convertible preferred stock were not included in the computation of diluted net loss per share because of the effect would be antidilutive. Since the Company was acquired on September 30, 2000, net loss per share is not presented for the periods September 30, 2000 through June 30, 2001 since the Company had no outstanding shares. Additionally, net loss per share is not presented for the period from April 1, 2000 to September 29, 2000 because such information is not deemed to be meaningful. 13 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) A reconciliation of shares used in calculation of basic and diluted net loss per share follows (in thousands, except per share amounts):

YEARS ENDED MARCH 31, ----------------------- 1999 2000 -------- -------- Basic and diluted net loss per share: Numerator: Net loss from continuing operations $ (5,848) $(26,424) Accretion of mandatorily redeemable convertible preferred stock to redemption value (1,258) (442) Beneficial conversion feature of convertible preferred stock -- (11,739) -------- -------- Net loss from continuing operations attributable to common stockholders (7,106) (38,605) Income (loss) from operations of discontinued user interface business 248 2,657 -------- -------- Loss attributable to common stockholders $ (6,858) $(35,948) ======== ======== Denominator: Weighted average common shares outstanding 444 5,913 Weighted average unvested common shares subject to repurchase (73) (132) -------- -------- Denominator for basic and diluted calculation 371 5,781 ======== ======== Basic and diluted net loss per share attributable to common stockholders $ (18.49) $ (6.22) ======== ======== Antidilutive securities including options, warrants and convertible preferred stock not included in net loss per share calculation 7,392 4,479 ======== ========

RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133, as amended, established accounting and reporting standards for derivative financial instruments, including certain derivatives instruments embedded in other contracts, and for hedging activities. Blaze adopted SFAS 133, as amended, on January 1, 2001. Blaze has not engaged in hedging activities or invested in derivative financial instruments and accordingly, the adoption of SFAS 133 did not have a material effect on its financial statements (unaudited). In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141") and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141 requires all business combinations to be accounted for using the purchase method of accounting and is effective for all business combinations initiated after June 30, 2001. SFAS 142 requires goodwill to be tested for impairment under certain circumstances, and written off when impaired, rather than being amortized as previous standards required. SFAS 142 is effective for fiscal years beginning after December 15, 2001 provided that the first interim period financial statements have not been previously issued. The adoption of SFAS 141 is not expected to have a material effect on the Company's operating results or financial condition. The Company is currently assessing the impact of SFAS 142 on its operating results and financial condition. 14 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) On October 3, 2001, the FASB issued Statement of Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"). FAS 144 supercedes FAS 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." FAS 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30 ("APB 30"), Reporting Results of Operations Reporting the Effects of Disposal of Segment of a Business. FAS 144 develops one accounting model for long-lived assets that are to be disposed of by sale. FAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, FAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. FAS 144 is effective for the Company beginning in fiscal 2002. RECLASSIFICATIONS Certain amounts in the fiscal year 1999 financial statements have been reclassified to conform to the fiscal year 2000 presentation. NOTE 2 -- ACQUISITION OF BLAZE SOFTWARE BY BROKAT: On September 29, 2000, Brokat completed the acquisition of Blaze Software. Under the terms of the Agreement and Plan of Merger dated June 19, 2000, among Blaze Software and Brokat approximately 4,961,000 shares of Brokat's Common Stock and options were issued or reserved for issuance for all outstanding shares and options of Blaze Software. The acquisition was accounted using the purchase method of accounting. The purchase consideration included approximately 4,131,000 shares of Common Stock valued at approximately $450.7 million. In addition, all of the outstanding stock options granted under the Blaze Software Option Plan were converted at the ratio of 1:0.1826 into stock options to purchase approximately 830,000 shares of Brokat's common stock. The Black-Scholes option pricing model was used to determine the fair value of the converted options. The fair value of the stock options, of approximately $82.1 million, was included as a component of the purchase price. Brokat also incurred approximately $11.9 million in acquisition expenses. The assumptions used in the calculation of fair value of the options were: risk free interest rate, 6.38%; average expected life, 2.3 years; volatility, 90%, and; 0% dividend yield. The total purchase price of approximately $526.2 million was allocated to assets acquired, including tangible and intangible assets, and liabilities assumed, based on their respected estimated fair values at the acquisition. The estimate of fair value of the net assets acquired is based on independent estimates. The total purchase price was allocated as follows (in thousands): Fair value of tangible assets $ 68,998 Acquired technology 14,166 Customer base 19,963 In-place workforce 5,950 Tradename 495 Fair value of liabilities assumed (9,959) In-process research and development 2,179 Goodwill 424,431 --------- $ 526,223 ========= 15 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT In connection with the acquisition, Brokat acquired one in process project. The existing product at the date of acquisition, Blaze Advisor Software Suite provides customers with the ability to automatically update their sales force with the latest information. The project is developing additional features to ease the use and deployment of the existing Blaze Advisor Software Suite; $2.2 million was ascribed to the in-process research and development project which was charged to operations in the period from September 30, 2000 to December 31, 2000. Amortization of in-process research and development is reflected in a separate line item on the consolidated statement of operations. Blaze Software used an independent appraiser firm to assist in the valuation of the in-process technology. Blaze Software provided assumptions of revenue, cost of revenue and operating expense to the appraiser to assist in the valuation. The in-process research and development project was valued through the use of a discounted cash flow analysis, taking into account projected future cash flows associated with the project once it achieves technological feasibility, its stage of completion as of the acquisition date, and the expected return requirement (i.e. discount rate) for determining present value of the future cash flows. Stages of completion were estimated by considering time, cost and complexity of tasks completed prior to the acquisition as a percentage of total time, cost and effort required for the total project up to achieving technological feasibility. Earnings associated with Blaze Software's incomplete technology were discounted at a rate of 20%. NOTE 3 - DISCONTINUED OPERATIONS: In December 1999, the Company's Board of Directors resolved to discontinue Blaze Software's entire user interface line of business. The business was subsequently sold on March 1, 2000. The accompanying financial statements have been prepared to reflect the historical results of operations and cash flows of the user interface business as discontinued operations for all periods presented. Balance sheet data (in thousands):

AS OF MARCH 31, --------------------- 1999 2000 ------- ------- Current assets $ 1,183 $ 615 Current liabilities (70) (24) ------- ------- Net assets of discontinued operations $ 1,113 $ 591 ======= =======

The current assets and current liabilities noted above comprise accounts receivable and accounts payable, respectively. Income statement data (in thousands):

FOR THE PERIOD ENDED APRIL 1, YEARS ENDED MARCH 31, 2000 TO ------------------------- SEPTEMBER 29, 1999 2000 2000 ------- ------- ------------- Revenues $ 9,094 $ 5,013 $ 174 Costs and expenses (8,846) (2,356) (98) ------- ------- ------- Income (loss) from discontinued operations $ 248 $ 2,657 $ 76 ======= ======= =======

16 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Cash flow data (in thousands):

FOR THE PERIOD FROM APRIL 1, YEARS ENDED MARCH 31, 2000 TO --------------------------- SEPTEMBER 29, 1999 2000 2000 ------- ------- ------------- Net cash provided by (used in) discontinued operations $ 2,061 $ 3,109 $ 412 ======= ======= ======

NOTE 4--TRANSACTIONS WITH BROKAT TECHNOLOGIES: Blaze Software sells products and services to Brokat Technologies and its subsidiaries. There were no sales to Brokat for the years ended March 31, 1999 and 2000, for the periods from April 1, 2000 to September 29, 2000, September 30, 2000 to December 31, 2000, and January 1, 2000 to June 30, 2000. Sales to Brokat for the period January 1, 2001 to June 30, 2001 totaled $188,000. NOTE 5 - BALANCE SHEET COMPONENTS: PROPERTY AND EQUIPMENT Property and equipment consists of the following (in thousands):

PREDECESSOR SUCCESSOR ----------- ----------------------------- AS OF AS OF AS OF MARCH 31, DECEMBER 31, JUNE 30, 2000 2000 2001 ----------- ------------ ---------- (UNAUDITED) Computer equipment $ 2,636 $ 2,782 $ 1,108 Furniture and fixtures 463 753 868 Leasehold improvements 316 916 978 ------- ------- ------- 3,415 4,451 2,954 Less: Accumulated depreciation and amortization (1,482) (337) (958) ------- ------- ------- $ 1,933 $ 4,114 $ 1,996 ======= ======= =======

17 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Property and equipment under capital leases, included in the above table, consist of the following (in thousands):

PREDECESSOR SUCCESSOR ----------- -------------------------- AS OF AS OF AS OF MARCH 31, DECEMBER 31, JUNE 30, 2000 2000 2000 ----------- ----------- --------- (UNAUDITED) Computer equipment $ 705 $ 696 $ 696 Less: Accumulated depreciation (322) (451) (531) ----- ----- ----- $ 383 $ 245 $ 165 ===== ===== =====

The amortization of assets recorded under capital leases is included within depreciation expense. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and other intangible assets consists of the following (in thousands):

SUCCESSOR ------------------------------ AS OF AS OF DECEMBER 31, JUNE 30, 2000 2001 ----------- --------- (UNAUDITED) Acquired technology $ 14,166 $ 14,166 In-place workforce 5,950 5,950 Customer base 19,963 19,963 Trade name 495 495 Goodwill 424,431 424,431 --------- --------- 465,005 465,005 Less: Accumulated amortization (23,250) (69,751) Impairment expense -- (395,254) --------- --------- $ 441,755 $ -- ========= =========

There were no goodwill and other intangible assets of the predecessor. 18 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands):

PREDECESSOR SUCCESSOR ----------- --------------------------- AS OF AS OF AS OF MARCH 31, DECEMBER 31, JUNE 30, 2000 2000 2001 ----------- ----------- --------- (UNAUDITED) Accrued compensation $1,622 $4,606 $3,972 Sales and income tax payable 1,276 718 236 Other accrued liabilities 4,548 3,921 1,574 ------ ------ ------ $7,446 $9,245 $5,782 ====== ====== ======

NOTE 6 - BORROWINGS: Blaze Software had a line of credit facility with a lender, whereby Blaze Software could borrow up to 80% of eligible United States and United Kingdom accounts receivable with a maximum borrowing of $5,000,000. Borrowings under the facility bore interest at the prime rate plus 3% (10.75% as of March 31, 1999) and were collateralized by certain assets of Blaze Software. As of March 31, 1999, Blaze Software had borrowed $1,631,000 under this facility. The facility was repaid and terminated in March 2000. In November 1998, Blaze Software entered into a bridge loan agreement with several of its existing investors totaling $1.5 million. The loan bore interest at the rate of 25%, was subordinated to the agreement between Blaze Software and Coast Business Credit, and was collateralized by certain assets of Blaze Software. The bridge loan was converted into 2,777,778 shares of Series AA Preferred Stock in June 1999. NOTE 7 - INITIAL PUBLIC OFFERING: In March 2000, Blaze Software completed its initial public offering and issued 4,000,000 shares of its common stock to the public at a price of $16.00 per share. Blaze Software received net proceeds of approximately $57.1 million in cash. Upon the closing the offering, all of the outstanding shares of the Series AA and BB convertible preferred stock were converted into an aggregate of 10,369,000 shares of common stock. In April 2000, in connection with the initial public offering, the underwriters purchased an additional 600,000 shares of common stock as a result of the exercise of their over-allotment option. This sale resulted in additional net proceeds of approximately $8,800,000. NOTE 8 - MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK: In June 1999, Blaze Software converted all of its outstanding mandatorily redeemable preferred stock into common stock at the applicable conversion rates. NOTE 9 - STOCKHOLDERS EQUITY: 19 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SERIES B PREFERRED STOCK In June 1999, Blaze Software converted all of its outstanding Series B preferred stock into shares of common stock. The conversion is disclosed in the statement of net parent investment/stockholders equity (deficit) within the column "Convertible preferred stock and common stock." PREFERRED STOCK WARRANTS In December 1996, warrants to purchase 107,143 shares of the Company's Series B preferred stock were issued at a price per share of $5.60. These warrants expired in December 1999. The fair value of these warrants was not material to the financial statements. SERIES AA AND BB PREFERRED STOCK In June 1999 and September 1999, Blaze Software issued 8,134,839 and 281,376 shares, respectively, of Series AA convertible preferred stock at a price of $0.54 per share. Net proceeds to Blaze Software were cash of $2.8 million and the cancellation of indebtedness of $1.6 million. Prior to the issuance of Series AA convertible preferred stock, Blaze Software converted all of its outstanding shares of Series A, Series B, Series C Series D, and Series F convertible preferred stock into common stock and all of its warrants for Series E preferred stock into warrants for common stock at the applicable conversion rates in effect for each series. The issuance in September 1999 resulted in a beneficial conversion feature of approximately $2.2 million, calculated in accordance with Emerging Issues Task Force No. 98-5, which resulted in an immediate charge to additional paid-in capital. On December 31, 1999 1,952,735 shares of Series BB preferred stock were issued for gross proceeds of approximately $13.9 million. The issuance resulted in a beneficial conversion feature of approximately $9.5 million, calculated in accordance with Emerging Issues Task Force No. 98-5, which resulted in an immediate charge to additional paid-in capital. In March 2000, all shares of Series AA and BB preferred stock were converted to shares of common stock effective with the Company's initial public offering. The conversion is disclosed in the statement of net parent investment/stockholders equity (deficit) within the column "Convertible preferred stock and common stock." DELAWARE REINCORPORATION In March 2000, Blaze Software reincorporated in the State of Delaware. The par value of the preferred and common stock is $0.0001 per share. All share data information has been restated to reflect the reincorporation. COMMON STOCK In March 2000, Blaze Software's stockholders approved an increase in the authorized number of common shares from 54,000,000 shares to 200,000,000 shares. Each share of common stock has the right to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to the prior rights of holders of all classes of stock outstanding at the time having priority rights as to dividends. 20 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10 - EMPLOYEE BENEFIT PLANS: TAX DEFERRED SAVINGS PLAN The Company has a savings plan that is intended to qualify as a deferred salary arrangement under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Savings Plan"). All full-time employees of Blaze Software are eligible to participate in the Savings Plan pursuant to the terms of the plan. Participants may defer up to 15 percent of their pre-tax earnings (up to the Internal Revenue Service limit). The Company matches 25 percent of employee contributions up to a maximum of $1,000 per employee. The participants' as well as the Company's matching contributions are fully vested. Company contributions to the Savings Plan were approximately $130,000, $47,000 and $40,000 for fiscal 2001, 2000 and 1999, respectively. Effective October 16, 2001, this plan was terminated. STOCK OPTION PLANS In 1986, Blaze Software adopted the 1986 Stock Option Plan (the "1986 Plan") and had 1,254,500 shares of Common Stock reserved for issuance there under. In 1996, the 1986 Plan was discontinued and replaced with the 1996 Stock Option Plan (the "1996 Plan"). Under the 1996 Plan, Blaze Software has reserved 5,753,429 shares of common stock for issuance. In addition, in March 2000, stockholders approved an increase in the number of shares available under the 1996 Plan by 1,250,000. In March 2000, stockholders approved the 2000 Stock Plan (the "2000 Plan") and reserved 250,000 shares of common stock for future issuance under this plan. Options granted under the 1996 Plan and the 2000 Plan (the "Plans") may be incentive stock options or nonqualified stock options and shall be granted at a price not less than 100% or 85% of fair market value, respectively, or at a price not less than 110% of fair market value under certain circumstances. Fair market value (as defined in the Plans) and the vesting, of these options shall be determined by Blaze Software's Board of Directors. The options expire no later than 10 years from the date of grant. Unvested options on termination of employment are canceled and returned to the Plans. Options can be exercised from the date of issuance, even though they have not fully vested. Such shares are subject to repurchase on a pro rata basis over a four-year period from the date of issuance. As of March 31, 2000 and 1999, there were approximately 734,400 and 73,500 shares, respectively, subject to repurchase, at a weighted average price of $ 0.73 per share and $0.56 per share, respectively. During fiscal year 2000 and 1999, approximately 13,100 and 157,500 shares, respectively, were repurchased. Shares acquired under the Plans are subject to Stock Purchase Agreements, which provide Blaze Software with a right of first refusal and grant Blaze Software repurchase rights for unvested shares, at their original cost. Options granted under the Plans have a term of ten years measured from the grant date and are initially unvested. Participants vest in the option shares granted over a four-year period with (i) twenty-five percent of the option shares vesting upon the completion of one year of service, and (ii) the balance of the option shares in thirty-six successive equal monthly installments upon the participants completion of each additional month of service. All Blaze Software, Inc. options outstanding on September 29, 2000 were converted into options to purchase Brokat's common stock and adjusted to give effect to the acquisition exchange ratio. 21 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) A summary of the status of Blaze Software's stock option plans as of September 29, 2000, March 31, 1998, 1999, and 2000 and changes during the years ended on these dates is presented below (in thousands, except per share amounts):

OPTIONS OUTSTANDING ------------------------ WEIGHTED SHARES AVERAGE AVAILABLE NUMBER EXERCISE FOR OF PRICE PER GRANT SHARES SHARE --------- ------ --------- Options outstanding at April 1, 1998 5 1,306 $ 0.59 Additional shares reserved 104 -- $ -- Granted (625) 625 $ 0.80 Exercised -- (98) $ 0.57 Canceled 637 (637) $ 0.59 ----- ----- Options outstanding at March 31, 1999 121 1,196 $ 0.70 Additional shares reserved 5,706 -- $ -- Granted (4,970) 4,970 $ 1.83 Exercised -- (1,486) $ 0.51 Canceled 202 (202) $ 1.42 ----- ----- Options outstanding at March 31, 2000 1,059 4,478 $ 1.98 Additional shares reserved -- -- $ -- Granted (485) 485 $12.48 Exercised -- (255) $ 1.28 Canceled 164 (164) $ 7.00 ----- ----- Options outstanding at September 29, 2000 738 4,544 $ 3.00 ===== ===== Blaze options assumed by Brokat -- 4,544 ===== =====

2000 EMPLOYEE STOCK PURCHASE PLAN In February 2000, the Board of Directors adopted the 2000 Employee Stock Purchase Plan (the "ESPP"), which is designated to allow eligible employees of the Company to purchase shares of common stock at semiannual intervals through periodic payroll deductions. An aggregate of 750,000 shares of common stock have been reserved for the ESPP, and no shares have been issued through March 31, 2000. The ESPP permits eligible employees to purchase common stock through payroll deductions of up to 15% of an employee's compensation, up to a maximum of $25,000 for all purchases ending within the same calendar year. Each offering period will run for twenty-four months and consist of four six-month purchase periods. The price at which common stock will be purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or the last day of each purchase period, whichever is lower. Effective September 29, 2000, this plan was terminated and assumed by Brokat. 22 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) STOCK-BASED COMPENSATION In connection with certain stock option grants during the nine month period ended December 31, 2000, Blaze Software recorded stock-based compensation expense totaling $13.2 million, which is being amortized in accordance with FASB Interpretation No. 28 over the vesting periods of the related options, which is generally four years. Stock-based compensation amortization expense has been allocated across the relevant functional expense categories. Amounts previously repeated have been reclassified to conform with current period presentation. The reclassification has no impact on the previously reported net loss. Stock-based compensation was allocated across the relevant functional expense categories within operating expenses as follows (in thousands):

PREDECESSOR SUCCESSOR ----------------------------------------------- ------------------------- FOR THE FOR THE FOR THE FOR THE PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM FOR THE YEAR ENDED APRIL 1, JANUARY 1, SEPTEMBER 30, JANUARY 1, MARCH 31, 2000 TO 2000 TO 2000 TO 2001 TO -------------------- SEPTEMBER 29, JUNE 30, DECEMBER 31, JUNE 30, 1999 2000 2000 2000 2000 2001 ------- ------- ------------ ----------- ------------ ----------- (UNAUDITED) (UNAUDITED) Cost of sales $ -- $ 787 $ 936 $ 1,006 $ 1,013 $ 894 Research and development -- 3,651 2,038 2,126 1,499 972 Selling and marketing -- 3,513 3,032 3,326 1,624 1,000 General and administrative -- 8,449 2,093 2,222 925 811 ------- ------- ------- ------- ------- ------- $ -- $16,400 $ 8,099 $ 8,680 $ 5,061 $ 3,677 ======= ======= ======= ======= ======= =======

FAIR VALUE DISCLOSURES The following information concerning Blaze Software's stock option plans is provided in accordance with SFAS No. 123. Blaze Software accounts for such plans in accordance with APB No. 25. The fair value of each option grant has been estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted average assumptions for grants:

PREDECESSOR ----------------------------------------------------------------- FOR THE FOR THE PERIOD FROM PERIOD FROM FOR THE YEAR ENDED APRIL 1, JANUARY 1, MARCH 31, 2000 TO 2000 TO ----------------------- SEPTEMBER 29, JUNE 30, 1999 2000 2000 2000 ---- ---- ------------ ----------- (UNAUDITED) Risk-free interest rate 4.7% 5.7% 6.3% 6.6% Expected life 5 years 5 years 5 years 5 years Dividend yield -- -- 0% 0% Expected volatility 0% 0% 90% 90%

23 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For purposes of pro forma disclosures, the estimated fair value of the options are amortized over the option's vesting period. Blaze Software pro forma information follows (in thousands, except per share amounts):

PREDECESSOR PREDECESSOR ------------------------------------- ----------- FOR THE FOR THE PERIOD FROM PERIOD FROM FOR THE YEAR ENDED APRIL 1, JANUARY 1, MARCH 31, 2000 TO 2000 TO ------------------- SEPTEMBER 29, JUNE 30, 1999 2000 2000 2000 ---- ---- ------------ ----------- (UNAUDITED) Net loss attributable to common stockholders $(6,858) $(35,948) $(28,436) $(15,951) ======= ======== ======== ======== Net loss--FAS 123 adjusted $(6,896) $(36,119) $(31,695) $(18,847) ======= ======== ======== ======== Net loss per share--as reported Basic and diluted $ 18.49 $ (6.22) ======= ======== Net loss per share--FAS 123 adjusted Basic and diluted $(18.59) $ (6.25) ======= ========

The weighted-average fair value of options granted in fiscal 2000 and 1999 was $0.44 and $0.18, respectively. NOTE 11 - COMPREHENSIVE INCOME: Under Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS 130"). Blaze Software displays all items required to be recognized under accounting standards as components of its comprehensive income. The comprehensive loss presented in the accompanying statements of operations consists of the net unrealized gains and losses on available-for-sale-investments and foreign currency translation adjustments, net of the related tax effects for all periods presented. The tax effects for other comprehensive income were immaterial for all periods presented. The balances for each component of accumulated other comprehensive income are as follows (in thousands):

PREDECESSOR SUCCESSOR PREDECESSOR SUCCESSOR ----------------------------------- ----------- ----------- ----------- FOR THE FOR THE FOR THE FOR THE PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM FOR THE YEAR ENDED APRIL 1, SEPTEMBER 30, JANUARY 1, JANUARY 1, MARCH 31, 2000 TO 2000 TO 2000 TO 2001 TO ------------------ SEPTEMBER 29, DECEMBER 31, JUNE 30, JUNE 30, 1999 2000 2000 2000 2000 2001 ---- ---- ------------ ----------- ----------- ----------- (UNAUDITED) (UNAUDITED) Cumulative translation adjustments $ 290 $ 509 $ 394 $ 189 $ 373 $(508) Unrealized gain/(loss) on investments -- (20) -- -- (55) -- ----- ----- ----- ----- ----- ----- Accumulated other comprehensive income $ 290 $ 489 $ 394 $ 189 $ 318 $(508) ===== ===== ===== ===== ===== =====

24 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12 - COMMITMENTS AND CONTINGENCIES: Blaze Software leases administrative, engineering and sales facilities in the United States, the United Kingdom, France, Germany, Japan and Australia under noncancelable operating leases that expire at various dates through 2005. Blaze Software is generally responsible for insurance and property taxes. Blaze Software's primary lease in San Jose, California, is subject to annual payment increases based on the consumer price index. Blaze Software also leases computer equipment under leases classified as capital leases. The Company's primary building lease for its corporate headquarters is collateralized by a certificate of deposit and is classified as restricted cash in the accompanying balance sheets. As of December 31, 2000, the aggregate future minimum lease payments under all noncancelable leases are as follows (in thousands):

PERIOD ENDING CAPITAL OPERATING DECEMBER 31, LEASES LEASES ------------- ------ --------- 2001 $ 218 $ 2,555 2002 123 2,428 2003 -- 2,499 2004 -- 2,592 2005 -- 2,844 2006 -- 735 ---- ------ -------- Total minimum lease payments 341 $ 13,653 ======== Less: Amount representing interest (39) ------ Present value of capital lease obligation 302 Current portion (186) ------ Long-term portion $ 116 ======

Rent expense for the period from January 1, 2001 to June 30, 2001, from the period from January 1, 2000 to June 30, 2000, from the period April 1, 2000 to September 29, 2000, September 30, 2000 to December 31, 2000 and for the years ended March 31, 2000 and 1999 was approximately $1,773,000 (unaudited), $1,395,000 (unaudited), $1,089,000, $697,000, $976,000 and $1,002,000, respectively. EMPLOYMENT AGREEMENTS Blaze Software has entered into employment agreements with certain officers of the Company. Some employment agreements also provide for severance in the event the individual is terminated without cause. LITIGATION From time to time, Blaze Software may be involved in litigation relating to claims arising out of its ordinary course of business. Management believes that there are no claims or actions pending or threatened against Blaze Software, the ultimate disposition of which would have a material impact on Blaze Software's financial position or results of operations. Blaze Software received notification of claims from a founder and director that he may assert against the Company. He contends that his personal equity ownership of Blaze Software was diluted improperly in connection with a preferred stock financing. Blaze Software believes that these assertions are without merit and intends to vigorously defend any claims that may be brought against the Company. 25 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 - INCOME TAXES: The components of income tax expense consisted of the following (in thousands):

PREDECESSOR SUCCESSOR ------------------------------------------------ --------------- FOR THE FOR THE PERIOD FROM PERIOD FROM YEARS ENDED MARCH 31, APRIL 1, 2000 SEPTEMBER 30, ----------------------- TO SEPTEMBER 29, TO DECEMBER 31, 1999 2000 2000 2000 ---- ---- --------------- --------------- Current: Federal $ -- $ -- $ -- $ -- Foreign 82 149 9 3 State 5 4 5 4 Deferred - federal and state -- -- -- -- ---- ---- ---- ---- Income tax expense $ 87 $153 $ 14 $ 7 ==== ==== ==== ====

The components of net deferred tax assets were as follows (in thousands):

PREDECESSOR SUCCESSOR ------------------------------------------------ ------------ MARCH 31, ------------------------- SEPTEMBER 29, DECEMBER 31, 1999 2000 2000 2000 -------- -------- ------------- ------------ Accrued liabilities $ 576 $ 846 $ 1,283 $ 1,667 Deferred revenue 12 20 20 20 Net operating loss carryforwards 6,702 7,906 14,627 16,525 Credit carryforwards and other 1,428 2,099 2,242 2,230 -------- -------- -------- -------- 8,718 10,871 18,172 20,442 Valuation allowance (8,718) (10,871) (18,172) (20,442) -------- -------- -------- -------- Net deferred tax assets $ -- $ -- $ -- $ -- ======== ======== ======== ========

Due to the uncertainty surrounding the realization of the deferred tax asset in future tax returns, Blaze Software has placed a valuation allowance against its net deferred tax assets. The increase in the valuation allowance is primarily due to net operating loss incurred. 26 BLAZE SOFTWARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Blaze Software's expected U.S. Federal statutory income tax rate (34%) differs from the effective tax rate as follows:

PREDECESSOR ---------------------- FOR THE PERIOD YEARS ENDED MARCH 31, FROM APRIL 1, 2000 ---------------------- TO DECEMBER 31, 1999 2000 2000 ---- ---- ------------------ "Expected" income benefit (34.0)% (34.0)% (34)% Net operating loss not benefited 34.0 10.5 24.7 Foreign income and withholding taxes 1.6 1.0 1.0 Stock compensation -- 23.5 4.6 ----- ----- ---- Effective tax rate 1.6% 1.0% (0.7)% ===== ===== ====

At June 30, 2001 (unaudited), the Company had available net operating loss carryforwards of approximately $58,429,000 and $17,125,000 to offset future federal and state taxable income, respectively. At June 30, 2001 (unaudited), Blaze Software also had available research and development credit carryforwards and other credit carryforwards of approximately $1,330,000 and $494,000 to offset future federal and state taxable income, respectively, and foreign tax credits of approximately $322,000 available to offset future federal taxable income. These carryforwards expire from 2000 to 2010. The Company's results are included in the combined income tax return of Brokat and have been computed on a separate return basis. For federal and state tax purposes (unaudited), a portion of Blaze Software's net operating loss carryforwards may be subject to certain limitation on annual utilization in case of a change in ownership, as defined by federal and state tax law. 27 EX-99.02 5 a76577a1ex99-02.txt EXHIBIT 99.02 EXHIBIT 99.02 PRO FORMA FINANCIAL INFORMATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma condensed consolidated financial information has been prepared to give effect to the acquisition of the assets of the Blaze business unit ("Blaze") from Brokat Technologies, Inc. on August 15, 2001 as well as the following: i) the acquisition of Systems/Link Corporation ("Systems/Link") that occurred on September 8, 2000 and ii) the distribution of all of our shares of Retek Inc. ("Retek") to our stockholders on September 29, 2000. The pro forma condensed consolidated financial information is based on the following: 1. Our unaudited historical consolidated financial statements as of June 30, 2001 and for the six months then ended; 2. Blaze's unaudited historical consolidated financial statements as of June 30, 2001 and for the six months then ended; 3. Our audited historical consolidated financial statements for the year ended December 31, 2000; 4. Blaze's historical consolidated financial statements for the year ended December 31, 2000, derived from Blaze's audited historical consolidated financial statements for the nine months ended December 31, 2000 and Blaze's unaudited historical consolidated financial statements for the three months ended March 31, 2000; 5. Systems/Link's unaudited historical financial statements for the period from January 1, 2000 through September 8, 2000; 6. Retek's unaudited historical consolidated financial statements for the period from January 1, 2000 through September 29, 2000; and 7. Pro forma adjustments as described in the accompanying notes. The pro forma condensed consolidated balance sheet at June 30, 2001 gives effect to the acquisition of Blaze as if it occurred as of June 30, 2001. The pro forma condensed consolidated statement of operations for the six months ended June 30, 2001 gives effect to the acquisition of Blaze as if it occurred as of January 1, 2001. The pro forma condensed consolidated statement of operations for the year ended December 31, 2000 gives effect to the acquisitions of Blaze and Systems/Link and the distribution of Retek as if they each occurred as of January 1, 2000. The related adjustments are described in the accompanying notes. The unaudited pro forma condensed consolidated financial information is based upon available information and certain assumptions set forth in the notes to the unaudited pro forma condensed consolidated financial information, which have been made solely for purposes of developing such unaudited pro forma financial information. The unaudited pro forma condensed consolidated financial information does not purport to represent what our results of operations or financial condition would have been had the acquisitions of Blaze and Systems/Link or the distribution of our shares of Retek occurred as of the pro forma dates specified above, or to project our results of operations or financial condition for any future period or date. The unaudited pro forma condensed consolidated financial information should be read in conjunction with our historical financial statements and notes, Retek's historical financial statements and notes, and the historical financial statements of Blaze and notes thereto, the latter of which are included herein. HNC SOFTWARE INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2001 (IN THOUSANDS)

PRO FORMA HNC PRO FORMA CONSOLIDATED AS REPORTED BLAZE ADJUSTMENTS HNC ----------- ----------- ----------- ------------ ASSETS Current assets: Cash and cash equivalents $ 51,496 $ -- $ (16,500)(a) $ 32,996 (2,000)(b) Marketable securities available for sale-debt 53,090 -- -- 53,090 Trade accounts receivable, net 47,148 3,750 -- 50,898 Current portion of deferred income taxes 16,900 -- -- 16,900 Other current assets 6,455 961 -- 7,416 --------- --------- --------- --------- Total current assets 175,089 4,711 (18,500) 161,300 Marketable securities available for sale-debt 65,028 -- -- 65,028 Equity investments 14,112 -- -- 14,112 Property and equipment, net 20,366 1,996 -- 22,362 Goodwill, net 84,202 -- 11,882(c) 96,084 Intangible assets, net 40,398 -- 12,142(c) 52,540 Deferred income taxes, less current portion 34,579 -- 200(f) 34,779 Other assets 883 1,184 2,000(b) 4,067 --------- --------- --------- --------- Total assets $ 434,657 $ 7,891 $ 7,724 $ 450,272 ========= ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 24,175 $ 8,057 $ 3,251(d) $ 35,483 Deferred revenue 7,655 2,766 -- 10,421 --------- --------- --------- --------- Total current liabilities 31,830 10,823 3,251 45,904 Non-current liabilities 430 28 2,000(b) 2,458 --------- --------- --------- --------- Total liabilities 32,260 10,851 5,251 48,362 --------- --------- --------- --------- Contingencies Stockholders' equity: Preferred stock -- -- -- -- Common stock 35 -- -- 35 Common stock in treasury (3,251) -- -- (3,251) Paid-in capital 532,747 -- -- 532,747 Accumulated deficit (126,155) (2,452) 2,452(e) (126,642) (487)(f) Notes receivable from stockholders (405) -- -- (405) Unearned stock-based compensation (442) -- -- (442) Accumulated other comprehensive loss (132) (508) 508(e) (132) --------- --------- --------- --------- Total stockholders' equity 402,397 (2,960) 2,473 401,910 --------- --------- --------- --------- Total liabilities and stockholders' equity $ 434,657 $ 7,891 $ 7,724 $ 450,272 ========= ========= ========= =========

See accompanying notes to unaudited pro forma condensed consolidated financial information. HNC SOFTWARE INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2001 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

PRO FORMA HNC PRO FORMA CONSOLIDATED AS REPORTED BLAZE ADJUSTMENTS HNC ----------- --------- ----------- ------------ Total Revenues $ 112,992 $ 15,097 $ -- $ 128,089 --------- --------- --------- --------- Operating expenses: Cost of revenues 43,978 6,917 -- 50,895 Research and development 22,318 6,219 -- 28,537 Sales and marketing 20,832 13,948 -- 34,780 General and administrative 15,733 5,816 -- 21,549 Transaction-related amortization and costs 27,579 443,754 (443,754)(g) 29,288 1,709 (h) Restructuring charge 2,960 1,393 -- 4,353 --------- --------- --------- --------- Total operating expenses 133,400 478,047 (442,045) 169,402 Operating loss (20,408) (462,950) 442,045 (41,313) Other income (expense): Interest expense (167) (1) -- (168) Other income (expense), net 3,509 (27) -- 3,482 --------- --------- --------- --------- Loss before income taxes (17,066) (462,978) 442,045 (37,999) Income tax provision (benefit) 4,880 -- (701)(i) 4,179 --------- --------- --------- --------- Net loss $ (21,946) $(462,978) $ 442,746 $ (42,178) ========= ========= ========= ========= Earnings per share: Basic and diluted net loss per common share $ (0.65) $ (1.25) ========= ========= Shares used in computing basic and diluted net loss per common share 33,830 33,830 ========= =========

See accompanying notes to unaudited pro forma condensed consolidated financial information. HNC SOFTWARE INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

HNC SYSTEMS/LINK HNC DISTRIBUTION EXCLUDING PRO FORMA AS REPORTED OF RETEK RETEK SYSTEMS/LINK ADJUSTMENTS ----------- ------------ --------- ------------ ------------ Total Revenues $ 254,884 $ (59,915)(j) $ 194,969 $ 9,877 $ -- --------- --------- --------- --------- -------- Operating expenses: Cost of revenues 133,382 (36,101)(j) 97,281 2,873 19(k) Research and development 75,490 (30,121)(j) 45,369 3,910 88(k) Sales and marketing 89,925 (30,053)(j) 59,872 2,423 19(k) General and administrative 53,321 (8,466)(j) 44,855 3,286 68(k) Transaction-related amortization and costs 43,734 (5,440)(j) 38,294 -- 9,612(l) In-process research and development 7,601 (4,000)(j) 3,601 -- -- Other 1,172 -- 1,172 -- -- --------- --------- --------- --------- --------- Total operating expenses 404,625 (114,181) 290,444 12,492 9,806 Operating income (loss) (149,741) 54,266 (95,475) (2,615) (9,806) Other income (expense): Interest expense (4,231) -- (4,231) (181) -- Other income (expense), net 9,546 (1,643)(j) 7,903 -- -- Expense related to debt conversion (12,676) -- (12,676) -- -- Minority interest in losses (income) of consolidated subsidiary 7,582 (7,582)(j) -- -- -- --------- --------- --------- --------- --------- Income (loss) from continuing operations before income taxes (149,520) 45,041 (104,479) (2,796) (9,806) Income tax provision (benefit) (33,102) 16,488(j) (16,614) 25 (3,941)(m) --------- --------- --------- --------- --------- Income (loss) from continuing operations $(116,418) $ 28,553 $ (87,865) $ (2,821) $ (5,865) ========= ========= ========= ========= ========= Earnings per share: Basic and diluted net loss per common share from continuing operations $ (4.08) $ (3.08) ========= ========= Shares used in computing basic and diluted net loss per common share from continuing operations 28,529 28,529 ========= =========

BLAZE PRO FORMA PRO FORMA CONSOLIDATED BLAZE ADJUSTMENTS HNC --------- ----------- ------------ Total Revenues $ 31,913 $ -- $ 236,759 --------- --------- ---------- Operating expenses: Cost of revenues 16,671 -- 116,844 Research and development 12,762 -- 62,129 Sales and marketing 34,775 -- 97,089 General and administrative 17,536 -- 65,745 Transaction-related amortization and costs 25,429 (25,429)(n) 51,324 3,418(o) In-process research and development -- -- 3,601 Other -- -- 1,172 --------- --------- --------- Total operating expenses 107,173 (22,011) 397,904 Operating income (loss) (75,260) 22,011 (161,145) Other income (expense): Interest expense (257) -- (4,669) Other income (expense), net 2,385 -- 10,288 Expense related to debt conversion -- -- (12,676) Minority interest in losses (income) of consolidated subsidiary -- -- -- --------- --------- --------- Income (loss) from continuing operations before income taxes (73,132) 22,011 (168,202) Income tax provision (benefit) 66 (1,401)(p) (21,865) --------- --------- --------- Income (loss) from continuing operations $ (73,198) $ 23,412 $(146,337) ========= ========= ========= Earnings per share: Basic and diluted net loss per common share from continuing operations $ (5.13) ========= Shares used in computing basic and diluted net loss per common share from continuing operations 28,529 =========

See accompanying notes to unaudited pro forma condensed consolidated financial information. HNC SOFTWARE INC. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 1 -- BASIS OF PRESENTATION During the year ended December 31, 2000, HNC completed two significant transactions: i) the acquisition of Systems/Link on September 8, 2000; and ii) the distribution of all of our shares of Retek Inc. to our stockholders on September 29, 2000. On August 15, 2001, we acquired the assets of the Blaze business unit from Brokat Technologies, Inc. in exchange for approximately $16,500 in cash. We applied the purchase method of accounting for the acquisition of Blaze, which resulted in a purchase price of $21,751. The purchase price included $2,000 in restricted cash held back to secure potential future indemnification rights, $1,500 in assumed severance obligations and approximately $1,751 of acquisition costs, each of which we accrued. The preliminary allocation of the purchase price using balances at August 15, 2001 is summarized below: Goodwill $ 9,142 Software development costs 10,247 In-process research and development 487 Other identified intangible assets 1,895 Net liabilities assumed (20) -------- Total purchase price $ 21,751 ======== The purchase price including consideration paid and liabilities assumed was allocated among the assets acquired based on the fair values of all assets acquired, including purchased in-process research and development with the residual purchase price assigned to goodwill. We are awaiting further information regarding receivables acquired in a foreign jurisdiction and expect to finalize our preliminary allocation by December 31, 2001. The fair values of the intangible assets and purchased in-process research and development were determined through an independent appraisal. The amount allocated to in-process research and development represents the purchased in-process research and development for projects that, as of the date of the acquisition, had not yet reached technological feasibility and had no alternative future use. The value of these projects was determined by estimating the resulting net cash flows from the sale of the products from completion of the projects, reduced by the portion of revenue attributable to developed technology and the percentage completion of the project. The resulting cash flows were then discounted back to their present value at appropriate discount rates. The amounts allocated to in-process research and development were charged to our statement of operations in the third quarter of 2001. NOTE 2 -- NEW ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations" ("FAS 141") and No. 142, "Goodwill and Other Intangible Assets" ("FAS 142"). FAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under FAS 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives (but with no maximum life). The amortization provisions of FAS 142 apply immediately to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, HNC is required to adopt FAS 142 effective January 1, 2002. We are currently evaluating the effect that adoption of the provisions of FAS 142 will have on our consolidated financial position, results of operations or disclosures in future periods. The historical financial statements contained herein do not reflect the provisions of FAS 142; however, FAS 142 has been applied to the Blaze transaction. On October 3, 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"). FAS 144 supercedes Statement of Financial Accounting Standard No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." FAS 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30, "Reporting Results of Operations--Reporting the Effects of Disposal of a Segment of a Business." FAS 144 develops one accounting model for long-lived assets that are to be disposed of by sale. FAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, FAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. HNC is required to adopt FAS 144 effective January 1, 2002. NOTE 3 -- PRO FORMA ADJUSTMENTS (a) Reflects cash we paid to Brokat Technologies, Inc. as of the acquisition date. (b) Reflects the reclassification to a restricted designation of the $2,000 portion of the cash purchase price held back to secure potential future indemnification rights, and the establishment of a corresponding liability. (c) Reflects the recording of goodwill and other intangible assets resulting from the acquisition of Blaze based on the purchase price allocation described in Note 1. (d) Reflects accrued liabilities related to assumed severance obligations along with transaction costs incurred by HNC. (e) Reflects the elimination of Blaze's equity accounts. (f) Reflects the amount allocated to in-process research and development based on the purchase price allocation described in Note 1, and resultant deferred tax asset established. (g) Reflects the elimination of Blaze's historical amortization and impairment of goodwill and intangible assets. (h) Reflects the amortization of identifiable intangible assets resulting from the Blaze acquisition over their estimated useful lives of two to four years, as if the acquisition had occurred on January 1, 2001. (i) Reflects the estimated tax benefit resulting from the amortization of the intangible assets recorded as part of the Blaze acquisition, as if it had occurred on January 1, 2001. (j) Reflects the reported results of operations of Retek Inc. as if our distribution of Retek Inc. common stock to our stockholders occurred as of January 1, 2000. (k) Reflects amortization of unearned stock-based compensation recorded in connection with the acquisition of Systems/Link, as if the acquisition had occurred on January 1, 2000. (l) Reflects the amortization of goodwill and other identifiable intangible assets resulting from the Systems/Link acquisition over their estimated useful lives of three to four years, as if the acquisition had occurred on January 1, 2000. (m) Reflects the estimated tax benefit resulting from the amortization of the intangible assets recorded as part of the Systems/Link acquisition, as if it had occurred on January 1, 2000. (n) Reflects the elimination of Blaze's historical amortization of goodwill and intangible assets. (o) Reflects the amortization of identifiable intangible assets resulting from the Blaze acquisition over their estimated useful lives of two to four years, as if the acquisition had occurred on January 1, 2000. (p) Reflects the estimated tax benefit resulting from the amortization of the intangible assets recorded as part of the Blaze acquisition, as if it had occurred on January 1, 2000. EX-99.03 6 a76577a1ex99-03.txt EXHIBIT 99.03 EXHIBIT 99.03 BYLAWS OF HNC SOFTWARE INC. (a Delaware corporation) As Adopted April 19, 1995 and Amended March 20, 1998, December 10, 1999 April 10, 2001 and August 31, 2001 ARTICLE I STOCKHOLDERS Section 1.1: Annual Meetings. An annual meeting of stockholders shall be held for the election of directors at such date, time and place, either within or without the State of Delaware, as the Board of Directors shall each year fix. Any other proper business may be transacted at the annual meeting. Section 1.2 Special Meetings. Special meetings of stockholders for any purpose or purposes may be called at any time by the Chairman of the Board, the Chief Executive Officer, the President, the holders of shares of the Corporation that are entitled to cast not less than ten percent (10%) of the total number of votes entitled to be cast by all shareholders at such meeting, or by a majority of the members of the Board of Directors. Special meetings may not be called by any other person or persons. If a special meeting of stockholders is called by any person or persons other than by a majority of the members of the Board of Directors, then such person or persons shall call such meeting by delivering a written request to call such meeting to each member of the Board of Directors, and the Board of Directors shall then determine the time, date and place of such special meeting, which shall be held not more than one hundred twenty (120) nor less than thirty-five (35) days after the written request to call such special meeting was delivered to each member of the Board of Directors. Section 1.3: Notice of Meetings. Written notice of all meetings of stockholders shall be given stating the place, date and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by applicable law or the Certificate of Incorporation of the Corporation, such notice shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 1.4: Adjournments. Any meeting of stockholders may adjourn from time to time to reconvene at the same or another place, and notice need not be given of any such adjourned meeting if the time, date and place thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, then a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting the Corporation may transact any business that might have been transacted at the original meeting. Section 1.5: Quorum. At each meeting of stockholders the holders of a majority of the shares of stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business, except if otherwise required by applicable law. If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares entitled to vote who are present, in person or by proxy, at the meeting may adjourn the meeting. Shares of the Corporation's stock belonging to the Corporation (or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation are held, directly or indirectly, by the Corporation), shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any other corporation to vote any shares of the Corporation's stock held by it in a fiduciary capacity. Section 1.6: Organization. Meetings of stockholders shall be presided over by such person as the Board of Directors may designate, or, in the absence of such a person, the Chairman of the Board, or, in the absence of such person, the President of the Corporation, or, in the absence of such person, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, at the meeting. Such person shall be chairman of the meeting and, subject to Section 1.11 hereof, shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seems to him or her to be in order. The Secretary of the Corporation shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 1.7: Voting; Proxies. Unless otherwise provided by law or the Certificate of Incorporation, and subject to the provisions of Section 1.8 of these Bylaws, each stockholder shall be entitled to one (1) vote for each share of stock held by such stockholder. Each stockholder entitled to vote at a meeting of stockholders, or to express consent or dissent to corporate action in writing without a meeting, may authorize another person or persons to act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in any manner permitted by applicable law. Voting at meetings of stockholders need not be by written ballot unless such is demanded at the meeting before voting begins by a stockholder or stockholders holding shares representing at least one percent (1%) of the votes entitled to vote at such meeting, or by such stockholder's or stockholders' proxy; provided, however, that an election of directors shall be by written ballot if demand is so made by any stockholder at the meeting before voting begins. If a vote is to be taken by written ballot, then each such ballot shall state the name of the stockholder or proxy voting and such other information as the chairman of the meeting deems appropriate. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Unless otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, every matter other than the election of directors shall be decided by the affirmative vote of the holders of a majority of the shares of stock entitled to vote thereon -6- that are present in person or represented by proxy at the meeting and are voted for or against the matter. Section 1.8: Fixing Date for Determination of Stockholders of Record. (a) Generally. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If no record date is fixed by the Board of Directors, then the record date shall be as provided by applicable law. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) Stockholder Request for Action by Written Consent. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice to the Secretary of the Corporation, request the Board of Directors to fix a record date for such consent. Such request shall include a brief description of the action proposed to be taken. The Board of Directors shall, within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. Such record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors within ten (10) days after the date on which such a request is received, then the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, to its principal place of business, or to any officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, then the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. Section 1.9: List of Stockholders Entitled to Vote. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder, shall be open to the examination of any stockholder, for any purpose germane to the meeting, -7- during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present at the meeting. Section 1.10: Action by Written Consent of Stockholders. (a) Procedure. Unless otherwise provided by the Certificate of Incorporation, and except as set forth in Section 1.8(b) above, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Written stockholder consents shall bear the date of signature of each stockholder who signs the consent and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, to its principal place of business or to any officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. No written consent shall be effective to take the action set forth therein unless, within sixty (60) days of the earliest dated consent delivered to the Corporation in the manner provided above, written consents signed by a sufficient number of stockholders to take the action set forth therein are delivered to the Corporation in the manner provided above. (b) Notice of Consent. Prompt notice of the taking of corporate action by stockholders without a meeting by less than unanimous written consent of the stockholders shall be given to those stockholders who have not consented thereto in writing and, in the case of a Certificate Action (as defined below), if the Delaware General Corporation Law so requires, such notice shall be given prior to filing of the certificate in question. If the action which is consented to requires the filing of a certificate under the Delaware General Corporation Law (a "Certificate Action"), then if the Delaware General Corporation Law so requires, the certificate so filed shall state that written stockholder consent has been given in accordance with Section 228 of the Delaware General Corporation Law and that written notice of the taking of corporate action by stockholders without a meeting as described herein has been given as provided in such section. Section 1.11: Inspectors of Elections. (a) Applicability. Unless otherwise provided in the Corporation's Certificate of Incorporation or required by the Delaware General Corporation Law, the following provisions of this Section 1.11 shall apply only if and when the Corporation has a class of voting stock that is: (i) listed on a national securities exchange; (ii) authorized for quotation on an interdealer quotation system of a registered national securities association; or (iii) held of record by more than 2,000 stockholders; in all other cases, observance of the provisions of this Section 1.11 shall be optional, and at the discretion of the Corporation. -8- (b) Appointment. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. (c) Inspector's Oath. Each inspector of election, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability. (d) Duties of Inspectors. At a meeting of stockholders, the inspectors of election shall (i) ascertain the number of shares outstanding and the voting power of each share, (ii) determine the shares represented at a meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. (e) Opening and Closing of Polls. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced by the inspectors at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise. (f) Determinations. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in connection with proxies in accordance with Section 212(c)(2) of the Delaware General Corporation Law, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification of their determinations pursuant to this Section 1.11 shall specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is accurate and reliable. Section 1.12: Notice of Stockholder Business; Nominations. (a) Annual Meeting of Stockholders. -9- (i) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders shall be made at an annual meeting of stockholders (A) pursuant to the Corporation's notice of such meeting, (B) by or at the direction of the Board of Directors or (C) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 1.12, who is entitled to vote at such meeting and who complies with the notice procedures set forth in this Section 1.12. (ii) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C) of subparagraph (a)(i) of this Section 1.12, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year's annual meeting (except in the case of the 1995 annual meeting, for which such notice shall be timely if delivered in the same time period as if such meeting were a special meeting governed by subparagraph (b) of this Section 1.12); provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. Such stockholder's notice shall set forth: (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner, and (2) the class and number of shares of the Corporation that are owned beneficially and held of record by such stockholder and such beneficial owner. (iii) Notwithstanding anything in the second sentence of subparagraph (a)(ii) of this Section 1.12 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased board of directors at least seventy (70) days prior to the first anniversary of the preceding year's annual meeting (or, if the annual meeting is held more than thirty (30) days before or sixty (60) days after such anniversary date, at least seventy (70) days prior to such annual meeting), a stockholder's notice required by this Section 1.12 shall also be considered timely, but only with -10- respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation. (b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of such meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of such meeting (i) by or at the direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 1.12. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation's notice of meeting, if the stockholder's notice required by subparagraph (a)(ii) of this Section 1.12 shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. (c) General. (i) Only such persons who are nominated in accordance with the procedures set forth in this Section 1.12 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.12. Except as otherwise provided by law or these bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.12 and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or nomination shall be disregarded. (ii) For purposes of this Section 1.12, the term "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to section 13, 14 or 15(d) of the Exchange Act. (iii) Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 1.12 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. -11- ARTICLE II BOARD OF DIRECTORS Section 2.1: Number; Qualifications. The Board of Directors shall consist of one or more members. The current number of directors shall be six (6),* and thereafter shall be fixed from time to time by resolution of the Board of Directors. No decrease in the authorized number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Directors need not be stockholders of the Corporation. Section 2.2: Election; Resignation; Removal; Vacancies. The Board of Directors shall initially consist of the person or persons elected by the incorporator or named in the Corporation's initial Certificate of Incorporation. Each director shall hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. Any director may resign at any time upon written notice to the Corporation. Subject to the rights of any holders of Preferred Stock then outstanding: (i) any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors and (ii) any vacancy occurring in the Board of Directors for any cause, and any newly created directorship resulting from any increase in the authorized number of directors to be elected by all stockholders having the right to vote as a single class, may be filled by the stockholders, by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Section 2.3: Regular Meetings. Regular meetings of the Board of Directors may be held at such places, within or without the State of Delaware, and at such times as the Board of Directors may from time to time determine. Notice of regular meetings need not be given if the date, times and places thereof are fixed by resolution of the Board of Directors. Section 2.4: Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President or a majority of the members of the Board of Directors then in office and may be held at any time, date or place, within or without the State of Delaware, as the person or persons calling the meeting shall fix. Notice of the time, date and place of such meeting shall be given, orally or in writing, by the person or persons calling the meeting to all directors at least four (4) days before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given by telephone, hand delivery, telegram, telex, mailgram, facsimile or similar communication method. Unless otherwise indicated in the notice, any and all business may be transacted at a special meeting. Section 2.5: Telephonic Meetings Permitted. Members of the Board of Directors, or any committee of the Board, may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant -------- * Amended to change authorized number from 5 to 6 by Board resolution dated August 31, 2001. -12- to conference telephone or similar communications equipment shall constitute presence in person at such meeting. Section 2.6: Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the total number of authorized directors shall constitute a quorum for the transaction of business. Except as otherwise provided herein or in the Certificate of Incorporation, or required by law, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 2.7: Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, or in his or her absence by the President, or in his or her absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 2.8: Written Action by Directors. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee, respectively. Section 2.9: Powers. The Board of Directors may, except as otherwise required by law or the Certificate of Incorporation, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. Section 2.10: Compensation of Directors. Directors, as such, may receive, pursuant to a resolution of the Board of Directors, fees and other compensation for their services as directors, including without limitation their services as members of committees of the Board of Directors. -13- ARTICLE III COMMITTEES Section 3.1: Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting of such committee who are not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in subsection (a) of Section 151 of the Delaware General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation, or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation, or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation under Sections 251 or 252 of the Delaware General Corporation Law, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and unless the resolution of the Board of Directors expressly so provides, no such committee shall have the power or authority to declare a dividend, authorize the issuance of stock or adopt a certificate of ownership and merger pursuant to section 253 of the Delaware General Corporation Law. Section 3.2: Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II of these Bylaws. -14- ARTICLE IV OFFICERS Section 4.1: Generally. The officers of the Corporation shall consist of a Chief Executive Officer and/or a President, one or more Vice Presidents, a Secretary, a Treasurer and such other officers, including a Chairman of the Board of Directors and/or Chief Financial Officer, as may from time to time be appointed by the Board of Directors. All officers shall be elected by the Board of Directors; provided, however, that the Board of Directors may empower the Chief Executive Officer of the Corporation to appoint officers other than the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person. Any officer may resign at any time upon written notice to the Corporation. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board of Directors. Section 4.2: Chief Executive Officer. Subject to the control of the Board of Directors and such supervisory powers, if any, as may be given by the Board of Directors, the powers and duties of the Chief Executive Officer of the Corporation are: (a) To act as the general manager and, subject to the control of the Board of Directors, to have general supervision, direction and control of the business and affairs of the Corporation; (b) To preside at all meetings of the stockholders; (c) To call meetings of the stockholders to be held at such times and, subject to the limitations prescribed by law or by these Bylaws, at such places as he or she shall deem proper; and (d) To affix the signature of the Corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and other papers and instruments in writing which have been authorized by the Board of Directors or which, in the judgment of the Chief Executive Officer, should be executed on behalf of the Corporation; to sign certificates for shares of stock of the Corporation; and, subject to the direction of the Board of Directors, to have general charge of the property of the Corporation and to supervise and control all officers, agents and employees of the Corporation. The President shall be the Chief Executive Officer of the Corporation unless the Board of Directors shall designate another officer to be the Chief Executive Officer. If there is no President, and the Board of Directors has not designated any other officer to be the Chief Executive Officer, then the Chairman of the Board shall be the Chief Executive Officer. -15- Section 4.3: Chairman of the Board. The Chairman of the Board shall have the power to preside at all meetings of the Board of Directors and shall have such other powers and duties as provided in these bylaws and as the Board of Directors may from time to time prescribe. Section 4.4: President. The President shall be the Chief Executive Officer of the Corporation unless the Board of Directors shall have designated another officer as the Chief Executive Officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board of Directors, and subject to the supervisory powers of the Chief Executive Officer (if the Chief Executive Officer is an officer other than the President), and subject to such supervisory powers and authority as may be given by the Board of Directors to the Chairman of the Board and/or to any other officer, the President shall have the responsibility for the general management the control of the business and affairs of the Corporation and the general supervision and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the Chief Executive Officer is an officer other than the President) and shall perform all duties and have all powers that are commonly incident to the office of President or that are delegated to the President by the Board of Directors. Section 4.5: Vice President. Each Vice President shall have all such powers and duties as are commonly incident to the office of Vice President, or that are delegated to him or her by the Board of Directors or the Chief Executive Officer. A Vice President may be designated by the Board to perform the duties and exercise the powers of the Chief Executive Officer in the event of the Chief Executive Officer's absence or disability. Section 4.6: Chief Financial Officer. Subject to the direction of the Board of Directors and the President, the Chief Financial Officer shall perform all duties and have all powers that are commonly incident to the office of chief financial officer. Section 4.7: Treasurer. The Treasurer shall have custody of all monies and securities of the Corporation. The Treasurer shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions. The Treasurer shall also perform such other duties and have such other powers as are commonly incident to the office of Treasurer, or as the Board of Directors or the President may from time to time prescribe. Section 4.8: Secretary. The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders and the Board of Directors. The Secretary shall have charge of the corporate minute books and similar records and shall perform such other duties and have such other powers as are commonly incident to the office of Secretary, or as the Board of Directors or the President may from time to time prescribe. Section 4.9: Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof. -16- Section 4.10: Removal. Any officer of the Corporation shall serve at the pleasure of the Board of Directors and may be removed at any time, with or without cause, by the Board of Directors. Such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation. ARTICLE V STOCK Section 5.1: Certificates. Every holder of stock shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, certifying the number of shares owned by such stockholder in the Corporation. Any or all of the signatures on the certificate may be a facsimile. Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner's legal representative, to agree to indemnify the Corporation and/or to give the Corporation a bond sufficient to indemnify it, against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. Section 5.3: Other Regulations. The issue, transfer, conversion and registration of stock certificates shall be governed by such other regulations as the Board of Directors may establish. ARTICLE VI INDEMNIFICATION Section 6.1 Indemnification of Officers and Directors. Each person who was or is made a party to, or is threatened to be made a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding"), by reason of the fact that he or she (or a person of whom he or she is the legal representative), is or was a director or officer of the Corporation or a Reincorporated Predecessor (as defined below) or is or was serving at the request of the Corporation or a Reincorporated Predecessor (as defined below) as a director or officer of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the Delaware General Corporation Law, against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall -17- continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the Corporation shall indemnify any such person seeking indemnity in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. As used herein, the term "Reincorporated Predecessor" means a corporation that is merged with and into the Corporation in a statutory merger where (a) the Corporation is the surviving corporation of such merger; (b) the primary purpose of such merger is to change the corporate domicile of the Reincorporated Predecessor to Delaware. Section 6.2: Advance of Expenses. The Corporation shall pay all expenses (including attorneys' fees) incurred by such a director or officer in defending any such proceeding as they are incurred in advance of its final disposition; provided, however, that if the Delaware General Corporation Law then so requires, the payment of such expenses incurred by such a director or officer in advance of the final disposition of such proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately that such director or officer is not entitled to be indemnified under this Article VI or otherwise; and provided, further, that the Corporation shall not be required to advance any expenses to a person against whom the Corporation directly brings a claim, in a proceeding, alleging that such person has breached his or her duty of loyalty to the Corporation, committed an act or omission not in good faith or that involves intentional misconduct or a knowing violation of law, or derived an improper personal benefit from a transaction. Section 6.3: Non-Exclusivity of Rights. The rights conferred on any person in this Article VI shall not be exclusive of any other right that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaw, agreement, vote or consent of stockholders or disinterested directors, or otherwise. Additionally, nothing in this Article VI shall limit the ability of the Corporation, in its discretion, to indemnify or advance expenses to persons whom the Corporation is not obligated to indemnify or advance expenses pursuant to this Article VI. Section 6.4: Indemnification Contracts. The Board of Directors is authorized to cause the Corporation to enter into indemnification contracts with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing indemnification rights to such person. Such rights may be greater than those provided in this Article VI. Section 6.5: Effect of Amendment. Any amendment, repeal or modification of any provision of this Article VI shall be prospective only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI and existing at the time of such amendment, repeal or modification. -18- ARTICLE VII NOTICES Section 7.1: Notice. Except as otherwise specifically provided herein or required by law, all notices required to be given pursuant to these Bylaws shall be in writing and may in every instance be effectively given by hand delivery (including use of a delivery service), by depositing such notice in the mail, postage prepaid, or by sending such notice by prepaid telegram, telex, overnight express courier, mailgram or facsimile. Any such notice shall be addressed to the person to whom notice is to be given at such person's address as it appears on the records of the Corporation. The notice shall be deemed given (i) in the case of hand delivery, when received by the person to whom notice is to be given or by any person accepting such notice on behalf of such person, (ii) in the case of delivery by mail, upon deposit in the mail, (iii) in the case of delivery by overnight express courier, on the first business day after such notice is dispatched, and (iv) in the case of delivery via telegram, telex, mailgram, or facsimile, when dispatched. Section 7.2: Waiver of Notice. Whenever notice is required to be given under any provision of these bylaws, a written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice. ARTICLE VIII INTERESTED DIRECTORS Section 8.1: Interested Directors; Quorum. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof that authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose, if: (i) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (ii) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the -19- Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. ARTICLE IX MISCELLANEOUS Section 9.1: Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors. Section 9.2: Seal. The Board of Directors may provide for a corporate seal, which shall have the name of the Corporation inscribed thereon and shall otherwise be in such form as may be approved from time to time by the Board of Directors. Section 9.3: Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of, magnetic tape, diskettes, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. Section 9.4: Reliance Upon Books and Records. A member of the Board of Directors, or a member of any committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or committees of the Board of Directors, or by any other person as to matters the member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation. Section 9.5: Certificate of Incorporation Governs. In the event of any conflict between the provisions of the Corporation's Certificate of Incorporation and Bylaws, the provisions of the Certificate of Incorporation shall govern. Section 9.6: Severability. If any provision of these Bylaws shall be held to be invalid, illegal, unenforceable or in conflict with the provisions of the Corporation's Certificate of Incorporation, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of these Bylaws (including without limitation, all portions of any section of these Bylaws containing any such provision held to be invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation, that are not themselves invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation) shall remain in full force and effect. -20- ARTICLE X AMENDMENT Section 10.1: Amendments. Stockholders of the Corporation holding a majority of the Corporation's outstanding voting stock shall have the power to adopt, amend or repeal Bylaws. To the extent provided in the Corporation's Certificate of Incorporation, the Board of Directors of the Corporation shall also have the power to adopt, amend or repeal Bylaws of the Corporation, except insofar as Bylaws adopted by the stockholders shall otherwise provide. -21- --------------------------------- BYLAWS OF HNC SOFTWARE INC. (A DELAWARE CORPORATION) AS ADOPTED APRIL 19, 1995 AND AMENDED MARCH 20, 1998, DECEMBER 10, 1999 APRIL 10, 2001 AND AUGUST 31, 2001 --------------------------------- BYLAWS OF HNC SOFTWARE INC. (a Delaware corporation) TABLE OF CONTENTS

PAGE ---- ARTICLE I - STOCKHOLDERS................................................ 1 Section 1.1: Annual Meetings.................................. 1 Section 1.2: Special Meetings................................. 1 Section 1.3: Notice of Meetings............................... 1 Section 1.4: Adjournments..................................... 1 Section 1.5: Quorum........................................... 2 Section 1.6: Organization..................................... 2 Section 1.7: Voting; Proxies.................................. 2 Section 1.8: Fixing Date for Determination of Stockholders of Record ..................................... 3 Section 1.9: List of Stockholders Entitled to Vote............ 3 Section 1.10: Action by Written Consent of Stockholders......... 4 Section 1.11: Inspectors of Elections.......................... 5 Section 1.12: Notice of Stockholder Business; Nominations...... 6 ARTICLE II - BOARD OF DIRECTORS......................................... 8 Section 2.1: Number; Qualifications........................... 8 Section 2.2: Election; Resignation; Removal; Vacancies........ 8

PAGE ---- Section 2.3: Regular Meetings................................. 8 Section 2.4: Special Meetings................................. 8 Section 2.5: Telephonic Meetings Permitted.................... 9 Section 2.6: Quorum; Vote Required for Action................. 9 Section 2.7: Organization..................................... 9 Section 2.8: Written Action by Directors...................... 9 Section 2.9: Powers........................................... 9 Section 2.10: Compensation of Directors........................ 9 ARTICLE III - COMMITTEES................................................ 10 Section 3.1: Committees....................................... 10 Section 3.2: Committee Rules.................................. 10 ARTICLE IV - OFFICERS ................................................. 11 Section 4.1: Generally........................................ 11 Section 4.2: Chief Executive Officer.......................... 11 Section 4.3: Chairman of the Board............................ 12 Section 4.4: President........................................ 12 Section 4.5: Vice President................................... 12 Section 4.6: Chief Financial Officer.......................... 12 Section 4.7: Treasurer........................................ 12 Section 4.8: Secretary........................................ 12 Section 4.9: Delegation of Authority.......................... 12

PAGE ---- Section 4.10: Removal.......................................... 13 ARTICLE V - STOCK ................................................. 13 Section 5.l: Certificates..................................... 13 Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificate...................... 13 Section 5.3: Other Regulations................................ 13 ARTICLE VI - INDEMNIFICATION............................................ 13 Section 6.1: Indemnification of Officers and Directors........ 13 Section 6.2: Advance of Expenses.............................. 14 Section 6.3: Non-Exclusivity of Rights........................ 14 Section 6.4: Indemnification Contracts........................ 14 Section 6.5: Effect of Amendment.............................. 14 ARTICLE VII - NOTICES ................................................. 15 Section 7.l: Notice........................................... 15 Section 7.2: Waiver of Notice................................. 15 ARTICLE VIII - INTERESTED DIRECTORS..................................... 15 Section 8.1: Interested Directors; Quorum..................... 15 ARTICLE IX - MISCELLANEOUS.............................................. 16 Section 9.1: Fiscal Year...................................... 16

PAGE ---- Section 9.2: Seal............................................. 16 Section 9.3: Form of Records.................................. 16 Section 9.4: Reliance Upon Books and Records.................. 16 Section 9.5: Certificate of Incorporation Governs............. 16 Section 9.6: Severability..................................... 16 ARTICLE X - AMENDMENT ................................................. 17 Section 10.1: Amendments....................................... 17

EX-23.01

                                                                   EXHIBIT 23.01



                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-92902, No. 333-14323, No. 333-18871, No.
333-42819, No. 333-46875, No. 333-50623, No. 333-62195, No. 333-71923, No.
333-80965, No. 333-87953, No. 333-89165, No. 333-33952, No. 333-40344, No.
333-41388, No. 333-45442, No. 333-55398 and No. 333-62492) of HNC Software Inc.
of our report dated October 26, 2001 relating to the financial statements of
Blaze Software, Inc., which appears in the Current Report on Form 8-K/A of HNC
Software Inc. dated October 29, 2001.


PricewaterhouseCoopers LLP

San Jose, California
October 29, 2001

EX-99.01

                                                                   EXHIBIT 99.01

                              BLAZE SOFTWARE, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            Page
                                                                            ----
                                                                         
Report of Independent Accountants.........................................    2

Consolidated Balance Sheets...............................................    3

Consolidated Statements of Operations.....................................    4

Consolidated Statements of Net Parent Investment
  /Stockholders' Equity (Deficit).........................................    5

Consolidated Statements of Cash Flows.....................................    7

Notes to Consolidated Financial Statements................................    8



                                       1


                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders/Owners
 of Blaze Software, Inc.

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of net parent
investment/stockholders' equity (deficit) and of cash flows present fairly, in
all material respects, the financial position of Blaze Software, Inc. and its
subsidiaries at March 31, 2000 and December 31, 2000, and the results of their
operations and their cash flows for the years ended March 31, 1999 and March 31,
2000 and for the periods from April 1, 2000 to September 29, 2000 and September
30, 2000 to December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. 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 of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, on September
29, 2000, Brokat AG acquired the outstanding common stock of Blaze Software,
Inc. The consolidated financial statements for the period subsequent to
September 29, 2000 have been prepared on the basis of accounting arising from
the acquisition (successor period). The financial statements for the period from
April 1, 2000 to September 29, 2000 are presented on Blaze Software, Inc.'s
previous basis of accounting (predecessor period).

PricewaterhouseCoopers LLP

San Jose, California
October 26, 2001


                                       2


                              BLAZE SOFTWARE, INC.
                           CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                                    PREDECESSOR             SUCCESSOR
                                                                                    -----------     --------------------------
                                                                                     MARCH 31,      DECEMBER 31,      JUNE 30,
                                                                                        2000            2000            2001
                                                                                    -----------     ------------     ---------
                                                                                                                    (UNAUDITED)
                                                                                                           
ASSETS
Current assets:
  Cash and cash equivalents                                                          $  57,295       $  23,722       $      --
  Short-term investments                                                                11,998              --              --
  Accounts receivable, net of allowance for doubtful accounts of $512, $520 and
     $247 at March 31, 2000, December 31, 2000 and June 30, 2001, respectively           4,939           6,995           3,750
  Prepaid expenses and other current assets                                              1,108           2,105             961
                                                                                     ---------       ---------       ---------
       Total current assets                                                             75,340          32,822           4,711

Property and equipment, net                                                              1,933           4,114           1,996
Goodwill and other intangible assets, net                                                   --         441,755              --
Restricted cash                                                                            702             741             763
Deposits and other assets                                                                  384             406             421
                                                                                     ---------       ---------       ---------
       Total assets                                                                  $  78,359       $ 479,838       $   7,891
                                                                                     =========       =========       =========

LIABILITIES AND NET PARENT INVESTMENT/
STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                                                                   $   1,972       $     796       $   2,058
  Accrued expenses and other current liabilities                                         7,446           9,245           5,782
  Current portion of capital lease obligations                                             176             186             217
  Deferred revenue                                                                       2,728           2,549           2,766
                                                                                     ---------       ---------       ---------
       Total current liabilities                                                        12,322          12,776          10,823

Long-term liabilities:
  Capital lease obligations, net of current portion                                        256             116              28
  Other long-term liabilities                                                               12              78              --
                                                                                     ---------       ---------       ---------
       Total liabilities                                                                12,590          12,970          10,851
                                                                                     ---------       ---------       ---------

Commitments and contingencies (Note 12)

Net parent investment/stockholders' equity (deficit):
  Common Stock, $0.0001 par value
     Authorized: 200,000 shares at March 31, 2000
     Issued and outstanding: 22,020 at March 31, 2000                                        2              --              --
  Additional paid-in capital                                                           144,642              --              --
  Accumulated other comprehensive income (loss)                                            489             189            (508)
  Unearned stock-based compensation                                                    (21,207)             --              --
  Net parent investment/accumulated deficit                                            (58,157)        466,679          (2,452)
                                                                                     ---------       ---------       ---------
       Total net parent investment/stockholders' equity (deficit)                       65,769         466,868          (2,960)
                                                                                     ---------       ---------       ---------
       Total liabilities and net parent investment/stockholders'
         equity (deficit)                                                            $  78,359       $ 479,838       $   7,891
                                                                                     =========       =========       =========



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


                                       3


                              BLAZE SOFTWARE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)



                                                                             PREDECESSOR                          SUCCESSOR
                                                          -----------------------------------------------  -------------------------
                                                                                   FOR THE      FOR THE      FOR THE      FOR THE
                                                                                 PERIOD FROM  PERIOD FROM  PERIOD FROM  PERIOD FROM
                                                              FOR THE YEAR ENDED   APRIL 1,    JANUARY 1,  SEPTEMBER 30,  JANUARY 1,
                                                                   MARCH 31,        2000 TO     2000 TO      2000 TO      2001 TO
                                                          ---------------------  SEPTEMBER 29,  JUNE 30,   DECEMBER 31,   JUNE 30,
                                                            1999         2000        2000         2000         2000         2001
                                                          ---------   ---------  ------------  ----------  -----------  ------------
                                                                                              (UNAUDITED)               (UNAUDITED)
                                                                                                      
Net revenues:
  Product licenses                                        $   3,722   $   8,486   $   5,514    $   6,435    $   6,206    $   5,853
  Service and maintenance                                     5,332       9,710       8,424        7,246        5,322        9,244
                                                          ---------   ---------   ---------    ---------    ---------    ---------
       Total revenues                                         9,054      18,196      13,938       13,681       11,528       15,097
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Cost of revenues:
  Product licenses                                               40          67          28           22            5           22
  Services and maintenance                                    2,892       6,808       7,921        6,680        5,741        6,895
                                                          ---------   ---------   ---------    ---------    ---------    ---------
       Total cost of revenues                                 2,932       6,875       7,949        6,702        5,746        6,917
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Gross profit                                                  6,122      11,321       5,989        6,979        5,782        8,180
Operating expenses:
  Research and development                                    3,843       8,730       6,161        5,619        3,968        6,219
  Sales and marketing                                         5,586      16,526      18,783       14,974        8,610       13,948
  General and administrative                                  2,205      12,234      11,236        5,638        3,585        5,816
  Restructuring expense                                          --          --          --           --           --        1,393
  Intangible amortization and impairment expense                 --          --          --           --       25,429      443,754
                                                          ---------   ---------   ---------    ---------    ---------    ---------
       Total operating expenses                              11,634      37,490      36,180       26,231       41,592      471,130
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Operating loss                                               (5,512)    (26,169)    (30,191)     (19,252)     (35,810)    (462,950)
Interest expense                                               (300)       (377)        (62)         (96)         (35)          (1)
Other income (expense), net                                      51         275       1,952        1,233          433          (27)
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Net loss from continuing operations before income taxes      (5,761)    (26,271)    (28,301)     (18,115)     (35,412)    (462,978)
Provision for income taxes                                      (87)       (153)        (14)         (51)          (7)          --
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Net loss from continuing operations                          (5,848)    (26,424)    (28,315)     (18,166)     (35,419)    (462,978)
Discontinued operations (Note 3):
  Income from operations of discontinued user
     interface business (net of income taxes)                   248       2,657          76          769           --           --
Gain (loss) on disposal of user interface business
  (net of income taxes)                                          --          --        (197)          --           --           --
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Net loss                                                     (5,600)    (23,767)    (28,436)     (17,397)     (35,419)    (462,978)
Accretion of mandatorily redeemable preferred stock
  to redemption value                                        (1,258)       (442)         --           --           --           --
Beneficial conversion feature                                    --     (11,739)         --           --           --           --
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Net loss attributable to common stockholders                 (6,858)    (35,948)    (28,436)     (17,397)     (35,419)    (462,978)
Other comprehensive income (loss):
  Unrealized loss on investments                                 --         (20)         --          (20)          --           --
  Translation adjustments                                       180         219         742         (185)         583         (697)
                                                          ---------   ---------   ---------    ---------    ---------    ---------
Comprehensive loss                                        $  (6,678)  $ (35,749)  $ (27,694)   $ (17,602)   $ (34,836)   $(463,675)
                                                          =========   =========   =========    =========    =========    =========
Basic and diluted net loss per common share
  attributable to common stockholders:
     Loss from continuing operations                      $  (19.15)  $   (6.68)
     Earnings/(loss) from discontinued operations              0.66        0.46
                                                          ---------   ---------
Basic and diluted net loss per common share
  attributable to common stockholders                     $  (18.49)  $   (6.22)
                                                          =========   =========
Number of shares used in the calculation of basic
  and diluted net loss per share                                371       5,781
                                                          =========   =========



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


                                       4


                              BLAZE SOFTWARE, INC.
         CONSOLIDATED STATEMENTS OF NET PARENT INVESTMENT/STOCKHOLDERS'
                                EQUITY (DEFICIT)
                                 (IN THOUSANDS)




                                                 MANDATORILY
                                                  REDEEMABLE                 SERIES B             CONVERTIBLE
                                                 CONVERTIBLE                CONVERTIBLE          PREFERRED AND
                                               PREFERRED STOCK            PREFERRED STOCK         COMMON STOCK       ADDITIONAL
                                              ------------------          ----------------      -----------------      PAID-IN
                                              SHARES      AMOUNT          SHARES    AMOUNT      SHARES     AMOUNT      CAPITAL
                                              ------      ------          ------    ------      ------     ------    ----------
                                                                                                
PREDECESSOR
Balance at April 1, 1998                       3,179     $  19,624         2,272     $ --          403     $    --    $    (552)

Issuance of Common Stock
    pursuant to exercise of options               --            --            --       --           98          --           56
Issuance of Common Stock                          --            --            --       --            1          --           --
Repurchase of Common Stock                        --            --             1       --         (158)         --          (88)
Accretion of Mandatorily Redeemable
    Convertible Preferred Stock
    to redemption value                           --         1,258            --       --           --          --       (1,258)
Net loss                                          --            --            --       --           --          --           --
Cumulative translation
    adjustment                                    --            --            --       --           --          --           --
                                               -----     ---------         -----     ----       ------     -------    ---------
Balance at March 31, 1999                      3,179        20,882         2,273       --          344          --       (1,842)

Issuance of Common Stock
    pursuant to exercise of options               --            --            --       --        1,486          --          755
Issuance of Common Stock
    pursuant to conversion of warrants            --            --            --       --          362          --           67
Accretion of Mandatorily Redeemable
    Preferred Stock to redemption value           --           442            --       --           --          --         (442)
Beneficial conversion feature                     --            --            --       --           --          --       11,739
Adjustment of Mandatorily Redeemable
    Preferred Stock Series C per
    anti-dilution provision                       20            --            --       --           --          --           --
Conversion of Mandatorily Redeemable                                          --       --           --          --           --
    Preferred Stock to Common Stock           (3,199)      (21,324)           --       --        3,199           1       21,323
Conversion of Series B Stock
    to Common Stock                               --            --        (2,273)      --        2,273          --           --
Issuance of Series AA Preferred Stock,
    net of issuance costs                         --            --            --       --           --          --        4,403
Issuance of Series BB Preferred Stock             --            --            --       --           --          --       13,943
Conversion of Series AA Preferred
    Stock to Common Stock                         --            --            --       --        8,416           1           --
Conversion of Series BB Preferred
    Stock to Common Stock                         --            --            --       --        1,953          --           --
Issuance of Common Stock pursuant
    initial public offering                       --            --            --       --        4,000          --       57,090
Unearned compensation                             --            --            --       --           --          --       37,607
Amortization of unearned
    compensation                                  --            --            --       --           --          --           --
Repurchase of Common Stock                        --            --            --       --          (13)         --           (1)
Net loss                                          --            --            --       --           --          --           --
Unrealized loss on investments                    --            --            --       --           --          --           --
Cumulative translation adjustment                 --            --            --       --           --          --           --
                                               -----     ---------         -----     ----       ------     -------    ---------
Balances at March 31, 2000                        --            --            --       --       22,020           2      144,642
                                               -----     ---------         -----     ----       ------     -------    ---------






                                                                                                            TOTAL
                                                                                                          NET PARENT
                                                NOTES       ACCUMULATED                   NET PARENT      INVESTMENT/
                                              RECEIVABLE       OTHER         UNEARNED     INVESTMENT/    STOCKHOLDERS'
                                                 FROM      COMPREHENSIVE    STOCK-BASED   ACCUMULATED       EQUITY
                                             STOCKHOLDERS   INCOME (LOSS)  COMPENSATION     DEFICIT       (DEFICIT)
                                             ------------  -------------   ------------   ------------   -------------
                                                                                          
PREDECESSOR
Balance at April 1, 1998                       $   (70)        $   110       $      --     $ (17,051)      $ (17,563)

Issuance of Common Stock
    pursuant to exercise of options                 --              --              --            --              56
Issuance of Common Stock                            --              --              --            --              --
Repurchase of Common Stock                          70              --              --            --             (18)
Accretion of Mandatorily Redeemable                                                                               --
    Convertible Preferred Stock
    to redemption value                             --              --              --            --          (1,258)
Net loss                                            --              --              --        (5,600)         (5,600)
Cumulative translation
    adjustment                                      --             180              --            --             180
                                               -------         -------       ---------     ---------       ---------
Balance at March 31, 1999                           --             290              --       (22,651)        (24,203)

Issuance of Common Stock
    pursuant to exercise of options                 --              --              --            --             755
Issuance of Common Stock
    pursuant to conversion of warrants              --              --              --            --              67
Accretion of Mandatorily Redeemable
    Preferred Stock to redemption value             --              --              --            --            (442)
Beneficial conversion feature                       --              --              --       (11,739)             --
Adjustment of Mandatorily Redeemable
    Preferred Stock Series C per
    anti-dilution provision                         --              --              --            --              --
Conversion of Mandatorily Redeemable                --              --              --            --              --
    Preferred Stock to Common Stock                 --              --              --            --          21,324
Conversion of Series B Stock
    to Common Stock                                 --              --              --            --              --
Issuance of Series AA Preferred Stock,
    net of issuance costs                           --              --              --            --           4,403
Issuance of Series BB Preferred Stock               --              --              --            --          13,943
Conversion of Series AA Preferred
    Stock to Common Stock                           --              --              --            --               1
Conversion of Series BB Preferred
    Stock to Common Stock                           --              --              --            --              --
Issuance of Common Stock pursuant
    initial public offering                         --              --              --            --          57,090
Unearned compensation                               --              --         (37,607)           --              --
Amortization of unearned
    compensation                                    --              --          16,400            --          16,400
Repurchase of Common Stock                          --              --              --            --              (1)
Net loss                                            --              --              --       (23,767)        (23,767)
Unrealized loss on investments                      --             (20)             --            --             (20)
Cumulative translation adjustment                   --             219              --            --             219
                                               -------         -------       ---------     ---------       ---------
Balances at March 31, 2000                          --             489         (21,207)      (58,157)         65,769
                                               -------         -------       ---------     ---------       ---------



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


                                       5


                              BLAZE SOFTWARE, INC.
         CONSOLIDATED STATEMENTS OF NET PARENT INVESTMENT/STOCKHOLDERS'
                                EQUITY (DEFICIT)
                                   (CONTINUED)
                                 (IN THOUSANDS)



                                             MANDATORILY
                                              REDEEMABLE         SERIES B              CONVERTIBLE
                                             CONVERTIBLE        CONVERTIBLE            PREFERRED AND
                                           PREFERRED STOCK    PREFERRED STOCK          COMMON STOCK          ADDITIONAL
                                           ----------------   ---------------       -------------------        PAID-IN
                                           SHARES    AMOUNT   SHARES   AMOUNT       SHARES       AMOUNT        CAPITAL
                                           ------    ------   ------   ------       ------       ------      ----------
                                                                                        
Balances at March 31, 2000                    --       --       --       --         22,020             2        144,642

Issuance of common stock pursuant
   to exercise of options                     --       --       --       --            370            --            313
Issuance of common stock pursuant
   to Employee Stock Purchase
   Agreement Plan                             --       --       --       --             60            --            669
Repurchase of common shares                   --       --       --       --            (20)           --            (32)
Repurchase of shares related to the
   Rabbi Trust                                --       --       --       --           (440)           --           (372)
Issuance of shares related to over-
   allotment in connection with the IPO       --       --       --       --            600            --          8,728
Acceleration of options                       --       --       --       --             --            --             --
Unrealized gain/loss on investments           --       --       --       --             --            --             --
Cumulative translation adjustment             --       --       --       --             --            --             --
Amortization of unearned compensation         --       --       --       --             --            --           (585)
Net loss                                      --       --       --       --             --            --             --
                                            ----     ----     ----     ----         ------       -------      ---------
Balance at September 29, 2000                 --     $ --       --     $ --         22,590       $     2      $ 153,363
                                            ====     ====     ====     ====         ======       =======      =========
SUCCESSOR
Balance at September 30, 2000                 --     $ --       --     $ --             --       $    --      $      --

Amortization of unearned compensation         --       --       --       --             --            --             --
Cumulative translation adjustment             --       --       --       --             --            --             --
Parent (distribution)/contribution, net       --       --       --       --             --            --             --
Net loss                                      --       --       --       --             --            --             --
                                            ----     ----     ----     ----         ------       -------      ---------
Balance at December 31, 2000                  --       --       --       --             --            --             --

Amortization of unearned compensation         --       --       --       --             --            --             --
Cumulative translation adjustment             --       --       --       --             --            --             --
Parent (distribution)/contribution, net       --       --       --       --             --            --             --
Net loss (unaudited)                          --       --       --       --             --            --             --
                                            ----     ----     ----     ----         ------       -------      ---------
Balance at June 30, 2001 (unaudited)          --     $ --       --     $ --             --       $    --      $      --
                                            ====     ====     ====     ====         ======       =======      =========





                                                                                                                  TOTAL
                                                                                                                NET PARENT
                                               NOTES       ACCUMULATED                         NET PARENT       INVESTMENT/
                                            RECEIVABLE        OTHER            UNEARNED        INVESTMENT/     STOCKHOLDERS'
                                              FROM        COMPREHENSIVE       STOCK-BASED      ACCUMULATED        EQUITY
                                           STOCKHOLDERS   INCOME (LOSS)       COMPENSATION       DEFICIT         (DEFICIT)
                                           ------------   -------------       ------------     -----------     -------------
                                                                                                
Balances at March 31, 2000                       --               489            (21,207)        (58,157)         65,769

Issuance of common stock pursuant
   to exercise of options                        --                --                 --              --             313
Issuance of common stock pursuant
   to Employee Stock Purchase

   Agreement Plan                                --                --                 --              --             669
Repurchase of common shares                      --                --                 --              --             (32)
Repurchase of shares related to the
   Rabbi Trust                                   --                --                 --              --            (372)
Issuance of shares related to over-
   allotment in connection with the IPO          --                --                 --              --           8,728
Acceleration of options                          --                --              1,763              --           1,763
Unrealized gain/loss on investments              --                20                 --              --              20
Cumulative translation adjustment                --              (115)                --              --            (115)
Amortization of unearned compensation            --                --              8,684              --           8,099
Net loss                                         --                --                 --         (28,436)        (28,436)
                                               ----         ---------          ---------       ---------       ---------
Balance at September 29, 2000                  $ --         $     394          $ (10,760)      $ (86,593)      $  56,406
                                               ====         =========          =========       =========       =========
SUCCESSOR
Balance at September 30, 2000                  $ --         $      --          $      --       $ 526,223       $ 526,223

Amortization of unearned compensation            --                --                 --           5,061           5,061
Cumulative translation adjustment                --               189                 --              --             189
Parent (distribution)/contribution, net          --                --                 --         (29,186)        (29,186)
Net loss                                         --                --                 --         (35,419)        (35,419)
                                               ----         ---------          ---------       ---------       ---------
Balance at December 31, 2000                     --               189                 --         466,679         466,868

Amortization of unearned compensation            --                --                 --           3,677           3,677
Cumulative translation adjustment                --              (697)                --              --            (697)
Parent (distribution)/contribution, net          --                --                 --          (9,830)         (9,830)
Net loss (unaudited)                             --                --                 --        (462,978)       (462,978)
                                               ----         ---------          ---------       ---------       ---------
Balance at June 30, 2001 (unaudited)           $ --         $    (508)         $      --       $  (2,452)      $  (2,960)
                                               ====         =========          =========       =========       =========



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


                                       6

                              BLAZE SOFTWARE, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



                                                                                                    PREDECESSOR
                                                                                 ---------------------------------------------------
                                                                                                            FOR THE       FOR THE
                                                                                                          PERIOD FROM   PERIOD FROM
                                                                                    FOR THE YEAR ENDED      APRIL 1,     JANUARY 1,
                                                                                          MARCH 31,         2000 TO       2000 TO
                                                                                 ----------------------   SEPTEMBER 29,   JUNE 30,
                                                                                     1999        2000        2000          2000
                                                                                 ----------    --------   ------------- -----------
                                                                                                                        (UNAUDITED)
                                                                                                            

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                        $ (5,600)    $(23,767)   $(28,436)     $(17,397)
  Income from discontinued operations                                                 (248)      (2,657)        121          (769)
                                                                                  --------     --------    --------      --------
                  Loss from continuing operations                                   (5,848)     (26,424)    (28,315)      (18,166)

  Adjustments to reconcile net loss to net cash used in operating activities:
            Bridge loan interest converted to equity                                    96           --          --            --
            Depreciation and amortization                                              899          597         518            --
            Amortization of stock-based compensation                                    --       16,400       9,862           412
            Loss on write-off of equipment                                             129           71          --         8,680
            Goodwill and other intangible assets                                                     --          --
            Write-off of in process  research & development                             --           --          --            --
            Capital lease for construction-in-progress                                  --           40          --            --

            Changes in assets and liabilities:
               Accounts receivable                                                    (557)      (1,779)       (830)       (1,727)
               Income taxes refund receivable                                           27           --          --            --
               Prepaid expenses and other                                             (533)        (144)       (504)         (873)
               Accounts payable                                                          7          492         149          (540)
               Accrued expenses                                                       (757)       4,573        (154)        2,642
               Deferred revenue                                                        (95)        (503)         75        (1,007)
               Deposits and other assets                                               260         (156)         26          (101)
               Other long-term liabilities                                              --           12          44            34
                                                                                  --------     --------    --------      --------
  Net cash used in continuing operations                                            (6,372)      (6,821)    (19,129)      (10,646)
  Net cash provided by discounted operations                                         2,061        3,109         412         1,821
                                                                                  --------     --------    --------      --------
                  Net cash used in operating activities                             (4,311)      (3,712)    (18,717)       (8,825)
                                                                                  --------     --------    --------      --------
FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                                (779)      (1,388)     (1,938)       (2,850)
  Purchases of short-term investments                                                   --      (12,018)         --       (22,876)
  Proceeds and maturities of short-term investments                                     --           --      12,018            --
                                                                                  --------     --------    --------      --------
                  Net cash provided by (used in) investing activities                 (779)     (13,406)     10,080       (25,726)
                                                                                  --------     --------    --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from note payable                                                           129           --          --            --
  Repayment of note payable                                                             --         (129)         --            --
  Payments of principal under capital lease financing                                 (172)        (136)        (88)           31
  Bank borrowings, net                                                              (1,047)      (1,631)         --        (2,658)
  Repayment of note payable to stockholder                                              --           --          --            --
  Proceeds from issuance of Common Stock                                                56       57,847       9,710        66,444
  Repurchase of Common Stock                                                           (18)          (1)        (32)          (27)
  Repurchase of Common Stock related to Rabbi Trust                                     --           --        (372)           --
  Proceeds from issuance of Preferred Stock, Series D and Series E warrants
       (net of issuance costs)                                                          --           67          --            31
  Proceeds from issuance of Preferred Stock, Series AA (net of
       issuance costs)                                                                  --        2,807          --           (53)
  Proceeds from issuance of Preferred Stock, Series BB                                  --       13,943          --            --
  Proceeds from bridge loan                                                          1,500           --          --            --
  Increase in restricted cash                                                           --         (702)        (27)           --
  Parent (distributions)/contributions, net                                             --           --          --          (282)
                                                                                  --------     --------    --------      --------
                  Net cash provided by (used in) financing activities                  448       72,065       9,191        63,486
                                                                                  --------     --------    --------      --------
Effect of exchange rate changes on cash                                                180          219        (115)         (162)

Net increase (decrease) in cash and cash equivalents                                (4,462)      55,166         439        28,773

Cash and cash equivalents at beginning of period                                     6,591        2,129      57,295        16,326
                                                                                  --------     --------    --------      --------
Cash and cash equivalents at end of period                                        $  2,129     $ 57,295    $ 57,734      $ 45,099
                                                                                  ========     ========    ========      ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year: Interest                                             $    202     $    313    $     62      $    124
                                                                                  ========     ========    ========      ========
  Cash paid during the year: Income taxes                                         $     49     $     11    $     14      $     17
                                                                                  ========     ========    ========      ========
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Cancellation of stockholder note in exchange for Common Stock                   $     70     $     --    $     --      $     --
                                                                                  ========     ========    ========      ========
  Assets acquired under capital lease obligations                                 $     --     $    468    $     --      $     --
                                                                                  ========     ========    ========      ========
  Accretion of cumulative dividends on Preferred Stock                            $  1,258     $    442    $     --      $     --
                                                                                  ========     ========    ========      ========
  Unearned compensation related to stock option grants                            $     --     $ 37,607    $     --      $  4,874
                                                                                  ========     ========    ========      ========
  Conversion of bridge loan to Preferred Stock                                    $     --     $  1,596    $     --      $     --
                                                                                  ========     ========    ========      ========
  Conversion of Mandatorily Redeemable Preferred Stock to Common Stock            $     --     $ 20,882    $     --      $     --
                                                                                  ========     ========    ========      ========
  Beneficial conversion feature                                                   $     --     $ 11,739    $     --      $ 11,739
                                                                                  ========     ========    ========      ========
  Write-off of property and equipment                                             $  3,761     $    776    $     --      $    304
                                                                                  ========     ========    ========      ========
  Parent permanent investment, net                                                $     --     $     --    $     --      $     --
                                                                                  ========     ========    ========      ========
  Goodwill from acquisition                                                       $     --     $     --    $     --      $     --
                                                                                  ========     ========    ========      ========





                                                                                                 SUCCESSOR
                                                                                  ---------------------------------------
                                                                                       FOR THE              FOR THE
                                                                                     PERIOD FROM          PERIOD FROM
                                                                                     SEPTEMBER 30,         JANUARY 1,
                                                                                       2000 TO              2001 TO
                                                                                     DECEMBER 31,           JUNE 30,
                                                                                        2000                  2001
                                                                                  ----------------      -----------------
                                                                                                          (UNAUDITED)
                                                                                                     
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                           $  (35,419)           $(462,978)
  Income from discontinued operations                                                        --                   --
                                                                                     ----------            ---------
                  Loss from continuing operations                                       (35,419)            (462,978)

  Adjustments to reconcile net loss to net cash used in operating activities:
            Bridge loan interest converted to equity                                         --                   --
            Depreciation and amortization                                                   337                  621
            Amortization of stock-based compensation                                      5,061                3,677
            Loss on write-off of equipment                                                   --                   27
            Goodwill and other intangible assets                                         23,250              443,755
            Write-off of in process research & development                                2,179                   --
            Capital lease for construction-in-progress                                       --                   --
            Changes in assets and liabilities:
                  Accounts receivable                                                    (1,783)               3,245
                  Income taxes refund receivable                                             --                   --
                  Prepaid expenses and other                                               (493)               1,144
                  Accounts payable                                                       (1,301)               1,262
                  Accrued expenses                                                        1,953               (3,463)
                  Deferred revenue                                                         (254)                 217
                  Deposits and other assets                                                 (48)                 (15)
                  Other long-term liabilities                                                22                  (78)
                                                                                     ----------            ---------
  Net cash used in continuing operations                                                 (6,496)             (12,586)
  Net cash provided by discontinued operations                                               --                   --
                                                                                     ----------            ---------
                  Net cash used in operating activities                                  (6,496)             (12,586)
                                                                                     ----------            ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                                   (1,098)                (530)
  Purchases of short-term investments                                                        --                   --
  Proceeds and maturities of short-term investments                                          --                   --
                                                                                     ----------            ---------
                  Net cash provided by (used in) investing activities                    (1,098)                (530)
                                                                                     ----------            ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from note payable                                                                 --                   --
  Repayment of note payable                                                                  --                   --
  Payments of principal under capital lease financing                                       (42)                 (57)
  Bank borrowings, net                                                                       --                   --
  Repayment of note payable to stockholder                                                   --                   --
  Proceeds from issuance of Common Stock                                                     --                   --
  Repurchase of Common Stock                                                                 --                   --
  Repurchase of Common Stock related to Rabbi Trust
  Proceeds from issuance of Preferred Stock, Series D and Series E warrants
       (net of issuance costs)                                                               --                   --
  Proceeds from issuance of Preferred Stock, Series AA (net of issuance costs)               --                   --
  Proceeds from issuance of Preferred Stock, Series BB                                       --                   --
  Proceeds from bridge loan                                                                  --                   --
  Increase in restricted cash                                                               (12)                 (22)
  Parent (distributions)/contributions, net                                             (26,553)              (9,830)
                                                                                     ----------            ---------
                  Net cash provided by (used in) financing activities                   (26,607)              (9,909)
                                                                                     ----------            ---------
Effect of exchange rate changes on cash                                                     189                 (697)
Net increase (decrease) in cash and cash equivalents                                    (34,012)             (23,722)
Cash and cash equivalents at beginning of period                                         57,734               23,722
                                                                                     ----------            ---------
Cash and cash equivalents at end of period                                           $   23,722            $      --
                                                                                     ==========            =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year: Interest                                                $       35            $      52
                                                                                     ==========            =========
  Cash paid during the year: Income taxes                                            $        7            $     105
                                                                                     ==========            =========
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Cancellation of stockholder note in exchange for Common Stock                      $       --            $      --
                                                                                     ==========            =========
  Assets acquired under capital lease obligations                                    $       --            $      --
                                                                                     ==========            =========
  Accretion of cumulative dividends on Preferred Stock                               $       --            $      --
                                                                                     ==========            =========
  Unearned compensation related to stock option grants                               $       --            $      --
                                                                                     ==========            =========
  Conversion of bridge loan to Preferred Stock                                       $       --            $      --
                                                                                     ==========            =========
  Conversion of Mandatorily Redeemable Preferred Stock to Common Stock               $       --            $      --
                                                                                     ==========            =========
  Beneficial conversion feature                                                      $       --            $      --
                                                                                     ==========            =========
  Write-off of property and equipment                                                $       --            $      27
                                                                                     ==========            =========
  Parent permanent investment, net                                                   $ (523,590)           $      --
                                                                                     ==========            =========
  Goodwill from acquisition                                                          $  467,184            $      --
                                                                                     ==========            =========




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

                                        7




                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

THE COMPANY

     Blaze Software, Inc. (together with its wholly-owned subsidiaries, "Blaze
Software" or the "Company), formerly a NASDQ publicly traded company
("Predecessor") (commission file number: 000-29817), was acquired by Brokat AG
("Brokat") on September 29, 2000 and Brokat subsequently sold Blaze Software to
HNC Software, Inc. ("HNC"). On August 15, 2001, HNC purchased from Brokat
substantially all of the assets and certain liabilities of Brokat's Blaze
Advisor business unit for approximately $18.5 million in cash. The accompanying
consolidated financial statements reflect Blaze Software as a Brokat owned
company ("Successor") from September 30, 2000 through June 30, 2001.

     The Company's principal activities include the development and licensing of
infrastructure software that enables adaptable and personalized interactions
that are consistent across all company communication channels, or touch points.
This software enables companies to implement their policies, practices and
procedures, or business rules, in e-business applications across multiple touch
points. Blaze Software also provides related maintenance and consulting
services. Blaze Software markets its products to a wide range of customers
mainly in North America, Europe and the Pacific Rim primarily through a direct
sales force.

BASIS OF PRESENTATION

     Successor

     The nine months ended December 31, 2000 is presented in two separate
periods in these consolidated financial statements due to the acquisition of
Blaze Software on September 29, 2000 by Brokat, which established a new basis of
accounting for certain assets and liabilities of Blaze Software. The purchase
method of accounting was used to record assets acquired and liabilities assumed
by Brokat. For the period from September 30, 2000 to December 31, 2000, Blaze
Software maintained separate financial statements, with the exception of equity
transactions.

     From the period beginning January 1, 2001, Blaze Software did not maintain
separate cost of sales, research and development, sales and marketing, and
general and administrative functions. The accompanying consolidated financial
statements for the period from January 1, 2001 to June 30, 2001 (unaudited)
reflect the carve-out historical results of operations and financial position of
Blaze Software as if Blaze Software had been operating as a separate business.
For the purposes of preparing the accompanying consolidated financial
statements, costs were allocated to Blaze Software using the following
allocation method: All costs and expenses directly attributable to Blaze
Software are included in the financial statements. No Brokat corporate cost
allocations for legal, human resources, other administrative functions and
services, rent and utilities were required as the Company operated autonomously
of the Brokat parent entity for all periods presented. The Blaze Software
financial statements costs and expenses were prepared on a carve-out basis from
the other entities within that subsidiary. The statements contain all expenses
directly attributable to services, rent, utilities, and interest related to
average working capital levels from the Company and Brokat. Brokat's management
believes that the allocation methods used are reasonable and reflective of Blaze
Software's proportionate share of such expenses. However, the financial
information included herein may not reflect the financial position, operating
results, changes in equity and cash flows of the Company in the future or what
they would have been had Blaze Software been a separate, stand-alone entity from
January 1, 2001 to June 30, 2001. No interdivision interest income or expense
has been allocated to, or included in, the accompanying unaudited interim
consolidated carve-out financial statements.

     Accordingly, the accompanying consolidated statement of operations for the
period from April 1, 2000 to September 29, 2000 and for the period from
September 30, 2000 to December 31, 2000 and the period from January 1, 2001 to
June 30, 2001 are not comparable in all material respects, since those
consolidated financial statements report financial position, results of
operation, and cash flows on a different basis of accounting.


                                       8


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     Predecessor and carve-out presentation

     The financial results for the years ended March 31, 1999 and March 31, 2000
and the period from April 1, 2000 to September 29, 2000 reflect Blaze Software
as a stand-alone public company.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Blaze
Software, Inc. and its wholly owned subsidiaries, Blaze Software GmbH, Blaze
Software S.A.R.L., Blaze Software Canada, Blaze Software (UK) Ltd, Blaze
Software Japan, Inc., and Blaze Software Australia Pty Ltd (together, "Blaze
Software" or the "Company"). All material intercompany balances and transactions
have been eliminated.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

INTERIM FINANCIAL STATEMENTS (UNAUDITED)

     The consolidated financial statements as of June 30, 2001 and for the six
months ended June 30, 2000 and 2001 are unaudited but have been prepared in
accordance with generally accepted accounting principles for interim financial
statements and the rules of the Securities and Exchange Commission and do not
include all disclosures required by generally accepted accounting principles for
annual financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
have been included. The results of operations of any interim period are not
necessarily indicative of the results of operations for a full year.

     IMPAIRMENT

     Brokat incurred a net loss during the first six months of 2001 and in prior
years. As of June 30, 2001, Brokat had a substantial shareholders' deficit and
had limited financial resources available to support its ongoing operations,
fund product development programs and pay its obligations as they become due.

     As a result of the aforementioned factors, Brokat announced and began to
implement a restructuring program, aimed at reducing operating costs and
improving organizational and operating efficiency. The cost reduction program
includes a hiring freeze and lower levels of external spending, as well as a
reduction in overall staffing levels.

     Brokat management currently believes that Brokat's existing capital
resources and cash from operations will not be sufficient to satisfy Brokat's
expected cash funding and working capital requirements through the end of 2001.
Brokat management is evaluating available opportunities to finance the Company's
cash needs.


                                       9


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     These or other sources of additional funding may not be available to Brokat
on a timely basis, at acceptable terms or at all. Pursuant to SFAS 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" the Company evaluated the recoverability of the long-lived
assets, including the identifiable intangible assets, goodwill and other long
lived assets recorded in connection with all of its various acquisitions. These
actions contemplate a plan to consider disposal of certain of the Brokat assets,
including Blaze. Those assets are expected to be sold or abandoned, depending on
resale market conditions. Due to the uncertainty regarding the ultimate outcome
of the actions steps within its restructuring program the accompanying financial
statements reflect an impairment loss of approximately $395.3 million.
Impairment expense has been classified within the operating statement caption
"Intangible Amortization and Impairment Expense." The impairment expense was
determined by comparing the carrying amounts of the respective assets to their
estimated fair value as of June 30, 2001. The estimated fair values of assets
held for sale are based on estimates of the expected sales price less costs to
sell. The estimated fair values for assets held for use are based on Brokat's
best estimates of discounted future cash flows. Brokat's estimates of expected
future cash flows and related fair values are based on the best information that
is currently available, but may change in subsequent periods based on a variety
of factors such as market conditions, Brokat's continuing negotiations related
to the disposal of certain assets and Brokat's continuing evaluation of the
recoverability of long-lived assets.

     RESTRUCTURING

     The restructuring program contemplates mainly a reduction of workforce
within Blaze. The workforce reductions commenced in the second quarter of 2001.
Blaze recorded restructuring charges of approximately $1.4 million.
Restructuring charges are disclosed separately in the consolidated statement of
operations. The restructuring charge relates primarily to severance benefits
accrued in accordance with Emerging Issues Task Force ("EITF") 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)."

FOREIGN CURRENCY TRANSLATION

     The functional currency of Blaze Software's subsidiaries is the respective
local currency. Accordingly, Blaze Software applies the current exchange rate to
translate the subsidiaries' assets and liabilities and the weighted average
exchange rate to translate the subsidiaries' revenues, expenses, gains and
losses into U.S. dollars. Translation adjustments are included as a separate
component of comprehensive income within divisional surplus
(deficit)/stockholders' equity in the accompanying consolidated financial
statements.

BUSINESS RISK AND CONCENTRATION OF CREDIT RISK

     Blaze Software currently operates in a single business segment and revenue
from continuing operations is principally attributable to the sale of software
products and related maintenance, consulting and training services which are
characterized by rapid technological advances, changes in customer requirements
and industry standards. Any failure by Blaze Software to anticipate or to
respond adequately to technological changes in its industry, changes in customer
requirements or changes in industry standards, could have a material adverse
effect on Blaze Software's business and operating results.

     Financial instruments which potentially subject Blaze Software to
concentrations of credit risk consist primarily of temporary cash investments,
including money market accounts and accounts receivable. Blaze Software placed
its temporary cash investments with one major financial institution at December
31, 2000 and two major financial institutions at March 31, 2000. Blaze Software
performs ongoing credit evaluations of its customers' financial condition and
does not require collateral. Blaze Software maintains allowances for potential
credit losses and such losses have been within management's expectations.


                                       10


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     At June 30, 2001, one customer accounted for approximately 15% (unaudited)
of the aggregate accounts receivable balance. At December 31, 2000, no customer
accounted for 10% or more of the aggregate accounts receivable balance. At March
31, 2000, two customers accounted for approximately 18% and 15% of the aggregate
accounts receivable balance. For the years ended March 31, 1999 and 2000, one
customer accounted for approximately 19% and 23% of total revenues,
respectively. For the periods from April 1, 2000 to September 29, 2000,
September 30, 2000 to December 31, 2000, January 1, 2000 to June 30, 2000 and
January 1, 2001 and June 30, 2001, one customer accounted for approximately 11%,
no customer accounted for more than 10%, one customer accounted for 17% and one
customer accounted for 14% of total revenues, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     Carrying amounts of certain Blaze Software's financial instruments
approximate fair value due to their short maturities.

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

     For the years ended March 31, 1999 and 2000 and for the period from April
1, 2000 to September 29, 2000 and the period from September 30, 2000 to December
31, 2000, Blaze Software invested its excess cash in money market accounts and
debt instruments and considered all highly liquid investments with an original
or remaining maturity of three months or less at the time of purchase to be cash
equivalents. Investments with an original or remaining maturity at the time of
purchase of over three months are classified as short-term investments as all
investments are classified as available-for-sale and can be readily liquidated
to meet current operational needs. The securities are carried at amortized cost,
which approximates fair value. Fair value is based upon market prices quoted on
the last day of the fiscal year.

     Beginning January 1, 2001, Brokat has managed cash and cash equivalents on
a centralized basis. All changes in cash and cash equivalents have been included
as an advance from Brokat.

     Unrealized gains and losses are reported as a separate component of
stockholders' equity. The amortized cost of the debt securities is adjusted for
the amortization of premiums and accretion of discounts to maturity. Such
amortization, as well as any interest on the securities, is included in interest
expense, net. Realized gains and losses and declines in value judged to be
other-than-temporary are also included in interest expense, and have not
been material. The cost of securities sold is based on the specific
identification method.

PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost and depreciated on a
straight-line basis over the estimated useful lives of the related assets,
generally three to five years for both the predecessor period and the successor
period. Leased assets are amortized on a straight-line basis over the lesser of
the estimated useful life or the lease term.

     Maintenance and repairs are charged to expense as incurred. When assets are
sold or retired, the cost and related accumulated depreciation are removed from
the accounts and any resulting gain or loss is included in operations.

GOODWILL AND OTHER INTANGIBLE ASSETS

     Goodwill represents the excess of the purchase price of the acquired
business over the fair value of the identifiable net assets acquired and is
amortized using the straight-line method over an estimated useful life of five
years. Acquired in-place workforce is amortized over the period of benefit of
five years. Acquired customer base and trade name are amortized over the period
of benefit of five years. Acquired technology is amortized over the periods of
benefit of five years. Amortization of goodwill and other intangible assets is
reflected in a separate line item on the consolidated statement of operations.


                                       11

                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

VALUATION OF LONG-LIVED ASSETS

     Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying value of
its long-lived assets, including, but not limited to, property and equipment,
goodwill and certain other assets has changed. The carrying value of a
long-lived asset is considered impaired when the undiscounted cash flow from
such asset is separately identifiable and is estimated to be less than its
carrying value. In that event, a loss is recognized based on the amount by which
the carrying value exceeds the fair value of the long-lived asset. Fair value is
determined primarily using the anticipated cash flows discounted at a rate
commensurate with the involved asset. Losses on long-lived assets to be disposed
of would be determined in a similar manner, except that fair values would be
reduced by the cost of disposal.

REVENUE RECOGNITION

     Blaze Software's revenues are derived from two sources; product license
revenues and service revenues. Product license revenues are derived from product
sales to end users and independent software vendors as well as royalties from
independent software vendors. Service revenues are derived from providing
consulting and training, maintenance and support services to end users.

     Blaze Software recognizes revenue in accordance with the American Institute
of Certified Public Accountants Statement of Position No. 97-2, Software Revenue
Recognition, as amended. License revenues from sales to end users and systems
integrators are recognized upon shipment of the product, if an executed
agreement or purchase order has been received, the fee is fixed and determinable
and collection is deemed probable. If an acceptance period is provided, revenue
is recognized upon the earlier of customer acceptance or the expiration of that
period. For enterprise application vendors, Blaze Software receives quarterly
reports from these vendors on sell-through of Blaze Software products to end
users. Blaze Software recognizes royalty revenues upon receipt of the quarterly
reports from vendors. For sales made through distributors, Blaze Software
recognizes revenues upon shipment of the product, if an executed agreement or
purchase order has been received, the fee is fixed and determinable and
collection is deemed probable. Distributors have no right of return.

     For contracts with multiple obligations (e.g., product licenses,
maintenance and other services), Blaze Software allocates revenue to each
component of the contract based on vendor specific objective evidence of its
fair value, which is based on the price when each component is sold separately,
or when not yet sold separately, the price established by management. Blaze
Software recognizes revenue allocated to undelivered products when the criteria
for product revenue set forth above are met.

     Service revenues from consulting, installation and training are recognized
as the related services are performed and collectibility is reasonably assured.
Revenues from maintenance and support agreements, which include product updates,
are deferred and recognized on a straight-line basis over the term of the
related agreement. Payments of maintenance fees are generally made in advance
and are nonrefundable.

ADVERTISING

     Blaze Software expenses advertising costs as they are incurred. Advertising
expense for the years ended March 31, 1999 and 2000, for the period from April
1, 2000 to September 29, 2000, for the period from September 30, 2000 to
December 31, 2000, for the period from January 1, 2000 to June 30, 2000 and for
the period from January 1, 2001 to June 30, 2001 was $431,000, $1,517,000,
$1,187,000, $517,000, $2,178,000 (unaudited) and $517,000 (unaudited),
respectively.


                                       12


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

INCOME TAXES

     Blaze Software accounts for income taxes in accordance with Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes. This statement prescribes the use of the
liability method whereby deferred tax assets and liabilities are determined
based on the differences between financial reporting and tax bases of assets and
liabilities and measured at tax rates that will be in effect when the
differences are expected to reverse. Valuation allowances are established when
necessary to reduce deferred tax assets where it is more likely than not the
deferred tax asset will not be realized.

     As of December 31, 2000, Blaze Software was not a separate taxable entity
for federal, state or local income tax purposes and its operations are included
in the Brokat income tax returns. The provision, if any, is computed using the
separate return method.

STOCK-BASED COMPENSATION

     Blaze Software has elected to adopt the disclosure provisions of Statement
of Financial Accounting Standards No. 123, Accounting for Stock-based
Compensation ("SFAS No. 123"). Blaze Software accounts for stock-based
compensation using Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, ("APB No. 25") and, accordingly, pro forma
disclosures required under SFAS No. 123 have been presented (See Note 10). Under
APB No. 25, compensation expense is based on the difference, if any, on the date
of the grant, between the deemed fair value of Blaze Software's common stock and
the exercise price. Additionally, pursuant to SFAS No. 123, common stock issued
to non-employees is accounted for at the fair value of the equity instruments
issued, or at the fair value of the consideration received, whichever is more
reliably measurable.

RESEARCH AND DEVELOPMENT EXPENDITURES

     Costs related to research, design and development of products are charged
to research and development expense as incurred. Under Statement of Financial
Accounting Standards No. 86, Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed," software development costs are capitalized
beginning when a product's technological feasibility has been established and
ending when a product is available for general release to customers. To date,
attaining technological feasibility of Blaze Software's products and general
release have substantially coincided. As a result, Blaze Software has not
capitalized any software development costs.

NET LOSS PER SHARE

     Blaze Software computes net loss in accordance with Statement of Financial
Accounting Standards No. 128, Earnings per Share ("SFAS No. 128"). Under the
provisions of SFAS No. 128, basic net loss per share is computed by dividing the
net loss available to common stockholders for the period by the weighted average
number of common shares outstanding during the period. Diluted net loss per
share is computed by dividing the net loss for the period by the weighted
average number of common and common equivalent shares outstanding during the
period. Options, warrants, mandatorily redeemable convertible preferred stock
and convertible preferred stock were not included in the computation of diluted
net loss per share because of the effect would be antidilutive. Since the
Company was acquired on September 30, 2000, net loss per share is not presented
for the periods September 30, 2000 through June 30, 2001 since the Company had
no outstanding shares. Additionally, net loss per share is not presented for the
period from April 1, 2000 to September 29, 2000 because such information is not
deemed to be meaningful.


                                       13


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     A reconciliation of shares used in calculation of basic and diluted net
loss per share follows (in thousands, except per share amounts):



                                                                             YEARS ENDED MARCH 31,
                                                                            -----------------------
                                                                              1999           2000
                                                                            --------       --------
                                                                                     
Basic and diluted net loss per share:
Numerator:
   Net loss from  continuing operations                                     $ (5,848)      $(26,424)
   Accretion of mandatorily redeemable convertible preferred stock
     to redemption value                                                      (1,258)          (442)
   Beneficial conversion feature of convertible preferred stock                   --        (11,739)
                                                                            --------       --------
   Net loss from continuing operations
     attributable to common stockholders                                      (7,106)       (38,605)
   Income (loss) from operations of discontinued
     user interface business                                                     248          2,657
                                                                            --------       --------
   Loss attributable to common stockholders                                 $ (6,858)      $(35,948)
                                                                            ========       ========
Denominator:
   Weighted average common shares outstanding                                    444          5,913
   Weighted average unvested common shares
     subject to repurchase                                                       (73)          (132)
                                                                            --------       --------
   Denominator for basic and diluted calculation                                 371          5,781
                                                                            ========       ========
   Basic and diluted net loss per share
     attributable to common stockholders                                    $ (18.49)      $  (6.22)
                                                                            ========       ========
   Antidilutive securities including options, warrants and convertible
     preferred stock not included in net loss per share calculation            7,392          4,479
                                                                            ========       ========


RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133, as amended, established accounting and reporting standards for
derivative financial instruments, including certain derivatives instruments
embedded in other contracts, and for hedging activities. Blaze adopted SFAS 133,
as amended, on January 1, 2001. Blaze has not engaged in hedging activities or
invested in derivative financial instruments and accordingly, the adoption of
SFAS 133 did not have a material effect on its financial statements (unaudited).

     In July 2001, the FASB issued Statement of Financial Accounting Standards
No. 141, "Business Combinations" ("SFAS 141") and Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS
142"). SFAS 141 requires all business combinations to be accounted for using the
purchase method of accounting and is effective for all business combinations
initiated after June 30, 2001. SFAS 142 requires goodwill to be tested for
impairment under certain circumstances, and written off when impaired, rather
than being amortized as previous standards required. SFAS 142 is effective for
fiscal years beginning after December 15, 2001 provided that the first interim
period financial statements have not been previously issued. The adoption of
SFAS 141 is not expected to have a material effect on the Company's operating
results or financial condition. The Company is currently assessing the impact of
SFAS 142 on its operating results and financial condition.


                                       14


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     On October 3, 2001, the FASB issued Statement of Accounting Standards No.
144 "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS
144"). FAS 144 supercedes FAS 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." FAS 144 applies to all
long-lived assets (including discontinued operations) and consequently amends
Accounting Principles Board Opinion No. 30 ("APB 30"), Reporting Results of
Operations Reporting the Effects of Disposal of Segment of a Business. FAS 144
develops one accounting model for long-lived assets that are to be disposed of
by sale. FAS 144 requires that long-lived assets that are to be disposed of by
sale be measured at the lower of book value or fair value less cost to sell.
Additionally, FAS 144 expands the scope of discontinued operations to include
all components of an entity with operations that (1) can be distinguished from
the rest of the entity and (2) will be eliminated from the ongoing operations of
the entity in a disposal transaction. FAS 144 is effective for the Company
beginning in fiscal 2002.

RECLASSIFICATIONS

     Certain amounts in the fiscal year 1999 financial statements have been
reclassified to conform to the fiscal year 2000 presentation.

NOTE 2 -- ACQUISITION OF BLAZE SOFTWARE BY BROKAT:

     On September 29, 2000, Brokat completed the acquisition of Blaze Software.
Under the terms of the Agreement and Plan of Merger dated June 19, 2000, among
Blaze Software and Brokat approximately 4,961,000 shares of Brokat's Common
Stock and options were issued or reserved for issuance for all outstanding
shares and options of Blaze Software. The acquisition was accounted using the
purchase method of accounting.

     The purchase consideration included approximately 4,131,000 shares of
Common Stock valued at approximately $450.7 million. In addition, all of the
outstanding stock options granted under the Blaze Software Option Plan were
converted at the ratio of 1:0.1826 into stock options to purchase approximately
830,000 shares of Brokat's common stock.

     The Black-Scholes option pricing model was used to determine the fair value
of the converted options. The fair value of the stock options, of approximately
$82.1 million, was included as a component of the purchase price. Brokat also
incurred approximately $11.9 million in acquisition expenses. The assumptions
used in the calculation of fair value of the options were: risk free interest
rate, 6.38%; average expected life, 2.3 years; volatility, 90%, and; 0% dividend
yield.

     The total purchase price of approximately $526.2 million was allocated to
assets acquired, including tangible and intangible assets, and liabilities
assumed, based on their respected estimated fair values at the acquisition. The
estimate of fair value of the net assets acquired is based on independent
estimates.

     The total purchase price was allocated as follows (in thousands):

                                      
Fair value of tangible assets            $  68,998
Acquired technology                         14,166
Customer base                               19,963
In-place workforce                           5,950
Tradename                                      495
Fair value of liabilities assumed           (9,959)
In-process research and development          2,179
Goodwill                                   424,431
                                         ---------
                                         $ 526,223
                                         =========




                                       15


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT

     In connection with the acquisition, Brokat acquired one in process project.
The existing product at the date of acquisition, Blaze Advisor Software Suite
provides customers with the ability to automatically update their sales force
with the latest information. The project is developing additional features to
ease the use and deployment of the existing Blaze Advisor Software Suite; $2.2
million was ascribed to the in-process research and development project which
was charged to operations in the period from September 30, 2000 to December 31,
2000. Amortization of in-process research and development is reflected in a
separate line item on the consolidated statement of operations.

     Blaze Software used an independent appraiser firm to assist in the
valuation of the in-process technology. Blaze Software provided assumptions of
revenue, cost of revenue and operating expense to the appraiser to assist in the
valuation. The in-process research and development project was valued through
the use of a discounted cash flow analysis, taking into account projected future
cash flows associated with the project once it achieves technological
feasibility, its stage of completion as of the acquisition date, and the
expected return requirement (i.e. discount rate) for determining present value
of the future cash flows. Stages of completion were estimated by considering
time, cost and complexity of tasks completed prior to the acquisition as a
percentage of total time, cost and effort required for the total project up to
achieving technological feasibility. Earnings associated with Blaze Software's
incomplete technology were discounted at a rate of 20%.

NOTE 3 - DISCONTINUED OPERATIONS:

     In December 1999, the Company's Board of Directors resolved to discontinue
Blaze Software's entire user interface line of business. The business was
subsequently sold on March 1, 2000. The accompanying financial statements have
been prepared to reflect the historical results of operations and cash flows of
the user interface business as discontinued operations for all periods
presented.

     Balance sheet data (in thousands):



                                              AS OF MARCH 31,
                                           ---------------------
                                            1999          2000
                                           -------       -------
                                                   
Current assets                             $ 1,183       $   615
Current liabilities                            (70)          (24)
                                           -------       -------
Net assets of discontinued operations      $ 1,113       $   591
                                           =======       =======


     The current assets and current liabilities noted above comprise accounts
receivable and accounts payable, respectively.

     Income statement data (in thousands):



                                                                                        FOR THE
                                                                                     PERIOD ENDED
                                                                                        APRIL 1,
                                                       YEARS ENDED MARCH 31,            2000 TO
                                                    -------------------------        SEPTEMBER 29,
                                                      1999              2000              2000
                                                    -------           -------        -------------
                                                                            
Revenues                                            $ 9,094           $ 5,013           $   174
Costs and expenses                                   (8,846)           (2,356)              (98)
                                                    -------           -------           -------
Income (loss) from discontinued operations          $   248           $ 2,657           $    76
                                                    =======           =======           =======



                                       16


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     Cash flow data (in thousands):



                                                                                               FOR THE
                                                                                             PERIOD FROM
                                                                                               APRIL 1,
                                                           YEARS ENDED MARCH 31,                2000 TO
                                                       ---------------------------           SEPTEMBER 29,
                                                         1999                2000                2000
                                                       -------             -------           -------------
                                                                                    
Net cash provided by (used in) discontinued
   operations                                          $ 2,061             $ 3,109              $  412
                                                       =======             =======              ======


NOTE 4--TRANSACTIONS WITH BROKAT TECHNOLOGIES:

     Blaze Software sells products and services to Brokat Technologies and its
subsidiaries. There were no sales to Brokat for the years ended March 31, 1999
and 2000, for the periods from April 1, 2000 to September 29, 2000, September
30, 2000 to December 31, 2000, and January 1, 2000 to June 30, 2000. Sales to
Brokat for the period January 1, 2001 to June 30, 2001 totaled $188,000.

NOTE 5 - BALANCE SHEET COMPONENTS:

PROPERTY AND EQUIPMENT

     Property and equipment consists of the following (in thousands):



                                                        PREDECESSOR                SUCCESSOR
                                                        -----------       -----------------------------
                                                          AS OF              AS OF             AS OF
                                                         MARCH 31,        DECEMBER 31,        JUNE 30,
                                                           2000               2000              2001
                                                        -----------       ------------       ----------
                                                                                             (UNAUDITED)
                                                                                    
Computer equipment                                        $ 2,636           $ 2,782           $ 1,108
Furniture and fixtures                                        463               753               868
Leasehold improvements                                        316               916               978
                                                          -------           -------           -------
                                                            3,415             4,451             2,954
Less:  Accumulated depreciation and amortization           (1,482)             (337)             (958)
                                                          -------           -------           -------
                                                          $ 1,933           $ 4,114           $ 1,996
                                                          =======           =======           =======



                                       17


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     Property and equipment under capital leases, included in the above table,
consist of the following (in thousands):



                                      PREDECESSOR             SUCCESSOR
                                      -----------     --------------------------
                                         AS OF           AS OF           AS OF
                                       MARCH 31,      DECEMBER 31,      JUNE 30,
                                          2000            2000            2000
                                      -----------     -----------      ---------
                                                                      (UNAUDITED)
                                                             
Computer equipment                       $ 705           $ 696           $ 696
Less:  Accumulated depreciation           (322)           (451)           (531)
                                         -----           -----           -----
                                         $ 383           $ 245           $ 165
                                         =====           =====           =====


     The amortization of assets recorded under capital leases is included within
depreciation expense.

GOODWILL AND OTHER INTANGIBLE ASSETS

     Goodwill and other intangible assets consists of the following (in
thousands):



                                                  SUCCESSOR
                                        ------------------------------
                                           AS OF              AS OF
                                        DECEMBER 31,         JUNE 30,
                                            2000               2001
                                        -----------          ---------
                                                            (UNAUDITED)
                                                       
Acquired technology                      $  14,166           $  14,166
In-place workforce                           5,950               5,950
Customer base                               19,963              19,963
Trade name                                     495                 495
Goodwill                                   424,431             424,431
                                         ---------           ---------
                                           465,005             465,005
Less:  Accumulated amortization            (23,250)            (69,751)
       Impairment expense                       --            (395,254)
                                         ---------           ---------
                                         $ 441,755           $      --
                                         =========           =========


     There were no goodwill and other intangible assets of the predecessor.


                                       18


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities consist of the following (in
thousands):



                                    PREDECESSOR             SUCCESSOR
                                    -----------    ---------------------------
                                       AS OF          AS OF           AS OF
                                     MARCH 31,     DECEMBER 31,      JUNE 30,
                                       2000            2000            2001
                                    -----------    -----------       ---------
                                                                    (UNAUDITED)
                                                           
Accrued compensation                  $1,622          $4,606          $3,972
Sales and income tax payable           1,276             718             236
Other accrued liabilities              4,548           3,921           1,574
                                      ------          ------          ------
                                      $7,446          $9,245          $5,782
                                      ======          ======          ======


NOTE 6 - BORROWINGS:

     Blaze Software had a line of credit facility with a lender, whereby Blaze
Software could borrow up to 80% of eligible United States and United Kingdom
accounts receivable with a maximum borrowing of $5,000,000. Borrowings under the
facility bore interest at the prime rate plus 3% (10.75% as of March 31, 1999)
and were collateralized by certain assets of Blaze Software. As of March 31,
1999, Blaze Software had borrowed $1,631,000 under this facility. The facility
was repaid and terminated in March 2000.

     In November 1998, Blaze Software entered into a bridge loan agreement with
several of its existing investors totaling $1.5 million. The loan bore interest
at the rate of 25%, was subordinated to the agreement between Blaze Software and
Coast Business Credit, and was collateralized by certain assets of Blaze
Software. The bridge loan was converted into 2,777,778 shares of Series AA
Preferred Stock in June 1999.

NOTE 7 - INITIAL PUBLIC OFFERING:

     In March 2000, Blaze Software completed its initial public offering and
issued 4,000,000 shares of its common stock to the public at a price of $16.00
per share. Blaze Software received net proceeds of approximately $57.1 million
in cash. Upon the closing the offering, all of the outstanding shares of the
Series AA and BB convertible preferred stock were converted into an aggregate of
10,369,000 shares of common stock.

     In April 2000, in connection with the initial public offering, the
underwriters purchased an additional 600,000 shares of common stock as a result
of the exercise of their over-allotment option. This sale resulted in additional
net proceeds of approximately $8,800,000.

NOTE 8 - MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:

     In June 1999, Blaze Software converted all of its outstanding mandatorily
redeemable preferred stock into common stock at the applicable conversion rates.

NOTE 9 - STOCKHOLDERS EQUITY:


                                       19


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

SERIES B PREFERRED STOCK

     In June 1999, Blaze Software converted all of its outstanding Series B
preferred stock into shares of common stock. The conversion is disclosed in the
statement of net parent investment/stockholders equity (deficit) within the
column "Convertible preferred stock and common stock."

PREFERRED STOCK WARRANTS

     In December 1996, warrants to purchase 107,143 shares of the Company's
Series B preferred stock were issued at a price per share of $5.60. These
warrants expired in December 1999. The fair value of these warrants was not
material to the financial statements.

SERIES AA AND BB PREFERRED STOCK

     In June 1999 and September 1999, Blaze Software issued 8,134,839 and
281,376 shares, respectively, of Series AA convertible preferred stock at a
price of $0.54 per share. Net proceeds to Blaze Software were cash of $2.8
million and the cancellation of indebtedness of $1.6 million. Prior to the
issuance of Series AA convertible preferred stock, Blaze Software converted all
of its outstanding shares of Series A, Series B, Series C Series D, and Series F
convertible preferred stock into common stock and all of its warrants for Series
E preferred stock into warrants for common stock at the applicable conversion
rates in effect for each series. The issuance in September 1999 resulted in a
beneficial conversion feature of approximately $2.2 million, calculated in
accordance with Emerging Issues Task Force No. 98-5, which resulted in an
immediate charge to additional paid-in capital.

     On December 31, 1999 1,952,735 shares of Series BB preferred stock were
issued for gross proceeds of approximately $13.9 million. The issuance resulted
in a beneficial conversion feature of approximately $9.5 million, calculated in
accordance with Emerging Issues Task Force No. 98-5, which resulted in an
immediate charge to additional paid-in capital.

     In March 2000, all shares of Series AA and BB preferred stock were
converted to shares of common stock effective with the Company's initial public
offering. The conversion is disclosed in the statement of net parent
investment/stockholders equity (deficit) within the column "Convertible
preferred stock and common stock."

DELAWARE REINCORPORATION

     In March 2000, Blaze Software reincorporated in the State of Delaware. The
par value of the preferred and common stock is $0.0001 per share. All share data
information has been restated to reflect the reincorporation.

COMMON STOCK

     In March 2000, Blaze Software's stockholders approved an increase in the
authorized number of common shares from 54,000,000 shares to 200,000,000 shares.
Each share of common stock has the right to one vote. The holders of common
stock are also entitled to receive dividends whenever funds are legally
available and when declared by the Board of Directors, subject to the prior
rights of holders of all classes of stock outstanding at the time having
priority rights as to dividends.


                                       20


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 10 - EMPLOYEE BENEFIT PLANS:

TAX DEFERRED SAVINGS PLAN

     The Company has a savings plan that is intended to qualify as a deferred
salary arrangement under Sections 401(a) and 401(k) of the Internal Revenue Code
(the "Savings Plan"). All full-time employees of Blaze Software are eligible to
participate in the Savings Plan pursuant to the terms of the plan. Participants
may defer up to 15 percent of their pre-tax earnings (up to the Internal Revenue
Service limit). The Company matches 25 percent of employee contributions up to a
maximum of $1,000 per employee. The participants' as well as the Company's
matching contributions are fully vested. Company contributions to the Savings
Plan were approximately $130,000, $47,000 and $40,000 for fiscal 2001, 2000 and
1999, respectively. Effective October 16, 2001, this plan was terminated.

STOCK OPTION PLANS

     In 1986, Blaze Software adopted the 1986 Stock Option Plan (the "1986
Plan") and had 1,254,500 shares of Common Stock reserved for issuance there
under. In 1996, the 1986 Plan was discontinued and replaced with the 1996 Stock
Option Plan (the "1996 Plan"). Under the 1996 Plan, Blaze Software has reserved
5,753,429 shares of common stock for issuance. In addition, in March 2000,
stockholders approved an increase in the number of shares available under the
1996 Plan by 1,250,000. In March 2000, stockholders approved the 2000 Stock Plan
(the "2000 Plan") and reserved 250,000 shares of common stock for future
issuance under this plan.

     Options granted under the 1996 Plan and the 2000 Plan (the "Plans") may be
incentive stock options or nonqualified stock options and shall be granted at a
price not less than 100% or 85% of fair market value, respectively, or at a
price not less than 110% of fair market value under certain circumstances. Fair
market value (as defined in the Plans) and the vesting, of these options shall
be determined by Blaze Software's Board of Directors. The options expire no
later than 10 years from the date of grant. Unvested options on termination of
employment are canceled and returned to the Plans. Options can be exercised from
the date of issuance, even though they have not fully vested. Such shares are
subject to repurchase on a pro rata basis over a four-year period from the date
of issuance. As of March 31, 2000 and 1999, there were approximately 734,400 and
73,500 shares, respectively, subject to repurchase, at a weighted average price
of $ 0.73 per share and $0.56 per share, respectively. During fiscal year 2000
and 1999, approximately 13,100 and 157,500 shares, respectively, were
repurchased.

     Shares acquired under the Plans are subject to Stock Purchase Agreements,
which provide Blaze Software with a right of first refusal and grant Blaze
Software repurchase rights for unvested shares, at their original cost.

     Options granted under the Plans have a term of ten years measured from the
grant date and are initially unvested. Participants vest in the option shares
granted over a four-year period with (i) twenty-five percent of the option
shares vesting upon the completion of one year of service, and (ii) the balance
of the option shares in thirty-six successive equal monthly installments upon
the participants completion of each additional month of service.

     All Blaze Software, Inc. options outstanding on September 29, 2000 were
converted into options to purchase Brokat's common stock and adjusted to give
effect to the acquisition exchange ratio.


                                       21


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     A summary of the status of Blaze Software's stock option plans as of
September 29, 2000, March 31, 1998, 1999, and 2000 and changes during the years
ended on these dates is presented below (in thousands, except per share
amounts):



                                                                      OPTIONS OUTSTANDING
                                                                     ------------------------
                                                                                    WEIGHTED
                                                    SHARES                           AVERAGE
                                                  AVAILABLE          NUMBER          EXERCISE
                                                     FOR               OF           PRICE PER
                                                    GRANT            SHARES           SHARE
                                                  ---------          ------         ---------
                                                                          
Options outstanding at April 1, 1998                    5            1,306           $ 0.59

Additional shares reserved                            104               --           $   --
Granted                                              (625)             625           $ 0.80
Exercised                                              --              (98)          $ 0.57
Canceled                                              637             (637)          $ 0.59
                                                    -----            -----
Options outstanding at March 31, 1999                 121            1,196           $ 0.70

Additional shares reserved                          5,706               --           $   --
Granted                                            (4,970)           4,970           $ 1.83
Exercised                                              --           (1,486)          $ 0.51
Canceled                                              202             (202)          $ 1.42
                                                    -----            -----
Options outstanding at March 31, 2000               1,059            4,478           $ 1.98

Additional shares reserved                             --               --           $   --
Granted                                              (485)             485           $12.48
Exercised                                              --             (255)          $ 1.28
Canceled                                              164             (164)          $ 7.00
                                                    -----            -----
Options outstanding at September 29, 2000             738            4,544           $ 3.00
                                                    =====            =====
Blaze options assumed by Brokat                        --            4,544
                                                    =====            =====


2000 EMPLOYEE STOCK PURCHASE PLAN

     In February 2000, the Board of Directors adopted the 2000 Employee Stock
Purchase Plan (the "ESPP"), which is designated to allow eligible employees of
the Company to purchase shares of common stock at semiannual intervals through
periodic payroll deductions. An aggregate of 750,000 shares of common stock have
been reserved for the ESPP, and no shares have been issued through March 31,
2000. The ESPP permits eligible employees to purchase common stock through
payroll deductions of up to 15% of an employee's compensation, up to a maximum
of $25,000 for all purchases ending within the same calendar year. Each offering
period will run for twenty-four months and consist of four six-month purchase
periods. The price at which common stock will be purchased under the ESPP is
equal to 85% of the fair market value of the common stock on the first day of
the offering period or the last day of each purchase period, whichever is lower.
Effective September 29, 2000, this plan was terminated and assumed by Brokat.


                                       22


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

STOCK-BASED COMPENSATION

     In connection with certain stock option grants during the nine month period
ended December 31, 2000, Blaze Software recorded stock-based compensation
expense totaling $13.2 million, which is being amortized in accordance with FASB
Interpretation No. 28 over the vesting periods of the related options, which is
generally four years. Stock-based compensation amortization expense has been
allocated across the relevant functional expense categories. Amounts previously
repeated have been reclassified to conform with current period presentation. The
reclassification has no impact on the previously reported net loss. Stock-based
compensation was allocated across the relevant functional expense categories
within operating expenses as follows (in thousands):



                                                  PREDECESSOR                           SUCCESSOR
                                -----------------------------------------------  -------------------------
                                                         FOR THE      FOR THE      FOR THE       FOR THE
                                                       PERIOD FROM  PERIOD FROM  PERIOD FROM   PERIOD FROM
                                 FOR THE YEAR ENDED      APRIL 1,    JANUARY 1,  SEPTEMBER 30,  JANUARY 1,
                                      MARCH 31,          2000 TO      2000 TO      2000 TO       2001 TO
                                --------------------   SEPTEMBER 29,  JUNE 30,   DECEMBER 31,   JUNE 30,
                                  1999        2000         2000         2000         2000         2001
                                -------      -------   ------------ -----------  ------------  -----------
                                                                     (UNAUDITED)               (UNAUDITED)
                                                                             
Cost of sales                   $    --      $   787      $   936      $ 1,006      $ 1,013      $   894
Research and development             --        3,651        2,038        2,126        1,499          972
Selling and marketing                --        3,513        3,032        3,326        1,624        1,000
General and administrative           --        8,449        2,093        2,222          925          811
                                -------      -------      -------      -------      -------      -------
                                $    --      $16,400      $ 8,099      $ 8,680      $ 5,061      $ 3,677
                                =======      =======      =======      =======      =======      =======


FAIR VALUE DISCLOSURES

     The following information concerning Blaze Software's stock option plans is
provided in accordance with SFAS No. 123. Blaze Software accounts for such plans
in accordance with APB No. 25.

     The fair value of each option grant has been estimated on the date of grant
using the Black-Scholes options-pricing model with the following weighted
average assumptions for grants:



                                                            PREDECESSOR
                                  -----------------------------------------------------------------
                                                                     FOR THE              FOR THE
                                                                   PERIOD FROM          PERIOD FROM
                                    FOR THE YEAR ENDED               APRIL 1,            JANUARY 1,
                                         MARCH 31,                    2000 TO             2000 TO
                                  -----------------------          SEPTEMBER 29,          JUNE 30,
                                  1999               2000               2000                2000
                                  ----               ----          ------------         -----------
                                                                                        (UNAUDITED)
                                                                            
Risk-free interest rate             4.7%               5.7%               6.3%               6.6%
Expected life                    5 years            5 years            5 years            5 years
Dividend yield                        --                 --                 0%                 0%
Expected volatility                   0%                 0%                90%                90%



                                       23


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     For purposes of pro forma disclosures, the estimated fair value of the
options are amortized over the option's vesting period. Blaze Software pro forma
information follows (in thousands, except per share amounts):



                                                                  PREDECESSOR                PREDECESSOR
                                                    -------------------------------------    -----------
                                                                               FOR THE         FOR THE
                                                                             PERIOD FROM     PERIOD FROM
                                                     FOR THE YEAR ENDED        APRIL 1,       JANUARY 1,
                                                          MARCH 31,            2000 TO         2000 TO
                                                    -------------------      SEPTEMBER 29,     JUNE 30,
                                                    1999           2000          2000           2000
                                                    ----           ----      ------------    -----------
                                                                                             (UNAUDITED)
                                                                                 
Net loss attributable to common stockholders      $(6,858)      $(35,948)      $(28,436)      $(15,951)
                                                  =======       ========       ========       ========
Net loss--FAS 123 adjusted                        $(6,896)      $(36,119)      $(31,695)      $(18,847)
                                                  =======       ========       ========       ========
Net loss per share--as reported
   Basic and diluted                              $ 18.49       $  (6.22)
                                                  =======       ========
Net loss per share--FAS 123 adjusted
   Basic and diluted                              $(18.59)      $  (6.25)
                                                  =======       ========


     The weighted-average fair value of options granted in fiscal 2000 and 1999
was $0.44 and $0.18, respectively.

NOTE 11 - COMPREHENSIVE INCOME:

     Under Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS 130"). Blaze Software displays all items required to
be recognized under accounting standards as components of its comprehensive
income.

     The comprehensive loss presented in the accompanying statements of
operations consists of the net unrealized gains and losses on
available-for-sale-investments and foreign currency translation adjustments, net
of the related tax effects for all periods presented. The tax effects for other
comprehensive income were immaterial for all periods presented. The balances for
each component of accumulated other comprehensive income are as follows (in
thousands):



                                                            PREDECESSOR                SUCCESSOR     PREDECESSOR      SUCCESSOR
                                                -----------------------------------   -----------    -----------     -----------
                                                                          FOR THE       FOR THE        FOR THE         FOR THE
                                                                        PERIOD FROM   PERIOD FROM    PERIOD FROM     PERIOD FROM
                                                FOR THE YEAR ENDED        APRIL 1,    SEPTEMBER 30,   JANUARY 1,     JANUARY 1,
                                                     MARCH 31,            2000 TO       2000 TO        2000 TO        2001 TO
                                                ------------------     SEPTEMBER 29,  DECEMBER 31,     JUNE 30,       JUNE 30,
                                                1999          2000          2000          2000          2000            2001
                                                ----          ----     ------------   -----------    -----------     -----------
                                                                                                     (UNAUDITED)     (UNAUDITED)
                                                                                                   
Cumulative translation adjustments             $ 290         $ 509        $ 394         $ 189          $ 373           $(508)
Unrealized gain/(loss) on investments             --           (20)          --            --            (55)             --
                                               -----         -----        -----         -----          -----           -----
Accumulated other comprehensive income         $ 290         $ 489        $ 394         $ 189          $ 318           $(508)
                                               =====         =====        =====         =====          =====           =====



                                       24


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 12 - COMMITMENTS AND CONTINGENCIES:

     Blaze Software leases administrative, engineering and sales facilities in
the United States, the United Kingdom, France, Germany, Japan and Australia
under noncancelable operating leases that expire at various dates through 2005.
Blaze Software is generally responsible for insurance and property taxes. Blaze
Software's primary lease in San Jose, California, is subject to annual payment
increases based on the consumer price index. Blaze Software also leases computer
equipment under leases classified as capital leases.

     The Company's primary building lease for its corporate headquarters is
collateralized by a certificate of deposit and is classified as restricted cash
in the accompanying balance sheets.

     As of December 31, 2000, the aggregate future minimum lease payments under
all noncancelable leases are as follows (in thousands):



PERIOD ENDING                                          CAPITAL       OPERATING
DECEMBER 31,                                           LEASES         LEASES
-------------                                          ------        ---------
                                                               
2001                                                   $  218        $  2,555
2002                                                      123           2,428
2003                                                       --           2,499
2004                                                       --           2,592
2005                                                       --           2,844
2006                                                       --             735
----                                                   ------        --------
Total minimum lease payments                              341        $ 13,653
                                                                     ========
Less:  Amount representing interest                       (39)
                                                       ------
Present value of capital lease obligation                 302
Current portion                                          (186)
                                                       ------
Long-term portion                                      $  116
                                                       ======


     Rent expense for the period from January 1, 2001 to June 30, 2001, from the
period from January 1, 2000 to June 30, 2000, from the period April 1, 2000 to
September 29, 2000, September 30, 2000 to December 31, 2000 and for the years
ended March 31, 2000 and 1999 was approximately $1,773,000 (unaudited),
$1,395,000 (unaudited), $1,089,000, $697,000, $976,000 and $1,002,000,
respectively.

EMPLOYMENT AGREEMENTS

     Blaze Software has entered into employment agreements with certain officers
of the Company. Some employment agreements also provide for severance in the
event the individual is terminated without cause.

LITIGATION

     From time to time, Blaze Software may be involved in litigation relating to
claims arising out of its ordinary course of business. Management believes that
there are no claims or actions pending or threatened against Blaze Software, the
ultimate disposition of which would have a material impact on Blaze Software's
financial position or results of operations. Blaze Software received
notification of claims from a founder and director that he may assert against
the Company. He contends that his personal equity ownership of Blaze Software
was diluted improperly in connection with a preferred stock financing. Blaze
Software believes that these assertions are without merit and intends to
vigorously defend any claims that may be brought against the Company.


                                       25


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 13 - INCOME TAXES:

     The components of income tax expense consisted of the following (in
thousands):



                                                              PREDECESSOR                         SUCCESSOR
                                           ------------------------------------------------    ---------------
                                                                               FOR THE             FOR THE
                                                                             PERIOD FROM         PERIOD FROM
                                            YEARS ENDED MARCH 31,           APRIL 1, 2000       SEPTEMBER 30,
                                           -----------------------         TO SEPTEMBER 29,    TO DECEMBER 31,
                                           1999               2000               2000               2000
                                           ----               ----         ---------------     ---------------
                                                                                   
Current:
   Federal                                 $ --               $ --               $ --               $ --
   Foreign                                   82                149                  9                  3
   State                                      5                  4                  5                  4
Deferred - federal and state                 --                 --                 --                 --
                                           ----               ----               ----               ----
   Income tax expense
                                           $ 87               $153               $ 14               $  7
                                           ====               ====               ====               ====


     The components of net deferred tax assets were as follows (in thousands):



                                                                  PREDECESSOR                              SUCCESSOR
                                               ------------------------------------------------           ------------
                                                       MARCH 31,
                                               -------------------------          SEPTEMBER 29,           DECEMBER 31,
                                                 1999             2000                 2000                   2000
                                               --------         --------          -------------           ------------
                                                                                              
Accrued liabilities                            $    576         $    846             $  1,283                $  1,667
Deferred revenue                                     12               20                   20                      20
Net operating loss carryforwards                  6,702            7,906               14,627                  16,525
Credit carryforwards and other                    1,428            2,099                2,242                   2,230
                                               --------         --------             --------                --------
                                                  8,718           10,871               18,172                  20,442
Valuation allowance                              (8,718)         (10,871)             (18,172)                (20,442)
                                               --------         --------             --------                --------
        Net deferred tax assets                $     --         $     --             $     --                $     --
                                               ========         ========             ========                ========


     Due to the uncertainty surrounding the realization of the deferred tax
asset in future tax returns, Blaze Software has placed a valuation allowance
against its net deferred tax assets. The increase in the valuation allowance is
primarily due to net operating loss incurred.


                                       26


                              BLAZE SOFTWARE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

     Blaze Software's expected U.S. Federal statutory income tax rate (34%)
differs from the effective tax rate as follows:



                                                 PREDECESSOR
                                            ----------------------
                                                                        FOR THE PERIOD
                                             YEARS ENDED MARCH 31,    FROM APRIL 1, 2000
                                            ----------------------      TO DECEMBER 31,
                                            1999              2000            2000
                                            ----              ----    ------------------
                                                                 
"Expected" income benefit                  (34.0)%           (34.0)%           (34)%
Net operating loss not benefited            34.0              10.5            24.7
Foreign income and withholding taxes         1.6               1.0             1.0
Stock compensation                            --              23.5             4.6
                                           -----             -----            ----
       Effective tax rate                    1.6%              1.0%           (0.7)%
                                           =====             =====            ====


     At June 30, 2001 (unaudited), the Company had available net operating loss
carryforwards of approximately $58,429,000 and $17,125,000 to offset future
federal and state taxable income, respectively. At June 30, 2001 (unaudited),
Blaze Software also had available research and development credit carryforwards
and other credit carryforwards of approximately $1,330,000 and $494,000 to
offset future federal and state taxable income, respectively, and foreign tax
credits of approximately $322,000 available to offset future federal taxable
income. These carryforwards expire from 2000 to 2010. The Company's results are
included in the combined income tax return of Brokat and have been computed on a
separate return basis. For federal and state tax purposes (unaudited), a portion
of Blaze Software's net operating loss carryforwards may be subject to certain
limitation on annual utilization in case of a change in ownership, as defined by
federal and state tax law.



                                       27

EX-99.02

                                                                   EXHIBIT 99.02


PRO FORMA FINANCIAL INFORMATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information
has been prepared to give effect to the acquisition of the assets of the Blaze
business unit ("Blaze") from Brokat Technologies, Inc. on August 15, 2001 as
well as the following: i) the acquisition of Systems/Link Corporation
("Systems/Link") that occurred on September 8, 2000 and ii) the distribution of
all of our shares of Retek Inc. ("Retek") to our stockholders on September 29,
2000. The pro forma condensed consolidated financial information is based on the
following:

        1.  Our unaudited historical consolidated financial statements as of
            June 30, 2001 and for the six months then ended;

        2.  Blaze's unaudited historical consolidated financial statements as of
            June 30, 2001 and for the six months then ended;

        3.  Our audited historical consolidated financial statements for the
            year ended December 31, 2000;

        4.  Blaze's historical consolidated financial statements for the year
            ended December 31, 2000, derived from Blaze's audited historical
            consolidated financial statements for the nine months ended December
            31, 2000 and Blaze's unaudited historical consolidated financial
            statements for the three months ended March 31, 2000;

        5.  Systems/Link's unaudited historical financial statements for the
            period from January 1, 2000 through September 8, 2000;

        6.  Retek's unaudited historical consolidated financial statements for
            the period from January 1, 2000 through September 29, 2000; and

        7.  Pro forma adjustments as described in the accompanying notes.


The pro forma condensed consolidated balance sheet at June 30, 2001 gives effect
to the acquisition of Blaze as if it occurred as of June 30, 2001. The pro forma
condensed consolidated statement of operations for the six months ended June 30,
2001 gives effect to the acquisition of Blaze as if it occurred as of January 1,
2001. The pro forma condensed consolidated statement of operations for the year
ended December 31, 2000 gives effect to the acquisitions of Blaze and
Systems/Link and the distribution of Retek as if they each occurred as of
January 1, 2000.

The related adjustments are described in the accompanying notes. The unaudited
pro forma condensed consolidated financial information is based upon available
information and certain assumptions set forth in the notes to the unaudited pro
forma condensed consolidated financial information, which have been made solely
for purposes of developing such unaudited pro forma financial information. The
unaudited pro forma condensed consolidated financial information does not
purport to represent what our results of operations or financial condition would
have been had the acquisitions of Blaze and Systems/Link or the distribution of
our shares of Retek occurred as of the pro forma dates specified above, or to
project our results of operations or financial condition for any future period
or date.

The unaudited pro forma condensed consolidated financial information should be
read in conjunction with our historical financial statements and notes, Retek's
historical financial statements and notes, and the historical financial
statements of Blaze and notes thereto, the latter of which are included herein.



                               HNC SOFTWARE INC.
            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                              AS OF JUNE 30, 2001
                                 (IN THOUSANDS)




                                                                                                    PRO FORMA
                                                          HNC                      PRO FORMA       CONSOLIDATED
                                                      AS REPORTED      BLAZE      ADJUSTMENTS          HNC
                                                      -----------   -----------   -----------      ------------
                                                                                       
ASSETS
Current assets:
  Cash and cash equivalents                            $  51,496     $      --     $ (16,500)(a)    $  32,996
                                                                                      (2,000)(b)
  Marketable securities available for sale-debt           53,090            --            --           53,090
  Trade accounts receivable, net                          47,148         3,750            --           50,898
  Current portion of deferred income taxes                16,900            --            --           16,900
  Other current assets                                     6,455           961            --            7,416
                                                       ---------     ---------     ---------        ---------
         Total current assets                            175,089         4,711       (18,500)         161,300
Marketable securities available for sale-debt             65,028            --            --           65,028
Equity investments                                        14,112            --            --           14,112
Property and equipment, net                               20,366         1,996            --           22,362
Goodwill, net                                             84,202            --        11,882(c)        96,084
Intangible assets, net                                    40,398            --        12,142(c)        52,540
Deferred income taxes, less current portion               34,579            --           200(f)        34,779
Other assets                                                 883         1,184         2,000(b)         4,067
                                                       ---------     ---------     ---------        ---------
         Total assets                                  $ 434,657     $   7,891     $   7,724        $ 450,272
                                                       =========     =========     =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:

  Accounts payable and accrued liabilities             $  24,175     $   8,057     $   3,251(d)     $  35,483
  Deferred revenue                                         7,655         2,766            --           10,421
                                                       ---------     ---------     ---------        ---------
         Total current liabilities                        31,830        10,823         3,251           45,904

Non-current liabilities                                      430            28         2,000(b)         2,458
                                                       ---------     ---------     ---------        ---------

         Total liabilities                                32,260        10,851         5,251           48,362
                                                       ---------     ---------     ---------        ---------

Contingencies

Stockholders' equity:
  Preferred stock                                             --            --            --               --
  Common stock                                                35            --            --               35
  Common stock in treasury                                (3,251)           --            --           (3,251)
  Paid-in capital                                        532,747            --            --          532,747
  Accumulated deficit                                   (126,155)       (2,452)        2,452(e)      (126,642)
                                                                                        (487)(f)
  Notes receivable from stockholders                        (405)           --            --             (405)
  Unearned stock-based compensation                         (442)           --            --             (442)
  Accumulated other comprehensive loss                      (132)         (508)          508(e)          (132)
                                                       ---------     ---------     ---------        ---------
         Total stockholders' equity                      402,397        (2,960)        2,473          401,910
                                                       ---------     ---------     ---------        ---------
         Total liabilities and stockholders' equity    $ 434,657     $   7,891     $   7,724        $ 450,272
                                                       =========     =========     =========        =========



            See accompanying notes to unaudited pro forma condensed
                      consolidated financial information.



                               HNC SOFTWARE INC.
       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2001
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




                                                                                                                PRO FORMA
                                                                HNC                          PRO FORMA         CONSOLIDATED
                                                            AS REPORTED        BLAZE        ADJUSTMENTS            HNC
                                                            -----------      ---------      -----------        ------------
                                                                                                   
Total Revenues                                               $ 112,992       $  15,097       $      --          $ 128,089
                                                             ---------       ---------       ---------          ---------

Operating expenses:
  Cost of revenues                                              43,978           6,917              --             50,895
  Research and development                                      22,318           6,219              --             28,537
  Sales and marketing                                           20,832          13,948              --             34,780
  General and administrative                                    15,733           5,816              --             21,549
  Transaction-related amortization and costs                    27,579         443,754        (443,754)(g)         29,288
                                                                                                 1,709 (h)
  Restructuring charge                                           2,960           1,393              --              4,353
                                                             ---------       ---------       ---------          ---------
     Total operating expenses                                  133,400         478,047        (442,045)           169,402

Operating loss                                                 (20,408)       (462,950)        442,045            (41,313)

Other income (expense):
  Interest expense                                                (167)             (1)             --               (168)
  Other income (expense), net                                    3,509             (27)             --              3,482
                                                             ---------       ---------       ---------          ---------

     Loss before income taxes                                  (17,066)       (462,978)        442,045            (37,999)

Income tax provision (benefit)                                   4,880              --            (701)(i)          4,179
                                                             ---------       ---------       ---------          ---------

Net loss                                                     $ (21,946)      $(462,978)      $ 442,746          $ (42,178)
                                                             =========       =========       =========          =========

Earnings per share:
  Basic and diluted net loss per common share                $   (0.65)                                         $   (1.25)
                                                             =========                                          =========

Shares used in computing basic and diluted net loss per
  common share                                                  33,830                                             33,830
                                                             =========                                          =========


             See accompanying notes to unaudited pro forma condensed
                      consolidated financial information.



                               HNC SOFTWARE INC.
       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2000
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                                              HNC                      SYSTEMS/LINK
                                                               HNC        DISTRIBUTION     EXCLUDING                    PRO FORMA
                                                           AS REPORTED      OF RETEK         RETEK      SYSTEMS/LINK   ADJUSTMENTS
                                                           -----------    ------------     ---------    ------------   ------------
                                                                                                        
Total Revenues                                              $ 254,884     $ (59,915)(j)    $ 194,969     $   9,877      $     --
                                                            ---------     ---------        ---------     ---------      --------
Operating expenses:
  Cost of revenues                                            133,382       (36,101)(j)       97,281         2,873            19(k)
  Research and development                                     75,490       (30,121)(j)       45,369         3,910            88(k)
  Sales and marketing                                          89,925       (30,053)(j)       59,872         2,423            19(k)
  General and administrative                                   53,321        (8,466)(j)       44,855         3,286            68(k)
  Transaction-related amortization and costs                   43,734        (5,440)(j)       38,294            --         9,612(l)

  In-process research and development                           7,601        (4,000)(j)        3,601            --            --
  Other                                                         1,172            --            1,172            --            --
                                                            ---------     ---------        ---------     ---------     ---------
     Total operating expenses                                 404,625      (114,181)         290,444        12,492         9,806

Operating income (loss)                                      (149,741)       54,266          (95,475)       (2,615)       (9,806)

Other income (expense):
  Interest expense                                             (4,231)           --           (4,231)         (181)           --
  Other income (expense), net                                   9,546        (1,643)(j)        7,903            --            --
  Expense related to debt conversion                          (12,676)           --          (12,676)           --            --
  Minority interest in losses (income) of
    consolidated subsidiary                                     7,582        (7,582)(j)           --            --            --
                                                            ---------     ---------        ---------     ---------     ---------
Income (loss) from continuing operations before
    income taxes                                             (149,520)       45,041         (104,479)       (2,796)       (9,806)

Income tax provision (benefit)                                (33,102)       16,488(j)       (16,614)           25        (3,941)(m)
                                                            ---------     ---------        ---------     ---------     ---------
Income (loss) from continuing operations                    $(116,418)    $  28,553        $ (87,865)    $  (2,821)    $  (5,865)
                                                            =========     =========        =========     =========     =========

Earnings per share:
  Basic and diluted net loss per common share
      from continuing operations                            $   (4.08)                     $   (3.08)
                                                            =========                      =========

Shares used in computing basic and diluted net loss per
   common share from continuing operations                     28,529                         28,529
                                                            =========                      =========




                                                                              BLAZE          PRO FORMA
                                                                             PRO FORMA      CONSOLIDATED
                                                             BLAZE          ADJUSTMENTS         HNC
                                                           ---------        -----------     ------------
                                                                                   
Total Revenues                                             $  31,913        $      --       $  236,759
                                                           ---------        ---------       ----------
Operating expenses:
  Cost of revenues                                            16,671               --          116,844
  Research and development                                    12,762               --           62,129
  Sales and marketing                                         34,775               --           97,089
  General and administrative                                  17,536               --           65,745
  Transaction-related amortization and costs                  25,429          (25,429)(n)       51,324
                                                                                3,418(o)
  In-process research and development                             --               --            3,601
  Other                                                           --               --            1,172
                                                           ---------        ---------        ---------
     Total operating expenses                                107,173          (22,011)         397,904

Operating income (loss)                                      (75,260)          22,011         (161,145)

Other income (expense):
  Interest expense                                              (257)              --           (4,669)
  Other income (expense), net                                  2,385               --           10,288
  Expense related to debt conversion                              --               --          (12,676)
  Minority interest in losses (income) of
    consolidated subsidiary                                       --               --               --
                                                           ---------        ---------        ---------
Income (loss) from continuing operations before
    income taxes                                             (73,132)          22,011         (168,202)

Income tax provision (benefit)                                    66           (1,401)(p)      (21,865)
                                                           ---------        ---------        ---------
Income (loss) from continuing operations                   $ (73,198)       $  23,412        $(146,337)
                                                           =========        =========        =========

Earnings per share:
  Basic and diluted net loss per common share
      from continuing operations                                                             $   (5.13)
                                                                                             =========
Shares used in computing basic and diluted net loss per
   common share from continuing operations                                                      28,529
                                                                                             =========


            See accompanying notes to unaudited pro forma condensed
                       consolidated financial information.



                               HNC SOFTWARE INC.
 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (IN
                       THOUSANDS, EXCEPT PER SHARE DATA)


NOTE 1 -- BASIS OF PRESENTATION

During the year ended December 31, 2000, HNC completed two significant
transactions: i) the acquisition of Systems/Link on September 8, 2000; and ii)
the distribution of all of our shares of Retek Inc. to our stockholders on
September 29, 2000.

On August 15, 2001, we acquired the assets of the Blaze business unit from
Brokat Technologies, Inc. in exchange for approximately $16,500 in cash. We
applied the purchase method of accounting for the acquisition of Blaze, which
resulted in a purchase price of $21,751. The purchase price included $2,000 in
restricted cash held back to secure potential future indemnification rights,
$1,500 in assumed severance obligations and approximately $1,751 of acquisition
costs, each of which we accrued. The preliminary allocation of the purchase
price using balances at August 15, 2001 is summarized below:

                                    
                Goodwill                               $  9,142
                Software development costs               10,247
                In-process research and development         487
                Other identified intangible assets        1,895
                Net liabilities assumed                     (20)
                                                       --------
                Total purchase price                   $ 21,751
                                                       ========

                

The purchase price including consideration paid and liabilities assumed was
allocated among the assets acquired based on the fair values of all assets
acquired, including purchased in-process research and development with the
residual purchase price assigned to goodwill. We are awaiting further
information regarding receivables acquired in a foreign jurisdiction and expect
to finalize our preliminary allocation by December 31, 2001. The fair values of
the intangible assets and purchased in-process research and development were
determined through an independent appraisal. The amount allocated to in-process
research and development represents the purchased in-process research and
development for projects that, as of the date of the acquisition, had not yet
reached technological feasibility and had no alternative future use. The value
of these projects was determined by estimating the resulting net cash flows from
the sale of the products from completion of the projects, reduced by the portion
of revenue attributable to developed technology and the



percentage completion of the project. The resulting cash flows were then
discounted back to their present value at appropriate discount rates. The
amounts allocated to in-process research and development were charged to our
statement of operations in the third quarter of 2001.

NOTE 2 -- NEW ACCOUNTING PRONOUNCEMENTS


In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combinations" ("FAS 141") and
No. 142, "Goodwill and Other Intangible Assets" ("FAS 142"). FAS 141 requires
all business combinations initiated after June 30, 2001 to be accounted for
using the purchase method. Under FAS 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually (or more
frequently if impairment indicators arise) for impairment. Separable intangible
assets that are not deemed to have indefinite lives will continue to be
amortized over their useful lives (but with no maximum life). The amortization
provisions of FAS 142 apply immediately to goodwill and intangible assets
acquired after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, HNC is required to adopt FAS 142 effective
January 1, 2002. We are currently evaluating the effect that adoption of the
provisions of FAS 142 will have on our consolidated financial position, results
of operations or disclosures in future periods. The historical financial
statements contained herein do not reflect the provisions of FAS 142; however,
FAS 142 has been applied to the Blaze transaction.

On October 3, 2001, the FASB issued Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS
144"). FAS 144 supercedes Statement of Financial Accounting Standard No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." FAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board
Opinion No. 30, "Reporting Results of Operations--Reporting the Effects of
Disposal of a Segment of a Business." FAS 144 develops one accounting model for
long-lived assets that are to be disposed of by sale. FAS 144 requires that
long-lived assets that are to be disposed of by sale be measured at the lower of
book value or fair value less cost to sell. Additionally, FAS 144 expands the
scope of discontinued operations to include all components of an entity with
operations that (1) can be distinguished from the rest of the entity and (2)
will be eliminated from the ongoing operations of the entity in a disposal
transaction. HNC is required to adopt FAS 144 effective January 1, 2002.

NOTE 3 -- PRO FORMA ADJUSTMENTS

    (a)  Reflects cash we paid to Brokat Technologies, Inc. as of the
         acquisition date.

    (b)  Reflects the reclassification to a restricted designation of the $2,000
         portion of the cash purchase price held back to secure potential future
         indemnification rights, and the establishment of a corresponding
         liability.

    (c)  Reflects the recording of goodwill and other intangible assets
         resulting from the acquisition of Blaze based on the purchase price
         allocation described in Note 1.

    (d)  Reflects accrued liabilities related to assumed severance obligations
         along with transaction costs incurred by HNC.

    (e)  Reflects the elimination of Blaze's equity accounts.

    (f)  Reflects the amount allocated to in-process research and development
         based on the purchase price allocation described in Note 1, and
         resultant deferred tax asset established.

    (g)  Reflects the elimination of Blaze's historical amortization and
         impairment of goodwill and intangible assets.



    (h)  Reflects the amortization of identifiable intangible assets resulting
         from the Blaze acquisition over their estimated useful lives of two to
         four years, as if the acquisition had occurred on January 1, 2001.

    (i)  Reflects the estimated tax benefit resulting from the amortization of
         the intangible assets recorded as part of the Blaze acquisition, as if
         it had occurred on January 1, 2001.

    (j)  Reflects the reported results of operations of Retek Inc. as if our
         distribution of Retek Inc. common stock to our stockholders occurred as
         of January 1, 2000.

    (k)  Reflects amortization of unearned stock-based compensation recorded in
         connection with the acquisition of Systems/Link, as if the acquisition
         had occurred on January 1, 2000.

    (l)  Reflects the amortization of goodwill and other identifiable intangible
         assets resulting from the Systems/Link acquisition over their estimated
         useful lives of three to four years, as if the acquisition had occurred
         on January 1, 2000.

    (m)  Reflects the estimated tax benefit resulting from the amortization of
         the intangible assets recorded as part of the Systems/Link acquisition,
         as if it had occurred on January 1, 2000.

    (n)  Reflects the elimination of Blaze's historical amortization of goodwill
         and intangible assets.

    (o)  Reflects the amortization of identifiable intangible assets resulting
         from the Blaze acquisition over their estimated useful lives of two to
         four years, as if the acquisition had occurred on January 1, 2000.

    (p)  Reflects the estimated tax benefit resulting from the amortization of
         the intangible assets recorded as part of the Blaze acquisition, as if
         it had occurred on January 1, 2000.

EX-99.03

                                                                   EXHIBIT 99.03

                                     BYLAWS
                                       OF
                                HNC SOFTWARE INC.

                            (a Delaware corporation)

                            As Adopted April 19, 1995
                  and Amended March 20, 1998, December 10, 1999
                       April 10, 2001 and August 31, 2001

                                    ARTICLE I

                                  STOCKHOLDERS

        Section 1.1: Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of Delaware, as the Board of Directors shall each year fix.
Any other proper business may be transacted at the annual meeting.

        Section 1.2 Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
Chief Executive Officer, the President, the holders of shares of the Corporation
that are entitled to cast not less than ten percent (10%) of the total number of
votes entitled to be cast by all shareholders at such meeting, or by a majority
of the members of the Board of Directors. Special meetings may not be called by
any other person or persons. If a special meeting of stockholders is called by
any person or persons other than by a majority of the members of the Board of
Directors, then such person or persons shall call such meeting by delivering a
written request to call such meeting to each member of the Board of Directors,
and the Board of Directors shall then determine the time, date and place of such
special meeting, which shall be held not more than one hundred twenty (120) nor
less than thirty-five (35) days after the written request to call such special
meeting was delivered to each member of the Board of Directors.

        Section 1.3: Notice of Meetings. Written notice of all meetings of
stockholders shall be given stating the place, date and time of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise required by applicable law or the Certificate of
Incorporation of the Corporation, such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting.

        Section 1.4: Adjournments. Any meeting of stockholders may adjourn from
time to time to reconvene at the same or another place, and notice need not be
given of any such adjourned meeting if the time, date and place thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the adjournment is for more than thirty (30)




days, or if after the adjournment a new record date is fixed for the adjourned
meeting, then a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. At the adjourned meeting
the Corporation may transact any business that might have been transacted at the
original meeting.

        Section 1.5: Quorum. At each meeting of stockholders the holders of a
majority of the shares of stock entitled to vote at the meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except if otherwise required by applicable law. If a quorum shall fail
to attend any meeting, the chairman of the meeting or the holders of a majority
of the shares entitled to vote who are present, in person or by proxy, at the
meeting may adjourn the meeting. Shares of the Corporation's stock belonging to
the Corporation (or to another corporation, if a majority of the shares entitled
to vote in the election of directors of such other corporation are held,
directly or indirectly, by the Corporation), shall neither be entitled to vote
nor be counted for quorum purposes; provided, however, that the foregoing shall
not limit the right of the Corporation or any other corporation to vote any
shares of the Corporation's stock held by it in a fiduciary capacity.

        Section 1.6: Organization. Meetings of stockholders shall be presided
over by such person as the Board of Directors may designate, or, in the absence
of such a person, the Chairman of the Board, or, in the absence of such person,
the President of the Corporation, or, in the absence of such person, such person
as may be chosen by the holders of a majority of the shares entitled to vote who
are present, in person or by proxy, at the meeting. Such person shall be
chairman of the meeting and, subject to Section 1.11 hereof, shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of discussion as seems to him or her to be
in order. The Secretary of the Corporation shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.

        Section 1.7: Voting; Proxies. Unless otherwise provided by law or the
Certificate of Incorporation, and subject to the provisions of Section 1.8 of
these Bylaws, each stockholder shall be entitled to one (1) vote for each share
of stock held by such stockholder. Each stockholder entitled to vote at a
meeting of stockholders, or to express consent or dissent to corporate action in
writing without a meeting, may authorize another person or persons to act for
such stockholder by proxy. Such a proxy may be prepared, transmitted and
delivered in any manner permitted by applicable law. Voting at meetings of
stockholders need not be by written ballot unless such is demanded at the
meeting before voting begins by a stockholder or stockholders holding shares
representing at least one percent (1%) of the votes entitled to vote at such
meeting, or by such stockholder's or stockholders' proxy; provided, however,
that an election of directors shall be by written ballot if demand is so made by
any stockholder at the meeting before voting begins. If a vote is to be taken by
written ballot, then each such ballot shall state the name of the stockholder or
proxy voting and such other information as the chairman of the meeting deems
appropriate. Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Unless otherwise provided by applicable law,
the Certificate of Incorporation or these Bylaws, every matter other than the
election of directors shall be decided by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote thereon



                                      -6-


that are present in person or represented by proxy at the meeting and are voted
for or against the matter.

        Section 1.8:  Fixing Date for Determination of Stockholders of Record.

        (a) Generally. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not precede the date upon which the resolution fixing the record
date is adopted by the Board of Directors and which shall not be more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action. If no record date is fixed by the
Board of Directors, then the record date shall be as provided by applicable law.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.

        (b) Stockholder Request for Action by Written Consent. Any stockholder
of record seeking to have the stockholders authorize or take corporate action by
written consent without a meeting shall, by written notice to the Secretary of
the Corporation, request the Board of Directors to fix a record date for such
consent. Such request shall include a brief description of the action proposed
to be taken. The Board of Directors shall, within ten (10) days after the date
on which such a request is received, adopt a resolution fixing the record date.
Such record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and shall not be more than ten
(10) days after the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If no record date has been fixed by the Board
of Directors within ten (10) days after the date on which such a request is
received, then the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by applicable law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its registered office in
the State of Delaware, to its principal place of business, or to any officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the Board of Directors
and prior action by the Board of Directors is required by applicable law, then
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
date on which the Board of Directors adopts the resolution taking such prior
action.

        Section 1.9: List of Stockholders Entitled to Vote. A complete list of
stockholders entitled to vote at any meeting of stockholders, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting,


                                      -7-



during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present at the meeting.

        Section 1.10: Action by Written Consent of Stockholders.

        (a) Procedure. Unless otherwise provided by the Certificate of
Incorporation, and except as set forth in Section 1.8(b) above, any action
required or permitted to be taken at any annual or special meeting of the
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Written stockholder consents shall bear the date of signature of each
stockholder who signs the consent and shall be delivered to the Corporation by
delivery to its registered office in the State of Delaware, to its principal
place of business or to any officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. No written consent shall
be effective to take the action set forth therein unless, within sixty (60) days
of the earliest dated consent delivered to the Corporation in the manner
provided above, written consents signed by a sufficient number of stockholders
to take the action set forth therein are delivered to the Corporation in the
manner provided above.

        (b) Notice of Consent. Prompt notice of the taking of corporate action
by stockholders without a meeting by less than unanimous written consent of the
stockholders shall be given to those stockholders who have not consented thereto
in writing and, in the case of a Certificate Action (as defined below), if the
Delaware General Corporation Law so requires, such notice shall be given prior
to filing of the certificate in question. If the action which is consented to
requires the filing of a certificate under the Delaware General Corporation Law
(a "Certificate Action"), then if the Delaware General Corporation Law so
requires, the certificate so filed shall state that written stockholder consent
has been given in accordance with Section 228 of the Delaware General
Corporation Law and that written notice of the taking of corporate action by
stockholders without a meeting as described herein has been given as provided in
such section.

        Section 1.11: Inspectors of Elections.

        (a) Applicability. Unless otherwise provided in the Corporation's
Certificate of Incorporation or required by the Delaware General Corporation
Law, the following provisions of this Section 1.11 shall apply only if and when
the Corporation has a class of voting stock that is: (i) listed on a national
securities exchange; (ii) authorized for quotation on an interdealer quotation
system of a registered national securities association; or (iii) held of record
by more than 2,000 stockholders; in all other cases, observance of the
provisions of this Section 1.11 shall be optional, and at the discretion of the
Corporation.



                                      -8-


        (b) Appointment. The Corporation shall, in advance of any meeting of
stockholders, appoint one or more inspectors of election to act at the meeting
and make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the person
presiding at the meeting shall appoint one or more inspectors to act at the
meeting.

        (c) Inspector's Oath. Each inspector of election, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of
his ability.

        (d) Duties of Inspectors. At a meeting of stockholders, the inspectors
of election shall (i) ascertain the number of shares outstanding and the voting
power of each share, (ii) determine the shares represented at a meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period of time a record of the disposition
of any challenges made to any determination by the inspectors, and (v) certify
their determination of the number of shares represented at the meeting, and
their count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.

        (e) Opening and Closing of Polls. The date and time of the opening and
the closing of the polls for each matter upon which the stockholders will vote
at a meeting shall be announced by the inspectors at the meeting. No ballot,
proxies or votes, nor any revocations thereof or changes thereto, shall be
accepted by the inspectors after the closing of the polls unless the Court of
Chancery upon application by a stockholder shall determine otherwise.

        (f) Determinations. In determining the validity and counting of proxies
and ballots, the inspectors shall be limited to an examination of the proxies,
any envelopes submitted with those proxies, any information provided in
connection with proxies in accordance with Section 212(c)(2) of the Delaware
General Corporation Law, ballots and the regular books and records of the
Corporation, except that the inspectors may consider other reliable information
for the limited purpose of reconciling proxies and ballots submitted by or on
behalf of banks, brokers, their nominees or similar persons which represent more
votes than the holder of a proxy is authorized by the record owner to cast or
more votes than the stockholder holds of record. If the inspectors consider
other reliable information for the limited purpose permitted herein, the
inspectors at the time they make their certification of their determinations
pursuant to this Section 1.11 shall specify the precise information considered
by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.

        Section 1.12: Notice of Stockholder Business; Nominations.

        (a) Annual Meeting of Stockholders.



                                      -9-


               (i) Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders shall be made
at an annual meeting of stockholders (A) pursuant to the Corporation's notice of
such meeting, (B) by or at the direction of the Board of Directors or (C) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of the notice provided for in this Section 1.12, who is entitled to vote
at such meeting and who complies with the notice procedures set forth in this
Section 1.12.

               (ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (C) of subparagraph
(a)(i) of this Section 1.12, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such other business
must otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice must be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
sixtieth (60th) day nor earlier than the close of business on the ninetieth
(90th) day prior to the first anniversary of the preceding year's annual meeting
(except in the case of the 1995 annual meeting, for which such notice shall be
timely if delivered in the same time period as if such meeting were a special
meeting governed by subparagraph (b) of this Section 1.12); provided, however,
that in the event that the date of the annual meeting is more than thirty (30)
days before or more than sixty (60) days after such anniversary date, notice by
the stockholder to be timely must be so delivered not earlier than the close of
business on the ninetieth (90th) day prior to such annual meeting and not later
than the close of business on the later of the sixtieth (60th) day prior to such
annual meeting or the close of business on the tenth (10th) day following the
day on which public announcement of the date of such meeting is first made by
the Corporation. Such stockholder's notice shall set forth: (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (1) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner, and (2) the class and number of shares of the Corporation that are owned
beneficially and held of record by such stockholder and such beneficial owner.

               (iii) Notwithstanding anything in the second sentence of
subparagraph (a)(ii) of this Section 1.12 to the contrary, in the event that the
number of directors to be elected to the Board of Directors of the Corporation
is increased and there is no public announcement by the Corporation naming all
of the nominees for director or specifying the size of the increased board of
directors at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting (or, if the annual meeting is held more than
thirty (30) days before or sixty (60) days after such anniversary date, at least
seventy (70) days prior to such annual meeting), a stockholder's notice required
by this Section 1.12 shall also be considered timely, but only with



                                      -10-


respect to nominees for any new positions created by such increase, if it shall
be delivered to the Secretary of the Corporation at the principal executive
office of the Corporation not later than the close of business on the tenth
(10th) day following the day on which such public announcement is first made by
the Corporation.

        (b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of such meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of such meeting (i) by or at the direction of the Board of
Directors or (ii) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice of
the special meeting, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 1.12. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by subparagraph (a)(ii) of this Section 1.12 shall
be delivered to the Secretary of the Corporation at the principal executive
offices of the Corporation not earlier than the ninetieth (90th) day prior to
such special meeting and not later than the close of business on the later of
the sixtieth (60th) day prior to such special meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.

        (c) General.

               (i) Only such persons who are nominated in accordance with the
procedures set forth in this Section 1.12 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 1.12. Except as otherwise provided by law or these
bylaws, the chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 1.12 and, if any proposed nomination or business is not in
compliance herewith, to declare that such defective proposal or nomination shall
be disregarded.

               (ii) For purposes of this Section 1.12, the term "public
announcement" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to section 13, 14 or 15(d) of the Exchange Act.

               (iii) Notwithstanding the foregoing provisions of this Section
1.12, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth herein. Nothing in this Section 1.12 shall be deemed to affect
any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.



                                      -11-


                                   ARTICLE II

                               BOARD OF DIRECTORS

        Section 2.1: Number; Qualifications. The Board of Directors shall
consist of one or more members. The current number of directors shall be six
(6),* and thereafter shall be fixed from time to time by resolution of the Board
of Directors. No decrease in the authorized number of directors constituting the
Board of Directors shall shorten the term of any incumbent director. Directors
need not be stockholders of the Corporation.

        Section 2.2: Election; Resignation; Removal; Vacancies. The Board of
Directors shall initially consist of the person or persons elected by the
incorporator or named in the Corporation's initial Certificate of Incorporation.
Each director shall hold office until the next annual meeting of stockholders
and until his or her successor is elected and qualified, or until his or her
earlier death, resignation or removal. Any director may resign at any time upon
written notice to the Corporation. Subject to the rights of any holders of
Preferred Stock then outstanding: (i) any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors and (ii) any
vacancy occurring in the Board of Directors for any cause, and any newly created
directorship resulting from any increase in the authorized number of directors
to be elected by all stockholders having the right to vote as a single class,
may be filled by the stockholders, by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.

        Section 2.3: Regular Meetings. Regular meetings of the Board of
Directors may be held at such places, within or without the State of Delaware,
and at such times as the Board of Directors may from time to time determine.
Notice of regular meetings need not be given if the date, times and places
thereof are fixed by resolution of the Board of Directors.

        Section 2.4: Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President or a
majority of the members of the Board of Directors then in office and may be held
at any time, date or place, within or without the State of Delaware, as the
person or persons calling the meeting shall fix. Notice of the time, date and
place of such meeting shall be given, orally or in writing, by the person or
persons calling the meeting to all directors at least four (4) days before the
meeting if the notice is mailed, or at least twenty-four (24) hours before the
meeting if such notice is given by telephone, hand delivery, telegram, telex,
mailgram, facsimile or similar communication method. Unless otherwise indicated
in the notice, any and all business may be transacted at a special meeting.

        Section 2.5: Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee of the Board, may participate in a meeting of the
Board or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant



--------
* Amended to change authorized number from 5 to 6 by Board resolution dated
August 31, 2001.

                                      -12-


to conference telephone or similar communications equipment shall constitute
presence in person at such meeting.

        Section 2.6: Quorum; Vote Required for Action. At all meetings of the
Board of Directors a majority of the total number of authorized directors shall
constitute a quorum for the transaction of business. Except as otherwise
provided herein or in the Certificate of Incorporation, or required by law, the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.

        Section 2.7: Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or in his or her absence by the
President, or in his or her absence by a chairman chosen at the meeting. The
Secretary shall act as secretary of the meeting, but in his or her absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.

        Section 2.8: Written Action by Directors. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board or
such committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board or committee,
respectively.

        Section 2.9: Powers. The Board of Directors may, except as otherwise
required by law or the Certificate of Incorporation, exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.

        Section 2.10: Compensation of Directors. Directors, as such, may
receive, pursuant to a resolution of the Board of Directors, fees and other
compensation for their services as directors, including without limitation their
services as members of committees of the Board of Directors.



                                      -13-


                                   ARTICLE III

                                   COMMITTEES

        Section 3.1: Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of the committee, the
member or members thereof present at any meeting of such committee who are not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent provided in a resolution of the Board of Directors, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation and may authorize the
seal of the Corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors as provided in subsection (a) of
Section 151 of the Delaware General Corporation Law, fix the designations and
any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation, or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the Corporation, or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series), adopting an
agreement of merger or consolidation under Sections 251 or 252 of the Delaware
General Corporation Law, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the Bylaws of the Corporation; and
unless the resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend, authorize the
issuance of stock or adopt a certificate of ownership and merger pursuant to
section 253 of the Delaware General Corporation Law.

        Section 3.2: Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of such rules each
committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these Bylaws.



                                      -14-


                                   ARTICLE IV

                                    OFFICERS

        Section 4.1: Generally. The officers of the Corporation shall consist of
a Chief Executive Officer and/or a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers, including a Chairman of the
Board of Directors and/or Chief Financial Officer, as may from time to time be
appointed by the Board of Directors. All officers shall be elected by the Board
of Directors; provided, however, that the Board of Directors may empower the
Chief Executive Officer of the Corporation to appoint officers other than the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer or the Treasurer. Each officer shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any number of offices may be held by the same person. Any officer
may resign at any time upon written notice to the Corporation. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise may be filled by the Board of Directors.

        Section 4.2: Chief Executive Officer. Subject to the control of the
Board of Directors and such supervisory powers, if any, as may be given by the
Board of Directors, the powers and duties of the Chief Executive Officer of the
Corporation are:

        (a) To act as the general manager and, subject to the control of the
Board of Directors, to have general supervision, direction and control of the
business and affairs of the Corporation;

        (b) To preside at all meetings of the stockholders;

        (c) To call meetings of the stockholders to be held at such times and,
subject to the limitations prescribed by law or by these Bylaws, at such places
as he or she shall deem proper; and

        (d) To affix the signature of the Corporation to all deeds, conveyances,
mortgages, guarantees, leases, obligations, bonds, certificates and other papers
and instruments in writing which have been authorized by the Board of Directors
or which, in the judgment of the Chief Executive Officer, should be executed on
behalf of the Corporation; to sign certificates for shares of stock of the
Corporation; and, subject to the direction of the Board of Directors, to have
general charge of the property of the Corporation and to supervise and control
all officers, agents and employees of the Corporation.

The President shall be the Chief Executive Officer of the Corporation unless the
Board of Directors shall designate another officer to be the Chief Executive
Officer. If there is no President, and the Board of Directors has not designated
any other officer to be the Chief Executive Officer, then the Chairman of the
Board shall be the Chief Executive Officer.



                                      -15-


        Section 4.3: Chairman of the Board. The Chairman of the Board shall have
the power to preside at all meetings of the Board of Directors and shall have
such other powers and duties as provided in these bylaws and as the Board of
Directors may from time to time prescribe.

        Section 4.4: President. The President shall be the Chief Executive
Officer of the Corporation unless the Board of Directors shall have designated
another officer as the Chief Executive Officer of the Corporation. Subject to
the provisions of these Bylaws and to the direction of the Board of Directors,
and subject to the supervisory powers of the Chief Executive Officer (if the
Chief Executive Officer is an officer other than the President), and subject to
such supervisory powers and authority as may be given by the Board of Directors
to the Chairman of the Board and/or to any other officer, the President shall
have the responsibility for the general management the control of the business
and affairs of the Corporation and the general supervision and direction of all
of the officers, employees and agents of the Corporation (other than the Chief
Executive Officer, if the Chief Executive Officer is an officer other than the
President) and shall perform all duties and have all powers that are commonly
incident to the office of President or that are delegated to the President by
the Board of Directors.

        Section 4.5: Vice President. Each Vice President shall have all such
powers and duties as are commonly incident to the office of Vice President, or
that are delegated to him or her by the Board of Directors or the Chief
Executive Officer. A Vice President may be designated by the Board to perform
the duties and exercise the powers of the Chief Executive Officer in the event
of the Chief Executive Officer's absence or disability.

        Section 4.6: Chief Financial Officer. Subject to the direction of the
Board of Directors and the President, the Chief Financial Officer shall perform
all duties and have all powers that are commonly incident to the office of chief
financial officer.

        Section 4.7: Treasurer. The Treasurer shall have custody of all monies
and securities of the Corporation. The Treasurer shall make such disbursements
of the funds of the Corporation as are authorized and shall render from time to
time an account of all such transactions. The Treasurer shall also perform such
other duties and have such other powers as are commonly incident to the office
of Treasurer, or as the Board of Directors or the President may from time to
time prescribe.

        Section 4.8: Secretary. The Secretary shall issue or cause to be issued
all authorized notices for, and shall keep, or cause to be kept, minutes of all
meetings of the stockholders and the Board of Directors. The Secretary shall
have charge of the corporate minute books and similar records and shall perform
such other duties and have such other powers as are commonly incident to the
office of Secretary, or as the Board of Directors or the President may from time
to time prescribe.

        Section 4.9: Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provision hereof.



                                      -16-


        Section 4.10: Removal. Any officer of the Corporation shall serve at the
pleasure of the Board of Directors and may be removed at any time, with or
without cause, by the Board of Directors. Such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation.


                                    ARTICLE V

                                      STOCK

        Section 5.1: Certificates. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the Corporation by the Chairman
or Vice-Chairman of the Board of Directors, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, of the Corporation, certifying the number of shares
owned by such stockholder in the Corporation. Any or all of the signatures on
the certificate may be a facsimile.

        Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate previously issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or such owner's legal representative, to agree
to indemnify the Corporation and/or to give the Corporation a bond sufficient to
indemnify it, against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.

        Section 5.3: Other Regulations. The issue, transfer, conversion and
registration of stock certificates shall be governed by such other regulations
as the Board of Directors may establish.


                                   ARTICLE VI

                                 INDEMNIFICATION

        Section 6.1 Indemnification of Officers and Directors. Each person who
was or is made a party to, or is threatened to be made a party to, or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he
or she (or a person of whom he or she is the legal representative), is or was a
director or officer of the Corporation or a Reincorporated Predecessor (as
defined below) or is or was serving at the request of the Corporation or a
Reincorporated Predecessor (as defined below) as a director or officer of
another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, shall be
indemnified and held harmless by the Corporation to the fullest extent permitted
by the Delaware General Corporation Law, against all expenses, liability and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes and
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and such indemnification shall



                                      -17-


continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnity in connection with a proceeding (or part thereof) initiated by such
person only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. As used herein, the term "Reincorporated
Predecessor" means a corporation that is merged with and into the Corporation in
a statutory merger where (a) the Corporation is the surviving corporation of
such merger; (b) the primary purpose of such merger is to change the corporate
domicile of the Reincorporated Predecessor to Delaware.

        Section 6.2: Advance of Expenses. The Corporation shall pay all expenses
(including attorneys' fees) incurred by such a director or officer in defending
any such proceeding as they are incurred in advance of its final disposition;
provided, however, that if the Delaware General Corporation Law then so
requires, the payment of such expenses incurred by such a director or officer in
advance of the final disposition of such proceeding shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be indemnified under
this Article VI or otherwise; and provided, further, that the Corporation shall
not be required to advance any expenses to a person against whom the Corporation
directly brings a claim, in a proceeding, alleging that such person has breached
his or her duty of loyalty to the Corporation, committed an act or omission not
in good faith or that involves intentional misconduct or a knowing violation of
law, or derived an improper personal benefit from a transaction.

        Section 6.3: Non-Exclusivity of Rights. The rights conferred on any
person in this Article VI shall not be exclusive of any other right that such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, Bylaw, agreement, vote or consent of stockholders
or disinterested directors, or otherwise. Additionally, nothing in this Article
VI shall limit the ability of the Corporation, in its discretion, to indemnify
or advance expenses to persons whom the Corporation is not obligated to
indemnify or advance expenses pursuant to this Article VI.

        Section 6.4: Indemnification Contracts. The Board of Directors is
authorized to cause the Corporation to enter into indemnification contracts with
any director, officer, employee or agent of the Corporation, or any person
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, providing indemnification rights
to such person. Such rights may be greater than those provided in this Article
VI.

        Section 6.5: Effect of Amendment. Any amendment, repeal or modification
of any provision of this Article VI shall be prospective only, and shall not
adversely affect any right or protection conferred on a person pursuant to this
Article VI and existing at the time of such amendment, repeal or modification.



                                      -18-


                                   ARTICLE VII

                                     NOTICES

        Section 7.1: Notice. Except as otherwise specifically provided herein or
required by law, all notices required to be given pursuant to these Bylaws shall
be in writing and may in every instance be effectively given by hand delivery
(including use of a delivery service), by depositing such notice in the mail,
postage prepaid, or by sending such notice by prepaid telegram, telex, overnight
express courier, mailgram or facsimile. Any such notice shall be addressed to
the person to whom notice is to be given at such person's address as it appears
on the records of the Corporation. The notice shall be deemed given (i) in the
case of hand delivery, when received by the person to whom notice is to be given
or by any person accepting such notice on behalf of such person, (ii) in the
case of delivery by mail, upon deposit in the mail, (iii) in the case of
delivery by overnight express courier, on the first business day after such
notice is dispatched, and (iv) in the case of delivery via telegram, telex,
mailgram, or facsimile, when dispatched.

        Section 7.2: Waiver of Notice. Whenever notice is required to be given
under any provision of these bylaws, a written waiver of notice, signed by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice.

                                  ARTICLE VIII

                              INTERESTED DIRECTORS

        Section 8.1: Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board or committee thereof that authorizes
the contract or transaction, or solely because his, her or their votes are
counted for such purpose, if: (i) the material facts as to his, her or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board or committee
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; (ii) the material facts as to his, her or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the



                                      -19-


Corporation as of the time it is authorized, approved or ratified by the Board
of Directors, a committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.

                                   ARTICLE IX

                                  MISCELLANEOUS

        Section 9.1: Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.

        Section 9.2: Seal. The Board of Directors may provide for a corporate
seal, which shall have the name of the Corporation inscribed thereon and shall
otherwise be in such form as may be approved from time to time by the Board of
Directors.

        Section 9.3: Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, magnetic tape,
diskettes, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.

        Section 9.4: Reliance Upon Books and Records. A member of the Board of
Directors, or a member of any committee designated by the Board of Directors
shall, in the performance of his or her duties, be fully protected in relying in
good faith upon records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.

        Section 9.5: Certificate of Incorporation Governs. In the event of any
conflict between the provisions of the Corporation's Certificate of
Incorporation and Bylaws, the provisions of the Certificate of Incorporation
shall govern.

        Section 9.6: Severability. If any provision of these Bylaws shall be
held to be invalid, illegal, unenforceable or in conflict with the provisions of
the Corporation's Certificate of Incorporation, then such provision shall
nonetheless be enforced to the maximum extent possible consistent with such
holding and the remaining provisions of these Bylaws (including without
limitation, all portions of any section of these Bylaws containing any such
provision held to be invalid, illegal, unenforceable or in conflict with the
Certificate of Incorporation, that are not themselves invalid, illegal,
unenforceable or in conflict with the Certificate of Incorporation) shall remain
in full force and effect.



                                      -20-


                                    ARTICLE X

                                    AMENDMENT

        Section 10.1: Amendments. Stockholders of the Corporation holding a
majority of the Corporation's outstanding voting stock shall have the power to
adopt, amend or repeal Bylaws. To the extent provided in the Corporation's
Certificate of Incorporation, the Board of Directors of the Corporation shall
also have the power to adopt, amend or repeal Bylaws of the Corporation, except
insofar as Bylaws adopted by the stockholders shall otherwise provide.



                                      -21-


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

                                     BYLAWS

                                       OF

                                HNC SOFTWARE INC.

                            (A DELAWARE CORPORATION)

                            AS ADOPTED APRIL 19, 1995
                  AND AMENDED MARCH 20, 1998, DECEMBER 10, 1999
                       APRIL 10, 2001 AND AUGUST 31, 2001

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



                                     BYLAWS

                                       OF

                                HNC SOFTWARE INC.

                            (a Delaware corporation)

                                TABLE OF CONTENTS



                                                                               PAGE
                                                                               ----
                                                                            
ARTICLE I - STOCKHOLDERS................................................        1

        Section 1.1:   Annual Meetings..................................        1

        Section 1.2:   Special Meetings.................................        1

        Section 1.3:   Notice of Meetings...............................        1

        Section 1.4:   Adjournments.....................................        1

        Section 1.5:   Quorum...........................................        2

        Section 1.6:   Organization.....................................        2

        Section 1.7:   Voting; Proxies..................................        2

        Section 1.8:   Fixing Date for Determination of Stockholders
                       of Record   .....................................        3

        Section 1.9:   List of Stockholders Entitled to Vote............        3

        Section 1.10:  Action by Written Consent of Stockholders.........       4

        Section 1.11:  Inspectors of Elections..........................        5

        Section 1.12:  Notice of Stockholder Business; Nominations......        6


ARTICLE II - BOARD OF DIRECTORS.........................................        8

        Section 2.1:   Number; Qualifications...........................        8

        Section 2.2:   Election; Resignation; Removal; Vacancies........        8







                                                                               PAGE
                                                                               ----
                                                                            
        Section 2.3:   Regular Meetings.................................        8

        Section 2.4:   Special Meetings.................................        8

        Section 2.5:   Telephonic Meetings Permitted....................        9

        Section 2.6:   Quorum; Vote Required for Action.................        9

        Section 2.7:   Organization.....................................        9

        Section 2.8:   Written Action by Directors......................        9

        Section 2.9:   Powers...........................................        9

        Section 2.10:  Compensation of Directors........................        9


ARTICLE III - COMMITTEES................................................       10

        Section 3.1:   Committees.......................................       10

        Section 3.2:   Committee Rules..................................       10

ARTICLE IV - OFFICERS  .................................................       11

        Section 4.1:   Generally........................................       11

        Section 4.2:   Chief Executive Officer..........................       11

        Section 4.3:   Chairman of the Board............................       12

        Section 4.4:   President........................................       12

        Section 4.5:   Vice President...................................       12

        Section 4.6:   Chief Financial Officer..........................       12

        Section 4.7:   Treasurer........................................       12

        Section 4.8:   Secretary........................................       12

        Section 4.9:   Delegation of Authority..........................       12








                                                                               PAGE
                                                                               ----
                                                                            
        Section 4.10:  Removal..........................................       13


ARTICLE V - STOCK      .................................................       13

        Section 5.l:   Certificates.....................................       13

        Section 5.2:   Lost, Stolen or Destroyed Stock Certificates;
                       Issuance of New Certificate......................       13

        Section 5.3:   Other Regulations................................       13


ARTICLE VI - INDEMNIFICATION............................................       13

        Section 6.1:   Indemnification of Officers and Directors........       13

        Section 6.2:   Advance of Expenses..............................       14

        Section 6.3:   Non-Exclusivity of Rights........................       14

        Section 6.4:   Indemnification Contracts........................       14

        Section 6.5:   Effect of Amendment..............................       14


ARTICLE VII - NOTICES  .................................................       15

        Section 7.l:   Notice...........................................       15

        Section 7.2:   Waiver of Notice.................................       15


ARTICLE VIII - INTERESTED DIRECTORS.....................................       15

        Section 8.1:   Interested Directors; Quorum.....................       15


ARTICLE IX - MISCELLANEOUS..............................................       16

        Section 9.1:   Fiscal Year......................................       16








                                                                               PAGE
                                                                               ----
                                                                            
        Section 9.2:   Seal.............................................       16

        Section 9.3:   Form of Records..................................       16

        Section 9.4:   Reliance Upon Books and Records..................       16

        Section 9.5:   Certificate of Incorporation Governs.............       16

        Section 9.6:   Severability.....................................       16


ARTICLE X - AMENDMENT  .................................................       17

        Section 10.1:  Amendments.......................................       17