Edgar Filing: STOCKGROUP INFORMATION SYSTEMS INC

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 7, 2003

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT TO FORM SB-2 FILE #333-91106
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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STOCKGROUP INFORMATION SYSTEMS INC.
(Exact Name of Registrant as Specified in Its Charter)

COLORADO 6282 84-1379282
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification
Number)

SUITE 500 - 750 WEST PENDER STREET
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 2T7 (604) 331-0995
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Executive Offices)

DEVLIN JENSEN
BARRISTERS AND SOLICITORS
2550 - 555 WEST HASTINGS STREET
VANCOUVER, BC, CANADA V6B 4N5
(604) 684-2550
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this registration statement becomes effective.

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If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

PROSPECTUS Subject to completion, dated July 7, 2003
----------

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

STOCKGROUP INFORMATION SYSTEMS INC.

2,994,927 shares of common stock to be sold by certain selling shareholders
2,714,900 shares of common stock issuable upon the exercise of outstanding
warrants to be sold by certain selling shareholders

This prospectus and registration statement relates to the offer and sale of
2,994,927 shares of our common stock and 2,714,900 shares of our common stock
issuable upon the exercise of outstanding warrants by certain selling
shareholders. The selling shareholders will offer and sell their shares of
outstanding common stock and shares of common stock underlying outstanding
warrants at prevailing market prices or at privately negotiated prices.

The shares will become tradable on the effective date of this prospectus. We
will receive no proceeds from sales of shares, other than proceeds, if any, from
the exercise of the warrants. Our common stock is listed on the O-T-C Bulletin
Board under the symbol "SWEB" and on the TSX Venture Exchange under the symbol
"SWB." On July 3, 2003, the closing price of our common stock was $0.34 per
share on the OTCBB.

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF MATERIAL ISSUES TO
CONSIDER BEFORE PURCHASING OUR COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this prospectus is July 7, 2003

TABLE OF CONTENTS

SUMMARY INFORMATION AND RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . 5
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SUMMARY FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . 8
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS . . . . . . . . . . . . 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . 14
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PREFERRED STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
CONVERTIBLE DEBENTURES, NOTES AND WARRANTS . . . . . . . . . . . . . . . . . . . . 17
STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES. 20
ORGANIZATION WITHIN LAST FIVE YEARS. . . . . . . . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
REGULATORY ISSUES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
RESEARCH AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . 24
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002 . . . 24
RESULTS OF OPERATIONS - FOR THE YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001 25
CRITICAL ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
LIQUIDITY AND CAPITAL RESOURCES. . . . . . . . . . . . . . . . . . . . . . . . . . 27
CORPORATE DEVELOPMENTS DURING THE YEAR . . . . . . . . . . . . . . . . . . . . . . 28
CORPORATE DEVELOPMENTS SINCE YEAR END. . . . . . . . . . . . . . . . . . . . . . . 28
DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND DOMAIN NAMES . . . . . . . . . . . . 28
LEASEHOLD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
EQUIPMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . 30
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . 30
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
AGGREGATED OPTION EXERCISE IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES . 32
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 72
ANTITAKEOVER EFFECTS OF COLORADO LAW AND OUR ARTICLES OF INCORPORATION AND BYLAWS. 72
TRANSFER AGENT AND REGISTRAR . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . . . . . . . . . . . 72
WHERE YOU CAN FIND ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . 72
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . 74
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS. . . . . . . . . . . . . . . . 76
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . 77
RECENT SALES OF UNREGISTERED SECURITIES. . . . . . . . . . . . . . . . . . . . . . . 77
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . 78
A. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
UNDERTAKINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

SUMMARY INFORMATION AND RISK FACTORS

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
BECAUSE IT IS A SUMMARY, IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU
SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE
ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS" AND OUR FINANCIAL
STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS, TO
UNDERSTAND THIS OFFERING FULLY. References herein to "we", "us", "our",
"Company" or "Stockgroup" refer to Stockgroup Information Systems Inc. and its
subsidiaries.

Company Overview

Stockgroup is a financial media and technology company which provides a wide
range of financial information services including Financial Software and Content
Systems, and Public Company Disclosure and Awareness Products.

We were incorporated under the laws of the State of Colorado in 1994 and have a
December 31st financial year end.

In addition to our corporate headquarters at Suite 500 - 750 West Pender Street,
Vancouver, British Columbia, Canada V6C 2T7, we have offices in Toronto,
Ontario. Our telephone number at our corporate head office is (604) 331-0995.

A full description of our company may be found elsewhere in this prospectus
under the heading "Business".

Selling shareholders

This prospectus relates to the registration for resale of 2,994,927 shares of
our common stock and 2,714,900 shares of our common stock issuable upon the
exercise of outstanding warrants by certain selling shareholders. The selling
shareholders will offer and sell their shares of outstanding common stock and
shares of common stock underlying outstanding warrants at prevailing market
prices or privately negotiated prices. We will not receive any proceeds from
the sale of the securities by the selling shareholders, other than through the
exercise of their outstanding warrants, if any.

Other Information

Common stock outstanding prior to the offering: 28,422,371. This number does not include shares reserved for issuance upon the
exercise of outstanding stock options or warrants.

Common stock offered by selling
Shareholders: 5,709,827 shares. This number assumes the exercise of all outstanding warrants
to purchase in aggregate 2,714,900 shares of our common stock.

Common stock to be outstanding after the
offering: 31,137,271 shares. This number assumes the exercise of all outstanding
warrants being offered by the selling shareholders.

Net proceeds: We will not receive any proceeds from the sale of the securities by the selling
shareholders.

Expiration Time: The offering by the selling shareholders will continue until the earlier of the
date all the shares being offered have been sold or, in the case of warrants,
the unexercised warrants, if any, expire.

Minimum offering: There is no minimum aggregate number of shares that must be sold in the
offering

Trading Symbols: OTCBB: "SWEB"
TSX Venture Exchange: "SWB"

SUMMARY FINANCIAL INFORMATION

Set forth below are summary statements of operations data for the quarters ended
March 31, 2003 and 2002 and years ended December 31, 2002 and 2001, and summary
balance sheet data as of March 31, 2003, December 31, 2002 and December 31,
2001. This information should be read in conjunction with the quarterly
consolidated financial statements for the quarters ended March 31, 2003 and 2002
and annual consolidated financial statements for the years ended December 31,
2002 and 2001 and notes thereto and "Management's Discussion and Analysis",
appearing elsewhere in this prospectus.

Three Months Ended Years Ended
March 31 December 31
2003 2002 2002 2001
-------------- --------------- --------------- -------------

STATEMENT OF OPERATIONS DATA:
REVENUE
Revenues. . . . . . . . . . . . . . . $ 601,712 $ 442,241 $ 1,964,699 $ 2,857,151
Cost of revenues. . . . . . . . . . . 157,354 164,248 706,911 1,045,326
-------------- --------------- --------------- -------------
Gross profit. . . . . . . . . . . . . $ 444,358 $ 277,993 $ 1,257,788 $ 1,811,825
-------------- --------------- --------------- -------------
EXPENSES
Sales and marketing . . . . . . . . . $ 158,774 $ 92,060 $ 475,038 $ 466,954
Product development . . . . . . . . . 7,451 18,498 78,792 241,392
General and administrative. . . . . . 530,288 363,540 1,712,056 1,776,710
Total expenses. . . . . . . . . . . . $ 696,512 $ 474,098 $ 2,265,886 $ 2,485,056
-------------- --------------- --------------- -------------
Loss from operations. . . . . . . . . $ (252,155) $ (196,105) $ (1,008,098) $ (673,231)
Interest income . . . . . . . . . . . - 146 195 4,020
Interest (expense). . . . . . . . . . (216,502) (184,359) (319,641) (596,097)
Gain (loss) on warrants
liability . . . . . . . . . . . . . - (55,000) (55,000) 242,000
Gain on restructuring
of convertible notes. . . . . . . . - 1,088,586 1,088,586 -
Gain on convertible note
redemption. . . . . . . . . . . . . - - - 58,701
Other income (expense). . . . . . . . 472 3,951 (12,719) 9,509
-------------- --------------- --------------- -------------
Loss before effect of
cumulative change in
accounting principle. . . . . . . . $ (468,185) $ 657,219 $ (306,677) $ (955,098)
Cumulative effect of
change in accounting
principle . . . . . . . . . . . . . . - - - 413,546
-------------- --------------- --------------- -------------
Net income (loss) . . . . . . . . . . $ (468,185) $ 657,219 $ (306,677) $ (541,552)
============== =============== =============== =============
Basic and diluted loss per share:
Net loss before cumulative change in
accounting principle. . . . . . . . (0.02) 0.06 (0.02) (0.10)
Cumulative effect of change in
accounting principle. . . . . . . . 0.00 0.00 0.00 0.04
Net loss. . . . . . . . . . . . . . . (0.02) 0.06 (0.02) (0.06)
============== =============== =============== =============

BALANCE SHEET DATA as at: . . . . . . March 31, 2003 December 31, 2002 December 31, 2001
--------------- ----------------- -----------------
Total assets. . . . . . . . . . . . . $ 1,132,241 $ 1,451,626 $ 723,690
Total liabilities . . . . . . . . . . 2,177,869 2,702,443 3,467,292
Total shareholders' deficiency. . . . (1,045,628) (1,250,817) (2,743,602)

RISK FACTORS

The following factors should be considered carefully in evaluating Stockgroup
and its business.

Our limited operating history makes it difficult for you to judge our prospects.

We have a limited operating history upon which an evaluation of our current
business and prospects can be based. We have not had annual operating profits
since we became a public company. You should consider any purchase of our
shares in light of the risks, expenses and problems frequently encountered by
all companies in the early stages of its corporate development.

Liquidity and capital resources are uncertain.

We incurred a net loss of $468,185 for the quarter ended March 31, 2003 [Q1 2002
net income $657,219], and $306,677 for the year ended December 31, 2002 [2001 -
$541,552], and had a working capital deficiency of $496,462 as at March 31,
2003. These factors raise substantial doubt about our ability to continue as a
going concern. As well, we have $209,610 in notes payable and $78,129 in capital
lease payments due within the next twelve months. We have raised $0.7M in an
equity placement on June 4, 2003, and we may need to seek additional capital.
Although we have taken steps to achieve profitable operations in 2003, there are
no assurances that we will be successful in achieving our goals.

In view of these conditions, our ability to continue as a going concern is
uncertain and dependent upon achieving a profitable level of operations and, if
necessary, on our ability to obtain necessary financing to fund ongoing
operations. As well, our ability to absorb a large unforseen expenditure is
limited by our current lack of capital resources.

Computer equipment problems and failures could adversely affect our business.

Problems or failures in Internet-related equipment, including file servers,
computers and software, could result in interruptions or slower response times
for our products, which could reduce the attractiveness of our Web site,
financial tools or software products to advertisers and users. Should such
interruptions continue for an extended period we could lose significant business
and reputation. Equipment problems and failures could result from a number of
causes, including an increase in the number of users of our Web site, computer
viruses, outside programmers penetrating and disrupting software systems, human
error, fires, floods, power and telecommunications failures and internal
breakdowns. In addition, any disruption in Internet access and data feeds
provided by third parties could have a material and adverse effect on our
businesses. Our limited resources do not currently permit us to maintain an
off-site disaster recovery facility. As a result, if we experience a major
disaster such as a fire, theft, or intentional destruction of our computer
equipment, it could have catastrophic results for our business.

We may not be able to compete successfully against current and future
competitors.

We currently compete with several other companies offering similar services.
Many of these companies have significantly greater financial resources, name
recognition, and technical and marketing resources, and virtually all of them
are seeking to improve their technology, products and services. We can not
assure you that we will have the financial resources or the technological
expertise to successfully meet this competition.

We are significantly influenced by our officers, directors and entities
affiliated with them.

In the aggregate, ownership of Stockgroup shares by management represents
approximately 19% of our present issued and outstanding shares of common stock.
These shareholders, if acting together, will be able to significantly influence
all matters requiring approval by shareholders, including the election of
directors and the approval of mergers or other business combinations
transactions involving the Company.

We may be unable to protect the intellectual property rights upon which our
business relies.

We regard substantial elements of our Web site and underlying technology as
proprietary and attempt to protect them by relying on intellectual property
laws, including trademark, service mark, copyright and trade secret laws and
restrictions on disclosure and transferring title and other methods. We also
generally enter into confidentiality agreements with employees and consultants
and in connection with license agreements with third parties, and we seek to
control access to proprietary information. Despite these precautions, it may be
possible for a third party to copy or otherwise obtain or use our proprietary
information without authorization or to develop similar technology
independently. There can also be no assurance that our business activities will
not infringe upon the proprietary rights of others, or that other parties will
not assert infringement claims against us, including claims that by, directly or
indirectly, providing hyperlink text links to Web sites operated by third
parties, we have infringed upon the proprietary rights of other third parties.

It is unclear how any existing and future laws enacted will be applied to the
internet industry and what effect such laws will have on us.

A number of legislative and regulatory proposals under consideration by federal,
state, provincial, local and foreign governmental organizations may lead to laws
or regulations concerning various aspects of the Internet including, but not
limited to, online content, user privacy, taxation, access charges, liability
for third-party activities and jurisdiction. Additionally, it is uncertain how
existing laws will be applied by the judiciary to the Internet. The adoption of
new laws or the application of existing laws may decrease the growth in the use
of the Internet, which could in turn decrease the demand for our services,
increase the cost of doing business or otherwise have a material adverse effect
on our business, results of operations and financial condition.

We may be held liable for online information or products provided by us or third
parties.

Because materials may be downloaded by the public on Internet services offered
by us or the Internet access providers with whom we have relationships, and
because third party information may be posted by third parties on our Web site
through discussion forums and otherwise, there is the potential that claims will
be made against us for defamation, negligence, copyright or trademark
infringement or other theories. Such claims have been brought against providers
of online services in the past. The imposition of liability based on such claims
could materially and adversely affect us.

Even to the extent such claims do not result in liability, we could incur
significant costs in investigating and defending against such claims. The
imposition on us of potential liability for information or products carried on
or disseminated through our Web site could require implementation of measures to
reduce exposure to such liability, which may require the expenditure of
substantial resources and limit the attractiveness of services to members and
users.

Our general liability insurance may not cover all potential claims to which we
are exposed or may not be adequate to indemnify us for all liability that may be
imposed. Any imposition of liability that is not covered by insurance or is in
excess of insurance coverage could have a material adverse effect on our
business, results of operations and financial condition.

Future sales of shares may adversely impact the value of our stock.

We will attempt to raise additional capital through the sale of common stock in
the near future. Future sales of common stock may dilute your position in the
Company. As there is a limited market for our common stock, there may be
considerable volatility in our stock price due to selling and buying pressures.
Future sales of shares by us or our stockholders could cause the market price of
our common stock to decline. We have authorized and reserved 4,848,593 shares
of common stock for issuance upon the exercise of outstanding warrants and
3,421,178 shares for issuance upon the exercise of non-qualified stock options,
some of which are currently in the money.

The departure of key personnel could have an adverse impact on our business.

We employ certain key personnel with skills, including management skills, which
may be difficult to replace quickly. Should one or more of our key personnel
depart our Company we may incur time and cost losses replacing them. Even if
replaced, it is possible that their departure could have a long lasting adverse
impact on us.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements." In some cases you can
identify forward-looking statements by terminology such as "may", "will",
"should", "could", "expects", "plans", "intends", "anticipates", "believes",
"estimates", "predicts", "potential" or "continue" or the negative of such terms
and other comparable terminology.

These forward-looking statements include, without limitation, statements about:

- our market opportunity;
- our strategies;
- competition;
- expected activities and expenditures as we pursue our business plan; and
- the adequacy of our available cash resources.

These statements appear in a number of places in this registration statement and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
trends affecting our financial condition or results of operations, (ii) our
business and growth strategies, (iii) the Internet and Internet commerce and
(iv) our financing plans. Although we believe that the expectations reflected in
the forward-looking statement are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements.

The accompanying information contained in this prospectus including, without
limitation, the information set forth under the headings "Risk Factors",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", and "Business" identify important factors that could adversely
affect actual results and performance. All forward-looking statements
attributable to us are expressly qualified in their entirety by the foregoing
cautionary statement.

USE OF PROCEEDS

We will not receive any of the proceeds from the offering of shares by the
selling shareholders.

SELLING SHAREHOLDERS

This prospectus relates to the offering by the selling shareholders of shares of
our common stock acquired by them in an equity investment and exercise of
warrants that the selling shareholders received in certain private placements.
9,771,525 shares of common stock offered by this prospectus are being offered by
the selling shareholders for their own accounts.

A. 22 SHAREHOLDERS PARTICIPATING IN THE MARCH 25, 2002 PRIVATE PLACEMENT

We are registering the resale of 4,051,000 shares for this group of
shareholders.

Bank Sal. Oppenheim jr. & Cie, A. Richard Bullock, Canadian Gravity Recovery
Inc., Jons Edstrand, Friedrich Gruehl, Inversiones Hispanola, Peter Jensen, Tara
Landes, Kathy Leishman, Les Entreprises de Richard Atkinson Lt e, LOM Nominees
Ltd., Northeastern Resources Corp., Thomas O'Neill, PCG Performance Capital
Group Ltd., Susan P. Richards, Robert J. Charlton Personal Law Corp., Lawrence
Ross, Vincent Smith, Value Relations IR Services, Praveen Varshney, WAT Capital
Corp., and Michael Wells (collectively, the "selling shareholders") purchased an
aggregate 2,000,000 units, each unit consisting of one common share and one
non-transferable warrant, at a price of $0.20 per unit, plus 51,000 common
shares at a price of $0.20 per share, for total gross proceeds of $410,200, from
us in a private placement transaction which completed on March 25, 2002. Each
warrant entitles the holder to acquire one share of us at an exercise price of
$0.30 until September 30, 2003.

As of the date of this prospectus 335,100 of the warrants had been exercised.

The percentage interest of each selling shareholder is based on the beneficial
ownership of that selling shareholder divided by the sum of the current
outstanding shares of common stock plus the additional shares, if any, which
would be issued to that selling shareholder (but not any other selling
shareholder) when exercising warrants in the future.

To our knowledge, each of the selling shareholders has sole voting and
investment power over the shares of common stock listed in the table below. No
selling shareholder has had a material relationship with us during the last
three years, other than as an owner of our common stock or other securities. To
our knowledge, none of these investors is affiliated with the others. One of
the selling shareholders, Tara Landes, is the daughter of one of our officers.

Amount and
Percentage of Stock Percentage of Stock
Number of Shares Number of Shares Owned Prior To the Owned After the
Name Beneficially Owned Offered Herein Offering Offering
------------------ ---------------- -------------------- -------------------

0
Bank Sal. Oppenheim jr. Cie. . . . . . . . . . . . 500,000 500,000 1.74% 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
A. Richard Bullock . . . . . . . . . . . . . . . . 250,000 250,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Canadian Gravity Recovery Inc. . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Jons Edstrand. . . . . . . . . . . . . . . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Friedrich Gruehl . . . . . . . . . . . . . . . . . 200,000 200,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Inversiones Hispanola. . . . . . . . . . . . . . . 250,000 250,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Peter Jensen . . . . . . . . . . . . . . . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Tara Landes. . . . . . . . . . . . . . . . . . . . 40,000 40,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Kathy Leishman . . . . . . . . . . . . . . . . . . 240,000 240,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Les Entreprises de Richard Atkinson Lte. . . . . . 200,000 200,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
LOM Nominees Ltd.. . . . . . . . . . . . . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Northeastern Resources Corp. . . . . . . . . . . . 200,000 200,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Thomas O'Neill . . . . . . . . . . . . . . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
PCG Performance Capital Group Ltd. . . . . . . . . 1,000,000 1,000,000 3.46% 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Susan P. Richards. . . . . . . . . . . . . . . . . 50,000 50,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Robert J. Charlton Personal Law Corp.. . . . . . . 160,000 160,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Lawrence Ross. . . . . . . . . . . . . . . . . . . 14,000 14,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Vincent Smith. . . . . . . . . . . . . . . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Value Relations IR Services. . . . . . . . . . . . 37,000 37,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Praveen Varshney . . . . . . . . . . . . . . . . . 110,000 110,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
WAT Capital Corp.. . . . . . . . . . . . . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------
0
Michael Wells. . . . . . . . . . . . . . . . . . . 100,000 100,000 * 0%
-------------------------------------------------- ------------------ ---------------- -------------------- -------------------

* - Less than 1%

B. STANLEY HOLLANDER

We are registering 250,000 common shares for this shareholder.

Stanley Hollander holds 250,000 non-transferable warrants, each exercisable for
one share of our common stock, with an exercise price of $0.30 and an expiry
date of September 15, 2003. These warrants were issued to him pursuant to a
consulting agreement dated March 16, 2002.

All warrants are immediately exercisable. As of the date of this filing, none
of the warrants had been exercised and Stanley Hollander's beneficial ownership
of our stock is less than 1% of the outstanding common shares.

C. MOUSTAFA, ASLAN, PANETTA, STONE, MCCORMACK, BRUENING, ALLIOTTS

We are registering the resale of 1,408,000 common shares for this group of
selling shareholders. These shares had previously been registered on Form SB-2
file #333-57296, as amended.

Yasser Moustafa, Richard Stone, Aslan Ltd., Panetta Partners, Ltd., Dennis
McCormack, Christoph Bruening and Keith Alliotts purchased an aggregate of $0.5
million of convertible debentures and warrants from us in a private placement
transaction which closed on January 19, 2001. As part of that private placement
the selling shareholders were issued debentures that may be converted into our

common stock and 800,000 warrants to acquire our common stock. The warrants of
each of the selling shareholders are exercisable through July 31, 2005. 62.5%
of the warrants of each selling shareholder have an exercise price of $0.25 per
share. The balance of the warrants have an exercise price of $0.50 per share.

On July 17, 2001, Moustafa converted principal of $300,000 plus accrued interest
into 608,827 common shares of our common stock. On March 15, 2002, the remaining
debenture holders converted the remaining principal of $200,000 plus accrued
interest into 413,808 common shares.

The following table sets forth information with respect to the common stock
beneficially owned by the selling shareholders as of the date of this
prospectus. Beneficial ownership is determined in accordance with Securities and
Exchange Commission rules and includes voting or investment power with respect
to the securities. The number of shares registered for resale by each of the
selling shareholders under this prospectus includes shares issuable upon
exercise of their warrants only.

The number of shares owned after the offering shown for each of the selling
shareholders represents the number of shares received upon conversion of each
shareholder's convertible debenture. We are registering for each shareholder,
and for each $100,000 of original principal of the convertible debenture, the
sale of 160,000 shares underlying warrants for an aggregate of 800,000 shares
underlying warrants. We are registering in this prospectus the sale of 608,827
common shares issued on the July 17, 2001 conversion. For further clarification,
we are not registering in this prospectus the sale of 413,808 common shares
issued on the March 15, 2002 conversion. Such shares, although they are
reflected in the table below as being owned after the offering, may be sold by
the selling shareholders under Rule 144 or another available exemption from
registration.

We have assumed the sale of all of the common stock offered under this
prospectus. However, as the selling shareholders can offer all, some or none of
their shares of common stock, no definitive estimate can be given as to the
number of shares that the selling shareholders will hold after this offering. We
have included the maximum number of shares each shareholder could own after this
offering, not including shares, if any, purchased or sold in the open market.

Amount and
Number of Percentage of Percentage of
Shares Number of Stock Owned Stock Owned
Beneficially Shares Offered Prior To the After the
Name Owned Herein Offering Offering
---------------------- ------------ -------------- -------------- ------------

0
Yasser Hosny Moustafa. 1,088,827 1,088,827 3.77% 0%
---------------------- ------------ -------------- -------------- ------------
103,452
Richard B. Stone . . . 183,452 80,000 * *
---------------------- ------------ -------------- -------------- ------------
103,452
Aslan Ltd. . . . . . . 183,452 80,000 * *
---------------------- ------------ -------------- -------------- ------------
51,726
Panetta Partners, Ltd. 91,726 40,000 * *
---------------------- ------------ -------------- -------------- ------------
51,726
Dennis McCormack . . . 91,726 40,000 * *
---------------------- ------------ -------------- -------------- ------------
51,726
Christoph Bruening . . 91,726 40,000 * *
---------------------- ------------ -------------- -------------- ------------
51,726
Keith Alliotts . . . . 91,726 40,000 * *
---------------------- ------------ -------------- -------------- ------------

* - Less than 1%

PLAN OF DISTRIBUTION

SELLING SHAREHOLDERS

The selling security holders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:

- ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling shareholders to sell a specified
number of such shares at a stipulated price per share;
- a combination of any such method of sale; or
- any other method permitted pursuant to applicable law.

The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

The selling shareholders may also engage in short sales against the box, puts
and calls and other transactions in securities of Stockgroup or derivatives of
our securities and may sell or deliver shares in connection with these trades.
The selling shareholders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling shareholder defaults on a
margin loan, the broker may, from time to time, offer and sell pledged shares.

Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

The selling shareholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.

We are required to pay all fees and expenses incident to the registration of the
shares. We have agreed to indemnify the selling shareholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act.

LEGAL PROCEEDINGS

We are currently involved in litigation with a customer to collect amounts owing
pursuant to a contract entered into in September, 2000. The defendant provided a
$100,000 deposit and contracted us to provide certain lead generation services.
We delivered the requested services throughout October and November, 2000,
however, the defendant defaulted on all additional payments. We are suing the
defendant for the $351,800 balance owing, plus interest and costs. The defendant
has filed a statement of defense and counterclaim to recover the $100,000
deposit. As of the date of this prospectus no further action had been taken by
either party and no court date has been set. Although we currently believe the
outcome of the litigation will be in our favor, we have not elected to pursue
the litigation at this time. We have made no provision for the counterclaim in
the financial statements and any settlement or final award will be reflected in
our statement of operations as the litigation is resolved.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following table sets forth, as of the date of this prospectus, the name, age
and position of our directors, executive officers and other significant
employees:

Director/Officer
Name Age Since Position with the Company
-----------------------------------------------------------------------------------------------------------

Marcus A. New . . . 33 May 1995(1) Chief Executive Officer and Chairman of the Board

Leslie A. Landes. . 59 August 1998(2) President and a Director

David Gillard . . . 33 November 2001 Chief Financial Officer

Craig Faulkner. . . 32 May 1995(3) Director

David N. Caddey . . 53 June 1999 Director

Louis deBoer II . . 51 October 1999 Director

Jeffrey Berwick . . 32 July 2002 Director

The backgrounds of the our directors, executive officers and significant
employees are as follows:

Marcus A. New, B.A., Chief Executive Officer and Chairman of the Board

Marcus A. New is the founder, and has been Chairman and Chief Executive Officer,
since May of 1995, of Stockgroup. Mr. New formed the vision for Stockgroup in
1995 and developed the company from an idea to the goal of becoming a leader in
information solutions for financial services companies and a leading provider of
investor relations products for public companies on the Internet. Over the last
five years he has grown the Company by re-investing internally generated capital
and has successfully built a substantial corporate client roster. Similar to
other successful Internet pioneers, Mr. New created Stockgroup based on
identification of the ways in which the Internet could be used to provide
services that were not otherwise available. Prior to that, Mr. New was VP of
AmCan Public Relations Group and is currently a director of Iwave.com Inc., an
online information company. Mr. New earned a Bachelor of Arts degree majoring
in business from Trinity Western University.

Leslie A. Landes, President and a Director

Leslie A. Landes has served as Stockgroup's President and Chief Operating
Officer since August 1998 and has been an advisor to Stockgroup since shortly
after its inception. Since January 1992, Mr. Landes has served as the President
and as a director of Landes Enterprises Limited, which he founded, and which is
an interim turnaround management consulting company that advised and counseled
clients in several industries, including telecommunications and technology, on
issues ranging from mergers and acquisitions to international marketing
campaigns. Prior to forming Landes Enterprises in 1992 Mr. Landes spent 13 years
with the Jim Pattison Group, Canada's third largest privately held company with
sales in excess of CDN$3 Billion, with over 13,000 employees. He served as
President of The Jim Pattison Sign Group, Outdoor Group and Communications
Group, which included radio and television stations and paid subscription print
publications. Ultimately he was appointed President of Jim Pattison Industries
Ltd. and Senior Vice President of the parent Jim Pattison Group, responsible for
the Group's acquisitions and divestitures, and with involvement in the
management of the Group's 50 diversified companies. He successfully initiated
and completed the acquisitions of other companies in a number of diverse
industries in which the Group was active. Under his direction the Sign Group was
built into the largest electric sign company in the world. Mr. Landes is also a
director of TIR Systems Ltd., a lighting technology company, which is a public
company.

David Gillard, CGA, Chief Financial Officer

David Gillard has been Chief Financial Officer of us since November 2001, and
prior to that he had been with us in the capacity of Controller since March
2000. From 1993 to 2000, prior to joining us, he gained extensive finance and
accounting experience with Maynards Industries Ltd., one of the largest asset
conversion companies in North America. He is a graduate of the British Columbia
Institute of Technology and has been a Certified General Accountant since 1996.

Craig Faulkner, B.A., Director

Craig Faulkner is one of our founding partners. Mr. Faulkner's skill and
knowledge of database-to-Web solutions brings a history of innovative and
dynamic solutions. Early in his career, Mr. Faulkner led us to co-develop one of
the first portfolio tracking tools, LivequoteSRG, fully based on the use of
Java. Mr. Faulkner managed our programming and information management team at
Stockgroup, initiated solutions with data and hardware vendors, while
maintaining a senior management role and board membership. Under Mr. Faulkner's
direction we implemented a sophisticated blend of both Sun Solaris and Microsoft
solutions. Mr. Faulkner is also part of the advisory boards for Brand Fidelity

----------------
1 Mr. New was a founding member and CEO of Stock Research Group Ltd., which was
incorporated in May, 1995, and became a director of Stockgroup in March, 1999.
2 Mr. Landes became President in August, 1998, but was not a director until
June, 1999
3 Mr. Faulkner was a founding member and Chief Technology Officer of Stock
Research Group Ltd., which was incorporated in May, 1995, and became a director
of Stockgroup in March, 1999.

an online service addressing the commercial naming and branding business, and
Serveyor, a leading Managed Service Provider (MSP) for Internet Availability
Monitoring, Performance Measurement and Quality testing. On March 28, 2002,
Craig resigned as our Chief Technology Officer but he remains on the Board of
Directors.

David N. Caddey, B.Sc., M.Sc., Director

David N. Caddey has been a director of us since June 1999 and has over 26 years
experience in the business and program management field. Since July 1998 he has
served as an Executive Vice President of MacDonald Dettwiler and Associates
Ltd., a space technology and satellite services company that designs,
manufactures, operates and markets a broad range of space products and services.
During this period he has also served as the General Manager of that company's
Space Missions Group, where he is responsible for managing the construction of
the Radarsat-2 spacecraft and associated ground infrastructure program, valued
at over $350 million, as well as the construction of the Space Station Mobile
Servicing System. From July 1994 to June 1998, Mr. Caddey worked as a Vice
President and General Manager of the Space and Defense Systems Business Area of
MacDonald Dettwiler and Associates LtdIn this capacity he was responsible for
marketing and sales, project management, technical management and post delivery
support. From 1990 to 1994 he served as Vice President and General Manager of
Geo-information Systems of MacDonald Dettwiler and Associates Ltd., where he
managed the development of Radarsat I Ground Segment Program.

Louis de Boer II, Director

Louis de Boer has served as a director of us since October 1999. Since May of
1998, he has served as President of MediaFutures, Inc., which provides
consulting services to clients in the Internet and cable broadcasting
industries, including such companies as Hearst New Media, Cox Enterprises and
Rainbow Programming as well as several emerging growth companies. From July
2000 through June 2001, he also served as Chief Executive Officer of Automatic
Media Incorporated, an Internet media and software firm based in New York City.
From June 1996 to April 1998, he was Chief Executive Officer at New Century
Network, an online company formed by a consortium of the nine leading US
newspaper organizations, including, Advance Communications, Cox Communications,
The Chicago Tribune, Hearst, Gannett, Knight-Ridder, Inc., The New York Times,
The Washington Post and Times-Mirror. From 1977 to December 1994, Mr. de Boer
was employed at HBO culminating in the positions of Executive Vice President of
HBO Inc. and President of its International division, where he played an
instrumental role in helping negotiate and broker deals that significantly
increased that company's presence in its international markets. Mr. de Boer is
also a director of Click TV, a television production company in the UK and Priva
Technologies, both of which are private companies.

Jeffrey Berwick, Director

Jeff Berwick has served as a director of us since July 2002. He began
programming and designing software applications independently in the early
1980's and has since become one of the foremost innovators in Internet services,
technology and marketing. From 1991 to 1995 he was involved in the financial
industry as an investment specialist for CIBC. During this time Mr. Berwick
identified a growing need within the financial industry. Combining his
knowledge of information technology and the investment industry, Mr. Berwick
established StockHouse Media Corporation in 1995. StockHouse grew to a size of
250 employees in 8 countries worldwide at its peak, providing financial
information through its portals to over a million unique customers. Mr. Berwick
held the position of Chief Executive Officer and Chairman of the Board for
StockHouse Media Corporation from its inception.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the date of this prospectus, the
beneficial ownership of common stock of each person known to us who owns, or has
the right to acquire within the next 60 days, more than 5% of our issued and
outstanding common stock.

Name and address* of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Class
-----------------------------------------------------------------

Marcus A. New. . . . . . . 3,016,500 10.32%

Yvonne New . . . . . . . . 2,214,500 7.79%

518464 B.C. Ltd. . . . . . 1,945,000 6.84%

U.S. Global Funds
7900 Callaghan Road,
San Antonio, TX 78229. . 2,400,000 8.44%

*Unless otherwise referenced, the address for each of the above mentioned
parties is c/o Stockgroup Information Systems Inc., Suite 500 - 750 West Pender
Street, Vancouver, British Columbia, Canada V6C 2T7.

On March 11, 1999, we entered into a Share Exchange and Share Purchase Agreement
with 579818 B.C. Limited, a British Columbia corporation, Stock Research Group,
Inc., a British Columbia corporation, and all of the shareholders of Stock
Research Group. Under that agreement we acquired all of the issued and
outstanding shares of Stock Research Group in consideration of which 579818 B.C.
Limited issued to the Stock Research Group shareholders 3,900,000 Class A
Exchangeable Shares. We also issued to Stock Trans, Inc., our transfer agent,
3,900,000 shares of common stock, to hold as trustee for the benefit of the
Stock Research Group shareholders. The exchangeable shares may be converted, at
the option of the holder, into an equal number of shares of common stock held by
the trustee. Pending any such conversion, each holder of the exchangeable shares
may direct the trustee to vote an equivalent number of shares of common stock.
The trustee has no discretion as to the voting or disposition of such common
stock.

As a result of these transactions each of the former Stock Research Group
shareholders has the right to vote, or to direct the trustee to vote on their
behalf, a number of shares of common stock equal to the number of exchangeable
shares held of record by them. In the aggregate, as of the date of this
prospectus, the 2,808,000 shares of common stock held by the trustee represent
approximately 9.88% of our issued and outstanding shares of common stock.

The trust created by these transactions will continue until the earliest to
occur of the following events:

- no outstanding exchangeable shares are held by any former Stock Research
Group shareholder;
- each of 579818 B.C. Limited and Stockgroup acts in writing to terminate the
trust and such termination is approved by the holders of the exchangeable
shares; and no outstanding exchangeable shares are held by any former Stock
Research Group shareholder; and
- December 31, 2098.

Marcus New directly owns 169,500 exchangeable shares and his wife, Yvonne New,
owns directly 19,500 exchangeable shares. They both indirectly own, through
518464 B.C. Ltd., a British Columbia company owned by Mr. New as to 50% and by
Mrs. New as to 50%, 1,945,000 exchangeable shares. Accordingly, Marcus and
Yvonne New beneficially own 2,134,000 exchangeable shares of common stock, which
represent approximately 7.51% of our issued and outstanding common stock.

Mr. New also owns 2,000 shares of common stock which were purchased in the open
market. On September 18, 2001, Mr. New was granted options to purchase 100,000
shares of common stock at an exercise price of $0.12 per share. These options
fully vested on March 18, 2002 and expire on September 17, 2007. On March 5,
2002, Mr. New was granted options to purchase 400,000 shares of common stock at
an exercise price of $0.22 per share, fully vesting on the grant date and with
an expiry date of March 4, 2008. On May 13, 2002, Mr. New was granted options
to purchase 300,000 shares of common stock at an exercise price of $0.17 per
share, fully vesting on grant date and with an expiry date of May 12, 2008. In
combination with Mr. New's 2,134,000 exchangeable shares, his wife's 80,500
common shares, his 800,000 vested options and 2,000 shares of common stock, Mr.
New holds a beneficial ownership position in us of 3,016,500 shares,
representing approximately 10.32% of issued and outstanding common stock.

Yvonne New owns directly 80,500 common shares. Her direct shares in combination
with her beneficial ownership of 2,134,000 exchangeable shares give her a
beneficial ownership position in us of 2,214,500 shares, representing
approximately 7.79% of issued and outstanding common stock.

U.S. Global Funds owns 2,400,000 shares, representing approximately 8.44% of
issued and outstanding common stock.

Security ownership of management

The tables below and the paragraphs that follow present certain information
concerning directors, executive officers and significant employees of us. None
of our directors, executive officers or significant employees has any immediate
family relationship with any other director, executive officer or significant
employee.

Shares
Beneficially
Owned Percent
Name Position with Company July 7, 2003 of Class
-----------------------------------------------------------------------------------------------

Marcus A. New. . . . . . . . CEO, Director 3,016,500 10.32%
Leslie A. Landes . . . . . . President, Director 831,560 2.85%
David Gillard. . . . . . . . Chief Financial Officer 100,000 0.35%
Craig D. Faulkner. . . . . . Director 784,000 2.74%
David N. Caddey. . . . . . . Director 160,000 0.56%
Louis de Boer II . . . . . . Director 100,000 0.35%
Jeffrey Berwick. . . . . . . Director 437,230 1.54%
-----------------------------------------------------------------------------------------------
All directors, executive officers and significant employees
as a group 5,429,290 18.72%
-----------------------------------------------------------------------------------------------

Of the amount shown for Craig Faulkner, Mr. Faulkner directly owns 169,000
exchangeable shares and indirectly owns, through 569358 B.C. Ltd., a British
Columbia company owned by Mr. Faulkner, 465,000 exchangeable shares. On
September 18, 2001, Mr. Faulkner was granted options to acquire 100,000 shares
of common stock at an exercise price of $0.12 per share, fully vesting on the
March 18,2002, and with an expiry date of September 17, 2007. On October 22,
2002, Mr. Faulkner was granted options to acquire 50,000 shares of common stock
at an exercise price of $0.15 per share, fully vesting on the grant date and
with an expiry date of October 21, 2008. Mr. Faulkner, through his direct and
indirect holdings and 150,000 vested options, beneficially owns 784,000 shares
representing 2.74% of our issued and outstanding common stock.

Leslie A. Landes acquired 105,000 common shares by exercising 105,000 options on
November 26, 2002. On August 10, 2001, Mr. Landes was granted 533,200 options at
an exercise price of $0.22 and with an expiry date of August 9, 2007, of which
426,560 had vested by the end of 2002. On October 22, 2002, Mr. Landes was
granted options to purchase 300,000 shares of common stock at an exercise price
of $0.15 per share, fully vesting on the grant date and with an expiry date of
October 21, 2008. Mr. Landes' common shares and vested options provide him with
a beneficial ownership of 831,560 shares representing 2.85% of our issued and
outstanding common stock.

Of the amount shown for Mr. Caddey, 50% (or 30,000 shares) are owned by Ms.
Donna Caddey, Mr. Caddey's wife.

David N. Caddey and his wife, Donna Caddey, each directly own 20,000
exchangeable shares. In addition, 20,000 shares of common stock are jointly
owned by David and Donna Caddey. On August 10, 2001, Mr. Caddey was granted
options to purchase 50,000 shares of common stock at an exercise price of $0.22
per share, full vesting on August 10, 2002, and an expiry date of August 9,
2007. On October 22, 2002, Mr. Caddey was granted options to purchase 50,000
shares of common stock at an exercise price of $0.15 per share, full vesting on
grant date, and an expiry date of October 21, 2008. In combination with his
direct and indirect holdings of 40,000 exchangeable shares and direct and
indirect holdings of 20,000 shares of common stock, and 100,000 vested options,
Mr. Caddey beneficially owns 160,000 shares representing less than 1% of issued
and outstanding common stock.

Louis de Boer II was granted, on August 10, 2001, options to purchase 50,000
shares of common stock at an exercise price of $0.22 per share, with a six year
term and fully vesting on August 10, 2002. On October 22, 2002, Mr. de Boer was
granted options to purchase 50,000 shares of common stock at an exercise price
of $0.15 per share, fully vesting on the grant date and with an expiry date of
October 21, 2008. Mr. de Boer's vested options provide him with a beneficial
ownership of 100,000 shares representing less than 1% of issued and outstanding
common stock.

David Gillard was granted, on April 30, 2001, options to purchase 7,500 shares
of common stock at an exercise price of $0.31 per share, fully vesting on
October 31, 2001 with a six year exercise term. On May 13, 2002, Mr. Gillard
was granted options to purchase 92,500 shares of common stock at an exercise
price of $0.15 per share, fully vesting on May 13, 2002 and with a six year
exercise term. Mr. Gillard has beneficial ownership of 100,000 shares of common
stock representing less than 1% of issued and outstanding common stock.

Jeffrey Berwick is a 27.8% shareholder in StockHouse Media Corporation. On June
19, 2002, we issued 2,080,000 common shares to Stockhouse Media Corporation,
pursuant to a Joint Venture Development and Operation Agreement. After the
release from escrow of the 2,080,000 shares owned by Stockhouse, and subsequent
division of such to Stockhouse shareholders, the share ownership of Mr. Berwick
was 437,230 common shares, representing approximately 1.54% of our issued and
outstanding common stock.

Employment and severance agreement

We have an employment agreement with our President, Leslie A. Landes. The
initial term of this agreement is 5 years and expires August 4, 2003, with two
possible renewal terms of two years each. By virtue of neither party giving 90
days' termination notice before August 4, 2003, the management agreement had
been renewed until August 4, 2005. Under the agreement Mr. Landes is scheduled
to receive a minimum compensation of CDN$150,000 per annum, however, he has
consented to receive only CDN$135,000 per annum until further notice, with no
provision for a retro-active increase back to CDN$150,000. The agreement may be
terminated by us or Mr. Landes on 30 days notice, and if early termination is
initiated by Stockgroup without cause, Mr. Landes is to receive a severance
payment equal to 12 months compensation.

DESCRIPTION OF SECURITIES

The following description of our securities and various provisions of our
Articles of Incorporation and our bylaws are summaries. Statements contained in
this prospectus relating to such provisions are not necessarily complete, and
reference is made to our Articles of Incorporation and bylaws, copies of which
have been filed with the Securities and Exchange Commission as exhibits to our
registration statement of which this prospectus constitutes a part, and
provisions of applicable law. Our authorized capital stock consists of
75,000,000 shares of common stock, no par value, of which 28,422,371 shares were
issued and outstanding as of the date of this prospectus, and 5,000,000 shares
of preferred stock, no par value, of which no shares were issued and outstanding
as of the date of this filing. As of the date of this prospectus there were, to
our knowledge after consultation with our transfer agent, 102 holders of record
of our common stock.

COMMON STOCK

Each share of our common stock is entitled to share pro rata in dividends and
distributions with respect to our common stock when, as and if declared by the
Board of Directors from funds legally available therefor. No holder of any
shares of common stock has any pre-emptive right to subscribe for any of our
securities. Upon dissolution, liquidation or winding up of Stockgroup, the
assets will be divided pro rata on a share-for-share basis among holders of the
shares of common stock after any required distribution to the holders of
preferred stock, if any. All shares of common stock outstanding are fully paid
and non-assessable.

Each shareholder of common stock is entitled to one vote per share with respect
to all matters that are required by law to be submitted to shareholders. The
shareholders are not entitled to cumulative voting in the election of directors.
Accordingly, the holders of more than 50% of the shares voting in the election
of directors will be able to elect all the directors if they choose to do so.

Currently, our bylaws provide that shareholder action may be taken at a meeting
of shareholders and may be affected by a consent in writing if such consent is
signed by the holders of the majority of outstanding shares, unless Colorado law
requires a greater percentage. Our Articles of Incorporation provide that our
bylaws may be amended by the affirmative vote of a majority of the shares
entitled to vote on such an amendment. These are the only provisions of our
bylaws or Articles of Incorporation that specify the vote required by
shareholders to take action.

PREFERRED STOCK

The Board of Directors is authorized, without further shareholder approval, to
issue from time to time up to an aggregate of 5,000,000 shares of preferred
stock. The preferred stock may be issued in one or more series and the Board of
Directors may fix the rights, preferences and designations thereof. No shares of
preferred stock are currently outstanding and we have no present plans to issue
any shares of preferred stock. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of our outstanding voting stock.

CONVERTIBLE DEBENTURES, NOTES AND WARRANTS

A. WARRANTS ISSUED WITH 3% CONVERTIBLE DEBENTURES

On January 19, 2001, we entered into a Securities Purchase Agreement with seven
unaffiliated investors to issue $500,000 of unsecured 3% convertible debentures
and 800,000 non-transferable share purchase warrants.

By March 15, 2002 all of the principal of the convertible debentures had been
converted into common stock.

The warrants remain outstanding and were issued on a pro-rata basis, with each
debenture holder receiving one Series A warrant for each dollar of debentures
purchased and three Series B warrants for each five dollars of debentures
purchased. The exercise price of the warrants is $0.25 per share for the Series
A warrants and $0.50 per share for the Series B warrants. The warrants permit
the holders to acquire up to an aggregate of 800,000 common shares at any time
up to July 31, 2005.

B. WARRANTS ISSUED WITH 8% CONVERTIBLE NOTES

On April 3, 2000, we entered into a Convertible Note Purchase Agreement with two
unaffiliated investors to issue unsecured 8% convertible notes and 5-year
callable warrants for gross proceeds of $3 million. As of the date of this
filing the principal balance of the notes had been fully extinguished or
converted into common shares. The agreement included non-transferable share
purchase warrants.

The warrants permit the holders to acquire up to 272,727 common shares at an
exercise price of $3.30 at any time up to March 31, 2005. The warrants may be
called by us, at a purchase price of $.01 per underlying share, if the stock
price of Stockgroup's common shares exceeds $6.51 for any 20 consecutive trading
days after the effective date of a registration statement, provided that the
holders have the right to exercise the warrants within 30 days after their
receipt of such a call.

The exercise price of the warrants is adjusted upon the occurrence of certain
events, including the issuance of equity or convertible instruments exchangeable
into common shares at a price below the market value of the common shares at the
time of issuance and the exercise price of the warrants. In certain
circumstances the holders of the warrants could elect on exercise to satisfy
their obligation to pay the cash exercise price to us by accepting a lesser
number of common shares.

On January 19, 2001, the exercise price and the number of callable warrants
outstanding were adjusted as a result of the 3% convertible debentures and
warrants being offered at a lower exercise price. The exercise price was
decreased from $3.30 to $3.00 and the number of callable warrants were increased
from 272,727 to 300,000.

On February 6, 2002, in a restructuring of the convertible notes, the number of
warrants was reduced to 281,818, with the exercise price remaining at $3.00.

C. WARRANTS ISSUED TO A CONSULTANT

On March 15, 2002, we issued 250,000 warrants to a consultant. Each warrant is
exercisable for one common share at $0.30, and the warrants expire on September
15, 2003.

D. WARRANTS ISSUED WITH A MARCH 2002 PRIVATE PLACEMENT

On March 25, 2002, a group of 22 unrelated investors purchased an aggregate
2,000,000 units, each unit consisting of one common share and one
non-transferable warrant, at a price of $0.20 per unit, plus 51,000 common
shares at a price of $0.20 per share, for total gross proceeds of $410,200, from
us in a private placement transaction. Each warrant entitles the holder to
acquire one share of us at an exercise price of $0.30 until September 30, 2003.

As of the date of this prospectus 335,100 of the warrants had been exercised.

E. WARRANTS ISSUED WITH A DECEMBER 2002 PRIVATE PLACEMENT

On December 31, 2002, a group of 28 unrelated investors purchased an aggregate
3,403,750 units, each unit consisting of one common share and one
non-transferable warrant, at a price of $0.16 per unit for total gross proceeds
of $544,600 from us in a private placement transaction. Each two warrants
entitle the holder to acquire one common share at an exercise price of $0.22
until December 31, 2003. We also issued 150,000 agent's warrants to Bolder
Capital as a placement fee in the transaction. Each one agent's warrant is
exercisable at $0.16 per common share.

As of the date of this prospectus none of the warrants or agent's warrants had
been exercised.

F. WARRANTS ISSUED WITH A JUNE 2003 SHORT FORM OFFERING

On June 4, 2003, a group of investors purchased an aggregate of 2,746,800 units,
each unit consisting of one common share and one non-transferable warrant, at a
price of C$0.37 per unit for total gross proceeds of C$1,016,316 from us under a
Short Form Offering. Each two warrants entitle the holder to acquire one common
share at an exercise price of C$0.75 until June 4, 2004. We also issued 274,680
agent's options, with each option allowing the agent to purchase one unit as
described above for C$0.37 at any time before June 4, 2005.

As of the date of this prospectus none of the warrants or agent's options had
been exercised.

STOCK OPTIONS

1999 Incentive Stock Option Plan

The purposes of our 1999 Incentive Stock Option Plan are to enhance our
profitability and shareholder value by enabling us to offer stock based
incentives to employees, directors and consultants. The 1999 Stock Option Plan
authorizes the grant to our, and our respective subsidiaries, employees,
directors, consultants and advisors, of:

- stock options;
- restricted shares (which would generally provide for a substantial risk of
forfeiture for a period of time);
- deferred shares, which would generally provide for shares to be issued upon
services being rendered; and

- performance shares, which would generally provide for shares to be issued
upon the attainment of specified performance goals.

Under the 1999 Stock Option Plan we may grant incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, and non-qualified
stock options. Incentive stock options may only be granted to our employees.

The number of shares authorized and reserved for grants under our 1999 Stock
Option Plan is 2,000,000. The 1999 Stock Option Plan is administered by the
Board of Directors, although the Board has the right to appoint a committee of
two or more non-employee directors to administer the plan. Subject to the
provisions of the plan, the Board and the committee have authority to determine
the employees, directors, consultants and advisors who are to receive awards and
the terms of such awards, including:

- the number of shares subject to the award;
- the fair market value of the shares subject to options;
- the exercise price per share;
- the terms of vesting, including whether vesting accelerates upon a change
of control, which may also be granted to participants at any time after an
award has been granted; and
- other terms.

Grants of options may consist of incentive stock options, non-qualified stock
options or a combination of both. Incentive stock options must have an exercise
price equal to at least 100% of the fair market value of a share on the date of
the award and non-qualified stock options must have an exercise price at least
equal to 75% of the fair market value of a share on the date of the award. If
the grant of an incentive stock option is to a shareholder holding more than 10%
of our voting stock, the exercise price must be at least 110% of the fair market
value on the date of grant. Terms and conditions of awards are set forth in
written agreements between the respective option holders and us. Awards under
the 1999 Stock Option Plan may not be made after March 11, 2009, and stock
options granted before that date may not have a term beyond that date.

If the employment with us of the holder of a stock option is terminated for any
reason, other than as a result of a voluntary termination with the consent of
the Board or the holder's death or disability, the holder's stock option
terminates on the same date. If the termination is due to such a voluntary
termination the holder may exercise the option, to the extent exercisable on the
date of termination of employment, until three months after the date of
termination. If an option holder dies or becomes disabled, stock options may
generally be exercised, to the extent exercisable on the date of death or
disability, by the option holder or the option holder's survivors until six
months after the date of death or disability.

As of the date of this prospectus options to purchase up to 1,493,576 shares of
common stock had been granted under the 1999 Stock Option Plan, of which
1,043,576 have been exercised, and options to purchase 506,424 shares were
available for future grants. We have registered the shares subject to issuance
under our 1999 Stock Option Plan pursuant to our registration statement on Form
S-8 filed with the Securities and Exchange Commission on November 16, 1999.

2000 Incentive Stock Option Plan

The purposes and description of our 2000 Incentive Stock Option Plan are
identical to our 1999 Stock Option Plan in all respects, save that the amount of
shares authorized and reserved for issuance under the 2000 Stock Option Plan is
500,000 shares. As of the date of this prospectus 421,666 options have been
issued under the 2000 Stock Option Plan, of which 264,166 have been exercised
and 78,334 options are available to be granted. We have registered the shares
subject to issuance under our 2000 Stock Option Plan pursuant to our
registration statement on Form S-8 filed with the Securities and Exchange
Commission on May 15, 2001.

2001 Incentive Stock Option Plan

The purposes and description of our 2001 Incentive Stock Option Plan are
identical to our 1999 and 2000 Stock Option Plans in all respects, save that the
amount of shares authorized and reserved for issuance under the 2001 Stock
Option Plan is 1,000,000 shares. As of the date of this prospectus 956,402
options have been issued under the 2001 Stock Option Plan, of which 123,202 have
been exercised and 43,598 options are available to be granted. We registered the
shares subject to issuance under our 2001 Stock Option Plan pursuant to our
registration statement on Form S-8 filed with the Securities and Exchange
Commission on May 13, 2002.

2002 Incentive Stock Option Plan

The purposes and description of our 2002 Incentive Stock Option Plan are
identical to our 1999, 2000, and 2001 Stock Option Plans in all respects, save
that the amount of shares authorized and reserved for issuance under the 2002
Stock Option Plan is 1,500,000 shares. As of the date of this prospectus
1,230,078 options have been issued under the 2002 Stock Option Plan, of which
72,878 have been exercised and 269,922 options are available to be granted. We
registered the shares subject to issuance under our 2002 Stock Option Plan
pursuant to our registration statement on Form S-8 filed with the Securities and
Exchange Commission on May 13, 2002.

EXPERTS

The consolidated financial statements of Stockgroup at December 31, 2002 and
2001, and for each of the two years in the period ended December 31, 2002,
appearing in this prospectus and registration statement have been audited by
Ernst & Young LLP, independent chartered accountants, as set forth in their
report thereon (which contains an explanatory paragraph describing conditions
that raise substantial doubt about our ability to continue as a going concern as
described in Note 1 to the consolidated financial statements) appearing
elsewhere herein, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.

LEGAL MATTERS

The validity of the issuance of the common stock offered hereby has been passed
upon for us by Faegre & Benson LLP.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES

Our Articles of Incorporation and bylaws authorize indemnification of every
person who is or was a director of us or is or was serving at our request as a
director of another corporation of which we are or were a shareholder. The
Board of Directors may determine whether or not to indemnify any person who is
or was an officer, employee, agent or person working to the benefit of us
against all costs, charges and expenses actually incurred by that person.

The directors may cause us to purchase and maintain insurance for the benefit of
any person who is or may be entitled to indemnification as mentioned above
against any expense or liability from which the person is or may be so entitled
to be indemnified and may secure such right of indemnification by mortgage or
other charge upon all or any part of our real and personal property, and any
action taken by the Board will not require approval or confirmation by our
shareholders.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or
controlling persons of us pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other
than our payment of expenses incurred or paid by a director, officer or
controlling person of us in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of competent jurisdiction the question whether such indemnification by us
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

ORGANIZATION WITHIN LAST FIVE YEARS

As set forth hereinabove, we have an employment agreement with our President,
Leslie A. Landes. This agreement was signed on August 4, 1998, and has a term of
5 years. Under the agreement Mr. Landes is scheduled to receive a minimum
compensation of CDN$150,000 per annum, however, he has consented to receive only
CDN$135,000 per annum until further notice, with no provision for a retroactive
increase back to CDN$150,000. The agreement may be terminated by Mr. Landes or
us on 30 days notice, and if early termination is initiated by Stockgroup
without cause, Mr. Landes is to receive a severance payment equal to 12 months
compensation.

Other than for our employment with Mr. Landes, and other than the employment
salary which is presently payable by us to Mr. New, there are no other
transactions or proposed transactions during the last two years to which we were
a party, in which any director, executive officer or a family member of any
director or executive officer had or is to have a direct or indirect material
interest exceeding $60,000.

DESCRIPTION OF BUSINESS

GENERAL

Stockgroup is a financial media and technology company. Our revenue streams for
2002 can be categorized into two broad areas:

- Financial Software and Content Systems,
- Public Company Disclosure & Awareness Products

See "Products and services" below for a full description of these two revenue
streams. The clients for Financial Content and Software Applications are
primarily enterprise companies from many different markets, such as media, banks
and credit unions, stock brokerages, insurance and others. Public Company
Disclosure & Awareness Products are awareness and disclosure products that are
purchased, as the name implies, by public companies in all industries.

Corporate Background

We are a United States publicly traded company incorporated in 1995 and
registered in Colorado. Our head office is in Vancouver, British Columbia,
Canada.

We operated from 1995 to 1997 as a profitable financial Internet technology and
media company that offered proprietary financial news and tools to investors and
companies.

We used our experience and the funds from a public offering in spring of 1999 to
provide the foundation for the development and initial marketing of our
products. In October 1999 we launched Smallcapcenter.com. At that time it was
widely believed that a subscription/advertising model centering around
Smallcapcenter was viable. While parts of this business model did not prove to
be profitable, the exercise of building Smallcapcenter and its related
investment tools gave us a strong foundation of skills and a suite of products
to sell commercially. Smallcapcenter is still a high-traffic and
well-maintained portal for the investment community, and its drawing power is a
key driver to many of our investor awareness products. It also serves as an
excellent development and testing ground for new financial software tools being
developed by us on a day-to-day basis.

From late 1999 to early 2001 we were hired to create several large enterprise
Web sites for different clients on a contract basis. These were large
contracts, and added a significant amount of revenue to us, but they also added
instability in our cost structure. In early 2001 it was decided that this
E-Business Solutions division would be de-emphasized in favor of other areas
with more profit potential, namely Financial Content and Software Applications
and Public Company Disclosure and Awareness Products (as described in the
"Products and services" section below).

From 2000 to 2001 we expanded our awareness and disclosure product line to
include Sector Supplements and automated investor relations Web page tools such
as the IntegratIR. We already had a large public company customer base, so the
transition into this area was a natural extension of our core competencies.

We entered the Financial Content and Software Applications market late in 2000
by licensing our proprietary financial software tools, content and applications
to customers that need to offer financial information to their customers or
improve their content offering. We had access to a wide array of customers
through our internal sales team as well as our reseller channels. Our content
and software application model is attractive to customers because it is a
comprehensive and cost effective alternative to in-house development.

Early in 2001, as the market for our products and services evolved, it became
apparent to us where the most profitable and sustainable areas of the business
were. They were Financial Content and Software Applications and Public Company
Disclosure and Awareness Products (including IntegratIR and other awareness and
disclosure products). Once these were identified, a more streamlined and stable
cost structure was introduced and our profitability and cash flow began to
improve.

On June 24, 2002, under an agreement with StockHouse Media Corporation, we
acquired the Web site assets, software and systems to run the Stockhouse
websites. We issued 2,080,000 common shares and we control and manage the
operations of the assets and receive the net revenue to our account. Due to
certain provisions in the agreement, we have the option of acquiring the
remaining 35% of the assets for between 920,000 and 1,120,000 common shares of
us based on a revenue/profit formula. The transaction was completed with an
arms length party, although one of the principals of Stockhouse Media
Corporation has since become a director of us.

Prior to that agreement StockHouse Media Corporation spent approximately C$35
million on its technology, brand and business development, ultimately becoming
established as one of the leading online financial communities.

That transaction provided several key benefits to us including:

- Augmenting the strength of our Company by integrating the technology and
products into our existing infrastructure;
- The deepening and strengthening of our technology, through incorporating
- StockHouse Media Corporation's applications and capabilities, expanding our
product offering and enhancing our ability to deliver products to our
customers;
- The immediate addition of the StockHouse Media Corporation revenue stream
and customer base; and
- The integration of resources of the two companies, lowering overall cost of
delivery, strengthening brand and adding value to the more than 450,000
registered subscribers and over 50 million monthly page views of
StockHouse.com and Smallcapcenter.com.

On July 23, 2002 we became a reporting issuer in Canada and on December 17,
2002, we were listed and began trading on the TSX Venture Exchange in Canada.

Products and services

Our understanding of Internet based financial technology and media has enabled
us to leverage our products and services to enter new markets and secure new
clients. Using a common integrated technology platform, we have developed two
main revenue sources: Financial Content and Software Applications and Public
Company Disclosure & Awareness Products and Advertising.

Financial Software and Contents Systems

We have developed proprietary financial applications and tools we license to
clients. The clients for Financial Content and Software Applications are from
many different markets, such as news media, banks and credit unions, stock
brokerages, leasing, insurance and others. We provide the tools on a
private-labeled basis, and they are typically sold in licencing contracts of 12
months or more. These long-term contracts generate stable, recurring revenue
streams.

Many of the tools are data-feed driven. We either feed data from our own
aggregated databases or from third parties. The advantage of using the
Stockgroup tools is that the customer is able to receive data and information
from a variety of different feeds all from point of contact and at a fraction of
the cost of purchasing all feeds individually. Also, in most cases we add value
by customizing, filtering and sorting data in the configuration the customer
wants. We are able to use our economies of scale and automation to give a
product that is efficiently delivered and customized, and at a substantial costs
savings to having the customer build and manage it internally.

Examples of some of the providers of third-party data feeds include Marketguide,
Comtex, Multex and North American Quotations.

We distribute financial tools through content and application syndicates, such
as Yellowbrix, through channel resellers such as The Associated Press, The
Canadian Press, Comtex News Network, Clarinet Communications and through our own
sales team. These financial tools, applications and content systems cover the
entire North American market including mutual funds, commodities and equities.

We bring in market feeds through satellite, File Transfer Protocol (FTP),
Extensible Markup Language (XML) and other delivery formats. We have built and
maintain our proprietary middleware solution that aggregates the multiple feeds,
translates and builds a common database infrastructure. Our system then cleans,
filters and maintains the data in a common database structure. A sophisticated
server cluster and security system backs this content/data management system.
The data is then streamed to our proprietary software applications.

The following are just a few of our over 25 Financial Content and Software
Applications products:

- Real-time stock quotes on major U.S. exchanges;
- North American 20-minute delayed stock quotes and indices;
- Portfolio management, live portfolio updates and wireless portfolio
updates;
- Most active stock updates;
- Stock watch lists;
- Company fundamentals, SEC/SEDAR filings;
- Daily stock market winners/losers, most actives;
- Company profiles, stock screening (investment data) and technical stock
analysis; and
- Employee stock option calculations.

The Financial Content and Software Applications is delivered to customers in
four different formats:

- On an Application Service Provider (ASP) basis where the content and
software is hosted by Stockgroup and private labeled to the customers
Internet or Intranet site;
- Through our proprietary software objects residing on the customers' servers
which use a proprietary Application Protocol Interface (API) to retrieve
data from our servers;
- Through secured Extensible Markup Language (XML) channel; or
- Through different wireless devices and modes including handheld devices,
Short Message Service (SMS) paging and Wireless Application Protocol (WAP)
portals which have been built and maintained by us.

Public Company Disclosure and Awareness Products

We have developed and own a large array of Public Company Disclosure and
Awareness products. These products are used by clients to either (a) manage
their investor relations and shareholder communications through their Web site,
(b) generate awareness for their company and their stock, (c) improve their
public disclosure compliance or (d) advertise their products and services.

Products and services offered by this revenue stream include the IntegratIR
software system, Investor Marketplace, E-Mail News Blasts, Sector Supplements,
Stockhouse @ The Bell sponsorship, Smallcap Express sponsorship, Web site
advertising, monthly investor marketing bundles, custom Web site development and
other online investor marketing products.

Public companies are increasingly outsourcing these activities because they lack
the internal skills and resources or because it is more effective and cost
efficient than in-house development and maintenance. We offer a 'one-stop
shopping' package for corporate clients and provide everything from news release
tracking and postings to quarterly streaming conference calls. Our understanding
of this market segment and focus has resulted in a highly specialized bundle of
products including: private label quotes, charts and database tools for building
relationships with shareholders and traffic reports to track investor usage of
Web sites and inquiries.

Our IntegratIR system represents a whole new way to manage shareholder
communications and reach new investors. The IntegratIR is an investor relations
Web page and email management system that functions as a software application -
giving the Investor Relations Officer and Chief Financial Officer desktop
control over the investor relations portion of their Web site. In addition to
standard features, such as dynamic quotes and charts, the IntegratIR provides
powerful new tools that automate the client's online disclosure activities
including publishing their press releases, publishing of regulatory filings and
distributing information requested by shareholders, all on a real-time,
automated basis.

Other awareness products for public companies include the following:

Investor Marketplace (IMP), a Web page which is actively marketed through
advertising to draw readers, where companies can be featured online to
prospective investors. Being featured on the IMP enables customers to get their
name, profile and internet link in front of a large investor audience that they
may not otherwise be able to attain.

Stockhouse News Blasts, Special Situation Alerts, and NewsHotlines, which are
targeted e-mail marketing tools used to disseminate news releases to an
exclusive list of up to 450,000 opt-in investors.

Sector Supplements, which are a spotlight feature on a certain industry sector,
such as energy, mining, biotech or technology, are an effective exposure tool
for companies. In a Sector Supplement investors are drawn to a Web site that
features up to 12 companies and contains industry-specific news and information.
Investors who visit this Web site can view each of the featured companies'
profiles, request information or link directly to the client's own Web site.

Sponsorship of the Stockhouse @ The Bell/Smallcap Express daily market recap
mailings that goes to a large audience of e-mail readers who have signed up to
receive it through Stockhouse.com and Smallcapcenter.com. A client who sponsors
Stockgroup @ The Bell/Smallcap Express gets an advertising banner at the top of
each flight. This can be an effective way for the client to get their name in
front of a large number of investors.

Advertising, which is shown in various positions on Stockhouse.com and
Smallcapcenter.com on a prescribed rotation, is another way for clients to get
the attention of a targeted investor audience. Potential investors who see the
advertisement can 'click through' the ad to get to a jump page which can include
the client's own description of their company or product.

The StockHouse network (StockHouse.com/.ca/.com.au) offers content aggregation
from hundreds of sources, a comprehensive equities database and the Internet's
first syndicated message forums, the BullBoards(TM). The three Web sites attract
investors in a number of global markets, including the USA, Canada and
Australia.

EMPLOYEES

As of the date of this prospectus we employed 33 people on a full-time basis and
3 people on a part-time basis.
None of our employees are subject to collective bargaining agreements. We have
never had a work stoppage. We believe relations with employees are good.

REGULATORY ISSUES
We are not subject to governmental regulation in our Internet publishing efforts
other than local state and municipal sales tax licenses.

existing laws will be applied by the judiciary to the Internet. The adoption of
new laws or the application of existing laws may decrease the growth in the use
of the Internet, which could in turn decrease the demand for our services,
increase the cost of doing business or otherwise have a material adverse effect
on our business, results of operations and financial condition.

SUBSIDIARIES

Stockgroup owns 100% of the issued and outstanding voting common shares of
579818 B.C. Ltd., which wholly owns Stockgroup Media Inc., a British Columbia
corporation, and owns 50% of Stockscores Analytics Corp., a British Columbia
corporation. In addition, Stockgroup wholly owns Stockgroup Systems Ltd., a
Nevada Corporation, and Stockgroup Australia Pty Ltd, an Australia Corporation.

RESEARCH AND DEVELOPMENT

During 2001 and 2002 we invested approximately $241,392 and $78,792,
respectively, on research and development related to new products and services.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion of the financial condition and results of operations of
Stockgroup should be read in conjunction with the unaudited financial statements
for the quarters ended March 31, 2003 and 2002 and the audited financial
statements for the years ended December 31, 2002 and 2001 and the notes thereto
included elsewhere in this prospectus. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of various factors including, but not limited to, those set forth under
"Risk Factors" and elsewhere in this prospectus.

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002

The results of the first three months of 2003 are a product of our continued
focus on improving the balance sheet and obtaining high quality sales customers
and partners for our Financial Software and Content Systems. We continued to
acquire additional twelve and twenty-four month customers for our Financial
Software and Content Systems, which will continue to grow our recurring revenue
stream.

Overall sales are up from the first three months of 2002. We continue to adapt
to the downturn in the Stock Markets.

Revenue and Gross Profits
--------------------------------------------------------------------------------
Total revenues in the first three months of 2003 were $0.602 million compared to
$0.442 million in the first three months 2002, an increase of $0.16 million, or
36%. Our Public Company Disclosure and Awareness Products revenue was $0.385
million compared to $0.285 million in the first three months 2002, a decrease of
$0.100 million or 35%. Financial Software and Content Systems revenue was
$0.216 million compared to $0.157 million in the first three months 2002, an
increase of $0.059 million or 38%.

Gross profits in the first three months of 2003 were $0.444 million compared to
$0.277 million in the first three months 2002, a increase of $0.166 million, or
60%. Gross profit as a percentage of sales was 74% and 61% for the three-months
periods ended March 31, 2003 and 2002 respectively.

We are continuing to provide innovative products in our Public Company
Disclosure and Awareness Products line, and the IntegrateIR sales remain strong,
delivering high value to customers. Historically, many of our Public Company
Disclosure and Awareness Products customers have come from the technology
sector, and the slowdown in this sector has caused considerable attrition. As
well, part of the product line has been affected adversely as public companies
reduced or eliminated spending on their awareness products. However, we
continue to sign new agreements for our disclosure products with major
corporations. We have been diversifying our target market for some time in
order to be less dependent on any one sector. We feel that this area of the
business will rebound fully when the financial markets begin to recover from
their current slowdown.

Financial Software and Content Systems continues to be a strong contributor to
our overall revenue and gross profits. Our process has matured over the past
year, and we are able to efficiently deliver high quality services to customers
for a fraction of the cost to customers of having it done internally. We have
established relationships with major sales channels, media networks, and
financial companies, and have already seen significant results. Financial
Software and Content Systems revenue was up this three month period 38% over the
same period a year ago, and down 0.6% quarter over quarter from the fourth
quarter 2002. All of this revenue is contractual, typically in 24-month terms,
so we have a solid base of revenue in this area to grow from.

Operating Expenses
--------------------------------------------------------------------------------
Total operating expenses in the first three months of 2003 were $0.696 million
compared to $0.474 million in the same three months last year, a increase of
$0.222 million or 47%. This increase was a result of the additional payroll,
amortization and foreign exchange costs for 2003. We have stabilized our
operating expenses at a level which will enable us to grow our sales
efficiently, thereby generating the greatest return on investment.

Sales and Marketing expenses were $0.158 million in the first three months of
2003 compared to $0.092 million in the first three months 2002, a increase of
$0.066 million, or 72%. This area of the expenses increased but should remain
relatively flat for the near future.

Product Development expenses in the first three months of 2003 were $0.007
million compared to $0.018 million in the first three months 2002, a decrease of
$0.011 million, or 60%. As our business has matured, product development has
naturally taken a lesser role. Our staff is more experienced, and our processes
for developing new products are streamlined so that overall development costs
are minimized.

General and Administrative expenses in the first three months of 2003 were
$0.530 million compared to $0.363 million in the first three months 2002, a
increase of $0.167 million, or 46%. The most notable increases have been in
payroll, which is our largest expense category. We have also had increases in
amortization due to the acquisition of the Stockhouse website.

Other Income (Expense) and Income Taxes
--------------------------------------------------------------------------------
Interest expense in the first three months of 2003 was $0.216 million compared
to $0.184 million in the first three months 2002, a increase of $0.032 million,
or 17%. Of the amount for the first three months of 2003, $0.013 million is
cash interest, either already paid or payable after the quarter end. The
remaining interest is non-cash interest arising out of the conversion of the 8%
convertible notes and the amortization of the debt discount on the 8%
convertible notes.

Income taxes were nil in both the first three months 2003 and the same three
months 2002. Due to our net loss position, we did not accrue tax in the first
three months of 2003. As at the most recent year end, Stockgroup had tax loss
carry forwards of $5.324 million in Canada which expire in 2006, 2007, and 2008,
and tax loss carry forwards of $3.144 million in the U.S. which expire in 2019,
2020, 2021, and 2022.

Net Income
--------------------------------------------------------------------------------
The net loss for the first three months of 2003 was $0.468 million compared to a
gain of $0.657 million in the first three months 2002, a decrease of $1.125
million or 171%.

RESULTS OF OPERATIONS - FOR THE YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31,
2001

We are in a business in which sales are strongly influenced by public interest
in the North American stock markets. Nearly all aspects of our business,
including financial tools, investor marketing and Stockhouse advertising are
affected by ups and downs of the markets.

The results for the year 2002 were mixed, as we made a number of significant
improvements during the year, but revenue was down from 2001, primarily due to
the discontinuation of our E-Business consulting. In our first quarter we
improved our balance sheet by restructuring and converting a portion of our
convertible debt, and in the process decreased our net loss dramatically through
a gain of $1.089 million. In our second quarter we acquired a valuable Web site
asset, software and technology by acquiring a majority interest in certain
assets of Stockhouse Media Inc. without expending any cash. We expect the
Stockhouse Media Inc. assets will yield positive returns in 2003. In the fourth
quarter we raised $0.490 million net in a private placement which improved our
balance sheet, and we were accepted for listing on the TSX Venture Exchange in
Canada. We emerged from 2002 stronger and more experienced, with a strong
management team in place.

Revenue and gross profits
--------------------------------------------------------------------------------
Total revenues for 2002 were $1.965 million compared to $2.857 million in 2001,
a decrease of $0.893 million or 31%. The drop in revenue was primarily the
result of the discontinuation of our E-Business consulting.

Our revenue from Public Company Disclosure and Awareness Products decreased
compared to last year, from $1.643 million in 2001 to $1.209 in 2002, a decrease
of $0.434 million or 26%. Much of this decrease was attributed to the decrease
in public company corporate communications spending caused by the continued
downturn in financial markets. Nevertheless, we continued to direct a
significant portion of our sales efforts in this area because we feel that,
strategically, this business will be profitable for us in the future.

Financial Software and Content Systems revenue increased from $0.580 million in
2001 to $0.756 million in 2002, an increase of 30%, which was a result of a
gradual buildup of recurring monthly fees. The revenue from Financial Software
and Content represented 38% of our total sales in 2002, an increase over the 20%
of sales it represented in 2001. This is a growing source of revenue that is
expected to continue increasing. We continue to acquire high quality clients,
both through new relationship building and referrals from existing clients.

E-Business revenue was nil in 2002, compared to $0.634 million in 2001. The
decision was made in 2001 to focus on our scalable recurring product lines in
place of consulting revenue.

Gross profits in 2002 were $1.258 million compared to $1.812 million in 2001, a
decrease of $0.554 million or 30%. Gross profit margin percentage increased
slightly from 63% to 64%. Direct costs include direct payroll, bandwidth, data
feeds and job-specific advertising purchases.

Operating expenses
--------------------------------------------------------------------------------
Total operating expenses for 2002 were $2.266 million compared to $2.485 million
in 2001, a decrease of $0.219 million or 9%. Most of the decrease in costs was
in product development, which dropped off significantly due to the fact that
most of our products were in place by the beginning of the year.

Sales and Marketing expenses were $0.475 million compared to $0.467 million in
2001, an increase of $0.008 million or 2%.

Product Development expenses in 2002 were $0.079 million compared to $0.241
million in 2001, a decrease of $0.163 million or 67%. Our products were fully
developed by the end of 2001, and our strategy for 2002 was to only develop new
products if there was a known demand or request for them. This led to a sharp
decrease in product development costs.

General and Administrative expenses in 2002 were $1.712 million compared to
$1.777 million in 2001, a decrease of $0.065 million or 4%. Payroll is our
largest cost item in this category. Our payroll costs remained relatively
stable throughout the year, with only moderate increases and a three-month
period after we acquired the Stockhouse Web site when our employee base
temporarily increased by about 10 people. In 2001, for comparison, we had
higher payroll at the beginning of the year than at the end, so overall the
payrolls were similar in both years. Our emphasis in all other cost areas for
both 2002 and 2001 has been toward cost reduction, with measured expansion in
conjunction with expanded sales only.

Operating losses were $1.008 million and $0.673 million for 2002 and 2001
respectively. The increase of operating loss year over year was due mainly to
the decrease in total sales.

Other income (expense) and income taxes
--------------------------------------------------------------------------------
Interest expense in 2002 was $0.320 million compared to $0.596 million in 2001,
a decrease of $0.276 million or 46%. Interest on our 8% convertible notes was
$0.120 million in 2002, compared to $0.193 million in 2001, a decrease of $0.073
million caused by lower principal balances in 2002 and put premiums being
avoided in 2002 due to the restructuring of the notes that took place on
February 6, 2002. Interest on our 3% convertible debentures was $0.160 million
in 2002, compared to $0.375 million in 2001, a decrease of $0.215 million caused
by the conversion of the full amount of principal in March 2002. Other interest
was $0.040 million in 2002, compared to $0.028 million in 2001, an increase of
$0.012 million caused by the addition of a 17% note in July 2002, a 25% note in
October 2002 and a new capital lease in June 2002. Of the $0.320 million in
interest expense in 2002, $0.040 million was paid in cash. The remaining $0.280
million was a combination of amortized debt discount on the 8% convertible notes
and deemed interest expense on the induced conversion of the 3% convertible
debentures.

The gain on warrants liability of $0.055 million results from the restructuring
of the warrants from the 3% convertible debentures, as described in Note 10 of
the financial statements.

The gain of $1.089 million is the result of the restructuring of our 8%
convertible notes in February 2002, and is further described in Note 7 of our
financial statements.

Other expense in 2002 was $0.013 million, which consists of net losses on market
value of short term marketable securities.

Due to our net loss position we did not incur income tax in 2002 or 2001.

Net income
--------------------------------------------------------------------------------
The net loss for 2002 was $0.307 million compared to $0.542 million in 2001, a
decrease in losses of $0.235 million or 43%. This reduction in net loss was due
to the gain of $1.089 million, which offset the increase in ordinary net loss of
$0.326 million.

CRITICAL ACCOUNTING POLICIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses our consolidated financial statements, which have been
prepared in accordance with accounting policies generally accepted in the United
States. The preparation of these consolidated financial statements requires us
to make estimates and assumptions that affect the assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. We believe the following critical
accounting policies affect significant judgments, estimates and assumptions used
in the preparation of the consolidated financial statements.

Revenue

Financial Software and Content Systems and Public Company Disclosure and
Awareness Products revenues are recognized as services are rendered based on
contractual terms such as usage, fixed fee or other pricing models. Financial
Software and Content Systems are sold in monthly service agreements, typically
12 or 24 months in length. Public Company Disclosure and Awareness Products are
sold in either one-off or 12-month contract arrangements. Revenue is recognized
only if a contractual arrangement is in place, no significant obligations remain
and collection of the resulting receivable is probable. Start-up fee revenues,
charges for implementation and initial integration support of our products are
recognized over the initial term of the contract pursuant to the SEC Staff
Accounting Bulletin 101, Revenue Recognition in Financial Statements. Amounts
received in advance are deferred and recognized over the service period.

Property and equipment

We evaluate, on a periodic basis, our property and equipment, to determine
whether any events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable. We base our evaluation on certain
impairment indicators, such as the nature of the assets, the future economic
benefit of the assets, any historical or future profitability measurements as
well as other external market conditions or factors that may be present. If
these impairment indicators are present or other factors exist that indicate
that the carrying amount of the asset may not be recoverable, we then use an
estimate of the undiscounted value of expected future operating cash flows to
determine whether the asset is recoverable and measure the amount of any
impairment as the difference between the carrying amount of the asset and its
estimated fair value. The fair value is estimated using valuation techniques
such as market prices for similar assets or discounted future operating cash
flows.

Amortization of property and equipment is on a straight-line basis over the
asset's estimated useful life.

Contingencies

From time to time we are subject to proceedings, lawsuits and other claims
related to labor and other matters. We are required to assess the likelihood of
any adverse judgments or outcomes to these contingencies as well as potential
ranges of probable losses and establish reserves accordingly. We use
professional judgement, legal advice and estimates in the assessment of outcomes
of contingencies. The amounts of reserve required, if any, may change in future
periods due to new developments in each matter or changes in approach to a
matter such as a change in settlement strategy.

LIQUIDITY AND CAPITAL RESOURCES

We ended the first quarter of 2003 with cash and cash equivalents of $178,076 a
decrease of $361,894 from Dec 31, 2002. This compares with a net cash decrease
of $110,324 in Q2 2002, $74,935 in Q3 2002 and a net cash increase of $468,598
in Q4 2002. Although we expect to generate positive cash flow from operations,
we are pursuing financing to improve our working capital position and to grow
the business to the greatest possible extent.

Our cash used in operations for the first three months of 2003 was $329,545. We
repaid $20,000 of our convertible notes, and $47,000 in notes payable. Other
uses of cash were repayment of capital lease, totaling $43,398. Sources of cash
included $84,495 for proceeds from exercise of warrants and stock options.

On June 4, 2003 we received $0.7M net from a Short Form Offering.

You should be cautioned that there can be no assurance that revenue, margins,
and profitability will increase. In addition, we have $209,610 of notes payable
and $78,129 of capital lease obligations due within the next 12 months. We may

need to seek additional capital. There can be no assurance that we will be
successful in raising a sufficient amount of additional capital or in internally
generating a sufficient amount of capital to meet long-term requirements. If we
are unable to generate the required amount of additional capital, our ability to
continue as a going concern is in substantial doubt.

CORPORATE DEVELOPMENTS DURING THE YEAR

A synopsis of corporate highlights for 2002 is as follows.

On February 6, 2002, we restructured the 8% convertible notes with Deephaven
Private Placement Trading Ltd. and Amro International, S.A. Under the
restructuring the interest rate and prepayment penalties were reduced to zero,
accrued interest has been waived, the conversion price is fixed at $0.50 and a
total of up to $300,000 cash is required to be paid to the noteholders over 10
quarterly installments starting June 30, 2002. The new notes have a two-year
term with renewal provisions for another two years. We filed a form 8-K on
February 20, 2002 which fully described the restructured notes.

On February 11, 2002, we announced an agreement with Freedom Communications, a
large private media company with publications and websites throughout the U.S.,
to provide our Financial Software and Content Systems to its websites.

On February 21, 2002, we announced the signing of a market exclusive agreement
with The Canadian Press, Canada's national news agency, to resell our financial
content management and software system in Canada.

On March 15, 2002, we and the remaining noteholders from the January 19, 2001 3%
convertible debenture reached an agreement whereby they would convert the $0.2M
balance of the debt into common shares at $0.50 per share. The exercise price of
the Series 3A warrants has been reduced from $1.00 to $0.25. The exercise price
of the Series 3B warrants has been reduced from $2.00 to $0.50. The expiry date
for both the Series 3A and 3B warrants has been extended to July 31, 2005.

On March 19, 2002, we signed a licensing agreement with Credential Group for
financial software tools and content. Credential Group is partnered with more
than 450 credit unions across Canada. We will provide Credential Group with
mutual fund information, stock quotes, interactive charts, indexes and other
financial information.

On March 25, 2002, we completed a $0.410M financing with 22 unaffiliated
investors. The funding included 2,000,000 units consisting of one common share
and one warrant each, at a price of $0.20 per unit, plus 51,000 common shares at
a price of $0.20 per share. The warrants have an exercise price of $0.25 and an
expiry date of March 31, 2003. The full details of this financing, including all
relevant documents, were filed in a Form 8-K on March 26, 2002 and can be viewed
therein.

On May 30, 2002, we announced that Profit Magazine had recognized our Canadian
subsidiary as one of Canada's fastest growing companies. The 2001 Profit 100
list awards companies based on their five-year revenue growth.

On June 24, 2002, we acquired certain of the assets of StockHouse Media Corp.
We purchased the StockHouse assets, including its financial communities,
StockHouse.com, StockHouse.ca and StockHouse.au, its software applications and
its infrastructure, with an initial 65% ownership interest for 2,080,000 shares
of unregistered common stock of Stockgroup and with an additional option to
acquire the remaining 35% interest based on a formula for between 920,000 and
1,120,000 shares. We filed a form 8-K on July 11, 2002 which fully describes the
agreement.

On September 25, 2002, we retained an independent investment dealer, Canaccord
Capital Corporation, to act as sponsor for the inter-listing of our shares on
the TSX Venture Exchange.

On October 1, 2002, we announced that Intrawest will license our IntegratIR
Software System. Our IntegratIR tool allows Intrawest complete control of the
individual elements of their IR site and enables Intrawest to quickly update and
change their site anytime from anywhere they have internet access.

On October 8, 2002, we announced a licensing agreement with National Bank
Financial to build a customized solution to provide online market data to their
clients. National Bank Financial is one of the leading securities dealers in
Canada.

On December 17, 2002, we were accepted for listing in Canada on the TSX Venture
Exchange.

On December 31, 2002, we closed a private equity placement of 3,403,750 units,
each unit consisting of one share and one warrant, to a group of unaffiliated
investors, for gross proceeds of $544,600.

CORPORATE DEVELOPMENTS SINCE YEAR END
On January 22, 2003, we reached an agreement with AP Digital, a division of The
Associated Press that distributes news and information to interactive
applications, to market and resell our market information and financial content
management and software system to AP's worldwide network of members and
customers.

On January 26, 2003, we announced a licensing agreement with Global Securities
Information Inc. (GSI) to provide GSI's clients with financial information
powered by the software tools and content in our proprietary Financial Content
Management System. Global Securities Information Inc. is an award-winning
specialty provider of public-record business transaction information to law and
accounting firms, investment banks, corporations and the business press.

On January 31, 2003, we announced that Amro International had converted its
remaining balance of $0.4 million of its convertible debenture. The debt was
converted into stock at US$0.32 per share as part of a negotiation between Amro
and Stockgroup to eliminate Amro's debt. Our outstanding long-term debt has been
reduced from $1.7 million to $1.3 million.

On February 5, 2003, we announced an agreement with UnionBanCal Corporation's
primary subsidiary, Union Bank of California, N.A., pursuant to which Union Bank
will license our cutting-edge XML suite of financial content and software
applications. We will customize a scrolling ticker and provide secure XML-based
quotes, charts and other banking-specific financial content for Union Bank's
customers and internal applications.

On February 18, 2003, we announced that our popular StockHouse financial Web
portals, StockHouse.com and StockHouse.ca had recorded over 6 million postings
within their BullBoards(TM) message forums.

On March 18, 2003, we launched a financial resource portal for one of Canada's
leading securities dealers, National Bank Financial. National Bank Financial's
newly launched customized financial solution will provide online market data
products for their clients. The complete suite of market data tools will benefit
their clients by providing them with market data research tools such as Stock
Screeners, Mutual Fund Screeners, Technical stock analysis, Market Indices,
Stock Charts, Stock Watch Lists, Portfolio Managers, Market Movers, Scrolling
Tickers and much more.

On April 11, 2003, we announced a C$2.0MM short form financing. First
Associates Investments Inc. will act as our Agent and has signed an agency
agreement for the underwriting of a C$2.0MM best efforts offering. Each unit
will consist of one share and one share purchase warrant and the unit has been
priced at C$0.37. Two warrants entitle the investor to purchase one additional
common share at a price of C$0.75 for 12 months.

On April 15, 2003, Stockgroup and one of its resellers, AP digital, a division
of the Associated Press, signed a licensing agreement with Netster.com. As a
result of the agreement Netster.com, one of the fastest growing search engines
on the Web, will use AP Financial Tools, a suite of news, market data and
financial applications powered by Stockgroup's Financial Content Software System
and provided by AP Digital. Netster.com is now able to offer its audience these
turnkey solutions that present and manage quotes, charts, user portfolios,
technical analysis, watch lists and more, through its portal site
www.netster.com.

On April 30, 2003, we announced that we will provide Richard Ivey School of
Business financial market content, data and applications for the use of faculty,
students and alumni as a gift to the school. Ivey's students, faculty and
alumni will be able to access a suite of news, market data, financial
applications and turnkey solutions that present and manage quotes, charts, user
portfolios, technical analysis, watch lists and much more, powered by
Stockgroup's Financial Content Software System for at least the next five years.

On May 23, 2003, we announced that Deephaven converted the entire remaining
balance of its convertible notes into common shares. The principal balance of
$1.2MM was converted at a negotiated conversion price of $0.28 into 4.4MM common
shares. This conversion removes all the convertible debt from our balance
sheet.

On June 4, 2003, we partially closed the short form offering previously
announced on April 1, 2003. With this partial closing we issued 2,746,800 common
shares and 2,746,800 warrants exercisable for 1,373,400 common shares at C$0.75.
Net proceeds to us after commissions and costs were C$0.9M. We also issued
agent's options to purchase 274,680 units of the offering at C$0.37 per unit,
each unit consisting of one common share and one half share purchase warrant,
with the warrants being exercisable at C$0.75 per share.

DESCRIPTION OF PROPERTY

INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND DOMAIN NAMES

We protect our intellectual property through a combination of trademark and
copyright law, trade secret protection and confidentiality agreements with its
employees, customers, independent contractors and strategic partners. We pursue
the registration of our domain names, trademarks and service marks in the United
States and internationally. Effective trademark, service mark, copyright and
trade secret protection may not be available in every country in which our
services and products are made available on-line. We create a majority of our
own content and obtain rights to use the balance of our content from third
parties. It is possible that we could become subject to infringement actions
based upon the content obtained from these third parties. In addition, others
may use this content and we may be subject to claims from its licensors. We
currently have no patents or patents pending and do not anticipate that patents
will become a significant part of our intellectual property in the future. We
enter into confidentiality agreements with our employees and independent
consultants and have instituted procedures to control access to and distribution
of our technology, documentation and other proprietary information and the
proprietary information of others from whom we license content. The steps we
take to protect our proprietary rights may not be adequate and third parties may
infringe or misappropriate our copyrights, trademarks, service marks and similar
proprietary rights. In addition, other parties may assert claims of infringement
of intellectual property or alter proprietary rights against us. The legal
status of intellectual property on the Internet is currently subject to various
uncertainties as legal precedents have not been set and are still to be
determined in many areas of internet law.

LEASEHOLD

Our corporate offices are composed of one floor of leased space located in the
center of Vancouver's business community. We also hold a lease in New York and
rent an office in Toronto on a month to month basis. Our facilities are fully
used for current operations, with the exception of the New York facility, which
is currently being subleased to a tenant.

City Monthly Payment Lease Term Expiry Date
-----------------------------------------------------------------------------

Vancouver. . . . . . C$23,647 7 years June 2006
New York . . . . . . $ 8,449 7 years August 2006
New York sublease. . $(8,449) 3 years April 2004
Toronto. . . . . . . C$2,400 N/A N/A

EQUIPMENT

We have made a significant investment in servers and computer equipment required
for our Web site and have dedicated staff assigned to maintenance and support of
these operations.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There have not been any material transactions with related parties in the past
two years.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock has been quoted for trading on the OTC Bulletin Board since
March 17, 1999, and on the TSX Venture Exchange since December 17, 2002.
Accordingly, there has been a limited public market for our common stock.

The following table sets forth high and low bid prices for our common stock on
the OTC Bulletin Board for the quarterly periods ending March 31, 2001 through
to June 30, 2003. These prices represent quotations between dealers without
adjustment for retail markup, markdown or commission and may not represent
actual transactions.

Quarter Ending: High Low Volume
---------------------------------------------------------------------

March 31, 2001. . . . . . . . . $ 1.000 $ 0.375 1,005,700
June 30, 2001 . . . . . . . . . $ 0.650 $ 0.280 2,840,800
September 30, 2001. . . . . . . $ 0.390 $ 0.090 1,105,300
December 31, 2001 . . . . . . . $ 0.200 $ 0.115 1,977,800
March 31, 2002. . . . . . . . . $ 0.400 $ 0.140 5,509,300
June 30, 2002 . . . . . . . . . $ 0.260 $ 0.147 2,734,400
September 30, 2002. . . . . . . $ 0.200 $ 0.125 1,785,900
December 31, 2002 . . . . . . . $ 0.270 $ 0.140 6,072,100
March 31, 2003. . . . . . . . . $ 0.380 $ 0.205 4,858,400
June 30, 2003 . . . . . . . . . $ 0.380 $ 0.219 7,464,200

The following table sets forth high and low bid prices for our common stock on
the TSX Venture Exchange for the period from inception on December 17, 2002 to
December 31, 2002, the two quarterly periods ended June 30, 2003. These prices
represent quotations between dealers without adjustment for retail markup,
markdown or commission and may not represent actual transactions.

Quarter Ending: High Low Volume
--------------------------------------------------------------------

December 31, 2002 (partial) C$ 0.45 C$ 0.38 181,500
March 31, 2003 C$ 0.50 C$ 0.31 575,300
June 30, 2003 C$ 0.49 C$ 0.34 703,744

Holders

As of the date of this prospectus we had 102 registered shareholders owning
28,422,371 shares of our common stock.

Dividends

We have not declared, and do not foresee declaring, any dividends now or into
the foreseeable future.

We have authorized and reserved, as of the date of this prospectus, an aggregate
of 10,055,191 shares of our common stock for issuance upon the exercise of
outstanding warrants and upon the exercise of non-qualified stock options.

EXECUTIVE COMPENSATION
The following summary compensation table reflects all compensation awarded to,
earned by, or paid to the Chief Executive Officer and the President of our
Company for all services rendered to us in all capacities during each of the
years ended December 31, 2001 and 2002. None of the other executive officers
received salary and bonus exceeding $100,000 during those years.

Summary Compensation Table

Securities All Other
Salary Underlying Compensation
Name and Principal Position Year $ Options (#) $
--------------------------------------------------------------------------------

Marcus A. New
Chief Executive Officer,. . 2001 $ 97,194 100,000 $0
Chairman and Director . . . 2002 $ 93,441 375,000 $0
--------------------------------------------------------------------------------
Leslie A. Landes. . . . . . 2001 $ 97,194 533,200 $0
President and . . . . . . . 2002 $ 93,441 (233,200) $0
Chief Operating Officer

Option Grants In the Last Fiscal Year To Named Executive Officers

Name Securities % Of Net Exercise Expiration
Underlying Options Price Date
Options Granted to $
Granted Employees
(1)(2) In Year (3)
----------------------------------------------------------------------

Marcus A. New. . . 400,000 40.3% 0.22 04-Mar-08
Marcus A. New. . . 300,000 30.2% 0.17 12-May-08
Marcus A. New. . . (325,000) (32.7%) 2.50 cancelled
Leslie A. Landes . (533,200) (53.7%) 0.94 cancelled
Leslie A. Landes . 300,000 30.2% 0.15 20-Oct-08
----------------------------------------------------------------------

(1) All of the above options are subject to the terms of our Stock Option Plan
and are exercisable only as they vest. The options have a term of six years
from date of grant.
(2) All options were granted at an exercise price equal to or greater than the
fair market value of our common stock on the date of grant.
(3) The denominator is total options granted less total options forfeited during
the year.

No bonuses were paid to named executive officers in any of the above years. No
Restricted Stock Awards (RSAs), Stock Appreciation Rights (SARs) or Long Term
Incentive Plans (LTIPs) were awarded to named executive officers in any of the
above years.

AGGREGATED OPTION EXERCISE IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

The following table summarizes the option holdings of the named executive
officers as at December 31, 2002:

Number of Shares Value of Unexercised
Uunderlying In-the-Money
Unexercised Options Options at
At December 31, 2002 December 31, 2002
----------------------------------------------------------------------------------------------
Shares
acquired Value Exer- Unexer- Exer- Unexer-
Name on Exercise Realized cisable cisable cisable cisable
----------------------------------------------------------------------------------------------

MARCUS A. NEW . . . . . 0 $ 0 800,000 0 $ 49,000 $ 0
Leslie A. Landes. . . . 105,000 $ 1,050 726,560 106,640 $ 42,797 $3,199
==============================================================================================

Directors' compensation

Stockgroup compensates its outside directors by issuing options to acquire
shares of common stock which fully vest after one year of service on the Board
of Directors. David N. Caddey and Lee de Boer were each granted 50,000 such
options on August 10, 2001 that have an exercise price of $0.22 per share and
fully vested on August 10, 2002. On October 22, 2002, Mr. Caddey and Mr. De
Boer were each granted a further 50,000 options with an exercise price of $0.15
fully vesting immediately. Craig Faulkner was also granted 50,000 options on
October 22, 2002 with an exercise price of $0.15 fully vesting immediately, as
director compensation.

FINANCIAL STATEMENTS

Stockgroup Information Systems Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED - Expressed in U.S. Dollars)

[See Note 1 - Nature of Business and Basis of Presentation]

March 31, December 31,
2003 2002
------------ --------------

ASSETS
CURRENT
Cash and cash equivalents. . . . . . . . . . . . . . $ 178,076 $ 539,970
Marketable securities. . . . . . . . . . . . . . . . 1,691 1,198
Accounts receivable [net of allowances for doubtful
accounts of $38,933; December 31, 2002 $40,866]. . 314,461 169,675
Prepaid expenses 87,417 102,118
------------ --------------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . $ 581,645 $ 812,961
Property and equipment, net. . . . . . . . . . . . . $ 550,596 $ 638,665
------------ --------------
$ 1,132,241 $ 1,451,626
============ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT
Accounts payable . . . . . . . . . . . . . . . . . . $ 288,129 $ 313,272
Accrued payroll liabilities. . . . . . . . . . . . . 49,606 109,930
Deferred revenue . . . . . . . . . . . . . . . . . . 375,974 320,900
Current portion of capital lease obligation. . . . . 78,129 103,205
Current portion of notes payable . . . . . . . . . . 209,610 95,371
Current portion of convertible notes (note 2). . . . 76,660 81,328
------------ --------------
TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . $ 1,078,107 $ 1,024,006
Capital lease obligation . . . . . . . . . . . . . . . 13,522 31,844
Notes Payable - 159,787
Convertible notes (note 2) . . . . . . . . . . . . . . 1,086,239 1,486,806
------------ --------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . $ 2,177,869 $ 2,702,443
------------ --------------
COMMITMENTS AND CONTINGENCIES (note 7)

SHAREHOLDERS' EQUITY (DEFICIENCY) (note 5)
COMMON STOCK, No Par Value
Authorized shares - 75,000,000
Issued and outstanding shares - 21,220,571
at March 31, 2003 [19,552,596 December 31, 2002] . $ 9,876,609 $ 9,203,235
ADDITIONAL PAID-IN CAPITAL . . . . . . . . . . . . . . 2,987,331 2,987,331
ACCUMULATED DEFICIT. . . . . . . . . . . . . . . . . . (13,909,568) (13,441,383)
------------ --------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY). . . . . . . . . $ (1,045,628) (1,250,817)
------------ --------------
$ 1,132,241 $ 1,451,626
============ ==============

The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.

Stockgroup Information Systems Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - Expressed in U.S. Dollars)

Three Months Three Months
Ended March Ended March
31, 2003 31, 2002
------------- -----------

REVENUE
Revenues . . . . . . . . . . . . . . . . . $ 601,712 $ 442,241
Cost of revenues . . . . . . . . . . . . . 157,354 164,248
------------- -----------
Gross profit . . . . . . . . . . . . . . . $ 444,358 $ 277,993

EXPENSES
Sales and marketing. . . . . . . . . . . . $ 158,774 $ 92,060
Product development. . . . . . . . . . . . 7,451 18,498
General and administrative . . . . . . . . 530,288 363,540
------------- -----------
$ 696,512 $ 474,098
------------- -----------
LOSS FROM OPERATIONS . . . . . . . . . . . . $ (252,155) $ (196,105)

Interest income. . . . . . . . . . . . . . . - 146
Interest expense . . . . . . . . . . . . . . (216,502) (184,359)
Loss on warrants liability . . . . . . . . . - (55,000)
Gain on restructuring
of convertible notes (note 2). . . . . . . - 1,088,586
Other income . . . . . . . . . . . . . . . . 472 3,951
------------- -----------
NET LOSS . . . . . . . . . . . . . . . . . . $ (468,185) $ 657,219
============= ===========
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE:
Net income (loss). . . . . . . . . . . . . . $ (0.02) $ 0.06
============= ===========
Weighted average shares
outstanding for the period . . . . . . . . 20,521,940 10,776,737
============= ===========

The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.

Stockgroup Information Systems Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - Expressed in U.S. Dollars)

Three Months Three Months
Ended March Ended March
31, 2003 31, 2002
-------------- ---------------

OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . . . . . . $ (468,185) $ 657,219
Add (deduct) non-cash items
Amortization. . . . . . . . . . . . . . . . . . . . . . 94,515 37,701
Gain on restructuring of convertible notes - (1,088,586)
Loss on warrants liability - 55,000
Effective interest on convertible notes and debentures. 203,644 178,573
Bad debt expense. . . . . . . . . . . . . . . . . . . . 3,067 (19,003)
Common stock and equivalents issued for services - 167,500
Stock based compensation - 27,568
Unrealized foreign exchange (gain) loss . . . . . . . . 11,996 -
-------------- ---------------
$ (154,963) $ 15,972
Net changes in non-cash working capital
Marketable securities . . . . . . . . . . . . . . . . (493) 14,667
Accounts receivable . . . . . . . . . . . . . . . . . (147,853) 19,569
Prepaid expenses. . . . . . . . . . . . . . . . . . . 14,701 (120,739)
Accounts payable. . . . . . . . . . . . . . . . . . . (25,143) (123,979)
Accrued payroll liabilities . . . . . . . . . . . . . (60,324) (58,503)
Accrued interest on notes payable . . . . . . . . . . (10,544) (4,374)
Deferred revenue. . . . . . . . . . . . . . . . . . . 55,074 (497)
-------------- ---------------
CASH PROVIDED BY (USED IN) OPERATIONS . . . . . . . . . . $ (329,545) $ (257,884)
-------------- ---------------
FINANCING ACTIVITIES
Issuance of common stock and warrants (net) $ - $ 390,920
Proceeds on exercise of warrants. . . . . . . . . . . . 83,775 -
Proceeds on exercise of stock options . . . . . . . . . 720 -
Repayments of convertible debt. . . . . . . . . . . . . (20,000) -
Repayments of notes payable . . . . . . . . . . . . . . (47,000) -
Repayment of capital lease obligations. . . . . . . . . (43,398) (1,871)
Repayment of bank indebtedness - (1,152)
-------------- ---------------
CASH PROVIDED BY (USED IN) FINANCING. . . . . . . . . . . $ (25,903) $ 387,897
-------------- ---------------
INVESTING ACTIVITIES
Property and equipment (net). . . . . . . . . . . . . . (6,446) -
-------------- ---------------
CASH PROVIDED BY (USED IN) INVESTING. . . . . . . . . . . $ (6,446) $ -
-------------- ---------------
INCREASE (DECREASE) IN CASH AND ASH EQUIVALENTS (361,894) 130,013
Cash and cash equivalents, beginning of period. . . . . . 539,970 126,618
-------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD. . . . . . . . . $ 178,076 $ 256,631
============== ===============

The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.

Stockgroup Information Systems Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003
(UNAUDITED)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Stockgroup Information Systems Inc. (the "Company") is a financial media and
technology company that provides various financial software solutions, tools,
content and services to media, corporate, and financial services companies. The
Company employs proprietary technologies that enable its clients to provide
financial data streams and news combined with fundamental, technical,
productivity, and disclosure tools to their customers, shareholders, and
employees in a cost effective manner. The Company also provides Internet
communications products for publicly traded companies and an online research
center for the investment community through its Stockhouse and Smallcapcenter
financial web sites.

The Company was incorporated under the laws of Colorado on December 6, 1994.

The accompanying interim unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 2003
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2003.

The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for annual
financial statements.

These interim financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31, 2002.

These financial statements have been prepared by management in accordance with
accounting principles generally accepted in the United States on a going concern
basis, which contemplates the realization of assets and the discharge of
liabilities in the normal course of business for the foreseeable future.

The Company incurred a net loss of $468,185 for the three months ended March 31,
2003, and had a working capital deficiency of $496,462 as at March 31, 2003.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management has been able, thus far, to finance the losses, as
well as the growth of the business, through a series of equity and debt private
placements. The Company is continuing to seek other sources of financing in
order to grow the business to the greatest possible extent. There are no
assurances that the Company will be successful in achieving its goals.

In view of these conditions, the ability of the Company to continue as a going
concern is uncertain and dependent upon achieving a profitable level of
operations and on the ability of the Company to obtain necessary financing to
fund ongoing operations. Management believes that its current and future plans
provide an opportunity to continue as a going concern. These financial
statements do not give effect to any adjustments which would be necessary should
the Company be unable to continue as a going concern and therefore be required
to realize its assets and discharge its liabilities in other than the normal
course of business and at amounts different from those reflected in the
accompanying financial statements.

2. CONVERTIBLE NOTES

March 31, 2003 December 31, 2002
------------------------------------------------------------------------------------------------

8% Convertible notes, maturing December 31, 2005
Principal . . . . . . . . . . . . . . . . . . . . . . . $ 1,241,016 $ 1,704,000
Unamortized debt discount . . . . . . . . . . . . . . . (78,117) (135,866)
------------------------------------------------------------------------------------------------
Subtotal. . . . . . . . . . . . . . . . . . . . . . . . $ 1,162,899 $ 1,568,134
Current portion . . . . . . . . . . . . . . . . . . . . 76,660 81,328
Long Term Portion . . . . . . . . . . . . . . . . . . . 1,086,239 1,486,806
================================================================================================

The convertible notes are non-interest bearing and are convertible into common
shares at the option of the holder at any time at a fixed conversion price of
$0.50 through to December 31, 2003. From January 1, 2004 to December 31, 2005,
or sooner in the event of a default on any mandatory payment described below,
the notes bear interest at 8% and are convertible into common shares at the
option of the holder at any time at a conversion price equal to the lesser of
(i) the initial conversion price of $0.50 and (ii) 88% of the average of the 5
lowest closing prices of the Company's common shares during the 30 trading days
prior to the date of conversion.

The restructured agreement provides for quarterly mandatory payments of $15,332
due at the end of each of the eight quarters ending December 31, 2004. If
applicable, the Company will also provide mandatory payments of 20% of the gross
proceeds raised from any common stock or common stock equivalent financing in
excess of $500,000 in 2003.

The restructuring resulted in a debt discount representing the difference
between the fair value of the notes at a market interest rate of 8% and the face
value of the notes which are non-interest bearing through to December 31, 2003.
The debt discount is subject to accretion over the interest-free period ending
December 31, 2003.

On January 28, 2003, one of the noteholders converted its entire principal
balance of $392,984 into 1,228,075 common shares at a negotiated conversion
price of $0.32. The discount on the conversion price was deemed an inducement
to convert, resulting in an interest expense of $145,985 representing the excess
of the fair value of the notes after inducement over the fair value before
inducement. The unamortized debt discount on the portion of the total principal
was fully expensed on the conversion date, resulting in an interest expense of
$31,711.

3. SHARE CAPITAL

The Company is authorized to issue up to 75,000,000 shares of common stock and
5,000,000 shares of preferred stock.

At March 31, 2003, in addition to the 21,220,571 common shares outstanding,
there were also 2,597,900 stock options and 4,848,59339048769
39048769DDavid_g39048769DH/Amro 181,818, Jesup 100K, Jan 19 800,000, Rainmaker
2Mwarrants outstanding.

Issues of common shares and common share equivalents for the three month period
ended March 31, 2003 are summarized as follows:

On January 28, 2003, we issued 1,228,075 common shares pursuant to a conversion
of $392,984 of principal of convertible notes at $0.32.

On February 3, 2003 we issued 100,000 common shares pursuant to a conversion of
$50,000 of principal of convertible notes at $0.50.

During the quarter 335,100 common shares were issued pursuant to exercises of
warrants at $0.25 for gross proceeds of $83,775.

On March 28, 2003, 4,800 common shares were issued to an employee pursuant to an
exercise of options at $0.15, for gross proceeds of $720.

Stock Options

The Company's 1999, 2000, 2001, and 2002 Stock Option Plans (collectively the
"Plans") authorize a total of 5,000,000 common shares for issuance. Activity
under the Plans is set forth below.

Options Outstanding
-----------------------------------
Shares
available Number of Price per
for grant shares share
-----------------------------------------------------------------------------------------

Balance at December 31, 2002. . . . . 898,278 2,602,700 $0.12-0.59
Options exercised . . . . . . . . . . - (4,800) 0.15
-----------------------------------------------------------------------------------------
Balance at March 31, 2003 . . . . . . 898,278 2,597,900 $0.12-0.59
=========================================================================================

Warrants

As at March 31, 2003, common stock issuable pursuant to warrants outstanding is
as follows:

Warrants Warrants
Outstanding Warrants Warrants Warrants Outstanding Exercise Expiry
At January Issued Exercised Cancelled at March Price Date
1, 2003 31, 2003
# # # # # $
--------------------------------------------------------------------------------------------------

Series 1 281,818 - - - 281,818 3.00 March 31, 2005
Series 3A 500,000 - - - 500,000 0.25 July 31, 2005
Series 3B 300,000 - - - 300,000 0.50 July 31, 2005
Series 4 2,000,000 - 335,100 - 1,664,900(1) 0.30 Sept 30, 2003
Series 5 250,000 - - - 250,000 0.30 Sept 15, 2003
Series 6 1,701,875 - - - 1,701,875 0.22 Dec 31, 2003
Series 7 150,000 - - - 150,000 0.16 Dec 31, 2003
--------------------------------------------------------------------------------------------------
5,183,693 - - - 4,848,593
==================================================================================================

(1) On March 30, 2003 the expiry date on the Series 4 warrants was extended from
March 30, 2003 to September 30, 2003, and the exercise price was changed from
$0.25 to $0.30.

4. ACCOUNTING FOR STOCK-BASED COMPENSATION

In December 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure -
an amendment of FASB Statement No. 123" ("SFAS 148"). This statement amends
SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), to provide
alternative methods of transition for an entity that voluntarily changes to the
fair value-based method of accounting for stock-based compensation under SFAS
123. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 and

Accounting Principles Board Opinion No. 28, "Interim Financial Reporting" ("APB
28") to require prominent disclosure of the effects of an entity's accounting
policy with respect to stock-based employee compensation on reported net income
and earnings per share in annual and interim financial statements. SFAS 148's
amendment of the transition and annual disclosure provisions of SFAS 123 is
effective for the Company's fiscal 2003. The amendment to disclosure
requirements under APB 28 is effective for the Company's fiscal 2003 first
quarter.

The Company measures compensation expense for all of its Stock Option Plans
using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and
related interpretations.

The following table provides pro forma disclosures of the effect on net income
and earnings per share if the fair value-based method had been applied in
measuring compensation expense (in thousands, except per share amounts):

For the three months ended
March 31, 2003 March 31, 2002

Net income (loss) - as reported . . . . $ (468,185) $ 657,219
Add: Stock-based employee compensation
expense included in reported net
income. . . . . . . . . . . . . . . . - 27,568
Deduct: Stock-based employee
compensation expense determined
under the fair value-based method
for all awards. . . . . . . . . . . . (8,235) (148,517)
------------ -------------
Net income - pro forma. . . . . . . . . $ (476,420) $ 536,270
============ =============
Net income per share - as reported. . . $ (0.02) $ 0.06
Net income per share - pro forma. . . . (0.02) 0.05

For purposes of the pro forma disclosures, the estimated fair value of the stock
options is amortized over the stock options' vesting period.

The pro forma effects of applying SFAS 123 for the periods presented are not
likely to be representative of the pro forma effects of future periods as the
number of stock options and the vesting schedules thereof vary widely from
quarter to quarter. No options were granted during the three months ended March
31, 2003.

The weighted average assumptions used and the resulting estimates of weighted
average fair value of stock options granted are as follows:

For the three months ended
March 31, 2003 March 31, 2002

Dividend yield . . . . . . . . . . . . 0% 0%
Weighted average expected life (years) 4.06 4.50
Risk-free interest rate. . . . . . . . 4.30% 3.83%
Expected volatility. . . . . . . . . . 121% 214%

5. SEGMENTED INFORMATION

SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, requires a public business enterprise to report financial and
descriptive information about its reportable operating segments. The Company has
concluded that its business activities fall into one identifiable business
segment with the following sources of revenue:

For the three months ended
March March
31, 2003 31, 2002
---------------------------------------------------------------------------------------

Public Company Disclosure and Awareness Products . . . . . . . . $ 385,580 $ 285,177
Financial Software and Content Systems . . . . . . . . . . . . . 216,132 157,064
---------------------------------------------------------------------------------------
$ 601,712 $ 442,241
=======================================================================================

During the first three months of 2003 and 2002 the Company had no customers from
whom revenue received by the Company represented greater than 10% of total
revenue.

6. COMMITMENTS AND CONTINGENCIES

The Company is currently involved in litigation with a customer to collect
amounts owing pursuant to a contract entered into in September 2000. The
defendant provided a $100,000 deposit and contracted the Company to provide
certain advertising services. The Company delivered the requested services
throughout October and November 2000; however, the defendant defaulted on all
additional payments. The Company is suing the defendant for the $351,800 balance
owing, plus interest and costs. The defendant has filed a statement of defense
and counterclaim to recover the $100,000 deposit. No court date has been set at
this time. Although management currently believes the outcome of the litigation
will be in the Company's favour, they have not elected to aggressively pursue
the litigation at this time. The Company has made no provision for the
counterclaim in the financial statements and any settlement or final award will
be reflected in the statement of operations as the litigation is resolved.

7. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2002, the FASB issued FASB Interpretation No. 45 "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires that a
liability be recorded in the guarantor's balance sheet upon issuance of a
guarantee. In addition, FIN 45 requires disclosures about the guarantees,
including indemnifications, that an entity has issued. The disclosure
provisions of FIN 45 are effective for financial statements of interim
periods ending after December 15, 2002; however, the provisions for initial
recognition and measurement are effective on a prospective basis for guarantees
that are issued or modified after December 31, 2002. The initial adoption of FIN
45 did not have a material impact on the Company's financial position, results
of operations or cash flows.

Consolidated Financial Statements

STOCKGROUP INFORMATION SYSTEMS INC.
December 31, 2002 and 2001

AUDITORS' REPORT

To the Shareholders of
STOCKGROUP INFORMATION SYSTEMS INC.

We have audited the accompanying consolidated balance sheets of STOCKGROUP
INFORMATION SYSTEMS INC. as of December 31, 2002 and 2001 and the related
consolidated statements of operations, shareholders' equity (deficiency), and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Stockgroup
Information Systems Inc. at December 31, 2002 and 2001 and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that
Stockgroup Information Systems Inc. will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company has incurred
recurring net losses and has a working capital deficiency. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

As discussed in Note 10 to the financial statements, in 2001, the Company
changed its method of accounting for callable warrants.

Vancouver, Canada,
February 24, 2003. Chartered Accountants

STOCKGROUP INFORMATION SYSTEMS INC.

CONSOLIDATED BALANCE SHEETS
[See Note 1 - Nature of Business and Basis of Presentation]

As at December 31 (expressed in US dollars)

2002 2001
$ $
-----------------------------------------------------------------------------------

ASSETS [notes 5, 6 and 7]
CURRENT
Cash and cash equivalents. . . . . . . . . . . . . . . 539,970 126,618
Marketable securities. . . . . . . . . . . . . . . . . 1,198 21,814
Accounts receivable [net of allowances for doubtful
accounts of $40,866; 2001 - $92,331] [note 3]. . . . . 169,675 173,105
Prepaid expenses . . . . . . . . . . . . . . . . . . . 102,118 60,465
-----------------------------------------------------------------------------------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . 812,961 382,002
-----------------------------------------------------------------------------------
Property and equipment, net [note 4] . . . . . . . . . 638,665 341,688
-----------------------------------------------------------------------------------
1,451,626 723,690
===================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT
Bank indebtedness. . . . . . . . . . . . . . . . . . . - 6,081
Accounts payable . . . . . . . . . . . . . . . . . . . 313,272 373,674
Accrued payroll liabilities. . . . . . . . . . . . . . 109,930 144,920
Deferred revenue . . . . . . . . . . . . . . . . . . . 320,900 124,944
Current portion of capital lease obligation [note 5] . 103,205 7,674
Current portion of notes payable [note 6]. . . . . . . 95,371 108,837
Current portion of convertible notes [note 7]. . . . . 81,328 2,509,236
Warrants liability [note 10] . . . . . . . . . . . . . - 110,000
-----------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . 1,024,006 3,385,366
-----------------------------------------------------------------------------------
Capital lease obligation [note 5]. . . . . . . . . . . 31,844 11,231
Notes payable [note 6] . . . . . . . . . . . . . . . . 159,787 -
Convertible notes [note 7] . . . . . . . . . . . . . . 1,486,806 -
Convertible debentures [note 8]. . . . . . . . . . . . - 70,695
-----------------------------------------------------------------------------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . 2,702,443 3,467,292
===================================================================================
Commitments and contingencies [note 14]

SHAREHOLDERS' EQUITY (DEFICIENCY)
Common stock, no par value [note 11]
Authorized shares - 75,000,000
Issued and outstanding shares - 19,552,596 in 2001
and 10,131,260 in 2001 . . . . . . . . . . . . . . . . 9,203,235 7,969,090
Additional paid-in capital . . . . . . . . . . . . . . 2,987,331 2,422,014
Accumulated deficit. . . . . . . . . . . . . . . . . . (13,441,383) (13,134,706)
-----------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY). . . . . . . . (1,250,817) (2,743,602)
-----------------------------------------------------------------------------------
1,451,626 723,690
===================================================================================

See accompanying notes

STOCKGROUP INFORMATION SYSTEMS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended December 31 (expressed in US dollars)

2002 2001
$ $

REVENUE
Revenues [note 12]. . . . . . . . . . . . . . . . . . . . . . . . 1,964,699 2,857,151
Cost of revenues. . . . . . . . . . . . . . . . . . . . . . . . . 706,911 1,045,326
-------------------------------------------------------------------------------------------
Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,257,788 1,811,825
-------------------------------------------------------------------------------------------

EXPENSES
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . 475,038 466,954
Product development . . . . . . . . . . . . . . . . . . . . . . . 78,792 241,392
General and administrative. . . . . . . . . . . . . . . . . . . . 1,712,056 1,776,710
-------------------------------------------------------------------------------------------
2,265,886 2,485,056
-------------------------------------------------------------------------------------------
Loss from operations. . . . . . . . . . . . . . . . . . . . . . . (1,008,098) (673,231)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . 195 4,020
Interest expense [notes 5, 6, 7 and 8]. . . . . . . . . . . . . . (319,641) (596,097)
Gain (loss) on warrants liability [note 10] . . . . . . . . . . . (55,000) 242,000
Gain on restructuring of convertible notes [note 7] . . . . . . . 1,088,586 -
Gain on convertible note redemptions. . . . . . . . . . . . . . . - 58,701
Other income (expense). . . . . . . . . . . . . . . . . . . . . . (12,719) 9,509
-------------------------------------------------------------------------------------------
Loss before cumulative effect of change in accounting principle . (306,677) (955,098)

Cumulative effect of change in accounting principle [note 10] . . - 413,546
-------------------------------------------------------------------------------------------
NET LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (306,677) (541,552)
===========================================================================================

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Loss before cumulative change in accounting principle . . . . . . (0.02) (0.10)
Cumulative effect of change in accounting principle . . . . . . . - 0.04
-------------------------------------------------------------------------------------------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.02) (0.06)
-------------------------------------------------------------------------------------------

Weighted average number of common shares outstanding. . . . . . . 14,151,349 9,305,391
===========================================================================================

See accompanying notes

STOCKGROUP INFORMATION SYSTEMS INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)

Year ended December 31 (expressed in US dollars)

TOTAL
ADDITIONAL ACCUMULATED SHAREHOLDERS'
COMMON STOCK COMMON STOCK PAID-IN CAPITAL DEFICIT EQUITY (DEFICIENCY)
[note 11] # OF SHARES $ $ $ $
-----------------------------------------------------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 2000 . . . . . . . . . . . . 8,467,676 7,344,483 2,602,743 (12,593,154) (2,645,928)
Fair value of detachable warrants pursuant
to convertible debenture private placement,
net of financing costs. . . . . . . . . . . . . . - - 298,778 - 298,778
Intrinsic value of beneficial conversion
feature pursuant to convertible debenture
private placement. . . . . . . . . . . . . . . . . - - 190,000 - 190,000
Issuance of common stock on partial conversion
of outstanding convertible notes and debentures . 960,640 413,664 - - 413,664
Repurchase of beneficial conversion feature
on partial redemption of outstanding
convertible notes. . . . . . . . . . . . . . . . . - - (31,551) - (31,551)
Intrinsic value of beneficial conversion
feature pursuant to convertible notes
private placement. . . . . . . . . . . . . . . . . - - 32,182 - 32,182
Cumulative effect of change in accounting principle. - - (765,546) - (765,546)
Issuance of common stock for shares granted
under the employee stock option plan . . . . . . . 92,944 27,260 - - 27,260
Issuance of common stock pursuant to exercise
of employee stock options. . . . . . . . . . . . . 600,000 173,993 - - 173,993
Issuance of common stock for consulting services . . 10,000 9,690 - - 9,690
Stock based compensation . . . . . . . . . . . . . . - - 95,408 - 95,408
Net loss . . . . . . . . . . . . . . . . . . . . . . - - - (541,552) (541,552)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001 . . . . . . . . . . . . . 10,131,260 7,969,090 2,422,014 (13,134,706) (2,743,602)
Issuance of common stock on partial conversion
of outstanding convertible notes [note 7] . . . . 666,700 100,000 - - 100,000
Repurchase of beneficial conversion feature on
partial redemption of outstanding convertible
notes [note 7] . . . . . . . . . . . . . . . . . - - (247,222) - (247,222)
Issuance of common stock on conversion of
Outstanding debentures [note 8]. . . . . . . . . 413,808 - 206,904 - 206,904
Reclassification of warrant liability to
equity [note 10]. . . . . . . . . . . . . . . . - - 165,000 - 165,000
Excess of fair value of convertible debentures
after conversion [note 8] . . . . . . . . . . . - - 24,000 - 24,000
Issuance of common stock pursuant to private
placements, net . . . . . . . . . . . . . . . . 5,454,750 571,563 301,756 - 873,319
Issuance of common stock pursuant to asset
acquisition [note 9]. . . . . . . . . . . . . . 2,080,000 424,320 - - 424,320
Issuance of common stock for shares granted
under the employee stock option plan . . . . . 101,078 17,712 - - 17,712
Issuance of common stock pursuant to exercise
of employee stock options. . . . . . . . . . . 205,000 13,050 - - 13,050
Issuance of common stock for consulting services 500,000 107,500 - - 107,500
Issuance of warrants for consulting services . . . - - 60,000 - 60,000
Stock based compensation . . . . . . . . . . . . . - - 54,879 - 54,879
Net loss . . . . . . . . . . . . . . . . . . . . . - - - (306,677) (306,677)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002 . . . . . . . . . . . . 19,552,596 9,203,235 2,987,331 (13,441,383) (1,250,817)
===================================================================================================================================

See accompanying notes

STOCKGROUP INFORMATION SYSTEMS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended December 31 (expressed in US dollars)

2002 2001
$ $
----------------------------------------------------------------------------------

OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . (306,677) (541,552)
Add (deduct) non-cash items
Amortization. . . . . . . . . . . . . . . . . . . . . . . 308,558 191,632
Amortization of deferred financing costs. . . . . . . . . - 8,818
Bad debt expense. . . . . . . . . . . . . . . . . . . . . (51,464) (27,299)
Loss on disposition of property and equipment . . . . . . - 8,759
Non-cash interest on convertible notes and debentures . . 280,471 401,093
Gain on redemption of convertible notes . . . . . . . . . - (58,701)
Gain on restructuring of convertible notes. . . . . . . . (1,088,586) -
Cumulative effect of change in accounting principle . . . - (413,546)
(Gain) loss on warrants liability . . . . . . . . . . . . 55,000 (242,000)
Common stock and warrants issued for consulting services. 167,500 9,690
Stock based compensation. . . . . . . . . . . . . . . . . 72,591 122,668
Unrealized foreign exchange gain. . . . . . . . . . . . . 3,322 -
----------------------------------------------------------------------------------
(559,285) (540,438)
Net change in operating assets and liabilities [note 15]. 128,418 (237,648)
----------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES . . . . . . . . . . . . (430,867) (778,086)
----------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net proceeds from issuance of common stock. . . . . . . . 886,369 173,993
Net proceeds from issuance of convertible debentures. . . - 479,960
Net proceeds from issuance of notes payable . . . . . . . 144,034 100,347
Repayments of convertible notes . . . . . . . . . . . . . (120,000) (181,000)
Repayment of capital lease obligation . . . . . . . . . . (7,231) (5,741)
Repayments of bank indebtedness, net. . . . . . . . . . . (6,081) (8,222)
----------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . . 897,091 559,337
----------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of property and equipment. . . . . . . . . . . . (54,115) (7,103
Proceeds on disposition of property and equipment . . . . 1,243 31,107
----------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES . . . . . (52,872) 24,004
----------------------------------------------------------------------------------

DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . 413,352 (194,745
Cash and cash equivalents, beginning of year. . . . . . . 126,618 321,363
----------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR. . . . . . . . . . 539,970 126,618
==================================================================================

See accompanying notes

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

The Company was incorporated under the laws of Colorado on December 6, 1994. The
Company previously operated under the name Stockgroup.com Holdings, Inc. until
its name was changed in accordance with the relevant provisions of the Colorado
Business Corporations Act and pursuant to shareholder approval received at the
Company's annual general meeting held September 20, 2001.

The financial statements have been prepared by management in accordance with
accounting principles generally accepted in the United States on a going concern
basis, which contemplates the realization of assets and the discharge of
liabilities in the normal course of business for the foreseeable future.

The Company incurred a net loss of $306,677 for the year ended December 31, 2002
[2001 - $541,552], and had a working capital deficiency of $211,045 as at
December 31, 2002. These factors raise substantial doubt about the Company's
ability to continue as a going concern. The Company experienced a significant
reduction in cash used in operations from $778,086 in 2001 to $430,867 in 2002
as a result of cost restructuring activities initiated in 2002. The Company has
negotiated the conversion of $392,984 of its 8% convertible notes on January 28,
2003, thereby eliminating eight mandatory quarterly payments totaling $42,012
and a maturity payment of $350,972. Of the remaining principal of its 8%
convertible notes, a total of $137,988 will be paid in mandatory quarterly
payments of $15,332 until December 31, 2004, and the $1,168,360 balance is due
December 31, 2005. Although the Company has taken steps to achieve profitable
operations in 2002, there are no assurances that the Company will be successful
in achieving its goals.

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (CONT'D.)

In view of these conditions, the ability of the Company to continue as a going
concern is uncertain and dependent upon achieving a profitable level of
operations and, if necessary, on the ability of the Company to obtain necessary
financing to fund ongoing operations. Management believes that its current and
future plans provide an opportunity to continue as a going concern. These
financial statements do not give effect to any adjustments which would be
necessary should the Company be unable to continue as a going concern and
therefore be required to realize its assets and discharge its liabilities in
other than the normal course of business and at amounts different from those
reflected in the accompanying financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Stockgroup Media Inc. (British Columbia, Canada),
Stockgroup Systems Ltd. (Nevada, United States), Stockgroup Australia, Pty Ltd.
and 579818 B.C. Ltd. (British Columbia, Canada). All significant intercompany
accounts 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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company generates its revenues from two primary sources: Public Company
Disclosure and Awareness Products and Financial Software and Content Systems. In
2001, the Company had a third source of revenue, E-Business Solutions, which was
discontinued in 2002.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

Public Company Disclosure and Awareness Products consist of small-scale web site
development and maintenance, IntegratIR investor relations tools, monthly
investor marketing programs, and online advertising. Revenue from small-scale
web site development and periodic web site maintenance is recognized upon
completion of the services provided no significant obligations remain and
collection of the resulting receivable is probable. Revenues from IntegratIR,
monthly investor marketing programs, and online advertising are recognized
ratably over the contract life as the service is provided. Most of these
services require an advance payment which is recorded as deferred revenue until
the services have been provided.

Financial Software and Content Systems consists of real time, time delayed and
wireless quotes and charts, company profiles, investment data and technical
analysis. Revenue from set up fees, periodic maintenance fees and contractual
monthly licensing fees for ongoing use of financial tools and content is
recognized ratably over the contract term, which is typically twelve months.

FOREIGN EXCHANGE

The reporting currency and the functional currency of the Company is the U.S.
dollar. The accounts of the Company's Canadian subsidiary are translated into
U.S. dollars such that monetary assets and liabilities are translated at
exchange rates in effect at the balance sheet date and non-monetary items are
translated at exchange rates prevailing at the transaction date. Operating
revenues and expenses are translated at average exchange rates prevailing during
the year. Any corresponding foreign exchange gains and losses are included in
income.

Foreign currency transactions are translated into U.S. dollars at the rate of
exchange in effect at the date of the transaction. Foreign currency balances of
monetary assets and liabilities are translated using the rate of exchange in
effect at the balance sheet date. Foreign exchange gains and losses on
transactions during the year and on the year end translation of the accounts are
included in income.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash and cash equivalents,
marketable securities, accounts receivable, bank indebtedness, accounts payable,
notes payable, convertible notes, convertible debentures and capital lease
obligations. Unless otherwise stated the fair value of the financial instruments
approximates their carrying value.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and short-term deposits with original
maturities of ninety days or less and are recorded at amortized cost.

MARKETABLE SECURITIES

Marketable securities consist of equity instruments held for trading and are
recorded at fair value based on quoted market prices. Both realized and
unrealized gains and losses are included in the statement of operations.

DEFERRED FINANCE COSTS

Finance costs associated with the issuance of convertible notes and debentures
are deferred and amortized over the term to earliest conversion. All finance
costs have been amortized and included as interest expense in the statement of
operations.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Amortization is provided using the
straight line method over the assets estimated useful lives as follows:

Computer equipment 5 years
Computer equipment under capital lease 2 years
Computer software 1 year
Website software 3 years
Office furniture and equipment 5 years
Leasehold improvements Term of the lease

PRODUCT DEVELOPMENT COSTS

Product development costs other than those incurred during the application
development stage are expensed as incurred. Costs incurred during the
application development stage are required to be capitalized and amortized over
the estimated useful life of the software. Substantially all of the Company's
product development costs are for ongoing operating and maintenance and have
been expensed in the period incurred.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

INCOME TAXES

The Company utilizes the liability method of accounting for income taxes. Under
this method, deferred taxes are determined based on the differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates. A valuation allowance is provided against deferred tax assets for which
it is more likely than not that the asset will not be realized.

STOCK-BASED COMPENSATION

The Company accounts for fixed stock-based awards to employees in accordance
with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations and has adopted the disclosure-only
alternative of FASB Statement No. 123, Accounting for Stock-Based Compensation.
Accordingly, compensation expense for stock options issued to employees is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee must pay to acquire
the stock.

EARNINGS PER SHARE

Basic earnings (loss) per share is computed based on the weighted average number
of common shares outstanding during each year. Diluted earnings (loss) per share
reflects the dilutive potential of outstanding securities using the treasury
stock method.

For the years ended December 31, 2001 and 2000, all of the Company's common
shares issuable upon the exercise of stock options, warrants and other
convertible securities were excluded from the determination of diluted loss per
share as their effect would be anti-dilutive.

COMPREHENSIVE INCOME

Comprehensive income includes all changes in equity except those resulting from
investments by owners and distributions by owners. Comprehensive income
comprises only net income for all years presented.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

RECENT PRONOUNCEMENTS

In December 2002, the Financial Accounting Standards Board issued Statement No.
148, ("SFAS 148"), "Accounting for Stock-Based Compensation-Transition and
Disclosure-An amendment of FASB Statement No. 123". SFAS 148 amends FASB
Statement No. 123, "Accounting for Stock Based Compensation" ("SFAS 123") and
provides alternative methods for accounting for a change by registrants to the
fair value method of accounting for stock-based compensation. Additionally, SFAS
148 amends the disclosure requirements of SFAS 123 to require disclosure in the
significant accounting policy footnote of both annual and interim financial
statements of the method of accounting for stock-based compensation and the
related pro-forma disclosure when the intrinsic value method continues to be
used. The statement is effective for fiscal years beginning after December 15,
2002. The Company will adopt the disclosure provisions of SFAS 148 beginning in
the quarter ended March 31, 2003.

In April 2002, the Financial Accounting Standards Board issued Statement No.
145, (SFAS 145"), "Rescission of FASB Statements No. 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections". SFAS 145 requires, among
other things, gains or losses of extinguishments of debt to be classified as
income (loss) from continuing operations rather than as an extraordinary items,
unless such extinguishments is determined to be extraordinary pursuant to
Accounting Principles Board Opinion No. 30 ("Opinion 30"), "Reporting the
Results of Operations - Reporting the Effects of a Disposal of a Segment of a
Business and Extraordinary, Unusual, and Infrequently Occurring Transactions".
The provisions SFAS 145 are effective for fiscal years beginning after May 15,
2002. Any gain or loss on extinguishment of debt that was classified as an
extraordinary item in prior periods presented that does not meet the criteria in
Opinion 30 for classification as an extraordinary item must be reclassified. The
Company will early adopt the provisions of SFAS 145 for the year ended December
31, 2002 and accordingly, will reclassify the $58,701 gain on convertible note
redemptions for 2001 from extraordinary items to a separate component of income
before taxes.

3. CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash and cash equivalents and trade
receivables.

The Company performs ongoing credit evaluations of its customers and maintains
allowances for potential credit losses. No customer owed greater than 10% of the
outstanding receivables in 2002. Amounts owing from two customers represented
12% and 12% respectively of the total accounts receivable balance in 2001.

4. PROPERTY AND EQUIPMENT

ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
$ $ $
---------------------------------------------------------------------------

2002
Computer equipment . . . . . . . . . . 514,541 389,184 125,357
Computer equipment under capital lease 154,254 46,195 108,059
Computer software. . . . . . . . . . . 147,747 111,070 36,677
Website software [note 9]. . . . . . . 347,122 46,680 300,442
Office furniture and equipment . . . . 141,047 102,780 38,267
Leasehold improvements . . . . . . . . 62,434 32,571 29,863
---------------------------------------------------------------------------
1,367,145 728,480 638,665
===========================================================================

2001
Computer equipment . . . . . . . . . . 531,682 299,841 231,841
Computer equipment under capital lease 24,646 6,097 18,549
Computer software. . . . . . . . . . . 110,698 110,698 -
Office furniture and equipment . . . . 146,187 76,621 69,566
Leasehold improvements . . . . . . . . 42,197 20,465 21,732
---------------------------------------------------------------------------
855,410 513,722 341,688
===========================================================================

5. CAPITAL LEASE OBLIGATION

The Company has capital lease agreements for computer equipment with lease
obligations as follows:

2002
$
--------------------------------------------------------------------------------
Total future lease payments 156,823
Less interest (effective rate during 2002 - 17%) (21,774)
--------------------------------------------------------------------------------
135,049

Less current portion (103,205)
--------------------------------------------------------------------------------
31,844
================================================================================

The following capital lease payments are required over the next two years:

2003 123,685
2004 33,138
--------------------------------------------------------------------------------
156,823
================================================================================

6. NOTES PAYABLE

The following table summarizes the activity under various agreements:

PRINCIPAL ACCRUED INTEREST TOTAL
$ $ $
------------------------------------------------------------------------------------------

2002
16% Notes payable, no specified maturity date 35,000 9,301 44,301
17% Notes payable, maturing January 31, 2004. 159,787 1,794 161,581
25% Notes payable, maturing January 21, 2003. 47,000 2,276 49,276
------------------------------------------------------------------------------------------
Total Notes payable . . . . . . . . . . . . . 241,787 13,371 255,158
==========================================================================================

2001
16% Notes payable, maturing July 30, 2002 . . 100,347 8,490 108,837
------------------------------------------------------------------------------------------
Total Notes payable . . . . . . . . . . . . . 100,347 8,490 108,837
==========================================================================================

On May 8, 2001 the Company entered into a Securities Purchase Agreement with an
individual related to a Director and Officer of the Company to issue $32,375
(Cdn$50,000) of secured unregistered 16% notes. The notes had an original
maturity of July 30, 2002 that was informally extended until November 18, 2002,
at which time the investor agreed to an amendment to extend the maturity date to
January 31, 2004 and increase the interest rate to 17%. The note has been
collateralized by a second floating charge over all of the Company's Canadian
subsidiary's property, assets, and rights.

On May 10, 2001, the Company entered into a Securities Purchase Agreement with
an unrelated investor to issue $35,000 of secured unregistered 16% notes. The
notes had an original maturity of July 30, 2002. The notes were extended beyond
the original maturity by an informal agreement for an undetermined period. All
accrued interest to December 31, 2002 was paid in January 2003.

On July 16, 2001, the Company entered into a Securities Purchase Agreement with
a Director and Officer of the Company to issue $32,972 (Cdn$50,000) of secured
unregistered 16% notes. The notes had an original maturity of July 30, 2002 that
was informally extended until November 18, 2002, at which time the investor
agreed to an amendment to extend the maturity date to January 31, 2004 and
increase the interest rate to 17%. The note has been collateralized by a second
floating charge over all of the Company's Canadian subsidiary's property,
assets, and rights.

6. NOTES PAYABLE (CONT'D.)

On July 23, 2002, the Company issued a $97,034 (Cdn $152,400) promissory note to
an unrelated party that bears interest at 17% interest and matures on June 30,
2003. On November 18, 2002, the noteholder agreed to extend the maturity date to
January 31, 2004. The note is collateralized by a General Security Agreement,
which places a floating charge over all of the Company's Canadian subsidiary's
property, assets, and rights.

On October 22, 2002, the Company issued a $47,000 promissory note to an
unrelated party that bears interest at 25.5% and matures on January 21, 2003.
The note is collateralized by a General Security Agreement, which places a
floating charge over all of the Company's Canadian subsidiary's property,
assets, and rights, but which is subordinated to the 16% and 17% notes. The
principal plus accrued interest was paid on January 21, 2003.

7. CONVERTIBLE NOTES

2002 2001
$ $
-------------------------------------------------------------------------

8% Convertible notes, maturing December 31, 2005
Principal . . . . . . . . . . . . . . . . . . . . 1,704,000 1,924,000
Prepayment premium. . . . . . . . . . . . . . . . - 288,600
Accrued interest. . . . . . . . . . . . . . . . . - 296,636
Unamortized debt discount . . . . . . . . . . . . (135,866) -
-------------------------------------------------------------------------
1,568,134 2,509,236
=========================================================================

Current portion . . . . . . . . . . . . . . . . . 81,328 2,509,236
Long term portion . . . . . . . . . . . . . . . . 1,486,806 -
-------------------------------------------------------------------------
1,568,134 2,509,236
=========================================================================

On February 6, 2002 the Company and the two lenders reached an agreement to
restructure the terms and conditions of the existing convertible notes and
callable warrants.

7. CONVERTIBLE NOTES (CONT'D.)

The note holders agreed to waive the 15% prepayment premium of $288,600 and the
accrued interest to date of $315,000 and immediately converted $100,000 of the
principal balance due into 666,700 common shares of the Company at a conversion
price of $0.15. The remaining principal balance of $1,824,000 matures on
December 31, 2005. The notes are non-interest bearing and are convertible into
common shares at the option of the holder at any time at a fixed conversion
price of $0.50 through to December 31, 2003. From January 1, 2004 to December
31, 2005, or sooner in the event of a default on any mandatory payment described
below, the notes bear interest at 8% and are convertible into common shares at
the option of the holder at any time at a conversion price equal to the lesser
of (i) the initial conversion price of $0.50 and (ii) 88% of the average of the
5 lowest closing prices of the Company's common shares during the 30 trading
days prior to the date of conversion.

The restructured agreement provides for $300,000 of mandatory payments through
to December 31, 2004. $23,340 was paid on June 28, 2002, $76,660 was paid on
July 12, 2002, $20,000 was paid on October 1, 2002, and $20,000 was paid on
January 2, 2003. Separate payments of $20,000 are due at the end of each of the
next eight quarters through to December 31, 2004. If applicable, the Company
will also provide mandatory payments of 20% of the gross proceeds raised from
any common stock or common stock equivalent financing in excess $500,000 in
2003.

The restructuring resulted in a gain of $1,088,586 consisting of $603,600 for
the waived prepayment premium and accrued interest, $247,222 for the repurchase
of the beneficial conversion feature and $237,764 for the debt discount
representing the difference between the fair value of the notes at a market
interest rate of 8% and the face value of the notes which are non-interest
bearing through to December 31, 2003. The debt discount of $237,764 is subject
to accretion over the interest-free period ending December 31, 2003.

The callable warrants permit the holders to acquire up to 181,818 common shares
at an exercise price of $3.00 at any time up to March 31, 2005. The warrants may
be called by the Company, at a purchase price of $.01 per underlying share, if
the stock price of the Company's common shares exceeds $6.00 for any 20
consecutive trading days, provided that the holders have the right to exercise
the warrants within 30 days after their receipt of such a call.

On January 28, 2003, one of the lenders agreed to convert its entire principal
balance of $392,984 into 1,228,075 common shares of the Company at $0.32 per
common share. This conversion reduces the mandatory quarterly cash payments to
$15,332 from $20,000.

8. CONVERTIBLE DEBENTURES

2002 2001
$ $
--------------------------------------------------------------------------

3% Convertible debentures, maturing December 31, 2003
Principal. . . . . . . . . . . . . . . . . . . . . . . - 200,000
Unamortized warrants discount. . . . . . . . . . . . . - (84,013)
Unamortized beneficial conversion feature. . . . . . . - (51,490)
Accrued interest . . . . . . . . . . . . . . . . . . . - 6,198
--------------------------------------------------------------------------
- 70,695
==========================================================================

On March 15, 2002, the Company and the 3% convertible debenture holders agreed
to an amendment to the original Securities Purchase Agreement. The debenture
holders agreed to immediately convert the $200,000 of outstanding principal and
$6,904 accrued interest into 413,808 common shares of the Company at the minimum
conversion price of $0.50. The conversion resulted in the immediate recognition
of $135,503 in interest expense related to the previously unamortized debt
discount and beneficial conversion feature.

The Company agreed to modify the existing terms of the Series 3A and 3B
warrants. The exercise price of the Series 3A warrants has been reduced from
$1.00 to $0.25. The exercise price of the Series 3B warrants has been reduced
from $2.00 to $0.50. The expiry date for both the Series 3A and 3B warrants has
been extended to July 31, 2005 from December 31, 2004. The reduction in the
exercise price and extension of the expiry date of the warrants is accounted for
as an inducement to convert the convertible debentures. The fair value of the
warrants after the conversion was $24,000 greater than the fair value of the
warrants prior to conversion and this excess fair value was recorded as interest
expense on the conversion date.

9. ASSET ACQUISITION

On June 24, 2002, the Company acquired certain website and related software
assets of Stockhouse Media Corporation ("Stockhouse"). Under the terms of the
agreement, the Company purchased a 65% interest in the assets by issuing
2,080,000 shares of unregistered common stock with a fair value of $424,320. The
assets acquired consisted of program source codes underlying the website for
$347,122, and prepaid operating costs of $77,198.

The prepaid operating costs of $77,198 were expensed fully in the current year.
The website software is being amortized over a three year period commencing on
the date of acquisition.

Presently, an unrelated third party investor is also considering an investment
in Stockhouse that would effect certain terms and conditions of the Company's
agreement with Stockhouse. If the third party invests in Stockhouse, then the
Company would maintain its 65% interest in the acquired assets but would have
the option to acquire the remaining 35% during the period of one year following
June 24, 2004. During the same period, Stockhouse would also have the option to
cause the Company to purchase the remaining 35% interest.

If the third party does not invest in Stockhouse, then the Company will
immediately have the option to acquire the remaining 35% of the website and
related software assets of Stockhouse with the issuance of additional common
shares. As per the terms of the agreement, the number of common shares to be
issued for the remaining 35% shall not be less than 920,000 shares and not more
than 1,120,000 shares.

The original 2,080,000 common shares were issued into an escrow account on June
28, 2002 and will be released to Stockhouse on the date the third party investor
makes its decision.

As of February 24, 2003, the Company has not exercised its option to acquire the
remaining 35%.

10. WARRANTS LIABILITY AND CUMULATIVE CHANGE IN ACCOUNTING PRINCIPLE

The Emerging Issues Task Force Abstract No. 00-19, Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock ("EITF 00-19") became applicable to the Company's warrants on June 30,
2001. Since the number of shares issuable in the event of exercise of the
callable warrants is not currently subject to an explicit limit, the Company's
300,000 callable and 800,000 other warrants were presented as a liability at
their fair value as at June 30, 2001. The fair value of the warrants liability
was estimated using the Black-Scholes option pricing model. The $413,546
difference between the previous carrying value of the warrants in additional
paid in capital of $765,546 and their fair value at June 30, 2001 of $352,000
has been recorded as the cumulative effect of a change in accounting principle
on prior periods. This $413,546 change in accounting principle has decreased the
net loss per share for the year ended December 31, 2001 by $0.04.

As at December 31, 2001, the Company could not demonstrate they had a sufficient
number of authorized but unissued shares to share settle all of the outstanding
warrants if exercised and the $110,000 fair value of the warrants was classified
as a current liability. As a result of the February 6, 2002 restructuring of the
convertible notes and callable warrants, the Company could demonstrate they had
a sufficient number of authorized but unissued shares to settle all of the
outstanding warrants if exercised and the $165,000 fair value of the warrants
was reclassified as equity. The $55,000 difference between the fair value on
December 31, 2001 and February 6, 2002 was recorded as a loss on warrants
liability in the statement of operations.

11. SHARE CAPITAL

[A] AUTHORIZED

The Company is authorized to issue up to 75,000,000 shares of common stock and
5,000,000 shares of preferred stock. No preferred stock are issued and
outstanding in the years presented.

11. SHARE CAPITAL (CONT'D.)

[B] COMMON STOCK

2002

On February 6, 2002, the Company issued 666,700 common shares pursuant to a
conversion of $100,000 of principal under the restructured convertible notes
[Note 7].

On February 25, 2002, the Company issued 33,000 common shares with a fair value
of $7,500 to an employee for services rendered.

On March 5, 2002, the Company issued 500,000 common shares to a consultant
pursuant to a service contract. The transaction was recorded at a fair value of
$107,500 based on the closing stock price on the date of the agreement.

On March 16, 2002, the Company issued warrants to purchase 250,000 common shares
to a consultant pursuant to a services agreement. The warrants have an exercise
price of $0.30 and expire on September 15, 2003. The $60,000 fair value of the
warrants issued was estimated using the Black-Scholes option pricing model and
was recorded as an expense in the current year.

On March 25, 2002, the Company issued 413,808 common shares pursuant to a
conversion of the final $206,904 in principal and accrued interest of the
convertible debentures as amended [Note 8].

On March 28, 2002, the Company completed a private placement of 2,000,000 units
at $0.20, each unit consisting of one common share and one warrant, plus 51,000
common shares, for gross proceeds of $410,200. Financing fees were $19,280 and
legal fees were $7,195, resulting in net cash proceeds of $383,725. Each warrant
entitles the holder to acquire one common share at $0.25 per share until March
31, 2003. The net proceeds were allocated to common stock and warrants based on
the relative fair value of each security at the time of issuance.

On June 28, 2002, the Company issued 2,080,000 common shares with a fair value
of $424,320 to Stockhouse Media Corporation pursuant to an asset purchase
agreement. The shares are being held in escrow until certain terms of the
agreement are met.

On September 23, 2002, the Company issued 68,078 common shares with a fair value
of $10,212 to an employee for services rendered.

11. SHARE CAPITAL (CONT'D.)

On November 20, 2002, a consultant exercised options resulting in the issuance
of 100,000 common shares for exercise proceeds of $12,000.

On November 25, 2002, an employee exercised options resulting in the issuance of
105,000 common shares for exercise proceeds of $1,050.

On December 31, 2002, the Company completed a private placement of 3,403,750
units at $0.16, each unit consisting of one common share and one warrant, for
gross proceeds of $544,600. Financing fees were $50,960 and legal fees were
$4,046, resulting in net cash proceeds of $489,594. Each two warrants entitle
the holder to acquire one common share at $0.22 per share until December 31,
2003. The net proceeds were allocated to common stock and warrants based on the
relative fair value of each security at the time of issuance. In addition,
150,000 warrants were issued to a placement agent with each warrant entitling
the holder to acquire one common share at $0.16 per share until December 31,
2003. The fair value of the $0.16 warrants was allocated to common stock and
warrants based on the relative fair value of each security at the time of
issuance.

2001

The Company issued an aggregate of 960,640 common shares pursuant to conversions
of convertible notes and debentures.

On January 19, 2001, the Company issued warrants to purchase 800,000 common
shares. The fair value of the warrants issued, net of financing costs, amounted
to $298,778 and was recorded as an increase to additional paid-in capital.

The Company issued an aggregate of 92,944 common shares directly to employees in
consideration for past services resulting in a compensation expense and an
increase in share capital of $27,260.

The Company issued an aggregate of 600,000 common shares to employees pursuant
to the exercise of stock options for total proceeds of $173,993.

The Company issued 10,000 common shares in exchange for consulting services. The
transaction was recorded at a fair value of $9,690 for the common shares based
on the closing stock price on the January 18, 2001 date of the agreement.

11. SHARE CAPITAL (CONT'D.)

[C] STOCK OPTIONS

1999, 2000, 2001 AND 2002 INCENTIVE STOCK OPTION PLANS (COLLECTIVELY THE
"PLANS")

The following table sets out the authorized shares under each plan:

COMMON
SHARES
EFFECTIVE DATE AUTHORIZED
----------------------------------------------------------------------

1999 Incentive Stock Option Plan March 11, 1999 2,000,000
2000 Incentive Stock Option Plan November 10, 2000 500,000
2001 Incentive Stock Option Plan September 20, 2001 1,000,000
2002 Incentive Stock Option Plan March 25, 2002 1,500,000
----------------------------------------------------------------------
Total authorized . . . . . . . . 5,000,000
======================================================================

The Plans entitle directors, employees and consultants to purchase common shares
of the Company.

Options immediately become exercisable once vested. Any options that do not vest
as the result of a grantee leaving the Company are forfeited and the common
shares underlying them are returned to the reserve. The Board has the authority
to vary the vesting provisions of grants at its discretion.

Activity under the Plans is set forth below:

OPTIONS OUTSTANDING
-----------------------------------------
SHARES WEIGHTED
AVAILABLE FOR NUMBER OF PRICE PER AVERAGE
GRANT SHARES SHARE EXERCISE PRICE
----------------------------------------------------------------------------------------

Balance at December 31, 2000 514,000 1,986,000 $0.01 - 4.44 $ 1.70
Additional shares authorized 1,000,000 - - -
Options granted. . . . . . . (2,184,644) 2,184,644 $0.12 - 3.58 $ 0.29
Options forfeited. . . . . . 1,061,800 (1,061,800) $0.20 - 4.44 $ 1.49
Options exercised. . . . . . - (692,944) $0.14 - 3.58 $ 0.34
----------------------------------------------------------------------------------------
Balance at December 31, 2001 391,156 2,415,900 $0.01 - 2.75 $ 0.91
Additional shares authorized 1,500,000 - - -
Options granted. . . . . . . (2,238,078) 2,238,078 $0.15 - 0.40 $ 0.18
Options forfeited. . . . . . 1,245,200 (1,245,200) $0.20 - 2.75 $ 1.57
Options exercised. . . . . . - (806,078) $0.01 - 0.25 $ 0.06
----------------------------------------------------------------------------------------
Balance at December 31, 2002 898,278 2,602,700 $0.12 - 0.59 $ 0.20
========================================================================================

11. SHARE CAPITAL (CONT'D.)

The number of options granted and options exercised for 2002 include 601,078
direct awards of common shares.

The weighted average remaining contractual life and weighted average exercise
price of options outstanding and of options exercisable as of December 31, 2002
are as follows:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------ -----------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER OF REMAINING AVERAGE AVERAGE
SHARES CONTRACTUAL EXERCISE SHARES EXERCISE
EXERCISE PRICE OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE
--------------------------------------------------------------------------------------------

0.12. . . . . . . . 200,000 4.72 $ 0.12 200,000 $ 0.12
0.15. . . . . . . . 812,000 5.68 $ 0.15 735,100 $ 0.15
0.17. . . . . . . . 300,000 5.37 $ 0.17 300,000 $ 0.17
0.22. . . . . . . . 1,033,200 4.83 $ 0.22 926,560 $ 0.22
0.31. . . . . . . . 157,500 3.33 $ 0.31 157,500 $ 0.31
0.40. . . . . . . . 50,000 5.75 $ 0.40 20,000 $ 0.40
0.59. . . . . . . . 50,000 4.02 $ 0.59 10,000 $ 0.59
--------------------------------------------------------------------------------------------
2,602,700 5.06 $ 0.20 2,349,160 $ 0.19
============================================================================================

For the year ended December 31, 2002 the Company recorded $240,091 [2001 -
$122,668] in stock based compensation expense. Of this total, $54,879 [2001 -
$95,408] is a result of options granted to an employee in 1999 with an exercise
price less than the market price of the common stock on the date of grant. A
total of $17,712 relates to stock bonuses granted to an employee measured at the
market price on the date of the grant. A total of $167,500 relates to shares and
warrants granted to consultants in exchange for services which have been
measured at fair value on the commitment date [2001 - $27,260].

11. SHARE CAPITAL (CONT'D.)

PRO FORMA DISCLOSURE OF STOCK BASED COMPENSATION

Pro forma information regarding results of operations and earnings (loss) per
share is required by FASB Statement No. 123 ("SFAS 123") for stock-based awards
to employees as if the Company had accounted for such awards using a valuation
method permitted under SFAS 123.

The fair value of the Company's stock-based awards granted to employees in 2002
and 2001 was estimated using the Black-Scholes option pricing model. The option
pricing assumptions include a dividend yield of 0%, a weighted average expected
life of 4.5 years [2001 - 4.5 years], a risk free interest rate of 3.83% [2001 -
4.45%] and an expected volatility of 214% [2001 - 216%]. The weighted average
fair value of options granted during 2002 was $0.18 [2001 - $0.12]. For pro
forma purposes, the estimated value of the Company's stock-based awards to
employees is amortized over the vesting period of the underlying options. The
effect on the Company's net loss and loss per share of applying SFAS 123 to the
Company's stock-based awards to employees would approximate the following:

2002 2001
$ $
----------------------------------------------------------------------------

Net loss. . . . . . . . . . . . . . . . . . . . . . (306,677) (541,552)
Compensation expense. . . . . . . . . . . . . . . . (306,406) (380,148)
----------------------------------------------------------------------------
Pro forma net loss. . . . . . . . . . . . . . . . . (613,083) (921,700)
============================================================================

BASIC AND DILUTED LOSS PER SHARE
As reported . . . . . . . . . . . . . . . . . . . . (0.02) (0.06)
Pro forma . . . . . . . . . . . . . . . . . . . . . (0.04) (0.10)
============================================================================

11. SHARE CAPITAL (CONT'D.)

[D] WARRANTS

As at December 31, 2002, common stock issuable pursuant to warrants outstanding
is as follows:

2002
Series 1 . . . 300,000 - - 18,182 281,818 3.00 March 31, 2005
Series 3A. . . 500,000 - - - 500,000 0.25 July 31, 2005
Series 3B. . . 300,000 - - - 300,000 0.50 July 31, 2005
Series 4 . . . - 2,000,000 - - 2,000,000 0.25 March 31, 2003
Series 5 . . . - 250,000 - - 250,000 0.30 September 15, 2003
Series 6 . . . - 1,701,875 - - 1,701,875 0.22 December 31, 2003
Series 7 . . . - 150,000 - - 150,000 0.16 December 31, 2003
-------------------------------------------------------------------------------------------------------------
1,100,000 4,101,875 - 18,182 5,183,693
=============================================================================================================

OUTSTANDING AT OUTSTANDING AT EXERCISE
JANUARY 1 ISSUED EXERCISED CANCELLED DECEMBER 31 PRICE EXPIRY
# # # # # $ DATE
-------------------------------------------------------------------------------------------------------------
2001
Series 1 warrants. 272,727 27,273 - - 300,000 3.00 March 31, 2005
Series 2 warrants. 100,000 - - 100,000 - - Cancelled
Series 3A warrants - 500,000 - - 500,000 1.00 December 31, 2004
Series 3B warrants - 300,000 - - 300,000 2.00 December 31, 2004
-------------------------------------------------------------------------------------------------------------
372,727 827,273 - 100,000 1,100,000
=============================================================================================================

12. SEGMENTED INFORMATION

The Company operates in one industry segment and derives its revenue from the
following services:

2002 2001
$ $
----------------------------------------------------------------------------------------------

Public company solutions . . . . . . . . . . . . . . . . . . . . . . . 1,209,164 1,643,023
Financial software and content systems . . . . . . . . . . . . . . . . 755,535 580,409
E-business solutions . . . . . . . . . . . . . . . . . . . . . . . . . - 633,719
----------------------------------------------------------------------------------------------
1,964,699 2,857,151
==============================================================================================

Revenue from external customers, by country of origin, is as follows:

2002 2001
$ $
----------------------------------------------------------------------------------------------

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,870,521 2,655,477
United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,178 201,674
----------------------------------------------------------------------------------------------
1,964,699 2,857,151
==============================================================================================

During 2002, the Company had no customers whose revenue represented greater than
10% of total revenue. During 2001, the Company had one customer whose revenue
represented 20% of total revenue.

Substantially all of the Company's property and equipment is located in Canada.

13. INCOME TAXES

The Company is subject to United States federal and state income taxes at an
approximate rate of 35%. The reconciliation of the provision (recovery) for
income taxes at the United States federal statutory rate compared to the
Company's income tax expense as reported is as follows:

2002 2001
$ $
--------------------------------------------------------------------------------

Tax expense (recovery) at U.S. statutory rates. . . . (107,000) (190,000)
Lower (higher) effective income taxes of
Canadian subsidiary. . . . . . . . . . . . . . . . (31,000) (26,000)
Change in valuation allowance . . . . . . . . . . . . 158,000 (852,000)
Change in opening valuation allowance for the
reduction in future enacted tax rates. . . . . . . - 1,004,000
Non-deductible expenses . . . . . . . . . . . . . . . 279,000 64,000
Non-taxable income. . . . . . . . . . . . . . . . . . (381,000) -
Non-taxable portion of capital loss realized during
the year. . . . . . . . . . . . . . . . . . . . . 82,000 -
--------------------------------------------------------------------------------
Income tax provision (recovery) . . . . . . . . . . . - -
================================================================================

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

Significant components of the Company's deferred tax assets as of December 31,
2002 are as follows:

2002 2001
$ $
--------------------------------------------------------------------------------

Net operating loss carryforwards. . . . . . . . . . . 2,997,000 3,091,000
Net capital loss carryforwards. . 82,000 -
Property and equipment. . . . . . . . . . . . . . . . 205,000 149,000
Other . . . . . . . . . . . . . . . . . . . . . . . . 114,000 -
--------------------------------------------------------------------------------
Total deferred tax assets . . . . . . . . . . . . . . 3,398,000 3,240,000
Valuation allowance . . . . . . . . . . . . . . . . . (3,398,000) (3,240,000)
--------------------------------------------------------------------------------
Net deferred tax assets . . . . . . . . . . . . . . . - -
================================================================================

The Company has recognized a valuation allowance for the deferred tax assets for
which it is more likely than not that realization will not occur.

13. INCOME TAXES (CONT'D.)

The net operating loss carryforwards expire as follows:

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

CANADA
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,576,000
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,289,000
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,000
----------------------------------------------------------------------------------
5,324,000
----------------------------------------------------------------------------------

U.S.
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,173,000
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,494,000
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,000
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342,000
----------------------------------------------------------------------------------
3,144,000
----------------------------------------------------------------------------------

TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,468,000
==================================================================================

The Company also has net capital losses of $230,000 available to offset future
taxable capital gains in Canada.

Pursuant to Section 382 of the Internal Revenue Code, use of the Company's net
operating loss carryforwards may be limited if the Company experiences a
cumulative change in ownership of greater than 50% in a moving three year
period. Ownership changes could impact the Company's ability to utilize net
operating losses and credit carryforwards remaining at the ownership change
date. The limitation will be determined by the fair market value of common stock
outstanding prior to the ownership change, multiplied by the applicable federal
rate. The Canadian non-capital loss carryforwards may also be limited by a
change in Company ownership.

14. COMMITMENTS AND CONTINGENCIES

[a] The Company has operating lease commitments with respect to office
premises with minimum annual payments as follows:

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

2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247,000
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281,000
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,000
----------------------------------------------------------------------------------
865,000
==================================================================================

Rental expense included in general and administrative expenses for the
year ended December 31, 2002 was $191,000 [2001 - $289,000].

[b] The Company is currently involved in litigation with a customer to
collect amounts owing pursuant to a contract entered into in September 2000. The
defendant provided a $100,000 deposit and contracted the Company to provide
certain lead generation services. The Company delivered the requested services
throughout October and November 2000, however, the defendant defaulted on all
additional payments. The Company is suing the defendant for the $351,800 balance
owing, plus interest and costs. The defendant has filed a statement of defense
and counterclaim to recover the $100,000 deposit. As of December 31, 2002, no
further action had been taken by either party and no court date has been set.
Although management currently believes the outcome of the litigation will be in
the Company's favour, they have not elected to aggressively pursue the
litigation at this time. The Company has made no provision for the counterclaim
in the financial statements and any settlement or final award will be reflected
in the statement of operations as the litigation is resolved.

15. SUPPLEMENTAL CASH FLOW INFORMATION

Net changes in operating assets and liabilities are as follows:

2001 2001
$ $
------------------------------------------------------------------------------------

Marketable securities . . . . . . . . . . . . . . . . 20,616 (4,729)
Accounts receivable . . . . . . . . . . . . . . . . . 54,895 73,004
Prepaid expenses. . . . . . . . . . . . . . . . . . . (41,653) 55,662
Accounts payable. . . . . . . . . . . . . . . . . . . (60,819) (437,160)
Accrued payroll liabilities . . . . . . . . . . . . . (45,458) (46,706)
Accrued interest on notes payable . . . . . . . . . . 4,881 8,490
Accrued interest on convertible notes and debentures. - 170,834
Deferred revenue. . . . . . . . . . . . . . . . . . . 195,956 (57,043)
------------------------------------------------------------------------------------
128,418 (237,648)
====================================================================================

Non-cash investing and financing activities are as follows:

2002 2001
$ $
------------------------------------------------------------------------------------

Computer equipment acquired under capital lease. . . . . . . . 129,608 24,646
Asset acquisition completed with the issuance of common stock. 424,320 -
====================================================================================

Cash amounts paid for interest are as follows:

2002 2001
$ $
------------------------------------------------------------------------------------
Cash paid for interest . . . . . . . . . . . . . . . . . . . . 39,586 24,170
====================================================================================

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

There are no disagreements with accountants on accounting and financial
disclosure.

ANTITAKEOVER EFFECTS OF COLORADO LAW AND OUR ARTICLES OF INCORPORATION AND
BYLAWS

Colorado law does not contain provisions which are intended to have the effect
of delaying or deterring a change in control or management of Stockgroup.

Our Articles of Incorporation permit the issuance of up to 5,000,000 shares of
preferred stock, having such rights, preferences and privileges as the Board of
Directors may determine. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of our outstanding voting stock.

Provisions of our bylaws which are summarized below may affect potential changes
in control of Stockgroup. The Board of Directors believes that these provisions
are in the best interests of shareholders because they will encourage a
potential acquirer to negotiate with the Board of Directors, which will be able
to consider the interests of all shareholders in a change in control situation.
However, the cumulative effect of these terms may be to make it more difficult
to acquire and exercise control of Stockgroup and to make changes in management
more difficult.

Our bylaws provide the number of directors of Stockgroup will be established by
the Board of Directors, but shall be no less than one. Between shareholder
meetings the Board of Directors may appoint new directors to fill vacancies or
newly created directorships. A director may be removed from office by the
affirmative vote of 66-2/3% of the combined voting power of the then outstanding
shares of stock entitled to vote generally in the election of directors.

As discussed above, our bylaws further provide that shareholder action may be
taken at a meeting of shareholders and may be effected by a consent in writing
if such consent is signed by the holders of the majority of outstanding shares,
unless Colorado law requires a greater percentage.

We are not aware of any proposed takeover attempt or any proposed attempt to
acquire a large block of our common stock.

TRANSFER AGENT AND REGISTRAR

Pacific Corporate Trust Company in Vancouver, Canada, is the transfer agent and
registrar for our capital stock.

SHARES ELIGIBLE FOR FUTURE SALE

As of the date of this prospectus 28,422,371 shares of our common stock were
outstanding, 3,421,178 shares of common stock were issuable subject to options
granted under our Stock Option Plans and 6,634,013 shares of common stock were
issuable pursuant to warrants granted under private placements. Of the
outstanding shares, 20,191,821 shares of common stock are immediately eligible
for sale in the public market without restriction or further registration under
the Securities Act unless purchased by or issued to any "affiliate" of ours, as
that term is defined in Rule 144 promulgated under the Securities Act, as
described below. All other outstanding shares of our common stock are
"restricted securities" as such term is defined under Rule 144, in that such
shares were issued in private transactions not involving a public offering and
may not be sold in the absence of registration other than in accordance with
Rule 144, 144(k) or 701 promulgated under the Securities Act or under another
exemption from registration.

The shares of common stock issued to certain selling shareholders are being
registered in the registration statement of which this prospectus is a part.
Upon effectiveness of this registration statement such shares will also be
immediately eligible for sale in the public market subject to restrictions
included in our agreements with the selling shareholders. We also filed
registration statements to register for resale the 5,000,000 shares of common
stock reserved for issuance under our Stock Option Plans. These registration
statements became effective immediately upon filing. Accordingly, shares covered
by these registration statements are eligible for sale in the public market
subject to vesting restrictions. As of the date of this prospectus 2,328,260 of
these options were exercisable.

Sales of substantial amounts of our common stock under Rule 144, this prospectus
or otherwise could adversely affect the prevailing market price of our common
stock and could impair our ability to raise capital through the future sale of
our securities.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2. This prospectus, which is a part of the registration
statement, does not contain all of the information included in the registration
statement. Some information is omitted and you should refer to the registration

statement and its exhibits. With respect to references made in this prospectus
to any contract, agreement or other document of Stockgroup, such references are
not necessarily complete and you should refer to the exhibits attached to the
registration statement for copies of the actual contract, agreement or other
document. You may review a copy of the registration statement, including
exhibits, at the Securities and Exchange Commission's public reference room at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.

The public may obtain information on the operation of the public reference room
by calling the Securities and Exchange Commission at 1-800-SEC-0330.

We will also file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information on file at the public
reference rooms. You can also request copies of these documents, for a copying
fee, by writing to the Securities and Exchange Commission.

Our Securities and Exchange Commission filings and the registration statement
can also be reviewed by accessing the Securities and Exchange Commission's
Internet site at http://www.sec.gov, which contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission.

STOCKGROUP INFORMATION SYSTEMS INC.

5,709,827 Shares of
Common Stock
--------------------

PROSPECTUS
--------------------
July 7, 2003

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Colorado Law provides that a corporation may indemnify a person made a party to
a proceeding because the person is or was a director against liability incurred
in the proceeding if:

(a) the person conducted himself or herself in good faith; and

(b) the person reasonably believed:

(i) in the case of conduct in an official capacity with the corporation,
that his or her conduct was in the corporation's best interests; and

(ii) in all other cases, that his or her conduct was at least not
opposed to the corporation's best interest.

The law also provides that a corporation may not indemnify a director:

(a) in connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or

(b) in connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving action in an
official capacity, in which proceeding the director was adjudged liable on the
basis that he or she derived an improper personal benefit.

Indemnification permitted under Colorado law in connection with a proceeding by
or in the right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding. Unless limited by its articles of incorporation,
Colorado law provides that a corporation shall indemnify a person who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the person was party because the person is or was a director, against
reasonable expenses incurred by him or her in connection with the proceeding.

Colorado law further provides that a corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a party to a proceeding in
advance of final disposition of the proceeding if:

(a) the director furnishes to the corporation a written affirmation of the
director's good faith belief that he or she met the standard of conduct
described in the law;

(b) the director furnishes to the corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it is
ultimately determined that he or she did not meet the standard of conduct; and

(c) a determination is made that the facts then known to those making the
determination would not preclude indemnification under Colorado law.

A corporation may not indemnify a director under Colorado law unless authorized
in the specific case after a determination has been made that indemnification of
the director is permissible in the circumstances because the director has met
the standard of conduct set forth in the law. A corporation may not advance
expenses to a director unless authorized in the specific case after the written
affirmation and undertaking required by the law are received and the
determination required by the law has been made.

The determinations required by Colorado law shall be made:

(a) by the board of directors by a majority vote of those present at a
meeting at which a quorum is present, and only those directors not parties to
the proceeding shall be counted in satisfying the quorum; or

(b) if a quorum cannot be obtained, by a majority vote of a committee of the
board of directors designated by the board of directors, which committee shall
consist of two or more directors not parties to the proceeding; except that
directors who are parties to the proceeding may participate in the designation
of directors for the committee.

Alternatively, the determination required to be made by the law may be made:

(a) by independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified above or, if a quorum of the
full board cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full board of
directors; or

(b) by the shareholders.

Authorization of indemnification and advance of expenses shall be made in the
same manner as the determination that indemnification or advance of expenses is
permissible; except that, if the determination that indemnification or advance
of expenses is permissible is made by independent legal counsel, authorization
of indemnification and advance of the expenses shall be made by the body that
selected such counsel.

Colorado law also provides that, unless otherwise provided in the articles of
incorporation:

(a) an officer is entitled to mandatory indemnification, and is entitled to
apply for court-ordered indemnification, in each case to the same extent as a
director;

(b) a corporation may indemnify and advance expenses to an officer,
employee, fiduciary or agent of the corporation to the same extent as to a
director; and

(c) a corporation may also indemnify and advance expenses to an officer,
employee, fiduciary or agent who is not a director to a greater extent, if not
inconsistent with public policy, and if provided for by its bylaws, general or
specific action of its board of directors or shareholders or contract.

Colorado law further provides that a corporation may purchase and maintain
insurance on behalf of a person who is or was a director, officer, employee,
fiduciary or agent of the corporation, or who, while a director, officer,
employee, fiduciary or agent of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of another domestic or foreign corporation or other person
or of an employee benefit plan, against liability asserted against or incurred
by the person in that capacity or arising from his or her status as a director,
officer, employee, fiduciary, or agent, whether or not the corporation would
have power to indemnify the person against the same liability under Colorado
law.

Our articles of incorporation provide that the Board of Directors has the power
to:

(a) indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right Stockgroup), by reason of the fact that he or she is or was a
director, officer, employee or agent of Stockgroup or is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he
reasonably believed to be in our best interests and, with respect to any
criminal action or proceedings, had no reasonable cause to believe his or her
conduct was unlawful;

(b) indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of Stockgroup to procure a judgment in its favor by reason of the fact that he
or she is or was a director, officer, employee or agent of Stockgroup or is or
was serving at our request as a director, officer, employee or agent of
Stockgroup or is or was serving at our request as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorney's fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he or she reasonably believed to
be in our best interests; but no indemnification shall be made in respect of any
claim, issue or matter as to which such person has been adjudged to be liable
for negligence or misconduct in the performance of his or her duty to Stockgroup
unless and only to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudication of liability,
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses which such court deems
proper;

(c) indemnify a director, officer, employee or agent of Stockgroup to the
extent that such person has been successful on the merits in defense of any
action, suit or proceeding referred to in subparagraph (a) or (b) above or in
defense of any claim, issue, or matter therein, against expenses (including
attorney's fees) actually and reasonable incurred by him or her in connection
therewith;

(d) authorize indemnification under subparagraph (a) or (b) above (unless
ordered by a court) in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
subparagraph (a) or (b). Such determination shall be made by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or, if such a quorum is not
obtainable or even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or by the shareholders;

(e) authorize payment of expenses (including attorney's fees) incurred in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding as authorized in subparagraph (d)
above upon receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if it is ultimately determined that he or
she is not entitled to be indemnified by Stockgroup; and

(f) purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of Stockgroup or who is or was serving at
our request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or her in any such capacity or arising
our of his or her status as such, whether or not we would have the power to
indemnify him or her against such liability under the provision of our Articles
of Incorporation.

The indemnification provided by our Articles of Incorporation is not exclusive
of any other rights to which those indemnified may be entitled under our bylaws,
any agreement, vote of shareholders or disinterested directors or otherwise, and
any procedure provided for by any of the foregoing, both as to action in his or
her official capacity and as to action in another while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of heirs, executors and administrators
of such a person.

Our bylaws give effect to the foregoing provisions of our Articles of
Incorporation.

We intend to enter into indemnification agreements with our directors and
officers. These agreements provide, in general, that we will indemnify such
directors and officers for, and hold them harmless from and against, any and all
amounts paid in settlement or incurred by, or assessed against, such directors
and officers arising out of or in connection with the service of such directors
and officers as a director or officer of Stockgroup or its affiliates to the
fullest extent permitted by Colorado law.

The Company intends to obtain liability insurance for its directors and officers
covering, subject to exceptions, any actual or alleged negligent act, error,
omission, misstatement, misleading statement, neglect or breach of duty by such
directors or officers, individually or collectively, in the discharge of their
duties in their capacity as directors or officers of Stockgroup.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

We believe that provisions of our Articles of Incorporation and bylaws will be
useful to attract and retain qualified persons as directors and officers. Our
Articles of Incorporation limit the liability of directors and officers to the
fullest extent permitted by Colorado law. This is intended to allow our
directors and officers the benefit of Colorado's corporation law which provides
that directors and officers of Colorado corporations may be relieved of monetary
liabilities for breach of their fiduciary duties as directors, except under
circumstances which involve acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or the payment of unlawful
distributions.

We intend to enter into indemnification agreements with our directors and
officers. These agreements will provide, in general, that we will indemnify and
hold harmless such directors and officers to the fullest extent permitted by law
against any judgments, fines, amounts paid in settlement, and expenses incurred
in connection with, or in any way arising out of, any claim, action or
proceeding against, or affecting, such directors and officers resulting from,
relating to or in any way arising out of, the service of such persons as our
directors and officers. Currently, directors and officers are entitled to the
benefits of the limitation of liability provided under our charter documents and
the laws of the State of Colorado.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other
than our payment of expenses incurred or paid by a director, officer or

controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth an itemization of various expenses, all of which
we will pay, in connection with the sale and distribution of the securities
being registered. All of the amounts shown are estimates, except the Securities
and Exchange Commission registration fee.

Securities and Exchange Commission Registration Fee $ 172
Accounting Fees and Expenses 5,000
Legal Fees and Expenses 5,000
Miscellaneous 3,500
-------------
Total $ 13,672

RECENT SALES OF UNREGISTERED SECURITIES

Set forth in chronological order is information regarding shares of our common
stock issued and options and warrants and other convertible securities granted
by us during the past three years. Also included is the consideration, if any,
received by us for such shares and options and information relating to the
section of the Securities Act, or rule of the Securities and Exchange
Commission, under which exemption from registration was claimed. All securities
issued were restricted.

1. On April 3, 2000, we entered into a Convertible Note Purchase Agreement
pursuant to which we obtained $3 million in a financing led by Deephaven Capital
Management LLC, a subsidiary of Knight/Trimark. Amro International S.A., managed
by Rhino Advisors was an additional lender in the funding. The funding included
$3 million of 8% convertible notes and five-year callable warrants. The notes
were convertible into common stock only after July 31, 2000. The notes may only
have been converted if we did not make payment on a noteholder's prepayment
request and were in receipt of a properly completed and executed conversion
notice at any time thereafter, or if we would have sought to prepay the notes.
Interest would have been paid in the form of cash or registered stock, at our
option. The warrants permit the holders to acquire up to 181,818 shares of
common stock. The placement agent in the transaction received warrants to
purchase 90,909 common shares on the same terms as the warrants issued to the
lenders. The issuances were made under Section 4(2) of the Securities Act and/or
Regulation D promulgated under the Securities Act and were made without general
solicitation or advertising. The purchasers were sophisticated investors with
access to all relevant information necessary to evaluate these investments, and
who represented to us that the shares were being acquired for investment. This
agreement was restructured in February 2002, as described in the "Selling
Shareholders" section of this prospectus.

2. On August 17, 2000, Stockgroup completed a private placement with
Mediastream Limited, a media company in Singapore, for the issuance of 116,935
shares at $3.72 each for gross cash proceeds of $435,000. The issuances were
made under Regulation S of the Securities Act.

3. On August 24, 2000, Stockgroup completed a private placement with
Continental Capital & Equity Corporation, a financial relations and direct
marketing advertising firm in Canada, for the issuance of 100,000 shares and
100,000 warrants in exchange for publicity services. The transaction was
recorded at a fair value of $162,500 for the shares based on the closing price
of the stock on the day of the agreement and $81,000 for the warrants based on
the fair value of the warrants under the Black-Scholes option pricing formula.
The issuances were made under Regulation S of the Securities Act. On June 30,
2001 the warrants under this private placement were cancelled.

4. On January 18, 2001, we issued 10,000 common shares to Value Relations IR
Services GmbH in exchange for consulting services. The transaction was recorded
at a fair value of $9,690 for the common shares based on the closing stock price
on the date of the agreement. The issuance was made under Regulation S of the
Securities Act.

5. On January 19, 2001, we closed a $0.5 million financing from a group of
unaffiliated investors pursuant to a Securities Purchase Agreement, under
Section 4(2) of the Securities Act. The funding included $0.5 million of 3%
convertible debentures and four-year warrants. The warrants were issued on a
pro-rata basis, with each debenture-holder receiving one Series A warrant for
each dollar of debentures purchased and 3 Series B warrants for each five
dollars of debentures purchased. The debentures mature on December 31, 2003 and
are convertible into common shares upon the earlier to occur of March 25, 2001
or the effective date of the registration of the shares issuable upon conversion
of the debentures and exercise of the warrants.

Stockgroup filed a registration statement on Form SB-2 for the investors' resale
of the shares underlying the debentures, the shares issuable, if any, in payment
of interest on the debentures, and the shares underlying the warrants, which
registration statement became effective on April 4, 2001. There was no placement
agent in the transaction.

On March 16, 2002, we issued 250,000 warrants to a consultant under Section 4(2)
of the Securities Act, each warrant having an exercise price of $0.30 and an
expiry date of August 31, 2003.

On March 25, 2002, we completed a $0.4M financing with 22 unaffiliated investors
pursuant to a Subscription Agreement under Section 4(2) of the Securities Act.
The funding included 2,000,000 units consisting of one common share and one
warrant each, at a price of $0.20 per unit, plus 51,000 common shares at a price
of $0.20 per share. The warrants have an exercise price of $0.30 and an expiry
date of September 30 , 2003. The 2,051,000 common shares were issued to the
investors on April 1, 2002.

On June 28, 2002, we issued 2,080,000 common shares to Stockhouse Media
Corporation in exchange for certain website and technology assets, valued at the
market price of the shares issued of $424,320 under Regulation 5 of the
Securities Act.

On December 31, 2002, we completed a $544,600 financing with 28 unaffiliated
investors pursuant to a Subscription Agreement under Section 4(2) of the
Securities Act. The funding included 3,403,750 units consisting of one common
share and one warrant each, at a price of $0.16 per unit. Each two warrants are
exercisable at $0.22 per common share and they expire on December 31, 2003.

On June 4, 2003, we issued 2,746,800 units at C$0.37 per unit under a Short Form
Offering in British Columbia and Alberta, Canada, under Regulation S of the
Securities Act. Each unit consists of one common share and one warrant, with
each two warrants exercisable for one common share at C$0.75 until June 4, 2004.
Gross proceeds were C$1,016,316. There were approximately 165 subscribers. The
offering was underwritten by an agent, First Associates Investments Inc. As
part of the offering we issued 274,680 agent's options, with each option
enabling the agent to purchase one unit as described above for C$0.37 at any
time until June 4, 2005.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

A. EXHIBITS

The following Exhibits are either attached hereto incorporated herein by
reference or will be filed by amendment to this registration statement:

EXHIBIT INDEX

A. EXHIBIT NUMBER AND DESCRIPTION OF EXHIBIT AND FILING REFERENCE

2.1 Share Exchange and Share Purchase Agreement dated March 11, 1999, among
I-Tech Holdings Group, Inc. (the "Registrant"), 579818 B.C. Ltd., Stock
Research Group, Inc. ("SRG"), and the former shareholders of SRG effecting
a change in control of Registrant. (incorporated by reference to the
Exhibits filed with Form 8K filed March 19, 1999, Form 8K/A filed March 24,
1999 and Form 8K/A filed May 10, 1999)

3.1 Articles of Incorporation (incorporated by reference to the Exhibits filed
with Form 10SB12G filed January 29, 1998, and Amendments to Articles of
Incorporation filed herewith)

3.2 Amended and Restated Bylaws (incorporated by reference to the Exhibits
filed with Form 10SB12G filed January 29, 1998)

4.1 1999, 2000, 2001, and 2002 Stock Incentive Plans (incorporated by reference
to the Exhibits filed with Form S-8 filed November 16, 1999, May 15, 2001,
and May 13, 2002 respectively.

4.2 Convertible Note Purchase Agreement, ("Note Purchase Agreement") dated
March 21, 2000, among the Registrant, Deephaven Private Placement Trading
Ltd. ("Deephaven") and Amro International, S.A. ("Amro") (incorporated by
reference to Form SB-2 and Form SB-2/A filed May 26, 2000 and August 1,
2000 respectively)

4.3 Form of 8% Convertible Note issued to each of Deephaven and Amro pursuant
to the Note Purchase Agreement (incorporated by reference to Form SB-2 and
Form SB-2/A filed May 26, 2000 and August 1, 2000 respectively)

4.4 Form of Callable Warrant issued to Deephaven, Amro, and Jesup and Lamont
Securities Corporation pursuant to the Note Purchase Agreement
(incorporated by reference to Form SB-2 and Form SB-2/A filed May 26, 2000
and August 1, 2000 respectively)

4.5 Registration Rights Agreement, dated March 31, 2000, among the Registrant,
Deephaven and Amro (incorporated by reference to Form SB-2 and Form SB-2/A
filed May 26, 2000 and August 1, 2000 respectively)

4.6 Securities Purchase Agreement, dated January 19, 2001, among the Registrant
and a group of unaffiliated investors (incorporated by reference to Form
SB-2 and Form SB-2/A filed March 20, 2001 and April 3, 2001 respectively)

4.7 Form of 3% Convertible Debenture, dated January 19, 2001, among the
Registrant and a group of unaffiliated investors (incorporated by reference
to Form SB-2 and Form SB-2/A filed March 20, 2001 and April 3, 2001
respectively)

4.8 Form of Warrant, dated January 19, 2001, among the Registrant and a group
of unaffiliated investors (incorporated by reference to Form SB-2 and Form
SB-2/A filed March 20, 2001 and April 3, 2001 respectively)

4.9 Registration Rights Agreement, dated January 19, 2001, among the Registrant
and a group of unaffiliated investors (incorporated by reference to Form
SB-2 and Form SB-2/A filed March 20, 2001 and April 3, 2001 respectively)

*5.1 Opinion of Faegre & Benson LLP, regarding the legality of the securities
being registered

*10.2 Employment Agreement, dated August 1, 1998, between the Registrant and
Leslie Landes.

*23.1 Consent of Faegre & Benson LLP (included in Exhibit 5.1)

**23.5 Consent of Ernst & Young LLP
----------------------
* Previously filed.
** Filed herewith.

B. FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules omitted because the information is included in the
Financial Statements or the notes thereto.

UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Company has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(b) The undersigned registrant hereby undertakes:

(i) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(A) to include any prospectus required by section 10(a)(3) of the Securities
Act;

(B) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually, or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424(b)
(230.424(b) of this Chapter) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and

(C) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

(ii) that, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and

(iii) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Vancouver, Province of British Columbia, on July 7, 2003.

STOCKGROUP INFORMATION SYSTEMS INC.

By: /s/ Marcus A. New
------------------------------------------------
Marcus A. New, Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ Marcus New Dated: July 7, 2003
-----------------------------------------------------------
Marcus A. New, Chief Executive Officer, Chairman of the Board

/s/ David Gillard Dated: July 7, 2003
-----------------------------------------------------------
David E. Gillard, Chief Financial Officer, Treasurer, Secretary

/s/ Leslie Landes Dated: July 7, 2003
-----------------------------------------------------------
Leslie A. Landes, President, Director

/s/ Craig Faulkner Dated: July 7, 2003
-----------------------------------------------------------
Craig D. Faulkner, Director

/s/ David Caddey Dated: July 7, 2003
-----------------------------------------------------------
David N. Caddey, Director

/s/ Lee deBoer Dated: July 7, 2003
-----------------------------------------------------------
Louis deBoer II, Director

/s/ Jeff Berwick Dated: July 7, 2003
-----------------------------------------------------------
Jeffrey D. Berwick, Director