Intraware (ITRA)

Completion of Acquisition or Disposition of Assets

On January 3, 2006, we completed the sale to FusionStorm of certain assets relating to our Sun Microsystems, Inc. software resale business.  FusionStorm paid us $250,000 in consideration for these assets, and will be required to pay us additional consideration of $200,000 if its gross profit from sales of certain Sun Microsystems software exceeds certain pre-established targets during the 12 months following completion of the asset sale.  The consideration paid and payable by FusionStorm to Intraware for these assets was determined as a result of arms-length negotiations between Intraware and FusionStorm.   We will incur costs as a direct result of the asset sale.

During the fiscal year ended February 28, 2005 and for the period from March 1, 2005 to December 31, 2005, Intraware has purchased from FusionStorm hardware products and services for approximately $182,000 and $256,000, respectively, in transactions not related to the asset purchase described above.

This asset purchase is described further in our Form 8-K dated October 28, 2005, filed with the Securities and Exchange Commission on November 3, 2005.