UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended January 31, 2000

                          Commission File Number 0-9747

                       EXCALIBUR TECHNOLOGIES CORPORATION

               (Exact name of registrant as specified in its charter)


                  Delaware                              85-0278207
         (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)                 Identification No.)

                1921 Gallows Road, Suite 200, Vienna, Virginia 22182
             (Address of principal executive offices         (Zip Code)

          Registrant's telephone number, including area code: (703)761 - 3700

           Securities registered pursuant to Section 12(b) of the Act: None

     Securities registered pursuant to Section 12(g) of the Act:  Common Stock

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to  file  such  reports)  and  (2)  has  been  subject  to the  filing
requirements for the past 90 days. Yes |X| No __

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  as of April 7, 2000 (based on the closing sales price as reported on
the NASDAQ National Market System) was $376,614,034.

The number of shares outstanding of the registrant's class of common stock as of
April 7, 2000 was 14,739,232.


                     The Index to Exhibits begins on Page 29


<PAGE>

                       EXCALIBUR TECHNOLOGIES CORPORATION

                           ANNUAL REPORT ON FORM 10-K

                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2000

                                TABLE OF CONTENTS

                                                                      Page

                                     PART I

Item 1.    Business......................................................1

Item 2.    Properties...................................................10

Item 3.    Legal Proceedings............................................10

Item 4.    Submission of Matters to a Vote of Security Holders..........10


                                     PART II

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters..........................................11

Item 6.    Selected Financial Data......................................12

Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations..........................13

Item 7A.   Market Risk..................................................20

Item 8.    Financial Statements and Supplementary Data..................20

Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure..........................20


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant...........21

Item 11.   Executive Compensation ......................................24

Item 12.   Security Ownership of Certain Beneficial Owners and
           Management...................................................27

Item 13.   Certain Relationships and Related Transactions...............29


                                    PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on
           Form 8-K.....................................................29


<PAGE>

                                     PART I

Item 1.       Business

This  report  contains  forward  looking   statements  that  involve  risks  and
uncertainties.  The  statements  contained  in this  report  that are not purely
historical are forward looking  statements  within the meaning of Section 27A of
the  Securities  Act of 1933,  as  amended  and  section  21E of the  Securities
Exchange  Act of 1934,  as  amended,  including  without  limitation  statements
regarding the  expectations,  beliefs,  intentions  or strategies  regarding the
future of Excalibur Technologies Corporation ("Excalibur" or the "Company"). All
forward  looking  statements  included in this  report are based on  information
available  to the  Company  on the  date  hereof  and  the  Company  assumes  no
obligation to update any such forward looking  statements.  The Company's actual
results could differ  materially from those anticipated in these forward looking
statements as a result of certain  factors,  including those set forth elsewhere
in this report.

Overview

Excalibur designs, develops,  markets and supports  high-performance,  accurate,
scalable and secure  search-powered  multimedia  software  solutions.  Excalibur
offers a suite of intelligent search solutions for corporate intranets, Internet
e-commerce,  online  publishing,  application  service   providers  ("ASP")  and
the original equipment manufacturer ("OEM") market  that enables individuals  to
quickly capture,  analyze, index, catalog, access, navigate,  retrieve,  publish
and share relevant information residing on an enterprise's networks,  intranets,
extranets  and the  Internet.  Retrievable  assets or data types  include  paper
documents,  text, databases,  word processing documents,  PDF (Portable Document
Format) files, newsfeeds, groupware systems, e-mails, images, audio and video.

Excalibur's software solutions deliver capabilities for ingesting, analyzing and
encoding  analog  or  digital  video,  managing  video  content,  video  content
rough-cut editing, web publishing, real-time profiling and retrospective search,
combined  full-text  and  database   searching,   word  meaning-based   semantic
searching,  fault-tolerant pattern recognition-based searching for both text and
images,  statistical  searching  and a full  suite of  traditional  keyword  and
Boolean search techniques.  Excalibur  RetrievalWare(R),  an enabling technology
for  Intranet  enterprise  portals,  has a modular  architecture  that  supports
parallel  processing on distributed,  multi-threaded  servers and is designed to
support both very large databases and large  information  systems with thousands
of users. It offers users a web-based unified view of all information assets and
enables  highly  accurate  search and  retrieval  over these  assets.  Excalibur
RetrievalWare  WebExpress  is an  advanced  search  engine  designed  for use by
web-driven businesses who need to provide their web site prospects and customers
with  the  most  accurate  search  results.  Excalibur  Screening  Room(R),  the
Company's video content management product, has a modular architecture, ASPenVM,
designed  to  enable  interconnected  computer  networks  at  end user  and  ASP
installations  to  provide  secure,   scalable  and  intuitive  access  to,  and
re-purposing  and publishing  capabilities  for,  video content over  intranets,
extranets and the Internet.

Excalibur offers its software  solutions to information  systems for workgroups,
enterprises and distributed wide area networks, including the Internet and World
Wide Web. The Company also offers training,  consulting and maintenance services
to facilitate implementation and use of Excalibur technology.

Excalibur's   software  products  combine  two  unique  and  complementary  core
technologies:  semantic  network and  Adaptive  Pattern  Recognition  Processing
("APRP(TM)").  The semantic network  leverages  lexical knowledge at the highest
level  using  built-in  knowledge  bases to search for  specific  word  meanings
enriched by related  terms and  concepts.  The  APRP(TM)  technology  identifies
patterns  in digital  data,  providing  the  capability  to build  content-based
analysis and  retrieval  applications  for any type of digital  information.  By
integrating   these  two  approaches,  Excalibur   believes   that  it  delivers
complete,  powerful, yet easy to use search-powered  capabilities.  The combined
technology underlies most Excalibur applications.

Excalibur  licenses its software products directly to commercial  businesses and
government  agencies  throughout  North  America,  Europe and other parts of the
world and also  distributes  its software  products to end users through license
agreements with value-added  resellers,  system integrators,  OEM, ASP and other
strategic  partners.  On November 17, 1999, the Company  formally  announced the
alignment  of  its  business   into  two  operating   segments.   The  Excalibur

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<PAGE>

Applications  Group develops,  markets and services the Excalibur  RetrievalWare
suite of products and targets large  corporations  and government  organizations
building knowledge  management  intranets and portals, as well as Internet based
e-commerce and online  service  businesses.  The Excalibur  Media Services Group
develops,  markets and services the  Screening  Room product line and focuses on
opportunities  in  association  with third party ASPs and OEMs that will host or
embed Screening Room in their product and service  offerings for their customers
and end users engaged in media,  broadcast,  entertainment,  training,  distance
learning, collaborative media production and corporate communication activities.

Excalibur's  wholly owned  subsidiary  located in the United Kingdom,  Excalibur
Technologies  International,  Ltd.  ("ETIL")  and a branch  of ETIL  located  in
Germany  conduct  international  sales  activities.  Except as otherwise  noted,
Excalibur and its subsidiaries  are collectively  referred to hereinafter as the
"Company."

The Company can be contacted via e-mail at invest@excalib.com and visited at its
web  site at  www.excalib.com.  Information  on our web site is not part of this
Form 10-K.

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PRODUCTS

Excalibur  offers  a  suite  of  intelligent   search  solutions  for  corporate
intranets, Internet e-commerce, online publishing and the OEM market through the
Excalibur Applications Group which develops,  markets, licenses and services the
Excalibur RetrievalWare suite of multimedia search solutions. This product group
includes Excalibur  RetrievalWare,  Excalibur RetrievalWare FileRoom,  Excalibur
RetrievalWare WebExpress, Excalibur Internet Spider, Excalibur RetrievalWare SDK
and Excalibur  EFS.  Through the Excalibur  Media  Services  Group,  the Company
provides  video-centric  multimedia  solutions  with Excalibur  Screening  Room,
Excalibur Visual  RetrievalWare,  and Excalibur Video Analysis Engine (VAE). The
Media Services  Group's products are targeted at the rapidly emerging market for
managing video content on the Internet and over private computer networks.

Excalibur Application Group Products:

The Excalibur  Application  Group's  products  contributed  88%, 94%, and 97% of
total consolidated revenues in fiscal years 2000, 1999 and 1998, respectively.

Excalibur RetrievalWare

Excalibur  RetrievalWare  offers an advanced  componentized  approach to content
access and  retrieval  and is an enabling  technology  for  intranet  enterprise
portals,  web  publishing  and  e-commerce   applications.   A  high-performance
scalable, more accurate alternative to traditional search and retrieval systems,
Excalibur  RetrievalWare  is a  comprehensive  software  solution  designed  for
enterprise-level  content  access and retrieval and intended to empower users to
find mission  critical data across  multiple data types,  all from a common user
interface.  By  integrating  the  APRP(TM) and  semantic  network  technologies,
Excalibur  RetrievalWare  delivers  superior  levels  of power  and  performance
throughout  the entire  information  management  process,  from data capture and
indexing to searching,  retrieval and dissemination.  With Excalibur's  semantic
networks,  users can easily and automatically find required information by using
all  of the  power  and  richness  of  natural  language  processing.  Excalibur
RetrievalWare  incorporates syntax,  morphology and the actual meaning of words.
The baseline semantic network,  created from complete dictionaries,  a thesaurus
and other reference  sources,  gives users a built-in  knowledge base of 500,000
word meanings,  50,000 language idioms and 1.6 million word associations.  Users
enter straightforward  plain English queries that are automatically  enhanced by
the related terms and  concepts,  thereby  increasing  the  opportunity  for the
return of highly relevant data. The software recognizes words at the root level,
idioms and the multiple meanings of words. An important benefit of this approach
is the  elimination of the costs  associated  with defining  keywords,  building
topic trees,  establishing expert rules and sorting and labeling  information in
database  fields.  Excalibur  RetrievalWare  also  enables  the  integration  of
specialized semantic networks for legal, medical, finance, engineering and other
disciplines.  APRP(TM)  identifies  patterns  in  digital  information.  In text
applications,  it provides  fuzzy  searching with a high degree of precision and
recall,  giving end users the ability to retrieve even  approximations of search
queries with a high degree of confidence  that all of the requested  information
will be returned  regardless  of errors in spelling or the  existence  of "dirty
data." The software  works at high speed and supports the rapid  development  of
multi-language text-retrieval systems.

Excalibur  RetrievalWare  supports more than 200 document formats stored on file
servers,  in  groupware  systems,  relational  databases,   document  management
systems, intranets and the Internet.  Excalibur RetrievalWare provides real time
profiling  which  enables  users to  create  and save Real  Time  Agent  Queries
(Profiles) that will automatically  collect incoming documents of interest.  The
RetrievalWare  Profiling  Server filters,  stores and distributes  incoming data
from any source  including  real-time  newsfeeds,  relational  databases,  paper
repositories and the RetrievalWare Internet Spider.

The latest version of the product,  Excalibur RetrievalWare 6.7, was released in
the third quarter of fiscal year 2000. RetrievalWare 6.7 is a major upgrade that
allows end users a wider degree of flexibility through automatic categorization,
enhanced XML support and expert  directories.  The upgrade  also  features a new
Power  Search  Plug-in for Lotus  Notes,  which allows end users to power search
from inside the Notes environment  across data distributed  enterprisewide,  and
groupware  support for FileNET  Panagon and Documentum.  The groupware  plug-ins
further enable users to integrate  these platforms and make them searchable with
all other enterprise  knowledge assets without taking them out of service.  With
the new automatic  categorization  feature,  users can quickly and easily create
categories  of interest to them and  RetrievalWare  6.7 will  automatically  and
accurately place information  pertaining to certain topics into these categories

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<PAGE>

for all users to navigate and/or search on. The Experts Directory is designed to
connect  domain  experts  or others  who might have  valuable  information  in a
specific topic or area of research to users seeking to leverage that  knowledge.
The  Knowledge  Contributor  enables  users to add  documents  to  RetrievalWare
libraries from their desktop. SmartView enables users to view documents in their
original published format, allowing users to view documents with the formatting,
graphics and layout of the application used to create the document,  with search
hits  highlighted  and  other   RetrievalWare   browsing  and  mark-up  features
available.  Other  features  of version  6.7  include  the  ability to index and
retrieve  documents  stored in zip archives,  language  plug-ins and support for
Linux.

Excalibur  RetrievalWare  provides  access to both  unstructured  and structured
information  across  enterprise  networks,  workgroup  LANs, and intranets.  The
software  may be  deployed  on a single  server  or on any  number  of  physical
servers.  Excalibur  RetrievalWare  server  solutions  can be  run  on  multiple
platforms including leading UNIX and Windows NT platforms.

The Excalibur RetrievalWare product family includes the following components:

Excalibur RetrievalWare FileRoom

Excalibur RetrievalWare FileRoom is built on Excalibur RetrievalWare  technology
and is an optional  component to allow loading,  indexing,  viewing and managing
scanned  documents,  images  and  text.  Users  access  the  FileRoom  through a
hierarchy consisting of FileRoom documents,  where each tier in the hierarchy is
a container for storing documents.  Users can directly view the scanned image of
a retrieved document from the FileRoom. Graphs, diagrams,  handwritten notations
and signatures in the retrieved  document are  immediately  accessible.  "Fuzzy"
searching  capabilities  provided  by  APRP(TM)  give  users  a  high  level  of
confidence  that their  queries  will  return all of the  requested  information
regardless  of the  quality  of  Optical  Character  Recognition  ("OCR")  data.
Document-level  security lets organizations  control user access at the fileroom
(library), cabinet, drawer, folder and document level.

Excalibur RetrievalWare WebExpress

Excalibur  RetrievalWare  WebExpress is a stand-alone  search and retrieval tool
designed for online  service  providers  and  content-rich  Internet  e-commerce
sites. RetrievalWare WebExpress offers superior search accuracy, performance and
scalability,  supporting  high numbers of concurrent  users  searching large and
heterogeneous document collections.

Excalibur Internet Spider

Excalibur Internet Spider is a multimedia,  high-performance  web spider/crawler
for  augmenting  the  retrieval  capabilities  of Excalibur  RetrievalWare,  for
stand-alone  use, or for  integration  with other  applications.  In addition to
HTML-based web pages,  Excalibur Internet Spider also retrieves word processing,
PDF, and multimedia  assets  including audio,  video  and images.  It is  highly
configurable  and  multi-threaded  and can provide  deep,  broad and  repetitive
crawling.  Users who want immediate  notification  when items of interest arrive
can post Agent  Profiles to pull links to related  documents to their  desktops.
Components  can be deployed on multiple  machines  for optimum  performance  and
bandwidth.

Excalibur RetrievalWare SDK

The Excalibur  RetrievalWare  SDK (Software  Developer's Kit) is a comprehensive
set of tools for  building  advanced  search-based  solutions.  At its core is a
highly scalable,  distributed  client/server  architecture.  Independent  server
processes maximize the efficiency and reliability of document loading,  indexing
and query  handling  and support  security and  encryption/decryption  features.
Dedicated  server  processes  enable  integration  of text search and relational
database (DBMS) storage  capabilities  through an open DBMS gateway.  The client
environment  is optimized  for the  development  of graphical  interfaces  using
industry standard tools such as Java and Visual Basic.  Excalibur  RetrievalWare
delivers Visual Basic custom  controls,  remote  procedure calls and open server
capabilities as well as engine-level,  high-level and client/server  application
program  interfaces  ("APIs").  These features speed the  development of systems
that can support thousands of users and contain custom functionality.

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Excalibur RetrievalWare Synchronizers

Excalibur RetrievalWare  Synchronizers provide document-level security for users
to search the contents of multiple  native  repositories  from a single point of
access including Lotus Notes,  Microsoft  Exchange,  Documentum EDMS 98, FileNET
Panagon, native file systems and relational database management systems.

Excalibur Electronic Filing Software (EFS)

Excalibur  EFS  version  3.7 is  the  last  version  of the  product  which  was
originally  introduced  in 1991  and has  been  phased  out.  Users  of EFS have
migrated to RetrievalWare  with the FileRoom option. EFS enables text and images
to be  entered  into the system  from  computer  files,  scanners  or  facsimile
machines  (after the scanned  image is  converted  to text by optical  character
recognition  software) and are automatically filed and indexed in a replica of a
physical  file  room  with  file  cabinets,  drawers,  folders,  in-baskets  and
wastebaskets,  utilizing a graphical  user  interface.  EFS provides  users with
multiple  methods  for  document  retrieval  and  operates  under  leading  UNIX
operating  systems and Windows NT in a  client/server  environment.  Client-only
implementations  are available on personal  computers  running Microsoft Windows
and Apple Macintoshes. EFS also provides links to leading external databases and
APIs  that  give  users  the  ability  to  integrate  EFS  with  other  software
applications  and  products.  A  variation  of this  software  product  provides
document image management capability for the World Wide Web.

Excalibur Media Services Group Products:

The Excalibur Media Services  Group's  products  contributed  12%, 6%, and 3% of
total consolidated revenues in fiscal years 2000, 1999 and 1998, respectively.

Excalibur Screening Room

Excalibur Screening Room is a comprehensive  solution for video asset management
providing scalable access, search and retrieval of video assets, both analog and
digital,  from any  desktop.  It provides  for  real-time  capturing,  encoding,
analyzing,  cataloguing,  browsing,  searching and retrieving  video, as well as
related  closed-caption text and metadata,  over corporate  intranets/extranets.
Designed to manage  video  content in  Internet  portal and  corporate  intranet
environments,  Excalibur  Screening  Room also  supports  media,  broadcast  and
entertainment  video  asset  management  solutions.  It enables  users to easily
capture  analog or digital  video,  automatically  create an  intelligent  video
storyboard,  and  play it  back in any of the  industry's  standard  video  file
formats. Screening Room users can then automatically browse, search and retrieve
precisely  what video clips they are looking for without having to play or watch
the video in its  entirety.  Excalibur  Screening  Room  combines  the  APRP(TM)
technology   for  video  analysis  with   Excalibur   RetrievalWare's   indexing
capabilities.  Excalibur  Screening  Room consists of four  components:  Capture
Client,  Edit Client,  Browser Client and Video Asset Server. The Capture Client
captures,  analyzes and  storyboards  analog or digital video assets,  including
live feeds and associated closed caption text and annotations for playback.  The
Edit  Client  is for  use by  persons  responsible  for  quality  assurance  and
editorial  control of storyboards and metadata.  It allows browsing,  searching,
editing and annotation of storyboards.  Users can additionally  output new rough
cut edit  segments to Edit  Decision  Lists("EDL")  for import  into  higher-end
offline  editing systems like AVID and Media 100. The Browser Client allows user
access to catalogs of video assets  through any standard web browser.  The Video
Asset  Server  indexes  and  stores  captured  video  assets  for  instantaneous
browsing, search and retrieval in a client/server environment.  Version 2.0, the
latest version of Excalibur  Screening  Room,  includes new  functionality  that
enables  users to search video based on spoken audio  content  (speech-to-text).
When closed-caption text is not present, Screening Room automatically translates
the spoken  portion of the audio track to  electronic  text that can be searched
using Excalibur  RetrievalWare.  In the fourth quarter,  the Company announced a
new  software  architecture  for its  Screening  Room  product.  Called  ASPenVM
(Application  Service  Provider  Enabled  Network  for  Video  Management),  the
architecture  establishes  a  platform  that ASP and  streaming  media  platform
partners can use to create  capabilities  for managing  video over intranets and
the Internet.

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Excalibur Visual RetrievalWare

Leveraging the APRP(TM)  technology,  Excalibur Visual RetrievalWare is a visual
retrieval engine and a comprehensive  image processing  library and programmer's
toolkit that enables the development of client/server systems that automatically
index and retrieve digital images.  Applications range from electronic  shopping
and digital libraries to document imaging and positive identification. Users can
search  for  visual  information  directly  from  their  intranet,  a  corporate
database,  the Internet,  or other sources using images or video clips as clues.
Visual data is reduced to a searchable  index that is typically less than 10% of
the size of the  original  image and is  automatically  recognized  based on its
shape, color and texture.  Users submit queries using examples of visual data or
by authoring a visual clue with a graphical  product.  Based on the shape, color
and texture of the visual clue, a list of similar or exact  matches is returned.
The product delivers its advanced retrieval  capabilities in an open,  flexible,
scalable and secure  architecture  and is designed to be easy to  implement  and
ready for extension.

Excalibur Video Analysis Engine (VAE)

Excalibur  Video  Analysis  Engine  is a toolkit  that  enables  developers  and
programmers to construct applications that analyze and re-purpose video content.
VAE  analyzes  any kind of  multi-media/video  asset  whether  it is  analog  or
digital,  allows  programmers  to  create  multi-threaded  applications  and has
enhanced scalability.  The toolkit is available as a Microsoft DirectShow filter
or C Library Developer's Kit. Based on the APRP(TM)  technology,  VAE plugs into
applications,  enabling  highly  accurate  event-change  detection.  VAE  uses a
caching  technique  which  compares a series of video  frames  based upon "event
detectors" dynamically selected by the calling program. The event detectors look
for specific occurrences in the video,  triggering "event alarms" appropriate to
the developer's application. Events include cuts, fades and dissolves.

SERVICES

Technical Support, Implementation Support and Education

Excalibur provides technical support,  or maintenance,  to customers through its
technical  support  personnel  located  in  the  Company's  Columbia,  Maryland;
Carlsbad,  California and Windsor, United Kingdom facilities and through certain
product  distributors.  Technical  support  consists  of bug  fixing,  telephone
support and product  enhancements.  Technical  support  typically is provided to
customers  under  a  renewable  annual  contract.  All  Excalibur  service  plan
customers have access to the Excalibur Online Technical  Support web site  which
provides the latest product information,  general service updates and web forums
for  technical  discussions.  The web site also  provides  electronic  forms for
opening  technical  support cases and  suggesting  product,  service and Company
enhancements.

The Company also provides on-site  implementation and consulting services to its
customers through employee and independent consultants who have been trained and
certified by the Company.  Implementation and consulting services are offered as
a package  or on a  time-and-materials  basis.  The  Company  conducts  training
seminars at its offices in Vienna, Virginia; Carlsbad,  California; and Windsor,
UK, as well as  on-site  training  for its  customers and  distribution  channel
partners.  Training customers  typically pay on a per-course basis for regularly
scheduled classes and on a per-day basis for on-site or dedicated courses.

MARKETING AND DISTRIBUTION

The Company's sales and marketing strategy focuses, in the case of the Excalibur
Applications Group, on the licensing of Excalibur products to end-user customers
through both a direct sales force as well as  strategic  partners and OEMs.  The
Excalibur Media Services Group emphasizes the licensing of Excalibur products to
end-user customers  indirectly through industry partners and application service
providers.  The targeted customer group for the Company's  products includes the
world's largest corporations,  government agencies and other institutions, large
computer  systems  integrators,  web-based  application  service  providers  and
web-driven  businesses.  For both business units,  members of the North American
sales team are located  throughout the United  States,  and most of the overseas
sales team is located in the United Kingdom.  The Company typically licenses its
Excalibur RetrievalWare product family to end users as either an enterprise-wide
or work-group level solution,  and licenses its Excalibur Screening Room product
to end users through  service  providers and industry  partners that pay monthly
fees for the right to use the product.

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Revenues  derived  from  contracts  and orders  issued by  agencies  of the U.S.
Government  were  approximately  $4.4  million,  $4.5 million and $5.4  million,
respectively,  in the fiscal years ended  January 31, 2000, 1999 and 1998. These
revenues,  expressed as a percentage of total revenues for the fiscal year, were
approximately 12%, 16% and 24%,  respectively.  Financial  information about the
Company's  segments  is  presented  in  Note  9 to  the  consolidated  financial
statements contained herein.

Marketing efforts focus on building brand awareness and establishing  demand for
the Company's  products and include  advertising,  public relations,  trade show
participation,    direct   mail   and   electronic   marketing   campaigns   and
telemarketing/lead  management  activities.  The Company also has a home page on
the World Wide Web at www.excalib.com  that is an integral part of its marketing
and sales  efforts.  Customers  are able to learn  about the suite of  Excalibur
products,  conduct  online  demonstrations  of products  and  enroll in training
courses, as well as access  passworded  areas for  technical  and other customer
support.

The Company has formed  relationships with distributors of its software products
and  the  strategic  partners  discussed  below  as  an  integral  part  of  its
distribution strategy.

Strategic Alliances

From  time to time,  the  Company  enters  into  contractual  arrangements  with
customers  that provide for the Company's core products to be customized to meet
the specific needs of those customers.  In most instances,  Excalibur  personnel
will align with the customers'  personnel to facilitate  the  development of the
solution to the customers'  satisfaction  using previously  developed and proven
Excalibur products. Generally, when the Company is able to reliably estimate the
costs to be incurred in these efforts, such contractual agreements are accounted
for under the percentage of completion method of accounting.  Additionally,  the
Company  enters  into  arrangements  with  certain  vendors to enhance  existing
products or assist in the development of new products.

In the fourth  quarter of fiscal year 2000,  the Company  announced an agreement
with AT&T Labs that  calls for the  integration  of AT&T  Lab's  image and audio
processing and speech recognition technologies with the Excalibur Screening Room
product to create an intranet-based  video asset management service that will be
marketed  by  both  Excalibur  and  AT&T.  The new  version  of the  product,  a
completely  outsourced  solution for video asset  management,  enables  users to
search, browse and selectively retrieve video content online.

In the third  quarter of fiscal year 2000,  the Company  announced a  licensing,
development and distribution agreement with NCR Corporation,  a provider of data
warehousing solutions for the retail,  financial,  communications,  airlines and
insurance markets.  The agreement gives NCR rights to use the Company's products
in NCR Teradata  warehouse  solutions and to resell the full  Excalibur  product
line through its  worldwide services and  solutions  group.  The NCR contract is
for licensing, integration and support which the  Company  is  recognizing  on a
percentage of completion  basis.  In addition,  NCR will pay the Company ongoing
royalties for data warehouse products it develops that use Excalibur technology.

In the third quarter of fiscal year 2000,  the Company  signed an agreement with
found.com, an e-commerce Internet search engine. The agreement enables found.com
to utilize Excalibur RetrievalWare  WebExpress for advanced search and retrieval
on its e-commerce network.

In the third  quarter of fiscal year 2000,  the Company  announced a  technology
licensing,  integration and  distribution  agreement with Parametric  Technology
Corporation  ("PTC"), a provider of integrated product development and lifecycle
management  solutions.  The  agreement  gives PTC rights to integrate  Excalibur
RetrievalWare  into PTC's  product and process  lifecycle  management  software,
Windchill.

In the second quarter of fiscal year 2000, the Company entered into an agreement
with  INTERVU, Inc.  to deliver a turnkey  service for the  management  of video
content over the Internet. The agreement calls for INTERVU to use Screening Room
to create a service for the management of video content over the Internet.

                                      7


<PAGE>

In the fourth  quarter of fiscal year 1999, the Company signed an agreement with
Inso Corporation  whereby Inso will integrate  Excalibur  RetrievalWare with the
Inso Media Bank media asset  management  solution  and with their  product  data
management  solution.  Under a separate  contractual  arrangement,  the  Company
purchased a license from Inso for Hyper Text Markup Language ("HTML") Export and
Viewer technologies to be included in Excalibur products.

In  July  1996,  the  Company  authorized  the  use of  its  name  by  Excalibur
Technologies N. V. ("ETNV"), a Belgian company incorporated in June 1996 for the
purpose of selling and marketing the  Company's  products and services  within a
large territory  including most of Northern Europe and Italy. In connection with
the formation of ETNV, the Company acquired approximately 13.2% of ETNV's voting
capital stock. The Company granted to ETNV an exclusive  license (the "License")
to distribute  certain of the Company's  products,  including  Excalibur EFS and
RetrievalWare,  to other authorized resellers and end users in the territory for
approximately five years. The License provided for the payment to the Company of
minimum  license  fees of  $1,475,000  for fiscal  year 1997 and the  payment of
additional  minimum license fees in each subsequent  fiscal year of the License.
In May 1999, the Company  terminated its 1996  distribution  agreement with ETNV
because ETNV failed to pay to Excalibur  the minimum  required  license fees for
the  quarter  ended  January 31,  1999 of  approximately  $900,000 as well as an
additional  amount of  approximately  $400,000  that was due on April 20,  1999.
Promptly after giving notice of such termination  Excalibur  commenced a lawsuit
in the United States District Court for the Eastern District of Virginia seeking
as damages such unpaid minimum license fees and other amounts due and owing from
ETNV.  The lawsuit was settled on July 21, 1999.  No payment was made by ETNV as
part of the settlement,  and no revenue related to the agreement was recorded in
the current fiscal year.

PRODUCT DEVELOPMENT AND ADVANCED RESEARCH

The  Company's  primary   technologies  are  its  semantic  network   processing
techniques and its proprietary adaptive pattern recognition  processing software
(APRP(TM)).

Excalibur's  semantic network  leverages lexical knowledge at the highest level,
offering a system to search for specific word meanings enriched by related terms
and  concepts.  With semantic  networks,  users find  information  using natural
language processing.  Semantic networks  incorporate syntax,  morphology and the
actual meaning of words as defined by published dictionaries and other reference
sources.

APRP(TM) consists of a software  architecture for processing digital information
to extract  patterns in the primary types of  computerized  data:  text,  image,
signal and video. The system provides high-speed pattern recognition that can be
used to store,  categorize,  retrieve and refine data. The processing of digital
patterns  provides  users with a way to store and use  computerized  data faster
with more  flexibility and with fewer data storage  requirements  than competing
systems.   The  Company's  pattern  recognition  methods  use  neural  computing
techniques to process data in a non-algorithmic,  parallel fashion by generating
responses to input data.  Systems utilizing these methods are unlike traditional
computer systems and are now being used in areas where traditional  systems have
been inefficient,  such as natural language,  machine vision, robotics,  pattern
matching  and signal  recognition.  Neural  computing  systems are  "trained" by
processing data, not by programming. Once the system has extracted patterns from
the  digital  data,  these  patterns  can be  sorted,  labeled  and used to make
decisions.

The  Company's  research  and  development  program  focuses  on  enhancing  and
expanding on the capabilities of its Excalibur RetrievalWare and video suites of
products  to  address   additional   markets  and  exploring  and  applying  its
proprietary  pattern   recognition   technology  in  new  areas  such  as  image
recognition,  character recognition and forms recognition.  The Company believes
the  market  is  emerging  for  search  products  that can  index  and  retrieve
unstructured  text and multimedia data types. To that end, the Company has begun
development of a multimedia server architecture to provide integrated multimedia
search and retrieval.

Certain elements of the Company's  software products are supplied to the Company
by other  independent  software  vendors under license  agreements  with varying
terms. Pursuant to these agreements, the Company makes periodic royalty payments
based on either revenues or units. The  technologies  acquired by the Company in
this manner  include word  processing  filters,  optical  character  recognition
engines,  dictionaries  and  thesauruses  in  electronic  form,  image and audio
processing, and face and speech recognition technologies.

                                      8


<PAGE>

The  Company  has  conducted   research  and  product   development  of  pattern
recognition  and  natural  language  systems  since 1980.  Research  and product
development expenditures for the development of new products and enhancements to
existing  products  were  approximately  $9.5 million,  $8.3  million  and  $6.4
million,  respectively,  in the fiscal years ended  January 31, 2000,  1999  and
1998.

PROTECTION OF PROPRIETARY TECHNOLOGY

The  Company  regards its  software as  proprietary  and relies  primarily  on a
combination   of   copyright,   trademark  and  trade  secret  laws  of  general
applicability,  employee  confidentiality and invention  assignment  agreements,
software  distribution  protection  agreements and other  intellectual  property
protection  methods to  safeguard  its  technology  and software  products.  The
Company also obtains  trademark  protection for its various  product names.  The
Company  has  not  obtained  patents  on  any  of  its  technology;  however, an
application was filed on August 24, 1998  with  the Patent and Trademark  Office
to obtain a patent on multimedia document  retrieval.  The patent application is
pending as of the date of this report.  The Company also relies upon its efforts
to design and produce new products and upon improvements to existing products to
maintain a competitive position in the marketplace.

COMPETITION

Competition  in  the  information  technology  and  communications  industry  in
general, and the software  development  industry in particular,  is intense. The
Company  competes in multiple  markets,  including the  traditional  information
retrieval  market.  This market has current and  potential  competitors  who are
larger and more  established  than the  Company and have  significantly  greater
financial,  technical,  marketing  and other  resources  than the  Company.  The
Company  considers its principal  competitive  advantage to be the architecture,
extensibility   to  multiple  data  types  and   performance  of  its  products.
RetrievalWare's  superior  language  handling  capability  is also a competitive
advantage.  The Company believes that compared to its primary  competition,  the
Company's  products provide users with more accurate results due to the semantic
network and APRP(TM) technologies,  an environment which is more scalable due to
the distributed search architecture and more comprehensive  searching due to the
ability  to  search  multiple  types of data.  The  Company  differentiates  its
products by using new technology to provide  benefits such as labor savings from
reduced manual pre-processing or organization of data, faster retrieval,  access
to many kinds of data,  full  integration  with  network  architecture  and more
forgiving interaction in retrieving information stored in computers. The Company
competes  with  numerous  companies  depending  on the  target  market for their
products.  Most often, the Company's  Applications  Group competes directly with
companies such as Verity, Inc. and Autonomy, Inc. to provide search solutions to
the corporate  intranet,  Internet  e-commerce,  online  publishing  and the OEM
market. The Company's Media Services Group primarily competes with Virage,  Inc.
to provide video content management  solutions to Internet portals and corporate
intranets.  There can be no  assurance  that the Company will be able to compete
successfully  against current or future competitors or that competition will not
materially  adversely  affect the  Company's  operating  results  and  financial
condition.

The Company's  activities  currently are subject to no particular  regulation by
governmental agencies other than those routinely imposed on corporate businesses
and no such regulation is now anticipated.

EMPLOYEES

The Company had 208  employees at January 31, 2000,  of whom 78 were in research
and  development,   72  in  sales  and  marketing,   31  in  technical  support,
professional  services and training  and 27 in finance and  administration.  The
employees are not covered by collective bargaining agreements and the management
of the Company  considers  relations with employees to be good.  Competition for
qualified  personnel within the Company's  industry is intense.  There can be no
assurance that the Company will be able to continue to attract,  hire or  retain
qualified  personnel  and the  inability to do so could have a material  adverse
effect upon the Company's operating results and financial condition.

                                      9


<PAGE>

Item 2.       Properties

The  Company's  corporate  headquarters  facilities  are occupied  under a lease
agreement that expires in calendar year 2004 for a total of approximately 18,700
square feet of space in an office building located at 1921 Gallows Road, Vienna,
Virginia 22182.

The Company  presently  leases three facilities that serve primarily as software
development and customer  support centers.  The Company  occupies  approximately
31,000 square feet of space in an office  building,  under a six-year lease that
expires in November 2001, located at 1959 Palomar Oaks Way, Carlsbad, California
92009. The Company also occupies approximately 10,659 square feet of space in an
office building  located at 10440 Little Patuxent  Parkway,  Columbia,  Maryland
21044 under a five-year  lease that  expires in December  2000 and 4,652  square
feet in the same building  under a lease that expires in March 2001. The Company
has  signed a new  lease to begin in the  summer  of 2000 at 11000  Broken  Land
Parkway,  Columbia  Maryland for 18,371 square feet. This space will replace the
expiring  Columbia,  Maryland  leases.  The Company  leases 2,863 square feet of
space in an office  building  at 4675  Stevens  Creek  Boulevard,  Santa  Clara,
California 95051. The three-year lease expires June 30, 2000. A three-year lease
for a fourth facility of 3,110 square feet to house software  development  staff
has  been  signed  to  begin in June of 2000 at 1455  Dixon  Avenue,  Lafayette,
Colorado 80026.

The Company leases office space in Windsor, England and commercial office suites
in Boulogne,  Paris, France, and in Munich and Frankfurt,  Germany in support of
its  international  sales operation.  Under its agreement,  the Company occupies
approximately 3,400 square feet in Windsor.  The lease for the Windsor office is
currently  on  extension  periods of three  month  intervals.  Negotiations  are
underway to lease new space in a nearby location.  The leased three-office space
in Boulogne,  Paris, and the three-office  space in Munich and the single office
in Frankfurt are on rolling contracts with one to three month notice periods for
cancellation.

The Company  believes  that its  facilities  are  maintained  in good  operating
condition and are adequate for its operations.

Item 3.       Legal Proceedings

There are no material pending legal proceedings to which the Company is a party.

Item 4.       Submission of Matters to a Vote of Security Holders

There  were  no  matters  submitted  to  the  shareholders  for a  vote  in  the
three-month period ended January 31, 2000.

                                      10


<PAGE>

                                     PART II

Item 5.       Market for Registrant's Common Equity and Related Stockholder
              Matters

The  Company's  common  stock is traded in the  over-the-counter  market  and is
listed on the National Market System of the NASDAQ Stock Market under the symbol
EXCA.

The following table sets forth,  for the period February 1, 1999 through January
31,  2000,  the high and low sale prices for the common stock as reported by the
National  Market System of NASDAQ.  The number of  shareholders  of record as of
January 31, 2000 was 1,127.  The Company has never declared or paid dividends on
its common stock and anticipates  that, for the foreseeable  future, it will not
pay dividends on its common stock.

                                                           High         Low

  Fiscal 2000 (February 1, 1999 - January 31, 2000)

  First Quarter....................................     $ 19 7/8      $  8 3/4
  Second Quarter...................................       17 5/16        9 9/32
  Third Quarter....................................       12 7/8         7 5/8
  Fourth Quarter...................................       25 1/2         9 1/4

  Fiscal 1999 (February 1, 1998 - January 31, 1999)

  First Quarter....................................     $ 13          $ 10 1/4
  Second Quarter...................................       14 9/16        9 1/2
  Third Quarter....................................       11 1/2         4 1/2
  Fourth Quarter...................................       12 1/16        5 1/2

                                      11


<PAGE>

Item 6.       Selected Financial Data

The selected financial data presented below as of January 31, 2000 and 1999, and
for the fiscal years ended  January 31, 2000,  1999 and 1998,  have been derived
from the  Company's  consolidated  financial  statements  and  should be read in
conjunction  with such  consolidated  financial  statements  and  notes  thereto
included elsewhere in this Annual Report on Form 10-K.

                                         Fiscal Years Ended January 31,
                                -----------------------------------------------
                                  2000      1999      1998      1997      1996
                                  ----      ----      ----      ----      ----
                                     (in thousands, except per share data)

Statement of Operations Data:
Revenues:
   Software.................... $32,649   $22,741   $17,202   $15,866   $15,004
   Maintenance.................   5,285     5,198     5,215     4,393     3,671
                                -------   -------   -------   -------   -------
                                 37,934    27,939    22,417    20,259    18,675
                                -------   -------   -------   -------   -------
Expenses:
   Cost of software revenues      4,842     3,808     3,039     1,630     1,064
   Cost of maintenance revenues   2,143     1,320     1,219     1,618     1,398
   Sales and marketing.........  16,210    13,501    13,184    14,430     8,752
   Research and product
      development..............   9,456     8,328     6,405     6,288     4,416
   General and administrative..   5,402     4,775     4,884     3,906     3,330
   Acquired in-process research
      and development..........       -         -     1,284         -         -
   Restructuring costs.........       -         -       577         -       653
   Merger costs................       -         -         -         -       490
                                -------   -------   -------   -------   -------
                                 38,053    31,732    30,592    27,872    20,103
                                -------   -------   -------   -------   -------
Operating loss.................    (119)   (3,793)   (8,175)   (7,613)   (1,428)

Interest income, net...........     250       239       374       781       544
Equity in net loss of affiliate       -      (300)     (525)     (341)        -
Write-off of investment in
affiliate......................    (471)        -         -         -         -
                                -------   -------   -------   -------   -------
Net loss.......................    (340)   (3,854)   (8,326)   (7,173)     (884)
Dividends on cumulative,
convertible preferred stock....      14        14        14        14        14
                                -------   -------   -------   -------   -------
Net loss applicable to
    common stock............... $  (354)  $(3,868)  $(8,340)  $(7,187)  $  (898)
                                =======   =======   =======   =======   =======
Basic and diluted net loss per
   common share................ $ (0.02)  $ (0.29)  $ (0.64)  $ (0.58)  $ (0.08)
                                =======   =======   =======   =======   =======
Weighted average number
   of common shares
   outstanding.................  14,282    13,526    12,934    12,351    11,496
                                =======   =======   =======   =======   =======

Balance Sheet Data (at end of period)(1):

Cash and cash equivalents.....  $ 10,884  $ 5,851   $ 4,939   $ 2,685   $ 2,903
Working capital...............    19,349    8,006     9,748    14,566    12,973
Total assets..................    30,687   19,712    20,045    26,147    23,046
Accumulated deficit...........   (56,138) (55,798)  (51,945)  (43,619)  (36,466)
Total shareholders' equity (2)    22,305   13,174    13,098    18,563    15,251

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

(1) The Company had no significant long-term debt for any of the periods
presented.
(2) No dividends have been declared or paid on the Company's common stock.

                                      12


<PAGE>

Item 7.       Management's Discussion and Analysis of Financial Condition and
              Results of Operations

Overview

The  statements  contained  in this  report that are not purely  historical  are
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the  Securities  Exchange Act of 1934,  including
without  limitation  statements  about  the  Company's  expectations,   beliefs,
intentions or strategies  regarding the future. All  forward-looking  statements
included in this report are based on information available to the Company on the
date  hereof  and  the  Company   assumes  no  obligation  to  update  any  such
forward-looking  statements.  The  forward-looking  statements  contained herein
involve  risks and  uncertainties.  The  Company's  actual  results could differ
materially  from those  anticipated  in these  forward-looking  statements  as a
result of certain factors, including those set forth in this report.

The Company  principally  earns  revenues  from the  licensing  of its  software
products to commercial  businesses  and  government  agencies  throughout  North
America,  Europe and other parts of the world. The Company licenses its software
to end users directly and also distributes its software products through license
agreements with value-added  resellers,  system integrators,  original equipment
manufacturers,  application  service  providers  and other  strategic  partners.
Revenues are provided  under  software  licenses with new customers and from the
related  sale  of  product  maintenance,  training  and  implementation  support
services. Additions to the number of authorized users, upgrades to newer product
versions  and the  renewal  of product  maintenance  arrangements  by  customers
pursuant to existing  licenses  also  provide  revenues  to the  Company.  Under
software  maintenance  contracts,  customers are  typically  entitled to receive
telephone  support,  software bug fixes and new releases of particular  software
products when and if they are released.

The Company  announced on November 17, 1999 the  alignment of the business  into
two operating segments. The Excalibur  Applications Group develops,  markets and
services  the  Excalibur  RetrievalWare  suite of  products  and  targets  large
corporations  and  government   organizations   building  knowledge   management
intranets and portals,  Internet based e-commerce and online service businesses.
The Excalibur  Media  Services  Group  develops,  markets and services the video
product line and provides software  products and services  primarily to original
equipment  manufacturers and application  service providers focusing on Internet
and intranet video content management.

The  following  chart  represents  revenues and expenses  (dollars in thousands)
attributable  to the  Applications  Group and Media Services Group for the years
ended January 31, 2000,  1999  and 1998.  Expenses  for each segment  consist of
direct and allocated  expenses and exclude the write-off of ETNV,  restructuring
costs and acquired in-process research and development costs.


                      Applications Group              Media Services Group
                      ------------------              --------------------
                Fiscal Years Ending January 31,  Fiscal Years Ending January 31,
                     2000      1999      1998       2000      1999       1998
                   --------  --------  --------   --------  --------   --------
Total Revenues     $ 33,369  $ 26,206  $ 21,791   $  4,565  $  1,733   $    626
Operating Expenses   29,090    24,888    24,209      8,963     6,844      4,522
                   --------  --------  --------   --------  --------   --------
Operating
Income (Loss)      $  4,279  $ 1,318   $ (2,418)  $ (4,398)  $(5,111)  $ (3,896)
                   --------  --------  --------   --------  --------   --------

Note:  Excludes the write-off of ETNV, acquired in-process R&D and
restructuring costs

The Company believes that in addition to other competitive advantages,  it holds
a competitive  advantage in that the Company's products accommodate the indexing
and retrieval of multiple data types.

On May 5, 1997, the Company acquired Interpix Software Corporation ("Interpix"),
located in Santa Clara, California, a privately owned company and developer of a
commercial  technology  enabling  the  collection,   indexing,   management  and
presentation  of multimedia  data on the Internet and corporate  intranets.  The
purchase method of accounting was applied to this  acquisition  transaction and,
accordingly,  the results of  operations  of Interpix  have been included in the
Company's  consolidated results of operations from the date of acquisition.  The

                                      13


<PAGE>

shareholders of Interpix received 275,000 shares of common stock of Excalibur in
exchange for all of the  outstanding  common  stock of  Interpix.  Approximately
$1,284,000  of the purchase  price was  allocated  to research  and  development
projects in process and was expensed in the second quarter of fiscal year 1998.

The Company  reorganized  its sales force and made other  changes to the overall
organization  at the end of the first quarter of fiscal year 1998. In connection
with these changes,  the Company reduced its workforce by approximately  10% and
recorded a restructuring  charge of $577,000 in the first quarter of fiscal year
1998.  The  charge  consisted  of  severance  pay and  benefits  for  terminated
employees. All payments associated with the restructuring charge were paid prior
to the end of fiscal year 1998.

Results of Operations

For the fiscal year ended January 31, 2000,  total  revenues were $37.9 million,
an increase  of 36% over total  revenues  of $27.9  million in the prior  fiscal
year. The net loss for the fiscal year ended January 31, 2000  was $0.3 million,
or $0.02 per common share,  compared to a net loss of $3.9 million, or $0.29 per
common  share last fiscal year.  The net loss for the fiscal year ended  January
31, 2000  included a charge of $0.5 million  related to the  termination  of the
Company's  relationship  with ETNV. Total revenues in fiscal year 1999 increased
25% from fiscal year 1998 revenues of $22.4 million. The net loss for the fiscal
year ended  January 31, 1998  was $8.3 million, or $0.64 per common  share.  The
net  loss  included  a  charge  of $1.3  million  for  in-process  research  and
development  expenses  related to the Interpix  acquisition and $0.6 million for
restructuring charges.

The following chart  summarizes the components of revenues and the categories of
expenses, including the amounts expressed as a percentage of total revenues, for
each of the three  fiscal  years in the period  ended  January  31, 2000 and the
percentage changes in the amounts between fiscal years (dollars in thousands).

<TABLE>
<CAPTION>
                                                                               Increase   Increase
                                                                              (Decrease) (Decrease)
                                                                                  from     from
                                                                                  1999     1998
                                                                                   to       to
                                  Components of Revenue and Expenses              2000     1999
                                    Fiscal years ended January 31,
                              2000               1999               1998
Revenues:                  $        %         $        %          $       %         %        %
                        -------   ----     -------   ----     -------   ----      ----     ----
<S>                    <C>       <C>     <C>       <C>       <C>       <C>       <C>      <C>
  RetrievalWare         $28,150    74%     $20,859    75%     $15,083    67%       35%      38%
  EFS                        48     -          318     1%       1,591     7%      -85%     -80%
  Video Products          4,452    12%       1,564     6%         528     2%      185%     196%
                        -------   ----     -------   ----     -------   ----      ----     ----
Total software           32,649    86%      22,741    81%      17,202    77%       44%      32%

Maintenance               5,285    14%       5,198    19%       5,215    23%        2%       0%
                        -------   ----     -------   ----     -------   ----      ----     ----
Total revenues          $37,934   100%     $27,939   100%     $22,417   100%       36%      25%
                        -------   ----     -------   ----     -------   ----      ----     ----
Expenses:

  Cost of sales         $ 6,985    18%     $ 5,128    18%     $ 4,258    19%       36%      20%
  Sales and marketing    16,210    43%      13,501    48%      13,184    59%       20%       2%
  Research and product
    development           9,456    25%       8,328    30%       6,405    29%       14%      30%
  General and
    administrative        5,402    14%       4,775    17%       4,884    22%       13%      -2%
  Acquired in-process
    research and
    development               -     -            -     -        1,284     6%        -     -100%
  Restructuring costs         -     -            -     -          577     3%        -     -100%
                        -------   ----     -------   ----     -------   ----      ----     ----
      Total expenses    $38,053   100%     $31,732   114%     $30,592   136%       20%       4%
                        -------   ----     -------   ----     -------   ----      ----     ----

</TABLE>
                                      14


<PAGE>

Revenues

Software  revenues  increased  from $17.2  million in fiscal  year 1998 to $22.7
million  in fiscal  year 1999 and to $32.6  million  in fiscal  year  2000.  The
increase in software  revenues in each  period was  attributable  to  increasing
market awareness and acceptance of the Company's products in the intranet portal
and  Internet  based  e-commerce  and  online  services  markets,   as  well  as
contributions  from  existing OEM partners and  alliances  with new partners who
chose the Company as the key search component in their product offerings.

RetrievalWare,  which emerged as the Company's  dominant  product line in fiscal
year  1998,  continued  that  trend into  fiscal  years 1999 and 2000.  Software
revenues from  RetrievalWare  increased 35% in fiscal year 2000 to $28.2 million
from $20.9 million in the prior year.  Software revenues for RetrievalWare  were
$15.1 million in fiscal year 1998. For fiscal year 2000,  RetrievalWare  product
revenue represented 86% of software revenues, compared to 92% and 88%, in fiscal
years  1999 and  1998,  respectively.  With the  availability  of  RetrievalWare
FileRoom,  EFS software  revenues  represented a negligible  percentage of total
software revenues in fiscal year 2000, compared to 1% and 9%,  respectively,  in
fiscal years 1999 and 1998. Software revenues from video products increased 185%
in fiscal year 2000 to $4.5 million from $1.6 million in 1999. Software revenues
from video  products were $0.5 million in fiscal year 1998.  Revenues from video
products were 14% of  software revenues  in fiscal year 2000 compared to 7%  and
3%, respectively, in fiscal years 1999 and 1998.

Revenue increases in fiscal year 2000 were driven by three primary areas.  These
included  sales to large  corporations  and  government  organizations  building
knowledge  management  intranets  and  corporate  portals,   sales  to  Internet
businesses and web content  providers,  and indirect sales via major integration
and distribution partnerships. Also in this fiscal year, the Company initiated a
new program to become a supplier to the ASP market by providing  Screening  Room
to those ASPs that are looking to add video content  management  capabilities to
their service offerings.

The  first  area  of  revenue  growth  came  from  sales  of   RetrievalWare  to
organizations  with large intranets seeking to implement high performance search
and retrieval  software or replace existing search  technology.  Typically these
are maturing  corporate intranet sites dealing with expanding amounts of content
and multimedia  data types that need to be effectively  accessed and utilized by
the  organization.  For the year ended  January 31, 2000,  intranet or knowledge
management market sales were approximately 38% of total license revenues.

A second area of revenue growth came from sales of Excalibur  RetrievalWare  and
WebExpress to Internet web portals,  e-commerce  businesses  and online  service
providers looking to provide their customers with an enhanced search experience.
Typically  these are online  businesses that place a high value on their content
and whose  customers  demand  accurate  search  results  from a large  amount of
information.  There are now approximately 70 companies using Excalibur  products
to power online information services and e-commerce  applications.  For the year
ended January 31, 2000, online services and e-commerce sales were  approximately
29% of total license revenues.

The third area of growth came from new and existing  OEM  partners  such as NCR,
Lombard,  Techmath,  KDN and OCS.  During the second  quarter of this year,  the
Company  completed its delivery to StorageTek  under the terms of that contract.
Revenue  of  approximately  $5.1  million  was  recognized  from the  StorageTek
agreement from its inception in July 1998. Revenue of approximately $2.8 million
was recognized from the StorageTek agreement in fiscal year 2000.

The licensing,  development and distribution agreement with NCR gives NCR rights
to use the Company's products in NCR Teradata warehouse solutions.  NCR also has
rights  under the  agreement  to resell  the full  Excalibur  product  line.  In
addition, NCR will pay the Company ongoing royalties for data warehouse products
it develops that use Excalibur technology.  For the year ended January 31, 2000,
the Company  recognized  revenues of  approximately  $4.3  million  from the NCR
agreement, which is being accounted for on a percentage of completion basis.

The  Company's  indirect  sales  strategy  continues to focus on  strategic  OEM
agreements that provide potentially  significant revenue opportunities.  For the
year ended January 31, 2000, OEM  relationships  provided  approximately  33% of
total license revenues.

                                      15


<PAGE>

Revenues  from  international  operations  are  provided  primarily  by software
licenses  with  various  European  commercial  and  government  customers  and a
well-established  European reseller network.  The Company's  international sales
operation, Excalibur Technologies International, Ltd. ("ETIL"), is headquartered
in the United  Kingdom,  with a branch office located in Germany.  International
revenues excluding Canada grew 25% in fiscal year 2000 to $9.2 million from $7.3
million in fiscal year 1999. Comparable international revenues were $7.8 million
in fiscal year 1998.  The  Company  terminated  its  relationship  with ETNV,  a
Belgian  Company  incorporated  in June 1996 to sell and  market  the  Company's
products and services  within a territory that included most of Northern  Europe
and Italy, in the first quarter of fiscal year 2000. No revenues  related to the
ETNV agreement were recognized in fiscal year 2000.

Software  maintenance and customer  support revenues were $5.3 million in fiscal
year 2000 and $5.2  million  in fiscal  years  1999 and 1998.  The  increase  in
maintenance  revenue  in  fiscal  year  2000 was  primarily  attributable  to an
increase in the number of RetrievalWare customers.  Flat maintenance revenues in
fiscal year 1999  compared to 1998 were  attributable  to the  transition of the
business from EFS to RetrievalWare, as well as the increase in revenues from OEM
agreements that do not have a significant maintenance component.

Operating Expenses

Costs of sales increased  36% to $7.0  million  in  fiscal  year  2000 from $5.1
million in fiscal  year  1999.  The  increase  in fiscal  year 2000 was  related
primarily to the sales volume increase and greater  royalty  expense  associated
with new features  included in the products.  In fiscal year 1999, cost of sales
increased 20% from $4.3 million in fiscal year 1998. The increase in fiscal year
1999 was attributable to higher revenues and increased ETIL cost of sales due to
higher royalties for new language  versions of RetrievalWare  and greater use of
partners.  Costs of  sales  represented 18%, 18% and 19% of  revenues in  fiscal
years 2000, 1999 and 1998, respectively.

Sales and marketing expenses  increased 20% to $16.2 million in fiscal year 2000
from $13.5 million in fiscal year 1999. In fiscal year 1998, sales and marketing
costs were $13.2 million.  Growth in marketing  program expenses and the opening
of the new Germany sales office were responsible for the increase in fiscal year
2000 expenses.  The increase in sales and marketing expenses in fiscal year 1999
was due to  personnel  growth in ETIL and the  marketing  department.  Sales and
marketing  expenses  were 43% of revenues in fiscal year 2000 compared to 48% in
fiscal year 1999 and 59% of revenues in fiscal year 1998.

Research and product  development  costs increased 14% to $9.5 million in fiscal
year 2000 from $8.3  million in fiscal  year 1999,  representing  25% and 30% of
revenues,  respectively.  The  fiscal  year 2000  increase  was  largely  due to
expenses  associated with the development  agreement with  StorageTek.  Text and
video  research  and  development  expenses  also  increased in the current year
compared to last year as the Company  continued to invest in the  enhancement of
its  RetrievalWare  and video  products.  The increase in fiscal year 1999, from
$6.4 million in fiscal year 1998, or 29% of revenue, was mainly  attributable to
the  establishment  of the joint  development  lab with  StorageTek in the third
quarter.

General  and  administrative  expenses  increased  in  fiscal  year 2000 to $5.4
million  from $4.8  million  in fiscal  year 1999,  representing  14% and 17% of
revenues, respectively. The increase in fiscal year 2000 was driven by increased
corporate  expenses  including legal and accounting  costs. In fiscal year 1999,
general and administrative costs declined from $4.9 million in fiscal year 1998.
Bad debt expense  in fiscal  years  2000, 1999  and 1998  was $0.8 million, $0.5
million and $0.3 millon, respectively.

In the second  quarter of fiscal year 1998,  the Company  recorded an expense of
$1.3 million for the cost of in-process research and development acquired in the
merger  with  Interpix  Software  Corporation  ("Interpix").   This  acquisition
facilitated the broadening of the Company's  product line with the  introduction
of Excalibur  Internet  Spider,  a multimedia web crawler that enables end users
and  application  developers  to  access  and  leverage  multimedia  information
published on intranets  and the World Wide Web. Cost cutting  measures  taken in
the first  quarter of fiscal year 1998  helped  offset the  additional  expenses
associated  with the Interpix  development  group.  Streamlining of the services
department and a reduction of the work force reduced  employee  related expenses
of research and development.

The Company  reorganized  its sales force and made other  changes to the overall
organization  at the end of the first  quarter of fiscal year 1998.  The Company
reduced its workforce by approximately  10% and recorded a restructuring  charge

                                      16


<PAGE>

of $0.6 million in the first quarter.  The charge consisted of severance pay and
benefits  for  terminated   employees.   All   expenditures   relative  to  this
restructuring charge were made in fiscal year 1998.

The activities for fiscal year 2000,  including those discussed above,  resulted
in total expenses of $38.1 million,  a 20% increase from total expenses of $31.7
million in the prior fiscal year. In fiscal year 1999, total expenses  increased
by 4% from $30.6  million in fiscal  year 1998.  The total  number of  employees
increased from 201 at the beginning of the current fiscal year to 208 at January
31, 2000. The Company had 168 employees at January 31, 1998.

Net  interest  income  increased  to $0.3  million in fiscal year 2000 from $0.2
million in 1999.  Net interest  income was $0.4 million in 1998. As discussed in
Note 3 to the consolidated  financial  statements  contained herein, the Company
recorded  in the fiscal  year ended  January  31,  2000 a charge  related to the
termination  of the agreement  with ETNV of $0.5  million.  The charge in fiscal
year 1999  related  to the  Company's  equity in the  net loss of  ETNV was $0.3
million, and $0.5 million in fiscal year 1998.

Liquidity and Capital Resources

In the fiscal year ended January 31, 2000, the Company's  combined  balance of
cash, cash equivalents and short term investments increased by $5.2 million to
$11.1  million  as  summarized  below (in  thousands).  At January  31,  2000,
investments  consisted of a certificate of deposit pledged to  collateralize a
letter of credit.

                       January 31,       January 31,
                          2000              1999             Change
                       -----------       -----------       ----------
   Cash and cash
     equivalents        $  10,884         $   5,851         $   5,033
   Investments                178                 -               178
                       -----------       -----------       ----------
   Total                $  11,062         $   5,851         $   5,211
                       ===========       ===========       ==========

The  Company's  operating  activities  used cash of $3.3  million in fiscal year
2000.  The net loss of $0.3  million  was  offset by  non-cash  charges  of $2.8
million,  including $1.4 million in depreciation and amortization,  $0.8 million
in bad  debt  expense  and  $0.5  million  for the  write-off  of the  Company's
investment  in ETNV.  Increases in accounts  receivable  used $8.7 million while
increases  in accounts  payable  and accrued  expenses  provided  $0.5  million.
Reductions  in prepaid  expenses and an increase in deferred  revenues  together
provided $2.5  million.  The Company's  operating  activities  used cash of $3.0
million in fiscal year 1999. The net loss of $3.9 million was offset by non-cash
charges  of  $2.3  million,   including   $1.5  million  in   depreciation   and
amortization,  $0.5  million  in bad  debt  expense  and  $0.3  million  for the
Company's  share  of the net  loss of ETNV and  amortization  of ETNV  warrants.
Reductions  in accounts  receivable  provided  $2.3 million  while  increases in
prepaid  expenses used $3.4 million.  Reductions  in accounts  payable,  accrued
expenses and deferred revenues used $0.3 million.

During fiscal year 2000,  investing activities used $1.2 million principally due
to the purchase of equipment  and leasehold  improvements.  In fiscal year 1999,
investing  activities provided $0.1 million. Net cash provided from the maturity
of U.S.  Treasury  Bills  totaled $1.5 million  while  purchases of computer and
other  equipment  used $1.1 million.  Loans to and  investments in the Company's
affiliate, ETNV, included in other assets, used $0.2 million.

Financing  activities provided $9.4 million in fiscal year 2000. Net proceeds of
$4.7 million were  provided by a private  placement of 500,000  shares of common
stock sold at $10.00 per share to  unaffiliated  accredited  investors.  Cash of
$4.7  million was  provided  from the  exercise of  employee  stock  options and
issuances of stock under the employee stock purchase plan.  Financing activities
provided $3.8 million in fiscal year 1999. A private placement of 325,000 shares
of common stock to an unaffiliated  financial institution at a purchase price of
$10.00 per share  provided $3.3 million.  Cash of $0.6 million was provided from
the exercise of employee stock options and issuances of stock under the employee
stock purchase plan.

The number of days sales  outstanding  ("DSO") at January 31, 2000 was 106 days,
an increase of 45 days from  January 31, 1999.  The variance in DSO was in large
part due to a sizable up front cash  payment  that was made by a customer in the
quarter  ended  January 31, 1999.  Management  believes  that the  allowance for
doubtful accounts of $0.8 million at January 31, 2000 is adequate.

                                      17


<PAGE>

The Company has available a $3,000,000  line of credit under an agreement with a
bank which expires on September 20, 2000. Up to $250,000 of borrowings may be in
the  form of  letters  of  credit.  The  line of  credit  is  collateralized  by
substantially  all corporate  assets.  Borrowings  under the line of credit bear
interest at the  lender's  prime rate plus up to 1% (8.5% at January 31,  2000).
The agreement  requires the Company to comply with certain  financial  covenants
that are computed on a monthly basis and prohibit additional  borrowings without
the bank's  approval.  As of January 31, 2000,  no borrowings  were  outstanding
under the line of credit.

As of January 31, 2000, the Company's balances of cash and cash equivalents were
$11.1  million.  The Company  believes  that its current  balance of cash,  cash
equivalents and its funds generated from operations,  if any, will be sufficient
to fund the Company's current  projected cash needs for the foreseeable  future.
Historically,  the  Company  has  primarily  used cash  provided by sales of its
common stock to finance its  operations.  If the actions taken by management are
not  effective in achieving  profitable  operating  results,  the Company may be
required to pursue  additional  external  sources of  financing in the future to
support its operations and capital requirements. There can be no assurances that
external  sources of  financing  will be  available  if  required,  or that such
financing will be available on terms acceptable to the Company.


Factors That May Affect Future Results

The Company's  business  environment is  characterized  by intense  competition,
rapid technological  changes,  changes in customer requirements and emerging new
market segments.  Consequently,  to compete  effectively,  the Company must make
frequent  new  product  introductions  and  enhancements  while  protecting  its
intellectual  property,  retain its key personnel and deploy sales and marketing
resources  to take  advantage of new business  opportunities.  Future  operating
results  will be  affected  by the  ability of the Company to expand its product
distribution  channels and to manage the expected growth of the Company.  Future
results may also be impacted by the  effectiveness  of the Company in  executing
future  acquisitions  and integrating the operations of acquired  companies with
those of the Company.  Failure to meet any of these  challenges  could adversely
affect future operating results.

The Company's quarterly operating results have varied  substantially in the past
and are likely to vary  substantially  from quarter to quarter in the future due
to a variety of factors. In particular, the Company's period-to-period operating
results  are  significantly  dependent  upon the timing of the  closing of large
license  agreements.  In this regard, the purchase of the Company's products can
require a significant  capital  investment  from a potential  customer which the
customer  generally  views  as a  discretionary  cost  that can be  deferred  or
canceled due to budgetary or other  business  reasons and can involve long sales
cycles of six  months or more.  Estimating  future  revenues  is also  difficult
because the Company  ships its products  soon after an order is received and, as
such does not have a significant  backlog.  Thus, quarterly license fee revenues
are  heavily  dependent  upon a  limited  number of  orders  for large  licenses
received  and  shipped  within  the same  quarter.  Moreover,  the  Company  has
generally  recorded a  significant  portion of its total  quarterly  license fee
revenues in the third month of a quarter, with a concentration of these revenues
occurring in the last half of that third month.  This  concentration of revenues
is influenced by customer tendencies to make significant capital expenditures at
the end of a fiscal  quarter.  The Company  expects  these  revenue  patterns to
continue for the foreseeable  future.  Despite the  uncertainties in its revenue
patterns,  the Company's  operating expenses are based upon anticipated  revenue
levels  and  such  expenses  are  incurred  on an  approximately  ratable  basis
throughout  a  quarter.  As a result,  if  expected  revenues  are  deferred  or
otherwise  not  realized in a quarter for any reason,  the  Company's  business,
operating  results  and  financial  condition  would  be  materially   adversely
affected.

As of January  31,  2000,  the  Company  had net  operating  loss  carryforwards
("NOLs") of approximately  $64.7 million.  The deferred tax assets  representing
the benefits of the NOLs have been offset  completely  by a valuation  allowance
due to the Company's  lack of an earnings  history.  The Company  incurred a net
loss of $0.3 million for the fiscal year ended January 31, 2000. The accumulated
deficit of the Company at January 31, 2000 was $56.1 million. The realization of
the  benefits of the NOLs is dependent on  sufficient  taxable  income in future
fiscal  years.  Lack of future  earnings,  or a change in the  ownership  of the
Company,  could  adversely  affect the  Company's  ability to utilize  the NOLs.
Despite the NOL  carryforwards,  the Company  may have income tax  liability  in
future years due to the application of the alternative  minimum tax rules of the
Internal Revenue Code.

                                      18


<PAGE>

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

The Company believes that inflation has not had a material effect on the results
of its operations to date.


Other Factors

Year 2000 Update

On July 29, 1998,  the  Securities  and Exchange  Commission  issued  additional
guidance on disclosures  that public  companies  should make related to the Year
2000.  In the  Company's  Annual  Report on Form 10-K for the fiscal  year ended
January 31, 1999,  the Company  discussed  its state of  readiness,  costs,  key
considerations  and  contingency  plans for  becoming  Year 2000  compliant  and
updated the status of its readiness in subsequent  interim  reports on Form 10-Q
throughout  the fiscal year ended  January 31,  2000.  The Company  successfully
transitioned to the Year 2000, and as of the date of this report,  the Company's
information   technology   systems  ("IT  systems")  and  its  own   development
information technology systems ("Non-IT systems") are Year 2000 compliant in all
material  respects.  Additionally,  the Company has not experienced any material
problems with third party products or services.  The costs of  remediation  were
not material.  The Company resolved IT systems  compliance issues through normal
replacement  and  upgrades  of  software.  Most of the non-IT  systems  remedial
activity  involved  applying low or zero cost  patches to operating  systems and
platforms  using  existing  MIS  resources to achieve a date  compliance  level.
Although the Company  believes that the  transition  into the Year 2000 has been
completed  successfully,  there can be no assurance that the Company will not be
adversely affected in the future by Year 2000 issues.

EURO Conversion

On January 1, 1999, the exchange rates of eleven countries (Germany, France, the
Netherlands,  Austria,  Italy, Spain, Finland,  Ireland,  Belgium, Portugal  and
Luxembourg)  were fixed  amongst one another  and became the  currencies  of the
EURO.  The currencies of the eleven  countries will remain in circulation  until
mid-2002.  The EURO currency will be introduced on January 1, 2002.  The Company
does not expect future  balance sheets and statements of earnings and cash flows
to be materially impacted by the EURO Conversion.


New Accounting Pronouncements

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
statement,  as amended by SFAS No. 137,  "Accounting for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB  Statement No.
133,"  establishes  accounting  and  reporting  standards  requiring  that every
derivative  instrument,  including certain  derivative  instruments  embedded in
other  contracts,  be  recorded  in the  balance  sheet  as  either  an asset or
liability  measured at its fair value.  The statement also requires that changes
in the  derivative's  fair value be recognized in earnings unless specific hedge
accounting  criteria are met. The Company believes the adoption of SFAS Nos. 133
and 137, which will be effective for the quarter ending April 30, 2001, will not
have a material effect on the financial statements.

In December 1999, the SEC released Staff Accounting  Bulletin No. 101,  "Revenue
Recognition in Financial  Statements."  This bulletin  establishes  more clearly
defined  revenue  recognition   criteria  than  previously  existing  accounting
pronouncements.  This  bulletin  will become  effective  for the Company for the
quarter  ending April 30, 2000.  The Company is  currently  evaluating  the full
impact of this  bulletin  to  determine  the impact on its  financial  position,
results of operations and cash flows but does not anticipate that it will have a
material effect.

                                      19


<PAGE>

Item 7A.  Market Risk

The Company's market risk is principally confined to changes in foreign currency
exchange  rates and  potentially  adverse  effects of differing tax  structures.
International revenues from ETIL, the Company's foreign sales subsidiary located
in the United Kingdom,  were  approximately 24% of total revenues in fiscal year
2000.  International sales are made mostly from the Company's foreign subsidiary
and are typically  denominated  in British  pounds.  The  Company's  exposure to
foreign exchange rate fluctuations arises in part from intercompany  accounts in
which  royalties on ETIL sales are charged to ETIL and recorded as  intercompany
receivables on the books of the U.S. parent company. The Company is also exposed
to foreign  exchange  rate  fluctuations  as the  financial  results of ETIL are
translated into U.S.  dollars in  consolidation.  As exchange rates vary,  those
results when translated may vary from  expectations and adversely impact overall
expected profitability.


Item 8.   Financial Statements and Supplementary Data

Financial  statements and  supplementary  data of the Company are submitted as a
separate section of this Annual Report on Form 10-K.


Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

None.

                                      20


<PAGE>

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant

Information Concerning Directors and Executive Officers

Name                          Age          Position

Donald R. Keough               73          Chairman of the Board of Directors

Patrick C. Condo               43          President and
                                           Chief Executive Officer,
                                           Director

Richard M. Crooks, Jr.         60          Director

John S. Hendricks              48          Director

W. Frank King III              60          Director

John G. McMillian              73          Director

Philip J. O'Reilly             62          Director

Harry C. Payne                 53          Director


Donald R. Keough has been  Chairman of the Board of Directors  and a Director of
the Company since June 1996.  Since April 15, 1993, Mr. Keough has been Chairman
of the Board of Allen & Company Incorporated, a New York investment banking firm
that is the Company's  largest  shareholder.  Mr.  Keough  retired as President,
Chief  Operating  Officer and a Director of The  Coca-Cola  Company on April 15,
1993,  where he had been  employed  since  1950.  He served as an Advisor to the
Board of Directors of The Coca-Cola  Company from April 1993 to April 1998. From
1986 to 1993, he also served as Chairman of the Board of Coca-Cola  Enterprises,
Inc., the world's  largest  bottling  system.  Mr. Keough serves on the Board of
Directors of Allen & Company  Incorporated,  H.J. Heinz Company,  The Washington
Post Company, McDonald's Corporation, USA Networks, Inc. and Yankee Nets L.L.C.

Patrick C. Condo was named  President  and Chief  Executive  Officer in November
1995,  and a Director in January 1996.  Mr. Condo was President from May 1995 to
November 1995. He became  Executive Vice President in January 1995 after serving
as the Director of Business Development from November 1992. From October 1987 to
November  1992,  Mr.  Condo held several  manager  level  positions  for Digital
Equipment  Corporation's  Image,  Video and  Voice  Business  Unit and  Software
Business Group in New Hampshire.

Richard M. Crooks,  Jr.  has been a  Director of the Company since June 1990 and
was  Chairman of the Board  from  June 1990 to June 1996.  Mr. Crooks  has  been
President  of RMC Consultants, a financial  advisory  services firm,  since June
1990.  Mr. Crooks is a director of and consultant to Allen & Company
Incorporated.  Mr. Crooks served as a Managing Director of Allen & Company
Incorporated for more than five years prior to June 1990.

John S. Hendricks was appointed as a Director of the Company in May 1997. He has
been Chairman and Chief Executive Officer of Discovery  Communications,  Inc., a
privately held,  diversified media company, since he founded the company in 1982
in order to develop a new cable television  service.  The effort resulted in the
launch of the  Discovery  Channel in 1985,  which has become one of the  world's
largest  cable  television  networks.  Mr.  Hendricks  is a director of Internet
Pictures  Corporation,  a provider of visual content solutions for the Internet;
TiVo,  Inc., a provider of personal  television  services and  equipment;  and a
member of the boards of various cable television  industry  groups,  educational
institutions and other organizations promoting natural history and science.

                                      21


<PAGE>

W. Frank King III was elected a Director of the Company in June 1992.  He is
presently a private investor.  Dr. King served as President,  Chief Executive
Officer, and a Director of PSW Technologies,  Inc., a leading provider of
technology for open systems computing, from 1992 to August 1998.  From 1988 to
November 1991, Dr. King was a Senior Vice President of Development of Lotus
Development Corporation.  Prior to joining Lotus, Dr. King held various
positions with IBM over 19 years, the most recent as Vice President of
Development in its Entry Systems Division.  Dr. King is a director of PSW
Technologies, Inc.; Auspex, Inc., a computer server manufacturer;
EonCommunications, a provider of Linux based communication servers; Perficient,
Inc., a provider of outsourced services to Internet software  companies; Natural
Microsystems, Inc., a developer of telephone products; and several private
technology companies.

John G.  McMillian  was elected a Director in June 1996.  He is the Chairman and
CEO of  Chaparral  Resources,  Inc. Mr.  McMillian  has interest in Peter Hughes
Diving  Company,   a  charter  company,   and  Contender  Boats,  Inc.,  a  boat
manufacturer,  and  serves on those  boards.  He also  serves  on the  boards of
Steadman Hawkins Sports Medicine Foundation,  American Country Insurance Company
and U.S.  Ski  Educational  Foundation,  and is a member  of the  SunTrust/Miami
Advisory  Board  Committee.  He was  Chairman  and Chief  Executive  Officer  of
Allegheny  &  Western   Energy   Corporation,   a  natural  gas  production  and
distribution company, from July 1987 until July 1995.

Philip J. O'Reilly has been a Director of the Company since April 1988.  Mr.
O'Reilly is a partner in the law firm of  O'Reilly, Marsh, Kearney & Corteselli
P.C., in Mineola, New York.  Mr. O'Reilly has been in private practice for more
than the past five years.

Harry C. Payne is  President-Elect  of Woodward  Academy,  Atlanta  Georgia.
From  1994-1999, Dr. Payne served as President of Williams College.  From 1988
until 1993, Dr. Payne was President of Hamilton  College, Clinton, New York.
Dr. Payne is a former Chair of the Board of the National Association of
Independent Colleges and Universities and serves on the board of Barnard
College.  He chairs the Academic Advisory Board of New Forum Publishers, Inc.,
Conshohocken, Pennsylvania.

Information Concerning the Board of Directors and Its Committees

The Board of Directors  held six meetings  during the fiscal year ended  January
31,  2000  and  acted by  unanimous  written  consent  on four  occasions.  Each
incumbent director attended more than 75% of the aggregate number of meetings of
the Board of Directors and  appropriate  Committees held during fiscal year 2000
since their election.

The  Board of  Directors  has  established  a number  of  Committees.  The Audit
Committee,  consisting of Mr. McMillian  (Chairman),  Dr. King and Mr. O'Reilly,
met four times  during  fiscal  year 2000.  The Audit  Committee  meets with the
Company's management, including its Chief Financial Officer, and its independent
accountants  several times a year to discuss  internal  controls and  accounting
matters,  the Company's financial  statements,  and the scope and results of the
auditing programs of the independent  accountants.  The Compensation  Committee,
currently composed of three directors, Messrs. Crooks (Chairman),  Hendricks and
O'Reilly,  administers management compensation and makes recommendations in that
regard to the Board. The Compensation Committee met once during fiscal 2000. The
Stock Option Plan Administration Committee,  which currently consists of Messrs.
Crooks  (Chairman) and O'Reilly,  administers  the Company's Stock Option Plans.
The Stock Option Administration Committee met once during fiscal 2000.

Each  non-employee  director is paid $5,000 for each meeting of the Board or its
Committees  attended,  whether  in person or by  telephone,  up to a maximum  of
$20,000 per fiscal year.  Messrs.  Keough and Crooks are not paid the  foregoing
fees. All directors are  reimbursed for their expenses in attending  meetings of
the Board or its Committees.  Each  non-employee  director  receives  options to
purchase  25,000 shares of common stock of Excalibur  upon joining the Board and
additional  options to purchase 25,000 shares of common stock of Excalibur after
each  subsequent  five-year  period of  service  as a member of the  Board.  The
Chairman may be granted  additional  options to purchase 25,000 shares of common
stock of  Excalibur  upon  being  elected  Chairman  and after  each  subsequent
five-year period of service. Mr. Keough has not been granted any stock options.

                                      22


<PAGE>

Executive Officers and Key Employees of the Registrant

Each year, the Board of Directors appoints the executive officers of the Company
to serve  until  the  next  Annual  Meeting  of  Shareholders  and  until  their
successors  have been duly  appointed and qualified.  The following  information
indicates the position,  age and business  experience of the executive officers,
Messrs.  Condo,  Buchanan,  Khan,  Nelson  and  Nunnerley  as well as other  key
employees of the Company.  There are no family relationships  between any of the
executive officers of the Company.

Name                    Age            Position

Patrick C. Condo        43             President and Chief Executive Officer

James H. Buchanan       44             Vice President, Chief Financial Officer,
                                       Treasurer and Secretary

Kamran Khan             36             Senior Vice President and General
                                         Manager, Applications Group

Paul E. Nelson          37             Chief Technology Officer

David Nunnerley         43             Senior Vice President and General
                                         Manager, Media Services Group

Daniel C. Agan          47             Vice President, Corporate Marketing

Nancy McKinley          50             Vice President, Human Resources &
                                         Administration

See the  discussion  included in the  preceding  section for the  business
experience of Mr. Condo.

James H. Buchanan joined the Company as Chief Financial Officer in September
1995.  Mr. Buchanan was elected Secretary and Treasurer of the Company on
November 17, 1995.  From March 1991 to August 1995, Mr. Buchanan was Vice
President, Controller and Treasurer of Legent Corporation, a software
development company.  Prior to that, he held several financial management
positions with Norfolk Southern Corporation and PepsiCo.  Mr. Buchanan is a
certified public accountant.

Kamran Khan was named Senior Vice  President and General  Manager,  Applications
Group in November  1999.  Previously,  Mr. Khan held  several  sales  management
positions  since  joining the Company in September  1993,  most recently as Vice
President,  Worldwide Sales. Mr. Khan served as general manager of the Company's
international   sales   operation   and   wholly-owned    subsidiary   Excalibur
Technologies,  Ltd.,  located in the United Kingdom,  from August 1995 until his
appointment  to Vice  President.  Prior to joining  the  Company,  Mr. Khan held
various positions,  including  regional business manager,  with PAFEC Limited, a
leading  firm  in  the  United  Kingdom   involved  with  the   development  and
implementation of computer-aided engineering and engineering document management
software systems.

Paul E. Nelson  was named the  Company's Chief  Technology  Officer in  November
1999. Mr. Nelson previously served as Senior Vice President, Product Development
from  January  1998  and as a Director of the Company  from  January 1, 1997  to
July 21, 1997.  He joined  the Company as  Vice President, Text Products in July
1995 in connection  with the  Company's  acquisition of  ConQuest Software, Inc.
("ConQuest"), a company  that  Mr. Nelson  co-founded in  1990.  Mr. Nelson  was
Senior Vice President of Product Development and a Director of ConQuest.

David  Nunnerley  was named Senior Vice  President  and General  Manager,  Media
Services  Group in  November  1999.  Mr.  Nunnerley  previously  served  as Vice
President,   Visual  Product  Development  since  February  1998  and  has  been
instrumental in the  development of the Company's  visual products since joining
the Company in 1996.  From 1994 to 1996,  Mr.  Nunnerley  was Vice  President of
Engineering for Videopress Software, a software company providing video delivery
products and solutions to cable companies deploying cable modems. Prior to that,
Mr.  Nunnerley held various  product  management/marketing  roles and management
positions with Digital Equipment Corporation.

                                      23


<PAGE>

Daniel C. Agan  joined the Company as Vice  President,  Corporate  Marketing  in
September  1996.  From 1991  through  1996,  Mr.  Agan was  President  and Chief
Executive Officer of Agan Associates,  Limited, a marketing consulting firm with
experience  providing  executive-level  service to a diverse range of clients in
the  technology,  online and  broadcasting  industries.  Prior to this, Mr. Agan
spent fifteen years with the Public  Broadcasting  Service (PBS) where he served
in a variety of  capacities,  most notably as Senior Vice President for National
Programming and Promotion.

Nancy McKinley was named Vice President of Human Resources and Administration in
November  1999 after serving as the  Company's  Director of Human  Resources and
Administration since 1996 during which she developed the human resource function
for the Company.  Prior to 1996,  Ms. McKinley was  Director of  Human Resourses
and  Administration for the Pelavin Research Institute of the American Institute
for Research  as well as holding  similar  positions in other firms  in the high
technology and international areas.

Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934 and regulations of the SEC
thereunder require the Company's  executive officers and directors,  and persons
who own more that ten  percent of a  registered  class of the  Company's  equity
securities,  to file reports of initial  ownership and changes in ownership with
the SEC.  Based  solely on its  review of copies of such forms  received  by the
Company,  or on written  representations  from certain reporting persons that no
other reports were required for such persons,  the Company  believes that during
or with  respect to the period from  February 1, 1999 to January 31, 2000 all of
the Section 16(a) filing  requirements  applicable  to its  executive  officers,
directors and ten percent shareholders were complied with on a timely basis.


Item 11.   Executive Compensation

Summary Compensation Table

The following  table presents  information  concerning the  compensation  of the
Chief Executive Officer and each of the other most highly compensated  executive
officers  during  the 2000  fiscal  year  (collectively,  the  "Named  Executive
Officers") for services rendered in all capacities to the Company for the fiscal
year ended January 31, 2000, as well as the previous two fiscal years:

                                                    Long Term Compensation
                                               --------------------------------
                         Annual Compensation          Awards          Payouts
                       ----------------------- -------------------- -----------
                                        Other            Securities        All
                                        Annual Restricted Under-          Other
Name and                                Compen- Stock     lying    LTIP  Compen-
Principal        Fiscal                 sation  Award(s) Options/ Payouts sation
Position          Year Salary($) Bonus($)  ($)    ($)      SARs(#)  ($)     ($)
--------          ---- --------- --------  ---    ---     --------  ---     ---

Patrick C. Condo  2000   275,000  102,369   --     --     175,000    --      --
Chief Executive   1999   225,000   71,281   --     --          --    --      --
Officer and       1998   200,000   86,000   --     --     400,000(1) --      --
President

James H. Buchanan 2000   230,000   84,425   --     --      35,000    --      --
Vice President,   1999   180,000   57,024   --     --      10,000    --      --
Chief Financial   1998   165,514   70,950   --     --     150,000(2) --      --
Officer, Secretary
and Treasurer

Paul E. Nelson    2000   181,500   72,725   --     --          --    --      --
Chief Technology  1999   165,000   81,800   --     --          --    --      --
Officer           1998   157,500   69,586   --     --      84,750(3) --      --


(1)  This amount includes options to purchase  300,000 shares that were granted
in prior years and subsequently  repriced on May 8, 1997.

                                      24


<PAGE>

(2)  This amount includes options to purchase  100,000 shares that were granted
in prior years and subsequently  repriced on May 8, 1997.

(3)  Represents options to purchase 84,750 shares that were granted in prior
years and subsequently repriced on May 8, 1997.


Option Grants in Last Fiscal Year

The following table sets forth certain  information  concerning  options granted
during fiscal 2000 to the Named Executive Officers.

                                                           Potential Realizable
                   Individual Grants                         Value at Assumed
                   -----------------                            Annual Rates
                          % of Total                           of Stock Price
                           Options                            Appreciation for
                          Granted to   Exercise                Option Term (2)
                         Employees in  or base  Expiration     ---------------
 Name       Granted(#)  Fiscal Year(1)  Price      Date       5% ($)     10%($)
-------     ----------  --------------  -----      ----       ------     ------

Patrick C.    175,000        25.9%     $15.00    12/17/09  1,650,848  4,183,574
  Condo

James H.       35,000         5.2%     $15.00    12/17/09    330,170    836,715
  Buchanan

Paul E.            --          --          --          --         --         --
  Nelson



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

(1)    These options vest in equal 12-1/2% increments every six months from the
       dates of original grant.

(2)    The  amounts  shown  are  hypothetical  gains  that  would  exist for the
       respective  options  if  exercised  at the end of the  option  term.  The
       assumed 5% and 10% rates of stock  price  appreciation  are  mandated  by
       rules of the Securities and Exchange  Commission and do not represent the
       Company's  estimate or projection of future increases in the price of its
       Common Stock.

                                      25


<PAGE>

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values

The following  table sets forth,  as of January 31, 2000,  the number of options
and the value of exercised and  unexercised  options held by the Named Executive
Officers.

                                             Number of
                                            Securities
                                            Underlying             Value of
                                            Unexercised           Unexercised
                                           Options/SARS at       In-the Money
                                           Fiscal Year-End      Options/SARS at
                Shares                         (#)            Fiscal Year-End($)
              Acquired on      Value       Exercisable/          Exercisable/
Name          Exercise(#)   Realized($)    Unexercisable       Unexercisable(1)
----          -----------   -----------    -------------       ----------------

Patrick C.        --            --       350,000/225,000  $6,024,750/$2,027,875
  Condo

James H.          --            --        128,750/66,250    $2,191,594/$727,531
  Buchanan

Paul E.           --            --              84,750/0          $1,493,719/$0
  Nelson


(1)  The closing  price of the Company's  common stock on January 31, 2000,  the
     last trading day of the Company's fiscal year, was $22.375 per share.


Employment Agreements

Under an agreement between the Company and Patrick C. Condo, President and Chief
Executive  Officer  entered  into in May 1998,  Mr. Condo will be paid an amount
equal to twelve months of base salary plus bonus  compensation  and continuation
of his employee  benefits for one year in the event Mr.  Condo's  employment  is
terminated or he is removed from his position as Chief Executive  Officer within
six months following certain "change of control" events relating to the Company.
Such arrangement was approved by the full Board of Directors.

The offer of employment  letter dated  September 7, 1995 for James H.  Buchanan,
Chief Financial Officer, Secretary and Treasurer of the Company, stipulates that
Mr.  Buchanan  will be paid an amount  equal to twelve  months of base salary in
semi-monthly  installments  should his  employment  be terminated by the Company
without cause.


Compensation Committee Interlocks and Insider Participation

The  members of the  Compensation  Committee  during  fiscal  2000 were  Messrs.
Crooks,  Hendricks and  O'Reilly,  none of whom is an officer or employee of the
Company  or its  subsidiaries.  No  member  of  the  Compensation  Committee  or
executive  officer of the Company has a  relationship  that would  constitute an
interlocking  relationship  with  executive  officers  or  directors  of another
entity.

                                      26


<PAGE>

Item 12.   Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 31, 2000, information concerning the
ownership of Common Stock of the Company of (i) all persons known to the Company
to beneficially own 5% or more of the Company's Common Stock, (ii) each director
of the Company,  (iii) each Named  Executive  Officer and (iv) all directors and
executive officers of the Company as a group.

                                       Amount and Nature            Percent
Name and Address                         of Beneficial             of Class
of Beneficial Owner                       Ownership (1)              Owned
-------------------                       -------------              -----
Allen & Company Incorporated              3,725,846 (2)(3)           24.8%
711 Fifth Avenue
New York, NY 10022

Alliance Capital Management L.P.            794,100 (4)               5.4%

Donald R. Keough                            155,500 (5)               1.1%

Patrick C. Condo                            364,325 (6)               2.4%

Richard M. Crooks, Jr.                      424,750 (7)               2.9%

John S. Hendricks                            25,000 (8)                 *

W. Frank King III                            38,000 (9)                 *

John G. McMillian                            40,000 (10)                *

Philip J. O'Reilly                           55,000 (11)                *

Harry C. Payne                               25,000 (12)                *

James H. Buchanan                           137,890 (13)                *

Paul E. Nelson                              322,949 (14)              2.2%

All directors and executive officers      1,697,187 (15)             10.8%
as a group (12 persons)


* Represents less than one percent of the outstanding common stock.

(1)    To the Company's knowledge, each person listed has sole voting and
       investment power as to the shares indicated, except as described below.

(2)    Does not include shares owned by persons,  including  Messrs.  Keough and
       Crooks and entities  which,  together with Allen & Company  Incorporated,
       may be  considered a "group," as such term is defined by Section 13(d) of
       the Securities Exchange Act of 1934, because (as reported on Schedule 13D
       filed with the SEC on July 21,  1997) many of these  persons or  entities
       are Allen stockholders,  officers, directors,  relatives or affiliates of
       the  foregoing.  No person or entity  included in this possible  "group,"
       with the  exception of Allen & Company  Incorporated,  owns 5% or more of
       the outstanding common stock.

(3)    Includes 271,800 shares of common stock issuable upon conversion of
       27,180 shares of the Company's cumulative convertible preferred stock.

(4)    Based  on  information  contained  in  a  Schedule  13G  filed  with  the
       Securities and Exchange  Commission on February 14, 2000 by AXA Financial
       Incorporated  and other entities as parent holding  companies of Alliance
       Capital Management L.P.

(5)    Does not include shares owned by Allen & Company Incorporated, of which
       Mr. Keough is Chairman of the Board, and as to which shares Mr. Keough
       disclaims beneficial ownership.

                                      27


<PAGE>

(6)    Includes (a) 10,000 shares of common stock owned  beneficially but not of
       record  upon  exercise  of stock  options  at a price of $4.75  per share
       expiring  November  13,  2002;  (b) 15,000  shares of common  stock owned
       beneficially  but not of record upon exercise of stock options at a price
       of $4.75 per share, expiring January 4, 2004; (c) 75,000 shares of common
       stock owned beneficially but not of record upon exercise of stock options
       at a price of $4.75 per share,  expiring  December  6, 2004;  (d) 100,000
       shares of common  stock owned  beneficially  but not of record,  issuable
       upon  exercise of stock  options at a price of $4.75 per share,  expiring
       June 2, 2005; (e) 100,000 shares of common stock owned  beneficially  but
       not of record,  issuable  upon  exercise  of stock  options at a price of
       $4.75 per share  expiring  November  1, 2005;  and (f)  62,500  shares of
       common stock owned beneficially but not of record, issuable upon exercise
       of stock options at a price of $7.63 per share expiring August 13, 2007.

(7)    Includes (a) 50,000 shares of common stock owned  beneficially but not of
       record, issuable upon exercise of stock options of the Company at a price
       of $16.10 per share  expiring June 28, 2000,  (b) 50,000 shares of common
       stock  issuable  upon exercise of stock options of the Company at a price
       of $20.56 per share expiring  November 27, 2005, and (c) 25,000 shares of
       common stock  issuable upon exercise of stock options of the Company at a
       price of $26.00 per share  expiring  February 17, 2010.  Does not include
       shares owned by Allen & Company  Incorporated,  of which Mr.  Crooks is a
       director  and  as  to  which  shares  Mr.  Crooks  disclaims   beneficial
       ownership.

(8)    Represents 25,000 shares of common stock owned  beneficially  but not of
       record, issuable upon exercise of stock options of the Company at a price
       of $4.875 per share expiring June 2, 2007.

(9)    Includes (a) 13,000 shares of common stock owned beneficially but not
       of record,  issuable  upon  exercise of stock options of the Company at a
       price of $12.50 per share,  expiring July 2, 2002;  and (b) 25,000 shares
       of common  stock  owned  beneficially  but not of record,  issuable  upon
       exercise  of stock  options of the Company at a price of $4.75 per share,
       expiring May 8, 2007.

(10)   Includes (a) 25,000 shares of common stock owned  beneficially but not of
       record, issuable upon exercise of stock options of the Company at a price
       of $22.50 per share,  expiring  June 28, 2006,  and (b) 10,000  shares of
       common stock owned beneficially but not of record, issuable upon exercise
       of stock options of the Company at a price of $14.00 per share,  expiring
       October 28, 2006.

(11)   Includes (a) 25,000 shares of common stock owned  beneficially but not of
       record, issuable upon exercise of stock options of the Company at a price
       of $13.00 per share  expiring  March 12, 2003;  and (b) 25,000  shares of
       common stock owned beneficially but not of record, issuable upon exercise
       of stock  options of the  Company at a price of $6.75 per share  expiring
       December 1, 2008.

(12)   Represents 25,000 shares of common stock owned  beneficially  but not of
       record, issuable upon exercise of stock options of the Company at a price
       of $8.188 per share expiring August 25, 2009.

(13)   Includes (a) 30,000 shares of common stock owned  beneficially but not of
       record, issuable upon exercise of stock options of the Company at a price
       of $4.75 per share  expiring  September 13, 2005; (b) 70,000 shares owned
       beneficially  but not of record,  issuable upon exercise of stock options
       of the Company at a price of $4.75 per share  expiring  November 1, 2005;
       (c) 31,250 shares of common stock owned  beneficially  but not of record,
       issuable  upon  exercise  of stock  options of the  Company at a price of
       $4.75 per share expiring  August 13, 2007; and (d) 5,000 shares of common
       stock owned  beneficially  but not of record,  issuable  upon exercise of
       stock  options  of the  Company  at a price of $6.25 per  share  expiring
       September 1, 2008.

(14)   Includes  84,750  shares of common stock owned  beneficially  but not of
       record, issuable  upon  exercise of stock options of the Company at
       price of $4.75 per share expiring July 20, 2005.

(15)   Includes 983,623 shares of common stock owned  beneficially  but not of
       record, issuable upon the exercise of options to purchase common stock of
       the Company.

                                      28


<PAGE>

Item 13.   Certain Relationships and Related Transactions

Donald R. Keough, the Chairman of the Board of Directors of the Company, is the
Chairman of the Board of Allen & Company Incorporated ("Allen").  Richard M.
Crooks, Jr., a director of the Company, is a director of and consultant to
Allen.

The  Company's  policy is that it will not make  loans to, or enter  into  other
transactions  with  directors,  officers  or  affiliates  unless  such  loans or
transactions   are  approved  by  a  majority  of  the   Company's   independent
disinterested  directors, may reasonably be expected to benefit the Company, and
will be on terms no less  favorable to the Company  than could be obtained  from
unaffiliated third parties.

See also "Compensation Committee Interlocks and Insider Participation" above.


                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)      Documents filed as part of Form 10-K

         1.   Financial Statements:

              The following financial statements of the Company are submitted in
              a separate section pursuant to the requirements of Form 10-K, Part
              I, Item 8 and Part IV, Items 14(a) and 14(d):

              Index to Consolidated Financial Statements
              Reports of Independent Accountants
              Consolidated Balance Sheets
              Consolidated Statements of Operations and Other Comprehensive Loss
              Consolidated Statements of Shareholders' Equity
              Consolidated Statements of Cash Flows
              Notes to Consolidated Financial Statements

         2.   Schedules Supporting Financial Statements:

              The  following  schedule is filed as part of this Annual Report on
              Form 10-K and  should be read in  conjunction  with the  Company's
              consolidated financial statements:

              Report of  Independent Public Accountants  on Schedule II  for the
              year ended January 31, 1998

              Schedule II, Valuation and Qualifying Accounts

              All other schedules are omitted because they are not required, are
              inapplicable,  or  the  information  is  otherwise  shown  in  the
              consolidated  financial  statements  or notes to the  consolidated
              financial statements.

         3.   Exhibits:

Exhibit Number and Description

2.01     Agreement and Plan of Merger Between Excalibur,  Excalibur Acquisition
         Corporation and ConQuest Software,  Inc., dated July 5,
                           1995. (2)

               2.02      Agreement of Merger Between Excalibur, EXCA Acquisition
                         Corporation and Interpix Software Corporation dated
                         May 2, 1997. (7)

               3.01      Certificate of Incorporation of Excalibur Technologies
                         Corporation. (1)

                                      29


<PAGE>

               3.02      Amendment of the Certificate of Incorporation dated
                         June 28, 1996. (6)

               3.03      Bylaws of Excalibur Technologies Corporation. (1)

              10.01      Incentive Stock Option Plan, dated April 1989. (1)

              10.02      Agreement and Plan of Merger Between Excalibur,
                         Excalibur Acquisition Corporation and ConQuest
                         Software, Inc., dated July 5, 1995. (2)

              10.03      1995 Incentive Plan, dated November 1995. (3)

              10.04      ConQuest Incentive Stock Option Plan, dated August 19,
                         1993. (4)

              10.05      Office Lease (10440 Little Patuxent Parkway, Suite 800,
                         Columbia, Maryland), commencing January 1, 1996. (4)

              10.06      Office Lease (1959 Palomar Oaks Way, Carlsbad,
                         California), commencing November 15, 1995. (4)

              10.07      Excalibur Technologies Corporation Employee Stock
                         Purchase Plan, effective August 1, 1996. (5)

              10.08      Office Lease (4675 Stevens Creek Boulevard, Santa
                         Clara, California 95051), commencing July 1, 1997. (7)

              10.09      Office Lease (1921 Gallows Road, Vienna, Virginia
                         22182), commencing May 1, 1999. (8)

              10.10      Employment agreement with James H. Buchanan, dated
                         September 7, 1995. (8)

              10.11      Office lease (11000 Broken Land Parkway, Columbia
                         Maryland), commencing June 15, 2000.

              21.01      Subsidiaries of Excalibur Technologies Corporation.

              23.01      Consent of PricewaterhouseCoopers LLP, Independent
                         Accountants.

              23.02      Consent of Arthur Andersen LLP, Independent Public
                         Accountants.

              27.01      Financial Data Schedule

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

(1)      Incorporated herein by reference to Form 10-K for the year ended
         January 31, 1991, filed April 22, 1991.

(2)      Incorporated herein by reference to Form 8-K, filed August 4, 1995.

(3)      Incorporated herein by reference to the Proxy Statement for the 1995
         Annual Meeting of Shareholders, dated October 16, 1995.

(4)      Incorporated herein by reference to Form 10-K for the year ended
         January 31, 1996, filed April 30, 1996.

(5)      Incorporated herein by reference to the Proxy Statement for the 1996
         Annual Meeting of Shareholders, dated May 28, 1996.

(6)      Incorporated herein by reference to Form 10-K for the year ended
         January 31, 1997, filed April 28, 1997.

(7)      Incorporated herein by reference to Form 10-K for the year ended
         January 31, 1998, filed April 23, 1998.

(8)      Incorporated herein by reference to Form 10-K for the year ended
         January 31, 1999, filed April 30, 1999.


(b)      Reports on Form 8-K.

         None

                                      30


<PAGE>

Index to Consolidated Financial Statements                                Page

Reports of Independent Accountants                              F-1, F-2, F-18

Consolidated Balance Sheets
  As of January 31, 2000 and 1999                                          F-3

Consolidated Statements of Operations and Other Comprehensive Loss
  For the fiscal years ended January 31, 2000, 1999 and 1998               F-4

Consolidated Statements of Shareholders' Equity
  For the fiscal years ended January 31, 2000, 1999 and 1998               F-5

Consolidated Statements of Cash Flows
  For the fiscal years ended January 31, 2000, 1999 and 1998               F-6

Notes to Consolidated Financial Statements                                 F-7

Schedule II - Valuation and Qualifying Accounts
  For the fiscal years ended January 31, 2000, 1999 and 1998              F-19

                                      31


<PAGE>

                        Report of Independent Accountants

To the Stockholders and Board of Directors of
Excalibur Technologies Corporation:


In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing under Item 14(a)(1)  present  fairly,  in all material  respects,  the
financial position of Excalibur Technologies Corporation and its subsidiaries at
January 31, 2000 and 1999,  and the results of their  operations  and their cash
flows for the  years  then  ended,  in  conformity  with  accounting  principles
generally  accepted in the United  States.  In  addition,  in our  opinion,  the
financial  statement  schedule  for the years  ended  January 31, 2000 and 1999,
listed in the index  appearing  under  Item  14(a)(2)  presents  fairly,  in all
material  respects,  the  information set forth therein when read in conjunction
with the related consolidated  financial statements.  These financial statements
and  financial  statement  schedule  are  the  responsibility  of the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedule based on our audits.  We conducted
our audits of these statements in accordance with auditing  standards  generally
accepted in the United States,  which require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/PricewaterhouseCoopers LLP

McLean, Virginia
March 8, 2000

                                      F-1


<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Excalibur Technologies Corporation:


We  have  audited  the  accompanying   consolidated   statement  of  operations,
shareholders'  equity and cash flows of Excalibur  Technologies  Corporation  (a
Delaware  corporation)  and  subsidiaries  for the year ended  January 31, 1998.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.

We conducted our audit in  accordance with 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 audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the results of operations  and cash flows of  Excalibur
Technologies  Corporation and subsidiaries  for the year  ended January 31, 1998
in conformity with generally accepted accounting principles.

                                             /s/ARTHUR ANDERSEN LLP

Vienna, Virginia,
February 27, 1998

                                      F-2


<PAGE>

                       EXCALIBUR TECHNOLOGIES CORPORATION
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)

                                                        As of January 31,
                                                      --------------------
                 ASSETS                                 2000        1999
                                                      --------    --------
Current Assets:
   Cash and cash equivalents .......................  $ 10,884    $  5,851
   Short term investments...........................       178           -
   Accounts receivable, net of allowance for
     doubtful accounts of $830 and $660,
     respectively ..................................    14,254       6,402
   Prepaid expenses and other ......................     2,354       2,291
                                                      --------    --------
       Total current assets ........................    27,670      14,544

Equipment and leasehold improvements, net of
  accumulated depreciation of $7,594 and
  $6,986, respectively .............................     1,766       2,034
Other assets .......................................     1,251       3,134
                                                      --------    --------
       Total assets ................................  $ 30,687    $ 19,712
                                                      ========    ========

  LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable ................................  $  1,982    $  1,933
   Accrued expenses ................................     2,474       1,915
   Deferred revenues ...............................     3,926       2,690
                                                      --------    --------
       Total current liabilities ...................     8,382       6,538
                                                      --------    --------

Commitments and Contingencies
Shareholders' Equity:
   5% Cumulative convertible preferred stock,
      $0.01 par value, preference in liquidation
      $10 per share plus dividends, 1,000 shares
      authorized; 27 shares issued and outstanding..       271         271
   Common stock, $0.01 par value, 40,000
      shares authorized; 14,646 and 13,689
      shares issued and outstanding ................       146         137
   Additional paid-in capital ......................    78,024      68,631
   Accumulated deficit .............................   (56,138)    (55,798)
   Accumulated other comprehensive income (loss)....         2         (67)
                                                      --------    --------
       Total shareholders' equity ..................    22,305      13,174
                                                      --------    --------
       Total liabilities and shareholders' equity ..  $ 30,687    $ 19,712
                                                      ========    ========

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

                                      F-3


<PAGE>

                       EXCALIBUR TECHNOLOGIES CORPORATION
                                AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                        OTHER COMPREHENSIVE LOSS
                      (in thousands, except per share data)

                                                 For the Fiscal Years Ended
                                                         January 31,
                                              --------    --------    --------
                                                2000        1999        1998
                                              --------    --------    --------
Revenues:
  Software ................................   $ 32,649    $ 22,741    $ 17,202
  Maintenance .............................      5,285       5,198       5,215
                                              --------    --------    --------
                                                37,934      27,939      22,417
                                              --------    --------    --------
Expenses:
  Cost of software revenues ...............      4,842       3,808       3,039
  Cost of maintenance revenues ............      2,143       1,320       1,219
  Sales and marketing .....................     16,210      13,501      13,184
  Research and product development ........      9,456       8,328       6,405
  General and administrative ..............      5,402       4,775       4,884
  Restructuring costs .....................          -           -         577
  Acquired in-process research
    and development .......................          -           -       1,284
                                              --------    --------    --------
                                                38,053      31,732      30,592
                                              --------    --------    --------

Operating loss ............................       (119)     (3,793)     (8,175)

Other income (expenses):
  Interest income, net ....................        250         239         374
  Equity in net loss of affiliate .........          -        (300)       (525)
  Write off of investment in affiliate ....       (471)          -           -
                                              --------    --------    --------
Net loss ..................................   $   (340)   $ (3,854)   $ (8,326)

Dividends on preferred stock ..............         14          14          14
                                              --------    --------    --------
Net loss applicable to common shareholders.   $   (354)   $ (3,868)   $ (8,340)
                                              ========    ========    ========

Basic and diluted net loss per common share   $  (0.02)   $  (0.29)   $  (0.64)
                                              ========    ========    ========
Weighted-average number of common shares
   outstanding - basic and diluted.........     14,282      13,526      12,934
                                              ========    ========    ========

Other comprehensive loss:
Net loss ..................................   $   (340)   $ (3,854)   $ (8,326)
  Foreign currency translation adjustment .         69           7         (31)
                                              --------    --------    --------
Comprehensive loss ........................   $   (271)   $ (3,847)   $ (8,357)
                                              ========    ========    ========

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

                                      F-4


<PAGE>
<TABLE>
<CAPTION>
                       EXCALIBUR TECHNOLOGIES CORPORATION
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (in thousands)
                                                                               Accumulated
                                                                                   Other
                                                                                  Compre-
                         Preferred Stock   Common Stock   Additional              hensive
                         ---------------   ------------    Paid-in   Accumulated   Income
                           Shares  Amount  Shares  Amount  Capital     Deficit     (Loss)      Total
                           ------  ------  ------  ------  --------   ---------    ------     --------
<S>                           <C>  <C>    <C>      <C>    <C>        <C>          <C>        <C>
Balance, January 31, 1997.     27   $ 271  12,449   $124   $61,830    $(43,619)    $ (43)     $18,563

Issuance of common stock
upon exercise of options..      -       -     415      4       781          -          -          785
Issuance of common stock
for acquisition of
Interpix..................      -       -     275      3     1,819          -          -        1,822
Issuance of common stock
for Employee Stock
Purchase Plan.............      -       -      40      1       284          -          -          285
Foreign Currency
Translation adjustment....      -       -       -      -         -          -        (31)         (31)
Net loss..................      -       -       -      -         -      (8,326)        -       (8,326)
                           ------   -----  ------   ----   --------   ---------    ------     --------
Balance, January 31, 1998.     27     271  13,179    132    64,714     (51,945)      (74)      13,098

Private Placement, net of
issuance costs............      -       -     325      3     3,247          -          -        3,250
Issuance of common stock
upon exercise of options..      -       -     167      2       533          -          -          535
Issuance of common stock
for Employee Stock
Purchase Plan.............      -       -      19      -       137          -          -          137
Foreign Currency
Translation adjustment....      -       -       -      -         -          -          7            7
Net loss..................      -       -       -      -         -      (3,854)        -       (3,854)
                           ------   -----  ------   ----   --------   ---------    ------     --------
Balance, January 31, 1999.     27     271  13,689    137    68,631     (55,798)      (67)      13,174

Private Placement, net of
issuance costs............      -       -     500      5     4,653          -          -        4,658
Issuance of common stock
upon exercise of options..      -       -     434      4     4,522          -          -        4,526
Issuance of common stock
for Employee Stock
Purchase Plan.............      -       -      23      -       218          -          -          218
Foreign Currency
Translation adjustment....      -       -       -      -         -          -         69           69
Net loss..................      -       -       -      -         -        (340)        -         (340)
                           ------   -----  ------   ----   --------   ---------    ------     --------
Balance, January 31, 2000.     27   $ 271  14,646   $146   $78,024    $(56,138)    $   2      $22,305
                           ======   =====  ======   ====   ========   =========    ======     ========
</TABLE>

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

                                      F-5


<PAGE>

                       EXCALIBUR TECHNOLOGIES CORPORATION
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

                                                 For the Fiscal Years Ended
                                                         January 31,
                                               --------------------------------
                                                 2000        1999        1998
                                               --------    --------    --------
Cash Flows from Operating Activities:
Net loss ...................................   $   (340)   $ (3,854)   $ (8,326)
Adjustments to reconcile net loss to
net cash used in operating activities:
   Depreciation and amortization ...........      1,441       1,486       1,540
   Bad debt expense ........................        838         493         250
   Acquired in-process research
   and development costs ...................          -           -       1,284
   Equity in net loss of affiliate .........          -         300         525
   Write off of investment in affiliate ....        471           -           -
   Loss on disposal of assets ..............          -           -           2
Changes in operating assets and liabilities:
   Accounts receivable .....................     (8,712)      2,349           4
   Prepaid expenses and other ..............      1,223      (3,425)        527
   Accounts payable and accrued expenses ...        579        (296)       (193)
   Deferred revenues .......................      1,248         (35)         11
                                               --------    --------    --------
   Net cash used in operating activities ...     (3,252)     (2,982)     (4,376)
                                               --------    --------    --------
Cash Flows from Investing Activities:
   Purchase of investments .................       (178)       (984)    (22,301)
   Proceeds from maturities of investments .          -       2,480      29,231
   Purchases of equipment and
   leasehold improvements ..................     (1,008)     (1,141)       (757)
   Other assets ............................          -        (256)        (95)
   Purchase of business ....................          -           -          55
   Net cash provided by (used in)              --------    --------    --------
    investing activities ...................     (1,186)         99       6,133
                                               --------    --------    --------
Cash Flows from Financing Activities:
   Proceeds from the issuance of common stock     5,218       3,387         285
   Proceeds from the exercise of stock
     options ...............................      4,520         435         333
   Cost incurred in connection with issuance
     of common stock .......................       (342)          -          (5)
   Repayment of notes payable ..............          -           -         (40)
                                               --------    --------    --------
   Net cash provided by financing activities      9,396      3,822          573
                                               --------    --------    --------
Effect of Exchange Rate Changes on Cash ....         75         (27)        (76)
                                               --------    --------    --------
Net Increase in Cash and Cash Equivalents ..      5,033         912       2,254

Cash and Cash Equivalents, beginning of year      5,851       4,939       2,685
                                               --------    --------    --------
Cash and Cash Equivalents, end of year .....   $ 10,884    $  5,851    $  4,939
                                               ========    ========    ========

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

                                      F-6


<PAGE>

             EXCALIBUR TECHNOLOGIES CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)      THE COMPANY

Operations and Organization

The  consolidated   financial  statements  include  the  accounts  of  Excalibur
Technologies Corporation ("Excalibur") and its wholly owned subsidiaries.  These
entities  are  collectively  referred  to  hereinafter  as  the  "Company."  All
significant intercompany transactions and accounts have been eliminated.

The Company designs, develops, markets and supports high performance,  accurate,
scalable and secure search- powered software solutions. Excalibur offers a suite
of intelligent search solutions for corporate  intranets,  Internet  e-commerce,
online  publishing,  application  service  providers  ("ASP")  and the  original
equipment  manufacturer  ("OEM")  market  that  enables  individuals  to quickly
capture, analyze, index, catalog, access, navigate,  retrieve, publish and share
relevant information residing on an enterprise's networks, intranets,  extranets
and the Internet. The Company offers consulting,  training,  product maintenance
and system  implementation  services in support of its  software  products.  The
Company  licenses its software  products  directly to commercial  businesses and
government  agencies  throughout  North  America,  Europe and other parts of the
world and also  distributes  its software  products to end users through license
agreements with value-added  resellers,  system integrators,  original equipment
manufacturers, application service providers and other strategic partners.

The Company has incurred  cumulative losses of approximately  $12.5 million over
the last  three  fiscal  years and the  accumulated  deficit  of the  Company at
January 31, 2000 was $56.1  million.  The  Company's  operations  are subject to
certain risks and uncertainties including, among others: the dependence upon the
timing of the closing on sales of large software licenses;  actual and potential
competition by entities with greater financial resources,  experience and market
presence  than the  Company;  rapid  technological  changes;  the success of the
Company's  product  marketing  and product  distribution  strategies;  the risks
associated with  acquisitions and  international  expansion;  the need to manage
growth; the need to retain key personnel and protect intellectual  property; and
the  availability  of additional  capital  financing on terms  acceptable to the
Company.

The Company's  balances of cash and cash equivalents at January 31, 2000 and its
funds generated from operations, if any, are expected to provide sufficient cash
to meet the  Company's  current  projected  needs  for the  foreseeable  future.
Historically,  the Company has used cash  provided  primarily  from sales of its
common  stock to fund its  operations.  If the  Company  fails  to  achieve  its
operating  plan for fiscal  year 2001,  the  Company's  balance of cash and cash
equivalents may be reduced substantially.  The Company may be required to pursue
additional  external  sources of financing to support its operations and capital
requirements.  There can be no assurance that external sources of financing will
be  available  to  fund  the  Company's  ongoing  operations  or  other  capital
requirements on terms acceptable to the Company.

Acquisition of Interpix Software Corporation

On May 5, 1997, the Company acquired Interpix Software  Corporation,  located in
Santa Clara, California, a privately owned company and developer of a commercial
technology  enabling the collection,  indexing,  management and  presentation of
multimedia data on the Internet and corporate intranets.  The purchase method of
accounting was applied to this  acquisition  transaction and,  accordingly,  the
results of operations  of Interpix  were included in the Company's  consolidated
results of operations  from the date of  acquisition.  The results of operations
for Interpix prior to the acquisition were not material.

The  shareholders  of  Interpix  received  275,000  shares  of  common  stock of
Excalibur in exchange for all of the outstanding  common stock of Interpix.  The
total  purchase  price  included  the  value of the  Excalibur  shares  totaling
$1,822,000  and  out-of-pocket  acquisition  costs  that  totaled  $45,000.  The
purchase price was allocated to the assets purchased and the liabilities assumed
based  upon  their  fair  values  on  the  date  of  acquisition.  Approximately
$1,284,000  of the purchase  price was  allocated  to research  and  development
projects in process and was expensed upon the effective date of the acquisition.

                                      F-7


<PAGE>

The remainder of the purchase  price was allocated to intangible  assets related
to the  completed  technology  base,  the  assembled  workforce  and trade names
acquired,  is included in other assets in the consolidated balance sheet, and is
being amortized on a straight-line basis over five years.  Amortization  expense
for the fiscal  years ended  January 31, 2000,  1999 and 1998 was  approximately
$118,000, $110,000 and $82,000,  respectively,  and accumulated amortization was
$310,000, $192,000 and $82,000 at January 31, 2000, 1999 and 1998, respectively.


(2)     SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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

Revenue Recognition

Revenue  from the sale of  software  licenses  is  recognized  upon  shipment of
product, provided that the fee is fixed and determinable, persuasive evidence of
an arrangement  exists and collection of the resulting  receivable is considered
probable.  Software revenues include revenues from licenses, training and system
implementation   services.   Historically,   the  Company  has  not  experienced
significant returns or exchanges of its products from direct sales to customers.
Revenue  related to  customer  support  agreements  is deferred  and  recognized
ratably  over the term of  respective  agreements.  When the Company  provides a
software license and the related  customer  support  arrangement for one bundled
price,  the fair value of the customer  support,  based on the price charged for
that element separately, is deferred and recognized ratably over the term of the
respective agreement.

Customization  work is sometimes  required to ensure that the Company's software
functionality   meets  the   requirements   of  its   customers.   Under   these
circumstances, the Company's revenues are derived from fixed price contracts and
revenue is  recognized  using the  percentage of completion  method based on the
relationship  of actual costs  incurred to total costs  estimated to be incurred
over the duration of the contract.

Research and Development Costs

Software  development  costs are  included in research and  development  and are
expensed as incurred.  Statement of Financial  Accounting Standards ("SFAS") No.
86,  "Accounting  for the  Cost of  Computer  Software  to be  Sold,  Leased  or
Otherwise Marketed" requires the capitalization of certain software  development
costs once  technological  feasibility  is  established,  which for the  Company
generally occurs upon completion of a working model.  Capitalization ceases when
the products  are  available  for general  release to  customers,  at which time
amortization of the capitalized  costs begins on a straight-line  basis over the
estimated  product life, or on the ratio of current  revenues to total projected
product  revenues,  whichever is greater.  To date, the period between achieving
technological feasibility and the general availability of such software has been
short, and software  development costs qualifying for  capitalization  have been
insignificant.  Accordingly,  the  Company  has  not  capitalized  any  software
development costs.

Cash, Cash Equivalents and Short Term Investments

The Company considers all highly liquid  investments  purchased with an original
maturity  of  three  months  or less to be cash  equivalents.  Cash  equivalents
consist of funds deposited in money market accounts.  Consequently, the carrying
amount of cash and cash  equivalents  approximates  fair  value.  The balance of
short term investments at January 31, 2000 consisted of a certificate of deposit
pledged to collateralize a letter of credit required for a leased facility.

                                      F-8


<PAGE>

Income Taxes

Deferred taxes are provided utilizing the liability method, whereby deferred tax
assets are recognized for deductible  temporary  differences  and operating loss
and tax credit  carryforwards  and deferred tax  liabilities  are recognized for
taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax
assets and  liabilities  are adjusted for the effects of changes in tax laws and
rates on the date of  enactment.  Deferred tax assets are reduced by a valuation
allowance  when, in the opinion of  management,  it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The Company
has provided a full valuation allowance against its net deferred tax asset as of
January 31, 2000 and 1999, respectively.

Equipment and Leasehold Improvements

Office  furniture and computer  equipment are recorded at cost.  Depreciation of
office  furniture  and equipment is provided on a  straight-line  basis over the
estimated useful lives of the assets, generally three to ten years. Amortization
of leasehold  improvements  and leased  assets are  provided on a  straight-line
basis over the shorter of the term of the applicable lease or the useful life of
the asset.

Expenditures  for normal  repairs and  maintenance  are charged to operations as
incurred.  The cost of property and equipment  retired or otherwise  disposed of
and the related  accumulated  depreciation or amortization  are removed from the
accounts and any resulting gain or loss is reflected in current operations.

Net Loss Per Common Share

Basic loss per common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted loss per common share includes the potential dilution that would
occur if securities or other  contracts to issue common stock were  exercised or
converted  into common  stock.  Options to purchase  2,676,955  shares of common
stock and  cumulative  convertible  preferred  stock  that were  outstanding  at
January 31, 2000 were not included in the  computation of diluted loss per share
as their effect would be anti-dilutive.  As a result, the basic and diluted loss
per common share amounts are identical.

Translation of Foreign Financial Statements

The  functional  currency  of the  Company's  foreign  subsidiary  is the  local
currency.   Accordingly,   assets  and  liabilities  of  the  Company's  foreign
subsidiary are translated  into U.S.  dollars at exchange rates in effect at the
balance sheet date. Income and expense items are translated at average rates for
the period.  Foreign  currency  translation  adjustments  are  accumulated  in a
separate component of shareholders'  equity.  Foreign currency transaction gains
or losses are recorded in operating  expenses and were not  significant  for the
years ended January 31, 2000, 1999 and 1998.

Concentrations of Credit Risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist  primarily  of cash  equivalents  and  accounts  receivable.
Management  believes that the Company's  investment  policy limits the Company's
exposure  to  concentrations  of credit  risk.  The Company  sells its  products
primarily  to  major  corporations,  including  distributors  that  serve a wide
variety of U.S. and foreign  markets,  and to government  agencies.  The Company
extends  credit  to  its  corporate  customers  based  on an  evaluation  of the
customer's  financial  condition,  generally  without  requiring  a  deposit  or
collateral.  Exposure to losses on receivables is principally  dependent on each
customer's  financial  condition.  The Company  monitors its exposure for credit
losses and  maintains an allowance  for  anticipated  losses.  The allowance for
doubtful  accounts was $830,000 and $660,000, respectively,  at January 31, 2000
and 1999.

                                      F-9


<PAGE>

Impairment of Long-lived Assets

The Company periodically  evaluates the recoverability of its long-lived assets.
This  evaluation  consists of a comparison  of the carrying  value of the assets
with the assets'  expected future cash flows,  undiscounted and without interest
costs.  Estimates  of expected  future cash flows  represent  management's  best
estimate based on reasonable and supportable assumptions and projections. If the
expected future cash flow,  undiscounted and without interest  charges,  exceeds
the carrying value of the asset, no impairment is recognized.  Impairment losses
are measured as the  difference  between the carrying value of long lived assets
and their fair  market  value,  based on  discontinued  future cash flows of the
related  assets.  The Company has not recorded any provision  for  impairment of
goodwill or other intangible or long lived assets.


(3)      INVESTMENT IN AFFILIATE

In  July  1996,  the  Company  authorized  the  use of  its  name  by  Excalibur
Technologies N.V. ("ETNV"),  a Belgian company incorporated in June 1996 for the
purpose of selling and marketing the  Company's  products and services  within a
large  territory  including  most of  Northern  Europe  and Italy.  The  Company
contributed approximately $488,000 in cash to ETNV in consideration for 13.2% of
its voting capital stock.  In the first quarter of fiscal year 2000, the Company
terminated its 1996 distribution  agreement with ETNV because ETNV failed to pay
to Excalibur the minimum required license fees for the quarter ended January 31,
1999 of approximately  $900,000 as well as an additional amount of approximately
$400,000  that was due on April 20, 1999.  Promptly  after giving notice of such
termination  Excalibur  commenced a lawsuit in the United States  District Court
for the  Eastern  District of Virginia  seeking as damages  such unpaid  minimum
license fees and other amounts due and owing from ETNV.  The lawsuit was settled
on July 21, 1999. No payment was made by ETNV as part of the settlement.

The original  investment  exceeded the  Company's  share of the  underlying  net
assets of ETNV by approximately  $827,000. The excess was being amortized over a
five-year period. The amortization of the excess, as well as the Company's share
of ETNV's net loss for the period and the  elimination of the Company's share of
gross  profit  included in ETNV's  prepaid  license is included in equity in net
loss of affiliate in the accompanying  consolidated statements of operations for
the fiscal years ended January 31, 2000,  1999 and 1998.  The net balance of the
investment  in and  advances to ETNV of $471,000 was included in other assets in
the  accompanying  consolidated  balance sheet at January 31, 1999. This account
was written off in the quarter ended April 30, 1999.  No revenue  related to the
agreement was recorded in the current year. The Company  recorded total revenues
of $938,675 and $1,656,000 related to ETNV in the fiscal years ended January 31,
1999 and 1998, respectively.


(4)      CAPITALIZATION

Stock Offerings

In March 1999, the Company  completed a private placement of 500,000 shares (the
"Shares") of its common stock to unaffiliated  accredited investors.  The Shares
were sold at a purchase price of $10.00 per share,  resulting in net proceeds to
the Company of approximately  $4.7 million.  Net proceeds from the placement are
being used to fund ongoing  operations and for general corporate purposes of the
Company.  The Shares were sold  pursuant to an exemption  from the  registration
requirements  of the Securities Act of 1933. A registration  statement under the
Securities Act of 1933 covering  resale of the Shares was declared  effective by
the Securities and Exchange Commission on July 14, 1999.

During the second quarter of fiscal year 1999,  the Company  completed a private
placement  of  325,000   shares  (the  "Shares")  of  its  common  stock  to  an
unaffiliated  financial  institution.  The Company sold the Shares at a purchase
price of $10.00 per share, representing the approximate fair market value of the
stock on the date of  issuance,  resulting  in  proceeds  to the Company of $3.3
million.  The transaction  was placed  directly by the Company.  The Shares were
sold  pursuant  to an  exemption  from  the  registration  requirements  of  the
Securities Act of 1933.

                                      F-10


<PAGE>

Cumulative Convertible Preferred Stock

The Company has issued 27,180 shares of cumulative  convertible preferred stock.
The cumulative  convertible  preferred stock is convertible into common stock at
the rate of 10  shares  of common  stock  per  share of  cumulative  convertible
preferred  stock.  Holders of the  cumulative  convertible  preferred  stock are
entitled to receive cumulative  dividends of $0.50 per share per annum,  payable
annually on April 1 if declared by the Board of Directors,  in cash or shares of
common stock (to be determined by the Board of Directors) valued at the lower of
$1.00 per share or the market  price on the date of  declaration.  The amount of
accumulated dividends that have not been declared or accrued at January 31, 2000
is approximately $70,000.

In the event of voluntary liquidation,  dissolution or winding-up of the Company
or upon any distribution of assets, whether voluntary or involuntary, holders of
the convertible  preferred stock would have a liquidation  preference of $10 per
share,  plus accrued and unpaid  dividends over holders of the Company's  common
stock.


(5)      EMPLOYEE BENEFIT PLANS

Stock Options

The Company has adopted certain stock option plans to attract, retain and reward
key employees.  The plans are administered by a Committee appointed by the Board
of Directors, which has the authority to determine which officers, directors and
key employees are awarded options pursuant to the plans and the terms and option
exercise prices of the stock options. In addition,  from time to time, the Board
of Directors  awards stock options outside the plans; no such awards occurred in
fiscal years 2000,  1999 or 1998. Of the total number of shares  authorized  for
stock options,  options to purchase 2,676,955 shares are outstanding and 645,839
shares are available for future grants.

Each  qualified  incentive  stock  option  granted  pursuant to the plans has an
exercise price equal to the fair market value of the underlying  common stock at
the date of grant, a ten-year term and typically a four-year  vesting period.  A
non-qualified option granted pursuant to the plans may contain an exercise price
that is below the fair  market  value of the  common  stock at the date of grant
and/or may be  immediately  exercisable.  The term of  non-qualified  options is
usually five or ten years.

The following table summarizes the Company's activity for all of its stock
option awards:
                                                                      Weighted-
                                                                       Average
                                        Number of       Range of       Exercise
                                         Options     Exercise Prices     Price
                                         -------     ---------------     -----
Balance, January 31, 1997 ........      2,663,158     $ 1.04 - 29.53     $12.53

Granted ..........................        812,213       4.25 - 13.25       7.35
Exercised ........................       (413,060)      1.04 - 11.64       1.91
Canceled .........................       (430,675)      4.25 - 28.69      14.53
                                       ----------     ---------------    -------
Balance, January 31, 1998 ........      2,631,636       1.04 - 22.50       7.81

Granted ..........................        249,501       5.50 - 13.88       8.10
Exercised ........................       (166,815)      1.04 - 10.38       3.20
Canceled .........................       (152,899)      4.14 - 16.02       7.94
                                       ----------     ---------------    -------
Balance, January 31, 1999 ........      2,561,423       1.04 - 22.50       8.14

Granted ..........................        675,450       7.88 - 24.00      13.60
Exercised ........................       (433,890)      3.11 - 17.02      10.43
Canceled .........................       (126,028)      4.38 - 19.13       9.36
                                       ----------     ---------------    -------
Balance, January 31, 2000 ........      2,676,955     $ 1.04 - 24.00     $ 9.09
                                       ==========     ===============    =======

Options to purchase  1,716,382,  1,796,090 and 1,530,918 shares of the Company's
common stock were vested and  exercisable  at January 31,  2000,  1999 and 1998,
respectively,  at weighted-average exercise prices of $7.70, $8.64 and $8.89 per
share, respectively.

                                      F-11


<PAGE>

The  following  table  summarizes  additional  information  about stock  options
outstanding at January 31, 2000:

                           Options Outstanding          Options Exercisable
                      ------------------------------   ---------------------
                                 Weighted-
                                 Average      Weighted-              Weighted-
                                 Remaining    Average                Average
  Range of            Number of  Contractual  Exercise   Number      Exercise
  Exercise Prices      Options   Life         Price    Exercisable    Price
  ----------------    ---------  -----------  ------   -----------    ------
  $ 1.04 to $4.63       198,036   6.55 years  $ 4.35       194,286    $ 4.36
  $ 4.75                949,380   5.47          4.75       880,407      4.75
  $ 4.88 to $10.38      602,731   8.36          7.84       239,720      7.55
  $10.50 to $15.00      589,039   8.27         13.62       154,874     11.98
  $15.25 to $24.00      337,769   4.89         18.35       247,095     18.30
  ----------------    ---------  -----------  ------   -----------    ------
                      2,676,955   6.74 years  $ 9.09     1,796,382    $ 7.70
                      =========  ===========  ======   ===========    ======

The Company adopted the disclosure requirements of SFAS No. 123, "Accounting for
Stock-Based   Compensation,"  effective  for  the  Company's  January  31,  1997
consolidated  financial  statements.  The Company applies APB Opinion No. 25 and
related Interpretations in accounting for its plans.  Accordingly,  compensation
cost would be recognized for its stock plans based on the intrinsic value of the
stock option at date of grant (i.e.,  the difference  between the exercise price
and the fair value of the Company's common stock).

Had  compensation  cost for the Company's  stock-based  compensation  plans been
determined  based on the fair value at the grant  dates for awards  under  those
plans made in fiscal  years 2000,  1999 and 1998  consistent  with the method of
SFAS No.123,  the  Company's  net loss and loss per common share would have been
increased to the pro forma amounts  indicated below (amounts in thousands except
per share data).

                                              2000      1999       1998
                                           --------   --------   --------
          Net loss, as reported            $   (340)  $ (3,854)  $ (8,326)
          Pro forma compensation expense      3,765      4,046      3,898
                                           --------   --------   --------
          Pro forma net loss               $ (4,105)  $ (7,900)  $(12,224)
                                           ========   ========   ========

          Basic and diluted net loss
          per common share, as reported    $ (0.02)   $ (0.29)   $ (0.64)

          Basic and diluted net loss
          per common share, pro forma      $ (0.28)   $ (0.58)   $ (0.95)


The fair  value of each  option  was  estimated  on the date of grant  using the
Black-Scholes  option-pricing  model.  The following table shows the assumptions
used for the grants that occurred in each fiscal year.

                                        2000           1999          1998
                                    ------------   ------------   ----------
       Expected volatility              70%            65%            65%
       Risk free interest rates     5.0% to 6.3%   4.5% to 5.6%   5.7% to 6.5%
       Dividend yield                   None          None           None
       Expected lives                 5 years        5 years        5 years


The  weighted  average  fair value per share for stock  option  grants that were
awarded  in  fiscal  years  2000,  1999 and 1998 was  $8.55,  $4.77  and  $4.24,
respectively.
                                      F-12

<PAGE>

Employee Stock Purchase Plan

In  June  1996,   the  Company's   shareholders   approved  the  adoption  of  a
non-compensatory  stock purchase plan for all active  employees.  Of the 250,000
shares of common  stock that were  reserved  for  issuance  thereunder,  23,096,
18,652 and 40,252 shares were  purchased by employees in fiscal years 2000, 1999
and 1998,  respectively.  The plan  provides  that  participating  employees may
purchase  common  stock each plan quarter at a price equal to 85% of the closing
price at the end of the quarterly period. Payment for the shares is made through
authorized payroll deductions of up to 10% of eligible annual compensation.

Deferred Compensation

ConQuest  Software Inc., a private software company acquired in June 1995 by the
Company,  entered into arrangements with certain of its officers,  employees and
independent  consultants  to defer a  portion  of their  compensation.  Deferred
compensation  of  employees  is  restricted  for use in the  exercise  of  stock
options. However, if an employee's options expire because the option terms lapse
or because employment  terminates,  the employee may request cash redemption one
year after expiration,  with 90 days notice.  During fiscal years 2000, 1999 and
1998, deferred compensation of $6,000, $161,000 and $654,000,  respectively, was
settled. The portion of the deferred compensation balance related to independent
consultants was settled in fiscal year 1998.

Employee Savings Plan

The Company has an employee  savings plan that qualifies under Section 401(k) of
the Internal Revenue Code. Under the plan,  participating  eligible employees in
the United  States may defer up to 20 percent of their pre-tax  salary,  but not
more than  statutory  limits.  ConQuest had a similar plan  established  for the
benefit of its  employees  that was merged  into the  Company's  plan  effective
December 31, 1996.  The Company did not make any  contributions  to the employee
savings plan in fiscal years 2000, 1999 or 1998.


(6)      INCOME TAXES

As the Company  incurred  pretax losses for the fiscal years  presented  herein,
there are no income taxes provided in the accompanying  consolidated  statements
of  operations.  At  January  31,  2000,  the  Company  had net  operating  loss
carryforwards ("NOLs") of approximately $64,656,000 that expire at various dates
through  fiscal  year  2020.  The  realization  of the  benefits  of the NOLs is
dependent on sufficient  taxable  income in future fiscal years.  Lack of future
earnings,  a change in the ownership of the Company,  or the  application of the
alternative  minimum tax rules could adversely  affect the Company's  ability to
utilize the NOLs.

The  Company's  net  deferred  tax assets at January  31,  2000 and 1999 were as
follows (in thousands):

                                                  2000              1999
      Deferred tax assets                       --------          --------
          Net operating loss carryforwards,
             not yet utilized                   $ 24,569          $ 27,053
          Other                                    1,188               513
                                                ---------         ---------
             Total deferred tax assets            25,757            27,566
          Valuation allowance                    (25,197)          (27,435)
                                                ---------         ---------
                                                     560               131
                                                    (560)             (131)
      Deferred tax liabilities                  ---------         ---------
             Net deferred tax assets            $      -          $      -
                                                =========         =========

Though  management  believes that future net operating income and taxable income
of the Company may be sufficient to utilize a substantial amount of the benefits
of the Company's net operating  loss  carryforwards  and to realize its deferred
tax assets, a valuation  allowance has been recorded to offset the full carrying
value of the deferred tax assets due to the Company's lack of prior earnings and
the amount of the accumulated deficit.

                                      F-13


<PAGE>

(7)      COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company conducts its operations using leased office  facilities.  The leases
terminate  at various  dates  through  fiscal  year 2005 with  options to renew.
Certain  leases provide for scheduled rent increases and obligate the Company to
pay shared  portions of the operating  expenses such as taxes,  maintenance  and
repair  costs.  The Company also has  operating  leases for  automobiles  at its
foreign subsidiary that are included in the figures below. Future minimum rental
payments  under  non-cancelable  operating  leases as of January 31, 2000 are as
follows (in thousands):

                     Year Ending
                     January 31,
                     -----------
                        2001              $ 1,751
                        2002                1,574
                        2003                1,099
                        2004                1,097
                        2005                  909
                                          -------
                                          $ 6,430
                                          =======

Total  rental  expense  under  operating  leases,  net of sublease  income,  was
approximately $1,700,000,  $1,303,000  and $1,190,000 in fiscal years 2000, 1999
and 1998,  respectively.  The sublease  income in fiscal years 1999 and 1998 was
$102,064 and $292,425, respectively. There was no sublease income in fiscal year
2000.


(8)      RESTRUCTURING COSTS

The Company  reorganized  its sales force and made other  changes to its overall
organization  in April  1997.  In  connection  with these  changes,  the Company
reduced its workforce by approximately  10% and recorded a restructuring  charge
of  $577,000  in the first  quarter of fiscal  year 1998.  The charge  primarily
consisted of severance pay and medical and other severance benefits for nineteen
terminated  employees  in  sales,  development,   marketing  and  administrative
functions. All payments associated with the restructuring charge were paid prior
to the end of fiscal year 1998.


(9)      SEGMENT REPORTING

Beginning  in fiscal  year 2000,  the  Company  aligned  its  business  into two
operating  segments.  The Excalibur  Applications  Group  develops,  markets and
services  the  Excalibur  RetrievalWare  suite of products  and focuses on large
corporations  and  government   organizations   building  knowledge   management
intranets and portals,  as well as Internet based  e-commerce and online service
businesses.  The Excalibur Media Services Group  develops,  markets and services
the video product line and provides software products and services  primarily to
original equipment  manufacturers and application  service providers focusing on
Internet and intranet video content management.

Prior to the second  quarter of the  current  year,  the  Company  operated as a
single segment. During the second quarter of the current year, the revenue model
for the Media Services Group segment became differentiated from the Applications
Group segment.  Media  Services Group revenues are generated  primarily from OEM
and ASP  transactions,  which may involve  development and  customization by the
Company.  While OEM deals are a significant  component of the Applications Group
revenues,  the majority of revenue is generated from licensing the RetrievalWare
suite of products directly to corporations and government organizations building
intranets and Internet based e-commerce and online service businesses. Until the
second quarter of the current year, the Media Services Group was not forecast to
meet any of the 10%  significance  tests as  outlined  in  Financial  Accounting
Standards  Board  ("FASB")  SFAS No.  131,  "Disclosures  about  Segments  of an
Enterprise and Related Information."

The Company does not identify or allocate assets by operating segment.

                                      F-14


<PAGE>

The following chart  represents  revenues and expenses (in thousands of dollars)
attributable  to the  Applications  Group and Media Services Group for the years
ended  January 31, 2000,  1999  and 1998.  Expenses for each segment  consist of
direct and allocated  expenses and exclude the write-off of ETNV,  restructuring
costs and acquired in-process research and development costs.

<TABLE>
<CAPTION>

                      Applications Group        Media Services Group               Total
                 -------------------------   -------------------------   -------------------------
                     Fiscal Years Ending        Fiscal Years Ending         Fiscal Years Ending
                         January 31,                January 31,                   January 31,
                   2000     1999     1998      2000     1999    1998        2000     1999    1998
                   ----     ----     ----      ----     ----    ----        ----     ----    ----
<S>              <C>      <C>      <C>       <C>      <C>      <C>       <C>      <C>      <C>
Total Revenues   $33,369  $26,206  $21,791   $ 4,565  $ 1,733  $   626   $37,934  $27,939  $22,417
Operating
  Expenses        29,090   24,888   24,209     8,963  $ 6,844  $ 4,522    38,053   31,732   28,731
                  ------   ------   ------    ------   ------   ------    ------   ------   ------
Operating
  Income (Loss)  $ 4,279  $ 1,318  $(2,418)  $(4,398) $(5,111) $(3,896)  $  (119) $(3,793) $(6,314)
                  ======   ======   ======    ======   ======   ======    ======   ======   ======
</TABLE>


Operations by Geographic Area

The following  table  presents  information  about the  Company's  operations by
geographical area (in thousands):

                                         Fiscal Years Ended January 31,
                                 ---------------------------------------------
                                     2000             1999             1998
                                     ----             ----             ----
   Sales to customers:
      United States              $    28,495      $    20,336      $    14,134
      United Kingdom                   4,842            4,490            3,460
      All Other                        4,597            3,113            4,823
                                  ----------       ----------       ----------
                                 $    37,934      $    27,939      $    22,417
                                 ===========      ===========      ===========

   Long-lived assets:
      United States              $     2,871      $     5,072      $     3,255
      All Other                          146               96               95
                                  ----------       ----------       ----------
                                 $     3,017      $     5,168      $     3,350
                                 ===========      ===========      ===========

Major Customers

Revenues  derived  from  contracts  and orders  issued by  agencies  of the U.S.
Government  were  approximately  $4.4  million,  $4.5 million and $5.4  million,
respectively,  in the fiscal years ended January 31, 2000, 1999 and 1998.  These
revenues,  expressed as a percentage of total revenues for the fiscal year, were
approximately  12%,  16% and 24%,  respectively.  In fiscal year 2000,  revenues
derived from one customer accounted for 12% of the Company's total revenues.  In
fiscal year 1999,  revenues  derived from one customer  accounted for 11% of the
Company's  total revenues.  No single customer  accounted for 10% or more of the
Company's revenue in the fiscal year ended January 31, 1998.


(10)     OTHER FINANCIAL DATA

a)       Prepaid expenses and other at January 31, 2000 and 1999 consisted of
         the following (in thousands):

                                                       2000           1999
                                                       ----           ----
Prepaid licenses                                     $   1,620      $   1,510
Prepaid other                                              734            781
                                                     ---------      ---------
                                                     $   2,354      $   2,291
                                                     =========      =========

                                      F-15


<PAGE>

b)       Equipment and leasehold improvements at January 31, 2000 and 1999
         consisted of the following (in thousands):

                                                       2000           1999
                                                       ----           ----
Computer equipment                                   $   7,474      $   7,269
Office furniture                                         1,448          1,348
Leasehold improvements                                     438            403
                                                     ---------      ---------
                                                         9,360          9,020
Less accumulated depreciation                           (7,594)        (6,986)
                                                     ---------      ---------
                                                     $   1,766      $   2,034
                                                     =========      =========

Assets  acquired under capital leases included in equipment above was $49,775 at
January 31, 2000 and related accumulated depreciation was $17,680. There were no
assets under capital leases at January 31, 1999.

Depreciation expense for fiscal years  2000, 1999  and  1998  was  $1,324,891,
$1,374,963 and $1,458,644, respectively.


c)       Other assets at January 31, 2000 and 1999 consisted of the following
         (in thousands):

                                                      2000            1999
                                                      ----            ----
Prepaid licenses                                    $     948      $   2,214
Other                                                     303            920
                                                    ---------      ---------
                                                    $   1,251      $   3,134
                                                    =========      =========


d)       Accrued expenses at January 31, 2000 and 1999 consisted of the
         following (in thousands):

                                                      2000            1999
                                                      ----            ----
Accrued payroll                                     $   2,098      $   1,469
Other                                                     376            446
                                                     --------      ---------
                                                    $   2,474      $   1,915
                                                    =========      =========


(11)     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
statement,  as amended by SFAS No. 137,  "Accounting for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB  Statement No.
133,"  establishes  accounting  and  reporting  standards  requiring  that every
derivative  instrument,  including certain  derivative  instruments  embedded in
other  contracts,  be  recorded  in the  balance  sheet  as  either  an asset or
liability  measured at its fair value.  The statement also requires that changes
in the  derivative's  fair value be recognized in earnings unless specific hedge
accounting  criteria are met. The Company believes the adoption of SFAS Nos. 133
and 137, which will be effective for the quarter ending April 30, 2001, will not
have a material effect on the financial statements.

In December 1999, the SEC released Staff Accounting  Bulletin No. 101,  "Revenue
Recognition in Financial  Statements."  This bulletin  establishes  more clearly
defined  revenue  recognition   criteria  than  previously  existing  accounting
pronouncements.  This  bulletin  will become  effective  for the Company for the
quarter  ending April 30, 2000.  The Company is  currently  evaluating  the full
impact of this  bulletin  to  determine  the impact on its  financial  position,
results of operations and cash flows but does not anticipate that it will have a
material effect.

                                      F-16


<PAGE>

(12)     SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

                             (in thousands)

                                                    For the Fiscal Years
                                                      Ended January 31,
                                                  -----------------------
                                                    2000           1999
                                                  --------       --------
Supplemental Disclosures of Noncash
Investing and Financing Activities:
   Stock options exercised under deferred
     compensation arrangements..............      $      6       $    100
                                                  ========       ========


(13)     LINE OF CREDIT

The Company has available a $3,000,000  line of credit under an agreement with a
bank which expires on September 20, 2000. Up to $250,000 of borrowings may be in
the  form of  letters  of  credit.  The  line of  credit  is  collateralized  by
substantially  all corporate  assets.  Borrowings  under the line of credit bear
interest at the  lender's  prime rate (8.5% at January 31,  2000) plus up to 1%.
The agreement  requires the Company to comply with certain  financial  covenants
that are computed on a monthly basis and prohibits additional borrowings without
the bank's approval. The Company was in compliance with all covenants at January
31, 2000. As of January 31, 2000, no borrowings were outstanding  under the line
of credit.

                                      F-17


<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Excalibur Technologies Corporation:

We have audited in accordance with auditing standards  generally accepted in the
United States, the consolidated  statement of operations,  shareholders'  equity
and cash flows of Excalibur Technologies  Corporation for the year ended January
31, 1998  included in this Form 10-K and have  issued our report  thereon  dated
February 27,  1998.  Our audit was made for the purpose of forming an opinion on
the basic  financial  statements  taken as a whole.  The schedule  listed in the
index is the  responsibility  of the Company's  management  and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements.  This schedule has been subjected to
the auditing  procedures applied in the audit of the basic financial  statements
and, in our opinion,  fairly states in all material  respects the financial data
required to be set forth therein in relation to the basic  financial  statements
taken as a whole.

                                              /s/ARTHUR ANDERSEN LLP

Vienna, Virginia,
February 27, 1998

                                      F-18


<PAGE>

SCHEDULE II

                       EXCALIBUR TECHNOLOGIES CORPORATION
                                AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS

             FOR FISCAL YEARS ENDED JANUARY 31, 2000, 1999 AND 1998

                                                           Translation
                        Balance at  Additions   Deductions  Adjustment  Balance
                        Beginning    Charged       From       During    at End
Description              of Year    to Expense   Reserves   the Period  of Year
------------             -------    ----------   --------   ----------  -------
2000
----
Deducted from
accounts receivable:
  For doubtful accounts   $660,000  $838,000   $667,000 (a)   $(1,000)  $830,000

1999
----
Deducted from
accounts receivable:
  For doubtful accounts   $527,000  $493,000   $356,000 (a)   $(4,000)  $660,000

1998
----
Deducted from
accounts receivable:
  For doubtful accounts   $367,000  $250,000   $ 93,000 (a)   $ 3,000   $527,000


Note (a) - Uncollected receivables written off, net of recoveries.

                                      F-19


<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                     EXCALIBUR TECHNOLOGIES CORPORATION


                                     By:  /s/Patrick C. Condo
                                          -------------------
                                          Patrick C. Condo
                                          President and Chief Executive Officer
Date:  April 28, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

     Signature                        Title                           Date
     ---------                        -----                           ----

/s/Patrick C. Condo          President, Chief Executive           April 28, 2000
---------------------        Officer and Director                 --------------
Patrick C. Condo             (Principal Executive Officer)

/s/Donald R. Keough                                               April 24, 2000
----------------------       Chairman of the Board                --------------
Donald R. Keough

/s/James H. Buchanan         Chief Financial Officer              April 28, 2000
---------------------        Secretary and Treasurer (Principal   --------------
James H. Buchanan            Financial and Accounting Officer)

/s/Richard M. Crooks, Jr.                                         April 26, 2000
-------------------------    Director                             --------------
Richard M. Crooks, Jr.

/s/John S. Hendricks                                              April 24, 2000
---------------------        Director                             --------------
John S. Hendricks

/s/W. Frank King III                                              April 28, 2000
---------------------        Director                             --------------
W. Frank King III

/s/John G. McMillian                                              April 27, 2000
---------------------        Director                             --------------
John G. McMillian

/s/Philip J. O'Reilly                                             April 25, 2000
---------------------        Director                             --------------
Philip J. O'Reilly

/s/Harry C. Payne                                                 April 27, 2000
---------------------        Director                             --------------
Harry C. Payne


<PAGE>

                                                                 Exhibit 21.01


               SUBSIDIARIES OF EXCALIBUR TECHNOLOGIES CORPORATION

                                January 31, 2000

                                                  Jurisdiction of Incorporation
                                                  -----------------------------

1.   Excalibur Technologies International, Ltd.           United Kingdom

2.   Excalibur Acquisition Corporation                    Maryland

3.   EXCA Acquisition Corporation                         Delaware


<PAGE>

                                                                 Exhibit 23.01


                       CONSENT OF INDEPENDENT ACCOUNTANTS


We consent to the  incorporation by reference in the registration  statements of
Excalibur  Technologies  Corporation  and  Subsidiaries  on Form S-3 (File  Nos.
333-79955,  33-79794,  33-90734,  33-65333,  333-01595,  333-5185, 333-17433 and
333-34705)  and on Form S-8  (File  Nos.  333-87621,  333-89144,  333-15369  and
333-40873)  of our  report  dated  March 8,  2000  related  to the  consolidated
financial statements  and financial statement schedule,  which  appears in  this
Form 10-K.

/s/PricewaterhouseCoopers LLP
McLean, Virginia
April 28, 2000


<PAGE>

                                                                 Exhibit 23.02


                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
reports  included  in this  Form  10-K,  into  the  Company's  previously  filed
Registration  Statements on Form S-3 (File No.  333-79955) and on Form S-8 (File
No. 333-87621).


                                              /s/ARTHUR ANDERSEN LLP
Vienna, Virginia,
April 26, 2000