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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------


                                  FORM 10-K/A

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

                                AMENDMENT NO. 1


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<C>          <S>
 (Mark one)
    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001



                                   OR




    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



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                       COMMISSION FILE NUMBER: 000-29059
                             ---------------------
                                 ELOQUENT, INC.
             (Exact name of registrant as specified in its charter)

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<S>                                            <C>
                   DELAWARE                                      94-3221868
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                      Identification No.)
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                     2000 ALAMEDA DE LAS PULGAS, SUITE 100
                          SAN MATEO, CALIFORNIA 94403
                    (Address of principal executive offices)

                                 (650) 294-6500
              (Registrant's telephone number, including area code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                         COMMON STOCK $0.001 PAR VALUE
                             ---------------------
     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
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.  [ ]

     The aggregate market value of the Common Stock of the registrant held by
non-affiliates as of March 1, 2002 was approximately $6,320,000.

     The number of shares of Common Stock outstanding at February 28, 2002 was
19,346,012 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE


     None.



                      EXPLANATORY NOTE TO AMENDMENT NO. 1



     Amendment No. 1 amends Items 10 and 1 to provide updated information
related to our Directors and Executive Officers and adds Items 11, 12 and 13 of
Part III of this Form 10-K. Except as otherwise stated herein, all information
contained in this Report on Form 10-K was current as of the date of filing of
the original Report on March 28, 2002 and has not been updated by Amendment No.
1.

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                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

     Eloquent(R) provides sales effectiveness solutions that enable our
customers to increase the productivity of their sales and marketing
organizations, accelerate new product revenue and reduce product launch
expenses. Eloquent's LaunchForce(TM) application enables production and hosting
of rich media product and sales content, personalized delivery of the content
and detailed measurement of the results. Rich media content involves the
combination of video, audio, graphics and text in a synchronized, searchable and
navigable format. LaunchForce delivers rich media content on the Web via
intranets or extranets or CD-ROMs. Eloquent LaunchForce services include
software development and system integration, video and rich media content
production and hosting. With LaunchForce, our customers, which are primarily
Fortune 1000 companies, roll out new product information to field sales
organizations and channel partners, monitor their audience's understanding and
adjust content when necessary to improve knowledge transfer. Since our inception
in March 1995, we have utilized our rich media technology to help companies
improve their ability to deliver critical product and sales information to
globally dispersed audiences in a cost-effective and timely manner and have
produced content for more than 250 customers.

INDUSTRY BACKGROUND

     Need To Maximize Sales Effectiveness.  As companies face increasing
pressure to accelerate new product revenue, ramp sales and channels personnel,
and reduce product launch expenses, maximizing sales effectiveness becomes
critical. In order to increase sales effectiveness, companies need to deliver
information in a timely, economical and attractive way -- a requirement that is
even more critical given today's increasingly dispersed work force, accelerated
product cycles, and complex products and services. Companies attempt to deliver
up-to-date information about their products and services to their sales force
and their channel partners through a variety of means and using a number of
different technologies that, although useful, do not always provide the most
efficient and robust means of delivering information. For example:

     - In-person presentations using audio/visual equipment, such as fly-ins or
       roadshows, provide rich presentations, but are often inconvenient and
       time-consuming for both the presenter and the audience, and often involve
       costly travel expenses.

     - Teleconferencing is a relatively inexpensive and fast means of
       communication, but provides for limited use of visual aids, does not
       easily accommodate large audiences and requires everyone to participate
       at the same time.

     - Web and satellite broadcasts, although convenient and useful for large
       audiences, do not provide personalization and interactivity with the
       audience.

     Growth of the Web.  The Web has emerged as a global communications medium,
enabling millions of people to gather information, communicate and conduct
business electronically. The broad acceptance of the Internet Protocol standard
has also led to the emergence of corporate intranets and extranets and the
development of new ways to access the Web, intranets and extranets, such as
through the television.

     Emergence of Streaming Media Technology.  The Web has evolved from a mass
of static, text-oriented pages to a much richer environment, capable of
delivering graphical, interactive and multimedia content. Prior to the
development of streaming media technologies, accessing video and audio files
over the Web was impractical because users could not experience the content
until the time-consuming process of downloading the files was complete. Today,
streaming media technologies and the proliferation of multimedia-capable
computers allow almost immediate playback of continuous "streams" of video and
audio content over the Web, intranets and extranets. The emergence of streaming
media technology has enabled highly interactive, rich media applications to be
effectively delivered over the Web, corporate intranets and extranets.

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     Opportunity for a Rich Media Sales Effectiveness Solution. Companies now
have the ability to deliver business communications over Web-based channels
using streaming media technology. However, existing streaming media technology
by itself does not give companies the ability to deliver compelling
communications that include multiple media, such as video, audio, graphics and
text, in a synchronized, easy-to-use format. Furthermore, ensuring sales
readiness demands a mechanism for monitoring and maximizing content
effectiveness. This involves tracking and measuring the use and understanding of
all product and sales information and ensuring the sales collateral, Web content
and presentations are current. Thus while companies can obtain the component
technologies required to produce and deliver their own rich media content, they
face a variety of challenges in combining and customizing technologies to create
a sales effectiveness solution. We believe the difficulties associated with
increasing the productivity of sales and marketing organizations, accelerating
new product revenue and reducing product launch expenses are inducing large
companies to seek media-rich packaged applications as part of a complete
solution.

PRODUCT EVOLUTION

     In February 1996, we introduced the first version of our solutions
platform, which included the essential elements of content production and
navigation, including synchronized video, audio, graphics and text as well as
searchable transcripts, for delivery on CD-ROM. In following years, we enhanced
our content production to include such features as searchable slides, variable
speed playback and high-resolution video. In April 1998 we introduced hosting
services for content delivery and in January 1999, we launched our professional
services organization to provide professional media development services.

     In July 1996, we introduced our application server software, which expanded
delivery of content production from CD-ROM to intranets. In November 1997 we
enhanced our server software by expanding delivery options to include Web-based
transmissions at 28.8 Kbps and tracking and reporting capabilities. In following
years, we further enhanced our application software enabling customers to
organize manage, secure, personalize and enrich all forms of streaming content.
In May 2001, we introduced LaunchForce, a scalable enterprise software solution
designed to manage, measure and improve sales and field readiness to globally
distributed audiences.

THE ELOQUENT SOLUTION

     Elements of the Solution.  Our solution includes the Eloquent LaunchForce
Software and Professional Services our customers need to deliver custom, rich
media content to their sales force and channel partners.

     Eloquent LaunchForce.  LaunchForce is a unique application that enables
fully integrated communication between the sales force and channels, executive
management and marketing team. This solution allows users to post, access and
track the effectiveness of all content. LaunchForce stores, organizes and
delivers all content to users through a single, graphical browser interface.
Principle elements of our software include:

     - Information Center.  The Eloquent LaunchForce Information Center is the
       access point for users of our software. The friendly user interface
       allows our customers to easily navigate, to find and access personalized
       content of all media types. This enables fast, easy access to current
       sales and product information. Users manage their development by
       utilizing the personal progress management window. By integrating
       Eloquent's rich media technology with other data formats, LaunchForce is
       intended to facilitate increased comprehension and retention.

     - Control Center.  The Eloquent LaunchForce Control Center, typically used
       by an organization's marketing team, allows for fast and easy creation
       and delivery of product and sales information. An audience-targeting
       feature allows the user to customize content to different audiences, or
       reuse content across audiences. LaunchForce stores, organizes and
       delivers all content through a single graphical browser interface. The
       product easily supports word processing documents, spreadsheets, rich
       media presentations, HTML pages, video, audio, quizzes and surveys and
       events calendars.

     - Tracking Center.  The Eloquent LaunchForce Tracking Center allows
       management to track key sales readiness metrics, including usage,
       comprehension, reach and user satisfaction. Management can

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       monitor the effectiveness of the materials with integrated testing,
       quizzes and usage reports and adjust content as messages and channels
       evolve.

     - Eloquent LaunchForce Studio.  LaunchForce Studio is a dynamic authoring
       and editing environment that allows users to create, edit and publish
       rich media presentations from the desktop. Using a Web camera,
       microphone, and Microsoft(R) PowerPoint slides presenters can create,
       record and edit their own high-quality rich media presentations that
       deliver complex messages to large audiences over the Internet or via
       CD-ROM. Presentations can include synchronized audio, video, transcripts,
       graphics and software demonstrations. Using LaunchForce Studio, customers
       can create professional presentations without the need to hire a
       professional production team.

     - Eloquent LaunchForce Live.  LaunchForce Live is an optional module that
       allows customers to deliver complex messages real-time to a live,
       distributed audience over the Internet as if the presenter and audience
       were in the same room. With LaunchForce Live, users sit at their desktop
       PC and use a Web browser and a desktop player to view a video of the
       speaker, hear audio, and watch Microsoft PowerPoint slides, Web pages, or
       software demonstrations. Interactive features allow users to respond to
       polls or ask questions of the speaker. Unique live navigation enables
       users to respond to interruptions, by pausing the presentation, or enter
       the presentation late without missing anything. Automatic archiving saves
       the entire presentation for on-demand viewing. Reporting features record
       user actions and document who attended the presentation, how long they
       attended and what features they utilized during the presentation.

     Professional Services.  Our professional services organization offers a
range of services to meet customer specific needs, including hosting, custom
software development and system integration, product launch consulting, and
video and rich media content production.

     - Hosting Services.  Our optional hosting service enables customers to
       utilize our software over the Web on our servers, which relieves our
       customers of the need to manage the servers and solve integration issues.
       Our hosting solution optimizes performance of LaunchForce and enables
       scalability, while avoiding potential bandwidth strain to our customers'
       information technology staff or corporate networks.

     - Professional Implementation and Integration Services.  Our professional
       services organization provides installation and configuration services
       enabling immediate customer productivity. We also facilitate integration
       of our sales effectiveness software with our customers' learning
       management systems, company intranet sites, employee portals or sales
       automation systems in response to their business requirements.

     - Product Launch Consulting Services.  Our product launch consulting
       services include strategy development, project planning and launch
       planning development, implementation planning and execution. Project
       planning and launch plan development includes guidance on best practices
       to facilitate development of an optimal product launch plan.
       Implementation planning includes defining milestones, deliverables and
       schedules to guide the project through deployment and to ensure its
       timeliness and cost effectiveness.

     - Video and Rich Media Content Production.  Our content production services
       include professional-quality video-taping, editing and digitization as
       well as audio transcription and translation, graphics production and
       software demonstration services. We videotape live speakers, using local
       video crews and simple lighting. We then convert the video into digital
       format and divide long segments into short talks and remove outtakes. We
       then "compress" the digital video and audio tracks using compression
       technologies. Transcription services provide word-for-word audio
       transcripts that are synchronized to the speakers presentation and are
       full-text searchable. If desired by the customer, content translation
       services provide localization of multi-lingual, Roman-script, text files.
       Graphics production services help our customers design and edit graphic
       elements for their presentations including Microsoft PowerPoint slides,
       menu navigation and deployment packaging for CD-ROM or Internet delivery.
       Our

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       software demonstration services allow our customers to digitally capture
       and integrate software demonstrations into their rich media
       presentations.

     - Customer Support.  We believe that a high level of customer service and
       support is critical to the adoption and successful utilization of our
       sales effectiveness solution -- LaunchForce. Our customer support
       organization helps customers resolve any issues that arise during the
       development process. Additionally, we provide an online help-center which
       contains information on product features and functionality.

     Benefits of the Eloquent Solution.  We believe that we have developed the
most effective and comprehensive application available for posting, accessing
and measuring use and understanding of product and sales information. With
LaunchForce, customers gain fully integrated communication between their sales
force and channels, executive management and marketing teams thus "closing the
loop" of information flow across all audiences. We believe that our solution
provides the following compelling customer benefits:

     - Maximize Content Understanding.  Central to LaunchForce's effectiveness
       in knowledge transfer is its support for rich media content. We believe
       that because rich media captures all of the presenters' enthusiasm,
       personality and knowledge, it is highly compelling and effective, making
       it easy for our customers' sales force and channels to learn critical
       information quickly. This allows the sales force to sell sooner.
       LaunchForce's support for rich media provides users with
       business-critical information in an interactive, navigable format with
       full-text and slide search functionality. We believe this format,
       combined with advanced streaming functionality for live or on-demand
       presentations and our delivery of multiple media, including synchronized
       digital audio, video, graphics and a scrolling transcript, make rich
       media content more engaging than other forms of business communication
       thus simplifying learning. We also believe that users comprehend and
       retain information contained in rich media presentations better than
       those contained in other methods of communication.

     - Monitor and Maximize Content Effectiveness.  To speed product launches
       and enhance their impact, our customers' executives and managers need to
       quickly respond to any knowledge transfer problems with the product
       launch content. LaunchForce allows management to track key field
       readiness metrics, including usage, comprehension, reach and user
       satisfaction. LaunchForce incorporates usage reports and quizzes,
       providing a low cost way to continuously monitor key readiness metrics.
       Executives and managers can see the results via an at-a glance graphical
       summary and can drill down to easily determine effectiveness with
       individual users or targeted audiences. Our customers can also customize
       reports to highlight specific information or export data for integration
       with in-house data analysis tools. With this detailed information,
       executives and managers can proactively revise and update content and
       incentive programs to optimize sales force understanding.

     - Maximize Sales Readiness with Live Presentations.  When launching a new
       product or service, gaining a competitive advantage requires getting the
       word out quickly to sales representatives, potential customers and
       industry analysts -- and by ensuring the message is understood. Live
       presentations ensure an audiences attention, comprehension and retention,
       but are time consuming to arrange, and road shows can take weeks or
       months to complete. LaunchForce Live lets our customers deliver complex
       messages to a worldwide audience over the Internet as if the presenter
       and audience were in the same room. Live rich media including video and
       audio allows presenters to project emotion and enthusiasm. To ensure
       comprehension, LaunchForce Live allows users to send typewritten or voice
       mail questions to a moderator, who clarifies or comments on the
       questions, then forwards them to the speaker for response. Speakers can
       conduct multiple-choice polls and view the response in real time. Using
       Eloquent LaunchForce Live, our customers can deliver their message to the
       Web browsers of as many as 10,000 users worldwide simultaneously, thus
       eliminating the delay and costs associated with road shows that can take
       weeks or months. Additionally, LaunchForce Live overcomes the disruption
       of conference participants who are interrupted during live presentations.
       LaunchForce Live incorporates play, pause, rewind and fast forward
       features to allow conference participants who are interrupted to pause
       the presentation then later resume where they left off. When joining an
       event that has already begun, attendees can start at the beginning to
       review what they have missed, then join the event in real-

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       time, or they can join the event in process. The LaunchForce Live module
       is integrated with the LaunchForce product thereby allowing our customers
       to automatically archive their presentations including video, audio,
       slides, polling and Web-guided tours. Thus participants unable to attend
       the live event, can play back an archived copy of the event in its
       entirety.

     We believe that these benefits can result in a number of strategic and
competitive advantages for our customers. For example:

     - Speed Time to Market.  By using LaunchForce and LaunchForce Live to
       educate its sales force about a new product introduction instead of
       having the product manager travel to each sales office to do so in
       person, our customers can commercially launch new products more quickly.
       Additionally, the LaunchForce Control Center enables marketing, sales and
       training teams to create and distribute content customized to different
       audiences, such as customers, sales and channel partners. The Control
       Center provides a single place to define and assign deliverables, to
       track progress on deliverables and to author, upload and update content.
       By streamlining the content creation and distribution process, our
       customers' sales force and channels are able to learn critical
       information quickly thus allowing them to sell products and services
       sooner.

     - Increased Employee Productivity.  Using our solutions means that a key
       business presentation only needs to be made once, thereby freeing the
       presenter to focus on his or her work instead of traveling to different
       offices to make the presentation. Work interruptions can be minimized
       because employees view the presentation at a time and place convenient to
       them instead of when the presenter is available. In addition, we believe
       our interactive, searchable, navigable format and engaging rich media
       presentation enables employees to comprehend and retain information
       better than that contained in traditional forms of business presentation.

     - Reduce Expenses.  Our solution eliminates many of the costs associated
       with traditional business presentations, including airline, hotel and
       other travel expenses for event participants, facilities costs and the
       opportunity costs associated with diverting employees from their work
       schedules. In addition, LaunchForce Studio, our authoring and editing
       environment, allows users to create, edit and publish rich media
       presentations, thus reducing or eliminating the cost our customer would
       incur producing the presentation with a professional team.

STRATEGY

     Our objective is to develop a leadership position in providing rich media
solutions to enhance sales effectiveness. The key elements of our strategy are:

     FirstLaunch.  Our FirstLaunch program is designed to ensure that a
company's first experience with LaunchForce is successful with minimal business
risk. FirstLaunch, is an offering of prepackaged hardware, software and services
aimed at those companies that have recurring product launch needs. The
FirstLaunch program consists of those components required to ensure sales and
field readiness, including LaunchForce software, cameras and hardware for
self-publishing, optional hosting services for the software, and LaunchForce
consulting services including training and sharing of best practices. The
FirstLaunch program enables companies to use LaunchForce for a 90-day rental
period, after which they can purchase the solution or continue renting in the
future. To ensure that FirstLaunch is successfully implemented, we provide the
following services:

     - Planning and Set Up.  Our professional services organization will set up
       all the hardware and software needed to implement LaunchForce and train
       our customers product launch or marketing team on how to use the
       solution.

     - Hosting Services.  We can host the LaunchForce software during the
       FirstLaunch engagement, thus reducing the burden on our customers'
       internal information technology resources and corporate networks.

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     - Self-Publishing Services.  Our professional services organization will
       configure the hardware and studio equipment needed to self-publish
       high-quality, rich media product and sales content at our customers'
       site.

     - Training.  Our professional services organization will train our
       customers' system administrators in on-site administration and train our
       customers' product launch or marketing team on how to use our LaunchForce
       application to manage their sales readiness process.

     Further Penetrate Large Corporate Accounts.  We believe that our existing
customer base of large corporations presents a significant opportunity for
revenue growth. We believe we have an opportunity to deepen our relationships
with existing customers by introducing our LaunchForce products and services and
by selling to different divisions of the same company. For example, we believe
that cost-cutting efforts by customers will encourage their sales and marketing
organizations to adopt new solutions for product launch activities in order to
reduce costs and increase effectiveness.

     Expand and Enhance Customer Solutions.  Our goal is to provide our
customers with a comprehensive solution to increasing sales effectiveness and
field readiness. We intend to pursue increased revenue opportunities by
continually enhancing the functionality of our LaunchForce solution and adding
value-added services to our offerings, through both in-house development efforts
and strategic acquisitions.

     Expand Internationally.  We currently sell our solutions within the United
States. Many of our customers have international operations and use rich media
content to deliver complex messages to audiences around the world. As a result,
we believe there is a significant opportunity to increase revenue by selling our
products and services internationally. To exploit this opportunity, we intend to
increase our sales and marketing efforts with multinational corporations.

CUSTOMERS

     Our customer focus is Fortune 1000 enterprises with large direct and
indirect sales forces, many product lines, and complex or rapidly changing
technology. Our current customers include large, global organizations in the
communications, computers and electronics manufacturing, professional services
and software industries. At December 31, 2001, one customer, Compaq Computer
Corporation, accounted for greater than 10% of accounts receivable and at
December 31, 2000 no customer accounted for greater than 10% of accounts
receivable. For fiscal year 2001, one customer, Compaq Computer Corporation,
accounted for more than 10% of revenue. For fiscal years 2000 and 1999, no
customer accounted for greater than 10% of revenue.

RESEARCH AND DEVELOPMENT

     We believe that our future success depends on our ability to maintain
technological leadership through timely enhancements of existing products and
development of new products that meet customer needs. During 2001, 2000 and
1999, other research and development expenses were $5.2 million, $5.3 million
and $2.0 million, respectively. All of these expenses were funded by us rather
than by any of our customers. We believe that a continued commitment to research
and development, particularly related to emerging technologies, will be required
to remain competitive. There can be no assurance that we will be successful in
developing, introducing or managing the transition to new or enhanced products
that will be responsive to technological changes or that will gain acceptance in
the market place.

SALES AND MARKETING

     We sell our solutions in the United States through a direct sales force.
Our sales strategy is to pursue opportunities with large companies and industry
leaders and to penetrate targeted vertical market segments. To implement this
strategy, each customer and target has a dedicated sales representative who is
responsible for maintaining the customer and target relationship. We market our
solutions through an in-house marketing staff and an outside public relations
firm. We conduct a variety of marketing programs nationwide to educate our
target market, create awareness and generate leads for our solutions. To achieve
these goals, we have engaged in activities such as direct marketing campaigns,
seminars, and trade shows. These programs are

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targeted at sales and marketing executives within identified vertical markets.
In addition, we conduct comprehensive public relations efforts that include
establishing and maintaining relationships with key trade press, business press
and industry analysts as well as an active executive speakers' bureau.

COMPETITION

     The market for rich media sales effectiveness solutions is new and rapidly
evolving. We expect that competition will intensify and new entrants will
emerge. Increased competition could lead to decreasing prices and profitability.
We compete with companies that offer alternative solutions to improving sales
effectiveness and launching new products and alternative applications for
deploying rich media, including:

     - providers of customer and partner relationship management software;

     - companies who help deliver product information to potential customers via
       personalized web sites;

     - companies who help deliver product information to a sales force via
       groupware or a portal;

     - providers of rich media software tools and applications;

     - multimedia content production and delivery companies;

     - digital asset management and similar companies who provide content
       management for objects including media;

     - companies that provide web-based systems for live collaboration among a
       small audience; and

     - traditional business communications and learning solution companies that
       offer live meeting and seminar services.

     We believe that we compete favorable with other sales effectiveness
solutions because:

     - unlike other companies who include product launch as one of many
       applications of their technology, we have built a scalable enterprise
       solution specifically designed to communicate complex product information
       to sales and channels personnel;

     - unlike other companies who use flat documents or documents plus audio to
       communicate, we incorporate the latest in rich media technology to
       improve the effectiveness, the usability, and the "stickiness" of the
       message;

     - unlike other companies who provide limited tools for delivering the right
       information to the right person, we supply a rich set of search,
       navigation, and personalization capabilities for a wide array of
       information formats including Microsoft Word, Microsoft PowerPoint, Adobe
       Acrobat, and other audio, video, text-based formats;

     - unlike other companies who only support one-way information flow, we
       include a complete set of accountability tools to track the usage and
       effectiveness of product launch messages; and

     - unlike other vendors who only support one information delivery channel,
       we include integrated support for on-demand Web delivery, live Web
       delivery, and off-line CD-ROM delivery.

     Although we believe that we compete favorably with alternative sales
effectiveness solutions, many of our current and potential competitors have
longer operating histories, significantly greater financial, technical and
marketing resources, greater name recognition and larger existing customer bases
than we do. These competitors may also be able to undertake more extensive
marketing campaigns for their brands and services, adopt more aggressive pricing
policies and make more attractive offers to potential employees and partners. We
may be unable to compete successfully against current or future competitors and
competitive pressures may cause our business to suffer.

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INTELLECTUAL PROPERTY

     We regard our copyrights, service marks, trademarks, trade secrets,
proprietary technology and similar intellectual property as critical to our
success, and we rely on trademark and copyright law, trade secret protection and
confidentiality and license agreements with our employees and independent
contractors to protect our proprietary rights. We strategically pursue the
registration of trademarks and service marks in the United States and abroad.
Effective trademark, service mark, copyright and trade secret protection may not
be available in every country in which our products and services are made
available.

     Our products and internally used authoring tools incorporate technology
licensed to us as follows:

     - We have a license from Verity, Inc. ("Verity") that grants us the rights
       to use Verity's proprietary search software in developing our products
       and authoring tools, and also grants us the worldwide right to use,
       reproduce, market and distribute Verity's search software as an embedded
       component of our products. Verity is free to grant identical or similar
       licenses to others. Generally, we are not permitted to transfer our
       license rights to others, other than in connection with a sale of our
       products. In consideration for our license rights, we have paid Verity an
       initial license fee of $25,000, and we pay royalties to Verity equal to
       2.5% of all sales of our products containing the licensed software and
       certain maintenance fees. The Verity license initially expired in May
       2000, but automatically renews for successive one-year terms if neither
       party gives 30 days' notice of nonrenewal prior to the end of each term.

     - We have a license from Voxware, Inc. ("Voxware") that grants us the right
       to use Voxware's proprietary compression software in developing our
       products and to incorporate Voxware's compression software into our
       products. Voxware is free to grant identical or similar licenses to
       others. Generally, we are not permitted to transfer our license rights to
       others, other than in connection with a sale of our products. In
       consideration for our license rights, we have paid Voxware an initial
       license fee of $20,000 and we pay royalties to Voxware equal to 1.5% of
       all sales of our products containing the licensed software. The license
       from Voxware initially expired in May 1998, but automatically renews for
       successive one-year terms if neither party gives 90 days' notice of
       nonrenewal prior to the end of each term.

     - We have a license from WebXpress, Inc., ("WebXpress") a subsidiary of BEA
       Systems, Inc., that grants us the right to integrate various versions of
       its proprietary WebXpress server software into our LaunchForce products.
       WebXpress is free to grant identical or similar licenses to others.
       Generally, we are not permitted to transfer our license rights to others,
       other than in connection with the distribution of our LaunchForce
       products. In consideration for our license rights, we pay license fees to
       WebXpress for each sale of our LaunchForce products containing the
       licensed software. Initially, the license fees range from approximately
       $2,000 to $13,000 per central processing unit on which our customers use
       our LaunchForce products, depending on the version of WebXpress software
       that is integrated into the LaunchForce products distributed. Our fees
       will be lowered based on our cumulative license fee payments; if our
       cumulative fees reach certain levels, our license fee per unit could be
       reduced to approximately one-half of our initial fees. We also pay
       WebXpress certain maintenance fees and additional license fees when we
       make sales of a LaunchForce products that incorporates the version of
       WebXpress software that itself incorporates security functions that
       WebXpress has licensed from another party. The WebXpress license expires
       in August 2002 and does not provide for any automatic renewals
       thereafter. If we are unable to renew this license, we would be forced to
       remove this technology from our product and develop or license a
       comparable technology. This could require additional license fees or
       extensive engineering efforts, or significantly decrease our products'
       functionality, either of which could harm our business, financial
       condition and operating results.

     - We have an OEM agreement with Visual Mining, Inc. ("Visual Mining") that
       grants us the right to integrate certain of its technology into our
       LaunchForce products. Visual Mining is free to grant identical or similar
       licenses to others. Generally, we are not permitted to transfer our
       license rights to others, other than in connection with the distribution
       of our LaunchForce products. In consideration for our license rights, we
       have paid Visual Mining an initial license and support fee of $16,000 for
                                        8
<PAGE>

50 licenses and we pay $540 for each additional license including support fees.
The Visual Mining agreement expires in January 2003 and may be renewed for
successive one-year terms at Visual Mining's then current renewal rate which
      cannot increase by more than 10% from the previous year.

     In addition, we have developed our products to integrate well with the
Microsoft Windows NT operating system, the operating system used by most of our
customers to run our software. If the Windows NT operating system is changed by
Microsoft so that it no longer integrates well with our products, or if Windows
NT experiences technical problems, the operation of our software could be
impaired. In such event, our business, financial condition and operating results
could be harmed. Microsoft is not obligated to ensure that Windows NT integrates
well with our products.

EMPLOYEES

     As of December 31, 2001, we had a total of 77 full-time employees, all of
whom were located in the United States. Of the total, 11 were in content
production and other professional services, 24 were in sales and marketing, 19
were in research and development, 18 were in general and administrative and 5
were in customer service and software and hosting support. None of our employees
are represented by a labor union. We have not experienced any work stoppages,
and we consider our relations with our employees to be good.

     The following table sets forth information regarding Eloquent's executive
officers as of December 31, 2001:

<Table>
<Caption>
NAME                     AGE                            POSITION
----                     ---                            --------
<S>                      <C>   <C>
Clifford A. Reid,        42    Chairman of the Board, Chief Executive Officer and Director
  Ph.D.................
Edward Molkenbuhr......  55    President
David Glazer...........  40    Chief Technical Officer
R. John Curson.........  58    Chief Financial Officer, Secretary and Treasurer
</Table>

     Clifford A. Reid, Ph.D. co-founded Eloquent in March 1995 and has served as
Eloquent's Chairman of the Board since inception. In July 2000, Dr. Reid
co-founded Rebop Media, Inc., where he was Chief Executive Officer and
President. Since November 2000, Dr. Reid has also served as Eloquent's Chief
Executive Officer. From March 1995 to January 1999, Dr. Reid served as
Eloquent's Chief Executive Officer and President. In April 1988, Dr. Reid
co-founded Verity, Inc., a search software products company, where he was Vice
President of Engineering from 1988 to 1992 and Executive Vice President from
1992 to 1993. Dr. Reid holds an S.B. in physics from the Massachusetts Institute
of Technology, an M.B.A. from Harvard University and a Ph.D. in
engineering-economic systems from Stanford University.


     Edward Molkenbuhr, served as Eloquent's President from June 2001 until
March 2002. Prior to joining the Company, he was President of Interpraise, Inc.
a developer of collateral assessment technology for the mortgage industry. From
1999 to 2000, Mr. Molkenbuhr was interim Chief Executive Officer to development
stage clients including Ultimode, Inc. and NBN Auto Inc. From 1997 to 1999, Mr.
Molkenbuhr served as Chief Executive Officer of Avesco Media Group, the U.S.
operations of Avesco PLC, an event staging services provider. From 1993 to 1997,
Mr. Molkenbuhr served as Senior Vice President and General Manager of the
Service Dealer Division of Triad Systems Corporation a control systems
engineering and integration company. Mr. Molkenbuhr holds a B.S. in accounting
and business administration from the University of San Francisco.


     David Glazer co-founded Eloquent in March 1995. Mr. Glazer has served as
Eloquent's Chief Technical Officer since inception. He was named to the Office
of the President in November 2000 and served in that capacity until June 2001.
From November 1994 to March 1995, he was an independent Web information delivery
systems consultant to clients including Netscape Communications Corporation,
Adobe Systems Incorporated and Tandem Computers Incorporated, which is now a
division of Compaq Computer Corporation. In April 1988, Mr. Glazer co-founded
Verity, Inc., a search software products company, where he served as Senior
Software Architect from June 1988 to November 1994. From 1984 to 1988, Mr.
Glazer worked as an independent contractor for Lotus Development Corporation, a
software products company. Mr. Glazer holds an S.B. in physics from the
Massachusetts Institute of Technology.

                                        9
<PAGE>

     R. John Curson has served as Eloquent's Chief Financial Officer, Secretary
and Treasurer since June 1999. He was named to the Office of the President in
November 2000 and served in that capacity until June 2001. From March 1999 to
June 1999, Mr. Curson served as a consultant to Pinnacle Systems, Inc.,
assisting with the integration into Pinnacle of Truevision, Inc., formerly known
as RasterOps, a digital imaging and video products company that Pinnacle
acquired in March 1999. Prior to that, Mr. Curson served as Truevision's Chief
Financial Officer from December 1993 to March 1999. From 1992 to 1993, Mr.
Curson served as Chief Financial Officer of LH Research Inc., a power-supply
developer and manufacturer. From 1989 to 1992, Mr. Curson served as Chief
Financial Officer for Martec Controls, a high-tech surveillance and remote
tracking products company. From 1987 to 1989, Mr. Curson served as Vice
President of Finance for Xidex Inc./Dysan International, a memory media products
company. From 1976 to 1987, Mr. Curson worked at Dataproducts Corporation, a
computer printer company, where he held a variety of financial positions. Mr.
Curson holds a B.S. in mechanical engineering from the University of Leeds, an
M.B.A. from the University of Leeds and an M.B.A. from the University of
California, Los Angeles.

ITEM 2.  PROPERTIES

     As corporate headquarters, Eloquent currently occupies approximately 20,000
square feet of leased office space in San Mateo, California. This lease expires
on May 31, 2002. Certain of Eloquent's research and development team occupy
approximately 2,700 square feet of leased office space in Boulder Colorado. This
lease expires on November 30, 2003. Further, certain sales and support employees
occupy and operate out of leased office units in OakBrook Terrace, Illinois;
Sudbury, Massachusetts; and New York, New York. In December 2000, we announced a
plan to restructure operations and consolidate leased facilities. We are
currently attempting to negotiate a lease termination or sublease a facility
located in San Mateo, California. Eloquent believes that alternative or
additional space will be available, at acceptable rates, to accommodate our
needs in the foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS

     Beginning in July 2001, the Company and certain of its officers and
directors were named as defendants in several class action shareholder
complaints filed in the United States District Court for the Southern District
of New York. These actions include (1) Pond Equities v. Eloquent, Inc., et al.,
Case No. 01-CV-6775; (2) Zitto Investments, Inc. v. Eloquent, Inc., et al., Case
No. 01-CV-7591; (3) Bartula v. Eloquent, Inc., et al., Case No. 01-CV-7607; and
(4) Holleran v. Eloquent, Inc., et al., Case No. 01-CV-7698. Similar complaints
were filed in the same Court against hundreds of other public companies that
conducted initial public offerings ("IPOs") of their common stock in the late
1990s (the "IPO Lawsuits"). In each of these complaints, the plaintiffs allege
that the Company, certain of its officers and directors and its IPO underwriters
violated the federal securities laws because the Company's IPO registration
statement and prospectus contained untrue statements of material fact or omitted
material facts regarding the compensation to be received by, and the stock
allocation practices of, the IPO underwriters. The plaintiffs seek unspecified
monetary damages and other relief.

     On August 8, 2001, the IPO Lawsuits were consolidated for pretrial purposes
before United States Judge Shira Scheindlin of the Southern District of New
York. Judge Scheindlin held an initial case management conference on September
7, 2001, at which time she ordered, among other things, that the time for all
defendants in the IPO Lawsuits to respond to any complaint be postponed until
further order of the Court. Thus, the Company has not been required to answer
any of the complaints, and no discovery has been served on the Company.

     At a further status conference on March 11, 2002, Judge Scheindlin stated
that she would appoint lead plaintiffs counsel in the IPO Lawsuits by the end of
March 2002 and that she would require the appointed lead plaintiffs counsel to
file amended, consolidated complaints in the IPO Lawsuits by April 17, 2002.
Judge Scheindlin further stated that she did not expect the defendants to file
motions to dismiss the amended, consolidated complaints until the summer of
2002. The Company believes that these lawsuits are without merit and intends to
defend against them vigorously.

                                        10
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS IN THE FOURTH
QUARTER OF 2001

     None.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Eloquent's Common Stock is traded on the Nasdaq National Market under the
symbol "ELOQ." Public trading of the Common Stock commenced on February 16,
2000. Prior to that, there was no public market for the Common Stock. The
following table sets forth, for the periods indicated, the high and low sale
price per share of the Common Stock on the Nasdaq National Market.

<Table>
<Caption>
                                                           2001             2000
                                                       -------------   ---------------
                                                       HIGH     LOW     HIGH     LOW
                                                       -----   -----   ------   ------
<S>                                                    <C>     <C>     <C>      <C>
First Quarter........................................  $1.63   $0.66   $45.00   $16.00
Second Quarter.......................................  $1.60   $0.50   $20.63   $ 5.88
Third Quarter........................................  $1.25   $0.87   $ 9.50   $ 2.56
Fourth Quarter.......................................  $0.80   $0.46   $ 3.94   $ 0.66
</Table>

     As of March 15, 2002 there were approximately 240 holders of record of
Eloquent's Common Stock. On March 15, 2002, the last sale price reported on the
Nasdaq National Market System for Eloquent's Common Stock was $0.69 per share.

     Eloquent has never declared or paid any cash dividends on its capital
stock. Eloquent intends to retain any future earnings to support operations and
to finance the growth and development of Eloquent's business and does not
anticipate paying cash dividends for the foreseeable future.

ITEM 6.  SELECTED FINANCIAL DATA

<Table>
<Caption>
                                                         YEAR ENDED DECEMBER 31,
                                           ---------------------------------------------------
                                             2001       2000       1999       1998      1997
                                           --------   --------   --------   --------   -------
                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                        <C>        <C>        <C>        <C>        <C>
STATEMENTS OF OPERATION DATA:
Total revenue............................  $  5,355   $ 14,847   $ 12,492   $  7,743   $ 3,925
Gross margin*............................  $    876   $  5,899   $  5,110   $  1,418   $   158
Loss from operations.....................  $(21,349)  $(35,500)  $(14,741)  $ (9,957)  $(6,348)
Net loss before extraordinary item and
  cumulative effect of accounting
  change.................................  $(20,416)  $(36,299)  $(16,615)  $(10,008)  $(6,369)
Extraordinary loss on extinguishment of
  debt...................................  $     --   $ (7,453)  $     --   $     --   $    --
Cumulative effect of accounting change --
  beneficial conversion feature..........  $     --   $ (7,500)  $     --   $     --   $    --
Net loss.................................  $(20,416)  $(51,252)  $(16,615)  $(10,008)  $(6,369)
Basic and diluted net loss per share:
  Net loss before extraordinary item and
     cumulative effect of accounting
     change..............................  $  (1.11)  $  (2.36)  $  (5.47)  $  (4.74)  $ (4.59)
  Net loss...............................  $  (1.11)  $  (3.33)  $  (5.47)  $  (4.74)  $ (4.59)
Weighted average shares, basic and
  diluted................................    18,363     15,381      3,036      2,111     1,388
</Table>

                                        11
<PAGE>

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                                ----------------------------------------------
                                                 2001      2000      1999      1998      1997
                                                -------   -------   -------   -------   ------
                                                                (IN THOUSANDS)
<S>                                             <C>       <C>       <C>       <C>       <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
  investments.................................  $21,405   $40,456   $17,174   $ 6,661   $4,016
Working capital...............................   16,994    34,031    12,706     4,164    2,551
Total assets..................................   29,175    49,593    25,265    11,461    8,073
Long-term obligations and subordinated
  notes.......................................    1,980       230     9,254     1,254    1,271
Total stockholders' equity....................   22,284    39,800     7,689     5,356    3,589
</Table>

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

* Amounts reported in the year ended December 31, 1999 have been reclassified to
  conform with the presentation of the years ended December 31, 2001 and 2000.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and Eloquent's Consolidated Financial Statements and
Notes thereto included elsewhere in this report. Except for the historical
information contained herein, the discussion in this report contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of Eloquent's plans, objectives, expectations and intentions. These
forward-looking statements are based on the current expectations of Eloquent,
and Eloquent assumes no obligation to update this information. The cautionary
statements made in this report should be read as being applicable to all related
forward-looking statements wherever they appear in this Form 10-K. Eloquent's
actual results could differ materially from those discussed here.

OVERVIEW

     We were incorporated in Delaware in March 1995. We provide sales
effectiveness solutions that enable customers to increase the productivity of
their sales and marketing organizations, accelerate new product revenues and
reduce product launch expenses. The LaunchForce application enables production
and hosting of rich media product and sales content, personalized delivery of
the content and detailed measurement of the results. Rich media content involves
the combination of video, audio, graphics and text in a synchronized, searchable
and navigable format. LaunchForce delivers rich media content on the Web via
intranets or extranets or CD-ROMs. LaunchForce services include software
development and system integration, video and rich media content production and
hosting.

EVOLUTION OF OUR PRODUCT OFFERINGS

     In February 1996, we introduced the first version of our solutions
platform, which included the essential elements of content production and
navigation, including synchronized video, audio, graphics and text as well as
searchable transcripts, for delivery on CD-ROM. In following years, we enhanced
our content production to include such features as searchable slides, variable
speed playback and high-resolution video. In April 1998 we introduced hosting
services for content delivery and in January 1999, we launched our professional
services organization to provide professional media development services.

     In July 1996, we introduced our application server software, which expanded
delivery of content production from CD-ROM to intranets. In November 1997 we
enhanced our server software by expanding delivery options to include Web-based
transmissions at 28.8 Kbps and tracking and reporting capabilities. In following
years, we further enhanced our application software enabling customers to
organize manage, secure, personalize and enrich all forms of streaming content.

     In May 2001, we introduced LaunchForce, a scalable enterprise software
solution designed to manage, measure and improve sales and field readiness to
globally distributed audiences. To support our enterprise software solution we
offer software development and system integration, video and rich media content
production and hosting services.

                                        12
<PAGE>

     In November 2001, we announced FirstLaunch, a new offering of prepackaged
hardware, software and services aimed at those companies that have recurring
product launch needs. The FirstLaunch program consists of those components
required to ensure sales and field readiness, including LaunchForce software,
cameras and hardware for self-publishing, optional hosting services for the
software, and LaunchForce consulting services including training and sharing of
best practices. The FirstLaunch program enables companies to adopt LaunchForce
on a rental basis, with an option to purchase or to continue renting in the
future.

     Most of our revenue to date has been from our content production services.
We intend to increase sales of our enterprise software so that software license
revenue constitutes an increasing percentage of our revenue. The gross margin
attributable to software license revenue is significantly higher than that of
our content production services. We cannot assure you that we will be able to
increase the proportion of software license revenue and, therefore, we cannot
assure you that we will be able to proportionally improve our gross margin. As
of December 31, 2001, we had not recorded any revenue related to our FirstLaunch
program.

ACQUISITION OF REBOP

     On July 5, 2001, we acquired Rebop Media, Inc. ("Rebop"), a recently formed
live video-based Web conferencing company. Rebop's live Web conferencing
solution is designed to integrate with our LaunchForce software. As a result of
the acquisition, our customers are expected to benefit from a fully integrated
live to on-demand sales effectiveness solution.

     As consideration for the acquisition of Rebop, the former shareholders of
Rebop, including Clifford A. Reid, an officer, director and major stockholder of
Eloquent and Rebop, received an aggregate of 802,481 shares of Eloquent common
stock valued at approximately $1.1 million at the announcement date and
approximately $3.8 million in cash. In addition, the former Rebop option holders
received options to purchase an aggregate of 47,514 shares of Eloquent common
stock valued at approximately $100,000 at the announcement date.

     The acquisition has been accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" which
requires the purchase method of accounting for business combinations initiated
after June 30, 2001. Approximately $1.5 million of the aggregate purchase price
was allocated to acquired technology and $207,000 was allocated to patents.
Approximately $283,000 of the aggregate purchase price represented in-process
technology that had not yet reached technological feasibility and had no
alternative future use, and accordingly, was charged to operations in the third
quarter of fiscal 2001. Goodwill of $3.2 million, which represents the excess of
the aggregate purchase price over the fair value of the tangible and
identifiable intangible assets acquired by Eloquent, has been accounted for in
accordance with the transition provisions of SFAS No. 142 "Goodwill and Other
Intangible Assets" which requires that goodwill acquired after June 30, 2001 not
be amortized but be tested for impairment.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires us 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 consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. A change in the facts and circumstances
surrounding these estimates could result in a change to the estimates, including
those related to uncollectible receivables, intangible assets, income taxes,
restructuring and other accrued liabilities, and contingencies and litigation,
and impact future operating results.

     We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

                                        13
<PAGE>

     Revenue recognition.  We generate revenue through licensing our software
and maintenance, content production services and professional services. Revenue
for enterprise software licenses is recognized upon shipment, or upon
notification by the customer, dependent on the delivery medium. Our maintenance
revenue consists of prepaid contracts related to software, and is recognized
over the contract term, usually one year.

     For each content production transaction, we charge our customers a fixed
fee for each hour of produced content. If the content is delivered on CD-ROMs,
we also charge fees for the use of our desktop player software and fees for
CD-ROM duplication. If the content is delivered by our hosting services, we
charge monthly hosting fees. We generally recognize content production services
revenue upon shipment of the rich media event to the customer. Content
production services revenue also includes revenue for CD-ROM duplication. We
recognize this revenue upon shipment of the duplicated CD-ROMs. We recognize
software license revenue upon delivery of software to the customer. Software
license and maintenance revenue also includes revenue for content hosting. We
recognize this revenue ratably over the period of the content hosting contract.

     Our professional services revenue is from contracted services to customize
the content and software for our customers. We recognize professional services
revenue on a percentage of completion basis as the services are performed.

     In accordance with generally accepted accounting principles in the United
States, the recognition of our revenue is partly based on our assessment of the
probability of collection of the resulting accounts receivable balance. As a
result, the timing or amount of revenue recognition may have been different if
different assessment of the probability of collection of accounts receivable had
been made at the time the transactions were recorded in revenue.

     Allowance for doubtful accounts.  Our management must make estimates of the
uncollectability of our accounts receivables. Management specifically analyzes
accounts receivable and analyzes historical bad debts, customer concentrations,
customer credit-worthiness, current economic trends and changes in our customer
payment terms when evaluating the adequacy of the allowance for doubtful
accounts. Our accounts receivable balance was $184,000, net of allowance for
doubtful accounts of $121,000 as of December 31, 2001.

     Goodwill and Intangible Assets -- Impairment.  Our long-lived assets
include goodwill and other intangible assets of $3.2 million and $1.4 million,
respectively, as of December 31, 2001. During 2001, we evaluated the
recoverability of our goodwill and other intangible assets in accordance with
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," which generally required us to assess
these assets for recoverability when events or circumstances indicate a
potential impairment by estimating the timing and amount of undiscounted future
cash flows to be generated from the use of these assets. No impairment losses
were recorded related to goodwill and other intangible assets during 2001. We
are adopting SFAS No. 142 effective January 1, 2002. Any impairment resulting
from these transition tests will be recorded as of January 1, 2002 and will be
recognized as the cumulative effect of a change in accounting principle. We have
not yet determined the amount of the impairment loss, if any, but expect to
complete that measurement by June 30, 2002. Any further impairment losses
recorded in the future could have a material adverse impact on our financial
conditions and results of operations.

     Accounting for income taxes.  As part of the process of preparing our
consolidated financial statements we are required to estimate our income taxes.
This process involves us estimating our actual current tax exposure together
with assessing temporary differences resulting from differing treatment of
items, such as deferred revenue, for tax and accounting purposes. These
differences result in deferred tax assets, which are included within our
consolidated balance sheet. To date, we have not achieved profitability.
Therefore, it appears more likely than not that we will be unable to recover our
deferred tax assets. Accordingly, we have established a valuation allowance. If
we achieve profitability in a future period, we may be able to reduce the
valuation allowances against our deferred tax assets resulting in an income tax
benefit in our consolidated statement of operations.

     Legal Contingencies.  We are currently involved in certain legal
proceedings which are discussed in Note 11 of "Notes to Consolidated Financial
Statements". We believe that these lawsuits are without merit

                                        14
<PAGE>

and intend to defend against them vigorously. We do not believe these
proceedings will have a material adverse effect on our business, results of
operations, cash flows or consolidated financial position. It is possible,
however, that future results of operations for any particular quarterly or
annual period could be materially affected by changes in our assumptions, or the
effectiveness of our strategies, related to these proceedings.

OTHER MATTERS:


     We have not achieved profitability on a quarterly or annual basis to date
and we may continue to incur net losses for the foreseeable future. As of
December 31, 2001, we had an accumulated deficit of $106.5 million. In December
2000, we announced a plan to restructure operations and gave notice of
termination to 80 employees and consultants. The restructuring is intended to
better align us with future market opportunities brought about by our new
product introductions and to reduce cash expenditures prior to revenue growth.
We expect to increase our operating expenses commensurate with increases in
revenue. If we are not able to increase revenue, our business, financial
condition and operating results would suffer.


RESULTS OF OPERATIONS

     The following table sets forth certain items from Eloquent's consolidated
statements of operations as a percentage of total revenue for the years
indicated.

<Table>
<Caption>
                                                               YEAR ENDED DECEMBER 31,
                                                              -------------------------
                                                              2001      2000      1999
                                                              -----     -----     -----
<S>                                                           <C>       <C>       <C>
Revenue:
  Software licenses and maintenance.........................    32%       35%       24%
  Content production services...............................    67        54        67
  Professional services.....................................     1        11         9
                                                              ----      ----      ----
          Total revenue.....................................   100       100       100
Cost of revenue:
  Software licenses and maintenance.........................    31        10         5
  Content production services...............................    49        38        40
  Professional services.....................................     6        14        12
  Stock-based compensation..................................    (1)       (1)        2
                                                              ----      ----      ----
          Total cost of revenue.............................    85        61        59
                                                              ----      ----      ----
  Gross margin..............................................    15        39        41
                                                              ----      ----      ----
Operating expenses:
  Research and development:
     Other research and development.........................    97        36        16
     Stock-based compensation...............................     9         4         1
                                                              ----      ----      ----
                                                               106        40        17
                                                              ----      ----      ----
  Sales and marketing:
     Other sales and marketing..............................   157       140        71
     Stock-based compensation...............................     1         3        10
                                                              ----      ----      ----
                                                               158       143        81
                                                              ----      ----      ----
  General and administrative:
     Other general and administrative.......................    81        33        28
     Stock-based compensation...............................    23        18        33
                                                              ----      ----      ----
                                                               104        51        61
                                                              ----      ----      ----
</Table>

                                        15
<PAGE>

<Table>
<Caption>
                                                               YEAR ENDED DECEMBER 31,
                                                              -------------------------
                                                              2001      2000      1999
                                                              -----     -----     -----
<S>                                                           <C>       <C>       <C>
  Restructuring expense:
     Other restructuring expense............................    42        24        --
     Stock-based compensation...............................    --         3        --
                                                              ----      ----      ----
                                                                42        27        --
                                                              ----      ----      ----
  In-process research and development.......................     5        --        --
  Impairment of tangible property and equipment.............    --        17        --
                                                              ----      ----      ----
          Total operating expenses..........................   415       278       159
                                                              ----      ----      ----
Loss from operations........................................  (400)     (239)     (118)
Interest expense............................................    (2)      (10)      (17)
Impairment of investment....................................   (14)      (15)       --
Interest and other income...................................    33        20         2
                                                              ----      ----      ----
Net loss before extraordinary item and cumulative effect of
  accounting change.........................................  (383)     (244)     (133)
Extraordinary loss on extinguishment of debt................    --       (50)       --
                                                              ----      ----      ----
Loss before cumulative effect of accounting change..........  (383)     (294)     (133)
Cumulative effect of accounting change -- beneficial
  conversion feature........................................    --       (51)       --
                                                              ----      ----      ----
Net loss....................................................  (383)%    (395)%    (133)%
                                                              ====      ====      ====
</Table>

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

     Revenue.  Revenue was $5.4 million, $14.8 million and $12.5 million in
2001, 2000 and 1999, respectively. The decrease in revenue from 2000 to 2001 was
due to fewer sales of our products and services. The decline in revenue is
reflective of difficult global economic conditions and the transition of our
product focus to LaunchForce, an enterprise software sales effectiveness
solution, from the production of rich media events. We believe that cost-cutting
efforts by customers is resulting in reduced capital expenditure budgets thereby
delaying purchasing decisions. Assuming no improvement in the current economic
climate, we anticipate that customers will continue to review their expenditures
and may eliminate or defer those projects and purchases determined to be
non-critical. We believe that while the impact of the slowing economy has
reduced our customer's capital expenditure budgets, it has also increased the
need for effective global product launches that do not rely on travel.
LaunchForce is designed to meet this need. Therefore, to encourage companies to
adopt LaunchForce, we introduced a program called FirstLaunch, which is tailored
to fit into existing marketing budgets. This will enable companies with limited
capital budgets to adopt Eloquent LaunchForce on a rental basis, with an option
to purchase or to continue renting in the future. The increase in revenue from
1999 to 2000 was primarily due to higher quantity sales of our server product.
The primary reason for the increase in number of sales was a growing sales force
and increased market acceptance of our solutions.

     A limited number of large customers have accounted for a majority of our
revenue, and will continue to do so for the foreseeable future. One customer,
Compaq Computer Corporation, accounted for more than 10% of our total revenue in
the year ended December 31, 2001. To date, most of our customers have been in
the telecommunications, software, high-technology manufacturing, financial
services and pharmaceuticals industries.

          Software licenses and maintenance.  Revenue from software licenses and
     maintenance were $1.7 million, $5.3 million and $3.0 million in 2001, 2000
     and 1999, respectively. The decrease from 2000 to 2001 was due to fewer
     sales of our software products. The increase from 1999 to 2000 was
     primarily due to higher quantity sales of our legacy server product,
     Enterprise Communications Server.
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<PAGE>

          Content production services.  Content production services revenue were
     $3.6 million, $8.1 million and $8.4 million in 2001, 2000 and 1999,
     respectively. The number of events produced in 2001 fell to approximately
     150 from approximately 510 in 2000 reflecting the transition of our product
     focus to our LaunchForce solution from the production of rich media events.
     Although we produced approximately 510 rich media events in 2000, a 66%
     increase over 1999, lower pricing contributed to the 4% decrease in revenue
     from 1999 to 2000.

          Professional services.  Professional services revenue were $79,000,
     $1.5 million and $1.1 million in 2001, 2000, and 1999, respectively. The
     number and average dollar value of professional services engagements
     decreased in conjunction with fewer sales of our software products from
     2000 to 2001. Professional services revenue grew 36% from 1999 to 2000. The
     increase reflected a greater number of professional services engagements
     during 2000.

     Cost of revenue.  Cost of revenue consists primarily of software licenses
and maintenance costs, content production costs, and professional services
costs. Cost of software licenses and maintenance consists of customer support
and hosting personnel, amortization of purchased technology and patents and
royalty payments due to the owners of licensed third-party software. Cost of
content production consists of event production costs and direct personnel
expenses associated with event production, with some fixed overhead components
for facilities and infrastructure support charges. Direct labor costs associated
with content production are deferred until revenue is recognized, at which time
they are expensed as cost of revenue. Cost of professional services consists of
direct labor costs associated with providing professional services, which are
deferred until revenue is recognized, at which time they are expensed as cost of
revenue.

          Software licenses and maintenance.  Cost of software licenses and
     maintenance was $1.7 million, $1.4 million, and $646,000 in 2001, 2000, and
     1999, respectively. The increase in expense from 2000 to 2001 was
     attributable to higher customer service and hosting personnel and related
     facilities costs, and amortization expense of $270,000 associated with the
     purchased technology and patents recorded upon acquisition of Rebop,
     partially offset by lower software royalty costs. The higher payroll and
     overhead expenses were associated with the introduction of application
     hosting. Over 45% of the increase in expense from 1999 to 2000 reflects
     costs associated with personnel and related facilities costs. Approximately
     36% of the increase reflects higher software royalty payments associated
     with increased software license revenue.

          Content production services.  Cost of content production was $2.6
     million, $5.7 million and $5.0 million in 2001, 2000 and 1999,
     respectively. The decrease in expense from 2000 to 2001 was primarily due
     to the restructuring initiatives undertaken in December 2000. The
     restructuring included a reduction in workforce and, accordingly, the
     decrease is due to reduced personnel expenses and related facilities and
     infrastructure and support charges. Additionally, the decrease in content
     production revenue from 2000 to 2001 resulted in reduced CD-ROM duplication
     expense. The increase in expense from 1999 to 2000, both in dollars and as
     a percentage of content production revenue, primarily reflects increased
     costs associated with additional production personnel and related
     facilities and infrastructure costs. Although we attempt to manage the
     correlation of our direct labor force with content production volume,
     expense levels for personnel and infrastructure are committed in advance of
     customer orders. The decrease in content production revenue to $8.1 million
     in 2000 from $8.4 million in 1999 resulted in excess committed production
     costs that could not be immediately eliminated.

          Professional services.  Cost of professional services was $301,000,
     $2.0 million and $1.5 million in 2001, 2000 and 1999, respectively. The
     majority of the decrease from 2000 to 2001 was due to reduced personnel and
     recruiting costs as a result of the December 2000 restructuring
     initiatives. We are continuing to redefine our professional services
     product offerings in response to the introduction of LaunchForce. We expect
     expenses to increase at a rate commensurate with increases in revenue. Cost
     of professional services was $2.0 million in 2000 compared to $1.5 million
     in 1999. The increase in expenses was due to higher personnel and
     recruiting costs associated with the growth of our professional services
     offerings.

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     Operating expenses.  Total operating expenses were $22.2 million, $41.4
million and $19.9 million in 2001, 2000 and 1999, respectively. Without the
effect of stock-based compensation expense, restructuring expense and impairment
charges, operating expenses for 2001, 2000 and 1999 would have been $18.2
million, $31.1 million and $14.3 million, respectively.

          Other research and development.  Other research and development
     expenses consist primarily of personnel expenses associated with software
     development. Other research and development expenses were $5.2 million,
     $5.3 million, and $2.0 million in 2001, 2000 and 1999, respectively. All of
     these expenses were funded by us rather than by any of our customers. The
     slight decrease from 2000 to 2001 was due to reduced expenditures on
     outside consultants offset by increased facilities and infrastructure
     support charges. Additionally due to accounting requirements, expenses
     incurred by Rebop prior to its acquisition were required to be included in
     our operating results. We recorded $796,000 of expenses incurred by Rebop
     in 2001 compared to $560,000 recorded in 2000. The increase in other
     research and development expense from 1999 to 2000 was due primarily to
     higher personnel expenses associated with growth in our engineering staff.
     Additionally, approximately 17% of the increase in expense from 1999 to
     2000 reflects the expenses incurred by Rebop.

          Other sales and marketing.  Other sales and marketing expenses consist
     primarily of personnel expenses associated with the sale of our products
     and services and personnel and marketing materials and expenses associated
     with the marketing of our products and services. Other sales and marketing
     expenses were $8.4 million, $20.8 million and $8.9 million in 2001, 2000
     and 1999, respectively. The decrease from 2000 to 2001 was due primarily to
     reduced personnel expenses and recruiting costs associated with the
     reduction in our sales force and marketing staff as a result of the
     December 2000 restructuring initiatives as well as reduced travel and
     entertainment and facilities costs associated with fewer personnel.
     Additionally, marketing and promotional activities were reduced in 2001.
     The increase from 1999 to 2000 was due primarily to higher personnel
     expenses and recruiting costs associated with growth in our sales force and
     marketing staff. Additionally, approximately 13% of the increase in expense
     from 1999 to 2000 reflects additional marketing and promotional activities.
     We expect sales and marketing expenses to increase at a rate commensurate
     with increases in revenue.

          Other general and administrative.  Other general and administrative
     expenses consist primarily of administrative personnel expenses,
     professional fees and facilities costs. Other general and administrative
     expenses were $4.3 million, $4.9 million and $3.5 million in 2001, 2000 and
     1999, respectively. The decrease from 2000 to 2001 reflects lower personnel
     expenses and infrastructure support charges and a reduction in our
     allowance for doubtful accounts. Approximately 25% of the increase in
     expense from 1999 to 2000 reflects higher personnel expenses. Approximately
     13% of the increase relates to our allowance for doubtful accounts, and 40%
     of the increase reflects additional professional fees necessary to support
     our growth. We expect general and administrative expenses in the near
     future to be comparable to 2001.

          Stock-based compensation.  Stock-based compensation expenses consist
     primarily of charges related to the difference between employee option
     exercise prices and deemed fair market values on the date of grant
     amortized over the vesting period of the options. Stock-based compensation
     expense was $1.7 million, $4.1 million and $5.8 million in 2001, 2000 and
     1999, respectively. The decrease in expense from 2000 to 2001 and from 1999
     to 2000 was due to the reversal of amortized stock-based compensation
     expense related to cancellations, due to employee terminations during both
     2001 and 2000, of unvested stock options previously granted. Stock-based
     compensation charges are presented within the relevant functional expenses
     and are being amortized using an accelerated method of amortization as
     described in Financial Accounting Standards Board ("FASB") Interpretation
     No. 28, over the vesting periods of the options, generally four to five
     years.

          Restructuring expense and impairment of property and equipment.  In
     December 2000, we announced a plan to restructure operations that resulted
     in a charge totaling $3.5 million. The restructuring is intended to better
     align Eloquent with future market opportunities brought about by our new
     product introductions and to reduce cash expenditures prior to revenue
     growth. Under the plan, we

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<PAGE>

     gave notice of termination in December 2000 to 80 employees and consultants
     and recorded approximately $1.4 million related to salary and termination
     benefits. We hope to reduce expenditures for office space and are actively
     negotiating lease terminations, where feasible, and pursuing sub-leases
     where lease termination is not feasible for identified properties. The
     restructuring charge included $1.8 million for lease expense. This charge
     reflects payments required during lease termination notice periods,
     estimates of lease payments prior to sub-letting space and estimates of any
     rent differential between our contractual liability and current market
     rates. The restructuring charge includes $356,000 for the buy-out of
     capital leases related to impaired equipment and elimination of maintenance
     contracts for impaired software. In addition, we recorded a $2.5 million
     non-cash impairment charge to write-off the carrying value of excess
     equipment and furniture, abandoned leasehold improvements and certain
     software and technology assets. The excess equipment and furniture and
     abandoned leasehold improvements are a result of the termination of 80
     employees and consolidation of the remaining employees in fewer leased
     facilities. In 2001, we recorded an additional $2.3 million restructuring
     charge for lease expense as a result of deteriorating real estate market
     conditions resulting in lower facility lease rates then estimated for the
     initial restructuring charge. This estimate is based on current comparable
     rates for leases in our market. If facilities rental rates continue to
     decrease in our market or if it takes longer than expected to sublease
     these facilities, the actual loss could exceed this estimate.

          In-process research and development.  In July 2001, we acquired Rebop.
     Approximately $283,000 of the aggregate purchase price represented
     purchased in-process research and development that had not yet reached
     technological feasibility and had no alternative future use, and
     accordingly, was charged to operations in the third quarter of fiscal 2001
     in accordance with FASB Interpretation No. 4, "Applicability of FASB
     Statement No. 2 to Business Combinations Accounted for by the Purchase
     Method".

     Interest expense.  In 2001, interest expense consists primarily of interest
charges on equipment leases. In 2000 and 1999, interest expense consisted
primarily of interest charges on equipment leases, the subordinated notes and
bank lines of credit and amortization of the debt issuance costs and the
discount related to the $20.0 million subordinated notes and warrants. Interest
expense was $93,000, $1.5 million and $2.2 million in 2001, 2000 and 1999,
respectively. The decrease in expense from 2000 to 2001 and from 1999 to 2000
primarily reflects repayment of the subordinated notes and the bank line of
credit in February 2000 upon the consummation of our initial public offering and
amortization of the debt issuance costs and the related discount.

     Impairment of investment.  During 2000, we entered into a strategic
relationship with eSpoc Inc. ("eSpoc"), a provider of an electronic marketplace
for the purchase and liquidation of medical equipment and supplies. As part of
this relationship, we purchased 461,538 shares of eSpoc preferred stock for $3.0
million. Also during 2000, we licensed our Eloquent Communications Server
product and provided related services to eSpoc. Under the terms of the
arrangement, we recognized revenue of approximately $52,000 in 2001 and $1.3
million in 2000.

     During the fourth quarter of 2000, we performed an evaluation of the
carrying value of this investment. We considered current financial market
conditions for raising capital and reviewed the cash flows and operating results
of eSpoc and we concluded that the unfavorable financial market conditions as
they relate to entities engaged in electronic commerce were not temporary.
Accordingly, the carrying value of the equity investment in eSpoc was determined
to be impaired. A loss of $2.3 million was recognized based on the amount by
which the carrying value exceeded the fair value of our proportionate share of
the net assets of eSpoc. In the second quarter of 2001, we re-evaluated the
carrying value of our investment in eSpoc and concluded that eSpoc was no longer
pursuing its original business plan and that eSpoc's current business plan would
not result in any return to investors. Accordingly, we recognized as a loss the
remaining carrying value of $759,000.

     Interest and other income.  Interest and other income consists primarily of
interest earnings on our cash equivalents and short-term investments. Interest
and other income was $1.8 million, $3.0 million and $301,000 in 2001, 2000 and
1999, respectively. The decrease from 2001 to 2000 was due to declining average
cash and

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<PAGE>

investment balances and declining interest rates. The increase from 1999 to 2000
was due to increasing average investment balances.

     Extraordinary loss on early extinguishment of debt and cumulative effect of
accounting change.  In October 1999, we sold convertible subordinated notes and
detachable warrants to purchase 1,500,000 shares of common stock for aggregate
gross consideration of $20.0 million. In conjunction with the sale of the notes
we incurred $1.5 million in debt issue costs. The gross consideration received
from the notes was allocated between the notes and the warrants in accordance
with Accounting Principles Board ("APB") Opinion No. 14, "Accounting for
Convertible Debt and Debt Issued with Stock Purchase Warrants" as follows: long-
term notes payable of $12.5 million and warrants of $7.5 million. The notes
contained a beneficial conversion feature of $5.0 million which was recorded as
a further discount on the sale of the notes.

     The debt issuance costs and the discount resulting from the issuance of the
warrants and the original beneficial conversion feature were being amortized to
interest expense. In accordance with the terms of the notes, all amounts
outstanding under the notes were repaid upon consummation of our initial public
offering on February 23, 2000. Upon repayment of the notes, the unamortized
portion of the debt issuance costs and the discount were recorded as an
extraordinary loss on the extinguishment of debt.

     In November 2000, the Emerging Issues Task Force ("EITF") reached a
consensus regarding accounting for securities involving beneficial conversion
features. The consensus requires a cumulative adjustment for certain securities
issued after May 1999. As outlined in EITF No. 00-27, the Task Force determined
that the conversion price used to calculate the intrinsic value should be based
on the proceeds allocated to the convertible instrument. The financial statement
impact to Eloquent of this requirement is that the additional beneficial
conversion feature calculated under the new regulations of $7.5 million has been
recorded in the fourth quarter 2000 statement of operations as the cumulative
effect of accounting change -- beneficial conversion feature.

LIQUIDITY AND CAPITAL RESOURCES

     Since our inception, we have financed our operations through private sales
of preferred stock, our initial public offering of common stock and, to a lesser
extent, borrowings under lines of credit. Net proceeds from our initial public
offering of common stock were approximately $75.4 million. At December 31, 2001,
we had approximately $21.4 million of cash and equivalents and short-term
investments.

     Net cash used for operating activities was $14.7 million, $20.1 million and
$8.2 million in 2001, 2000 and 1999, respectively. In 2001 and 2000, net cash
used for operating activities was primarily attributable to net losses which
were partially off-set by non-cash charges related to the impairment of an
investment, depreciation and amortization of tangible assets and stock-based
compensation expense. In 2000, net cash used for operating activities was also
partially off-set by non-cash charges related to loss on early extinguishment of
debt and the cumulative effect of an accounting change related to the beneficial
conversion feature of the subordinated notes. Net cash used for operating
activities in 1999 was primarily attributable to a net loss which was partially
off-set by the non-cash charge for stock-based compensation expense.

     Net cash provided by investing activities was $16.4 million in 2001. Net
cash used for investing activities was $45.6 million and $976,000 in 2000 and
1999, respectively. Net cash provided by investing activities in 2001 was
related primarily to sales and maturities of investments in short-term
marketable securities off-set by cash used for the acquisition of Rebop. Net
cash used for investing activities in 2000 was related primarily to investments
in short-term marketable securities, purchases of property and equipment and
investment in eSpoc. Net cash used for investing activities in 1999 was
primarily related to purchases of property and equipment.

     Net cash used for financing activities was $410,000 in 2001. Net cash
provided by financing activities was $53.0 million and $19.7 million in 2000 and
1999, respectively. Net cash used in financing activities in 2001 resulted
primarily from principal payments on our capital leases and the repurchase of
our common stock through a Board approved stock repurchase program. This was
partially offset by cash received for common stock issuances under stock option
and employee stock purchase plans. Net cash provided by financing

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<PAGE>

activities in 2000 resulted primarily from the sale of common stock in our
initial public offering, partially offset by repayment of borrowings. Net cash
provided by financing activities in 1999 resulted primarily from the sale of
preferred stock and subordinated notes and warrants.

     We believe that our current cash and cash equivalents will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures for
at least the next 12 months. We have incurred substantial losses and negative
cash flows from operations in every fiscal period since inception. For the year
ended December 31, 2001, we incurred a loss from operations of approximately
$21.3 million and negative cash flows from operations of $14.7 million. For the
year ended December 31, 2000, we incurred a loss from operations of
approximately $35.5 million and negative cash flows from operations of $20.1
million. For the year ended December 31, 1999, we incurred a loss from
operations of approximately $14.7 million and negative cash flows from
operations of $8.2 million. As of December 31, 2001, 2000 and 1999, we had
accumulated deficits of approximately $106.5 million, $86.1 million and $34.8
million, respectively. We expect operating losses and negative cash flows to
continue for the foreseeable future. Failure to generate sufficient revenues,
raise additional funds through public or private financings, or other
arrangements, or reduce certain discretionary spending could have a material
adverse effect on our ability to achieve our intended business objectives. There
can be no assurance that such additional financings, if needed, will be
available on terms attractive to us, if at all. Our failure to raise capital
when needed could have a material adverse effect on our business, financial
condition and operating results. If additional funds are raised through the
issuance of equity securities, the percentage ownership of our then-current,
stockholders would be reduced. Furthermore, such equity securities may have
rights, preferences or privileges senior to those of common stock.

     We lease certain office facilities under non-cancelable operating lease
arrangements expiring between 2002 and 2005. These commitments primarily
represent office facilities vacated as part of our restructuring activities. At
December 31, 2001, future minimum lease commitments under non-cancelable
operating leases are: 2002 -- $1.1 million; 2003 -- $1.1 million; 2004 -- $1.1
million and 2005 -- $582.000. We sublease one of these facilities to a third
party tenant. The future sublease income under non-cancelable operating leases
are: 2002 -- $176,000; 2003 -- $192,000; 2004 -- $192,000 and 2005 -- $16,000.

     We have entered into various technology licensing agreements that allow us
to incorporate the licensed technology into our software products. Certain of
the agreements require royalty payments ranging from 1.5% to 2.5% of revenue
generated from products incorporating the licensed technology. Another agreement
requires royalty payments of less than $1,000 per license, after payment of an
initial licensing fee of $16,000. The remaining agreement requires payment of
fees ranging from approximately $2,000 to $13,000, per central processing unit,
depending on the version of the technology that is incorporated in our product.

     Beginning in July 2001, the Company and certain of its officers and
directors were named as defendants in several class action shareholder
complaints filed in the United States District Court for the Southern District
of New York. In each of these complaints, the plaintiffs allege that the
Company, certain of its officers and directors and its IPO underwriters violated
the federal securities laws because the Company's IPO registration statement and
prospectus contained untrue statements of material fact or omitted material
facts regarding the compensation to be received by, and the stock allocation
practices of, the IPO underwriters. The plaintiffs seek unspecified monetary
damages and other relief. The Company believes that these lawsuits are without
merit and intends to defend against them vigorously. However, an adverse
decision could have a material adverse effect on the Company's business, results
of operations, cash flows or consolidated financial position.

RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the FASB issued SFAS No. 141, "Business Combinations", and
SFAS No. 142, "Goodwill and Other Intangible Assets", collectively referred to
as the "Standards". SFAS No. 141 supersedes APB No. 16, "Business Combinations".
The provisions of SFAS No. 141 (1) require that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001,
(2) provide specific criteria for the initial recognition and measurement of
intangible assets apart from goodwill, and (3) require that unamortized negative
goodwill be written off immediately as an extraordinary gain instead of being
deferred

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<PAGE>

and amortized. SFAS No. 141 also requires that upon adoption of SFAS No. 142 the
Company reclassify the carrying amounts of certain intangible assets into or out
of goodwill, based on certain criteria. SFAS No. 142 supersedes APB No. 17,
"Intangible Assets," and is effective for fiscal years beginning after December
15, 2001. SFAS No. 142 primarily addresses the accounting for goodwill and
intangible assets subsequent to their initial recognition. The provisions of
SFAS No. 142 (1) prohibit the amortization of goodwill and indefinite-lived
intangible assets, (2) require that goodwill and indefinite-lived intangible
assets be tested annually for impairment (and in interim periods if certain
events occur indicating that the carrying value of goodwill and/or
indefinite-lived intangible assets may be impaired), and (3) require that
reporting units be identified for the purpose of assessing potential future
impairments of goodwill.

     The Company will adopt the provisions of SFAS No. 142 in its first quarter
ended March 31, 2002. The Company is in the process of preparing for its
adoption of SFAS No. 142 and is making the determinations as to what its
reporting units are and what amounts of goodwill, intangible assets, other
assets, and liabilities should be allocated to those reporting units. In
preparation for the adoption of FAS No. 142, the Company is in the process of
evaluating the useful lives of its existing intangible assets. It has not
determined whether any changes to those useful lives are going to have a
material impact on the results of its operations.

     SFAS No. 142 requires that goodwill be tested annually for impairment using
a two-step process. The first step is to identify a potential impairment and, in
transition, this step must be measured as of the beginning of the fiscal year.
However, a company has six months from the date of adoption to complete the
first step. The Company expects to complete that first step of the goodwill
impairment test during the second quarter of 2002. The second step of the
goodwill impairment test measures the amount of the impairment loss (measured as
of the beginning of the year of adoption), if any, and must be completed by the
end of the Company's fiscal year. Any impairment loss resulting from the
transitional impairment tests will be reflected as the cumulative effect of a
change in accounting principle in the first quarter 2002. The Company has not
yet determined what effect these impairment tests will have on its earnings and
financial position.

     In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets", which is effective for fiscal years beginning
after December 15, 2001. SFAS No. 144 supersedes SFAS No. 121, "Accounting for
the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", and the accounting and reporting provisions relating to the
disposal of a segment of a business of APB No. 30. The Company does not expect
that the adoption of SFAS 144 will have a significant impact on its consolidated
financial statements.

                            RISKS AND UNCERTAINTIES

     In addition to the other information provided in this Form 10-K, the
following risk factors should be considered carefully in evaluating Eloquent and
our business.

RISKS RELATED TO OUR BUSINESS

  WE COMPETE IN NEW AND RAPIDLY EVOLVING TECHNOLOGY AND WEB-RELATED MARKETS, WE
  NEED TO MANAGE PRODUCT TRANSITIONS AND TO DEVELOP NEW PRODUCT FEATURES IN
  ORDER TO SUCCEED.

     Our future success depends in part on our ability to manage the product
transition from focusing on providing rich media content production services to
providing our sales readiness enabling solution, LaunchForce. Managing this
transition and marketing LaunchForce requires us to present a compelling value
proposition to our potential customers. Therefore, we must do the following:

     - identify new applications for our existing products;

     - anticipate the features and functionality that will reduce our customers'
       costs as well the time from customer product introduction to first
       revenue;

     - incorporate those features and functionality into products that can be
       easily deployed;

     - communicate and demonstrate the operational impact of the features and
       functionality; and

     - price our products competitively and offer flexible licensing models.

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<PAGE>

If we are not successful in achieving these objectives on a long-term basis, our
business, financial condition and operating results will suffer.

  WE EXPECT TO CONTINUE TO INCUR LOSSES, AND AS A RESULT WE MAY NOT ACHIEVE
  PROFITABILITY.

     We have not achieved profitability on a quarterly or annual basis to date
and we anticipate that we will continue to incur net losses for the foreseeable
future. Our failure to achieve profitability could deplete our current capital
resources and reduce our ability to raise additional capital. We incurred a net
loss of approximately $20.4 million in the year ended December 31, 2001 compared
to $51.3 million in the 2000. As of December 31, 2001, we had an accumulated
deficit of approximately $106.5 million. In December 2000, we announced a plan
to restructure operations. The plan is intended to better align us with future
market opportunities brought about by our new product introductions and to
reduce cash expenditures prior to revenue growth. In 2001, we recorded
additional restructuring expense relating to various office leases as part of
our December 2000 restructuring plan. This estimate is based on current
comparable rates for leases in our market. If facilities rental rates continue
to decrease in our market or if it takes longer than expected to sublease these
facilities, the actual loss could exceed this estimate. Although we have
initiated actions to reduce cash expenditures and expenses, there can be no
assurance that we will be successful in generating additional revenue or
achieving profitability.

  OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS, AND
  AN UNANTICIPATED DECLINE IN REVENUE MAY CAUSE OUR STOCK PRICE TO FALL.

     In some future quarter, our operating results may be below the expectations
of public market analysts and investors, which may cause the price of our common
stock to fall. The factors that may cause our quarterly operating results to
fall short of expectations include:

     - delays of customer orders, which could prevent us from recognizing
       revenue until later quarters;

     - seasonal trends in sales of our solutions, which could result in lower
       quarterly revenue in the fourth quarter;

     - the slowdown and potential recession of the US and international
       economies may cause customers to defer or decrease their orders,
       resulting in fewer sales;

     - downward pressure on prices paid by our customers, as a result of
       competition or other factors, which could reduce our quarterly revenue
       even if we maintain or increase the number of sales;

     - new product and service introductions by our competitors, which could
       cause our competitors to capture revenue that we otherwise could have
       received;

     - increased costs incurred as we expand operations, increase our marketing
       efforts or undertake other initiatives, which could reduce our profit
       margin if not matched by a corresponding growth in revenue; and

     - technical difficulties or system downtime affecting the Web generally or
       the operation of our network or servers, which could cause customer
       dissatisfaction and reduce our revenue.

     We have experienced and expect to continue to experience seasonality in our
business. Due to the marketing cycles of our customers, sales of our content
production services generally tend to be lower in the fourth calendar quarter of
each year. Because the market for enterprise software designed to improve sales
and field readiness using the Web is still new, additional seasonal and other
patterns in the usage of our products and services may emerge as the market
matures.

     Our quarterly operating results may fluctuate significantly in the future
because of a variety of factors, many of which are outside our control. As a
result, operating results for any particular quarter may not be indicative of
future operating results.

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<PAGE>

  WE DEPEND ON A LIMITED NUMBER OF LARGE CUSTOMERS FOR A MAJORITY OF OUR
  REVENUE, SO THE LOSS OF OR DELAY IN PAYMENT FROM ONE OR A SMALL NUMBER OF
  CUSTOMERS COULD HAVE A LARGE IMPACT ON OUR REVENUE AND OPERATING RESULTS.

     If we were to lose a key customer, our business, financial condition and
operating results would suffer. In addition, if a key customer fails to pay
amounts it owes us, or does not pay those amounts on time, our revenue and
operating results would suffer. A limited number of large customers have
accounted for a majority of our revenue and will continue to do so for the
foreseeable future. For example, our top 10 customers during the year ended
December 31, 2001 accounted for approximately 55% of our revenue during that
period. Due to our limited number of large customers, the cancellation or delay
of a customer order during a given quarter is likely to significantly reduce
revenue for the quarter.

  THE LENGTH OF OUR SALES CYCLE IS UNCERTAIN AND THEREFORE COULD CAUSE
  SIGNIFICANT VARIATIONS IN OUR OPERATING RESULTS.

     Because we are transitioning our product focus to LaunchForce from the
production of rich media events, the length of our sales cycle -- the time
between an initial customer contact and completing a sale -- can be
unpredictable. The time between the date of our initial contact with a potential
new customer and the execution of a sales contract with that customer generally
ranges from less than two months to more than nine months, depending on the
significance of the financial terms of the arrangement, the relative size of the
customer's installation of our solution, and other factors. Our sales cycle is
also subject to delays as a result of customer-specific factors over which we
have little or no control, including budgetary constraints and internal
acceptance procedures. During the sales cycle, we may expend substantial sales
and management resources without generating corresponding revenue. Our expense
levels are relatively fixed in the short term and are based in part on our
expectations of our future revenue. As a result, any delay in our sales cycle
could cause significant variations in our operating results, particularly
because a relatively small number of customer orders represents a large portion
of our revenue. The current slowdown, and potential recession, in the US and
international economies may cause our sales cycle to lengthen even further. If
this occurs, our orders and revenue may be adversely impacted.

 WE MAY NOT BE ABLE TO BUILD AN EFFECTIVE SALES ORGANIZATION, WHICH WOULD
 PREVENT US FROM ACHIEVING THE INCREASED SALES VOLUME NECESSARY FOR US TO
 ACHIEVE PROFITABILITY.

     In order to increase our revenue, we must build an effective sales
organization. If we do not do so, we will not be able to increase our sales
sufficiently to achieve profitability. In connection with our restructuring, we
reduced the size of our sales organization. Our future success will depend in
part on our ability to recruit and retain additional, qualified sales personnel
and to train and motivate such personnel. In the past, we have had difficulty
recruiting, retaining and managing qualified sales personnel. We cannot
guarantee that we will not encounter similar difficulties in the future.
Competition for qualified personnel, particularly in the San Francisco Bay Area,
where we are located, is intense. Many of the companies competing with us for
qualified sales personnel are larger and more established than we are and have
greater financial resources than we do. This may make it even more difficult for
us to recruit and retain such personnel.

     Our operational history suggests that the level of sales we achieve is
generally determined by the number of sales personnel we employ. In 1998 and
early 1999, we suffered a significant decline in sales to customers in the
western United States primarily due to attrition in our West Coast sales force.
If we experience turnover in our sales force in the future, our business,
financial condition and operating results may suffer. Newly hired sales
personnel generally do not become fully productive until they have worked for at
least two quarters. Because of the time required to recruit new sales personnel
and for them to become fully productive, an unanticipated loss of sales
personnel could result in an under productive sales organization and reduced
sales for a significant period of time.

                                        24
<PAGE>

 WE FACE INTENSE COMPETITION FOR QUALIFIED PERSONNEL, WHICH COULD IMPAIR OUR
 ABILITY TO RECRUIT AND RETAIN KEY PERSONNEL.

     Our ability to develop, market and sell our solutions and to maintain our
competitive position depends on our ability to attract, retain and motivate
highly skilled technical, sales and marketing and other personnel. Despite the
economic downturn, there is a limited number of people with the necessary
technical skills and understanding, and competition for their services,
particularly in the San Francisco Bay Area, continues to be intense. We continue
to recruit in several key areas, if we fail to recruit or retain these
personnel, our ability to develop, market and sell our solutions will suffer.

 WE DEPEND ON TECHNOLOGY LICENSED FROM OTHER COMPANIES. WE MAY NOT BE ABLE TO
 RENEW THESE LICENSES AS THEY EXPIRE FROM TIME TO TIME, AND WE MAY NOT BE ABLE
 TO REPLACE THE LICENSED TECHNOLOGY WITHOUT SIGNIFICANT EXPENSE OR ENGINEERING
 EFFORTS, IF AT ALL.

     Our desktop player software, which runs on an end user's personal computer
to allow the user to view an event, and LaunchForce, include technologies that
other companies have licensed to us. If we are unable to maintain or renew these
licenses when they expire, we would be forced to remove these technologies from
our products and develop or license comparable technologies. This could require
additional license fees or extensive engineering efforts, or significantly
decrease our products' functionality, either of which could harm our business,
financial condition and operating results.

     In addition, we have developed our products to integrate well with the
Microsoft Windows NT operating system, the operating system used by most of our
customers to run our software. If the Windows NT operating system is changed by
Microsoft so that it no longer integrates well with our products, or if Windows
NT experiences technical problems, the operation of our software could be
impaired. In that event, our business, financial condition and operating results
could be harmed. Microsoft is not obligated to ensure that Windows NT integrates
well with our products.

     We may be required to obtain licenses from third parties to refine,
develop, market and deliver new products. We may be unable to obtain any needed
license on commercially reasonable terms or at all and rights granted under any
licenses may not be valid and enforceable.

 WE OPERATE IN MARKETS THAT WILL BECOME INCREASINGLY COMPETITIVE, WHICH COULD
 LEAD TO DECREASING PRICES AND REDUCED PROFITABILITY.

     The market for sales effectiveness solutions is new and rapidly evolving.
We expect that competition will intensify. Increased competition could lead to
decreasing prices and profitability. We compete with companies that offer
components of a rich media business-to-business communications solution,
including:

     - providers of customer and partner relationship management software;

     - companies who help deliver product information to potential customers via
       personalized web sites;

     - companies who help deliver product information to a sales force via
       groupware or a portal;

     - providers of rich media software tools;

     - multimedia content production and delivery companies;

     - digital asset management and similar companies that provide content
       management for objects including media;

     - companies that provide web-based systems for live collaboration among a
       small audience; and

     - traditional business communications and learning solution companies that
       offer live meeting and seminar services.

In addition, our customers and potential customers represent a source of
competition to the extent they decide to develop in-house sales effectiveness
and field readiness solutions.

                                        25
<PAGE>

     Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical and marketing resources,
greater name recognition and larger existing customer bases than we do. These
competitors may also be able to undertake more extensive marketing campaigns for
their brands and services, adopt more aggressive pricing policies and make more
attractive offers to potential employees and partners. We may be unable to
compete successfully against current or future competitors, and competitive
pressures may cause our business to suffer.

 OUR MANAGEMENT TEAM HAS LITTLE EXPERIENCE WORKING TOGETHER IN THEIR CURRENT
 POSITIONS, WHICH COULD LIMIT THE TEAM'S EFFECTIVENESS IN OPERATING OUR
 BUSINESS.

     Our management team does not have significant experience working together
at Eloquent in their current positions. This could prevent or limit our
management team's ability to work together effectively. The failure of our
management team to work together effectively could delay efficient
decision-making and execution of business objectives, which would negatively
impact our business, financial condition and operating results.

 WE MAY NOT BE ABLE TO ADEQUATELY MANAGE OUR ANTICIPATED GROWTH, WHICH COULD
 IMPAIR OUR EFFICIENCY AND NEGATIVELY IMPACT OUR OPERATIONS.

     We may not be able to manage our growth effectively, which could impair our
efficiency, reduce the quality of our solutions, impair further growth and harm
our business, financial condition and operating results. If we do not
effectively manage this growth, we will not be able to operate efficiently or
maintain the quality of our products. Either outcome would harm our operating
results. In the past, we have experienced rapid growth, and we plan to continue
to expand our operations. This expansion is expensive and places a significant
strain on our personnel and other resources. To manage our expanded operations
effectively, we will need to further improve our operational, financial and
management systems and successfully hire, train, motivate and manage our
employees.

 WE WILL DEPEND ON REVENUE FROM OUR HOSTING BUSINESS, WHICH WILL SUFFER IF OUR
 HOSTING EQUIPMENT AND SOFTWARE EXPERIENCE SYSTEM FAILURES.


     Our future success depends in part on our ability to successfully host our
software on behalf of our customers on our servers. Our ability to host our
software will depend on the efficient and uninterrupted operation of our
computer and communications hardware and software systems. We do not have fully
redundant hosting systems, a formal disaster recovery plan or alternative
providers of hosting services. We also may not have business interruption
insurance sufficient to compensate us for losses that may occur. All of our
hosting servers are located at AT&T Hosting Services ("AT&T") facilities in
Redwood City, California. These systems and operations are vulnerable to damage
or interruption from earthquakes, floods, fires, power loss, telecommunication
failures or similar events. They are also subject to computer viruses,
break-ins, sabotage, intentional acts of vandalism and similar misconduct.
Despite any precautions we may take, the occurrence of a natural disaster or
other unanticipated problems at the AT&T facility could result in interruptions
in our hosting service. In addition, the failure by AT&T to provide the data
communications capacity that we require could result in interruptions in our
hosting service. Any damage to or failure of our hosting systems could result in
interruptions in our hosting service. System interruptions will reduce our
revenue and profits, and our future revenue and profits will be harmed if our
customers believe that our hosting system is unreliable.


 POTENTIAL ERRORS IN OUR SOFTWARE COULD HARM OUR REPUTATION AND REDUCE OUR SALES
 AND PROFITABILITY.

     Software defects discovered after we release our software could result in
loss of revenue, delays in market acceptance and harm to our reputation. Any
product liability claim against us, if successful and of sufficient magnitude,
could harm our profitability and future sales. Our software has in the past
contained, and may in the future contain, "bugs" or errors. Although we
typically design our customer license agreements to contain provisions that
limit our exposure to potential product liability claims, we cannot guarantee
that contractual limitations of liability would be enforceable or would
otherwise protect us from liability for damages to a customer resulting from a
defect in our software. Even though we maintain insurance that covers damages
                                        26
<PAGE>

arising from the implementation and use of our software, we cannot assure you
that our insurance would cover or be sufficient to cover any product liability
claims against us.

 WE HAVE IN THE PAST EXPERIENCED RETURNS OF OUR PRODUCTS, AND AS OUR BUSINESS
 GROWS WE MAY EXPERIENCE INCREASED RETURNS, WHICH COULD HARM OUR REPUTATION AND
 NEGATIVELY IMPACT OUR OPERATING RESULTS.

     In the past, some of our customers have returned our rich media events to
us because they felt that modifications were required for the product to meet
project specifications and the customer's requirements. It is likely that we
will experience some level of returns in the future and the amount of returns
may increase despite our efforts to minimize returns. Also, returns may
adversely affect our relationship with affected customers and may harm our
reputation. This could cause us to lose potential customers and business in the
future.

 THE FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY MAY IMPAIR OUR COMPETITIVE
 POSITION.

     Our copyrights, service marks, trademarks, trade secrets, proprietary
technology and similar intellectual property are critical to our success. If we
are unable to adequately protect our rights from infringement by competitors or
others, or from misuse by our licensees, the competitive advantage that our
rights provide will be weakened.

     We rely on trademark and copyright law, trade secret protection and
confidentiality and license agreements with our employees and independent
contractors to protect our proprietary rights. We strategically pursue the
registration of trademarks and service marks in the United States and abroad.
Effective trademark, service mark, copyright and trade secret protection may not
be available in every country in which our products and services are made
available.

     We have licensed in the past, and expect to license in the future, certain
of our proprietary rights to third parties. The steps taken by us to protect our
proprietary rights may not be adequate. Although we attempt to ensure that the
quality of our brand is maintained by these licensees, licensees may take
actions that may harm the value of our proprietary rights or reputation.

 WE MAY BECOME SUBJECT TO INTELLECTUAL PROPERTY LITIGATION IN THE FUTURE THAT
 COULD CAUSE US TO INCUR SIGNIFICANT EXPENSE AND COULD REQUIRE US TO ALTER OUR
 PRODUCTS.

     We may be subject to legal proceedings and claims associated with our
intellectual property from time to time in the future. These claims, even if
without merit, could cause us to expend significant financial and managerial
resources. Further, if these claims are successful, we may be required to change
our trademarks, alter our copyrighted material or pay financial damages, any of
which could harm our business. Third parties may infringe or misappropriate our
copyrights, trademarks or similar proprietary rights in the future. In such
event, we may be forced to pursue infringement claims against such third
parties. These claims also could cause us to expend significant financial and
managerial resources.

RISKS RELATED TO THE INTERNET

 OUR FUTURE SUCCESS DEPENDS ON CONTINUED GROWTH IN USE OF THE WORLDWIDE WEB FOR
 BUSINESS COMMUNICATIONS.

     Our business could suffer if Web usage does not continue to grow. Web usage
may be inhibited for a number of reasons, including:

     - inadequate network infrastructure;

     - security concerns;

     - inconsistent quality of service;

     - lack of availability of cost-effective and high-speed service; and

     - changes in government regulation of the Web.
                                        27
<PAGE>

     If Web usage grows, the Web infrastructure may not be able to support the
demands placed on it by this growth, or its performance and reliability may
decline. In addition, future outages and other interruptions occurring
throughout the Web could lead to decreased use of our products and would
therefore harm our business.

 IF WE ARE UNABLE TO KEEP UP WITH THE RAPID TECHNOLOGICAL CHANGES THAT
 CHARACTERIZE THE WEB, OUR BUSINESS WOULD SUFFER.

     Our future success will depend on our ability to continually improve our
solutions. To do so, we will need to continually enhance our solutions in
response to the rapid technological developments, evolving industry standards
and user demands, and frequent new product introductions and enhancements that
characterize the market for Web products and services. In the event new
multimedia enabling technologies are developed and widely adopted, we may be
required to make fundamental and costly changes in our technology. We may not be
able to make these enhancements or changes in a cost-effective manner fast
enough to keep up with our competitors or at all. In this event, our business
would suffer.

RISKS RELATED TO OUR COMMON STOCK

 OUR STOCK PRICE HAS BEEN EXTREMELY VOLATILE IN THE PAST AND IS LIKELY TO BE
 EXTREMELY VOLATILE IN THE FUTURE, WHICH COULD CAUSE YOU TO LOSE ALL OR A PART
 OF YOUR INVESTMENT AND MAY RESULT IN COSTLY AND DISTRACTING SECURITIES
 LITIGATION.

     The market price of our common stock has been volatile in the past and is
likely to be extremely volatile in the future. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company. Securities
litigation could result in substantial costs and a diversion of our management's
attention and resources. The stocks of Web-related and technology companies like
ours have experienced extreme price and volume fluctuations in recent months,
many of which appear unrelated to the companies' business, financial condition
or operating results. Although the market price of our stock will in part be
based on our business, financial condition and operating results, we expect that
it will also be affected to a significant degree by these market-wide and
industry-wide price and volume fluctuations.

 IF WE FAIL TO MEET NASDAQ NATIONAL MARKET LISTING REQUIREMENTS, OUR COMMON
 STOCK WILL BE DELISTED.

     Our common stock is currently listed on the Nasdaq National Market. Nasdaq
has requirements that a company must meet in order to remain listed on the
Nasdaq National Market. These requirements include maintaining minimum net
tangible assets of $4.0 million and a minimum bid price of $1.00. Although these
requirements were not being enforced through December 31, 2001, the Nasdaq
National Market began to enforce these requirements again in January 2002. Our
net tangible assets are approximately $17.6 million at December 31, 2001,
however, if we continue to experience losses from operations and we are unable
to raise additional funds, out net tangible assets will decline. The minimum bid
price for our common stock was below $1.00 for each of the 30 trading days
beginning January 2, 2002. We have received a letter from the Nasdaq National
Market informing us that we will be subject to delisting unless our minimum bid
price is above $1.00 for ten consecutive business days during the 90 days from
February 14, 2002. If as a result of the application of these listing
requirements, our common stock were delisted from the Nasdaq National Market,
our stock would become hard to buy and sell. Further, our stock could then
potentially be subject to what are known as the "penny stock" rules, which place
additional requirements on broker-dealers who sell or make a market in such
securities. Consequently, if we were removed from the Nasdaq National Market,
the ability or willingness of broker-dealers to sell or make a market in our
Common Stock might decline. As a result, your ability to resell your shares of
our common stock could be adversely affected.

                                        28
<PAGE>

 OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SIGNIFICANT PORTION OF OUR COMMON
 STOCK, WHICH ENABLES THEM TO CONTROL MATTERS DECIDED BY THE STOCKHOLDER.

     Our directors and executive officers and their affiliates beneficially own
a significant portion of our common stock. As a result of their beneficial
ownership, our directors and executive officers, acting alone or with others,
are able to control most matters requiring stockholder approval, including the
election of directors and approval of significant transactions. This
concentration of ownership may also have the effect of delaying or preventing a
change in control of Eloquent. This could prevent our stockholders from
realizing a premium over the market price for their shares or from bringing
about a change in management.

ITEM 7A.  QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

     The primary objective of our investment activities is to preserve principal
while at the same time maximizing yields without significantly increasing risk.
To achieve this objective, we maintain our portfolio of cash equivalents and
short-term investments in a variety of securities, including, certificates of
deposit, government securities and corporate and asset-backed bonds. The
majority of our investments are in short-term debt securities issued by
corporations. These securities are generally classified as short-term
investments.

     We place our investments in high-quality issues with minimum quality
ratings of A1/P1 or A/A, depending on the rating organization. We limit the
amount of credit exposure to 10% at time of purchase for any one issuer,
excluding U.S. treasury securities or institutional money market funds.

     Our exposure to market risk is thereby limited to interest income
sensitivity, which is affected by changes in the general level of U.S. interest
rates. Our investments are subject to interest rate risk, which will decline in
value if interest rates increase. Investments in both fixed rate and floating
rate interest earning instruments carrying varying degrees of interest rate
risk. Fixed rate securities may have their fair market value adversely impacted
due to a rise in interest rates. In general, securities with longer maturities
are subject to greater interest rate risk than those with shorter maturities.
While floating rate securities generally are subject to less interest rate risk
than fixed rate securities, floating rate securities may produce less income
than expected if interest rates decrease. Due in part to these factors, our
investment income may fall short of expectations or we may suffer losses in
principal if securities are sold that have declined in market value due to
changes in interest rates.

     We do not have any foreign currency or other derivative financial
instruments.

                                        29
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Eloquent's Consolidated Financial Statements and Notes thereto are set
forth on the pages indicated at Item 14(a).

     The following table sets forth selected unaudited quarterly information for
Eloquent's last eight fiscal quarters. Eloquent believes that all necessary
adjustments (which consisted only of normal recurring adjustments) have been
included in the amounts stated below to present fairly the results of such
periods when read in conjunction with the consolidated financial statements and
related notes included elsewhere herein.

<Table>
<Caption>
                                           FIRST QUARTER   SECOND QUARTER   THIRD QUARTER   FOURTH QUARTER
                                           -------------   --------------   -------------   --------------
                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                        <C>             <C>              <C>             <C>
YEAR ENDED DECEMBER 31, 2001
Total revenue............................    $  2,005         $ 1,610          $ 1,072         $    668
Gross margin.............................    $    714         $   433          $   (79)        $   (192)
Loss from operations.....................    $ (4,749)        $(6,451)         $(5,364)        $ (4,785)
Net loss.................................    $ (4,206)        $(6,693)         $(4,986)        $ (4,531)
Basic and diluted net loss per share.....    $  (0.24)        $ (0.37)         $ (0.27)        $  (0.24)
Weighted average shares, basic and
  diluted................................      17,793          17,936           18,610           19,243
YEAR ENDED DECEMBER 31, 2000
Total revenue............................    $  4,626         $ 5,207          $ 3,154         $  1,860
Gross margin.............................    $  2,317         $ 2,684          $   994         $    (96)
Loss from operations.....................    $ (5,931)        $(7,263)         $(9,305)        $(13,001)
Net loss before extraordinary item and
  cumulative effect of accounting
  change.................................    $ (6,504)        $(6,505)         $(8,602)        $(14,688)
Extraordinary loss on extinguishment of
  debt...................................    $ (7,453)        $    --          $    --         $     --
Cumulative effect of accounting change --
  beneficial conversion feature..........    $     --         $    --          $    --         $ (7,500)
Net loss.................................    $(13,957)        $(6,505)         $(8,602)        $(22,188)
Basic and diluted net loss per share:
  Net loss before extraordinary item and
     cumulative effect of accounting
     change..............................    $  (0.67)        $ (0.39)         $ (0.50)        $  (0.84)
  Net loss...............................    $  (1.44)        $ (0.39)         $ (0.50)        $  (1.27)
Weighted average shares, basic and
  diluted................................       9,698          16,831           17,185           17,531
</Table>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.

                                        30
<PAGE>


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     (a) Identification of Directors:


     Our directors and their ages as of April 26, 2002 are as follows:



<Table>
<Caption>
NAME                                        AGE                    POSITION
----                                        ---                    --------
<S>                                         <C>   <C>
Clifford A. Reid..........................  43    Chairman of the Board, Chief Executive
                                                  Officer and Director
Michael E. Herman(1)......................  60    Director
Anthony P. Brenner(1).....................  44    Director
Terry L. Opdendyk(1)(2)...................  54    Director
Sarah M. Nolan(2).........................  51    Director
</Table>


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


(1)Member of Audit Committee.



(2)Member of Compensation Committee.



CLIFFORD A. REID, PH.D.



     Clifford A. Reid, Ph.D. co-founded Eloquent in March 1995 and has served as
Eloquent's Chairman of the Board since its inception. Since November 2000, Dr.
Reid has also served as Eloquent's Chief Executive Officer. In July 2000, Dr.
Reid co-founded Rebop Media, Inc., where he was Chief Executive Officer and
President until its acquisition by Eloquent in July 2001. From March 1995 to
January 1999, Dr. Reid served as Chief Executive Officer and President of
Eloquent. In April 1988, Dr. Reid co-founded Verity, Inc., a search software
products company, where he was Vice President of Engineering from 1988 to 1992
and Executive Vice President from 1992 to 1993. Dr. Reid holds an S.B. in
physics from the Massachusetts Institute of Technology, an M.B.A. from Harvard
University and a Ph.D. in engineering-economic systems from Stanford University.



MICHAEL E. HERMAN



     Michael E. Herman has served as a director of Eloquent since November 1999.
From 1993 to 2000, Mr. Herman served as President of the Kansas City Royals, a
major league baseball team. From 1985 to 1990, Mr. Herman served as the
President and Chief Operating Officer of the Ewing Marion Kauffman Foundation.
From 1990 until 1999, he served as Chairman of the Investment Committee of the
Ewing Marion Kauffman Foundation. From 1974 to 1990, Mr. Herman served as
Executive Vice President and Chief Financial Officer of Marion Laboratories, a
pharmaceutical company. Mr. Herman serves on the board of directors of the Janus
Capital Corporation and the Cerner Corporation, and is a trustee of the
University of Chicago Graduate School of Business and the Rensselaer Polytechnic
Institute. Mr. Herman holds a B.S. in Metallurgical Engineering from Rensselaer
Polytechnic Institute and an M.B.A. from the University of Chicago.



ANTHONY P. BRENNER



     Anthony P. Brenner has served as a director of Eloquent since July 1998.
From January 1998 through March 2002, Mr. Brenner was a managing director and
partner of Crosslink Capital, Inc., a venture capital firm that was formerly the
Omega Ventures arm of Robertson, Stephens & Company. From September to December
1997, he was an independent consultant to Omega Ventures. Since January 1989,
Mr. Brenner has served as President of Cedar Point Partners, L.P., a private
equity investment partnership. From May 1994 to September 1996, Mr. Brenner was
Senior Managing Director of Advanta Partners, a venture capital firm affiliated
with Advanta Corporation, a financial services company. Mr. Brenner presently
serves as a member of the board of directors of Mainspring Communications Inc.
and from May 1992 to August 1996 served as a member of the board of directors of
Advanta Corporation. Mr. Brenner holds a B.A. in economics from Yale University
and an M.B.A. from Stanford University.


                                        31
<PAGE>


TERRY L. OPDENDYK



     Terry L. Opdendyk has served as a director of Eloquent since October 1995.
Mr. Opdendyk has been a partner of ONSET Ventures since 1984. He currently
serves as Chairman of ONSET Venture Services Corporation; General Partner of OEA
Management, L.P., the General Partner of ONSET Enterprise Associates, L.P.;
General Partner of OEA II Management, L.P., the General Partner of ONSET
Enterprise Associates II, L.P.; Managing Director of OEA III Management, L.L.C.,
the General Partner of ONSET Enterprise Associates III, L.P.; Managing Director
of ONSET IV Management L.L.C., and the General Partner of ONSET IV, L.P. Mr.
Opdendyk holds a B.S. in computer science from Michigan State University and an
M.S. in computer science from Stanford University.



SARAH M. NOLAN



     Sarah M. Nolan has served as a director of Eloquent since March 2001. From
September 1999 to February 2001, Ms. Nolan served as the President and Chief
Executive Officer of move.com, an Internet company focused on assisting
individuals in buying or renting a new residence. In 1999, Ms. Nolan served as
Executive-in-Residence at Onset Ventures, a venture capital firm. In 1998, Ms.
Nolan served as Chairman of the Board and Chief Executive Officer of Narrowline,
an Internet advertising exchange and research company. In 1997, Ms. Nolan served
as President and Chief Executive Officer of OptionsLink, L.L.C., a web and IVR
based company that managed employee stock options. From 1992 to 1997, Ms. Nolan
served as President of Nolan Consulting Group, a business consulting company.
Ms. Nolan holds a B.A. in psychology and anthropology from Rhodes College,
Memphis, Tennessee, and an M.B.A. from New York University.


     (b) Identification of Executive Officers:


     The information concerning the Company's executive officers included under
the caption "Employees" in Part 1, Item 1, hereof is incorporated by reference
into this Item 10.


     (c) Compliance with Section 16(a) of the Exchange Act:

     To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2001, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.

ITEM 11.  EXECUTIVE COMPENSATION


                           COMPENSATION OF DIRECTORS



     We have not provided cash compensation to non-employee directors for their
services as directors or members of committees of the Board. The members of the
Board are eligible for reimbursement for their expenses incurred in connection
with attendance at Board meetings in accordance with Company policy.



     Each non-employee director of the Company receives stock option grants
under the 1999 Equity Incentive Plan. Options granted to non-employee directors
under the 1999 Equity Incentive Plan are intended by the Company not to qualify
as incentive stock options under the Internal Revenue Code (the "Code"). Option
grants to non-employee directors under the 1999 Equity Incentive Plan are
non-discretionary. All options granted to non-employee directors under the 1999
Equity Incentive Plan will have a term of ten (10) years and the exercise price
will be the fair market value of the Common Stock on the day such options are
granted.



     Each person who is elected or appointed for the first time to be a
non-employee director shall automatically, on the date of his or her initial
election or appointment as a non-employee director, receive an initial grant to
purchase fifty thousand (50,000) shares of Common Stock of the Company. The
initial grants to non-employee directors under the 1999 Equity Incentive Plan
vest 1/3 per year from the date on which they were granted.


                                        32
<PAGE>


     In addition, each year, on the day after the Company's annual stockholders'
meeting, any person who is then a non-employee director will automatically be
granted an annual grant to purchase 10,000 shares of Common Stock without
further action by the Company, the Board, or the stockholders of the Company. If
an optionee did not serve as a non-employee director during the entire period
since the preceding annual stockholders' meeting, the annual option grant to
that non-employee director will be reduced, pro rata, for each full quarter such
non-employee director did not serve during such period. The annual grants to
non-employee directors under the 1999 Equity Incentive Plan vest one year from
the date such annual grants were made.



     On the day of the 2001 annual stockholders' meeting, Sarah Nolan was
elected to the Board by the stockholders of the Company. Pursuant to the terms
of the 1999 Equity Incentive Plan and as described above, she automatically
received the initial grant of an option to purchase 50,000 shares of Common
Stock at an exercise price per share of $1.14. The fair market value of such
Common Stock on the date of grant was $1.14 (based on the closing sales price
reported on the Nasdaq National Market for the date of grant). As described
above, this initial grant will vest 1/3 per year from the date it was granted.



     Pursuant to the terms of the 1999 Equity Incentive Plan, on the day after
the 2001 annual stockholders' meeting the non-employee directors Anthony
Brenner, Michael Herman, and Terry Opdendyk received a one-time grant of an
option to purchase 50,000 shares of Common Stock, in lieu of the annual grant
described above, at an exercise price per share of $1.10. The fair market value
of such Common Stock on the date of grant was $1.10 (based on the closing sales
price reported on the Nasdaq National Market for the date of grant). As
described above, these annual grants vest one year from the date such annual
grants were made.



     As of March 1, 2002, no non-employee director options had been exercised
under the 1999 Equity Incentive Plan.


                                        33
<PAGE>


                       COMPENSATION OF EXECUTIVE OFFICERS



SUMMARY OF COMPENSATION



     The following table shows for the fiscal years ended December 31, 1999,
2000 and 2001, compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its other four most highly compensated executive
officers at December 31, 2001 and one former executive officer who departed from
the Company during fiscal year 2001 (the "Named Executive Officers"):



                           SUMMARY COMPENSATION TABLE



<Table>
<Caption>
                                                                                   LONG-TERM
                                              ANNUAL COMPENSATION                COMPENSATION
                                        --------------------------------   -------------------------
                                                               OTHER       SECURITIES
                                                               ANNUAL      UNDERLYING    ALL OTHER
                                        SALARY     BONUS    COMPENSATION    OPTIONS     COMPENSATION
NAME AND PRINCIPAL POSITION      YEAR     ($)       ($)         ($)           (#)          ($)(1)
---------------------------      ----   -------   -------   ------------   ----------   ------------
<S>                              <C>    <C>       <C>       <C>            <C>          <C>
Clifford A. Reid, Ph.D.........  2001   222,787    75,000        --         200,000         161
  Chairman of the Board and      2000    98,538    50,840        --              --          --
  Chief Executive Officer        1999   140,000    45,720        --         125,000          --
Edward Molkenbuhr..............  2001   115,096    15,000        --         400,000         169
  President                      2000        --        --        --              --          --
                                 1999        --        --        --              --          --
David Glazer...................  2001   174,423    21,500        --         100,000         261
  Chief Technical Officer        2000   142,212   145,215        --         100,000         131
                                 1999   145,000    22,860        --         100,000          --
R. John Curson.................  2001   199,423    26,400        --         200,000         306
  Chief Financial Officer,       2000   166,731    35,467        --         152,500         153
  Secretary and Treasurer        1999    98,622     7,814        --         210,000          --
Joseph Cortale.................  2001   105,644        --        --         250,000         132
  Vice President of Sales        2000        --        --        --              --          --
                                 1999        --        --        --              --          --
Gary Laney(2)..................  2001   106,923    45,034        --          50,000         126
  Former Vice President of
  Sales                          2000   160,000   122,805        --         166,931         108
  and Office of the President    1999    14,308        --        --          37,069          --
</Table>


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


(1)Reflects long term life insurance premiums paid by Eloquent.



(2)As of June 20, 2001, Mr. Laney resigned from the Office of the President, and
   as of June 27, 2001, he terminated his employment with Eloquent as Vice
   President of Sales.



                       STOCK OPTION GRANTS AND EXERCISES



     The Company currently grants options to its executive officers under its
1999 Equity Incentive Plan and 2000 Non-Qualified Stock Plan. As of March 1,
2002, options to purchase a total of 3,240,964 shares were outstanding under the
Company's 1999 Equity Incentive Plan, and predecessor plans and options to
purchase 1,967,555 shares remained available for grant thereunder, and options
to purchase a total of 655,709 shares were outstanding under the Company's 2000
Non-Qualified Stock Plan and options to purchase 1,344,291 shares remained
available for grant thereunder. Options generally vest over a four year period,
twenty-five (25%) after one year and 2.083% per month thereafter.


                                        34
<PAGE>


     The following tables show for the fiscal year ended December 31, 2001,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers:



                       OPTION GRANTS IN LAST FISCAL YEAR



<Table>
<Caption>
                                  INDIVIDUAL GRANTS                                         POTENTIAL
                             ---------------------------                               REALIZABLE VALUE AT
                                            PERCENTAGE                                   ASSUMED ANNUAL
                             NUMBER OF       OF TOTAL                                 RATES OF STOCK PRICE
                             SECURITIES      OPTIONS                                      APPRECIATION
                             UNDERLYING     GRANTED TO     EXERCISE OR                   FOR OPTION TERM
                              OPTIONS      EMPLOYEES IN    BASE PRICE    EXPIRATION   ---------------------
NAME                         GRANTED(#)   FISCAL 2001(1)     ($/SH)         DATE        5%($)      10%($)
----                         ----------   --------------   -----------   ----------   ---------   ---------
<S>                          <C>          <C>              <C>           <C>          <C>         <C>
Dr. Reid...................   200,000           8.0%          0.75        04/24/11      94,334     239,061
Mr. Molkenbuhr.............   400,000          16.0%          1.45        06/19/11     364,633     923,978
Mr. Glazer.................   100,000           4.0%          0.78        05/08/11      49,054     124,312
Mr. Curson.................   200,000           8.0%          0.78        05/08/11      98,108     248,624
Mr. Cortale................   250,000          10.0%          0.67        10/15/11     105,303     266,838
Mr. Laney..................    50,000           2.0%          0.78        05/08/11      24,527      62,156
</Table>


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


(1)Percentage is based on the total options granted to employees in Fiscal Year
   2001. It does not include options granted to non-employee directors or
   options assumed in connection with the acquisition of Rebop Media, Inc.
   consummated in July 2001.



                AGGREGATED OPTION EXERCISES IN FISCAL 2001, AND


                     VALUE OF OPTIONS AT END OF FISCAL 2001



<Table>
<Caption>
                                                                        NUMBER OF
                                                                       SECURITIES         VALUE OF
                                                                       UNDERLYING        UNEXERCISED
                                                                       UNEXERCISED      IN-THE-MONEY
                                           SHARES                        OPTIONS           OPTIONS
                                         ACQUIRED ON      VALUE       AT FY-END(#)      AT FY-END($)
NAME                                     EXERCISE(#)   REALIZED($)   VESTED/UNVESTED   VESTED/UNVESTED
----                                     -----------   -----------   ---------------   ---------------
<S>                                      <C>           <C>           <C>               <C>
Dr. Reid...............................        --            --      121,876/203,124          --
Mr. Molkenbuhr.........................        --            --            0/400,000          --
Mr. Glazer.............................        --            --      106,250/193,750          --
Mr. Curson.............................        --            --      225,938/336,562          --
Mr. Cortale............................        --            --            0/250,000          --
Mr. Laney..............................     5,208         2,477                   --          --
</Table>



             EMPLOYMENT SEVERANCE AND CHANGE OF CONTROL AGREEMENTS



     In November 2000, the Company entered into an employment agreement with
John Curson. Under the terms of this agreement, in the event Mr. Curson is
terminated without "cause", he is entitled to receive from the Company continued
payment of his base salary for a period of six months and continued vesting of
any outstanding stock options during such period. In addition, in the event of a
change of control of Eloquent, one-half of his then-unvested shares subject to
options will immediately vest.



     In June 2001, the Company entered into an employment agreement with M.
Edward Molkenbuhr. Under the terms of this agreement, in the event Mr.
Molkenburh is terminated without "cause", he is entitled to receive from the
Company $18,750 per month, plus a continuation of the health plan benefits in
place at that time, for six months following such termination.



     In June 2001, the Company entered into an employment agreement with Joseph
Cortale. Under the terms of this agreement, in the event Mr. Cortale is
terminated upon a change of control, he is entitled to


                                        35
<PAGE>


receive from the Company $18,334 per month, plus a continuation of the health
plan benefits in place at that time, for six months following such termination.



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION



     The Compensation Committee is currently composed of two outside directors:
Sarah Nolan and Terry Opdendyk. Kathryn Gould and David Millet served as members
of the Compensation Committee until their resignations from the Board on January
24 and March 26, 2001, respectively. None of the members of the Compensation
Committee was at any time since the formation of Eloquent one of our officers or
employees. None of our executive officers serves as a member of the Board or
Compensation Committee of any entity that has one or more executive officers
serving on our Board or Compensation Committee.



     On July 5, 2001, pursuant to the First Amended and Restated Agreement and
Plan of Merger dated June 22, 2001 by and among Eloquent, Rebop Media, Inc.,
Rebop Acquisition Corp. and Certain Shareholders of Rebop Media, Inc., Eloquent
acquired all outstanding shares of capital stock of Rebop Media, Inc. in
exchange for 802,481 shares of Eloquent Common Stock and approximately $3.8
million in cash. In addition, the former Rebop Media, Inc. option holders
received options to purchase an aggregate of 47,514 shares of Eloquent Common
Stock. Mr. Glazer, an officer of Eloquent, was also a director of Rebop Media,
Inc. Dr. Reid, an officer, director, and 5% stockholder of Eloquent, was also an
officer, director, and shareholder of Rebop Media, Inc. Pursuant to the terms of
the merger with Rebop Media, Inc. and in exchange for his shares of Rebop Media,
Inc. Common Stock, Dr. Reid received 524,314 shares of Eloquent Common Stock and
$817,996 in cash.



     The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.



     On June 27, 2001, Gary Laney exercised options to purchase 5,208 shares of
the Company's Common Stock at a total exercise price of $4,062. The difference
between the exercise price and the fair market value of such shares, based on
the closing sales price reported on the Nasdaq National Markets for the date of
exercise, (the "Net Value Realized") was $2,477.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


     The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 1, 2002 by: (i) each director; (ii)
each of the executive officers named in the Summary Compensation Table; (iii)
all executive officers and directors of the Company as a group; and (iv) all
those known by the Company to be beneficial owners of more than 5% of its Common
Stock. Unless otherwise


                                        36
<PAGE>


indicated, the address for each of the stockholders listed below is c/o
Eloquent, Inc., 2000 Alameda de las Pulgas, Suite 100, San Mateo, California
94403.



<Table>
<Caption>
                                                              BENEFICIAL OWNERSHIP(1)
                                                              ------------------------
                                                              NUMBER OF    PERCENT OF
BENEFICIAL OWNER                                                SHARES        TOTAL
----------------                                              ----------   -----------
<S>                                                           <C>          <C>
Entities associated with Crosslink Capital, Inc.(2).........  1,334,787        6.9%
  555 California Street
  Suite 2350
  San Francisco, CA 94104
Entities associated with Foundation Capital(3)..............  3,358,192       17.4%
  70 Willow Road, Suite 200
  Menlo Park, CA 94025
Entities associated with ONSET Ventures(4)..................  2,122,507       11.0%
  2490 Sand Hill Road
  Menlo Park, CA 94025
Entities associates with Perkins Capital Management,
  Inc.(5)...................................................  1,171,750        6.1%
  730 East Lake Street
  Wayzata, MN 55391
Anthony P. Brenner(6).......................................  1,439,517        7.4%
  c/o Crosslink Capital, Inc.
  555 California Street
  Suite 2350
  San Francisco, CA 94104
Michael E. Herman(7)........................................    189,120          *
Sarah M. Nolan(8)...........................................     50,870          *
Terry L. Opdendyk(9)........................................  2,274,497       11.8%
  c/o ONSET Ventures
  2490 Sand Hill Road
  Menlo Park, CA 94025
Joseph Cortale(10)..........................................    250,000        1.3%
R. John Curson(11)..........................................    562,500        2.8%
David Glazer(12)............................................    902,481        4.6%
Gary Laney(13)..............................................         --          *
Edward Molkenbuhr(14).......................................    400,000        2.0%
Clifford A. Reid, Ph.D.(15).................................  2,433,314       12.4%
All executive officers and directors as a group (10
  Persons)(16)..............................................  8,502,299       39.8%
</Table>


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


  * Less than one percent.



 (1)This table is based upon information supplied by officers, directors and
    principal stockholders and Schedules 13D and 13G filed with the Securities
    and Exchange Commission (the "SEC"). Unless otherwise indicated in the
    footnotes to this table and subject to community property laws where
    applicable, the Company believes that each of the stockholders named in this
    table has sole voting and investment power with respect to the shares
    indicated as beneficially owned. Applicable percentages are based on
    19,276,166 shares outstanding on March 1, 2002 adjusted as required by rules
    promulgated by the SEC.



 (2)Includes 49,998 shares held by Crossover Fund III Management, L.L.C., 30,000
    shares held by Delta Growth Management, Inc., 1,254,789 shares held by
    Crosslink Omega III Holdings, L.L.C. (collectively, the "Crosslink Funds").
    As of March 1, 2002, Mr. Brenner, a director of Eloquent, was a member of
    Crossover Fund III Management, L.L.C., Crosslink Omega III Holdings, L.L.C.,
    and was a member of the general partner of each of the other Crosslink
    Funds. Mr. Brenner disclaims beneficial ownership of these shares within the
    meaning of Rule 13d-3 under the Securities Exchange Act of 1934.


                                        37
<PAGE>


 (3)Includes 1,537,522 shares held by Foundation Capital, L.P., 141,574 shares
    held by Foundation Capital Entrepreneurs Fund, L.L.C, and 1,679,096 shares
    held by Foundation Capital Management, L.L.C.



 (4)Includes 1,668,103 shares held by ONSET Enterprise Associates II, L.P.,
    429,404 shares, held by ONSET Enterprise Associates III, L.P., and 25,000
    shares held by ONSET Venture Services Corporation (collectively, the "ONSET
    Funds"). Mr. Opdendyk, a director of Eloquent, is a general partner of each
    of the ONSET Funds. Mr. Opdendyk disclaims beneficial ownership of all these
    shares within the meaning of Rule 13d-3 under the Securities Exchange Act of
    1934.



 (5)Perkins Capital Management, Inc. has sole investment power with respect to
    1,171,750 shares but has voting power with respect to none of such shares.



 (6)Includes 1,334,787 shares held by the Crosslink Funds. As of March 1, 2002,
    Mr. Brenner, a director of Eloquent, is a member of Crossover Fund III
    Management, L.L.C., Crosslink Omega III Holdings, L.L.C., and is a member of
    the general partner of each of the other Crosslink Funds. Mr. Brenner
    disclaims beneficial ownership of these shares within the meaning of Rule
    13d-3 under the Securities Exchange Act of 1934. This figure also includes
    29,730 outstanding shares and 75,000 shares underlying currently exercisable
    stock options granted to Mr. Brenner under our 1999 Equity Incentive Plan
    and held by him in his individual capacity. If these options were exercised
    in full within sixty (60) days of March 1, 2002, 58,333 of these shares
    would be subject to a repurchase right in favor of Eloquent.



 (7)Includes 42,870 shares held by the Michael E. Herman Revocable Trust of
    which Mr. Herman serves as trustee. Includes 29,100 shares held by Vail
    Fishing Partners of which Mr. Herman is a general partner. Includes 1,750
    shares held by Mr. Herman's wife, Karen Herman, but Mr. Herman disclaims
    beneficial ownership of such 1,750 shares held by his wife within the
    meaning of Rule 13d-3 under the Securities Exchange Act of 1934. Includes
    40,400 shares held by the Herman Family Trading Company, L.P. Mr. Herman
    serves as the sole trustee of the sole general partner of Herman Family
    Trading Company. Includes 25,000 shares underlying currently exercisable
    stock options granted to Mr. Herman under our 1997 Equity Incentive Plan and
    transferred by Mr. Herman to the Herman Family Trading Company, L.P. and
    50,000 shares underlying currently exercisable stock options granted to Mr.
    Herman under our 1999 Equity Incentive Plan and held by him in his
    individual capacity. If these options were exercised in full within sixty
    (60) days of March 1, 2002, 58,333 of these shares would be subject to a
    repurchase right in favor of Eloquent.



 (8)Includes 50,000 shares underlying currently exercisable stock options
    granted to Ms. Nolan under our 1999 Equity Incentive Plan and held by her in
    her individual capacity. If these options were exercised in full within
    sixty (60) days of March 1, 2002, 50,000 of these shares would be subject to
    a repurchase right in favor of Eloquent.



 (9)Includes 2,122,507 shares held by the ONSET Funds. Mr. Opdendyk, a director
    of Eloquent, is a general partner of each of the ONSET Funds. Mr. Opdendyk
    disclaims beneficial ownership of these shares within the meaning of Rule
    13d-3 under the Securities Exchange Act of 1934. This figure also includes
    76,990 outstanding shares and 75,000 shares underlying currently exercisable
    stock options granted to Mr. Opdendyk under our 1999 Equity Incentive Plan
    and held by him in his individual capacity. If these options were exercised
    in full within sixty (60) days of March 1, 2002, 58,333 of these shares
    would be subject to a repurchase right in favor of Eloquent.



(10)Includes 250,000 shares underlying currently exercisable stock options
    granted to Mr. Cortale under our 1999 Equity Incentive Plan. If these
    options were exercised in full within sixty (60) days of March 1, 2002,
    250,000 of these shares would be subject to a repurchase right in favor of
    Eloquent.



(11)Includes 262,500 shares underlying currently exercisable stock options
    granted to Mr. Curson under our 1997 Equity Incentive Plan, 200,000 shares
    underlying currently exercisable stock options granted to Mr. Curson under
    our 1999 Equity Incentive Plan, and 100,000 shares underlying currently
    exercisable stock options granted to Mr. Curson under our 2000 Non-Qualified
    Stock Plan. If these options were exercised in full within sixty (60) days
    of March 1, 2002, 302,500 of these shares would be subject to a repurchase
    right in favor of Eloquent.


                                        38
<PAGE>


(12)Includes 100,000 shares underlying currently exercisable stock options
    granted to Mr. Glazer under our 1997 Equity Incentive Plan, 100,000 shares
    underlying currently exercisable stock options granted to Mr. Glazer under
    our 1999 Equity Incentive Plan, and 100,000 shares underlying currently
    exercisable stock options granted to Mr. Glazer under our 2000 Non-Qualified
    Stock Plan. If these options were exercised in full within sixty (60) days
    of March 1, 2002, 175,000 of these shares would be subject to a repurchase
    right in favor of Eloquent.



(13)As of June 20, 2001, Mr. Laney resigned from the Office of the President,
    and as of June 27, 2001, Mr. Laney terminated his employment with Eloquent
    as Vice President of Sales. On June 27, 2001, Mr. Laney sold his only shares
    of the Company's common stock. All of Mr. Laney's outstanding stock options
    have now terminated.



(14)Includes 400,000 shares underlying currently exercisable stock options
    granted to Mr. Molkenburh under our 1999 Equity Incentive Plan If these
    options were exercised in full within sixty (60) days of March 1, 2002,
    400,000 of these shares would be subject to a repurchase right in favor of
    Eloquent.



(15)Includes 125,000 shares underlying currently exercisable stock options
    granted to Mr. Reid under our 1997 Equity Incentive Plan and 200,000 shares
    underlying currently exercisable stock options granted to Mr. Reid under our
    2000 Non-Qualified Stock Plan. If these options were exercised in full
    within sixty (60) days of March 1, 2002, 186,979 of these shares would be
    subject to a repurchase right in favor of Eloquent. Darlene K. Mann, Mr.
    Reid's domestic partner, is a general partner of each of the ONSET Funds.
    Mr. Reid disclaims beneficial ownership of any of the shares held by the
    ONSET Funds.



(16)Includes 2,112,500 shares underlying currently exercisable stock options
    granted to ten (10) of our executive officers and directors under our 1997
    Equity Incentive Plan, 1999 Equity Incentive Plan, and/or 2000 Non-Qualified
    Stock Plan. If these options were exercised in full within sixty (60) days
    March 1, 2002, 1,539,478 of these shares would be subject to a repurchase
    right in favor of Eloquent.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


     On July 5, 2001, pursuant to the First Amended and Restated Agreement and
Plan of Merger dated June 22, 2001 by and among Eloquent, Rebop Media, Inc.,
Rebop Acquisition Corp. and Certain Shareholders of Rebop Media, Inc., Eloquent
acquired all outstanding shares of capital stock of Rebop Media, Inc. in
exchange for 802,481 shares of Eloquent Common Stock and approximately $3.8
million in cash. In addition, the former Rebop Media, Inc. option holders
received options to purchase an aggregate of 47,514 shares of Eloquent Common
Stock. Mr. Glazer, an officer of Eloquent, was also a director of Rebop Media,
Inc. Dr. Reid, an officer, director, and 5% stockholder of Eloquent, was also an
officer, director, and shareholder of Rebop Media, Inc. Pursuant to the terms of
the merger with Rebop Media, Inc. and in exchange for his shares of Rebop Media,
Inc. Common Stock, Dr. Reid received 524,314 shares of Eloquent Common Stock and
$817,996 in cash.



     The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.



     On June 27, 2001, Gary Laney exercised options to purchase 5,208 shares of
the Company's Common Stock at a total exercise price of $4,062. The Net Value
Realized was $2,477.


                                        39
<PAGE>

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) The following documents are filed as part of this report:

          1.  Consolidated Financial Statements as of December 31, 2001 and
     2000, and for the three years ended December 31, 2001, 2000 and 1999:


<Table>
<Caption>
                                                               PAGE
                                                               ----
<S>                                                            <C>
Consolidated Balance Sheets.................................    41
Consolidated Statements of Operations.......................    42
Consolidated Statements of Stockholders' Equity.............    43
Consolidated Statements of Cash Flows.......................    44
Notes to Consolidated Financial Statements..................    45
Report of Independent Accountants...........................    63
</Table>


          2.  Financial Statement Schedules.

          Schedules not listed below have been omitted because the information
     required to be set forth therein is not applicable or is included in the
     consolidated financial statements or notes thereto.

          Schedule II -- Valuation and Qualifying Accounts for the three years
     ended December 31, 2001, 2000 and 1999.

          3.  Exhibits

          The exhibits listed in the accompanying index to exhibits are filed or
     incorporated by reference as part of this Annual Report on Form 10-K.

     (b) The Company did not file a report on Form 8-K in the quarter ended
December 31, 2002.

     (c) See Exhibits listed in the accompanying index to exhibits.

     (d) The financial statement schedules required by this Item are listed
under Item 14(a)(2).

                                        40
<PAGE>

                                 ELOQUENT, INC.

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                 2001        2000
                                                              ----------   ---------
                                                              (IN THOUSANDS, EXCEPT
                                                                PER SHARE AMOUNTS)
<S>                                                           <C>          <C>
                                       ASSETS
Current assets:
     Cash and cash equivalents..............................  $   5,744    $  4,519
     Short-term investments.................................     14,686      34,949
     Restricted short-term investments......................        975         988
     Accounts receivable, net of allowances for doubtful
      accounts of $121 and $599, respectively...............        184       2,768
     Prepaid expenses and deferred production costs.........        316         370
                                                              ---------    --------
          Total current assets..............................     21,905      43,594
Property and equipment, net.................................      1,944       3,348
Acquired technology and patents, net........................      1,429          --
Goodwill....................................................      3,230          --
Other assets................................................        667       2,651
                                                              ---------    --------
          Total assets......................................  $  29,175    $ 49,593
                                                              =========    ========

                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable.......................................  $     595    $  1,736
     Other accrued liabilities..............................      3,446       5,990
     Capital lease obligation -- current portion............        230         709
     Deferred revenue.......................................        640       1,128
                                                              ---------    --------
          Total current liabilities.........................      4,911       9,563
Capital lease obligation, net of current portion............         --         230
Long-term liabilities.......................................      1,980          --
Commitments and contingencies (Note 11).....................         --          --
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000 shares authorized
  and no shares issued or outstanding.......................         --          --
Common stock, $0.001 par value; 40,000 shares authorized;
  19,345 and 17,837 shares issued and outstanding,
  respectively..............................................         19          18
Additional paid-in capital..................................    129,700     128,150
Treasury stock, at cost.....................................       (273)         --
Notes receivable from employees.............................       (100)         --
Unearned stock-based compensation...........................       (641)     (2,462)
Other comprehensive income: unrealized gain on
  investments...............................................         94         193
Accumulated deficit.........................................   (106,515)    (86,099)
                                                              ---------    --------
          Total stockholders' equity........................     22,284      39,800
                                                              ---------    --------
          Total liabilities and stockholders' equity........  $  29,175    $ 49,593
                                                              =========    ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        41
<PAGE>

                                 ELOQUENT, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                  (IN THOUSANDS, EXCEPT
                                                                    PER SHARE AMOUNTS)
<S>                                                           <C>        <C>        <C>
Revenue:
  Software licenses and maintenance.........................  $  1,703   $  5,261   $  2,958
  Content production services...............................     3,573      8,066      8,413
  Professional services.....................................        79      1,520      1,121
                                                              --------   --------   --------
         Total revenue......................................     5,355     14,847     12,492
Cost of revenue:
  Software licenses and maintenance.........................     1,652      1,425        646
  Content production services...............................     2,601      5,673      5,021
  Professional services.....................................       301      2,041      1,496
  Stock-based compensation..................................       (75)      (191)       219
                                                              --------   --------   --------
         Total cost of revenue..............................     4,479      8,948      7,382
                                                              --------   --------   --------
  Gross margin..............................................       876      5,899      5,110
                                                              --------   --------   --------
Operating expenses:
  Research and development:
    Other research and development..........................     5,196      5,300      1,959
    Stock-based compensation................................       477        665        142
                                                              --------   --------   --------
                                                                 5,673      5,965      2,101
                                                              --------   --------   --------
  Sales and marketing:
    Other sales and marketing...............................     8,428     20,841      8,856
    Stock-based compensation................................        28        502      1,227
                                                              --------   --------   --------
                                                                 8,456     21,343     10,083
                                                              --------   --------   --------
  General and administrative:
    Other general and administrative........................     4,333      4,927      3,499
    Stock-based compensation................................     1,230      2,691      4,168
                                                              --------   --------   --------
                                                                 5,563      7,618      7,667
                                                              --------   --------   --------
  Restructuring expense:
    Other restructuring expense.............................     2,250      3,542         --
    Stock-based compensation................................        --        473         --
                                                              --------   --------   --------
                                                                 2,250      4,015         --
                                                              --------   --------   --------
  In-process research and development.......................       283         --         --
  Impairment of tangible property and equipment.............        --      2,458         --
                                                              --------   --------   --------
         Total operating expenses...........................    22,225     41,399     19,851
                                                              --------   --------   --------
Loss from operations........................................   (21,349)   (35,500)   (14,741)
Interest expense............................................       (93)    (1,500)    (2,175)
Impairment of investment....................................      (759)    (2,250)        --
Interest and other income...................................     1,785      2,951        301
                                                              --------   --------   --------
Net loss before extraordinary item and cumulative effect of
  accounting change.........................................   (20,416)   (36,299)   (16,615)
Extraordinary loss on extinguishment of debt................        --     (7,453)        --
                                                              --------   --------   --------
Net loss before cumulative effect of accounting change......   (20,416)   (43,752)   (16,615)
Cumulative effect of accounting change -- beneficial
  conversion feature........................................        --     (7,500)        --
                                                              --------   --------   --------
Net loss....................................................  $(20,416)  $(51,252)  $(16,615)
                                                              ========   ========   ========
Basic and diluted net loss per share:
  Net loss before extraordinary item and cumulative effect
    of accounting change....................................  $  (1.11)  $  (2.36)  $  (5.47)
  Extraordinary loss........................................        --      (0.48)        --
  Cumulative effect of accounting change -- beneficial
    conversion feature......................................        --      (0.49)        --
                                                              --------   --------   --------
         Net loss...........................................  $  (1.11)  $  (3.33)  $  (5.47)
                                                              ========   ========   ========
Shares used in computing basic and diluted net loss per
  share.....................................................    18,363     15,381      3,036
                                                              ========   ========   ========
</Table>

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

                                        42
<PAGE>

                                 ELOQUENT, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<Table>
<Caption>
                                    CONVERTIBLE
                                  PREFERRED STOCK    COMMON STOCK     TREASURY STOCK    ADDITIONAL       NOTES          UNEARNED
                                  ---------------   ---------------   ---------------    PAID-IN       RECEIVABLE     STOCK-BASED
                                  SHARES   AMOUNT   SHARES   AMOUNT   SHARES   AMOUNT    CAPITAL     FROM EMPLOYEES   COMPENSATION
                                  ------   ------   ------   ------   ------   ------   ----------   --------------   ------------
                                                                           (IN THOUSANDS)
<S>                               <C>      <C>      <C>      <C>      <C>      <C>      <C>          <C>              <C>
BALANCES, DECEMBER 31, 1998.....   7,159    $ 7      3,472    $ 3        --    $  --     $ 25,922        $  --          $ (2,344)
  Net loss and comprehensive
    loss........................      --     --         --     --        --       --           --           --                --
  Exercise of stock options.....      --     --        423      1        --       --          260           --                --
  Exercise of common stock
    warrants....................      --     --         23     --        --       --           --           --                --
  Repurchase of unvested common
    stock.......................      --     --       (359)    --        --       --         (122)          --                --
  Issuance of common stock in
    exchange for services.......      --     --         15     --        --       --          150           --                --
  Issuance of common stock
    warrants in exchange for
    services....................      --     --         --     --        --       --          403           --                --
  Issuance of common stock
    warrants in connection with
    long-term notes payable.....      --     --         --     --        --       --        7,500           --                --
  Beneficial conversion charge
    related to long-term notes
    payable.....................      --     --         --     --        --       --        5,000           --                --
  Unearned stock-based
    compensation................      --     --         --     --        --       --       12,976           --           (12,976)
  Amortization of unearned
    stock-based compensation....      --     --         --     --        --       --           --           --             5,756
                                  ------    ---     ------    ---      ----    -----     --------        -----          --------
BALANCES, DECEMBER 31, 1999.....   7,159    $ 7      3,574    $ 4        --    $  --     $ 52,089        $  --          $ (9,564)
  Net loss......................      --     --         --     --        --       --           --           --                --
  Net unrealized gain on
    investments.................      --     --         --     --        --       --           --           --                --
  Comprehensive loss............      --     --         --     --        --       --           --           --                --
  Initial Public Offering, net
    of issuance expenses of
    $7,064......................      --     --      5,175      5        --       --       75,436           --                --
  Conversion of Preferred
    Stock.......................  (7,159)    (7)     7,159      7        --       --           --           --                --
  Exercise of stock options.....      --     --        491     --        --       --          404           --                --
  Exercise of common stock
    warrants....................      --     --      1,335      2        --       --            3           --                --
  Repurchase of unvested common
    stock.......................      --     --        (75)    --        --       --          (56)          --                --
  Stock issued under stock
    purchase plan...............      --     --        176     --        --       --          708           --                --
  Issuance of common stock in
    exchange for services.......      --     --          2     --        --       --           28           --                --
  Net beneficial conversion
    charge related to long-term
    notes payable...............      --     --         --     --        --       --        2,500           --                --
  Unearned stock-based
    compensation................      --     --         --     --        --       --       (2,962)          --             2,962
  Amortization of unearned
    stock-based compensation....      --     --         --     --        --       --           --           --             4,140
                                  ------    ---     ------    ---      ----    -----     --------        -----          --------
BALANCES, DECEMBER 31, 2000.....      --    $--     17,837    $18        --    $  --     $128,150        $  --          $ (2,462)
                                  ======    ===     ======    ===      ====    =====     ========        =====          ========
  Net loss......................      --     --         --     --        --       --           --           --                --
  Net unrealized loss on
    investments.................      --     --         --     --        --       --           --           --                --
  Comprehensive loss............      --     --         --     --        --       --           --           --                --
  Purchase of treasury stock....      --     --         --     --      (246)    (287)          --           --                --
  Exercise of stock options.....      --     --        574     --        --       --          504           --                --
  Exercise of common stock
    warrants....................      --     --         16     --       148       --           --           --                --
  Repurchase of unvested common
    stock.......................      --     --        (14)    --        --       --          (29)          --                --
  Stock issued under stock
    purchase plan...............      --     --        130     --        28       14           97           --                --
  Stock issued for purchase of
    Rebop, Inc..................      --     --        802      1        --       --        1,139           --                --
  Notes receivable from
    employees...................      --     --         --     --        --       --           --         (100)               --
  Unearned stock-based
    compensation................      --     --         --     --        --       --         (161)          --               161
  Amortization of unearned
    stock-based compensation....      --     --         --     --        --       --           --           --             1,660
                                  ------    ---     ------    ---      ----    -----     --------        -----          --------
BALANCES, DECEMBER 31, 2001.....      --    $--     19,345    $19       (70)   $(273)    $129,700        $(100)         $   (641)
                                  ======    ===     ======    ===      ====    =====     ========        =====          ========

<Caption>
                                                 OTHER
                                                COMPRE-       TOTAL
                                  ACCUMULATED   HENSIVE   STOCKHOLDERS'
                                    DEFICIT     INCOME       EQUITY
                                  -----------   -------   -------------
                                             (IN THOUSANDS)
<S>                               <C>           <C>       <C>
BALANCES, DECEMBER 31, 1998.....   $ (18,232)    $ --       $  5,356
  Net loss and comprehensive
    loss........................     (16,615)      --        (16,615)
  Exercise of stock options.....          --       --            261
  Exercise of common stock
    warrants....................          --       --             --
  Repurchase of unvested common
    stock.......................          --       --           (122)
  Issuance of common stock in
    exchange for services.......          --       --            150
  Issuance of common stock
    warrants in exchange for
    services....................          --       --            403
  Issuance of common stock
    warrants in connection with
    long-term notes payable.....          --       --          7,500
  Beneficial conversion charge
    related to long-term notes
    payable.....................          --       --          5,000
  Unearned stock-based
    compensation................          --       --             --
  Amortization of unearned
    stock-based compensation....          --       --          5,756
                                   ---------     ----       --------
BALANCES, DECEMBER 31, 1999.....   $ (34,847)    $ --       $  7,689
  Net loss......................     (51,252)      --        (51,252)
  Net unrealized gain on
    investments.................          --      193            193
                                                            --------
  Comprehensive loss............          --       --        (51,059)
                                                            --------
  Initial Public Offering, net
    of issuance expenses of
    $7,064......................          --       --         75,441
  Conversion of Preferred
    Stock.......................          --       --             --
  Exercise of stock options.....          --       --            404
  Exercise of common stock
    warrants....................          --       --              5
  Repurchase of unvested common
    stock.......................          --       --            (56)
  Stock issued under stock
    purchase plan...............          --       --            708
  Issuance of common stock in
    exchange for services.......          --       --             28
  Net beneficial conversion
    charge related to long-term
    notes payable...............          --       --          2,500
  Unearned stock-based
    compensation................          --       --             --
  Amortization of unearned
    stock-based compensation....          --       --          4,140
                                   ---------     ----       --------
BALANCES, DECEMBER 31, 2000.....   $ (86,099)    $193       $ 39,800
                                   =========     ====       ========
  Net loss......................     (20,416)      --        (20,416)
  Net unrealized loss on
    investments.................          --      (99)           (99)
                                                            --------
  Comprehensive loss............          --       --        (20,515)
                                                            --------
  Purchase of treasury stock....          --       --           (287)
  Exercise of stock options.....          --       --            504
  Exercise of common stock
    warrants....................          --       --             --
  Repurchase of unvested common
    stock.......................          --       --            (29)
  Stock issued under stock
    purchase plan...............          --       --            111
  Stock issued for purchase of
    Rebop, Inc..................          --       --          1,140
  Notes receivable from
    employees...................          --       --           (100)
  Unearned stock-based
    compensation................          --       --             --
  Amortization of unearned
    stock-based compensation....          --       --          1,660
                                   ---------     ----       --------
BALANCES, DECEMBER 31, 2001.....   $(106,515)    $ 94       $ 22,284
                                   =========     ====       ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        43
<PAGE>

                                 ELOQUENT, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Cash flows from operating activities:
  Net loss..................................................  $(20,416)  $(51,252)  $(16,615)
  Adjustments to reconcile net loss to net cash used for
    operating activities:
    Depreciation and amortization...........................     2,006      1,461      1,249
    Acquired in-process research and development............       283         --         --
    Impairment of tangible property and equipment...........        --      2,458         --
    Impairment of equity investment -- eSpoc Inc............       759      2,250         --
    Loss on equity investment -- Rebop Media, Inc...........       796        560         --
    Extraordinary loss on extinguishment of debt............        --      7,453         --
    Cumulative effect on accounting change-beneficial
      conversion feature....................................        --      7,500         --
    Amortization of discount on long-term notes payable.....        --        478        975
    Amortization of deferred charges........................        14        361        195
    Issuance of common stock in exchange for services.......        --         28         --
    Amortization of stock-based compensation................     1,660      4,139      5,756
    Changes in operating assets and liabilities, net of
      acquisition
      Accounts receivable, net..............................     2,584        671     (1,457)
      Deferred production cost..............................        86       (110)       226
      Prepaid expenses......................................       (32)       108       (268)
      Other assets..........................................       281       (362)      (282)
      Accounts payable and other accrued liabilities........    (2,263)     3,809      1,962
      Deferred revenue......................................      (488)       341         81
                                                              --------   --------   --------
         Net cash used for operating activities.............   (14,730)   (20,107)    (8,178)
                                                              --------   --------   --------
Cash flows from investing activities:
  Proceeds from (sales and maturities of) short-term
    investments.............................................    20,177    (35,744)        --
  Purchases of long-term investments........................        --     (4,500)        --
  Purchases of property and equipment.......................      (244)    (5,352)      (976)
  Acquisition of Rebop Media, Inc., net of cash acquired....    (3,568)        --         --
                                                              --------   --------   --------
         Net cash provided by (used for) investment
           activities.......................................    16,365    (45,596)      (976)
                                                              --------   --------   --------
Cash flows from financing activities:
  Proceeds from borrowings under bank line of credit........        --         --      4,000
  Repayment of borrowings under bank line of credit.........        --     (3,000)    (2,500)
  Fees incurred in connection with bank line of credit......        --         --        (75)
  Proceeds from issuance of subordinated notes, net of
    issuance costs..........................................        --         --     18,652
  Repayment of subordinated notes...........................        --    (20,000)        --
  Proceeds from issuance of common stock, net of repurchases
    and offering costs......................................       572     76,504        139
  Treasury stock purchases, net.............................      (273)        --         --
  Proceeds from capital lease financing.....................        --        277        158
  Payment of principal on capital lease financing...........      (709)      (733)      (707)
                                                              --------   --------   --------
         Net cash provided by (used for) financing
           activities.......................................      (410)    53,048     19,667
                                                              --------   --------   --------
Net increase (decrease) in cash and cash equivalents........     1,225    (12,655)    10,513
Cash and cash equivalents, beginning of year................     4,519     17,174      6,661
                                                              --------   --------   --------
Cash and cash equivalents, end of year......................  $  5,744   $  4,519   $ 17,174
                                                              ========   ========   ========
Supplemental disclosure of cash flow information:
    Cash paid during the year for:
      Interest..............................................  $     80   $    574   $  1,004
    Non-cash transactions:
      Stock-based compensation, net of cancellations........  $   (161)  $ (2,962)  $ 12,976
</Table>

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

                                        44
<PAGE>

                                 ELOQUENT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  FORMATION AND BUSINESS

     Eloquent, Inc. ("Eloquent" or the "Company") was incorporated in Delaware
in March 1995. Eloquent provides sales effectiveness solutions that enable
customers to increase the productivity of their sales and marketing
organizations, accelerate new product revenues and reduce product launch
expenses. The Eloquent LaunchForce application enables production and posting of
rich media product and sales content, personalized delivery of the content and
detailed measurement of the results. Rich media content involves the combination
of video, audio, graphics and text in a synchronized, searchable and navigable
format. LaunchForce delivers rich media content on the Web via intranets or
extranets or creates CD-ROMs. LaunchForce services include software development
and system integration, video and rich media content production and hosting.

     The Company has incurred substantial losses and negative cash flows from
operations in every fiscal period since inception. For the year ended December
31, 2001, the Company incurred a loss from operations of approximately
$21,349,000 and negative cash flows from operations of $14,730,000. For the year
ended December 31, 2000, the Company incurred a loss from operations of
approximately $35,500,000 and negative cash flows from operations of
$20,107,000. For the year ended December 31, 1999, the Company incurred a loss
from operations of approximately $14,741,000 and negative cash flows from
operations of $8,178,000. As of December 31, 2001, 2000 and 1999, the Company
had accumulated deficits of approximately $106,515,000, $86,099,000 and
$34,847,000, respectively. Management expects operating losses and negative cash
flows to continue for the foreseeable future. Failure to generate sufficient
revenues, raise additional funds through public or private financings, or other
arrangements, or reduce certain discretionary spending could have a material
adverse effect on the Company's ability to achieve its intended business
objectives.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  USE OF ESTIMATES

     The preparation of consolidated 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 consolidated
financial statements and the reported amounts of revenue and expenses during the
reporting period. A change in the facts and circumstances surrounding these
estimates, including those related to uncollectible receivables, intangible
assets, income taxes, restructuring and other accrued liabilities, and
contingencies and litigation, could result in a change to the estimates and
impact future operating results.

  PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany accounts and transactions have
been eliminated.

  FINANCIAL INSTRUMENTS, RISKS AND CONCENTRATIONS

     Financial instruments, which potentially subject Eloquent to concentrations
of credit risk, consist principally of cash and cash equivalents, short-term
investments, and accounts receivable.

     Eloquent considers all highly liquid investments, purchased with an
original or remaining maturity of three months or less, as of the date of
purchase, to be cash equivalents and those with an original or remaining
maturity, as of the date of purchase, of greater than three months to be
short-term investments. At December 31, 2001 and 2000, substantially all of
Eloquent's cash and cash equivalents were maintained by one major U.S. financial
institution. These deposits may, at times, exceed the federally insured limits.

     Eloquent acquires certain equity investments for the promotion of business
and strategic objectives. These non-marketable securities are accounted for
using either the cost method or the equity method and are

                                        45
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

included in "Other assets.". Eloquent periodically evaluates the carrying value
of these investments when events and circumstances warrant such a review. When
the carrying value of an investment is considered impaired, a loss is recognized
based on the amount by which the carrying value exceeds the fair value of the
asset.

     The carrying amounts of Eloquent's financial instruments, including cash
equivalents, accounts receivable, accounts payable, other liabilities and
capital lease obligations approximate fair value due to their short maturities.

     Eloquent supplies a variety of customers and generally does not require
collateral against orders. Although Eloquent maintains an allowance for
potential credit losses it believes to be adequate, a payment default on a
significant sale could materially and adversely affect its operating results and
financial condition. At December 31, 2001, one customer, Compaq Computer
Corporation, accounted for greater than 10% of accounts receivable and at
December 31, 2000 no customer accounted for greater than 10% of accounts
receivable. For fiscal year 2001, one customer, Compaq Computer Corporation,
accounted for more than 10% of revenue. For fiscal years 2000 and 1999, no
customer accounted for greater than 10% of revenue.

     Eloquent's management has determined that the Company operates in a single
business segment that is characterized by rapid technological advances, changes
in customer requirements and evolving industry standards. Any failure by
Eloquent to anticipate or respond to changes in demand could have a material
adverse effect on its business, operating results, cash flows and consolidated
financial position.

     Eloquent relies on a number of third-party suppliers for various services.
While management believes Eloquent could obtain these services from other
qualified suppliers on similar terms and conditions, a disruption in the supply
of these services by the current suppliers could have an adverse impact on the
business, operating results, cash flows and consolidated financial position.

  DEFERRED PRODUCTION COSTS

     Costs that relate to uncompleted content production are included in the
consolidated financial statements in "Prepaid expenses and deferred production
costs". The deferred production costs at December 31, 2001 are expected to be
entirely billed and collected in 2002.

  PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets, generally three to five years. Leasehold
improvements and assets acquired under capital lease obligations are amortized
on a straight-line basis over the shorter of the estimated useful economic life
or the length of the lease. Repairs and maintenance costs are expensed as
incurred.

     Eloquent evaluates the carrying value of equipment and leasehold
improvements when events and circumstances warrant such a review. When the
carrying value of equipment and leasehold improvements is considered impaired, a
loss is recognized based on the amount by which the carrying value exceeds the
fair value of the asset.

  REVENUE RECOGNITION

     Eloquent recognizes revenue in accordance with Statement of Position
("SOP") 97-2, "Software Revenue Recognition", as amended by SOP 98-9 and SOP
98-4, when all of the following criteria are met: evidence of an arrangement
exists, delivery has occurred, collection of the receivable is probable and the
fee is fixed or determinable. For contracts with multiple obligations,
vendor-specific objective evidence must exist to allocate the total fee to all
delivered and undelivered elements of the arrangement.

                                        46
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Software licenses and maintenance revenue includes applications server and
desktop player software licenses, software maintenance and hosting fees. The
revenue for applications server and desktop player software licenses is
recognized upon shipment. Eloquent recognizes revenue for maintenance and
hosting ratably over the period of the maintenance or hosting contract.

     Eloquent recognizes content production revenue upon shipment of the
completed production copy. Eloquent recognizes revenue for compact disc
duplication upon shipment of the duplicated compact discs.

     Eloquent recognizes professional services revenue for education and
installation services in accordance with SOP 81-1, "Accounting for Performance
of Construction-Type and Certain Production-Type Contracts" and Accounting
Research Bulletin No. 45 "Long Term Construction-Type Contracts". Professional
services revenue, for arrangements in which alterations to the features and
functionality of the server software are made is recognized for the entire
arrangement, including license fees, as the services are performed and when
collectibility is probable.

     Deferred revenue primarily comprises contractual billings in excess of
recognized revenue and payments received in advance of revenue recognition.

  ADVERTISING EXPENSE

     Eloquent expenses advertising costs as they are incurred. Advertising
expenses for fiscal years 2001, 2000 and 1999 were not significant.

  RESEARCH AND DEVELOPMENT COSTS

     Research and development costs are expensed as incurred. To date, products
have generally reached technological feasibility and have been released for sale
at substantially the same time. Accordingly, no software development costs have
been capitalized as of December 31, 2001 or 2000. All research and development
expenses were funded by the Company rather than by any of our customers.

  ACQUIRED TECHNOLOGY AND PATENTS AND GOODWILL

     Goodwill represents the excess of the aggregate purchase price over the
fair value of the tangible and identifiable intangible assets acquired by the
Company. Acquired technology and patents are amortized on a straight-line basis
over their estimated useful lives of three and five years, respectively.
Goodwill is not amortized in accordance with the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets".

  STOCK-BASED COMPENSATION

     Eloquent accounts for stock-based compensation issued to employees in
accordance with the provisions of Accounting Principles Board Opinion ("APB")
No. 25, "Accounting for Stock Issued to Employees", and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation". Under APB No. 25, expense is based on the difference, if any, on
the date of grant, between the fair value of common stock and the exercise
price. Stock issued to non-employees has been accounted for in accordance with
EITF 96-18 "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods and Services" and
SFAS No. 123, and valued using the Black-Scholes option-pricing model.

  INCOME TAXES

     Eloquent accounts for income taxes using the liability method under which,
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and

                                        47
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

liabilities using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.

  NET LOSS PER SHARE

     Basic net loss per share is computed by dividing the net loss for the
period by the weighted average number of vested common shares outstanding during
the period. Diluted net loss per share is computed by dividing the net loss for
the period by the weighted average number of common and potential common shares
outstanding during the period. Potential common shares are composed of common
shares issuable upon conversion of convertible preferred stock (using the
if-converted method) and shares issuable upon the exercise of stock options and
warrants and are included in the diluted net loss per share to the extent that
they are dilutive.

  RECLASSIFICATIONS

     Certain prior year amounts have been reclassified to conform to current
year presentation.

  RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other
Intangible Assets", collectively referred to as the "Standards". SFAS No. 141
supersedes APB No. 16, "Business Combinations". The provisions of SFAS No. 141
(1) require that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, (2) provide specific criteria for
the initial recognition and measurement of intangible assets apart from
goodwill, and (3) require that unamortized negative goodwill be written off
immediately as an extraordinary gain instead of being deferred and amortized.
SFAS No. 141 also requires that upon adoption of SFAS No. 142 the Company
reclassify the carrying amounts of certain intangible assets into or out of
goodwill, based on certain criteria. SFAS No. 142 supersedes APB No. 17,
"Intangible Assets", and is effective for fiscal years beginning after December
15, 2001. SFAS No. 142 primarily addresses the accounting for goodwill and
intangible assets subsequent to their initial recognition. The provisions of
SFAS No. 142 (1) prohibit the amortization of goodwill and indefinite-lived
intangible assets, (2) require that goodwill and indefinite-lived intangibles
assets be tested annually for impairment (and in interim periods if certain
events occur indicating that the carrying value of goodwill and/or
indefinite-lived intangible assets may be impaired), and (3) require that
reporting units be identified for the purpose of assessing potential future
impairments of goodwill.

     The Company will adopt the provisions of SFAS No. 142 in its first quarter
ended March 31, 2002. The Company is in the process of preparing for its
adoption of SFAS No. 142 and is making the determinations as to what its
reporting units are and what amounts of goodwill, intangible assets, other
assets, and liabilities should be allocated to those reporting units. In
preparation for the adoption of FAS No. 142, the Company is in the process of
evaluating the useful lives of its existing intangible assets. It has not
determined whether any changes to those useful lives are going to have a
material impact on the results of its operations.

     SFAS No. 142 requires that goodwill be tested annually for impairment using
a two-step process. The first step is to identify a potential impairment and, in
transition, this step must be measured as of the beginning of the fiscal year.
However, a company has six months from the date of adoption to complete the
first step. The Company expects to complete that first step of the goodwill
impairment test during the second quarter of 2002. The second step of the
goodwill impairment test measures the amount of the impairment loss (measured as
of the beginning of the year of adoption), if any, and must be completed by the
end of the Company's fiscal year. Any impairment loss resulting from the
transitional impairment tests will be reflected

                                        48
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

as the cumulative effect of a change in accounting principle in the first
quarter 2002. The Company has not yet determined what effect these impairment
tests will have on the Company's earnings and financial position.

     In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets", which is effective for fiscal years beginning
after December 15, 2001. SFAS No. 144 supersedes FASB No. 121, "Accounting for
the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of ", and the accounting and reporting provisions relating to the
disposal of a segment of a business of APB No. 30. The Company does not expect
that the adoption of SFAS No. 144 will have a significant impact on its
consolidated financial statements.

3.  ACQUISITION OF REBOP MEDIA, INC.

     During the summer of 2000, Eloquent's management and Board of Directors
determined the need to either develop or acquire technology that would allow
Eloquent to offer live video-based Web conferencing as part of its business
communications solution. Eloquent's management and Board of Directors evaluated
several potential companies with "live" technology as potential acquisitions and
also considered investing in a new company to be founded by Cliff Reid, an
officer, director and holder of more than 5% of Eloquent's common stock. Given
the anticipated acquisition price of these companies and Eloquent's desire to
have a product designed to integrate seamlessly with Eloquent's on-demand
software, the management and the Board determined that it was in the best
interests of Eloquent to invest in a new company rather than acquire an existing
company.

     In October 2000, Eloquent and Rebop Media, Inc. ("Rebop"), a
recently-formed live video-based Web conferencing company, entered into a
strategic relationship whereby Eloquent invested approximately $1,500,000 in
Rebop. The investment was for Series A preferred stock and represented
approximately 18% of Rebop's capital stock, on an as-if converted basis. The
investment was accounted for using the equity method. However, because Eloquent
bore substantially all the economic risk of Rebop's operations, Eloquent
recorded 100% of Rebop's operating losses in 2001 and 2000 of approximately
$1,327,000 and $918,000, respectively, including stock-based compensation
charges of $531,000 and $358,000, respectively, as research and development
expense.

     As part of this investment in Rebop, Eloquent obtained the right, subject
to Eloquent's Board of Directors' approval, to acquire Rebop at a later date if
Rebop successfully installed its product in three customer sites. The
acquisition of Rebop was to be by means of the issuance of a number of shares of
Eloquent's common stock, the number to be determined through a formula based on
the market price of Eloquent's common stock at the time of the acquisition.
Alternatively, at Eloquent's option, Rebop could be acquired for $13,600,000 in
cash.

     Members of Eloquent's Board of Directors believed that the formula would
result in a reasonable purchase price for Rebop in comparison to the anticipated
potential acquisition price for other companies with live technology. The
formula established an acquisition price that Eloquent's Board of Directors
believed would yield a satisfactory return on investment. Further, as the value
of the transaction was limited to a maximum of $13,600,000, Eloquent determined
that the cost of hiring an outside advisor was disproportionately large as
compared to the size of the transaction.

     Rebop's Web conferencing solution, "LaunchForce Live", is designed to
integrate with Eloquent's LaunchForce on-demand software. As a result of the
acquisition, Eloquent's customers are expected to benefit from a fully
integrated live-to-on demand sales effectiveness solution. Cliff Reid,
Eloquent's Chief Executive Officer and a director and major stockholder, served
as President and Chief Executive Officer of Rebop.

     In April 2001, following Rebop's successful installation of its product in
three customer sites and with the unanimous approval of Eloquent's Board (Dr.
Reid abstaining), Eloquent exercised its right to acquire Rebop. Given general
economic and stock market conditions existing at the time, including the market
price of

                                        49
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Eloquent's common stock, Eloquent's Board of Directors determined that the
number of shares of Eloquent common stock to be issued in the acquisition would
have resulted in significant dilution to Eloquent's existing stockholders.
Therefore, Eloquent's Board of Directors, with Dr. Reid abstaining, unanimously
determined that it was in the best interests of Eloquent to renegotiate the
terms of the purchase agreement to reflect the general decrease in the value of
internet based companies between the time of the initial investment and the time
Eloquent exercised its right to acquire Rebop. Because the purchase price had
already been established in the original acquisition agreement, the Board
determined that it was in the best interests of Eloquent and its stockholders to
limit the dilution caused by the acquisition by capping the number of shares of
common stock to be issued in the acquisition and to pay the remainder of the
acquisition price in cash. The maximum number of shares of common stock to be
issued was based in part on the market value of Rebop established by an analysis
performed by the Company's management. In performing its analysis regarding the
fair value of Rebop, the Company's management considered, among other things,
the current high-tech market, synergies arising from incorporation of Rebop's
technology into existing Eloquent products and the future cash flows of those
products.

     On June 22, 2001, Eloquent agreed to acquire Rebop pursuant to a First
Amended and Restated Agreement and Plan of Merger by and among Rebop Acquisition
Corp., a California corporation, Eloquent and Rebop.

     In July 2001, Eloquent completed its acquisition of all the outstanding
shares of Rebop common stock and common stock options for approximately
$3,813,000 in cash and 849,995 shares of common stock (including shares issuable
on exercise of stock options) valued at approximately $1,207,000 and acquisition
costs of approximately $310,000. The source of the funds for the acquisition was
available cash reserves. The value of the common stock and options was
determined based on the average market price of Eloquent's common stock over the
5-day period before and after the terms of the acquisition were announced in
June 2001. The shares of Rebop's series A preferred stock owned by Eloquent were
cancelled as part of the transaction. At the closing of the acquisition on July
5, 2001, 10% of the stock to be issued and cash to be paid to the former
shareholders of Rebop (including Dr. Reid) was placed in escrow to secure
certain indemnification obligations contained in the merger agreement. The
escrow terminated in January 2002 without Eloquent making any claims against the
escrow, resulting in the release of all cash and stock held.

     The acquisition has been accounted for in accordance with SFAS No. 141,
"Business Combinations." SFAS No. 141 requires the purchase method of accounting
for business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. Pro forma information reflecting the results of
Rebop's operations for the periods prior to the acquisition of Rebop have not
been presented as Rebop's operating results have historically been recognized by
Eloquent since the Company's original investment in Rebop.

     The allocation of the purchase price to the assets acquired and liabilities
assumed based on the fair value of Rebop is as follows (in thousands):

<Table>
<S>                                                            <C>
Tangible assets acquired....................................   $  238
Acquired technology.........................................    1,492
Patents.....................................................      207
Goodwill....................................................    3,230
In-process research and development.........................      283
Liabilities assumed.........................................      (77)
                                                               ------
Total.......................................................   $5,373
                                                               ======
</Table>

     The excess of the purchase price of Rebop over the fair market value of the
net assets acquired resulted in the recognition of approximately $3,230,000 of
goodwill.

                                        50
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Acquired technology of $1,492,000 is being amortized over a three-year
useful life. Patents of $207,000 are being amortized over a five-year useful
life. Amortization of intangible assets charged to operations amounted to
$270,000 in 2001. The amortization of intangible assets charged to operations is
expected to be as follows: 2002 and 2003 -- $540,000; 2004 -- $290,000;
2005 -- $40,000 and 2006 -- $19,000. Goodwill of $3,230,000, is not expected to
be tax deductible and is being accounted for in accordance with SFAS No. 142.
The $283,000 attributable to in-process research and development was expensed on
the acquisition date in accordance with FASB Interpretation No. 4,
"Applicability of FASB Statement No. 2 to Business Combinations Accounted for by
the Purchase Method."

4.  RESTRUCTURING EXPENSE AND IMPAIRMENT OF PROPERTY AND EQUIPMENT

     In December 2000, Eloquent announced a plan to restructure operations that
resulted in a one-time charge totaling $4,015,000. The restructuring is intended
to better align Eloquent with future market opportunities brought about by its
new product introductions and to reduce cash expenditures prior to revenue
growth. Under the plan, Eloquent gave notice of termination in December 2000 to
80 employees and recorded approximately $1,425,000 related to salary and
termination benefits and approximately $473,000 of stock-based compensation
expense for the amortization of the stock-based compensation charge over the
termination notice period related to stock options granted prior to Eloquent's
initial public offering.

     Eloquent is actively pursuing opportunities to reduce expenditures for
office space. The restructuring charge recorded in 2000 includes $1,761,000 for
lease expense. This charge reflected payments required during lease termination
notice periods, estimates of lease payments prior to sub-letting space and
estimates of any rent differential between the contractual liability of Eloquent
and current market rates. In 2001, Eloquent recorded an additional $2,250,000
restructuring charge for lease expense as a result of deteriorating real estate
market conditions resulting in lower facility lease rates than estimated for the
initial restructuring charge. This estimate is based on current comparable rates
for leases in the Company's market. If facilities rental rates continue to
decrease in our market or if it takes longer than expected to sublease these
facilities, the actual loss could exceed this estimate.

     In December 2000, Eloquent also recorded a $2,458,000 impairment charge to
write-off the carrying value of excess equipment and furniture, abandoned
leasehold improvements and certain software and technology assets. The excess
equipment and furniture and abandoned leasehold improvements are a result of the
termination of over 80 employees and consultants and consolidation of the
remaining employees in fewer leased facilities. Further, with its reduced
employee base, Eloquent re-evaluated its investments in various productivity and
market initiatives that relied on purchased software and technology and
concluded that it could not support these investments. Accordingly, Eloquent
abandoned these initiatives. The restructuring charge recorded in December 2000
includes $356,000 for the buy-out of capital leases related to impaired
equipment and elimination of maintenance contracts for impaired software.

     Components of the accrued restructuring charges and changes in accrued
amounts related to the restructuring are as follows (in thousands):

<Table>
<Caption>
                                                   NON-CASH     OTHER NON-CASH   FACILITIES AND
                                  REDUCTION IN   STOCK-BASED    RESTRUCTURING     OTHER LEASE
                                   WORKFORCE     COMPENSATION       COSTS         OBLIGATIONS      TOTAL
                                  ------------   ------------   --------------   --------------   -------
<S>                               <C>            <C>            <C>              <C>              <C>
Initial charges.................    $ 1,425         $ 473            $ 79           $ 2,038       $ 4,015
Cash payments and deductions....       (143)         (473)            (79)             (147)         (842)
                                    -------         -----            ----           -------       -------
Balances, December 31, 2000.....    $ 1,282         $  --            $ --           $ 1,891       $ 3,173
  Charges.......................         --            --              --             2,250         2,250
  Cash payments and
     deductions.................     (1,282)           --              --            (1,306)       (2,588)
                                    -------         -----            ----           -------       -------
Balances, December 31, 2001.....    $    --         $  --            $ --           $ 2,835       $ 2,835
                                    =======         =====            ====           =======       =======
</Table>

                                        51
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     At December 31, 2001, $855,000 was recorded in "Accounts payable and other
liabilities" and $1,980,000 was recorded in "Long-term liabilities".

5.  SHORT-TERM INVESTMENTS

     Short-term investments are classified as available for sale and are
recorded at fair value based on quoted market prices. Unrealized gains and
losses are recorded as a component of stockholders' equity and included in other
comprehensive income. Realized gains and losses are recorded based on the
specific identification method. Eloquent's short-term investments consisted of
the following (in thousands):

<Table>
<Caption>
                                                      AMORTIZED   UNREALIZED   UNREALIZED    FAIR
                                                        COST        GAINS        LOSSES      VALUE
                                                      ---------   ----------   ----------   -------
<S>                                                   <C>         <C>          <C>          <C>
DECEMBER 31, 2001:
  Asset-backed bonds................................   $ 6,478       $ 22         $--       $ 6,500
  Certificates of deposit...........................     1,023         --          --         1,023
  Corporate bonds...................................     7,045         72                     7,117
  U.S. Government and Agencies Securities...........     1,021         --          --         1,021
                                                       -------       ----         ---       -------
  Short-term investments............................   $15,567       $ 94         $--       $15,661
                                                       =======       ====         ===       =======
DECEMBER 31, 2000:
  Asset-backed bonds................................   $15,075       $ 92         $--       $15,167
  Certificates of deposit...........................     2,988          2          --         2,990
  Commercial paper..................................     1,464         --          --         1,464
  Corporate bonds...................................    16,217         99          --        16,316
                                                       -------       ----         ---       -------
  Short-term investments............................   $35,744       $193         $--       $35,937
                                                       =======       ====         ===       =======
</Table>

     At December 31, 2001, the underlying maturities of short-term investments
were: $6,404,000 within one year, $4,892,000 between one and two years and
$4,350,000 between two and five years. Restricted short-term investments reflect
a letter of credit arrangement in satisfaction of a lease deposit. In 2001, the
Company realized net gains of $113,000, which have been recorded in "Interest
and other income".

6.  BALANCE SHEET DETAILS

  PROPERTY AND EQUIPMENT

<Table>
<Caption>
                                                                DECEMBER 31,
                                                              -----------------
                                                               2001      2000
                                                              -------   -------
                                                               (IN THOUSANDS)
<S>                                                           <C>       <C>
Computer equipment and software.............................  $ 3,809   $ 3,540
Furniture and fixtures......................................      337       274
Computer equipment acquired under capital lease
  obligations...............................................      945       945
Leasehold improvements under capital lease obligations......      496       496
                                                              -------   -------
                                                                5,587     5,255
Less accumulated depreciation and amortization..............   (3,643)   (1,907)
                                                              -------   -------
                                                              $ 1,944   $ 3,348
                                                              =======   =======
</Table>

     Accumulated amortization on equipment acquired under capital lease
obligations was $2,220,000 and $2,335,000 as of December 31, 2001 and 2000,
respectively. Repair and maintenance expenses for fiscal years 2001, 2000 and
1999 were not significant.

                                        52
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  OTHER ASSETS

<Table>
<Caption>
                                                               DECEMBER 31,
                                                              ---------------
                                                               2001     2000
                                                              ------   ------
                                                              (IN THOUSANDS)
<S>                                                           <C>      <C>
Lease and other deposits....................................  $  633   $  814
Investment in Rebop Media, Inc..............................      --      986
Investment in eSpoc Inc.....................................      --      750
Deferred charges -- debt issue costs........................      --       14
Other assets................................................      34       87
                                                              ------   ------
                                                              $  667   $2,651
                                                              ======   ======
</Table>

  OTHER ACCRUED LIABILITIES

<Table>
<Caption>
                                                               DECEMBER 31,
                                                              ---------------
                                                               2001     2000
                                                              ------   ------
                                                              (IN THOUSANDS)
<S>                                                           <C>      <C>
Accrued restructuring expenses..............................  $  855   $3,173
Accrued compensation and related expenses...................     865    1,426
Accrued consulting and professional fees....................     398      460
Accrued acquisition costs, Rebop Media, Inc.................     485       --
Accrued liabilities.........................................     843      931
                                                              ------   ------
                                                              $3,446   $5,990
                                                              ======   ======
</Table>

7.  STRATEGIC INVESTMENTS AND RELATED PARTY TRANSACTION

     During 2000, Eloquent entered into a strategic relationship with eSpoc Inc.
("eSpoc"), a provider of an electronic marketplace for the purchase and
liquidation of medical equipment and supplies. As part of this relationship,
Eloquent purchased 461,538 shares of eSpoc preferred stock for $3,000,000. Also
during 2000, Eloquent licensed its Eloquent Communications Server product and
provided related services to eSpoc. Under the terms of the arrangement, Eloquent
recognized revenue of approximately $52,000 in 2001 and $1,343,000 in 2000.

     During the fourth quarter of 2000, Eloquent performed an evaluation of the
carrying value of this investment. The Company considered current financial
market conditions for raising capital and reviewed the cash flows and operating
results of eSpoc. Eloquent concluded that the unfavorable financial market
conditions as they relate to entities engaged in electronic commerce were not
temporary. Accordingly, the carrying value of the equity investment in eSpoc was
determined to be impaired. A loss of $2,250,000 was recognized based on the
amount by which the carrying value exceeded the fair value of Eloquent's
proportionate share of the net assets of eSpoc. In the second quarter of 2001,
the Company re-evaluated the carrying value of its investment in eSpoc and
concluded that eSpoc was no longer pursuing its original business plan and that
eSpoc's current business plan would not result in any return to investors.
Accordingly, Eloquent recognized as a loss the remaining carrying value of
$759,000.

8.  LINE OF CREDIT AND DEFERRED CHARGES

     In July 1999, Eloquent entered into a revolving line of credit agreement
with a financial institution that allowed for maximum borrowings of $9,000,000
at certain defined interest rates not to exceed 9% per annum.

                                        53
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The agreement expired in January 2001. At December 31, 2000, no borrowings were
outstanding under the line of credit.

     In connection with the revolving line of credit, Eloquent issued to the
lender warrants to purchase 70,000 shares of common stock at $5.10 per share.
The warrants expire July 2006. Eloquent valued the warrants using the
Black-Scholes option pricing model at $403,000, and recorded the value of the
warrants as debt issue costs in "Other assets". The debt issue costs were
amortized over the life of the revolving credit facility of 18 months. The
assumptions used in the Black-Scholes model were: dividend yield of 0%;
volatility of 55%; risk-free interest rate of 5.94%; and the expected life of 7
years.

9.  CONVERTIBLE NOTES AND WARRANTS, DEFERRED CHARGES AND EFFECT OF ACCOUNTING
CHANGE

     In October 1999, Eloquent sold convertible notes and detachable warrants to
purchase 1,500,000 shares of common stock for aggregate gross consideration of
$20,000,000. The notes provided that they were to mature on October 20, 2004 and
bear interest at 12% per annum. The warrants have an exercise price of $0.01 per
share and expire the earlier of 5 years after the repayment of the notes or
October 20, 2006. In conjunction with the sale of the notes Eloquent incurred
$1,500,000 in debt issue costs that were included in "Other assets" and being
amortized over the life of the notes. In accordance with the terms of the notes,
all amounts outstanding under the notes were repaid upon consummation of
Eloquent's initial public offering on February 23, 2000.

     The gross consideration received from the notes was allocated between the
notes and the warrants in accordance with APB No. 14, "Accounting for
Convertible Debt and Debt Issued with Stock Purchase Warrants," as follows (in
thousands):

<Table>
<S>                                                            <C>
Long-term notes payable.....................................   $12,500
Warrants....................................................     7,500
                                                               -------
Gross consideration.........................................   $20,000
                                                               =======
</Table>

     The notes provided that after December 31, 2000, the investors, at their
option, could convert the notes to Series E preferred stock at an initial
conversion rate of $8 per share, subject to certain anti-dilutive provisions.
This gave rise to a beneficial conversion feature of $5,000,000, based on the
fair value of common stock at the date of the sale of the notes and detachable
warrants. This beneficial conversion feature was recorded as a further discount
on the sale of the notes. In November 2000, the Emerging Issues Task Force
("EITF") reached a consensus regarding accounting for securities involving
beneficial conversion features. The consensus requires a cumulative adjustment
for certain securities issued after May 1999. As outlined in EITF No. 00-27, the
Task Force determined that the conversion price used to calculate the intrinsic
value should be based on the proceeds allocated to the convertible instrument.
The financial statement impact to Eloquent of this requirement is that the
additional beneficial conversion feature calculated under the new regulations of
$7,500,000 has been recorded in the fourth quarter 2000 statement of operations
as the cumulative effect of accounting change -- beneficial conversion feature.

     The debt issuance costs and the discount resulting from the issuance of the
warrants were being amortized to interest expense over the life of the notes.
The original beneficial conversion feature of $5,000,000 was being amortized
over the one-year period up to the earliest conversion date. Upon repayment of
the notes in February 2000, the unamortized portion of the discount resulting
from the issuance of the warrants and the original beneficial conversion feature
and the debt issuance costs were recorded as an extraordinary loss on the
extinguishment of debt.

                                        54
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10.  CAPITAL LEASE OBLIGATIONS

     In August 1999, Eloquent entered into a lease line of credit agreement with
a financial intermediary. The line of credit allowed for principal borrowings of
up to $1,500,000 through July 2000. The agreement replaced Eloquent's previous
lease line of credit agreement. Leases bear interest at rates ranging from 9.95%
to 10.54%, are collateralized by the underlying equipment and are payable over
the equipment lease term. At December 31, 2001, lease payments due in 2002, the
end of the lease term, total $240,000 of which $10,000 represents interest.

11.  COMMITMENTS AND CONTINGENCIES

  OPERATING LEASE OBLIGATIONS

     Eloquent leases certain office facilities under non-cancelable operating
lease arrangements expiring between 2002 and 2005. These commitments primarily
represent office facilities vacated as part of our restructuring activities.
Eloquent subleases one such facility to a third party tenant. At December 31,
2001, future minimum lease commitments and future sublease income under
non-cancelable operating leases are (in thousands):

<Table>
<Caption>
                                                             FUTURE LEASE   FUTURE SUBLEASE
                                                               PAYMENTS         INCOME
                                                             ------------   ---------------
<S>                                                          <C>            <C>
2002.......................................................     $1,092           $176
2003.......................................................      1,123            192
2004.......................................................      1,111            192
2005.......................................................        582             16
                                                                ------           ----
Total......................................................     $3,908           $576
                                                                ======           ====
</Table>

     Rental expense for the years ended December 31, 2001, 2000 and 1999 was
$897,000, $3,680,000 and 1,188,000, respectively.

 ROYALTIES

     Eloquent has entered into various technology licensing agreements that
allow it to incorporate the licensed technology into its software products.
Certain of the agreements require royalty payments ranging from 1.5% to 2.5% of
revenue generated from products incorporating the licensed technology. Another
agreement requires royalty payments of less than $1,000 per license, after
payment of an initial licensing fee of $16,000. The remaining agreement requires
payment of fees ranging from approximately $2,000 to $13,000, per central
processing unit, depending on the version of the technology that is incorporated
in our product. The Company is not required to pay any future minimum royalties
under these agreements.

 LITIGATION

     Beginning in July 2001, the Company and certain of its officers and
directors were named as defendants in several class action shareholder
complaints filed in the United States District Court for the Southern District
of New York. In each of these complaints, the plaintiffs allege that the
Company, certain of its officers and directors and its IPO underwriters violated
the federal securities laws because the Company's IPO registration statement and
prospectus contained untrue statements of material fact or omitted material
facts regarding the compensation to be received by, and the stock allocation
practices of, the IPO underwriters. The plaintiffs seek unspecified monetary
damages and other relief. The Company believes that these lawsuits are without
merit and intends to defend against them vigorously. However, an adverse
decision could have a

                                        55
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

material adverse effect on the Company's business, results of operations, cash
flows or consolidated financial position.

12.  STOCKHOLDERS' EQUITY

  INITIAL PUBLIC OFFERING OF COMMON STOCK AND CONVERSION OF PREFERRED STOCK

     In February 2000, Eloquent completed its initial public offering and issued
5,175,000 shares of its common stock at a price of $16.00 per share. Eloquent
received approximately $75,441,000 in cash, net of underwriting discounts,
commissions and other offering costs. Simultaneously with the closing of the
initial public offering, each outstanding share of convertible preferred stock
was automatically converted into one share of common stock. Accordingly,
Eloquent's Certificate of Incorporation was amended to authorize 10,000,000
shares of undesignated preferred stock and 40,000,000 shares of common stock.

  CONVERTIBLE PREFERRED STOCK

     Prior to Eloquent's initial public offering in 2000, the convertible
preferred stock authorized by Eloquent's Articles of Incorporation could be
issued in one or more series. The convertible preferred stock at December 31,
1999 comprised (in thousands):

<Table>
<Caption>
                                                        NUMBER OF       COMMON
                                          NUMBER OF      SHARES         SHARES
                                            SHARES     ISSUED AND    RESERVED FOR   LIQUIDATION
                                          AUTHORIZED   OUTSTANDING    CONVERSION       VALUE
                                          ----------   -----------   ------------   -----------
<S>                                       <C>          <C>           <C>            <C>
Series A................................    1,250         1,250         1,250         $ 1,000
Series B................................    1,922         1,908         1,908           3,300
Series C................................    1,912         1,912         1,912           7,458
Series D................................    2,355         2,089         2,089          10,655
Series E................................    2,500            --         2,500              --
                                            -----         -----         -----         -------
                                            9,939         7,159         9,659         $22,413
                                            =====         =====         =====         =======
</Table>

  COMMON STOCK WARRANTS

     In 1999, in conjunction with the revolving line of credit, Eloquent
provided the lender with warrants to purchase 70,000 shares of common stock at
$5.10 per share. See Note 8 for further details.

     In 1999, warrants to purchase 1,500,000 shares were issued in conjunction
with the convertible notes at an exercise price of $0.01 per share. See Note 9
for further details.

     In 1998, Eloquent issued fully exercisable warrants to purchase 22,115
shares of common stock for $3.90 per share in connection with a capital lease
arrangement. The warrants expire March 2005. The fair market value of these
warrants was estimated using the Black-Scholes option pricing model and the
following assumptions; dividend yield of 0%; volatility of 55%, risk-free
interest rate of 5.61% and a term of 7 years. The fair value was recorded as an
expense in the year ended December 31, 1998.

     At December 31, 2001, the weighted average contractual life of the
outstanding warrants was 3.8 years.

                                        56
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Warrant activity for common stock and preferred stock now converted to
common stock is as follows:

<Table>
<Caption>
                                                                WARRANTS OUTSTANDING
                                                            ----------------------------
                                                              SHARES     PRICE PER SHARE
                                                            ----------   ---------------
<S>                                                         <C>          <C>
Balance, December 31, 1998................................     137,887   $0.173 - $3.90
  Granted.................................................   1,570,000   $ 0.01 - $5.10
  Exercised...............................................     (22,500)           $0.01
                                                            ----------
Balance, December 31, 1999................................   1,685,387   $ 0.01 - $5.10
  Exercised...............................................  (1,335,576)  $ 0.01 - $1.73
  Cancelled...............................................      (3,557)  $ 0.01 - $1.73
                                                            ----------
Balance, December 31, 2000................................     346,254   $ 0.01 - $5.10
  Exercised...............................................    (164,199)  $ 0.01 - $0.80
  Cancelled...............................................     (22,989)  $ 0.01 - $0.80
                                                            ----------
Balance, December 31, 2001................................     159,066   $ 0.01 - $5.10
                                                            ==========
</Table>

  STOCK REPURCHASE PROGRAM

     In May 2001, Eloquent's Board of Directors authorized the repurchase of up
to 250,000 shares of the Company's outstanding common stock. At December 31,
2001, the Company had purchased 246,000 shares at an average price of $1.17 per
share. Shares repurchased under the program are being re-issued to satisfy
exercises of warrants, purchases under the employee stock plan and exercises of
options issued under employee equity incentive plans.

  STOCKHOLDERS RIGHTS PLAN

     In October 2000, Eloquent's Board of Directors adopted a Stockholders
Rights Plan ("Rights Plan") under which all stockholders of record as of
November 8, 2000 received rights to purchase shares of a new series of preferred
stock. The adoption of the Rights Plan was intended as a means to guard against
abusive takeover tactics and was not in response to any particular proposal. The
rights trade with Eloquent's common stock, unless and until they are separated
upon the occurrence of certain future events. The rights are exercisable only if
a person or group acquires 20% or more of Eloquent's common stock or announces a
tender offer for 20% or more of the common stock. If a person acquires 20% or
more of Eloquent's common stock, all rightsholders except the buyer will be
entitled to acquire Eloquent's common stock at a discount. The rights
distribution was not taxable to the stockholders. Eloquent's Board of Directors
may terminate the Rights Plan at any time or redeem the rights prior to the time
a person acquires more than 20% of Eloquent's common stock.

  STOCK-BASED COMPENSATION

     In connection with certain stock option grants, Eloquent recorded unearned
stock-based compensation totaling $13,189,000, which is being amortized
utilizing the accelerated method prescribed in FASB Interpretation No. 28 over
the vesting periods of the related options which is generally four to five
years. If options are cancelled prior to vesting, the stock-based compensation
expense related to the unvested options that was calculated utilizing the
accelerated method is reversed and expense is recognized on a straight-line
basis. Amortization of stock-based compensation recognized during the years
ended December 31, 2001, 2000 and 1999 totaled $1,660,000, $4,140,000 and
$5,756,000, respectively, net of adjustments for cancellations. The amortization
expense has been allocated across the relevant functional expense categories.
Amounts

                                        57
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

reported in 1999 have been reclassified to conform with 2001 and 2000
presentations. The reclassification has no impact on the previously reported net
loss.

13.  EMPLOYEE BENEFIT PLANS

  COMMON STOCK OPTIONS

     In October 1999, the Board approved Eloquent's 1999 Equity Incentive Plan
(the Plan) that provides for the grant of incentive stock options, nonstatutory
stock options and other equity instruments. The Plan became effective upon
consummation of Eloquent's initial public offering and shares available under
existing incentive plans became authorized for issuance under the Plan.
6,765,474 shares of common stock have been authorized for issuance of stock
options to employees, directors, or consultants. Under the terms of the Plan and
its predecessor plans, incentive options may be granted to employees, and
nonstatutory options may be granted to employees, directors and consultants, at
prices no less than 100% and 85%, respectively, of the fair market value of
Eloquent's common stock at the date of grant. The Plan will terminate in October
2009, unless terminated earlier by the Board of Directors.

     Options granted prior to November 1998 generally became exercisable
immediately and vest at 20% upon completion of one year from the vesting
commencement date and ratably 1/60 each month thereafter. Grants after November
1998 and prior to January 2000 generally became exercisable immediately and vest
at 25% upon completion of one year from the vesting commencement date and
ratably 1/48 each month thereafter. Grants to new employees subsequent to
January 2000, vest at 25% upon completion of one year from the vesting
commencement date and ratably 1/48 each month thereafter and grants to existing
employees vest ratably over 48 months. The options expire ten years from the
date of grant, and Eloquent holds the right to repurchase unvested shares issued
pursuant to their exercise at the original exercise price.

     In July 2000, the Board adopted the 2000 Non-Qualified Stock Plan that
provides for the grant of nonstatutory stock options and other equity
instruments. 2,000,000 shares of common stock have been authorized for issuance
of stock options to employees, directors, or consultants at prices no less than
85% of the fair market value of Eloquent's common stock at the date of grant.
Grants to existing employees generally vest ratably over 48 months and expire
ten years from the date of grant.

                                        58
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Stock option activity under all option plans is summarized as follows:

<Table>
<Caption>
                                                            OPTIONS OUTSTANDING
                                             --------------------------------------------------
                                                                                   WEIGHTED
                                                                                   AVERAGE
                                             SHARES AVAILABLE   SHARES UNDER    EXERCISE PRICE
                                                FOR GRANT          OPTION         PER SHARE
                                             ----------------   ------------   ----------------
<S>                                          <C>                <C>            <C>
Balances, December 31, 1998................        734,122        1,318,712         $0.49
  Additional shares reserved...............      3,160,000               --
  Granted..................................     (3,082,050)       3,082,050         $1.96
  Exercised................................             --         (422,643)        $0.61
  Cancelled................................        650,777         (650,777)        $0.68
                                                ----------       ----------
Balances, December 31, 1999................      1,462,849        3,327,342         $1.80
  Additional shares reserved...............      2,000,000               --
  Granted..................................     (3,033,724)       3,033,724         $6.46
  Exercised................................             --         (490,689)        $0.82
  Cancelled................................      1,202,417       (1,202,417)        $5.62
                                                ----------       ----------
Balances, December 31, 2000................      1,631,542        4,667,960         $3.95
  Additional shares reserved...............        760,974               --
  Granted and assumed......................     (2,754,832)       2,754,832         $0.93
  Exercised................................             --         (574,727)        $0.98
  Cancelled................................      2,947,920       (2,947,920)        $4.14
                                                ----------       ----------
Balance, December 31, 2001.................      2,585,604        3,900,145         $2.11
                                                ==========       ==========
</Table>

     The options outstanding and currently vested by exercise price at December
31, 2001 were as follows:

<Table>
<Caption>
OPTIONS OUTSTANDING
--------------------------------------------------------------------------              VESTED OPTIONS
                                       WEIGHTED AVERAGE                      -------------------------------------
                           SHARES         REMAINING       WEIGHTED AVERAGE   SHARES EXERCISABLE   WEIGHTED AVERAGE
RANGE OF EXERCISE PRICE  OUTSTANDING   CONTRACTUAL LIFE    EXERCISE PRICE       AT 12/31/01        EXERCISE PRICE
-----------------------  -----------   ----------------   ----------------   ------------------   ----------------
<S>                      <C>           <C>                <C>                <C>                  <C>
$0.13 - $ 0.75........      877,308          9.45              $ 0.63              140,992             $ 0.41
$0.78 - $ 1.00........    1,023,525          8.78              $ 0.91              336,209             $ 0.94
$1.01 - $ 2.00........      931,908          9.22              $ 1.38               96,124             $ 2.00
$2.20 - $ 7.50........      829,359          8.45              $ 3.44              325,967             $ 3.74
$8.00 - $25.13........      238,035          8.13              $10.89              107,371             $10.48
                          ---------                                              ---------
$0.13 - $25.13........    3,900,145                                              1,006,663             $ 2.89
                          =========                                              =========
</Table>

  EMPLOYEE STOCK PURCHASE PLAN

     Under the Company's Employee Stock Purchase Plan ("ESPP"), 878,365 shares
of common stock have been reserved for issuance at December 31, 2001. Under the
ESPP, employees are granted the right to purchase shares of common stock at a
price per share that is 85% of the lesser of the fair market value at the
beginning of the offering period or the end of the offering period. In 2001 and
2000, shares totaling 158,209 and 176,044, respectively, were issued at average
per share prices of $0.72 and $4.02, respectively.

                                        59
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  FAIR VALUE DISCLOSURES

     Eloquent calculated the fair value of each option grant and each stock
purchase right on the date of grant or issuance using the Black-Scholes option
pricing model and the following weighted average assumptions for the years ended
December 31:

<Table>
<Caption>
                                                                             EMPLOYEE
                                                                              STOCK
                                                   STOCK OPTION PLANS     PURCHASE PLAN
                                                  --------------------    --------------
                                                  2001    2000    1999    2001     2000
                                                  ----    ----    ----    -----    -----
<S>                                               <C>     <C>     <C>     <C>      <C>
Risk-free interest rate.........................  4.69%   6.08%   5.68%   3.94%    6.23%
Expected life...................................   5.0     5.0     5.0     0.5      0.4
Dividend yield..................................    --      --      --      --       --
Volatility......................................   143%     70%      0%    133%     100%
</Table>

     Eloquent's pro forma information follows (in thousands, except per share
data):

<Table>
<Caption>
                                                          YEAR ENDED DECEMBER 31,
                                                       ------------------------------
                                                         2001       2000       1999
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Net loss.............................................  $(20,416)  $(51,252)  $(16,615)
Net loss -- FAS 123 Adjusted.........................  $(21,195)  $(55,170)  $(17,043)
Net loss per share as reported -- Basic and
  Diluted............................................  $  (1.11)  $  (3.33)  $  (5.47)
Net loss per share FAS 123 Adjusted -- Basic and
  Diluted............................................  $  (1.15)  $  (3.59)  $  (5.61)
</Table>

     The effects of applying SFAS 123 in this pro forma disclosure may not be
indicative of future amounts. Additional rewards in future years are
anticipated.

  401(k) SAVINGS PLAN

     Eloquent has a savings plan (the "Savings Plan") that qualifies as a
deferred salary arrangement under Section 401(k) of the Internal Revenue Code,
under which, participating employees may defer a percentage (not to exceed 15%)
of their eligible pretax earnings up to the Internal Revenue Service's annual
contribution limit. All employees of Eloquent are eligible to participate in the
Savings Plan. Eloquent is not required to contribute to the Savings Plan and has
made no contributions since the inception of the Savings Plan.

                                        60
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14.  INCOME TAXES

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes. Significant components of
deferred tax assets for federal and state income taxes are as follows (in
thousands):

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Restructuring expense.......................................  $  2,201   $  1,417
Impairment charges..........................................     1,003      1,883
Depreciation and amortization...............................       475         96
Other.......................................................     2,300      1,557
Research and development credits............................       606        437
Net operating losses........................................    25,948     20,930
                                                              --------   --------
Net deferred tax asset......................................    32,533     26,320
Less valuation allowance....................................   (32,533)   (26,320)
                                                              --------   --------
                                                              $     --   $     --
                                                              ========   ========
</Table>

     Eloquent has established a valuation allowance against its deferred tax
assets due to the uncertainty surrounding the realization of such assets.
Management evaluates on an annual basis the recoverability of the deferred tax
assets and the level of the valuation allowance. At such time as it is
determined that it is more likely than not that the deferred tax assets are
realizable, the valuation allowance will be reduced.

     Eloquent's effective tax rate differs from the statutory federal income tax
rate as shown in the following schedule:

<Table>
<Caption>
                                                              DECEMBER 31,
                                                              ------------
                                                              2001    2000
                                                              ----    ----
<S>                                                           <C>     <C>
Statutory federal income tax rate...........................  (34)%   (34)%
Valuation allowance on deferred tax asset...................   34      34
                                                              ---     ---
Effective tax rate..........................................   --      --
                                                              ===     ===
</Table>

     At December 31, 2001, Eloquent had federal and state net operating loss
carryforwards of approximately $70,099,000 and $35,235,000, respectively, and
federal and state research and development tax credit carryforwards of $436,000
and $257,000, respectively. Eloquent's net operating loss carryforwards, as well
as credit carryforwards, expire between the years 2005 and 2021, if not
utilized.

     The Tax Reform Act of 1986 limits the use of net operating loss and tax
credit carryforwards in certain situations where changes occur in the stock
ownership of a company. If Eloquent should have an ownership change, as defined,
utilization of the carryforwards would be restricted.

                                        61
<PAGE>
                                 ELOQUENT, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15.  NET LOSS PER SHARE

     The following table sets forth the computation of basic and diluted net
loss per share (in thousands, except per share amounts):

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Loss before extraordinary item and cumulative effect of
  accounting change.........................................  $(20,416)  $(36,299)  $(16,615)
Extraordinary loss on extinguishment of debt................        --     (7,453)        --
                                                              --------   --------   --------
Loss before cumulative effect of accounting change..........   (20,416)   (43,752)   (16,615)
Cumulative effect of accounting change -- beneficial
  conversion feature........................................        --     (7,500)        --
                                                              --------   --------   --------
Net loss....................................................  $(20,416)  $(51,252)  $(16,615)
                                                              ========   ========   ========

Weighted average common stock outstanding...................    18,382     15,406      3,494
Weighted average unvested common stock subject to
  repurchase................................................       (19)       (25)      (458)
                                                              --------   --------   --------
Weighted average common stock outstanding for basic and
  diluted calculation.......................................    18,363     15,381      3,036
                                                              --------   --------   --------
Basic and diluted net loss per share:
Loss before extraordinary item and cumulative effect of
  accounting change.........................................  $  (1.11)  $  (2.36)  $  (5.47)
Extraordinary loss on extinguishment of debt................        --      (0.48)        --
Cumulative effect of accounting change -- beneficial
  conversion feature........................................        --      (0.49)        --
                                                              --------   --------   --------
Net loss....................................................  $  (1.11)  $  (3.33)  $  (5.47)
                                                              ========   ========   ========
ANTIDILUTIVE SECURITIES:
  Convertible preferred stock...............................        --         --      7,159
  Options to purchase common stock..........................     3,900      4,667      3,327
  Warrants..................................................       159        346      1,685
                                                              --------   --------   --------
                                                                 4,059      5,013     12,171
                                                              ========   ========   ========
</Table>

                                        62
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Eloquent, Inc.:

     In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)1 on page 31 present fairly, in all material respects,
the financial position of Eloquent, Inc. and its subsidiary at December 31, 2001
and 2000, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in the index
appearing under Item 14(a)2 on page 31 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 of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

                                          /s/ PRICEWATERHOUSECOOPERS LLP

San Jose, California
January 31, 2002

                                        63
<PAGE>

                                                                     SCHEDULE II

                                 ELOQUENT, INC.

                       VALUATION AND QUALIFYING ACCOUNTS

<Table>
<Caption>
                                                 BALANCE AT
                                                 BEGINNING     ADDITIONS                  BALANCE AT END
                                                  OF YEAR     (REDUCTIONS)   WRITE-OFFS      OF YEAR
                                                 ----------   ------------   ----------   --------------
                                                                     (IN THOUSANDS)
<S>                                              <C>          <C>            <C>          <C>
Allowance for doubtful accounts:
  Year ended December 31, 2001.................   $   599       $   (80)       $(398)        $   121
  Year ended December 31, 2000.................   $   334       $   286        $ (21)        $   599
  Year ended December 31, 1999.................   $   105       $   270        $ (41)        $   334
Valuation allowance for deferred tax assets:
  Year ended December 31, 2001.................   $26,320       $ 6,213           --         $32,533
  Year ended December 31, 2000.................   $11,349       $14,971           --         $26,320
  Year ended December 31, 1999.................   $ 6,782       $ 4,567           --         $11,349
</Table>

                                        64
<PAGE>

                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this report on Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Mateo, State of California, on the 29th day of April 2002.


                                          ELOQUENT, INC.

                                          By:     /s/ CLIFFORD A. REID
                                            ------------------------------------
                                                      Clifford A. Reid
                                            Chief Executive Officer and Director

                               POWER OF ATTORNEY


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-K/A has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:



<Table>
<Caption>
                   SIGNATURE                                     TITLE                        DATE
                   ---------                                     -----                        ----
<S>                                               <C>                                    <C>



              /s/ CLIFFORD A. REID                       Chairman of the Board,          April 29, 2002
------------------------------------------------  Chief Executive Officer and Director
                Clifford A. Reid                     (Principal Executive Officer)




               /s/ R. JOHN CURSON                  Chief Financial Officer, Secretary    April 29, 2002
------------------------------------------------   and Treasurer (Principal Financial
                 R. John Curson                         and Accounting Officer)




                       *                                        Director                 April 29, 2002
------------------------------------------------
               Michael E. Herman




                       *                                        Director                 April 29, 2002
------------------------------------------------
                 Sara M. Nolan




                       *                                        Director                 April 29, 2002
------------------------------------------------
               Anthony P. Brenner




                       *                                        Director                 April 29, 2002
------------------------------------------------
               Terry L. Opdendyk




           *By: /s/ CLIFFORD A. REID
   ------------------------------------------
                Clifford A. Reid
                Attorney-in-fact
</Table>


                                        65
<PAGE>

                               INDEX TO EXHIBITS


<Table>
<Caption>
EXHIBIT
 NUMBER                      DESCRIPTION OF DOCUMENT
-------                      -----------------------
<C>        <S>
 3.03(1)   Amended and Restated Certificate of Incorporation, as
           currently in effect.
 3.04(1)   Amended and Restated Bylaws, as currently in effect.
 4.01(1)   Form of Specimen Stock Certificate.
 4.02(1)   Fourth Amended and Restated Investors' Rights Agreement,
           dated October 20, 1999, among Eloquent and certain investors
           named therein.
 4.03(1)   Securities Purchase Agreement, dated October 20, 1999, by
           and among Eloquent and certain investors named therein.
 5.01(1)   Opinion of Cooley Godward LLP regarding legality of the
           securities being registered.
10.01(1)   Form of Indemnity Agreement entered into by Eloquent with
           each of its directors and executive officers.
10.02(1)   Equity Incentive Plan.
10.03(1)   Form of Stock Option Agreement under the Equity Incentive
           Plan.
10.04(1)   1997 Equity Incentive Plan.
10.05(1)   Form of Stock Option Agreement under the 1997 Equity
           Incentive Plan.
10.06(7)   1999 Equity Incentive Plan, as amended.
10.07(1)   Form of Stock Option Agreement under the 1999 Equity
           Incentive Plan.
10.08(1)   Form of Nonstatutory Stock Option Agreement for Non-Employee
           Director Grants under the 1999 Equity Incentive Plan.
10.09(1)   1999 Employee Stock Purchase Plan.
10.10(1)   Form of 1999 Employee Stock Purchase Plan Offering.
10.11(1)   Employment Agreement, dated December 23, 1998, between
           Eloquent and Abraham Kleinfeld.
10.12(1)   Office Lease, dated November 19, 1996, between Eloquent and
           California Casualty Indemnity Exchange, as amended.
10.13(1)   OEM Agreement, dated May 30, 1997, between Eloquent and
           Verity, Inc.
10.14(1)   Software License Agreement, dated June 30, 1997, between
           Eloquent and Voxware, Inc.
10.15(8)   Master Agreement, dated June 22, 2001, between Eloquent and
           AT&T Corp.
10.16(1)   Sublease Agreement, dated June 1, 1999, between Eloquent and
           California Casualty Indemnity Exchange.
10.17(1)   ISV Software License Agreement, dated August 1, 1999,
           between Eloquent and WebXpress, Inc.
10.18(1)   Assignment of Sublease, dated November 24, 1999, between
           Eloquent and California Casualty.
10.19(2)   2000 Non-Qualified Stock Plan.
10.20(3)   Agreement and Plan of Merger and Reorganization, dated
           October 31, 2000 among Eloquent, Inc., Rebop Acquisition
           Corp., Rebop Media, Inc., and Certain Shareholders of Rebop
           Media, Inc.
10.21(4)   Employment Agreement, dated as of December 1, 2000, between
           Eloquent and John Curson.
10.22(4)   Confidential Severance Agreement, dated November 1, 2000,
           between Eloquent and Abraham Kleinfeld.
10.23(5)   First Amended and Restated Agreement and Plan of Merger,
           dated June 22, 2001, by and between Eloquent, Rebop Media,
           Inc., Rebop Acquisition Corp. and Certain Shareholders of
           Rebop Media, Inc.
10.24(6)   Employment Offer Letter, dated June 6, 2001 between Eloquent
           and M. Edward Molkenbuhr
10.25(6)   Employment Offer Letter, dated June 28, 2001 between
           Eloquent and Joseph Cortale
10.26(8)   Addendum to Master Agreement, dated June 22, 2001, between
           Eloquent and AT&T Corp.
</Table>


                                        66
<PAGE>


<Table>
<Caption>
EXHIBIT
 NUMBER                      DESCRIPTION OF DOCUMENT
-------                      -----------------------
<C>        <S>
10.27(8)   Dedicated Hosting Service -- Service Order Attachment, dated
           April 28, 2001, between Eloquent and AT&T Corp.
10.28(8)   AT&T Dedicated Hosting Service Upgrade Addendum, dated
           September 25, 2001, between Eloquent and AT&T Corp.
23.01      Consent of PricewaterhouseCoopers LLP.
</Table>


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


(1) Incorporated by reference to the same numbered exhibit previously filed with
    the Company's Regulation Statement on Form S-1 (SEC File No. 333-89537).



(2) Incorporated by reference to exhibit 99.1 previously filed with the
    Company's Registration Statement on Form S-8 (SEC File No. 333-34182).



(3) Incorporated by reference to exhibit 99.2 previously filed with the
    Company's Quarterly Report on Form 10-Q for the quarterly period ended
    September 30, 2000.



(4) Incorporated by reference to the same numbered exhibit previously filed with
    the Company's Annual Report on Form 10-K for the year ended December 31,
    2000 (SEC File No. 000-29059).



(5) Incorporated by reference to the exhibit 2.1 previously filed with the
    Company's Current Report on Form 8-K filed on July 6, 2001.



(6) Incorporated by reference to the same numbered exhibit previously filed with
    the Company's Quarterly Report on Form 10-Q for the quarterly period ended
    June 30, 2001.



(7) Incorporated by reference to the same numbered exhibit previously filed with
    the Company's Quarterly Report on Form 10-Q for the quarterly period ended
    September 30, 2001.



(8) Incorporated by reference to the same numbered exhibit previously filed with
    the Company's Annual Report on Form 10-K for the year ended December 31,
    2001.


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