UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K

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

                   For the Fiscal Year Ended January 31, 2001

                        Commission File Number 000-31989


                               CONVERA CORPORATION
             (Exact name of registrant as specified in its charter)


                     Delaware                      54-1987541
         State or other jurisdiction of         (I.R.S. Employer
         incorporation or organization)         Identification No.)

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

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

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

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

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

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

The aggregate  market value of the  voting stock held by  non-affiliates of  the
registrant as of April 9, 2001 (based on the closing sales price as  reported on
the NASDAQ National Market System) was $67,290,180.

The number of shares outstanding  of the registrant's Class A common stock as of
April 9, 2001 was 35,363,930.



                     The Index to Exhibits begins on Page 30



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                               CONVERA CORPORATION

                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2001

                                TABLE OF CONTENTS
                                      Page

                                     PART I
<S>               <C>                                                                                 <C>

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

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

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

Item 4.           Submission of Matters to a Vote of Security Holders........................         11

                                                       PART II

Item 5.           Market for Registrant's Common Equity and Related Stockholder Matters......         12

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

Item 7.           Management's Discussion and Analysis of Financial   Condition
                  and Results of Operations..................................................         14

Item 7A.          Quantitative and Qualitative Disclosures About Market Risk.................         21

Item 8.           Financial Statements and Supplementary Data................................         21

Item 9.           Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure...................................................         21

                                                      PART III

Item 10.          Directors and Executive Officers of the Registrant.........................         22

Item 11.          Executive Compensation ....................................................         25

Item 12.          Security Ownership of Certain Beneficial Owners and Management.............         28

Item 13.          Certain Relationships and Related Transactions.............................         30

                                                       PART IV

Item 14.          Exhibits, Financial Statement Schedules and Reports on Form 8-K............         30


</TABLE>


<PAGE>


                                     PART I


ITEM 1.           Business

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

OVERVIEW

Convera  was  established  through  the  combination  of  the  former  Excalibur
Technologies   Corporation   ("Excalibur")  and  Intel  Corporation's  ("Intel")
Interactive Media Services ("IMS") division. On December 21, 2000, Excalibur and
Intel  consummated  a  business  combination   transaction  (the  "Combination")
pursuant to an Agreement and Plan of Contribution and Merger,  dated as of April
30, 2000, as amended,  by and among Excalibur,  Intel, the Company and Excalibur
Transitory, Inc., a wholly owned subsidiary of the Company. At the completion of
the Combination, Excalibur became a wholly owned subsidiary of the Company, each
outstanding  share of  Excalibur  common stock was  converted  into one share of
Class A common stock of the Company,  and Intel  contributed  to the Company its
IMS  division,  intellectual  property  assets  and  other  assets  used by that
division, as well as $150 million in cash at closing, in exchange for 14,949,384
shares of Class A common stock of the Company and  12,207,038  shares of Class B
non-voting common stock of the Company.

The Combination  was accounted for using the purchase method of accounting.  All
references in this Form 10-K to financial results for the Company for the period
prior to December 21, 2000 reflect the historical financial results of Excalibur
and its subsidiaries.

Convera designs,  develops,  markets,  implements and supports  high-performance
technologies,  products,  services and  solutions  for  managing and  monetizing
high-value  digital  content--text,  images  and  video.  Convera  conducts  its
business through the licensing and deployment of its digital content  management
technology on customer  infrastructures  and to customers with branded  content,
such as sports leagues,  entertainment  providers,  news and information outlets
and training  companies,  that wish to outsource the management and monetization
of their high-value digital assets.

Convera   maintains   an  extensive   portfolio  of  patented  and   proprietary
technologies.  Its core technologies include: advanced computational linguistics
and semantic networking that leverage lexical knowledge using built-in knowledge
bases to search not only for specific word meanings,  but also for related terms
and  concepts;   Adaptive  Pattern  Recognition  Processing   ("APRP(TM)")  that
identifies  patterns  in  digital  data,   providing  the  capability  to  build
content-based  analysis  and  retrieval  applications  for any  type of  digital
information;  intelligent real-time video analysis that detects scene changes as
they occur;  and  tamper-resistant,  content  protection  technology that guards
digital assets against unauthorized modification, use or access. In combination,
these core technologies form the cornerstones of the Convera content  management
platform  on which the Company  builds  products  and  provides  its  end-to-end
content management and publishing service.

In September 2000, Intel and the National Basketball Association ("NBA") entered
into a master services agreement, which Intel contributed to Convera on December
21, 2000, for the distribution of personalized  highlights,  archival  material,
television  broadcast  enhancements and real time distribution of NBA games over
broadband  networks.  Convera will be the NBA's provider of services  related to
the development and  distribution of those products for the term of the services
agreement, subject to the NBA's right to authorize major telecasters and certain
other third parties to provide television  broadcast  enhancements and real time
distribution of NBA games.

Convera and the NBA are working together to create a hosted, end-to-end solution
that  transforms  video  footage  and other data into a  searchable  database of
rich-media interactive content assets and then manages those  assets--archiving,
enhancing,  protecting,  and managing their  distribution as branded NBA content
offerings--to  create  a new fan  experience  for the  NBA's  end-users  and new
revenue  opportunities  for the NBA.  Under  this  10-year  services  agreement,
Convera  will  provide data and video  integration  and NBA content  management,
logging, indexing and retrieval, as well as other related services. Convera will
receive  in cash a  percentage  of NBA  revenue  from the  sale of NBA  products
subject to the services agreement,  as well as a percentage of NBA revenues from
advertising and sponsorship related to the covered NBA products.

In addition to the  services  agreement,  Convera  entered  into a  contribution
agreement  with the NBA,  under  which the NBA  contributed  certain  intangible
assets such as all of the NBA  know-how  related to the  creation,  development,
distribution,   marketing  and  deployment,  over  the  Internet  and  broadband
networks,  of products  using sports and  entertainment  content;  a database of
customer  profiles of NBA fans;  the right to use certain  NBA  personnel  and a
non-exclusive license to the NBA trademark.  In exchange for the contribution of
these  assets,  Convera  issued  4,746,221  shares  of  Class  A  common  stock,
representing 10% of the total outstanding stock of the Company on that date.

Products

Convera's  products  enable  digital  content to be managed  and  utilized  more
effectively  to  increase  productivity  or reduce  expenses.  They are used for
enterprise  information  portals,   Internet  e-business  applications,   online
publishing and by application  service providers ("ASPs") and original equipment
manufacturers ("OEMs") as value-added components of their offerings. The Convera
product  family  enables  digital  content to be  captured,  analyzed,  indexed,
cataloged,  accessed, navigated,  searched, secured, retrieved and published via
interconnected  computer networks, and empowers individuals to locate, share and
utilize  relevant  information  quickly,  easily  and  intuitively.   Accessible
content,  or  data  types,  include  paper  documents,   text,  databases,  word
processing  documents,   PDF  (portable  document  format)  files,  news  feeds,
groupware systems, e-mails, images, audio, video and many more.

Convera's software solutions deliver  capabilities for ingesting,  analyzing and
encoding analog or digital video, automatic metadata extraction,  speech-to-text
conversion,  managing video  content,  video content shot  selection,  rough-cut
editing, edit decision list exporting,  web publishing,  XML encoding and export
of metadata, real-time profiling and retrospective searching, combined full-text
and database searching,  word meaning-based  semantic searching,  fault-tolerant
pattern  recognition  based-searching  for  both  text and  images,  statistical
searching,  robust  search  using  traditional  keyword and Boolean  techniques,
protecting  digital content and business rules from  unauthorized  modification,
use or access, and rights management that govern usage by specifying  persistent
rights,  rules  and  predictable  consequences,  and then  enforces  these  upon
consumer acceptance.

Convera  RetrievalWare(R)  features a modular architecture that enables parallel
processing  on  distributed,  multi-threaded  servers and is designed to support
very large content sets and large  information  systems with thousands of users.
Convera  RetrievalWare(R)  WebExpress is an advanced  search engine designed for
use by web-driven  businesses  whose revenues or reputations rely on the ability
of their prospects and customers to retrieve  accurate  information  quickly and
naturally  from their web sites.  Convera  Screening  Room(R)  deploys a modular
architecture  to  provide  secure,   scalable  and  intuitive   access  to,  and
re-expression  and publishing  capabilities  for, video content over  intranets,
extranets and the Internet.  Convera Internet Software Integrity System ("ISIS")
encrypts  high-value or sensitive  digital content with a package of intelligent
agents  that  forms a  tamper-resistant,  renewable  and mobile  shield  against
unauthorized  modification,  use or access, and that specifies persistent rights
and business rules governing use.

Convera  offers its software  solutions to information  systems for  workgroups,
enterprises and distributed  wide area networks,  including the Internet and the
World Wide Web. The Company also offers professional  implementation services to
ensure Convera products integrate seamlessly into customer environments, as well
as  training,   consulting   and   maintenance   services  to  facilitate   full
implementation and optimal use of its technologies.

End-to-end Content Management and Publishing Service

Built on its expertise in multimedia content  management,  its core technologies
in  computational  linguistics,  image  and video  processing,  tamper-resistant
content protection, and its feature-rich applications, Convera enables owners of
high-worth branded content to manage,  publish and monetize their digital assets
through a single-stop, outsourced solution. Targeted at media rich organizations
in sports,  news and  information,  entertainment,  and  training,  the  Company
believes  that its service  consolidates  all of the  functions  content  owners
require to increase  utilization,  Web  distribution  and  monetization of their
media content, including ingestion and encoding,  automatic metadata extraction,
archive  creation,  indexing  and  retrieval,  re-expression  and  re-purposing,
editing  support,  video/data  integration,  content  security,  business  model
support (ad insertion, subscriptions,  pay-per-view,  syndication,  e-commerce),
packaging for Web  distribution,  cross  platform  formatting  (56K,  broadband,
wireless) and management of content distribution to the edge of the network.

Convera  technology  can also be deployed in the form of an  end-to-end  content
management and publishing service to media-rich  organizations for archiving and
managing video assets, for exploiting the Internet as a distribution channel and
for generating additional revenue through alternative distribution.  The Company
also offers  integration  services to ensure the service  operates as a seamless
extension to the customers' existing content management infrastructure.

Business Strategy

The Company licenses its software products directly to commercial businesses and
government  agencies  throughout  North  America,  Europe and other parts of the
world  and  distributes  its  software  products  to end users  through  license
agreements with value-added resellers, systems integrators, OEMs, ASPs and other
strategic partners. The Company's technology may also be customized and deployed
to  commercial  businesses.  Convera's  wholly owned  subsidiary  located in the
United Kingdom, Convera Technologies  International,  Limited ("CTIL"), and CTIL
offices  located in Germany,  and the  Company's  affiliate  in France,  Convera
France,  conduct  international  sales  activities.  Except as otherwise  noted,
Convera  and its  subsidiaries  are  collectively  referred  to  hereinafter  as
"Convera"  or the  "Company",  and  for  periods  prior  to the  closing  of the
Combination on December 21, 2000, the "Company" refers to Excalibur Technologies
Corporation and its subsidiaries.

The Company can be contacted via email at invest@convera.com  and visited at its
web site,  www.convera.com.  Information  on the Convera web site is not part of
this Form 10-K.

CONVERA PRODUCTS

PRODUCTS

Convera  develops,   markets,  licenses,   services  and  supports  the  Convera
RetrievalWare(R)  suite of multimedia search solutions for corporate  intranets,
Internet e-commerce, online publishing and the OEM market. Products include:

Convera RetrievalWare(R);
Convera RetrievalWare(R)FileRoom;
Convera RetrievalWare(R)WebExpress;
Convera Internet Spider;
Convera RetrievalWare(R)SDK;
Convera Screening Room(R);
Convera Visual RetrievalWare(R);
Convera Video Analysis Engine; and
Convera Internet Software Integrity System.

Convera's  products  contributed 85% of total revenues in fiscal years 2001, and
100% of total revenues in fiscal years 2000 and 1999.

Convera RetrievalWare(R)

Convera  RetrievalWare(R)  offers an advanced modular approach to content access
and retrieval and is an enabling technology for intranet enterprise portals, web
publishing and e-commerce  applications.  A high-performance,  scalable and more
accurate  alternative  to  traditional  search and  retrieval  systems,  Convera
RetrievalWare(R)   is   a   comprehensive   software   solution   designed   for
enterprise-level  content  access  and  retrieval  that  empowers  users to find
mission  critical data across  multiple data types from a common user interface.
By  integrating  the  APRP(TM)  and  semantic  network   technologies,   Convera
RetrievalWare(R)  delivers  superior levels of power and performance  throughout
the entire  information  management  process,  from data capture and indexing to
searching, retrieval and dissemination.

With  Convera's  semantic  networks,  users can  easily and  automatically  find
required  information by using all of the power and richness of natural language
processing.  Convera  RetrievalWare(R)  incorporates syntax,  morphology and the
actual meaning of words.  The baseline  semantic network in the English language
version was created from complete dictionaries,  a thesaurus and other reference
sources, giving users a built-in knowledge base of 500,000 word meanings, 50,000
language  idioms and 1.6 million word  associations.  Users submit plain English
queries that are  automatically  expanded to include related terms and concepts,
thereby increasing the likelihood that highly relevant content will be returned.
The  software  recognizes  words  at the root  level,  idioms  and the  multiple
meanings of words.  This approach  eliminates the costs associated with defining
keywords,  building  topic  trees,  establishing  expert  rules and  sorting and
labeling information in database fields. Convera  RetrievalWare(R) also supports
specialized semantic networks for legal, medical, finance, engineering and other
disciplines.

APRP(TM) identifies patterns in digital  information.  In text applications,  it
provides fuzzy searching with a high degree of precision and recall,  giving end
users the ability to retrieve even  approximations of search queries with a high
degree of  confidence  that all of the  requested  information  will be returned
regardless of errors in spelling or the existence of inconsistencies in the data
which may be caused by poor quality of optical character recognition  processes.
The  software  works  at high  speed  and  supports  the  rapid  development  of
multi-language text-retrieval systems.

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

The latest  version  of  Convera  RetrievalWare(R),  RetrievalWare(R)  6.8,  was
released in the fourth quarter of fiscal year 2001. Version 6.8 is a significant
enhancement to the product that includes  compatibility  with Microsoft  Windows
2000 and  upgrades to support  the latest  version of other  significant  server
operating  systems,  database  management  systems and  groupware  products.  In
addition  to  the  substantial  compatibility  upgrades,   RetrievalWare(R)  6.8
includes a newly  engineered  user interface,  which is the principal  component
customers  see when using the  product.  The new  interface  incorporates  human
factors  findings that the Company  believes will increase use and acceptance of
RetrievalWare(R). The RetrievalWare(R) Internet Spider released with version 6.8
supports the HTTPS/SSL standard, which enables customers to index data stored on
secure web  sites.  In  addition,  RetrievalWare(R)  6.8  includes  support  for
searching  additional  non-English  languages and improved  tools for developers
using the Java programming language to integrate search into their web sites and
applications.

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

The Convera RetrievalWare(R) product family includes the following components:

         Convera RetrievalWare(R) FileRoom

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

         Convera RetrievalWare(R) WebExpress

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

         Convera Internet Spider

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

         Convera RetrievalWare(R) SDK

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

         Convera RetrievalWare(R) Synchronizers

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

Convera Screening Room(R)

Convera Screening Room(R) is a comprehensive solution for video asset management
providing scalable access, search and retrieval of video assets, both analog and
digital,  from any  desktop.  It provides  for  real-time  capturing,  encoding,
analyzing,  cataloging,  browsing, searching and retrieving of video, as well as
related  captured  text  (closed  captions or  speech-to-text  conversions)  and
metadata, over corporate  intranets/extranets.  Designed to manage video content
in  Internet  portal and  corporate  intranet  environments,  Convera  Screening
Room(R) also supports media,  broadcast and entertainment video asset management
solutions.  It  enables  users  to  easily  capture  analog  or  digital  video,
automatically create an intelligent video storyboard, and play it back in any of
the  industry's  standard video file formats.  Screening  Room(R) users then can
automatically  browse,  search and retrieve  precisely what video clips they are
looking for without having to play or watch the video in its entirety.

Convera  Screening  Room(R) combines the APRP(TM)  technology for video analysis
with Convera RetrievalWare(R)'s indexing capabilities. Convera Screening Room(R)
consists of four components:  Screening Room(R) Capture, Screening Room(R) Edit,
Screening  Room(R)  Browse and Screening  Room(R) Video Asset Server.  Screening
Room(R)  Capture  ingests,  analyzes  and  storyboards  analog or digital  video
assets,  including  live feeds,  and extracts,  indexes and searches  associated
metadata  such as  captured  text (both  closed-caption  text and  spoken  audio
content  converted  to  text),   keyframe  images  of  significant   scenes  and
annotations.  Screening Room(R) Edit enables users to browse,  search,  edit and
annotate  storyboards.  In  addition,  users can select and  compile  clips from
multiple video assets to create new derivative works,  export files and metadata
in  industry-standard  XML format, or output new rough-cut edit segments to Edit
Decision Lists ("EDLs") for import into higher-end  offline editing systems like
Avid and Media 100.  Screening  Room(R) Browse allows user access to catalogs of
video assets  through any standard web browser.  The Video Asset Server  indexes
and  stores  captured  video  assets  for  instantaneous  browsing,  search  and
retrieval in a client/server environment.

Version 2.2, the latest version of Convera  Screening  Room(R),  was released in
the fourth quarter of fiscal year 2001.  Screening Room(R) 2.2 includes features
in the areas of video format support,  database support, data import and export,
video logging and encoding,  metadata logging and storage,  and scheduling.  Key
features  include  support for  encoding  and  playback of MPEG 2, a format that
makes it possible to transmit  broadcast-quality  video over computer  networks;
improved  interface  and  options  for  capturing  video;  expanded  options for
importing  and exporting  video assets and metadata;  ability to encode video in
several formats simultaneously in a distributed  configuration;  and the ability
to  simultaneously  populate  multiple  repositories  with XML data during video
capture and loading.

In addition to the Convera Screening Room(R) application,  the Screening Room(R)
product family includes the following components:

         Convera Screening Room(R) Capture (Standalone Version)

Convera  Screening  Room(R)  Capture  (Standalone  Version)  was released in the
fourth quarter of fiscal year 2001. The standalone Capture product is a separate
packaging of the Capture  component  of the full  Screening  Room(R)  system and
utilizes the same core  technology.  It provides the ability to log, analyze and
encode  video,  and save the data and video  assets in a  non-proprietary  (XML)
format.  Screening  Room(R)  Capture  does not  require  purchase  of the entire
Screening Room(R) system,  and enables loading of video assets and metadata into
a third party database or content  management  system, or otherwise  repurposing
the asset.  Screening  Room(R) Capture is also a suitable  component for sale to
OEM customers.

         Screening Room(R) Capture API

The Screening Room(R) Capture API (Application  Programming  Interface)  enables
developers  to control the  Screening  Room(R)  Capture  component  from another
program.  The  Screening  Room(R)  Capture  API can be used to  drive  Screening
Room(R) Capture when that component is delivered as a part of the full Screening
Room(R) video asset management system or when the Capture component is delivered
in its standalone packaging.

Convera Visual RetrievalWare(R)

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

Convera Video Analysis Engine ("VAE")

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

Convera Internet Software Integrity System ("ISIS")

The Convera  Internet  Software  Integrity  System is a software  solution  that
protects  content  and  enforces  usage  rights for the online  distribution  of
premium  digital  content  such as music,  video and  books.  This  solution  is
designed for developers of content distribution platforms. It uses both standard
encryption and patented  tamper-resistant software technology to provide strong,
persistent  content  protection  to ensure the content stays  protected  through
every link in the  content  distribution  value chain (up to and  including  the
end-user).  The encryption  technology transforms the content into an unreadable
form by unauthorized  users. The  tamper-resistant  software  technology ensures
only  authorized,  protected  decryption of the content by hiding critical code,
keys and  other  secrets  from  observation,  and  detecting  attempts  to break
security  mechanisms.  The  combination  of these  technologies  in ISIS thwarts
illicit copying, use and redistribution of digital content.

The  Internet   Software   Integrity  System  includes  client  and  server-side
components  as well as tools.  The  tools  package  the  content  for  protected
distribution. The client-side security components act like unique locks and keys
for each user to access the protected  content.  The client  components  enforce
usage rules such as allowing the user to access the content only on a particular
PC and to copy the content only a certain number of times.  These components are
manufactured  in large  volume,  typically  one unique  component  per user.  By
creating unique  security  components for each user, ISIS reduces the value of a
successful  attack on each  component  thus  reducing the incentive to break the
system and preventing any global breaks.  The server-side  components manage the
distribution and updating of the client-side components. The server periodically
updates or "renews" the  client-side  components in order to reduce  further the
value and incentive of breaking the security system.

TECHNICAL SUPPORT, IMPLEMENTATION SERVICES AND EDUCATION

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

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

CONVERA END-TO-END CONTENT MANAGEMENT AND PUBLISHING SERVICE

Convera's  technology can also be deployed in the form of an end-to-end  content
management and publishing service for media rich organizations wishing to manage
their media content and monetize it through Internet  distribution.  The service
incorporates   Convera's  core   technologies   and   capabilities   in  content
acquisition,  content  management,  content  security and content  publishing to
provide a  consolidated  platform  for managing and  publishing  media  content.
Revenue  derived  from the  deployment  of Convera's  technology  in this manner
accounted for 15% of total consolidated revenues in fiscal year 2001.

Convera's  end-to-end  content  management  and  publishing  capability  enables
owners of  high-worth  branded  content to manage,  publish and  monetize  their
digital  assets through a single-stop,  outsourced  solution.  Targeted at media
rich organizations in sports, news and information, entertainment, and training,
the service consolidates all of the functions content owners require to increase
utilization, Web distribution and monetization of their media content, including
ingestion  and  encoding,  automatic  metadata  extraction,   archive  creation,
indexing  and  retrieval,   re-expression  and  re-purposing,  editing  support,
video/data integration,  content security, business model support (ad insertion,
subscriptions,   pay-per-view,   syndication,  e-commerce),  packaging  for  Web
distribution,   cross  platform  formatting  (56K,   broadband,   wireless)  and
management of content distribution to the edge of the network.

MARKETING AND DISTRIBUTION

The Company's  sales and marketing strategy  focuses on the licensing of Convera
products to customers  both  through a direct sales force and through  strategic
partners and OEMs, and on the sale of Convera's  end-to-end  service directly to
end user customers.  The Company's  targeted customer groups include the world's
largest corporations, government agencies and other institutions, large computer
systems integrators, Web-driven businesses, and media-rich organizations such as
sports leagues, news and information providers,  entertainment organizations and
training companies.

Members of the North  American  sales  team are  located  throughout  the United
States and Canada, and the majority of the overseas sales team is located in the
United Kingdom. The Company typically licenses its Convera  RetrievalWare(R) and
Convera Screening Room(R) products to end users as either an  enterprise-wide or
work-group  level  solution,  licenses its Convera ISIS product to OEM customers
and  third  party  software  vendors  who  distribute  through  their  own sales
channels, and offers its end-to-end content management and publishing service to
end users for  monthly  fees or in some  cases  through  royalty  payments  as a
percentage of revenue.

Marketing efforts focus on building brand awareness and establishing  demand for
the Company's products and end-to-end content management and publishing service,
and include advertising, public relations, trade show participation, direct mail
and electronic marketing campaigns and telemarketing/lead management activities.
The Company's home page on the World Wide Web,  www.convera.com,  is an integral
part of its  marketing  and sales  efforts.  Through  the web site,  prospective
customers  can learn  about the suite of Convera  products  and  conduct  online
demonstrations  of products,  while  existing  customers  can enroll in training
courses and access  password-protected  areas for technical  and other  customer
support.

PRODUCT DEVELOPMENT AND ADVANCED RESEARCH

The  Company's  primary   technologies  are  its  semantic  network   processing
techniques,   proprietary  adaptive  pattern  recognition   processing  software
(APRP(TM))  and  patented   tamper-resistant  software  for  protecting  digital
content.

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

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

Convera's  patented   tamper-resistant   content  protection  technologies  work
together as a package of  intelligent  agents that encrypts  digital  assets and
establishes  a renewable and mobile shield  against  unauthorized  modification,
access and use. In addition,  the technologies can specify persistent rights and
business  rules that govern usage of the protected  content and stipulate  three
layers of authorization:  user,  content and device on which the content will be
consumed.

The  Company's  research  and  development  program  focuses  on  enhancing  and
expanding the capabilities of its Convera  RetrievalWare(R),  Screening  Room(R)
and ISIS products to address additional markets and market requirements,  and on
exploring and applying its  proprietary  technologies in new areas such as media
asset  management and multimedia  content  retrieval,  for example.  The Company
believes the market is emerging for search  products that can index and retrieve
unstructured  text and  multimedia  data  types.  To that end,  the  Company  is
evaluating a  multimedia  server  architecture  which would  provide  integrated
multimedia search and retrieval.

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

The  Company  has  conducted   research  and  product   development  of  pattern
recognition  and  natural  language  systems  since 1980.  Research  and product
development expenditures for the development of new products and enhancements to
existing  products  were  approximately  $13.0  million,  $9.5  million and $8.3
million,  respectively,  in the fiscal years ended  January 31,  2001,  2000 and
1999.

PROTECTION OF PROPRIETARY TECHNOLOGY

The  Company  regards its  software as  proprietary  and relies  primarily  on a
combination  of patents,  copyright,  trademark and trade secret laws of general
applicability,  employee  confidentiality and invention  assignment  agreements,
software  distribution  protection  agreements and other  intellectual  property
protection  methods to  safeguard  its  technology  and software  products.  The
Company also obtains  trademark  protection for its various  product brand names
and Company name.  The Company has three  patents and eight patent  applications
currently  pending  before the Patent and  Trademark  Office,  each  intended to
protect  technology-related  assets of the Company. The Company also relies upon
its efforts to design and produce new products and upon improvements to existing
products to maintain a competitive position in the marketplace.

COMPETITION

Competition in the information  technology industry in general, and the software
development industry in particular, is intense. The Company competes in multiple
markets,  including the traditional information retrieval and content management
market  segments as well as the  emerging  market  segment  for  digital  rights
management. These market segments have current and potential competitors who are
larger and more  established  than the  Company and have  significantly  greater
financial,  technical,  marketing and other  resources than the Company.  In the
information  retrieval  and  content  management  market  segments,  the Company
considers  its  principal   competitive   advantages  to  be  the  architecture,
extensibility  to multiple data types and performance of its content  management
applications.  The Company  also  believes the  superior  language  handling and
content publishing capabilities of its products are competitive  advantages.  In
the emerging  market for digital rights  management,  the Company  considers its
competitive  advantages to be the tamper-resistance,  persistence,  renewability
and  mobility  of its  content  protection  technologies  and the  comprehensive
content   management,   business   model   support  and  Internet   distribution
capabilities of its end-to-end service.

Compared  to its primary  competition,  the Company  believes  its  applications
provide users with:  (1) more accurate  results due to the semantic  network and
APRP(TM)  technologies,  (2) an  environment  that is more  scalable  due to the
distributed search architecture,  and (3) more comprehensive search capabilities
due to the ability to search  multiple types of data.  The Company  believes its
content  protection  technologies  provide users a high level of confidence that
only authorized  users will access  protected  content due to the encryption and
tamper-resistance  technologies;  and the Company's  end-to-end service provides
users with a reliable outsource solution due to the integration of all necessary
content  acquisition,   management,   enhancement,   security  and  distribution
technologies into a one-stop solution.

The Company competes with numerous companies  depending on the target market for
its products.  Most often, the Company competes  directly with companies such as
Verity,  Inc. and Autonomy,  Inc. to provide  search  solutions to the corporate
intranet, Internet e-commerce, online publishing and the OEM market. The Company
primarily  competes  with  Virage,  Inc.  to provide  video  content  management
solutions  to Internet  portals  and  corporate  intranets,  and  competes  with
InterTrust   Technologies   Corporation,   RealNetworks,   Inc.,  Microsoft  and
ContentGuard  Holdings,  Inc. to provide digital rights management  solutions to
OEM and  third-party  vendor  accounts.  Convera  believes  it is the  first  to
consolidate  the  capabilities   offered  by  its  various  competitors  into  a
single-source.  There  can be no  assurance  that  the  Company  will be able to
compete  successfully  against current or future competitors or that competition
will not  materially  adversely  affect  the  Company's  operating  results  and
financial  condition.  The  Company's  activities  currently  are  subject to no
particular  regulation  by  governmental  agencies  other than  those  routinely
imposed on corporate businesses and no such regulation is now anticipated.

SEGMENT INFORMATION

As a result of the  Combination  in fiscal year 2001,  the  Company  changed the
structure of its organization to reflect one reportable segment. The Company has
restated the corresponding  segment  information for earlier periods  presented.
Beginning  in fiscal year 2000,  the Company had aligned its  business  into two
operating segments,  differentiating  between text and visual product lines. The
Company's  business is no longer  analyzed in this manner.  All of the Company's
revenues are from external customers.

Revenues  derived  from  contracts  and orders  issued by  agencies  of the U.S.
Government  were  approximately  $5.0  million,  $4.4 million and $4.5  million,
respectively,  in the fiscal years ended January 31, 2001, 2000 and 1999.  These
revenues,  expressed as a percentage of total revenues for the fiscal year, were
approximately 10%, 12% and 16%, respectively.

Financial  information  is  located  in the  consolidated  financial  statements
beginning on page F-3.  Additional  information related to segment reporting can
be found in Note 9 to the consolidated financial statements contained herein.

EMPLOYEES

The Company had 359  employees at January 31, 2001, of whom 166 were in research
and  development,   107  in  sales  and  marketing,  47  in  technical  support,
professional  services and training  and 39 in finance and  administration.  The
employees  are  not  covered  by  collective  bargaining  agreements,   and  the
management  of the  Company  considers  relations  with  employees  to be  good.
Competition for qualified  personnel  within the Company's  industry is intense.
There can be no assurance  that the Company will be able to continue to attract,
hire or retain  qualified  personnel  and the  inability  to do so could  have a
material  adverse  effect upon the  Company's  operating  results and  financial
condition.


Item 2.       Properties

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

The Company's principal  development and customer support centers are located in
Carlsbad,  California;  Columbia, Maryland; Lafayette,  Colorado; and Hillsboro,
Oregon.  The  company  leases  additional  space for  sales  and  administrative
functions in New York, New York and San Jose, California.

The Company  leases space in Windsor,  England and  commercial  office suites in
Paris,  France,  and  in  Munich  and  Frankfurt,  Germany  in  support  of  its
international sales operation.

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


Item 3.       Legal Proceedings

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




<PAGE>


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

The Excalibur  Technologies  Corporation Annual Meeting of Shareholders was held
December  21,  2000.  At the  meeting,  Excalibur's  shareholders  approved  the
Agreement  and Plan of  Contribution  and Merger dated as of April 30, 2000,  as
amended, by and among Excalibur, Intel, Convera and Excalibur Transitory,  Inc.,
a wholly owned subsidiary of Convera (the "Merger Agreement").  For the approval
of the Merger  Agreement,  the vote was  12,371,358  shares for;  14,598  shares
against;  and 2,150  shares  abstaining.  Upon  completion  of the  Combination,
Excalibur became a wholly owned subsidiary of Convera. Excalibur's name has been
changed to Convera Technologies, Inc.

For the approval of the Convera 2000 Stock Option Plan,  which was in connection
with and a condition  to the  Combination,  the vote was  9,517,708  shares for;
2,846,342 shares against; and 24,056 shares abstaining.

For the approval of two corporate governance provisions of Convera's amended and
restated certificate of incorporation and bylaws, the vote was 12,060,647 shares
for; 323,170 shares against; and 4,289 shares abstaining.

For the election of ten members to the  Excalibur  board of directors  for terms
expiring at the completion of the combination,  or at the 2001 annual meeting if
the Combination was not approved, the vote was as follows:

                             Number of Shares Voted
                           For              Withheld

Donald R. Keough:          12,049,803       338,303
Herbert A. Allen:          12,049,783       338,303
Susan K. Allen:            12,035,733       352,353
Patrick C. Condo:          12,049,733       338,353
Richard M. Crooks:         12,070,913       317,173
John S. Hendricks:         12,070,913       317,173
W. Frank King III:         12,070,888       317,198
John G. McMillian:         12,070,913       317,173
Philip J. O'Reilly:        12,070,913       317,173
Harry C. Payne:            12,070,913       317,173

For the approval of the amendment to  Excalibur's  1996 Employee  Stock Purchase
Plan, the vote was 12,281,164  shares for;  103,749  shares  against;  and 3,193
shares abstaining.



<PAGE>


                                     PART II

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

The Company's Class A common stock is traded in the over-the-counter  market and
is listed on the  National  Market  System of the NASDAQ  Stock Market under the
symbol  "CNVR." As a result of the  Combination,  the  Excalibur  common  stock,
traded  under the  symbol  "EXCA,"  ceased to be listed on the  Nasdaq  National
Market.  In the  Combination,  the  Excalibur  common  stock was  converted on a
one-for-one basis into Convera Class A common stock.

The  following  table  sets  forth the high and low sale  prices for the Class A
common stock for the period from December 22, 2000 through  January 31, 2001 and
for Excalibur  common stock for the period February 1, 1999 through December 21,
2000,  as  reported  by the  National  Market  System of  NASDAQ.  The number of
shareholders  of record as of January 31, 2001 was 1,021.  The Company has never
declared or paid  dividends on its common stock and  anticipates  that,  for the
foreseeable future, it will not pay dividends on its common stock.

<TABLE>
<CAPTION>

           <S>                                                      <C>                <C>
                                                                     High               Low

           Fiscal 2001 (February 1, 2000 - January 31, 2001)

           First Quarter....................................      $  45   3/8         $ 21  5/16
           Second Quarter...................................         59   1/2           26 25/64
           Third Quarter....................................         70   3/16          40
           Fourth Quarter...................................         58   1/2           13

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

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

</TABLE>

Item 6.       Selected Financial Data

The selected financial data presented below have been derived from the Company's
consolidated financial statements. The balance sheet data as of January 31, 2001
and 2000, and the statement of operations data for the fiscal years ended
January 31, 2001, 2000 and 1999 should be read in conjunction with such
consolidated financial statements and notes thereto included elsewhere in this
Annual Report on Form 10-K.

The Combination was accounted for using the purchase method of accounting. All
references in this Form 10-K to financial results for the Company for the period
prior to December 21, 2000 reflect the historical financial results of Excalibur
and its subsidiaries.




<PAGE>
<TABLE>
<CAPTION>

<S>                                              <C>            <C>             <C>             <C>           <C>

------------------------------------------------------------------------------------------------------------------------
                                                                  Fiscal Years Ended January 31,
                                                 2001             2000           1999            1998           1997
                                                 ----             ----           ----            ----           ----
Statement of Operations Data:                                  (in thousands, except per share data)
Revenues:
     Software...............................$     37,299    $    32,649    $     22,741     $    17,202    $   15,866
     Maintenance............................       6,621          5,285           5,198           5,215         4,393
                                            --------------  -------------  ---------------  -------------  -------------
   License-related.........................       43,920         37,934          27,939          22,417        20,259
   Services (3).............................       7,602              -               -               -             -
                                            --------------  -------------  ---------------  -------------  -------------
                                                  51,522         37,934          27,939          22,417        20,259
                                            --------------  -------------  ---------------  -------------  -------------

Cost of revenues:
     Software ..............................       8,288          4,724           3,697           2,957         1,630
     Maintenance ...........................       1,474          2,143           1,320           1,219         1,618
                                            --------------  -------------  ---------------  -------------  -------------
   License-related .........................       9,762          6,867           5,017           4,176         3,248
   Services ................................       7,846              -               -               -             -
                                            --------------  -------------  ---------------  -------------  -------------

                                                  17,608          6,867           5,017           4,176         3,248
                                            --------------  -------------  ---------------  -------------  -------------


Gross margin................................      33,914         31,067          22,922          18,241        17,011
                                            --------------  -------------  ---------------  -------------  -------------


Operating expenses:
   Sales and marketing......................      22,345         16,210          13,501          13,184        14,430
   Research and product development.........      12,968          9,456           8,328           6,405         6,288
   General and administrative...............       6,279          5,402           4,775           4,884         3,906
   Amortization of goodwill & other
     intangible assets (4)..................      15,672            118             111              82             -
   Acquired in-process research and
     development............................         800              -               -           1,284             -
   Restructuring costs......................           -              -               -             577             -
                                            --------------  -------------  ---------------  -------------  -------------
                                                  58,064         31,186          26,715          26,416        24,624
                                            --------------  -------------  ---------------  -------------  -------------

Operating loss..............................     (24,150)          (119)         (3,793)         (8,175)       (7,613)

Interest income, net........................       1,368            250             239             374           781
Equity in net loss of affiliate.............           -              -            (300)           (525)         (341)
Write-off of investment in affiliate........           -           (471)              -               -             -
                                            --------------  -------------  ---------------  -------------  -------------

Net loss....................................     (22,782)          (340)         (3,854)         (8,326)       (7,173)


Dividends on cumulative, convertible
preferred stock.............................          10             14              14              14            14
                                            --------------  -------------  ---------------  -------------  -------------

Net loss applicable to common stock.........$    (22,792)   $      (354)   $     (3,868)    $    (8,340)   $   (7,187)
                                            ==============  =============  ===============  =============  =============

Net loss per common share - basic and
   diluted..................................$      (1.22)   $     (0.02)   $      (0.29)    $     (0.64)   $    (0.58)

Weighted-average number of common shares
   outstanding - basic and diluted..........      18,714         14,282          13,526          12,934        12,351



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

Cash and cash equivalents...................$     37,061    $    10,884    $      5,851     $     4,939    $    2,685
Working capital.............................     166,543         19,288           8,006           9,748        14,566
Total assets................................   1,026,445         30,687          19,712          20,045        26,147
Accumulated deficit.........................     (78,920)       (56,138)        (55,798)        (51,945)      (43,619)
Total shareholders' equity (2)..............   1,015,058         22,305          13,174          13,098        18,563

(1)      The Company had no significant long-term debt for any of the periods presented.
(2)      No dividends have been declared or paid on the Company's common stock.
(3)      Services revenue derived from end-to-end content management and publishing service.
(4)      FY 2001 amortization primarily related to merger with Intel's IMS division.

</TABLE>

<PAGE>


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

Overview

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

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

On December 21, 2000,  Excalibur and Intel  consummated the Combination.  At the
completion of the  Combination,  Excalibur  became a wholly owned  subsidiary of
Convera, each outstanding share of Excalibur common stock was converted into one
share of Class A common stock of Convera,  and Intel  contributed to Convera IMS
division,  intellectual  property assets and other assets used by that division,
as well as approximately  $155 million in cash, with $150 million at closing and
the  balance  payable in fiscal  year 2002 to fund  retention  bonuses to former
Intel  employees,  in exchange for 14,949,384  shares of Class A common stock of
Convera and 12,207,038 shares of Class B non-voting common stock.

All  references  in this Form 10-K to financial  results for the Company for the
period prior to December 21, 2000 reflect the  historical  financial  results of
Excalibur and its subsidiaries.

The  Combination has been accounted for using the purchase method of accounting.
The  purchase  price for the IMS  division was  determined  to be  approximately
$925.1 million,  which included  approximately $2 million in transaction  costs,
less  approximately  $600,000  in costs to register  and issue the  shares.  The
shares issued to Intel as consideration  for the contributed  assets were valued
based on the  existing  market price when the  Combination  was  announced.  The
purchase  price was allocated to the assets  acquired  based on their  estimated
fair values on the  acquisition  date. In connection with the  Combination,  the
Company  recorded  approximately  $769.8  million  in  goodwill,  which is being
amortized on a straight-line basis over six years.

In connection with the  Combination,  the Company recorded a charge for acquired
in-process  research and development  ("IPRD") of approximately  $800,000 in the
fiscal year ended January 31,  2001The  purchased  IPRD  represents  the present
value of the  estimated  after-tax  cash flows  expected to be  generated by the
purchased  technology,  which,  at  December  21,  2000,  had  not  yet  reached
technological feasibility.  The cash flow projections for revenues were based on
estimates  of market size and growth  factors,  expected  industry  trends,  the
anticipated nature and timing of product  introduction and the estimated life of
the underlying  technology.  Estimated  operating expenses and income taxes were
deducted from estimated  revenue  projections  to arrive at estimated  after tax
cash  flows.  Projected  operating  expenses  include  cost of sales,  sales and
marketing and general and administrative  expenses.  The other intangible assets
acquired  from Intel  included  certain  developed  technology  and an  existing
workforce as well as certain existing and in-process customer contracts. For the
fiscal  year ended  January  31,  2001,  the Company  recorded  amortization  of
goodwill and other intangible assets of $15.7 million.

The IMS division had contracts in process at the time of the Combination,  which
were being accounted for using the completed  contract method,  and accordingly,
revenue was deferred until all remaining costs,  obligations and potential risks
were insignificant and the contract  deliverables were agreed to and accepted by
the  customer.  Convera has  continued to account for the  existing  contributed
contracts  using the completed  contract  method of accounting.  For purposes of
determining the value of these contributed contracts at the date of acquisition,
management  considered the total amounts to be received under each contract.  As
these  contracts  are  completed  by Convera,  revenue  and the  related  costs,
including  profit on work  performed by Convera  subsequent to the  acquisition,
will be recognized.  Existing contracts that were completed prior to January 31,
2001 resulted in aggregate  revenue  recognition of  approximately  $7.6 million
recorded as services  revenues and  approximately  $700,000 recorded as software
revenues.  The  associated  costs  recognized  related to these  contracts  were
approximately   $7.5  million   included  in  cost  of  services   revenues  and
approximately  $400,000  included  in cost of  software  revenues.  The  Company
expects to complete the remaining  contributed  contracts during the fiscal year
ending January 31, 2002.

In September 2000, Intel and the National Basketball Association ("NBA") entered
into a master services agreement, which Intel contributed to Convera on December
21, 2000, for the distribution of personalized  highlights,  archival  material,
television  broadcast  enhancements and real time distribution of NBA games over
broadband networks. Convera and the NBA are working together to create a hosted,
end-to-end  solution  that  transforms  video  footage  and  other  data  into a
searchable  database of rich-media  interactive  content assets and then manages
those assets--archiving,  enhancing, protecting, and managing their distribution
as branded NBA content  offerings--to  create a new fan experience for the NBA's
end-users and new revenue opportunities for the NBA.

Under this  10-year  services  agreement,  Convera  will  provide data and video
integration and NBA content management, logging, indexing and retrieval, as well
as other  related  services.  Convera will  receive in cash a percentage  of NBA
revenue from the sale of NBA products subject to the services agreement, as well
as a percentage of NBA revenues from advertising and sponsorship  related to the
covered NBA products. The NBA will have the exclusive right to make all sales of
NBA  products.  The NBA products  will  include  highlights  on demand,  archive
online,  television  broadcast  enhancements  and real time  distribution of NBA
games over  broadband  networks.  Convera will be the NBA's provider of services
related to the  development  and  distribution of those products for the term of
the  services  agreement,   subject  to  the  NBA's  right  to  authorize  major
telecasters  and certain  other third  parties to provide  television  broadcast
enhancements and real time distribution of NBA games.

In addition to the  services  agreement,  Convera  entered  into a  contribution
agreement  with the NBA,  under  which the NBA  contributed  certain  intangible
assets such as all of the NBA  know-how  related to the  creation,  development,
distribution,   marketing  and  deployment,  over  the  Internet  and  broadband
networks,  of products  using sports and  entertainment  content;  a database of
customer  profiles of NBA fans;  the right to use certain  NBA  personnel  and a
non-exclusive license to the NBA trademark.  In exchange for the contribution of
these  assets,  Convera  issued  4,746,221  shares  of  Class  A  common  stock,
representing 10% of the total outstanding stock of the Company on that date.

Results of Operations

For the fiscal year ended January 31, 2001,  total  revenues were $51.5 million,
an increase of 36% over total revenues of $37.9 million in fiscal year 2000. The
net loss for fiscal  year 2001 was $22.8  million,  or $1.22 per  common  share,
compared to a net loss of $0.3 million, or $.02 per share in the prior year. For
the fiscal year ended January 31, 2000, total revenues  increased 36% over total
revenues of $27.9 million in fiscal year 1999.  The net loss in fiscal year 1999
was $3.9 million, or $0.29 per common share.

The Company  uses EBITDA  (earnings  before  interest,  taxes  depreciation  and
amortization)  as  an  additional  measure  of  performance.  EBITDA  is  not  a
measurement  of financial  performance  under  accounting  principles  generally
accepted in the United States and should not be considered as an  alternative to
net loss or as an  indicator  of Convera's  operating  performance.  The Company
believes that EBITDA is widely used by analysts,  investors and other interested
parties  as a  financial  measure.  EBITDA is not  necessarily  comparable  with
similarly titled measures for other companies.

For the fiscal year ended January 31, 2001, the EBITDA loss was $4.0 million, or
$0.21 per common share compared to a positive  EBITDA of $3.4 million,  or $0.24
per common share in fiscal year 2000. For fiscal year 1999, EBITDA loss was $1.4
million, or $0.11 per common share.

The following  charts summarize the components of revenues and the categories of
expenses, including the amounts expressed as a percentage of total revenues, and
EBITDA for each of the three fiscal  years in the period ended  January 31, 2001
(dollars in thousands).

<TABLE>
<CAPTION>

<S>                             <C>           <C>       <C>           <C>        <C>          <C>          <C>           <C>
------------------------------ -------------------------------------------------------------------- --- --------- --- ---------
                                                                                                        Increase      Increase
                                                                                                        (Decrease)    (Decrease)
                                                                                                        from          from
                                               Components of Revenue and Expenses                       2000 to       1999 to
                                                                                                          2001          2000
                                                 Fiscal years ended January 31,
                                      2001                    2000                     1999
Revenues:                          $          %            $          %             $         %            %             %
                               ----------- --------    ----------- --------     ---------- --------     ---------     ---------
                                 $37,299       72%       $32,649       86%        $22,741      81%          14%           44%
   Software

   Maintenance                     6,621       13%         5,285       14%          5,198      19%          25%            2%
                               ----------- --------    ----------- --------     ---------- --------     ---------     ---------
                                  43,920       85%        37,934      100%         27,939     100%          16%           36%
 License-related

 Services                          7,602       15%            --       --              --      --           --            --
                               ----------- --------    ----------- --------     ---------- --------     ---------     ---------
      Total revenues             $51,522      100%       $37,934      100%        $27,939     100%          36%           36%
                               ----------- --------    ----------- --------     ---------- --------     ---------     ---------

Expenses:

   Cost of license-related
      revenues                    $9,762       19%        $6,867       18%         $5,017      18%          42%           36%

   Cost of services revenues       7,846       15%            --       --              --      --           --            --

   Sales and marketing            22,345       44%        16,210       43%         13,501      48%          38%           20%

   Research and product
      development                 12,968       25%         9,456       25%          8,328      30%          37%           14%

   General and administrative      6,279       12%         5,402       14%          4,775      17%          16%           13%

   Amortization of goodwill
      and other intangible
      assets                      15,672       30%           118       --             111      --        13181%           --

   Acquired in-process
      research and
      development                    800        2%            --       --              --      --           --            --
                               ----------- --------    ----------- --------     ---------- --------     ---------     ---------
      Total expenses             $75,672      147%       $38,053      100%        $31,732     113%          53%           20%
                               ----------- --------    ----------- --------     ---------- --------     ---------     ---------
Operating loss                  $(24,150)                  $(119)                 $(3,793)                 N/A           N/A

Other income (expense), net        1,368                    (221)                     (61)                 N/A           N/A
                               -----------             -----------              ----------

Net loss                        $(22,782)                  $(340)                 $(3,854)                 N/A           N/A
                               ===========             ===========              ==========
</TABLE>

<TABLE>
<CAPTION>

<S>                            <C>                       <C>                     <C>

                                             Fiscal years ended January 31,
                                  2001                    2000                    1999
                               -----------             -----------              ----------

EBITDA:
Operating loss                  $(24,150)                  $(119)                 $(3,793)
Depreciation                       1,329                   1,323                    1,375
Amortization of goodwill and
   other intangible assets        15,672                     118                      111
Amortization of other assets       2,327                   2,105                      869
Acquired in-process research
   and development                   800                      --                       --
                               -----------             -----------              ----------

                                 $(4,022)                 $3,427                  $(1,438)
EBITDA (loss)                  ===========             ===========              ==========

</TABLE>

Revenues

Software  revenues,  which include amounts generated through software  licensing
and implementation services,  increased 14% to $37.3 million in fiscal year 2001
from $32.6  million in fiscal  year 2000 and  increased  44% in fiscal year 2000
from $22.7 million in fiscal year 1999. The increase in software revenues in all
periods was primarily  attributable to increased sales of the Company's  digital
content management products to larger corporations and government  organizations
building intranets,  sales to online service providers and e-commerce businesses
and sales to the original  equipment  manufacturer  ("OEM") market.  Each year's
increase reflects  continued  contributions  from existing and new OEMs who have
chosen the Company as a key search component in their product offerings.  During
fiscal years 2001 and 2000, OEM relationships provided approximately 18% and 33%
of total software revenues, respectively.

During the year ended  January 31, 2000,  the Company  recognized  approximately
$4.3 million in revenues from an OEM agreement with NCR, which provided NCR with
the rights to integrate  the Company's  products in the NCR TOR solution.  Under
this  arrangement,  NCR also has the right to resell the Company's  full product
line. NCR will pay the Company royalties when they resell the Company's products
to end users.  No value was assigned to the reseller  arrangement  since NCR was
not obligated to resell the Company's  products.  Thus, all of the consideration
received in  connection  with this  contract  was  assigned  to the  integration
services.  Revenues  derived  from the NCR  agreement  were  approximately  $1.2
million  for the year  ended  January  31,  2001.  The  Company  also  generated
approximately $2.8 million and $2.3 million for the years ended January 31, 2000
and 1999, respectively, from an OEM arrangement with StorageTek.

Maintenance  revenues  were $6.7  million in fiscal year 2001,  compared to $5.3
million  and $5.2  million  in fiscal  years  2000 and 1999,  respectively.  The
increase  in  maintenance  revenue in fiscal  years 2001 and 2000 was  primarily
attributable  to an  increase  in  the  number  of  RetrievalWare(R)  customers.
Maintenance  revenues as a percentage of total  revenue has decreased  each year
based  primarily  on the  increase  in  revenues  from  OEM and  other  reseller
agreements that do not have as significant of a maintenance component.

Convera offers its  end-to-end  content  management  and publishing  services to
media-rich  organizations  as an outsource  solution for  archiving and managing
video assets,  for  exploiting  the Internet as a  distribution  channel and for
generating additional revenue through alternative distribution. The Company also
offers  integration  services  to ensure  the  service  operates  as a  seamless
extension to the customers' existing content management infrastructure. Revenues
from  services  in 2001 were $7.6  million,  reflecting  the  transition  of and
completion  of one of the  contracts  assigned  in  the  Combination  under  the
completed contract method of accounting.

Revenues  from  international  operations  are  provided  primarily  by software
licenses  with  various  European  commercial  and  government  customers  and a
well-established  European reseller network.  The Company's  international sales
operation,  Convera Technologies International,  Ltd. ("CTIL"), is headquartered
in the  United  Kingdom,  with  offices  in Germany  and  France.  International
revenues  from  CTIL grew 40% in fiscal  year  2001 to $12.9  million  from $9.2
million  in fiscal  year  2000  compared  to 25% in  fiscal  year 2000 from $7.3
million in fiscal year 1999. The Company  terminated its relationship with ETNV,
a Belgian  Company  incorporated  in June 1996, to sell and market the Company's
products and services  within a territory that included most of Northern  Europe
and Italy, in the first quarter of fiscal year 2000. No revenues  related to the
ETNV agreement were recognized in fiscal year 2000.

Revenues  derived  from  contracts  and orders  issued by  agencies  of the U.S.
Government  were  approximately  10%,  12% and 16% of total  revenues for fiscal
years 2001,  2000 and 1999,  respectively.  One  customer  accounted  for 15% of
revenues  during  fiscal  year 2001.  In fiscal  years  2000 and 1999,  revenues
derived  from one customer  accounted  for 12% and 11%,  respectively,  of total
Company revenues.

Cost of Revenues

Cost of license  related  revenues  increased 42% to $9.8 million in fiscal year
2001 from $6.9 million in fiscal year 2000. In fiscal year 2000, cost of license
related  revenues  increased  36% from $5.0  million in fiscal  year  1999.  The
increase in both fiscal years was related primarily to the sales volume increase
and  greater  royalty  expense  associated  with new  features  included  in the
Company's products that were derived from other third party software products.

Cost of services represents the personnel and other costs incurred in connection
with performing on the Company's service related  contracts.  For the year ended
January 31, 2001, the cost of services primarily represents those costs incurred
in  connection  with the  completion  of the  contracts  accounted for using the
completed contract method of accounting.

Operating Expenses

Sales and marketing  expenses increased 38% to $22.3 million in fiscal year 2001
from $16.2 million in fiscal year 2000. In fiscal year 1999, sales and marketing
costs were $13.5 million.  Growth in expenditures for marketing  programs and in
the number of sales and  marketing  personnel  was  responsible  for the expense
increase in 2001.  Sales and marketing  personnel  increased from 72 to 107 from
January 31, 2000 to January 31, 2001.  Growth in marketing  program expenses and
the opening of the new Germany sales office were responsible for the increase in
fiscal year 2000 expenses.  Sales and marketing expenses were 43% of revenues in
fiscal years 2001 and 2000 compared to 48% in fiscal year 1999.

Research and product  development costs increased 37% to $13.0 million in fiscal
year 2001 from $9.5 million in fiscal year 2000, representing 25% of revenues in
both  periods.  The fiscal year 2001  increase was due to growth in the text and
video product  engineering  staffs and the addition of engineering  personnel in
connection  with the merger  with  Intel's  IMS  division.  The fiscal year 2000
increase was largely due to expenses associated with a development contract with
StorageTek. The agreement with StorageTek was an OEM, licensing and distribution
agreement  that gave  StorageTek  the right to integrate the Company's  software
products  with  StorageTek  equipment.  The  Company  was  responsible  for  the
development  of new features and  interfaces  to the standard  products  covered
under the OEM  portion of the  agreement.  Since the  services  were  considered
essential to the functionality of the license, the OEM portion of this agreement
was recognized on a percentage of completion  basis.  The Company  completed its
development  obligations  under the agreement during fiscal year 2000.  Expenses
associated with this agreement were classified as research and development costs
and cost of  maintenance  revenues.  Text and  video  research  and  development
expenses also  increased in fiscal year 2000 compared to fiscal year 1999 as the
Company continued to invest in the enhancement of its RetrievalWare(R) and video
products.  Research  and  development  expenses  were  $8.3  million,  or 30% of
revenues in fiscal year 1999.

General and  administrative  expenses  increased 16% in fiscal year 2001 to $6.3
million  from $5.4  million  in fiscal  year 2000,  representing  12% and 14% of
revenues,  respectively.  The  increase in fiscal year 2001 was due to growth in
personnel required to support the Company's expanding  operations.  The increase
in fiscal year 2000 was driven by increased  corporate  expenses including legal
and accounting costs. In fiscal year 1999, general and  administrative  expenses
were $4.8 million, or 17% of revenues.

Amortization of goodwill and other  acquisition  related  intangible  assets was
approximately $15.7 million for the year ended January 31, 2001. The majority of
this amount relates to amortization of goodwill and intangible assets related to
the Combination from the December 21, 2000 closing date to the end of the fiscal
year.  This amount also includes  approximately  $1.0 million in amortization of
the  intangible  assets  acquired  from  the NBA  pursuant  to the  contribution
agreement. The write-off of acquired in-process research and development related
to the  Combination  was $0.8  million.  Amortization  expenses of $118,000  and
$111,000 for the years ended January 31, 2000 and 1999, respectively, related to
goodwill from an acquisition made in the second quarter of fiscal year 1998.

Total  expenses for fiscal year 2001 were $75.7  million,  a 99%  increase  from
total  expenses of $38.1  million in the prior fiscal year. In fiscal year 2000,
total  expenses  increased  by 20% from $31.7  million in fiscal year 1999.  The
change in the net loss per share,  from $0.02 per  common  share in fiscal  year
2000 to $1.22 per common  share in fiscal year 2001,  was  primarily  due to the
significant  increase  in  amortization  expense  and in the number of  weighted
average shares outstanding related to the Combination.

The total number of employees  increased  from 208 at January 31, 2000 to 359 at
January 31, 2001. The Company had 201 employees at January 31, 1999.

Other  income  increased  to $1.4  million from a loss of $0.2 million in fiscal
year 2000 and a loss of approximately  $60,000 in fiscal year 1999. The increase
in fiscal year 2001 primarily  represents interest income from the investment of
the $150 million  contributed by Intel as part of the  Combination.  A charge of
$0.5  million  related  to the  termination  of  the  Company's  agreement  with
Excalibur  Technologies  N.V.  ("ETNV")  was the primary  cause of the change in
other income from fiscal year 1999 to fiscal year 2000.

Liquidity and Capital Resources

The  Company's  combined  balance  of  cash,  cash  equivalents  and  short-term
investments  at January 31,  2001 as compared to January 31, 2000 is  summarized
below  (in  thousands).   At  January  31,  2000,  investments  consisted  of  a
certificate of deposit pledged to collateralize a letter of credit.

<TABLE>
<CAPTION>

                                      January 31,         January 31,             Change
                                         2001                 2000
                                     --------------      ---------------      ----------------
              <S>                   <C>                 <C>                  <C>
              Cash and cash
               equivalents           $      37,061       $       10,884       $        26,177
              Investments                  119,083                  178               118,905
                                     -- -----------      --- -----------      --- ------------
               Total                 $     156,144       $       11,062       $       145,082
                                     == ===========      === ===========      === ============

</TABLE>

In fiscal year 2001,  the Company's  operating  activities  used $7.8 million of
cash.  The net loss of $22.8  million  was offset by  non-cash  charges of $18.6
million,   including  $15.7  million  of  amortization  of  goodwill  and  other
intangibles,  $0.8 million of acquired in-process research and development, $1.3
million of  depreciation,  and $0.8  million in bad debt  expense.  Increases in
accounts  receivable  and prepaid  expenses  used $5.1 million and $1.8 million,
respectively, while increases in accounts payable, accrued expenses and deferred
revenues together  contributed $3.3 million.  The Company's operating activities
used cash of $3.3 million in fiscal year 2000.  The net loss of $0.3 million was
offset  by  non-cash  charges  of  $2.7  million,   including  $1.4  million  in
depreciation and amortization, $0.8 million in bad debt expense and $0.5 million
for the write-off of the Company's  investment  in Excalibur  Technologies  N.V.
("ETNV"), a Belgian company incorporated in June 1996 for the purpose of selling
and  marketing  the  Company's  products and services  within a large  territory
including most of Northern  Europe and Italy.  Increases in accounts  receivable
used $8.7  million  while  increases  in accounts  payable and accrued  expenses
provided  $0.6  million.  Reductions  in prepaid  expenses  and an  increase  in
deferred  revenues  together  provided  $2.5 million.  The  Company's  operating
activities  used cash of $3.0 million in fiscal year 1999.  The net loss of $3.9
million was offset by non-cash  charges of $2.3 million,  including $1.5 million
in  depreciation  and  amortization,  $0.5  million in bad debt expense and $0.3
million for the Company's share of the net loss of ETNV and amortization of ETNV
warrants.   Reductions  in  accounts  receivable  provided  $2.3  million  while
increases in prepaid expenses used $3.4 million. Reductions in accounts payable,
accrued expenses and deferred revenues used $0.3 million.

Investing activities  contributed $27.5 million in cash in fiscal year 2001. The
Company  received  cash of $150  million  in  connection  with the  Combination.
Shortly after consummation of the Combination,  the Company purchased short-term
investments, in the form of United States Treasury Bills, totaling approximately
$119 million.  Additionally,  costs incurred in relation to the Combination used
$2.0 million.  Equipment and leasehold  improvement purchases used $1.8 million.
During fiscal year 2000,  investing activities used $1.2 million principally due
to the purchase of equipment  and leasehold  improvements.  In fiscal year 1999,
investing  activities provided $0.1 million. Net cash provided from the maturity
of U.S.  Treasury  Bills  totaled $1.5 million  while  purchases of computer and
other equipment used $1.1 million.

Financing  activities  provided $6.1 million in fiscal year 2001.  Approximately
$5.7  million  represented  proceeds  from the issuance of common stock upon the
exercise of outstanding  stock options,  while  approximately  $400K represented
purchases of shares of the Company  through its employee  stock  purchase  plan.
Financing  activities  provided  approximately $9.4 million in fiscal year 2000.
Net  proceeds of $4.9 million  were  provided by a private  placement of 500,000
shares  of common  stock  sold at $10.00  per share to  unaffiliated  accredited
investors. Cash of $4.5 million was provided from the exercise of employee stock
options and issuances of stock under the employee stock purchase plan. Financing
activities  provided  $3.8 million in fiscal year 1999.  A private  placement of
325,000 shares of common stock to an unaffiliated financial institution provided
$3.4  million,  while cash of $0.4  million was  provided  from the  exercise of
employee  stock options and issuances of stock under the employee stock purchase
plan.

The number of days sales  outstanding  ("DSO") at January 31, 2001 was 123 days,
an  increase of 17 days from  January 31,  2000.  Management  believes  that the
allowance for doubtful accounts of $1.2 million at January 31, 2001 is adequate.

As of January 31, 2001, the Company's  balances of cash,  cash  equivalents  and
short-term  investments were $156 million. The Company believes that its current
balance of cash, cash  equivalents and its funds generated from  operations,  if
any, will be sufficient to fund the Company's  current  projected cash needs for
the  foreseeable  future.  Prior to fiscal year 2001,  the Company had primarily
used cash  provided by sales of its common stock to finance its  operations.  If
the actions  taken by  management  are not  effective  in  achieving  profitable
operating  results,  the Company may be required to pursue  additional  external
sources of  financing  in the  future to  support  its  operations  and  capital
requirements. There can be no assurances that external sources of financing will
be  available  if required,  or that such  financing  will be available on terms
acceptable to the Company.

As of  January 31, 2001,  the  Company  had  net  operating  loss  carryforwards
("NOLs") of  approximately  $80.4  million.  The Company  incurred a net loss of
$22.8  million  for the fiscal  year ended  January 31,  2001.  The  accumulated
deficit of the Company at January 31, 2001 was $78.9 million. The realization of
the  benefits of the NOLs is dependent on  sufficient  taxable  income in future
fiscal  years.  Lack of future  earnings,  or a change in the  ownership  of the
Company,  could  adversely  affect the  Company's  ability to utilize  the NOLs.
Despite the NOL  carryforwards,  the Company  may have income tax  liability  in
future years due to the application of the alternative  minimum tax rules of the
Internal Revenue Code. Further,  the NOLs generated prior to the Combination are
subject to the annual limitations prescribed by IRC Section 386.

Factors That May Affect Future Results - Forward Looking Information

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

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

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

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

EURO Conversion

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


Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

The Company's market risk is principally confined to changes in foreign currency
exchange  rates and  potentially  adverse  effects of differing tax  structures.
International revenues from CTIL, the Company's foreign sales subsidiary located
in the United  Kingdom,  along with entities  established  in Paris,  France and
Munich,  Germany,  were approximately 25% of total revenues in fiscal year 2001.
International  sales are made mostly from the Company's  foreign  subsidiary and
are typically  denominated in British  pounds,  French Francs or German Deutsche
Marks.  As  of  January  31,  2001,  approximately  42%,  4%  and  3%  of  total
consolidated  accounts  receivable were  denominated in British  pounds,  French
Francs and German  Deutsche  Marks,  respectively.  Additionally,  the Company's
exposure to foreign exchange rate fluctuations  arises in part from intercompany
accounts in which  royalties  on CTIL sales are charged to CTIL and  recorded as
intercompany receivables on the books of the U.S. parent company. The Company is
also exposed to foreign exchange rate  fluctuations as the financial  results of
CTIL are translated into U.S. dollars in consolidation.  As exchange rates vary,
those results when translated may vary from  expectations  and adversely  impact
overall expected profitability.

As of January 31, 2001, 11% of the Company's cash and cash  equivalents  balance
was included in the Company's foreign subsidiaries.  Cash equivalents consist of
funds  deposited in money market  accounts  with  original  maturities  of three
months or less. The Company's  short-term  investments consist primarily of U.S.
Government  treasury  bills,  with  maturity  dates  ranging  from 3 months to 6
months.  Given the relatively  short maturity  periods of cash  equivalents  and
short-term investments, the Company's exposure to fluctuations in interest rates
is limited.


Item 8.       Financial Statements and Supplementary Data

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


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

None.


<PAGE>

                                    PART III

Item 10.      Directors and Executive Officers of the Registrant

Directors of the Registrant

<TABLE>
<CAPTION>

<S>                                   <C>        <C>
Name                                  Age         Position

Ronald J. Whittier                    64          Chairman

Patrick C. Condo                      44          President, Chief Executive Officer,
                                                  Chief Operating Officer, and
                                                  Director

Herbert A. Allen                      61          Director

Andy D. Bryant                        50          Director

Gerhard H. Parker                     57          Director

David J. Stern                        58          Director

</TABLE>

Ronald J. Whittier has been Chairman since the effective date of the Combination
on December  21, 2000 and was Chief  Executive  Officer  from  December 21, 2000
through April 5, 2001.  Mr.  Whittier  formerly held the position of Senior Vice
President and General  Manager of Intel's  Interactive  Media Services  division
since 1999.  From 1995 to 1999,  he was  responsible  for  coordinating  Intel's
various activities in content,  applications and authoring tools. Prior to 1995,
he held various jobs at Intel,  including  manager of Intel  Architecture  Labs,
Director  of  Corporate  Marketing  and general  manager of the Memory  Products
Division. Mr. Whittier joined Intel in 1970.

Patrick C. Condo has been President,  Chief Operating  Officer and a director of
Convera  since the  effective  date of the merger with  Intel's IMS  division on
December 21, 2000 and was appointed  Chief  Executive  Officer on April 5, 2001.
Mr. Condo is formerly  President and Chief Executive  Officer of Excalibur since
November  1995 and a Director  since  January  1996.  Mr. Condo was President of
Excalibur from May 1995 to November 1995. He became  Executive Vice President of
Excalibur in January 1995 after serving as the Director of Business  Development
from November  1992.  From October 1987 to November 1992, Mr. Condo held several
manager level positions for Digital  Equipment  Corporation's  Image,  Video and
Voice Business Unit and Software Business Group in New Hampshire.

Herbert A. Allen has been a director of the Company since the effective  date of
Combination  on December  21, 2000 and was a director  of  Excalibur  since June
2000. He has been President,  Chief Executive  Officer,  Managing Director and a
director of Allen & Company  Incorporated,  a privately held  investment-banking
firm for more than the past five years. He is a member of the board of directors
of The Coca-Cola Company.

Andy D. Bryant has been a director of the Company  since the  effective  date of
the  Combination on December 21, 2000. He has served as Executive Vice president
and Chief  Financial and  Enterprise  Services  Officer of Intel since  December
1999.  Prior to that, Mr. Bryant was Senior Vice  President and Chief  Financial
Officer of Intel from January 1999 to December 1999 and Vice President and Chief
Financial  Officer of Intel from 1994 to January 1999.  Mr. Bryant is a director
of Synopsys, a provider of high-level design automation solutions for the design
of integrated circuits, systems on a chip (SoCs) and electronic systems.

Gerhard H. Parker has been a director of the Company since the effective date of
the  Combination  on December 21, 2000. He has been Executive Vice President and
General  Manager,  New Business  Group of Intel since 1998.  Prior to that,  Dr.
Parker  was  Executive  Vice  President  and  General  Manager,  Technology  and
Manufacturing  Group of Intel,  from 1996 to 1998 and Senior Vice  President and
General Manager, Technology and Manufacturing Group of Intel, from 1992 to 1996.

David J. Stern has been a director of the Company  since the  effective  date of
the  Combination  on December  21,  2000.  He has been the  Commissioner  of the
National Basketball Association for more than the past five years.

Executive Officers of the Registrant

Each year, the Board of Directors appoints the executive officers of the Company
to serve  until  the  next  Annual  Meeting  of  Shareholders  and  until  their
successors  have been duly  appointed and qualified.  The following  information
indicates the position,  age and business  experience of the executive officers.
There are no family  relationships  between any of the executive officers of the
Company.

<TABLE>
<CAPTION>

<S>                                    <C>          <C>
Name                                    Age          Position

Patrick C. Condo                        44           President, Chief Executive Officer
                                                     and Chief Operating Officer

James H. Buchanan                       45           Vice President, Chief Financial Officer,
                                                     Treasurer and Assistant Secretary

Ciaran T. Doyle                         38           Vice President, Integration Services

Kamran Khan                             37           Vice President, Sales and Marketing

James Kiles                             47           Chief Strategy Officer and Vice President,
                                                     Business Development

Parvinder S. Kohli                      44           Vice President, Content Security Solutions

Marc S. Martin                          35           Vice President, General Counsel and Secretary

David Nunnerley                         44           Vice President, Content Management Products

Kenneth E. Rhodes                       41           Vice President, Interactive Services Platform

</TABLE>

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

James H. Buchanan was named Vice President,  Chief Financial Officer,  Treasurer
and Assistant  Secretary in December 2000. Mr.  Buchanan was the Chief Financial
Officer, Secretary and Treasurer of Excalibur since 1995. From 1991 to 1995, Mr.
Buchanan was Vice President,  Controller and Treasurer of Legent Corporation,  a
software  development  company.   Prior  to  that,  he  held  several  financial
management positions with Norfolk Southern Corporation and PepsiCo. Mr. Buchanan
is a certified public accountant.

Ciaran T. Doyle was named Vice President, Integration Services in December 2000.
Mr. Doyle was previously  Director of  Entertainment  Content  Services at Intel
Corporation  from  1998.  Prior to  joining  Intel  Corporation,  Mr.  Doyle was
Managing Director of Binary Interactive  Solutions,  Ltd., a technology strategy
consultancy  company,  from  1997 to 1998.  From  1991 to 1997,  Mr.  Doyle  was
Managing Director of The MultiMedia Corporation Plc, a software developer.

Kamran Khan was named Vice  President,  Sales and  Marketing  in December  2000.
Previously, Mr. Khan was Senior Vice President and General Manager, Applications
Group,  of Excalibur.  Mr. Khan held several  sales  management  positions  with
Excalibur from 1993 to 2000. Prior to joining  Excalibur,  Mr. Khan held various
positions,  including  regional business manager,  with PAFEC Limited, a leading
firm in the United Kingdom involved with the development and  implementation  of
computer-aided engineering and engineering document management software systems.

James  Kiles was named  Chief  Strategy  Officer  and Vice  President,  Business
Development  in December  2000.  Mr. Kiles was  previously  Director,  Strategic
Investments at Intel Corporation from 1999 to 2000. From 1997 to 1999, Mr. Kiles
was Manager,  Strategic  Investments with Intel Corporation and a Senior Systems
Engineer with Intel Corporation from 1996 to 1997.

Parvinder  S. Kohli was named Vice  President,  Content  Security  Solutions  in
December  2000. Mr. Kohli was General  Manager,  Internet  Security  Services at
Intel  Corporation from 1999 to 2000 before joining Convera.  Prior to that, Mr.
Kohli served as Director,  Business  Development  in the area of e-commerce  for
Intel Corporation from 1994 to 1999.

Marc S.  Martin was named Vice  President,  General  Counsel  and  Secretary  in
December 2000. Prior to joining Convera, Mr. Martin was Vice President,  General
Counsel and Secretary of BET Interactive, LLC, an Internet content company, from
1999 to 2000.  From  1998 to 1999,  Mr.  Martin  was Vice  President,  Associate
General  Counsel and Assistant  Secretary  with BET Holdings,  Inc., a media and
entertainment  company. From 1996 to 1998, Mr. Martin was the chief counsel of a
telecom  subsidiary of Capital One Financial  Corporation,  a financial services
company.  Prior to that, Mr. Martin was an associate with Skadden,  Arps, Slate,
Meagher & Flom, a law firm.

David  Nunnerley  was named  Vice  President,  Content  Management  Products  in
December 2000.  Previously,  Mr. Nunnerley was Senior Vice President and General
Manager,  Media  Services  Group,  of  Excalibur  and  was  instrumental  in the
development of the company's  visual products since joining the company in 1996.
From  1994 to  1996,  Mr.  Nunnerley  was  Vice  President  of  Engineering  for
Videopress  Software,  a software company  providing video delivery products and
solutions  to cable  companies  deploying  cable  modems.  Prior  to  that,  Mr.
Nunnerley  held  various  product   management/marketing  roles  and  management
positions with Digital Equipment Corporation.

Kenneth E. Rhodes was named Vice  President,  Interactive  Services  Platform in
December 2000. Prior to joining Convera,  Mr. Rhodes was an engineering  manager
at Intel  Corporation  from 1991,  where he was  responsible  for the design and
implementation  of  digital  video  software,  including  systems  software  and
applications.

Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934 and regulations of the SEC
thereunder require the Company's  executive officers and directors,  and persons
who own more that ten  percent of a  registered  class of the  Company's  equity
securities,  to file reports of initial  ownership and changes in ownership with
the SEC.  Based  solely on its  review of copies of such forms  received  by the
Company,  or on written  representations  from certain reporting persons that no
other reports were required for such persons,  the Company  believes that during
or with  respect to the period from  February 1, 2000 to January 31, 2001 all of
the Section 16(a) filing  requirements  applicable  to its  executive  officers,
directors and ten percent shareholders were complied with on a timely basis.


<PAGE>


Item 11.      Executive Compensation

Summary Compensation Table

The following  table presents  information  concerning the  compensation  of the
Company's Chief Executive Officer and each of the other most highly  compensated
executive  officers  during  the 2001  fiscal  year  (collectively,  the  "Named
Executive  Officers") for services rendered in all capacities to the Company for
the fiscal  year ended  January 31,  2001,  as well as the  previous  two fiscal
years:

<TABLE>
<CAPTION>

                                                                        Long Term Compensation
                                   Annual Compensation                  Awards           Payouts
                                   -------------------                  ------           -------
                                                      Other                  Securities               All
                                                      Annual     Restricted  Under-                  Other
                                                      Compen-    Stock       lying        LTIP      Compen-
Name and Principal    Fiscal                          sation     Award(s)    Options/    Payouts     sation
Position               Year    Salary ($)   Bonus ($)    ($)      ($)         SARs (#)      ($)        ($)
--------               ----    ----------   ---------    ---      ---         --------      ---        ---
<S>                  <C>       <C>        <C>         <C>         <C>         <C>           <C>       <C>
Ronald J. Whittier     2001      42,564 (1)     --       --        --          900,000       --        --
Chairman and Chief
Executive Officer (2)

Patrick C. Condo       2001     277,757    158,957       --        --          100,000       --        --
President and Chief    2000     275,000    102,369       --        --          175,000       --        --
Operating Officer (2)  1999     225,000     71,281       --        --               --       --        --

James H. Buchanan      2001     250,000    130,060       --        --          205,000       --        --
Vice President, Chief  2000     230,000     84,425       --        --           35,000       --        --
Financial Officer,     1999     180,000     57,024       --        --           10,000       --        --
Asst. Secretary and
Treasurer

Kamran Khan            2001     200,000    106,116   17,437 (3)    --          285,250       --        --
Vice President, Sales  2000     145,000    117,246   44,990 (4)    --           35,000       --        --
and Marketing          1999     151,438    106,733   54,644 (5)    --            5,000       --        --

David Nunnerley (8)    2001     200,000     77,442    9,594 (6)    --          293,000       --        --
Vice President         2000     180,000     68,000   18,428 (7)    --           50,000       --        --
Content Management     1999     175,038     48,428   27,260 (8)    --           15,000       --        --
Products

</TABLE>

(1)    Represents  compensation paid from  December 22, 2000, when  Mr. Whittier
       became CEO of Convera  Corporation through January 31, 2001.
(2)    On April 5, 2001, Mr. Condo  replaced  Mr. Whittier  as  Chief  Executive
       Officer.
(3)    Represents expenses associated with a  sales award  trip, grossed up  for
       taxes.
(4)    In  connection  with  Mr. Khan's   relocation from the   United  Kingdom,
       payments of $28,169 were made by the Company on Mr. Khan's  behalf for an
       apartment  in Virginia.   The  remainder  of Other   Annual  Compensation
       represents  income tax consulting services,  a payment made to Mr. Khan's
       pension plan in the United Kingdom and expenses  associated  with a sales
       award trip. All of the items were grossed up for taxes.
(5)    Represents payments  of $42,254 made by the Company on Mr. Khan's  behalf
       for an  apartment in Virginia. The remainder of Other Annual Compensation
       represents income tax consulting services, travel expenses for Mr. Khan's
       spouse and expenses associated with a sales award trip.  All of the items
       were grossed up for taxes.
(6)    Represents rental payments paid by the Company on Mr. Nunnerley's behalf,
       grossed up for taxes.
(7)    Represents  rental payments  and travel expenses  paid  by the Company on
       Mr. Nunnerley's behalf, grossed up for taxes.
(8)    Represents  rental payments  and travel expenses  paid  by the Company on
       Mr. Nunnerley's behalf, grossed up for taxes.


<PAGE>


Option Grants in Last Fiscal Year

The following table sets forth certain information concerning options granted
during fiscal 2001 to the Named Executive Officers.

<TABLE>
<CAPTION>

                                                                                  Potential Realizable
                                                                                   Value at Assumed
                      Individual Grants                                             Annual Rates of
                                 % of Total                                            Stock Price
                                 Options                                            Appreciation for
                                 Granted to       Exercise                          Option Term (2)
                                                                                    ---------------
                    Options      Employees in      or Base      Expiration
   Name             Granted (#)  Fiscal Year       Price         Date (1)        5% ($)         10%($)
-------             -----------  -----------       -----         --------        ------         ------
<S>                  <C>             <C>          <C>           <C>          <C>             <C>
Ronald J.             900,000        11.6%         $20.52        12/21/10     11,614,426      29,433,236
 Whittier

Patrick C.            100,000         1.3%         $33.25         4/28/10      2,091,075       5,299,194
 Condo

James H.              100,000         1.3%         $33.25         4/28/10      2,091,075       5,299,194
 Buchanan             105,000         1.3%         $20.52        12/21/10      1,355,016       3,433,878

Kamran Khan            50,000         0.6%         $33.25         4/28/10      1,045,537       2,649,597
                      235,250         3.0%         $20.52        12/21/10      3,035,882       7,693,521

David Nunnerley        50,000         0.6%         $33.25         4/28/10      1,045,537       2,649,597
                      243,000         3.1%         $20.52        12/21/10      3,135,895       7,946,974

</TABLE>

-------------------------------------------
(1)    The options listed with an  expiration date  of  12/21/10  vest in  equal
       12-1/2% increments every six months from the date of original grant.  The
       options listed with  an expiration date  of 4/28/10  vest  in  equal  25%
       increments every six months from the date of original grant.

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


<PAGE>


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

The following  table sets forth,  as of January 31, 2001,  the number of options
and the value of exercised and  unexercised  options held by the Named Executive
Officers.

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

<S>                               <C>               <C>             <C>                     <C>
Ronald J. Whittier                 --                --                 --/900,000               --/--

Patrick C.  Condo                  --                --               600,000/75,000         $6,004,475/--

James H. Buchanan                  --                --              220,000/180,000         $2,224,535/--

Kamran Khan                        --                --              127,250/272,750         $1,162,144/--

David Nunnerley                    --                --              119,500/280,500           $907,771/--

</TABLE>

-------------------------------------------
(1)  The closing price of the Company's common stock on January 31, 2001, the
     last trading day of the Company's fiscal year, was $18.813 per share.


Employment Agreements

In May 1998, Mr. Condo entered into an agreement with Excalibur  under which Mr.
Condo would be paid an amount  equal to twelve  months of base salary plus bonus
compensation and continuation of his employee benefits for one year in the event
Mr.  Condo's  employment  was  terminated or he was removed from his position as
chief executive  officer within six months following certain "change of control"
events relating to Excalibur. Such arrangement was approved by the full Board of
Directors.  In connection  with the  formation of Convera,  Mr. Condo waived all
rights to these payments to which he would have been entitled as a result of the
business combination.  He simultaneously  entered into an agreement with Convera
under  which Mr.  Condo  will be paid an amount  equal to twelve  months of base
salary plus bonus compensation and continuation of his employee benefits for one
year in the event Mr. Condo's employment is terminated or he is removed from his
position as President of Convera  Corporation within six months following change
of control events relating to Convera.

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

Compensation Committee Interlocks and Insider Participation

The members of the Compensation  Committee are Messrs.  Allen, Bryant and Stern,
none of whom is an officer or employee of the  Company or its  subsidiaries.  No
member of the Compensation  Committee or executive  officer of the Company has a
relationship  that would constitute an interlocking  relationship with executive
officers or directors of another entity.


<PAGE>


Item 12.      Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 15, 2001, information concerning the
ownership of Common Stock of the Company of (i) all persons known to the Company
to beneficially own 5% or more of the Company's Common Stock, (ii) each director
of the Company, (iii) each Named Executive Officer and (iv) all directors and
executive officers of the Company as a group.

<TABLE>
<CAPTION>

                                                   Amount and Nature                       Percent
Name and Address  of Beneficial                           of Class
of Beneficial Owner                                  Ownership (1)                          Owned        Class
-------------------                                  -------------                          -----        -----
<S>                                                   <C>                                  <C>           <C>
Intel Corporation                                     14,949,384                             42.3%        A
2200 Mission College Boulevard                        12,207,038 (2)                        100.0%        B
Santa Clara, California 95052

NBA Media Ventures, LLC                                4,746,221                             13.4%        A
450 Harmon Meadow Boulevard
Secaucus, NJ  07094

Allen & Company Incorporated                           3,315,846 (3)                          9.4%        A
711 Fifth Avenue
New York, NY 10022

Ronald J. Whittier                                            --                               --

Herbert A. Allen                                         556,515 (4)                          1.6%        A

Andy D. Bryant                                                --                               --

Gerhard H. Parker                                             --                               --

David J. Stern                                                --                               --

Patrick C. Condo                                         626,952 (5)                          1.7%        A

James H. Buchanan                                        246,767 (6)                            *         A

Kamran Khan                                              145,822 (7)                            *         A

David Nunnerley                                          133,553 (8)                            *         A

All directors and executive officers                   1,709,609 (9)                          4.7%        A
 as a group (14 persons)

</TABLE>

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

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

(2) The Class B common stock of Convera Corporation is non-voting stock.

(3) Does not include  shares owned by Mr.  Herbert A. Allen,  who together  with
Allen &  Company  Incorporated  may be  considered  a  "group,"  as such term is
defined by Section 13(d) of the Securities Exchange Act of 1934.

(4) Does not include shares owned by Allen & Company Incorporated,  of which Mr.
Allen is President and Chief Executive  Officer and as to which shares Mr. Allen
disclaims beneficial  ownership.  (5) Includes (a) 10,000 shares of common stock
owned  beneficially  but not of record upon exercise of stock options at a price
of $4.75 per share expiring November 13, 2002; (b) 15,000 shares of common stock
owned  beneficially  but not of record upon exercise of stock options at a price
of $4.75 per share,  expiring January 4, 2004; (c) 75,000 shares of common stock
owned  beneficially  but not of record upon exercise of stock options at a price
of $4.75 per share,  expiring  December 6, 2004;  (d)  100,000  shares of common
stock owned  beneficially  but not of record,  issuable  upon  exercise of stock
options at a price of $4.75 per share, expiring June 2, 2005; (e) 100,000 shares
of common stock owned beneficially but not of record,  issuable upon exercise of
stock  options at a price of $4.75 per share  expiring  November  1,  2005;  (f)
100,000 shares of common stock owned  beneficially  but not of record,  issuable
upon exercise of stock options at a price of $7.63 per share expiring August 13,
2007; (g) 175,000 shares of common stock owned  beneficially  but not of record,
issuable upon exercise of stock options at a price of $15.00 per share  expiring
December 16, 2009; and (h) 50,000 shares of common stock owned  beneficially but
not of record,  issuable upon exercise of stock options at a price of $33.25 per
share expiring April 28, 2010.

(6) Includes (a) 30,000  shares of common  stock owned  beneficially  but not of
record,  issuable  upon  exercise of stock  options of the Company at a price of
$4.75  per  share   expiring   September  13,  2005;  (b)  70,000  shares  owned
beneficially  but not of record,  issuable upon exercise of stock options of the
Company at a price of $4.75 per share  expiring  November  1,  2005;  (c) 50,000
shares of common  stock  owned  beneficially  but not of record,  issuable  upon
exercise of stock options of the Company at a price of $7.63 per share  expiring
August 13, 2007; (d) 10,000 shares of common stock owned beneficially but not of
record,  issuable  upon  exercise of stock  options of the Company at a price of
$6.25 per share  expiring  September 1, 2008,  (e) 35,000 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $15.00 per share  expiring  December  16, 2009 and (f)
50,000  shares of common stock owned  beneficially  but not of record,  issuable
upon  exercise  of stock  options of the  Company at a price of $33.25 per share
expiring April 28, 2010.

(7)  Includes (a) 1,000  shares of common  stock owned  beneficially  but not of
record,  issuable  upon  exercise of stock  options of the Company at a price of
$4.75 per share  expiring  August 23,  2005;  (b) 30,000  shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.75 per share  expiring  December  3, 2005;  (c) 250
shares of common  stock  owned  beneficially  but not of record,  issuable  upon
exercise of stock options of the Company at a price of $4.75 per share  expiring
February 5, 2006; (d) 15,000 shares of common stock owned  beneficially  but not
of record,  issuable upon exercise of stock options of the Company at a price of
$4.75 per share  expiring  December 16, 2006;  (e) 12,500 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the  Company  at a price of $4.75 per share  expiring  May 7,  2007;  (f) 16,000
shares of common  stock  owned  beneficially  but not of record,  issuable  upon
exercise of stock options of the Company at a price of $8.56 per share  expiring
January 1, 2008; (g) 5,000 shares of common stock owned  beneficially but not of
record,  issuable  upon  exercise of stock  options of the Company at a price of
$6.25 per share  expiring  August 31,  2008;  (h) 15,000  shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $16.625 per share  expiring April 13, 2009; (i) 20,000
shares of common  stock  owned  beneficially  but not of record,  issuable  upon
exercise of stock options of the Company at a price of $15.00 per share expiring
December 16, 2009; and (j) 25,000 shares of common stock owned  beneficially but
not of record, issuable upon exercise of stock options of the Company at a price
of $33.25 per share expiring April 28, 2010.

(8)  Includes (a) 5,000  shares of common  stock owned  beneficially  but not of
record,  issuable  upon  exercise of stock  options of the Company at a price of
$4.75 per share  expiring  September 8, 2006;  (b) 25,000 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.75 per share  expiring  January 7, 2007; (c) 12,000
shares of common  stock  owned  beneficially  but not of record,  issuable  upon
exercise of stock options of the Company at a price of $8.56 per share  expiring
January 1, 2008; (d) 15,000 shares of common stock owned beneficially but not of
record,  issuable  upon  exercise of stock  options of the Company at a price of
$6.25  expiring  August  31,  2008;  (e)  10,000  shares of common  stock  owned
beneficially  but not of record,  issuable upon exercise of stock options of the
Company at a price of $16.625  per share  expiring  April 13,  2009;  (f) 40,000
shares of common  stock  owned  beneficially  but not of record,  issuable  upon
exercise of stock options of the Company at a price of $15.00 per share expiring
December 16, 2009; and (g) 25,000 shares of common stock owned  beneficially but
not of record, issuable upon exercise of stock options of the Company at a price
of $33.25 per share expiring April 28, 2010.

(9)  Includes  1,141,750  shares of common stock owned  beneficially  but not of
record,  issuable  upon the exercise of options to purchase  common stock of the
Company.


Item 13.      Certain Relationships and Related Transactions

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

Mssrs. Bryant and Parker are employed by Intel Corporation,  which owns 57.1% of
the Company's outstanding common stock. Mr. Allen is President,  Chief Executive
Officer, Managing Director and a director of Allen & Company Incorporated, which
owns 7.0% of the Company's  outstanding  common stock. Mr. Stern is Commissioner
of the  National  Basketball  Association,  which  owns  10%  of  the  Company's
outstanding common stock.

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


                                     PART IV

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

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

         1.   Financial Statements:

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

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

         2.   Schedules Supporting Financial Statements:

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

         3.   Exhibits:

              Exhibit Number and Description

               3.1     Amended and Restated Certificate of Incorporation of
                        Convera (1)
               3.2     By-laws of Convera (1)
              10.1     Incentive Stock Option Plan, dated April 1989 (2)
              10.2     1995 Incentive Plan, dated November 1995 (3)
              10.3     ConQuest Incentive Stock Option Plan, dated August 19,
                        1993 (4)
              10.4     Office Lease (1959 Palomar Oaks Way, Carlsbad,
                        California), commencing November 15, 1995 (4)
              10.5     Amended and Restated Excalibur Technologies Corporation
                        1996 Employee Stock Purchase Plan (1)
              10.6     Office Lease (1921 Gallows Road, Vienna, Virginia 22182),
                        commencing May 1, 1999 (5)
              10.7     Employment agreement with James H. Buchanan, dated
                        September 7, 1995 (5)
              10.8     Office lease (11000 Broken Land Parkway, Columbia
                        Maryland), commencing June 15, 2000 (6)
              10.9     Convera Stock Option Plan (7)
              10.10    Form of Transferred IP License Agreement between Intel
                        Corporation and Convera (7)
              10.11    Form of IP License Contribution Agreement between Intel
                        Corporation and Convera (7)
              10.12    Form of Registration Rights Agreement between Intel
                        Corporation and Convera (7)
              10.13    Contribution Agreement, dated as of September 13, 2000
                        between Convera and NBA Media Ventures, LLC (1)
              10.14    Form of Registration Rights Agreement between Convera and
                        NBA Media Ventures, LLC (1)
              10.15    Office Lease (1781 Fox Drive, San Jose, California),
                        commencing January 4, 2001
              10.16    Office Lease (23245 NW Evergreen Parkway, Hillsboro,
                        Oregon) commencing March 1, 2001
              21.01    Subsidiaries of Convera
              23.01    Consent of PricewaterhouseCoopers LLP, Independent
                        Accountants
              23.02    Consent of Ernst & Young LLP, Independent Accountants

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

(1)      Incorporated  herein by reference  to Convera's Form S-4  (Registration
         No. 333-50172) filed November 17, 2000.
(2)      Incorporated herein  by reference to Excalibur's Form 10-K for the year
         ended January 31, 1991, filed April 22, 1991.
(3)      Incorporated herein by reference to Excalibur's Proxy Statement for the
         1995 Annual Meeting of  Shareholders,  dated October 16, 1995.
(4)      Incorporated herein by reference to  Excalibur's Form 10-K for the year
         ended January 31, 1996, filed April 30, 1996.
(5)      Incorporated herein by reference to  Excalibur's Form 10-K for the year
         ended January 31, 1999, filed April 30, 1999.
(6)      Incorporated herein by reference to  Excalibur's Form 10-K for the year
         ended January 31, 2000, filed April 28, 2000
(7)      Incorporated   herein  by  reference to   Excalibur's  Form  8-K  dated
         April 30, 2000, filed May 3, 2000.


<PAGE>


(b)      Reports on Form 8-K.

The Company filed a Form 8-K for Item 2 on December 22, 2000, as amended on Form
8-K/A on February 9, 2001,  reporting the consummation of a business combination
transaction   with  Intel   Corporation  and  the  consummation  of  a  business
transaction with NBA Media Ventures, LLC and WNBA Enterprises, LLC.

Excalibur filed a Form 8-K for Item 5 on November 21, 2000,  reporting financial
results for the quarter ended October 31, 2000.


<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                           <C>

Index to Consolidated Financial Statements                                                     Page


Reports of Independent Auditors and Independent Accountants                                    F-1, F-2

Consolidated Balance Sheets
         As of January 31, 2001 and 2000                                                       F-3

Consolidated Statements of Operations and Other Comprehensive Loss
         For the fiscal years ended January 31, 2001, 2000 and 1999                            F-4

Consolidated Statements of Shareholders' Equity
         For the fiscal years ended January 31, 2001, 2000 and 1999                            F-5

Consolidated Statements of Cash Flows
         For the fiscal years ended January 31, 2001, 2000 and 1999                            F-6

Notes to Consolidated Financial Statements                                                     F-7

</TABLE>


<PAGE>


                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors and Shareholders
Convera Corporation

We  have  audited  the  accompanying   consolidated  balance  sheet  of  Convera
Corporation  as of January  2001,  and the related  consolidated  statements  of
operations and other comprehensive income,  shareholders' equity, and cash flows
for the  fiscal  year ended  January  31,  2001.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Convera
Corporation  as of  January  31,  2001,  and  the  consolidated  results  of its
operations  and its cash flows for the fiscal year ended  January 31,  2001,  in
conformity with accounting principles generally accepted in the United States.


                                                     /s/ ERNST & YOUNG LLP

McLean, Virginia
March 2, 2001


<PAGE>


                        Report of Independent Accountants


To the Stockholders and Board of Directors of
Convera Corporation:


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


                                        /s/PricewaterhouseCoopers LLP

McLean, Virginia
March 8, 2000


<PAGE>


                      CONVERA CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)


<TABLE>
<CAPTION>

                                                                                         As of January 31,
                                                                               ---------------------------------------
                               ASSETS
                                                                                    2001                    2000
                                                                               ---------------         ---------------
<S>                                                                           <C>                     <C>
Current Assets:
     Cash and cash equivalents........................................         $      37,061           $      10,884
     Short term investments...........................................               119,083                     178
     Accounts receivable, net of allowance for doubtful
          accounts of $1,231 and $830, respectively...................                17,392                  14,254
     Prepaid expenses and other ......................................                 4,394                   2,354
                                                                               ---------------         ---------------
           Total current assets.......................................               177,930                  27,670

Equipment and leasehold improvements, net of accumulated
     depreciation of $8,785 and $7,594, respectively..................                 2,635                   1,766
Other assets..........................................................                   436                     986
Goodwill and other intangible assets..................................               845,444                     265
                                                                               ---------------         ---------------
         Total assets.................................................         $   1,026,445           $      30,687
                                                                               ===============         ===============

                LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
     Accounts payable.................................................                 3,480                   1,982
     Accrued expenses.................................................                 3,257                   2,474
     Deferred revenues................................................                 4,650                   3,926
                                                                               ---------------         ---------------
           Total current liabilities..................................                11,387                   8,382
                                                                               ---------------         ---------------

Commitments and Contingencies
Shareholders' Equity:
     5% Cumulative convertible preferred stock, $0.01 par
         value: preference in liquidation; $10 per share plus
         dividends; 5,000,000 and 1,000,000 shares authorized,
         respectively; 0 and 27,180 shares issued and outstanding,
         respectively.................................................                     -                     271
     Common stock Class A, $0.01 par value, 100,000,000 and
         40,000,000 shares authorized, respectively; 35,327,589 and
         14,646,452 shares issued and outstanding, respectively.......                   353                     146
     Common stock Class B, $0.01 par value, 40,000,000 shares
         authorized; 12,207,038 shares issued and outstanding.........                   122                       -
     Additional paid-in capital.......................................             1,094,192                  78,024
     Accumulated deficit .............................................               (78,920)                (56,138)
     Accumulated other comprehensive income (loss)....................                  (689)                      2
                                                                               ---------------         ---------------
         Total shareholders' equity...................................             1,015,058                  22,305
                                                                               ---------------         ---------------
         Total liabilities and shareholders' equity...................         $   1,026,445           $      30,687
                                                                               ===============         ===============
</TABLE>

                             See accompanying notes.

<PAGE>


                      CONVERA CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                               COMPREHENSIVE LOSS
                 (in thousands, except share and per share data)


<TABLE>
<CAPTION>

                                                              For the Fiscal Years Ended January 31,
                                                      --------------------------------------------------------
                                                           2001                2000                1999
                                                      ----------------    ----------------    ----------------
<S>                                                    <C>                 <C>                 <C>
Revenues:
      Software.......................................   $    37,299         $   32,649          $   22,741
      Maintenance....................................         6,621              5,285               5,198
                                                      ----------------    ----------------    ----------------
    License-related..................................        43,920             37,934              27,939
    Services.........................................         7,602                  -                   -
                                                      ----------------    ----------------    ----------------
                                                             51,522             37,934              27,939
                                                      ----------------    ----------------    ----------------

Cost of revenues:
      Software ......................................         8,288              4,724               3,697
      Maintenance ...................................         1,474              2,143               1,320
                                                      ----------------    ----------------    ----------------
    License-related .................................         9,762              6,867               5,017
    Services.........................................         7,846                  -                   -
                                                      ----------------    ----------------    ----------------
                                                             17,608              6,867               5,017
                                                      ----------------    ----------------    ----------------

Gross margin:                                                33,914             31,067              22,922
                                                      ----------------    ----------------    ----------------

Operating expenses:
    Sales and marketing..............................        22,345             16,210              13,501
    Research and product development.................        12,968              9,456               8,328
    General and administrative.......................         6,279              5,402               4,775
    Amortization of goodwill and other intangible
       assets........................................        15,672                118                 111
    Acquired in-process research and development.....           800                  -                   -
                                                      ----------------    ----------------    ----------------
                                                             58,064             31,186              26,715
                                                      ----------------    ----------------    ----------------

Operating loss.......................................       (24,150)              (119)             (3,793)

Other income (expense), net..........................         1,368               (221)                (61)
                                                      ----------------    ----------------    ----------------

Net loss.............................................       (22,782)              (340)             (3,854)

Dividends on preferred stock.........................            10                 14                  14
                                                      ----------------    ----------------    ----------------
Net loss applicable to common shareholders...........   $   (22,792)        $     (354)         $   (3,868)
                                                      ================    ================    ================

Basic and diluted net loss per common share..........   $     (1.22)         $   (0.02)         $    (0.29)
Weighted-average number of common shares outstanding
    - basic and diluted..............................    18,713,717         14,281,615          13,526,217

Other comprehensive loss:
    Net loss.........................................       (22,782)              (340)             (3,854)
    Foreign currency translation adjustment..........          (691)                69                   7
                                                      ----------------    ----------------    ----------------
Comprehensive loss...................................   $   (23,473)        $     (271)         $   (3,847)
                                                      ================    ================    ================
</TABLE>

                             See accompanying notes.


<PAGE>

<TABLE>
<CAPTION>


                      CONVERA CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        (in thousands, except share data)


                                                                                                         Accumulated
                                                                                                            Other
                                                                                Additional                Compre-hensive
                                 Preferred Stock        Common Stock          Paid-in     Accumulated     Income
                                 ---------------        ------------
                                 Shares  Amount       Shares       Amount      Capital       Deficit       (Loss)         Total
                                 ------  ------       ------       ------      -------       -------       ------         -----
<S>                             <C>     <C>        <C>           <C>        <C>           <C>            <C>         <C>
Balance, January 31, 1998..      27,180  $  271     13,178,999    $   132    $    64,714    $  (51,944)    $  (74)    $    13,099

Private placement, net of
issuance costs.............           -       -        325,000          3          3,247             -          -           3,250
Issuance of common stock
upon exercise of options...           -       -        166,815          2            533             -          -             535
Issuance of common stock
for Employee Stock
Purchase Plan..............           -       -         18,652          -            137             -          -             137
Foreign Currency
Translation adjustment.....           -       -              -          -              -             -          7               7
Net loss...................           -       -              -          -              -        (3,854)         -          (3,854)
                                --------  ------  -------------   --------   ------------   -----------    -------    ------------
Balance, January 31, 1999..      27,180     271     13,689,466        137         68,631       (55,798)       (67)         13,174

Private placement, net
of issuance costs..........           -       -        500,000          5          4,653             -          -           4,658
Issuance of common stock
upon exercise of options...           -       -        433,890          4          4,522             -          -           4,526
Issuance of common stock
for Employee Stock
Purchase Plan..............           -       -         23,096          -            218             -          -             218
Foreign Currency
Translation adjustment.....           -       -              -          -              -             -         69              69
Net loss...................           -       -              -          -              -          (340)         -            (340)
                                --------  ------  -------------   --------   ------------   -----------    -------    ------------
Balance, January 31, 2000..      27,180     271     14,646,452        146         78,024       (56,138)         2          22,305

Issuance of common stock
upon exercise of options...           -       -        701,480          7          5,653             -          -           5,660
Issuance of common stock
for Employee Stock
Purchase Plan..............           -       -         12,252          -            413             -          -             413
Conversion of preferred
stock......................     (27,180)   (271)       271,800          3            268             -          -               -
Issuance of common stock
related to IMS merger......           -       -     27,156,422        272        922,806             -          -         923,078
Issuance of common stock
to NBA.....................           -       -      4,746,221         47         74,706             -          -          74,753
Tax benefit related to
stock options..............           -       -              -          -         12,322             -          -          12,322
Foreign Currency
Translation adjustment.....           -       -              -          -              -             -       (691)           (691)
Net loss...................           -       -              -          -              -       (22,782)         -         (22,782)
                                --------  ------  -------------   --------   ------------   -----------    -------    ------------
Balance, January 31, 1998..           -       -     47,534,627    $   475    $ 1,094,192    $  (78,920)    $ (689)    $ 1,015,058
                                ========  ======  =============   ========   ============   ===========    =======    ============

</TABLE>

                             See accompanying notes.


<PAGE>

<TABLE>
<CAPTION>

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


                                                                          For the Fiscal Years Ended January 31,
                                                                     -------------------------------------------------
                                                                         2001               2000              1999
                                                                     ------------       -----------        -----------
<S>                                                              <C>                <C>                <C>
Cash Flows from Operating Activities:
Net loss                                                          $    (22,782)      $       (340)      $     (3,854)
Adjustments to reconcile net loss to net cash used in
   operating activities:
     Depreciation..........................................              1,329              1,323              1,375
     Provision for doubtful accounts.......................                828                838                493
     Amortization of goodwill and other intangibles........             15,672                118                111
     Acquired in-process research and development..........                800                  -                  -
     Equity in net loss of affiliate.......................                  -                  -                300
     Write off of investment in affiliate..................                  -                471                  -
Changes in operating assets and liabilities, net of
   effects from acquisition:
     Accounts receivable...................................             (5,150)            (8,712)             2,349
     Prepaid expenses and other............................             (1,782)             1,223             (3,425)
     Accounts payable and accrued expenses.................              2,475                579               (296)
     Deferred revenues.....................................                833              1,248                (35)
                                                                     ------------       -----------        -----------
     Net cash used in operating activities.................             (7,777)            (3,252)            (2,982)
                                                                     ------------       -----------        -----------

Cash Flows from Investing Activities:
     Purchase of investments...............................           (118,625)              (178)              (984)
     Proceeds from maturities of investments...............                  -                  -              2,480
     Purchases of equipment and leasehold improvements.....             (1,792)            (1,008)            (1,141)
     Other assets..........................................                  -                  -               (256)
     Net cash acquired in acquisition of business..........            147,953                  -                  -
                                                                     ------------       -----------        -----------
     Net cash provided by (used in) investing activities...             27,536             (1,186)                99
                                                                     ------------       -----------        -----------

Cash Flows from Financing Activities:
     Proceeds from the issuance of common stock, net.......                413              4,876              3,387
     Proceeds from the exercise of stock options...........              5,653              4,520                435
                                                                     ------------       -----------        -----------
     Net cash provided by financing activities.............              6,066              9,396              3,822
                                                                     ------------       -----------        -----------

Effect of Exchange Rate Changes on Cash....................                352                 75                (27)
                                                                     ------------       -----------        -----------

Net Increase in Cash and Cash Equivalents..................             26,177              5,033                912

Cash and Cash Equivalents, beginning of year...............             10,884              5,851              4,939
                                                                     ------------       -----------        -----------

Cash and Cash Equivalents, end of year.....................       $     37,061       $     10,884       $      5,851
                                                                     ============       ===========        ===========

</TABLE>

                             See accompanying notes.


<PAGE>


                      CONVERA CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (dollars in thousands, except share and per share data)

(1)      THE COMPANY

Operations and Organization

Convera Corporation and its wholly-owned  subsidiaries  (hereinafter referred to
as the "Company" or "Convera")  principally earns revenues from the licensing of
its  software  products  and the  provision  of  services in  deployment  of the
Company's technology to commercial businesses and government agencies throughout
North  America,  Europe and other parts of the world.  The Company  licenses its
software  to end users  directly  and also  distributes  its  software  products
through  license  agreements with  value-added  resellers,  system  integrators,
original  equipment  manufacturers,  application  service  providers  and  other
strategic partners.

On December 21, 2000,  Excalibur and Intel  consummated  a business  combination
transaction   (the   "Combination")   pursuant  to  an  Agreement  and  Plan  of
Contribution  and Merger,  dated as of April 30, 2000, as amended,  by and among
Excalibur,  Intel,  the Company and Excalibur  Transitory,  Inc., a wholly owned
subsidiary  of the Company.  At the  completion  of the  Combination,  Excalibur
became a wholly owned  subsidiary  of the  Company,  each  outstanding  share of
Excalibur  common stock was converted  into one share of Class A common stock of
the Company, and Intel contributed to the Company its Interactive Media Services
(IMS)  division,  intellectual  property  assets and other  assets  used by that
division,  as well as  approximately  $155,000 in cash, with $150,000 at closing
and the balance payable in fiscal year 2002 to fund retention  bonuses to former
Intel  employees,  in exchange for 14,949,384  shares of Class A common stock of
the Company and 12,207,038 shares of Class B non-voting common stock.

The Combination  was accounted for using the purchase method of accounting.  All
references  herein to financial  results for the Company for the period prior to
December 21, 2000 reflect the historical  financial results of Excalibur and its
subsidiaries.

In September 2000, Intel and the National  Basketball  Association (NBA) entered
into master services  agreement,  which Intel contributed to Convera on December
21, 2000, for the distribution of personalized  highlights,  archival  material,
television  broadcast  enhancements and real time distribution of NBA games over
broadband  networks.  Convera will be the NBA's provider of services  related to
the development and  distribution of those products for the term of the services
agreement, subject to the NBA's right to authorize major telecasters and certain
other third parties to provide television  broadcast  enhancements and real time
distribution of NBA games.  Convera and the NBA are working together to create a
hosted,  end-to-end solution that transforms video footage and other data into a
searchable  database of rich-media  interactive  content assets and then manages
those assets--archiving,  enhancing, protecting, and managing their distribution
as branded NBA content  offerings--to  create a new fan experience for the NBA's
end-users and new revenue opportunities for the NBA.

In addition to the  services  agreement,  Convera  entered  into a  contribution
agreement  with the NBA,  under  which the NBA  contributed  certain  intangible
assets such as all of the NBA  know-how  related to the  creation,  development,
distribution,   marketing  and  deployment,  over  the  Internet  and  broadband
networks,  of products  using sports and  entertainment  content;  a database of
customer  profiles of NBA fans;  the right to use certain  NBA  personnel  and a
non-exclusive license to the NBA trademark.  In exchange for the contribution of
these  assets,  Convera  issued  4,746,221  shares  of  Class  A  common  stock,
representing 10% of the total outstanding stock of the Company on that date.

The Company has incurred  cumulative  losses of  approximately  $27,000 over the
last three  fiscal years and the  accumulated  deficit of the Company at January
31, 2001 was $78,920.  The Company's operations are subject to certain risks and
uncertainties  including,  among others:  the dependence  upon the timing of the
closing on sales of large software licenses; actual and potential competition by
entities with greater financial  resources,  experience and market presence than
the Company;  rapid technological  changes; the success of the Company's product
marketing  and  product  distribution  strategies;  the  risks  associated  with
acquisitions and international expansion; the need to manage growth; the need to
retain key personnel and protect intellectual  property; and the availability of
additional capital financing on terms acceptable to the Company.


<PAGE>


(2)      SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The  consolidated   financial   statements   include  the  accounts  of  Convera
Corporation  and its wholly owned  subsidiaries.  All  significant  intercompany
transactions and accounts have been eliminated.

Use of Estimates

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

Revenue Recognition

The  Company  recognizes  revenue  in  accordance  with  American  Institute  of
Certified  Public  Accountants'  Statement of Position  97-2,  Software  Revenue
Recognition  ("SOP 97-2"),  as amended by Statement of Position  98-9,  Software
Revenue Recognition, with respect to certain transactions.

Revenue  from the sale of  software  licenses  is  recognized  upon  shipment of
product, provided that the fee is fixed and determinable, persuasive evidence of
an arrangement  exists and collection of the resulting  receivable is considered
probable.  Software revenues include revenues from licenses, training and system
implementation  services.  Training and systems implementation services are sold
as part of a  bundled  software  license  agreement  as  well as  separately  to
customers who have  previously  purchased  software  licenses.  When training or
systems  implementation  services that are not essential to the functionality of
the software are sold as part of a bundled license agreement,  the fair value of
these  services,  based  on  the  price  charged  for  the  services  when  sold
separately, is deferred and recognized when the services are performed.

Historically,  the Company has not experienced  significant returns or exchanges
of its products  from direct  sales to  customers.  Revenue  related to customer
support  agreements  is  deferred  and  recognized  ratably  over  the  term  of
respective agreements.  Customer support agreements generally include bug fixes,
telephone  support and product upgrades on a when and if available  basis.  When
the  Company  provides a  software  license  and the  related  customer  support
arrangement for one bundled price, the fair value of the customer support, based
on the price  charged for that element  separately,  is deferred and  recognized
ratably over the term of the respective agreement.

Customization  work is sometimes  required to ensure that the Company's software
functionality   meets  the   requirements   of  its   customers.   Under   these
circumstances, the Company's revenues are derived from fixed price contracts and
revenue is recognized  using the  percentage  of completion  method based on the
relationship  of actual costs  incurred to total costs  estimated to be incurred
over the duration of the contract.  Estimated  losses on such contracts would be
charged  against  earnings  in the period such  losses are  identified.  No such
losses have been incurred on such contracts to date.

The in-process  customer  contracts  assigned to the Company by the IMS division
are accounted for using the completed contract method, and accordingly,  revenue
is deferred  until all remaining  costs,  obligations  and  potential  risks are
insignificant  and the contract  deliverables  are agreed to and accepted by the
customer.  As these contracts are completed by Convera,  revenue and the related
costs,  including  profit  on  work  performed  by  Convera  subsequent  to  the
acquisition,  will be  recognized.  As of January  31,  2001,  the  Company  had
recorded  deferred  costs  and  deferred  revenues  of $2,686  related  to these
contracts.

Research and Development Costs

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

Advertising

Advertising costs are expensed as incurred.  The Company incurred  approximately
$347,  $3 and $112 in  advertising  costs for the years ended  January 31, 2001,
2000 and 1999, respectively.

Stock Based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"   ("SFAS  123"),  allows  companies  to  account  for  stock-based
compensation  either under the provisions of SFAS 123 or under the provisions of
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees" ("APB 25"), as amended by FASB Interpretation No. 44, "Accounting for
Certain  Transactions  Involving Stock  Compensation (an  interpretation  of APB
Opinion No.  25)," but  requires pro forma  disclosure  in the  footnotes to the
financial  statements  as if the  measurement  provisions  of SFAS  123 had been
adopted.  The Company  elected to account for its  stock-based  compensation  in
accordance with the provisions of APB 25.

Net Loss Per Common Share

The Company  follows  Financial  Accounting  Standards  Board Statement No. 128,
"Earnings Per Share,"  ("SFAS 128") for computing  and  presenting  net loss per
share information.  Basic loss per common share is computed by dividing net loss
available to common stockholders by the weighted average number of common shares
outstanding  for the  period.  Diluted  loss per common  share  excludes  common
equivalent  shares and  unexercised  stock options as the  computation  would be
anti-dilutive. A reconciliation of the net loss available to common stockholders
and the number of shares used in computing  basic and diluted net loss per share
is in Note 10.

Translation of Foreign Financial Statements

The  functional  currency  of the  Company's  foreign  subsidiary  is the  local
currency.   Accordingly,   assets  and  liabilities  of  the  Company's  foreign
subsidiary are translated  into U.S.  dollars at exchange rates in effect at the
balance sheet date. Income and expense items are translated at average rates for
the period.  Foreign  currency  translation  adjustments  are  accumulated  in a
separate component of shareholders'  equity.  Foreign currency transaction gains
or losses are recorded in operating  expenses and were not  significant  for the
years ended January 31, 2001, 2000 and 1999.

Concentrations of Credit Risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist  primarily of cash equivalents,  short-term  investments and
accounts  receivable.  Management believes that the Company's  investment policy
limits the  Company's  exposure to  concentrations  of credit risk.  The Company
sells its products primarily to major corporations,  including distributors that
serve a wide variety of U.S. and foreign  markets,  and to government  agencies.
The Company extends credit to its corporate  customers based on an evaluation of
the customer's  financial  condition,  generally  without requiring a deposit or
collateral.  Exposure to losses on receivables is principally  dependent on each
customer's  financial  condition.  The Company  monitors its exposure for credit
losses and  maintains an allowance  for  anticipated  losses.  The allowance for
doubtful  accounts  was $1,231 and $830,  respectively,  at January 31, 2001 and
2000.  For the years ended January 31, 2001,  2000,  and 1999, the Company wrote
off $428,  $667,  and $356,  respectively,  in accounts  receivable  against the
allowance for doubtful  accounts.  The provision for doubtful accounts was $828,
$838,  and  $493,  for the  years  ended  January  31,  2001,  2000,  and  1999,
respectively.

Cash and Cash Equivalents

The Company considers all highly liquid  investments  purchased with an original
maturity  of  three  months  or less to be cash  equivalents.  Cash  equivalents
consist of funds deposited in money market accounts.  Consequently, the carrying
amount of cash and cash equivalents  approximates fair value.  Substantially all
cash and cash equivalents are on deposit with two major financial institutions.

Short Term Investments

Highly liquid  investments with maturities of one year or less are classified as
short-term  investments.  Short-  term  investments  consist  primarily  of U.S.
Government  treasury  bills and are carried at amortized  cost. The Company also
has a certificate of deposit for $142 which is pledged to collateralize a letter
of credit required for a leased facility.

Other Investments

The Company has certain  investments in public corporate equity  securities that
are  classified  as  available  for sale and  recorded  at fair  value  with any
unrealized gains or losses recorded as a component of shareholders'  equity.  To
date,  there have been no  unrealized  gains or losses on such  securities.  The
Company also has certain  investments in nonpublic  equity  securities  that are
recorded at cost, subject to net realizable value considerations.

Income Taxes

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

Equipment and Leasehold Improvements

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

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

Goodwill and Other Intangible Assets

Goodwill,  which  represents the excess of acquisition  cost over the net assets
acquired in a business  combination  accounted for using the purchase  method of
accounting,  is being  amortized on a straight  line basis over periods  ranging
from five to six years. Other intangible assets,  including assembled workforce,
developed technology,  customer contracts, and other acquired rights are carried
at cost less accumulated  amortization.  Amortization of other intangible assets
is charged to income on a  straight-line  basis over the  periods  estimated  to
benefit, ranging from one to 12 years.

Impairment of Long-Lived Assets

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

Reclassifications

Certain  amounts  presented in the prior years'  financial  statements have been
reclassified to conform with the fiscal year 2001 presentation.

Recent Pronouncements

In December  1999,  the SEC issued Staff  Accounting  Bulletin No. 101,  Revenue
Recognition in Financial  Statements ("SAB 101"). SAB 101 summarizes  certain of
the SEC staff's views in applying  generally accepted  accounting  principles to
revenue recognition in financial statements.  The Company adopted SAB 101 in the
quarter  ended  January  31,  2001.  The  adoption  of SAB 101  did  not  have a
significant impact on the Company's financial statement and no amounts have been
restated as a result.

On March 31, 2000, the FASB issued FIN 44. FIN 44 clarifies guidance for certain
issues that arose in the  application  of APB 25.  Some of the more  significant
conclusions reached by FIN 44 include the definition of an employee,  accounting
treatment of options granted to non-employee  members of the board of directors,
awards granted between entities, the treatment of stock options as a result of a
change in an individual's  employment  status,  stock option repricing and other
modifications  including  the term and  vesting.  The Company  has adopted  this
interpretation on the effective date of July 1, 2000. The adoption of FIN 44 did
not have a  significant  impact  on the  Company's  financial  statement  and no
amounts have been restated as a result

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133 ("SFAS 133") "Accounting for Derivative Instruments and Hedging Activities,"
as amended in June 2000 by Statement of Financial  Accounting  Standards No. 138
("SFAS 138"), "Accounting for Certain Derivative Instruments and Certain Hedging
Activities,"  which  requires  companies to recognize all  derivatives as either
assets or  liabilities  in the balance sheet and to measure such  instruments at
fair  value.  SFAS  133 was  subsequently  amended  by  Statement  of  Financial
Accounting   Standards  No.  137  ("SFAS  137"),   "Accounting   for  Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
Statement  No. 133," and  consequently,  required  adoption date of SFAS 133 was
delayed.  The Company will adopt the  provisions of SFAS 133, as amended by SFAS
138, as of February 1, 2001.  That  adoption is not  expected to have a material
impact on the Company's financial statements.


 (3)     ACQUISITIONS

On December 21, 2000,  Excalibur and Intel  consummated the Combination.  At the
completion of the Combination, Excalibur became a wholly owned subsidiary of the
Company, each outstanding share of Excalibur common stock was converted into one
share of Class A common stock of the Company.  Intel  contributed to the Company
its IMS division,  intellectual property and other assets used by that division,
as well as approximately $155,000 in cash, with $150,000 paid at closing and the
balance  payable in fiscal year 2002 to fund  retention  bonuses to former Intel
employees,  in exchange  for  14,949,384  shares of Class A common  stock of the
Company and 12,207,038 shares of Class B non-voting common stock.

The  Combination has been accounted for using the purchase method of accounting.
The  preliminary  purchase  price  for the IMS  division  was  determined  to be
approximately  $925,125,  which included approximately $2,047 of transaction and
direct  acquisition costs less approximately $593 in costs to register and issue
the shares.  The shares issued to Intel as consideration for the contribution of
assets were valued based on the market price when the Combination was originally
announced. The purchase price was preliminarily allocated to the assets acquired
based on their estimated fair values on the acquisition date as follows:

       Net tangible assets acquired                                $150,711
       Developed technology                                           9,090
       Assembled workforce                                            4,070
       Customer contracts                                             3,010
       Acquired in-process research and development                     800
       Net deferred tax liabilities                                 (12,322)
       Goodwill                                                     769,766
                                                               --------------

          Total purchase price                                     $925,125
                                                               ==============

Goodwill  is being  amortized  on a  straight-line  basis over six years and the
other  intangible  assets  are being  amortized  on a  straight-line  basis over
periods ranging from one to three years.

In connection with the  Combination,  the Company recorded a charge for acquired
in-process  research and development  ("IPRD") of approximately $800 in the year
ended January 31, 2001. The purchased  IPRD  represents the present value of the
estimated  after-tax  cash  flows  expected  to be  generated  by the  purchased
technology,  which,  at December  21,  2000,  had not yet reached  technological
feasibility.  The cash flow  projections for revenues were based on estimates of
market size and growth factors, expected industry trends, the anticipated nature
and timing of product  introduction  and the  estimated  life of the  underlying
technology.  Estimated  operating  expenses and income taxes were  deducted from
estimated  revenue  projections  to arrive at  estimated  after tax cash  flows.
Projected  operating  expenses  include cost of sales,  sales and  marketing and
general and administrative expenses.

The following  unaudited pro forma  information has been prepared  assuming that
the Combination and the agreement with the NBA Parties referred to in Note 1 had
taken  place  at the  beginning  of the  year  ended  January  31,  2001 and the
beginning of the year ended  January 31, 2000,  respectively.  The amount of the
purchase  price  allocated  to  IPRD  has  been  excluded  from  the  pro  forma
information,  as it is a non-recurring item. The pro forma financial information
is not necessarily  indicative of the combined  results that would have occurred
had the  acquisitions  taken place at the  beginning  of the  period,  nor is it
necessarily indicative of results that may occur in the future.

Pro forma information (unaudited):

<TABLE>
<CAPTION>
                                                                       Year ended January 31,
                                                                       2001               2000
                                                                       ----               ----
      <S>                                                           <C>                 <C>
       Revenues                                                $      53,388       $      39,502
       Operating loss                                               (161,774)           (149,913)
       Net loss                                                     (160,406)           (150,134)
       Basic and diluted net loss per common share                     (3.40)              (3.25)

</TABLE>


 (4)     PREPAID EXPENSES AND OTHER

Prepaid expenses and other current assets at January 31, 2001 and 2000 consisted
of the following:

<TABLE>
<CAPTION>
                                                                    2001           2000
                                                                    ----           ----
      <S>                                                        <C>            <C>
       Prepaid licenses                                           $   2,401      $   1,620
       Prepaid other                                                  1,993            734
                                                                -----------    -----------
                                                                  $   4,394      $   2,354
                                                                ===========    ===========

</TABLE>


(5)      EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements  at January 31, 2001 and 2000  consisted of
the following:

<TABLE>
<CAPTION>
                                                                    2001           2000
                                                                    ----           ----
      <S>                                                        <C>            <C>
       Computer equipment                                         $   9,250      $   7,474
       Office furniture                                               1,672          1,448
       Leasehold improvements                                           498            438
                                                                  ---------      ---------
                                                                     11,420          9,360

       Less accumulated depreciation                                 (8,785)        (7,594)
                                                                  ---------      ---------
                                                                 $    2,635     $    1,766
                                                                 ==========     ==========

</TABLE>

Assets  acquired  under capital leases  included in equipment  above were $50 at
January 31, 2001 and 2000. The related accumulated  depreciation was $17 and $18
for fiscal years ended January 31, 2001 and 2000, respectively.

Depreciation expense for fiscal years 2001, 2000 and 1999 was $1,329, $1,323 and
$1,375 respectively.


 (6)     GOODWILL AND OTHER INTANGIBLE ASSETS

Net goodwill and other acquisition-related intangibles  at fiscal year ends were
as follows:

<TABLE>
<CAPTION>
                                                                    2001           2000
                                                                    ----           ----
      <S>                                                     <C>             <C>
       Goodwill                                                $ 770,342       $     576
       Developed technology                                       13,160               -
       Other intangibles                                          77,925               -
                                                               ----------      ----------
                                                                 861,427             576

       Less accumulated amortization                             (15,983)           (311)
                                                               ----------      ----------
                                                               $ 845,444       $     265
                                                               ==========      ==========

</TABLE>

Amortization expense for fiscal years 2001, 2000 and 1999  was $15,672, $118 and
$111 respectively.


(7)      ACCRUED EXPENSES

Accrued expenses at January 31, 2001 and 2000 consisted of the following:

<TABLE>
<CAPTION>
                                                                    2001           2000
                                                                    ----           ----
      <S>                                                        <C>             <C>
       Accrued payroll                                            $   2,016       $   2,098
       Accrued consulting fees                                          608               -
       Other                                                            633             376
                                                                  ---------       ---------
                                                                  $   3,257       $   2,474
                                                                  =========       =========
</TABLE>


(8)      INCOME TAXES

The Company incurred pretax losses for the fiscal years presented herein.  There
are no income taxes  provided in the  accompanying  consolidated  statements  of
operations.

The items  accounting  for the  difference  between income taxes computed at the
federal statutory rate and the provision for income taxes consisted of:

<TABLE>
<CAPTION>

                                                         2001                       2000
                                                 ----------------------    -----------------------
     <S>                                         <C>           <C>         <C>            <C>

        Federal benefit at statutory rate         $  (7,974)   (35) %       $    (119)    (35) %
        Effect of:
             State benefits, net of federal            (350)    (1) %              (6)     (2) %
               benefits
             Goodwill                                 4,876     21  %              41      12  %
             Other                                       43      0  %              34      10  %
             Valuation allowance                      3,405     15  %              49      15  %
                                                  ---------                 ---------
                                                  $       -      0  %       $       -       0  %
                                                  ==========                ==========

</TABLE>

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

The  Company's  net deferred  tax  assets at  January 31, 2001 and 2000  were as
follows:

<TABLE>
<CAPTION>

                                                                  2001                 2000
                                                              ------------        -------------
      <S>                                                      <C>                <C>
        Deferred tax assets:
             Net operating loss carryforwards,
                not yet utilized                               $  31,282           $  24,569
             Other                                                 2,334               1,188
                                                               ----------          ---------
                Total deferred tax assets                         33,616              25,757
             Valuation allowance                                       -             (25,197)
                                                               ----------          ----------
                                                                  33,616                 560
                                                               ----------          ----------

        Deferred tax liabilities:
             Acquired intangible                                 (33,201)                  -
             Other                                                  (415)               (560)
                                                               ----------          ---------
                Total deferred tax liabilities                   (33,616)               (560)
                                                               ----------          ----------

                  Net deferred tax assets (liabilities)        $       -           $       -
                                                               ==========          ==========

</TABLE>

At January 31, 2001, the Company had net operating loss  carryforwards  ("NOLs")
of approximately  $80,416 that expire at various dates through fiscal year 2021.
The use of these NOLS may be limited by Section 382 of the Internal Revenue Code
as a result of the business combination with Intel. Approximately $31,675 of the
NOLs relate to stock option exercises. The tax benefit associated with the stock
option exercises will be credited to equity when realized.

The  realization of the benefits of the NOLs is dependent on sufficient  taxable
income in future  fiscal  years.  Lack of future  earnings,  future  changes  in
ownership of the Company or the application of the alternative minimum tax rules
could adversely affect the Company's ability to utilize the NOLs.

The valuation allowance as of January 31, 2000 was reduced to $0 during the year
ended  January  31,  2001  resulting  from the  establishment  of  deferred  tax
liabilities  in  connection  with  the  Combination  and  the  NBA  contribution
agreement.  $12,322 of the reduction in the valuation allowance relates to stock
option exercises.


(9)      CAPITALIZATION

The authorized  capital stock of Convera consists of 100 million shares of Class
A voting common stock,  par value $0.01 per share,  40 million shares of Class B
non-voting  common stock,  par value $0.01 per share, and five million shares of
cumulative convertible preferred stock, par value $0.01 per share.

During  the fourth  quarter of the fiscal  year  ended  January  31,  2001,  the
outstanding  cumulative  convertible  preferred  stock  of  27,180  shares  were
converted  into common  stock at the rate of 10 shares of common stock per share
of cumulative  convertible  preferred stock. There is no cumulative  convertible
preferred stock issued and outstanding as of January 31, 2001.


(10)     NET LOSS PER COMMON SHARE

The following table sets forth the computation of basic and diluted net loss per
common share:

<TABLE>
<CAPTION>

                                                            For the Fiscal Years Ended January 31,
                                                   ----------------------------------------------------------
                                                         2001                2000                 1999
                                                   -----------------   ------------------   -----------------
<S>                                                <C>                  <C>                 <C>
Numerator:
    Net loss....................................... $     (22,782)       $         (340)     $      (3,854)
    Less: Dividends on preferred stock.............            10                    14                 14
                                                   -----------------   ------------------   -----------------
       Net loss applicable to common shareholders.. $     (22,792)       $         (354)     $      (3,868)
                                                   =================   ==================   =================

Denominator:
    Weighted average number of common shares
    outstanding - basic and diluted.................   18,713,717            14,281,615         13,526,217

Basic and diluted net loss per common share.........$       (1.22)       $        (0.02)     $       (0.29)

</TABLE>

The following equity instruments were not included in the computation of diluted
net loss per common share because their effect would be antidilutive:

<TABLE>
<CAPTION>
                                                            For the Fiscal Years Ended January 31,
                                                   ----------------------------------------------------------
                                                         2001                2000                 1999
                                                   -----------------   ------------------   -----------------
<S>                                                    <C>                   <C>                <C>
    Convertible preferred stock....................             -               271,800            271,800
    Stock options..................................     4,810,862             1,008,427            775,389
                                                   -----------------   ------------------   -----------------
        Dilutive potential common stock ...........     4,810,862             1,280,227          1,047,189
                                                   =================   ==================   =================

</TABLE>


(11)     EMPLOYEE BENEFIT PLANS

Stock Options

The Convera 2000 stock option plan was  approved by  Excalibur  shareholders  in
December  2000 in  connection  with and as a condition to the  Combination.  The
stock option plan  authorizes  the granting of stock  options and other forms of
incentive  compensation  to purchase up to 11.25 million shares of the Company's
Class A common stock in order to attract,  retain and reward key  employees.  In
addition,  at  the  closing  of the  Combination,  Convera  assumed  Excalibur's
existing stock option plans. The plans are administered by a Committee appointed
by the Board of Directors,  which has the authority to determine which officers,
directors and key employees  are awarded  options  pursuant to the plans and the
terms and option  exercise  prices of the stock options.  Of the total number of
shares  authorized for stock options,  options to purchase  9,674,420 shares are
outstanding.  The  Company  has a total of  15,601,257  shares of Class A common
stock reserved for the issuance of warrants and options.

Upon  consummation of the  Combination,  the Company granted options to purchase
7,028,248  shares of Class A common stock to employees with an exercise price of
$20.52 per share  representing  the average of the closing  prices of  Excalibur
common stock for the five trading days  immediately  preceding the closing date.
There was no  compensation  expense  recorded in  connection  with these grants,
since the fair value of the Company's common stock on the date of grant was less
than the exercise price.

Each  qualified  incentive  stock  option  granted  pursuant to the plans has an
exercise price as determined by the Committee but not less than 100% of the fair
market value of the  underlying  common  stock at the date of grant,  a ten-year
term and typically a four-year  vesting period.  A non-qualified  option granted
pursuant  to the plans may  contain  an  exercise  price  that is below the fair
market value of the common stock at the date of grant and/or may be  immediately
exercisable. The term of non-qualified options is usually five or ten years.

The following table summarizes the Company's activity for all of its stock
option awards:

<TABLE>
<CAPTION>

                                                                                          Weighted-Average
                                           Number of Options   Range of Exercise Prices    Exercise Price

       <S>                                       <C>               <C>                        <C>
        Balance, January 31, 1998                 2,631,636         $ 1.04 - 22.50              $ 7.81
        Granted                                     249,501           5.50 - 13.88                8.10
        Exercised                                  (166,815)          1.04 - 10.38                3.20
        Canceled                                   (152,899)          4.14 - 16.02                7.94
                                                ------------      ----------------           ---------
        Balance, January 31, 1999                 2,561,423           1.04 - 22.50                8.14
        Granted                                     675,450           7.88 - 24.00               13.60
        Exercised                                  (433,890)          3.11 - 17.02               10.43
        Canceled                                   (126,028)          4.38 - 19.13                9.36
                                                ------------      --------- ------           ---------
        Balance, January 31, 2000                 2,676,955           1.04 - 24.00                9.09
        Granted                                   7,809,198          15.69 - 67.19               21.51
        Exercised                                  (702,179)          3.11 - 36.50                8.06
        Canceled                                   (109,554)          4.75 - 60.13               17.95
                                                ------------      --------- ------          ----------
        Balance, January 31, 2001                 9,674,420         $ 1.04 - 67.19             $ 19.09
                                                 ==========         ======= ======             =======

</TABLE>

Options to purchase  2,148,198,  1,716,382 and 1,796,090 shares of the Company's
common stock were vested and  exercisable  at January 31,  2001,  2000 and 1999,
respectively, at weighted-average exercise prices of $11.84, $7.70 and $8.64 per
share, respectively.

The  following  table  summarizes  additional  information  about stock  options
outstanding at January 31, 2001:

<TABLE>
<CAPTION>

                                              Options Outstanding                      Options Exercisable
                                   -------------------------------------------     ----------------------------
                                                  Weighted-Average
                                                    Remaining
                                                   Contractual  Weighted-Average                Weighted-Average
                                     Number of        Life        Exercise            Number       Exercise
                                                      ----        ---------                        --------
       Range of Exercise Prices       Options                       Price          Exercisable       Price
       ------------------------       -------                       -----          -----------       -----

       <S>                          <C>             <C>           <C>               <C>           <C>
       $   1.04 to $ 4.75              708,097       4.56 years    $   4.68            708,097     $   4.68
       $   4.88 to $17.75            1,238,729       7.71             12.00          1,072,229        11.20
       $  18.38 to $20.52            7,045,199       9.89             20.52              8,451        20.10
       $  20.56 to $35.00              562,645       8.50             29.29            313,723        26.27
       $  35.06 to $67.19              119,750       9.45             46.00             45,698        37.57
                                   -----------    -----------      --------        -----------     --------
                                     9,674,420       9.13 years    $  19.09          2,148,198     $  11.84
                                   ===========    =============    ========        ===========     ========

</TABLE>

Had  compensation  cost for the Company's  stock-based  compensation  plans been
determined  based on the fair value at the grant  dates for awards  under  those
plans made in fiscal  years 2001,  2000 and 1999  consistent  with the method of
SFAS No. 123, the  Company's  net loss and loss per common share would have been
increased to the pro forma amounts indicated below.

<TABLE>
<CAPTION>

                                                                    2001            2000            1999
                                                                    ----            ----            ----
          <S>                                                  <C>             <C>             <C>
          Net loss, as reported                                 $   22,782      $      340      $    3,854
          Pro forma compensation expense                            10,798           3,765           4,046
                                                                ----------      ----------      ----------
          Pro forma net loss                                    $   33,580      $    4,105      $    7,900
                                                                ==========      ==========      ==========

          Basic and diluted net loss per common share,
          as reported                                               ($1.22)         ($0.02)         ($0.29)
          Basic and diluted net loss per common share,
          pro forma                                                 ($1.79)         ($0.29)         ($0.58)

</TABLE>

The effect of applying SFAS No. 123 on pro forma net loss as stated above is not
necessarily representative of the effects on  reported net loss for future years
due to, among  other things,  vesting period  of the stock options  and the fair
value of additional options in the future years.

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

<TABLE>
<CAPTION>

                                                           2001                 2000                 1999
                                                     -----------------    -----------------     ----------------
        <S>                                           <C>                  <C>                  <C>
         Expected volatility                               80%                  70%                   65%
         Risk free interest rates                      5.2% to 6.5%         5.0% to 6.3%         4.5% to 5.6%
         Dividend yield                                    None                 None                 None
         Expected lives                                  5 years              5 years               5 years

</TABLE>

The  weighted  average  fair value per share for stock  option  grants that were
awarded  in fiscal  years  2001,  2000 and 1999 was  $10.98,  $8.55  and  $4.77,
respectively.

Employee Stock Purchase Plan

In December  2000,  the  Excalibur  shareholders  approved the  amendment of the
Excalibur 1996 employee  stock  purchase  plan,  now in effect for Convera.  The
employee stock purchase plan is a non-compensatory plan for all active employees
and provides that  participating  employees may purchase  common stock each plan
quarter at a purchase  price equal to the lesser of 85% of the closing  price on
the date of exercise or 85% of the closing  price on the date of grant.  Payment
for the shares is made through  authorized  payroll  deductions  of up to 10% of
eligible annual compensation.

Of the 250,000  shares of Class A common  stock that were  reserved for issuance
thereunder,  12,252,  23,096 and 18,652  shares were  purchased  by employees in
fiscal years 2001, 2000 and 1999, respectively.

Employee Savings Plan

The Company has an employee  savings plan that qualifies under Section 401(k) of
the Internal Revenue Code. Under the plan,  participating  eligible employees in
the United  States may defer up to 20 percent of their pre-tax  salary,  but not
more than statutory  limits.  The plan was amended in the current fiscal year to
allow the Company to match $0.50 on every  dollar up to the maximum of 8% of the
employee's contribution on total compensation.

For  the  fiscal  year  ended   January  31,  2001,   the  Company   contributed
approximately  $221 to the employee savings plan. No such  contribution was made
in fiscal years 2000 or 1999.


(12)     COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company conducts its operations using leased office  facilities.  The leases
terminate  at various  dates  through  fiscal  year 2005 with  options to renew.
Certain  leases provide for scheduled rent increases and obligate the Company to
pay shared  portions of the operating  expenses such as taxes,  maintenance  and
repair  costs.  The Company also has  operating  leases for  equipment  and it's
foreign subsidiary has operating leases for automobiles that are included in the
figures below.  Future minimum rental  payments under  non-cancelable  operating
leases as of January 31, 2001 are as follows:

                Year Ending
                January 31,
                   2002                    $    2,654
                   2003                         2,067
                   2004                         1,687
                   2005                         1,451
                   2006                           724
                                              --------
                                              $ 8,583
                                              ========

Total  rental  expense  under  operating  leases,  net of sublease  income,  was
approximately  $1,925,  $1,700 and $1,303 in fiscal  years 2001,  2000 and 1999,
respectively.  The sublease  income in fiscal years 1999 was $102.  There was no
sublease income in fiscal years 2001 and 2000.

Other Commitments

Former Intel  employees who became Convera  employees will receive a payment for
the excess, if any, of the calculated aggregate gain they would have realized on
forfeited  Intel stock options that would have vested between 2002 and 2005 over
the calculated aggregate gain on Convera stock options as of September 30, 2002.
The gain attributable to these employees' forfeited Intel stock options is equal
to the  positive  difference,  if any,  between  (i)  $61.50,  representing  the
approximate fair market value of the Intel stock underlying these options in May
2000  when  this  bonus  arrangement  was  established,  and (ii) the per  share
exercise  price of the  forfeited  Intel stock  options.  The maximum  aggregate
amount that Convera would be required to pay,  assuming no aggregate gain on the
Convera stock options at September 30, 2002 is approximately $5,600.

In addition,  Convera will pay bonuses to  specified  former  employees of Intel
that  remain  employed  by  Convera  as of April 30,  2001,  funded  through  an
additional  capital   contribution  from  Intel.  These  retention  bonuses  are
contingent  on the  continuing  employment  of the Intel  employees  that joined
Convera in conjunction  with the Combination with Convera through April 30 2001.
These  individual  bonus amounts were  determined  based on the intrinsic  value
immediately  prior to the closing of the  Combination  of  unvested  Intel stock
options  forfeited that would have vested in calendar year 2001 for those former
Intel employees that become employees of Convera.

As of January 31, 2001,  the Company has $142 in  outstanding  letters of credit
required for a leased facility.


(13)     SEGMENT REPORTING

As a result of the  Combination  in fiscal year 2001,  the  Company  changed the
structure of its organization to reflect one reportable segment. The Company has
restated the corresponding  segment  information for earlier periods  presented.
Beginning  in fiscal  year 2000,  the  Company  aligned  its  business  into two
operating segments,  differentiating  between text and visual product lines. The
Company's business is no longer monitored in this manner.

Operations by Geographic Area

The following  table  presents  information  about the  Company's  operations by
geographical area:

<TABLE>
<CAPTION>

                                                                   Fiscal Years Ended January 31,
                                                         ----------------------------------------------------
                                                               2001              2000              1999
                                                               ----              ----              ----
        <S>                                               <C>               <C>                <C>
         Sales to customers:
              United States                                $    36,359       $    28,495       $    20,336
              United Kingdom                                    12,891             4,842             4,490
              All Other                                          2,272             4,597             3,113
                                                            ----------        ----------        ----------
                                                           $    51,522       $    37,934       $    27,939
                                                           ===========       ===========       ===========

         Long-lived assets:
              United States                                $   836,023       $     2,871       $     5,072
              All Other                                            170               146                96
                                                            ----------        ----------        ----------
                                                           $   836,193       $     3,017       $     5,168
                                                           ===========       ===========       ===========
</TABLE>

Major Customers

Revenues  derived  from  contracts  and orders  issued by  agencies  of the U.S.
Government were approximately  $5,000, $4,400 and $4,500,  respectively,  in the
fiscal years ended January 31, 2001, 2000 and 1999. These revenues, expressed as
a percentage of total revenues for the fiscal year, were  approximately 10%, 12%
and 16%, respectively.  For the fiscal year ended January 31, 2001, one customer
accounted  for 15% of the  Company's  total  revenues,  and for the fiscal years
January 31, 2000 and 1999, a different customer accounted for 12% and 11% of the
Company's total revenues, respectively.


(14)     SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>

                                                               For the Fiscal Years Ended January 31,
                                                         ----------------------------------------------------
                                                               2001              2000              1999
                                                               ----              ----              ----
        <S>                                               <C>               <C>                <C>
Supplemental Disclosures of Non-cash Investing
Activities:
     Issuance of common stock for acquisition of IMS
       assets   ......................................... $ 925,125            $    -            $   -
     Issuance of Class A common stock in exchange for
       certain contributed NBA assets....................    74,753                 -                -
     Stock options exercised under deferred
       compensation arrangements.........................         7                 6              100
     Preferred stock converted to Class A common stock...       271                 -                -

</TABLE>


(15)     SELECTED QUARTERLY INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                            1st Quarter    2nd Quarter    3rd Quarter    4th Quarter
<S>                                        <C>             <C>            <C>            <C>
2001:
Revenues.................................   $   9,384       $  11,373      $  12,304      $  18,461
Gross margin.............................       7,825           9,364          9,555          7,170
Operating loss...........................      (1,763)           (135)          (484)       (21,768)
Net loss.................................      (1,668)             (2)          (375)       (20,737)
Net loss applicable to common
shareholders.............................      (1,671)             (5)          (378)       (20,738)

Basic and diluted loss per common stock..   $   (0.11)      $   (0.00)     $   (0.02)     $   (0.69)

2000:
Revenues.................................   $   7,759       $   9,070      $   8,366      $  12,739
Gross margin.............................       6,192           7,279          6,595         11,001
Operating loss...........................      (1,468)           (276)        (1,011)         2,636
Net loss.................................      (1,882)           (210)          (956)         2,708
Net loss applicable to common
shareholders.............................      (1,885)           (213)          (959)         2,703

Basic and diluted loss per common stock..   $   (0.14)      $   (0.01)     $   (0.07)     $    0.19
Diluted income (loss) per common
shareholders.............................   $   (0.14)      $   (0.01)     $   (0.07)     $    0.17

</TABLE>

The  Company  calculated  earnings  per share on a  quarter-by-quarter  basis in
accordance  with  GAAP.  Quarterly  earnings  per  share  figures  may not total
earnings  per share for the year due to the  weighted  average  number of shares
outstanding.


<PAGE>




                                   SIGNATURES

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


                                                       CONVERA CORPORATION

                                                  By:  /s/ Patrick C. Condo
                                                       -----------------------
                                                       Patrick C. Condo
                                                       Chief Executive Officer

Date:  April 30, 2001


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

<TABLE>
<CAPTION>

     Signature                        Title                                        Date

<S>                          <C>                                                <C>
/s/Patrick C. Condo          President, Chief Executive                         April 30, 2001
-----------------------      Officer, Chief Operating Officer                   --------------
Patrick C. Condo             and Director
                             (Principal Executive Officer)

/s/James H. Buchanan         Chief Financial Officer, Treasurer,                April 30, 2001
-----------------------      and Assistant Secretary                            --------------
James H. Buchanan            (Principal Financial and Accounting Officer)

/s/Ronald J. Whittier        Chairman of the Board                              April 27, 2001
-----------------------                                                         --------------
Ronald J. Whittier

/s/Herbert A. Allen          Director                                           April 24, 2001
-----------------------                                                         --------------
Herbert A. Allen

/s/Andrew D. Bryant          Director                                           April 24, 2001
-----------------------                                                         --------------
Andrew D. Bryant

/s/Gerhard H. Parker         Director                                           April 23, 2001
-----------------------                                                         --------------
Gerhard H. Parker

/s/David J. Stern            Director                                           April 23, 2001
-----------------------                                                         --------------
David J. Stern

</TABLE>