<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

     (MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED APRIL 29, 2000

                                       OR

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

                        FOR THE TRANSITION PERIOD FROM TO

                       COMMISSION FILE NUMBER: 000-28797

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

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


          DELAWARE                                             77-0473454
----------------------------                                 ---------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification Number)


                                 305 MAIN STREET
                             REDWOOD CITY, CA 94063
                    (Address of principal executive offices)

                            TELEPHONE: (650) 298-4600
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (l) 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 such filing
requirements for the past 90 days.


                                 Yes [X] No [ ]


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


              71,319,719 shares of Common Stock as of May 31, 2000




<PAGE>   2


                                NIKU CORPORATION
                          QUARTERLY REPORT ON FORM 10-Q
                       FOR THE PERIOD ENDED APRIL 29, 2000


                                      INDEX
<TABLE>
<CAPTION>


                                                                                                 PAGE
                                                                                                 ----
<S>     <C>                                                                                      <C>
PART I  FINANCIAL INFORMATION

Item 1.    Financial Statements:

                    Condensed Consolidated Balance Sheets                                          3

                    Condensed Consolidated Statements of Operations                                4

                    Condensed Consolidated Statements of Cash Flows                                5

                    Notes to Condensed Consolidated Financial Statements                           6

Item 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                                                   8

Item 3.    Quantitative and Qualitative Disclosures About Market Risk                             17


PART II           OTHER INFORMATION

Item 2.    Change in Securities and Use of Proceeds                                               18

Item 6.    Exhibits and Reports on Form 8-K                                                       18

           Signature                                                                              19
</TABLE>

                                       2

<PAGE>   3


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                                NIKU CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


<TABLE>
<CAPTION>

                                                                       APRIL 30,         JANUARY 31,
                                                                         2000               2000
                                                                     -------------      -------------
                                                                               (unaudited)
<S>                                                                  <C>                <C>
ASSETS

Current assets:
     Cash and cash equivalents                                       $     184,697      $      27,650
     Short-term investments                                                 42,286             16,865
     Accounts receivable, net                                               11,579              8,261
     Prepaid expenses and other current assets                               3,512              2,065
                                                                     -------------      -------------
       Total current assets                                                242,074             54,841
                                                                     -------------      -------------

Deposits and other assets                                                    4,502              1,952
Property and equipment, net                                                  7,445              6,048
Goodwill and other intangible assets, net                                   63,894             49,684
                                                                     -------------      -------------
           Total assets                                              $     317,915      $     112,525
                                                                     =============      =============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
     Accounts payable                                                $       7,363      $       6,172
     Accrued liabilities                                                     9,227              5,997
     Current portion of long-term obligations                                3,203              5,720
     Deferred revenue                                                        5,025              4,261
                                                                     -------------      -------------
       Total current liabilities                                            24,818             22,150

Long-term obligations                                                           --              1,725
                                                                     -------------      -------------

           Total liabilities                                                24,818             23,875
                                                                     -------------      -------------

Redeemable convertible preferred stock and warrants                             --            100,919
                                                                     -------------      -------------

Stockholders' equity (deficit)                                             293,097            (12,269)
                                                                     -------------      -------------
           Total liabilities and stockholders' equity (deficit)      $     317,915      $     112,525
                                                                     =============      =============
</TABLE>


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

                                       3
<PAGE>   4

                                NIKU CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)


<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED
                                                      APRIL 30,
                                              ---------------------------
                                                  2000             1999
                                              ----------       ----------
                                                      (unaudited)
<S>                                           <C>              <C>
Revenue:
     License                                  $    5,640       $      241
     Services                                      2,541              132
     Marketplace                                     434               --
                                              ----------       ----------

         Total revenue                             8,615              373
                                              ----------       ----------
Cost of revenue:
     License                                         592               67
     Services                                      1,981               22
     Marketplace                                      10               --
                                              ----------       ----------

         Total cost of revenue                     2,583               89
                                              ----------       ----------
Gross profit                                       6,032              284
                                              ----------       ----------
Operating expenses:
     Sales and marketing                          11,827              808
     Research and development                      6,675            1,088
     General and administrative                    2,200              325
     Stock-based compensation                      8,761              313
     Amortization of goodwill
       and other intangible assets                 5,047               61
                                              ----------       ----------

         Total operating expenses                 34,510            2,595
                                              ----------       ----------
Operating loss                                   (28,478)          (2,311)

Interest and other income (expense), net           1,539              (45)
                                              ----------       ----------

Net loss                                      $  (26,939)      $   (2,356)
                                              ==========       ==========
Basic and diluted net loss per share          $    (0.54)      $    (0.42)
                                              ==========       ==========
Shares used in computing basic
     and diluted net loss per share               49,760            5,639
                                              ==========       ==========
</TABLE>


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

                                       4
<PAGE>   5

                                NIKU CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                  THREE MONTHS ENDED
                                                                                       APRIL 30,
                                                                               -------------------------
                                                                                  2000            1999
                                                                               ---------       ---------
                                                                                      (unaudited)
<S>                                                                            <C>             <C>
Cash flows from operating activities:
     Net loss                                                                  $ (26,939)      $  (2,356)
     Adjustments to reconcile net loss to net cash
        used in operating activities:
          Depreciation                                                               641              30
          Amortization of debt discount                                              340              42
          Amortization of goodwill and other intangible assets                     5,047              61
          Employee stock-based compensation                                        6,741             282
          Nonemployee stock-based compensation                                     2,020              31
          Revenue resulting from nonmonetary exchanges for computer
             equipment, software and services                                       (245)           (237)
          Expense resulting from nonmonetary exchanges for services                   --             (45)
          Interest on note receivable from stockholders                              (62)             --
          Changes in operating assets and liabilities:
            Accounts receivable                                                   (3,229)           (476)
            Prepaid expenses and other current assets                             (1,296)            (22)
            Other assets                                                          (2,519)             --
            Accounts payable                                                         974             565
            Accrued liabilities                                                    2,616             227
            Deferred revenue                                                         718             257
                                                                               ---------       ---------
          Net cash used in operating activities                                  (15,193)         (1,641)
                                                                               ---------       ---------
Cash flows used in investing activities:
     Purchases of property and equipment                                          (1,592)           (331)
     Purchases of short-term investments, net                                    (25,191)             --
     Net cash received in acquisition                                              1,146              --
                                                                               ---------       ---------
          Net cash used in investing activities                                  (25,637)           (331)
                                                                               ---------       ---------
Cash flows from financing activities:
     Proceeds from initial public offering of common stock, net                  202,173              --
     Issuance of common stock                                                        286              10
     Proceeds from debt obligations                                                2,600           3,830
     Repayment of debt obligations                                                (7,182)             --
                                                                               ---------       ---------
          Net cash provided by financing activities                              197,877           3,840
                                                                               ---------       ---------
Net increase in cash and cash equivalents                                        157,047           1,868
Cash and cash equivalents, beginning of period                                    27,650           5,147
                                                                               ---------       ---------
Cash and cash equivalents, end of period                                       $ 184,697       $   7,015
                                                                               =========       =========
Noncash investing and financing activities:
     Deferred revenue resulting from nonmonetary exchanges for computer
        equipment, software and services                                       $      40       $      --
                                                                               =========       =========
     Common stock issued for notes receivable                                  $   3,321       $      56
                                                                               =========       =========
     Common stock issued and stock options assumed for acquisition             $  19,998       $      --
                                                                               =========       =========
     Deferred stock-based compensation                                         $  24,424       $     237
                                                                               =========       =========
     Redeemable convertible preferred stock warrant issued in
        conjunction with debt issuance                                         $      --       $     510
                                                                               =========       =========
     Conversion of redeemable convertible preferred stock to common stock      $ 100,919       $      --
                                                                               =========       =========
</TABLE>



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


                                       5
<PAGE>   6

                                NIKU CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have
been prepared by Niku Corporation (Niku or the Company) and reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the interim periods presented. Such adjustments are of a normal
recurring nature. The consolidated results of operations for the interim periods
presented are not necessarily indicative of the results for any future interim
period or for the entire fiscal year. Certain information and footnote
disclosures normally included in annual consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
omitted, although the Company believes that the disclosures included are
adequate to make the information presented not misleading. The unaudited
condensed consolidated financial statements and notes included herein should be
read in conjunction with the consolidated financial statements and notes for the
fiscal year ended January 29, 2000, included in the Company's 2000 Annual Report
on Form 10-K.

     The Company has a fiscal year that ends on the Saturday nearest January 31.
For presentation purposes, the condensed consolidated financial statements and
notes refer to the interim periods' calendar month end.

     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 recorded amounts reported in the unaudited condensed
consolidated financial statements and accompanying notes. A change in the facts
and circumstances surrounding these estimates could result in a change to the
estimates and impact future operating results.


                                       6
<PAGE>   7

2.  BUSINESS COMBINATIONS

     During the first quarter of fiscal 2001, the Company acquired Legal
Anywhere, Inc. (Legal Anywhere), a privately-held company in Portland, Oregon.
Legal Anywhere provides Internet-based "collaborative tools" to law firms and
corporate legal departments. Niku issued 853,689 shares of its common stock for
all of Legal Anywhere's outstanding capital stock and assumed 141,282 stock
options for an aggregate purchase price of $20.6 million, including direct
acquisition related costs of $0.6 million. Of the purchase price of the
transaction, $1.3 million was allocated to the acquired tangible assets and
liabilities based on their estimated fair values as of the date of the
acquisition, $14.8 million was allocated to goodwill and $4.5 million was
allocated to other intangible assets. The goodwill and other intangible assets
are being amortized on a straight-line basis over a three-year period.

     During the fourth quarter of fiscal 2000, the Company acquired Proamics
Corporation (Proamics), a privately held company in Chicago, Illinois. Proamics
provides project accounting, time-and-expense and billing software. Niku issued
3,501,938 shares of its common stock and 6,491,203 shares of its Series D
redeemable convertible preferred stock for all of Proamics' outstanding capital
stock for an aggregate purchase price of $50.4 million, including direct
acquisition related costs of $0.4 million. Of the purchase price of the
transaction, a net of $1.4 was allocated to the net liabilities based on their
estimated fair values as of the date of the acquisition, $28.7 million was
allocated to goodwill and $22.7 million was allocated to other intangible
assets. The goodwill and other intangible assets are being amortized on a
straight-line basis over a three to five year period.

     The following summary, prepared on an unaudited pro forma basis, combines
the Company's consolidated results of operations for the first quarter of fiscal
2000, with Legal Anywhere's and Proamics' results of operations for their
respective first quarters ending March 31, 1999, as if Legal Anywhere and
Proamics had been acquired as of February 1, 1999.

<TABLE>
<CAPTION>

                                                                                        THREE
                                                                                     MONTHS ENDED
                                                                                      APRIL 30,
(IN THOUSANDS, EXCEPT PER SHARE DATA)                                                    1999
                                                                                    --------------
                                                                                      (unaudited)
<S>                                                                                 <C>
Pro forma revenue                                                                   $        3,732
                                                                                    ==============

Pro forma net loss                                                                  $       (8,304)
                                                                                    ==============

Basic and diluted pro forma net loss per share                                      $        (0.83)
                                                                                    ==============

Shares used to compute basic and diluted pro forma net loss per share                        9,995
                                                                                    ==============
</TABLE>


     The pro forma results are not necessarily indicative of what would have
occurred if the acquisitions had been in effect for the period presented. In
addition, they are not intended to be a projection of future results, and do not
reflect any synergies that might be achieved from combined operations.

3.   STOCKHOLDERS' EQUITY (DEFICIT)

     Stock-based Compensation


     During the period from February 1, 2000 to February 21, 2000, prior to the
completion of the Company's initial public offering (IPO), the Company recorded
additional deferred stock-based compensation of $24.4 million related to 2.3
million stock options granted during that period. The deferred stock-based
compensation recorded for that period represented the difference at the date of
grant between the exercise price of each stock option granted and the assumed
fair value of the underlying common stock. The deferred stock-based compensation
is being amortized on an accelerated basis over the vesting period, generally
four years.

    Initial Public Offering

     On February 28, 2000, the Company completed its IPO of 9.2 million shares
(including over-allotment option exercised by the underwriters) of its common
stock for net proceeds of approximately $202.2 million. Upon the completion of
the IPO, the Company issued approximately 48.2 million shares of common stock
for all outstanding shares of redeemable convertible preferred stock, which were
converted to common stock on a one-for-one basis.


                                       7
<PAGE>   8
4.   COMPREHENSIVE LOSS

     The Company did not have any significant components of other comprehensive
loss for the first quarters of fiscal 2001 and 2000.

5.   NET LOSS PER SHARE

     Basic net loss per share is computed using the weighted-average number of
outstanding shares of common stock, excluding shares of restricted stock subject
to repurchase summarized below. Diluted net loss per share is computed using the
weighted-average number of shares of common stock outstanding and, when
dilutive, potential common shares from options and warrants to purchase common
stock and unvested restricted stock using the treasury stock method and from
convertible securities on an "as if converted" basis. The following potential
common shares have been excluded from the computation of diluted net loss per
share because the effect would have been anti-dilutive:

<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED
                                                                        APRIL 30,
                                                                   ------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)                                2000        1999
                                                                   ------      ------
                                                                       (unaudited)

<S>                                                                <C>         <C>
Shares issuable under stock options                                 7,129       2,860
Shares of restricted stock subject to repurchase                    2,418       1,000

Shares issuable pursuant to warrants to purchase redeemable
     convertible preferred stock                                       --         630

Shares of redeemable convertible preferred stock on an "as if
     converted" basis                                                  --      23,143
</TABLE>

6.   SEGMENT REPORTING

     The Company operates in a single reportable segment: Internet software.
Company information reviewed by management is as follows:

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED
                                                                APRIL 30,
                                                      ------------------------------
(IN THOUSANDS)                                            2000             1999
                                                      ------------      ------------
                                                               (unaudited)
<S>                                                    <C>               <C>
License                                               $      5,640      $        241
                                                      ------------      ------------

Services:
     Consulting                                              2,014               127
     Maintenance                                               527                 5
                                                      ------------      ------------
                                                             2,541               132

Marketplace                                                    434                --
                                                      ------------      ------------
     Total revenue                                    $      8,615      $        373
                                                      ============      ============
</TABLE>

7.   SUBSEQUENT EVENTS

     ACQUISITIONS

     In the second quarter of fiscal 2001, the Company announced it would
acquire three privately-held companies: 600 Monkeys, Inc., a provider of
Internet solutions for advertising and public relations agencies, bSource, Inc.,
a provider of a virtual marketplace for services such as web development, law
and public relations services, and ABT Corporation, a provider of enterprise
project management solutions for information technology organizations. The total
consideration for these three acquisitions will be 4.6 million shares of the
Company's common stock and $13.0 million in cash payments to the shareholders of
these companies. The acquisitions of 600 Monkeys and bSource are expected to
close in the second quarter of fiscal 2001 and the acquisition of ABT is
expected to close in the third quarter of fiscal 2001. These transactions will
be accounted for as purchases.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the condensed
consolidated financial statements and related notes contained herein and the
information contained in our annual report for the year ended January 29, 2000.
This discussion contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. We may
identify these statements by the use of words such as "believe", "expect",
"anticipate", "intend", "plan" and similar expressions. These forward-looking
statements involve several risks and uncertainties. Our actual results may
differ materially from those set forth in these forward-looking statements as a
result of a number of factors, including those described under the caption "
Factors That May Affect Future Results " herein and elsewhere in our annual
report for the year ended January 29, 2000. These forward-looking statements
speak only as of the date of this quarterly report, and we caution you not to
rely on these statements without also considering the risks and uncertainties
associated with these statements and our business as addressed elsewhere in this
quarterly report and in our Form 10-K for the year ended January 29, 2000.

OVERVIEW

     Niku Corporation provides Internet software products and an online
marketplace for the sourcing, management and delivery of professional services.
Niku's Internet software products are designed to automate the core business
processes of professional services organizations, professional services
providers within enterprises and small businesses, and individual professionals.

RECENT EVENTS

    Initial Public Offering

     On February 28, 2000, we completed our initial public offering (IPO) of 9.2
million shares (including over-allotment option exercised by the underwriters)
of our common stock for net proceeds of approximately $202.2 million.
Concurrently with the IPO, we issued approximately 48.2 million shares of common
stock for all outstanding shares of redeemable convertible preferred stock,
which were converted to common stock on a one-for-one basis.


                                       8
<PAGE>   9

    Acquisition of Legal Anywhere

     During the first quarter of fiscal 2001, we acquired Legal Anywhere, Inc.
(Legal Anywhere), a privately-held company in Portland, Oregon. Legal Anywhere
provides Internet-based "collaborative tools" to law firms and corporate legal
departments. We issued 853,689 shares of our common stock for all of Legal
Anywhere's outstanding capital stock and assumed 141,282 stock options for an
aggregate purchase price of $20.6 million, including direct acquisition related
costs of $0.6 million.

    Acquisition of 600 Monkeys, bSource, and ABT

     In the second quarter of fiscal 2001, we announced we would acquire three
privately-held companies: 600 Monkeys, Inc., a provider of Internet solutions
for advertising and public relations agencies, bSource, Inc., a provider of a
virtual marketplace for services such as web development, law and public
relations services, and ABT Corporation, a provider of enterprise project
management solutions for information technology organizations. The total
consideration for these three acquisitions will be 4.6 million shares of our
common stock and $13.0 million in cash payments to the shareholders of these
companies. The acquisitions of 600 Monkeys and bSource are expected to close in
the second quarter of fiscal 2001 and the acquisition of ABT is expected to
close in the third quarter of fiscal 2001. These transactions will be accounted
for as purchases.

RESULTS OF OPERATIONS

     License. License revenue consists of license sales of our Internet software
products. License revenue in the first quarter of fiscal 2001 increased 2,240%
to $5.6 million from $0.2 million in the first quarter of fiscal 2000. This
increase is attributable to an increase in sales to new customers resulting from
increased headcount in our sales force and expanded marketing efforts. License
revenue has been derived primarily from the sale of our eNiku product. The
percentage of our total revenue attributable to license revenue remained
consistent at 65%.

     Services. Services revenue consists of revenue from maintenance and support
contracts and the delivery of implementation consulting services. Services
revenue in the first quarter of fiscal 2001 increased 1,825% to $2.5 million
from $0.1 million in the first quarter of fiscal 2000. This increase resulted
primarily from increased customer implementations and maintenance and support
arrangements. The percentage of our total revenue attributable to service
revenue decreased to 30% from 35% for the comparable period in fiscal 2000.

     Marketplace. Marketplace revenue consists of revenue from a variety of
transactions, which include, but are not limited to, Niku Services Marketplace
projects, subscriptions and sponsorship arrangements, such as advertising and
affiliations. Marketplace revenue for the first quarter of fiscal 2001 increased
to $0.4 million from no revenue in the first quarter of fiscal 2000. Marketplace
revenue for the first quarter of fiscal 2000 was primarily from sponsorship
arrangements and xNiku subscriptions. Through April 30, 2000, we have not
derived any significant revenue from the Niku Services Marketplace projects. The
percentage of our total revenue attributable to marketplace revenue in fiscal
2001 was 5%.

     Cost of Revenue. Cost of revenue includes the costs of our license revenue
and services revenue. Cost of license revenue includes royalties due to third
parties, product packaging, documentation and shipping costs. Cost of service
revenue includes salaries and related expenses for our post customer support and
implementation consulting services and the costs of third parties contracted to
provide consulting services to our customers. Cost of revenue as a percentage of
total revenue was 30% in the first quarter of fiscal 2001 compared to 24% in the
first quarter of fiscal 2000, and increased in absolute dollars to $2.6 million
from $0.1 million. The increase in cost of revenue in absolute dollars primarily
resulted from an increase in the service revenue derived from the delivery of
implementation consulting services and post customer support in the first
quarter of fiscal 2001. We anticipate that the cost of revenue will increase in
absolute dollars as a result of the increase in personnel and personnel related
costs, such as salaries, and travel-related costs to support our implementation
consulting services and the cost to support marketplace revenue, such as hosting
costs to support the Niku Services Marketplace.

     Gross Profit. Gross profit increased in absolute dollars to $6.0 million in
the first quarter of fiscal 2001 from $0.3 million in the first quarter of
fiscal 2000. This increase in gross profit is primarily attributable to the
increase in revenue. Gross profit was 70% for the first quarter of fiscal 2001
compared to 76% for the first quarter of fiscal 2000. The decrease in gross
profit percentage is primarily attributable to the salaries and related expenses
for our implementation consulting services.

     Sales and Marketing. Sales and marketing expenses as a percentage of total
revenue decreased to 137% in the first quarter of fiscal 2001 from 217% in the
first quarter of fiscal 2000, and increased in absolute dollars to $11.8 million
from $0.8 million. The increase in sales and marketing expenses in absolute
dollars was attributable to sales and marketing efforts of the Company, which
included an increase in personnel and personnel-related costs, such as salaries
and commissions, and additional spending in advertising, trade shows

                                       9
<PAGE>   10
and travel-related costs. We anticipate that the sales and marketing expenses
will increase in absolute dollars as we continue to expand our domestic and
international sales and marketing efforts.

     Research and Development. Research and development expenses as a percentage
of total revenue decreased to 77% in the first quarter of fiscal 2001 from 292%
in the first quarter of fiscal 2000, and increased in absolute dollars to $6.7
million from $1.1 million. The increase in absolute dollars was primarily
attributable to increases in personnel and personnel-related costs associated
with the development of our products. In the first quarter of fiscal 2001 we
released two versions of our eNiku products. We anticipate that research and
development expense will increase in absolute dollars as we support our internal
product development efforts and the integration of acquired companies'
technologies.

     General and Administrative. General and administrative expenses as a
percentage of total revenue decreased to 26% in the first quarter of fiscal 2001
from 87% in the first quarter of fiscal 2000, and increased in absolute dollars
to $2.2 million from $0.3 million. The increase in absolute dollars was
attributable to an increase in general and administrative personnel and
personnel related costs, such as salaries, and an increase in administrative and
professional services fees. We anticipate that general and administrative
expenses will continue to increase in absolute dollars as we add personnel to
support the expansion of our operations and incur additional expenses related to
the anticipated growth of our business.

     Stock-based Compensation. Stock-based compensation expense increased to
$8.8 million in the first quarter of fiscal 2001 from $0.3 million in the first
quarter of fiscal 2000. This increase was primarily attributable to an increase
in the amortization of deferred stock compensation with respect to stock options
granted and restricted stock sold from January 31, 1998 to February 28, 2000.
The amortization of deferred stock-based compensation, combined with the expense
associated with options granted to non-employees, related to the following items
in the condensed consolidated statements of operations:
<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED
                                                       APRIL 30,
                                             ------------------------------
(IN THOUSANDS)                                   2000              1999
                                             ------------      ------------
                                                      (unaudited)
<S>                                          <C>               <C>
     Cost of revenue                         $         81      $         14
     Sales and marketing                            6,067               117
     Research and development                       1,355               136
     General and administrative                     1,258                46
                                             ------------      ------------
         Total stock-based compensation      $      8,761      $        313
                                             ============      ============
</TABLE>

     Amortization of the April 30, 2000 balance of deferred stock-based
compensation for the remaining three quarters of fiscal 2001 and the fiscal
years 2002, 2003 and 2004 is estimated to be approximately $17.5 million, $10.5
million, $4.4 million and $1.1 million.

     Amortization of Goodwill and Other Intangible Assets. Amortization of
goodwill and other intangible assets increased to $5.1 million in the first
quarter of fiscal 2001 from $0.1 million in the first quarter of fiscal 2000.
This increase was attributable to the amortization of goodwill and other
intangible assets of $3.3 million related to the acquisition of Proamics in the
fourth quarter of fiscal 2000, and $1.7 million related to the acquisition of
Legal Anywhere in the first quarter of fiscal 2001. The amortization of goodwill
and other intangible assets from the acquisition of Alyanza Software Corporation
in the fourth quarter of fiscal 1999 was $0.1 million in the first quarter of
fiscal 2001 and 2000. We anticipate that amortization of goodwill and other
intangible assets will increase in absolute dollars due to future acquisitions.

     Interest and Other Expense, Net. Interest and other expense, net consists
of interest income, interest expense and other non-operating expenses. Interest
and other expense, net increased 3,520% to an interest and other income, net of
$1.5 million for the first quarter of fiscal 2001, compared to $0.1 million for
the comparable period of the prior year. The net increase was primarily
attributable to higher average invested cash and short-term investment balances,
which yielded more interest income in the first quarter of fiscal 2001, compared
to the first quarter of fiscal 2000. This increase in interest and other
expense, net was offset by interest expense related to outstanding debt and
equipment lease obligations.

LIQUIDITY AND CAPITAL RESOURCES

     As of April 30, 2000, we had cash, cash equivalents and short-term
investments of $227.0 million, an increase of $182.5 million from January 31,
2000. The increase is primarily a result of cash generated by financing
activities, mainly from the $202.2 million net proceeds from our initial public
offering and $2.6 million from borrowings under debt obligations. These cash
inflows were offset by cash outflows for operating activities of $15.2 million
and to a lesser extent, financing and investing activities, capital expenditures
of $1.6 million and cash paid on debt and lease obligations of $7.2 million.

                                       10
<PAGE>   11

     We expect to experience significant growth in our operating expenses,
particularly research and development and sales and marketing expenses, for the
foreseeable future in order to execute our business plan. As a result, we
anticipate that operating expenses, as well as planned capital expenditures,
will constitute a material use of our cash resources. In addition, we may
utilize cash resources to fund acquisitions or investments in complementary
businesses, technologies or product lines. We believe that cash from operations
and existing cash will be sufficient to meet our working capital and expense
requirements for at least the next twelve months.

YEAR 2000 READINESS

     We designed all of our products to be Year 2000 compliant when configured
and used in accordance with related documentation, and provided that the
underlying operating system of the host machine and any other software and
hardware used with or in the host machine or our products are Year 2000
compliant. Additionally, we have tested Niku products for Year 2000 compliance
and determined they are Year 2000 compliant. To date we have not experienced any
material Year 2000 related issues.

     Although January 1, 2000 has occurred, our information technology systems
may be impaired or cease to operate due to the Year 2000 problem. Additionally,
we rely on technology supplied by third parties. These third parties may
experience Year 2000 related problems. Any Year 2000 problems experienced by us
or any of these third parties may harm our business. Additionally, the Internet
may face serious disruption arising from the Year 2000 problem.

     Further, any Year 2000 problems with respect to our products may lead to
claims from our customers asserting liability, including liability for breach of
warranties related to our products, which may result in large settlements or
judgments against us.

FACTORS THAT MAY AFFECT FUTURE RESULTS

     The occurrence of any of the following risks could materially and adversely
affect our business, financial condition and operating results. In this case,
the trading price of our common stock could decline and you might lose all or
part of your investment.

     WE HAVE INCURRED LOSSES DURING OUR OPERATING HISTORY AND WE EXPECT TO INCUR
FUTURE LOSSES FOR THE FORESEEABLE FUTURE

     We have experienced operating losses in each quarterly and annual period
since we were formed and we expect to incur significant losses in the future. As
of April 29, 2000, we had an accumulated deficit of $66.5 million. We expect to
significantly increase our research and development, sales and marketing, and
general and administrative expenses, in part as a result of our recent
acquisitions. In addition, as a result of our acquisitions we will record
non-cash charges for the amortization of goodwill and other intangible assets as
these assets are amortized over the next three to five years. Further, we will
incur substantial stock-based compensation expense in future periods, which
represents non-cash charges incurred as a result of the issuance of stock and
stock options prior to our initial public offering on February 28, 2000. As a
result of these factors, we will need to significantly increase our revenue to
achieve and maintain profitability. We may not be able to sustain our recent
revenue growth rates. In fact, we may not have any revenue growth, and our
revenue could decline. Our failure to significantly increase our revenue would
seriously harm our business and operating results. Due to these and other
factors, we believe that period-to-period comparisons of our results of
operations are not meaningful and should not be relied upon as indicators of our
future performance. It is possible that in some future periods, our results of
operations may be below the expectations of investors. If this occurs, the price
of our common stock will decline.

OUR PRODUCTS HAVE A LONG SALES CYCLE, WHICH MAKES IT DIFFICULT TO PREDICT OUR
QUARTERLY RESULTS, AND MAY CAUSE OPERATING RESULTS TO VARY SIGNIFICANTLY

     The sales cycle for our products is long, typically from three to six
months, making it difficult to predict the quarter in which we may recognize
revenue from a sale, if at all. Our products often are part of a significant
strategic decision by our customers regarding their information systems.
Accordingly, the decision to license our products typically requires significant
pre-purchase evaluation. We spend substantial time educating and providing
information to prospective customers regarding the use and benefits of our
products. During this evaluation period, we may expend significant funds in
sales and marketing efforts. Our lengthy sales cycle may cause license revenue
and operating results to vary significantly from period to period. If
anticipated sales from a specific customer for a particular quarter are not
realized in that quarter, our operating results may vary significantly.


                                       11
<PAGE>   12


IF WE FAIL TO EXPAND OUR DIRECT AND INDIRECT SALES CHANNELS, OUR ABILITY TO
INCREASE REVENUE WILL BE LIMITED

     In order to grow our business, we need to increase market awareness and
sales of our products and services. To achieve this goal, we need to increase
both our direct and indirect sales channels. Our failure to do so could harm our
ability to increase revenue. We currently receive substantially all of our
revenue from direct sales, but intend to increase sales through indirect sales
channels in the future. We need to expand our direct sales force by hiring
additional salespersons and sales management. We are seeking to hire more of
these types of personnel in the current fiscal year. There is strong competition
for qualified sales personnel in our business, and we may not be able to attract
and retain sufficient new sales personnel to expand our operations. We intend to
derive some of our revenue from our indirect sales channels, which involves
selling our software through value added resellers and other third parties.
These resellers offer our software products to their customers together with
consulting and implementation services or integrate our software solutions with
other software. We also intend to offer our Internet software through
application service providers, who install our software on their own computer
servers and charge their customers for access to our software. We are seeking to
expand our indirect sales channel to involve more relationships with third
parties in the current fiscal year and we may not be able to do so successfully.

TO DATE, CUSTOMERS HAVE NOT DEPLOYED OUR PRODUCTS ON A LARGE-SCALE AND WE MAY
EXPERIENCE CUSTOMER DISSATISFACTION AND LOST SALES IF OUR PRODUCTS DO NOT
ACCOMMODATE LARGE-SCALE DEPLOYMENTS

     Our software must be able to accommodate substantial increases in the
number of people using our products. Our products have not been tested in the
context of large-scale customer implementations. If our customers cannot
successfully implement large-scale deployments, or if they determine that our
products cannot accommodate large-scale deployments, we could lose some or all
of our existing customers and be unable to obtain new customers.

IMPLEMENTATION OF OUR PRODUCTS BY LARGE CUSTOMERS MAY BE COMPLEX AND CUSTOMERS
COULD BECOME DISSATISFIED IF IMPLEMENTATION OF OUR PRODUCTS PROVES DIFFICULT,
COSTLY OR TIME-CONSUMING

    Our products must integrate with many existing computer systems and software
programs used by our customers. Integrating with many other computer systems and
software programs can be complex, time-consuming and expensive and cause delays
in the deployment of our products. Because we are one of the first companies to
offer products designed for professional services automation, many customers
will be facing these integration issues for the first time in the context of
professional services automation software. Customers could become dissatisfied
with our products if implementations prove to be difficult, costly or
time-consuming.

WE EXPECT TO DEPEND ON LICENSES OF OUR ENIKU INTERNET SOFTWARE PRODUCT FOR
SUBSTANTIALLY ALL OF OUR REVENUE FOR THE FORESEEABLE FUTURE

     We anticipate that revenue from the license of our Internet software
products and related services revenue, as opposed to marketplace revenue, will
continue to constitute the vast majority of our revenue for the foreseeable
future. Consequently, a decline in the price of or demand for these products and
related services, or their failure to achieve broader market acceptance, would
seriously harm our business.


WE HAVE SOLD OUR PRODUCTS TO COMPANIES AS PART OF BROADER BUSINESS RELATIONSHIPS
AND REVENUE FROM THESE CONTRACTS MAY NOT BE INDICATIVE OF FUTURE REVENUE

     We have licensed our products to companies from whom we have purchased
products and services under separate arrangements. These companies generally
consist of (1) companies to whom we license our Internet software and from whom
we receive software to use in our business and (2) members of our Niku Partners
Network. In these relationships, we typically license our Internet software to a
company and that company licenses us software that it markets. These software
licenses are typically non-exclusive, have a perpetual term and may only be
terminated if the terms of the license are violated. Members of our Niku
Partners Network

                                       12
<PAGE>   13
typically license our software in return for a fee. In addition, we typically
pay a fee to these companies to provide implementation services to our customers
or to provide development services for us. Our agreements with Niku Partner
Network members typically have a term of two years and may be terminated sooner
if there is a breach of the agreement. It may be more difficult to sell our
products and services to potential customers if we do not also agree to use the
software products or services that a potential customer provides. We cannot
assure you that we will be successful in licensing our products to customers
without having to enter into broader relationships with them.

WE EXPECT REVENUE FROM OUR PRODUCTS TO BE CONCENTRATED IN A RELATIVELY SMALL
NUMBER OF CUSTOMERS

    We expect to derive a significant portion of our revenue from a relatively
small number of customers for the foreseeable future. As a result, if we lose a
major customer, our quarterly and annual results of operations could be harmed.
We cannot be certain that customers that have accounted for significant revenue
in past periods, individually or as a group, will continue to purchase products
or renew our services in any future period.

THE MARKET FOR OUR PRODUCTS AND SERVICES IS NEWLY EMERGING AND CUSTOMERS MAY NOT
ACCEPT OUR PRODUCTS AND SERVICES

    The market for professional services automation software products and
services is newly emerging. Services businesses have not traditionally automated
the management of their business processes. We cannot be certain that this
market will continue to develop and grow or that companies will elect to utilize
our products and services rather than attempt to develop applications internally
or through other sources. In addition, the use of the Internet, as well as
corporate intranets and extranets, has not been widely adopted for professional
services automation. Companies that have already invested substantial resources
in other methods may be reluctant to adopt a new approach that may replace,
limit or compete with their existing systems or methods. We expect that we will
need to continue intensive marketing and sales efforts to educate prospective
customers about the uses and benefits of our products and services. Therefore,
demand for and market acceptance of our products and services will be subject to
a high level of uncertainty.

DEFECTS IN OUR PRODUCTS OR SERVICES COULD RESULT IN LOSS OF OR DELAY IN REVENUE,
LOSS OF MARKET SHARE, FAILURE TO ACHIEVE MARKET ACCEPTANCE OR INCREASED COSTS

    Products and services as complex as those we offer or develop frequently
contain undetected defects or errors. Despite internal testing and testing by
our customers or potential customers, defects or errors may occur in our
existing or future products and services, including Year 2000 errors. For
example, from time to time in the past, versions of our software that have been
delivered to customers have contained errors. In these instances, we have
resolved the errors. In the future, if we are not able to detect and correct
errors prior to release, we may experience a loss of or delay in revenue, loss
of market share, failure to achieve market acceptance or increased costs to
remediate errors, any of which could significantly harm our business. Defects or
errors could also result in tort or warranty claims. Although we attempt to
reduce the risk of losses resulting from any claims through warranty disclaimers
and liability limitation clauses in our customer agreements, these contractual
provisions may not be enforceable in every instance. Furthermore, although we
maintain errors and omissions insurance, this insurance coverage may not
adequately cover us for claims. If a court refused to enforce the
liability-limiting provisions of our contracts for any reason, or if liabilities
arose that were not contractually limited or adequately covered by insurance,
our business could be harmed.

IF WE CANNOT BUILD A CRITICAL MASS OF BUYERS AND SELLERS FOR OUR NIKU SERVICES
MARKETPLACE, THE MARKETPLACE WILL NOT BE SUCCESSFUL

    The success of the Niku Services Marketplace depends in large part on our
ability to build a critical mass of buyers and sellers of services for our Niku
Services Marketplace. To attract sellers of services, we must build a critical
mass of buyers interested in obtaining services. However, buyers must perceive
value in the Niku Services Marketplace, which, in part, depends upon the breadth
of the offerings from sellers of services. If we are unable to increase the
number of buyers and sellers of services, the Niku Services Marketplace will not
be successful.

                                       13
<PAGE>   14

WE HAVE FOCUSED ON THE IT CONSULTING INDUSTRY AND OUR EFFORTS TO EXPAND SALES OF
OUR PRODUCTS AND SERVICES TO OTHER SERVICE INDUSTRIES MAY NOT SUCCEED

    To date, our products and services have been targeted for the information
technology, or IT, consulting industry and our primary product has been eNiku
for IT Consulting. However, we intend to develop and market our products and
services in other professional services industries. For example, with our
acquisition of Legal Anywhere in early fiscal 2001, we began to offer products
to the legal profession. Businesses may be less likely to use our products and
services outside of the IT consulting industry. Even if they do, we may need to
develop additional expertise or industry-specific knowledge, which we may not be
able to do in a timely manner. Therefore, we may not succeed in marketing our
products and services for use outside of the IT consulting industry. We may
experience difficulties that could delay or prevent the successful development,
introduction or marketing of new or enhanced products and services for new
professional services industries in the future. In addition, those products and
services may not meet the requirements of the marketplace in these new markets
and may not achieve market acceptance.

SYSTEM FAILURE MAY CAUSE INTERRUPTION OF OUR SERVICES

    The performance of our website servers and networking hardware and software
infrastructure is critical to iNiku, our hosted professional services automation
software and our ability to provide high quality customer service. Currently,
our infrastructure and systems for iNiku, our hosted applications and our
corporate website are located at one site maintained by USi. The hosting site is
in an area susceptible to earthquakes. We depend on this single-site
infrastructure and any disruption to this infrastructure resulting from a
natural disaster or other event could result in an interruption in our services.
Our systems and operations are vulnerable to damage or interruption from human
error, natural disasters, power loss, telecommunications failures, break-ins,
sabotage, computer viruses, intentional acts of vandalism and similar events. We
do not have a formal disaster recovery plan or alternative provider of hosting
services. In addition, we do not carry sufficient business interruption
insurance to compensate us for losses that could occur. In the past we have
experienced temporary outages with respect to our iNiku website. These outages
were due to temporary malfunctions of our website servers. To date, these
outages have resulted in our iNiku website being temporarily unavailable to
users for periods of several minutes to several hours. Any system failure that
causes an interruption in service or a decrease in responsiveness of our
Internet-based services, if sustained or repeated, could harm our reputation and
the attractiveness of our brand name.

WE DEPEND ON DISTRIBUTION, MARKETING AND TECHNOLOGY RELATIONSHIPS AND IF OUR
CURRENT AND FUTURE RELATIONSHIPS ARE NOT SUCCESSFUL, OUR BUSINESS MAY BE HARMED

    We rely on distribution, marketing and technology relationships with a
variety of companies. These distribution, marketing and technology relationships
include relationships with:

     -   the Niku Partners Network of consulting firms;

     -   operators of high traffic websites; and

     -   vendors of e-commerce and Internet software, such as Allaire, Fulcrum,
         Microsoft, Oracle and Seagate Software, whose products or technologies
         we incorporate into or integrate with our products, such as development
         tools, databases and search engines.

     We depend on these companies to promote our products, provide our direct
sales force with customer leads, attract users to iNiku and the Niku Services
Marketplace, integrate and implement our products with those of customers or
provide enhanced functionality to our products. Some of these relationships are
not documented in writing, or are governed by agreements that can be terminated
by either party with little or no prior notice or do not provide for minimum
payments to us. Our Internet marketing relationships also require us to make
significant cash payments. Companies with which we have a distribution,
marketing or technology relationship may promote products or services of several
different companies, including, in some cases, products or services that compete
with ours. These companies may not devote adequate resources to selling or
promoting our products and services. We may not be able to maintain these
relationships or enter into additional relationships in the future.

BECAUSE WE HAVE EXPANDED OUR OPERATIONS, OUR SUCCESS WILL DEPEND ON OUR ABILITY
TO MANAGE OUR EXPECTED GROWTH, IMPROVE OUR EXISTING SYSTEMS AND IMPLEMENT NEW
SYSTEMS, PROCEDURES AND CONTROLS

    We have rapidly and significantly expanded our operations and expect to
continue to expand our operations. This growth has placed, and is expected to
continue to place, a significant strain on our managerial, operational,

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<PAGE>   15

financial and other resources. We are seeking to hire a substantial number of
new employees in the current fiscal year. Our ability to compete effectively and
to manage future expansion of our operations, if any, will require us to
continue to improve our financial and management controls, reporting systems and
procedures on a timely basis. We expect to hire additional new employees to
support our business and to implement and integrate new accounting and control
systems. We may not be able to manage our growth efficiently.

ACQUISITIONS MAY PRESENT RISKS TO OUR BUSINESS

    Future acquisitions could create risks for us, including:

     -    amortization of expenses related to goodwill and other intangible
          assets;

     -    difficulties in assimilating the acquired personnel, operations,
          technologies or products;

     -    our ability to effectively market and sell our products to the
          acquired company's customers;

     -    unanticipated costs associated with the acquisitions;

     -    the need to manage geographically-dispersed operations;

     -    diversion of management's attention from other business concerns;

     -    the inability to retain the acquired employees; and

     -    adverse effects on our or the acquired company's existing business
          relationships.

    If we experience difficulties in assimilating acquired businesses, products
or technologies, our ongoing business could be disrupted, our management and
employees could be distracted and we could incur increased expenses.
Furthermore, we may issue equity securities to pay for any future acquisitions,
which could be dilutive to our existing stockholders. We may also incur debt or
assume unknown liabilities in connection with acquisitions.

OUR INCREASED INTERNATIONAL ACTIVITIES MAY NOT RESULT IN INCREASED REVENUE

    We only recently expanded our operations into Canada, the United Kingdom,
The Netherlands, Sweden, Germany and Australia. In the future, we intend to
expand our operations into other areas, particularly in the Asia-Pacific region.
We believe we must expand the sales of our products and services outside the
United States and hire additional international personnel. In connection with
this expansion, we also will need to develop internationalized versions of our
products. Therefore, we expect to commit significant resources to expand our
international sales, marketing and development. We may not be successful in
marketing our products and services to customers in markets outside the United
States, where adoption of the Internet and electronic commerce may evolve slowly
or may not evolve at all.

INCREASED INTERNATIONAL ACTIVITIES WILL EXPOSE US TO ADDITIONAL OPERATIONAL
CHALLENGES THAT WE MIGHT NOT OTHERWISE FACE

    If we succeed in increasing our international activities, we will be exposed
to additional operational challenges that we would not otherwise face if we
conducted our operations only in the United States. These include:

     -    currency exchange rate fluctuations, particularly if we sell our
          products in denominations other than U.S. dollars;

     -    seasonal fluctuations in purchasing patterns in other countries,
          particularly declining sales during summer months in European markets;

     -    tariffs, export controls and other trade barriers;

     -    difficulties in collecting accounts receivable in foreign countries;

     -    the burdens of complying with a wide variety of foreign laws;

                                       15
<PAGE>   16

     -    reduced protection for intellectual property rights in some countries,
          particularly in Asia; and

     -    the need to develop internationalized versions of our products.

PROVISIONS OF DELAWARE LAW, OUR CERTIFICATE OF INCORPORATION AND BYLAWS COULD
DELAY OR PREVENT A TAKEOVER OF US, EVEN IF DOING SO WOULD BENEFIT OUR
STOCKHOLDERS

    Provisions of Delaware law, our certificate of incorporation and bylaws
could have the effect of delaying or preventing a third party from acquiring us,
even if a change in control would be beneficial to our stockholders. These
provisions include:

     -    authorizing the issuance of preferred stock without stockholder
          approval;

     -    providing for a classified board of directors with staggered, three
          year terms;

     -    prohibiting cumulative voting in the election of directors;

     -    requiring two-thirds of the outstanding shares to approve amendments
          to some provisions of our certificate of incorporation and bylaws;

     -    requiring a majority of the stockholders to call stockholders
          meetings; and

     -    prohibiting stockholder actions by written consent.

THE SUCCESS OF OUR BUSINESS DEPENDS ON THE ADOPTION OF THE INTERNET FOR
ELECTRONIC COMMERCE AND COMMUNICATIONS

    Our business is based on providing software for the sourcing, management and
delivery of professional services using the Internet. Therefore, in order for
our business to be successful, the Internet must be widely adopted, in a timely
manner, as a means of electronic commerce and communication relating to
professional services. Because electronic commerce and communication over the
Internet are new and evolving, it is difficult to predict the size of this
market and its sustainable growth rate. To date, many businesses and consumers
have been deterred from utilizing the Internet for a number of reasons,
including, but not limited to:

     -    potentially inadequate development of network infrastructure;

     -    security concerns, including the potential for fraud or theft of
          stored data and information communicated over the Internet;

     -    inconsistent quality of service, including well-publicized down times
          for popular websites;

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

     -    limited numbers of local access points for corporate users;

     -    delay in the development of enabling technologies or adoption of new
          standards;

     -    inability to integrate business applications with the Internet;

     -    the need to operate with multiple and frequently incompatible
          products; and

     -    a lack of tools to simplify access to and use of the Internet.

INCREASING GOVERNMENTAL REGULATION OF THE INTERNET COULD LIMIT THE MARKET FOR
OUR PRODUCTS AND SERVICES

    A number of legislative and regulatory proposals under consideration by
federal, state, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, such as user privacy,
taxation of goods and services provided over the Internet, pricing, content and
quality of products and services. Legislation could dampen the growth in
Internet usage and decrease or limit its acceptance as a communications and
commercial medium. If enacted, these laws and regulations could limit the market
for our products and services. In addition, existing laws could be applied to
the Internet, including consumer privacy


                                       16
<PAGE>   17

laws. Legislation or application of existing laws could expose companies
involved in electronic commerce, to increased liability, which could limit the
growth of electronic commerce generally.

SECURITY RISKS OF ELECTRONIC COMMERCE MAY DETER FUTURE USE OF OUR PRODUCTS AND
SERVICES

    A fundamental requirement to conduct Internet-based electronic commerce is
the secure transmission of confidential information over public networks.
Failure to prevent security breaches of our customers' networks, or
well-publicized security breaches affecting the Internet in general, could
significantly harm our business. We cannot be certain that advances in computer
capabilities, new discoveries in the field of cryptography, or other
developments will not result in a compromise or breach of the security measures
of our products and services or our iNiku business website. Anyone who is able
to circumvent our security measures could misappropriate proprietary,
confidential customer information or cause interruptions in our operations. We
may be required to incur significant costs to protect against security breaches
or to alleviate problems caused by breaches. Further, a well-publicized
compromise of security could deter people from using the Internet to conduct
transactions that involve transmitting confidential information.

NEW TAX TREATMENT OF COMPANIES ENGAGED IN INTERNET COMMERCE MAY ADVERSELY AFFECT
THE INTERNET INDUSTRY

    Tax authorities on the international, federal, state and local levels are
currently reviewing the appropriate tax treatment of companies engaged in
Internet commerce. New state tax regulations may subject companies engaged in
electronic commerce to additional state sales, income and other taxes. A
recently passed federal law places a temporary moratorium on certain types of
taxation on electronic commerce. We cannot predict the effect of current
attempts to impose sales, income or other taxes on commerce over the Internet;
although, if imposed, these taxes would likely increase our cost of doing
business.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    We develop products in the United States and market our products in North
America, and to a lesser extent, Europe and the Asia-Pacific region. As a
result, our financial results may be affected by factor such as changes in
foreign currency exchange rates or weak economic conditions in foreign markets.
As all sales are currently made in U.S. dollars, a strengthening of the dollar
may make our products less competitive in foreign markets. We do not expect any
material adverse effect on our consolidated financial position, results of
operations or cash flows due to movements in any specific foreign currency.

     We currently do not use financial instruments to hedge operating expenses
by our European and Asia-Pacific subsidiaries. We intend to assess the need to
utilize financial instruments to hedge currency exposures on an ongoing basis.
Our exposure to market risk for changes in interest rates relates primarily to
our investment portfolio and outstanding debt obligations. We not use derivative
financial instruments for speculative or trading purposes. Our investments
consists primarily of highly liquid debt instruments that are of high-quality
investment grade and mature in one year or less, as specified in our investment
policy. The policy also limits the amount of credit exposure to any one issue,
issuer and type of instrument. Due to the short-term nature of our investments,
we believe that there is no material risk exposure. Therefore no quantitative
tabular disclosures are required.

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<PAGE>   18

                           PART II. OTHER INFORMATION

ITEM 2.    CHANGE IN SECURITIES AND USE OF PROCEEDS

    (c)    CHANGES IN SECURITIES

    In January 2000, in connection with its acquisition of Legal Anywhere, Inc.,
Niku issued 853,689 shares of common stock to a group of forty-four individual
investors, three venture capital funds and one corporate investor, FJF, Inc.,
all of whom were former stockholders of Legal Anywhere. The sale of these shares
was made in reliance on Section 3(a)(10) under the Securities Act.

    Prior to the completion of the initial public offering, Comdisco, Inc.
elected to exercise its Series B Preferred Stock warrants and receive a lesser
number of shares in exchange for a reduction in the exercise price resulting in
the issuance of 610,312 shares of Series B preferred stock.

    Concurrently with the closing of the initial public offering all outstanding
shares of Niku's preferred stock automatically converted into 48,229,809 shares
of common stock. The issuance of common stock upon automatic conversion of the
Niku's previously outstanding Preferred Stock upon consummation of the initial
public offer was made in reliance on Section 3(a)(9) of the Securities Act.

    (d)    USE OF PROCEEDS

    On February 28, 2000, Niku completed its initial public offering of common
stock. The managing underwriters in the offering were Goldman, Sachs & Co., Dain
Rauscher Wessels, Thomas Weisel Partners LLC, U.S. Bancorp Piper Jaffray. The
shares of the common stock sold in the offering were registered under the
Securities Act of 1933, as amended, on a Registration Statement on Form S-1 (No.
333-93439). The Securities and Exchange Commission declared the Registration
Statement effective on February 28, 2000.

    The offering commenced and terminated on February 28, 2000 after all of the
9.2 million shares of common stock registered under the Registration Statement
(including 1.9 million shares sold in connection with the exercise of the
underwriters' over-allotment option). The initial public offering price was
$24.00 per share for an aggregate initial public offering of $220.8 million.

    Niku paid a total of $15.5 million in underwriting discounts and commissions
and $3.1 million has been paid for costs and expenses related to the offering.
None of the costs and expenses related to the offering were paid directly or
indirectly to any director, officer, general partner of Niku or their
associates, persons owning 10 percent or more of any class of equity securities
of Niku or an affiliate of Niku.

    After deducting the underwriting discounts and commissions and the offering
expenses the estimated net proceeds to Niku from the offering were $202.2
million. The net offering proceeds have been invested in money market funds and
other investment grade securities. Niku may use a portion of the net proceeds to
acquire or invest in businesses, technologies, products or services.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

    (a.)   Exhibits

           The Exhibits listed in the accompanying Exhibit Index are filed as
part of this report.

    (b.)   Reports on Form 8-K

           None.


                                       18
<PAGE>   19

                                    SIGNATURE




Pursuant to the requirements 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.


                                   NIKU CORPORATION





Date:  June 13, 2000               By: /s/ Mark Nelson
                                       ----------------------------------------
                                        Mark Nelson
                                        Chief Financial Officer

                                       19
<PAGE>   20

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

 Exhibit
  Number                             Exhibit Title
  ------                             -------------

<S>            <C>
  10.01        Office Lease, dated as of March 28, 2000 by and between the
               Registrant and DLC Redwood City, LLP.

  27.01        Financial Data Schedule for April 29, 2000. (EDGAR version only)
</TABLE>

                                       20