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

                                   FORM 10-K

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

  For The Fiscal Year Ended December 31, 1999

                                      OR

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

                          Commission File No. 0-27741

                                  VIADOR INC.
            (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                <C>
            Delaware                                 94-3234636
  (State or other jurisdiction                    (I.R.S. Employer
of incorporation or organization)               Identification No.)
</TABLE>

<TABLE>
<S>                                       <C>
           167 Second Avenue
         San Mateo, California                                94401
(Address of principal executive offices)                    (Zip Code)
</TABLE>

                                (650) 685-3000
             (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:

                                     None

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

                        Common Stock, $0.001 par value

  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 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 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 the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference to Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

  The aggregate market value of voting stock held by non-affiliates of the
Registrant was $259,061,862 as of March 27, 2000 based upon the closing price
of the Registrant's Common Stock on the Nasdaq National Market reported for
March 27, 2000. Shares of Common Stock held by each executive officer and
director and by each person who beneficially owns more than 5% of the
outstanding Common Stock have been excluded in that such persons may under
certain circumstances be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination of affiliate
status for any other purpose.

17,151,539 shares of the Registrant's $0.001 par value Common Stock were
outstanding at March 27, 2000.

                      DOCUMENTS INCORPORATED BY REFERENCE

  The following documents (or portions thereof) are incorporated by reference
into the Parts of this Form 10-K noted:

  Part III incorporates by reference from the definitive proxy statement for
the Registrant's 1999 Annual Meeting of Stockholders to be filed with the
Commission pursuant to Regulation 14A not later than 120 days after the end of
the fiscal year covered by this Form.

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                                  VIADOR INC.
                            Form 10-K Annual Report
                  for the fiscal year ended December 31, 1999

                               Table of Contents

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<CAPTION>
 Item No.                                                                  Page
 --------                                                                  ----
PART I

 <C>      <S>                                                              <C>
    1.    Business......................................................     1
    2.    Properties....................................................    13
    3.    Legal Proceedings.............................................    14
    4.    Submission of Matters to a Vote of Security Holders...........    14

PART II

    5.    Market for the Registrant's Common Stock and Related
          Stockholder Matters...........................................    14
    6.    Selected Financial Data.......................................    15
    7.    Management's Discussion and Analysis of Financial Condition
          and Results of Operations.....................................    16
    7A.   Quantitative and Qualitative Disclosures About Market Risk....    33
    8.    Financial Statements and Supplementary Data...................    33
    9.    Changes In and Disagreements With Accountants on Accounting
          and Financial Disclosure......................................    33

PART III

   10.    Directors and Executive Officers of the Registrant............    34
   11.    Executive Compensation........................................    34
   12.    Security Ownership of Certain Beneficial Owners and
          Mangement.....................................................    34
   13.    Certain Relationships and Related Transactions................    34

PART IV

   14.    Exhibits, Financial Statement Schedules and Reports on Form 8-
          K.............................................................    34
          Exhibit Index.................................................    34
          Signatures....................................................    36
</TABLE>
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                                    PART I

ITEM 1. BUSINESS

  Except for the historical financial information contained herein, the
matters discussed in this Annual Report on Form 10-K may be considered
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Act of
1934, as amended. Such statements include declarations regarding the intent,
beliefs or current expectations of Viador and our management. Such forward-
looking statements are not guarantees of future performance and involve a
number of risks and uncertainties. Actual results could differ materially from
those indicated by such forward-looking statements. We undertake no obligation
to publicly release the results of any revision to these forward-looking
statements that may be made to reflect events or circumstances after the dates
hereof or to reflect the occurrence of unanticipated events. Important factors
that could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to: the company's
short operating history which makes it difficult to predict its future results
of operations; the dependence of the company's revenue upon the company's
suite of products; the company's history of operating losses and expected
future losses which could impede its ability to address the risks and
difficulties encountered by companies in new and rapidly evolving markets; the
company's future operating results could fluctuate which may cause volatility
or a decline in the price of the company's stock.

Overview

  We develop and market internet software that enables businesses to create
enterprise information portals for both business-to-business, or B2B, and
business-to-employee, or B2E use. An enterprise information portal gives users
a single browser-based interface with which to quickly and easily access
information from a variety of enterprise data sources. We believe the Viador
E-Portal Suite offers a comprehensive and integrated enterprise information
portal that is specifically designed for the web and works with a customer's
existing hardware and software systems, without the need for additional
technology expenditures. It provides our customers with the ability to manage
and share information on a secure and cost-effective basis that can
accommodate significant increases in the number of users and amount of
information. As more users contribute increasing amounts of information to the
portal, we believe our customers are able to increase business productivity
and efficiency.

  We were incorporated as Infospace Inc. in California in December 1995. In
January 1999, the Company changed its name to Viador, Inc. and in October
1999, we reincorporated in the state of Delaware. Our principal headquarters
are located at 167 Second Avenue, San Mateo, California 94401, and our
telephone number is (650) 685-3000. Our common stock is listed on the Nasdaq
National Market under the symbol "VIAD". Our home page is located on the Web
at http://www.viador.com, where you can find additional information about us
and our products; however, that information is generally not targeted at
investors and is not a part of this report. All references to "we", "us",
"our", and "Viador" refer to Viador Inc.

Recent Developments

  Since our initial public offering in October of 1999 through December 1999,
we continue to grow our business presence, acquire customers and partners,
release new products, make key additions to our management team and have been
recognized by the industry with several prestigious awards.

 Product Announcements

  In the fourth quarter of 1999, we introduced the Business-to-Business E-
Portal(TM), a product and services offering that will allow personalized
communication and information exchange between businesses. Our B2B E-Portal,
targeted at "dot.coms" and brick-and-mortar companies alike, is helping
companies generate revenue and get to market faster by giving them the ability
to securely share information and services with customers, partners and
suppliers.

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  We also announced the Viador B2B E-Portal ICE(TM) rapid implementation
methodology to support customers deploying Viador's B2B E-Portal. The ICE
rapid implementation methodology, available exclusively from us and our
strategic systems integration partners, brings a proven, repeatable process
that guides customers through the ideation, creation and extension, or ICE, of
their enterprise portals. The ICE methodology helps companies implement an
enterprise portal in as little as six weeks.

  We also announced that Viador E-Portal Suite(TM) will be made available in
French, German, Japanese and Spanish.

 New Customers

  We announced that Shiseido Company, Ltd., one of the world's most
prestigious cosmetic brands, has deployed the Viador E-Portal Suite to provide
its worldwide operations with secure browser-based access to sales, production
and inventory information. With 60 offices around the world, the company is
leveraging our technology to speed time to market, streamline distribution,
and reduce operational costs.

  We also announced strong customer acceptance of the new B2B E-Portal by 12
companies, such as Apparel Internetworking Corporation, Broden, Charles
Schwab, FaceTime Communications, Gelco Information Network, Heads Up,
Mediaplex, OnDemand, PMH Caramanning, RREEF, transchannel and VARStreet.com.
These companies represent multiple industries including healthcare, insurance,
finance and manufacturing, and range from brick-and-mortar to pure play
Internet companies. All are leveraging our solutions to quickly roll out
business-to-business portals to increase their level of service to customers
and to increase their speed to revenue.

 Strategic Partnerships

  We announced new or expanded partnerships with:

  IBM. We announced that Viador E-Portal Suite will support IBM's Enterprise
Information Portal that integrates a wide variety of unstructured information
in the form of text, images, audio and video.

  Broden. A leading computing and solutions integrator will be extending
Broden's full range of products and consulting services with the addition of
our E-Portal Suite(TM). As part of its solutions offerings for steamship
companies, Broden plans to incorporate our technology into its newest service
called "CargoTrends." CargoTrends allows users to access, organize and analyze
data from disparate data sources, as well as gain access to real-time
information on shipping trends and market information on the industry--data
important to making crucial business decisions.

  Deloitte Consulting. One of the world's top management consulting firms has
chosen to include Viador's enterprise portal technology in solutions it
proposes to Global 1,000 companies. Through this agreement, Deloitte
Consulting will include our E-Portal Suite(TM) as preferred technology to be
used in industry-specific e-Business solutions.

  Hynet. Our customers will be able to access business-critical information
such as sales proposals, marketing collateral and globalization of e-Content
through Hynet Directive(TM) XML repository via our E-Portal Suite(TM).

  Internet content and service providers. These partnerships will allow users
of our enterprise portal to access CNET technology and business news,
infoUSA's Internet yellow and white pages, ON24's syndicated streaming
broadcast news, as well as TRIP.com's travel booking and tracking
capabilities.

                                       2
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 Awards

  We were recognized by the industry with 2 new awards:

  Federal Computer Week. We were listed as one of the "10 Hot Companies to
Watch." Federal Computer Week recognizes us as a company that offers an
innovative solution that helps budget-constrained agencies to unlock
information from their internal systems through a web-based enterprise portal.

  Crossroads 2000 A-List Award. For the first time ever, an Enterprise
Information Portal vendor was awarded by this prestigious consulting
organization and we were chosen. These awards are unique because they are the
only ones that validate the business utility of emerging technology in the
enterprise. The Award was announced for Group 2: Excellence in Execution. Our
E-Portal Suite was given the award by Open Systems Advisors, Inc. after
detailed review and in-depth interviews with our customers.

 Management additions

  S. Ramakrishnan, former chief information officer and vice president in the
Global Consumer Bank group at Citibank, was named our vice president of
engineering and chief technology officer. Mr. Ramakrishnan, who brings years
of Fortune 1000 experience to our management team, is responsible for leading
Viador's overall technology direction, and overseeing the execution of product
development.

Business Acquisitions

  We recently acquired our distributor in Switzerland, Viador AG, which is now
our wholly-owned subsidiary. See "Distribution--International" on page 9.

Industry Background

  In today's highly competitive environment, businesses are focused on
improving their efficiency, effectiveness and ability to meet customer
demands. Providing diverse internal decision makers with relevant, accurate
and timely information is a key strategic priority for business and an
important element of achieving competitive advantage. Similarly, sharing
information with customers and suppliers is essential to succeed as an e-
business.

  Abundance of Information. Business decision-makers need quick access to
relevant information from a variety of sources, including the internet,
internal corporate networks, e-mail, databases and business software programs.
However, the large and growing quantity of information, coupled with the lack
of effective solutions for efficiently accessing, combining and organizing it,
makes it difficult to identify and utilize relevant information. Due to this
information overload, businesses need to be able to quickly identify and
obtain relevant information in order to make timely and informed decisions.

  The Proliferation of Disparate Information Technology Formats. There is a
rapidly growing variety of technologies used for creating, storing and
organizing information. These include many different items of computer
hardware, such as mainframe computers and computer networks, and numerous
software programs, such as those for finance, accounting, sales, manufacturing
and human resources. However, many of these hardware and software systems were
developed independently to be operated on a stand-alone basis and were not
designed to be compatible with other hardware and software. In order to access
all of an enterprise's information, users may need to use separate software
programs, complete separate security protocols and use different computer
terminals. As the number of formats and amount of information grows, it
becomes increasingly difficult and time consuming to navigate around these
technological obstacles to obtain relevant information.

Emergence of the Internet as the Global Medium for Communications. The
internet continues to experience rapid growth and expansion as an important
global medium for communications and business due to

                                       3
<PAGE>

its cost effectiveness, extensive reach and ability to handle tremendous
growth. The internet provides a powerful medium for enterprises and their
customers, suppliers and strategic partners to share business information
efficiently. We expect that the ability to securely share information
efficiently over the internet will become increasingly important and lead
growing numbers of enterprises to adopt web-based information and
communication solutions.

  Growth of E-Business. The internet continues to transform the way that
business is conducted. It can help businesses improve customer satisfaction,
reduce cost structures, globalize operations, foster innovation and accelerate
speed to market. E-business is the use of the internet and emerging
technologies to replace or supplement traditional business channels and
practices. As the number of internet users has grown, enterprises have
increasingly viewed the internet as an opportunity to interact rapidly with a
larger number of geographically distributed offices, employees, customers,
suppliers and partners. In many cases, the adoption of a web-based marketing,
communication or financial model provides enterprises with strategic
competitive advantages and can prevent the loss of market share to aggressive
e-business innovators.

  Need for a Comprehensive Solution. The above factors suggest the need for a
solution that facilitates the organization's secure access to and use of
enterprise information by those who require it, regardless of whether they are
users inside the business or outside partners. However, current solutions
generally do not enable companies to organize and provide secure access to
enterprise information through a single interface regardless of its format.
The ideal solution would work with all of the enterprise's information
technology and provide integrated access to all enterprise information
regardless of its source or format. Furthermore, given the large amounts of
electronic data being generated, the ideal solution would help users get fast
access to personalized and relevant information.

  A comprehensive solution would work with existing customer information
systems and would not require customers to replace or upgrade their existing
technology investments. It also would utilize the internet, so that it would
work through a web browser without any need to install additional software on
users' computers. An internet-based solution could be implemented quickly,
accommodate significant increases in the number of users and amount of
information, and adapt to changes in the customer's business model. In
contrast, we believe that any solution that does not utilize the internet
would have significant difficulty accommodating substantial increases in the
number of users and amount of information.

Enterprise Information Portals

  We provide a suite of enterprise software products that enables
organizations to build enterprise information portals that permit quick, easy
access to all enterprise information, facilitate the provision of customized
and personalized information and permit the secure sharing of enterprise
information both within the enterprise and with outside partners.

  Single Interface for All Enterprise Information. Our software permits users
to access data from multiple sources within and outside the company through a
single interface. We provide a comprehensive and integrated enterprise
information portal solution that provides access to user-personalized, up-to-
the-minute information quickly and easily.

  Adaptable Web-Based Architecture. In contrast to existing solutions, our
software architecture can accommodate significant increases in the number of
users and amount of information. Our software architecture is designed for the
internet, which means that it:

  .  works through a user's existing web browser,

  .  does not require the installation of any additional software on the
     user's desktop, and

  .  can be quickly rolled out to thousands of additional users.


                                       4
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  Our solution provides the means to build and enhance over time the methods
by which our customers organize, retrieve and distribute information. The open
and highly adaptable architecture of our software gives our customers the
flexibility to customize and extend their enterprise portal framework as their
needs evolve. Our enterprise information portal provides greater benefits to
the enterprise the more users it reaches and the more broadly our software is
deployed.

  Customized and Personalized Information. We address the information overload
problem by helping users locate and retrieve the most pertinent business
information. This capability increases the efficiency of information use by
our customers' employees. Our software allows the organization to
automatically categorize information by subject, by user, by department, by
role within the organization and according to other criteria. Its capabilities
permit users to locate and access desired information from various data
sources. In addition, our software permits each user to customize his or her
portal interface to access and display information in accordance with that
user's needs and preferences.

  Combines Ease of Use with Sophisticated Functions. The Viador E-Portal Suite
provides browser-based searchable access to the entire range of an
organization's enterprise information assets, facilitating location of and
access to information regardless of the underlying data source. Our browser-
based interface combines the ease of use of popular consumer internet portals,
while providing users with the ability to search enterprise-wide for specific
information and analyze data. The database access capabilities within our
software are all web-based and, unlike unintegrated database access tools,
offer a uniform look and feel for reporting, querying and analytical
processing.

  Builds Upon Customers' Existing Investments in Information
Technology. Customers who utilize our software are able to build upon their
new and existing hardware and software investments. As a result, our customers
typically do not need to purchase new computer equipment or software in order
to install and integrate our software.

  Ease of Implementation. The Viador E-Portal Suite is designed to be
implemented rapidly over the web using our customers' existing information
technology. Once installed on an organization's servers, our software can
reach employees enterprise-wide via their existing web browsers. New users can
be added in minutes on the customer's servers since no new software has to be
installed on the user's computer.

  Secure and Selective Access. Security features are essential to permit
customers to share confidential information rapidly over the internet with a
large number of geographically distributed offices, employees, customers,
suppliers and partners. Our software allows the organization to customize
information access by individual user and category of user. Our product's
security features operate in conjunction with our customers' existing security
services to identify and authenticate users.

Viador Strategy

  Our goal is to be the leading provider of enterprise information portal
software solutions in the B2B and B2E market segments. Key elements of our
strategy include:

  Extend Technology Leadership. We believe we are among the first companies to
provide a solution that has all of the following features:

  .  based on pure internet architecture;

  .  provides search capabilities using internet search technology;

  .  facilitates personalization of the information provided to each user;

  .  designed to accommodate significant increases in the number of users and
     amount of information;

  .  can retrieve and deliver information from different, otherwise
     incompatible sources; and

  .  provides multi-level security.

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  We intend to enhance our technology by continuing to devote significant
resources to research and development efforts and by forming strategic
relationships that will enable us to further enhance the performance and
adaptability of our software.

  Expand Sales, Distribution and Marketing. We intend to significantly grow
our direct sales organization to expand coverage and penetration of large
enterprise opportunities to take advantage of our innovative technologies. We
are making significant new investments in our corporate and field marketing
capacity as well as efforts to improve awareness of Viador and the Viador E-
Portal Suite solution. In addition, we will continue to exploit and build our
network of resellers of products who also provide related services,
manufacturers who use our software in their products, system integrators who
bring together various hardware and software to solve a specific customer
problem and distributors to expand our indirect distribution worldwide.

  Increase Use by Existing Customers. The value of our software to our
customers grows as it is deployed more widely throughout the organization for
the following reasons:

  .  more data can be accessed by customers' users as the number of
     departments within an organization that uses our software increases;

  .  users become more accustomed to using the portal to access data; and

  .  users contribute increasing amounts of information to the portal, which
     makes this information accessible to all authorized users.

  For these reasons, we believe that our customers are able to realize greater
productivity and efficiency in their businesses. We believe that our success
at winning and delivering initial deployments of our software by customers can
be grown to enterprise-wide adoption of our technology, which would generate
significant added revenue.

  Build Strategic Relationships. We have formed strategic relationships
covering marketing, engineering and sales with numerous multinational
companies that are at the forefront of providing technology for e-business. We
have an established marketing arrangement with IBM which has significantly
improved our distribution capabilities and resulted in additional sales. In
addition, our technology can be used with IBM's Net.Commerce initiative for e-
commerce storefronts and we are delivering our technology onto the IBM OS/390
mainframe. E-commerce involves buying and selling merchandise and services
over the internet. Our products are currently distributed in Japan by Mitsui,
which assisted us in adapting our products for Japan and other international
markets. In addition, we have partnered with Infoseek for joint marketing
purposes and to incorporate into our software Infoseek's technologies for
searching and indexing information available on the internet and on our
customers' internal networks. We have also recently entered into an alliance
agreement with Deloitte Consulting LLC and a product development and marketing
agreement with Hewlett-Packard Company. We also intend to develop new
strategic relationships with other large hardware, software and e-business
companies.

  Build World Class Service and Support Operations. Superior customer service,
training and support are necessary to build long-term customer relationships
that enable enterprise-wide deployments of our software. Our goal is to
deliver technology and services that enable our customers to rapidly implement
advanced technology business solutions throughout their organizations at the
lowest possible cost. To succeed and maintain a competitive edge, we will
continue to build on the success of our Advanced Solutions Group, which uses
our core technology to solve customers' individual problems. We intend to grow
our direct service and support organization to expand our training
capabilities and to provide reliable customer support.

Technology

  We believe the Viador E-Portal Suite offers a comprehensive and integrated
enterprise information portal that gives users a single browser-based
interface with which to quickly and easily access up-to-the-minute information
from a variety of enterprise data sources. Combining this easy-to-use browser-
based interface with our products' information delivery capability, our
software provides secure access and delivery of data.

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  Adaptable Internet Architecture.  The architecture of the Viador E-Portal
Suite is designed for the web, which gives it the ability to accommodate
significant increases in the number of users and the amount of information.
Our software's highly adaptable architecture and software development kit give
customers the added flexibility to customize and extend their enterprise
information portal as their needs evolve. It is Java-based, it operates on
Microsoft Windows NT servers and Unix. Our software works with major web
servers and browsers. We facilitate enterprise-wide scalability through add-on
options that enable multiple servers, distributed throughout a customer's
organization, to work together in servicing user information requests.

  Comprehensive Access. Our software provides comprehensive information access
for the following categories of data, content and application:

  .  structured data, including data from databases, data marts, data
     warehouses and business software;

  .  unstructured data, including data contained in internal company
     networks, on the internet, in groupware and in documents stored in file
     systems;

  .  event data, such as news or stock quotes, that is constantly changing
     and which is delivered in real time;

  .  internet content in the form of news feeds from the WWW; and

  .  applications operating within an organization or as services over the
     internet.

  Information Personalization. We address the information overload problem by
helping users locate and retrieve the most pertinent business information.
This capability increases the efficiency of information use by our customers'
employees. Our software allows the organization to focus information by
subject, by user, by department, by role within the organization and according
to other criteria. Its capabilities permit the location of and access to
desired information from structured, unstructured and event data sources. In
addition, our software permits each user to customize his or her portal
interface to access and display information in accordance with that user's
needs and preferences.

  Secure Information Sharing. Security features are essential to permit
customers to share confidential information rapidly over the internet with a
large number of geographically distributed offices, employees, customers,
suppliers and partners. Our products' security features operate in conjunction
with our customers' existing security services to identify and authenticate
users. These features permit the enterprise to establish multiple levels of
access rights based upon each user's job function and organizational role.

  Easy Administration. Our software facilitates the management of enterprise
information in large organizations with thousands of users, giving the system
administrator an added measure of flexibility to centrally monitor and
administer the system from virtually anywhere. User administration by the
user's job function and organizational role enables the administrator to
precisely delineate access privileges to reports, databases and documents for
individual users and groups. The server management component of our software
audits server usage and monitors user access in real time.

Products and Services

 Products

  The Viador E-Portal Suite is comprised of the following products, which are
sold both individually and as a suite:

  Viador Sage is a browser-like interface that gives users the ability to
search, access, analyze and share business information through a simple
interface similar to popular consumer internet portals. Both organizations

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and individual users can customize the Viador Sage interface to meet their
information needs. Viador Sage provides comprehensive access to structured,
unstructured and event data. Personalization capabilities enable the filtering
of information by time, subject and job function to improve user productivity.

  Viador Information Center is a high-performance Java server that provides
data access, content delivery, session management and user security. Viador
Information Center further ensures that our software can grow with the
enterprise through add-on options that provide support for additional
computers and balancing the needs of multiple users. These options enable
multiple servers, distributed enterprise-wide, to work together in servicing
user information requests.

  Viador Gateway allows customers to choose from a wide range of data sources
they would like to include in the Viador Information Center. These sources
include: Oracle, Sybase, Informix, DB2, Microsoft SQL Server, Hyperion
Essbase, Oracle Express, ODBC, Microsoft Office, internal company networks and
others.

  Viador Sentinel is an integrated B2B security server for extending secure
web-based access to partners, customers and suppliers over the internet.
Viador Sentinel operates in conjunction with existing security services to
identify and authenticate users, encrypt data, process requests and securely
deliver sensitive information. Viador Sentinel allows companies to exchange
information with e-business customers, suppliers and partners, thereby
facilitating more efficient operations and improving customer satisfaction.

  Viador Administrator facilitates the management of large customer
information technology environments with thousands of users by giving the
system administrator flexibility to centrally monitor and administer the
system from virtually anywhere. Administration of users by job
responsibilities and role within the organization enables the administrator to
precisely define access privileges for individual users and groups. A server
management feature monitors and creates a record of user access in real time.

 Services

  Our Advanced Solutions Group offers architectural and technical consulting
services, customer support and training in connection with licenses of our
software. We believe that services are an important part of our success and we
expect to continue to expand our professional services organization.

  Consulting. Our pre-sale and post-sale technology implementation services
work seamlessly together so that our assigned consulting engagement team can
work with a customer from the initial business problem discussions through
implementation of their solution. We believe that this allows us to develop
greater knowledge of the customer's environment and add the highest level of
value. Our consultants are qualified and trained to perform a wide variety of
services including prototype development, installation, configuration and
testing of our software and integration with the customer's existing
databases, security and other systems. Our consultants also help customers
develop a strategy for the customers' enterprise-wide deployment of our
software. Once deployed into a customer site on an engagement, our consultants
become advisors and help us discover new business opportunities within the
company.

  Customer Support. We provide product upgrades and customer support through
our customer support program. Customer support personnel are available 24
hours a day, seven days a week. We also offer e-mail-based support. Customers
generally purchase the first year of product support at the time they license
our software; after that, support may be renewed on an annual basis. Our
support engineers will immediately render assistance to system critical
problems and work with the customer to diagnose the issue and resolve it until
the customer is satisfied. Our support organization works with our sales force
in identifying new opportunities, product uses and for maintenance renewals.

  Training. We offer a variety of training programs tailored to particular
user groups, including end users and information technology personnel.
Training classes are offered at customer sites, in various high demand

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cities and also at our headquarters in San Mateo, California. We also provide
training classes for third-party service providers, such as independent
systems consultants and distributors. We provide training early in the sales
cycle to ensure successful implementations and sponsor free half-day training
seminars as an inducement to potential customers.

Distribution

  We have designed our distribution strategy to address the particular
requirements of our diverse target customers. We distribute our products
directly through a direct sales force. We distribute our products indirectly
through Original Equipment Manufacturers, or OEMs, Value Added Resellers, or
VARs, and systems integrators.

  Direct Sales. We sell our software primarily through our domestic direct
sales organization, with sales professionals located in twenty-seven
geographic regions in the United States and Canada. Additionally, the field
sales force is complemented by direct telesales and telemarketing
representatives based at our headquarters in San Mateo, California. Technical
sales support is provided by sales engineers located in several of the field
offices. We currently intend to add a significant number of sales
representatives and sales engineers in other domestic locations.

  International. We believe it is important to have an international presence
and intend to continue to conduct business in markets outside the United
States through a combination of subsidiaries and distributors. We conduct
business internationally through a variety of distribution and service
partners. We use distributors in the Netherlands, Germany, United Kingdom,
Canada, Hong Kong and Japan and plan to expand our distributor channel to
other international markets. We recently acquired our distributor in
Switzerland, Viador AG, which is now a wholly-owned subsidiary of our company.

  OEMS. We have established OEM relationships to leverage our sales efforts.
For example, we have OEM reseller agreements with several leading systems
vendors to bundle our server software with certain of their product offerings.
Some of our OEM partners include IBM and Micromuse.

  VARS and Systems Integrators. VARs and systems integrators customize,
configure, and install our software products with complementary hardware,
software, and services. In combining these products and services, these
resellers are able to deliver more complete Viador-based solutions to address
specific customer needs. We may also help these VARs and systems integrators
design customized applications to meet the unique requirements of these
customers. Some of our VAR and Systems Integration partners include ACS,
Deloitte Consulting, Daou Systems and Nextera.

  Since our products affect users throughout the customer's organization, our
sales effort involves multiple decision makers and frequently include the
chief executive officer, the chief financial officer, vice president of
finance, controller and vice president of purchasing. While the average sales
cycle varies substantially from customer to customer, for initial sales it has
generally ranged from two to nine months. Our sales cycle is affected by
seasonal fluctuations as a result of our customers' fiscal year budgeting
cycles and slow summer purchasing patterns overseas. We typically receive a
substantial portion of our orders in the last two weeks of each fiscal quarter
because our customers often delay purchases of products to the end of the
quarter. Also, we expect our revenue to be higher in the fourth quarter than
in other quarters of the year. For further discussion regarding these risks,
see "Risk Factors That May Affect Future Results--Since our sales cycle is
long, unpredictable and subject to seasonal fluctuations, it is difficult to
accurately forecast our revenue; if we fail to achieve our forecasted revenue,
our operating results will suffer and our stock price may decline" on page 26.

Marketing

  Our marketing efforts are directed at promoting our enterprise information
portal product family, building a leadership position by defining the
enterprise information portal market space and increasing our market share in
that market. Our marketing programs are targeted at both mid- to executive-
level information technology

                                       9
<PAGE>

professionals as well as line-of-business executives and are focused on
creating awareness of, and generating interest in, our software.

  We engage in a variety of marketing activities, including developing and
executing joint marketing strategies designed to leverage our existing
strategic relationships, managing and maintaining our web site, issuing
newsletters and direct mailings, web-marketing campaigns, creating and placing
advertisements in various media, conducting aggressive public relations
campaigns, and establishing and maintaining close relationships with
recognized industry analysts. We are an active participant in technology-
related conferences and demonstrate our products at trade shows targeted at
information technology audiences. Our marketing campaigns are tightly
synchronized with our sales force to ensure appropriate follow up with sales
leads.

  We expect to grow our sales and marketing staff significantly. We believe
that demand is increasing, and will continue to increase, for web enterprise
information access software and services, such as those sold by us. We may not
be able to expand our sales and marketing staff, either domestically or
internationally, to take advantage of any increase in demand for web
enterprise information portals. Our failure to expand our sales and marketing
organization or other distribution channels could materially adversely affect
our business. For additional discussion of risks we face with respect to our
inability to grow our sales and marketing staff, see "Risk Factors That May
Affect Future Results--If we do not expand our customer base, we may never
become profitable and our stock price will likely decline" on page 24.

Product Development

  Our development staff is responsible for enhancing our existing products and
expanding our product line. We believe that a technically skilled, quality
oriented and highly productive software development organization will be a key
component of the continued success of our new product offerings. We expect
that we will increase our product development expenditures substantially in
the future.

  Our current product development activities focus on product enhancements to
the Viador E-Portal Suite and the integration of external services and partner
technology. These development efforts may not be completed within our
anticipated schedules, and if completed, they may not have the features
necessary to make them successful in the marketplace. Delays or problems in
the development or marketing of product enhancements or new products could
result in a material adverse effect on our business. We believe that
significant investments in research and development are required to remain
competitive. While we intend to continue to invest a significant percentage of
our total revenues in research and development, a number of our competitors
are in a position to expend substantially more absolute dollars on research
and development than we are. Our research and development expenditures were
$5.9 million, $2.5 million, and $1.4 million for the years ended December 31,
1999, 1998 and 1997, respectively. See "Management's Discussion and Analysis
of Financial Condition and Results of Operation--Operating Expenses--Research
and Development" on page 20. For a discussion of risks related to our product
development, see "Risk Factors That May Affect Future Results--Risks Related
To Our Industry--If we fail to manage technological change or effectively
respond to changes in customer needs, demand for our products and services
will drop and our business will suffer," on page 31.

Competition

  The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other
market activities of industry participants. Our primary source of direct
competition comes from independent software vendors of corporate portal
software. We also compete with business intelligence software vendors.
Business intelligence software is installed on a personal computer and permits
the analysis of information in databases. We also face indirect competition
from potential customers' internal development efforts.

  Our major competitors in the corporate portal field tend to be early stage
private companies. In addition, several major business intelligence software
vendors have introduced portal products as a web interface to their

                                      10
<PAGE>

business intelligence software. At least one business software company,
Peoplesoft, has introduced a portal that works with its software and we expect
more will do so. We also expect to face competition from new entrants. Most
business software companies have a significantly installed customer base and
have the opportunity to offer portal products to those customers as additional
components of their software.

  We believe that the principal competitive factors considered in selecting
enterprise information portal solutions are comprehensive access to existing
IT infrastructure, security, scalability, personalization and filtering
capabilities and an installed base of customers. We believe that the ability
of our software to access a wide variety of data sources is a major
differentiating factor relative to competing portal products. Our competitors
which are early-stage private companies focus on providing access to
unstructured data in the form of websites and documents. Portals offered by
business intelligence software vendors concentrate on integrating and
accessing structured data. Portals offered by business software companies
generally only provide an interface for their software programs.

  Many of our competitors have longer operating histories, significantly
greater financial, technical, marketing and other resources, significantly
greater name recognition and a larger installed base of customers. Moreover, a
number of our competitors, particularly major business software companies,
have well-established relationships with our current and potential customers
as well as with independent systems consultants and other vendors and service
providers. In addition, these competitors may be able to respond more quickly
to new or emerging technologies and changes in customer requirements, or to
devote greater resources to the development, promotion and sale of their
products, than we can.

  It is also possible that new competitors, alliances among competitors or
other third parties may emerge and rapidly acquire significant market share.
We expect that competition in our markets will increase as a result of
consolidation and the formation of alliances in the industry. Increased
competition may result in price reductions, reduced gross margins and loss of
market share, any of which could materially adversely affect our business. We
may be unable to compete successfully against current or future competitors
and the competitive pressures we face may materially adversely affect our
business. For a discussion of the competitive risks we face, see "Risk Factors
That May Affect Future Results--Risks Related To Our Industry--The markets in
which we compete are highly competitive and we may not be able to compete
effectively" and "Risk Factors That May Affect Future Results--Risks Related
To Viador--If our strategic relationships are discontinued, it may be more
difficult for us to maintain certain features of our products or reach
particular customers or markets" on pages 31 and 30, respectively.

Intellectual Property Rights

  Our success depends upon our proprietary technology. We rely primarily on a
combination of patent, copyright, trade secret and trademark laws,
confidentiality procedures, contractual provisions and other similar measures
to protect our proprietary information. For example, we license rather than
sell our software to customers and require licensees to enter into license
agreements that impose certain restrictions on licensees' ability to utilize
the software. We have applied for two U.S. patents, but we have no patents or
patent applications pending in any foreign countries. There can be no
assurance that any of our patents, copyrights or trademarks will not be
challenged or invalidated.

  As part of our confidentiality procedures, we enter into non-disclosure
agreements with certain of our employees, directors, contractors, consultants,
corporate partners, customers and prospective customers. We also enter into
license agreements with respect to our technology, documentation and other
proprietary information. Those licenses are generally non-transferable and
have a perpetual or ten year term. Despite our best efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or otherwise
obtain and use our products or technology that we consider proprietary and
third parties may attempt to develop similar technology independently. In
particular, we provide our licensees with access to object code versions of
our software, and other proprietary information underlying our licensed
software. Policing unauthorized use of our products is difficult, particularly
because the global nature of the internet makes it difficult to control the
ultimate destination

                                      11
<PAGE>

or security of software or other data transmitted. While we are unable to
determine the extent to which piracy of our software exists, we expect
software piracy to be a persistent problem. In addition, effective protection
of proprietary rights may be unavailable or limited in certain countries. The
laws of some foreign countries do not protect our proprietary rights to the
same extent as do the laws of the United States. Overall, the protection of
our proprietary rights may not be adequate and our competitors may
independently develop similar technology.

  We are not aware that our products, trademarks, copyrights or other
proprietary rights infringe the proprietary rights of third parties. Third
parties may assert infringement claims against us in the future with respect
to current or future products. Further, we expect that software product
developers will increasingly be subject to infringement claims as the number
of products and competitors in our industry segment grows and the
functionality of products in different industry segments overlaps. From time
to time, we hire or retain employees or consultants who have worked for
independent software vendors or other companies developing products similar to
those offered by us. Those prior employers may claim that our products are
based on their products and that we have misappropriated their intellectual
property. Any claims of that variety, with or without merit, could cause a
significant diversion of management attention, result in costly and protracted
litigation, cause product shipment delays or require us to enter into royalty
or licensing agreements. Those royalty or licensing agreements, if required,
may not be available on terms acceptable to us or at all, which would have a
material adverse affect on our business. For additional discussion regarding
our intellectual property risk, see "Risk Factors That May Affect Future
Results--Risks Related To Viador--If we are unable to effectively protect our
proprietary rights, our competitors may be able to copy important aspects of
our products or product presentation, which would undermine the relative
appeal of our products to customers and reduce our sales" on page 29.

Employees

  As of December 31, 1999, we had a total of 152 employees, including 78
people in sales and marketing, 43 people in engineering, 24 people in
operations and 7 people in finance and administration. This rapid growth
places a significant demand on our management and operational resources. In
order to manage growth effectively, we must implement and improve our
operational systems, procedures and controls on a timely basis. We believe
that our future success will depend in part on our continued ability to
attract, hire and retain qualified personnel. The competition for those
personnel is intense, and there can be no assurance that we will be able to
identify, attract and retain those personnel in the future. None of our
employees is represented by a labor union, and management believes that our
employee relations are good.

Executive Officers of the Registrant

  The following table sets forth certain information regarding our current
executive officers:

<TABLE>
<CAPTION>
               Name              Age                 Position
               ----              ---                 --------
   <C>                           <C> <S>
   Stan X. Wang................   37 Chief Executive Officer, President,
                                      Chairman of the Board of Directors

                                     Executive Vice President and General
   Jonathan M. Harding.........   47 Manager

                                     Vice President, Chief Financial Officer
   Raja H. Venkatesh...........   38 and Secretary

                                     Vice President, International Business
   Ben C. Connors..............   42 Development

                                     Vice President, Engineering and Chief
   Subramanian Ramakrishnan....   41 Technology Officer

   Steven C. Dille.............   39 Vice President, Marketing
</TABLE>

  Stan X. Wang is a co-founder of Viador. Mr. Wang has served as President,
Chief Executive Officer and Chairman of the Board of Directors since Viador
was founded in December 1995. Prior to founding Viador, from January 1995 to
December 1995, Mr. Wang oversaw the data warehouse division of the RightSizing
Group, a software and services company focused on Internet, data warehouse and
large database and financial database applications where he designed and
implemented numerous large enterprise software projects. From July 1990

                                      12
<PAGE>

to January 1995, Mr. Wang was an architect in Oracle Corporation's information
access tools group. Mr. Wang holds a B.S. in Electrical Engineering from Tsing
Hua University in China, an M.S. in Mathematics from Oregon State University
and an M.S. in Mechanical Engineering from the California Institute of
Technology.

  Jonathan M. Harding has served as Executive Vice President and General
Manager since January 2000. Mr. Harding served as Senior Vice President of
North American Operations from April 1998 to January 2000. Prior to joining
Viador, from July 1994 to April 1998, Mr. Harding was Managing Partner at
Vision Unlimited, an information technology consulting company. Mr. Harding
also served as Vice President of Professional Services at Brock Control
Systems from July 1993 to July 1994. Previously, Mr. Harding has held senior
executive positions at Computer Task Group and Knowledge Ware. Mr. Harding
holds a B.S. in Economics from SUNY-Brockport and attended the Graduate School
of Industrial Administration at Carnegie Mellon University.

  Raja H. Venkatesh joined Viador as Vice President, Chief Financial Officer
and Secretary in June 1999. Prior to joining Viador, from August 1997 to June
1999, Mr. Venkatesh served as Corporate Treasurer at Maxtor Corporation, a
manufacturer of information storage products for desktop computer systems.
From April 1996 to August 1997, Mr. Venkatesh served as Director of Corporate
Strategy and Development at the Pacific Telesis Group. Previously, Mr.
Venkatesh served in various capacities in the Treasurer's office of General
Motors Corporation from July 1990 to March 1996. Mr. Venkatesh holds a B.S. in
Engineering from the Regional Engineering College in India and an M.B.A. from
the Darden Graduate School of Business Administration at the University of
Virginia.

  Ben C. Connors is a co-founder of Viador. Mr. Connors has served as Vice
President of International Business Development since November 1998. Mr.
Connors served as Chief Operating Officer from July 1997 to November 1998 and
as Vice President of Sales and Marketing from January 1996 to July 1997. Prior
to joining Viador,
from November 1995 to January 1996, Mr. Connors served as Chief Executive
Officer of Quadsoft, Inc., a custom software development and outsourcing
company, which he also co-founded. Mr. Connors also served as Vice President
of Sales and Marketing for The RightSizing Group from May 1994 to November
1995. Previously, Mr. Connors held sales and marketing management positions
with The ASK Group, Oracle Corporation and Hewlett-Packard Company. Mr.
Connors holds a B.S. in Mechanical Engineering from Stanford University and an
M.B.A. from Harvard Business School.

  Subramanian Ramakrishnan has served as Vice President, Engineering and Chief
Technology Officer since November 1999. Prior to joining Viador, Mr.
Ramakrishnan has held numerous positions worldwide at Citibank, including
marketing and product development director, regional operations and technology
director, and group MIS director. Most recently, he served as Chief
Information Officer and Vice President in the Global Consumer Bank group at
Citibank. Mr. Ramakrishnan holds a B.S. in Engineering from the Indian
Institute of Technology and an MBA from the Indian Institute of Management.

  Steven C. Dille has served as Vice President of Marketing since December
1997. Prior to joining Viador, from February 1992 to November 1997, Mr. Dille
served in the marketing division at Sybase, Inc., a global independent
software company, most recently as director of data warehousing. Previously,
Mr. Dille has held marketing and technology leadership positions at Hewlett-
Packard Company, NCR and as an independent consultant. Mr. Dille holds a B.S.
in Computer Science and Mathematics from the University of Pittsburgh and a
M.B.A. in Marketing and Finance from The University of Chicago.

ITEM 2. PROPERTIES

  We currently lease the following facilities: our corporate headquarters in
San Mateo, California and sales offices in New York, New York; Boston,
Massachusetts; Arlington, Virginia; League City, Texas; Huntington Beach,
California; Palm Coast, Florida and Sylvan Lake, Michigan. In February 2000,
we entered into an agreement to lease approximately 60,000 square feet for our
own new corporate headquarters in Mountain View, California. We anticipate
that we will move our headquarters from San Mateo to Mountain View by June
2000. We believe that existing facilities will be adequate for the foreseeable
future.

                                      13
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

  We are not a party to any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  None.

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

  Our common stock has traded on the Nasdaq National Market under the symbol
"VIAD" since October 26, 1999. The following table sets forth the range of
high and low sales prices reported on the National Market for our common stock
for the periods indicated.

<TABLE>
<CAPTION>
                                                                   High   Low
                                                                  ------ ------
     <S>                                                          <C>    <C>
     Fiscal 1999
       Fourth Quarter (from October 26).......................... $56.00 $ 9.00
     Fiscal 2000
       First Quarter (through March 27, 2000).................... $64.81 $25.75
</TABLE>

  On March 27, 2000, the latest practicable trading day before the printing of
this annual report, the closing price per share of our common stock was
$61.50. As of March 27, 2000, there were 180 holders of record of our common
stock. Because many shares of Viador common stock are held by brokers and
other institutions on behalf of stockholders, we are unable to estimate the
total number of stockholders represented by these record holders. Because the
market price of our common stock is subject to fluctuation, the market value
of the shares of our common stock may increase or decrease. We have never
declared or paid any cash dividends on our common stock since our
incorporation and anticipate that for the foreseeable future, we will continue
to retain any earnings for use in our business.

Use of Proceeds of Initial Public Offering

  The effective date of our registration statement on Form S-1 filed under the
Securities Act of 1933 (No. 333-84041) relating to the initial public offering
of our common stock, was October 25, 1999. A total of 4,600,000 shares of our
common stock were sold at a price of $9.00 per share to an underwriting
syndicate led by Bear, Stearns & Co. Inc., CIBC World Markets Corp. and U.S.
Bancorp Piper Jaffray, Inc. The offering commenced on October 25, 1999 and
closed on October 29, 1999. The initial public offering resulted in gross
proceeds of $41.4 million, $2,898,000 of which was the underwriting discount.
Expenses related to the offering totaled approximately $1.3 million. We
received net proceeds in the amount of $37,232,000. From the time of receipt
through December 31, 1999, the proceeds were applied toward working capital
requirements and capital expenditures.

                                      14
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

  The tables that follow present portions of our financial statements and are
not complete. You should read the following selected financial data in
conjunction with our financial statements and related notes thereto and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 16. The statements of operations data for the years ended
December 31, 1999, 1998 and 1997 and the balance sheet data as of December 31,
1999 and 1998 are derived from our financial statements that have been audited
by KPMG LLP, independent auditors, which are included elsewhere in this
filing. The statement of operations data for the years ended December 31, 1996
and 1995 and the balance sheet data as of December 31, 1997, 1996 and 1995 are
derived from audited financial statements that are not included in this
filing. The historical results presented below are not necessarily indicative
of the results to be expected for any future fiscal year. For further
information about our historical results, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" beginning on page
16.

<TABLE>
<CAPTION>
                                             Years Ended December 31
                                      -----------------------------------------
                                        1999     1998     1997     1996   1995
                                      --------  -------  -------  ------  -----
                                      (In thousands except per share data)
<S>                                   <C>       <C>      <C>      <C>     <C>
Statement of Operations Data:
Revenues............................. $ 10,151  $ 3,825  $ 1,582  $  997  $  80
Cost of revenue......................    2,691    1,387      903     314     10
                                      --------  -------  -------  ------  -----
Gross profit.........................    7,460    2,438      679     683     70
                                      --------  -------  -------  ------  -----
Operating expense:
  Sales and marketing................   11,266    4,295    1,802     125     11
  Research and development...........    5,931    2,481    1,351     364     15
  General and administrative.........    2,940    1,365      936     358      8
  Amortization of stock-based
   compensation......................    1,254      445      --      --     --
                                      --------  -------  -------  ------  -----
    Total operating expense..........   21,391    8,586    4,089     847     34
                                      --------  -------  -------  ------  -----
Operating income (loss)..............  (13,931)  (6,148)  (3,410)   (164)    36
Interest income (expense), net.......      624      (63)      62      10    --
Net income (loss).................... $(13,307) $(6,211) $(3,348) $ (154) $  36
                                      ========  =======  =======  ======  =====
Basic and diluted net income (loss)
 per share........................... $  (2.20) $ (1.82) $ (1.34) $(0.08) $0.02
Weighted average shares used in
 computing basic and diluted net
 income (loss) per share.............    6,043    3,416    2,495   1,993  1,563
<CAPTION>
                                                   December 31
                                      -----------------------------------------
                                        1999     1998     1997     1996   1995
                                      --------  -------  -------  ------  -----
                                      (In thousands except per share data)
<S>                                   <C>       <C>      <C>      <C>     <C>
Balance Sheet Data:
Cash and cash equivalents............ $ 44,720  $ 4,181  $ 1,029  $  290  $  42
Working capital......................   41,755    2,771     (317)     (5)    78
Total assets.........................   52,178    7,185    2,918     530    123
Long-term obligations, including
 current portion.....................      --       --       --      100    --
Total stockholders' equity
 (deficit)...........................   43,458    3,371       90     (67)    86
</TABLE>

                                      15
<PAGE>

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

  Except for the historical financial information contained herein, the
matters discussed in this Annual Report on Form 10-K may be considered
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Act of
1934, as amended. Such statements include declarations regarding the intent,
beliefs or current expectations of Viador and our management. Such forward-
looking statements are not guarantees of future performance and involve a
number of risks and uncertainties. Actual results could differ materially from
those indicated by such forward-looking statements. We undertake no obligation
to publicly release the results of any revision to these forward-looking
statements which may be made to reflect events or circumstances after the
dates hereof or to reflect the occurrence of unanticipated events. Important
factors which could cause actual results to differ materially from those in
the forward-looking statements, include but are not limited to: the company's
short operating history which makes it difficult to predict its future results
of operations; the dependence of the company's revenue upon the company's
suite of products; the company's history of operating losses and expected
future losses which could impede its ability to address the risks and
difficulties encountered by companies in new and rapidly evolving markets; the
company's future operating results could fluctuate which may cause volatility
or a decline in the price of the company's stock.

Overview

  We develop and market internet software that enables businesses to create
enterprise information portals. Our products enable organizations to build
enterprise information portals that permit quick, easy access to all
enterprise information, facilitate the provision of customized and
personalized information and permit the secure sharing of enterprise
information both within the enterprise and with outside partners. We had net
losses of approximately $13.3 million, $6.2 million and $3.3 million for the
years ended December 31, 1999, 1998 and 1997, respectively. In addition, the
Company had an accumulated deficit of approximately $23 million as of
December 31, 1999.

  Historically, we have focused our selling efforts in North America and
derived a significant majority of our revenue from North America. However, we
believe that our international sales will increase. We currently have
distribution agreements with partners in Asia and Europe, and we have
delivered our products to customers in Latin America.

  We were incorporated in 1995 as Infospace, Inc. and changed our name to
Viador Inc. in 1999. Since our inception, we have developed web-based products
designed to permit our customers to search, analyze and deliver relevant
information to users within and outside the enterprise. We delivered our first
product, Web-Charts, in September 1996. Over the next two years, we introduced
more sophisticated web products and a proprietary web security server product.
In the first quarter of 1999, we first shipped a fully integrated web-based
product suite called the Viador E-Portal Suite, which integrated our prior
product offerings and is now our primary licensed product.

 Recent Events

  In January 2000, Viador acquired a subsidiary in Switzerland. See Note 8 of
Notes to Financial Statements.

 Segment Presentation

  We manage and evaluate the performance of our business through a single
operating segment: Enterprise information portals.

                                      16
<PAGE>

 Results of Operations

  The following table and discussion compares the results of operations in
absolute dollars and as a percentage of total revenues for the three years
ended December 31:

<TABLE>
<CAPTION>
                                       Years Ended December 31,
                              ------------------------------------------------
                                   1999             1998            1997
                              ---------------   --------------  --------------
                                            (in thousands)
<S>                           <C>       <C>     <C>      <C>    <C>      <C>
Statement of Operations
  Data:
Revenues
Licenses....................  $  7,320    72 %  $ 2,283    60 % $   839    53 %
Service.....................     2,831    28 %    1,542    40 %     743    47 %
                              --------  -----   -------  -----  -------  -----
Total Revenue...............    10,151    100%    3,825    100%   1,582   100 %
                              --------  -----   -------  -----  -------  -----
Cost of Revenue.............     2,691    27 %    1,387    36 %     903    57 %
Gross profit................     7,460     73 %   2,438    64 %     679    43 %
                              --------  -----   -------  -----  -------  -----
Operating expense
  Sales and marketing.......    11,266   111 %    4,295   112 %   1,802   114 %
  Research and Development..     5,931    58 %    2,481    65 %   1,351    85 %
  General and
   administrative...........     2,940    29 %    1,365    36 %     936    59 %
  Amortization of stock-
   based compensation.......     1,254     12 %     445    12 %     --
                              --------  -----   -------  -----  -------  -----
Total operating expenses....    21,391   211 %    8,586   224 %   4,089   258 %
                              --------  -----   -------  -----  -------  -----
Operating loss..............   (13,931) (137)%   (6,148) (161)%  (3,410) (216)%
Interest income (expense),
 net........................       624      6%      (63)   (2)%      62     4 %
                              --------  -----   -------  -----  -------  -----
Net income (loss)...........  $(13,307) (131)%  $(6,211) (162)% $(3,348) (212)%
                              ========  =====   =======  =====  =======  =====
</TABLE>

Revenues

  We derive our revenue from the sale of software product licenses and from
professional consulting, training, maintenance and support services. In
December 1997, we adopted Statement of Position 97-2, Software Revenue
Recognition. SOP 97-2 generally requires revenue earned on software
arrangements involving multiple elements to be allocated to each element based
on its relative fair value. We recognize product license revenue when
persuasive evidence of an agreement exists, the product has been delivered,
the license fee is fixed or determinable and collection of the fee is
probable. The entire fee related to arrangements that require the Company to
deliver specified additional features or upgrades is deferred until delivery
of the feature or upgrade has occurred, because the Company does not have
sufficient vendor-specific objective evidence of fair value to allocate
revenue to the various elements in such arrangements. All of the contract
software revenue related to arrangements involving consulting services that
are essential to the functionality of the software at the customer site is
deferred until the consulting services have been completed and customer
acceptance has been obtained using the completed contract method. Contract
software revenue related to arrangements to maintain the compatibility of the
Company's software products with the software products or platforms of the
customer or other vendor is recognized ratably over the term of the
arrangement. License revenue from OEM and VAR arrangements in which the
Company earns a royalty based on a specified percentage of OEM and VAR sales
to end users incorporating the Company's software is recognized upon delivery
to the end user. Nonrefundable prepaid royalty fees received by the Company
from OEM and VAR customers are deferred and recognized as the end user sales
are reported to the Company by the OEM or VAR, unless the Company has an
arrangement to maintain the compatibility of its software products with the
software products or platforms of the OEM or VAR. In that case, due to the
Company's software compatibility obligation, the prepaid royalty fees are
recognized as the end user sales are reported to the Company by the OEM or VAR
but limited to no more than the fee that would be recognizable on a cumulative
basis if the entire fee was being recognized ratably over the term of the
arrangement.

  Service revenue consists of fees from professional services and from
maintenance and support. Professional services include integration of
software, software development, training and software installation. We bill

                                      17
<PAGE>

professional services fees either on a time and materials basis or on a fixed-
price schedule. We recognize professional services fees generally as the
services are performed except, as described above, where such services are
essential to the functionality of software sold as part of the arrangement.
Our clients typically purchase maintenance agreements annually, and we price
maintenance agreements based on a percentage of the product license fee. We
recognize revenue from maintenance and support agreements ratably over the
term of the agreement, which is typically one year. We price telephone support
based on differing contracted levels of support. Customers purchasing
maintenance agreements receive future product upgrades and electronic, web-
based technical support and basic ten hours a day, five days a week telephone
support. Customers can also purchase extended telephone support, which is
available 24 hours a day, seven days a week, for an additional fee. We record
cash receipts from customers and billed amounts due from customers in excess
of revenue recognized as deferred revenue. The timing and amount of revenue
recognized from individual contracts, some of which represent over 10% of
revenue recognized during a particular quarter, can vary significantly.
Furthermore, as discussed above, revenue related to significant transactions
may be recognized over the term of the agreement, which may extend recognition
over a period of 36 to 60 months. This can result in fluctuations in revenue
from one quarter to the next. Furthermore, the timing and amount of cash
receipts from customers can vary significantly depending on specific contract
terms and can therefore have an impact on the amount of accounts receivable
and deferred revenue in any given period.

  Total Revenue. Revenue was approximately $ 10.1 million, $3.8 million and
$1.6 million in 1999, 1998 and 1997, respectively, representing an increase of
$6.3 million, or 166 %, from 1998 to 1999 and an increase of approximately
$2.2 million, or 138%, from 1997 to 1998. The increase in revenue as a
percentage of total revenues and in absolute dollars from each corresponding
previous year was primarily due to increased license revenue as the
availability of new software products attracted new customers.

  License Revenue. License revenue was $7.3 million, $2.3 million, and
$839,000 in 1999, 1998 and 1997, respectively. License revenue increased $5.0
million or 217% from 1998 to 1999 as we introduced new features in our
existing products and introduced new software products in 1999. License
revenue increased $1.4 million or 174% from 1997 to 1998 as our products
gained market acceptance.

  Service Revenue. Service revenue for the years ended December 31, 1999,
1998, and 1997 was $2.8 million, $1.5 million, and $743,000, or 28%, 40% and
47% of total revenue, respectively. Service revenues increased by $1.3 million
or 87% from 1998 to 1999 primarily because of increase in labor force in the
service area, which permitted Viador to further expand its services. Service
revenue increased by $757,000 or 102% from 1997 to 1998 due to our expansion
of the services to include customer maintenance and support services as well
as consulting in support of our licensed product sales.

  Channel Mix. We distribute our products directly through a direct sales
force. We distribute our products indirectly through Original Equipment
Manufacturers ("OEMs"), Value Added Resellers ("VARs") and systems
integrators. Indirect channel revenues for the years ended December 31, 1999,
1998 and 1997 were 5.4%, 3.6% and 0% of total revenues, respectively. Indirect
channel revenues increased both as a percentage of total revenues and in
absolute dollars from each corresponding previous year primarily because of
the expanded use of channel partners and their customer base. In general, the
distribution of revenues among channels will fluctuate in future periods
depending on the timing of new product releases, Viador's ability to expand
its use of OEMs and VARs, the timing of direct sales to large customer
accounts and customer buying patterns.

  Geographic Mix. International revenues (sales outside of the United States)
for years ended December 31, 1999, 1998 and 1997 were 6%, 12% and 14% of total
revenue, respectively. International revenues increased in absolute dollars
from each corresponding previous year because of increased distribution
channels and customer base in international market. See Note 6 of Notes to
Financial Statements for further geographic information.

  Viador will continue to make investments in international markets by direct
expansion, acquisition or partnering with OEMs, VARs and distributors
throughout the world. International revenues may fluctuate in

                                      18
<PAGE>

future periods as a result of competition, the general demand for Internet-
and intranet-related products in international markets, and general economic
conditions of the regions.

Gross Margin
<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                                --------------------------------
                                                 1999   1998  1997
                                                ------ ------ -----
     <S>                                        <C>    <C>    <C>    <C> <C> <C>
     Gross Margin
     License gross margin:
       License revenue......................... $7,320 $2,283 $ 839
       Cost of license revenue.................    130    --    --
                                                ------ ------ -----
         Gross Margin.......................... $7,190 $2,283 $ 839
                                                ====== ====== =====
     Service gross margin:
       Service revenue......................... $2,831 $1,542 $ 743
       Cost of service revenue.................  2,561  1,387   903
                                                ------ ------ -----
         Gross Margin.......................... $  270 $  155 $(160)
                                                ====== ====== =====
</TABLE>

  Viador's gross margin consists of license and service revenues offset by the
costs of these licenses and services. Our cost of license revenue includes
royalties due to third parties for integrated technology, the cost of manuals
and product documentation and shipping costs, including the costs associated
with the electronic transmission of software to new customers and an
allocation of our facilities and depreciation expenses. Our cost of service
revenue includes salaries and related expenses for our customer support,
professional consulting and training services organizations as well as an
allocation of our facilities and depreciation expenses.

  License gross margins for the years ended December 31, 1999, 1998 and 1997
were 98%, 100%, and 100% of license revenues, respectively. The decrease in
license gross margin from 1998 to 1999 is primarily due to royalties paid to
one of our partners for integrated technology. Service gross margins for the
years ended December 31, 1999, 1998 and 1997 were 10%, 10%, and (22%) of
service revenues, respectively. Service gross margin as percentage of total
service revenue increased from 1997 to 1998 as corresponding service revenue
increased by more than 100% between years, exceeding our fixed costs of
providing services.

Cost of revenue

  Our cost of revenue includes salaries and related expenses for our customer
support, professional consulting and training services organizations and costs
of contracting with third parties to provide consulting services to customers.
Our cost of revenue also includes royalties due to third parties for
integrated technology, the cost of manuals and product documentation and
shipping costs, including the costs associated with the electronic
transmission of software to new customers and an allocation of our facilities
and depreciation expenses. The cost of license revenue has not been
significant to date.

  Cost of revenue for the years ended December 31, 1999, 1998 and 1997 was
$2.7 million, $1.4 million and $0.9 million or 27%, 36% and 57% of total
revenues, respectively. Cost of revenue as a percentage of total revenue
decreased by 9% from 1998 to 1999 and 21% from 1997 to 1998. The decrease
resulted primarily from the increased dollars of revenue derived from license
revenue for which the related cost of license revenue was insignificant. We
anticipate that our cost of revenue will grow in future periods in order to
accommodate planned increases in the number of customers and greater
utilization of our products by existing customers. The cost of our license
revenue also may increase.

                                      19
<PAGE>

Operating Expenses

  Our operating expenses are classified into four general categories: sales
and marketing, research and development, general and administrative and
amortization of deferred stock-based compensation. We classify all charges to
these operating expense categories based on the nature of the expenditures.
Although each category includes expenses that are category specific, each
category includes expenses that are common to the other three, such as
salaries, employee benefits, bonuses, travel and entertainment costs,
telephone expenses, rent, facilities costs and third-party professional
service fees. The sales and marketing category of operating expenses includes
expenditures specific to the category, such as sales commissions, public
relations and advertising, trade shows, marketing collateral materials and web
seminars. We allocate the total costs for overhead and facilities to each of
the functional areas that use the overhead and facilities services based on
their estimated usage as measured primarily by employee headcount. These
allocated charges include facility rent for the corporate office and
depreciation expense for office furniture and equipment. Viador's total
operating expenses for the years ended December 31, 1999, 1998 and 1997 were
$21.4 million, $8.6 million and $4.1 million, or 211%, 224%, and 258% of total
revenues, respectively. Operating expenses increased for each year compared to
the corresponding earlier year in absolute dollars as we increased sales and
marketing activities, developed new distribution channels, funded greater
levels of research and development, broadened professional services and
support, and improved operational and financial systems.

 Sales and Marketing

  Sales and marketing expenses consist of operating expenses associated with
Viador's sales, marketing, international and other business development
efforts. Sales and marketing expenses for the years ended December 31, 1999,
1998 and 1997 were $11.3 million, $4.3 million, and $1.8 million, or 111%,
112%, and 114% of total revenue, respectively. Sales and marketing expenses
increased in absolute dollars from 1998 to 1999 due to increased staffing,
sales commissions, tradeshow events and increased investment in international
costs. Sales and marketing expenses increased in absolute dollars from 1997 to
1998 due to an increase in selling commissions and travel expenses for sales
personnel.

 Research and Development

  Research and development expenses consisted primarily of compensation and
outside contractor fees to support research and development ("R&D")
activities. Research and development expenses for the years ended December 31,
1999, 1998 and 1997 were $5.9 million, $2.5 million, and $1.4 million, or 58%,
65%, and 85% of total revenues, respectively. R&D expenses increased in
absolute dollars for each year compared to the corresponding earlier year as
we increased the number of engineers, launched new products and put quality
assurance programs in place. We believe that our research and development is
critical to our future success and we anticipate that research and development
expenses will grow significantly in future periods.

 General and Administrative

  General and administrative expenses for all years presented consist
primarily of compensation and fees for professional services. General and
administrative expenses for the years ended December 31, 1999, 1998 and 1997
were $2.9 million, $1.4 million, and $936,000, or 29%, 36% and 59% of total
revenues respectively. General and administrative expenses increased in
absolute dollars from 1998 to 1999 due to an increase in staffing and
professional services for legal and accounting, reflecting increased business
activity and support requirements. General and administrative expenses
increased in absolute dollars from 1997 to 1998 due to expansion of our
facilities and increases in staffing, depreciation expenses, legal and
accounting expenses.

 Amortization of Stock-based Compensation

  Amortization of stock-based compensation primarily consists of charges
incurred for employee stock options issued at less than the fair market value
at the date of grant. Amortization of stock-based compensation for the years
ended December 31, 1999, 1998 and 1997 was $1.2 million, $445,000 and $0, or
12%, 12% and 0% of total revenues respectively.

                                      20
<PAGE>

Operating Loss

  For the years ended December 31, 1999, 1998 and 1997, operating loss was
$13.9 million, $6.1 million and $3.4 million or (137%), (161%) and (216%) of
total revenues.

  Since our inception, we have incurred substantial costs to develop our
technology and products, to recruit and train personnel for our engineering,
sales and marketing and professional services departments and to establish an
administrative organization. As a result, we have incurred net losses in each
year since inception and, as of December 31, 1999, had an accumulated deficit
of approximately $23 million. We anticipate that our operating expenses will
increase in future years commensurate to or greater than any revenue increases
as we increase sales and marketing operations, develop new distribution
channels, fund greater levels of research and development, broaden
professional services and support, and improve operational and financial
systems.

  Accordingly, we expect to incur additional losses for the foreseeable
future. In addition, our limited operating history makes it difficult for us
to predict future operating results and, accordingly, we cannot assure you
that we will achieve or sustain revenue growth or profitability.

Interest Income (Expenses), Net

  Interest income (expense) net, for the years ended December 31, 1999, 1998,
and 1997 was $624,000, ($63,000), and $62,000, respectively. The increase from
1998 to 1999 was primarily due to investment returns on our initial public
offering proceeds received in late October 1999. The decrease from 1997 to
1998 was due to the use of cash for operations and the payment of interest on
a $2.0 million bridge loan obligation starting in the second quarter of 1998.

Income Tax

  Viador provided no income tax provision for the years ended December 31,
1999, 1998 and 1997. The net deferred tax assets at December 31, 1999 were $0,
net of a valuation allowance of $9.6 million, of which $8.9 million relates to
net operating loss and tax credit carryforwards. Realization of Viador's net
deferred tax assets depends on Viador generating sufficient taxable income in
future years in appropriate tax jurisdictions to obtain benefit from the
reversal of temporary differences and from net operating loss and credit
carryforwards. See Note 5 of Notes to Financial Statements.

Liquidity and Capital Resources

  From our inception, we have financed our operations primarily through an
initial public offering in which we raised money and private equity placements
totaling approximately $63.8 million. At December 31, 1999, we had an
accumulated deficit of approximately $23 million and cash and cash equivalents
of approximately $44.7 million.

  At December 31, 1999, Viador's principal source of liquidity was $44.7
million in cash, cash equivalents, and short-term investments, representing a
$40.5 million increase from the December 31, 1998 balance of $4.2 million.
Viador's cash, cash equivalents and short-term investments are managed to be
available for working capital, strategic investment opportunities, or other
potential cash needs in the future. Viador has no material debt.

  In 1999, cash used in operating activities of approximately $9.9 million was
primarily attributable to a net loss for the year of $13.3 million, and also
due to the increase in accounts receivable, accounts payable and accrued
liabilities. Cash used in investing activities of $1.6 million related
primarily to capital expenditures. The capital expenditures primarily
consisted of purchases of computer hardware and software. Viador anticipates
that capital expenditures will increase in future periods for leasehold
improvement expenditures related to our new corporate facility and personal
computer requirements for our increasing staff. Cash provided by financing
activities of $52.0 million for 1999 was primarily attributable to proceeds
from our initial public offering in October 1999.

                                      21
<PAGE>

  In the years 1998 and 1997, cash used in operating activities of $4.8
million and $2.3 million, respectively, was primarily attributable to a net
loss for the year of $6.2 million and $3.3 million, partially offset by
amortization and depreciation. Cash used in investing activities of $484,000
and $342,000 during 1998 and 1997, respectively, related primarily to capital
expenditures. The capital expenditures primarily consisted of purchases of
computer hardware and software as well as furniture and fixtures related to
additional leased facilities. Cash provided by financing activities of $8.5
million and $3.4 million for 1998 and 1997, respectively, were primarily
attributable to net proceeds from private equity placements.

  Deferred revenues primarily consist of the unrecognized portion of license
and service revenues received pursuant to subscription and support contracts,
consulting and prepaid license royalties. Deferred revenues increased to $5.0
million at December 31, 1999 from $2.7 million at December 31, 1998 due to
increased sales activities.

  Viador's principal commitments as of December 31, 1999 consisted of
obligations under noncancelable operating leases for monthly rent. See Note 7
of Notes to Financial Statements. Viador has a $2.5 million line of credit
with a commercial bank for the purpose of financing working capital
requirements and equipment purchases. As of December 31, 1999, no amount was
outstanding thereunder. The loan contains certain standard covenants, is based
on a percentage of qualified outstanding accounts receivables and is secured
by a security interest in all of our intellectual property. Interest on
borrowings thereunder accrues at the rate of 1% over the bank rate, as
announced by the bank from time to time, for the line of credit and 1.25% over
the bank rate, as announced by the bank from time to time, for the equipment
loan.

  We believe that our existing cash and cash equivalents, funds available
under our existing credit facility and the net proceeds from our initial
public offering will be sufficient to fund our working capital and capital
expenditures for at least 12 months. The execution of our business plan will
require substantial additional capital to fund our operating losses, sales and
marketing expenses, capital expenditures, lease payments and working capital
requirements thereafter. We intend to continue to consider our future
financing alternatives, which may include the incurrence of indebtedness,
additional public or private equity offerings or an equity investment by a
strategic partner. Actual capital requirements may vary based upon the timing
and success of the expansion of our operations. We have negotiated a lease for
a new headquarters facility, which will provide space for future growth. See
Note 8 of Notes to Financial Statements. Our capital requirements may change
based upon technological and competitive developments. In addition, several
factors may affect our capital requirements, including:

  .  demand for our products and services or our anticipated cash flow from
     our operations being less than expected;

  .  our development plans or projections proving to be inaccurate; or

  .  our engaging in acquisitions or other strategic transactions.

We have no present commitments or arrangements assuring us of any future
equity or debt financing, and we cannot assure you that any such equity or
debt financing will be available to us on favorable terms, or at all.

Year 2000 Disclosure

  Since entering the year 2000, the Company has not experienced any major year
2000-related disruption in the operation of its systems. Although most year
2000 problems should have become evident on January 1, 2000, additional year
2000-related problems may become evident only after that day. The Company will
continue to monitor its operations and systems over the next couple of months
but does not expect to encounter any significant impacts to its business due
to year 2000 exposures. The Company has incurred no costs to date associated
with year 2000 remediation efforts and expects to incur only minimal expenses
going forward. See "Risk Factors That May Affect Future Results--Risks Related
to Viador--We are at risk of Year 2000 issues" on page 30.

                                      22
<PAGE>

                  RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

                            Risks Related to Viador

We cannot predict whether we will be successful because we have a short
operating and sales history.

  We were founded in 1995, and began offering software products in the third
quarter of 1996. Our primary product, the Viador E-Portal Suite, was first
shipped in the first quarter of 1999. The revenue and income potential of our
business and market is unproven, and our limited operating history makes it
difficult to evaluate us and our prospects.

  We anticipate making significant investments in our sales and marketing
programs, personnel recruitment, product development and infrastructure.
Therefore, we believe that we will continue to experience significant losses
on a quarterly and annual basis for the foreseeable future. You must consider
us and our prospects in light of the risks and difficulties encountered by
companies in the early stage of development, particularly companies in new and
rapidly evolving markets. Our ability to address these risks depends on a
number of factors, which include our ability to:

  .  provide software that is reliable, cost-effective and able to
     accommodate significant increases in the number of users and amount of
     information;

  .  market the Viador E-Portal Suite, our other products and the Viador
     brand name effectively;

  .  continue to grow our infrastructure to accommodate new developments in
     the enterprise information portal software market and increased sales;

  .  hire, retain and motivate qualified personnel; and

  .  respond to competition.

We may not be successful in meeting these challenges and addressing these
risks and uncertainties. If we are unable to do so, our business will not be
successful and your investment in our capital stock will decline in value.

Our business currently depends on revenue related to the Viador E-Portal
Suite, and it is uncertain whether the market will increasingly accept this
product.

  We generate most of our revenue from licenses and services related to the
products comprising the Viador E-Portal Suite. We expect that these products,
and future upgraded versions of these products, will continue to account for a
large portion of our revenue for the foreseeable future. Our future financial
performance will depend on increasing acceptance of our current products and
on the successful development, introduction and customer acceptance of new and
enhanced versions of our products. Our business could be harmed if we fail to
deliver the enhancements to our products that customers want.

  The market for enterprise information portal software is newly emerging and
there can be no assurance that customers will adopt our products. Accordingly,
we cannot accurately estimate the potential demand for our products and
services. We believe that market acceptance of our products and services
depends principally on our ability to:

  .  effectively market the Viador E-Portal Suite, our other products and our
     services;

  .  hire, train and retain a sufficient number of qualified sales and
     marketing personnel;

  .  provide high-quality and reliable customer support for our products;

  .  distribute and price our products and services in a manner that is more
     appealing to customers than that of our competitors;

                                      23
<PAGE>

  .  develop for Viador a favorable reputation among our customers, potential
     customers and participants in the software industry; and

  .  withstand downturns in general economic conditions or conditions that
     would slow corporate spending on software products.

  Some of the foregoing factors are beyond our control. If our customer base
does not expand, we may never become profitable and our stock price will
likely decline.

  Our services consist of maintenance, support, consulting and training.
Service revenue represented 28%, 40% and 47% of total revenue for 1999, 1998
and 1997, respectively. We anticipate that service revenue will continue to
represent a significant percentage of total revenue. Our ability to increase
our service revenue will depend in large part on our ability to increase sales
of the Viador E-Portal Suite and to increase the size of our service
organization, including our ability to recruit and train a sufficient number
of qualified service representatives. If service revenue is less than
anticipated, our fixed costs of providing services will exceed our service
revenue and our operating results could be materially adversely affected.

We have a history of losses and may not be able to achieve profitability in
the future.

  Since our inception, we have experienced operating losses, negative cash
flows from operations and net losses in each quarterly and annual period. As
of December 31, 1999, we had an accumulated net deficit of approximately $23
million. Revenue from our software and related services may not be sufficient
to make us profitable in the future. If we do achieve profitability, we cannot
be certain that we can sustain or increase profitability on a quarterly or
annual basis, particularly to the extent that we face significant competition.
In addition, we expect to significantly increase our sales and marketing,
product development, engineering and administrative expenses as we grow. As a
result, we will need to generate significant revenue increases to achieve and
maintain profitability.

If we do not expand our customer base, we may never become profitable and our
stock price will likely decline.

  The market for enterprise information portal software is newly emerging and
there can be no assurance that customers will adopt our products. Accordingly,
we cannot accurately estimate the potential demand for our products and
services. We believe that market acceptance of our products and services
principally depends on our ability to:

  .  effectively market the Viador E-Portal Suite, our other products and our
     services;

  .  hire, train and retain a sufficient number of qualified sales and
     marketing personnel;

  .  provide high-quality and reliable customer support for our products;

  .  distribute and price our products and services in a manner that is more
     appealing to customers than that of our competitors;

  .  develop a favorable reputation for Viador among our customers, potential
     customers and participants in the software industry; and

  .  withstand downturns in general economic conditions or conditions that
     would slow corporate spending on software products.

  Some of the foregoing factors are beyond our control. If our customer base
does not expand, we may never become profitable and our stock price will
likely decline.

                                      24
<PAGE>

Our operating results in one or more future periods are likely to fluctuate
significantly and may fail to meet or exceed the expectations of securities
analysts or investors, causing our stock price to fall.

  We expect to experience significant fluctuations in our future results of
operations due to a variety of factors, many of which are outside of our
control, including:

  .  demand for and market acceptance of our products and services;

  .  our expansion into international markets;

  .  introduction of products and services or enhancements by us and our
     competitors;

  .  competitive factors that affect our pricing;

  .  the mix of products and services we sell;

  .  the timing and magnitude of our capital expenditures, including costs
     relating to the expansion of our operations;

  .  the size and timing of customer orders, particularly large orders, some
     of which represent more than 10% of total revenue during a particular
     quarter;

  .  the hiring and retention of key personnel;

  .  conditions specific to the enterprise information portal market and
     other general economic factors;

  .  changes in generally accepted accounting policies, especially those
     related to the recognition of software revenue; and

  .  new government legislation or regulation.

  We typically receive 50% to 70% of our orders in the last month of each
fiscal quarter because our customers often delay purchases of products until
the end of the quarter and our sales organization and our individual sales
representatives strive to meet quarterly sales targets. Because a substantial
portion of our costs are relatively fixed and based on anticipated revenue, a
failure to book an expected order in a given quarter will likely not be offset
by a corresponding reduction in costs and, therefore, could adversely affect
our operating results for that quarter. Due to these factors, we believe that
quarter-to-quarter comparisons of our operating results are not a good
indication of our future performance. In future quarters, our operating
results may be below the expectations of public market analysts and investors.
In this event, the price of our common stock may fall significantly.

Because our customers' orders vary substantially in size, our quarterly
operating results are difficult to forecast and may fluctuate.

  Customer orders during a particular quarter typically vary considerably in
size, from as low as several thousand dollars to over $500,000. For example,
there were two customers whose revenues exceeded 10% of our total revenue for
each of the quarters ended December 31, 1999, September 30, 1999 and March 31,
1999. Another customer accounted for 18% of recognized revenue for the quarter
ended June 30, 1999. No other customer accounted for more than 10% of
quarterly recognized revenue during each of the corresponding quarters during
1999. Because of the large size of some individual customer orders relative to
total orders during a quarter, our revenue may fluctuate significantly from
one quarter to the next. If a customer who places a large order cancels or
reduces the order, or if we are unable to fulfill the order in a timely
fashion or are otherwise unable to recognize revenue for the order in the
quarter in which it is anticipated, it could result in increased volatility in
our revenue and stock price.

                                      25
<PAGE>

We plan to increase our operating expenses to bring about and support higher
sales of the Viador E-Portal Suite, which will result in larger net losses if
our revenue does not grow accordingly.

  We plan to significantly increase our operating expenses to expand our sales
and marketing operations and consulting and training programs, broaden our
customer support capabilities and fund greater levels of research and
development. Our operating expenses, which include research and development,
sales and marketing, and general and administrative expenses, are based on our
expectations of future revenue and are relatively fixed in the short term. If
revenue falls below our expectations in any quarter and we are not able to
quickly reduce our spending in response, our operating results will be
adversely affected and our stock price may fall.

Since our sales cycle is long, unpredictable and subject to seasonal
fluctuations, it is difficult to accurately forecast our revenue; if we fail
to achieve our forecasted revenue, our operating results will suffer and our
stock price may decline.

  The typical sales cycle of our products is long and unpredictable and
requires both a significant capital investment decision by our customers and
our education of potential customers regarding the use and benefits of our
products. Our sales cycle is generally between three and nine months. A
successful sales cycle typically includes presentations to both business and
technical decision makers. The implementation of our products involves a
significant commitment of resources by prospective customers. Accordingly, a
purchase decision for a potential customer typically requires the approval of
several senior decision makers. Our sales cycle is also affected by the
business conditions of each prospective customer. Due to the relative
importance of many of our individual product sales, a lost or delayed sale
could adversely affect our quarterly operating results. Our sales cycle is
also affected by seasonal fluctuations as a result of our customers' fiscal
year budgeting cycles and slow summer purchasing patterns overseas. Also, we
expect revenue to be higher in the fourth quarter than in other quarters of
the year since many customers strive to spend unused budgeted dollars before
the end of the year.

If our software contains errors, we may lose customers or experience reduced
market acceptance of our products.

  Our software products are inherently complex and may contain defects and
errors that are detected only when the products are in use. In addition, some
of our customers require or may require enhanced customization of our software
for their specific needs, and these modifications may increase the likelihood
of undetected defects or errors. Further, we often render implementation,
consulting and other technical services, the performance of which typically
involves working with sophisticated software, computing and networking
systems, and we could fail to meet customer expectations as a result of any
defects or errors. As a result, we may lose customers, customers may fail to
implement our products more broadly within their organization and we may
experience reduced market acceptance of our products. Our products are
designed to facilitate the secure transmission of sensitive business
information to specified parties outside the business over the internet. As a
result, the reputation of our software products for providing good security is
vital to their acceptance by customers. Our products may be vulnerable to
break-ins, theft or other improper activity that could jeopardize the security
of information for which we are responsible. Problems caused by product
defects, failure to meet project milestones for services or security breaches
could result in loss of or delay in revenue, loss of market share, failure to
achieve market acceptance, diversion of research and development resources,
harm to our reputation, increased insurance costs or increased service and
warranty costs. To address these problems, we may need to expend significant
capital resources that may not have been budgeted.

Product liability claims could harm our business.

  Our license agreements with customers typically contain provisions designed
to limit our exposure to potential product liability claims. All domestic and
international jurisdictions may not enforce these limitations. Although we
have not experienced any product liability claims to date, we may encounter
this type of claim in the future. Product liability claims brought against us,
whether or not successful, could divert the attention of our management and
key personnel and could be expensive to defend.

                                      26
<PAGE>

We may be unable to maintain or grow our international operations, which could
slow or undermine our overall growth.

  During 1999, 1998 and 1997, we derived 6%, 12% and 14%, respectively, of our
total revenue from sales outside the United States. During the past three
years, we have derived our international revenue primarily from sales in
Canada, Europe and Asia Pacific. We intend to expand our international
operations and anticipate that in the foreseeable future a significant portion
of our revenue may be derived from sources outside the United States. If we
are unable to maintain or grow our international operations, it could slow or
undermine our overall growth.

  We have not identified any material risk associated with doing business in
Canada, other than risk associated with foreign currency fluctuations. In
Japan, we have an exclusive distribution relationship with Mitsui. To the
extent we are unable to favorably renew our distribution agreement or make
alternative arrangements, we may have decreased revenue in Japan. We also face
country-specific risks in Europe and Asia pacific region (the region), such as
fluctuation in currency, general economic conditions in the region and
regulatory uncertainties associated with being a foreign company doing
business in the region.

  We also have committed additional resources to customizing our products for
selected international markets, including German, French and Spanish-speaking
markets, among others, and in developing international sales and support
organizations. In addition, even if we successfully expand our international
operations and successfully customize our products, there can be no assurance
that we will be able to maintain or increase international market demand for
our products.

  Our international operations are subject to a number of risks, including:

  .  costs of customizing our products for foreign countries;

  .  protectionist laws and business practices favoring local competition;

  .  dependence on the performance of local resellers and other strategic
     partners;

  .  adoption of general internet technologies in each international market;

  .  compliance with multiple, conflicting and changing governmental laws and
     regulations;

  .  longer sales and payment cycles;

  .  import and export restrictions and tariffs;

  .  difficulties in staffing and managing international operations;

  .  greater difficulty or delay in accounts receivable collection;

  .  foreign currency exchange rate fluctuations;

  .  multiple and conflicting tax laws and regulations; and

  .  political and economic instability.

If our plan to sell the Viador E-Portal Suite directly to customers is not
successful, we may not be able to grow our revenue and our stock price may
suffer.

  We sell our products primarily through our domestic direct sales
organization and we support our customers with our technical and customer
support staff in several field offices. Our ability to achieve revenue growth
in the future will depend on our ability to recruit and train sufficient
technical, customer and direct sales personnel. We have in the past and may in
the future experience difficulty in recruiting qualified sales, technical and
support personnel. Our inability to rapidly and effectively expand our direct
sales force and our technical and support staff could reduce or eliminate our
growth and cause our stock price to fall.

                                      27
<PAGE>

Our failure to manage our growth could adversely affect our business.

  The planned expansion of our operations will place a significant strain on
our management, financial controls, operations systems, personnel and other
resources. Our ability to manage our future growth, should it occur, will
depend in large part upon a number of factors including our ability to
rapidly:

  .  build and train our sales and marketing staff to create an expanding
     presence in the evolving enterprise information portal market, and keep
     them fully informed over time regarding the technical features, issues
     and key selling points of our products;

  .  develop our customer support capacity as sales of our products grow, so
     that we can provide customer support without diverting engineering
     resources from product development efforts; and

  .  expand our internal management and financial controls significantly, so
     that we can maintain control over our operations and provide support to
     other functional areas within Viador as the number of our personnel and
     size of our organization increases.

Our inability to achieve any of these objectives could adversely affect our
business.

We depend on technology licensed from third parties and, if we do not maintain
those license arrangements, this could result in delays in shipping our
products and services, which could harm our business.

  We license our search engine technology, which is integrated into the Viador
E-Portal Suite, from Infoseek. This technology provides users of our products
with the ability to search and classify information. We also license software,
that facilitates the retrieval of frequently changing real-time data, from On
Display. This software may not continue to be available on commercially
reasonable terms, or at all. Our loss of or inability to maintain either of
these technology licenses could result in delays in the sale of our products
and services until equivalent technology, if available, is identified,
licensed and integrated, which could harm our business.

  In addition, we license various Java-related software from Sun Microsystems,
which is the core technology upon which our products are based. In the event
that Sun were to discontinue or significantly alter its Java product, it would
impair our ability to provide product upgrades and develop new products.

We will need significant additional funds, which we may be unable to obtain on
terms acceptable to us or at all.

  The expansion and development of our business will require significant
capital to fund our operating losses, working capital needs and capital
expenditures. During the next twelve months, we expect to meet our cash
requirements with existing cash and cash equivalents and short-term
investments, the net proceeds from our initial public offering, cash flow from
sales of our services and proceeds from existing and future working capital
lines of credit and other borrowings. Our failure to generate sufficient cash
flows from sales of services or to raise sufficient funds may require us to
delay or abandon some or all of our development and expansion plans or
otherwise forego market opportunities.

  Future equity or debt financing may not be available to us on favorable
terms or at all. In addition, our credit agreements contain certain covenants
restricting our ability to incur further indebtedness and we have pledged some
of our assets as security for any borrowings thereunder. Future borrowing
instruments such as credit facilities and lease agreements are also likely to
contain similar or more restrictive covenants and will likely require us to
pledge assets as security for borrowings under those future arrangements. Our
inability to obtain additional capital on satisfactory terms may delay or
prevent the expansion of our business, which could cause our business and
prospects to suffer.


                                      28
<PAGE>

If our plan to sell software services over the internet as a substitute for
licensing our software fails, it could harm our business.

  In addition to licensing our software, we plan to sell software services to
customers over the internet. We would price these services on a per
transaction basis or on a subscription basis to companies seeking to avoid the
upfront cost of licensing software. This business model is unproven and
represents a significant departure from the strategies traditionally employed
by us and other software vendors. Our efforts to develop this business may
require significant management time and attention. In connection with this new
business model, we will contract with third-party service providers to perform
many of the necessary services, and we will be responsible for monitoring
their performance. If any service provider delivers inadequate support or
service to our customers, our reputation could be harmed.

  Even if our strategy to sell software services over the internet
successfully attracts customers, some of those internet customers may
otherwise have bought our software services through our traditional licensing
arrangements. Any shift in potential license revenue to our new business
model, which is unproven and potentially less profitable, could harm our
business.

If we are unable to hire and integrate new personnel, it will disrupt our
operations and impair our growth.

  We are in the process of hiring a number of financial and accounting
personnel. Once hired, these people will need time to familiarize themselves
with Viador and our accounting and sales practices. In addition, we anticipate
switching from our current accounting software to a more sophisticated
accounting and financial information software system in the near future. In
addition, we have grown from 61 employees at December 31, 1997 to 83 employees
at December 31, 1998 to 152 employees at December 31, 1999, and we expect to
continue to hire additional employees in order to grow our business. The
integration of new personnel has resulted and will continue to result in some
disruption to our ongoing operations. Our failure to complete this integration
in an efficient manner could harm our business and prospects.

  We also plan to hire additional personnel to establish and implement
corporate security processes and policies in light of our planned expansion of
our operations. If we are unable to hire and integrate these new personnel in
advance of our planned future growth, our business and prospects could suffer.

We may not be able to recruit and retain the personnel we need, which would
impair our growth.

  We are highly dependent on certain members of our management and engineering
staff, including, without limitation, our Chief Executive Officer, our Senior
Vice President of North American Operations, our Chief Technology Officer, our
Vice President of Marketing, our Vice President of Business Development and
our Chief Financial Officer. The loss of one or more of these officers might
impede the achievement of our business objectives. Furthermore, recruiting and
retaining qualified financial and technical personnel is critical to our
success. If our business grows, we will also need to recruit a significant
number of management, technical and other personnel for our business.
Competition for employees in our industry is intense. We may not be able to
continue to attract and retain skilled and experienced personnel on acceptable
terms.

If we are unable to effectively protect our proprietary rights, our
competitors may be able to copy important aspects of our products or product
presentation, which would undermine the relative appeal of our products to
customers and reduce our sales.

  We believe that proprietary rights are important to our business. We
principally rely upon a combination of patent, copyright, trademark and trade
secret laws as well as contractual restrictions to protect our proprietary
technology. We have filed applications seeking U.S. patents on two inventions.
However, patents for these inventions may not issue and it is possible that
these and any other patents issued to us may be circumvented by our
competitors or otherwise may not provide significant proprietary protection or
commercial advantage to us. Similarly, our trademark, service mark and
copyright rights may not provide significant proprietary protection or

                                      29
<PAGE>

commercial advantage to us, and the measures we take to maintain the
confidentiality of our trade secrets may be ineffective. If we are unable to
effectively protect our proprietary rights, our competitors may be able to
copy important aspects of our products or product message, which would
undermine the relative appeal of our products to customers and thus reduce our
sales.

If our products infringe upon the proprietary rights of others, we may be
forced to pay high prices to license new technology or stop selling our
products.

  Our commercial success will also depend in part on our not infringing the
proprietary rights of others and not breaching technology licenses that cover
technology used in our products. It is uncertain whether any third-party
proprietary rights will require us to develop alternative technology or to
alter our products or processes, obtain licenses or cease certain activities.
If any licenses of that type are required, we may not be able to obtain those
licenses on commercially favorable terms, if at all. Our failure to obtain a
license to any technology that we may require to commercialize our products
and services could cause our business and prospects to suffer. Litigation,
which could result in substantial cost to us, may also be necessary to enforce
any patents issued or licensed to us or to determine the scope and validity of
third-party proprietary rights.

We are at risk of Year 2000 issues

  We have not experienced any Year 2000-related disruption in the operation of
our systems. Although most Year 2000 problems should have become evident on
January 1, 2000, additional Year 2000-related problems may become evident in
the future and have a material adverse effect on our business and operations.
See Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Year 2000 Disclosure" beginning on page 22.

If our strategic relationships are discontinued, it may be more difficult for
us to maintain certain features of our products or reach particular customers
or markets.

  We have strategic relationships with IBM, Mitsui, Infoseek and others. For
more information regarding our recent strategic relationships, see Item 1.
"Business--Recent Developments." Our strategic relationship with IBM provides
us with marketing assistance. Our strategic relationship with Mitsui provides
us with distribution, marketing and sales assistance in Japan. Our strategic
relationship with Infoseek provides us access to technology and joint
marketing. Although our strategic relationships are a key factor in our
overall business strategy, our strategic partners may not view their
relationships with us as significant to their own businesses. There is a risk
that these parties may not perform their obligations as agreed. Our
arrangements with strategic partners generally do not establish minimum
performance requirements but instead rely on the voluntary efforts of our
partners. In addition, most of our agreements with strategic partners may be
terminated by either party with little notice. If our strategic relationships
are discontinued, it may be more difficult for us to maintain certain features
of our products or reach particular customers or markets.

                                      30
<PAGE>

                         Risks Related To Our Industry

The markets in which we compete are highly competitive and we may not be able
to compete effectively.

  The existing enterprise information portal software market is intensely
competitive. There are few substantial barriers to entry and we expect that we
will face additional competition from existing competitors in the future.
Moreover, if our approach is successful, it is likely that additional
competitors will enter the market. Some of these additional competitors may
have significantly more resources than we have, and may be able to devote the
resources necessary to independently develop technology that provides
equivalent or superior functionality compared to our products. For example, we
also compete against larger companies providing a suite of products targeting
business internet applications, including Microsoft and Oracle, who we expect
may provide products as part of their suite that compete with ours. To date,
we have faced competition and sales resistance from potential customers that
have developed or may develop in-house systems that may substitute for those
we offer.

  We also compete against providers of software products to businesses. These
providers may expand their technologies or acquire other companies to support
greater functionality and capability, particularly in the areas of query
response time and ability to support large numbers of users. We cannot assure
you that we will be able to successfully compete against current and future
competitors, or that competitive pressures we face will not materially
adversely affect our business, prospects, operating results and financial
condition.

If we fail to manage technological change or effectively respond to changes in
customer needs, demand for our products and services will drop and our
business will suffer.

  The market for enterprise information portals is still in an early stage of
development and is characterized by rapidly changing technology, evolving
industry standards, frequent new service and product introductions and changes
in customer demands. Our future success will depend to a substantial degree on
our ability to offer products and services that incorporate leading technology
and respond to technological advances and emerging industry standards and
practices on a timely and cost-effective basis. You should be aware that:

  .  our technology or systems may become obsolete upon the introduction of
     alternative technologies;

  .  the technological life cycles of our products are difficult to estimate;

  .  we may not have sufficient resources to develop or acquire new
     technologies or to introduce new services capable of competing with
     future technologies or service offerings; and

  .  the price of the products and services we provide may decline as rapidly
     as, or more rapidly than, the cost of any competitive alternatives.

  We may not be able to effectively respond to the technological requirements
of the changing market for enterprise information portals. To the extent we
determine that new technologies and equipment are required to remain
competitive, the development, acquisition and implementation of those
technologies and equipment are likely to continue to require significant
capital investment by us. We may not have sufficient capital for this purpose
in the future, and even if it is available, investments in new technologies
may not result in commercially viable technological processes and there may
not be commercial applications for those technologies. If we do not develop
and introduce new products and services and achieve market acceptance in a
timely manner, demand for our products and services will drop and our business
will suffer.

Our business and prospects will suffer if we are unable to adequately respond
to customer demands.

  We expect that our customers increasingly will demand additional information
and reports with respect to the services we provide. To meet these demands, we
must develop and implement an automated customer service system to enable
future sales growth. In addition, if we are successful in implementing our
marketing strategy, we also expect the demands on our technical support
resources to grow rapidly, and we may experience

                                      31
<PAGE>

difficulties in responding to customer demand for our services and providing
technical support in accordance with our customers' expectations. We expect
that these demands will require not only the addition of new management
personnel, but also the development of additional expertise by existing
management personnel and the establishment of long-term relationships with
third-party service vendors. We may not be able to keep pace with any growth,
successfully implement and maintain our operational and financial systems or
successfully obtain, integrate and utilize the employees, facilities, third-
party vendors and equipment, or management, operational and financial
resources necessary to manage a developing and expanding business in our
evolving and increasingly competitive industry. If we are unable to address
these customer demands, our business and prospects will suffer.

Our future success will depend upon the ability of our products to work with a
large variety of hardware, software, database and networking systems.

  We currently serve, and intend to continue to serve, a customer base with a
wide variety of hardware, software, database and networking systems. To gain
broad market acceptance, we believe that we must support an increased number
of systems in the future. We currently develop our products on Microsoft
Windows NT. Therefore, we experience a delay when we adapt our products to be
installed on other major servers. A delay in any rollout of our product onto a
new system could adversely affect our revenues and operating results. There
can be no assurance that we will adequately expand our data source and system
coverage to service potential customers, or that the expansion will be
sufficiently rapid to meet or exceed the system and data source coverage of
our competitors. The success of our products will depend on various factors,
including the ability of our products to integrate and be compatible with
customer systems, particularly hardware systems, operating systems and data
sources, as well as or better than competitive offerings. The success of our
products will also depend on the ability of our existing products to work well
with one another, with new products we are developing and with new software
being developed by third parties. We cannot assure you that we will
successfully develop and market product enhancements or new products that
respond to these technological changes, shifting customer tastes or evolving
industry standards, or that we will not experience difficulties that could
delay or prevent the successful development, introduction and marketing of
these products. If we are unable to develop and introduce new products or
enhancements of existing products in a timely manner or if we experience
delays in the commencement of commercial shipments of new products and
enhancements, our business will suffer.

If our stock price is volatile or decreases significantly, you may not be able
to sell your stock at a favorable price at any given time or ever.

  Stock prices and trading volumes for many internet-related companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations. This market
volatility, as well as general domestic or international economic, market and
political conditions, could materially adversely affect the price of our
common stock without regard to our operating performance. In addition, our
operating results may not meet the expectations of public market analysts and
investors. If this were to occur, the market price of our common stock would
likely decrease significantly. Volatility in our stock price may prevent you
from selling our stock at a favorable price at any given time or knowing the
appropriate time to sell our stock. If our stock price drops, it is possible
that you may never be able to sell our stock at a favorable price.

Our officers, directors and affiliates may be able to control all matters
submitted for stockholder approval, and you will be subject to their
decisions.

  Some of our stockholders own a large enough stake in us to have a
significant influence on the matters presented to stockholders. As a result,
these stockholders may be able to control all matters requiring stockholder
approval, including the election and removal of directors, the approval of
significant corporate transactions, such as any merger, consolidation or sale
of all or substantially all of our assets, and the control of our management
and affairs. Accordingly, that concentration of ownership may delay, defer or
prevent a change in control of Viador, impede a merger, consolidation,
takeover or other business combination involving Viador or discourage

                                      32
<PAGE>

a potential acquirer from making a tender offer or otherwise attempting to
obtain control of Viador, any of which could have a material adverse effect on
the market price of our common stock.

We have certain anti-takeover defenses that could prevent an acquisition of
our business that you might favor.

  Provisions of our certificate of incorporation and bylaws and the provisions
of Delaware law could have the effect of delaying, deferring or preventing an
acquisition of our business. For example, our board of directors is divided
into three classes to serve staggered three-year terms, we may authorize the
issuance of up to 10,000,000 shares of "blank check" preferred stock, our
stockholders may not take actions by written consent and our stockholders are
limited in their ability to make proposals at stockholder meetings.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Investment Portfolio

  Viador places its investments in instruments that meet high credit quality
standards, as specified in Viador's investment policy guidelines; the policy
also limits the amount of credit exposure to any one issue, issuer, or type of
instrument. Our interest income is sensitive to changes in the general level
of U.S. interest rates, particularly since the majority of our cash or cash
equivalent investments are in short-term instruments. Due to the short-term
nature of our investments, we believe that there is no material risk exposure.
At December 31, 1999, 1998 and 1997, our cash investments were all short-term
and had a weighted average interest rate ranging from 2.39% to 6.28% . The
fair value of our cash investments approximated the book value as of December
31, 1999, 1998 and 1997 of $44.7 million, $4.1 million, and $1.0 million,
respectively.

Impact of Foreign Currency Rate Change

  We develop products in the United States and market our products in North
America, Europe and the Asia-Pacific region. As a result, our financial
results could be affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in foreign markets. As all of our
sales are currently made in U.S. dollars, a strengthening of the dollar could
make our products less competitive in foreign markets. Our interest income is
sensitive to changes in the general level of U.S. interest rates, particularly
since the majority of our investments are in short-term instruments. 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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  The Financial Statements and Supplementary Data of Viador, Inc. required by
this item are set forth on the pages indicated for Item 14(a).

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

  Not applicable.

                                      33
<PAGE>

                                   PART III

  The Company's Proxy Statement for its 2000 Annual Meeting of Stockholders,
which, when filed pursuant to Regulation 14A under the Securities and Exchange
Act of 1934, will be incorporated by reference in this Annual Report on Form
10-K pursuant to General Instruction G(3) of Form 10-K, provides the
information required under Part III (Items 10, 11, 12 and 13), except for the
information with respect to the Company's executive officers who are not
directors, which is included in "Item 1. Business-Executive Officers of the
Registrant."

                                    PART IV

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

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

  1. Financial Statements

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
   <S>                                                                    <C>
   Independent Auditors' Report.......................................... F-2
   Balance Sheets as of December 31, 1999 and 1998....................... F-3
   Statements of Operations for the years ended December 31, 1999, 1998,
    and 1997............................................................. F-4
   Statements of Stockholders' Equity for the years ended December 31,
    1999, 1998, and 1997................................................. F-5
   Statements of Cash Flows for the years ended December 31, 1999, 1998,
    and 1997............................................................. F-6
   Notes to Financial Statements......................................... F-7
</TABLE>

  2. Financial Statement Schedule

  The following Financial Statement Schedule of the Registrant is filed as
part of this Report.

<TABLE>
   <S>                                                                       <C>
   Schedule II--Valuation and Qualifying Accounts........................... S-1
</TABLE>

  All other schedules are omitted because they are not applicable or the
required information is shown in the Financial Statements or notes thereto.

  3. Exhibits. The following Exhibits are filed as part of, or incorporated by
reference into, this Report:

<TABLE>
<CAPTION>
 Exhibit
   No.   Exhibit Title
 ------- -------------
 <C>     <S>
  *3.1   Form of Amended and Restated Certificate of Incorporation
  *3.2   Form of Amended and Restated Bylaws

  *4.1   Reference is made to Exhibit 3.1

  *4.2   Reference is made to Exhibit 3.2

  *4.3   Specimen Common Stock certificate

  *4.4   Amended and Restated Investors' Rights Agreement, among the Registrant
          and the parties listed on Schedule A thereto, dated May 21, 1999

 *10.1   Form of Amended and Restated 1997 Stock Option and Incentive Plan

 *10.2   Form of 1999 Stock Incentive Plan

 *10.3   Form of 1999 Employee Stock Purchase Plan

 *10.4   Form of Indemnification Agreement for Officers and Directors

 *10.5   Assignment of Lease, by and between the Registrant and Valley of
          California, Inc., and Consent to Assignment, dated as of December 16,
          1997 and related office leases
</TABLE>


                                      34
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
   No.   Exhibit Title
 ------- -------------
 <C>     <S>
 *10.6   Collateral Assignment, Patent Mortgage and Security Agreement, by and
          between the Registrant and Comerica Bank--California, dated March 4,
          1997

 *10.7   Revolving Credit Loan and Security Agreement, by and between the
          Registrant and Comerica Bank--California, dated March 17, 1999

 *10.8   SpaceSQL Version 4.0 License Agreement by and between the Registrant
          and IBM Corporation, dated September 18, 1998

 *10.9   Software Marketing and Distributorship Agreement by and between the
          Registrant and Mitsui & Co. Ltd, dated June 26, 1997

 *10.10  Variable Rate Single Payment Note by and between the Registrant and
          Comerica Bank--California, dated June 29, 1999

  10.11  Alza Corporation Sublease to Viador Inc., by and between the
          Registrant and Alza Corporation, dated January 31, 2000

  10.12  Stock Purchase Agreement, by and among Messrs. Andreas Zwimpfer, David
          Keat, Charles Fraefel, Chula de Silva and Tim Moser and the
          Registrant, dated January 20, 2000

  23.1   Consent of KPMG LLP, dated March 29, 2000

  27.1   Financial Data Schedule
</TABLE>
--------
* Incorporated by reference to the corresponding exhibits of the Registrant's
  Registration Statement on Form S-1 (File No. 333-84041) filed on October 25,
  1999.

  (b) Reports on Form 8-K.

  The Registrant did not file any reports on Form 8-K during the last quarter
of the fiscal year ended December 31, 1999.

  (c) See the Exhibit Index of this Form 10-K.

                                      35
<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 Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized on this
29th day of March 2000.

                                          VIADOR CORPORATION

                                                     /s/ Stan X. Wang
                                          By: _________________________________
                                                        Stan X. Wang
                                                       President and
                                                  Chief Executive Officer

                               POWER OF ATTORNEY

   KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stan Wang and Raja Venkatesh jointly
and severally, as such person's attorney-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Annual Report on Form 10-K and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorney-in-
fact, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. Pursuant to the requirements of the Securities Exchange
Act of 1934, this Form 10-K has been signed below by the following persons on
March 29, 2000 on behalf of the Registrant and in the capacities indicated:

<TABLE>
<CAPTION>
               Signature                          Title                 Date
               ---------                          -----                 ----

 <C>                                    <S>                        <C>
           /s/ Stan X. Wang             President, Chief           March 29, 2000
 ______________________________________  Executive Officer and
              Stan X. Wang               Director (Principal
                                         Executive Officer)

         /s/ Raja H. Venkatesh          Chief Financial Officer,   March 29, 2000
 _____________________________________   (Principal Financial
           Raja H. Venkatesh             Officer and Principal
                                         Accounting Officer)

            /s/ Teddy Kiang             Director                   March 29, 2000
 ______________________________________
              Teddy Kiang

          /s/ Dawn G. Lepore            Director                   March 29, 2000
 ______________________________________
             Dawn G. Lepore

          /s/ Chong Sup Park            Director                   March 29, 2000
 ______________________________________
             Chong Sup Park

        /s/ Virginia M. Turezyn         Director                   March 29, 2000
 ______________________________________
          Virginia M. Turezyn
</TABLE>

                                      36
<PAGE>

                                  VIADOR INC.

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Independent Auditors' Report.............................................  F-2

Balance Sheets as of December 31, 1999 and 1998..........................  F-3

Statements of Operations for the years ended December 31, 1999, 1998, and
 1997....................................................................  F-4

Statements of Stockholders' Equity for the years ended December 31, 1999,
 1998, and 1997..........................................................  F-5

Statements of Cash Flows for the years ended December 31, 1999, 1998, and
 1997....................................................................  F-6

Notes to Financial Statements............................................  F-7
</TABLE>

                                      F-1
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of Viador Inc.:

  We have audited the accompanying balance sheets of Viador Inc. (the
Company), as of December 31, 1999 and 1998, and the related statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1999. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Viador Inc., as of
December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1999,
in conformity with generally accepted accounting principles.

                                          /s/ KPMG LLP

Mountain View, California
January 20, 2000, except as to note 8,
 which is as of January 31, 2000

                                      F-2
<PAGE>

                                  VIADOR INC.

                                 BALANCE SHEETS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                               December 31
                                                             -----------------
                                                               1999     1998
                                                             --------  -------
<S>                                                          <C>       <C>
ASSETS

Current Assets:
  Cash and cash equivalents................................. $ 44,720  $ 4,181
  Accounts receivable, net of allowance of $208,000 and
   $53,000 in 1999 and 1998, respectively...................    5,435    2,404
  Other current assets......................................      320      --
                                                             --------  -------
    Total current assets....................................   50,475    6,585
  Property and equipment, net...............................    1,413      577
  Other assets..............................................      290       23
                                                             --------  -------
    Total assets............................................ $ 52,178  $ 7,185
                                                             ========  =======


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable.......................................... $    942  $   542
  Accrued liabilities.......................................    2,258      379
  Accrued vacation..........................................      548      186
  Deferred revenue..........................................    4,972    2,707
                                                             --------  -------
    Total liabilities.......................................    8,720    3,814


Bank borrowings, commitments and contingencies (Note 7)

Stockholders' equity:
  Convertible preferred stock, $0.001 par value; --
   10,000,000 and 5,208,333 shares authorized as of December
   31, 1999 and 1998, respectively; no shares and 4,306,866
   issued and outstanding as of December 31, 1999 and 1998,
   respectively; aggregate liquidation preferences of $0 and
   $12,441 as of December 31, 1999 and 1998, respectively...      --         4
  Common Stock, $0.001 par value; 100,000,000 and 16,666,667
   shares authorized as of December 31, 1999, and 1998
   respectively; 16,559,238 and 4,664,589 shares issued and
   outstanding as of December 31, 1999 and 1998,
   respectively.............................................       17        5
  Additional paid-in capital................................   68,255   14,221
  Deferred stock-based compensation.........................   (1,796)  (1,148)
  Treasury stock............................................      (34)     (34)
  Accumulated deficit.......................................  (22,984)  (9,677)
                                                             --------  -------
    Total stockholders' equity..............................   43,458    3,371
                                                             --------  -------
    Total liabilities and stockholders' equity.............. $ 52,178  $ 7,185
                                                             ========  =======
</TABLE>

                See accompanying notes to financial statements.

                                      F-3
<PAGE>

                                  VIADOR INC.

                            STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                                  ---------------------------
                                                    1999      1998     1997
                                                  ---------  -------  -------
<S>                                               <C>        <C>      <C>
Revenue:
  License........................................ $   7,320  $ 2,283  $   839
  Service........................................     2,831    1,542      743
                                                  ---------  -------  -------
    Total revenue................................    10,151    3,825    1,582
Cost of revenue..................................     2,691    1,387      903
                                                  ---------  -------  -------
    Gross profit.................................     7,460    2,438      679
                                                  ---------  -------  -------
Operating expenses:
  Sales and marketing............................    11,266    4,295    1,802
  Research and development.......................     5,931    2,481    1,351
  General and administrative.....................     2,940    1,365      936
  Amortization of stock-based compensation.......     1,254      445      --
                                                  ---------  -------  -------
    Total operating expenses.....................    21,391    8,586    4,089
                                                  ---------  -------  -------
    Operating loss...............................   (13,931)  (6,148)  (3,410)
Interest income..................................       624      134       68
Interest expense ................................       --      (197)      (6)
                                                  ---------  -------  -------
    Net loss..................................... $ (13,307) $(6,211) $(3,348)
                                                  =========  =======  =======
Basic and diluted net loss per share............. $   (2.20) $ (1.82) $ (1.34)
                                                  =========  =======  =======
Shares used in computing basic and diluted net
 loss per share..................................     6,043    3,416    2,495
                                                  =========  =======  =======
</TABLE>



                See accompanying notes to financial statements.

                                      F-4
<PAGE>

                                  VIADOR INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                     Convertible                                                            Notes               Total stock-
                   preferred stock     Common stock     Additional   Deferred             receivable   Accu-      holders'
                  ------------------ ------------------  paid-in   stock-based  Treasury     from     mulated      equity
                    Shares    Amount   Shares    Amount  capital   compensation  stock   stockholders deficit     (deficit)
                  ----------  ------ ----------  ------ ---------- ------------ -------- ------------ --------  -------------
<S>               <C>         <C>    <C>         <C>    <C>        <C>          <C>      <C>          <C>       <C>
Balances as of
 December 31,
 1996............        --    $--    4,591,678   $ 5    $   173     $   --       $--       $(127)    $   (118)    $   (67)
 Stock options
  exercised......        --     --       20,834    --          1         --        --         --           --            1
 Issuance of
  Series A
  convertible
  preferred
  stock..........  1,543,235     2          --     --      3,513         --        --         --           --        3,515
 Interest on
  notes
  receivable from
  stockholders...        --     --          --     --        --          --        --         (11)         --          (11)
 Net loss........        --     --          --     --        --          --        --         --        (3,348)     (3,348)
                  ----------   ---   ----------   ---    -------     -------      ----      -----     --------     -------
 Balances as of
  December 31,
  1997...........  1,543,235     2    4,612,512     5      3,687         --        --        (138)      (3,466)         90
 Stock options
  exercised......        --     --       78,996    --          8         --        --         --           --            8
 Repurchase of
  stock in
  settlement of
  notes
  receivable from
  founders.......        --     --      (26,919)   --         (1)        --        (34)        35          --          --
 Cancellation of
  stockholders
  notes..........        --     --          --     --        --          --        --         103          --          103
 Issuance of
  Series B
  convertible
  preferred stock
  net of $92
  issuance
  costs..........  2,763,631     2          --     --      8,528         --        --         --           --        8,530
 Deferred stock-
  based
  compensation
  related to
  stock option
  grants.........        --     --          --     --      1,593      (1,593)      --         --           --          --
 Amortization of
  stock-based
  compensation...        --     --          --     --        --          445       --         --           --          445
 Warrants for
  services
  performed......        --     --          --     --         88         --        --         --           --           88
 Options issued
  to
  nonemployees...        --     --          --     --        188         --        --         --           --          188
 Warrants issued
  in connection
  with bridge
  loan...........        --     --          --     --        130         --        --         --            --         130
 Net loss........        --     --          --     --        --          --        --         --        (6,211)     (6,211)
                  ----------   ---   ----------   ---    -------     -------      ----      -----     --------     -------
Balances as of
 December 31,
 1998............  4,306,866     4    4,664,589     5     14,221      (1,148)      (34)       --        (9,677)      3,371
 Stock options
  exercised......        --     --      395,784    --        197         --        --         --           --          197
 Issuance of
  Series C
  convertible
  preferred stock
  net of $38
  issuance
  costs..........  2,495,994     3          --     --     14,540         --        --         --           --       14,543
 Cashless
  exercise of
  warrants for
  preferred
  stock..........      2,923   --           --     --        --          --        --         --           --          --
 Issuance of
  common stock in
  public offering
  net of $4,168
  issuance
  costs..........        --     --    4,600,000     5     37,227         --        --         --           --       37,232
 Warrants for
  services
  performed......        --     --          --     --         37         --        --         --           --           37
 Preferred stock
  converted to
  common stock... (6,805,783)   (7)   6,805,783     7        --          --        --         --           --          --
 Options issued
  to
  nonemployees...        --     --          --     --         35         --        --         --           --           35
 Exercise of
  warrants.......        --     --       93,082    --         95         --        --         --           --           95
 Deferred stock-
  based
  compensation
  related to
  stock option
  grants.........        --     --          --     --      1,903      (1,903)      --         --           --          --
 Amortization of
  stock-based
  compensation...        --     --          --     --        --        1,255       --         --           --        1,255
 Net loss........        --     --          --     --        --          --        --         --       (13,307)    (13,307)
                  ----------   ---   ----------   ---    -------     -------      ----      -----     --------     -------
Balances as of
 December 31,
 1999............        --     --   16,559,238   $17    $68,255     $(1,796)     $(34)     $ --      $(22,984)    $43,458
                  ==========   ===   ==========   ===    =======     =======      ====      =====     ========     =======
</TABLE>

                See accompanying notes to financial statements.

                                      F-5
<PAGE>

                                  VIADOR INC.

                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                    Years Ended December 31
                                                    --------------------------
                                                      1999     1998     1997
                                                    --------  -------  -------
<S>                                                 <C>       <C>      <C>
Cash flows from operating activities:
  Net loss......................................... $(13,307) $(6,211) $(3,348)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
  Cancellation of stockholder notes................      --       103      --
  Issuance of options for services performed.......       35      188      --
  Interest on bridge loan..........................      --        63      --
  Interest on note receivable from stockholders....      --       --        11
  Warrants issued for services performed...........       37       88      --
  Amortization of discount on bridge loan..........      --       130      --
  Amortization of deferred stock-based
   compensation....................................    1,255      445      --
  Software sold in exchange for property and
   equipment.......................................      --       --       (22)
  Depreciation and amortization....................      635      248       89
  Changes in operating assets and liabilities:
    Accounts receivable............................   (3,031)    (931)  (1,342)
    Other assets...................................     (587)      52       (4)
    Accounts payable and accrued liabilities.......    2,641      360      261
    Deferred revenue...............................    2,265      626    2,020
                                                    --------  -------  -------
  Net cash used in operating activities............  (10,057)  (4,839)  (2,335)
                                                    --------  -------  -------
  Cash flows used in investing activities--
   acquisition of property and equipment...........   (1,471)    (484)    (342)
                                                    --------  -------  -------
Cash flows from financing activities:
  Proceeds from issuance of common stock...........   37,524        8        1
  Proceeds from issuance of preferred stock, net...   14,543    6,467    3,515
  Proceeds from bridge loan........................      --     1,870      --
  Proceeds from issuance of warrants...............      --       130      --
  Borrowing under line of credit...................      --       500      100
  Repayment under line of credit...................      --      (500)    (100)
  Repayment of loan from stockholder...............      --       --      (100)
                                                    --------  -------  -------
  Net cash provided by financing activities........   52,067    8,475    3,416
                                                    --------  -------  -------
Net increase in cash and cash equivalents..........   40,539    3,152      739
Cash and cash equivalents, beginning of year.......    4,181    1,029      290
                                                    --------  -------  -------
Cash and cash equivalents, end of year............. $ 44,720  $ 4,181  $ 1,029
                                                    ========  =======  =======
Supplemental disclosure of non cash financing
 activities:
  Repurchase of common stock in settlement of notes
   receivable from stockholders.................... $    --   $    35  $   --
                                                    ========  =======  =======
  Preferred stock issued upon conversion of bridge
   loan and accrued interest....................... $    --   $ 2,063  $   --
                                                    ========  =======  =======
  Preferred stock converted to common stock........ $      7  $   --   $   --
                                                    ========  =======  =======
  Deferred stock-based compensation................ $  1,903  $ 1,593  $   --
                                                    ========  =======  =======
</TABLE>

                See accompanying notes to financial statements.

                                      F-6
<PAGE>

                                  VIADOR INC.

                         NOTES TO FINANCIAL STATEMENTS

                       December 31, 1999, 1998, and 1997

(1) Business of the Company

  Viador Inc. (the Company) was incorporated as Infospace Inc. in California
in December 1995. In 1999, the Company changed its name to Viador Inc. and
reincorporated in the State of Delaware. The Company develops web-based
products designed to search, analyze and deliver relevant information to users
within and outside an enterprise.

(2) Summary of Significant Accounting Policies

 (a) 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 expenses during the reporting period.
Actual results could differ from those estimates.

 (b) Revenue Recognition

  The Company has adopted Statement of Position (SOP) 97-2, Software Revenue
Recognition, as amended by SOP 98-9. SOP 97-2 as amended, generally requires
revenue earned on software arrangements involving multiple elements to be
allocated to each element based on the relative fair value of the elements.

  The Company licenses its products to end user customers, original equipment
manufacturers (OEM) and value added resellers (VAR). Software license revenue
from sales to end users is generally recognized upon receipt of a signed
contract or purchase order and delivery of the software, provided the related
fee is fixed and determinable and collectibility of the fee is probable and
vendor-specific objective evidence for all elements has been established. The
Company has established sufficient vendor-specific objective evidence to
ascribe a value to consulting services and post-contract customer support
based on the price charged when these elements are sold separately.
Accordingly, in accordance with the provisions of SOP 98-9, license revenue is
recorded under the residual method described in SOP 98-9 for arrangements in
which licenses are sold with consulting services, post-contract customer
support or both. However, the entire fee related to arrangements that require
the Company to deliver specified additional features or upgrades is deferred
until delivery of the feature or upgrade has occurred, because the Company
does not have sufficient vendor-specific objective evidence of fair value to
allocate revenue to the various elements in such arrangements. All of the
contract software revenue related to arrangements involving consulting
services that are essential to the functionality of the software at the
customer site is deferred until the consulting services have been completed
and customer acceptance has been obtained using the completed contract method.

  Contract software revenue related to arrangements to maintain the
compatibility of the company's software products with the software products or
platforms of the customer or other vendor is recognized ratably over the term
of the arrangement. License revenue from OEM and VAR arrangements in which the
Company earns a royalty based on a specified percentage of OEM and VAR sales
to end users incorporating the Company's software is recognized upon delivery
to the end user. Nonrefundable prepaid royalty fees received by the Company
from OEM and VAR customers are deferred and recognized as the end user sales
are reported to the Company by the OEM or VAR, unless the Company has an
arrangement to maintain the compatibility of its software products with the
software products or platforms of the OEM or VAR. In that case, due to the
Company's software compatibility obligation, the prepaid royalty fees are
recognized as the end user sales are reported to the Company by the OEM or VAR
but limited to no more than the fee that would be recognizable on a cumulative
basis if the entire fee was being recognized ratably over the term of the
arrangement.


                                      F-7
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

  Service revenue consists of fees from professional services and from
maintenance and support. Professional services include integration of
software, application development, training and software installation. We bill
professional services fees either on a time and materials basis or on a fixed-
price schedule. Professional services fees are generally recognized as the
services are performed except as described above where such services are
essential to the functionality of software sold as part of the arrangement.
Clients typically purchase maintenance agreements annually, and maintenance
agreements are priced based on a percentage of the product license fee. The
Company recognizes revenue from maintenance and support agreements ratably
over the term of the agreement, which is typically one year.

  Cost of service revenue includes salaries and related expenses for
consulting services, customer support, implementation and training services
organizations, costs of contracting with third parties contracted to provide
consulting services to customers. Cost of license revenue includes royalties
due to third parties for integrated technology, the cost of manuals and
product documentation, production media used to deliver our products and
shipping costs, including the costs associated with the electronic
transmission of software to new customers and an allocation of our facilities,
communications and depreciation expenses. Costs of license revenues have not
been significant to date.

 (c) Cash and Cash Equivalents

  Cash and cash equivalents consists of cash and highly liquid investments
such as money market funds purchased with remaining maturities of three months
or less. The Company is exposed to credit risk in the event of default by the
financial institutions or the issuers of these investments to the extent of
the amounts recorded on the balance sheet.

 (d) Financial Instruments and Concentration of Credit Risk

  The carrying value of the Company's financial instruments, including cash
and cash equivalents and accounts receivable approximates fair market value.
Financial instruments that subject the Company to concentrations of credit
risk consist primarily of cash and cash equivalents and trade accounts
receivable.

   The Company sells its products and services to customers in diversified
industries. Credit risk is concentrated in North America and Asia. The Company
performs ongoing credit evaluations of its customer's financial condition and,
generally, requires no collateral from its customers. The Company maintains
reserves to provide for estimated credit losses. Actual credit losses could
differ from such estimates.

 (e) Property and Equipment

  Property and equipment are recorded at cost less accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method
over the estimated useful lives of the respective assets generally three to
five years. Leasehold improvements are amortized on a straight line basis over
the shorter of the estimated useful lives of the assets or the lease term.

 (f) Software Development Costs

  In accordance with Statement of Financial Accounting Standards (SFAS) No.
86, Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed, development costs incurred in the research and development
of software products are expensed as incurred until technological feasibility
in the form of a working model has been established. As of December 31, 1999,
technological feasibility was established concurrent with the general release
of the software and therefore, no costs have been capitalized.


                                      F-8
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

  The Company accounts for the costs of computer software developed or
obtained for internal use in accordance with Statement of Position 98-1 (SOP
98-1), "Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use," which was effective for fiscal years beginning after
December 15, 1998. This statement requires that certain costs incurred during
a software development project be capitalized. These costs generally include
external direct costs of materials and services consumed in the project and
internal costs such as payroll and benefits of those employees directly
associated with the development of the software. Though the adoption of SOP
98-1 required the Company to modify its method of accounting for software, it
did not have a material impact in its financial statements.

 (g) Impairment of Long-Lived Assets

  The Company evaluates its long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount of the assets or fair value less costs to sell.

 (h) Income Taxes

  The Company utilizes the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be recovered.

 (i) Defined Contribution Plan

  The Company has a defined contribution retirement plan under Section 401(k)
of the Internal Revenue Code which covers substantially all employees.
Eligible employees may contribute amounts to the plan, via payroll
withholding, subject to certain limitations. Under the 401(k) plan, employees
may elect to reduce their current compensation by up to the statutorily
prescribed annual limit and to have the amount of such reduction contributed
to the 401(k) plan. The 401(k) plan permits, but does not require, additional
matching contributions to the 401(k) plan by the Company on behalf of all
participants in the 401(k) plan. To date, the Company has not made any
matching contributions to the 401(k) plan.

 (j) Stock-Based Compensation

  The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations, in accounting for
its fixed employee plan stock options. As such, compensation expense would be
recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. SFAS No. 123, "Accounting for
Stock-Based Compensation," established accounting and disclosure requirements
using a fair value-based method of accounting for stock-based employee
compensation plans. As allowed by SFAS No. 123, the Company has elected to
continue to apply the intrinsic value-based method of accounting described
above, and has adopted the disclosure requirements of SFAS No. 123.


                                      F-9
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

 (k) Advertising Expense

  The cost of advertising is generally expensed as incurred. Such costs are
included in sales and marketing expense and totaled approximately $935,000,
$273,000, and $114,000 for the years ended December 31, 1999, 1998, and 1997,
respectively.

 (l) Comprehensive Income

  The Company has no material components of other comprehensive income (loss)
for all periods presented.

 (m) 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
excluding shares of restricted stock subject to repurchase and, when dilutive,
potential common shares from restricted stock options and warrants to purchase
common stock using the treasury stock method and from convertible securities
using the "as if converted" basis. The following potential common shares have
been excluded from the computation of diluted net loss per share for all
periods presented because the effect would have been antidilutive (in
thousands):

<TABLE>
<CAPTION>
                                                                Year Ended
                                                               December 31,
                                                             -----------------
                                                             1999  1998  1997
                                                             ----- ----- -----
   <S>                                                       <C>   <C>   <C>
   Shares issuable under stock options...................... 3,966 3,045 2,823
   Shares of restricted stock subject to repurchase.........   925   765 1,636
   Shares issuable pursuant to warrants to purchase common
    and convertible preferred stock.........................   --     90   --
   Shares of convertible preferred stock on an "as if
    converted" basis........................................   --  4,310 1,545
</TABLE>

  The weighted-average exercise price of stock options was $3.24, $0.12, and
$0.05 for the years ended December 31, 1999, 1998 and 1997, respectively. The
weighted-average purchase price of restricted stock was $0.02 for all periods
presented. The weighted-average exercise price of the warrants was $0.70 for
the year ended December 31, 1998. There were no warrants outstanding during
the year ended December 31, 1997.

 (n) Initial Public Offering and Reverse Stock Split

  On October 25, 1999 the Company completed an initial public offering (IPO)
of 4,600,000 shares at a price of $9.00 per share; proceeds net of direct
issuance costs amounted to $37,232,000. On the IPO date, the Company effected
a 1-for-2.4 reverse stock split of its common stock. The accompanying
financial statements have been retroactively restated to give effect to the 1-
for-2.4 reverse stock split.

 (o) Recent Accounting Pronouncements

  In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133 establishes accounting and reporting standards for derivative
financial instruments and hedging activities related to those instruments, as
well as other hedging activities. Because the Company does not currently hold
any derivative instruments and does not engage in hedging activities, the
Company expects that the adoption of SFAS No. 133 will not have a material
impact on

                                     F-10
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

its financial position, results of operations, or cash flows. The Company will
be required to adopt SFAS No. 133 in fiscal 2001.

 (p) Reclassifications

  Certain prior year balances have been reclassified to conform to the current
year presentation.

(3) Property and Equipment

  A summary of property and equipment consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                     December
                                                                        31,
                                                                    -----------
                                                                     1999  1998
                                                                    ------ ----
   <S>                                                              <C>    <C>
   Computers and software.......................................... $1,492 $608
   Furniture and fixtures..........................................    697  120
   Leasehold improvements..........................................    214  204
                                                                    ------ ----
                                                                     2,403  932
   Less accumulated depreciation and amortization..................    990  355
                                                                    ------ ----
                                                                    $1,413 $577
                                                                    ====== ====
</TABLE>

(4) Stockholders' Equity

 (a) Convertible Preferred Stock

  All of the then outstanding shares of the Company's convertible preferred
stock was automatically converted into .417 shares of common stock upon the
closing of the Company's initial public offering on October 25, 1999.

  The rights, preferences, privileges, and restrictions of Series A, B and C
convertible preferred stock prior to conversion were as follows:

  .  Each share of convertible preferred stock was convertible at the option
     of the holder, at any time after the date of issuance, into one share of
     common stock,subject to adjustment for certain dilutive events. Each
     share has voting rights equal to the common stock on an "as-if-
     converted" basis.

  .  Series A, B, and C convertible preferred stockholders were entitled to
     noncumulative dividends of $0.10, $0.13 and $0.15 per share per annum,
     respectively, when and if declared by the Company's Board of Directors.

  .  Each share of Series A, B and C convertible preferred stock had a
     liquidation preference of $2.47, $3.12 and $5.84 per share,
     respectively, plus any declared but unpaid dividends over holders of
     common stock.

  In 1998, the Company issued $2,000,000 in convertible bridge notes, bearing
9% interest, payable to certain preferred stockholders. The full amount of the
notes plus accrued interest payable of $63,000 was converted into 979,400
shares of Series B preferred stock. In conjunction with the issuance of the
convertible notes, the Company issued warrants to purchase 62,500 common stock
at an exercise price of $0.72 per share. The $130,000 fair value assigned to
the warrants and related discount on the notes was determined using the Black-
Scholes option pricing model using the following assumptions: no dividends;
contractual life of 5 years; risk-free interest rate of 6.9%; and expected
volatility of 65%. The discount on the notes payable was amortized to interest
expense over the period the notes were outstanding. The warrants expired upon
the completion of the initial public offering in October 1999.

                                     F-11
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


  In 1999, the Company issued 2,495,994 shares of Series C convertible
preferred stock for $5.84 per share resulting in gross proceeds to the Company
of approximately $14,581,000. The rights, preferences, and privileges of the
holders of Series C preferred stock were the same as the holders of Series A
and B convertible preferred stock discussed above, except that the dividend
rate was $0.15 per share, and the liquidation preference was $5.84 per share.
The Series C preferred stock was converted into common stock upon completion
of the initial public offering in October 1999.

 (b) Stock Plans

  The Company's Board of Directors adopted the 1999 Stock Incentive Plan (the
1999 Plan) on July 20, 1999 under which 7,000,000 shares have been reserved
for issuance. The number of shares reserved under the Incentive Plan will
automatically increase beginning on January 1 of each year by the lesser of 5%
of the total number of shares outstanding or 3,000,000 shares; the increase in
the number of shares reserved as of January 1, 2000 was 827,962. The Incentive
Plan, which has five separate programs, allows non-employee board members,
executive officers and other highly compensated employees to purchase shares
using a portion of their salary or retainer fee. The Incentive Plan allows
eligible employees to be issued shares of common stock directly, upon the
attainment of performance milestones or the completion of services. The
Incentive Plan also allows automatic option grants at periodic intervals to
eligible non-employee board members to purchase shares of common stock. As of
December 31, 1999, there were 2,541,319 additional shares available for grant
under the 1999 plan.

  The incentive stock options under the Plan can be exercised at a price of at
least 85% of the stock's fair market value on the date of grant for employees
owning less than 10% of the voting power of all classes of stock, and at least
110% of the fair market value on the date of grant for employees owning more
than 10% of the voting power of all classes of stock. Under the Plan, options
generally expire in 10 years. However, the term of the options may be limited
to 5 years if the optionee owns stock representing more than 10% of the voting
power of all classes of stock. Vesting periods are determined by the Company's
Board of Directors and generally provide for shares to vest ratably over a 3
to 4 year period.

  In 1998, the Company repurchased 26,920 shares of common stock at prices
ranging from $0.11 to $1.44 per share in settlement of $35,000 notes
receivable from two stockholders and forgave notes receivable from five other
stockholders totaling $103,000 for the return of 181,414 unvested stock
options. The Company recorded a $103,000 compensation charge for the
forgiveness of the notes. The Company also issued options to purchase 94,783
shares of common stock at exercise prices ranging from $0.05 to $0.24 to non-
employees for services performed. The fair value of the options at the vesting
date was determined to be $188,000 using the Black-Scholes option pricing
model using the following assumptions: no dividends; contractual life of 10
years; risk-free interest rate of 6.9%; and expected volatility of 65%. The
fair value of the options was charged to expense in 1998 as the related
services were performed.

  In 1999, the Company issued options to purchase 12,691 shares of common
stock at exercise prices ranging from $0.24 to $10.01 to non-employees for
services performed. The fair value of the options at the vesting date was
determined to be $35,000 using the Black-Scholes option pricing model using
the following assumptions: no dividends; contractual life of 10 years; risk-
free interest rate of 5.6%; and expected volatility of 65%. The fair value of
the options was charged to expense in 1999 as the related services were
performed.

                                     F-12
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


  A summary of the status of the Company's options under the 1999 Plan is as
follows:

<TABLE>
<CAPTION>
                                           Years Ended December 31,
                          -------------------------------------------------------------
                                 1999                 1998                1997
                          -------------------- ------------------- --------------------
                                     Weighted-            Weighted            Weighted-
                                      average             average              average
                                     exercise             exercise            exercise
                           Shares      price    Shares     price    Shares      price
                          ---------  --------- ---------  -------- ---------  ---------
<S>                       <C>        <C>       <C>        <C>      <C>        <C>
Outstanding at beginning
 of period..............  3,045,363    $0.12   2,822,481   $0.05   2,364,583    $0.05
Granted.................  1,394,849     9.39     723,737    0.26     570,580     0.10
Exercised...............   (395,784)    0.58     (78,990)   0.10     (20,833)    0.05
Canceled................    (78,339)    3.33    (421,865)   0.05     (91,849)    0.05
                          ---------            ---------           ---------
Outstanding at end of
 period.................  3,966,089     3.24   3,045,363    0.12   2,822,481     0.05
                          ---------            ---------           ---------
Options vested and
 exercisable at end of
 period.................  2,335,966     0.20   1,780,226    0.07     854,941     0.05
                          ---------            ---------           ---------
Weighted-average fair
 value of options
 granted during the
 period with exercise
 prices equal to fair
 value at date of
 grant..................               $1.47               $ --                 $0.02
Weighted-average fair
 value of options
 granted during the
 period with exercise
 prices less than fair
 value at date of
 grant..................               $4.30               $1.73                $ --
</TABLE>

  As of December 31, 1999, the range of exercise prices and weighted-average
remaining contractual life of outstanding options were as follows:

<TABLE>
<CAPTION>
                              Options outstanding          Options exercisable
                       ---------------------------------- ---------------------
                                    Weighted-
                                     average    Weighted-             Weighted-
                                    remaining    average               average
                         Number    contractual  exercise    Number    exercise
   Exercise prices     outstanding life (years)   price   exercisable   price
   ---------------     ----------- -----------  --------- ----------- ---------
   <S>                 <C>         <C>          <C>       <C>         <C>
   $0.05..............  2,047,387     6.73         0.05    1,994,254     0.05
    0.24..............    591,791     8.30         0.24      270,311     0.24
    0.62..............    150,139     9.03         0.62       29,642     0.62
    5.28..............    450,453     9.46         5.28       25,853     5.28
    9.00..............    273,826     9.81         9.00       15,000     9.00
   10.01..............    342,227     9.63        10.01          906    10.01
   29.00..............     23,642     9.88        29.00          --       --
   41.25..............     86,624     9.99        41.25          --       --
                        ---------                          ---------
                        3,966,089                          2,335,966
                        =========                          =========
</TABLE>

 (c) Warrants

  In 1998, the Company issued warrants to purchase 12,500 shares of common
stock at an exercise price of $0.72 per share in exchange for services. These
warrants expired upon the initial public offering of the Company's common
stock. The $39,000 fair value of the warrants was determined using the Black-
Scholes option pricing model using the following assumptions: no dividends;
contractual life of 5 years; risk-free interest rate of 6.5%; and expected
volatility of 65%. The fair value of the warrants was charged to expense in
1998 as the related services were performed.


                                     F-13
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

  In 1998, the Company issued warrants to purchase 14,760 shares of common
stock at prices ranging from $0.24 to $0.62 per share in exchange for services
performed in 1998. These warrants expired upon the initial public offering of
the Company's common stock. The $49,000 fair value of the warrants was
determined using the Black-Scholes option pricing model, using the following
assumptions: no dividends; contractual life of 5 years; risk-free interest
rate of 6.5%; and expected volatility of 65%. The fair value of the warrants
was charged to expense in 1998 as the related services were performed.

  In 1999, the Company issued warrants to purchase 4,007 shares of Series C
preferred stock at a price of $5.84 per share in exchange for services; the
Company also issued 3,479 warrants to purchase common stock at a price of
$0.62 per share in exchange for services. These warrants were fair valued at
$15,000 and $22,000, respectively, and expired upon the initial public
offering of the Company's common stock. There were no outstanding warrants as
of December 31, 1999. The fair value of the warrants was determined using the
Black-Scholes option pricing model using the following assumptions: no
dividends; contractual life of 5 years; risk-free interest rate of 5.6%; and
expected volatility of 65%. The fair value of the warrants was charged to
expense in 1999 as the related services were performed.

 (d) Stock-Based Compensation

  The Company uses the intrinsic-value method in accounting for its employee
stock-based compensation plans. Accordingly, no compensation cost has been
recognized for any of its stock options granted or restricted stock sold
because the exercise price of each option or purchase price of each share of
restricted stock equaled or exceeded the fair value of the underlying common
stock as of the grant date, except for stock options granted and restricted
stock sold from September 1998 through June 1999. With respect to the stock
options granted and restricted stock sold from September 1998 to June 1999,
the Company recorded deferred stock compensation of $3,496,000 for the
difference at the grant or issuance date between the exercise price of each
stock option granted or purchase price of each restricted share sold and the
fair value of the underlying common stock. This amount is being amortized on
an accelerated basis over the vesting period, generally 48 months. The
amortization of deferred stock compensation, combined with expense associated
with stock options granted to non-employees, relates to the following items in
the accompanying statements of operations (in thousands):

<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                     December
                                                                        31,
                                                                    -----------
                                                                    1999  1998
                                                                    ---- ------
<S>                                                                 <C>  <C>
Cost of revenue.................................................... $ 40 $  113
Research and development...........................................  159    427
Sales and marketing................................................  311    638
General and administrative.........................................  123    112
                                                                    ---- ------
    Total.......................................................... $633 $1,290
                                                                    ==== ======
</TABLE>

  There was no amortization of deferred stock compensation nor expense
associated with stock options granted to non-employees in 1997.

                                     F-14
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


  Had compensation costs been determined in accordance with SFAS No. 123 for
all of the Company's stock-based compensation plans, net loss and basic and
diluted net loss per share would have been as follows (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                                    --------------------------
                                                      1999     1998     1997
                                                    --------  -------  -------
   <S>                                              <C>       <C>      <C>
   Net loss:
     As reported................................... $(13,307) $(6,211) $(3,348)
     Pro forma.....................................  (15,284)  (6,229)  (3,357)
   Basic and diluted net loss per share:
     As reported................................... $  (2.20) $ (1.82) $ (1.34)
     Pro forma.....................................    (2.53)   (1.82)   (1.35)
</TABLE>

  For all grants that were granted prior to the Company's initial public
offering in October 1999, the fair value of these options was determined using
the minimum value method, which assumes no volatility except for non-
employees. The fair value for the options granted subsequent to the Company's
initial public offering was estimated at the date of grant using a Black-
Scholes option pricing model. The fair value of the Company's stock based
awards was estimated assuming no expected dividends and the following
weighted-average assumptions:

<TABLE>
<CAPTION>
                                                     Years Ended December 31,
                                                   -----------------------------
                                                     1999      1998      1997
                                                   --------- --------- ---------
     <S>                                           <C>       <C>       <C>
     Expected Life................................ 3.9 years 4.1 years 4.6 years
     Risk-free interest rate......................   5.7%      5.6%      6.5%
     Volatility...................................  88.67%      65%       65%
</TABLE>

 (e) Employee Stock Purchase Plan

  The Company's Board of Directors adopted the Employee Stock Purchase Plan
(the Purchase Plan) on July 20, 1999 under which 300,000 shares have been
reserved for issuance. The Purchase Plan has been approved by the
stockholders. The number of shares reserved under the Purchase Plan will
automatically increase beginning on January 1 of each year by the lesser of an
amount equal to 2% of the total number of outstanding shares, or 800,000
shares; the increase in the number of shares reserved as of January 1, 2000
was to 331,185. Under the Purchase Plan, eligible employees may purchase
common stock in an amount not to exceed 15% of an employee's cash
compensation. The purchase price per share will be 85% of the common stock
fair value at the lower of certain plan defined dates.

  As of December 31, 1999 approximately $300,000 was withheld from employee
payroll for the first purchase of shares expected on April 30, 2000.

                                     F-15
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


(5) Income Taxes

  The differences between the income tax benefit computed at the federal
statutory rate and the Company's tax provision for all periods presented
primarily relate to net operating losses not benefited.

  The types of temporary differences that give rise to significant portions of
the Company's deferred tax assets and liabilities as of December 31, 1999,
1998 and 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                     1999     1998     1997
                                                    -------  -------  -------
     <S>                                            <C>      <C>      <C>
     Deferred tax assets:
       Reserves and accruals....................... $   684  $   523  $   116
       Net operating loss and tax credit
        carryforwards..............................   8,932    3,266    1,366
                                                    -------  -------  -------
       Gross deferred tax assets...................   9,616    3,789    1,482
       Less: valuation allowance...................  (9,616)  (3,788)  (1,474)
                                                    -------  -------  -------
         Total deferred tax assets.................     --         1        8
     Deferred tax liabilities--property and
      equipment....................................     --        (1)      (8)
                                                    -------  -------  -------
         Net deferred tax assets................... $   --   $   --   $   --
                                                    =======  =======  =======
</TABLE>

  In light of the Company's recent history of operating losses, the Company
has provided a valuation allowance for its net deferred tax assets as it is
presently unable to conclude that it is more likely than not that the deferred
tax assets will be realized. The net change in the total valuation allowance
for the year ended December 31, 1999 and 1998 was an increase of $5,828,000
and $2,314,000, respectively.

  As of December 31, 1999, the Company has net operating loss carryforwards
for federal and state income tax purposes of approximately $19 million and $18
million, respectively, available to reduce future income subject to income
taxes. The federal net operating loss carryforwards expire beginning in 2012
through 2019. The state net operating loss carryforwards expire beginning in
2003.

  As of December 31, 1999, the Company also has research credit carryforwards
for federal and state income tax purposes of approximately $451,000 and
$354,000, respectively, available to reduce future income taxes. The federal
research credit carryfoward expire beginning in 2011 through 2019. The
research credit carryforwards for state purposes carry forward indefinitely
until utilized. The Company has a foreign tax credit carryforward for federal
tax purposes in the amount of $20,000. The foreign tax credit carryforward
expires in 2002.

  Federal and state tax laws impose substantial restrictions on the
utilization of net operating loss carryforwards in the event of an "ownership
change" as defined in Section 382 of the Internal Revenue Code. If the Company
has an ownership change, utilization of the above mentioned carryforwards
could be reduced significantly.

(6) Geographic, Segment and Significant Customer Information

  The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 131, Disclosures about Segments of an Enterprise and Related Information.
SFAS No. 131 establishes standards for the manner in which public companies
report information about operating segments in annual and interim financial
statements. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The method for
determining what information to report is based on the way management
organizes the operating segments within the Company for making operating
decisions and assessing financial performance.

  The Company's chief operating decision-maker is considered to be the chief
executive officer (CEO). The CEO reviews financial information presented on an
entity level basis accompanied by disaggregated information

                                     F-16
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

about revenues by product type and certain information about geographic
regions for purposes of making operating decisions and assessing financial
performance. The entity level financial information is identical to the
information presented in the accompanying statements of operations. Therefore,
the Company has determined that it operates in a single operating segment:
Enterprise information portal systems. The disaggregated information reviewed
on a product basis by the CEO is as follows (in thousands):

<TABLE>
<CAPTION>
                                                            Year Ended December
                                                                    31,
                                                           ---------------------
                                                            1999    1998   1997
                                                           ------- ------ ------
   <S>                                                     <C>     <C>    <C>
   Revenue
     License.............................................. $ 7,320 $2,283 $  839
     Services:
       Consulting.........................................   1,694  1,112    638
       Maintenance........................................   1,137    430    105
                                                           ------- ------ ------
                                                           $10,151 $3,825 $1,582
                                                           ======= ====== ======
</TABLE>

  Significant customer information is as follows:

<TABLE>
<CAPTION>
                                                Percentage of
                                                Total Revenue
                                                ----------------    Percentage of
                                                  Year Ended       Total Accounts
                                                 December 31,        Receivable
                                                ----------------  -----------------
                                                1999  1998  1997  December 31, 1999
                                                ----  ----  ----  -----------------
   <S>                                          <C>   <C>   <C>   <C>
   Customer A..................................   8%   15%    5%           2%
   Customer B..................................   4%   11%   10%          --
</TABLE>

  Revenues aggregating 3% of total revenue for the year ended December 31,
1999 were generated from a customer who is also a stockholder of the Company,
and whose ownership percentage was 3.7% as of December 31, 1999.

  The Company markets its products from its operations in North America.
International sales are primarily to customers in Canada, Europe and Asia
Pacific. Revenues derived from international sales were 6%, 12% and 14% of
total revenue for the years ended December 31, 1999, 1998 and 1997. Sales did
not exceed 3% for any one country outside of North America in any period
presented.

(7) Bank Borrowings, Commitments and Contingencies

  In 1999, the Company entered into a $2,000,000 bank line of credit.
Borrowings under the agreement bear interest at the bank's base rate, as
announced by the bank from time to time, plus 1%. In 1999 the Company also
entered into a revolving equipment loan in the amount of $500,000. This loan
bears interest at the bank's base rate, as announced by the bank from time to
time, plus 1.25%. As of December 31, 1999, the Company had no balances
outstanding under the line of credit or the equipment loan. The loans are
based on a percentage of qualified outstanding accounts receivable and is
secured by a security interest in certain of the Company's intellectual
property.


                                     F-17
<PAGE>

                                  VIADOR INC.

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

  The Company leases its facilities and certain equipment under noncancelable
operating lease agreements. Rent expense was approximately, $528,000, $293,000
and $103,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. Future minimum lease payments under noncancelable operating
leases for the next five years and thereafter are as follows:

<TABLE>
<CAPTION>
                                                                   December 31
                                                                  --------------
                                                                  (in thousands)
       <S>                                                        <C>
       2000......................................................    $ 3,906
       2001......................................................      4,066
       2002......................................................      4,156
       2003......................................................      4,229
       2004......................................................      4,319
       Thereafter................................................        360
                                                                     -------
          Total..................................................    $21,036
                                                                     =======
</TABLE>

  During 1999 the Company entered into software marketing and distribution
agreements with distributors located in Germany and Hong Kong. Some of the
agreements include a buyout obligation that can be exercised by the
distributor following the third anniversary of the agreement if minimum sales
quotas and certain conditions have been met. As of December 31, 1999, no sales
have been reported by the distributors.

(8) Subsequent Events

  On January 20, 2000, the Company acquired a European distributor for
$2,000,000 in cash and notes.

  In January 2000, the Company issued a warrant to a third party as
consideration for entering into a joint marketing, training and product
implementation arrangement. The warrant is for 50,000 shares of Viador common
stock at a price of $45 per share, exerciseable at any time prior to January
2002. The $621,600 fair value of the warrant was determined using the Black-
Scholes option pricing model using the following assumptions: no dividends;
contractual life of 2 years; risk-free interest rate of 5.8%; and expected
volatility of 88.67%. The fair value of the warrant will be amortized to
marketing expense over the seven year term of the arrangement.

  In late January 2000, the Company entered into a facilities lease agreement
expiring in January 2005 which includes monthly base rental payments ranging
from $250,000 to $281,000 per month plus a proportionate share of taxes,
insurance and other expenses. In connection with the lease, the Company issued
a warrant to the landlord for 50,000 shares of Viador common stock at a price
of $17.88 per share, exerciseable at any time prior to January 2001. The
$907,050 fair value of the warrant was determined using the Black-Scholes
option pricing model using the following assumptions: no dividends;
contractual life of 1 year risk-free interest rate of 5.8%; and expected
volatility of 88.67%. The fair value of the warrant will be amortized over 5
years to rent expense. The Company also issued a letter of credit secured by a
certificate of deposit for $1,688,718 to the landlord for the term of the
lease as a security deposit.

                                     F-18
<PAGE>

                               VIADOR CORPORATION

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

              For the Years Ended December 31, 1999, 1998 and 1997
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                        Balance
                              Balance at  Costs                         at End
                              Beginning    and                            of
Classification                of Period  Expenses Deductions/Write-Offs Period
--------------                ---------- -------- --------------------- -------
<S>                           <C>        <C>      <C>                   <C>
For the year 1999
  Allowance for doubtful
   accounts..................    $53       $237           $ (82)         $208
For the year 1998
  Allowance for doubtful
   accounts..................    $50       $108           $(105)         $ 53
For the year 1997
  Allowance for doubtful
   accounts..................    $20       $ 43           $ (13)         $ 50
</TABLE>

                                      S-1
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit
   No.                             Exhibit Description
 -------                           -------------------
 <C>     <S>
  *3.1   Form of Amended and Restated Certificate of Incorporation
  *3.2   Form of Amended and Restated Bylaws

  *4.1   Reference is made to Exhibit 3.1

  *4.2   Reference is made to Exhibit 3.2

  *4.3   Specimen Common Stock certificate

  *4.4   Amended and Restated Investors' Rights Agreement, among the Registrant
          and the parties listed on Schedule A thereto, dated May 21, 1999

 *10.1   Form of Amended and Restated 1997 Stock Option and Incentive Plan

 *10.2   Form of 1999 Stock Incentive Plan

 *10.3   Form of 1999 Employee Stock Purchase Plan

 *10.4   Form of Indemnification Agreement for Officers and Directors

 *10.5   Assignment of Lease, by and between the Registrant and Valley of
          California, Inc., and Consent to Assignment, dated as of December 16,
          1997 and related office leases

 *10.6   Collateral Assignment, Patent Mortgage and Security Agreement, by and
          between the Registrant and Comerica Bank--California, dated March 4,
          1997

 *10.7   Revolving Credit Loan and Security Agreement, by and between the
          Registrant and Comerica Bank--California, dated March 17, 1999

 *10.8   SpaceSQL Version 4.0 License Agreement by and between the Registrant
          and IBM Corporation, dated September 18, 1998.

 *10.9   Software Marketing and Distributorship Agreement by and between the
          Registrant and Mitsui & Co. Ltd, dated June 26, 1997

 *10.10  Variable Rate Single Payment Note by and between the Registrant and
          Comerica Bank--California, dated June 29, 1999

  10.11  Alza Corporation Sublease to Viador Inc., by and between the
          Registrant and Alza Corporation, dated January 31, 2000

  10.12  Stock Purchase Agreement, by and among Messrs. Andreas Zwimpfer, David
          Keat, Charles Fraefel, Chula de Silva and Tim Moser and the
          Registrant, dated January 20, 2000

  23.1   Consent of KPMG, LLP, dated March 29, 2000

  27.1   Financial Data Schedule
</TABLE>
--------
* Incorporated by reference to the corresponding exhibits of the Registrant's
  Registration Statement on Form S-1 (File No. 333-84041) filed on October 25,
  1999.