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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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FORM 10-K/ A

|   |  |                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------
|x  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For The Fiscal Year Ended December 31,
    2001                                                 
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to           .                                     

Commission File No. 1-6154



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VIADOR INC.

(Exact name of Registrant as specified in its
charter)


|                                                                                        |  |                                         
|--------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                |  | 94-3234636                              
|(State or other jurisdiction of
    incorporation or organization)                      |  | (I.R.S. Employer
    Identification No.)
|977 Benecia Avenue
    Sunnyvale California(Address of principal executive
    offices) |  | 94085-2805(Zip Code)                    

(408) 735-5956

(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 o

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/ A or any amendment to this Form 10-K/
A.     o

The aggregate market value of voting stock held
by non-affiliates of the Registrant was $4,725,558 as of
April 9, 2002 based upon the closing price of the
Registrants Common Stock on the Nasdaq National Market
Over-the-Counter Bulletin Board reported for April 9, 2002.
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.

33,096,884 shares of the Registrants $0.001
par value Common Stock were outstanding at April 9, 2002.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant has incorporated by reference into
Part III of this Annual Report on Form 10-K/A portions
of its Proxy Statement for the 2002 Annual Meeting of
Stockholders as amended on May 2, 2002.



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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Table of Contents                                                                            
|PART I                                                                                       
|ITEM 1. BUSINESS                                                                             
|ITEM 2. PROPERTIES                                                                           
|ITEM 3. LEGAL PROCEEDINGS                                                                    
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS             
|ITEM 6. SELECTED FINANCIAL DATA                                                              
|ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|PART III                                                                                     
|ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|ITEM 11. EXECUTIVE COMPENSATION                                                              
|ITEM 12. SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                     
|ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV                                                                                      
|ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|SIGNATURES                                                                                   
|INDEX TO EXHIBITS                                                                            
|EXHIBIT 23.1                                                                                 



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##### Table of Contents



VIADOR INC.

Form 10-K/ A Annual Report

For the Fiscal Year Ended December 31,
2001






Table of Contents


|              |  |                                                                                           |    |  |    | 
|------------- |  | ----------------------------------------------------------------------------------------- | -- |  | -- | 
|              |  |                                                                                          
|Item No.      |  | Page                                                                                     
|              |  |                                                                                          
|PART I       
|1.            |  | Business                                                                                  |    |  | 1  | 
|2.            |  | Properties                                                                                |    |  | 13 | 
|3.            |  | Legal Proceedings                                                                         |    |  | 13 | 
|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              |    |  | 15 | 
|6.            |  | Selected Financial Data                                                                   |    |  | 18 | 
|7.            |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |    |  | 19 | 
|7A.           |  | Quantitative and Qualitative Disclosures About
    Market Risk                            |    |  | 46 | 
|8.            |  | Financial Statements and Supplementary Data                                               |    |  | 46 | 
|9.            |  | Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure  |    |  | 46 | 
|PART III     
|10.           |  | Directors and Executive Officers of the Registrant                                        |    |  | 47 | 
|11.           |  | Executive Compensation                                                                    |    |  | 47 | 
|12.           |  | Security Ownership of Certain Beneficial Owners
    and Management                        |    |  | 47 | 
|13.           |  | Certain Relationships and Related Transactions                                            |    |  | 47 | 
|PART IV      
|14.           |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |    |  | 47 | 
|Exhibit Index |  |                                                                                           | 48 | 
|Signatures    |  |                                                                                           | 51 | 



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##### Table of Contents






PART I




ITEM 1. BUSINESS

Except for the historical financial
information contained herein, the matters discussed in this
Annual Report on Form 10-K/ A 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 offers a comprehensive and
integrated enterprise information portal that is specifically
designed for the World Wide Web, or 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, InfoSpace Inc.
changed its name to Viador Inc., (Viador or the Company) and in
October 1999, we reincorporated in the state of Delaware. Our
principal headquarters are located 977 Benecia Avenue, Sunnyvale
CA 94085, and our telephone number is (408) 735-5956. In
October 1999, we raised gross proceeds of $41.4 million
through an initial public offering. Our common stock traded on
the Nasdaq National Market tier of the Nasdaq Stock Market under
the symbol VIAD from October 26, 1999 until it
was delisted on October 31, 2001. Subsequent to
October 31, 2001, our common stock has traded on the
Over-the-Counter Bulletin Board. Our home page is located on the
Web at http://www.viador.com, where you can find additional
information about our products and us; 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.
Viador is not affiliated with and is not related to, InfoSpace,
Inc., a Delaware corporation headquartered in Redmond,
Washington.

Since 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 last 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,
which integrated our prior product offerings. In the fourth
quarter of 1999, we introduced the Business-to-Business
E-Portal, a product and services offering that is designed to
allow personalized communication and information exchange
between businesses. In the second quarter of 2000, we introduced
Viador Portlets, a technology for easily extending the Viador
E-Portal by adding tightly integrated modules for accessing
additional data sources and applications. In the fourth quarter
of 2000, we introduced Viador E-Portal Express, a portal user
interface that set new standards for

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performance and scalability. We delivered
significantly enhanced products in the fourth quarter of 2001.
In October 2001, we announced general availability of our
E-Portal 6.4, a major advance that allows enterprises to rapidly
deploy custom user interfaces based on open standards and
point-and-click design tools. In November 2001, we announced
E-Portal 6.4 compliance with the People with Disabilities Act,
based on World Wide Web Consortium, or W3C, standards for
accessible compliance with the Web Accessibility Initiative, or
WAI.


Recent Developments

Going
Concern

The consolidated financial statements presented
in this Annual Report have been prepared on a going concern
basis, which contemplates, among other things, the realization
of assets and the satisfaction of liabilities in the normal
course of business. Our recurring net losses, including net
losses of $24.5 million and $29.3 million for the
years ended December 31, 2001 and 2000, respectively, raise
substantial doubt regarding our ability to continue as a going
concern. In 2001 and 2000, our revenue was not sufficient to
support our operations, and revenue will not be sufficient to
support operations until such time, if any, that our enterprise
information portal software gains substantial market acceptance.
We expect to continue to use cash in operations and incur
operating losses in the foreseeable future. We received
$1.0 million of additional funding for our operations in
March 2002 in the form of debt with equity financing. The
consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded
asset amounts or the amount and classification of liabilities or
any other adjustments that might be necessary should we be
unable to continue as a going concern.

Class Action
Law Suit

On November 13, 2001, a press release issued
by Milberg Weiss Bershad Hynes & Lerach LLP announced
that The Plaintiffs Executive Committee in In re: Initial
Public Offering Securities Litigation, 21 MC 92
(SAS) had filed a class action law suit on
November 13, 2001, on behalf of purchasers of our
securities of between October 25, 1999 and December 6,
2000, inclusive. As of this date, we have not been served with
legal process and are unable to speculate as to the ultimate
outcome of this proceeding.

NASDAQ
Notice of Noncompliance and Delisting

On July 3, 2001, we received a letter from
Nasdaq indicating Viador had failed to comply with the minimum
bid price required for continued listing as set forth in
marketplace rule 4450 (a) (5) and that its
securities were, therefore, subject to delisting from Nasdaq. We
requested a hearing before a Nasdaq Listing Qualifications Panel
to review this determination. On August 15, 2001, Nasdaq
notified us of additional deficiencies including net tangible
assets and stockholders equity, market capitalization,
total assets, total revenues, stockholder approval and audit
committee composition requirements. Despite our attempts to
remedy these deficiencies, on October 30, 2001 the Company
was notified by Nasdaq that our securities would be delisted
from the National Market tier of the Nasdaq Stock Market
effective with the opening of business on October 31, 2001.
The delisting occurred on October 31, 2001 and our shares
of common stock are now traded on the Over-the-Counter Bulletin
Board.

Private
Financing

On July 6, 2001, we raised $500,000 in
financing through a private offering of convertible debt
securities and warrants. On August 13, 2001, we raised
$3.8 million in financing through a private offering of our
common stock and warrants. On March 18, 2002, we received
$1 million in financing through a private offering of
convertible debt securities and warrants. For further
information regarding these offerings, see
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and
Capital Resourcesand Market for the
Registrants Common Stock and Related Stockholder
Matters  Information Required by Item 701 of
Regulation S-K.

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We are currently attempting to reduce expenses
and raise additional financing to fund our operations. There can
be no assurance that we will be successful in our efforts to
reduce expenses or to obtain additional financing. Failure to
reduce expenses and/or to obtain additional financing will
impair our ability to meet our business objectives and continue
as a going concern. Based on our assumptions, which we believe
are reasonable, we believe we may have sufficient cash to reach
profitability provided that we meet the revenue and expense
goals contained in our business plan.

Management
Changes

On August 13, 2001, Stan Wang was appointed
president of Viador. On September 21, 2001, Dick Warmington
resigned as Viadors interim chief executive officer and
Stan Wang was appointed chief executive officer. Dick Warmington
continues to serve as a member of Viadors Board of
Directors and its audit committee.

On October 1, 2001, Don Cochrane resigned as
vice president of worldwide sales and marketing.

On October 8, 2001, Nathan A. Cammack
was appointed vice president of finance and administration and
chief financial officer to replace Alice Pilch, who resigned on
September 21, 2001.

On October 8, 2001, Tek-min Gan joined us as
senior director of United States sales. Mr. Tek-min Gan
resigned his position with us effective January 28, 2002.

Restructuring

During the second half of 2000, adverse economic
conditions reduced demand for software products in general and
impaired our revenue growth. In addition, we believe concerns
about our financial viability adversely impacted our revenue
growth. In response to these conditions, we decided to
streamline our operations and reduce our expenditure levels. In
furtherance of these objectives, on January 5, 2001, we
reduced our workforce in the United States by 87 positions, or
36% of our workforce, and we aggressively cut other costs. After
April 6, 2001, we also restructured our business to focus
on three distribution models: e-government with systems
integrators, OEM partnerships and independent resellers. As a
result of the new focus and an ongoing effort to reduce costs
and preserve cash, we reduced our workforce further by 55
positions out of the remaining 151 positions, or 37% of our
workforce in the United States. The reductions were made in
functional areas that did not align with the streamlined
distribution model, primarily in direct sales and marketing with
further reductions in our consulting organization. On
June 29, 2001, we announced that a future layoff of
approximately 10 people or 14% of our then current workforce
would occur to further reduce costs. By September 17, 2001,
we had further reduced our workforce in the United States by 21
positions, or 36% of our remaining workforce in the United
States. At December 31, 2001, our workforce totaled 33
employees. It is possible that we will have further workforce
and cost reductions in the future.

As part of our restructuring program, we
terminated our corporate lease with Alza Corporation on
June 30, 2001, and entered into a new corporate lease
agreement for our current office. As consideration for early
termination, we surrendered our restricted lease deposit of
$1.0 million and a significant amount of our office
furniture, leasehold improvements and other assets related to
the corporate lease (with a net book value of approximately
$1.6 million) to the landlord. For further information
regarding our restructuring program, see
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Restructuring
Expense, Impairment Loss and Loss on Lease Terminationon page 27.

Effect
of Economic Conditions

In the first half of the year 2000, a more
significant portion of our customers were newly funded dot-coms
and Internet-related companies that wanted to move quickly in
their buying decisions. Starting with the second half of the
year 2000, our customers tended to be more conservative buyers
and scaled down their budgets for capital expenditures. The
economic environment of 2001 further exacerbated this situation.
In addition, potential customers questioned our viability as a
company since our stock price and cash balances had decreased
throughout the year 2000 and 2001. The tragic events of
September 11, 2001 had pervasive

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negative effects across our markets, and
generally further slowed purchasing activity. These changes
lengthened the sales cycle and reduced the overall demand for
our product.


Product
Announcements

In October, 2001 we announced general
availability of our E-Portal 6.4, a major advance that allows
enterprises to rapidly deploy custom portal user interfaces
based using open standards and point and click design tools. The
Viador E-Portal 6.4 will make it easier for our global customers
and partners to increase their profitability and success by
sharing highly customized portals both inside and outside the
firewall. With todays cost-conscious purchasing
environment, it is more important than ever for organizations to
leverage customer management, supply chain and operational
systems. Without exception, our customers need information and
insight to clearly understand what to act on in order to
compete, reduce costs, increase revenues and ultimately drive
profitability. Our Viador E-Portal is ready to help achieve
these objectives for our customers and partners.

Strategic
Partnerships

We announced new or expanded partnerships with:

Autonomy.Viador
announced an alliance and product integration with Autonomy
Corporation plc, to automate management and processing of large
quantities of unstructured information within the Viador
E-Portal. This integration has enabled customers to categorize,
link and deliver that information through the portal.

Security and Authentication
Vendors.Viador announced
relationships with Netegrity and Oblix. Viador has utilized its
E-Portal Framework to create portlets integrating
Netegritys SiteMinder platform and Oblix NetPoint into the
Viador E-Portal. These products add an extra level of security,
and help deliver personalized content based on a users
role and privilege within an enterprise.

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

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to 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;                                                                 
|
| |  | can be quickly rolled out to thousands of
    additional users;                                                                                         
|
| |  | uses industry standard components in the areas of
    web servers, application servers, application program
    interfaces, or APIs, and databases; and
|
| |  | provides a cross-platform portable architecture
    to move between Windows and Unix platforms.                                                       

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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
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 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 to deliver self-service
solutions in the business-to-business, or B2B, and
business-to-employee, or 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;           
|
| |  | provides multi-level security;                                                                     

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| |   |                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | provides a fully cross-platform architecture not
    tied to a particular operating system, web server, application
    server or database vendor;                                                                                 
|
| |  | provides very tightly integrated relational and
    Online Analytical Processing, or OLAP, reporting tools that work
    together with a full feature rich portal;                                                                 
|
| |  | provides a comprehensive set of APIs to
    integrate portlets, customization and layout, repository and
    reporting; and                                                                                                       
|
| |  | provides a Rapid Application Development, or RAD,
    environment via the E-Portal Express for quick implementation
    needs and out-of-the-box functionality that can be deployed in
    hours after installation and not months.

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 plan to continue to
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;                                                                           
|
| |  | users contribute increasing amounts of
    information to the portal, which makes this information
    accessible to all authorized users;     
|
| |  | provides a cross-platform architecture that
    allows for system migration across hardware and operating system
    platforms (Windows, Unix);
|
| |  | provides excellent migration compatibility to
    preserve customer investment of software and reports previously
    developed; and           
|
| |  | offers general feature and performance
    enhancements with each subsequent release.                                                          

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.

Technology

We believe the Viador E-Portal offers a
comprehensive and integrated enterprise information portal that
gives users a single browser-based interface 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.

Adaptable Internet
Architecture.The architecture of the
Viador E-Portal 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, Windows
2000 servers and UNIX. Our software works with major web
servers and browsers.

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



| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | structured data, including data from relational
    and multi-dimensional 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 World Wide Web; 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 Express product family is
comprised of the following products which are sold both
individually and in combination with other products.

The Viador E-Portal is the foundation of the
product family. It consists of the Viador Information Center, a
high performance, Java server, a web-browser based user
interface and a set of programming interfaces for customizing
the Viador E-Portal user interface and for integrating
enterprise content, productivity tools and enterprise
applications. The Viador E-Portal supports site-wide custom
branding and individual personalization of the user interface
and integrates unstructured documents, structured databases and
web based content and data feeds into a clearly organized and
easily searched portal layout that resembles familiar consumer
portals. The Viador E-Portal allows enterprises to maximize the
value of their enterprise knowledge base and to easily and
securely deploy a wide range of information sources and
enterprise applications to employees, supply chain partners and
customers.

Viador Sentinel is an integrated extranet
security server that allows remote Viador E-Portal users to
safely access critical business information and sensitive
application deployed over the Internet. Viador Sentinel works in
conjunction with existing network security technology to provide
an additional layer of protection to the Viador E-Portal. Viador
Sentinel provides services that authenticate and authorize users
based on their assigned rights and encrypt both data
transmission and application communication deployed through the
Viador E-Portal.

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Viador E-Business Intelligence is a set of
integrated web based reporting and analysis tools that allows
the Viador E-Portal to deliver standard reports, real time data
access and data visualization and interactive business analysis
presentations. These 100% web based tools allow enterprise
developers to create, schedule and publish interactive and
printable reports, charts, crosstabs and multi-dimensional OLAP
presentations through the Viador E-Portal. The Viador E-Business
Intelligence tools include Viador Gateway which accesses a wide
range of data sources including relational databases such as
Oracle, IBM DB2, Microsoft SQL Server and
Sybase and multi-dimensional databases such as Hyperion
Essbase, Oracle Express and Microsoft OLAP services.

In addition, Viador develops and sells
value-added Viador Portlets for integrating specialized systems
such as Content Management systems into the Viador E-Portal
interface, many of which are included within the Viador E-Portal
product. Viador is committed to developing and selling
additional enterprise strength portlets. These portlets can be
sold to existing Viador E-Portals customers to provide
additional portal services or to integrate additional business
applications and data sources into the Viador E-Portal. In
addition select partners have built portlets for sale with the
Viador E-Portal.

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
maintain 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, and 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 are trained to 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 cities and also at our headquarters in Sunnyvale,
California. We also provide training classes for third-party
service providers, such as independent systems consultants and
distributors. We offer training early in the sales cycle to
ensure successful implementations.

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. Technical sales support is provided by sales
engineers located both in the field and at our headquarters.

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International.Historically, we have focused our selling efforts in North
America and derived a majority of our revenue from North
America. However, we believe it is important to have an
international presence and we 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. In Europe we use distributors in the Nordic
Region (Finland, Norway, Sweden, Denmark), Italy, Greece, Isreal
and Russia. We have our own direct Sales and Presales Team in
Germany, Switzerland and the United Kingdom. In Asia, we use
distributors in Japan, Korea, Indonesia, China and Hong Kong.
For information regarding revenues from international
operations, see Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Results of Operations 
Revenueon page 22.

OEMS.We continue to
focus on developing OEM relationships to leverage our sales
efforts. Our largest current OEM is 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, BridgeIT, and Answerthink.

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, and senior vice president
of worldwide sales and marketing. 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 37.

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

We have engaged 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 believe with our current sales and marketing
staff, we can continue to support the existing demand for our
enterprise information portal software and services. We may
consider expanding our sales and marketing staff, domestically
and internationally, to take advantage of any increase in demand
for our products and services. However, 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 retain and 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 35.

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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 continue to invest
significantly in product development.

Our current product development activities focus
on product enhancements to the Viador E-Portal 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. Our research
and development expenditures were $4.7 million,
$8.3 million and $5.9 million for the years ended
December 31, 2001, 2000 and 1999, respectively. 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. See
Managements Discussion and Analysis of Financial
Condition and Results of Operation  Operating
Expenses  Research and Development on
page 25. 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 41.

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, large application software vendors, and application
server vendors that provide a portal add-on. 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 business
intelligence software. 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.

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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 on
pages 41.

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
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 40.

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Employees

As of December 31, 2001, we had a total of
33 employees, including 4 people in sales and marketing, 14
people in engineering, 12 people in consulting and 3 people in
finance and administration. We believe that our future success
will depend in part on our continued ability to retain qualified
personnel. The competition for those personnel is intense, and
there can be no assurance that we will be able to 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 as of
December 31, 2001:

|                  |  |     |    |          |  |                                                                             
|----------------- |  | --- | -- | -------- |  | ----------------------------------------------------------------------------
|Name              |  | Age |    | Position
|                  |  |     |    |         
|Stan X. Wang      |  |     | 39 |          |  | Chief Executive Officer and President                                       
|Nathan A. Cammack |  |     | 55 |          |  | Chief Financial Officer and Vice President of
    Finance and Administration

Stan X. Wangis a
co-founder of Viador Inc. Mr. Wang has served as Chairman
of the Board of Directors since Viador was founded in December
1995. From December 1995 to October 2000, and from August 2001
to the present, Mr. Wang served as President and Chief Executive
Officer. Prior to founding Viador, Inc., 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.
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.

Nathan A. Cammackhas served as Vice President of
Finance and Administration and Chief Financial Officer since
October 2001. Previously, Mr. Cammack served as Chief Financial
Officer of Infolio, Inc., a privately held company involved in
wireless technology and an OEM licensee of Viador, Inc., from
February 2000 until October 2001. Previously, Mr. Cammack
served in a business development role for Spectrum Telecorp, a
privately held company engaged in telecommunications billing
services, from October 1997 to February 2000. Previously, from
October 1996, to October 1997, Mr. Cammack served as
Operations Controller for Packard Bell/ NEC. Previously,
Mr. Cammack held CFO positions at privately held companies
including Maxoptix, Vicom, and DAVID Systems. Mr. Cammack
held a variety of finance and accounting positions at Xerox,
Intel and Memorex. Mr. Cammack holds a B.A. from San
Francisco State University, and an M.B.A. from Santa Clara
University.




ITEM 2. PROPERTIES

We currently lease our corporate headquarters in
Sunnyvale, California and a sales office in Arlington, Virginia.
We believe that existing facilities will be adequate for the
foreseeable future.




ITEM 3. LEGAL PROCEEDINGS

On June 30, 2000, John Alves, a former
employee of Viador, filed a civil complaint with the Orange
County Superior Court against Viador, Stan Wang, Jonathan
Harding, and Raja Venkatesh. Mr. Alves claimed that his
employment agreement with Viador entitled him to purchase more
shares and at a lower price per share than Viador had offered
him. The complaint alleged breach of written contract, breach of
implied covenant of good faith and fair dealing, fraud,
negligent misrepresentation, promissory estoppel, breach of
fiduciary duty, and conspiracy, and sought unspecified
compensatory, emotional distress, and punitive damages, and an
award of interest and costs. Mr. Alves dismissed the
complaint without prejudice on December 7, 2000.

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On December 11, 2000, Mr. Alves filed a
Demand for Arbitration against Viador with the Western Case
Management Center of the American Arbitration Association
(AAA) in Fresno, California for the same claims. On
January 19, 2001, Mr. Alves amended his Demand, adding
Stan Wang, Jonathan Harding, and Raja Venkatesh. AAA accepted
the Amended Demand on February 28, 2001. On
November 7, 2001 the parties executed a Settlement
Agreement and General Release, under which we paid
Mr. Alves the sum of $25,000 in exchange for which
Mr. Alves filed a Dismissal with Prejudice against Viador
and Messrs. Wang, Harding, and Venkatesh in the Arbitration.

On November 15, 2000, Source Tagging
Institute (STI) filed a complaint against us with the
Circuit Court for the City of Alexandria, Virginia, alleging
breach of contract and seeking unspecified monetary damages.
Also on November 15, 2000, Viador filed a complaint with
the Circuit Court for Arlington County, Virginia, against STI
and William C. Bender, a director of STI, seeking damages,
return of property, and injunctive relief. STI and Viador
entered into a contract for STI to provide certain services to
Viador. We terminated the contract, and STI and Mr. Bender
alleged that Viador had breached the contract by failing to
provide sufficient support for STI to perform. We alleged
conversion and other tortuous acts against Bender and STI. On
October 23, 2001, Bender, STI and Viador executed a
Settlement Agreement and General Release under which the parties
agreed to dismiss with prejudice all complaints relating to this
matter. No payments were made by either party.

Class Action
Law Suit

On December 6, 2000, 101go filed a complaint
against us with the Supreme Court of New York, County of Broome,
in New York State, alleging breach of contract. On
February 21, 2001, we responded to 101gos complaint
and filed a counter-claim alleging breach of contract. On
December 12, 2001, Viador and 101go entered into a
Settlement Agreement and General Release was executed, under
which we paid to 101go the sum of $17,500. Each company filed
and served their respective Dismissals with Prejudice, and the
matter was closed.

On July 17, 2001 Surf Software filed a
complaint against us with the Superior Court for the State of
California, County of Santa Clara, alleging non-payment for
services furnished and rendered. The parties executed a
Settlement Agreement under which Viador made two payments
totaling $21,160 to Surf Software. On November 27, 2001
Surf Software filed a Request for Dismissal with Prejudice and
the matter was closed.

On November 13, 2001, a press release issued
by Milberg Weiss Bershad Hynes & Lerach LLP announced that
The Plaintiffs Executive Committee in In re: Initial
Public Offering Securities Litigation, 21 MC 92 (SAS) had
filed a class action law suit on November 13, 2001, on
behalf of purchasers of the securities of Viador, Inc. between
October 25, 1999 and December 6, 2000, inclusive. This
proceeding is at a very early stage and we are unable to
speculate as to ultimate outcome.




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

None.

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|        |                                                                             
|------- | ----------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON STOCK
    AND RELATED STOCKHOLDER MATTERS

Our common stock traded on the Nasdaq National
Market tier of the Nasdaq Stock Market under the symbol
VIAD from October 26, 1999 until it was
delisted on October 31, 2001. Subsequent to
October 31, 2001, our common stock has traded on the Nasdaq
National Market Over-the-Counter Bulletin Board. The following
table sets forth the range of high and low sales prices reported
on the Nasdaq National Market and the Nasdaq Over-the-Counter
Bulletin Board for our common stock for the periods indicated.

|             |                |      |   |       |  |  |   |       | 
|------------ | -------------- | ---- | - | ----- |  |  | - | ----- | 
|             |                | High |   | Low  
|             |                |      |   |      
|Fiscal 2000: |                |      |   |       |  |  |   |      
|             | First Quarter  |      | $ | 64.81 |  |  | $ | 25.75 | 
|             | Second Quarter |      | $ | 49.00 |  |  | $ | 7.13  | 
|             | Third Quarter  |      | $ | 17.18 |  |  | $ | 8.50  | 
|             | Fourth Quarter |      | $ | 8.87  |  |  | $ | 1.00  | 
|Fiscal 2001: |                |      |   |       |  |  |   |      
|             | First Quarter  |      | $ | 1.88  |  |  | $ | 0.41  | 
|             | Second Quarter |      | $ | 1.35  |  |  | $ | 0.34  | 
|             | Third Quarter  |      | $ | 0.43  |  |  | $ | 0.12  | 
|             | Fourth Quarter |      | $ | 0.20  |  |  | $ | 0.06  | 

On April 9, 2002, the latest practicable
trading day before the printing of this annual report, the
closing price per share of our common stock was $0.27. As of
April 9, 2002, there were 134 holders of record of our
common stock. This number does not include stockholders whose
shares are held in trust by other entities. The actual number of
stockholders is greater than this number of holders of record.
Based on the number of annual reports requested by brokers, we
estimate that the number of beneficial stockholders of the
shares of our common stock as of April 9, 2002 was
approximately 5,000. 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.

(a) Modification to Instruments Defining
the Rights of Common Stockholders.

None.



| |     |                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | Material Limitations or Qualifications on
    Rights of Common Stockholders Resulting from the Issuance or
    Modification of Other Securities.

On July 6, 2001 and on March 18, 2002,
we issued convertible debt securities in private offerings.
These issuances of convertible debt securities may materially
affect the rights evidenced by the common stock since such debt
securities would have priority over the common stock in the
distribution of proceeds from any sale of our assets and any
subsequent distribution.

(c) Information Required by Item 701
of Regulation S-K.

On July 6, 2001, we raised $500,000 in
financing through a private offering of convertible debt
securities, in connection with which we issued warrants and
convertible promissory notes. We issued three notes to the
individuals and in the amounts listed in the Schedule of
Convertible Promissory Notes Issued under Exhibit 10.24 in
the Index to Exhibits on page 47, and three warrants to the
individuals and for the number of shares listed in the Schedule
of Warrants Issued under Exhibit 10.25 in the Index to
Exhibits on page 47.

The securities were offered and issued to certain
private investors, including Dick Warmington, who was then our
chief executive officer, and is currently a member of the Board
of Directors. The offering and issuance was exempt from
registration under the Securities Act of 1933, as amended,
pursuant to section 4(2) thereof, as a transaction not involving
any public offering.

15



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON STOCK
    AND RELATED STOCKHOLDER MATTERS (CONTINUED)

Until September 6, 2001, interest accrued on
the outstanding principal amount at an annual stated rate of one
percent plus the prime rate, compounded quarterly. After
September 6, 2001, interest accrued at an annual stated
rate of three percent plus the prime rate, compounded quarterly.
The notes were each convertible at the option of the lenders
into shares of our common stock at a conversion price equal to
the lower of either the average closing bid price of our common
stock on Nasdaq during the 20 days before July 6, 2001
or the average closing bid price of our common stock on Nasdaq
during the 20 days before the date of conversion. The
lenders also had the option, but only upon our mutual agreement,
to convert the notes into equity securities we issued to any
third party in any equity financing during the term of the note
at a conversion price equal to the price per share at which the
securities were sold to the third party. The notes were in no
event convertible into a number of shares that, combined with
all other shares acquired by the converting lender directly or
indirectly from us or any person acting on our behalf, such as
an officer, director, substantial stockholder or underwriter,
would have exceeded 19.9% of our total issued and outstanding
shares of voting stock as of the date of conversion. The lenders
elected not to convert any of the notes and we repaid the full
loan principal on the notes, in an aggregate amount of $500,000
along with accrued interest in the aggregate amount of $7,267 on
September 16, 2001, September 24, 2001 and
October 5, 2001.

The warrants each expire on July 6, 2003 and
are exercisable at any time or from time to time, in whole or in
part, for an aggregate number of 1,250,000 shares of our common
stock at a price per share of $0.40. The warrants are in no
event exercisable into a number of shares that, combined with
all other shares acquired by the converting lender directly or
indirectly from us or any person acting on our behalf, such as
an officer, director, substantial stockholder or underwriter,
would exceed 19.9% of our total issued and outstanding shares of
voting stock as of the date of exercise.

On August 13, 2001, we raised
$4.0 million in financing through a private offering of
equity securities. As consideration for the funds, we issued
14,814,814 shares of common stock and warrants to purchase a
total of 2,962,962 shares of common stock. We incurred a
commission of $240,000 to a third-party finder.

The warrants were issued to the individuals and
in the amounts listed in the Schedule of Warrants Issued in
Equity Financing under Exhibit 10.31 in the Index of
Exhibits on page 47. The warrants each expire on
February 12, 2006 and are exercisable at any time or from
time to time, in whole or in part, after February 12, 2002
at a price of $0.27 per share.

On March 18, 2002, we received
$1.0 million in financing through a private offering of
debt securities and a commitment to provide us with additional
financing of up to $2.0 million upon our request from
Mr. Heungyeung Yeung, who currently holds certain of our
securities. Mr. Yeungs commitment to provide
$2.0 million in additional financing is subject to certain
conditions relating to our ability to meet our obligations under
the notes and warrants issued to Mr. Yeung, changes in our
equity ownership, composition of our management team and any
change in control.

As consideration for the funds and the commitment
to provide additional funds, we issued a convertible promissory
note and two warrants to Mr. Yeung. The note has a
principal amount of $1 million and is convertible into
16,711,230 shares of our common stock. The note accrues interest
at a stated rate of 1% per year and matures on March 18,
2004.

One of the warrants is exercisable in whole or in
part, at any time or from time to time, for 3,333,333 shares of
our common stock at an exercise price of $0.06 per share. The
second warrant is exercisable for an aggregate of 3,333,333
shares of our common stock at an exercise price of $0.06 per
share, but is subject to vesting, such that 25% of the warrant
becomes exercisable every six months and is entirely exercisable
on March 18, 2004, two years after the issuance date. The
second warrant ceases to vest in the event Mr. Yeung fails
to fulfill his commitment to provide additional funding.
However, if Mr. Yeungs failure to provide additional
funding is due to our failure to meet any of the conditions
above, the second warrant becomes fully exercisable. Both
warrants expire on March 18, 2005.

16



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON STOCK
    AND RELATED STOCKHOLDER MATTERS (CONTINUED)

Each time we receive additional funding from
Mr. Yeung, we will issue to Mr. Yeung a convertible
promissory note with a principal amount equal to the amount of
such additional funding. Interest on any such note will accrue
at a rate equal to the sum of (a) the prime rate in effect
on loans made by Citibank, N.A. as of the date such note, plus
(b) three percent (3%). Any such note will be convertible
into either shares of our common stock or any equity securities
we issue to a third party or third parties in one or more bona
fide, arms-length transactions for the purpose of raising
capital during the term of such note. If the note is converted
into our common stock, the note will be convertible into a
number of shares of our common stock equal to the total
principal and interest amount outstanding on the note at the
time of conversion divided by $0.05984. If the note is converted
into another class of equity securities issued in an equity
financing, the note will be convertible into a number of shares
of such equity securities equal to the total principal and
interest amount outstanding on the note at the time of
conversion divided by the price per share or unit at which such
equity securities are sold to third party investors.

None of the notes or warrants issued or issuable
to Mr. Yeung in this offering is convertible or exercisable
if the conversion or exercise of any such note or warrant would
result in Mr. Yeung or his affiliates holding more than
49.9% of our issued and outstanding voting stock.

In connection with this financing, we incurred a
commission payable to Mr. Yeung in the amount of $60,000.

The offering and issuance were exempt from
registration under the Securities Act of 1933, as amended,
pursuant to Section 4(2) thereof, as a transaction not
involving a public offering.

17



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##### Table of Contents






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 19. The
statements of operations data for the years ended
December 31, 2001, 2000 and 1999 and the balance sheet data
as of December 31, 2001, and 2000 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 year ended
December 31, 1997 and the balance sheet data as of
December 31, 1998 and 1997 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
19.

|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |     |       |       |       | 
|---------------------------------------------------------------------------------- | ------------------------------------ | --------------------------------------------- | --------------------- | ----------------------- | ------ | ----- | ------- | ------ | ------ | ------ | ------- | ----- | ------ | ------ | ------ | ----- | ----- | ----- | ------ | --- | ----- | ----- | ----- | 
|                                                                                   |                                      |                                              
|                                                                                   |                                      | Years Ended December 31,                     
|                                                                                   |                                      |                                              
|                                                                                   |                                      | 2001                                          |                       | 2000                    |        | 1999  |         | 1998   |        | 1997  
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |       
|                                                                                   |                                      |                                              
|                                                                                   |                                      | (In thousands except per share data)         
|Statement of Operations Data:                                                      |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Revenues:                                                                          |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|                                                                                   | License                              |                                               | $                     | 4,652                   |        |       | $       | 18,687 |        |        | $       | 7,320 |        |        | $      | 2,283 |       |       | $      | 839 |      
|                                                                                   | Service                              |                                               |                       | 4,445                   |        |       |         | 7,538  |        |        |         | 2,831 |        |        |        | 1,542 |       |       |        | 743 |      
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|                                                                                   |                                      |                                               | Total revenue         |                         |        | 9,097 |         |        |        | 26,225 |         |       |        | 10,151 |        |       |       | 3,825 |        |     |       | 1,582 |      
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Cost of revenue:                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|                                                                                   | Amortization of capitalized software |                                               |                       | 3,453                   |        |       |         | 925    |        |        |         |      |        |        |        |      |       |       |        |    |      
|                                                                                   | License and service cost of revenue  |                                               |                       | 2,920                   |        |       |         | 9,436  |        |        |         | 2,691 |        |        |        | 1,387 |       |       |        | 903 |      
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|                                                                                   |                                      |                                               | Total cost of revenue |                         |        | 6,373 |         |        |        | 10,361 |         |       |        | 2,691  |        |       |       | 1,387 |        |     |       | 903   |      
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|                                                                                   |                                      |                                               | Gross profit          |                         |        | 2,724 |         |        |        | 15,864 |         |       |        | 7,460  |        |       |       | 2,438 |        |     |       | 679   |      
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Operating expense:                                                                 |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|                                                                                   |                                      | Sales and marketing                           |                       |                         | 11,509 |       |         |        | 28,211 |        |         |       | 11,266 |        |        |       | 4,295 |       |        |     | 1,802 |      
|                                                                                   |                                      | Research and development                      |                       |                         | 4,679  |       |         |        | 8,256  |        |         |       | 5,931  |        |        |       | 2,481 |       |        |     | 1,351 |      
|                                                                                   |                                      | General and administrative                    |                       |                         | 5,240  |       |         |        | 6,853  |        |         |       | 2,940  |        |        |       | 1,365 |       |        |     | 936   |      
|                                                                                   |                                      | Amortization of goodwill                      |                       |                         | 169    |       |         |        | 427    |        |         |       |       |        |        |       |      |       |        |     |      |      
|                                                                                   |                                      | Restructuring expense                         |                       |                         | 251    |       |         |        | 693    |        |         |       |       |        |        |       |      |       |        |     |      |      
|                                                                                   |                                      | Loss on lease termination                     |                       |                         | 2,824  |       |         |        | 1,270  |        |         |       |       |        |        |       |      |       |        |     |      |      
|                                                                                   |                                      | Impairment loss  goodwill                    |                       |                         | 1,536  |       |         |        |       |        |         |       |       |        |        |       |      |       |        |     |      |      
|                                                                                   |                                      | Impairment loss  equipment held for
    sale |                       |                         | 850    |       |         |        |       |        |         |       |       |        |        |       |      |       |        |     |      |      
|                                                                                   |                                      | Amortization of stock-based compensation      |                       |                         | (121   | )     |         |        | 1,021  |        |         |       | 1,254  |        |        |       | 445   |       |        |     |      |      
|                                                                                   |                                      | Loss on sale of equipment                     |                       |                         | 190    |       |         |        |       |        |         |       |       |        |        |       |      |       |        |     |      |      
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|                                                                                   |                                      |                                               |                       | Total operating expense |        |       | 27,127  |        |        |        | 46,731  |       |        |        | 21,391 |       |       |       | 8,586  |     |       |       | 4,089 | 
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Operating loss                                                                     |                                      |                                               | (24,403               | )                       |        |       | (30,867 | )      |        |        | (13,931 | )     |        |        | (6,148 | )     |       |       | (3,410 | )  
|Other income and expense, net                                                      |                                      |                                               | (369                  | )                       |        |       | 1,535   |        |        |        | 624     |       |        |        | (63    | )     |       |       | 62     |    
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Net loss before income taxes and extraordinary
    item                            |                                      |                                               | (24,772               | )                       |        |       | (29,332 | )      |        |        | (13,307 | )     |        |        | (6,211 | )     |       |       | (3,348 | )  
|Extraordinary gain on extinguishment of debt                                       |                                      |                                               | 377                   |                         |        |       |        |        |        |        |        |       |        |        |       |       |       |       |       |    
|Provision for income taxes                                                         |                                      |                                               | (65                   | )                       |        |       |        |        |        |        |        |       |        |        |       |       |       |       |       |    
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Net loss                                                                           |                                      | $                                             | (24,460               | )                       |        | $     | (29,332 | )      |        | $      | (13,307 | )     |        | $      | (6,211 | )     |       | $     | (3,348 | )  
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Basic and diluted net loss per share                                               |                                      | $                                             | (1.03                 | )                       |        | $     | (1.67   | )      |        | $      | (2.20   | )     |        | $      | (1.82  | )     |       | $     | (1.34  | )  
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    
|Weighted average shares used in computing basic
    and diluted net loss per share |                                      |                                               | 23,931                |                         |        |       | 17,547  |        |        |        | 6,043   |       |        |        | 3,416  |       |       |       | 2,495  |    
|                                                                                   |                                      |                                               |                       |                         |        |       |         |        |        |        |         |       |        |        |        |       |       |       |        |    

|                                           |  |                                      |        |      |  |      |        |      |  |      |        |  |  |   |       |  |  |   |       |  
|------------------------------------------ |  | ------------------------------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ----- |  |  | - | ----- | -
|                                           |  |                                     
|                                           |  | As of December 31                   
|                                           |  |                                     
|                                           |  | 2001                                 |        | 2000 |  | 1999 |        | 1998 |  | 1997
|                                           |  |                                      |        |      |  |      |        |      |  |     
|                                           |  |                                     
|                                           |  | (In thousands except per share data)
|Balance Sheet Data:                        |  |                                      |        |      |  |      |        |      |  |      |        |  |  |   |       |  |  |   |       |  
|Cash, cash equivalents and restricted cash |  | $                                    | 1,043  |      |  | $    | 15,955 |      |  | $    | 44,720 |  |  | $ | 4,181 |  |  | $ | 1,029 |  
|Working capital (deficiency)               |  |                                      | (3,305 | )    |  |      | 6,447  |      |  |      | 41,755 |  |  |   | 2,771 |  |  |   | (317  | )
|Total assets                               |  |                                      | 3,306  |      |  |      | 35,615 |      |  |      | 52,178 |  |  |   | 7,185 |  |  |   | 2,918 |  
|Total stockholders equity (deficit)       |  |                                      | (2,419 | )    |  |      | 17,165 |      |  |      | 43,458 |  |  |   | 3,371 |  |  |   | 90    |  

18



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|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/ A 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 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 offers a comprehensive and
integrated enterprise information portal that is specifically
designed for the World Wide 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 had net losses of approximately
$24.5 million, $29.3 million, and $13.3 million
for the years ended December 31, 2001, 2000 and 1999,
respectively. In addition, we had accumulated deficits of
approximately $76.8 million and $52.3 million as of
December 31, 2001 and 2000, respectively.

We were incorporated as Infospace Inc. in
California in December 1995. In January 1999, we changed our
name to Viador Inc., and we subsequently reincorporated in the
State of Delaware. In October 1999, we raised gross proceeds of
$41.4 million through an initial public offering. 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 last 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, which
integrated our prior product offerings. In the fourth quarter of
1999, we introduced the Business-to-Business E-Portal, a product
and services offering that is designed to allow personalized
communication and information exchange between businesses. In
the second quarter of 2000, we introduced Viador Portlets, a
technology for easily extending the Viador E-Portal by adding
tightly integrated modules for accessing additional data sources
and applications. In the fourth quarter of 2000, we introduced
Viador E-Portal Express, a portal user interface that set new
standards for performance and scalability.

We delivered significantly enhanced products in
the fourth quarter of 2001 as follows: In October 2001, we
announced general availability of our E-Portal 6.4, a major
advance that allows enterprises to rapidly deploy custom user
interfaces based on open standards and point-and-click design
tools. In November 2001, we announced E-Portal 6.4 which
complies with the Americans with Disabilities Act, based on
World Wide Web Consortium, or W3C, standards for accessible
compliance with the Web Accessibility Initiative, or WAI.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Historically, we have focused our selling efforts
in North America and derived a majority of our revenue from
North America. However, we believe it is important to have an
international presence and we 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. In Europe we use distributors in the Nordic
Region (Finland, Norway, Sweden, Denmark), Italy, Greece, Isreal
and Russia. We have our own direct Sales and Presales Team in
Germany, Switzerland, the United Kingdom and Canada. In Asia, we
use distributors in Japan, Korea, Indonesia, China, Hong Kong,
and Thailand.

Recent Events

Class Action
Law Suit

On November 13, 2001, a press release issued
by Milberg Weiss Bershad Hynes & Lerach LLP announced that
The Plaintiffs Executive Committee in In re: Initial
Public Offering Securities Litigation, 21 MC 92 (SAS) had
filed a class action law suit on November 13, 2001, on
behalf of purchasers of the our securities of between
October 25, 1999 and December 6, 2000, inclusive. As
of this date, we have not been served with legal process and are
unable to speculate as to the ultimate outcome of this
proceeding.

NASDAQ
Notice of Noncompliance and Delisting

On July 3, 2001, we received a letter from
Nasdaq indicating we failed to comply with the minimum bid price
required for continued listing as set forth in marketplace rule
4450 (a) (5) and that its securities were, therefore,
subject to delisting from Nasdaq. We requested a hearing before
a Nasdaq Listing Qualifications Panel to review this
determination. On August 15, 2001, Nasdaq notified us of
additional deficiencies including net tangible assets and
stockholders equity, market capitalization, total assets,
total revenues, stockholder approval and audit committee
composition requirements. Despite our attempts to remedy these
deficiencies, on October 30, 2001 we were notified by
Nasdaq that our securities would be delisted from the National
Market tier of the Nasdaq Stock Market effective with the
opening of business on October 31, 2001. The delisting
occurred on October 31, 2001 and our shares of common stock
are now traded on the Over-the-Counter Bulletin Board.

Private
Financing

On July 6, 2001, we raised $500,000 in
financing through a private offering of convertible debt
securities and warrants. On August 13, 2001, we raised
$3.8 million in financing through a private offering of our
common stock and warrants. On March 18, 2002, we received
$1.0 million in financing through a private offering of
convertible debt securities and warrants. For further
information regarding these offerings, see
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and Capital
Resourcesand Changes in Securities and Use
of Proceeds  Information Required by Item 701 of
Regulation S-K.

Management
Changes

On August 13, 2001, Stan Wang was appointed
president of Viador. On September 21, 2001, Dick Warmington
resigned as Viadors interim chief executive officer and
Stan Wang was appointed chief executive officer. Dick Warmington
continues to serve as a member of Viadors Board of
Directors and its audit committee.

On October 1, 2001, Don Cochrane resigned as
vice president of worldwide sales and marketing.

On October 8, 2001, Nathan A. Cammack was
appointed vice president of finance and administration and chief
financial officer replacing Alice Pilch, who resigned on
September 21, 2001.

20



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##### Table of Contents



|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

On October 8, 2001, Tek-min Gan joined us as
senior director of United States sales. Mr. Tek-min Gan
resigned his position with us effective January 28, 2002.

Renegotiation
with Creditors

On December 11, 2001, we entered into a
workout agreement with certain of our creditors representing
approximately $1.9 million of our outstanding accounts
payables which was completed in early February 2002. Under the
workout agreement, these creditors agreed to release us from any
obligation to repay any such amounts in exchange for payment of
25% of the total debt we owed them as of September 30,
2001. On February 8, 2002, we paid the creditors that were
party to the workout agreement their respective agreed upon
amounts aggregating approximately $0.5 million.

Restructuring

During the second half of 2000 and continuing
through 2001, adverse economic conditions reduced demand for our
software products in general and impaired our revenue growth. In
addition, we believe concerns regarding our financial viability
adversely impacted our revenue growth. In response to these
conditions, we decided to streamline our operations and reduce
our expenditure levels. In furtherance of these objectives, on
January 5, 2001, we reduced our workforce in the United
States by 87 positions, or 36% of our workforce, and
aggressively cut other costs. After April 6, 2001, we also
restructured our business to focus on three distribution models:
e-government with systems integrators, partnerships with
Original Equipment Manufacturers, or OEMs, and independent
resellers. As a result of the new focus and an ongoing effort to
reduce costs and preserve cash, we reduced our workforce further
by 55 positions out of the remaining 151 positions, or 37% of
our workforce in the United States. The reductions were made in
functional areas that did not align with the streamlined
distribution model, primarily in direct sales and marketing with
further reductions in our consulting organization. On
June 29, 2001, we announced that a future layoff of
approximately 10 people or 14% of our then current workforce
would occur to further reduce costs. By September 17, 2001, we
had further reduced our workforce in the United States by 21
positions, or 36% of our remaining workforce in the United
States. At December 31, 2001, our workforce totaled 33
employees. It is possible that we will have further workforce
and cost reductions in the future.

During one of our 2001 restructurings, we
terminated our corporate lease with Alza Corporation on
June 30, 2001, and entered into a new corporate lease
agreement for our current office. As consideration for early
termination, we surrendered our restricted lease deposit of
$1.0 million and a significant amount of our office
furniture, leasehold improvements and other assets related to
the corporate lease (with a net book value of approximately
$1.6 million) to the landlord.

Effect
of Economic Conditions

In the first half of the year 2000, a significant
portion of our customers were newly funded dot-coms and
internet-related companies that wanted to move quickly in their
buying decisions. Starting with the second half of the year
2000, our customers had tended to be more conservative buyers
and scaled down their budgets for capital expenditures. The
economic environment of 2001 exacerbated this situation. In
addition, potential customers have questioned our viability as a
company since our stock price and cash balances have decreased
throughout the years 2001 and 2000. The tragic events of
September 11, 2001 had pervasive negative effects across our
markets and generally further slowed purchasing activity. These
changes lengthened the sales cycle and reduced the overall
demand for our product.

Segment
Presentation

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

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Fluctuations
in Operating Results

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 presence in international markets;                                                                 
|
| |  | introductions of new products and services or
    enhancements by us and our competitors;              
|
| |  | competitive factors that affect our pricing;                                                           
|
| |  | the size and timing of customer orders;                                                                
|
| |  | hiring and retention of key personnel;                                                                 
|
| |  | the mix of products and services we sell;                                                              
|
| |  | the timing and magnitude of our capital
    expenditures;                                              
|
| |  | conditions specific to the enterprise information
    portal market and other general economic factors.

Consequently, we believe that period-to-period
comparisons of our operating results are not necessarily
meaningful and that such comparisons cannot be relied upon as
indicators of future performance.

Results of Operations

The following table sets forth certain operating
data as a percentage of total revenue for the periods indicated.

|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |        |        |       | 
|------------------------------------------------------- | --------------------------------------------- | --------------------------- | ------------------------ | ------ | ------ | ----- | ------ | ------ | ------ | ----- | ------ | ------ | ------ | ----- | 
|                                                        |                                               |                            
|                                                        |                                               | Years Ended December 31,   
|                                                        |                                               |                            
|                                                        |                                               | 2001                        |                          | 2000   |        | 1999 
|                                                        |                                               |                             |                          |        |        |      
|Revenue:                                                |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        | License                                       |                             |                          | 51.1   | %      |       |        | 71.3   | %      |       |        | 72.1   | %     
|                                                        | Service                                       |                             |                          | 48.9   |        |       |        | 28.7   |        |       |        | 27.9   |       
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        |                                               |                             | Total revenue            |        |        | 100.0 |        |        |        | 100.0 |        |        |        | 100.0 | 
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|Cost of revenue:                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        | Amortization of capitalized software          |                             |                          | 38.0   |        |       |        | 3.5    |        |       |        |       |       
|                                                        | License and service cost of revenue           |                             |                          | 32.1   |        |       |        | 36.0   |        |       |        |       |       
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        |                                               |                             | Total cost of revenue    |        |        | 70.1  |        |        |        | 39.5  |        |        |        | 26.5  | 
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        |                                               |                             | Gross profit             |        |        | 29.9  |        |        |        | 60.5  |        |        |        | 73.5  | 
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|Operating expenses:                                     |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        | Sales and marketing                           |                             |                          | 126.5  |        |       |        | 107.6  |        |       |        | 111.0  |       
|                                                        | Research and development                      |                             |                          | 51.4   |        |       |        | 31.5   |        |       |        | 58.3   |       
|                                                        | General and administrative                    |                             |                          | 57.6   |        |       |        | 26.1   |        |       |        | 29.0   |       
|                                                        | Amortization of goodwill                      |                             |                          | 1.9    |        |       |        | 1.6    |        |       |        |       |       
|                                                        | Restructuring expense                         |                             |                          | 2.8    |        |       |        | 2.6    |        |       |        |       |       
|                                                        | Loss on lease termination                     |                             |                          | 31.0   |        |       |        | 4.8    |        |       |        |       |       
|                                                        | Impairment loss  goodwill                    |                             |                          | 16.9   |        |       |        |       |        |       |        |       |       
|                                                        | Impairment loss  equipment held for
    sale |                             |                          | 9.3    |        |       |        |       |        |       |        |       |       
|                                                        | Amortization of stock-based compensation      |                             |                          | (1.3   | )      |       |        | 3.9    |        |       |        | 12.4   |       
|                                                        | Loss on sale of equipment                     |                             |                          | 2.1    |        |       |        |       |        |       |        |       |       
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        |                                               |                             | Total operating expenses |        |        | 298.2 |        |        |        | 178.1 |        |        |        | 210.7 | 
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        | Operating loss                                |                             |                          | (268.3 | )      |       |        | (117.6 | )      |       |        | (137.2 | )     
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|Other income (expense):                                 |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        | Interest income                               |                             |                          | 1.8    |        |       |        | 6.2    |        |       |        | 6.1    |       
|                                                        | Interest expense                              |                             |                          | (0.1   | )      |       |        | (0.2   | )      |       |        |       |       
|                                                        | Non-cash interest expense                     |                             |                          | (5.5   | )      |       |        |       |        |       |        |       |       
|                                                        | Other income and expense                      |                             |                          | (0.3   | )      |       |        | (0.2   | )      |       |        |       |       
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        |                                               | Other income (expense), net |                          |        | (4.1   | )     |        |        | 5.8    |       |        |        | 6.1    |      
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|Net loss before income taxes and extraordinary
    item |                                               |                             | (272.3                   | )      |        |       | (111.8 | )      |        |       | (131.1 | )     
|Extraordinary gain on extinguishment of debt            |                                               |                             | 4.1                      |        |        |       |       |        |        |       |       |       
|Provision for income taxes                              |                                               |                             | (0.7                     | )      |        |       |       |        |        |       |       |       
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       
|                                                        |                                               | Net loss                    |                          |        | (268.9 | )%    |        |        | (111.8 | )%    |        |        | (131.1 | )%   
|                                                        |                                               |                             |                          |        |        |       |        |        |        |       |        |       

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Revenue

We follow the revenue recognition principles
described in Statement of Position, or SOP, 97-2, Software
Revenue Recognition, as amended by SOP 98-9.

We license our products to end user customers,
original equipment manufacturers, or OEM, and value added
resellers, or VARs. 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
undelivered elements has been established. Vendor-specific
objective evidence of fair value for consulting services is
based on the price charged when those services are sold
separately. We also have vendor-specific objective evidence of
fair value of post-contract customer support based on the
contractually specified annual renewal rate for such services.
Accordingly, 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 us to deliver specified additional features or
upgrades is deferred until delivery of the feature and/or
upgrade has occurred, unless we have sufficient vendor-specific
objective evidence of fair value to allocate revenue to the
various elements in these arrangements. Fees related to
arrangements that require us to deliver unspecified additional
products are deferred and recognized ratably over the term of
the contract. Revenue related to arrangements involving
consulting services that are essential to the functionality of
the software is deferred and recognized as the services are
performed.

Software revenue related to arrangements to
maintain the compatibility of our 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 arrangements in which we earn a royalty based
on a specified percentage of OEM sales to end users
incorporating our software is recognized upon delivery to the
end user. Service revenue consists of fees from professional
services including integration of software, application
development, training and software installation. We bill
professional service fees on a time and materials basis. We
recognize professional services fees as the services are
performed. Customers typically purchase post-contract customer
agreements annually, which are priced based on a fixed
percentage of the product license fee. We recognize revenue
allocated to post-contract customer support agreements ratably
over the term of the agreements, which are typically one year.

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,
amortization of capitalized software development costs, and an
allocation of our facilities, communications and depreciation
expenses. Cost of service revenue includes salaries and related
expenses for consulting services, customer support,
implementation and training services organizations, and costs of
contracting with third parties engaged to provide consulting
services to customers.

Total Revenue.Total
revenue was approximately $9.1 million, $26.2 million
and $10.1 million in 2001, 2000 and 1999, respectively,
representing a decrease of $17.1 million, or 65%, from 2000
to 2001, and an increase of approximately $16.1 million, or
158%, from 1999 to 2000. For the year ended December 31,
2001, license revenues and service revenue accounted for 51% and
49% of total revenue, respectively, as compared to 71% and 29%
of total revenue, respectively, for the year ended
December 31, 2000 and 72% and 28% of total revenue,
respectively, for the year ended December 31, 1999. The
decrease in total revenue in 2001 was primarily due to
reductions in license revenue resulting from decreased demand
for our products and secondarily, a reduction in service revenue
associated with reduced demand for our consulting services. The
percentage shift toward service revenue is due to lower new
customer license revenues caused both by the generally poor
economic climate and our financial condition versus the
continuing demand from existing customers for customization of
their licensed portal products. The increase in revenue in
absolute dollars from

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|        |                                                                                                          
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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

1999 to 2000 was primarily due to increased
license revenue as the availability of new software products
attracted new customers, including 140 new customers during the
year ended December 31, 2000.

License Revenue.License revenue for the years ended
December 31, 2001, 2000 and 1999 was $4.6 million,
$18.7 million and $7.3 million, respectively, or 51%,
71% and 72% of total revenue, respectively. License revenue
decreased $14.0 million, or 75%, from 2000 to 2001 due to a
reduction in software purchases attributable to general adverse
economic conditions and customer concerns regarding our
viability. License revenue increased $11.4 million, or
155%, from 1999 to 2000 due to the introduction of Viador
Portlets in the fourth quarter of 2000.

Service Revenue.Service revenue for the years ended
December 31, 2001, 2000 and 1999 was $4.4 million,
$7.5 million and $2.8 million, respectively, or 49%,
29% and 28% of total revenue, respectively. Service revenue
decreased $3.1 million, or 41%, from 2000 to 2001 due to a
decrease in consulting services provided, although the
percentage reduction was less dramatic than that for license
revenues for the same periods. Service revenue increased by
$4.7 million, or 166%, from 1999 to 2000. Increases in
service revenue for both years were due to an increase in labor
force in the service area, which permitted Viador to further
expand its services.

Channel Mix.We
distribute our products directly through a direct sales force.
We distribute our products indirectly through OEMs, VARs and
systems integrators. Indirect channel revenues for the years
ended December 31, 2001, 2000 and 1999 were approximately
40%, 35% and 5.4% of total revenue, 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. This percentage increase was,
in part, the result of the decrease in our direct sales force.
Our financial condition continues to negatively affect our
success in direct selling efforts. In general, the distribution
of revenues among channels will fluctuate in future periods
depending on the timing of new product releases, our ability to
expand our use of OEMs and VARs, the timing of direct sales to
large customer accounts and customer buying patterns.

Geographic Mix.International revenue (sales outside
of the United States) for years ended December 31, 2001,
2000 and 1999 were 19%, 14% and 6% of total revenue,
respectively. International revenue increased in absolute
dollars and as a percentage of total revenue from the similar
period in the prior year because of increased distribution
channels and customer base in international markets. The
increase is also attributable to the fact that a majority of
international revenues are generated through substantial
distribution partners in non-US markets, giving less profile to
our current financial condition. During 2001, our European
direct sales organization has been dramatically reduced. We plan
to continue to invest in international markets by partnering
with OEMs, VARs and distributors throughout the world.
International revenues may fluctuate in 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.

Cost of revenue

Our cost of revenue includes salaries and related
expenses for our customer maintenance and support, professional
consulting and implementation and training services
organizations and costs of contracting with third parties to
provide consulting services to customers and amortization of
software development costs. Our cost of revenue also 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, and depreciation
expenses.

Total cost of revenue for the years ended
December 31, 2001, 2000 and 1999 was $6.4 million,
$10.4 million and $2.7 million, or 70%, 40% and 27% of
total revenue, respectively. Total cost of revenue decreased by
$4.0 million, or 38%, from 2000 to 2001 and increased by
$7.7 million, or 285%, from 1999 to

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

2000. The decrease on a dollar basis from 2000 to
2001 was a result of the substantial decline in total revenues
for the year ended December 31, 2001. The increase on a
dollar basis from 1999 to 2000 is primarily due to amortization
of capitalized software costs of $923,000 and increased service
costs related to consulting fees and payroll expenses. Total
cost of revenue increased to 70% of total revenue in 2001 from
40% in 2000 and 27% in 1999. The increase in cost of revenue as
a percentage of total revenue for the year ended
December 31, 2001 resulted primarily from a significant
acceleration in software amortization in the amount of
approximately $3.5 million. Amortization of capitalized
software costs was accelerated as projection of any future
revenues from underlying product sales was deemed to be
uncertain for purposes of evaluating recoverability.

Gross margins for the years ended
December 31, 2001, 2000 and 1999 were 30%, 60% and 73% of
total revenue, respectively. The decrease in gross margin from
2000 to 2001 is primarily due to a reduced proportion of license
revenues, which historically have generated for us higher
margins than service revenues (contributing approximately 9% to
the decline), a significant charge of $3.5 million caused by the
acceleration of the amortization of capitalized software
development costs. The decrease in gross margin from 1999 to
2000 is primarily due to amortization of capitalized software
costs of approximately $0.9 million and increased service
costs related to consulting fees and payroll expenses.

Operating Expenses

Our operating expenses are classified into five
general categories: sales and marketing, research and
development, general and administrative, amortization of
stock-based compensation and amortization of goodwill. In
addition to five general categories, we have recorded special
charges for restructuring expense, loss on lease termination and
impairments in 2001. 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 may be common to
the other categories, 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 and
utilities for the corporate office and depreciation expense for
office furniture and equipment.

Our total operating expenses for the years ended
December 31, 2001, 2000 and 1999 were $27.1 million,
$46.7 million and $21.4 million, or 298%, 178% and
211% of total revenues, respectively. Operating expenses
decreased from 2000 to 2001 resulted from our efforts to
streamline our operations and reduce our expenditure levels
associated with the restructuring that we announced and
implemented in the second half of 2000 and the first quarter of
2001. Operating expenses increased in absolute dollars from 1999
to 2000 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.

On January 5, 2001, we reduced our workforce
in the United States by 87 positions, or 36% of our workforce in
the United States, and aggressively cut costs. On April 6,
2001, we announced that we are restructuring our business to
focus on three distribution models: e-government with systems
integrators, OEM partnerships and independent resellers. As a
result of the new focus and an ongoing effort to reduce costs
and preserve cash, we reduced our workforce further by 55
positions out of the 151 positions remaining after the earlier
reduction, or 37% of our workforce in the United States. The
reductions were made in functional areas that did not align with
the streamlined distribution model, primarily in direct sales
and marketing with further reductions in our consulting
organization. On June 29, 2001, we reduced our workforce
further by approximately 10 positions or 14% of our then current
workforce would occur to further reduce costs. By
September 17, 2001, we had further reduced our workforce in
the United States by 21 positions, or 36% of our

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

then remaining workforce in the United States. At
December 31, 2001, our workforce totaled 33 employees. It
is possible that we will have further cost and workforce
reductions in the future.

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, 2001,
2000 and 1999 were $11.5 million, $28.2 million and
$11.3 million, or 127%, 108% and 111% of total revenue,
respectively. Sales and marketing expenses decreased in absolute
dollars from 2000 to 2001 due to reduced salaries and related
expenses resulting from decreased staffing associated with
announced restructurings in January, April, June and September
2001. Sales and marketing expenses increased in absolute dollars
from 1999 to 2000 primarily due to increased staffing, tradeshow
events and investment in international costs. In addition, costs
of $3.2 million were charged to bad debt reserve for the
fiscal year ending December 31, 2000. We believe that sales
and marketing expenses are likely to decline in absolute dollars
in the near term as a result of the cost containment procedures
we have implemented.

Research
and Development

Research and development expenses consist of
operating expenses associated with software development.
Research and development expenses for the years ended
December 31, 2001, 2000, and 1999 were $4.7 million,
$8.3 million, and $5.9 million, respectively, or 51%,
31%, and 58% total revenue, respectively. In 2001, we did not
capitalize any software development costs. Had we not
capitalized any software development costs for the year ended
December 31, 2000, research and development expense would
have been 41% of total revenue. Research and development expense
decreased by 43% from 2000 to 2001. The decrease in research and
development expenses was principally due to our reduced use of
outside contractors and reduced salary-related expenses from our
restructuring. Research and development expenses increased 32%
without software capitalization in 2000 as compared to the year
ended December 31, 1999. The increase in research and
development expenses in fiscal 2000 compared to 1999 was due to
planned increases in research and development headcount plus
increased spending for external consultants. Early in fiscal
2000, we began enhancing our E-Portal Suite software, which was
already a working product. Accordingly, we had attained
technological feasibility, as defined in the accounting
standards. We capitalized approximately $3.4 million
additional development costs related to enhancing this product
in fiscal 2000. In the three months ended June 30, 2001,
the remaining balance of previously capitalized software
development costs was fully amortized as projection of any
future revenues from software sales was deemed to be uncertain
for purposes of evaluating recoverability. The amount fully
amortized and charged to cost of revenue in 2001 was
$3.5 million and $0.9 million in 2000.

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, 2001, 2000 and 1999 were
$5.2 million, $6.9 million and $2.9 million, or
58%, 26% and 29% of total revenue, respectively. General and
administrative expense decreased in absolute dollars from 2000
to 2001 primarily due to decreased staffing associated with the
announced restructurings in January, April, June and September
2001. General and administrative expense increased in absolute
dollars from 1999 to 2000, primarily due to increased staffing,
rent, management fees and professional legal services reflecting
increased business activity and support requirements. We believe
that general and administrative expenses are likely to decline
in absolute dollars in the near term as a result of the cost
containment procedures we have implemented.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Amortization
of Stock-based Compensation

Amortization of stock-based compensation
primarily consists of charges incurred for employee stock
options issued with exercise prices less than the fair market
value of our stock at the date of grant. Amortization of
stock-based compensation for the years ended December 31,
2001, 2000 and 1999 was approximately ($0.1 million),
$1.0 million and $1.2 million, or (1)%, 4% and 12% of
total revenue, respectively. A credit of $(0.1 million) to
the statement of operations for the year ended December 31,
2001 is due to a reversal of previously recorded deferred
compensation expense related to forfeitures that occurred during
2001. Since we had previously amortized deferred compensation on
an accelerated method as allowed under Financial Accounting
Standard Board Interpretation No. 28, a credit was recorded
in the June 2001 quarter for future periods as determined by
comparing the expense as recorded to the amounts earned based on
actual vesting.

Amortization
of Goodwill

Amortization of goodwill was attributable to the
acquisition of a distributor in Switzerland in January 2000 and
is based on a straight-line method over the expected period to
be benefited, which is five years. Amortization of goodwill for
the years ended December 31, 2001 and 2000 was
approximately $0.2 million and $0.4 million,
respectively, or 2% each of total revenue. There was no
amortization of goodwill in fiscal 1999. At December 31,
2000, we performed an impairment evaluation of goodwill. The
evaluation was based on current year activities and project cash
flows as compared to the carrying value of goodwill. Our
evaluation indicated that the December 31, 2000 balance of
$1.7 million was recoverable. At June 30, 2001, we
performed a further evaluation of goodwill to determine whether
it was recoverable. The evaluation was based on current year
activities and projected cash flows as compared to the carrying
value of goodwill. This impairment evaluation indicated that the
$1.5 million of goodwill remaining unamortized was deemed
impaired as actual revenues for the acquired company were below
projected revenues and key management personnel terminated
employment with the subsidiary located in Switzerland.
Consequently, we recorded an impairment charge for the entire
remaining unamortized balance.

Restructuring
Expense, Impairment Loss and Loss on Lease Termination

In December 2000, we implemented a Board-approved
restructuring program to streamline our business and to reduce
costs, which resulted in a restructuring charge of approximately
$0.7 million. This restructuring charge included
approximately $0.2 million for severance charges associated
with the reduction in workforce (87 positions or 36% of our the
work force) and approximately $0.5 million related to estimated
losses resulting from obligations to pay rent on pre-existing
space that was vacant at that time. In connection with the
restructuring, we also recorded charges totaling approximately
$1.3 million for write-downs of leasehold improvements and
other assets. These assets were specifically identified in the
restructuring program. In April and June 2001, we implemented
another restructuring program designed to further streamline our
business and reduce costs. These restructuring programs resulted
in an additional restructuring expense of approximately
$0.2 million for severance charges associated with
reductions in our United States workforce (55 positions in April
and approximately 10 positions later in the year). As of
December 31, 2001, $23,000 of restructuring expense remains
accrued and is expected to be paid by the end of the second
quarter of fiscal 2002.

In June 2001, we terminated our corporate lease
with Alza Corporation, which was scheduled to expire in 2005 in
order to reduce future operating expenses. As consideration for
early termination, we surrendered our restricted lease deposit
of $1.0 million and a significant amount of our office
furniture, leasehold improvements and other assets associated
with the corporate lease (with a net book value of approximately
$1.8 million) to the landlord.

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

In June 2001, management decided to sell certain
equipment. In connection with this decision, we recognized a
loss on equipment held for sale of approximately
$0.9 million for the year ended December 31, 2001.

Operating Loss

For the years ended December 31, 2001, 2000
and 1999, operating loss was $24.4 million,
$30.9 million and $13.9 million, or 268%, 118% and
137% of total revenue, respectively.

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
recurring net losses in each year since inception and, as of
December 31, 2001, had an accumulated deficit of
approximately $76.8 million.

Although our restructuring is expected to
significantly reduce our operating costs, our limited operating
history makes it difficult for us to predict future operating
results with certainty and, accordingly, we cannot assure you
that we will achieve or sustain revenue growth or profitability.

Other Income and Expense, Net

Other income and expense, net, for the years
ended December 31, 2001, 2000, and 1999 was approximately
$(0.4) million, $1.5 million and $0.6 million or (4)%,
6% and 6% of revenue, respectively. The decrease between 2001
and 2000 was primarily due to a reduction in interest-bearing
cash and investment balances.

On July 6, 2001, we raised $0.5 million
in cash through a private offering of convertible debt
securities and warrants to purchase 1,250,000 shares of common
stock at a price of $0.40 per share. We issued three notes to
the individual investors. The notes payable bore interest at the
stated rate of prime plus 1% until September 6, 2001. After
September 6, 2001, the notes bore interest at a rate of 3%
plus the prime rate, compounded quarterly. For accounting
purposes, approximately $0.2 million was allocated to the
warrants and $0.2 million was initially recorded as notes
payable with a face value of $0.5 million. The amount
allocated to the warrants 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 90%. The notes were
each convertible at the option of the lenders into shares of our
common stock at a conversion price equal to the lower of either
the average closing bid price of our common stock on the Nasdaq
National Market tier of the Nasdaq Stock Market during the
20 days before July 6, 2001 or the average closing bid
price of our common stock on Nasdaq during the 20 days
before the date of conversion. We recorded the beneficial
conversion feature of approximately $0.3 million (limited
to the proceeds) as additional paid in capital. The remaining
carrying amount of the notes payable of zero was accreted to the
face value of the notes payable of $0.5 million over the
term of the debt resulting in a non-cash interest charge of $0.5
million during the third quarter of fiscal year 2001.

Extraordinary gain on extinguishment of
debt

We recorded an extraordinary gain on
extinguishment of liability in the Consolidated Statement of
Operations for the year ended December 31, 2001 to reflect
settlement of an outstanding debt of approximately
$0.3 million with a payment of $0.1 million.
Separately, in December 2001 we derecognized a payable in the
amount of approximately $0.2 million. We had carried this
disputed payable to a vendor for approximately two years and we
had not been successful in our attempts to contact the company.
We believe that this vendor is no longer in business and are not
aware of any successors-in-interest to the obligation. The
approximate $0.2 million gain is also recorded in
extraordinary gain on extinguishment of debt in the Consolidated
Statement of Operations for the year ended December 31,
2001. The gain was not adjusted for tax considerations due to
our net operating loss and tax credit carryforwards.

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Provisions of Income Taxes

We recorded an income tax provision of $65,000
for the year ended December 31, 2001 in connection with foreign
taxes. We did not record an income tax provision for the years
ended December 31, 2000 and 1999. The net deferred tax
assets as of December 31, 2001, were $0, net of a valuation
allowance of $28 million, of which $27 million relates to
net operating loss and tax credit carryforwards. The net
deferred tax assets as of December 31, 2000 were $0, net of
a valuation allowance of $20.4 million, of which
$18.5 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.

Net Loss

For the years ended December 31, 2001, 2000
and 1999, we recorded a net loss of approximately
$24.5 million, $29.3 million and $13.3 million,
or 269%, 112% and 131% of total revenue, respectively.

Recent Accounting Pronouncements

In June 2001, the FASB issued SFAS 141
Business Combinations,which addresses
financial accounting and reporting for business combinations and
supersedes Accounting Principles Board Opinion No. 16
(APB 16), Business Combinations.All business combinations in the scope of SFAS 141 are
to be accounted for using one method, the purchase method. This
Statement requires that intangible assets be recognized as
assets apart from goodwill if they meet one of two
criteria  the contractual-legal criterion or the
separability criterion. SFAS 141 also requires disclosure of the
primary reasons for a business combination and the allocation of
the purchase price paid to the assets acquired and liabilities
assumed by major balance sheet caption. This Statement does not
change many of the provisions of APB 16 related to the
application of the purchase method. Also, SFAS 141 does not
change the requirement to write off certain research and
development assets acquired in a business combination as
required by FASB Interpretation No. 4,
Applicability of FASB Statement No. 2 to Business
Combinations Accounted for by the Purchase Method.The
provisions of SFAS 141 apply to all business combinations
initiated after June 30, 2001 and applies to all business
combinations accounted for using the purchase method for which
the date of acquisition is July 1, 2001 or later. The
adoption of SFAS 141 did not have a material effect on our
consolidated financial position or results of operations.

In June 2001, the FASB issued SFAS 142,
Goodwill and Other Intangible Assets,which
supersedes APB 17, Intangible Assets.SFAS 142 addresses the accounting treatment for
goodwill and other intangible assets acquired individually or
with a group of other assets upon their acquisition. This
statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially
recognized in the financial statements. With the adoption of
SFAS 142, goodwill is no longer subject to amortization
over its estimated useful life; rather, goodwill will be subject
to at least an annual assessment for impairment by applying a
fair-value-based test. Also, if the benefit of an intangible
asset is obtained through contractual or other legal rights, or
if the intangible asset can be sold, transferred, licensed,
rented or exchanged, an acquired intangible asset should be
separately recognized. The terms of SFAS 142 are effective
as of the beginning of the first quarter of the fiscal year
beginning after December 15, 2001. Certain provisions of
SFAS 142 are applied to goodwill and other acquired
intangible assets for which the acquisition date is after
June 30, 2001. We do not believe the adoption of
SFAS 142 will have a material effect on our consolidated
financial position or results of operations.

In August 2001 the FASB issued
SFAS No. 143, Accounting for Asset Retirement
Obligationsand in October issued SFAS 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets.SFAS No. 143 requires that the fair
value of an asset retirement obligation be recorded as a
liability in the period in which it incurs the obligation.
SFAS No. 144 serves to clarify and further define the
provisions of SFAS No. 121

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed
of.SFAS No. 144 does
not apply to goodwill and other intangible assets that are not
amortized. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002 and SFAS No. 144 is
effective for fiscal years beginning after December 15,
2001. We will adopt SFAS No. 144 effective
January 1, 2002 and SFAS No. 143 effective
January 1, 2003. We do not believe the adoption of these
Statements will have a material effect on our consolidated
financial position or results of operations.

Critical Accounting Policies

Our critical accounting policies are as follows:



| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | revenue recognition;                                            
|
| |  | estimating allowance for doubtful accounts;                     
|
| |  | assessing outcome of litigation;                                
|
| |  | impairment of long-lived and intangible assets
    and goodwill;

Revenue
Recognition

We license our software products to end user
customers, OEMs and VARs. 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 undelivered elements has been
established. We have vendor-specific objective evidence for
consulting services is established by the price we charge when
we sell those services separately. We also have vendor-specific
objective evidence of fair value of post-contract customer
support based on contractually stipulated annual renewal rates
for such services. Accordingly, 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 us to deliver
specified additional features or upgrades is deferred until
delivery of the feature and/or upgrade has occurred, unless we
have sufficient vendor-specific objective evidence of fair value
to allocate revenue to the various elements in these
arrangements. Fees related to arrangements that require us to
deliver unspecified additional products are deferred and
recognized ratably over the term of the contract. 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 and recognized as
the services are performed. Our sales transactions are often
concentrated in a relatively few customers. Failure to recognize
revenue correctly could lead to material misstatement of our
financial performance, thus exposing our credibility and market
valuation.

Estimating
Allowance for Doubtful Accounts

We perform ongoing credit evaluations of our
customers financial condition and generally do not require
collateral. We maintain allowances for potential credit losses,
and these allowances are based on estimates by management. If
the estimates of credit risk are understated, we could be
exposed to significant amounts of bad debts in excess of our
provisions.

Assessing
Outcome of Litigation

Managements current estimated liability
related to certain pending litigation is based on claims for
which our management believes it is probable a liability has
been incurred and can estimate the amount or range of loss. We
have recorded the minimum estimated liability related to those
claims, where there is a range of loss. Because of the
uncertainties related to both the amount and range of loss on
the remaining pending litigation, management is unable to make a
reasonable estimate of the liability that could result from an
unfavorable

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

outcome and therefore, no liability has been
accrued. As additional information becomes available, we will
assess the potential liability related to our pending litigation
and revise our estimates. Such revisions in our estimates of the
potential liability could materially impact our results of
operation and financial position.

Impairment
of Long-lived and Intangible Assets and Goodwill

We evaluate its long-lived assets, including
goodwill, 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 estimated fair value less
costs to sell. A number of factors can trigger an impairment
review, such as significant underperformance relative to
historical or projected future operating results, significant
changes in the manner of use of the acquired assets or the
strategy for our overall business, or significant negative
industry or economic trends. The effect of such valuation
adjustments can significantly effect our financial performance
and market valuation. If we fail to identify assets that have
been impaired, we may fail to record an impairment or we may
fail to record and impairment in the proper period. If we fail
to accurately estimate fair value, any impairment loss that we
record may not be accurate.

Liquidity and Capital Resources

From our inception, we have financed our
operations primarily through private equity placements and an
initial public offering of common stock. The total amount of
equity raised through a series of private financing rounds prior
to our initial public offering and our October 1999 initial
public offering from our inception through December 31,
2001 was approximately $63.8 million. In July 2001, we raised
additional financing totaling $0.5 million through a
private offering of convertible debt securities and warrants,
and in August 2001, we raised additional financing totaling
$4.0 million through a private offering of common stock and
warrants. As of December 31, 2001, we had an accumulated
deficit of approximately $76.8 million and cash and cash
equivalents of approximately $0.5 million. For the years
ended December 31, 2001, 2000 and 1999, we had net losses
of approximately $24.5 million, $29.3 million and
$13.3 million, respectively. The size of our accumulated
deficit, our losses since inception and our ongoing need for
capital to continue our operations raises substantial doubt as
to our ability to continue operations during the year 2002.

On July 6, 2001, we received from three
lenders a $0.5 million loan at a stated interest rate of
prime plus 1%, payable on or before September 6, 2001. In
connection with the loan, we issued warrants to purchase a total
of 1,250,000 shares of common stock. The warrants are each
immediately exercisable at a price of $0.40 per share. The notes
were each convertible at the option of the lenders into shares
of our common stock at a conversion price equal to the lower of
either the average closing bid price of our common stock on
Nasdaq during the 20 days before July 6, 2001 or the
average closing bid price of our common stock on Nasdaq during
the 20 days before the date of conversion. The lenders
elected not to convert and the full loan principal of
$0.5 million and accrued interest of approximately $7,000
was repaid to the three lenders on September 16, 2001,
September 24, 2001 and October 5, 2001.

On August 13, 2001, we received from three
investors $4.0 million in exchange for 14,814,814 shares of
common stock. In connection with this investment, we issued
warrants to purchase a total of 2,962,962 shares of common
stock; the warrants are generally exercisable after
February 12, 2002 at a price of $0.27 per share. We
incurred a commission related to the transaction to a
third-party finder in the amount of $240,000.

On December 11, 2001, we circulated a
workout agreement with certain of our creditors representing
approximately $1.9 million of our outstanding accounts
payable. In February 2002, these creditors released us from any
obligation to repay any such amounts in exchange for payment of
25% of the total debt we owed

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

them as of September 30, 2001. On
February 8, 2002, we paid the creditors that were party to
the workout agreement their respective agreed upon amounts
aggregating approximately $0.5 million, which will result
in an extraordinary gain of $1.4 million which will be
reflected in our first quarter of 2002 financial results. As of
December 31, 2001, we set aside $0.5 million in
restricted cash for the purpose of settling the
$1.9 million in accounts payable.

On March 18, 2002, we received
$1.0 million in financing through a private offering of
debt securities and a commitment to provide additional financing
of up to $2.0 million upon request from Mr. Heungyeung
Yeung, who currently holds certain of our equity securities.
Mr. Yeungs commitment to provide $2.0 million in
additional financing is subject to certain conditions relating
to our ability to meet our obligations under the notes and
warrants issued to Mr. Yeung, changes in our equity
ownership, composition of our management team and any change in
control.

As consideration for the funds and the commitment
to provide additional funds, we issued a convertible promissory
note and two warrants to Mr. Yeung. The note has a
principal amount of $1.0 million and is convertible into
16,711,230 shares of our common stock. The note accrues interest
at a stated rate of 1% per year and matures on March 18,
2004.

We are currently attempting to raise additional
financing to fund our operations. There can be no assurance that
we will be successful in our efforts to reduce expenses or to
obtain additional financing. Failure to reduce expenses and/or
to obtain additional financing will result in a material adverse
effect on our ability to meet our business objectives and
continue as a going concern. Based on our assumptions, which we
believe are reasonable, we believe we may have sufficient cash
to reach profitability provided that we meet the revenue and
expense goals contained in our business plan.

As of December 31, 2001, our principal
source of liquidity was $0.5 million in cash and cash
equivalents representing a $15.5 million decrease from the
December 31, 2000 balance of $16.0 million. Net cash
used in operating activities for 2001 was approximately
$12.5 million. The net use of cash for the year ended
December 31, 2001 resulted primarily from our net loss of
$24.5 million and a $3.6 million decrease in accounts
payable, accrued expenses, accrued vacation and accrued bonus
and a $2.0 million decrease in deferred revenue, which were
partially offset by a $5.9 million decrease in accounts
receivable, non-cash charges of $2.8 million in loss on
lease termination, $2.4 million in impairment losses and
$0.9 million in depreciation and amortization. Net cash
used in investing activities for the year ended
December 31, 2001 was approximately $0.2 million. Net
cash used in financing activities for the year ended
December 31, 2001 was approximately $2.7 million and
resulted primarily from the $5.0 million repayment of a
bank line of credit and a $1.0 million note payable from a
business acquisition offset by proceeds from the sale of equity
instruments of $3.8 million.

In 2000, cash used in operating activities of
approximately $23.3 million was primarily attributable to a
net loss for the year of $29.3 million, and also due to the
changes in operating assets and liabilities. Cash used in
investing activities was $11.9 million, related primarily
to capital expenditures, capitalizable software development
costs, a security deposit and cash paid in a business
acquisition. Our capital expenditures primarily consisted of
purchases of computer hardware, software and leasehold
improvement expenditures related to our corporate facility. Cash
provided by financing activities of $6.4 million for 2000
was primarily attributable to $5.0 million in borrowing
under a line of credit.

During the year 1999 cash used in operating
activities of $10.1 million was primarily attributable to a
net loss for the year of $13.3 million, partially reduced
by non-cash charges from amortization and depreciation. Cash
used in investing activities of $1.5 million 1999 related
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 $52.1
million for 1999 were primarily attributable to net proceeds
from our initial public offering October 1999.

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Our liquidity and capital requirements depend on
numerous factors discussed under the section entitled
Risk Factors That May Affect Future Resultsbeginning on page 32. Factors such as the ability to
expand our customer base, the level of investment in our
business, the level of expenditures for marketing and sales, the
level of investment in distribution, customer service and other
capabilities would also increase our liquidity requirements. The
timing and amount of these capital requirements cannot be
accurately predicted.

Our financial statements were prepared on the
assumption that we will continue as a going concern. The report
of our independent accountants for the year ended
December 31, 2001 acknowledges that we have incurred losses
in each of the last three fiscal years. These conditions cause
substantial doubt as to our ability to continue as a going
concern. Our financial statements included herein do not include
any adjustments that might result should we be unable to
continue as a going concern.

RISK FACTORS THAT MAY AFFECT FUTURE
RESULTS

Risks Related to Viador

We may seek protection, or be the subject of
involuntary proceedings, under the Federal Bankruptcy
Code.

We may seek protection under Chapter 11 of
the Federal Bankruptcy Code. Additionally, we are subject to the
risk that creditors may seek to commence involuntary bankruptcy
proceedings against us. If we file for Chapter 11
protection, or if involuntary proceedings are commenced against
us, by our creditors, our creditors or other parties in interest
may be permitted to propose their own plan, and we could be
unsuccessful in having a plan of reorganization confirmed which
is acceptable to the requisite number of creditors and holders
entitled to vote on such a plan. This could lead to our
inability to emerge from Chapter 11. Moreover, once
bankruptcy proceedings are commenced, either by the filing of a
voluntary petition or if an involuntary petition is filed
against us, our creditors could seek our liquidation. If a plan
were consummated or if we were liquidated, it would almost
certainly result in our creditors receiving less than 100% of
the face value of their claims, and in the claims of our equity
holders being cancelled in whole. In addition, during any
bankruptcy or similar proceeding, we would need court approval
to take any actions out of the ordinary course, which would
result in our inability to manage the normal operations of the
company and which would cause us to incur additional costs
associated with the bankruptcy process.

Auditors opinion expresses doubt about
our ability to continue as a going
concern.

The Independent Auditors Report issued in
connection with the audited financial statements of the Company
for our fiscal years ended December 31, 2001 and 2000,
expresses substantial doubt about the Companys ability to
continue as a going concern, due to the lack of sufficient
source of revenue and our dependence on our ability to raise
capital from stockholders or other sources to sustain
operations. See Financial Statements 
Independent Auditors Report.

As a result of questions concerning our status
as a going concern, our customers and vendors may decide not to
do business with us.

Due to concerns regarding our ability to continue
operations, customers and vendors may decide not to conduct
business with us, or may conduct business with us on terms that
are less favorable than those customarily extended by them.
Additionally, we are currently experiencing some resistance in
the marketplace and we believe that one of the several factors
for this resistance is related to concerns regarding our ability
to continue our business as a going concern. In any event, if
customers and vendors decide not to conduct business with us,
our net sales would further decrease, and our business will
suffer significantly.

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

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, was first shipped in the first
quarter of 1999. We introduced Viador Portlets in the second
quarter of 2000 and Viador E-Portal Express in the fourth
quarter of 2000.

We have made significant investments in our sales
and marketing programs, personnel recruitment, product
development and infrastructure and have experienced significant
losses on a quarterly and annual basis in the past. 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. 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.

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, 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;    
|
| |  | 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.

We may not be able to continue operating if we
cannot raise additional financing.

Our independent certified public accountants have
included an explanatory paragraph in their audit report for the
years ended December 31, 2001 and 2000 with respect to our
financial statements raising a substantial doubt with respect to
our ability to continue as a going concern. Any significant
increase in planned capital expenditures or other costs or any
decrease in or elimination of anticipated sources of revenue
could cause us to restrict our business and product development
efforts or to continue to deplete our available cash. We are
attempting to find additional funding to finance our operations.
Additional funding alternatives may not be available to us
within the necessary timeframe, on favorable terms or at all. If
we do not realize significant additional revenue or raise
additional debt or equity financing, we may be unable to execute
our business development efforts, and we may be unable to
continue as a going concern or we may have to sell assets. The
factors leading to and the existence of the explanatory
paragraph in the audit report will have a material adverse
effect on our ability to obtain additional financing.

Failure to raise additional capital will have
a material adverse effect on our ability to operate as a going
concern.

We may require additional financing to fund the
continuation and growth of our operations, which involves
funding for our working capital requirements. We may have
insufficient capital to fund our operations through the next 12
months. We are actively seeking financing our current capital
needs through the sale of additional equity. However, the
significant contraction in the capital markets, particularly in
the technology sector, combined with our early stage of
commercial operations has made it difficult to raise additional
capital. If we do not obtain additional cash funding, the
carrying amounts of certain assets, including property,
equipment and capitalized software development costs may not be
recovered.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Additional future equity or debt financing may
not be available to us on favorable terms or at all. Future
borrowing instruments such as credit facilities and lease
agreements are also likely to contain restrictive covenants and
will likely require us to pledge assets as security for
borrowings under those future arrangements. Failure to raise
sufficient additional capital would have a material adverse
effect on our ability to operate as a going concern or to
achieve our business objectives. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resourceson page 30.

Our cost-cutting efforts may harm our
business.

Our management is implementing plans designed to
reduce our cash requirements through a combination of reductions
in components of working capital, equipment purchases and
operating expenditures, including a significant reduction in
force. However, there can be no assurance that we will be able
to successfully implement these plans or that we will be able to
do so without a material adverse effect on our business,
financial condition or results of operations.

Our business currently depends on revenue
related to the Viador E-Portal, 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.
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 still in its infancy as an emerging technology 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, our other
    products and our services;                                                         
|
| |  | 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 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 49%, 29%
and 28% of total revenue for the years ended December 31,
2001, 2000 and 1999, respectively. We anticipate that service
revenue will fluctuate as a percentage of total revenue. 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.

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Continuing uncertainty of the U.S. economy,
which has spread to Europe and Asia, may have serious
implications for the growth and stability of our business and
may negatively affect our stock price.

The revenue growth and profitability of our
business depends significantly on the overall demand for
software products, particularly in the product segments in which
we compete. Softening demand for these products caused by
ongoing economic uncertainty may result in decreased revenues or
earnings levels or growth rates. The U.S. economy has weakened
and market conditions continue to be challenging. This weakening
has resulted in individuals and companies delaying or reducing
expenditures. Further delays or reductions in spending could
have a material adverse effect on demand for our services, and
consequently on our business, operating results, financial
condition, prospects and stock price. In addition, the terrorist
acts of September 11, 2001 and subsequent terrorist
activities have created an uncertain economic environment and we
cannot predict the impact of these events, or of any related
military action, on our customers or business. We believe that
these events may cause some businesses to eliminate or further
curtail spending on technology related to our products.

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

Since our inception, we have experienced
recurring operating losses, negative cash flows from operations
and net losses in each quarterly and annual period. As of
December 31, 2001, we had an accumulated net deficit of
approximately $76.8 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 a weak
economic environment and significant competition.

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:



| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | retain a sufficient number of qualified sales and
    marketing personnel;                                                               
|
| |  | effectively market the Viador E-Portal, our other
    products and our services;                                                         
|
| |  | 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.

We were unable to maintain our listing on The
Nasdaq National Market tier of the Nasdaq Stock
Market.

On July 3, 2001, we received a letter from
Nasdaq indicating we failed to comply with the minimum bid price
required for continued listing as set forth in marketplace rule
4450 (a) (5) and that its securities were, therefore,
subject to delisting from Nasdaq. We requested a hearing before
a Nasdaq Listing Qualifications Panel to review this
determination. On August 15, 2001, Nasdaq notified us of
additional deficiencies

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

including net tangible assets and
stockholders equity, market capitalization, total assets,
total revenues, and audit committee composition requirements.
Despite our attempts to remedy these deficiencies, on
October 30, 2001 we were notified by Nasdaq that our
securities would be delisted from the Nasdaq National Stock
Market tier of the Nasdaq Stock Market effective with the
opening of business on October 31, 2001. The delisting
occurred on October 31, 2001 and our shares of common stock
are now traded on the Over-the-Counter Bulletin Board.

The delisting of our stock has had a material
negative impact on the trading market and price of our stock and
has subjected us to certain state regulatory requirements.
Low-priced stocks are subject to additional risks, including and
the potential loss of effective trading markets.

There may be no active trading market in our
common stock.

Presently, our common stock is eligible to be
traded on the Over-the-Counter Bulletin Board. Effective with
the open of business on October 31, 2001, our common stock
was delisted from The Nasdaq National Market. Since we have been
delisted from Nasdaq, we cannot assure you that an active
trading market for our common stock will continue. If an active
trading market for our common stock is not sustained, you may
not be able to sell your common stock when you need to do so, or
at a price acceptable to you, or even at all.

The trading price for our common stock has
fallen substantially and this could affect our ability to raise
capital and your ability to resell your shares at or above the
price you paid to purchase such shares.

The stock market, in general, and the trading
prices of shares in public technology companies, have been
extremely volatile and have experienced a substantial drop in
market price. Indeed, the trading price of our common stock
dropped significantly, thereby precipitating our delisting from
Nasdaq. We believe that this drop has resulted from many
factors, some of which are beyond our control, such as:



| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | investor perception of us and Internet-related
    businesses in general;          
|
| |  | general economic conditions both in the United
    States and in foreign countries;
|
| |  | our results in operations;                                                         
|
| |  | adverse business developments;                                                     
|
| |  | changes in financial estimates by securities
    analysts; and                     
|
| |  | announcements by our competitors of new products
    and services.                 

As a result of these factors, and due to the
risks related to the absence of an active trading market for our
common stock (which are described above) we cannot assure you
that the trading price of our common stock will not continue to
drop or stay at its currently low price. The significant
decreases in the trading price of our common stock and the
currently low trading price that we are experiencing is likely
to affect our visibility and credibility in our market and will
likely limit our ability to raise capital in the future.
Additionally, as a result of our low stock trading price and our
delisting for Nasdaq, you may not be able to resell your shares
of common stock when you need to or at prices higher than what
you paid to purchase such shares.

If our stock price is volatile, we may become
subject to securities litigation which is expensive and could
result in a diversion of resources.

Securities class action litigation has often been
brought against companies that experience volatility in the
market price of their securities. Litigation brought against us
could result in substantial costs to us in defending against the
lawsuit and a diversion of managements attention that
could cause our business to be harmed.

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Future sales of our common stock may
negatively affect our stock price.

The market price of our common stock could
decline as a result of sales of a large number of shares of our
common stock in the market, or the perception that such sales
could occur. These sales also might make it more difficult for
us to sell equity securities in the future at a time and at a
price that we deem appropriate.

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

We may 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 size and timing of customer orders,
    particularly large orders, some of which represent more than 10%
    of total revenue during a particular quarter;
|
| |  | 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 period-to-period comparisons of our
operating results are not necessarily meaningful and cannot be
relied upon as indicators of future performance. In future
periods, 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 one million dollars. 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.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

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.

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

During 2001, 2000 and 1999, we derived 19%, 14%
and 6%, 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

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

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. We are
currently working on renewing the terms of distributorship. 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
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.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

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, from Inktomi. This
technology provides users of our products with the ability to
search and classify information. We also license JRUN, a Java
servlet engine from Macromedia, which is necessary for users to
access the Viador E-Portal. 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.

If we do not manage the recent reduction in
our workforce, it could have a material adverse effect on our
business.

On January 5, 2001, we reduced our workforce
in the United States by 87 positions, or 36% of our workforce in
the United States, and aggressively cut costs. On April 6,
2001, we further reduced our workforce by 55 people, or 37% of
our workforce. On June 29, 2001, we announced another
workforce reduction of approximately 10 people or 14% of the
workforce to further reduce costs. On September 17, 2001,
we had further reduced our workforce in the United States by 21
positions, or 36% of our workforce in the United States. At
December 31, 2001, our workforce totaled 33 employees. It
is possible that we will have further workforce and cost
reductions in the future.

Any failure to manage the impact of the workforce
reduction on our product development schedules, our ability to
retain remaining personnel, or our ability to recruit new
employees in the future could have a material adverse effect on
our business, operating results and financial condition.

If we are unable to motivate and retain our
personnel, it could have a material, adverse effect on our
business.

Our success depends in large part on our ability
to motivate and retain highly skilled employees on a timely
basis. Our workforce reductions and any future workforce
reduction could result in some disruption in our ongoing
operations and harm our efforts to motivate existing employees.
Our failure to retain highly skilled personnel may limit the
rate at which we generate revenue and develop new products or
product enhancements. This could have a material adverse effect
on our business, operating results and financial condition.

We have appointed a new president and chief
financial officer, and the integration of these officers may
interfere with our operations.

On August 13, 2001, we announced the
appointment of Stan X. Wang as president of our company. In
October 2001, we announced the appointment of Nathan A.
Cammack as our new chief financial officer. The transitions of
Messrs. Wang and Cammack have resulted and will continue to
result in disruption to our ongoing operations, and these
transitions may materially harm the way that the market
perceives our company and the price of our common stock.

Loss of either of our executive officers could
harm our business.

Our future success depends to a significant
degree on the skills, experience and efforts of our senior
management. In particular, we depend upon the continued services
of Messrs. Wang and Cammack. The loss of the services of
Messrs. Wang and/or Cammack could harm our business and
operations. In addition, we have not obtained life insurance
benefiting us on any of our employees or entered into employment
agreements with our key employees. If any of our key employees
left or was seriously injured and unable to work and we were
unable to find a qualified replacement, our business could be
harmed.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

If we do not successfully recruit and retain
skilled personnel for permanent management positions, we may not
be able to effectively implement our business
objectives.

We have experienced significant personnel changes
at the senior management level. During 2001, Dick Warmington
resigned as interim president and chief executive officer and
Alice Pilch resigned as chief financial officer. We appointed
Stan X. Wang president in September 2001 and Nathan A.
Cammack chief financial officer in October 2001. On
October 1, 2001, Don Cochrane resigned as vice president of
worldwide sales and marketing. We cannot predict how these
changes in management will affect our business. However, if we
fail to recruit and retain qualified individuals to permanently
serve in these senior management positions, our business,
financial condition and results of operations will be seriously
harmed.

We may not be able to recruit and retain
personnel, 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 chief technology officer, our
senior vice president of worldwide sales and marketing, 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.
Our ability to attract and retain skilled and experienced
personnel may be adversely impacted by limitations on our
ability to issue stock options due to the delisting of our
common stock from the Nasdaq National Market System. 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 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.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

Class action litigation due to stock price
volatility could lead to substantial costs and divert our
managements attention and resources.

In the past, securities class action litigation
often has been brought against a company following periods of
volatility in the market price of its securities. Companies in
the semiconductor industry and other technology industries are
particularly vulnerable to this kind of litigation due to the
high volatility of their stock prices. Accordingly, we have been
the target of securities litigation, such as the class action
law suit filed against us by The Plaintiffs Executive
Committee. Securities litigation could result in substantial
costs and could divert our managements attention and
resources. For further information regarding the law suit, see
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Recent
Events  Class Action Law Suit on
page 41.

Our business may be affected by the events of
September 11, 2001.

Our business and operating results may differ
materially from our expectations due to consequences
attributable to the events that took place in New York City and
Washington D.C. on September 11, 2001. We cannot predict
the nature or effect on our revenues or operations of any future
political or economic events and policies that may arise
directly or indirectly as a result of those events. In addition,
these events may continue to have a negative impact on the
general emotions and psychology of the marketplace, which could
cause our stock price to fluctuate.

Risks Related To Our Industry

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

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, large application software vendors, and application
server vendors providing a portal add-on. 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. We cannot assure 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.                                    

43



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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

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. 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 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 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 may have to support an increased
number of systems in the future. We currently develop our
products on Microsoft Windows NT and Solaris. 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

44



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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    (CONTINUED)

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 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.

Reliance on Continuous Power Supply

California has recently experienced an energy
crisis that could disrupt our operations and increase our
expenses of our California facilities. In the event of an acute
power shortage, that is, when power reserves for the State of
California fall below certain critical levels, California has on
some occasions implemented, and may in the future continue to
implement, rolling blackouts throughout California. We currently
do not have adequate backup generators or alternate sources of
power in the event of a blackout, and our current insurance does
not provide coverage for any damages we or our customers may
suffer as a result of any interruption in our power supply. If
blackouts interrupt our power supply, we would be temporarily
unable to continue operations at our California facilities. Any
such interruption in our ability to continue operations at our
facilities could damage our reputation, harm our ability to
retain existing customers and to obtain new customers, and could
result in lost revenue, any of which could substantially harm
our business and results of operations.

45



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##### Table of Contents






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 and 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, 2001, we held no
interest-bearing investments. At December 31, 2000 and
1999, our cash investments were all short-term and had an
average interest rate ranging from 6.56% to 6.73%. The fair
value of our cash investments approximated the book value as of
December 31, 2001 and 2000 of $0.5 million and
$16.0 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. No foreign
currency derivatives were purchased or written during the
three-year period ended December 31, 2001.




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.

46



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PART III




ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT

Information regarding the directors of Viador is
set forth under Election of Directors on
pages 15-16 of Viadors Notice of Annual Meeting of
Stockholders and Proxy Statement, as amended, dated May 2,
2002 (the Notice of Proxy Statement), which pages
are incorporated herein by reference. Information with respect
to the Companys executive officers who are not directors
is included in Item 1. Business 
Executive Officers of the Registrant.




ITEM 11. EXECUTIVE
COMPENSATION

Information regarding Viadors compensation
of its named executive officers and directors is set forth on
pages 18-21 of the Notice and Proxy Statement, which pages
are incorporated herein by reference.






|         |                                                                    
|-------- | -------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP AND CERTAIN BENEFICIAL
    OWNERS AND MANAGEMENT

Information regarding security ownership of
certain beneficial owners and management is set forth on
pages 21-23 of the Notice and Proxy Statement, which pages
are incorporated herein by reference.






|         |                                                   
|-------- | --------------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED
    TRANSACTIONS

Information regarding certain relationships and
related transactions is set forth on page 29-30 of the
Notice and Proxy Statement, which pages are incorporated herein
by reference.




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.

|                                                                                                                                               |  |      |     | 
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                               |  | Page
|                                                                                                                                               |  |     
|Independent Auditors Report                                                                                                                   |  |      | F-2 | 
|Consolidated Balance Sheets as of
    December 31, 2001 and 2000.                                                                              |  |      | F-3 | 
|Consolidated Statements of Operations for the
    years ended December 31, 2001, 2000 and 1999                                                 |  |      | F-4 | 
|Consolidated Statements of Stockholders
    Equity (Deficit) and Comprehensive Loss for the years ended
    December 31, 2001, 2000 and 1999. |  |      | F-5 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2001, 2000 and 1999                                                 |  |      | F-7 | 
|Notes to Consolidated Financial Statements                                                                                                     |  |      | F-8 | 



| |                                 
| | --------------------------------
| | 2. Financial Statement Schedule.

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

|                                                    |  |  |     | 
|--------------------------------------------------- |  |  | --- | 
|Schedule II  Valuation and
    Qualifying Accounts |  |  | S-1 | 

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

47



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

|            |           |               |  |                                                                                                                                                                                  
|----------- | --------- | ------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |           | Exhibit Title
|            |           |              
|            | ****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
|            | ***10.13  |               |  | Note Secured by Stock Pledge Agreement, by and
    between Raja Venkatesh and the Registrant, dated April 14,
    2000                                                           
|            | ***10.14  |               |  | Stock Pledge Agreement, by and between Raja
    Venkatesh and the Registrant, dated April 14, 2000                                                                               
|            | ***10.15  |               |  | Note Secured by Stock Pledge Agreement, by and
    between Raja Venkatesh and the Registrant, dated May 26,
    2000                                                             
|            | ***10.16  |               |  | Stock Pledge Agreement, by and between Raja
    Venkatesh and the Registrant, dated May 26, 2000                                                                                 
|            | ****10.17 |               |  | Note Secured by Stock Pledge Agreement, by and
    between Mr. Steve Dille and the Registrant, dated
    July 13, 2000                                                           
|            | ****10.18 |               |  | Stock Pledge Agreement, by and between
    Mr. Steve Dille and the Registrant, dated July 13, 2000                                                                               
|            | ****10.19 |               |  | Employment Agreement between Mr. Steve Dille
    and the Registrant dated November 30, 2000                                                                                      
|            | ****10.20 |               |  | Employment Agreement by and between
    Mr. Johnathan Harding and the Registrant dated
    October 5, 2000                                                                       
|            | ****10.21 |               |  | Mutual Release Agreement by and between Viador
    GmbH and the Registrant Dated November 27, 2000                                                                               
|            | ^10.22    |               |  | Sublease Termination Agreement by and between the
    Registrant and Alza Corporation, dated May 31, 2001.                                                                       

48



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|            |        |               |  |                                                                                                                                                                                                                                                   |                                                                                
|----------- | ------ | ------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------
|Exhibit No. |        | Exhibit Title
|            |        |              
|            | ^10.23 |               |  | Convertible Note and Warrant Purchase Agreement
    by and among the Registrant and Messrs. Dick Warmington,
    Zhihan Wang and Kin Lui, dated July 6, 2001.                                                                                    
|            | ^10.24 |               |  | Form of Convertible Promissory Note issued in
    connection with Convertible Note and Warrant Purchase Agreement
    by and among the Registrant and Messrs. Dick Warmington,
    Zhihan Wang and Kin Lui, dated July 6, 2001.                  
|            |        |               |  |                                                                                                                                                                                                                                                   | Schedule of Convertible Promissory Notes Issued:                               
|            |        |               |  |                                                                                                                                                                                                                                                   | (a) Convertible Promissory Note for $300,000
    issued to Mr. Zhihan Wang;    
|            |        |               |  |                                                                                                                                                                                                                                                   | (b) Convertible Promissory Note for $100,000
    issued to Mr. Dick Warmington;
|            |        |               |  |                                                                                                                                                                                                                                                   | (c) Convertible Promissory Note for $100,000
    issued to Mr. Kin Lui.        
|            | ^10.25 |               |  | Form of Warrant issued in connection with
    Convertible Note and Warrant Purchase Agreement by and among the
    Registrant and Messrs. Dick Warmington, Zhihan Wang and Kin
    Lui, dated July 6, 2001.                                      
|            |        |               |  |                                                                                                                                                                                                                                                   | Schedule of Warrants Issued:                                                   
|            |        |               |  |                                                                                                                                                                                                                                                   | (a) Warrant for 750,000 shares issued to
    Mr. Zhihan Wang;                  
|            |        |               |  |                                                                                                                                                                                                                                                   | (b) Warrant for 250,000 shares issued to
    Mr. Dick Warmington;              
|            |        |               |  |                                                                                                                                                                                                                                                   | (c) Warrant for 250,000 shares issued to
    Mr. Kin Lui.                      
|            | ^10.26 |               |  | Convertible Promissory Note issued to
    Mr. Dick Warmington in connection with Convertible Note and
    Warrant Purchase Agreement by and among the Registrant and
    Mssrs. Dick Warmington, Zhihan Wang and Kin Lui, dated
    July 6, 2001.
|            | ^10.27 |               |  | Warrant issued to Mr. Dick Warmington in
    connection with Convertible Note and Warrant Purchase Agreement
    by and among the Registrant and Messrs Dick Warmington, Zhihan
    Wang and Kin Lui, dated July 6, 2001.                        
|            | ^10.28 |               |  | Sublease Agreement by and between the Registrant
    and Techspan, Inc., dated July 2, 2001.                                                                                                                                                     
|            | ^10.29 |               |  | Severance Agreement by and between the Registrant
    and Jonathan Harding, dated May 8, 2001.                                                                                                                                                   
|            | ^10.30 |               |  | Stock Purchase Agreement by and among Registrant
    and Messrs. Heungyeung Yeung, Zhihan Wang, and Magison
    Investment Ltd., dated August 13, 2001.                                                                                          
|            | ^10.31 |               |  | Form of Warrant issued in connection with Stock
    Purchase Agreement by and among Registrant, and
    Messrs. Heungyeung Yeung, Zhihan Wang, and Magison
    Investment Ltd., dated August 12, 2001.                                           
|            |        |               |  |                                                                                                                                                                                                                                                   | Schedule of Issued Warrants in Equity Financing                                
|            |        |               |  |                                                                                                                                                                                                                                                   | a. Warrant to Mr. Heungyeung Yeung                                             
|            |        |               |  |                                                                                                                                                                                                                                                   | b. Warrant to Mr. Zhihan Wang                                                  
|            |        |               |  |                                                                                                                                                                                                                                                   | c. Warrant to Magison Investment Ltd.                                          
|            | ^10.32 |               |  | Employment Agreement by and between the
    Registrant and Alice Pilch dated June 25, 2001.                                                                                                                                                      
|            | #10.33 |               |  | Convertible Note and Warrant Purchase Agreement
    by and between the Registrant and Heungyeung Yeung dated
    March 18, 2002.                                                                                                                 
|            | #10.34 |               |  | Form of Convertible Promissory Note Issued to
    Mr. Yeung in connection with Convertible Note and Warrant
    Purchase Agreement by and between the Registrant and
    Mr. Yeung dated March 18, 2002.                                         
|            | #10.35 |               |  | Form of Convertible Promissory Note issuable to
    Mr. Yeung in connection with Convertible Promissory Note
    and Warrant Purchase Agreement by and between the Registrant and
    Mr. Yeung, dated March 18, 2002.                           
|            | #10.36 |               |  | Form of Warrant issued to Mr. Yeung in
    connection with Convertible Promissory Note and Warrant Purchase
    Agreement by and between the Registrant and Mr. Yeung,
    dated March 18, 2002.                                                 
|            | #10.37 |               |  | Form of Warrant issued to Mr. Yeung in
    connection with Convertible Promissory Note and Warrant Purchase
    Agreement by and between the Registrant and Mr. Yeung,
    dated March 18, 2002.                                                 

49



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|            |        |               |  |                                                                                                                             
|----------- | ------ | ------------- |  | ----------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |        | Exhibit Title
|            |        |              
|            | #10.38 |               |  | Workout Agreement by and between Registrant and
    certain of its creditors as listed therein, dated
    December 11, 2001.
|            | 23.1   |               |  | Independent Auditors Report and Consent.                                                                                   
|            | 24.1   |               |  | Power of Attorney (included on page 51).                                                                                    



---



|     |                                                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*    | Incorporated by reference to Exhibits of the
    Registrants Registration Statement on Form S-1 (File
    No. 333-84041) filed on October 25, 1999.                                                              
|    
|**   | Incorporated by reference to Exhibits of the
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 1999, filed with the Securities and
    Exchange Commission on March 30, 2000.
|    
|***  | Incorporated by reference to the
    Registrants Quarterly Report on Form 10-Q, filed on
    August 14, 2000.                                                                                                    
|    
|**** | Incorporated by reference to the
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000, with the Securities and
    Exchange Commission dated April 2, 2001.                



|  |                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------
|^ | Incorporated by reference to the
    Registrants Quarterly Report on Form 10-Q, filed on
    August 20, 2001.
| 
|# | Incorporated by reference to the
    Registrants Annual Report on Form 10-K, filed on
    April 15, 2002.    

(b) Reports on Form 8-K.

The Registrant filed a report on Form 8-K on
October 10, 2001 announcing the appointment of Stan X.
Wang as President and Chief Executive Officer and Nathan A.
Cammack as Chief Financial Officer and the resignations of Dick
Warmington as Chief Executive Officer and Alice Pilch as Chief
Financial Officer.

(c) See the Exhibit Index of this
Annual Report on Form 10-K/A.

50



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##### Table of Contents






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/A to be signed on its behalf
by the undersigned, thereunto duly authorized on this 6th day of
May 2002.



| |            
| | -----------
| | VIADOR INC.



| |     |                 
| | --- | ----------------
| | BY: | /s/ Stan X. Wang

| |                        
| | -----------------------
| | 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 X. Wang and Nathan A. Cammack 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/A
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/A has been signed below by the following persons
on behalf of the Registrant and in the capacities indicated:

|                                       |  |                                                                                                |  |             
|-------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | ------------
|Signature                              |  | Title                                                                                          |  | Date        
|                                       |  |                                                                                                |  |             
|/s/ Stan X. WangStan X. Wang           |  | Chairman of the Board, President and Chief
    Executive Officer (Principal Executive Officer) |  | May 6, 2002 
|                                      
|/s/ Nathan A. CammackNathan A. Cammack |  | Chief Financial Officer (Principal Financial
    Officer and Principal Accounting Officer)     |  | May 6, 2002 
|                                      
|/s/ Teddy KiangTeddy Kiang             |  | Director                                                                                       |  | May 6, 2002 
|                                      
|/s/ Song JunSong Jun                   |  | Director                                                                                       |  | May 6, 2002 
|                                      
|Zhihan Wang                            |  | Director                                                                                       |  | May   , 2002
|                                      
|Dick Warmington                        |  | Director                                                                                       |  | May   , 2002

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##### Table of Contents



VIADOR INC.

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                                               |  |      |     | 
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                               |  | Page
|                                                                                                                                               |  |     
|Independent Auditors Report                                                                                                                   |  |      | F-2 | 
|Consolidated Balance Sheets as of
    December 31, 2001 and 2000.                                                                              |  |      | F-3 | 
|Consolidated Statements of Operations for the
    years ended December 31, 2001, 2000 and 1999                                                 |  |      | F-4 | 
|Consolidated Statements of Stockholders
    Equity (Deficit) and Comprehensive Loss for the years ended
    December 31, 2001, 2000 and 1999. |  |      | F-5 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2001, 2000 and 1999                                                 |  |      | F-7 | 
|Notes to Consolidated Financial Statements                                                                                                     |  |      | F-8 | 

F-1



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

The Board of Directors and Stockholders of Viador
Inc.:

We have audited the accompanying consolidated
balance sheets of Viador Inc. and subsidiary (the Company), as
of December 31, 2001 and 2000, and the related consolidated
statements of operations, stockholders equity (deficit),
and cash flows for each of the years in the three-year period
ended December 31, 2001. These consolidated financial
statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. 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 consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Viador Inc. and subsidiary,
as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United
States of America.

The accompanying consolidated financial
statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered
recurring losses from operations and has a net capital
deficiency that raise substantial doubt about the Companys
ability to continue as a going concern. Managements plans
in regard to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



| |             
| | ------------
| | /s/ KPMG LLP

Mountain View, California 
 March 27, 2002

F-2



---



##### Table of Contents



VIADOR INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |         |        |        | 
|-------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | -------------------------------------------------------- | ------- | ----- | ------ | ----- | ------- | ------ | ------ | 
|                                                   |                                                                                                                                                                                                                    |                          
|                                                   |                                                                                                                                                                                                                    | December 31,             
|                                                   |                                                                                                                                                                                                                    |                          
|                                                   |                                                                                                                                                                                                                    | 2001                      |                                                          | 2000   
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |        
|ASSETS                                             |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|Current assets:                                    |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   | Cash and cash equivalents                                                                                                                                                                                          |                           | $                                                        | 518     |       |        | $     | 15,955  |       
|                                                   | Restricted cash                                                                                                                                                                                                    |                           |                                                          | 525     |       |        |       |        |       
|                                                   | Accounts receivable, net of allowance of $380 and
    $2,033 in 2001 and 2000, respectively                                                                                                                        |                           |                                                          | 1,195   |       |        |       | 7,072   |       
|                                                   | Other current assets                                                                                                                                                                                               |                           |                                                          | 182     |       |        |       | 1,870   |       
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   |                                                                                                                                                                                                                    | Total current assets      |                                                          |         | 2,420 |        |       |         | 24,897 |       
|Property and equipment, net                        |                                                                                                                                                                                                                    |                           | 726                                                      |         |       |        | 4,357 |        
|Capitalized software development cost, net         |                                                                                                                                                                                                                    |                           |                                                         |         |       |        | 2,453 |        
|Goodwill and other intangibles, net                |                                                                                                                                                                                                                    |                           |                                                         |         |       |        | 1,705 |        
|Other assets                                       |                                                                                                                                                                                                                    |                           | 160                                                      |         |       |        | 2,203 |        
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   |                                                                                                                                                                                                                    |                           | Total assets                                             |         | $     | 3,306  |       |         | $      | 35,615 | 
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|LIABILITIES AND STOCKHOLDERS EQUITY
    (DEFICIT) |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|Current liabilities:                               |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   | Notes payable                                                                                                                                                                                                      |                           | $                                                        |        |       |        | $     | 6,000   |       
|                                                   | Accounts payable                                                                                                                                                                                                   |                           |                                                          | 2,273   |       |        |       | 1,376   |       
|                                                   | Accrued expenses                                                                                                                                                                                                   |                           |                                                          | 582     |       |        |       | 3,640   |       
|                                                   | Accrued vacation                                                                                                                                                                                                   |                           |                                                          | 158     |       |        |       | 1,052   |       
|                                                   | Accrued bonus                                                                                                                                                                                                      |                           |                                                          | 84      |       |        |       | 1,035   |       
|                                                   | Accrued restructuring expenses                                                                                                                                                                                     |                           |                                                          | 23      |       |        |       | 693     |       
|                                                   | Deferred revenue                                                                                                                                                                                                   |                           |                                                          | 2,605   |       |        |       | 4,654   |       
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   |                                                                                                                                                                                                                    | Total current liabilities |                                                          |         | 5,725 |        |       |         | 18,450 |       
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|Commitments and contingency (Note 12)              |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|Stockholders equity (deficit):                    |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   | Convertible preferred stock, $0.001 par
    value;  10,000,000 shares authorized as of
    December 31, 2001 and 2000. None issued and outstanding as
    of December 31, 2001 and 2000.                          |                           |                                                          |        |       |        |       |        |       
|                                                   | Common Stock, $0.001 par value; 100,000,000
    shares authorized as of December 31, 2001 and 2000;
    33,147,212 and 18,199,139 shares issued and outstanding as of
    December 31, 2001 and 2000, respectively |                           |                                                          | 34      |       |        |       | 19      |       
|                                                   | Additional paid-in capital                                                                                                                                                                                         |                           |                                                          | 74,809  |       |        |       | 71,431  |       
|                                                   | Deferred stock-based charges                                                                                                                                                                                       |                           |                                                          | (452    | )     |        |       | (1,759  | )     
|                                                   | Treasury stock                                                                                                                                                                                                     |                           |                                                          | (34     | )     |        |       | (34     | )     
|                                                   | Notes receivable from stockholders                                                                                                                                                                                 |                           |                                                          |        |       |        |       | (123    | )     
|                                                   | Accumulated deficit                                                                                                                                                                                                |                           |                                                          | (76,776 | )     |        |       | (52,316 | )     
|                                                   | Accumulated other comprehensive loss                                                                                                                                                                               |                           |                                                          |        |       |        |       | (53     | )     
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   |                                                                                                                                                                                                                    |                           | Total stockholders equity (deficit)                     |         |       | (2,419 | )     |         |        | 17,165 | 
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        
|                                                   |                                                                                                                                                                                                                    |                           | Total liabilities and stockholders equity
    (deficit) |         | $     | 3,306  |       |         | $      | 35,615 | 
|                                                   |                                                                                                                                                                                                                    |                           |                                                          |         |       |        |       |        

See accompanying notes to consolidated financial
statements.

F-3



---



##### Table of Contents



VIADOR INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

(In thousands, except per share
data)


|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |        |         |  
|------------------------------------------------------------------ | --------------------------------------------- | ------------------------ | ------- | ------ | ------- | ---- | ------- | ------ | ------- | - | ------- | ------ | ------- | -
|                                                                   |                                               |                         
|                                                                   |                                               | Years Ended December 31,
|                                                                   |                                               |                         
|                                                                   |                                               | 2001                     |         | 2000   |         | 1999
|                                                                   |                                               |                          |         |        |         |     
|Revenue:                                                           |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   | License                                       |                          | $       | 4,652  |         |      | $       | 18,687 |         |   | $       | 7,320  |        
|                                                                   | Service                                       |                          |         | 4,445  |         |      |         | 7,538  |         |   |         | 2,831  |        
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   |                                               | Total revenue            |         |        | 9,097   |      |         |        | 26,225  |   |         |        | 10,151  |  
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|Cost of revenue:                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   | Amortization of capitalized software          |                          |         | 3,453  |         |      |         | 925    |         |   |         |       |        
|                                                                   | License and service cost of revenue           |                          |         | 2,920  |         |      |         | 9,436  |         |   |         | 2,691  |        
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   |                                               | Total cost of revenue    |         |        | 6,373   |      |         |        | 10,361  |   |         |        | 2,691   |  
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   |                                               | Gross profit             |         |        | 2,724   |      |         |        | 15,864  |   |         |        | 7,460   |  
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|Operating expenses:                                                |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   | Sales and marketing                           |                          |         | 11,509 |         |      |         | 28,211 |         |   |         | 11,265 |        
|                                                                   | Research and development                      |                          |         | 4,679  |         |      |         | 8,256  |         |   |         | 5,931  |        
|                                                                   | General and administrative                    |                          |         | 5,240  |         |      |         | 6,853  |         |   |         | 2,940  |        
|                                                                   | Amortization of goodwill                      |                          |         | 169    |         |      |         | 427    |         |   |         |       |        
|                                                                   | Restructuring expense                         |                          |         | 251    |         |      |         | 693    |         |   |         |       |        
|                                                                   | Loss on lease termination                     |                          |         | 2,824  |         |      |         | 1,270  |         |   |         |       |        
|                                                                   | Impairment loss  goodwill                    |                          |         | 1,536  |         |      |         |       |         |   |         |       |        
|                                                                   | Impairment loss  equipment held for
    sale |                          |         | 850    |         |      |         |       |         |   |         |       |        
|                                                                   | Amortization of stock-based compensation*     |                          |         | (121   | )       |      |         | 1,021  |         |   |         | 1,255  |        
|                                                                   | Loss on sale of equipment                     |                          |         | 190    |         |      |         |       |         |   |         |       |        
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   |                                               | Total operating expenses |         |        | 27,127  |      |         |        | 46,731  |   |         |        | 21,391  |  
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   |                                               | Operating loss           |         |        | (24,403 | )    |         |        | (30,867 | ) |         |        | (13,931 | )
|Other income and (expense):                                        |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   | Interest income                               |                          |         | 166    |         |      |         | 1,636  |         |   |         | 627    |        
|                                                                   | Interest expense                              |                          |         | (10    | )       |      |         | (60    | )       |   |         | (3     | )      
|                                                                   | Non-cash interest expense                     |                          |         | (500   | )       |      |         |       |         |   |         |       |        
|                                                                   | Other income and expense, net                 |                          |         | (25    | )       |      |         | (41    | )       |   |         |       |        
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   |                                               | Other income and expense |         |        | (369    | )    |         |        | 1,535   |   |         |        | 624     |  
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|Net loss before income taxes and extraordinary
    item            |                                               |                          | (24,772 | )      |         |      | (29,332 | )      |         |   | (13,307 | )     
|Extraordinary gain on extinguishment of debt                       |                                               |                          | 377     |        |         |      |        |        |         |   |        |       
|Provision for income taxes                                         |                                               |                          | (65     | )      |         |      |        |        |         |   |        |       
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|                                                                   |                                               | Net loss                 |         | $      | (24,460 | )    |         | $      | (29,332 | ) |         | $      | (13,307 | )
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|Basic and diluted net loss per share before
    extraordinary item |                                               | $                        | (1.03   | )      |         | $    | (1.67   | )      |         | $ | (2.20   | )     
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|Basic and diluted net loss per share 
    extraordinary item      |                                               | $                        | 0.01    |        |         | $    |        |        |         | $ |        |       
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|Basic and diluted net loss per share                               |                                               | $                        | (1.02   | )      |         | $    | (1.67   | )      |         | $ | (2.20   | )     
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       
|Shares used in computing basic and diluted net
    loss per share  |                                               |                          | 23,931  |        |         |      | 17,547  |        |         |   | 6,043   |       
|                                                                   |                                               |                          |         |        |         |      |         |        |         |   |         |       



---



|  |                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------
|* | The allocation of the amortization of stock-based
    compensation relates to the following expense categories as
    follows:

|                           |  |      |      |      |  |      |       |  |  |   |       | 
|-------------------------- |  | ---- | ---- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                           |  | 2001 |      | 2000 |  | 1999
|                           |  |      |      |      |  |     
|Cost of revenue            |  | $    | (2   | )    |  | $    | 102   |  |  | $ | 63    | 
|Sales and marketing        |  |      | (71  | )    |  |      | 705   |  |  |   | 527   | 
|Research and development   |  |      | (16  | )    |  |      | 194   |  |  |   | 288   | 
|General and administrative |  |      | (32  | )    |  |      | 20    |  |  |   | 377   | 
|                           |  |      |      |      |  |      |       |  |  |   |       | 
|                           |  | $    | (121 | )    |  | $    | 1,021 |  |  | $ | 1,255 | 
|                           |  |      |      |      |  |      |       |  |  |   |       | 

See accompanying notes to consolidated financial
statements.

F-4



---



##### Table of Contents



VIADOR INC.


CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY (DEFICIT) AND COMPREHENSIVE LOSS

(In thousands, except share data)


|                                 |                                                                                |                 |           |              |   |            |   |           |   |          |            |            |   |             |    |               |  |               |        |        |   |           |        |        |   |   |     |   |  |   |   |      |   |   |         |         |   |   |   |         |   |   |        |         |  
|-------------------------------- | ------------------------------------------------------------------------------ | --------------- | --------- | ------------ | - | ---------- | - | --------- | - | -------- | ---------- | ---------- | - | ----------- | -- | ------------- |  | ------------- | ------ | ------ | - | --------- | ------ | ------ | - | - | --- | - |  | - | - | ---- | - | - | ------- | ------- | - | - | - | ------- | - | - | ------ | ------- | -
|                                 |                                                                                |                 |           |              |   |            |   |           |   |          |            |            |   |             |    |               |  |               |        |       
|                                 |                                                                                | Convertible     |           |              |   |            |   | Deferred- |   |          |            | Notes      |   |             |    | Accumulated   |  | Total        
|                                 |                                                                                | Preferred Stock |           | Common Stock |   | Additional |   | Stock-    |   |          |            | Receivable |   |             |    | Other         |  | Stockholders
|                                 |                                                                                |                 |           |              |   | Paid-in    |   | Based     |   | Treasury |            | From       |   | Accumulated |    | Comprehensive |  | Equity       
|                                 |                                                                                | Shares          |           | Amount       |   | Shares     |   | Amount    |   | Capital  |            | Charges    |   | Stock       |    | Stockholders  |  | Deficit       |        | Loss   |   | (Deficit)
|                                 |                                                                                |                 |           |              |   |            |   |           |   |          |            |            |   |             |    |               |  |               |        |        |   |          
|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 non-employees                                                |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        | 35     |   |           |        |       |   |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        | 35      |  
|                                 | Exercise of warrants                                                           |                 |           |             |   |            |   |          |   |          |            | 93,082     |   |             |    |              |  |               |        | 95     |   |           |        |       |   |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        | 95      |  
|                                 | Deferred stock- based compensation related to
    stock option grants          |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        | 1,903  |   |           |        | (1,903 | ) |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        |        |  
|                                 | Amortization of deferred stock-based compensation                              |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        |       |   |           |        | 1,255  |   |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        | 1,255   |  
|                                 | Net loss                                                                       |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        |       |   |           |        |       |   |   |     |  |  |   |   |     |   |   |         | (13,307 | ) |   |   | (13,307 | ) |   |        | (13,307 | )
|                                 |                                                                                |                 |           |              |   |            |   |           |   |          |            |            |   |             |    |               |  |               |        |        |   |           |        |        |   |   |     |   |  |   |   |      |   |   |         |         |   |   |   |         |   |   |        |        
|                                 | Comprehensive loss                                                             |                 |           |              |   |            |   |           |   |          |            |            |   |             |    |               |  |               |        |        |   |           |        |        |   |   |     |   |  |   |   |      |   |   |         |         |   |   |   | (13,307 | ) |   |        |         |  
|                                 |                                                                                |                 |           |              |   |            |   |           |   |          |            |            |   |             |    |               |  |               |        |        |   |           |        |        |   |   |     |   |  |   |   |      |   |   |         |         |   |   |   |         |   |   |        |        
|Balances as of December 31, 1999 |                                                                                |                 |          |              |   |            |  |           |   |          | 16,559,238 |            |   |             | 17 |               |  |               | 68,255 |        |   |           | (1,796 | )      |   |   | (34 | ) |  |   |  |      |   |   | (22,984 | )       |   |   |  |         |   |   | 43,458 |        
|                                 | Stock options exercised                                                        |                 |           |             |   |            |   |          |   |          |            | 1,459,531  |   |             |    | 2             |  |               |        | 244    |   |           |        |       |   |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        | 246     |  
|                                 | Stock options exercised for notes                                              |                 |           |             |   |            |   |          |   |          |            | 94,167     |   |             |    |              |  |               |        | 497    |   |           |        |       |   |   |     |  |  |   |   | (497 | ) |   |         |        |   |   |   |        |   |   |        |        |  
|                                 | Cancellation of stockholder note                                               |                 |           |             |   |            |   |          |   |          |            | (44,167    | ) |             |    |              |  |               |        | (233   | ) |           |        |       |   |   |     |  |  |   |   | 233  |   |   |         |        |   |   |   |        |   |   |        |        |  
|                                 | Repurchase of restricted stock                                                 |                 |           |             |   |            |   |          |   |          |            | (31,202    | ) |             |    |              |  |               |        | (142   | ) |           |        |       |   |   |     |  |  |   |   | 141  |   |   |         |        |   |   |   |        |   |   |        | (1      | )
|                                 | Repurchase of stock in settlement of option
    exercise payments              |                 |           |             |   |            |   |          |   |          |            | (675       | ) |             |    |              |  |               |        |       |   |           |        |       |   |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        |        |  
|                                 | Options issued to non-employees                                                |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        | 102    |   |           |        | (19    | ) |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        | 83      |  
|                                 | Warrants                                                                       |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        | 1,529  |   |           |        | (1,529 | ) |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        |        |  
|                                 | Amortization of deferred warrant issued to non-
    employee                   |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        |       |   |           |        | 225    |   |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        | 225     |  
|                                 | Impairment loss  write-down of
    deferred non- employee warrant             |                 |           |             |   |            |   |          |   |          |            |           |   |             |    |              |  |               |        |       |   |           |        | 339    |   |   |     |  |  |   |   |     |   |   |         |        |   |   |   |        |   |   |        | 339     |  

F-5



---



##### Table of Contents



|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  |     |         |   |   |        |         |  
|--------------------------------- | ----------------------------------------------------------------------------------------------- | --------------- | - | ------------ |  | ---------- | - | --------- |  | -------- | ---------- | ---------- | - | ----------- | -- | ------------- |  | ------------- | ------ | ----- | - | --------- | ------ | ----- | - | - | --- | - |  | - | ---- | --- |  | - | ------- | ------- | - |  | --- | ------- | - | - | ------ | ------- | -
|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |      
|                                  |                                                                                                 | Convertible     |   |              |  |            |   | Deferred- |  |          |            | Notes      |   |             |    | Accumulated   |  | Total        
|                                  |                                                                                                 | Preferred Stock |   | Common Stock |  | Additional |   | Stock-    |  |          |            | Receivable |   |             |    | Other         |  | Stockholders
|                                  |                                                                                                 |                 |   |              |  | Paid-in    |   | Based     |  | Treasury |            | From       |   | Accumulated |    | Comprehensive |  | Equity       
|                                  |                                                                                                 | Shares          |   | Amount       |  | Shares     |   | Amount    |  | Capital  |            | Charges    |   | Stock       |    | Stockholders  |  | Deficit       |        | Loss  |   | (Deficit)
|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |          
|                                  | Common stock issued under employee stock purchase
    plan                                      |                 |   |             |  |            |   |          |  |          |            | 212,247    |   |             |    |              |  |               |        | 1,179 |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 1,179   |  
|                                  | Amortization of deferred stock-based compensation
    for employees                             |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        | 1,021 |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 1,021   |  
|                                  | Foreign currency translation adjustments                                                        |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     | (53     | ) |   |        | (53     | )
|                                  | Net loss                                                                                        |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         | (29,332 | ) |  |     | (29,332 | ) |   |        | (29,332 | )
|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  |     |         |   |   |        |        
|                                  | Comprehensive loss                                                                              |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  | $   | (29,385 | ) |   |        |         |  
|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  |     |         |   |   |        |        
|Balances as of December 31, 2000. |                                                                                                 |                 |  |              |  |            |  |           |  |          | 18,199,139 |            |   |             | 19 |               |  |               | 71,431 |       |   |           | (1,759 | )     |   |   | (34 | ) |  |   | (123 | )   |  |   | (52,316 | )       |   |  | (53 | )       |   |   | 17,165 |        
|                                  | Stock options exercised                                                                         |                 |   |             |  |            |   |          |  |          |            | 66,126     |   |             |    |              |  |               |        | 13    |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 13      |  
|                                  | Issuance of common stock in private offering, net                                               |                 |   |             |  |            |   |          |  |          |            | 14,814,815 |   |             |    | 15            |  |               |        | 3,745 |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 3,760   |  
|                                  | Repurchase of restricted stock                                                                  |                 |   |             |  |            |   |          |  |          |            | (1,105     | ) |             |    |              |  |               |        | (1    | ) |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | (1      | )
|                                  | Reserve on note receivable from stockholders                                                    |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        |      |   |   |     |  |  |   |      | 123 |  |   |         |        |   |  |     |        |   |   |        | 123     |  
|                                  | Options issued to non-employees                                                                 |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        | 8     |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 8       |  
|                                  | Amortization of deferred stock-based rent                                                       |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        | 140   |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 140     |  
|                                  | Beneficial conversion feature recognized and
    warrants issued in connection with bridge loan |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        | 500   |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 500     |  
|                                  | Write-down of deferred stock-based rent in
    connection with lease termination                |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        | 381   |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 381     |  
|                                  | Amortization of deferred stock-based compensation
    for employees                             |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        | (937  | ) |           |        | 816   |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | (121    | )
|                                  | Common stock issued under employee stock purchase
    plan                                      |                 |   |             |  |            |   |          |  |          |            | 68,237     |   |             |    |              |  |               |        | 20    |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        | 20      |  
|                                  | Deferred compensation on options granted to
    employees below fair value, net                 |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        | 30    |   |           |        | (30   | ) |   |     |  |  |   |      |    |  |   |         |        |   |  |     |        |   |   |        |        |  
|                                  | Foreign currency translation adjustments                                                        |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         |        |   |  |     | 53      |   |   |        | 53      |  
|                                  | Net loss                                                                                        |                 |   |             |  |            |   |          |  |          |            |           |   |             |    |              |  |               |        |      |   |           |        |      |   |   |     |  |  |   |      |    |  |   |         | (24,460 | ) |  |     | (24,460 | ) |   |        | (24,460 | )
|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  |     |         |   |   |        |        
|                                  | Comprehensive loss                                                                              |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  | $   | (24,460 | ) |   |        |         |  
|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  |     |         |   |   |        |        
|Balances as of December 31, 2001. |                                                                                                 |                 |  |              |  |            |  |           |  |          | 33,147,212 |            |   | $           | 34 |               |  | $             | 74,809 |       |   | $         | (452   | )     |   | $ | (34 | ) |  | $ |     |     |  | $ | (76,776 | )       |   |  |     |         |   | $ | (2,419 | )      
|                                  |                                                                                                 |                 |   |              |  |            |   |           |  |          |            |            |   |             |    |               |  |               |        |       |   |           |        |       |   |   |     |   |  |   |      |     |  |   |         |         |   |  |     |         |   |   |        |        

See accompanying notes to consolidated financial
statements.

F-6



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##### Table of Contents



VIADOR INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(In thousands)


|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |         |       |        |         |  
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------- | ----- | ------ | ------- | ------- | ----- | ------ | ------- | ------- | ----- | ------ | ------- | -
|                                                                            |                                                                                             |                                                  
|                                                                            |                                                                                             | Years Ended December 31,                         
|                                                                            |                                                                                             |                                                  
|                                                                            |                                                                                             | 2001                                              |                                                                            | 2000                                                    |       | 1999  
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |       
|Cash flows from operating activities:                                       |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Net loss                                                                                    |                                                   | $                                                                          | (24,460                                                 | )     |        | $       | (29,332 | )     |        | $       | (13,307 | )    
|                                                                            | Adjustments to reconcile net loss to net cash
    used in operating activities:             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |         |      
|                                                                            |                                                                                             | Reserve on notes receivable from stockholder      |                                                                            |                                                         | 123   |        |         |         |      |        |         |         |      |       
|                                                                            |                                                                                             | Extraordinary gain on extinguishment of liability |                                                                            |                                                         | (377  | )      |         |         |      |        |         |         |      |       
|                                                                            |                                                                                             | Depreciation and amortization                     |                                                                            |                                                         | 862   |        |         |         | 2,785 |        |         |         | 635   |       
|                                                                            |                                                                                             | Amortization of capitalized software              |                                                                            |                                                         | 2,651 |        |         |         |      |        |         |         |      |       
|                                                                            |                                                                                             | Amortization of deferred stock-based compensation |                                                                            |                                                         | (121  | )      |         |         | 1,021 |        |         |         | 1,255 |       
|                                                                            |                                                                                             | Amortization of goodwill                          |                                                                            |                                                         | 169   |        |         |         | 427   |        |         |         |      |       
|                                                                            |                                                                                             | Amortization of deferred stock-based charges      |                                                                            |                                                         | 148   |        |         |         | 83    |        |         |         | 72    |       
|                                                                            |                                                                                             | Non-cash interest expense                         |                                                                            |                                                         | 500   |        |         |         |      |        |         |         |      |       
|                                                                            |                                                                                             | Loss on lease termination                         |                                                                            |                                                         | 2,824 |        |         |         | 1,270 |        |         |         |      |       
|                                                                            |                                                                                             | Loss on sale of equipment                         |                                                                            |                                                         | 190   |        |         |         |      |        |         |         |      |       
|                                                                            |                                                                                             | Impairment loss  goodwill                        |                                                                            |                                                         | 1,536 |        |         |         |      |        |         |         |      |       
|                                                                            |                                                                                             | Impairment loss  equipment held for
    sale     |                                                                            |                                                         | 850   |        |         |         |      |        |         |         |      |       
|                                                                            |                                                                                             | Changes in operating assets and liabilities:      |                                                                            |                                                         |       |        |         |         |       |        |         |         |       |       
|                                                                            |                                                                                             |                                                   | Accounts receivable                                                        |                                                         |       | 5,877  |         |         |       | (1,616 | )       |         |       | (3,031 | )      
|                                                                            |                                                                                             |                                                   | Other current assets and other assets                                      |                                                         |       | 3,104  |         |         |       | (1,314 | )       |         |       | (587   | )      
|                                                                            |                                                                                             |                                                   | Accounts payable, accrued expenses, accrued
    vacation and accrued bonus |                                                         |       | (3,629 | )       |         |       | 3,223  |         |         |       | 2,641  |        
|                                                                            |                                                                                             |                                                   | Accrued restructuring expense                                              |                                                         |       | (670   | )       |         |       | 693    |         |         |       |       |        
|                                                                            |                                                                                             |                                                   | Deferred revenue                                                           |                                                         |       | (2,049 | )       |         |       | (527   | )       |         |       | 2,265  |        
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            |                                                                                             |                                                   |                                                                            | Net cash used in operating activities                   |       |        | (12,472 | )       |       |        | (23,287 | )       |       |        | (10,057 | )
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|Cash flows from investing activities:                                       |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Capital expenditures                                                                        |                                                   |                                                                            | (70                                                     | )     |        |         | (5,453  | )     |        |         | (1,471  | )    
|                                                                            | Proceeds from sales of equipment                                                            |                                                   |                                                                            | 36                                                      |       |        |         |        |       |        |         |        |      
|                                                                            | Rent paid in advance                                                                        |                                                   |                                                                            |                                                        |       |        |         | (500    | )     |        |         |        |      
|                                                                            | Security deposit                                                                            |                                                   |                                                                            |                                                        |       |        |         | (1,689  | )     |        |         |        |      
|                                                                            | Capitalization of software development costs                                                |                                                   |                                                                            | (198                                                    | )     |        |         | (3,376  | )     |        |         |        |      
|                                                                            | Acquisition of business, net of cash acquired                                               |                                                   |                                                                            |                                                        |       |        |         | (883    | )     |        |         |        |      
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            |                                                                                             |                                                   |                                                                            | Net cash used in investing activities                   |       |        | (232    | )       |       |        | (11,901 | )       |       |        | (1,471  | )
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|Cash flows from financing activities:                                       |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Transfer of funds to escrow account in connection
    with workout agreement                |                                                   |                                                                            | (525                                                    | )     |        |         |        |       |        |         |        |      
|                                                                            | Proceeds from (repayment of) bank line of credit                                            |                                                   |                                                                            | (5,000                                                  | )     |        |         | 5,000   |       |        |         |        |      
|                                                                            | Repayment of note payable from business
    acquisition                                     |                                                   |                                                                            | (1,000                                                  | )     |        |         |        |       |        |         |        |      
|                                                                            | Proceeds from issuance of common stock and
    warrants, net                                |                                                   |                                                                            | 3,792                                                   |       |        |         | 1,423   |       |        |         | 37,524  |      
|                                                                            | Proceeds from issuance of preferred stock, net                                              |                                                   |                                                                            |                                                        |       |        |         |        |       |        |         | 14,543  |      
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            |                                                                                             |                                                   |                                                                            | Net cash provided by (used in) financing
    activities |       |        | (2,733  | )       |       |        | 6,423   |         |       |        | 52,067  |  
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|Net increase (decrease) in cash and cash
    equivalents                    |                                                                                             |                                                   | (15,437                                                                    | )                                                       |       |        | (28,765 | )       |       |        | 40,539  |        
|Cash and cash equivalents, beginning of year                                |                                                                                             |                                                   | 15,955                                                                     |                                                         |       |        | 44,720  |         |       |        | 4,181   |        
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|Cash and cash equivalents, end of year                                      |                                                                                             | $                                                 | 518                                                                        |                                                         |       | $      | 15,955  |         |       | $      | 44,720  |        
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|Supplemental disclosure of cash flow information:                           |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Cash paid during the year for:                                                              |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |         |      
|                                                                            |                                                                                             | Interest                                          |                                                                            | $                                                       | 142   |        |         | $       | 60    |        |         | $       | 7     |       
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            |                                                                                             | Income taxes                                      |                                                                            | $                                                       | 65    |        |         | $       | 18    |        |         | $       | 3     |       
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|Supplemental disclosure of non-cash investing and
    financing activities: |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Repurchase of unvested common stock and reduction
    in notes receivable from stockholders |                                                   | $                                                                          |                                                        |       |        | $       | 141     |       |        | $       |        |      
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Common stock issued to stockholders for note
    receivable                                 |                                                   | $                                                                          |                                                        |       |        | $       | 264     |       |        | $       |        |      
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Preferred stock converted to common stock                                                   |                                                   | $                                                                          |                                                        |       |        | $       |        |       |        | $       | 7       |      
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Warrants issued to lessor                                                                   |                                                   | $                                                                          |                                                        |       |        | $       | 1,529   |       |        | $       |        |      
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        
|                                                                            | Notes payable issued in partial payment for
    business acquisition                        |                                                   | $                                                                          |                                                        |       |        | $       | 1,000   |       |        | $       |        |      
|                                                                            |                                                                                             |                                                   |                                                                            |                                                         |       |        |         |         |       |        |         |        

See accompanying notes to consolidated financial
statements.

F-7



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##### Table of Contents



VIADOR INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

December 31, 2001, 2000 and
1999

Note 1. Business of the Company

Viador Inc. and subsidiaries (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.

Note 2. Basis of Presentation

The consolidated financial statements have been
prepared on a going concern basis, which contemplates, among
other things, the realization of assets and the satisfaction of
liabilities in the normal course of business. The Companys
recurring net losses, including net losses of
$24.5 million, $29.3 million and $13.3 million
for the years ended December 31, 2001, 2000 and 1999,
respectively, raise substantial doubt regarding the
Companys ability to continue as a going concern. In 2001
and 2000, the Companys revenue was not sufficient to
support its operations, and revenue will not be sufficient to
support operations until such time, if any, that the
Companys enterprise information portal software gains
substantial market acceptance. The Company expects to continue
to use cash in operations and incur operating losses in the
foreseeable future. The Company needs to obtain additional
funding to sustain its operations in 2002 and is currently in
discussions with third parties to obtain such funding.
Management believes that the successful completion of these
actions will allow the Company to continue as a going concern.
However, the consolidated financial statements do not include
any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount and
classification of liabilities or any other adjustments that
might be necessary should the Company be unable to continue as a
going concern.

Note 3. Summary of Significant Accounting
Policies

(a) Basis
of Financial Statements

The accompanying consolidated financial
statements include the accounts of the Company and its
subsidiary, after elimination of all intercompany accounts and
transactions.

(b) 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.

(c) Revenue
Recognition

The Company licenses its software 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 undelivered 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, 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 and/or upgrade has occurred, unless the Company has
sufficient vendor-specific objective evidence of fair

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VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

value to allocate revenue to the various elements
in these arrangements. Fees related to arrangements that require
the Company to deliver unspecified additional products are
deferred and recognized ratably over the term of the contract.
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
and recognized as the services are performed.

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 arrangements in which the
Company earns a royalty based on a specified percentage of OEM
sales to end users incorporating the Companys software is
recognized upon delivery by the OEM to the end user.

Professional service revenue consists of fees
from professional services including integration of software,
application development, training and software installation. The
Company bills professional services fees on a time and materials
basis. The Company recognizes professional services fees as the
services are performed.

Customers typically purchase post-contract
customer support agreements annually, which are priced based on
a fixed percentage of the product license fee. The Company
recognizes revenue allocated to post-contract customer support
agreements ratably over the term of the agreements, which are
typically one year. The Company records OEM licensing revenue,
primarily royalties, when OEM partners ship products
incorporating Viador software, provided collection of such
revenue is deemed probable. The Company had no remaining
obligations in relation to such licensing revenue at
December 31, 2001.

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 the
Companys products and shipping costs, including the costs
associated with the electronic transmission of software to new
customers, amortization of capitalized software development
costs, and an allocation of the Companys facilities,
communications and depreciation expenses. In the quarter ended
June 30, 2001, the remaining balance of previously
capitalized software development costs was fully amortized as
projection of any future revenues from software sales was deemed
to be uncertain for purposes of evaluating recoverability.

Cost of service revenue includes salaries and
related expenses for consulting services, customer support,
implementation and training services organizations, and costs of
contracting with third parties that provide services to
customers.

(d) 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.

In December 2001, the Company deposited $525,000
in designated funds into a non-interest bearing trust account.
These funds were restricted for the sole purpose of payment on
the Companys workout agreement with its creditors. See
Note 13 to Consolidated Financial Statements.

(e) Financial
Instruments and Concentration of Credit Risk

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

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VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

The Company sells its products and services to
customers in diversified industries. Credit risk is concentrated
in North America, Europe 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.

(f) Foreign
Currency Translation

Assets and liabilities of a foreign subsidiary,
whose functional currency is the local currency, are translated
to reporting currency at year-end exchange rates. Revenues and
expenses are translated at the average rates of exchange
prevailing during the year. The adjustment resulting from
translating the financial statements of such foreign subsidiary
is included in accumulated other comprehensive loss, which is
reflected as a separate component of stockholders equity
(deficit) and comprehensive income.

(g) 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.

(h) Software
Development Costs

The Company accounts for its software development
expenses in accordance with Statement of Financial Accounting
Standards No. 86, Accounting for the Costs of
Computer Software to Be Sold, Leased, or Otherwise
Marketed. This statement requires that, once
technological feasibility of a new product enhancement has been
established, all subsequent costs incurred in developing that
product or enhancement to a commercially acceptable level be
capitalized and amortized. The Company uses a detailed program
design working model approach in determining technological
feasibility. All software costs are amortized as a cost of
revenue either on a straight-line basis, or on the basis of each
products projected revenues, whichever results in greater
amortization, over the remaining estimated economic life of
product, which historically has been estimated to be one to two
years. In the quarter ended June 30, 2001, the remaining
balance of previously capitalized software development costs was
fully amortized as projection of any future revenues from
underlying product sales was deemed to be uncertain for purposes
of evaluating recoverability. Consequently, net capitalized
software development costs amounted to approximately zero and
$3.4 million as of December 31, 2001 and 2000,
respectively. There were no capitalized software costs in fiscal
1999.

(i) Deferred
Revenue

Deferred revenue primarily represents customer
advances received pursuant to the term of OEM and subscription
agreements. Additionally, maintenance revenue is deferred and
recognized ratably over the term of the contract, generally
twelve months.

(j) Impairment
of Long-Lived Assets

The Company evaluates its long-lived assets,
including goodwill, 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

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VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

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 estimated fair value less costs
to sell.

(k) Income
Taxes

The Company uses the asset and liability method
of accounting for income taxes. Under this method, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to the differences between the
financial statement and tax basis of assets and liabilities and
operating loss and tax credit carryforwards using enacted tax
rates expected to apply to the year in which the differences are
expected to affect taxable income. The effect on deferred tax
assets and liabilities of a change in tax rate is recognized in
operations in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be recovered.

(l) 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.

(m) 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, in accounting for its
employee stock option plan. 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. In
April 2000, Financial Accounting Standard Board
(FASB) issued FASB Interpretation No. 44 (FIN
No. 44), Accounting for Certain Transactions
Involving Stock Compensation: An Interpretation of APB
No. 25. The Company has adopted the provisions of
FIN No. 44, and such adoption did not materially impact the
Companys results of operations. Statement of Financial
Accounting Standard (SFAS) No. 123,
Accounting for Stock-Based Compensation,
(SFAS No. 123) 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.

(n) Advertising
Expense

The cost of advertising is generally expensed as
incurred. Such costs are included in sales and marketing expense
and totaled approximately $314,000, $899,000 and $935,000 for
the years ended December 31, 2001, 2000 and 1999,
respectively.

(o) Comprehensive
Income (Loss)

SFAS No. 130 Reporting
Comprehensive Income, establishes standards for the
reporting and display of comprehensive income and its components
in the financial statements. Items of comprehensive income
(loss) that the Company currently reports relate to foreign
currency translation adjustments. The Company

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VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

displays comprehensive loss and its components on
its Consolidated Statements of Stockholders Equity
(Deficit) and Comprehensive Loss.

(p) 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, shares of restricted stock
subject to repurchase and 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):

|                                                                                               |  |                          |       |      |  |      |       |  |  |  |       | 
|---------------------------------------------------------------------------------------------- |  | ------------------------ | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                                                                               |  |                         
|                                                                                               |  | Years Ended December 31,
|                                                                                               |  |                         
|                                                                                               |  | 2001                     |       | 2000 |  | 1999
|                                                                                               |  |                          |       |      |  |     
|Shares issuable under stock options                                                            |  |                          | 5,051 |      |  |      | 5,560 |  |  |  | 3,966 | 
|Shares of restricted stock subject to repurchase                                               |  |                          | 35    |      |  |      | 35    |  |  |  | 925   | 
|Shares issuable pursuant to warrants to purchase
    common and/or convertible preferred stock |  |                          | 4,218 |      |  |      | 100   |  |  |  |      | 

The weighted-average exercise price of stock
options was $2.59, $10.62 and $3.24 at December 31, 2001,
2000 and 1999, respectively. The weighted-average purchase price
of restricted stock was $0.26, $0.66 and $0.02 at
December 31, 2001, 2000 and 1999, respectively. The
weighted-average exercise price of the warrants was $0.31 and
$31.44 per share at December 31, 2001 and 2000,
respectively. There were no warrants outstanding during the year
ended December 31, 1999.

(q) 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.

(r) Recent
Accounting Pronouncements

In July 2001, the FASB issued SFAS 141
Business Combinations,which addresses
financial accounting and reporting for business combinations and
supersedes Accounting Principles Board Opinion No. 16
(APB 16), Business
Combinations. This Statement requires all business
combinations to be accounted for using the purchase method of
accounting and redefines goodwill and other intangibles that
should be recognized separate from goodwill if they meet one of
two criteria  the contractual-legal criterion or the
separability criterion. SFAS 141 also requires disclosure
of the primary reasons for a business combination and the
allocation of the purchase price paid to the assets acquired and
liabilities assumed by major balance sheet caption. The
provisions of SFAS 141 apply to all business combinations
initiated after June 30, 2001 and applies to all business
combinations accounted for using the purchase method for which
the date of acquisition is July 1, 2001 or later. The
adoption of SFAS 141 did not have a material effect on the
Companys consolidated financial position or results of
operations.

In July 2001, the FASB issued SFAS 142,
Goodwill and Other Intangible Assets, which
supersedes APB 17, Intangible Assets.
SFAS 142 requires that goodwill and other intangibles with
an indefinite useful

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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

life not be amortized, but be tested for
impairment at least annually by applying a fair-value-based
test. Also, if the benefit of an intangible asset is obtained
through contractual or other legal rights, or if the intangible
asset can be sold, transferred, licensed, rented or exchanged,
an acquired intangible asset should be separately recognized.
The terms of SFAS 142 are effective as of the beginning of
the first quarter of the fiscal year beginning after
December 15, 2001. Certain provisions of SFAS 142 are
applied to goodwill and other acquired intangible assets for
which the acquisition date is after June 30, 2001. The
Company does not believe the adoption of SFAS 142 will have
a material effect on the Companys consolidated financial
position or results of operations.

In August 2001 the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations
and in October issued SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. SFAS
No. 143 requires that the fair value of an asset retirement
obligation be recorded as a liability in the period in which it
incurs the obligation. SFAS No. 144 serves to clarify and
further define the provisions of SFAS No. 121
Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of. SFAS
No. 144 does not apply to goodwill and other intangible
assets that are not amortized. SFAS No. 143 is effective
for fiscal years beginning after June 15, 2002 and SFAS
No. 144 is effective for fiscal years beginning after
December 15, 2001. The Company expects to adopt SFAS
No. 144 effective January 1, 2002 and SFAS
No. 143 effective January 1, 2003. The Company does
not believe the adoption of Statements 143 and 144 will have a
material effect on the Companys consolidated financial
position or results of operations.

(s) Reclassifications

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

Note 4. Business Acquisition

On January 20, 2000, the Company acquired a
distributor in Switzerland (the acquired company). The
acquisition, recorded under the purchase method of accounting,
included the purchase of all outstanding common stock of the
acquired company which, including acquisition costs, resulted in
a total purchase price of $2.0 million. The Company paid
$1.0 million in cash at the closing of the acquisition and
issued notes payable of $1.0 million which accrued interest
at six percent per annum; the note payable and related interest
were paid in full in January 2001. The purchase price was
allocated to assets acquired and liabilities assumed based on
estimated fair market value at the date of the acquisition as
follows (in thousands):

|                                                |                      |   |       |       | 
|----------------------------------------------- | -------------------- | - | ----- | ----- | 
|Current assets (includes cash acquired of $117) |                      | $ | 179   |      
|Goodwill                                        |                      |   | 2,131 |      
|Current liabilities                             |                      |   | (277  | )    
|                                                |                      |   |       |      
|                                                | Total purchase price |   | $     | 2,033 | 
|                                                |                      |   |       |      

Goodwill, which represents the excess of purchase
price over value of net assets acquired, is amortized on a
straight-line basis over the expected period to be benefited,
which was five years. In the three months ended June 30,
2001, the remaining unamortized portion of goodwill was deemed
impaired as actual revenues for the acquired company were below
projected revenues and key management personnel terminated
employment with the subsidiary located in Switzerland. As a
result, the Company recorded an impairment charge of $1.5
million for the entire remaining unamortized balance.
Consequently, amortization expense related to goodwill was
$169,000 and $427,000 in fiscal 2001 and 2000, respectively.

The pro-forma combined revenues, net loss and
loss per share of Viador and the acquired company for 1999 would
not be significantly different from Viadors reported
results for that same year.

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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

Note 5. Property and Equipment

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

|                                               |  |              |       |      |  |   |       | 
|---------------------------------------------- |  | ------------ | ----- | ---- |  | - | ----- | 
|                                               |  |             
|                                               |  | December 31,
|                                               |  |             
|                                               |  | 2001         |       | 2000
|                                               |  |              |       |     
|Computers and software                         |  | $            | 1,656 |      |  | $ | 4,038 | 
|Furniture and fixtures                         |  |              | 724   |      |  |   | 2,375 | 
|Leasehold improvements                         |  |              |      |      |  |   | 628   | 
|                                               |  |              |       |      |  |   |       | 
|                                               |  |              | 2,380 |      |  |   | 7,041 | 
|Less accumulated depreciation and amortization |  |              | 1,654 |      |  |   | 2,684 | 
|                                               |  |              |       |      |  |   |       | 
|                                               |  | $            | 726   |      |  | $ | 4,357 | 
|                                               |  |              |       |      |  |   |       | 

Note 6. Restructuring Expense, Impairment
and Loss on Lease Termination

In December 2000, the Board of Directors approved
a restructuring program designed to streamline the
Companys business and to reduce costs, which resulted in
the accrual of a fiscal year 2000 restructuring expense of
$693,000 and an impairment loss of $1,270,000. Restructuring
expense in 2000 included $234,000 for severance charges
associated with the reduction in the Companys United
States and Canadian workforce (87 positions or 36% of the work
force) and $459,000 related to estimated losses resulting from
obligations to pay rent on vacant space. The impairment loss of
$1,270,000 in 2000 related to leasehold improvements of $745,000
and other assets of $986,000 and $339,000 for other deferred
charges related to vacant unused space under a rental agreement.
These assets were specifically identified in the restructuring
program.

In 2001, the Board of Directors approved several
restructuring programs designed to streamline the Companys
business and to reduce costs. These restructuring programs
resulted in a restructuring expense of $251,000 for severance
charges associated with reductions in the Companys United
States workforce (55 positions in April and approximately ten
positions subsequent to June). As of December 31, 2001,
$23,000 of restructuring expense remains accrued and is expected
to be paid by the end of the second quarter of 2002. The
following table depicts the activity for the restructuring
accrual for the year ended December 31, 2001 (in thousands):

|                                                   |       |           |      |      |  |       |      |   |  |   |      |    | 
|-------------------------------------------------- | ----- | --------- | ---- | ---- |  | ----- | ---- | - |  | - | ---- | -- | 
|                                                   |       | Severance |      | Rent |  | Total
|                                                   |       |           |      |      |  |      
|Restructuring accrual, December 31, 2000.          |       | $         | 234  |      |  | $     | 459  |   |  | $ | 693  |   
|Additions to Restructuring Accrual, April 2001.    |       |           | 144  |      |  |       |     |   |  |   | 144  |   
|Additions to Restructuring Accrual, June 2001.     |       |           | 73   |      |  |       |     |   |  |   | 73   |   
|Additions to Restructuring Accrual, September 2001 |       |           | 10   |      |  |       |     |   |  |   | 10   |   
|Additions to Restructuring Accrual, December 2001. |       |           | 24   |      |  |       |     |   |  |   | 24   |   
|Cash Payments (January 2001 through December 2001) |       |           | (462 | )    |  |       | (459 | ) |  |   | (921 | ) 
|                                                   |       |           |      |      |  |       |      |   |  |   |      |   
|                                                   | Total |           | $    | 23   |  |       | $    |  |  |   | $    | 23 | 
|                                                   |       |           |      |      |  |       |      |   |  |   |      |   

In June 2001, the Company terminated its
corporate lease that was scheduled to expire in 2005 in order to
reduce future operating expenses. As consideration for early
termination, the Company surrendered its restricted lease
deposit of $1 million and a significant amount of its
office furniture, leasehold improvements and other assets
associated with the corporate lease (with a net book value of
approximately $1.8 million) to the landlord. The net book
value of surrendered assets associated with this event and the
lease deposit

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VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

surrendered is included in Loss on Lease
termination in the accompanying Consolidated Statement of
Operations for the year ended December 31, 2001.

In June 2001, management decided to sell certain
equipment. In connection with this decision, the Company
recognized a loss on equipment held for sale of $850,000. During
the three months ended September 30, 2001, equipment was
sold for $36,000 resulting in a loss of $190,000.

Note 7. Extraordinary Gain on
Extinguishment of Debt

The Company recorded an extraordinary gain on
extinguishment of debt in the Consolidated Statement of
Operations for the year ended December 31, 2001, to reflect
settlement of an outstanding debt of $314,000 with a payment of
$128,000. Separately, in December 2001 the Company derecognized
a payable in the amount of $191,000. The Company had carried
this disputed payable to a vendor for approximately two years
and had not been successful in its attempts to contact the
vendor. Viador believes that this vendor is no longer in
business. This $191,000 gain is also recorded as an
extraordinary gain on extinguishment of debt in the Consolidated
Statement of Operations for the year ended December 31,
2001. These gains were not adjusted for tax considerations, as
income from the discharge of indebtedness is not included in
gross income when the discharge occurs when a Company is
insolvent. However, the net operating loss for the current year
was reduced by the amount discharged.

Note 8. Stockholders
Equity

(a) Convertible
Preferred Stock

All of the then outstanding shares of the
Companys convertible preferred stock were automatically
converted into 0.417 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 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.

As of December 31, 2000 and 1999, there was
no convertible preferred stock issued or outstanding.

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VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
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 were originally 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, 2002, 2001 and 2000 was 1,657,631, 909,957
and 827,962, respectively. In addition, the stockholders
approved an additional reserve of 2,500,000 shares in June 2001.
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, 2001,
there were 4,174,104 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 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.

In 2000, the Company issued options to purchase
8,300 shares of Common Stock at an exercise price of $20.75 to a
non-employee for services performed. The fair value of the
options at the vesting date was determined to be $102,000 using
the Black-Scholes option pricing model using the following
assumptions: no dividends, contractual life of one year;
risk-free interest rate of 5.70% and expected volatility of 89%.
The fair value of the options is being charged to expense as the
related services are performed and such expense amounted to
approximately $83,000 in 2000.

In 2000, the Company issued a loan to an officer
of the Company in the amount of $264,000 for the exercise of
certain stock options and $67,200 for payment of related tax
liabilities. During the fourth quarter of 2000, the officer
departed from the Company and returned the unvested shares and
the Company cancelled $141,000 of the balance of the note
receivable.

F-16



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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

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

|                                                                                                                                    |  |                          |            |          |  |        |       |          |  |        |            |          |  |   |       |  |  |  |           |   |  |   |      | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | -------- |  | ------ | ----- | -------- |  | ------ | ---------- | -------- |  | - | ----- |  |  |  | --------- | - |  | - | ---- | 
|                                                                                                                                    |  |                         
|                                                                                                                                    |  | Years Ended December 31,
|                                                                                                                                    |  |                         
|                                                                                                                                    |  |                          |            |          |  |       
|                                                                                                                                    |  | 2001                     |            | 2000     |  | 1999  
|                                                                                                                                    |  |                          |            |          |  |       
|                                                                                                                                    |  |                          |            | Weighted |  |        |       | Weighted |  |        |            | Weighted
|                                                                                                                                    |  |                          |            | Average  |  |        |       | Average  |  |        |            | Average 
|                                                                                                                                    |  |                          |            | Exercise |  |        |       | Exercise |  |        |            | Exercise
|                                                                                                                                    |  | Shares                   |            | Price    |  | Shares |       | Price    |  | Shares |            | Price   
|                                                                                                                                    |  |                          |            |          |  |        |       |          |  |        |            |         
|Outstanding at beginning of period                                                                                                  |  |                          | 5,559,517  |          |  | $      | 10.62 |          |  |        | 3,966,089  |          |  | $ | 3.24  |  |  |  | 3,045,363 |   |  | $ | 0.12 | 
|Granted                                                                                                                             |  |                          | 6,066,488  |          |  |        | 0.47  |          |  |        | 3,854,364  |          |  |   | 15.85 |  |  |  | 1,394,849 |   |  |   | 9.39 | 
|Exercised                                                                                                                           |  |                          | (66,125    | )        |  |        | 0.19  |          |  |        | (1,459,530 | )        |  |   | 0.37  |  |  |  | (395,784  | ) |  |   | 0.58 | 
|Canceled                                                                                                                            |  |                          | (6,508,676 | )        |  |        | 7.53  |          |  |        | (801,406   | )        |  |   | 17.91 |  |  |  | (78,339   | ) |  |   | 3.33 | 
|                                                                                                                                    |  |                          |            |          |  |        |       |          |  |        |            |          |  |   |       |  |  |  |           |   |  |   |      | 
|Outstanding at end of period                                                                                                        |  |                          | 5,051,204  |          |  |        | 2.59  |          |  |        | 5,559,517  |          |  |   | 10.62 |  |  |  | 3,966,089 |   |  |   | 3.24 | 
|                                                                                                                                    |  |                          |            |          |  |        |       |          |  |        |            |          |  |   |       |  |  |  |           |   |  |   |      | 
|Options exercisable at end of period                                                                                                |  |                          | 4,071,353  |          |  | $      | 1.90  |          |  |        | 2,175,168  |          |  | $ | 3.83  |  |  |  | 2,335,966 |   |  | $ | 0.20 | 
|                                                                                                                                    |  |                          |            |          |  |        |       |          |  |        |            |          |  |   |       |  |  |  |           |   |  |   |      | 
|Weighted-average fair value of options granted
    during the period with exercise prices equal to fair value at
    date of grant  |  |                          |            |          |  | $      | 0.46  |          |  |        |            |          |  | $ | 13.36 |  |  |  |           |   |  | $ | 1.47 | 
|Weighted-average fair value of options granted
    during the period with exercise prices less than fair value at
    date of grant |  |                          |            |          |  | $      |      |          |  |        |            |          |  | $ |      |  |  |  |           |   |  | $ | 4.30 | 

As of December 31, 2001, the range of
exercise prices and weighted-average remaining contractual life
of outstanding options were as follows:

|                |  |                     |           |              |  |                     |      |             |  |           |       |  |  |  |           |  |  |   |       | 
|--------------- |  | ------------------- | --------- | ------------ |  | ------------------- | ---- | ----------- |  | --------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                |  |                     |           |              |  |                    
|                |  | Options Outstanding |           |              |  | Options Exercisable
|                |  |                     |           |              |  |                    
|                |  |                     |           | Weighted-    |  |                     |      |            
|                |  |                     |           | Average      |  | Weighted-           |      |             |  | Weighted-
|                |  |                     |           | Remaining    |  | Average             |      |             |  | Average  
|                |  | Number              |           | Contractual  |  | Exercise            |      | Number      |  | Exercise 
|Exercise Prices |  | Outstanding         |           | Life (Years) |  | Price               |      | Exercisable |  | Price    
|                |  |                     |           |              |  |                     |      |             |  |          
|$ 0.05  $ 0.24 |  |                     | 1,018,989 |              |  |                     | 4.82 |             |  | $         | 0.06  |  |  |  | 1,018,989 |  |  | $ | 0.06  | 
|$ 0.25  $ 0.41 |  |                     | 3,023,821 |              |  |                     | 9.51 |             |  |           | 0.29  |  |  |  | 2,449,414 |  |  |   | 0.27  | 
|$ 0.62  $ 1.00 |  |                     | 300,855   |              |  |                     | 8.96 |             |  |           | 0.92  |  |  |  | 151,281   |  |  |   | 0.89  | 
|$ 2.38  $ 5.28 |  |                     | 141,252   |              |  |                     | 8.56 |             |  |           | 4.11  |  |  |  | 60,379    |  |  |   | 4.42  | 
|$ 9.00  $14.06 |  |                     | 243,185   |              |  |                     | 8.23 |             |  |           | 11.75 |  |  |  | 212,777   |  |  |   | 11.71 | 
|$20.75  $29.00 |  |                     | 224,674   |              |  |                     | 8.30 |             |  |           | 20.84 |  |  |  | 101,236   |  |  |   | 20.94 | 
|$36.75  $37.38 |  |                     | 98,428    |              |  |                     | 8.08 |             |  |           | 36.87 |  |  |  | 52,277    |  |  |   | 36.89 | 
|                |  |                     |           |              |  |                     |      |             |  |           |       |  |  |  |           |  |  |   |       | 
|$ 0.05  $37.38 |  |                     | 5,051,204 |              |  |                     | 8.35 |             |  |           | 2.59  |  |  |  | 4,046,353 |  |  |   | 1.90  | 
|                |  |                     |           |              |  |                     |      |             |  |           |       |  |  |  |           |  |  |   |       | 

(c) Warrants

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.

F-17



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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

In 2000, the Company issued warrants to
non-employees with fair values aggregating $1,529,000. Both
warrants are exercisable, non-forfeitable and vested. The first
warrant was issued 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 $45.00 per share, exercisable
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 89%. The fair value of the
warrant is being amortized to marketing expense using the
straight-line method over the seven year term of the
arrangement. The second warrant was issued in connection with a
facility lease. The warrant is exercisable for 50,000 shares of
Viador common stock at a price of $17.88 per share, exercisable
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 one year; risk-free interest rate of 5.8%;
and expected volatility of 89%. In 2000, as disclosed more fully
in Note 6, approximately $339,000 of the unamortized balance of
the resulting deferred charge was written off in connection with
a restructuring program implemented in the fourth quarter of
fiscal 2000. In 2001, the remaining unamortized balance of
$381,000 was written off in connection with the Companys
decision to terminate and exit the leased facility.

On July 6, 2001 the Company issued
convertible promissory notes with warrants to purchase 1,250,000
shares of common stock at an exercise price of $0.40 per share
in return for $500,000 in cash. The notes bore interest at prime
plus 1% until September 6, 2001. After September 6,
2001, the notes bore interest at a rate of 3% plus the prime
rate, compounded quarterly. For accounting purposes, $252,000 of
the proceeds was allocated to the warrants and $248,000 was
initially recorded as notes payable with a face value of
$500,000. The fair value of the warrants 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 90%.
The notes were each convertible at the option of the lenders
into shares of common stock at a conversion price equal to the
lower of either the average closing bid price of the
Companys common stock on Nasdaq during the 20 days
before July 6, 2001 or the average closing bid price of the
Companys common stock on Nasdaq during the 20 days
before the date of conversion. The Company measured and recorded
a beneficial conversation feature of $248,000 (limited to the
proceeds) as additional paid in capital. The remaining carrying
amount of the notes payable of zero was accreted to the face
value of the notes payable of $500,000 over the term of the debt
resulting in a non-cash interest charge of $500,000 during the
third quarter. The lenders elected not to convert any of the
notes and, accordingly, the notes along with accrued interest
were repaid in full in September 2001.

The notes and warrants were offered and issued to
certain private investors, including Dick Warmington, who was
then the Companys chief executive officer, and is
currently a member of the Board of Directors. The offering and
issuance was exempt from registration under the Securities Act
of 1933, as amended, pursuant to section 4(2) thereof, as a
transaction not involving any public offering.

The warrants each expire on July 6, 2003 and
are exercisable at any time or from time to time, in whole or in
part, for an aggregate number of 1,250,000 shares of the
Companys common stock at a price per share of $0.40. The
warrants are in no event exercisable into a number of shares
that, combined with all other shares acquired by the converting
lender directly or indirectly from the Company or any person
acting on behalf of the Company, such as an officer, director,
substantial stockholder or underwriter, would exceed 19.9% of
the Companys total issued and outstanding shares of voting
stock as of the date of exercise.

On August 13, 2001, the Company raised
$4.0 million in financing through a private offering of
equity securities. As consideration for the funds, the Company
issued 14,814,814 shares of common stock and warrants to
purchase a total of 2,962,962 shares of common stock. The
Company incurred a commission of $240,000 to a third-party
finder.

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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

The warrants each expire on February 12,
2006 and are exercisable at any time or from time to time, in
whole or in part, after February 12, 2002 at a price of
$0.27 per share.

The offering and issuance were exempt from
registration under the Securities Act of 1933, as amended,
pursuant to Section 4(2) thereof, as a transaction not
involving a public offering.

(d) Employee
Stock Purchase Plan

The Companys Board of Directors adopted the
Employee Stock Purchase Plan (the Purchase Plan) in 1999 under
which 300,000 shares were originally reserved for issuance. The
Purchase Plan has been approved by the stockholders. In the year
ending December 31, 2001, 68,237 shares were issued and
363,983 shares were reserved for future issuance under this
plan. In the year ending December 31, 2000, 212,247 shares were
issued and 331,185 shares were reserved for future issuance
under this plan. No shares were issued under the plan in 1999.
The number of shares reserved under the Purchase Plan
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 number of shares
reserved as of January 1, 2002 is increased by 662,944; the
number of shares reserved as of January 1, 2001 is
increased by 363,983. 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.

(e) Stock-Based
Compensation

Had compensation costs been determined using the
fair value method 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):

|                                      |             |                          |   |         |   |      |   |         |   |  |   |         |  
|------------------------------------- | ----------- | ------------------------ | - | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                      |             |                         
|                                      |             | Years Ended December 31,
|                                      |             |                         
|                                      |             | 2001                     |   | 2000    |   | 1999
|                                      |             |                          |   |         |   |     
|Net loss:                             |             |                          |   |         |   |      |   |         |   |  |   |        
|                                      | As reported |                          | $ | (24,460 | ) |      | $ | (29,332 | ) |  | $ | (13,307 | )
|                                      | Pro forma   |                          |   | (26,929 | ) |      |   | (42,357 | ) |  |   | (15,284 | )
|Basic and diluted net loss per share: |             |                          |   |         |   |      |   |         |   |  |   |        
|                                      | As reported |                          | $ | (1.02   | ) |      | $ | (1.67   | ) |  | $ | (2.20   | )
|                                      | Pro forma   |                          |   | (1.13   | ) |      |   | (2.41   | ) |  |   | (2.53   | )

For all options 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:

|                        |  |                          |  |           |  |          
|----------------------- |  | ------------------------ |  | --------- |  | ---------
|                        |  |                         
|                        |  | Years Ended December 31,
|                        |  |                         
|                        |  | 2001                     |  | 2000      |  | 1999     
|                        |  |                          |  |           |  |          
|Expected Life           |  | 4.0 years                |  | 4.0 years |  | 3.9 years
|Risk-free interest rate |  | 3.1%                     |  | 6.1%      |  | 5.7%     
|Volatility              |  | 186.71%                  |  | 134.74%   |  | 88.67%   

The fair value of shares issued under the
Employee Stock Purchase Plan during fiscal 2001 was estimated
using the Black-Scholes model, with the following assumptions
for each of the two six-month periods in fiscal

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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

2000: (i) dividend yield of zero percent,
(ii) expected life of one-half year, (iii) expected
volatility of 187% and (iv) risk-free interest rate of 4.1%.

Note 9. Income Taxes

Income tax expense for the year ended
December 31, 2001 consisted of (in thousands):

|         |         |                           |   |    |    | 
|-------- | ------- | ------------------------- | - | -- | -- | 
|         |         | 2001                     
|         |         |                          
|Current: |         |                           |   |   
|         | State   |                           | $ | 10 |   
|         | Foreign |                           |   | 55 |   
|         |         |                           |   |   
|         |         | Total current tax expense |   | $  | 65 | 
|         |         |                           |   |   

The 2001, 2000, and 1999 income tax expense
differed from the amounts computed by applying the U.S. federal
income tax rate of 34% to pretax income before extraordinary
item as a result of the following (in thousands):

|                                                                                      |                   |      |        |      |  |      |        |   |  |   |        |   | 
|------------------------------------------------------------------------------------- | ----------------- | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | - | 
|                                                                                      |                   | 2001 |        | 2000 |  | 1999
|                                                                                      |                   |      |        |      |  |     
|Federal benefit at statutory rate                                                     |                   | $    | (8,422 | )    |  | $    | (9,972 | ) |  | $ | (4,524 | )
|State taxes, net of federal income tax benefit                                        |                   |      | 10     |      |  |      |       |   |  |   |       |  
|Foreign                                                                               |                   |      | 55     |      |  |      |       |   |  |   |       |  
|Net operating loss net of income from the
    discharge of indebtedness not benefited |                   |      | 7,561  |      |  |      | 9,454  |   |  |   | 4,126  |  
|Nondeductible expenses                                                                |                   |      | 861    |      |  |      | 518    |   |  |   | 398    |  
|                                                                                      |                   |      |        |      |  |      |        |   |  |   |        |  
|                                                                                      | Total tax expense |      | $      | 65   |  |      | $      |  |  |   | $      |  | 
|                                                                                      |                   |      |        |      |  |      |        |   |  |   |        |  

As reported in Note 7, the Company had
cancellation of indebtedness income of $377 that was not
includable in gross income for tax purposes due to insolvency
during the year ended December 31, 2001. However, the
Company is required to reduce its current year net operating
loss by $377, the amount of income from the discharge of
indebtedness.

The types of temporary differences that give rise
to significant portions of the Companys deferred tax
assets and liabilities as of December 31, 2001 and 2000 are
as follows (in thousands):

|                     |                                                 |                                   |   |         |        |  |   |         |        | 
|-------------------- | ----------------------------------------------- | --------------------------------- | - | ------- | ------ |  | - | ------- | ------ | 
|                     |                                                 | 2001                              |   | 2000   
|                     |                                                 |                                   |   |        
|Deferred tax assets: |                                                 |                                   |   |         |        |  |   |        
|                     | Accruals and reserves                           |                                   | $ | 1,003   |        |  | $ | 1,851   |       
|                     | Property and equipment                          |                                   |   | 42      |        |  |   | 4       |       
|                     | Net operating loss and tax credit carryforwards |                                   |   | 27,000  |        |  |   | 18,545  |       
|                     | Other                                           |                                   |   | 4       |        |  |   |        |       
|                     |                                                 |                                   |   |         |        |  |   |        
|                     |                                                 | Gross deferred tax assets         |   |         | 28,049 |  |   |         | 20,400 | 
|                     | Less: valuation allowance                       |                                   |   | (28,049 | )      |  |   | (20,400 | )     
|                     |                                                 |                                   |   |         |        |  |   |        
|                     |                                                 | Total and net deferred tax assets |   | $       |       |  |   | $       |       | 
|                     |                                                 |                                   |   |         |        |  |   |        

The net change in the total valuation allowance
for the year ended December 31, 2001 was an increase of
$7.6 million and for the year ended December 31, 2000
was an increase of $10.8 million. The Companys
accounting for deferred taxes under SFAS No. 109 involves
the evaluation of a number of factors concerning

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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

the realizability of the Companys deferred
tax assets. To support the Companys conclusion that a 100%
valuation allowance was required, management primarily
considered such factors as the Companys history of
operating losses, the nature of the Companys deferred tax
assets and the absence of taxable income in prior carryback
years. Although managements operating plans assume taxable
and operating income in future periods, managements
evaluation of all the available evidence in assessing the
realizability of the deferred tax assets indicates that such
plans are not considered sufficient to overcome the available
negative evidence.

The Company has net operating loss carryforwards
for federal and California income tax purposes of approximately
$67.7 million and $43.2 million, respectively, available to
reduce future income subject to income taxes. The U.S. net
operating loss carryforwards will begin to expire, if not
utilized, in 2013. The California net operating loss
carryforwards will begin to expire, if not utilized, in 2003
through 2006.

As of December 31, 2001, the Company also
has research credit carryforwards for federal and state purposes
of approximately $947,000 and $915,000 respectively, available
to reduce future income taxes. The federal research credit
carryforwards expire beginning in 2012 through 2021. The
research credit carryforwards for state purposes carry forward
indefinitely until utilized. The company has a foreign tax
credit carryforward for federal tax purpose in the amount of
$146,000. The foreign tax credits begin to expire in 2002.

As of December 31, 2001, approximately
$365,000 of the valuation allowance for deferred tax assets is
attributable to employee stock option deductions, the benefit
from which will be allocated to additional paid-in capital when
and if subsequently realized.

Federal and California tax laws impose
substantial restrictions on the utilization of net operating
loss and credit carryforwards in the event of an ownership
change for tax purposes, as defined in Section 382 of
the Internal Revenue Code. The Company has not yet determined
whether an ownership change occurred due to significant stock
transactions in each of the reporting years disclosed. If an
ownership change occurred, utilization of the net operating loss
carryforwards could be reduced significantly.

Note 10. Geographic, Segment and
Significant Customer Information

The Company has adopted 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 about revenue by product type for purposes of making
operating decisions and assessing financial performance. The
entity level financial information is identical to the
information presented

F-21



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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

in the accompanying statements of operations.
Therefore, the Company operates in a single operating segment:
Enterprise information portal systems. The disaggregated
information is as follows (in thousands):

|         |           |                          |               |       |       |       |   |        |       |        |   |       |       |        | 
|-------- | --------- | ------------------------ | ------------- | ----- | ----- | ----- | - | ------ | ----- | ------ | - | ----- | ----- | ------ | 
|         |           |                         
|         |           | Years Ended December 31,
|         |           |                         
|         |           | 2001                     |               | 2000  |       | 1999 
|         |           |                          |               |       |       |      
|Revenue: |           |                          |               |       |       |       |   |        |       |        |   |      
|         | License   |                          | $             | 4,652 |       |       | $ | 18,687 |       |        | $ | 7,320 |      
|         | Services: |                          |               |       |       |       |   |        |       |        |   |       |      
|         |           | Consulting               |               |       | 970   |       |   |        | 3,910 |        |   |       | 1,694 |       
|         |           | Maintenance              |               |       | 3,475 |       |   |        | 3,628 |        |   |       | 1,137 |       
|         |           |                          |               |       |       |       |   |        |       |        |   |      
|         |           |                          | Total revenue |       | $     | 9,097 |   |        | $     | 26,225 |   |       | $     | 10,151 | 
|         |           |                          |               |       |       |       |   |        |       |        |   |      

Significant customer information is as follows:

|           |  |                             |      |                |  |      |     |                   |  |  |     |   |  |  |      |  
|---------- |  | --------------------------- | ---- | -------------- |  | ---- | --- | ----------------- |  |  | --- | - |  |  | ---- | -
|           |  |                             |      | Percentage of 
|           |  | Percentage of Total Revenue |      | Total Accounts
|           |  | Years Ended December 31,    |      | Receivable    
|           |  |                             |      |               
|           |  | 2001                        |      | 2000           |  | 1999 |     | December 31, 2001
|           |  |                             |      |                |  |      |     |                  
|Customer A |  |                             | 22.1 | %              |  |      | 6.7 | %                 |  |  | 5.6 | % |  |  | 14.6 | %

The Company markets its products mainly from its
operations in North America. International sales are primarily
to customers in Europe and Asia Pacific. Revenues derived from
sales to customers in Asia Pacific and Europe were 19%, 14%, and
6% of total revenue for the years ended December 31, 2001,
2000 and 1999, respectively.

Revenues aggregating 5.7% of total revenue for
the year ended December 31, 2001 were generated from a
customer who is also a stockholder of the Company, and whose
ownership percentage was 0.98% as of December 31, 2001.
Revenues aggregating 1.4% of total revenue for the year ended
December 31, 2000 were generated from a customer who is
also a stockholder of the Company, and whose ownership
percentage was 1.76% as of December 31, 2000.

Note 11. Notes Payables

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%. The credit agreement was based on a
percentage of qualified outstanding accounts receivable and is
secured by a security interest in certain of the Companys
intellectual property. Effective December 20, 2000, the
maximum borrowing under the line of credit was increased to
$5.0 million. The Company had $5.0 million and $0
outstanding balances under the line of credit as of
December 31, 2000 and 1999, respectively. The bank line of
credit, which matured on December 31, 2000, was paid in
full on January 2, 2001. This bank line of credit was not
renewed. In 1999, the Company also entered into a revolving
equipment loan in the amount of $500,000 with 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 equipment loan. The equipment
loan agreement expired during 2000.

As more fully discussed in Note 4, in
January 2000, the Company issued notes payable in an aggregate
principal amount of $1.0 million in connection with the
acquisition of a business. This note bears interest at 6% per
annum and was due and payable no later than January 20,
2001. The Company paid the notes in full on January 2, 2001.

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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

Note 12. Commitments and
Contingency

The Company leases its facilities and certain
equipment under noncancelable operating lease agreements. Rent
expense was approximately, $1,679,553, $2,667,000 and $528,000
for the years ended December 31, 2001, 2000 and 1999,
respectively. Future minimum lease payments under noncancelable
operating leases for the years after December 31, 2001 are
as follows (in thousands):

|     |       |              |    |     | 
|---- | ----- | ------------ | -- | --- | 
|     |       | December 31,
|     |       |             
|2002 |       | $            | 86 |    
|2003 |       |              | 22 |    
|2004 |       |              | 22 |    
|2005 |       |              | 17 |    
|     |       |              |    |    
|     | Total |              | $  | 147 | 
|     |       |              |    |    

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. In December
2000, the agreement with a distributor in Germany was
terminated. The reported revenue by the distributor in Hong Kong
accounts for less than 1% of the total revenue in the year 2000.

On November 13, 2001, a press release issued
by Milberg Weiss Bershad Hynes & Lerach LLP announced
that The Plaintiffs Executive Committee in In re: Initial
Public Offering Securities Litigation, 21 MC 92
(SAS) had filed a class action law suit on
November 13, 2001, on behalf of purchasers of the
securities of Viador, Inc. between October 25, 1999 and
December 6, 2000, inclusive. This proceeding is at a very
early stage and the Company is unable to speculate as to
ultimate outcome.

Note 13. Subsequent Events

On December 11, 2001, the Company circulated
a workout agreement with certain of its creditors representing
approximately $1,867,000 of its outstanding accounts payable.
Upon consummation in February 2002 and under the terms of the
workout agreement, these creditors released the Company from any
obligation to repay any such amounts in exchange for payment of
25% of the total debt the Company owed them as of
September 30, 2001. On February 8, 2002, the Company
paid the creditors that were party to the workout agreement
their respective agreed upon amounts aggregating approximately
$467,000 for an extraordinary gain of $1,400,000, which will be
reflected in the first quarter of 2002 financial results. As of
December 31, 2001, the Company had classified $525,000 as
restricted cash, which was restricted and was to be used only to
pay creditors as part of this workout agreement.

As of December 31, 2001, the Company
deposited $0.5 million into a non-interest bearing trust
account. These funds were restricted for the sole purpose of
payment on the Companys workout agreement with its
creditors.

On March 18, 2002, the Company received
$1.0 million in financing through a private offering of
debt securities and a commitment to provide additional financing
of up to $2.0 million upon request to Mr. Heungyeung
Yeung, who currently holds certain of the Companys equity
securities. Mr. Yeungs commitment to provide
$2.0 million in additional financing is subject to certain
conditions relating to the Companys ability to meet the
Companys obligations under the notes and warrants issued
to Mr. Yeung, changes in equity ownership, composition of
the Companys management team and any change in control.

F-23



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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

As consideration for the funds and the commitment
to provide additional funds, the Company issued a convertible
promissory note and two warrants to Mr. Yeung. The note has
a principal amount of $1.0 million and is convertible into
16,711,230 shares of the Companys common stock. The note
accrues interest at a stated rate of 1% per year and matures on
March 18, 2004.

One of the warrants is exercisable in whole or in
part, at any time or from time to time, for 3,333,333 shares of
the Companys common stock at an exercise price of $0.06
per share. The second warrant is exercisable for an aggregate of
3,333,333 shares of the Companys common stock at an
exercise price of $0.06 per share, but is subject to vesting,
such that 25% of the warrant becomes exercisable every six
months and is entirely exercisable on March 18, 2004, two
years after the issuance date. The second warrant ceases to vest
in the event Mr. Yeung fails to fulfill his commitment to
provide additional funding. However, if Mr. Yeungs
failure to provide additional funding is due to the
Companys failure to meet any of the conditions above, the
second warrant becomes fully exercisable. Both warrants expire
on March 18, 2005.

Each time the Company receives additional funding
from Mr. Yeung, it will issue to Mr. Yeung a
convertible promissory note with a principal amount equal to the
amount of such additional funding. Interest on any such note
will accrue at a rate equal to the sum of (a) the prime
rate in effect on loans made by Citibank, N.A. as of the date
such note, plus (b) three percent (3%). Any such note will
be convertible into either shares of common stock or any equity
securities the Company issues to a third party or third parties
in one or more bona fide, arms-length transactions for the
purpose of raising capital during the term of such note. If the
note is converted into the Companys common stock, the note
will be convertible into a number of shares of common stock
equal to the total principal and interest amount outstanding on
the note at the time of conversion divided by $0.05984. If the
note is converted into another class of equity securities issued
in an equity financing, the note will be convertible into a
number of shares of such equity securities equal to the total
principal and interest amount outstanding on the note at the
time of conversion divided by the price per share or unit at
which such equity securities are sold to third party investors.

None of the notes or warrants issued or issuable
to Mr. Yeung in this offering is convertible or exercisable
if the conversion or exercise of any such note or warrant would
result in Mr. Yeung or his affiliates holding more than
49.9% of the Companys issued and outstanding voting stock.

In connection with this financing, the Company
incurred a commission payable to Mr. Yeung in the amount of
$60,000.

F-24



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##### Table of Contents



VIADOR INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

December 31, 2001, 2000 and
1999

Note 14. Quarterly Results of Operations
(Unaudited)

The following tables set forth certain unaudited
statements of operations data for the eight quarters ended
December 31, 2001 (in thousands):

|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |      |       |       |  
|----------------------------------------------------------------------- | --------------------------------------------- | ------------------------ | --------------------- | -------- | ----- | --------- | ------ | -------- | ------ | -------- | ------ | -------- | ------ | --------- | ------- | -------- | ------ | ----- | ------ | ----- | ----- | ----- | ------- | ----- | ------ | ------ | ------ | ----- | ----- | ----- | ------ | ---- | ----- | ----- | -
|                                                                        |                                               |                         
|                                                                        |                                               | Three Months Ended      
|                                                                        |                                               |                         
|                                                                        |                                               | Mar. 31,                 |                       | June 30, |       | Sept. 30, |        | Dec. 31, |        | Mar. 31, |        | June 30, |        | Sept. 30, |         | Dec. 31,
|                                                                        |                                               | 2000                     |                       | 2000     |       | 2000      |        | 2000     |        | 2001     |        | 2001     |        | 2001      |         | 2001    
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |         
|Statement of operations                                                 |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Revenue:                                                                |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|                                                                        | License                                       |                          | $                     | 4,193    |       |           | $      | 5,382    |        |          | $      | 6,398    |        |           | $       | 2,714    |        |       | $      | 2,254 |       |       | $       | 1,330 |        |        | $      | 551   |       |       | $      | 516  |      
|                                                                        | Service                                       |                          |                       | 1,125    |       |           |        | 2,063    |        |          |        | 2,037    |        |           |         | 2,313    |        |       |        | 1,361 |       |       |         | 1,347 |        |        |        | 855   |       |       |        | 883  |      
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|                                                                        |                                               |                          | Total revenue         |          |       | 5,318     |        |          |        | 7,445    |        |          |        | 8,435     |         |          |        | 5,027 |        |       |       | 3,615 |         |       |        | 2,677  |        |       |       | 1,406 |        |      |       | 1,399 |  
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Cost of revenue:                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|                                                                        | Amortization of capitalized software          |                          |                       |         |       |           |        | 109      |        |          |        | 337      |        |           |         | 390      |        |       |        | 423   |       |       |         | 3,031 |        |        |        | 103   |       |       |        | (104 | )    
|                                                                        | License and service cost of revenue           |                          |                       | 1,617    |       |           |        | 2,220    |        |          |        | 2,397    |        |           |         | 3,291    |        |       |        | 1,791 |       |       |         | 727   |        |        |        | 412   |       |       |        | (10  | )    
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|                                                                        |                                               |                          | Total cost of revenue |          |       | 1,617     |        |          |        | 2,329    |        |          |        | 2,734     |         |          |        | 3,681 |        |       |       | 2,214 |         |       |        | 3,758  |        |       |       | 515   |        |      |       | (114  | )
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|                                                                        |                                               |                          | Gross profit (loss)   |          |       | 3,701     |        |          |        | 5,116    |        |          |        | 5,701     |         |          |        | 1,346 |        |       |       | 1,401 |         |       |        | (1,081 | )      |       |       | 891   |        |      |       | 1,513 |  
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Operating expenses:                                                     |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|                                                                        | Sales and marketing                           |                          |                       | 6,256    |       |           |        | 7,191    |        |          |        | 7,024    |        |           |         | 7,740    |        |       |        | 4,586 |       |       |         | 4,605 |        |        |        | 1,972 |       |       |        | 346  |      
|                                                                        | Research and development                      |                          |                       | 1,306    |       |           |        | 2,053    |        |          |        | 2,696    |        |           |         | 2,201    |        |       |        | 1,949 |       |       |         | 1,754 |        |        |        | 671   |       |       |        | 305  |      
|                                                                        | General and administrative                    |                          |                       | 1,452    |       |           |        | 1,401    |        |          |        | 1,628    |        |           |         | 2,372    |        |       |        | 1,487 |       |       |         | 1,488 |        |        |        | 1,380 |       |       |        | 885  |      
|                                                                        | Amortization of goodwill                      |                          |                       |         |       |           |        | 146      |        |          |        | 107      |        |           |         | 174      |        |       |        | 107   |       |       |         | 213   |        |        |        |      |       |       |        | (151 | )    
|                                                                        | Restructuring expense                         |                          |                       |         |       |           |        |         |        |          |        |         |        |           |         | 693      |        |       |        |      |       |       |         | 217   |        |        |        |      |       |       |        | 34   |      
|                                                                        | Loss on lease termination                     |                          |                       |         |       |           |        |         |        |          |        |         |        |           |         |         |        |       |        |      |       |       |         | 2,824 |        |        |        |      |       |       |        |     |      
|                                                                        | Impairment loss  goodwill                    |                          |                       |         |       |           |        |         |        |          |        |         |        |           |         | 1,270    |        |       |        |      |       |       |         | 1,430 |        |        |        |      |       |       |        | 106  |      
|                                                                        | Impairment loss  equipment held for
    sale |                          |                       |         |       |           |        |         |        |          |        |         |        |           |         |         |        |       |        |      |       |       |         | 550   |        |        |        | 300   |       |       |        |     |      
|                                                                        | Amortization of stock-based compensation      |                          |                       | 334      |       |           |        | 278      |        |          |        | 219      |        |           |         | 190      |        |       |        | 204   |       |       |         | (375  | )      |        |        | 53    |       |       |        | (3   | )    
|                                                                        | Loss on sale of equipment                     |                          |                       |         |       |           |        |         |        |          |        |         |        |           |         |         |        |       |        |      |       |       |         |      |        |        |        | 190   |       |       |        |     |      
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|                                                                        |                                               | Total operating expenses |                       |          | 9,348 |           |        |          | 11,069 |          |        |          | 11,674 |           |         |          | 14,640 |       |        |       | 8,333 |       |         |       | 12,706 |        |        |       | 4,566 |       |        |      | 1,522 |      
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Operating loss                                                          |                                               |                          | (5,647                | )        |       |           | (5,953 | )        |        |          | (5,973 | )        |        |           | (13,294 | )        |        |       | (6,932 | )     |       |       | (13,787 | )     |        |        | (3,675 | )     |       |       | (9     | )   
|Other income and expense, net                                           |                                               |                          | 435                   |          |       |           | 410    |          |        |          | 348    |          |        |           | 342     |          |        |       | 86     |       |       |       | 13      |       |        |        | (417   | )     |       |       | (56    | )   
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Net loss before income taxes and extraordinary
    item                 |                                               |                          | (5,212                | )        |       |           | (5,543 | )        |        |          | (5,625 | )        |        |           | (12,952 | )        |        |       | (6,846 | )     |       |       | (13,774 | )     |        |        | (4,092 | )     |       |       | (65    | )   
|Extraordinary gain on extinguishment of debt                            |                                               |                          |                      |          |       |           |       |          |        |          |       |          |        |           |        |          |        |       |       |       |       |       |        |       |        |        |       |       |       |       | 377    |     
|Provision for income taxes                                              |                                               |                          |                      |          |       |           |       |          |        |          |       |          |        |           |        |          |        |       |       |       |       |       | 28      |       |        |        |       |       |       |       | 34     |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Net income (loss)                                                       |                                               | $                        | (5,212                | )        |       | $         | (5,543 | )        |        | $        | (5,625 | )        |        | $         | (12,952 | )        |        | $     | (6,846 | )     |       | $     | (13,802 | )     |        | $      | (4,092 | )     |       | $     | 278    |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Basic net income (loss) per share before
    extraordinary item         |                                               | $                        | (0.31                 | )        |       | $         | (0.32  | )        |        | $        | (0.32  | )        |        | $         | (0.72   | )        |        | $     | (0.38  | )     |       | $     | (0.76   | )     |        | $      | (0.16  | )     |       | $     | 0.00   |     
|Basic net income (loss) per
    share  extraordinary item              |                                               | $                        |                      |          |       | $         |       |          |        | $        |       |          |        | $         |        |          |        | $     |       |       |       | $     |        |       |        | $      |       |       |       | $     | 0.01   |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Basic net income (loss) per share                                       |                                               | $                        | (0.31                 | )        |       | $         | (0.32  | )        |        | $        | (0.32  | )        |        | $         | (0.72   | )        |        | $     | (0.38  | )     |       | $     | (0.76   | )     |        | $      | (0.16  | )     |       | $     | 0.01   |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Weighted average shares used in basic net income
    (loss) per share   |                                               |                          | 17,023                |          |       |           | 17,373 |          |        |          | 17,709 |          |        |           | 18,018  |          |        |       | 18,197 |       |       |       | 18,258  |       |        |        | 26,047 |       |       |       | 33,142 |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Diluted net income (loss) per share before
    extraordinary item       |                                               | $                        | (0.31                 | )        |       | $         | (0.32  | )        |        | $        | (0.32  | )        |        | $         | (0.72   | )        |        | $     | (0.38  | )     |       | $     | (0.76   | )     |        | $      | (0.16  | )     |       | $     | 0.00   |     
|Diluted net income (loss) per
    share  extraordinary item            |                                               | $                        |                      |          |       | $         |       |          |        | $        |       |          |        | $         |        |          |        | $     |       |       |       | $     |        |       |        | $      |       |       |       | $     | 0.01   |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Diluted net income (loss) per share                                     |                                               | $                        | (0.31                 | )        |       | $         | (0.32  | )        |        | $        | (0.32  | )        |        | $         | (0.72   | )        |        | $     | (0.38  | )     |       | $     | (0.76   | )     |        | $      | (0.16  | )     |       | $     | 0.01   |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     
|Weighted average shares used in diluted net
    income (loss) per share |                                               |                          | 17,023                |          |       |           | 17,373 |          |        |          | 17,709 |          |        |           | 18,018  |          |        |       | 18,197 |       |       |       | 18,258  |       |        |        | 26,047 |       |       |       | 33,142 |     
|                                                                        |                                               |                          |                       |          |       |           |        |          |        |          |        |          |        |           |         |          |        |       |        |       |       |       |         |       |        |        |        |       |       |       |        |     

F-25



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##### Table of Contents



VIADOR INC.

SCHEDULE IIVALUATION AND QUALIFYING
ACCOUNTS

For the Years Ended December 31, 2001,
2000, and 1999

(In thousands)


|                  |                                 |                     |   |            |  |             |   |            |  |  |   |        |   |  |   |       | 
|----------------- | ------------------------------- | ------------------- | - | ---------- |  | ----------- | - | ---------- |  |  | - | ------ | - |  | - | ----- | 
|                  |                                 |                     |   |            |  |             |   | Balance at
|                  |                                 | Balance at          |   |            |  | Deductions/ |   | End of    
|Classification    |                                 | Beginning of Period |   | Provisions |  | Write-Offs  |   | Period    
|                  |                                 |                     |   |            |  |             |   |           
|For the year 2001 |                                 |                     |   |            |  |             |   |            |  |  |   |        |   |  |   |      
|                  | Allowance for doubtful accounts |                     | $ | 2,033      |  |             | $ | 3,542      |  |  | $ | (5,195 | ) |  | $ | 380   | 
|For the year 2000 |                                 |                     |   |            |  |             |   |            |  |  |   |        |   |  |   |      
|                  | Allowance for doubtful accounts |                     | $ | 208        |  |             | $ | 3,081      |  |  | $ | (1,256 | ) |  | $ | 2,033 | 
|For the year 1999 |                                 |                     |   |            |  |             |   |            |  |  |   |        |   |  |   |      
|                  | Allowance for doubtful accounts |                     | $ | 53         |  |             | $ | 237        |  |  | $ | (82    | ) |  | $ | 208   | 

S-1



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##### Table of Contents






INDEX TO EXHIBITS

|            |           |               |  |                                                                                                                                                                                  
|----------- | --------- | ------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |           | Exhibit Title
|            |           |              
|            | ****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
|            | ***10.13  |               |  | Note Secured by Stock Pledge Agreement, by and
    between Raja Venkatesh and the Registrant, dated April 14,
    2000                                                           
|            | ***10.14  |               |  | Stock Pledge Agreement, by and between Raja
    Venkatesh and the Registrant, dated April 14, 2000                                                                               
|            | ***10.15  |               |  | Note Secured by Stock Pledge Agreement, by and
    between Raja Venkatesh and the Registrant, dated May 26,
    2000                                                             
|            | ***10.16  |               |  | Stock Pledge Agreement, by and between Raja
    Venkatesh and the Registrant, dated May 26, 2000                                                                                 
|            | ****10.17 |               |  | Note Secured by Stock Pledge Agreement, by and
    between Mr. Steve Dille and the Registrant, dated
    July 13, 2000                                                           
|            | ****10.18 |               |  | Stock Pledge Agreement, by and between
    Mr. Steve Dille and the Registrant, dated July 13, 2000                                                                               
|            | ****10.19 |               |  | Employment Agreement between Mr. Steve Dille
    and the Registrant dated November 30, 2000                                                                                      
|            | ****10.20 |               |  | Employment Agreement by and between
    Mr. Johnathan Harding and the Registrant dated
    October 5, 2000                                                                       
|            | ****10.21 |               |  | Mutual Release Agreement by and between Viador
    GmbH and the Registrant Dated November 27, 2000                                                                               
|            | ^10.22    |               |  | Sublease Termination Agreement by and between the
    Registrant and Alza Corporation, dated May 31, 2001.                                                                       



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##### Table of Contents



|            |        |               |  |                                                                                                                                                                                                                                                   |                                                                                
|----------- | ------ | ------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------
|Exhibit No. |        | Exhibit Title
|            |        |              
|            | ^10.23 |               |  | Convertible Note and Warrant Purchase Agreement
    by and among the Registrant and Messrs. Dick Warmington,
    Zhihan Wang and Kin Lui, dated July 6, 2001.                                                                                    
|            | ^10.24 |               |  | Form of Convertible Promissory Note issued in
    connection with Convertible Note and Warrant Purchase Agreement
    by and among the Registrant and Messrs. Dick Warmington,
    Zhihan Wang and Kin Lui, dated July 6, 2001.                  
|            |        |               |  |                                                                                                                                                                                                                                                   | Schedule of Convertible Promissory Notes Issued:                               
|            |        |               |  |                                                                                                                                                                                                                                                   | (a) Convertible Promissory Note for $300,000
    issued to Mr. Zhihan Wang;    
|            |        |               |  |                                                                                                                                                                                                                                                   | (b) Convertible Promissory Note for $100,000
    issued to Mr. Dick Warmington;
|            |        |               |  |                                                                                                                                                                                                                                                   | (c) Convertible Promissory Note for $100,000
    issued to Mr. Kin Lui.        
|            | ^10.25 |               |  | Form of Warrant issued in connection with
    Convertible Note and Warrant Purchase Agreement by and among the
    Registrant and Messrs. Dick Warmington, Zhihan Wang and Kin
    Lui, dated July 6, 2001.                                      
|            |        |               |  |                                                                                                                                                                                                                                                   | Schedule of Warrants Issued:                                                   
|            |        |               |  |                                                                                                                                                                                                                                                   | (a) Warrant for 750,000 shares issued to
    Mr. Zhihan Wang;                  
|            |        |               |  |                                                                                                                                                                                                                                                   | (b) Warrant for 250,000 shares issued to
    Mr. Dick Warmington;              
|            |        |               |  |                                                                                                                                                                                                                                                   | (c) Warrant for 250,000 shares issued to
    Mr. Kin Lui.                      
|            | ^10.26 |               |  | Convertible Promissory Note issued to
    Mr. Dick Warmington in connection with Convertible Note and
    Warrant Purchase Agreement by and among the Registrant and
    Mssrs. Dick Warmington, Zhihan Wang and Kin Lui, dated
    July 6, 2001.
|            | ^10.27 |               |  | Warrant issued to Mr. Dick Warmington in
    connection with Convertible Note and Warrant Purchase Agreement
    by and among the Registrant and Messrs Dick Warmington,
    Zhihan Wang and Kin Lui, dated July 6, 2001.                        
|            | ^10.28 |               |  | Sublease Agreement by and between the Registrant
    and Techspan, Inc., dated July 2, 2001.                                                                                                                                                     
|            | ^10.29 |               |  | Severance Agreement by and between the Registrant
    and Jonathan Harding, dated May 8, 2001.                                                                                                                                                   
|            | ^10.30 |               |  | Stock Purchase Agreement by and among Registrant
    and Messrs. Heungyeung Yeung, Zhihan Wang, and Magison
    Investment Ltd., dated August 13, 2001.                                                                                          
|            | ^10.31 |               |  | Form of Warrant issued in connection with Stock
    Purchase Agreement by and among Registrant, and
    Messrs. Heungyeung Yeung, Zhihan Wang, and Magison
    Investment Ltd., dated August 12, 2001.                                           
|            |        |               |  |                                                                                                                                                                                                                                                   | Schedule of Issued Warrants in Equity Financing                                
|            |        |               |  |                                                                                                                                                                                                                                                   | a. Warrant to Mr. Heungyeung Yeung                                             
|            |        |               |  |                                                                                                                                                                                                                                                   | b. Warrant to Mr. Zhihan Wang                                                  
|            |        |               |  |                                                                                                                                                                                                                                                   | c. Warrant to Magison Investment Ltd.                                          
|            | ^10.32 |               |  | Employment Agreement by and between the
    Registrant and Alice Pilch dated June 25, 2001.                                                                                                                                                      
|            | #10.33 |               |  | Convertible Note and Warrant Purchase Agreement
    by and between the Registrant and Heungyeung Yeung dated
    March 18, 2002.                                                                                                                 
|            | #10.34 |               |  | Form of Convertible Promissory Note Issued to
    Mr. Yeung in connection with Convertible Note and Warrant
    Purchase Agreement by and between the Registrant and
    Mr. Yeung dated March 18, 2002.                                         
|            | #10.35 |               |  | Form of Convertible Promissory Note issuable to
    Mr. Yeung in connection with Convertible Promissory Note
    and Warrant Purchase Agreement by and between the Registrant and
    Mr. Yeung, dated March 18, 2002.                           
|            | #10.36 |               |  | Form of Warrant issued to Mr. Yeung in
    connection with Convertible Promissory Note and Warrant Purchase
    Agreement by and between the Registrant and Mr. Yeung,
    dated March 18, 2002.                                                 
|            | #10.37 |               |  | Form of Warrant issued to Mr. Yeung in
    connection with Convertible Promissory Note and Warrant Purchase
    Agreement by and between the Registrant and Mr. Yeung,
    dated March 18, 2002.                                                 
|            | #10.38 |               |  | Workout Agreement by and between Registrant and
    certain of its creditors as listed therein, dated
    December 11, 2001.                                                                                                                     



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##### Table of Contents



|            |      |               |  |                                          
|----------- | ---- | ------------- |  | -----------------------------------------
|Exhibit No. |      | Exhibit Title
|            |      |              
|            | 23.1 |               |  | Independent Auditors Report and Consent.
|            | 24.1 |               |  | Power of Attorney (included on page 51). 



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|     |                                                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*    | Incorporated by reference to Exhibits of the
    Registrants Registration Statement on Form S-1 (File
    No. 333-84041) filed on October 25, 1999.                                                              
|    
|**   | Incorporated by reference to Exhibits of the
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 1999, filed with the Securities and
    Exchange Commission on March 30, 2000.
|    
|***  | Incorporated by reference to the
    Registrants Quarterly Report on Form 10-Q, filed on
    August 14, 2000.                                                                                                    
|    
|**** | Incorporated by reference to the
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000, with the Securities and
    Exchange Commission dated April 2, 2001.                



|  |                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------
|^ | Incorporated by reference to the
    Registrants Quarterly Report on Form 10-Q, filed on
    August 20, 2001.
| 
|# | Incorporated by reference to the
    Registrants Annual Report on Form 10-K, filed
    April 15, 2002.