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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------

                                  FORM 10-KSB
                    ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                       COMMISSION FILE NUMBER: 000-21729

                              THE VIALINK COMPANY
                 (Name of Small Business Issuer in its Charter)

<TABLE>
<S>                                            <C>
                  DELAWARE                                      73-1247666
        (State of Other Jurisdiction                         (I.R.S. Employer
       Incorporation or Organization)                      Indemnification No.)

              13800 BENSON ROAD                                 73013-6417
              EDMOND, OKLAHOMA                                  (Zip Code)
  (Address of Principal Executive Offices)
</TABLE>

                                 (405) 936-2500
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

<TABLE>
<S>                                            <C>
                                                           NAME OF EACH EXCHANGE
             TITLE OF EACH CLASS                            ON WHICH REGISTERED
---------------------------------------------  ---------------------------------------------
                    None                                            N/A
</TABLE>

         Securities registered under Section 12(g) of the Exchange Act:
                         COMMON STOCK, $.001 PAR VALUE
                                (Title of Class)
                   REDEEMABLE COMMON STOCK PURCHASE WARRANTS
                                (Title of Class)

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 past 90 days.  Yes [X]  No [ ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  [ ]

     The issuer's revenues for the fiscal year ending December 31, 1999 were
$615,519.

     As of March 3, 2000, the aggregate market value of the voting common stock
of the registrant held by non-affiliates of the registrant (affiliates for these
purposes being Registrant's directors, executive officers and holders of more
than 5% of Registrant's common stock on such date) computed by reference to the
price at which the common equity was sold, or the average bid and asked price of
such common equity on that date was $604.8 million.

     As of March 3, 2000, the issuer had 19,735,416 outstanding shares of Common
Stock. This number, as well as all other share numbers in this Form 10-KSB
reflect the proposed 2-for-1 split of our common stock to be effected on March
28, 2000 in the form of a stock dividend paid to the stockholders of record on
March 17, 2000.

     Transitional Small Business Disclosure Format: Yes [ ]  No [X]
                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Proxy Statement for issuer's 2000 Annual Meeting of
Shareholders are incorporated by reference into Part III of this Annual Report
on Form 10-KSB
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                                     PART 1

ITEM 1. BUSINESS

                                    BUSINESS

     We are a leading provider of subscription-based, business-to-business
electronic commerce services that enable consumer packaged goods (CPG) and
grocery industry participants to efficiently manage their highly complex supply
chain information. Our services allow manufacturers, wholesalers, distributors
and retailers to communicate and synchronize item, price and promotion
information in a more cost-effective and accessible way than has been possible
using traditional electronic and paper-based methods. Our syncLink service,
introduced in 1997, is a synchronized, secure, shared database of item codes,
descriptions and specifications, product authorizations and de-authorizations
and product prices, costs and promotions. synclink provides, the foundation for
our Chain Pricing, Item Movement and Scan Based Trading services.

INDUSTRY BACKGROUND

  Growth of the Internet and Business-to-Business Electronic Commerce

     The Internet has emerged as the fastest growing communications medium in
history, enabling millions of people to gather information, communicate and
conduct business electronically. According to GartnerGroup, the worldwide
business-to-business electronic commerce market is forecast to grow from $145
billion in 1999 to $7.3 trillion in 2004, representing 7% of forecast total
global sales. Due to the growing number of Web users and the increasing use of
the Internet for business-to-business communication, many businesses now
recognize the Internet as critical to their competitive position. Businesses are
capitalizing on the global reach of the Internet to expand into new markets and
are utilizing the Web as a powerful distribution channel to market and deliver
goods and services. Also, businesses are increasingly using the Internet to
interact with suppliers, distributors and other business partners to achieve
greater efficiencies.

  The Consumer Packaged Goods and Grocery Industries

     The CPG and grocery industries in the U.S. manufacture and distribute a
wide variety of prepackaged items primarily sold in supermarkets, convenience
stores, small grocery stores, mass merchandisers, warehouse clubs and chain
drugstores. Representative items include beverages, canned goods, dry goods,
snack foods and health and beauty products. The movement of merchandise from
manufacturer to retailer is characterized by various multi-tiered distribution
methods, such as direct-to-store deliveries and intermediate deliveries through
wholesalers, distributors and retailer warehouses. This distribution structure
is commonly referred to as the "supply chain." The CPG and grocery industries
are very large and highly fragmented. According to the U.S. Census Bureau, the
U.S. CPG and grocery industries represented $851 billion in retail sales in
1997. These sales were generated by 300,000 retail locations. These retail
locations represented over 4,200 retail chains and were supplied by over 20,000
manufacturers and over 50,000 wholesalers, distributors and brokers.

     CPG and grocery industry participants must manage a large number of items,
each of which may be packaged, distributed and sold in different sizes and
configurations and potentially under different promotion terms. A typical
supermarket has an average of 40,000 unique items in its store inventory
supplied by up to 2,500 suppliers. A large format supermarket, or supercenter,
may have over 100,000 unique items in inventory supplied by up to 3,000
suppliers. A typical convenience store has an average of 2,800 items in
inventory supplied by up to 300 suppliers. The vast number of items are
delivered in many different packaging quantities, including bulk truckloads,
pallets, cases and individual units. Items, prices and promotions are often
unique to each trading partner, and individual stores within a retail chain can
be authorized to sell different products. Consequently, product assortment,
pricing and promotion can vary by geography, store size or demographic factors.
Moreover, item prices and promotions change frequently at every level of the
supply chain, sometimes more than once a week, and the terms of

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the promotion, for example, the start date, end date, percentage or absolute
dollar discounts, links to other promotions and quantity discounts, can be very
complex. Finally, according to New Product News, approximately 16,000 new
products were introduced in the CPG and grocery industries in 1999.

  Challenges Faced By Industry Participants

     To date, the CPG and grocery supply chain has been characterized by low
electronic commerce penetration, manually intensive business processes and high
purchase order and invoice error rates. According to the 1993 Joint Industry
Study on Efficient Consumer Response, improving efficiencies in critical supply
chain areas such as store assortment, replenishment, promotion and product
development, could reduce grocery supply chain costs by up to 10.8% of sales.
More specifically, the study indicated that costs related to promotion
administration, buying and selling processes, deductions and other clerical and
administrative areas could be reduced by over 3.4% of sales. We do not believe
the inefficiencies identified in the Joint Industry Study have been successfully
addressed since the time of its release. Supply chain information exchange
continues to remain largely paper-based and unsynchronized. The Joint Industry
Study also indicated that item, price and promotion information synchronization
is necessary to achieve the benefits of a paperless system.

     One of the most significant challenges facing a retailer is the maintenance
of its "pricebook." The pricebook typically contains descriptions of each item
in a store's inventory, including supplier and retailer product codes, item
specifications (packaging and selling unit information), Universal Product Code
(UPC), purchase cost, retail sales price and any discounts to be received from
the supplier. The vast number of items, variability of pricing, lack of reliable
information exchanged between trading partners and the traditional practice of
manual updating all combine to make pricebook maintenance extremely difficult
and error prone and result in a lack of "synchronization" between trading
partners. A single retailer may have thousands of suppliers, each of which may
have different prices for the same item it supplies to different stores. Because
many retailers do not communicate electronically with their suppliers, retail
buyers manually key item and price information from a large number of suppliers'
reports, catalogs, e-mails, phone calls and faxes into their pricebook.

     One of the most important pieces of information within a pricebook is the
product code used to track the item through the supply chain. Maintaining
product code information for each trading partner is difficult because the
commonly recognized UPC bar code printed on many item labels is typically not
used for tracking products throughout the entire supply chain. Rather, the UPC
bar code is most commonly used at the retail checkout register exclusively as a
standardized means to ensure selling price accuracy. In contrast, most
manufacturers, wholesalers, distributors and retailers use their own set of item
codes and naming protocols. As a result, a single product could be represented
by thousands of separate product codes. Therefore, retailers and suppliers spend
considerable time and resources translating and maintaining product code
information among their trading partners.

     Due to the limited number of available alternatives, many suppliers and
retailers continue to employ paper-based communications to manage their supply
chain information, resulting in operational inefficiencies and administrative
errors. According to a 1999 Grocery Manufacturers of America study, 60% of all
invoices have errors, 60% of which are due to price and promotion issues. In
addition, 35% of all invoices result in the retailer taking deductions for
errors and discrepancies in invoices from suppliers. These deductions represent
approximately 8% of annual invoice sales from suppliers. Invoice errors and
discrepancies also cause significant administrative inefficiencies for both
suppliers and retailers attempting to research and reconcile the source of the
error. A 1998 Grocery Manufacturers of America study estimated that the
administrative cost of invoice errors averages $40 per error and can reach up to
$236 per error.

  Limitations of Current Approaches

     Currently, there is no established universal, low-cost electronic method
for manufacturers, wholesalers, distributors and retailers to share item, price
and promotion information easily and efficiently. In the traditional electronic
data interchange (EDI) model, a communication technology available for several
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years, each participant creates, or "maps," a "connection" with each one of its
participating supply chain partners. Suppliers and retailers that would have to
create hundreds of point-to-point connections to implement an electronic based
supply chain have found EDI too costly and technologically difficult.
Consequently, only a small percentage of the industries' suppliers and retailers
use EDI or have access to electronic supply chain applications. In addition,
without a shared database of record from which both trading partners can access
agreed upon item, price and promotion information, pricebook synchronization is
virtually impossible.

     The unavailability of basic electronic commerce capabilities has impeded
the application of more advanced supply chain concepts, such as collaborative
planning, forecasting and replenishment, and scan based trading. For example,
many stores have automatic scanning capabilities at the check-out register;
however, only a small percentage of the information captured by the scanner is
shared with suppliers in a timely manner.

     In order to improve the visibility and sharing of item, price and promotion
information throughout the supply chain, manage data complexity, collaborate on
product and promotion decisions, minimize supply chain information
inefficiencies, and improve overall service levels to their customers, trading
partners require a solution that enables them to:

     - Synchronize item, price and promotion information between trading
       partners in an easily accessible, cost-efficient and secure manner to use
       as the foundation for electronic transactions;

     - Seamlessly connect to all trading partners through multiple technology
       platforms, including Extensible Markup Language (XML), an emerging
       standard for the exchange of data over the Internet, and EDI, and across
       significantly varied levels of technological sophistication; and

     - Manage, map and maintain item, price and promotion information for tens
       of thousands of unique items from up to thousands of trading partners.

     We believe the inefficiencies and inadequacies of current approaches have
created a significant opportunity for a business-to-business electronic commerce
solution within the CPG and grocery industries.

THE VIALINK SOLUTION

     We provide subscription-based, business-to-business electronic commerce
services that enable CPG and grocery industry participants to efficiently manage
their highly complex supply chain information. Our solution is designed to
operate across disparate technology platforms, application suites and item
coding structures and can be implemented and deployed rapidly. Customers make
only a single connection to our services. They may do this using a variety of
technologies, such as a standard Internet browser, e-mail, highly sophisticated
proprietary network infrastructure, standard EDI formats or XML.

     Our syncLink service replaces the multiple connections among manufacturers,
wholesalers, distributors and retailers with a single electronic connection to a
shared database. syncLink provides our customers with a cost-effective,
reliable, scalable and secure way to communicate and synchronize trading and
pricebook information. As the item, price and promotion information-of-record
for participating trading partners, the syncLink database forms the foundation
for viaLink's other electronic commerce services:

     - Chain Pricing -- an advanced information reporting service that
       facilitates the sharing of syncLink data among authorized members
       throughout all stages of the supply chain;

     - Item Movement -- a service that allows retailers to share actual retail
       item sales and warehouse item movement information with manufacturers and
       distributors on a daily or weekly basis; and

     - Scan Based Trading -- a service that enables retailers and suppliers to
       transact business electronically based on actual retail sales data.

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     We believe our solution provides suppliers and retailers with the following
benefits:

     - Reduced manual data entry and pricebook maintenance, which can increase
       overall administrative efficiency;

     - Reduced invoice discrepancies through synchronization of trading
       information, which can reduce deduction write-offs, working capital
       inefficiencies and administrative costs associated with reconciling the
       discrepancies;

     - Reduced time spent resolving errors and disputes, which can increase
       salesforce productivity and actual time selling;

     - Enhanced promotion effectiveness and ability to facilitate more efficient
       new product introductions due to greater trading information visibility;
       and

     - Improved item delivery and receiving processes.

     We believe that the benefits of our solution will attract leading national
and regional retailers and suppliers to our network of CPG and grocery industry
participants. We also believe that the addition of these retailers and suppliers
will create a network effect that increases the value of our viaLink solution to
subscribers.

STRATEGY

     Our objective is to become the industry-accepted electronic commerce
utility for synchronizing item, price and promotion information for the CPG and
grocery industries. We plan to accomplish this by implementing the following
strategies:

  Target Leading Retailers and Suppliers to Create a Network Effect

     We intend to create a network effect by targeting leading national and
regional retailers and suppliers and providing the services necessary to create
efficiencies for these key participants. We believe the adoption of our services
by these companies will be an important endorsement for the rest of the CPG and
grocery industries. As a result of this network effect, we believe the value of
our services to our subscribers will increase with the addition of new trading
partners, thereby increasing the overall value of our solution. Over the last
several months, we have signed a number of customers including Coors Brewing
Company, Kraft Foods, Spartan Stores and Unified Western Grocers.

  Build on First Mover Advantage and Increase Brand Awareness

     We believe our position as the first company to offer a synchronized,
secure, shared database containing item, price and promotion information
provides us with a first mover advantage to attract a critical mass of retailers
and suppliers. To increase the number of retailers and suppliers that use our
services, we intend to rapidly build awareness of our services by developing a
compelling brand and value proposition. Our plans include:

     - Expanding the size and capabilities of our internal sales force;

     - Working with existing customers to connect new suppliers and retailers;

     - Advertising extensively in industry and business media;

     - Participating in industry trade shows and conferences; and

     - Working with industry trade associations to provide broad industry
       influence.

  Leverage Strategic Alliances and Relationships

     We believe that strategic alliances and relationships enhance our ability
to reach new customers. We have established strategic, business and technology
alliances with leading organizations such as
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i2 Technologies, Ernst & Young and Hewlett-Packard. These alliances provide us
with technology services, financial resources and marketing and sales support
and enhance our ability to develop and deliver new services. We have also formed
alliances and relationships with ICS FoodOne, OMI International, Cyclone
Commerce and UCCnet and we are a member of the Oracle Partner Program. We
believe these alliances and relationships add to our credibility with potential
new customers, contribute to expanding awareness of our products and services
and are critical to achieving greater market penetration and acceptance of our
services. As opportunities arise, we intend to establish additional alliances
and relationships with key participants in a number of strategic markets or
acquire complementary services and technologies to further drive adoption of our
solution and enhance and expand our service offerings.

     We recently announced an initiative to enable third-party technology
providers to connect to our services. This program, called the "viaLink ready
Program", allows technology providers to create and rapidly deploy solutions
that use our services and extend the capabilities of their own applications. We
expect to gain greater adoption and penetration of our solution by accessing the
customers of these third-party technology providers. The "viaLink ready Program"
is being facilitated by our implementation of XML. Currently, we have 13
companies participating in the "viaLink ready Program".

  Expand Service Offerings

     Given the significant complexities and inefficiencies prevalent in the CPG
and grocery supply chain, we expect suppliers and retailers will demand more
advanced supply chain services that assist them in tracking sales, forecasting
demand, replenishing inventory and managing transactions based on point-of-sale
data. syncLink, the foundation of our solution, allows us to develop and deploy
other value-added services. For example, we plan to deploy our Item Movement
service which, together with syncLink, allows trading partners to implement Scan
Based Trading. We will continue to invest resources to develop complementary
services that leverage the syncLink database and create efficiencies for our
subscribers.

  Enter New Markets

     We plan to expand internationally and to extend our solution to other
industries outside of the CPG and grocery industries. Over the next 12 months,
we plan to extend our solution to address the food service industry due to of
its similarities to the CPG and grocery industries and the overlap of supply
chain participants. We also intend to establish and expand our global presence
by opening sales offices in Europe and in the Asia/Pacific region. We expect to
expand into industries other than food service and into international markets
through our sales efforts and by leveraging our strategic relationship and
alliance partners.

SERVICES

     We offer the following value-added electronic commerce services for the CPG
and grocery industries:

  syncLink

     Our subscription-based service, syncLink, is a synchronized, shared
database containing item, price and promotion information, including product
authorizations and de-authorizations. syncLink is maintained in a secure
environment and its data is accessible only to authorized subscribers.

  Chain Pricing

     Chain Pricing, a reporting service using syncLink data, allows authorized
manufacturers, wholesalers, distributors and retailers to share item, price and
promotion information. Chain Pricing provides item and pricing information
visibility though each level of multi-tiered distribution channels. For example,
a manufacturer may not have information on the prices and promotions offered by
its independently-owned distributors. By implementing syncLink and Chain Pricing
services at each of its distributors, a manufacturer is able to view prices and
promotions offered on its products by its distributors to specific retailers.
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  Item Movement

     Item Movement provides timely retail sales and warehouse item movement
information to manufacturers and suppliers using data within syncLink. For
example, a manufacturer can view information relating to items shipped from the
warehouse to a customer and can compare this movement information with
information relating to product sales at the retail store. This visibility of
price and item movement is important for manufacturers and suppliers and can
help optimize promotion spending and supply chain planning decisions.

  Scan Based Trading

     The traditional business-to-business trading environment in the CPG and
grocery industries is delivery-based, i.e., the point of transaction is the
supplier's point-of-delivery to the retailer. In traditional trading
relationships, the retailer purchases the inventory from the supplier. However,
a new operational environment, known as scan based trading, is emerging in which
the consumer point-of-sale becomes the new trading boundary between suppliers
and retailers. Our Scan Based Trading service allows trading partners to
transact business based upon items sold at the retail outlet scanner, similar to
consignment selling. Scan Based Trading requires reliable, synchronized exchange
of item, price and promotion information and a shared control system for
managing delivery information, retail sales data, inventories and shrink
reporting.

     Scan Based Trading represents a significant change from current business
practices and has broad benefits for both retailers and suppliers, including
improved information visibility throughout the supply chain. Scan Based Trading
reduces a retailer's inventory investment, lowers administrative expenses and
allows the supplier to collect critical consumer pricing and promotion
information at the point of sale which can be used to make better production,
scheduling and promotion decisions. For the supplier, it also eliminates a
supply chain bottleneck because the supplier is no longer required to check-in
products upon arrival at each store. These and other efficiencies translate into
improved asset utilization, just-in-time product flows, improved assortment at
the store shelf and improved replenishment effectiveness.

     The Direct Store Delivery Committee of the Grocery Manufacturers of America
selected us as their electronic commerce provider in a pilot program of item,
price and promotion synchronization and scan based trading. Schnuck Markets, in
St. Louis, Missouri, Andronico's, in Berkeley, California, and 23 suppliers are
piloting synchronization. Five of those suppliers are also piloting our Item
Movement and Scan Based Trading services.

  Key Features

     Our services have the following key features:

     - Accessible. Our services can be accessed through a single connection from
       a variety of technology platforms. Customers can access our services
       using a standard Web browser, e-mail or a sophisticated private network
       infrastructure.

     - Subscription-Based. Through our partner Hewlett-Packard, we serve as the
       database host and provide our services on a subscription basis, so that
       each subscriber's technology and capital investments are minimized. Our
       subscription fee is a cost-effective monthly charge, based on the number
       of store and/or warehouse connections and the type of services (e.g.,
       syncLink, Chain Pricing, Item Movement and/or Scan Based Trading) being
       used. We also charge an implementation fee to cover the cost of mapping
       the data and providing the interface connection.

     - Secure. We protect customer information from unauthorized users with a
       series of firewalls and passwords. Additionally, we provide access to
       information in our database only to those authorized parties designated
       by our customers.

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     - Neutral. We provide our customers with an independent, secure database of
       record for item, price and promotion information. syncLink can be used to
       provide a neutral source of data to resolve disputes about prices,
       products and promotions between trading partners.

     - Flexible. We believe our service adds value to the trading partners by
       providing data translation capabilities to facilitate efficient trading
       using common item information. Our service allows our customers to
       maintain their existing item definitions and coding structures.

IMPLEMENTATION, MAINTENANCE AND CUSTOMER SUPPORT

     syncLink implementation begins with the supplier. Manufacturers,
wholesalers and distributors send their data to us in an agreed-upon format, and
our services perform an automated check against existing viaLink master items in
the syncLink database. This automated check matches information such as product
descriptions, UPC bar codes, size, quantities and case configurations. Items not
automatically matched are processed by our data management team for manual
matching. A viaLink or third-party implementation professional is assigned to
the supplier to help the supplier's staff link their items to the master items.
Depending on the retailer, a similar process may occur to match retailer item
codes to the syncLink database. Our implementation team also works with
customers to help link their technology platforms and interfaces to our services
and to define the data transmission formats required by each customer.

     Once the implementation process is complete, the relationship with our
customer is transitioned to our customer support staff. We offer two levels of
support to our customers. Level 1 support manages issues related to Internet
connectivity and browsers, questions about the basic functionality of our
services, and administrative issues, including customer security access. Level 2
support addresses more complex matters such as business rule issues (e.g., data
mapping), transmission error corrections, data file export issues related to
customer data and connection issues. Our customer support services are available
to all customers 24 hours a day, 365 days a year.

     Each supplier performs ongoing maintenance of item, price and promotion
information. These changes are then loaded into syncLink, either on-line or
through batch interfaces with supplier systems, and the information is made
available to the retailer for acceptance or rejection.

STRATEGIC ALLIANCES AND RELATIONSHIPS

     We have formed a number of strategic alliances and relationships that we
believe are integral to driving rapid adoption and penetration of our services.
The continued establishment of strategic alliances is a fundamental business
strategy as we expand our services and enter new markets. Our strategic
alliances and relationships include the following:

  Ernst & Young

     In May 1999, we entered into a strategic alliance with Ernst & Young. As
part of this alliance, Ernst & Young has agreed to provide us with marketing and
sales support. In addition, Ernst & Young will provide us with its consulting
services at discounted rates, including services related to general systems
integration, technology enhancements, implementation, project management and
training. In connection with this alliance, Ernst & Young purchased $2.0 million
of our common stock.

  i2 Technologies

     In October 1999, we entered into a strategic alliance with i2 Technologies,
a leading supply chain planning software and e-business solutions provider. The
primary focus of this alliance is to integrate the products and services of our
two companies, extend the integrated solutions across multiple industries, and
develop joint sales and marketing programs. i2 Technologies has agreed to pay us
a royalty based upon revenues it receives from providing the syncLink and Chain
Pricing services outside of the CPG, grocery

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and food service industries. In connection with this alliance, i2 Technologies
purchased $5.0 million of our common stock and has a warrant to purchase an
additional $5.0 million of our common stock.

  Hewlett-Packard

     In February 1999, we entered into a strategic alliance with
Hewlett-Packard. As a result of this alliance, Hewlett-Packard provides us with
the secure technology infrastructure and platform, including agreed-to
performance, back-up and reliability criteria, to host our syncLink and other
services. Hewlett-Packard may also provide us with co-marketing and consulting
support from time to time. Additionally, Hewlett-Packard invested $6.0 million
in us in the form of convertible debt. We, in turn, will use up to $3.0 million
to purchase Hewlett-Packard products and services.

  Other Alliances and Relationships

     We have established alliances and relationships with other companies and
organizations to help enhance our ability to reach new customers, develop joint
marketing programs, connect to services with complementary functionality and
gain technical knowledge. Currently, we have entered into alliances and
relationships with the following companies and organizations:

     - Cyclone Commerce -- We have integrated Cyclone's Internet data exchange
       security technology with our services. We also have a joint sales and
       marketing program with Cyclone.

     - ICS FoodOne -- We are working together to connect our services to ICS
       FoodOne's complementary new product introduction and promotion
       announcement services.

     - OMI International -- We are working together, including developing joint
       marketing programs, to connect our services to OMI's retail order
       management systems.

     - Food Marketing Institute -- Utilizing our services, we are working with
       the Food Marketing Institute on an initiative to improve promotion
       efficiency for the food industry.

     - Oracle Partner Program -- We joined Oracle's global partner program to
       gain access to their technology support, education resources and
       marketing support.

     - UCCnet -- We joined UCCnet's alliance as an architect partner to leverage
       our services through UCCnet's emerging electronic marketplace for the CPG
       and grocery industries.

     Cyclone, ICS FoodOne and OMI, along with 10 other companies, are the
initial members of our "viaLink ready Program".

TECHNOLOGY

  Architecture

     We have deployed a reliable, secure and readily available technology
platform based on open architectures and industry standard technologies. The
platform utilizes Oracle relational database technology and applications built
with the Smalltalk object-oriented programming and development language.
Smalltalk is a portable development and operational environment, well-suited to
manage mission-critical business applications.

     Access to our services is provided through the Internet, as well as other
methods of electronic communication. In order to maintain the security of our
database, users do not have direct access to the underlying data stored in the
Oracle databases. Users connect to application programs, which interpret the
requests for service, then connect to the Oracle databases for access to the
underlying data.

  Data Integrity and Security

     Our production operations are housed and hosted in Hewlett-Packard's secure
facility in Atlanta, Georgia. This facility is secured through a variety of
technical and physical protection mechanisms,

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including full-time professional security staff. This facility provides
redundant infrastructure such as backup utilities and communication lines to
support a high availability operation. The Hewlett-Packard servers hosting our
services include fail-over capability, with redundant data storage and
communications resources.

     To minimize the security risks associated with a shared network on the
Internet, we have implemented extensive security measures in our services. We
use encryption technologies to protect the confidentiality of information
transmitted over the Internet. Customer access to our services is controlled
through specific user identification and password combinations. We also protect
our services through firewalls, which are intended to restrict unauthorized use
and prevent security breaches. Additionally, we contract with third-party
organizations to test the integrity of our security protocols.

CUSTOMERS

     We have offered our viaLink services for two years, and we currently have
more than 620 customers, including 420 Coors distributors. Our existing customer
base is primarily small suppliers and retailers. Currently, we are targeting
large national and regional customers. Recently, we have signed several large
national customers such as Coors Brewing Company, Kraft Foods, Spartan Stores
and Unified Western Grocers.

     In addition to our viaLink services, we also provide web hosting activities
for a limited number of our customers. In 1999, web hosting services accounted
for 48% of our revenues.

     Three customers individually accounted for 20%, 13% and 10% of our total
revenues in 1997; 13%, 11% and 11% of our total revenues in 1998; and 27%, 14%
and 12% of our total revenues in 1999. Likewise, approximately 57%, 49% and 70%
of our total revenues were attributable to five clients in 1997, 1998 and 1999,
respectively. Due to the sale of our consulting and systems integration assets,
we lost more than 90% of our historical revenue. We will continue to be
dependent upon revenues from a limited number of customers until we achieve
market penetration. In 1999, no one customer accounted for more than 27% of
revenues.

SALES AND MARKETING

     We market our services to the CPG and grocery industries directly through
our sales and marketing team and senior staff members and indirectly through our
alliances, particularly Ernst & Young and i2 Technologies. As of March 3, 2000,
our sales and marketing team consisted of 16 full-time employees. We intend to
continue to expand our sales and marketing team in 2000 and to further leverage
our relationships with Ernst & Young, i2 Technologies, and Hewlett-Packard.

     Our sales and marketing team is responsible for generating sales leads,
following-up on customer referrals, signing contracts with new customers and
providing input into our services and product development efforts based on
customer feedback and market data. We generate sales and marketing leads through
trade advertising, customer referrals, public relations, trade shows and
strategic relationships. We also use a variety of other consulting and
contractor relationships to help develop and promote our services. We believe
forming indirect sales and co-marketing relationships, such as with i2
Technologies and Ernst & Young, will allow us to leverage the significant
resources of these larger organizations and more rapidly penetrate our target
market.

     Our marketing strategy is focused on increasing the awareness of the
viaLink brand and services, educating our target market on the benefits of
business-to-business electronic commerce and positioning ourselves as the
cornerstone of the CPG and grocery industries' electronic commerce strategy and
activities. To increase the awareness of our brand and understanding of our
services, we recently launched a brand awareness campaign that included a new
logo, advertising campaign, customer newsletter, Web site and sales collateral
and presentation materials.

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<PAGE>   11

     We intend to significantly expand our sales and marketing activities in
2000. We intend to continue to build our brand awareness and generate additional
sales leads by increasing our staff, marketing expenditures and advertising and
participating in trade shows.

PRODUCT DEVELOPMENT AND ENHANCEMENT

     We initially introduced syncLink in 1997 and intend to continue to make
significant investments in product development and enhancements to improve and
extend our services, including enhancements to our Scan Based Trading service.
Our plans also include a wide deployment of XML to enable third-party technology
providers, including our "viaLink ready Program" members, to accelerate the
adoption of our services by the industry.

     Growth of our services will require that we continue to invest in our
hardware platform, including additional servers, enterprise storage systems and
additional backup and recovery capabilities. We also expect to deploy our
services across multiple data centers to accommodate expansion into
international markets.

     In addition to internal product development and enhancement efforts, we
intend to seek acquisitions of complementary businesses, products and
technologies, or enter into joint venture or license agreements to broaden our
service offerings and provide more comprehensive solutions to the CPG and
grocery supply chain.

     Currently, the dynamic nature of the information technology industry places
significant research and development demands on businesses that desire to remain
competitive. Our future success, particularly our ability to achieve widespread
market adoption, depends on the success of our product development and
enhancement efforts in a timely manner. There are a number of risks and
challenges involved in the development of new features and technologies which,
if not successfully addressed, would harm our business.

     As of March 3, 2000, our product development, technical support and
operations staff consisted of 27 full-time employees. Our product development
expenses were $1.2 million in 1998 and $2.8 million in 1999. We believe that
significant investments in product development and enhancement will be required
to remain competitive.

PROPRIETARY RIGHTS

     Our success and ability to compete are dependent upon our ability to
develop and maintain the proprietary aspects of our technology and operate
without infringing on the proprietary rights of others. We have no patents or
patent applications pending. Instead, we rely primarily on a combination of
copyright, trademark and trade secret laws, confidentiality procedures and
contractual provisions to protect our proprietary rights. Because the software
development industry is characterized by rapid technological change, we believe
that factors such as the technological and creative skills of our personnel, new
product developments, frequent product enhancements, name recognition and
reliable product maintenance are more important to establishing and maintaining
a technology leadership position than the various legal protections available
for our technology. viaLink(R) and Chainlink(R) are our registered trademarks.
viaLink ready(SM) and syncLink(SM) are our service marks.

     We also require employee and third-party non-disclosure and confidentiality
agreements. We seek to protect our software, documentation and other written
materials under trade secret and copyright laws, which afford only limited
protection. We cannot be certain that others will not develop technologies that
are similar or superior to our technology or design around the copyrights and
trade secrets owned by us. We believe, however, that these measures afford only
limited protection. Despite these precautions, it may be possible for
unauthorized parties to copy portions of our software products, reverse
engineer, or obtain and use information that we regard as proprietary.

     Although we are not aware of any claims that we are infringing any
proprietary rights of third parties, there can be no assurance that third
parties will not claim infringement by us in the future. We expect
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<PAGE>   12

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. Any
infringement claims against us, with or without merit, could be time consuming
to defend, result in costly litigation, divert management's attention and
resources, cause product shipment delays or require us to enter into royalty or
licensing agreements. In the event of a successful claim of product infringement
against us, should we fail or be unable to either license the infringed or
similar technology or develop alternative technology on a timely basis, our
business, operating results and financial condition could be materially
adversely affected.

     We rely upon software that we license from third parties, including
software that is integrated with our internally developed software and is used
in our products to perform key functions. There can be no assurance that these
third-party software licenses will continue to be available to us on
commercially reasonable terms. The loss of or inability to maintain any such
software licenses could result in shipment delays or reductions until equivalent
software could be developed, identified, licensed and integrated and could
materially adversely affect our business, operating results and financial
condition.

COMPETITION

     The business-to-business electronic commerce environment in which we
operate is still evolving and subject to rapid change. Currently, we compete
principally on the basis of the specialized nature and uniqueness of our
services. We believe the in-depth industry knowledge embedded in the
functionality of our services, our cost-effective subscription pricing, and the
accessibility of our services to all potential customers in the industry are
competitive advantages for us. Additionally, we believe we have the only
Internet-based electronic commerce solution in production today for
synchronization of item, price and promotion information for the CPG and grocery
industries.

     Currently, we do not know of any direct competition for our electronic
commerce services. However, we believe direct competition for our services will
develop and increase in the future. Direct competition could develop from
several potential sources, including:

     - Large, enterprise-wide software vendors, developers and integrators such
       as EDS, i2 Technologies, IBM, Manugistics, Oracle and SAP;

     - EDI providers such as GEIS and Sterling Commerce;

     - Large business-to-business electronic commerce exchange vendors such as
       Ariba, CommerceOne and VerticalNet;

     - Other database vendors such as A.C. Nielsen, Information Resources and
       QRS;

     - Industry-led initiatives such as UCCnet;

     - Big 5 consulting firms such as Andersen Consulting, Deloitte & Touche,
       Ernst & Young, KPMG and PricewaterhouseCoopers; and

     - Existing industry participants who may attempt to deploy their
       proprietary systems as industry solutions.

     These large potential competitors, if successful, may provide functionality
similar to our services. Many of our potential competitors have substantially
greater resources than we do. Any failure by us to achieve rapid market
penetration or to successfully address the risks posed by expected competition
would have a material adverse effect on our business, financial condition and
operating results.

     We recently joined UCCnet's alliance as an architect partner to leverage
our services through UCCnet's emerging electronic marketplace for the CPG and
grocery industries. UCCnet also recently announced it had awarded a multi-year
contract to AppNet, Inc. to develop, build and maintain UCCnet's electronic
marketplace. AppNet will design and develop user interfaces, perform supply
chain integration, provide implementation and consulting services and will be
responsible for hosting and operations.

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<PAGE>   13

Although we do not believe AppNet is a direct competitor to our syncLink service
at this time, they could become a competitor if they choose to build similar
functionality rather than use our services in the UCCnet marketplace.

EMPLOYEES

     As of March 3, 2000, we had 103 full-time employees and three part-time
employees. Of the full-time employees, 16 were employed in sales and marketing,
27 were employed in product research and development, technical support and
operations, 41 were employed in implementation, customer support and service and
19 were employed in human resources, administration, finance and accounting.
None of our employees are represented by a labor union. We have not experienced
any work stoppages and consider our relations with our employees to be good.

               ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

     You should carefully consider these factors that may affect future results,
together with all of the other information included in this Form 10-KSB, in
evaluating our business. The risks and uncertainties described below are those
that we currently believe may materially affect us. Additional risks and
uncertainties that we are unaware of or that we currently deem immaterial also
may become important factors that affect us.

     Keep these risks in mind when you read "forward-looking" statements
elsewhere in this Form 10-KSB. These are statements that relate to our
expectations for future events and time periods. Generally, the words
"anticipate," "expect," "intend," and similar expressions identify
forward-looking statements. Forward-looking statements involve risks and
uncertainties, and future events and circumstances could differ significantly
from those anticipated in the forward-looking statements. Please see "Special
Cautionary Note Regarding Forward-Looking Statements" below in this Item 1.

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<PAGE>   14

DUE TO THE RECENT SALE OF OUR CONSULTING AND SYSTEMS INTEGRATION ASSETS AND THE
SALE OF OUR SUBSIDIARY, IJOB, INC., WE NEED TO REPLACE MOST OF OUR HISTORICAL
REVENUES WITH REVENUES FROM OUR VIALINK SERVICES.

     We have historically derived substantially all of our revenues from
providing management consulting services and computer systems integration
services to the retail and wholesale distribution industries. In order to permit
us to focus our resources solely on developing and marketing our viaLink
services, we sold the assets underlying our management consulting services and
computer systems integration services, and we sold our wholly-owned subsidiary,
ijob, Inc. We had previously generated over 90% of our total revenues from these
operations.

     As a result of these sales, we are now substantially dependent on revenues
generated from our viaLink services. Our viaLink services have achieved limited
market acceptance and, to date, have accounted for an insignificant amount of
our historical revenues. Consequently, we resemble a development stage company
and will face many of the inherent risks and uncertainties that development
stage companies face. These risks include, but are not limited to, our:

     - Need for our services to achieve market acceptance and produce a
       sustainable revenue stream;

     - Need to expand sales, support and product development capabilities;

     - Need to manage rapidly changing operations;

     - Dependence upon key personnel;

     - Reliance on strategic alliances and relationships;

     - Ability to obtain financing on acceptable terms; and

     - Ability to offer greater value than our competitors.

     Our business strategy may not successfully address these risks. If we fail
to recognize significant revenues to replace the revenues lost in these sales,
our business, financial condition and operating results would be materially
adversely affected.

WE ARE SUBSTANTIALLY DEPENDENT ON OUR VIALINK SERVICES. IF OUR VIALINK SERVICES
FAIL TO BECOME ACCEPTED BY THE CONSUMER PACKAGED GOODS AND GROCERY INDUSTRIES,
OUR BUSINESS WILL BE MATERIALLY ADVERSELY AFFECTED.

     Virtually all of our revenues for the foreseeable future will be derived
from implementation fees and subscription revenues from our viaLink services,
which may not achieve market acceptance. To date we have received an
insignificant amount of revenues from these services. The acceptance of our
syncLink service as an industry-wide shared database will depend upon
subscriptions from a large number of industry manufacturers, suppliers and
retailers. We cannot predict when a significant number of manufacturers,
suppliers and retailers will subscribe to our services, if ever. If our services
do not achieve market acceptance, or if market acceptance develops more slowly
than expected, our business, operating results and financial condition will be
seriously damaged.

     A number of factors will determine whether our services achieve market
acceptance, including:

     - Performance and functionality of our services;

     - Ease of adoption;

     - Satisfaction of our initial subscribers;

     - Success of our marketing efforts;

     - Success of our strategic relationships and alliances;

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<PAGE>   15

     - Successful completion and favorable reporting of our synchronization and
       Scan Based Trading pilot expected in June 2000; and

     - Continued acceptance of the Internet for business use.

     The market for business-to-business electronic commerce services is
evolving rapidly. As the market evolves, customers, including our current
customers, may not choose our services.

WIDESPREAD INDUSTRY ADOPTION OF OUR SERVICES IS DEPENDENT UPON A CRITICAL MASS
OF LARGE NATIONAL RETAILERS AND SUPPLIERS SUBSCRIBING TO OUR SERVICES.

     Our success depends on a significant number of large retailers using our
services and linking with manufacturers, wholesalers and distributors over the
Internet through syncLink. To encourage purchasers to use our services, syncLink
must offer a broad range of product, price and promotion information from a
large number of suppliers. However, to attract suppliers to subscribe to
syncLink, we must increase the number of retailers who use our services. If we
are unable to quickly build a critical mass of retailers and suppliers, we will
not be able to benefit from a network effect where the value of our services to
each subscriber significantly increases with the addition of each new
subscriber. Our inability to achieve this network effect would reduce the
overall value of our services to retailers and suppliers and, consequently,
would harm our business.

WE DEPEND ON SUPPLIERS FOR THE SUCCESS AND ACCURACY OF OUR SERVICES.

     We depend on suppliers to subscribe to our services in sufficient and
increasing numbers to make our services attractive to retailers and,
consequently, other suppliers. In order to provide retailers accurate data, we
rely on suppliers to update their item, price and promotion information stored
in our database. We cannot guarantee that the item, price and promotion
information available from our services will always be accurate, complete and
current, or that it will comply with governmental regulations. Incorrect
information could expose us to liability if it harms users of our services or
result in decreased adoption and use of our services.

WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT FUTURE OPERATING LOSSES.

     We have a history of operating losses, and we expect to incur net losses
for the foreseeable future. We incurred net operating losses of approximately
$2.9 million in 1997, $1.5 million in 1998 and $13.8 million in 1999. As of
December 31, 1999, we had an accumulated deficit of approximately $13.6 million
representing the sum of our historical net losses. We expect to expend
significant resources to aggressively develop and market our services into an
unproven market. Therefore, we expect to have negative cash flow and net losses
from operations for the foreseeable future. We may never generate sufficient
revenues to achieve or sustain profitability or generate positive cash flow.

THE UNPREDICTABILITY OF OUR QUARTER-TO-QUARTER RESULTS COULD CAUSE OUR STOCK
PRICE TO BE VOLATILE OR DECLINE.

     Our future operating results may vary significantly from quarter to quarter
due to a variety of factors, many of which are outside our control. Our expense
levels are based primarily on our estimates of future revenues and are largely
fixed in the short term. Due in large part to our uncertainty regarding the
success of our services, we cannot predict with certainty our quarterly revenues
and operating results. We may be unable to adjust spending rapidly enough to
compensate for any unexpected revenue shortfall caused by factors such as
delayed or lack of market acceptance of our services. Further, we believe that
period-to-period comparisons of our operating results are not necessarily a
meaningful indication of future performance, especially in light of the
significant changes in our business that we have undertaken. It is possible that
in one or more future quarters, our results may fall below the expectations of
securities analysts or investors. If this occurs, the trading price of our
common stock would likely be volatile or decline.

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<PAGE>   16

OUR STOCK PRICE MAY BE VOLATILE.

     The market price of our common stock has been volatile in the past and may
be volatile in the future. The market price of our common stock may be
significantly affected by various factors, including but not limited to:

     - Fluctuations in our operating results;

     - Changes in financial estimates by securities analysts or our failure to
       perform in line with these estimates;

     - Timing of large national retailers and suppliers subscribing to our
       services;

     - Changes in market valuations of other technology companies;

     - Announcements by us or our potential competitors relating to significant
       technical innovations, acquisitions, strategic alliances and
       relationships, joint ventures or investments;

     - Departures of key personnel; and

     - Downturns in the general economy.

IF OUR STRATEGIC ALLIANCES AND RELATIONSHIPS DO NOT PRODUCE THE ANTICIPATED
BENEFITS OR IF WE ARE UNABLE TO ENTER INTO ADDITIONAL FUTURE ALLIANCES AND
RELATIONSHIPS, OUR SERVICES MAY NOT ACHIEVE MARKET ACCEPTANCE.

     Our business depends substantially on developing and maintaining strategic
alliances and relationships to develop, market and sell our services. We believe
our current and future strategic alliances and relationships will help us to
validate our technology, facilitate broad market acceptance of our services and
enhance our sales and marketing. Our current strategic alliances and
relationships may not provide the benefits we expect or the access to new
customers we anticipate, and they may not be sustained on favorable terms, if at
all. Further, we may not be able to enter into successful new strategic
alliances and relationships in the future. If we are unable to develop key
alliances and relationships or maintain and enhance existing alliances and
relationships, our business, operating results and financial condition would be
harmed.

A PROMISSORY NOTE WE ISSUED TO HEWLETT-PACKARD HAS LEVERAGED US CONSIDERABLY,
CAUSING FINANCIAL AND OPERATING RISK, AND MAY RESULT IN SIGNIFICANT DILUTION TO
OUR STOCKHOLDERS.

     As a result of our issuing a $6.0 million subordinated secured convertible
promissory note to Hewlett-Packard, our debt service requirements will increase
substantially when we are required to repay the note in February 2004. The
degree to which we are leveraged could materially adversely affect our ability
to obtain future financing and could make us more vulnerable to industry
downturns, general economic downturns and competitive pressures. Our ability to
meet our debt obligations will be dependent upon our future performance, which
will be subject to financial, business and other factors affecting our
operations. Additionally, beginning in August 2000, all principal and interest
due under the note may be converted into shares of our common stock at $1.75 per
share, a substantial discount from our current stock price, which would result
in substantial dilution to our stockholders.

WE ARE DEPENDENT UPON THE OPERATION OF HEWLETT-PACKARD'S DATA CENTER FOR THE
TIMELY AND SECURE DELIVERY OF OUR SERVICES.

     We use Hewlett-Packard's data center as the host for our services. We are
dependent on our continued relationship with Hewlett-Packard and on their data
center for the timely and secure delivery of our services. If Hewlett-Packard's
data center fails to meet our expectations in terms of reliability and security,
our ability to deliver our services will be seriously harmed, resulting in the
potential loss of customers and subscription revenue. Furthermore, if our
relationship with Hewlett-Packard were terminated, we would be forced to find
another service provider to host our services. The transition to

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<PAGE>   17

another service provider could result in interruptions of our services and could
increase the cost of providing our services.

OUR SINGLE-SITE INFRASTRUCTURE AND SYSTEMS MAY BE VULNERABLE TO NATURAL
DISASTERS AND OTHER UNEXPECTED EVENTS, AND LOSSES WE INCUR AS A RESULT OF THESE
EVENTS COULD EXCEED THE AMOUNT OF INSURANCE WE CARRY.

     The performance of our server and networking hardware and software
infrastructure is critical to our business, reputation and ability to provide
high quality services and attract and retain users of our services. We depend on
our single-site infrastructure and systems which are located at a secure,
underground Hewlett-Packard facility in Atlanta, Georgia. Any disruption to this
infrastructure resulting from a natural disaster or other event could result in
an interruption in our services. These interruptions, if sustained or repeated,
could impair our reputation, the quality of our services and our ability to
attract and retain users of our services.

     Our systems and operations may be vulnerable to damage or interruption from
human error, natural disasters, power loss, telecommunications failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events. We do not have a formal disaster recovery plan or alternative provider
of hosting services. In addition, our business interruption insurance may not be
sufficient to compensate us for losses that could occur. Any system failure that
causes an interruption in services could result in fewer transactions and, if
sustained or repeated, could impair our reputation and the attractiveness of our
services or prevent us from providing our services entirely.

THE ROYALTIES WE MUST PAY TO ERNST & YOUNG AND I2 TECHNOLOGIES COULD ADVERSELY
AFFECT OUR ABILITY TO BECOME PROFITABLE.

     Pursuant to an alliance agreement, we must pay Ernst & Young a royalty of
7% of our total revenues, excluding any revenues derived from Ernst & Young
audit clients, until May 2001. Upon meeting specified milestones relating to
significant Ernst & Young clients becoming our customers, these royalty payments
to Ernst & Young will continue in perpetuity.

     Pursuant to a separate alliance agreement, we must pay i2 Technologies a
royalty of 5% of syncLink and Chain Pricing subscription services revenues over
the term of the agreement through December 31, 2003. The royalty payments we are
obligated to pay could inhibit our ability to become profitable and could have
an adverse effect on our operating results and financial condition.

WE EXPECT TO FACE INCREASED COMPETITION. IF WE ARE UNABLE TO COMPETE
SUCCESSFULLY, OUR BUSINESS WILL BE HARMED.

     Currently, we do not know of any direct competition for our electronic
commerce services. However, we believe direct competition for our services will
develop and increase in the future. If we face increased competition, we may not
be able to sell our viaLink services on terms favorable to us. Furthermore,
increased competition could reduce our market share or require us to reduce the
price of our services.

     To achieve market acceptance and thereafter to increase our market share,
we will need to continually develop additional services and introduce new
features and enhancements. Our potential competitors may have significant
advantages over us, including:

     - Significantly greater financial, technical and marketing resources;

     - Greater name recognition;

     - Broader range of products and services; and

     - Larger customer bases.

     Consequently, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements.

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WE MUST ADAPT TO TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS TO REMAIN
COMPETITIVE.

     The Web-based electronic commerce market is characterized by rapid changes
due to technological innovation, evolving industry standards and changes in
subscriber needs. Our future success will depend on our ability to continue to
develop and introduce a variety of new services and enhancements that are
responsive to technological change, evolving industry standards and customer
requirements on a timely basis. We cannot be certain that technological
developments and products and services our competitors introduce will not cause
our existing services, and new technologies in which we invest, to become
obsolete.

OUR OPERATING RESULTS MAY BE HARMED IF BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE
OVER THE INTERNET DOES NOT CONTINUE TO GAIN ACCEPTANCE, PARTICULARLY IN THE
CONSUMER PACKAGED GOODS AND GROCERY INDUSTRIES.

     Our ability to achieve market acceptance depends upon the consumer packaged
goods and grocery industries' widespread acceptance of the Internet as a vehicle
for business-to-business electronic commerce. There are a number of critical
issues concerning commercial use of the Internet, including security,
reliability, cost, quality of service and ease of use and access. Organizations
that have already invested substantial resources in other means of exchanging
information may be reluctant to implement Internet-based business strategies. We
cannot assure you that Internet-based information management utilizing viaLink,
or any other product, will become widespread. If the Internet fails to become
widely accepted by the consumer packaged goods and grocery industries, our
subscribers may be forced to use private communications networks which would
materially adversely affect our operating results.

UNDETECTED SOFTWARE ERRORS OR FAILURES FOUND IN OUR PRODUCTS MAY RESULT IN LOSS
OF OR DELAY IN MARKET ACCEPTANCE OF OUR PRODUCTS WHICH COULD MATERIALLY
ADVERSELY AFFECT OUR OPERATING RESULTS.

     Errors or defects in our products may result in loss of revenues or delay
in market acceptance and could materially adversely affect our business,
operating results and financial condition. Applications such as ours may contain
errors or defects, sometimes called "bugs," particularly when first introduced
or when new versions or enhancements are released. Despite our testing, current
versions, new versions or enhancements of our products may still have defects
and errors after commencement of commercial operation. As a result of "bugs" in
our software, customers may experience data loss, data corruption or other
business disruption, which could subject us to potential liability.

PERFORMANCE PROBLEMS WITH OUR DATABASE OR SOFTWARE COULD SUBJECT US TO PRODUCT
LIABILITY CLAIMS WHICH, WHETHER OR NOT SUCCESSFUL, COULD MATERIALLY ADVERSELY
AFFECT OUR BUSINESS.

     Our subscribers depend on our database to provide, access, manage and share
item, pricing and promotion information in an efficient and cost-effective
manner. Any errors, defects or other performance problems with our database,
software or services could result in financial or other damages to our
subscribers. A product liability claim, whether or not successful, could damage
our reputation and our business, operating results and financial condition. Our
service agreements with our subscribers typically contain provisions designed to
limit our exposure to potential liability claims. However, these contract
provisions may not preclude all potential claims. Product liability claims in
excess of insurance limits could require us to spend significant time and money
in litigation or to pay significant damages.

THE SECURITY OF OUR DATABASE COULD BE BREACHED, WHICH COULD DAMAGE OUR
REPUTATION AND DETER CUSTOMERS FROM USING OUR SERVICES.

     We must protect our computer systems and networks from break-ins, security
breaches and other disruptive problems associated with the unauthorized use of
the Internet. Our database and services may be vulnerable to break-ins and
similar security breaches that jeopardize the security of the information stored
in our database and transmitted through our computer systems and networks and
those of our subscribers. In addition, we could, in the future, be subjected to
denial of service, vandalism and other attacks on our systems by Internet
hackers. Due to the highly proprietary information that we retain in our

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<PAGE>   19

database, any security breach could adversely affect our ability to attract and
retain subscribers, damage our reputation and subject us to litigation.
Moreover, the security and privacy concerns of potential subscribers, as well as
concerns related to computer viruses, may inhibit the marketability of our
services.

     Our services contain security protocols. We have also contracted with
third-party providers to provide security protocols for the transmission of data
over the Internet. Although we intend to continue our current security efforts
and to implement security technology and operational procedures to prevent
break-ins, damage and failures, these security efforts may fail. Our insurance
coverage may be insufficient in certain circumstances to cover claims that may
result from these events.

WE EXPECT OUR PLANNED AGGRESSIVE GROWTH TO STRAIN OUR RESOURCES.

     We intend to expand our operations rapidly in the foreseeable future to
pursue existing and potential market opportunities. If this rapid growth occurs,
it will place significant demands on our management and operational resources.
We will need to hire additional sales and marketing, research and development
and technical personnel to increase and support our sales. We will also need to
hire additional support and administrative personnel, expand our customer
service capabilities, contract for third-party implementation resources and
expand our information management systems. From time to time, we have
experienced, and we expect to continue to experience, difficulty in hiring and
retaining talented and qualified employees. Our failure to attract and retain
the highly trained technical personnel that are essential to our product
development, marketing, service and support teams may limit the rate at which we
can generate revenue and develop new products or product enhancements. In order
to manage our growth effectively, we must implement and improve our operational
systems, procedures and controls on a timely basis. If we fail to implement and
improve these systems, our business, operating results and financial condition
may be materially adversely affected.

WE PLAN TO EXPAND INTO INTERNATIONAL MARKETS, WHICH WILL CAUSE OUR BUSINESS TO
BECOME SUSCEPTIBLE TO ADDITIONAL RISKS.

     As part of our strategy, we plan to expand our presence and the sales of
our services outside the United States. Conducting international operations
would subject us to risks we do not face in the United States including:

     - Currency exchange rate fluctuations;

     - Unexpected changes in regulatory requirements;

     - Longer accounts receivable payment cycles and difficulties in collecting
       accounts receivables;

     - Difficulties in managing and staffing international operations;

     - Potentially adverse tax consequences, including restrictions on the
       repatriation of earnings;

     - The burdens of complying with a wide variety of foreign laws and
       regulatory requirements;

     - Reduced protection for intellectual property rights in some countries;
       and

     - Political and economic instability.

     Each country may have unique operational characteristics in each of their
CPG and grocery industries that may require significant modifications to our
existing services. In addition, we have limited experience in marketing, selling
and supporting our services in foreign countries. Development of these skills
may be more difficult or take longer than we anticipate, especially due to
language barriers, currency exchange risks and the fact that the Internet may
not be used as widely in other countries, and the adoption of electronic
commerce may evolve slowly or may not evolve at all. As a result, we may not be
successful in marketing our services to retailers and suppliers in markets
outside the United States.

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WE PLAN TO MOVE OUR CORPORATE HEADQUARTERS TO DALLAS, TEXAS. THIS MOVE MAY
ADVERSELY AFFECT OUR OPERATIONS AND CAUSE US TO LOSE KEY PERSONNEL.

     We intend to move our corporate headquarters from Edmond, Oklahoma to
Dallas, Texas within the next 12 months. We believe the move to Dallas will give
us greater access to technology and development personnel and resources. We
expect this move will place a significant strain on our operations and may cause
us to lose some of our employees, particularly our development staff. While we
anticipate that many of our employees will accept positions with us in Dallas,
we cannot assure you that all of our employees will be willing to relocate. If
we were to lose a significant number of employees, our management would have to
devote a significant amount of their time to recruiting and training efforts and
our business, financial condition and operating results may be materially
adversely affected. In addition, the lease on our facilities in Oklahoma extends
until 2005. If we are unable to sublease or assign these premises on acceptable
terms or if our landlord refuses to release us from our obligations under the
lease, we will remain liable for all or a portion of the remaining rental
payments, which would negatively affect our operating results.

OUR SUCCESS IS SUBSTANTIALLY DEPENDENT ON OUR ABILITY TO RETAIN AND ATTRACT KEY
PERSONNEL.

     Our future performance depends on the continued service of our key senior
management team, Smalltalk programmers and sales personnel. The loss of the
services of one or more of our key personnel, in particular Lewis B. Kilbourne,
our Chief Executive Officer, could seriously harm our business. On October 1,
1998, we entered into an employment agreement with Dr. Kilbourne. This agreement
has a three-year term, with year-to-year renewals. We do not maintain a key man
life insurance policy for Dr. Kilbourne. Our future success also depends on our
continuing ability to attract, hire, train and retain a substantial number of
highly skilled managerial, technical, sales, marketing and customer support
personnel. Competition for qualified personnel is intense, and we may fail to
retain our key employees or to attract or retain other highly qualified
personnel.

IF WE MAKE FUTURE ACQUISITIONS OR ENTER INTO JOINT VENTURES OR ADDITIONAL
ALLIANCE ARRANGEMENTS, OUR MANAGEMENT'S ATTENTION MAY BE DIVERTED FROM OUR
OPERATIONS, WE MAY INCUR ADDITIONAL LIABILITIES AND WE MAY NOT SUCCESSFULLY
INTEGRATE ACQUIRED OPERATIONS.

     In the future we may acquire additional businesses, products and
technologies, or enter into joint ventures or alliance arrangements that could
complement or expand our business. Management's negotiations of potential
acquisitions or joint ventures and alliance agreements and management's
integration of acquired businesses, products or technologies could divert their
time and resources. Any future acquisitions could require us to issue dilutive
equity securities, incur debt or contingent liabilities, amortize goodwill and
other intangibles or write-off in-process research and development and other
acquisition-related expenses. Further, we may not be able to successfully
integrate any acquired business, product or technology into our existing
operations or retain the key employees of the acquired business. If we are
unable to fully integrate an acquired business, product or technology, we may
not receive the intended benefits of that acquisition.

IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR FACE A
CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE OUR
INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR SIGNIFICANT DAMAGES.

     Our success is in part dependent upon our proprietary software technology.
Companies in the software industry have experienced substantial litigation
regarding intellectual property. Our subscription agreements contain provisions
prohibiting the unauthorized use, copying and transfer of our proprietary
information. We own no patents; rather, we rely on a combination of trade
secret, copyright and trademark laws as well as non-disclosure and
confidentiality agreements to protect our proprietary technology. However, these
measures provide only limited protection, and we may not be able to detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights.

                                       19
<PAGE>   21

     Any litigation to enforce our intellectual property rights may divert
management resources and may not be adequate to protect our business. We also
could be subject to claims that we have infringed the intellectual property
rights of others. In addition, we may be required to indemnify our subscribers
for similar claims made against them. Any claims against us or any claims we may
seek to bring against others could require us to spend significant time and
money in litigation, pay damages, develop new intellectual property or acquire
licenses to intellectual property that is the subject of the infringement
claims. These licenses, if required, may not be available on acceptable terms.
Intellectual property claims against us could have a material adverse effect on
our business, operating results and financial condition.

WE DEPEND ON THIRD-PARTY TECHNOLOGY FOR USE IN OUR PRODUCTS. IF WE ARE UNABLE TO
CONTINUE TO USE THESE SOFTWARE LICENSES, OUR BUSINESS MAY BE MATERIALLY
ADVERSELY AFFECTED.

     We currently, and in the future we expect to continue to, license or
otherwise obtain access to intellectual property of third parties. We rely upon
software that we license from third parties, including software that is
integrated with our internally developed software and used in our products to
perform key functions. These third-party software licenses may not continue to
be available to us on commercially reasonable terms. The loss of, or inability
to maintain or obtain, any of these software licenses, could result in delays in
our ability to provide our services or in reductions in the services we provide
until we integrate equivalent software that we develop internally or that we
identify and license from a third-party. Any delay in product development or in
providing our services could damage our business, operating results and
financial condition.

OUR CUSTOMER BASE IS CONCENTRATED AND OUR SUCCESS DEPENDS IN PART ON OUR ABILITY
TO RETAIN EXISTING CUSTOMERS AND SUBSCRIBERS.

     If one or more of our major customers were to substantially reduce or
terminate their use of our services, our business, operating results and
financial condition would be harmed. In 1999, we derived 70% of our total
revenues from our five largest customers. Our largest customer in 1999 accounted
for approximately 27% of our total revenues. The amount of our revenues
attributable to specific customers is likely to vary from year to year. We do
not have long-term contractual commitments with any of our current subscribers,
and our subscribers may terminate their contracts with little or no advance
notice and without significant penalty. As a result, we cannot be certain that
any of our current subscribers will be subscribers in future periods. A
subscriber termination would not only result in lost revenue, but also the loss
of subscriber references that are necessary for securing future subscribers.

THE PRICE OF OUR COMMON STOCK MAY DECLINE DUE TO SHARES ELIGIBLE FOR FUTURE
SALE.

     Sales of a substantial number of shares of common stock could adversely
affect the market price of the common stock and could impair our ability to
raise capital through the sale of equity securities. As of March 3, 2000, we had
outstanding 19,735,416 shares of common stock. Of these shares:

     - 16,047,780 shares are freely tradable without restriction or further
       registration under the Securities Act unless purchased by our
       "affiliates;" and

     - 3,687,636 shares of common stock are "restricted securities" as defined
       in Rule 144 of the Securities Act.

     An additional 1,541,052 shares of common stock are issuable upon the
exercise of currently exercisable options.

     An additional 45,000 shares of common stock are issuable upon the exercise
of currently exercisable warrants. All of the shares issued upon the exercise of
these warrants will be freely tradable.

     Pursuant to the $6.0 million subordinated secured convertible promissory
note we issued to Hewlett-Packard, Hewlett-Packard may convert the note into
shares of our common stock at a conversion price of $1.75 per share beginning in
August 2000.

                                       20
<PAGE>   22

     Pursuant to our agreement with Ernst & Young, Ernst & Young is entitled to
request the registration of 750,000 shares of our common stock which were
purchased by them upon the exercise of a warrant. Pursuant to our agreement with
i2 Technologies, i2 Technologies is entitled to request the registration of
895,536 shares of our common stock which were purchased by them and 746,268
shares of common stock issuable to them upon exercise of a warrant.

PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT, DELAY OR
IMPEDE A CHANGE IN CONTROL OF US AND MAY REDUCE THE MARKET PRICE OF OUR COMMON
STOCK.

     Provisions of our certificate of incorporation and bylaws, including those
relating to our classified board and our ability to offer "blank check"
preferred stock, could have the effect of discouraging, delaying or preventing a
merger or acquisition that a stockholder may consider favorable. We are also
subject to the anti-takeover laws of Delaware which may discourage, delay or
prevent someone from acquiring or merging with us, which may adversely affect
the market price of our common stock. Please see "Description of
Securities -- Anti-Takeover Effects" for more information concerning
anti-takeover provisions.

        SPECIAL PRECAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This Form 10KSB contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "will," "expect," "intend," "anticipate,"
"believe," "estimate," "continue" and other similar words. You should read
statements that contain these words carefully because they discuss our future
expectations, make projections of our future results of operations or of our
financial condition or state other "forward-looking" information. We believe
that it is important to communicate our future expectations to our investors.
However, there may be events in the future that we are not able to accurately
predict or control. The factors listed in the sections captioned "Additional
Factors That May Affect Future Results" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," as well as any
cautionary language in this Form 10KSB, provide examples of risks, uncertainties
and events that may cause our actual results to differ materially from the
expectations we describe in our forward-looking statements.

ITEM 2. DESCRIPTION OF PROPERTY

     We currently lease the following facilities under operating leases

     - Approximately 30,000 square feet of space in Edmond, Oklahoma for our
       corporate headquarters under a ten-year lease expiring on June 30, 2006.
       The lease requires monthly rental payments of $27,500 until June 2001,
       and $28,750 during the remaining term of the lease. Netplex currently
       subleases approximately 18,000 square feet of the office facility from
       the Company for monthly rental payments of approximately $17,100.

     - Approximately 21,700 square feet of space in Dallas, Texas for our
       executive and financial offices under a lease expiring on October 31,
       2001. The lease requires monthly rental payments over the term of the
       lease of $21,145 subject to normal operating expense escalations
       beginning January 2001.

     - Approximately 1,950 square feet of space in Chicago, Illinois for our
       marketing office under a lease expiring on December 7, 2002. The lease
       requires monthly rental payments of $2,607 until November 2000, $2,685
       from December 2000 to December 2001, and $2,765 for the remaining term of
       the lease.

                                       21
<PAGE>   23

     We believe that our existing facilities are adequate for our current needs
and that additional space will be available as needed.

ITEM 3. LEGAL PROCEEDINGS

     On July 16, 1999, Investor Awareness filed suit against us in the District
Court for Cook County Illinois alleging that we breached a contract between
Investor Awareness and us relating to investor relations services. Investor
Awareness has alleged that we agreed to issue options to it pursuant to the
terms of that contract. Investor Awareness is seeking a declaratory judgment for
the options it allegedly earned under the agreement and for damages of
approximately $67,500 plus costs and attorneys fees. We have filed an answer
stating that we have not breached any of our duties under the contract. We will
vigorously defend the claims of this suit. However, we may not prevail in this
litigation.

     There are no other material legal proceedings pending or, to our knowledge,
threatened against us.

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

     None.

                                    PART II

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

     Our common stock has been quoted on the Nasdaq SmallCap Market under the
symbol "IQIQ" since November 1996. The following table sets forth, for the
periods indicated, the high and low closing prices of the common stock as
reported by the Nasdaq SmallCap Market.

<TABLE>
<CAPTION>
                                                               COMMON STOCK
                                                                  PRICE
                                                              --------------
                                                               HIGH     LOW
                                                              ------   -----
<S>                                                           <C>      <C>
1997:
First Quarter...............................................  $ 1.34   $0.92
Second Quarter..............................................    1.06    0.75
Third Quarter...............................................    1.38    0.77
Fourth Quarter..............................................    1.13    0.75
1998:
First Quarter...............................................    1.03    0.75
Second Quarter..............................................    1.23    0.66
Third Quarter...............................................    0.88    0.59
Fourth Quarter..............................................    2.81    0.61
1999:
First Quarter...............................................    7.75    2.92
Second Quarter..............................................    5.75    3.31
Third Quarter...............................................    4.61    3.31
Fourth Quarter..............................................   18.19    4.53
</TABLE>

                                       22
<PAGE>   24

                                DIVIDEND POLICY

     We have never declared or paid cash dividends on our capital stock and we
do not intend to pay cash dividends on our capital stock in the foreseeable
future. We currently expect to retain any future earnings to fund the operation
and expansion of our business. Any future determination as to the payment of
dividends will be at the discretion of our board of directors. In addition, the
terms of the secured subordinated promissory note we issued to Hewlett-Packard
prohibit us from paying any dividends while any amounts remain outstanding under
this note.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion should be read in conjunction with the financial
statements and related notes. The following discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those discussed below and elsewhere in this
Form 10-KSB, particularly under the heading "Additional Factors That May Affect
Future Results."

OVERVIEW

     We are a leading provider of subscription-based, business-to-business
electronic commerce services that enable CPG and grocery industry participants
to efficiently manage their highly complex supply chain information. Our
services allow manufacturers, wholesalers, distributors and retailers to
communicate and synchronize item, price and promotion information in a more
cost-effective and accessible way than has been possible using traditional
electronic and paper-based methods.

     We were originally formed in 1985 as Applied Intelligence Group, Inc. From
inception, our operations consisted primarily of consulting services related to
the planning, designing, building and installation of computerized information
management systems and computerized checkout or point-of-sale systems in the
retail and distribution industry. We also provided a Web-based human resource
recruiting application.

     In 1993, we began the design and development of viaLink, an Internet-based
subscription service to complement our existing consulting business. We
introduced the syncLink service, formerly marketed and sold as Item Catalog, in
January 1997. In 1998, we made the strategic decision to focus exclusively on
our viaLink services. As a result, we sold our management consulting and systems
integration assets to The NetPlex Group, Inc. in September 1998 and changed our
name to The viaLink Company in October 1998. In December 1998, we sold ijob, our
wholly-owned subsidiary which operated our Web-based human resources recruiting
application, to DCM Company.

     Prior to 1999, we derived substantially all of our revenues from our
consulting and systems integration assets. As a result of the sales of our
management consulting and systems integration assets and ijob, we resemble a
development stage company because our planned principal operations have not yet
generated significant revenues. This fundamental change in our business is
extremely risky, and we cannot be certain that our strategic decision to shift
our focus from our historical businesses to our viaLink services ultimately will
be successful.

     We expect to generate our future revenues primarily from monthly
subscriptions to our services. For use of our syncLink service, retailers pay us
based on the number of suppliers from whom they receive data and suppliers pay
us based on the number of retailers that subscribe to their data. Our basic
syncLink subscription service fee is a monthly flat fee per trading partner per
store for direct-store-delivery customers. We have a similar pricing model for
warehouse-delivered products. Our other services, Chain Pricing, Item Movement
and Scan Based Trading, are available for additional fees. Previously, we priced
our services based on a flat monthly subscription rate with no variable
component for the number of stores or warehouse connections.

     We also charge an implementation fee ranging from $1,200 for an on-line
implementation to over $100,000 for more complex supplier and retailer
installations. Our implementation fees are separately priced based on time and
materials. Implementation costs consist primarily of labor by technical support
                                       23
<PAGE>   25

personnel to configure customer data and establish a connection to our services.
Our typical implementation fee is approximately $20,000. Additionally, we
receive revenues from the performance of certain Web-hosting services, but we
expect to reduce our focus and reliance on providing these services in the
future.

     We recognize revenues for our subscription and Web-hosting services as they
are provided. Revenues collected in advance are deferred and recognized as
earned. Revenues for implementations are recognized as the implementations are
completed. We have agreed to pay a royalty of up to 7% of our total revenues to
Ernst & Young and 5% of our syncLink and Chain Pricing subscription revenues to
i2 Technologies.

     We reported a substantial loss from operations for the fiscal year ended
December 31, 1999 and we expect to report substantial losses for the foreseeable
future. The extent of these losses will depend primarily on the amount of
revenues generated from implementations of and subscriptions to our viaLink
services, which have not yet achieved market acceptance or significant market
penetration. In order to achieve market penetration, we expect to continue our
high level of expenditures for sales and marketing and development of our
viaLink services. These expenses substantially exceed our revenues, which to
date have been minimal. As a result, we expect to incur losses in future periods
until such time as the recurring revenues from these services are sufficient to
cover expenses.

RESULTS OF OPERATIONS

     The sale of our consulting and systems integration assets was effective
September 1, 1998, and the sale of ijob was effective December 31, 1998. As a
result of the sale of our consulting and systems integration assets, we are no
longer a reseller of hardware and software. Consequently, our results of
operations for the year ended December 31, 1999 do not include the results of
operations related to the consulting and systems integration assets or the
operations of ijob. Our results of operations for the years ended December 31,
1997 and 1998 include the sales, expenses and results of operations related to
the consulting and systems integration assets through August 31, 1998 and the
operations of ijob for the entire period. Therefore, the results of operations
for the year ended December 31, 1999 are not comparable to the year ended
December 31, 1998 and the results of operations for the year ended December 31,
1998 are not comparable to the year ended December 31, 1997

  Comparison of 1999 to 1998

     Revenues. Our total revenues decreased 93%, from $8.2 million for the
fiscal year ended December 31, 1998, to $616,000 for the fiscal year ended
December 31, 1999. The decrease in revenues was the result of the sales of our
management consulting and systems integration assets and ijob.

     Direct Cost of Sales. Direct cost of sales consists of purchased hardware
and certain software for resale, and costs associated with viaLink's proprietary
software products. Direct cost of sales were eliminated in 1999 as the result of
the sale of our consulting and systems integration assets in 1998.

     Customer Operations. Customer operations expense consists of personnel
costs associated with implementation, consulting and other services and costs of
operating, maintaining and accessing our technical operations and hosting
facilities. Customer operations expense also includes the cost of providing
support and maintenance to customers. Our customer operations expense decreased
29%, from $3.8 million for the fiscal year ended December 31, 1998, to $2.7
million for the fiscal year ended December 31, 1999. This decrease was largely
due to a decrease in the personnel costs which resulted from the sale of the
consulting and systems integration assets during 1998.

     Development. Development expense includes personnel and contract labor
costs and professional fees incurred for product development, enhancements,
upgrades, quality assurance and testing. Our development expenses increased
132%, from $1.2 million for the fiscal year ended December 31, 1998, to $2.8
million for the fiscal year ended December 31, 1999. This increase was due
primarily to an increase in development staff from 15 persons at January 1, 1999
to 27 persons at December 31, 1999. Additionally, $487,000 of non-cash service
costs is included in development expense in 1999 for the

                                       24
<PAGE>   26

amortization of a portion of the fair value of the warrants issued to Ernst &
Young and i2 Technologies, reflecting the development efforts provided by these
alliance partners. We are utilizing and will increase our reliance on our
alliance partners and other vendors to advance our development efforts. We are
currently undertaking various projects that we expect will result in continued
increases in these types of expenses for the foreseeable future.

     Selling and Marketing. Selling and marketing expense consists primarily of
personnel costs, commissions, travel, promotional events, including trade shows,
seminars and technical conferences, advertising and public relations programs.
Selling and marketing expense increased 570%, from $436,000 for the fiscal year
ended December 31, 1998, to $2.9 million for the fiscal year ended December 31,
1999. This increase in selling and marketing expense was primarily due to (a)
the expansion of our sales, business development and marketing team from four
persons at January 1, 1999 to 15 persons at December 31, 1999, resulting in
$900,000 in increased personnel costs, (b) our new marketing and promotional
program to promote our viaLink services, resulting in approximately a $1.1
million increase in advertising, travel and other fees and (c) $487,000 of
non-cash service costs for the amortization of a portion of the fair value of
the warrants issued to Ernst & Young and i2 Technologies reflecting the selling
and marketing efforts provided by these alliance partners. We expect these types
of expenses will continue to increase in the foreseeable future.

     General and Administrative (G&A). G&A expense consists primarily of the
personnel and other costs of the finance, human resources, administrative and
executive departments and the fees and expenses associated with legal,
accounting and other services. G&A expense increased 138%, from $2.3 million for
the fiscal year ended December 31, 1998, to $5.4 million for the fiscal year
ended December 31, 1999. This increase in G&A expense is primarily attributable
to the recruiting, staffing and relocation of key executive and management staff
and the related increase in personnel expenses for the administrative
infrastructure built to support future operations. In addition, G&A expense also
increased due to an increase in legal, consulting and other professional fees.
As a result of our significant efforts to develop internal processes and
infrastructure to support the expected increase in operational activity and
scale, we anticipate that our G&A expense will continue to increase in absolute
dollars for the foreseeable future.

     Depreciation and Amortization. Depreciation and amortization expense
increased 30%, from $458,000 for the fiscal year ended December 31, 1998, to
$594,000 for the fiscal year ended December 31, 1999. This increase reflects the
effect of $2.3 million in capital expenditures in 1999 for new computer hardware
and software to support the viaLink services. This effect is partially offset by
the sale of our consulting and systems integration assets on September 1, 1998,
and the sale of ijob on December 31, 1998.

     Interest Expense, Net. Interest expense, net, increased from $161,000 for
the fiscal year ended December 31, 1998, to $4.0 million for the fiscal year
ended December 31, 1999. This increase is due to the promissory note we issued
to Hewlett-Packard for $6.0 million at 11.5% interest, plus the amortization of
the beneficial conversion feature of the note as more fully discussed in Note 5
to the financial statements. We will continue to record non-cash interest
charges of approximately $1.0 million per quarter until the conversion date of
August 5, 2000. Interest expense is offset by interest income on short-term
investments.

     Gain on Sale of Assets. Gain on sale of assets decreased 62%, from $3.3
million for the fiscal year ended December 31, 1998, to $1.3 million for the
fiscal year ended December 31, 1999. On March 11, 1999, DCM Company paid the
note receivable of $800,000 plus accrued interest in full due to us in
connection with the sale of ijob, and we recognized the deferred gain of
$462,000 during the first quarter of 1999. We also recorded $801,000 of income
under the earn-out agreement with NetPlex during 1999. Due to the potential for
non-payment, no amounts have been recorded under the NetPlex earn-out agreement
subsequent to September 30, 1999. We will continue to record income under the
earn-out agreement as we receive payments.

     Realized Gain on Sale of Marketable Securities. During the second quarter
of 1999, we converted 643,770 shares of NetPlex preferred stock we received as
consideration for the sale of the consulting assets into 643,770 shares of
freely-tradable common stock of NetPlex. In December 1999, we sold all of our
                                       25
<PAGE>   27

shares of NetPlex common stock for proceeds of $4.9 million. This sale resulted
in a realized gain of $3.9 million recorded for the fiscal year ended December
31, 1999.

     Tax Provision. Deferred tax assets and deferred tax liabilities are
separately recognized and measured at currently enacted tax rates for the tax
effect of temporary differences between the financial reporting and tax
reporting bases of assets and liabilities, and net operating loss and tax credit
carryforwards for tax purposes. A valuation allowance must be established for
deferred tax assets if it is "more likely than not" that all or a portion will
not be realized. Prior to the third quarter of 1998, we had recorded a tax
benefit of $1.0 million related to the pre-tax losses incurred in prior years,
and no valuation allowance had been established prior to the third quarter of
1998. As a result of the net gain on the sale of our consulting and systems
integration assets, the deferred tax asset of $1.0 million was realized and a
valuation allowance of $190,000 was established for the remaining net deferred
tax asset as of September 30, 1998. The deferred tax asset at December 31, 1998
and December 31, 1999, generated by losses recorded in the fourth quarter of
1998 and during 1999, is offset by a full valuation allowance. We will continue
to provide a full valuation allowance for future and current net deferred tax
assets until such time as we believe it is more likely than not that the asset
will be realized.

     Other Comprehensive Income. Other comprehensive income for the fiscal year
ended December 31, 1998 includes an unrealized loss of $316,000, representing
the net decrease in market value of the 643,770 shares of NetPlex stock received
as consideration from the sale of our consulting and systems integration assets
from September 1, 1998 to December 31, 1998. During 1999, and through the date
of sale of the NetPlex shares, we continued to record other comprehensive income
for the fluctuations in market value. All such unrealized gains were realized as
gain on sale of securities in December 1999.

  Comparison of 1998 to 1997

     Revenues. Our total revenues decreased 9%, from $9.0 million for the fiscal
year ended December 31, 1997, to $8.2 million for the fiscal year ended December
31, 1998. This decrease in revenues was primarily attributable to the sale of
our consulting assets.

     Direct Cost of Sales. Direct cost of sales decreased 29%, from $2.2 million
for the fiscal year ended December 31, 1997, to $1.6 million for the fiscal year
ended December 31, 1998. This decrease corresponded with the decrease in
hardware and product sales, offset by an increase in consulting and proprietary
solution sales for the fiscal year ended December 31, 1998.

     Customer Operations. Customer operations expense decreased by 17%, from
$4.5 million for the fiscal year ended December 31, 1997, to $3.8 million for
the fiscal year ended December 31, 1998. This decrease was due to the sale of
our consulting and systems integration assets.

     Development. Development expense increased 7%, from $1.1 million for the
fiscal year ended December 31, 1997 to $1.2 million for the fiscal year ended
December 31, 1998. This increase was due primarily to increased development
activity for our services. We incurred costs of approximately $1.9 million and
$1.8 million for product development in 1997 and 1998, respectively. For the
same periods we capitalized $752,000 and $617,000, respectively, in software
development costs.

     Selling and Marketing. Selling and marketing expense decreased 38%, from
$709,000 for the fiscal year ended December 31, 1997, to $436,000 for the fiscal
year ended December 31, 1998. This decrease was primarily a result of management
initiatives to improve cash flow by reducing sales and marketing expense.

     General and Administrative. G&A expense decreased 20%, from $2.8 million
for the fiscal year ended December 31, 1997, to $2.3 million for the fiscal year
ended December 31, 1998. This decrease was primarily as a result of management
initiatives to improve cash flow by reducing G&A expense.

     Depreciation and Amortization. Depreciation and amortization expense
decreased 9%, from $503,000 for the fiscal year ended December 31, 1997, to
$458,000 for the fiscal year ended December 31, 1998.

                                       26
<PAGE>   28

This decrease is due to decreased depreciation and amortization related to the
consulting assets sold in 1998.

     Interest Expense, Net. Interest expense, net, increased from $74,000 for
the fiscal year ended December 31, 1997, to $161,000 for the fiscal year ended
December 31, 1998. This increase was due to increased borrowing under our line
of credit in 1998.

     Gain on Sale of Assets. As a result of the sale of our consulting and
systems integration assets, we recorded a one-time net gain of $3.0 million for
the fiscal year ended December 31, 1998. Additionally, we accrued $341,000 under
the earn-out agreement with NetPlex in 1998.

     Tax Provision (Benefit). Prior to the third quarter of 1998, we recorded a
tax benefit of $1.0 million related to the pre-tax losses incurred in prior
years, and no valuation allowance was established prior to the third quarter of
1998. As a result of the net gain on the sale of our consulting and systems
integration assets in the third quarter of 1998, the deferred tax asset of $1.0
million was realized and a valuation allowance of $190,000 was established for
the remaining net deferred tax asset as of September 30, 1998. Losses were
incurred in the fourth quarter of 1998, for which no net deferred tax asset was
recorded. We will not record any further tax benefits and deferred tax assets
until such time as management believes it is more likely than not that the asset
may be realized.

     Other Comprehensive Loss. Other comprehensive loss of $316,000 is the
result of the write-down to market value at December 31, 1998 of the NetPlex
preferred stock received in connection with the sale of our consulting and
systems integration assets to NetPlex.

LIQUIDITY AND CAPITAL RESOURCES

     Due to the sale of our consulting and systems integration assets and the
sale of ijob, we are unable to rely on our historical revenues and expect cash
requirements in connection with sales and marketing and investment in our
viaLink services will be substantial. As a result of these sales, we now
resemble a development stage company because our planned principal operations
have not yet generated significant revenues. As of December 31, 1999, we had
cash, cash equivalents and short-term investments of $15.1 million.

     During 1999, we used $8.5 million in operating activities, reflecting a net
loss of $12.6 million. Cash used in operating activities also reflects the
effects of the gain on sale of marketable securities of $3.9 million, $6.5
million for non-cash stock compensation and interest expense for the conversion
feature of the Hewlett-Packard note, $1.0 million of depreciation and
amortization and a $900,000 increase in cash provided by other working capital
changes.

     During 1999, we used $3.8 million in investing activities. Cash used in
investment activities consisted primarily of increases in short-term
investments, capital expenditures and capitalized software development costs.
Also included in investing activities were proceeds of $4.9 million received by
us in connection with the sale of our NetPlex common stock. In March 1999, we
received proceeds of $812,444 for payment of the note receivable and accrued
interest due to us in connection with the sale of ijob. Additionally, we
invested $1.3 million in computer hardware, $768,000 in computer software and
$275,000 in various other fixed assets in 1999, compared to $42,000 in total
expenditures in 1998. We also invested $607,000 in software development costs
during 1999, compared to $617,000 in 1998.

     During 1999, financing activities provided net cash of $20.2 million,
primarily the result of the investments made by certain of our alliance
partners. Additionally, we received $7.6 million in proceeds from the exercise
of our stock options and warrants, offset in part by approximately $400,000 of
registration costs. In February 1999, we completed a financing with
Hewlett-Packard, whereby Hewlett-Packard provided us with $6.0 million through a
subordinated secured promissory note. In connection with our agreement with
Ernst & Young, which was entered into in May 1999, we issued a warrant to
purchase up to 1,000,000 shares of our common stock at a price of $2.00 per
share. In August 1999, Ernst & Young exercised warrants to purchase 250,000
shares of our common stock resulting in gross proceeds to us of $500,000. In
November 1999, Ernst & Young exercised warrants to purchase the remaining
750,000 shares
                                       27
<PAGE>   29

of our common stock from this agreement, resulting in gross proceeds to us of
$1.5 million. In October 1999, i2 Technologies invested $5.0 million in us in
exchange for 895,536 shares of our common stock and a warrant to purchase up to
an additional 746,268 shares of our common stock at an exercise price of $6.70
per share.

     We currently do not have a credit facility available to borrow additional
funds. We have incurred operating losses and negative cash flow in the past and
expect to incur operating losses and negative cash flow for the foreseeable
future. We expect our spending to increase steadily for the foreseeable future
for further technology and product development, increased marketing expenditures
and other technology and database costs. We also expect to hire additional
management and support/service employees. To support this level of spending, we
must use our current cash, cash equivalents and collection of accounts
receivable to operate the business and/or eventually obtain additional
financing. We cannot be certain when operating revenues will exceed operating
costs, if ever.

     We believe that our available cash resources will be sufficient to finance
our presently anticipated operating losses and working capital expenditure
requirements for the foreseeable future. Our future capital requirements will
depend on our revenue growth, profitability, working capital requirements, level
of investment in long term assets and other financing sources. Increases in
these capital requirements or a lack of revenue due to delayed or less than
expected market acceptance of our viaLink services would accelerate the use of
our cash, cash equivalents and short-term investments.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes standards for accounting
and reporting for derivative instruments. The effective date for SFAS No. 133,
as amended by SFAS No. 137, is effective for fiscal years beginning after June
15, 2001. We are currently not a party to any derivative instruments and do not
expect the adoption of SFAS No. 133 to have a significant impact on our
financial position or operating results.

ITEM 7. FINANCIAL STATEMENTS

     See Index to Financial Statements on Page F-1 of this Annual Report on Form
10-KSB.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     (a) Previous independent accountants

          (i) Effective December 7, 1999, PricewaterhouseCoopers LLP has
     resigned as The viaLink Company's independent accountants.

          (ii) The reports of PricewaterhouseCoopers LLP on the financial
     statements for the past two fiscal years contained no adverse opinion or
     disclaimer of opinion, and were not qualified or modified as to
     uncertainty, audit scope, or accounting principles.

          (iii) In connection with its audits for the two most recent fiscal
     years and through December 7, 1999, there have been no disagreements with
     PricewaterhouseCoopers LLP on any matter of accounting principles or
     practices, financial statement disclosure, or auditing scope or procedure,
     which disagreements, if not resolved to the satisfaction of
     PricewaterhouseCoopers LLP would have caused them to make reference thereto
     in their report on the financial statements for such years.

     (b) New independent accountants

          (i) The Company engaged KPMG LLP as its new independent accountants as
     of December 10, 1999.

          (ii) During the Company's most recent two fiscal years, the Company
     did not consult with KPMG LLP regarding the application of accounting
     principles as to a specified transaction or the

                                       28
<PAGE>   30

     type of opinion that might be rendered on the Company's financial
     statements or any matter that was either the subject of a disagreement or a
     reportable event.

          The Company's Board of Directors participated in and approved the
     decision to engage KPMG LLP as the Company's new independent accountants.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item is set forth under the caption
"Management" in the Company's definitive Proxy Statement (the "Proxy
Statement"), which will be filed with the Securities and Exchange Commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934 and is
incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

     The information required by this Item is set forth under the caption
"Executive Compensation" in the Proxy Statement, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934 and is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item is set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in the Proxy
Statement, which will be filed with the Securities and Exchange Commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934 and is
incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item is set forth under the caption
"Certain Transactions" in the Proxy Statement, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934 and is incorporated herein by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) The following documents are filed as part of this Annual report on Form
10-KSB:

          1. Financial Statements.

             See Index to Financial Statements on page F-1 of this Annual Report
        on Form 10-KSB

          2. Financial Statements Schedules.

             Financial statement schedules under the applicable rules and
        regulations of the Securities and Exchange Commission have been omitted
        as the schedules are not applicable or the information required thereby
        is included in the Company's financial statements or notes thereto.

          3. Exhibits.

                                       29
<PAGE>   31

             The following instruments are included as exhibits to the report.
        Exhibits incorporated by reference are so indicated.

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
        2.1**            Agreement and Plan of Merger dated May 8, 1996 by and among
                         the Registrant, Vantage Capital Resources, Inc., John
                         Simonelli, Larry E. Howell, Robert L. Barcum, Robert N.
                         Baker and David B. North
        2.2(1)           Asset Purchase Agreement dated June 12, 1997 by and among
                         ijob, Inc., Human Technologies, Inc., David C. Mitchell and
                         Ron Beasley
        2.3(2)           Asset Acquisition Agreement dated August 31, 1998 by and
                         between the Registrant and The NetPlex Group, Inc.
        2.4(2)           First Amendment to Asset Acquisition Agreement dated
                         September 9, 1998 by and between Registrant and The NetPlex
                         Group, Inc.
        2.5(2)           Stock Purchase Agreement dated December 31, 1998 by and
                         among Registrant, DCM Company, Inc., David C. Mitchell and
                         ijob, Inc.
        3.1(3)           Form of Certificate of Incorporation
        3.2(3)           Form of Bylaws
        4.1(4)           Form of Certificate of Common Stock
        4.2              See Exhibits 3.1 and 3.2 for provisions of the Registrant's
                         Certificate of Incorporation and Bylaws defining rights of
                         holders of common stock of the Registrant
        4.3**            Form of Underwriter's Warrant Agreement by and between
                         Barron Chase Securities Inc. and the Registrant
        4.4(5)           Shareholder Agreement dated as of February 4, 1999 by and
                         between Registrant and Hewlett-Packard Company
        4.5(6)           Stock Option Agreement dated as of December 18, 1998 by and
                         between Registrant and Brian Herman
        4.6(7)           Registration Rights Agreement dated May 3, 1999 by and
                         between Registrant and Ernst & Young LLP
        4.7(8)           Securities Purchase Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
        4.8(8)           Common Stock Purchase Warrant dated October 12, 1999, issued
                         by the Registrant to i2 Technologies, Inc.
        4.9(8)           Registration Rights Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
       10.1(6)           Note Purchase Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.2**            Lease dated October 3, 1994 by and between the Registrant
                         and Oklahoma Christian Investment Corporation
       10.3(3)           Form of Subordinated Secured Convertible Promissory Note
                         dated as of February 4, 1999 issued by the Registrant in
                         favor of Hewlett-Packard Company
       10.4(6)           Security Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.5**            Exchange Agreement dated October 14, 1996 by and among the
                         Registrant, Robert L. Barcum, Robert N. Baker, Russell L.
                         Reinhardt, David B. North, John Simonelli, and Larry E.
                         Howell
</TABLE>

                                       30
<PAGE>   32

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
       10.6(2)           Earn-out Agreement dated September 30, 1998 by and between
                         the Registrant and The NetPlex Group, Inc.
       10.7(9)           Administrative Services Agreement dated August 31, 1998 by
                         and between the Registrant and The NetPlex Group, Inc
       10.8(9)           Sublease dated September 1, 1998 by and between Applied
                         Intelligence Group, Inc. and The NetPlex Group, Inc.
       10.9(9)           Software Remarketing and Reselling Agreement effective as of
                         September 1, 1998 by and between the Registrant and The
                         NetPlex Group, Inc.
       10.10(3)          Form of Indemnification Agreement dated February 9, 1998 by
                         and between the Registrant and the Registrant's executive
                         officers
       10.11(3)          Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Lewis B. Kilbourne
       10.12(3)          Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Robert N. Baker
       10.13(10)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1995 Stock Option Plan, as amended and restated effective
                         September 1, 1998
       10.14(11)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1998 Non-Qualified Stock Option Plan
       10.15(12)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1998 Stock Grant Plan
       10.16(13)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1997 Employee Stock Purchase Plan
       10.17(4)          The viaLink Company 1999 Stock Option/Stock Issuance Plan
       10.18(14)         1999 Stock Option/Stock Issuance Plan Form of Stock Option
                         Agreement
       10.19(14)         1999 Stock Option/Stock Issuance Plan Form of Stock Issuance
                         Agreement
       10.20(14)         1999 Stock Option/Stock Issuance Plan Form of Automatic
                         Stock Option Agreement
       10.21(4)          The viaLink Company 1999 Employee Stock Purchase Plan
       10.22(7)          Amended and Restated Alliance Agreement dated as of May 3,
                         1999 by and between the Registrant and Ernst & Young LLP
       10.23(7)          Master Services Agreement dated May 3, 1999 by and between
                         the Registrant and Ernst & Young LLP
       10.24(8)          Alliance and Marketing Agreement dated October 12, 1999, by
                         and between the Registrant and i2 Technologies, Inc.
       10.25(8)          Software License dated October 12, 1999, by and between the
                         Registrant and i2 Technologies, Inc.
       10.26             Office Building Sublease effective as of December 16, 1999,
                         between Kerr-McGee Corporation and the Registrant
       10.27             Employment Agreement made as of April 1, 1999, by and
                         between the Registrant and J. Andrew Kerner
       10.28             Employment Agreement made as of April 9, 1999, by and
                         between the Registrant and David M. Lloyd
       10.29             Employment Agreement made as of April 8, 1999, by and
                         between the Registrant and Robert I. Noe
       10.30             Employment Agreement effective January 4, 2000 by and
                         between the Registrant and Patrick Fitzgerald.
</TABLE>

                                       31
<PAGE>   33

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
       10.31             Form of Addendum to Employment Agreement between the
                         Registrant and J. Andrew Kerner
       10.32             Form of Addendum to Employment Agreement between the
                         Registrant and David M. Lloyd
       10.33             Form of Addendum to Employment Agreement between the
                         Registrant and Robert I. Noe
       21.1(3)           Subsidiaries of Registrant
       23.1              Consent of KPMG LLP
       23.2              Consent of PricewaterhouseCoopers LLP
       27                Financial Data Schedule
</TABLE>

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

  ** Incorporated herein by reference to the Registrant's Registration Statement
     on Form SB-2 (Reg. No. 333-5038-D), as amended.

 (1) Incorporated herein by reference to the Registrant's Annual Report on Form
     10-KSB for the year ending December 31, 1997.

 (2) Incorporated herein by reference to the Registrant's Definitive Information
     Statement on Schedule 14-C filed October 15, 1998.

 (3) Incorporated herein by reference to the Registrant's Definitive Proxy
     Statement on Schedule 14A (File No. 000-21729) filed April 19, 1999.

 (4) Incorporated herein by reference to the Registrant's Registration Statement
     on Form 8-A/A (File No. 333-05038-D) filed under Section 12(g) of the
     Exchange Act.

 (5) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated February 4, 1999.

 (6) Incorporated herein by reference to the Registrant's Annual Report on Form
     10-KSB for the year ending December 31, 1998.

 (7) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated May 3, 1999.

 (8) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated October 12, 1999.

 (9) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated October 27, 1998.

(10) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-69203).

(11) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-69319).

(12) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-47547).

(13) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-30073).

          4. Reports on Form 8-K.

             The Registrant filed a Current Report on Form 8-K, dated October 4,
        1999, reporting pursuant to Item 5 of such Form the Notice of Redemption
        of Redeemable Common Stock Purchase Warrants of viaLink Company sent to
        the holders of our Redeemable Common Stock Purchase Warrants. This
        notice set the redemption date of November 5, 1999.

             The Registrant filed a Current Report on Form 8-K, dated October
        12, 1999, reporting pursuant to Items 5 and 7 of such Form the
        Registrant's strategic relationship with i2 Technologies, Inc., to
        integrate certain of the products and services of the Registrant and i2;

                                       32
<PAGE>   34

        and i2's investment of $5.0 million in exchange for common stock and
        issuance of a warrant to purchase an additional $5.0 million in common
        stock.

             The Registrant filed a Current Report on Form 8-K, dated November
        16, 1999, reporting pursuant to Items 5 and 7 of such Form the
        completion of the Registrant's reincorporation in Delaware.

             The Registrant filed a Current Report on Form 8-K, dated December
        7, 1999, reporting pursuant to Items 4 and 7 of such Form the change in
        the Registrant's Certifying Accountants. Effective December 7, 1999,
        PricewaterhouseCoopers LLP resigned as The viaLink Company's independent
        accountants and the Registrant subsequently engaged KPMG LLP as its new
        independent accountants as of December 10, 1999.

             The Registrant filed a Current Report on Form 8-K, dated March 1,
        2000, reporting pursuant to Items 5 and 7 of such Form the declaration
        of a two-for-one split of shares of the Registrant's common stock to be
        effected in the form of a stock dividend of one share for each share of
        common stock outstanding payable to stockholders of record on March 17,
        2000.

                                       33
<PAGE>   35

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, as of the 21st day of March, 2000.

                                            THE VIALINK COMPANY
                                            (Registrant)

                                            By:   /s/ LEWIS B. KILBOURNE
                                              ----------------------------------
                                                      Lewis B. Kilbourne
                                                   Chief Executive Officer

                                            By:    /s/ J. ANDREW KERNER
                                              ----------------------------------
                                                       J. Andrew Kerner
                                                Senior Vice President, Finance
                                                   Chief Financial Officer
                                                   (principal financial and
                                                     accounting officer)

                                       34
<PAGE>   36

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                           <C>
FINANCIAL STATEMENTS OF THE VIALINK COMPANY
  Independent Auditors' Reports.............................  F-2
  The viaLink Company Balance Sheets as of December 31, 1998
     and 1999...............................................  F-4
  The viaLink Company Statements of Operations and
     Comprehensive Income (Loss)
     for the Years Ended December 31, 1997, 1998 and 1999...  F-5
  The viaLink Company Statements of Stockholders' Equity for
     the Years Ended December 31, 1997, 1998 and 1999.......  F-6
  The viaLink Company Statements of Cash Flows for the Years
     Ended December 31, 1997, 1998 and 1999.................  F-7
  The viaLink Company Notes to Financial Statements.........  F-8
</TABLE>

                                       F-1
<PAGE>   37

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
The viaLink Company:

     We have audited the accompanying balance sheet of The viaLink Company as of
December 31, 1999, and the related statements of operations and comprehensive
income (loss), stockholders' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The viaLink Company as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

                                            KPMG LLP

Dallas, Texas
February 3, 2000, except as
to Note 13, which is as of
March 1, 2000

                                       F-2
<PAGE>   38

                        INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors
The viaLink Company

     In our opinion, the accompanying balance sheet and the related statements
of operations and comprehensive income (loss), of stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
The viaLink Company at December 31, 1998, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 1998,
in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

                                            PRICEWATERHOUSECOOPERS LLP

Oklahoma City, Oklahoma
February 22, 1999, except as to the
stock splits described in Note 8 and
Note 13 relating to the 1997 and
1998 share and per share data,
which is as of March 14, 2000.

                                       F-3
<PAGE>   39

                              THE VIALINK COMPANY

                                 BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1999

                                     ASSETS

<TABLE>
<CAPTION>
                                                                 1998          1999
                                                              ----------   ------------
<S>                                                           <C>          <C>
Current assets:
  Cash and cash equivalents.................................  $  715,446   $  8,616,305
  Short-term investments, held to maturity..................          --      6,479,443
  Accounts receivable -- trade, net of allowance for
     doubtful accounts of $7,841 in 1998 and $41,416 in
     1999...................................................     158,117        122,796
  Other receivables.........................................     585,778        472,599
  Prepaid expenses..........................................      16,716        395,513
  Marketable securities, available for sale.................     684,327             --
                                                              ----------   ------------
          Total current assets..............................   2,160,384     16,086,656
Furniture, equipment and leasehold improvements, net........     719,910      2,473,281
Software development costs, net.............................   1,340,230      1,523,588
Note receivable, net of deferred gain on sale...............     337,958             --
Deferred service fees.......................................          --      3,046,302
Other assets................................................      38,564        108,762
                                                              ----------   ------------
          Total assets......................................  $4,597,046   $ 23,238,589
                                                              ==========   ============

                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities..................  $1,066,273   $  2,236,521
  Current portion of capital lease obligations..............      44,194             --
                                                              ----------   ------------
          Total current liabilities.........................   1,110,467      2,236,521
Long-term debt..............................................          --      4,230,720
                                                              ----------   ------------
          Total liabilities.................................   1,110,467      6,467,241
Commitments and Contingencies(Notes 7 and 11)
Stockholders' equity:
  Common stock, $.001 par value; 50,000,000 shares
     authorized; 2,826,613 and 19,569,644 shares issued and
     outstanding at December 31, 1998 and 1999,
     respectively...........................................       2,827         19,570
  Additional paid-in capital................................   4,763,569     31,740,964
  Unearned stock compensation...............................          --     (1,389,079)
  Accumulated deficit.......................................    (964,144)   (13,600,107)
  Accumulated other comprehensive loss......................    (315,673)            --
                                                              ----------   ------------
          Total stockholders' equity........................   3,486,579     16,771,348
                                                              ----------   ------------
          Total liabilities and stockholders' equity........  $4,597,046   $ 23,238,589
                                                              ==========   ============
</TABLE>

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

                                       F-4
<PAGE>   40

                              THE VIALINK COMPANY

            STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
                                                          1997          1998           1999
                                                       -----------   -----------   ------------
<S>                                                    <C>           <C>           <C>
Revenues.............................................  $ 9,022,842   $ 8,230,628   $    615,519
Operating expenses:
  Direct cost of sales...............................    2,211,956     1,563,757             --
  Customer operations................................    4,526,968     3,759,626      2,655,113
  Development........................................    1,131,093     1,205,743      2,803,247
  Selling and marketing..............................      708,652       435,978      2,919,857
  General and administrative.........................    2,840,978     2,285,955      5,430,466
  Depreciation and amortization......................      502,559       458,259        594,373
                                                       -----------   -----------   ------------
          Total operating expenses...................   11,922,206     9,709,318     14,403,056
                                                       -----------   -----------   ------------
Loss from operations.................................   (2,899,364)   (1,478,690)   (13,787,537)
Interest expense, net................................      (73,581)     (161,355)    (3,983,785)
Gain on sale of assets...............................           --     3,339,123      1,262,921
Realized gain on sale of marketable securities.......           --            --      3,872,438
                                                       -----------   -----------   ------------
Income (loss) before income taxes....................   (2,972,945)    1,699,078    (12,635,963)
Provision (benefit) for income taxes.................   (1,112,127)    1,049,440             --
                                                       -----------   -----------   ------------
Net income (loss)....................................   (1,860,818)      649,638    (12,635,963)
Other comprehensive income (loss):
  Unrealized income (loss) on marketable securities,
     net of tax......................................           --      (315,673)       315,673
                                                       -----------   -----------   ------------
Comprehensive income (loss)..........................  $(1,860,818)  $   333,965   $(12,320,290)
                                                       ===========   ===========   ============
Net income (loss) per common share --
  -- Basic...........................................  $     (0.17)  $      0.06   $      (0.96)
                                                       ===========   ===========   ============
  -- Diluted.........................................  $     (0.17)  $      0.05   $      (0.96)
                                                       ===========   ===========   ============
Weighted average common shares outstanding --
  -- Basic...........................................   10,909,752    10,964,164     13,114,028
                                                       ===========   ===========   ============
  -- Diluted.........................................   10,909,752    12,409,772     13,114,028
                                                       ===========   ===========   ============
</TABLE>

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

                                       F-5
<PAGE>   41

                              THE VIALINK COMPANY

                       STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
                                                                                       ACCUMULATED
                                      COMMON STOCK       ADDITIONAL      UNEARNED         OTHER       ACCUMULATED
                                  --------------------     PAID-IN        STOCK       COMPREHENSIVE     EARNINGS
                                    SHARES     AMOUNTS     CAPITAL     COMPENSATION   INCOME (LOSS)    (DEFICIT)        TOTAL
                                  ----------   -------   -----------   ------------   -------------   ------------   ------------
<S>                               <C>          <C>       <C>           <C>            <C>             <C>            <C>
Balance, December 31, 1996......   2,726,500   $2,727    $ 4,491,226   $        --      $     --      $    247,036   $  4,740,989
  Exercise of stock options.....         444       --            279                                                          279
  Stock issued under employee
    stock purchase plan.........       2,565        3          7,483                                                        7,486
  Net loss......................                                                                        (1,860,818)    (1,860,818)
                                  ----------   -------   -----------   -----------      --------      ------------   ------------
Balance, December 31, 1997......   2,729,509    2,730      4,498,988            --            --        (1,613,782)     2,887,936
  Exercise of stock options.....      88,610       89        240,303                                                      240,392
  Stock issued under employee
    stock purchase plan.........       3,461        3          8,555                                                        8,558
  Stock issued under employee
    bonus plan..................       5,033        5         15,723                                                       15,728
  Net income....................                                                                           649,638        649,638
  Unrealized loss on securities
    available for sale..........                                                        (315,673)                        (315,673)
                                  ----------   -------   -----------   -----------      --------      ------------   ------------
Balance, December 31, 1998......   2,826,613    2,827      4,763,569            --      (315,673)         (964,144)     3,486,579
  Exercise of stock options.....     575,435      575      1,993,311                                                    1,993,886
  Stock issued under employee
    stock purchase plan.........         172       --          1,891                                                        1,891
  Proceeds from Hewlett-Packard
    note........................                           6,000,000                                                    6,000,000
  Issuance of stock options to
    employees...................                           2,185,736    (2,185,736)                                            --
  Issuance of stock purchase
    warrants....................                           4,006,468                                                    4,006,468
  Amortization of unearned stock
    compensation................                                           796,657                                        796,657
  Proceeds from exercise of
    common stock warrants.......   1,068,042    1,068      5,621,192                                                    5,622,260
  Exercise of common stock
    warrants, Ernst & Young.....     250,000      250      1,999,750                                                    2,000,000
  Issuance of common stock for
    services....................      20,480       21        549,639                                                      549,660
  Proceeds from issuance of
    common stock to i2
    Technologies, Inc. .........     223,884      224      4,999,776                                                    5,000,000
  Registration costs............                            (365,763)                                                    (365,763)
  Two-for-one stock split on
    November 29, 1999...........   4,820,196    4,820         (4,820)                                                          --
  Two-for-one stock split on
    March 1, 2000 (note 13).....   9,784,822    9,785         (9,785)                                                          --
  Unrealized gain on securities,
    net of reclassification
    adjustment..................                                                         315,673                          315,673
  Net loss......................                                                                       (12,635,963)   (12,635,963)
                                  ----------   -------   -----------   -----------      --------      ------------   ------------
Balance, December 31, 1999......  19,569,644   $19,570   $31,740,964   $(1,389,079)           --      $(13,600,107)  $ 16,771,348
                                  ==========   =======   ===========   ===========      ========      ============   ============
</TABLE>

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

                                       F-6
<PAGE>   42

                              THE VIALINK COMPANY

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
                                                                 1997          1998           1999
                                                              -----------   -----------   ------------
<S>                                                           <C>           <C>           <C>
Cash flows from operating activities:
  Net income (loss).........................................  $(1,860,818)  $   649,638   $(12,635,963)
  Adjustments to reconcile net income (loss) to net cash
    used in operating activities:
    Depreciation and amortization...........................      827,396       925,134      1,015,609
    Deferred income tax provision (benefit).................   (1,112,127)    1,049,440             --
    Gain on sale of assets..................................           --    (2,998,453)      (462,042)
    Gain on sale of marketable securities...................           --            --     (3,872,438)
    Amortization of unearned stock compensation.............           --            --        796,657
    Amortization of deferred service fee....................           --            --        960,166
    Loss on disposal of fixed assets........................           --        12,694             --
    Non-cash interest expense on convertible debt...........           --            --      4,230,720
    Professional fees paid with common shares...............           --            --        549,660
    Increase (decrease) in cash for changes in:
      Accounts receivable, net..............................      672,515     1,054,162         35,321
      Other receivables.....................................      269,981      (540,885)       113,179
      Prepaid expenses and other assets.....................      127,830        32,407       (448,995)
      Accounts payable and accrued liabilities..............      428,512      (397,899)     1,170,248
      Deferred revenue......................................      (96,315)     (236,134)            --
                                                              -----------   -----------   ------------
         Net cash used in operating activities..............     (743,026)     (449,896)    (8,547,878)
                                                              -----------   -----------   ------------
Cash flows from investing activities:
  Proceeds from sale of assets, net of costs................           --     2,607,731             --
  Proceeds from sale of marketable securities...............           --            --      4,872,438
  Capital expenditures......................................     (332,987)      (41,785)    (2,345,157)
  Collection on note receivable from sale of ijob...........           --            --        800,000
  Purchase of short-term investments........................           --            --     (9,099,443)
  Proceeds upon maturity of short-term investments..........           --            --      2,620,000
  Capitalized expenditures for software development.........     (752,158)     (617,180)      (607,181)
                                                              -----------   -----------   ------------
         Net cash provided by (used in) investing
           activities.......................................   (1,085,145)    1,948,766     (3,759,343)
                                                              -----------   -----------   ------------
Cash flows from financing activities:
  Decrease in bank overdraft................................     (261,141)      (23,619)            --
  Proceeds from convertible debt............................           --            --      6,000,000
  Proceeds from long-term debt..............................    1,270,000     3,522,639             --
  Proceeds from stockholder notes...........................        6,455            --             --
  Proceeds from exercise of stock option and purchase
    plans...................................................        7,765       264,678      1,995,777
  Proceeds from exercise of common stock purchase warrants,
    net of registration costs...............................           --            --      7,256,497
  Proceeds from issuance of common stock to i2
    Technologies, Inc. .....................................           --            --      5,000,000
  Payments of capital lease obligations.....................     (135,153)     (132,422)       (44,194)
  Payment of stockholder notes..............................      (20,000)     (482,830)            --
  Payments of long-term debt................................     (780,000)   (4,012,639)            --
                                                              -----------   -----------   ------------
         Net cash provided by (used in) financing
           activities.......................................       87,926      (864,193)    20,208,080
                                                              -----------   -----------   ------------
Net increase (decrease) in cash and cash equivalents........   (1,740,245)      634,677      7,900,859
Cash and cash equivalents, beginning of period..............    1,821,014        80,769        715,446
                                                              -----------   -----------   ------------
Cash and cash equivalents, end of period....................  $    80,769   $   715,446   $  8,616,305
                                                              ===========   ===========   ============
Supplemental disclosures of cash flow information:
  Cash paid for interest....................................  $   123,778   $   220,553   $         --
                                                              ===========   ===========   ============
  Cash paid for income taxes, net of refunds................  $   114,852   $    26,454   $         --
                                                              ===========   ===========   ============
Supplemental schedule of non-cash investment activities:
  Issuance of stock purchase warrants for future services...  $        --   $        --   $  4,006,468
                                                              ===========   ===========   ============
</TABLE>

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

                                       F-7
<PAGE>   43

                              THE VIALINK COMPANY

                         NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     General Description of Business -- The viaLink Company (the "Company")
provides subscription-based, business-to-business electronic commerce solutions
that enable the CPG and grocery industries to more efficiently manage their
highly complex supply chain information. Our services allow manufacturers,
wholesalers, distributors and retailers to communicate, exchange and synchronize
item, pricing and promotion information in a more cost-effective and accessible
way than has been possible using traditional methods.

     Our strategy is to continue our investment in marketing and sales
activities, development of our viaLink services and customer support services to
facilitate our plan to penetrate the market and build recurring revenues
generated from subscriptions to our viaLink services. In order to implement this
strategy, we believe that we will need significant additional capital resources
and we are seeking additional financing sources and other potential technology,
strategic and marketing partners. Consequently, we resemble a development stage
company and will face many of the inherent risks and uncertainties that
development stage companies face. There can be no assurance, however, that these
efforts will be successful or that we will be able to obtain additional
financing or agreements with other partners on commercially reasonable terms, if
at all. Our failure to successfully negotiate such arrangements would have a
material adverse effect on our business, financial condition and results of
operations, including our viability as an enterprise. As a result of the high
level of expenditures for investment in technology development, implementation,
customer support services, and selling and marketing expenses, we expect to
incur losses in the foreseeable future periods until such time, if ever, as the
recurring revenues from our viaLink services are sufficient to cover the
expenses.

     Our clients and customers range from small, rapidly growing companies to
large corporations in the consumer packaged goods and grocery industries and are
geographically dispersed throughout the United States.

     Basis of Presentation -- The financial statements include the accounts of
the Company and, prior to December 31, 1998, its wholly-owned subsidiary, ijob,
Inc., which was formed June 30, 1997. All material intercompany balances and
transactions have been eliminated. On December 31, 1998, ijob, Inc. was sold,
and therefore, is not included in the Company's financial statements subsequent
to that date.

     Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires the use of management's
estimates and assumptions in determining the carrying values of certain assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts for certain revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

     Cash and Cash Equivalents and Short-term Investments -- For purposes of the
statement of cash flows, the Company considers all highly liquid investments
with a maturity of three months or less at the time of purchase to be cash
equivalents. Similar investments with a maturity, at purchase, of more than
three months are classified as short-term investments held to maturity and are
carried at amortized cost.

     Marketable Securities -- The Company classifies its investment in
marketable securities as available-for-sale in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
Company's securities are carried at fair market value, with the unrealized gains
and losses reported as other comprehensive income or loss until realized.

     Risks from Concentrations -- Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
temporary cash investments, notes receivable and accounts receivable. The
Company places its temporary cash investments with high credit quality financial
institutions. Concentrations of credit risk with respect to accounts receivable
are limited due to the large

                                       F-8
<PAGE>   44
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

number of individual accounts and their dispersion across different regions. The
Company does not believe a material risk of loss exists with respect to its
financial position due to concentrations of credit risk.

     The Company received, as consideration for the sale of its management
consulting and systems integration assets, 643,770 shares of preferred stock
which were converted into common shares of the NetPlex Group, Inc. Such shares
were classified as available-for-sale marketable securities and were subject to
fluctuations in value due to market conditions until the sale of such securities
in December 1999.

     Prior to 1999, the Company's revenues were in part dependent on large
license fees and systems integration contracts from a limited number of
customers. In 1999, three customers individually accounted for 27, 14 and 12
percent of revenues. In 1997, 1998 and 1999, approximately 57, 49 and 70
percent, respectively, of the Company's total revenues were attributable to five
clients. During 1998, the Company sold its wholly owned subsidiary, ijob, Inc.,
and the assets underlying its management consulting and systems integration
services (see Note 2). Historically, over 90% of the Company's revenues were
generated from assets sold pursuant to these sales. As a result of the sales,
the Company resembles a development stage company since its planned principal
operations have not yet generated significant revenues. We will continue to be
dependent upon revenues from a limited number of customers until we achieve
market penetration.

     Furniture, equipment and leasehold improvements -- Furniture, equipment and
leasehold improvements are stated at cost. Expenditures for repairs and
maintenance are charged to expense as incurred. Upon disposition, the cost and
related accumulated depreciation are removed from the accounts and the resulting
gain or loss is reflected in operations for the period. The Company depreciates
furniture and equipment using the straight-line method over their estimated
useful lives ranging from 3 to 10 years. Leasehold improvements are amortized
over the lease term using the straight-line method.

     Revenue Recognition -- Prior to 1999, the Company's revenues were primarily
realized from providing management consulting services, systems integration
services and reselling hardware and software products. The Company recognized
revenue as the services were provided and products were delivered. Revenues from
fixed-price contracts were recognized using the percentage of completion method.
The Company's revenues in 1999 consist of recurring monthly subscription fees
for customer use of the viaLink services, implementation fees, and recurring
monthly fees for hosting customer websites. Contracts for customer use of the
viaLink services are generally for a one-year period, but are generally
cancelable with 30 days notice. The Company recognizes revenue for the use of
the viaLink services and for hosting customer websites as these services are
provided. Implementation fees for the viaLink services are nonrefundable and are
separately priced from the use of the viaLink services based on time and
materials, and are recognized when each implementation is complete.
Implementation costs consist primarily of labor by technical support personnel
to configure customer data and establish a connection to the viaLink database.
The Company has no obligation to perform any future services and no additional
implementation services are necessary upon renewal of the service by the
customer. Revenues collected in advance are deferred and recognized as earned.

     Direct Cost of Sales -- Direct cost of sales represents the cost of
hardware and certain point-of-sale software acquired for resale, including
royalty payments required for sale of the Company's proprietary software
products.

     Development -- The Company incurred costs and expenses of approximately
$1.9 million, $1.8 million and $3.4 million for product development in 1997,
1998 and 1999, respectively. The Company capitalizes certain of these costs,
including interest, that are directly related to the development of software to
be sold and software developed for internal use. Capitalization of costs for
internal use software begins after the preliminary project stage and ends when
the software is substantially complete and ready for its intended

                                       F-9
<PAGE>   45
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

use. The Company also capitalizes certain of these costs, including interest,
for software to be sold beginning when technological feasibility has been
established and ending when the product is available for customers. Capitalized
software development costs are amortized using the straight-line method over the
estimated useful life of three to five years and are subject to impairment
evaluation in accordance with the provisions of SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."

     Earnings Per Share -- Basic earnings per share is calculated by dividing
net income (loss) by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share is calculated by dividing net
income (loss) by the weighted-average number of common shares and dilutive
potential common shares outstanding during the period. Diluted earnings per
share also includes the impact of convertible debt, if dilutive, using the
if-converted method.

     Income Taxes -- The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires deferred tax liabilities or assets to be
recognized for the anticipated future tax effects of temporary differences that
arise as a result of the differences in the carrying amounts and tax bases of
assets and liabilities, and for loss carryforwards and tax credit carryforwards.
SFAS 109 requires that the Company record a valuation allowance when it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.

     Reclassifications -- Certain prior year amounts have been reclassified to
conform to the 1999 financial statement presentation.

2. DIVESTITURES

     On December 31, 1998, the Company sold its wholly-owned subsidiary, ijob,
Inc. to DCM Company ("DCM"), a corporation wholly-owned by David C. Mitchell,
the President and a member of the board of directors of ijob at the time of the
sale. DCM purchased all of the outstanding stock of ijob for a collateralized,
ten-year $800,000 promissory note that accrued interest at 8% per annum. The
promissory note was collateralized by substantially all of ijob's fixed assets,
contract rights, accounts receivable and general intangibles. The net gain of
$462,042 on the sale was deferred and netted against the $800,000 promissory
note at December 31, 1998, as DCM was considered to be a highly leveraged
entity. On March 11, 1999, the promissory note and accrued interest were paid in
full. Accordingly, the deferred gain on the sale of $462,042 was recognized in
the 1999 statement of operations.

     Effective September 1, 1998, the Company sold the assets related to its
management consulting and systems integration services (including the Company's
proprietary Retail Services Application ("RSA") software) to NetPlex Group, Inc.
("Consulting Assets Sale"). The Company received $3.0 million in cash and
643,770 shares of NetPlex preferred stock, with a market value of approximately
$1.0 million at the date of the sale. The Company used the cash proceeds from
the sale to repay (i) $551,062 of long-term debt, (ii) $565,094 of stockholder
loans including interest and (iii) expenses attributable to the Consulting
Assets Sale. The net gain from the Consulting Assets Sale was $2,998,453. At
December 31, 1998, the market value of the 643,770 shares of NetPlex preferred
stock was $684,327, yielding an unrealized loss of $315,673, which was included
in other comprehensive loss in 1998. In December 1999, the Company sold the
643,770 shares for $4.87 million resulting in a realized gain of $3.87 million
included in the 1999

                                      F-10
<PAGE>   46
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

statement of operations. The following represents condensed unaudited results of
operations related to the management consulting and systems integration
services:

<TABLE>
<CAPTION>
                                                                             EIGHT MONTHS
                                                               YEAR ENDED       ENDED
                                                              DECEMBER 31,    AUGUST 31,
                                                                  1997           1998
                                                              ------------   ------------
<S>                                                           <C>            <C>
Revenues....................................................   $7,544,678     $6,831,916
Expenses....................................................    7,335,395      5,045,104
                                                               ----------     ----------
Income before income taxes..................................   $  209,283     $1,786,812
                                                               ==========     ==========
</TABLE>

     In conjunction with the Consulting Assets Sale, the Company entered into an
earn-out agreement that provides for quarterly cash payments aggregating up to
$1.5 million based on revenues generated from the assets sold to NetPlex through
March 31, 2000. During 1999, the Company accrued payments in accordance with the
Consulting Assets Sale earn-out agreement in the amount of $801,000,
representing the estimated earn-out through September 30, 1999. NetPlex did not
make the contractually required payments in the time periods specified in the
earn-out agreement. Subsequent to December 31, 1999, however, the Company
received payment for the amounts recognized through September 30, 1999. Due to
this uncertainty, no amounts have been recorded under the earn-out agreement
subsequent to September 30, 1999. The earn-out agreement includes certain
acceleration provisions upon any breach by NetPlex, including increased cash
earn-out payments up to $1.5 million and issuance to the Company of an
additional 643,770 shares of NetPlex common stock. The Company has not
recognized any amounts which may become due under these acceleration provisions
and will recognize income under the earn-out agreement as payments are received.

     The Company's balance sheets as of December 31, 1998 and 1999 and the
statement of operations for 1999, do not include the assets and operations of
the consulting and systems integration assets, nor do they include the assets
and operations of ijob, which are included in the comparable period of 1998.
Therefore, the years presented are not comparable.

3. SHORT-TERM INVESTMENTS

     At December 31, 1999, all marketable debt securities were classified as
held-to-maturity and carried at amortized cost. Short-term investments consisted
of the following:

<TABLE>
<S>                                                        <C>
Certificates of deposit..................................  $  100,000
Commercial paper.........................................   5,038,141
Bankers acceptances......................................     744,480
U.S. government securities...............................     596,822
                                                           ----------
          Total short-term investments...................  $6,479,443
                                                           ==========
</TABLE>

     At December 31, 1999, the estimated fair value of each investment
approximated its amortized cost, and therefore, there were no significant
unrealized gains or losses.

                                      F-11
<PAGE>   47
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. FURNITURE, EQUIPMENT, LEASEHOLD IMPROVEMENTS AND SOFTWARE DEVELOPMENT COSTS

     Furniture, equipment and leasehold improvements at December 31, 1998 and
1999 consisted of the following:

<TABLE>
<CAPTION>
                                                                1998          1999
                                                             -----------   -----------
<S>                                                          <C>           <C>
Furniture and fixtures.....................................  $   286,583   $   388,918
Computer equipment.........................................    1,432,776     2,734,831
Computer software..........................................      492,790     1,260,472
Leasehold improvements.....................................       49,669       222,755
                                                             -----------   -----------
                                                               2,261,818     4,606,976
Less: accumulated depreciation and amortization............   (1,541,908)   (2,133,695)
                                                             -----------   -----------
Furniture, equipment and leasehold improvements, net.......  $   719,910   $ 2,473,281
                                                             ===========   ===========
</TABLE>

     Computer equipment in 1998 and 1999 included $321,840 of assets under
capital leases. Furniture and fixtures in 1998 and 1999 included $88,766 of
assets under capital leases. Accumulated depreciation for all assets under
capital leases at December 31, 1998 and 1999 was $262,537 and $344,658,
respectively.

     The Company incurred total costs of approximately $1.9 million, $1.8
million and $3.4 million for development of software in 1997, 1998 and 1999,
respectively. We capitalized $752,158, $617,180 and $607,181 of these costs for
development of software in 1997, 1998 and 1999, respectively. Interest
capitalized during 1997, 1998 and 1999 was not material. Amortization of
developed software during 1997, 1998 and 1999 was $324,837, $466,375 and
$423,823, respectively. Accumulated amortization at December 31, 1998 and 1999
was $763,755 and $1,187,578, respectively.

5. LONG-TERM DEBT

     On July 19, 1995, the Company entered into a revolving credit agreement
(the "Agreement") with a bank whereby the Company could borrow, under two
separate notes, up to the lesser of $3,000,000 or the borrowing base as defined
in the agreement. Pursuant to the terms of the revolving credit agreement, upon
successful completion of the Company's initial public offering, the working
capital note of $800,000 was paid in full on November 27, 1996, and in October
1997 and December 1997, the terms of the remaining note were renegotiated to a
credit line of $500,000. Interest on the note was prime plus 0.5% at December
31, 1997, which was 9%.

     During the first quarter of 1998, the Company completed a new credit
facility with a commercial lender that replaced the revolving credit agreement
with the bank. Under the new credit facility the Company could borrow up to
$1,000,000; however, amounts borrowed were limited to 75% of the Company's
accounts receivable as defined by the new facility. The facility was
collateralized by accounts receivable and all tangible assets of the Company and
was guaranteed by three principal officers of the Company. The interest rate on
the new facility was prime plus 3%. The promissory note under this agreement was
paid in full on October 16, 1998. During the first quarter of 1998, the Company
obtained a credit facility including a large sale financing option with IBM
Credit Corp., whereby the Company could finance directly with IBM Credit Corp.
large sales of hardware or software. As of December 31,1998, there were no
amounts outstanding on this credit facility and in February of 1999, the Company
terminated its arrangement under this credit facility. We no longer have any
available working capital borrowings or credit facility available for
borrowings.

     On February 4, 1999, the Company entered into a financing agreement and
note purchase agreement with Hewlett-Packard pursuant to which Hewlett-Packard
purchased a $6.0 million secured subordinated promissory note. This note bears
interest at 11.5% per annum, with interest payments deferrable to

                                      F-12
<PAGE>   48
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

maturity in February 2004. The Company received stockholders' approval at our
1999 annual meeting to exchange the original note for a subordinated secured
convertible promissory note, convertible into common stock at the option of
Hewlett-Packard beginning August 2000 at a conversion price of $1.75 per share.
The Company may demand conversion at maturity. The closing of the purchase of
the note occurred as of February 5, 1999. At December 31, 1999, contractual
interest of $621,945 for 1999 is included in the note payable balance as the
amounts become convertible with the note balance.

     The Emerging Issues Task Force ("EITF") Issue 98-5 requires that beneficial
conversion features present in convertible securities should be recognized and
measured by allocating a portion of the proceeds equal to the value of that
feature to additional paid-in capital. The value of the beneficial conversion
feature in the note with Hewlett-Packard was approximately $20.0 million at the
commitment date. However, the value allocated to additional paid-in capital is
limited to the $6.0 million proceeds based on the prescribed accounting.
Accordingly, we have allocated the full amount of proceeds to the beneficial
conversion feature and recorded $6.0 million as additional paid-in capital at
the time of closing. This amount is being accreted by charges to interest
expense and corresponding increases in long-term debt during the period from
issuance of the note to August 2000 when the note becomes convertible. Non-cash
interest charges of $3.6 million were recognized in 1999, and the Company will
recognize approximately $1.0 million in non-cash interest expense, per quarter,
through August 2000.

     The financial instruments included in long-term debt at December 31, 1999
are convertible into common shares at $1.75 per share. The estimated market
value of the shares of common stock which would be issued upon conversion of the
outstanding debt and accrued interest using the last reported sales price on
December 31, 1999 of $18.188 per share is approximately $68.8 million.

6. NOTES PAYABLE TO STOCKHOLDERS

     In October 1998, the Company repaid all stockholder notes in the principal
amount of $482,830, plus accrued interest of $82,264. Notes payable to
stockholders at December 31, 1997 totaled $482,830 and included interest at
rates ranging from 8.5% to 11.5%.

     Interest expense for 1997 and 1998 related to the notes payable to
stockholders was $46,473 and $38,293, respectively.

7. ALLIANCE AGREEMENTS

     On May 3, 1999, the Company entered into an agreement with Ernst & Young
LLP, pursuant to which Ernst & Young will provide us with consulting and
integration services and sales and marketing support, to assist in the
development and market penetration of our viaLink services. In connection with
this agreement, we issued Ernst & Young a warrant to purchase up to 1,000,000
shares of our common stock at a price of $2.00 per share contingent upon our
ability to register the common stock underlying the warrant agreement.
Additionally, we have agreed to pay a royalty of 7.0% of our service revenues to
Ernst & Young for a period of two years and, in the event that at least ten
"significant clients" of Ernst & Young become subscribers to our services during
this two year period, we will be obligated to continue this royalty payment in
perpetuity. Ernst & Young will not receive any royalties for services we provide
to clients subject to the reporting requirements of the federal securities laws
for which it serves as the principal independent auditor. As of the date of the
issuance of the warrant, the warrant conversion price was below the fair value
of our stock. The issuance of this warrant has been recorded as an asset and an
increase in additional paid in capital of $1.9 million, representing the fair
value of the warrant issued. The fair value of the warrant at the measurement
date was determined using a Black-Scholes option pricing model with the
following assumptions: interest rate (zero-coupon U.S. government issued with a
remaining life equal to the expected term of the warrant) of 6.0%; a dividend
yield of 0%; volatility factor of the expected market price of the Company's
common stock of 100.4%; and weighted-average expected life of
                                      F-13
<PAGE>   49
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the warrant of 1.5 years. The asset will be amortized over the service period
and will result in non-cash charges to our statement of operations. On August 9,
1999, Ernst & Young exercised warrants to purchase 250,000 shares of common
stock resulting in gross proceeds received by us of $500,000. On November 10,
1999, Ernst & Young exercised warrants to purchase the remaining 750,000 shares
of common stock resulting in gross proceeds received by us of $1.5 million.
During 1999, royalties under this agreement totaled $19,700, and are included in
selling and marketing expense.

     On October 12, 1999, The Company entered into a strategic relationship with
i2 Technologies, Inc. ("i2"), the primary focus of which is to integrate the
products and services of our two companies and to extend the solutions across
multiple industries. i2 will use our syncLink services to provide product, price
and promotion information to facilitate business processes between trading
partners using an Internet-accessible shared database. Our two companies will
also develop joint sales and marketing programs, and develop enhancements to the
viaLink services. Additionally, i2 invested $5.0 million in the Company in
exchange for 895,536 shares of viaLink common stock and a warrant to purchase up
to an additional 746,268 shares of common stock at $6.70 per share, representing
a twenty percent (20%) premium over the market price of the stock at the time of
the agreement. The initial term of the agreement will expire on December 31,
2003 and will automatically renew on a year-to-year basis thereafter unless
terminated by either party. The issuance of this warrant has been recorded as an
asset and an increase in additional paid-in capital for the fair value of the
warrant issued to i2 and will result in non-cash charges to our statement of
operations during the term of the agreement. The fair value of the warrant at
the measurement date was determined using a Black-Scholes option pricing model
with the following assumptions: interest rate (zero-coupon U.S. government
issued with a remaining life equal to the expected term of the warrant) of
5.91%; a dividend yield of 0%; volatility factor of the expected market price of
the Company's common stock of 101.6%; and weighted-average expected life of the
warrant of 2.0 years. Additionally we have agreed to pay i2 a royalty of five
percent (5%) of the syncLink and Chain Pricing subscription revenues during the
term of the agreement. We will also pay a royalty, in addition to the five
percent, based upon subscription revenues received from new customers with whom
i2 had "significant involvement" in the sales process. i2 has agreed to pay us a
royalty based upon revenues i2 receives from providing syncLink and Chain
Pricing services outside of the consumer packaged goods industry. During 1999,
royalties under this agreement totaled $21,800, and are included in selling and
marketing expense.

8. COMMON STOCK

     On November 29, 1999, the Company's board of directors approved a
two-for-one stock split in the form of a dividend. The par value remained $0.001
per share. The stock split was effective December 21, 1999 and is reflected in
the per share data in the accompanying financial statements and notes to the
financial statements.

                                      F-14
<PAGE>   50
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     A reconciliation of the numerator and the denominator used in the
calculation of earnings (loss) per share is as follows:

<TABLE>
<CAPTION>
                                                   FOR THE YEAR ENDED DECEMBER 31,
                                               ----------------------------------------
                                                  1997          1998           1999
                                               -----------   -----------   ------------
<S>                                            <C>           <C>           <C>
Basic:
  Net income (loss)..........................  $(1,860,818)  $   649,638   $(12,635,963)
  Weighted average common shares
     outstanding.............................   10,909,752    10,964,164     13,114,028
                                               -----------   -----------   ------------
     Earnings (loss) per share...............  $     (0.17)  $      0.06   $      (0.96)
                                               ===========   ===========   ============
Diluted:
  Net income (loss)..........................  $(1,860,818)  $   649,638   $(12,635,963)
  Weighted average common shares
     outstanding.............................   10,909,752    10,964,164     13,114,028
  Add: Net effect of dilutive potential
     shares..................................           --     1,445,608             --
                                               -----------   -----------   ------------
                                                10,909,752    12,409,772     13,114,028
     Earnings (loss) per share...............  $     (0.17)  $      0.05   $      (0.96)
                                               ===========   ===========   ============
</TABLE>

     For the year ended December 31, 1999, options to purchase 10,439,692 shares
at a weighted average exercise price of $4.35 and warrants to purchase 47,000
and 746,268 shares of common stock at $1.50 and $6.70, respectively, and
3,688,000 shares of common stock to be issued upon the conversion of the note
issued to Hewlett-Packard, were outstanding, but were not included in the
computation of diluted earnings per share because the effect of these
outstanding options, warrants and stock issuable upon conversion of debt would
be antidilutive.

     During 1998, options to purchase 1,440,000 and 120,000 shares of common
stock at $1.25 and $2.25 per share, respectively, and warrants to purchase
3,680,000 and 720,000 shares of common stock at $1.25 and $1.50, respectively,
were outstanding, but were not included in the computation of diluted EPS
because the exercise price of the options and warrants was greater than the
average market price of the common shares.

     During 1997, options to purchase 2,332,312 shares at a weighted average
exercise price of $1.05 and warrants to purchase 3,680,000 and 720,000 shares of
common stock at $1.25 and $1.50, respectively, were outstanding, but were not
included in the computation of diluted EPS because the exercise price of the
options and warrants was greater than the average market price of the common
shares.

     On June 29, 1999, the Securities and Exchange Commission declared effective
a post-effective amendment to our registration statement on Form SB-2 thereby
permitting holders of viaLink's 3,680,000 redeemable common stock purchase
warrants to voluntarily exercise the warrants, subject to specific state
approvals. Each warrant allowed the holder to purchase one share of viaLink
common stock at a price of $1.25 per share, on or before November 20, 1999. On
October 4, 1999, we issued a Notice of Redemption to holders of our redeemable
common stock purchase warrants and as of December 31, 1999, all 3,680,000
redeemable stock purchase warrants had been exercised. Warrant exercises
resulted in gross proceeds of $4.6 million to the Company during 1999.

9. STOCK OPTION AND STOCK PURCHASE PLANS

     Stock Purchase Plan -- The Company established The viaLink Company Employee
Stock Purchase Plan on April 1, 1997. At the Company's 1999 annual meeting our
stockholders approved the adoption of the 1999 Employee Stock Purchase Plan
which replaced the predecessor Employee Stock Purchase Plan as of July 1, 1999.
The 1999 Stock Purchase Plan provides eligible employees of viaLink with the
opportunity to acquire a proprietary interest in viaLink through participation
in a payroll deduction based

                                      F-15
<PAGE>   51
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

employee stock purchase plan designed to operate in compliance with Section 423
of the Internal Revenue Code. The price will be 85 percent of the per share fair
market value on either the granting date or the exercise date, whichever market
value is lower. The number of shares of common stock authorized and reserved for
issuance under the Plan is 800,000 shares. For the years ended December 31,
1997, 1998 and 1999, 10,260, 13,844 and 12,244 shares, respectively, of common
stock have been purchased under the stock purchase plan.

     Stock Option and Grant Plans -- The Company adopted The viaLink Company
1995 Stock Option Plan in March 1995 and amended the 1995 Plan on April 30, 1996
and September 1, 1998. The 1995 Plan was replaced by The viaLink Company 1999
Stock Option/Stock Issuance Plan in May 1999. While the Company may no longer
grant options pursuant to the 1995 Plan, options granted under the 1995 Plan
remain outstanding. The 1995 Plan provided for the issuance of incentive stock
options and non-incentive stock options to attract, retain and motivate
management, directors, professional employees, professional non-employee service
providers and other individuals who have benefited or could benefit the Company.

     The viaLink Company 1998 Non-Qualified Stock Option Plan was adopted on
February 9, 1998, and amended effective September 1, 1998. The Non-Qualified
Plan was replaced by the 1999 Stock Option/ Stock Issuance Plan in May 1999.
Although the Company may no longer grant options pursuant to the Non-Qualified
Plan, options granted under the Non-Qualified Plan remain outstanding.

     On February 10, 1998, the board of directors of the Company adopted the
1998 Stock Grant Plan (the "Stock Grant Plan" or "Plan") to attract, retain and
motivate consultants, independent contractors and key employees of the Company
and its subsidiaries by way of granting shares of stock in the Company. The
sale, transfer or other disposal of shares of common stock received pursuant to
the Stock Grant Plan is restricted for a period of one year. During 1998, 20,132
shares of common stock were issued pursuant to the Plan at an average price of
$0.78. No shares were granted under this plan in 1999. We may no longer grant
shares pursuant to the Stock Grant Plan.

     At the Company's 1999 annual meeting, the Company's stockholders approved
the adoption of The viaLink Company 1999 Stock Option/Stock Issuance Plan to
attract and retain the services of individuals essential to the Company's
long-term growth and financial success. The Company's officers and other key
employees, non-employee board members and consultants and other advisors are
eligible to receive option grants under the 1999 Plan.

     The Company has reserved 15,000,000 shares of our common stock for issuance
over the ten year term of the 1999 Plan, including shares initially reserved
under the predecessor plans. This share reserve will automatically be increased
on the first trading day of each calendar year, beginning with the 2000 calendar
year, by an amount equal to 1% of the shares of common stock outstanding on the
last trading day of the immediately preceding calendar year, but in no event
will such annual increase exceed 200,000 shares. Options may be granted under
the 1999 Plan at an exercise price per share not less than the fair market value
per share of common stock on the option grant date.

     The Company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for its employee stock
options. APB No. 25 requires compensation expense be recorded for any excess of
the market value of the underlying stock over the option price on the
measurement date. During May 1999, the Company granted options for 2,540,000 and
360,000 shares at exercise prices per share of $3.61 and $3.13, respectively,
compared to the market price of $4.25 on the date of grant. The excess of the
market value over the exercise price is being amortized over the vesting period.
Stock compensation expense of $718,000 is included in the 1999 statement of
operations for these grants representing the portion of the service period in
1999. The exercise price equaled the market price at the date of grant for all
other option grants during 1997, 1998 and 1999 and no compensation expense has
been recognized for all other grants in 1997, 1998 and 1999.

                                      F-16
<PAGE>   52
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Pro forma information regarding net income and earnings per share is
required by FAS No. 123 and has been determined as if the Company had accounted
for its stock options under the fair value method defined by SFAS No. 123. The
fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for fiscal year 1997, 1998 and 1999, respectively: interest rates
(zero-coupon U.S. government issued with a remaining life equal to the expected
term of the options) of 6.47%, 4.52% and 5.56%; dividend yields of 0.0%;
volatility factors of expected market price of the Company's common stock of 65%
for 1997 and 1998 and 101% for 1999; and weighted-average expected life of the
options of 5.9, 6.7 and 2.5 years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its stock options.

     The Company's historical and pro forma information is as follows for the
years ended December 31:

<TABLE>
<CAPTION>
                                                   1997         1998          1999
                                                -----------   ---------   ------------
<S>                                             <C>           <C>         <C>
Net income (loss), as reported................  $(1,860,818)  $ 649,638   $(12,635,963)
Pro forma-diluted.............................  $(2,530,746)  $(176,182)  $(16,563,728)
Earnings (loss) per share-diluted, as
  reported....................................  $     (0.17)  $    0.05   $      (0.96)
Pro forma-diluted.............................  $     (0.23)  $   (0.01)  $      (1.26)
</TABLE>

     A summary of the Company's stock option activity and related information
follows for the years ended December 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
                                                                              WEIGHTED
                                                              NUMBER OF       AVERAGE
                                                                SHARES     EXERCISE PRICE
                                                              ----------   --------------
<S>                                                           <C>          <C>
Outstanding at December 31, 1996............................   1,739,352       $1.08
  Granted...................................................     670,000        0.94
  Exercised.................................................      (1,776)       0.16
  Canceled..................................................     (76,744)       0.83
                                                              ----------
Outstanding at December 31, 1997............................   2,330,832        1.05
  Granted...................................................   4,838,972        0.80
  Exercised.................................................    (354,440)       0.68
  Canceled..................................................    (177,812)       0.86
                                                              ----------
Outstanding at December 31, 1998............................   6,637,552        0.89
  Granted...................................................   6,120,000        6.88
  Exercised.................................................  (1,956,440)       0.92
  Canceled..................................................    (361,420)       2.21
                                                              ----------
Outstanding at December 31, 1999............................  10,439,692       $4.35
                                                              ==========
</TABLE>

                                      F-17
<PAGE>   53
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                                         OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                                 -----------------------------------   ----------------------
                                               WEIGHTED    WEIGHTED                  WEIGHTED
                                               AVERAGE     AVERAGE     EXERCISABLE   AVERAGE
RANGE OF                         OUTSTANDING   EXERCISE   REMAINING        AT        EXERCISE
EXERCISE PRICE                   AT 12/31/99    PRICE        LIFE       12/31/99      PRICE
--------------                   -----------   --------   ----------   -----------   --------
<S>                              <C>           <C>        <C>          <C>           <C>
$0.15..........................       4,836     $ 0.15     5.2 years        4,836     $0.15
$0.45..........................       7,324     $ 0.45     6.2 years        7,324     $0.45
$0.75 to $0.83.................   3,876,620     $ 0.76     8.6 years    1,157,816     $0.76
$0.97..........................     120,800     $ 0.97     5.9 years      115,600     $0.97
$1.25..........................     360,000     $ 1.25     1.9 years      360,000     $1.25
$1.75..........................      32,112     $ 1.75     9.0 years       32,112     $1.75
$2.25..........................      60,000     $ 2.25     9.0 years       20,000     $2.25
$3.13..........................     360,000     $ 3.13     9.4 years           --        --
$3.60 to $3.82.................   3,316,000     $ 3.63     9.5 years           --        --
$4.82..........................      48,000     $ 4.82     9.4 years           --        --
$6.00..........................     650,000     $ 6.00     9.8 years           --        --
$15.22.........................   1,604,000     $15.22    10.0 years           --        --
                                 ----------                             ---------
                                 10,439,692                             1,697,688     $0.91
                                 ==========                             =========     =====
</TABLE>

10. INCOME TAXES

     The components of the provision (benefit) for income taxes for the years
ended December 31, 1997, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                      1997          1998        1999
                                                   -----------   ----------   --------
<S>                                                <C>           <C>          <C>
Current..........................................  $        --   $       --   $     --
Deferred.........................................   (1,112,127)   1,049,440         --
                                                   -----------   ----------   --------
Provision (benefit) for income taxes.............  $(1,112,127)  $1,049,440   $     --
                                                   ===========   ==========   ========
</TABLE>

     The differences in federal income taxes at the statutory rate and the
provision for income taxes for the years ended December 31, 1997, 1998, and 1999
are as follows:

<TABLE>
<CAPTION>
                                                    1997          1998         1999
                                                 -----------   ----------   -----------
<S>                                              <C>           <C>          <C>
Income tax expense (benefit) at federal
  statutory
  rate.........................................  $(1,010,801)  $  577,687   $(4,296,227)
State income taxes.............................     (118,918)      67,963      (505,439)
Reduction of valuation allowance credited to
  additional paid-in capital...................           --           --     3,802,458
Benefit of net operating loss carryforwards not
  recognized...................................           --      401,302     1,012,326
Other..........................................       17,592        2,488       (13,118)
                                                 -----------   ----------   -----------
Provision (benefit) for income taxes...........  $(1,112,127)  $1,049,440   $        --
                                                 ===========   ==========   ===========
</TABLE>

                                      F-18
<PAGE>   54
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Deferred tax assets (liabilities) are comprised of the following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                1998         1999
                                                              ---------   -----------
<S>                                                           <C>         <C>
Deferred tax assets:
  Allowance for doubtful accounts...........................  $   2,980   $    15,738
  Compensated absences......................................     17,583        31,277
  Tax credit carryforwards..................................     24,985        26,990
  Unrealized loss on marketable securities..................    119,956            --
  Net operating loss carryforwards..........................    781,387     6,878,587
                                                              ---------   -----------
                                                                946,891     6,952,592
Deferred tax liabilities:
  Deferred service fees.....................................         --    (1,157,595)
  Discount on long-term debt................................         --      (908,666)
  Software development costs................................   (508,763)     (578,963)
  Depreciation and amortization.............................    (36,826)     (159,815)
                                                              ---------   -----------
Net deferred tax asset, before valuation allowance..........    401,302     4,147,553
Valuation allowance.........................................   (401,302)   (4,147,553)
                                                              ---------   -----------
Net deferred tax asset......................................  $      --   $        --
                                                              =========   ===========
</TABLE>

     The discount recognized in 1999 for the value of the beneficial conversion
feature in the note payable to Hewlett-Packard, and the assets recognized in
1999 for the value of the warrants issued to Ernst & Young LLP and i2
Technologies, Inc. were not recognized for income tax purposes. Accordingly, the
Company established deferred tax liabilities totaling approximately $3.8 million
for these temporary differences by reducing the amount recorded as additional
paid in capital for the value of the beneficial conversion feature and the
warrants. These deferred tax liabilities have been used to support the
recoverability of an equivalent amount of deferred tax assets, thereby reducing
the amount of valuation allowance. The benefit of this reduction in the
valuation allowances has been recognized as additional paid-in capital.

     The Company's tax deduction for stock-based compensation in 1999 exceeds
the cumulative expense for those options and warrants recognized for financial
reporting purposes by approximately $7.2 million. This excess deduction is a
component of the net operating loss carryforwards for which a deferred tax asset
and corresponding valuation allowance of approximately $2.7 million have been
recognized at December 31, 1999. When the net operating loss carryforwards are
utilized for financial reporting purposes, this portion of the benefit will be
credited directly to additional paid in capital.

     At December 31, 1999, the Company had net operating loss ("NOL")
carryforwards for federal and state purposes of approximately $18,100,000 and
$18,500,000, respectively, and other carryforwards of approximately $71,000. The
Federal and State NOL carryforwards begin to expire in 2011.

     SFAS 109 requires that the Company record a valuation allowance when it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of the deferred tax asset depends on
the Company's ability to generate sufficient taxable income in the future. The
Company has recognized a full valuation allowance for the amount of net deferred
tax asset at December 31, 1998 and 1999 since the Company resembles a
development stage company and has no history of profitability without the
consulting assets that were sold in 1998.

                                      F-19
<PAGE>   55
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The ability of the Company to utilize the NOL carryforward to reduce future
taxable income taxes may be limited upon occurrence of certain capital stock
transactions during any three-year period resulting in an aggregate ownership
change of more than 50%.

11. COMMITMENTS AND CONTINGENCIES

     The Company leases its office and storage space under operating leases. The
terms range from month-to-month up to ten years and include options to renew.
The Company also leases office equipment under various noncancelable lease
agreements. Total rental expense in 1997, 1998 and 1999 for all leases was
$455,369, $410,669 and $460,279, respectively.

     Future minimum lease payments under noncancelable leases at December 31,
1999 follows:

<TABLE>
<CAPTION>
                                                           OPERATING
                                                             LEASES
                                                           ----------
<S>                                                        <C>
2000.....................................................  $  958,000
2001.....................................................     781,000
2002.....................................................     371,000
2003.....................................................     353,000
2004.....................................................     348,000
Thereafter...............................................     345,000
                                                           ----------
Future minimum lease payments............................  $3,156,000
                                                           ==========
</TABLE>

     Future minimum lease payments have not been reduced by future minimum
sub-lease rentals of approximately $1.2 million under operating leases, with
terms through 2005.

     In December 1997, the Company entered into an agreement with Investor
Awareness to provide investor relations services. Subject to certain criteria in
the agreement, Investor Awareness would be granted an option to purchase 40,000
shares of the Company's common stock at $1.5625 per share. The Company believes
the criteria were not met and that Investor Awareness did not earn the option to
purchase the 40,000 shares. Investor Awareness has filed a lawsuit alleging the
Company failed to issue the option under the terms of the agreement. Although
the outcome of any legal proceeding cannot be predicted with certainty, the
Company believes the ultimate outcome of this proceeding will not have a
material adverse effect on the Company's financial position but could be
material to the results of operations in any one accounting period.

12. RETIREMENT PLAN

     The Company has a profit sharing plan (the "Plan") for certain eligible
employees who have attained the age of 18 and completed one year of service.
Under the Plan, employer contributions are made at management's discretion.
Participants may contribute up to 6% of earnings as eligible contributions and
up to 15% of earnings in total for any Plan year. The Company's discretionary
matching percentage is up to 100% of each participant's total eligible
contributions for a year. The Company made no contributions in 1997, 1998, or
1999.

13. SUBSEQUENT EVENT -- STOCK SPLIT

     On March 1, 2000, the Company's board of directors approved a two-for-one
split of the common stock. Par value of the common stock will remain $.001 per
share. The stock split will be effective March 28, 2000.

                                      F-20
<PAGE>   56
                              THE VIALINK COMPANY

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The effect of the stock split has been recognized retroactively in the
stockholders' equity accounts in the balance sheet as of December 31, 1999, and
in all share and per share data in the accompanying financial statements, notes
to financial statements and supplemental financial data. Stockholders' equity
accounts have been restated to reflect the reclassification of an amount equal
to the par value of the increase in issued shares from additional paid-in
capital to the common stock account.

                                      F-21
<PAGE>   57

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
        2.1**            Agreement and Plan of Merger dated May 8, 1996 by and among
                         the Registrant, Vantage Capital Resources, Inc., John
                         Simonelli, Larry E. Howell, Robert L. Barcum, Robert N.
                         Baker and David B. North
        2.2(1)           Asset Purchase Agreement dated June 12, 1997 by and among
                         ijob, Inc., Human Technologies, Inc., David C. Mitchell and
                         Ron Beasley
        2.3(2)           Asset Acquisition Agreement dated August 31, 1998 by and
                         between the Registrant and The NetPlex Group, Inc.
        2.4(2)           First Amendment to Asset Acquisition Agreement dated
                         September 9, 1998 by and between Registrant and The NetPlex
                         Group, Inc.
        2.5(2)           Stock Purchase Agreement dated December 31, 1998 by and
                         among Registrant, DCM Company, Inc., David C. Mitchell and
                         ijob, Inc.
        3.1(3)           Form of Certificate of Incorporation
        3.2(3)           Form of Bylaws
        4.1(4)           Form of Certificate of Common Stock
        4.2              See Exhibits 3.1 and 3.2 for provisions of the Registrant's
                         Certificate of Incorporation and Bylaws defining rights of
                         holders of common stock of the Registrant
        4.3**            Form of Underwriter's Warrant Agreement by and between
                         Barron Chase Securities Inc. and the Registrant
        4.4(5)           Shareholder Agreement dated as of February 4, 1999 by and
                         between Registrant and Hewlett-Packard Company
        4.5(6)           Stock Option Agreement dated as of December 18, 1998 by and
                         between Registrant and Brian Herman
        4.6(7)           Registration Rights Agreement dated May 3, 1999 by and
                         between Registrant and Ernst & Young LLP
        4.7(8)           Securities Purchase Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
        4.8(8)           Common Stock Purchase Warrant dated October 12, 1999, issued
                         by the Registrant to i2 Technologies, Inc.
        4.9(8)           Registration Rights Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
       10.1(6)           Note Purchase Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.2**            Lease dated October 3, 1994 by and between the Registrant
                         and Oklahoma Christian Investment Corporation
       10.3(3)           Form of Subordinated Secured Convertible Promissory Note
                         dated as of February 4, 1999 issued by the Registrant in
                         favor of Hewlett-Packard Company
       10.4(6)           Security Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.5**            Exchange Agreement dated October 14, 1996 by and among the
                         Registrant, Robert L. Barcum, Robert N. Baker, Russell L.
                         Reinhardt, David B. North, John Simonelli, and Larry E.
                         Howell
       10.6(2)           Earn-out Agreement dated September 30, 1998 by and between
                         the Registrant and The NetPlex Group, Inc.
       10.7(9)           Administrative Services Agreement dated August 31, 1998 by
                         and between the Registrant and The NetPlex Group, Inc
</TABLE>
<PAGE>   58

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
       10.8(9)           Sublease dated September 1, 1998 by and between Applied
                         Intelligence Group, Inc. and The NetPlex Group, Inc.
       10.9(9)           Software Remarketing and Reselling Agreement effective as of
                         September 1, 1998 by and between the Registrant and The
                         NetPlex Group, Inc.
       10.10(3)          Form of Indemnification Agreement dated February 9, 1998 by
                         and between the Registrant and the Registrant's executive
                         officers
       10.11(3)          Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Lewis B. Kilbourne
       10.12(3)          Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Robert N. Baker
       10.13(10)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1995 Stock Option Plan, as amended and restated effective
                         September 1, 1998
       10.14(11)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1998 Non-Qualified Stock Option Plan
       10.15(12)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1998 Stock Grant Plan
       10.16(13)         The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
                         1997 Employee Stock Purchase Plan
       10.17(4)          The viaLink Company 1999 Stock Option/Stock Issuance Plan
       10.18(14)         1999 Stock Option/Stock Issuance Plan Form of Stock Option
                         Agreement
       10.19(14)         1999 Stock Option/Stock Issuance Plan Form of Stock Issuance
                         Agreement
       10.20(14)         1999 Stock Option/Stock Issuance Plan Form of Automatic
                         Stock Option Agreement
       10.21(4)          The viaLink Company 1999 Employee Stock Purchase Plan
       10.22(7)          Amended and Restated Alliance Agreement dated as of May 3,
                         1999 by and between the Registrant and Ernst & Young LLP
       10.23(7)          Master Services Agreement dated May 3, 1999 by and between
                         the Registrant and Ernst & Young LLP
       10.24(8)          Alliance and Marketing Agreement dated October 12, 1999, by
                         and between the Registrant and i2 Technologies, Inc.
       10.25(8)          Software License dated October 12, 1999, by and between the
                         Registrant and i2 Technologies, Inc.
       10.26             Office Building Sublease effective as of December 16, 1999,
                         between Kerr-McGee Corporation and the Registrant
       10.27             Employment Agreement made as of April 1, 1999, by and
                         between the Registrant and J. Andrew Kerner
       10.28             Employment Agreement made as of April 9, 1999, by and
                         between the Registrant and David M. Lloyd
       10.29             Employment Agreement made as of April 8, 1999, by and
                         between the Registrant and Robert I. Noe
       10.30             Employment Agreement effective January 4, 2000 by and
                         between the Registrant and Patrick Fitzgerald.
       10.31             Form of Addendum to Employment Agreement between the
                         Registrant and J. Andrew Kerner
       10.32             Form of Addendum to Employment Agreement between the
                         Registrant and David M. Lloyd
</TABLE>
<PAGE>   59

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
       10.33             Form of Addendum to Employment Agreement between the
                         Registrant and Robert I. Noe
       21.1(3)           Subsidiaries of Registrant
       23.1              Consent of KPMG LLP
       23.2              Consent of PricewaterhouseCoopers LLP
       27                Financial Data Schedule
</TABLE>

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

  ** Incorporated herein by reference to the Registrant's Registration Statement
     on Form SB-2 (Reg. No. 333-5038-D), as amended.

 (1) Incorporated herein by reference to the Registrant's Annual Report on Form
     10-KSB for the year ending December 31, 1997.

 (2) Incorporated herein by reference to the Registrant's Definitive Information
     Statement on Schedule 14-C filed October 15, 1998.

 (3) Incorporated herein by reference to the Registrant's Definitive Proxy
     Statement on Schedule 14A (File No. 000-21729) filed April 19, 1999.

 (4) Incorporated herein by reference to the Registrant's Registration Statement
     on Form 8-A/A (File No. 333-05038-D) filed under Section 12(g) of the
     Exchange Act.

 (5) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated February 4, 1999.

 (6) Incorporated herein by reference to the Registrant's Annual Report on Form
     10-KSB for the year ending December 31, 1998.

 (7) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated May 3, 1999.

 (8) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated October 12, 1999.

 (9) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated October 27, 1998.

(10) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-69203).

(11) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-69319).

(12) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-47547).

(13) Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-8, as amended (Reg. No. 333-30073).