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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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


                                 FORM 10-KSB/A

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                       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.)

               13155 NOEL ROAD                                     75240
                DALLAS, TEXAS                                   (Zip Code)
  (Address of Principal Executive Offices)
</TABLE>

                                 (972) 934-5500
                (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)

     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.  [X]

     The issuer's revenues for the fiscal year ending December 31, 2000 were
$1,621,437.


     As of April 27, 2001, 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 $44.8 million.



     As of April 27, 2001, the issuer had 25,127,170 outstanding shares of
Common Stock.



     Transitional Small Business Disclosure Format:  Yes [ ]  No [X]


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                                     PART I

ITEM 1. BUSINESS

                                    BUSINESS

     We provide subscription-based, business-to-business electronic commerce
services that enable food industry participants to efficiently manage their
highly complex supply chain information. Our core service, syncLink(SM), allows
manufacturers, wholesalers, distributors, sales agencies (such as food brokers)
retailers and foodservice operators 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
additional services, which are all built on the syncLink foundation, include
distribuLink(SM) for chain pricing data and the viaLink Partner Package, our
advanced e-business practices product suite.

     We were originally formed in 1985 as Applied Intelligence Group, an
Oklahoma Corporation. In 1998, we changed our name to The viaLink Company. In
1999, we reorganized as a Delaware Corporation.

INDUSTRY BACKGROUND

  The Consumer Packaged Goods, Grocery and Foodservice Industries

     The consumer packaged goods (CPG), grocery and foodservice 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, chain drugstores and foodservice operators such
as restaurants, hotels and caterers. The movement of merchandise from
manufacturer to retailer or operator 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, in 1997 the U.S. CPG, grocery and
foodservice markets represented $1.2 trillion in annual sales generated by
300,000 retail locations and 740,000 foodservice operators. These retail
locations and foodservice operators are supplied by over 20,000 manufacturers
and over 50,000 wholesalers, distributors and brokers. We believe we offer the
only deployed Internet-based, synchronized item, price and promotion information
service to this $1.2 trillion U.S. market. The global CPG, grocery and
foodservice market represents an even larger opportunity for the Company.

     Significant item-specific variations and complexities characterize the CPG
and grocery industries. A typical supermarket has an average of 40,000 items in
inventory, supplied by up to 5,000 separate suppliers. A large format
supermarket, or supercenter, can have over 100,000 items in inventory. A
convenience store has an average of 2,800 items in inventory, supplied by up to
300 suppliers. According to New Product News, approximately 16,000 new products
were introduced in the CPG and grocery industries in 1999.

     Items, prices and promotions are unique to each trading partner
relationship within the supply chain, and different products can be authorized
for sale at the specific store level. Product assortment, pricing and promotion
can vary by geography, store size, or other demographics. Furthermore, item
price and promotion changes that frequently occur at every level of the supply
chain can be very complex and time consuming. Prices can change as frequently as
daily or weekly for certain products.

     The significant industry fragmentation, complex and frequently changing
item, price and promotion information, non-standardized data, and disparate
industry technology systems provide a tremendous opportunity for us to prosper
as a shared information intermediary and global utility. We provide our
customers with an independent, secure database of record for item, price and
promotion information. Our services can be used to provide a neutral source of
data to resolve disputes about prices, products and promotions between trading
partners.

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  Lack of Information Synchronization in the CPG, Grocery and Foodservice
  Industries

     The CPG, grocery and foodservice industries' supply chain has experienced
low electronic commerce penetration and continues to be characterized by
significant data complexity, manually intensive business processes, and high
purchase order and invoice error rates.

     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 the supplier's and retailer's product code,
item specifications (packaging and selling unit information), Universal Product
Code (UPC), purchase cost, retail sales price and any discounts to be received
from the item supplier. The large number of items, variability of pricing, lack
of reliable information exchanged between trading partners and the traditional
practice of manual updating make pricebook maintenance extremely difficult and
error prone. Larger supply chain participants have attempted to bridge the
information gap by using the traditional electronic data interchange (EDI)
model. EDI technology has been available for many years; however, many suppliers
and retailers have found this approach to be cost prohibitive and
technologically difficult to implement. Without a shared "database of record"
from which trading partners may access agreed upon item, price and promotion
information, pricebook synchronization has been virtually impossible.

     The existing relationships within the foodservice supply chain makes for an
even more compelling case for synchronization. Unlike the CPG channel where
large manufacturers deliver directly to most large retailers, the foodservice
industry almost always adds a distributor/wholesaler between manufacturers and
operators. This adds a third level of complexity to most item and price
sensitive transactions and doubles the number of potential occurrences for
errors -- once at the operator and manufacturer levels and twice at the
distributor level. The use of promotions within the foodservice industry has
heretofore been relatively rare as the technology to track promotional
incentives from manufacturers through distributors to operators has been
virtually non-existent. As a result, the industry has historically embraced the
use of rebates as a means of providing pricing discounts to operators as they
have been the only effective means of tracking end-user sales in the absence of
technology to track promotions. We believe that our synchronized database should
help to minimize undetected product substitutions which is a characteristic of
the foodservice supply chain largely unshared by CPG.

  Quantifying the Magnitude of the Information Problem in the U.S.

     Unsynchronized product, price and promotion data and ineffective
communication between retailers and suppliers represent a major portion of the
estimated inefficiency in the industries' sales. A 1993 Joint Industry Study on
Efficient Consumer Response concluded 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. This translates to
over $30 billion in potential supply chain inefficiencies in the U.S. CPG and
grocery industries alone. The study also concluded that item, price and
promotion information synchronization is essential to achieve the benefits of a
paperless system.

     Due to the limited number of available alternatives, many suppliers and
retailers continue to employ paper-based, manual communications to manage their
supply chain information, resulting in operational inefficiencies and
administrative errors. 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 1999 Grocery Manufacturers of
America (GMA) study found that an estimated 60% of all invoices in the CPG
industry have errors and approximately 60% of the errors are due to price and
promotion issues. In addition, approximately 35% of all invoices result in the
retailer taking deductions for errors and discrepancies in invoices from
suppliers. These deductions were estimated to represent 8% of annual invoice
sales from suppliers. A 1998 GMA study estimated that the administrative cost of
invoice errors averages $40 per error and can reach up to $236 per error.

     Applying the average of $40 per invoice error to the 55 CPG companies that
participated in the study, this would translate to approximately $4 billion per
year in administrative costs for these 55 companies to process invoice errors.
This estimate assumes the average of 3 million invoices produced per year by
each
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of the 55 CPG companies incur the estimated invoice error rate of 60%, resulting
in approximately 99 million invoices annually. This estimate increases
considerably when you take into account our target market of 20,000
manufacturers and 50,000 wholesalers & distributors in the U.S. CPG and grocery
industries, as well as international companies.

     We believe that our services also provide a compelling value proposition to
the $367 billion U.S. foodservice industry. According to a recent joint study
conducted under the auspices of the International Food Manufacturers Association
and the International Food Distributors Association entitled "Enabling
Profitable Growth in the Food-Prepared-Away-from-Home Industries: Efficient
Foodservice Response (or "EFR")," invoice accuracy and deductions are also a
major problem for the foodservice industry. Of the 241 million foodservice
orders generated annually, approximately 80% are placed manually. The complexity
of the supply chain presents an error-prone order scenario that is virtually
tailor-made for viaLink's syncLink service, with an estimated 63% of all invoice
errors due to product, price and promotion mistakes. Indeed the structure of the
foodservice industry itself (which places distributors as the intermediary
between foodservice operators and manufacturers) provides for even greater risk
of item, price and promotion errors as compared to CPG.

     According to the EFR study, potential savings from e-commerce in the
foodservice industry are estimated at $6.6 billion annually, with a significant
portion attributed to product, price and promotion synchronization. Our syncLink
service is targeted directly at this annual savings opportunity and provides for
an additional level of potential "connection points" as compared to CPG due to
the prevalence of distributors and brokers in the foodservice industry.

  Cost Savings and Benefits of Synchronization in the CPG and Grocery Industries

     According to the 2000 GMA study in which we served as the intermediary
information service provider, the economic benefit of supplier synchronization
ranged from $4,100 to $20,600 per year for each average 100-store chain, while
100-store retailer synchronization savings ranged from $4,700 to $10,300 per
year per supplier. The following sections highlight the financial advantages or
net annual savings that may be realized from utilizing viaLink's services which
enables a rapid payback opportunity to its retailer and supplier customers.

     The 2000 GMA study also found that invoice deductions were reduced by 69%
during the pilot time period. This improvement was driven by a 59% reduction in
cost mismatches/discrepancies and a 100% elimination of item
mismatches/discrepancies. In addition, the time spent resolving item and price
discrepancies that did occur was reduced by half with even greater reductions
for suppliers and retailers with more items, promotions and store-level
complexities.

  Scan Based Trading

     The traditional business-to-business trading environment in the CPG,
grocery and foodservice industries is delivery-based (i.e., the point of
transaction is the supplier's point-of-delivery to the retailer). Scan based
trading (SBT) is an emerging industry model in which title changes hands between
suppliers and retailers at the checkout stand and not at the back door. Scan
based trading builds upon synchronization to align supply and demand at the
point of sale.

     In order to gain broad market acceptance, SBT 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. Our syncLink service provides the necessary
synchronization and viaLink's sbtLink service provides the third party control
system necessary to effectively manage SBT processes. SBT represents a change
from current business practices and has broad benefits for both suppliers and
retailers. The long-term benefits to suppliers conducting SBT through our
sbtLink service are

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the competitive advantage gained through better negotiation for shelf space and
the increased cash flow resulting from improved asset management. The immediate
benefits to suppliers include:

     - increased route productivity through use of off-peak delivery hours;

     - increased route selling opportunities through elimination of backroom
       waiting time and check-in time;

     - improved asset utilization due to the widening of delivery windows; and

     - inexpensive access to product information by product, by pricing zone,
       and by deal.

     For retailers, the long-term benefit of conducting SBT through our sbtLink
service is the competitive advantage gained through better customer satisfaction
and loyalty resulting from accurate stocking and pricing of items. The immediate
benefits to retailers include:

     - elimination of back room check-in;

     - increased productivity through re-deploying personnel normally involved
       in back room check-in;

     - improved shrink control;

     - reductions in stock-out occurrences;

     - reduction in inventory investment; and

     - improved assortment.

     According to the 2000 GMA pilot study, the benefits and key findings of
conducting SBT using our syncLink and sbtLink services as follows:

     - 3% to 4% increased sales growth;

     - shrink levels of 0.3%; and

     - error-free invoicing and payment -- no deductions throughout the pilot
       period.

     The pilot study concluded that SBT processes are enhanced by using a single
intermediary, such as us, serving both trading partners because the intermediary
bridges the technical gap between trading partners; allows smaller companies to
participate in advanced electronic commerce practices that would otherwise be
unattainable; and provides accurate and timely reporting that increases
accountability and speed of action among trading partners.

OUR SOLUTION

     We provide subscription-based, business-to-business electronic commerce
solutions designed specifically to address the complexities and inefficiencies
of the supply chain in the CPG, grocery and foodservice industries. We transform
today's point-to-point model to a single point (i.e. a centralized information
hub).

     Our solution is architected to operate across disparate technology
platforms and item coding standards and can be implemented and deployed rapidly.
Instead of making multiple connections to reach many trading partners, customers
make only a single connection, using a wide range of technologies, including
standard Internet browsers, e-mail, highly sophisticated proprietary network
infrastructures, standard EDI formats or Extensible Markup Language (XML), an
emerging standard for the exchange of data over the Internet.

     Our solution provides suppliers and retailers with the following benefits:

     - reduced invoice discrepancies through synchronization of trading
       information, thereby reducing write-offs and administrative costs
       associated with them;

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     - reduced manual data entry and pricebook maintenance, thereby increasing
       overall administrative efficiency;

     - increased sales force productivity resulting from decreased time spent
       resolving errors and disputes and increased time actually selling;

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

     - improved delivery and store receiving process.

     We offer an entire suite of value-added supply chain electronic commerce
services for the CPG, grocery and foodservice industries. Our solution is
composed of data synchronization (syncLink); chain pricing (distribuLink); and
the viaLink Partner Package, our advanced e-business practices product suite.

  syncLink -- Data Synchronization

     Our core service, syncLink, is a synchronized, central information hub that
offers manufacturers, distributors, wholesalers, foodservice operators and
retailers one shared source for product specifications, price, and promotions,
including new product introductions, authorizations, and de-authorizations
unique to their trading relationships. The syncLink service replaces the
multiple connections among retailers, operators and suppliers with a single
electronic connection to a shared database. syncLink provides customers with a
cost-effective, reliable, scaleable, accurate and secure way to communicate and
synchronize trading information. The syncLink database forms the foundation for
the Company's other electronic services.

  distribuLink -- Chain Pricing

     distribuLink, a reporting service using syncLink data, allows authorized
manufacturers, wholesalers, distributors and retailers to share item, price and
promotion information. distribuLink 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 distribuLink
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.

  viaLink Partner Package --

     viaLink Partner Package is a product suite that enables its customers to
conduct a variety of advanced e-business practices for demand planning and
creation, order and promotion management, and procurement. The viaLink Partner
Package is built upon syncLink and consists of four services, all of which are
built on the data-of-record shared by a trading partnership in syncLink.
Customers can choose any and all services included in the suite. The services
include:

     - clearLink(sm) -- Provides timely retail sales and wholesale warehouse
       movement information to manufacturers and suppliers using data within
       syncLink.

     - promoLink(sm) -- Permits trading partners to promote products at the
       point-of-sale and keep track of promotion dollars in near-real time.

     - viaLink honor check-in -- Enables trading partners to eliminate back-room
       check-in with tools to ensure that inventory and shrink are kept in
       control.

     - sbtLink(sm) -- Gives trading partners the shared control system necessary
       to conduct scan-based trading.

     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

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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 food
industry. 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,
grocery and foodservice 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.

  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 in industry and business media;

     - Participating in industry trade shows and conferences; and

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

  Expand Service Offerings

     Given the significant complexities and inefficiencies prevalent in the CPG,
grocery and foodservice supply chains, 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. We will continue to invest
resources to develop complementary services that leverage the syncLink database
and create efficiencies for our subscribers.

  Enter New Markets

     During 2000, we began our expansion internationally and the extension of
our solution to other industries outside of the CPG and grocery industries. We
have established our global presence by opening sales offices in Hong Kong and
Australia. We expect to continue this expansion by opening sales offices in
Europe and expansion into other industries by leveraging our existing or future
strategic relationships and alliance partners.

TECHNOLOGY PLATFORM

     Our technology platform is reliable, secure and readily accessible 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

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development and operational environment, well suited to manage mission-critical
business applications. We allow users to access the system using virtually any
technology, from an Internet browser to sophisticated EDI, including an XML
based interface.

     Access to our services is provided through the Internet, as well as other
methods of electronic communication. In order to maintain the security of its
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.

     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, including full-time professional
security staff. The 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.

SALES AND MARKETING

     We employ a multi-tiered sales and marketing strategy consisting of direct
sales force personnel and indirect partnerships and alliances, such as Cap
Gemini Ernst & Young, to penetrate and influence potential customers. Currently,
our Sales and Marketing team consists of 18 full-time employees, including 12
sales professionals. Senior executives, particularly on larger key accounts, are
also actively involved in the sales process.

     The sales and marketing team is responsible for generating sales leads,
following-up on customer referrals, signing contracts with new customers and
providing input into the Company's services and product development based on
customer feedback and market data. We generate sales leads through trade
advertising, customer referrals, public relations, trade shows and strategic
relationships. We also utilize a variety of other consulting and contractor
relationships with industry experts and opinion leaders to help develop and
promote viaLink's services.

     Our strategy is to create a network effect by targeting leading national
and regional retailers and suppliers and providing the services necessary to
create efficiencies for all participants. As a result of this network effect,
the value to each participant using our services increases with the addition of
each new participant, increasing the overall value of the our solution. Our
marketing strategy is focused on increasing the awareness of the our brand and
services, educating our target market on the benefits of B2B e-commerce, and
positioning our services as the cornerstone of CPG, grocery and foodservice
e-business activities. To increase the awareness of us and our services, at the
beginning of 2000 we launched a new marketing campaign, including new logo,
advertising, customer newsletter, web site, sales collateral, and trade show
presence.

     An important component of this strategy is to work with emerging B2B
trading exchanges in the CPG, grocery and foodservice industries. For example,
the Company has developed relationships and gained important endorsements from
the WorldWide Retail Exchange (WRE) and UCCnet. We are working with the
e-business alliance of IBM, i2, and Ariba, as well as an extended group of
industry leading service providers to provide critical functionality in building
the WRE.

CUSTOMERS


     We currently have more than 700 customers. A majority of our existing
customer base is small suppliers and retailers; however we have recently added
several large multi-national suppliers and retailers. Currently, we are
targeting large national and regional customers and we believe that we have made
inroads with respect to retailer and supplier adoption of our service offering.
We expect to add several more industry leaders to our customer list which
already includes: A&P, Bestfoods Baking, Coors Brewing Company, Earthgrains,
Fort James, Frito-Lay, IBC, Kraft Foods, Pepsi, Safeway, Schnucks, Spartan
Stores, Winn Dixie Stores, Inc. and Wise Foods.


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     Three customers individually accounted for 13%, 11% and 11% of our total
revenues in 1998; 27%, 14% and 12% of our total revenues in 1999 and 18%, 13%
and 11% of our total revenues in 2000. Likewise, approximately 49%, 70% and 60%
of our total revenues were attributable to five clients in 1998, 1999 and 2000,
respectively.

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 viaLink Partner Package. 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 December 31, 2000, our product development, technical support and
operations staff consisted of 36 full-time employees. Our product development
expenses were $1.2 million in 1998, $2.8 million in 1999 and $6.3 million in
2000. 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 rely primarily on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect our proprietary rights.
However, we currently have an application for a patent pending for the sbtLink
portion of our viaLink Partner Package suite of services. 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 very important to establishing and maintaining
a technology leadership position in addition to the various legal protections
available for our technology.

     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.

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     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 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 Accenture, Cap Gemini Ernst & Young,
       Deloitte & Touche, KPMG Consulting 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.

                                        9
<PAGE>   11

EMPLOYEES

     As of December 31, 2000, we had 117 full-time employees and 4 part-time
employees. Of the full-time employees, 18 were employed in sales and marketing,
36 were employed in product research and development, technical support and
operations, 44 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.


WE MAY BE UNABLE TO OBTAIN THE ADDITIONAL CAPITAL REQUIRED TO SUSTAIN AND GROW
OUR BUSINESS.



     We intend to continue our investment in and development of our services and
technology and expansion into other industries and geographic markets. We have
incurred operating losses and negative cash flow in the past and expect to incur
operating losses and negative cash flow in the future. Our ability to fund our
planned working capital and capital expenditures will depend largely upon our
ability to obtain sufficient capital. Our future capital requirements will
depend on a number of factors, including our:



     - Services achieving market acceptance;



     - Services producing a sustainable revenue stream;



     - Ability to enter into one or more license agreements;



     - Working capital requirements; and



     - Level of our investment in and development of our services and
       technology.



     If we are unable to successfully execute our business plan within the
timeframes we have projected, we may need to obtain approximately $5 to $10
million in additional capital. We may not be able to obtain the additional
capital resources necessary to satisfy our cash requirements or to implement our
growth strategy successfully. If we obtain additional capital, we cannot be
certain that it will be on favorable terms. If we cannot obtain adequate
additional capital resources, we will be forced to curtail our planned business
expansion, sell or merge our business, or face bankruptcy. We may also be unable
to fund our ongoing operations, including investment in and development of our
services and technology, expansion of our sales and marketing activities and
expansion into other industries and geographic markets.



IF OUR VIALINK SERVICES FAIL TO GAIN MARKET ACCEPTANCE, OUR BUSINESS WILL BE
MATERIALLY ADVERSELY AFFECTED.



     We will derive virtually all of our revenues for the foreseeable future
from implementation fees and subscription revenues from our viaLink services. We
are just beginning to generate a significant amount of revenues from these
services.


                                        10
<PAGE>   12


     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; and



     - Success of our marketing efforts.



     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. As a result, we cannot predict when our
services will achieve market acceptance, 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.



OUR SUCCESS 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 subscribing
to and using our services and linking with manufacturers, wholesalers and
distributors over the Internet through syncLink. We cannot predict when a
significant number of manufacturers, suppliers and retailers will subscribe to
our services, if ever. To encourage purchasers to subscribe to and use our
services, we must offer a broad range of product, price and promotion
information from a large number of suppliers through our syncLink service.
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.



OUR SALES CYCLE CAUSES UNPREDICTABLE VARIATIONS IN OUR OPERATING RESULTS WHICH
COULD CAUSE OUR STOCK PRICE TO DECLINE.



     Our sales cycle has been and may continue to be unpredictable. Our sales
cycle is subject to delays over which we have little or no control over
customer-specific factors such as budgetary constraints and internal acceptance
procedures. Consequently, we may spend considerable time and expense providing
information to prospective customers about the use and benefits of our services
without generating corresponding revenue. The length of the sales cycle makes it
difficult to accurately forecast the quarter in which our implementation and
subscription services will occur. This may cause our revenues from those
services to be delayed from the expected quarter to a subsequent quarter or
quarters or to vary from quarter to quarter. Furthermore, our expense levels are
relatively fixed and there is substantial uncertainty as to when particular
sales efforts will begin to generate revenues. As a result, our revenues and
results of operations in any quarter may not meet market expectations or be
indicative of future performance and it may be difficult for you to evaluate our
prospects. Our failure to meet revenue expectations would likely cause the
market price of our common stock to decline.



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
$1.5 million in 1998, $13.8 million in 1999 and $39.1 million in 2000. The
significant decline in revenues in 1999 was the direct result of the sale of our
management consulting services and computer systems integration services, which
together had historically generated over 90% of our total revenues. Because our
viaLink services have achieved limited market acceptance to date, our revenues
only increased $1.0 million from 1999 to 2000. As of December 31, 2000, we had
an accumulated deficit of approximately $52.7 million representing the sum of
our historical net


                                        11
<PAGE>   13


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.



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, such as those
relating to pricing alcohol and liquor or nutritional guidelines. Incorrect
information could expose us to liability if it harms users of our services or
result in decreased adoption and use of our services.



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 2000, we derived 60% of our total
revenues from our five largest customers. Our largest customer in 2000 accounted
for approximately 18% 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.



     In addition to the preferred stock that we issued in the private placement,
we issued Series A Warrants to acquire 3,920,000 shares of our common stock and
Series B Warrants to acquire 666,667 shares of our common stock. Subject to
certain conditions, we will issue an additional 727,000 Series A Warrants. The
initial exercise price for Series A Warrants is $3.75 per share and the initial
exercise price for the Series B Warrants is $3.00 per share. These exercise
prices are subject to antidilution provisions with respect to certain future
issuances by us of our equity securities and other similar adjustments if
certain of our executive officers transfer, sell or otherwise dispose of shares
of our common stock for six months after the date the registration statement
relating to this prospectus is declared effective. Assuming we issue the maximum
number of warrants, the private placement is expected to result in dilution upon
exercise of the warrants of 5,313,667 shares of common stock.



A PROMISSORY NOTE WE ISSUED TO HEWLETT-PACKARD MAY STRAIN OUR FINANCIAL
RESOURCES AND MAY RESULT IN DILUTION TO OUR STOCKHOLDERS.



     As a result of our issuing a $3.8 million subordinated secured convertible
promissory note to Hewlett-Packard, we are required to make payments of interest
only in the amount of $19,039 per month through the remainder of 2001 and
payments of principal and interest in the amount of $326,094 per month from
January 1, 2002 until the final payment on December 31, 2002. These payments
could strain our available cash resources and could make us more vulnerable to
industry downturns, general economic downturns and competitive pressures. Our
ability to meet our debt obligations is dependent upon our future performance,
which is subject to financial, business and other factors affecting our
operations. Additionally, all principal and interest due under the note is
convertible into shares of our common stock at $1.75 per share, an amount lower
than our current stock price. As a result, a conversion of this note would
result in dilution to our stockholders.


                                        12
<PAGE>   14


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



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.



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.



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


                                        13
<PAGE>   15


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 ARE EXPANDING INTO INTERNATIONAL MARKETS, WHICH WILL CAUSE OUR BUSINESS TO
BECOME SUSCEPTIBLE TO ADDITIONAL RISKS.



     As part of our strategy, we are expanding our presence and the sales of our
services outside the United States. Conducting international operations subjects
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
food 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. Further, 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.



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.



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, or even the
potential for such sales, 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 April 27, 2001, we had outstanding 25,127,170 shares of common
stock. Of these shares:



     - 21,760,923 shares are freely tradable without restriction or further
       registration under the Securities Act unless purchased by our
       "affiliates;" and



     - 3,366,247 shares of common stock are "restricted securities" as defined
       in Rule 144 of the Securities Act.


                                        14
<PAGE>   16


     Furthermore, an additional:



     - 4,867,433 shares of common stock are issuable upon the exercise of
       currently exercisable options;



     - 7,972,531 shares of common stock are issuable upon the exercise of
       currently outstanding warrants; and



     - 2,175,893 shares of common stock are issuable upon the conversion of a
       currently outstanding convertible promissory note; and



     - 3,920,000 shares of common stock are issuable upon the conversion of
       currently outstanding preferred stock.



Substantially all shares issued following the exercise of these options or
warrants or the conversion of the preferred stock will be freely tradable.

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


        SPECIAL PRECAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


     This Form 10-KSB 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 10-KSB, 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 $18,500.

     - Approximately 43,300 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 $54,800 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 $2,685 through December 2001, and
       $2,765 for the remaining term of the lease.

     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

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

                                        15
<PAGE>   17

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

     None.

                                        16
<PAGE>   18

                                    PART II

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

     Our common stock is quoted on the Nasdaq National Market under the symbol
"VLNK" since March 2000. From November 1996 to March 2000 our common stock was
quoted on the Nasdaq SmallCap Market. The following table sets forth, for the
periods indicated, the high and low closing prices of the common stock as
reported by the Nasdaq National and SmallCap Markets.

<TABLE>
<CAPTION>
                                                               COMMON STOCK
                                                                   PRICE
                                                              ---------------
                                                               HIGH     LOW
                                                              ------   ------
<S>                                                           <C>      <C>
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
2000:
First Quarter...............................................   40.88    14.44
Second Quarter..............................................   25.19     7.25
Third Quarter...............................................   11.31     5.44
Fourth Quarter..............................................    8.94     2.00
</TABLE>


     As of the close of business on April 27, 2001, there were 151 record
holders of our common stock.


                                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."

     Statements of our management's intentions, beliefs, anticipations,
expectations and similar expressions concerning future events or outcomes
contained in this Report constitute "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Any
forward-looking statements are made by us in good faith, pursuant to the
safe-harbor provisions of the Reform Act. As with any future event or outcome,
we cannot assure you that the events or outcomes described in forward-looking
statements made in this Report will occur or that the results of future events
or outcomes will not vary materially from those described in the forward-looking
statements. These forward-looking statements reflect our management's current
views and projections regarding economic conditions, industry environments and
our performance. Important factors that could cause our actual performance and
operating results to differ materially from the forward-looking statements
include, but are not limited to,

                                        17
<PAGE>   19

changes in the general level of economic activity in the markets served by us,
introduction of new products or services by competitors, sales performance,
expense levels, interest rates, changes in our financial condition, availability
and terms of capital sufficient to support our current and anticipated level of
activity, delays in implementing further enhancements to our services and our
ability to implement our business strategies.

     Our expectations with respect to future results of operations that may be
embodied in oral and written forward-looking statements, including any
forward-looking statements that may be included in this Report, are subject to
risks and uncertainties that must be considered when evaluating the likelihood
of our realization of such expectations. Our actual results could differ
materially. Factors that could cause or contribute to such differences include,
but are not limited to, those discussed in "Additional Factors That May Affect
Future Results."

OVERVIEW

     We provide subscription-based, business-to-business electronic commerce
services that enable food industry participants to efficiently manage their
highly complex supply chain information. Our core service, syncLink(SM), allows
manufacturers, wholesalers, distributors, sales agencies (such as food brokers),
retailers and foodservice operators 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
additional services, which are all built on the syncLink foundation, include
distribuLink(SM) for chain pricing data and the viaLink Partner Package, our
advanced e-business practices product suite.

     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 our syncLink service, formerly marketed and sold as Item Catalog, in
January 1997. In 1998, we made the strategic decision to focus primarily 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 just
begun to generate 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, our customers
pay us either a flat monthly subscription rate or a rate based on the number
trading partners and the size and complexity of the trading relationships. Our
other services are available for additional monthly subscription fees.

     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
personnel to configure customer data and establish a connection to our services.


     Our subscription services are provided by and are resident on our database
servers. Our customers gain access to and use our services through means ranging
from Internet web browsers to fully automated batch interfaces imbedded in the
customers IT systems. Basic implementation services, including training the
customer on how to use our services and how to format and populate our database
with the customer's

                                        18
<PAGE>   20


data, are provided to all of our customers. Services beyond the basic
implementation services include consulting services that help customers modify
their own IT systems and procedures to enable more automated interfaces with our
services. Additionally, we receive revenues from the performance of certain
Web-hosting services for a limited number of customers for which we provide no
other viaLink services. The web-hosting service is not related or similar in any
regard to our other services and we expect to reduce our focus and reliance on
providing these services in the future.



     We recognize revenues for our subscription, basic implementation and
Web-hosting services over the terms of the subscription and Web-Hosting
arrangements. Revenues collected in advance are deferred and recognized as
earned. Revenues for consulting services related to complex supplier and
retailer installations are recognized as services are provided.


     We reported a substantial loss from operations for the fiscal years ended
December 31, 1999 and 2000, and we expect to report losses for the fiscal year
ended December 31, 2001. 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 and the amount of expenses incurred in generating these
revenues. In order to achieve market penetration, we expect to continue our high
level of expenditures for technology and product development and other
technology and database costs. 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.

     During 2000, we began the extension of our solution to the food service
industry, including hiring two key executives. Additionally, we initiated our
expansion into international markets by opening an office in Australia as part
of a joint venture with Cap Gemini Ernst & Young Australia Pty, Ltd. We expect
this expansion into the foodservice industry and internationally will continue
to be facilitated by leveraging our strategic relationships and alliances.

RESULTS OF OPERATIONS

  Comparison of 2000 to 1999

     Revenues.  Our revenues are comprised of revenues for subscriptions to our
services, implementation revenues and certain revenues for Web-hosting services.
We expect Web-Hosting revenues to continue to decrease in the future. The
following table sets forth for the periods indicated the components of revenue
included in our consolidated statements of operations:

<TABLE>
<CAPTION>
                                                                1999        2000
                                                              --------   ----------
<S>                                                           <C>        <C>
Revenues:
  Subscription..............................................  $ 74,930   $  483,205
  Implementation............................................   247,914      936,032
  Hosting...................................................   292,675      202,200
                                                              --------   ----------
          Total revenues....................................  $615,519   $1,621,437
                                                              ========   ==========
</TABLE>


     Subscription and implementation revenues increased from 1999 to 2000
reflecting increases in the number of implementations and increases in
subscribers from 411 customers at December 31, 1999 to 727 customers at December
31, 2000. We expect continued increases in the number of customers purchasing
implementation and subscription services. Additionally, during 2000, we
increased the subscription rates that we charge for our services. Our current
pricing for retailers ranges from $25 per supplier per month for a small
retailer and a flat rate of up to $35,000 per month for the largest retailers.
Our pricing for suppliers ranges from $25 per retailer up to $5,000 per retailer
per month and a flat rate subscription price of up to $100,000 per month.


     Customer Operations.  Customer operations expense consists of personnel
costs associated with implementation, consulting and other services and costs of
operating, maintaining and accessing our

                                        19
<PAGE>   21

technical operations and hosting facilities. Customer operations expense also
includes the cost of providing support and maintenance to customers. Our
customer operations expense increased from $2.7 million in 1999 to $7.3 million
in 2000. This increase is due primarily to increased personnel costs for our
implementation and customer service teams and our expanded operations platform,
including the hosting of our technical operations by Hewlett-Packard. In October
2000 we entered into a lease agreement with Hewlett Packard to expand our
operations platform. We believe this expanded platform will significantly
increase the capacity and scalability of our operations. We expect that the
expanded platform will be complete during the first quarter of 2001 and will
result in increased operating lease and hosting expenses when complete.


     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 from
$2.8 million in 1999 to $6.3 million in 2000. This increase was due primarily to
an increase in personnel costs and professional fees for product development.
Additionally, $0.5 million and $1.1 million of non-cash service costs is
included in development expense for 1999 and 2000, respectively, for the
amortization of a portion of the fair value of the warrants and options issued
to Cap Gemini Ernst & Young, i2 Technologies and other service providers,
reflecting the development efforts provided. Additionally, during 2000, we
incurred professional fees of $1.2 million which were paid with common stock
in-lieu of cash in accordance with our alliance agreement with Cap Gemini Ernst
& Young. We recognized development expense as if the company had paid cash for
the services. We do not expect significant expenses to be settled with stock in
lieu of cash in the future. We are utilizing and expect to increase our reliance
on certain alliance partners and other vendors to advance our development
efforts. We are currently undertaking various projects to expand the
functionality of our services, including internationalization, that we expect
will result in continued increases in these expenses for the foreseeable future.


     Selling and Marketing.  Selling and marketing expense consists primarily of
personnel costs, travel, promotional events, including trade shows, seminars and
technical conferences, advertising and public relations programs. Selling and
marketing expense increased from $2.9 million in 1999 to $9.7 million in 2000.
This increase was primarily due to the expansion of our sales, business
development and marketing team from four persons at January 1, 1999 to 18
persons at December 31, 2000 and our new marketing and advertising program to
promote our viaLink services. Compensation expense increased $1.8 million from
1999 to 2000 for the increases in selling and marketing staff. The new marketing
and advertising program, along with the increased headcount resulted in an
increase in advertising, travel and other professional fees of approximately
$4.3 million in 2000. Additionally, selling and marketing expense includes $0.5
million and $1.1 million of non-cash service costs for the amortization of a
portion of the fair value of the warrants and options issued to Cap Gemini Ernst
& Young, i2 Technologies and other service providers reflecting the selling and
marketing efforts provided during 1999 and 2000, respectively. We expect selling
and marketing costs to decrease in 2001 in absolute dollars as compared to 2000
reflecting decreased media costs offset in part by increases in trade show and
direct marketing efforts as we focus on customer acquisition and increases in
international and foodservice marketing activities to build awareness.

     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 from $5.4 million in 1999
to $13.6 million in 2000. This increase in G&A expense is attributable to
several factors in 2000: a) increase of $3.1 million, including $1.4 million in
non-cash stock compensation, in personnel costs for key executive and management
staff and personnel expenses for the administrative infrastructure built to
support future operations; b) $2.6 million related to recruiting and the
relocation of the executive offices from Edmond, Oklahoma to Dallas, Texas; c)
$0.4 million in deferred offering costs written-off upon withdrawal of a
registration statement relating to a previously proposed offering of our common
stock; d) $1.1 million to write-off a purchase deposit and an investment in a
note receivable and e) increases in professional fees of $0.9 million for
increased business activities. We anticipate that our other G&A expenses will
decrease in absolute dollars in 2001 reflecting the completion of our move from
Edmond to Dallas and non-recurrence

                                        20
<PAGE>   22

of the significant items above, offset in part by increases in efforts to
develop and expand our international operations.

     Depreciation and Amortization.  Depreciation and amortization expense
increased from $0.6 million in 1999 to $1.6 million in 2000. This increase
reflects the effect of capital expenditures in 1999 and 2000 for new computer
hardware and software to support the viaLink services.

     Interest Expense, Net.  Interest expense, net, decreased from $4.0 million
in 1999 to $2.4 million in 2000. This decrease reflects the completion of the
amortization of the beneficial conversion feature of the convertible note as
more fully discussed in Note 6 to the financial statements and increases in
interest income on short-term investments. Future interest expense will be
primarily comprised of stated interest on the convertible note at 11.5%
interest, net of interest income earned on cash equivalents and short-term
investments. Interest income on short-term investments was $0.3 million in 1999
and $0.7 million in 2000.

     Gain on Sale of Assets.  Gain on sale of assets decreased from $1.3 million
in 1999 to $0.1 million in 2000. Gain on sale of assets represents income
recognized under the earn-out agreement with NetPlex and during 1999 reflects
the recognition of the deferred gain of $0.5 million upon collection of the note
receivable due to us in connection with the sale of ijob.

     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 not "more likely than not" that all or a portion
will be realized. We have established a full valuation allowance for the net
deferred tax assets as of December 31, 1999 and December 31, 2000, generated by
losses recorded in 1999 and during 2000. We will continue to provide a full
valuation allowance for future and current net deferred tax assets until such
time as we believe we have sufficient objective evidence to support that it is
more likely than not that the asset will be realized.

     Other Comprehensive Income.  Other comprehensive income in 1999 includes an
unrealized gain of $0.3 million, representing the net increase in market value
of the 643,770 shares of NetPlex capital stock received as consideration from
the sale of our consulting and systems integration assets. These securities were
sold in December 1999.

  Comparison of 1999 to 1998

     Revenues.  Our total revenues decreased 93%, from $8.2 million in 1998, to
$0.6 million in 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 our 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 in 1998 to $2.7 million in 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 in 1998, to $2.8 million in 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, $0.5 million non-cash service
costs is included in development expense

                                        21
<PAGE>   23

in 1999 for the amortization of a portion of the fair value of the warrants
issued to Cap Gemini Ernst & Young and i2 Technologies, reflecting the
development efforts provided by these alliance partners.

     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 $0.4 million in 1998 to $2.9
million in 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 $0.9 million 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) $0.5 million of non-cash service costs for the amortization of a portion of
the fair value of the warrants issued to Cap Gemini Ernst & Young and i2
Technologies reflecting the selling and marketing efforts provided by these
alliance partners.

     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 in
1998 to $5.4 million in 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 $0.5 million in 1998 to $0.6 million in 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 $0.2 million
in 1998, to $4.0 million in 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.

     Gain on Sale of Assets.  Gain on sale of assets decreased 62%, from $3.3
million in 1998, to $1.3 million in 1999. On March 11, 1999, DCM Company paid
the note receivable of $0.8 million plus accrued interest in full due to us in
connection with the sale of ijob, and we recognized the deferred gain of $0.5
million during the first quarter of 1999. We also recorded $0.8 million of
income under the earn-out agreement with NetPlex during 1999.

     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
shares of NetPlex common stock for proceeds of $4.9 million. This sale resulted
in a realized gain of $3.9 million recorded in 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

                                        22
<PAGE>   24

our consulting and systems integration assets, the deferred tax asset of $1.0
million was realized and a valuation allowance of $0.2 million 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.

     Other Comprehensive Income.  Other comprehensive income for the fiscal year
ended December 31, 1998 includes an unrealized loss of $0.3 million,
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.

LIQUIDITY AND CAPITAL RESOURCES

     Our principal potential sources of liquidity are cash on hand, cash
generated from operations and cash provided from financing activities. As of
December 31, 2000, we had cash, cash equivalents and short-term investments of
$3.0 million.

     During 2000, we used $26.8 million in operating activities, reflecting a
net loss of $39.1 million. Cash used in operating activities also reflects $7.2
million for non-cash stock compensation and interest expense for the conversion
feature of the Hewlett-Packard note, $2.1 million of depreciation and
amortization, $1.2 million in professional fees paid by issuing common shares,
$0.7 million write-off of deferred offering costs and note receivable and a $1.1
million increase in cash provided by other working capital changes.

     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 $0.9 million increase in cash provided by other working
capital changes.

     During 2000, investing activities provided $4.6 million in net cash. This
amount reflects $8.0 million received upon the maturities of short-term
investments, as partially offset by reinvestment of $1.5 million, investment in
notes receivable of $0.3 million and $1.6 million in capital expenditures and
capitalized software development costs.

     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, proceeds of $0.8
million for payment of the note receivable and accrued interest due to us in
connection with the sale of ijob. Additionally during 1999, we invested $2.3
million in computer hardware, software and various other fixed assets and $0.6
million in software development costs.

     During 2000, financing activities provided net cash of $16.6 million,
primarily the result of the issuance of 1.5 million shares of our common stock.
Additionally, we received $1.0 million in proceeds from the exercise of
outstanding stock options and warrants and purchases under stock purchase plans
and incurred approximately $0.5 million of offering costs, a portion of which
were subsequently written-off.

     During 1999, financing activities provided net cash of $20.2 million,
primarily the result of the investments made by certain of our alliance
partners: a) $6.0 million from Hewlett-Packard; b) $2.0 million from Cap Gemini
Ernst & Young; and c) $5.0 million from i2 Technologies. Additionally, we
received $7.6 million in proceeds from the exercise of our stock options and
warrants, offset in part by approximately $0.4 million of registration costs.

     We have incurred operating losses and negative cash flow in the past and
expect to incur operating losses and negative cash flow until late in 2001. We
expect our spending to increase for the foreseeable future for further
technology and product development and other technology and database costs. We
also

                                        23
<PAGE>   25

expect increases in customer operations expense to outsource implementation
resources which will be incurred after corresponding increases in contracted
implementation revenues.

     On February 7, 2001 we entered into a series of agreements pursuant to
which investors paid us an aggregate of $10,018,250 in consideration for (1)
3,643 shares of our Series A Convertible Participating Preferred Stock
convertible into shares of our common stock at an initial conversion price of
$2.75 per share and (2) Series A Warrants to purchase up to 3,643,000 shares of
our common stock at initial exercise price of $3.75 per share. One of the
investors (1) will also receive a Series B Warrant to purchase up to 666,667
shares of our common stock at an initial exercise price of $3.00 per share and
(2) will, promptly after the effectiveness of the registration statement
covering the resale of the underlying common stock, invest an additional
$1,999,250 in consideration for 727 shares of preferred stock and a Series A
Warrant to purchase up to 727,000 shares of our common stock.

     We believe that we will reach the point of cash flow break-even from
operations late in the fourth quarter of 2001. We estimate that our cash flow
needs, through the point at which we reach cash flow break-even, has been
addressed by our recent closing of additional capital in February of 2001.
However, dependent on market conditions, we may raise additional capital to
further accelerate growth including other vertical or geographic markets. The
use of our cash, cash equivalents and short-term investments would accelerate
and could require us to obtain additional capital if (a) we are unable to
maintain or decrease our projected level of spending, (b) we are unable to
manage our working capital requirements or (c) we experience a lack of revenue
growth due to delayed or less than expected market acceptance of our viaLink
services.

     If we are required to raise additional capital there can be no assurance as
to whether, when or the terms upon which any such capital may be obtained. Any
failure to obtain an adequate and timely amount of additional capital on
commercially reasonable terms could have a material adverse effect on our
business, financial condition and results of operations, including our viability
as an enterprise.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board, issued Statement of
Financial Accounting Standards (SFAS) No. 133. SFAS No. 133, as amended,
establishes new standards of accounting and reporting for derivative instruments
and hedging activities. SFAS No. 133 requires that all derivatives be recognized
at fair value in the balance sheet, and that the corresponding gains or losses
be reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that exists.
SFAS No. 133 will be effective for our fiscal year 2001. We do not expect SFAS
No. 133 to have a material effect on our financial position or results of
operations.


     In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
101), providing the staff's views in applying generally accepted accounting
principles to selected revenue recognition issues. SAB 101 became effective for
the fourth quarter of the year ended December 31, 2000. The cumulative effect of
the adoption of SAB 101 is reported as a change in accounting method as of
January 1, 2000 in our December 31, 2000 financial statements. The adoption of
SAB 101 results in the deferral of a portion of our implementation revenues and
expenses for each customer over the period the subscription-based viaLink
services are provided. Effective January 1, 2000, we recorded a cumulative
effect adjustment increasing deferred revenue and deferred customer operations
expense (included in prepaid expenses) by $107,000 with no change to
stockholders' equity or retained earnings. Adoption of SAB 101 resulted in
increased revenues and customer operations expense of $45,000 for the year ended
December 31, 2000.


ITEM 7. FINANCIAL STATEMENTS

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

                                        24
<PAGE>   26

                                    PART III

ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
       WITH SECTION 16(A) OF THE EXCHANGE ACT

EXECUTIVE OFFICERS AND DIRECTORS

<TABLE>
<CAPTION>
NAME                                   AGE                         POSITION(S)
----                                   ----                        -----------
<S>                                    <C>    <C>
Lewis B. Kilbourne, Ph.D.............   54    Chairman of the Board and Chief Executive Officer
                                              (Class I)
Robert N. Baker......................   49    President and Chief Operating Officer (Class II)
Mark L. Bromberg.....................   50    President of Food Service and Hospitality
Christopher R. Riley.................   39    President of viaLink International, Inc.
Robert I. Noe........................   49    Executive Vice President of Business Development
David M. Lloyd.......................   49    Senior Vice President of Operations
William P. Creasman..................   48    Vice President, Chief Financial Officer, General
                                              Counsel and Secretary
Jack Scott...........................   50    Chief Information Officer
Sue A. Hale..........................   56    Director (Class I)
Warren D. Jones......................   57    Director (Class II)
Jimmy M. Wright......................   47    Director (Class III)
</TABLE>

     Lewis B. "Bucky" Kilbourne, Ph.D.  has served as a member of our board of
directors since December 1997 and was elected as the Chief Executive Officer in
October 1998 and Chairman of the Board in November 1999. Dr. Kilbourne has more
than 20 years of financial experience in the retail, food service and banking
business. From May 1997 until his employment with us, Dr. Kilbourne was a
Professor of Finance and Economics at Oklahoma City University and also served
as President of Kilbourne and Associates, Inc., a management consulting firm
located in Oklahoma City. From January 1994 to May 1997, Dr. Kilbourne served as
Chief Financial Officer of Sonic Corporation, a national restaurant chain based
in Oklahoma City. He has also held executive financial positions with Popeye's,
Church's Fried Chicken, Brock Hotels, Showbiz Pizza and National Convenience
Stores. Dr. Kilbourne has a B.A. in political science and economics from
Louisiana State University and a M.A. and Ph.D., both in economics, from the
University of Pennsylvania.

     Robert N. Baker is one of our co-founders and has served as a director
since our formation in 1985 and was a Vice President until October 1998. Mr.
Baker has served as our President and Chief Operating Officer since October 1998
and is responsible for our technology development and services. Mr. Baker has
over 20 years of experience in management, technical support and systems
development within the retail industry. He received his B.S. in mathematics from
Oklahoma Christian University of Science and Arts.

     Mark L. Bromberg serves as our President of Food Service and Hospitality.
Mr. Bromberg joined us in April 2000. From 1997 to April 2000, Mr. Bromberg
served as President and Chief Executive Officer of Pinnacle Restaurant Group LLC
and from 1989 to 1997 he served as President and Chief Executive Officer of East
Side Mario's Restaurants, Inc. Mr. Bromberg's career spans more than 25 years in
the restaurant and hospitality industries and he has served on the boards of
numerous food service and hospitality industry companies and associations in
both the U.S. and Canada. Mr. Bromberg received his B.S. and M.B.A. from Cornell
University.

     Christopher R. Riley serves as our President of viaLink International, Inc.
Mr. Riley joined us in September 2000. From May 2000 to September 2000, Mr.
Riley served as the Vice President, Strategic Development for Seagram Company
Ltd.'s Asia Pacific Operations. From January 1996 to May 2000, Mr. Riley served
as Managing Director and Chief Executive Officer of Frito Lay Australia, a
division of PepsiCo. Mr. Riley brings more than 16 years of overseas experience
in the consumer packaged goods and food industries. Mr. Riley received his B.S.
from the University of Warwick U.K. and his M.B.A. from Cranfield Institute of
Technology in the U.K.

                                        25
<PAGE>   27

     Robert I. Noe serves as our Executive Vice President of Business
Development and is responsible for marketing, alliances and industry relations.
Mr. Noe joined us in April 1999. Prior to that time, Mr. Noe served as the Vice
President of Industry Solutions and in other management positions at Electronic
Data Systems, a publicly traded professional services company. Mr. Noe received
his B.S. and M.A. in business administration from Central Michigan University.

     David M. Lloyd serves as our Senior Vice President of Operations. Mr. Lloyd
joined us in April 1999 as Vice President of Human Resources. From April 1997 to
April 1999, Mr. Lloyd served as Senior Vice President of Human Resources and
Administration for Fujitsu ICL Retail Systems, Inc. From June 1994 to April
1997, Mr. Lloyd served as Vice President of Human Resources for Station Casinos.
Mr. Lloyd received a B.S. in economics from Upsala College in New Jersey and an
M.B.A. from New York Institute of Technology.

     William P. Creasman became our Vice President, Chief Financial Officer,
General Counsel and Secretary in November 2000. Mr. Creasman joined us in August
2000. From February 1987 to August 2000, Mr. Creasman served as Senior Vice
President, General Counsel and Secretary of TCBY Enterprises, Inc. Mr. Creasman
received his B.A. from The Johns Hopkins University and his J.D. from Wake
Forest University.

     Jack Scott serves as our Chief Information Officer. Mr. Scott joined us in
February 2000. From 1996 to February 2000, Mr. Scott served as Chief Information
Officer and Vice President of Information Services of Unified Western Grocers
Inc. His career spans more than 29 years with manufacturing, retail and the
grocery industry. Mr. Scott graduated from the Honeywell School of Information
Services in Fullerton, California.

     Sue A. Hale has served as a member of our board of directors and as the
chairwoman of the compensation committee and a member of the audit committee of
the board of directors since March 1999. Ms. Hale is currently the Executive
Editor of the Daily Oklahoman, the largest daily paper in Oklahoma. From January
1996 to January 2000, Ms. Hale served as the General Manager of Connect
Oklahoma, a statewide news and information Internet company. Ms. Hale received a
B.A. in English and music from Southwestern College.

     Warren D. Jones has served as a member of our board of directors and the
chairman of the audit committee and a member of the compensation committee of
the board of directors since December 1999. Mr. Jones is currently retired.
Prior to his retirement, Mr. Jones spent 31 years at PricewaterhouseCoopers LLP
where he served as managing partner in New Orleans and Pittsburgh, and most
recently was responsible for risk management and compliance for the firm's
Southwest region technology, telecommunications and entertainment clients. Mr.
Jones received his B.S. in industrial and labor relations from Cornell
University and an M.B.A. from Syracuse University.

     Jimmy M. Wright has served as a member of our board of directors and as a
member of the compensation and audit committees of the board of directors since
February 1998. Mr. Wright is currently the Managing Partner with Diversified
Retail Solutions, L.L.C., a supply chain consulting business, where he has
served since February 1998. From July 1998 to September 1999, Mr. Wright served
as the Chief Logistics Officer of Amazon.com, a publicly-traded Web-based
retailer. In January 1998, Mr. Wright retired as Vice President of Distribution
for Wal-Mart Stores, Inc. During his 13 year tenure at Wal-Mart, he was involved
in all facets of strategic planning, including supply chain management,
personnel, site selection and building design. Mr. Wright received his B.B.A. in
management from The University of Texas, Permian Basin.

                                        26
<PAGE>   28


CLASSIFIED BOARD OF DIRECTORS



     Our board of directors consists of five directors divided into three
classes with each class serving for a term of three years:



     - Class I, comprised of Dr. Kilbourne and Ms. Hale, whose terms will expire
       in 2003;



     - Class II, comprised of Messrs. Jones and Baker, whose terms will expire
       in 2001; and



     - Class III, comprised of Mr. Wright, whose term will expire in 2002.



ITEM 10. EXECUTIVE COMPENSATION



SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION



     The following table provides certain summary information concerning the
compensation earned by our Chief Executive Officer and each of the four other
most highly compensated executive officers whose salary and bonus for 2000 was
in excess of $100,000, for services rendered in all capacities to the company
and our subsidiaries for the fiscal years ended December 31, 1998, 1999 and
2000. During 2000, these officers received additional non-cash compensation,
perquisites and other personal benefits. However, the aggregate amount thereof
did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus
paid to and accrued for the individual during the year.



                           SUMMARY COMPENSATION TABLE



<TABLE>
<CAPTION>
                                                                                LONG-TERM
                                                                               COMPENSATION
                                                                               ------------
                                      ANNUAL COMPENSATION                       SECURITIES
                                  ---------------------------   OTHER ANNUAL    UNDERLYING     ALL OTHER
NAME AND PRINCIPAL POSITION       YEAR    SALARY      BONUS     COMPENSATION   OPTIONS/SARS   COMPENSATION
---------------------------       ----   --------    --------   ------------   ------------   ------------
<S>                               <C>    <C>         <C>        <C>            <C>            <C>
Lewis B. Kilbourne..............  2000   $241,538    $207,000     $242,568(1)         --             --
  Chairman of the Board and       1999    161,731      84,375                    340,000             --
  Chief Executive Officer         1998     20,769(2)       --                    800,000         40,000(3)
Robert N. Baker.................  2000   $211,423    $ 68,000     $123,064(1)         --             --
  President and Chief             1999    180,963      57,047                         --             --
  Operating Officer               1998    120,713          --                    600,000             --
Robert I. Noe...................  2000   $250,000    $ 85,313                         --             --
  Executive Vice President of     1999    168,269(4)   50,395                    700,000             --
  Business Development
David M. Lloyd..................  2000   $209,508    $ 89,040                         --             --
  Senior Vice President           1999    137,077(4)   41,573                    500,000             --
  of Operations
Mark L. Bromberg................  2000   $138,462(5) $ 46,876                    140,000             --
  President of Food Service and
  Hospitality
J. Andrew Kerner................  2000   $221,019(6) $ 59,626                         --             --
  Former Senior Vice President    1999   $164,423(4) $ 62,664                    600,000             --
  of Finance and Chief Financial
  Officer
</TABLE>


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


(1) Dr. Kilbourne and Mr. Baker received $242,568 and $123,064, respectively in
    connection with their relocation from Oklahoma City, Oklahoma to Dallas,
    Texas.



(2) Dr. Kilbourne was hired in October 1998 and was compensated at an annual
    rate of $150,000 for 1998.



(3) Dr. Kilbourne received $30,000 for his services in connection with the sale
    of our consulting and systems integration assets to The NetPlex Group, Inc.
    and $10,000 for his service as a non-employee


                                        27
<PAGE>   29


    member of the board of directors. Both of these amounts were earned prior to
    his employment with us.



(4) Messrs. Noe, Kerner and Lloyd were hired in April 1999 and were compensated
    at annual rates of $250,000, $225,000 and $190,000, respectively for 1999.



(5) Mr. Bromberg was hired in April 2000 and was compensated at an annual rate
    of $225,000.



(6) Mr. Kerner served as our Senior Vice President of Finance and Chief
    Financial Officer until November 2000.



STOCK OPTIONS AND STOCK APPRECIATION RIGHTS



     The following table contains information concerning the stock options
granted to each of our executive officers named in the summary compensation
table during the 2000 fiscal year. All the grants were made under our 1999 Stock
Option/Stock Issuance Plan or predecessor plans. Except for the limited stock
appreciation rights summarized in footnote 3, we did not grant any SARs to any
of our executive officers named in the summary compensation table during the
2000 fiscal year.



                     OPTION/SAR GRANTS IN LAST FISCAL YEAR



<TABLE>
<CAPTION>
                                         INDIVIDUAL GRANTS(1)(2)
                        ---------------------------------------------------------
                         NUMBER OF      % OF TOTAL                                  POTENTIAL REALIZABLE VALUE AT ASSUMED
                         SECURITIES    OPTIONS/SARS                                      ANNUAL RATED OF STOCK PRICE
                         UNDERLYING     GRANTED TO    EXERCISE                         APPRECIATION FOR OPTION TERM(5)
                        OPTIONS/SARS   EMPLOYEES IN   PRICE PER                     --------------------------------------
NAME                     GRANTED(3)      2000(4)        SHARE     EXPIRATION DATE     0%         5%($)          10%($)
----                    ------------   ------------   ---------   ---------------   ------   -------------   -------------
<S>                     <C>            <C>            <C>         <C>               <C>      <C>             <C>
Lewis B. Kilbourne....         --           --              --                --      --              --              --
Robert N. Baker.......         --           --              --                --      --              --              --
Robert I. Noe.........         --           --              --                --      --              --              --
David M. Lloyd........         --           --              --                --      --              --              --
Mark L. Bromberg......    125,000(6)       5.5%       $14.1250      May 17, 2010                      --      $1,110,392
                           15,000(7)       0.7%         3.8125     Dec. 11, 2010                      --          35,965
J. Andrew Kerner(8)...         --           --              --                --                      --              --
</TABLE>


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


(1) Each option represents the right to purchase one share of common stock and
    generally vests at a rate of 33% per annum over three years. If we are
    acquired by merger, consolidation, asset sale or tender or exchange offer,
    the option will accelerate in full, unless (a) the successor assumes the
    option, (b) the option is replaced with a cash incentive program of the
    successor which preserves the option spread or (c) the acceleration of the
    option is restricted by limitations imposed at the time of the grant. In the
    event the option does not otherwise accelerate, the option will accelerate
    in full if the individual's position is involuntarily terminated within
    eighteen (18) months after a merger, consolidation, asset sale or tender or
    exchange offer, and remain exercisable for the one-year following such
    termination or sooner termination of the option. Each option expires on the
    earliest to occur of (a) ten years from the date of grant, (b) three (3)
    months following termination of the individual's employment us, other than
    by death or permanent disability or (c) twelve months following termination
    of the individual's employment with us, death or permanent disability. All
    options were granted at fair market value as determined by the board of
    directors on the date of the grant.



(2) The compensation committee has the authority to cancel outstanding options
    in return for the grant of new options. These new options may be for the
    same or a different number of option shares with an exercise price based
    upon the fair market value of the common stock on the new grant date.



(3) The options include a "limited stock appreciation right" pursuant to which
    the options may, upon successful completion of a hostile tender offer for
    more than 50% of the total combined voting power of our outstanding
    securities or change in the composition of the board of directors through
    contested elections, be surrendered to us in return for a cash payment equal
    to the excess of (a) the then market price of the shares of common stock
    subject to the surrendered option or, if higher, the


                                        28
<PAGE>   30


    highest price paid per share of common stock in the tender offer over (b)
    the exercise price payable for those shares.



(4) The total number of options granted to employees in 2000 was 2,254,000.



(5) Amounts represent hypothetical gains that could be achieved for the
    respective options if exercised at the end of the option term. The 0%, 5%
    and 10% assumed annual rates of compounded stock price appreciation are
    mandated by rules of the Securities and Exchange Commission and do not
    represent our estimate or projection of our future common stock prices.
    These amounts represent assumed rates of appreciation in the value of our
    common stock from the deemed fair market value for accounting purposes on
    the date of grant. Actual gains, if any, on stock option exercises are
    dependent on the future performance of the common stock and overall stock
    market conditions. The amounts reflected in the table may not necessarily be
    achieved.



(6) Options granted on May 17, 2000.



(7) Options granted on December 11, 2000.



(8) Mr. Kerner served as our Senior Vice President of Finance and Chief
    Financial Officer until November 2000.



FISCAL YEAR-END OPTION VALUES



     The following table sets forth information concerning the number and value
of unexercised options held by each of our Named Officers as of December 31,
2000.



                           FISCAL 2000 OPTION VALUES



<TABLE>
<CAPTION>
                                                    NUMBER OF SECURITIES UNDERLYING      VALUE OF UNEXERCISED
                                                        UNEXERCISED OPTIONS AT          IN-THE-MONEY OPTIONS AT
                          SHARES                           DECEMBER 31, 2000             DECEMBER 31, 2000(2)
                        ACQUIRED ON      VALUE      -------------------------------   ---------------------------
NAME                     EXERCISE     REALIZED(1)    EXERCISABLE     UNEXERCISABLE    EXERCISABLE   UNEXERCISABLE
----                    -----------   -----------   -------------   ---------------   -----------   -------------
<S>                     <C>           <C>           <C>             <C>               <C>           <C>
Lewis B. Kilbourne....      --            --           656,668          403,332       $1,068,758      $412,492
Robert N. Baker.......      --            --           400,004          199,996          815,008       407,492
Robert I. Noe.........      --            --           250,000          450,000               --            --
David M. Lloyd........      --            --           183,333          316,667               --            --
Mark L. Bromberg......      --            --                --          140,000               --            --
J. Andrew Kerner......      --            --           166,666               --               --            --
</TABLE>


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


(1) The value realized of shares acquired on exercise was determined by
    subtracting the exercise price of the fair market value of our common stock
    on the exercise date multiplied by the number of shares exercised.



(2) Value is determined by subtracting the exercise price from the fair market
    value of our common stock as of December 29, 2000 of $2.813, based on the
    closing sales price of our common stock as reported on the Nasdaq National
    Market and multiplying by the number of shares underlying the options.



DIRECTOR COMPENSATION AND INDEMNIFICATION AGREEMENTS



     We currently pay our non-employee directors $10,000 annually for their
services as members of the board of directors. We also reimburse our directors
for any out-of-pocket expenses and additional fees incurred in attending
meetings of the board of directors and committees thereof on which such
directors serve. Under our 1999 Stock Option/Stock Issuance Plan, non-employee
directors automatically receive stock option grants to purchase 48,000 shares of
our common stock, provided such non-employee director has served on the board
for at least six months. Employee directors are eligible to receive stock option
grants at the discretion of the compensation committee of the board of
directors.


                                        29
<PAGE>   31


     We did not grant any automatic or discretionary options to our non-employee
directors in 2000. The options that should have been granted to non-employee
directors after our 2000 annual meeting of stockholders were not granted until
January 2001.



     Our certificate of incorporation limits the liability of our directors to
us or our stockholders for breaches of the directors' fiduciary duties to the
fullest extent permitted by Delaware law. In addition, our certificate of
incorporation and bylaws provide for mandatory indemnification of directors and
officers to the fullest extent permitted by Delaware law. We also maintain
directors and officers liability insurance and enter into indemnification
agreements with all of our directors and executive officers.



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION



     None of our officers or employees served as a member of the compensation
committee of the board of directors in the last fiscal year. None of our current
executive officers has served as a member of the board of directors or
compensation committee of any other entity that has or has had one or more
executive officers serving as a member of our board of directors or compensation
committee during the last fiscal year.



EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS



 Dr. Kilbourne and Mr. Baker



     On October 1, 1998, we entered into employment contracts with Lewis B.
Kilbourne and Robert N. Baker. Under the contracts, we will pay an annual base
salary of $150,000 to Dr. Kilbourne and $175,127 to Mr. Baker. Dr. Kilbourne and
Mr. Baker are each also eligible to receive an annual bonus equal to 50% of his
then current annual salary.



     Under these contracts, we granted to each of Dr. Kilbourne and Mr. Baker
incentive stock options for the purchase of 200,000 shares of common stock under
our 1995 Stock Option Plan and non-qualified stock options for the purchase of
400,000 shares of common stock under the 1998 Non-Qualified Stock Option Plan.
Both the incentive stock options and the non-qualified stock options vest and
become exercisable over a three year period. The options granted to Dr.
Kilbourne have an exercise price of $0.75 per share. The incentive stock options
granted to Mr. Baker are exercisable for $0.83 per share and the non-qualified
stock options are exercisable for $0.75 per share. Dr. Kilbourne's incentive
stock options expire on February 28, 2005 and his non-qualified stock options
expire on October 31, 2007. Mr. Baker's incentive stock options expire on
September 29, 2007 and his non-qualified stock options expire on September 30,
2003. In the event the contracts with Dr. Kilbourne and Mr. Baker are terminated
or specific corporate reorganization events occur, any non-exercisable options
will become fully exercisable.



     Each employment contract has a term of three years and is subject to
automatic renewal on a year-to-year basis, unless either party provides
six-months prior written notice of termination. If we terminate the contracts
for any reason, other than for "cause" (as defined in the agreement), or if Dr.
Kilbourne or Mr. Baker terminate their contract for any reason other than an
uncured breach, Dr. Kilbourne or Mr. Baker will be entitled to:



     - the continuation of his then current salary and the benefits provided
       pursuant to the agreement;



     - a one time payment in the amount of the greater of:



          (A) the bonus due, or



          (B) 15% of the salary payable for such quarter; and



     - a lump sum payment of $400,000.



     The compensation committee of the board of directors approved amendments to
Dr. Kilbourne's employment agreement in August 1999, June 2000 and October 2000,
resulting in an increase in Dr. Kilbourne's annual compensation to $310,000 and
an increase to his annual bonus to 100% of his then


                                        30
<PAGE>   32


current annual salary. In addition, in connection with the August 1999
amendment, we granted non-qualified options to purchase 200,000 shares of common
stock under the 1999 plan to Dr. Kilbourne. These options vest and become
exercisable over a three-year period and have a current exercise price of $3.81
per share. All of the options expire on September 3, 2009.



 Messrs. Noe, Kerner and Lloyd



     In April 1999, we entered into employment contracts with Robert I. Noe, J.
Andrew Kerner and David M. Lloyd. Under these contracts, we will pay an annual
base salary of $250,000 to Mr. Noe, $225,000 to Mr. Kerner and $190,000 to Mr.
Lloyd. Messrs. Noe and Kerner are each also eligible to receive an annual bonus
equal to 50% of his then current annual salary, and Mr. Lloyd is also eligible
to receive an annual bonus equal to 33% of his then current annual salary.



     In connection with their employment contracts, we granted non-qualified
stock options to purchase 600,000, 500,000 and 400,000 shares of common stock
under the 1999 plan to Messrs. Noe, Kerner and Lloyd, respectively. The options
vest and become exercisable over a three-period and have a current exercise
price of $3.61. All of the options expire on May 21, 2009.



     Each employment contract has a one year term with automatic renewal on a
year-to-year basis, unless either party provides 30 days prior written notice of
termination. If we terminate the contract for any reason other than for "cause"
(as defined under the applicable agreement), Messrs. Noe, Kerner and Lloyd will
be entitled to a lump sum payment equal to his then current annual salary.



     In March 2000, the compensation committee of the board of directors
approved an amendment to each of these employment contracts to extend the
initial term until May 25, 2001.



     Mr. Kerner resigned effective November 2000.



 Mr. Bromberg



     In April 2000, we entered into an employment agreement with Mark L.
Bromberg. Under this contract, we will pay Mr. Bromberg an annual salary of
$225,000. Mr. Bromberg is also eligible to receive an annual performance bonus
of $75,000 paid in quarterly installments if he satisfies certain criteria
established by our Chief Executive Officer. The agreement guaranteed the payment
of a $18,750 bonus to Mr. Bromberg for the fiscal quarter ending June 30, 2000.



     In connection with his employment agreement, we granted non-qualified stock
options to purchase 125,000 shares of common stock under the 1999 plan to Mr.
Bromberg. The options vest and become exercisable over a three-year period and
have a current exercise price of $14.125. All of the options expire on May 17,
2010.



     The employment agreement is at will. However, if we terminate Mr. Bromberg
without cause, Mr. Bromberg will be entitled to severance equal to six month
salary, payable in twelve monthly installments.


ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


     The following table sets forth certain information known to us with respect
to the beneficial ownership of our common stock as of April 27, 2001, by:



     - each person known by us who are beneficial owners of five percent (5%) or
       more of our common stock;



     - each current director and nominee for director;



     - each executive officer named in the summary compensation table set forth
       in Item 10 of this Form 10-KSB; and



     - all current directors and executive officers as a group.


                                        31
<PAGE>   33


     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power with
respect to the securities. Unless otherwise indicated, each of the stockholders
has sole voting and investment power with respect to the shares beneficially
owned by them, subject to community property laws, where applicable. Shares of
common stock subject to stock options, warrants or convertible preferred stock
which are currently exercisable or convertible or will become exercisable or
convertible within 60 days after April 27, 2001 are treated as outstanding and
beneficially owned with respect to the person holding these options, warrants or
convertible preferred stock for the purpose of computing the percentage
ownership of that person. However, these shares are not treated as outstanding
for purposes of computing the percentage of any other person. The percentage of
beneficial ownership is based on 25,127,170 shares of common stock outstanding
on April 27, 2001.



<TABLE>
<CAPTION>
                                                                               PERCENTAGE
                                                                  SHARES       OF SHARES
                                                               BENEFICIALLY   BENEFICIALLY
BENEFICIAL OWNER (1)                                              OWNED          OWNED
--------------------                                           ------------   ------------
<S>                                                            <C>            <C>
Executive Officers and Directors
  Lewis B. Kilbourne(2).....................................      710,668          2.8%
  Robert N. Baker(3)........................................    2,707,620         10.5
  Robert I. Noe(4)..........................................      464,000          1.8
  Mark L. Bromberg(5).......................................       77,666            *
  J. Andrew Kerner (6)......................................            0            0
  David M. Lloyd(7).........................................      352,666          1.4
  Sue A. Hale(8)............................................       88,000            *
  Warren D. Jones(9)........................................       54,000            *
  Jimmy M. Wright(10).......................................      246,000          1.0
  All executive officers and directors as a group (11
     persons)(11)...........................................    4,867,680         17.4
Other 5% Stockholders:
  Hewlett-Packard Company(12)...............................    5,750,832         20.0
  Cap Gemini Ernst & Young U.S. LLC(13).....................    1,123,553          4.5
  i2 Technologies, Inc.(14).................................    1,718,626          6.6
  RGC International Investors, LDC(15)......................      333,333          1.3
</TABLE>


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


  *  Less than one percent of the outstanding common stock



 (1) Unless otherwise indicated, the address for all officers, directors and
     stockholders is 13155 Noel Road, Suite 800, Dallas, Texas 75240.



 (2) Includes 656,668 shares of common stock underlying options, 27,000 shares
     of common underlying Series A Convertible Participating Preferred Stock and
     27,000 shares of common stock underlying Series A Warrants.



 (3) Includes 400,004 shares of common stock underlying options, 163,000 shares
     of common stock underlying Series A Convertible Participating Preferred
     Stock and 163,000 shares of common stock underlying Series A Warrants.



 (4) Includes 450,000 shares of common stock underlying options, 7,000 shares of
     common underlying Series A Convertible Participating Preferred Stock and
     7,000 shares of common stock underlying Series A Warrants.



 (5) Includes 41,666 shares of common stock underlying options, 18,000 shares of
     common stock underlying Series A Convertible Participating Preferred Stock
     and 18,000 shares of common stock underlying Series A Warrants.



 (6) Mr. Kerner served as our Senior Vice President of Finance and Chief
     Financial Officer until November 2000. Mr. Kerner's address is 2924
     Stanford, Dallas, Texas 75225.


                                        32
<PAGE>   34


 (7) Includes 316,666 shares of common stock underlying options, 18,000 shares
     of common underlying Series A Convertible Participating Preferred Stock and
     18,000 shares of common stock underlying Series A Warrants



 (8) Includes 88,000 shares of common stock underlying options.



 (9) Includes 16,000 shares of common stock beneficially owned by Mr. Jones'
     spouse, Kathleen Jones, and 50,000 shares of common stock underlying
     options.



(10) Includes 246,000 shares of common stock underlying options.



(11) See notes 2-10 above.



(12) Includes 2,175,893 shares of common stock issuable upon conversion of a
     subordinated secured convertible promissory note convertible and 1,399,046
     shares of common stock underlying warrants. Hewlett-Packard's address is
     3000 Hanover Street, Palo Alto, California 93404.



(13) Cap Gemini's address is 750 Seventh Avenue, New York, New York, 10019.



(14) Includes 897,779 shares of common stock underlying warrants. i2's address
     is 11701 Luna Road, Dallas, Texas 75234.



(15) RGC's address is 251 St. Asaphs Road, Bala Cynwyd, Pennsylvania 19004.
     According to a Schedule 13G filed with the Securities and Exchange
     Commission on January 8, 2001, RGC International Investors, LDC on its
     behalf and on behalf of Rose Glen Capital Management, L.P. and RGC General
     Partner Corp. has reported that it has shared voting power and shared
     dispositive power over all of these shares of common stock.


ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


PAYMENTS AND OPTION GRANTS TO OFFICERS



     For a description of payments and option grants to executive officers, see
the information set forth in Item 10 of this Form 10-KSB.



TRANSACTIONS WITH CERTAIN EXECUTIVE OFFICERS



     In connection with, and as a condition to, a private placement, on February
7, 2001, we entered into a Subscription Agreement with Lewis B. Kilbourne,
Robert N. Baker, Mark L. Bromberg, Christopher R. Riley, Robert I. Noe, David M.
Lloyd, William P. Creasman and Jack Scott whereby these executive officers
agreed to pay us an aggregate of $761,750 in consideration for 277 shares of
Series A Convertible Participating Preferred Stock and Series A Warrants to
purchase 277,000 shares of our common stock. The investment by these officers
was contingent upon approval by our stockholders of the issuance as required by
NASD Rule 4350. The officers deposited the $761,750 into an escrow account
pending our receipt of this approval. We received the requisite stockholder
approval on March 30, 2001. Immediately thereafter, the $761,750 held in escrow
was released from escrow into our account. Upon our receipt of the escrowed
funds, we issued these officers an aggregate of 277 shares of Series A
Convertible Participating Preferred Stock and Series A Warrants to purchase
277,000 shares of our common stock.



TRANSACTIONS WITH HEWLETT-PACKARD



     On February 4, 1999, we entered into a Note Purchase Agreement with
Hewlett-Packard pursuant to which Hewlett-Packard purchased from us a $6.0
million Secured Subordinated Promissory Note. Upon approval by our stockholders
in May 1999, the note was exchanged for a Subordinated Secured Convertible
Promissory Note, convertible into common stock at a price of $1.75 per share.
This note is secured by our current intellectual property and intellectual
property it may acquire in the future. In connection with, and as a condition
to, a private placement, in April 2001, we converted approximately $3.8 million
of the note into 2,175,893 shares of our common stock based on a conversion
price of $1.75. We agreed to restructure the remaining, unconverted balance of
the note so that our interest rate would decrease from 11.5% to 6.0% on the
remaining principal. However, as a result of the restructuring, we may


                                        33
<PAGE>   35


not prepay the note and beginning January 1, 2002, our monthly payments will be
based on both the outstanding principal and interest of the note.



     In connection with the note conversion referred to above, we agreed to
issue a warrant to Hewlett-Packard to purchase up to 1,384,658 shares of our
common stock at an initial exercise price of $3.75 per share. The exercise price
is subject to antidilution provisions for stock splits, stock dividends,
combinations or reclassifications of our common stock.



     As a condition to the note conversion, Hewlett-Packard agreed not to sell
any shares it received as a result of the note conversion for a period of six
months commencing on February 1, 2001. The lock-up period also applies to shares
of common stock Hewlett-Packard receives if it exercises the warrant described
above during the lock-up period. In addition, Hewlett-Packard has a right to
have an advisor present at our board meetings.



     On March 22, 2000, as part of a private placement, we issued 66,801 shares
of our common stock and a warrant to purchase an additional 14,388 shares of our
common stock at an exercise price of $29.19 per share to Hewlett-Packard in
exchange for $2.0 million.



TRANSACTIONS WITH CAP, GEMINI, ERNST & YOUNG



     On May 3, 1999, we entered into a strategic relationship with Cap, Gemini,
Ernst & Young U.S. LLC whereby Cap, Gemini will provide us with its consulting
services in connection with our syncLink and other services. In connection with
this agreement, we agreed to pay Cap, Gemini a royalty for a period of two years
beginning on the date of agreement. This royalty will be equal to 7% of our
revenues from its subscription services which it provides to suppliers and
retailers of food and consumer packaged goods. If at least ten of Cap, Gemini's
"Tier 1" clients in the CPG and grocery industries subscribe to our services
during the initial two-year term, we will be required to continue the royalty
payments in perpetuity. Cap, Gemini will not receive any royalties for services
we provide to clients for which Cap, Gemini serves as the principal independent
auditor, nor will the clients subject to the reporting requirements of the
federal securities laws for which Cap, Gemini serves as the principal
independent auditor be counted as one of Cap, Gemini's "Tier 1" clients that it
brings to us.



     As a part of this agreement, we issued a warrant to Cap, Gemini pursuant to
which it purchased 1,000,000 shares of our common stock at a price of $2.00 per
share.



     In addition to the above, Cap, Gemini agreed to provide professional
services to us to further the implementation of our services. We may pay for
Cap, Gemini's services either in cash or in shares of our common stock. If we
pay with common stock, we will receive a substantial discount from the standard
rates Cap, Gemini charges for such services. The common stock will be valued at
85% of the average closing bid prices for the five trading days prior to the
date the invoice for these services is rendered to us by Cap, Gemini. However,
if Cap, Gemini is the beneficial owner of more than 9.99% of the voting power of
our common stock on a fully-diluted basis, we will not have the option to pay
for such services with common stock.



TRANSACTIONS WITH i2 TECHNOLOGIES



     On October 12, 1999, we entered into a strategic relationship with i2
Technologies, Inc. primarily to integrate the products and services of the two
companies, extend the solutions across multiple industries and develop joint
sales and marketing programs. As a part of this relationship, i2 Technologies
invested $5.0 million in us in exchange for 895,536 shares of our common stock
and a warrant to purchase an additional 883,391 shares of our common stock at an
exercise price of $5.66 per share. Additionally, we agreed to pay i2
Technologies a royalty of 5% of the syncLink and Chain Pricing subscription
revenues during the term of the agreement. We also agreed to pay i2 additional
royalties based upon subscription revenues received from new customers with whom
i2 Technologies had "significant involvement" in the sales process. i2
Technologies agreed to pay us a royalty based upon revenues i2 received from
providing the syncLink and Chain Pricing services outside of the CPG and grocery
industries. The initial term of the


                                        34
<PAGE>   36


agreement was to expire on December 31, 2003 and automatically renew on a
year-to-year basis thereafter unless terminated by either party. Effective
January 29, 2001, we terminated the agreement with i2.



     On March 22, 2000, as part of a private placement, we issued 66,801 shares
of our common stock and a warrant to purchase an additional 14,388 shares of our
common stock at an exercise price of $29.19 per share to i2 Technologies in
exchange for $2.0 million.



INDEMNIFICATION



     In addition to the indemnification provisions contained in our bylaws, we
have entered into separate indemnification agreements with each of our directors
and officers. These agreements require us, among other things, to indemnify such
director or officer against expenses (including attorneys' fees), judgments,
fines and settlements paid by such individual in connection with any action,
suit or proceeding arising out of such individual's status or service as a
director or officer of the company (other than liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest)
and to advance expenses incurred by such individual in connection with any
proceeding against such individual with respect to which such individual may be
entitled to indemnification by us.



     All future transactions between us and our officers, directors, principal
stockholders and affiliates will be approved by a majority of the independent
and disinterested members of the board of directors, and will be on terms no
less favorable to us than could be obtained from unaffiliated third parties.


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.

             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(1)           Asset Purchase Agreement dated June 12, 1997 by and among
                         ijob, Inc., Human Technologies, Inc., David C. Mitchell and
                         Ron Beasley
        2.2(2)           Asset Acquisition Agreement dated August 31, 1998 by and
                         between the Registrant and The NetPlex Group, Inc.
        2.2(2)           First Amendment to Asset Acquisition Agreement dated
                         September 9, 1998 by and between Registrant and The NetPlex
                         Group, Inc.
        2.3(3)           Stock Purchase Agreement dated December 31, 1998 by and
                         among Registrant, DCM Company, Inc., David C. Mitchell and
                         ijob, Inc.
        3.1(4)           Form of Certificate of Incorporation
        3.2(5)           Form of Certificate of Amendment to Certificate of
                         Incorporation
        3.3(6)           Amended and Restated Bylaws
        3.4(6)           Bylaw Amendment
        4.1(7)           Form of Certificate of Common Stock
</TABLE>

                                        35
<PAGE>   37

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
        4.2(8)           Form of Series A Convertible Participating Preferred Stock
                         Certificate.
        4.3(8)           Designations, Preferences and Rights of Series A Convertible
                         Participating Preferred Stock of The viaLink Company
        4.4              See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the
                         Registrant's Certificate of Incorporation and Bylaws
                         defining rights of holders of common stock of the Registrant
        4.5(9)           Form of Underwriter's Warrant Agreement by and between
                         Barron Chase Securities Inc. and the Registrant
        4.6(10)          Shareholder Agreement dated as of February 4, 1999 by and
                         between Registrant and Hewlett-Packard Company
        4.7(3)           Stock Option Agreement dated as of December 18, 1998 by and
                         between Registrant and Brian Herman
        4.8(11)          Registration Rights Agreement dated May 3, 1999 by and
                         between the Registrant and Cap Gemini Ernst & Young LLP
        4.9(12)          Common Stock Purchase Warrant dated October 12, 1999, issued
                         by the Registrant to i2 Technologies, Inc.
        4.9(12)          Registration Rights Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
        4.10(13)         Common Stock Purchase Warrant dated March 24, 2000, by the
                         Registrant in favor of Hewlett-Packard Company
        4.11(13)         Common Stock Purchase Warrant dated March 24, 2000, by the
                         Registrant in favor of i2 Technologies, Inc.
        4.12(13)         Amendment No. 1 to Registration Rights Agreement dated as
                         March 22, 2000, by and among the Registrant and
                         Hewlett-Packard Company
        4.13(13)         Amendment No. 1 to Registration Rights Agreement dated as
                         March 22, 2000, by and among the Registrant and i2
                         Technologies, Inc.
        4.14(13)         Registration Rights Agreement dated as of March 22, 2000, by
                         and between the Registrant and Millennium Partners, L.P.
        4.15(14)         Common Stock Purchase Warrant dated March 24, 2000 by the
                         Registrant in favor of AGE Investments, Inc.
        4.15(14)         Registration Rights Agreement dated as of April   , 2000 by
                         and between the Registrant and AGE Investments, Inc.
        4.16(15)         Common Stock Warrant dated May 31, 2000, by the Registrant
                         in favor of RGC International Investors, LDC
        4.17(15)         Common Stock Purchase Warrant dated May 31, 2000 by the
                         Registrant in favor of AGE Investments, Inc.
        4.18(15)         Registration Rights Agreement dated as of May 31, 2000 by
                         and between the Registrant and RGC International Investors,
                         LDC
        4.19(15)         Amendment No. 1 to Registration Rights Agreement dated as
                         May 31, 2000, by and among the Registrant and AGE
                         Investments, Inc.
        4.20(16)         Registration Rights Agreement dated as of December 29, 2000
                         by and between The viaLink Company and RGC International
                         Investors, LDC.
        4.21(17)         Form of Series A Warrant
        4.22(17)         Series B Warrant dated February 7, 2001 by The viaLink
                         Company in favor of Velocity Investment Partners Ltd.
</TABLE>

                                        36
<PAGE>   38


<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
        4.23(17)         Form of Registration Rights Agreement by and among The
                         viaLink Company and certain investors
       10.1(10)          Note Purchase Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.2(12)          Securities Purchase Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
       10.3(4)           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(12)          Security Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.5(2)           Earn-out Agreement dated September 30, 1998 by and between
                         the Registrant and The NetPlex Group, Inc.
       10.6(18)          Software Remarketing and Reselling Agreement effective as of
                         September 1, 1998 by and between the Registrant and The
                         NetPlex Group, Inc.
       10.7(3)           Form of Indemnification Agreement dated February 9, 1998 by
                         and between the Registrant and the Registrant's executive
                         officers
       10.8(3)           Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Lewis B. Kilbourne
       10.9(3)           Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Robert N. Baker
       10.10(4)          The viaLink Company 1999 Stock Option/Stock Issuance Plan
       10.11(9)          1999 Stock Option/Stock Issuance Plan Form of Stock Option
                         Agreement
       10.12(9)          1999 Stock Option/Stock Issuance Plan Form of Stock Issuance
                         Agreement
       10.13(9)          1999 Stock Option/Stock Issuance Plan Form of Automatic
                         Stock Option Agreement
       10.14(4)          The viaLink Company 1999 Employee Stock Purchase Plan
       10.15(11)         Amended and Restated Alliance Agreement dated as of May 3,
                         1999 by and between the Registrant and Cap Gemini Ernst &
                         Young LLP
       10.16(11)         Master Services Agreement dated May 3, 1999 by and between
                         the Registrant and Cap Gemini Ernst & Young LLP
       10.17(3)          Office Building Sublease effective as of December 16, 1999,
                         between Kerr-McGee Corporation and the Registrant
       10.18(3)          Employment Agreement made as of April 9, 1999, by and
                         between the Registrant and David M. Lloyd
       10.19(3)          Employment Agreement made as of April 8, 1999, by and
                         between the Registrant and Robert I. Noe Registrant and
                         Robert I. Noe
       10.20(13)         Securities Purchase Agreement dated as of March 22, 2000, by
                         and among the Registrant and the Purchasers listed on
                         Schedule I thereto
       10.21(14)         Addendum to Employment Agreement effective as of March 10,
                         2000 by and between the Registrant and David M. Lloyd
       10.22(14)         Addendum to Employment Agreement effective as of March 14,
                         2000 by and between the Registrant and Robert I. Noe
       10.23(15)         Securities Purchase Agreement dated as of May 31, 2000 by
                         and between the Registrant and RGC International Investors,
                         LDC.
       10.24(5)          Amendment No. 1 to The viaLink Company 1999 Stock
                         Option/Stock Issuance Plan
</TABLE>


                                        37
<PAGE>   39

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
       10.25(15)         Employment Agreement effective April 21, 2000 by and between
                         the Registrant and Mark L. Bromberg
       10.26(17)         Securities Purchase Agreement dated as of February 2, 2001,
                         by and between The viaLink Company and Velocity Investment
                         Partners Ltd.
       10.27(17)         Form of Securities Purchase Agreement by and among The
                         viaLink Company and certain investors
       10.28(19)         Employment Agreement effective September 25, 2000 by and
                         between the Registrant and Jack Scott
       10.29(19)         Employment Agreement effective as September 4, 2000 by and
                         between the Registrant and Christopher R. Riley
       10.30(19)         Employment Agreement effective as of August 29, 2000 by and
                         between the Registrant and William P. Creasman
       10.31(19)         First Amendment to Employment Agreement dated as of August
                         27, 1999 by and between the Registrant and Lewis B.
                         Kilbourne
       10.32(19)         Addendum to Employment Agreement effective as of June 5,
                         2000 between the Registrant and Lewis B. Kilbourne
       10.33(19)         Addendum to Employment Agreement effective as of October 1,
                         2000 between the Registrant and Lewis B. Kilbourne
       10.34             Service Level Agreement for Operations Services prepared by
                         Hewlett-Packard Company for the Registrant dated June 3,
                         1999
       10.35             Addendum to Service Level Agreement for Operations Services
                         dated September 15, 2000
       21(19)            Subsidiaries of Registrant
       23.1              Consent of KPMG LLP
       23.2              Consent of PricewaterhouseCoopers LLP
</TABLE>

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

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

 (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 Annual Report on Form
     10-KSB for the year ending December 31, 1999.

 (4) Incorporated herein by reference to the Registrant's Definitive Proxy
     Statement on Schedule 14A filed April 19, 1999.

 (5) Incorporated herein by reference to the Registrant's Definitive Proxy
     Statement on Schedule 14A filed April 24, 2000.

 (6) Incorporated herein by reference to the Registrant's Quarterly Report on
     Form 10-QSB for the quarter ending September 30, 2000.

 (7) Incorporated herein by reference to the Registrant's Registration Statement
     on Form 8-A/A Amendment No. 2 filed under Section 12(g) of the Exchange Act
     filed on June 21. 2000.

 (8) Incorporated herein by reference to the Registrant's Current Report of Form
     8-K dated February 7, 2001.

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

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

                                        38
<PAGE>   40

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

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

(13) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated March 22, 2000.

(14) Incorporated herein by reference to the Registrant's Quarterly Report on
     Form 10-QSB for the quarter ended March 31, 2000.

(15) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated May 31, 2000.

(16) Incorporated herein by reference to the Registrant's Current Report on Form
     8-K dated December 29, 2000.

(17) Incorporated herein by reference to the Registrant's Current Report of Form
     8-K dated February 7, 2001.

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

(19) Previously filed with the Registrant's Annual Report on Form 10-KSB for the
     year ended December 31, 2000.

          4. Reports on Form 8-K.

             None.

                                        39
<PAGE>   41

                                   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 30th day of April, 2001.


                                            THE VIALINK COMPANY
                                            (Registrant)


                                            By:   /s/ LEWIS B. KILBOURNE

                                              ----------------------------------
                                                      Lewis B. Kilbourne
                                                   Chief Executive Officer


                                            By:     /s/ BRIAN M. CARTER

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

                                                       Brian M. Carter


                                                  Vice President of Finance


                                               and Principal Accounting Officer


                                        40
<PAGE>   42

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                            <C>
CONSOLIDATED FINANCIAL STATEMENTS OF THE VIALINK COMPANY
  Independent Auditors' Reports.............................   F-2
  The viaLink Company Consolidated Balance Sheets as of
     December 31, 1999 and 2000.............................   F-4
  The viaLink Company Consolidated Statements of Operations
     and Comprehensive Income (Loss) for the Years Ended
     December 31, 1998, 1999 and 2000.......................   F-5
  The viaLink Company Consolidated Statements of
     Stockholders' Equity (Deficit) for the Years Ended
     December 31, 1998, 1999 and 2000.......................   F-6
  The viaLink Company Consolidated Statements of Cash Flows
     for the Years Ended December 31, 1998, 1999 and 2000...   F-7
  The viaLink Company Notes to Consolidated Financial
     Statements.............................................   F-8
</TABLE>

                                       F-1
<PAGE>   43

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
The viaLink Company:

     We have audited the accompanying consolidated balance sheets of The viaLink
Company and its subsidiary as of December 31, 1999 and 2000, and the related
consolidated statements of operations and comprehensive income (loss),
stockholders' equity (deficit) and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The viaLink Company and its subsidiary as of December 31, 1999 and 2000, and the
results of their operations and their cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.

                                            KPMG LLP

Dallas, Texas
February 8, 2001

                                       F-2
<PAGE>   44

                        INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors
The viaLink Company

     In our opinion, the accompanying consolidated statements of operations and
comprehensive income (loss), of stockholders' equity and of cash flows present
fairly, in all material respects, the results of operations and cash flows of
The viaLink Company for the year ended December 31, 1998, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides 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 1998 share and
per share data, which is as of March 14, 2000.

                                       F-3
<PAGE>   45

                              THE VIALINK COMPANY

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 2000

                                     ASSETS

<TABLE>
<CAPTION>
                                                                  1999           2000
                                                              ------------   ------------
<S>                                                           <C>            <C>
Current assets:
  Cash and cash equivalents.................................  $  8,616,305   $  2,980,600
  Short-term investments, held to maturity..................     6,479,443             --
  Accounts receivable -- trade, net of allowance for
     doubtful accounts of $41,000 in 1999 and $158,000 in
     2000...................................................       122,796        514,663
  Other receivables.........................................       472,599         60,113
  Prepaid expenses..........................................       395,513        651,727
                                                              ------------   ------------
          Total current assets..............................    16,086,656      4,207,103
Furniture, equipment and leasehold improvements, net........     2,473,281      2,568,909
Software development costs, net.............................     1,523,588      1,615,191
Deferred service fees.......................................     3,046,302      1,042,866
Other assets................................................       108,762         98,352
                                                              ------------   ------------
          Total assets......................................  $ 23,238,589   $  9,532,421
                                                              ============   ============

                     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable and accrued liabilities..................  $  2,236,521   $  3,253,708
  Deferred revenues.........................................            --        122,640
  Current portion of capital lease obligations..............            --         63,603
                                                              ------------   ------------
          Total current liabilities.........................     2,236,521      3,439,951
Long-term liabilities:
  Long-term debt............................................     4,230,720      7,313,836
  Capital lease obligations, less current portion...........            --         70,560
                                                              ------------   ------------
          Total long-term liabilities.......................     4,230,720      7,384,396
          Total liabilities.................................     6,467,241     10,824,347
Commitments and contingencies(Notes 7 and 11)
Stockholders' equity (deficit):
  Common stock, $.001 par value; 150,000,000 shares
     authorized; 9,784,822 and 22,779,566 shares issued and
     outstanding at December 31, 1999 and 2000,
     respectively...........................................         9,785         22,780
  Additional paid-in capital................................    31,750,749     51,902,400
  Unearned stock compensation...............................    (1,389,079)      (487,895)
  Accumulated deficit.......................................   (13,600,107)   (52,729,211)
                                                              ------------   ------------
          Total stockholders' equity (deficit)..............    16,771,348     (1,291,926)
                                                              ------------   ------------
          Total liabilities and stockholders' equity
            (deficit).......................................  $ 23,238,589   $  9,532,421
                                                              ============   ============
</TABLE>

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

                                       F-4
<PAGE>   46

                              THE VIALINK COMPANY

     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

<TABLE>
<CAPTION>
                                                         1998           1999           2000
                                                      -----------   ------------   ------------
<S>                                                   <C>           <C>            <C>
Revenues............................................  $ 8,230,628   $    615,519   $  1,621,437
Operating expenses:
  Direct cost of sales..............................    1,563,757             --             --
  Customer operations...............................    3,759,626      2,655,113      7,308,645
  Development.......................................    1,205,743      2,803,247      6,281,645
  Selling and marketing.............................      435,978      2,919,857      9,729,799
  General and administrative........................    2,285,955      5,430,466     13,604,905
  Depreciation and amortization.....................      458,259        594,373      1,570,057
                                                      -----------   ------------   ------------
          Total operating expenses..................    9,709,318     14,403,056     38,495,051
                                                      -----------   ------------   ------------
Loss from operations................................   (1,478,690)   (13,787,537)   (36,873,614)
Interest expense, net...............................     (161,355)    (3,983,785)    (2,379,909)
Gain on sale of assets..............................    3,339,123      1,262,921        124,419
Realized gain on sale of marketable securities......           --      3,872,438             --
                                                      -----------   ------------   ------------
Income (loss) before income taxes...................    1,699,078    (12,635,963)   (39,129,104)
Provision for income taxes..........................    1,049,440             --             --
                                                      -----------   ------------   ------------
Net income (loss)...................................      649,638    (12,635,963)   (39,129,104)
Other comprehensive income (loss):
  Unrealized income (loss) on marketable securities,
     net of tax.....................................     (315,673)       315,673             --
                                                      -----------   ------------   ------------
Comprehensive income (loss).........................  $   333,965   $(12,320,290)  $(39,129,104)
                                                      ===========   ============   ============
Net income (loss) per common share --
  -- Basic..........................................  $      0.06   $      (0.96)  $      (1.89)
                                                      ===========   ============   ============
  -- Diluted........................................  $      0.05   $      (0.96)  $      (1.89)
                                                      ===========   ============   ============
Weighted average common shares outstanding --
  -- Basic..........................................   10,964,164     13,114,028     20,732,411
                                                      ===========   ============   ============
  -- Diluted........................................   12,409,772     13,114,028     20,732,411
                                                      ===========   ============   ============
</TABLE>

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

                                       F-5
<PAGE>   47

                              THE VIALINK COMPANY

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

<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, 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
  Proceeds from exercise of
    common stock warrants, Cap
    Gemini 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)                                                          --
  Unrealized gain on securities,
    net of reclassification
    adjustment..................                                                          315,673                         315,673
  Net loss......................                                                                       (12,635,963)   (12,635,963)
                                  ----------   -------   -----------   -----------      ---------     ------------   ------------
Balance, December 31, 1999......   9,784,822    9,785     31,750,749    (1,389,079)            --      (13,600,107)    16,771,348
  Exercise of stock options and
    warrants....................   1,471,737    1,472        812,646                                                      814,118
  Stock issued under employee
    stock purchase plan.........      42,561       43        196,609                                                      196,652
  Issuance of stock options to
    service providers...........                             424,541                                                      424,541
  Issuance of stock options to
    employees...................                             997,500      (997,500)                                            --
  Amortization of unearned stock
    compensation................                                         1,898,684                                      1,898,684
  Proceeds from issuance of
    common stock, net...........   1,494,351    1,494     16,066,306                                                   16,067,800
  Issuance of common stock for
    services....................      80,817       81      1,663,954                                                    1,664,035
  Two-for-one stock split, March
    2000 (Note 8)...............   9,905,278    9,905         (9,905)                                                          --
  Net loss......................                                                                       (39,129,104)   (39,129,104)
                                  ----------   -------   -----------   -----------      ---------     ------------   ------------
Balance, December 31, 2000......  22,779,566   $22,780   $51,902,400   $  (487,895)     $      --     $(52,729,211)  $ (1,291,926)
                                  ==========   =======   ===========   ===========      =========     ============   ============
</TABLE>

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

                                       F-6
<PAGE>   48

                              THE VIALINK COMPANY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                 1998           1999           2000
                                                              -----------   ------------   ------------
<S>                                                           <C>           <C>            <C>
Cash flows from operating activities:
  Net income (loss).........................................  $   649,638   $(12,635,963)  $(39,129,104)
  Adjustments to reconcile net income (loss) to net cash
    used in operating activities:
    Depreciation and amortization...........................      925,134      1,015,609      2,068,341
    Deferred income tax provision...........................    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      1,898,684
    Non-cash service costs for warrant and options issued to
      service providers.....................................           --        960,166      2,243,602
    Loss on disposal of fixed assets........................       12,694             --             --
    Non-cash interest expense on convertible debt...........           --      4,230,720      3,083,116
    Professional fees paid with common shares...............           --        549,660      1,185,883
    Write-off of deferred offering costs and notes
      receivable............................................           --             --        671,248
    Increase (decrease) in cash for changes in:
      Accounts receivable, net..............................    1,054,162         35,321       (391,867)
      Other receivables.....................................     (540,885)       113,179        412,486
      Prepaid expenses and other assets.....................       32,407       (448,995)      (195,804)
      Accounts payable and accrued liabilities..............     (397,899)     1,170,248      1,201,562
      Deferred revenue......................................     (236,134)            --        122,640
                                                              -----------   ------------   ------------
         Net cash used in operating activities..............     (449,896)    (8,547,878)   (26,829,213)
                                                              -----------   ------------   ------------
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......................................      (41,785)    (2,345,157)    (1,053,369)
  Collection on note receivable from sale of ijob...........           --        800,000             --
  Purchase of short-term investments........................           --     (9,099,443)    (1,524,698)
  Investment in note receivable.............................           --             --       (265,000)
  Proceeds upon maturity of short-term investments..........           --      2,620,000      8,004,141
  Capitalized expenditures for software development.........     (617,180)      (607,181)      (589,888)
                                                              -----------   ------------   ------------
         Net cash provided by (used in) investing
           activities.......................................    1,948,766     (3,759,343)     4,571,186
                                                              -----------   ------------   ------------
Cash flows from financing activities:
  Decrease in bank overdraft................................      (23,619)            --             --
  Proceeds from convertible debt............................           --      6,000,000             --
  Proceeds from exercise of stock option and purchase
    plans...................................................      264,678      1,995,777      1,010,770
  Proceeds from exercise of common stock purchase warrants,
    net of registration costs...............................           --      7,256,497     16,067,800
  Proceeds from issuance of common stock to i2
    Technologies, Inc. .....................................           --      5,000,000             --
  Payments of deferred offering costs.......................           --             --       (456,248)
  Payments of capital lease obligations.....................     (132,422)       (44,194)            --
  Proceeds from long-term debt..............................    3,522,639             --             --
  Payment of stockholder notes..............................     (482,830)            --             --
  Payments of long-term debt................................   (4,012,639)            --             --
                                                              -----------   ------------   ------------
         Net cash provided by (used in) financing
           activities.......................................     (864,193)    20,208,080     16,622,322
                                                              -----------   ------------   ------------
Net increase (decrease) in cash and cash equivalents........      634,677      7,900,859     (5,635,705)
Cash and cash equivalents, beginning of year................       80,769        715,446      8,616,305
                                                              -----------   ------------   ------------
Cash and cash equivalents, end of year......................  $   715,446   $  8,616,305   $  2,980,600
                                                              ===========   ============   ============
Supplemental disclosures of cash flow information:
  Cash paid for interest....................................  $   220,553   $         --   $         --
                                                              ===========   ============   ============
  Cash paid for income taxes, net of refunds................  $    26,454   $         --   $         --
                                                              ===========   ============   ============
Supplemental schedule of non-cash investing and financing
  activities:
  Issuance of stock purchase warrants for future services...  $        --   $  4,006,468   $         --
                                                              ===========   ============   ============
  Issuance of common stock for software development
    services................................................  $        --   $         --   $    478,152
                                                              ===========   ============   ============
  Assets acquired under capital leases......................  $        --   $         --   $    134,163
                                                              ===========   ============   ============
</TABLE>

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

                                       F-7
<PAGE>   49

                              THE VIALINK COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     General Description of Business and Liquidity -- We provide
subscription-based, business-to-business electronic commerce services that
enable food industry participants to more efficiently manage their highly
complex supply chain information. Our services allow manufacturers, wholesalers,
distributors, sales agencies (such as food brokers), retailers and foodservice
operators to communicate and synchronize item, pricing and promotion information
in a more cost-effective and accessible way than has been possible using
traditional electronic and paper-based 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. 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. Our failure to successfully
execute our strategy 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.

     We reported a substantial loss from operations for the fiscal years ended
December 31, 1999 and 2000, and we expect to incur losses for the fiscal year
ending December 31, 2001. 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 and the amount of expenses incurred in generating
these revenues. In order to achieve market penetration and acceptance we expect
to continue our high level of expenditures for development of our viaLink
services. These expenses have substantially exceeded our revenues, which to date
have been minimal.

     We believe that our cash, cash equivalents and the additional equity
financing discussed in Note 13 will be sufficient to meet our cash flow needs.
However, we may need to raise additional capital if (a) we are unable to
maintain or decrease our projected level of spending, (b) we are unable to
manage our working capital requirements or (c) we experience a lack of revenue
growth due to delayed or less than expected market acceptance of our viaLink
services. If we are required to raise additional capital there can be no
assurance as to whether, when or the terms upon which any such capital may be
obtained. Any failure to obtain an adequate and timely amount of capital on
commercially reasonable terms could have a material adverse effect on our
business, financial condition and results of operations, including our viability
as an enterprise.

     Basis of Presentation -- The financial statements include the accounts of
the Company and its wholly owned subsidiaries. Prior to its sale on December 31,
1998, the financial statements include, ijob, Inc., a wholly-owned subsidiary
which was formed June 30, 1997. In April 2000, we formed viaLink International,
Inc., a wholly-owned subsidiary. viaLink International is a Delaware corporation
formed to include our international operations. Our consolidated financial
statements include the accounts of viaLink International. All intercompany
transactions and balances have been eliminated in consolidation.

     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
                                       F-8
<PAGE>   50
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 equity 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 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 1998, three customers individually accounted for 13, 11 and 11
percent of revenues. In 1999, three customers individually accounted for 27, 14
and 12 percent of revenues. In 2000, three customers individually accounted for
18, 13 and 11 percent of revenues. In 1998, 1999 and 2000, approximately 49, 70
and 60 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). Prior to 1999, 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 has just begun to generate 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 -- The Company's revenues beginning 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 periods
ranging from one to three years, but are generally cancelable with 30 days
notice. Implementation fees for the viaLink services are due up front, are
nonrefundable and are separately priced from the use of the viaLink services
based on time and materials. Implementation costs consist primarily of labor by
technical support personnel to configure customer data and establish a
connection to the viaLink database. Implementation activities can range from a
"basic" implementation that simply establishes a web browser
                                       F-9
<PAGE>   51
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

interface to more involved activities where the Company assists a customer to
modify the customer's systems and automate the connection. The Company has no
obligation to perform any future implementation services and no additional
implementation services are necessary upon renewal of the service by the
customer. The Company recognizes implementation fees and associated costs for
the more involved implementation activities as the services are provided.
Implementation fees and associated direct costs to provide basic implementations
are deferred and recognized over the period the subscription-based viaLink
services are provided. Implementation fees and associated direct costs for basic
implementations are deferred because the Company does not have an objective
basis to determine the fair value of the basic implementation services and they
are essential to the viaLink services. The fair value of more involved
implementation activities is established using a residual method and generally
equals the amount charged by viaLink based on time and materials. The Company
recognizes revenue for hosting customer websites and subscription fees for
customer use of the viaLink services as these services are provided. Revenues
collected in advance are deferred and recognized as earned.

     In December 1999, the Securities and Exchange Commission staff (the
"Staff") issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue
Recognition in Financial Statements. As subsequently interpreted by the Staff
through issuance of a document summarizing frequently asked questions and
answers, the Staff has provided guidance on accounting for revenue from
multiple-element arrangements that are not currently addressed by existing
accounting pronouncements. In particular, the Staff has provided guidance that
revenue should not be allocated among the elements unless the allocation is
based on reliable, verifiable and objectively determinable fair values of the
elements. The Staff's guidance also provides that if an undelivered element is
essential to the functionality of a delivered element, no revenue allocated to
the delivered element should be recognized until that undelivered element is
delivered. The Company adopted SAB 101 in the fourth quarter of 2000, with
retroactive effect to January 1, 2000. Prior to adoption of SAB 101, the Company
recognized all implementation fees and associated costs as the services were
provided. The cumulative effect of adopting SAB 101 was to increase both
deferred revenues and deferred customer operations expense by approximately
$107,000 as of January 1, 2000 with no impact on stockholders' equity.

     The Company's revenues prior to 1999 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 revenue, by type, consisted of the following during 1998,
1999 and 2000:



<TABLE>
<CAPTION>
                                                             1998         1999         2000
                                                          ----------    --------    ----------
<S>                                                       <C>           <C>         <C>
Revenues:
  Subscription..........................................  $    3,860    $ 74,930    $  483,205
  Implementation........................................       9,000     247,914       936,032
  Hosting...............................................     412,270     292,675       202,200
  Other management consulting...........................   7,805,498          --            --
                                                          ----------    --------    ----------
          Total revenues................................  $8,230,628    $615,519    $1,621,437
                                                          ==========    ========    ==========
</TABLE>


     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
$1.8 million, $3.4 million and $6.9 million for product development in 1998,
1999 and 2000, respectively. The Company capitalizes certain of these costs,
including interest, that are directly related to the development of software to
be sold

                                       F-10
<PAGE>   52
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 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 2000 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-11
<PAGE>   53
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED 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
                                                             ENDED
                                                           AUGUST 31,
                                                              1998
                                                          ------------
<S>                                                       <C>
Revenues................................................   $6,831,916
Expenses................................................    5,045,104
                                                           ----------
Income before income taxes..............................   $1,786,812
                                                           ==========
</TABLE>

     In conjunction with the Consulting Assets Sale, the Company entered into an
earn-out agreement that provided 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 1998, 1999 and 2000, the Company recognized a gain on
sale for payments received in accordance with the Consulting Assets Sale
earn-out agreement in the amount of $341,000, $801,000, and $124,000
respectively. The Company does not expect to receive additional payments under
the earn-out agreement.

     The Company's balance sheets and statements of operations as of and for the
years ended December 31, 1999 and 2000, 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, 2000, the Company did not have any investments in
marketable debt securities. At December 31, 1999, all marketable debt securities
were classified as held-to-maturity and carried at amortized cost. Short-term
investments at December 31, 1999 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-12
<PAGE>   54
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

     Furniture, equipment and leasehold improvements at December 31, 1999 and
2000 consisted of the following:

<TABLE>
<CAPTION>
                                                                1999          2000
                                                             -----------   -----------
<S>                                                          <C>           <C>
Furniture and fixtures.....................................  $   388,918   $   403,212
Computer equipment.........................................    2,734,831     3,274,864
Computer software..........................................    1,260,472     2,291,496
Leasehold improvements.....................................      222,755       303,088
                                                             -----------   -----------
                                                               4,606,976     6,272,660
Less: accumulated depreciation and amortization............   (2,133,695)   (3,703,751)
                                                             -----------   -----------
Furniture, equipment and leasehold improvements, net.......  $ 2,473,281   $ 2,568,909
                                                             ===========   ===========
</TABLE>

     Computer equipment in 1999 and 2000 included $322,000 and $134,000 of
assets under capital leases. Furniture and fixtures in 1999 included $89,000 of
assets under capital leases. Accumulated depreciation for all assets under
capital leases at December 31, 1999 and 2000 was $345,000 and $28,000,
respectively.

     The Company incurred total costs of approximately $1.8 million, $3.4
million and $6.9 million for development of software in 1998, 1999 and 2000,
respectively. We capitalized $0.6 million of these costs for development of
software in 1998, 1999 and 2000. Interest capitalized during 1998, 1999 and 2000
was not material. Amortization of developed software during 1998, 1999 and 2000
was $0.5 million, $0.4 million and $0.5 million, respectively. Accumulated
amortization at December 31, 1999 and 2000 was $1.2 million and $1.7 million,
respectively.

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued expenses at December 31, 1999 and 2000
consisted of the following:

<TABLE>
<CAPTION>
                                                                 1999         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
Accounts payable............................................  $  503,124   $1,005,674
Accrued employee compensation...............................     874,080    1,340,320
Accrued professional fees and contract labor................     597,257      514,371
Other accrued expenses......................................     262,060      393,343
                                                              ----------   ----------
          Total accounts payable and accrued liabilities....  $2,236,521   $3,253,708
                                                              ==========   ==========
</TABLE>

6. LONG-TERM DEBT

     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 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 note bears interest at 11.5%
per annum, with interest payments deferrable to maturity in February 2004. The
note contained a beneficial conversion feature valued at approximately $20.0
million at the commitment date. Accordingly, we 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. The amount was 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 became
convertible. Non-cash interest charges of $3.6 million and $2.4 million were
recognized in 1999 and 2000, respectively, as accreted charges to interest
expense. We will continue to recognize interest expense at 11.5% per annum until
the note is converted to common stock. At December 31, 1999 and

                                       F-13
<PAGE>   55
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2000, contractual interest of $0.6 million and $1.3 million, respectively, is
included in the note payable balance as the amounts are convertible with the
note balance.

     The financial instruments included in long-term debt at December 31, 2000
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 29, 2000 of $2.81 per share is approximately $11.7 million.

7. ALLIANCE AGREEMENTS

     On May 3, 1999, the Company entered into an agreement with Cap Gemini Ernst
& Young LLP (CGEY), pursuant to which CGEY 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 CGEY 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 CGEY for a
period of two years and, in the event that at least ten "significant clients" of
CGEY become subscribers to our services during this two year period, we will be
obligated to continue this royalty payment in perpetuity. CGEY 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 fair value of this
warrant was recorded as an asset and an increase in additional paid in capital
of $1.9 million. 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 the warrant of 1.5 years. The
asset is being amortized over the service period as non-cash charges to our
statement of operations. On August 9, 1999, CGEY exercised warrants to purchase
250,000 shares of common stock resulting in gross proceeds received by us of
$500,000. On November 10, 1999, CGEY 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 and 2000, royalties under this agreement totaled
$20,000 and $96,000, respectively, 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 was to integrate the
products and services of our two companies and to extend the solutions across
multiple industries. i2 agreed to 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 agreed
to 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 was to expire on December 31,
2003. The fair value of this warrant has been recorded as an asset and an
increase in additional paid-in capital and results 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 agreed to pay i2 a
royalty of five percent (5%) of the syncLink and Chain Pricing subscription
revenues during the period the agreement is in place.
                                       F-14
<PAGE>   56
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

We also agreed to 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 agreed to pay us a royalty based upon
revenues i2 received from providing syncLink and Chain Pricing services outside
of the consumer packaged goods industry. During 1999 and 2000, royalties under
this agreement totaled $22,000 and $26,000, respectively, and are included in
selling and marketing expense. Effective January 29, 2001, we terminated our
agreements with i2.

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.

     On March 1, 2000, the Company's board of directors approved a two-for-one
stock split in the form of a dividend. The par value of the common stock
remained $.001 per share. The stock split was effective March 28, 2000 and is
reflected in the per share data in the accompanying financial statements and
notes to the financial statements.

     On March 22, 2000, the Company entered into a Securities Purchase Agreement
pursuant to which i2 Technologies, Inc., Hewlett-Packard Company and Millennium
Partners, L.P. paid us an aggregate of $6.0 million as consideration for (1)
200,403 shares of our common stock and (2) warrants to purchase 31,866 shares of
our common stock at an exercise price of $39.39 per share. The warrants can be
exercised at any time on or before March 24, 2003. Additionally, we issued
warrants to purchase 2,844 shares of our common stock at an exercise price of
$42.20 to an investment bank as partial compensation for services rendered to us
as our financial advisor in connection with that transaction. All of these
warrants contain anti-dilution protection provisions.

     On May 31, 2000, we entered into a Securities Purchase Agreement pursuant
to which RGC International Investors, LDC ("RGC") paid us an aggregate of $10.0
million as consideration for (1) 960,615 shares of our common stock and (2) a
warrant to purchase 768,492 shares of our common stock at initial exercise price
of $12.06 per share. The exercise price was subject to certain adjustments based
on the market price of our common stock. The warrants were exercised on December
29, 2000, utilizing non-cash exercise provisions outlined in the warrant
agreement, and an acceleration of the market price adjustment, resulting in the
issuance of 984,945 shares to RGC. Upon closing of the transaction with RGC, we
issued a warrant to purchase 45,608 shares of our common stock at an exercise
price of $13.15 to an investment bank as partial compensation for services
rendered to us as our financial advisor in connection with that transaction.

     On December 29, 2000, we entered into a Securities Purchase Agreement
pursuant to which RGC paid us an aggregate of $1.0 million as consideration for
333,333 shares of our common stock at a price of $3.00 per share.

     In December 1997, we 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 our common stock at $1.5625 per share. On June 15, 2000, we entered
into a Settlement Agreement with Investor Awareness pursuant to which we issued
options to purchase 20,000 shares of our common stock to two principals of
Investor Awareness with an exercise price of $0.78125 and sold an aggregate of
20,000 additional shares of our common stock to these individuals as settlement
of a lawsuit alleging that we failed to issue the option under the terms of the
agreement. We have recorded an expense of $185,000 included in general and
administrative expense for the year ended December 31, 2000, representing the
fair value the options issued.

                                       F-15
<PAGE>   57
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED 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,
                                              -----------------------------------------
                                                 1998           1999           2000
                                              -----------   ------------   ------------
<S>                                           <C>           <C>            <C>
Basic:
  Net income (loss).........................  $   649,638   $(12,635,963)  $(39,129,104)
  Weighted average common shares
     outstanding............................   10,964,164     13,114,028     20,732,411
                                              -----------   ------------   ------------
     Net income (loss) per share............  $      0.06   $      (0.96)  $      (1.89)
                                              ===========   ============   ============
Diluted:
  Net income (loss).........................  $   649,638   $(12,635,963)  $(39,129,104)
  Weighted average common shares
     outstanding............................   10,964,164     13,114,028     20,732,411
  Add: Net effect of dilutive potential
     shares.................................    1,445,608             --             --
                                              -----------   ------------   ------------
                                               12,409,772     13,114,028     20,732,411
     Net income (loss) per share............  $      0.05   $      (0.96)  $      (1.89)
                                              ===========   ============   ============
</TABLE>

     For the year ended December 31, 2000, options to purchase 11,189,720 shares
at a weighted average exercise price of $6.90 and warrants to purchase 40,000,
746,268, 45,608 and 34,538 shares of common stock at $1.50, $6.70, $13.15 and
$39.39, respectively, and 4,180,000 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.

     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.

     On October 4, 1999, we issued a Notice of Redemption to holders of our
redeemable common stock purchase warrants. All 3,680,000 redeemable stock
purchase warrants were exercised in 1999 and 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 employee stock purchase plan designed to operate in
compliance with Section 423 of the Internal Revenue

                                       F-16
<PAGE>   58
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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, 1998, 1999 and 2000:
13,844, 12,244 and 42,561 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 and 2000. 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 25,500,000 shares of its 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 5% 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 500,000 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 SFAS No. 123 and related interpretations in accounting
for its stock options granted to non-employee consultants and service providers.
The fair value of the options granted are recorded as an operating expense and
an increase in additional paid in capital over the term of the service
agreement. The fair value of each option grant was determined using
Black-Scholes option pricing model with the following assumptions used during
2000: interest rate (zero-coupon U.S. government issued with a remaining life
equal to the expected term of each option) of 6.34%; a dividend yield of 0%;
volatility factors of the expected market price of the Company's common stock
ranging from 101% to 156%; and weighted-average expected life ranging from 1.5
to 2.5 years. During 2000, the Company granted options to purchase 30,000,
16,000, 10,000, 50,000 and 74,000 shares at exercise prices per share of $8.31,
$8.91, $9.06, $17.50 and $40.25, respectively. At December 31, 2000, the Company
has options outstanding to purchase 50,000 and 74,000 shares at exercise prices
of $17.50 and $40.25, respectively, for which the

                                       F-17
<PAGE>   59
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

measurement date has not occurred. The expense recorded for these options is
based upon the fair value for each grant at each financial statement date until
the measurement date occurs. Stock compensation expense of $425,000 is included
in the 2000 statement of operations for all grants to non-employee consultants
and service providers.

     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 $0.8 million and $1.9 million, respectively, is
included in the 1999 and 2000 statement of operations for these grants
representing the portion of the service period in 1999 and 2000. The exercise
price equaled the market price at the date of grant for all other option grants
during 1998, 1999 and 2000 and no compensation expense has been recognized for
all other grants to employees and directors in 1998, 1999 and 2000.

     Pro forma information regarding net income and earnings per share is
required by and has been determined as if the Company had accounted for its
employee 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 1998, 1999 and 2000, respectively: interest rates
(zero-coupon U.S. government issued with a remaining life equal to the expected
term of the options) of 4.52%, 5.56% and 5.6% to 6.3%; dividend yields of 0.0%;
volatility factors of expected market price of the Company's common stock of 65%
for 1998, 101% for 1999 and 112% to 157% in 2000; and weighted-average expected
life of the options of 6.7 years in 1998 and 2.5 years in 1999 and 2000. The
weighted average grant date fair value per share for options granted to
employees during 1998, 1999 and 2000 was $1.04, $9.28 and $12.45, respectively.

     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>
                                                 1998          1999           2000
                                               ---------   ------------   ------------
<S>                                            <C>         <C>            <C>
Net income (loss), as reported..............   $ 649,638   $(12,635,963)  $(39,129,104)
Pro forma-diluted...........................   $(176,182)  $(16,563,728)  $(65,941,540)
Net income (loss) per share-diluted, as
  reported..................................   $    0.05   $      (0.96)  $      (1.89)
Pro forma-diluted...........................   $   (0.01)  $      (1.26)  $      (3.18)
</TABLE>

                                       F-18
<PAGE>   60
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A summary of the Company's stock option activity and related information
follows for the years ended December 31, 1998, 1999 and 2000:

<TABLE>
<CAPTION>
                                                                              WEIGHTED
                                                              NUMBER OF       AVERAGE
                                                                SHARES     EXERCISE PRICE
                                                              ----------   --------------
<S>                                                           <C>          <C>
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
  Granted...................................................   2,494,000        17.44
  Exercised.................................................    (582,804)        1.36
  Canceled..................................................  (1,161,168)        9.37
                                                              ----------
Outstanding at December 31, 2000............................  11,189,720       $ 6.90
                                                              ==========
</TABLE>

     The following table summarizes information about stock options outstanding
at December 31, 2000:

<TABLE>
<CAPTION>
                                                 OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                                          ----------------------------------   ----------------------
                                                        WEIGHTED   WEIGHTED                  WEIGHTED
                                                        AVERAGE     AVERAGE                  AVERAGE
RANGE OF                                                EXERCISE   REMAINING                 EXERCISE
EXERCISE PRICE                            OUTSTANDING    PRICE       LIFE      EXERCISABLE    PRICE
--------------                            -----------   --------   ---------   -----------   --------
<S>                                       <C>           <C>        <C>         <C>           <C>
$0.45...................................       3,936     $ 0.45    5.2 years        3,936     $ 0.45
$0.75 to $0.83..........................   3,393,902     $ 0.79    7.6 years    2,205,462     $ 0.79
$0.97...................................     100,800     $ 0.97    4.6 years      100,800     $ 0.97
$1.25...................................     240,000     $ 1.25    0.9 years      240,000     $ 1.25
$2.25...................................      60,000     $ 2.25    8.0 years       40,000     $ 2.25
$3.13...................................     324,500     $ 3.13    8.4 years       84,500     $ 3.13
$3.60 to $3.82..........................   3,015,916     $ 3.64    8.0 years    1,082,572     $ 3.64
$5.56 to $6.00..........................     886,666     $ 5.85    9.0 years      199,994     $ 6.00
$8.31 to $9.06..........................     565,500     $ 8.88    9.7 years           --         --
$10.06..................................     341,500     $10.06    9.4 years           --         --
$14.13 to $15.22........................   1,587,000     $15.13    9.0 years      641,315     $15.22
$17.50..................................     110,000     $17.50    9.0 years           --         --
$40.25..................................     560,000     $40.25    9.2 years           --         --
                                          ----------                            ---------     ------
At December 31, 2000....................  11,189,720                            4,598,579     $ 3.77
                                          ==========                            =========     ======
At December 31, 1999....................  10,439,692                            1,697,688     $ 0.91
                                          ==========                            =========     ======
At December 31, 1998....................  11,189,720                            2,180,000     $ 1.08
                                          ==========                            =========     ======
</TABLE>

                                       F-19
<PAGE>   61
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES

     The components of the provision for income taxes for the years ended
December 31, 1998, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                 1998      1999   2000
                                                              ----------   ----   ----
<S>                                                           <C>          <C>    <C>
Current.....................................................  $       --   $--    $--
Deferred....................................................   1,049,440    --     --
                                                              ----------   ---    ---
Provision for income taxes..................................  $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, 1998, 1999, and 2000
are as follows:

<TABLE>
<CAPTION>
                                                   1998         1999           2000
                                                ----------   -----------   ------------
<S>                                             <C>          <C>           <C>
Income tax expense (benefit) at federal
  statutory rate..............................  $  577,687   $(4,296,227)  $(13,303,895)
State income taxes............................      67,963      (505,439)    (1,565,164)
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     14,766,373
Other.........................................       2,488       (13,118)       102,686
                                                ----------   -----------   ------------
Provision for income taxes....................  $1,049,440   $        --   $         --
                                                ==========   ===========   ============
</TABLE>

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

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                            --------------------------
                                                               1999           2000
                                                            -----------   ------------
<S>                                                         <C>           <C>
Deferred tax assets:
  Allowance for doubtful accounts.........................  $    15,738   $     60,196
  Compensated absences....................................       31,277         76,877
  Tax credit carryforwards................................       26,990         30,178
  Depreciation and amortization...........................           --        207,348
  Net operating loss carryforwards........................    6,878,587     19,549,389
                                                            -----------   ------------
                                                              6,952,592     19,923,988
Deferred tax liabilities:
  Deferred service fees...................................   (1,157,595)      (396,289)
  Discount on long-term debt..............................     (908,666)            --
  Software development costs..............................     (578,963)      (613,773)
  Depreciation and amortization...........................     (159,815)            --
                                                            -----------   ------------
Net deferred tax asset, before valuation allowance........    4,147,553     18,913,926
Valuation allowance.......................................   (4,147,553)   (18,913,926)
                                                            -----------   ------------
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 Cap Gemini 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

                                       F-20
<PAGE>   62
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 were 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 was recognized as
additional paid-in capital.

     The Company's tax deduction for stock-based compensation in 1999 and 2000
exceeds the cumulative expense for those options and warrants recognized for
financial reporting purposes by approximately $7.4 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 $2.8
million have been recognized at December 31, 2000. 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, 2000, the Company had net operating loss ("NOL")
carryforwards for federal and state purposes of approximately $51,400,000 and
$51,800,000, respectively, and other carryforwards of approximately $79,000. 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, 1999 and 2000 since the Company resembles a
development stage company and has no history of profitability without the
consulting assets that were sold in 1998.

     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 1998, 1999 and 2000 for all leases was
$410,669, $460,279 and $1,039,437, respectively.

     Future minimum lease payments under non-cancelable operating leases at
December 31, 2000 follows:

<TABLE>
<CAPTION>
                                                           OPERATING
                                                             LEASES
                                                           ----------
<S>                                                        <C>
2001....................................................   $1,040,000
2002....................................................      371,000
2003....................................................      353,000
2004....................................................      348,000
2005....................................................      345,000
Thereafter..............................................           --
                                                           ----------
Future minimum lease payments...........................   $2,457,000
                                                           ==========
</TABLE>

     Future minimum lease payments have not been reduced by future minimum
sub-lease rentals of approximately $1.0 million under operating leases, with
terms through 2005.

     Additionally, we have entered into an operating lease agreement to lease
certain data processing equipment and software from Hewlett-Packard for our new
technology platform. The lease includes certain cancellation provisions which
expire on March 29, 2001 at which point the lease becomes noncancelable and
provides for 36 monthly installments of $153,000 beginning in April of 2001.
                                       F-21
<PAGE>   63
                              THE VIALINK COMPANY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 1998, 1999, or
2000.

13. SUBSEQUENT EVENT


     On February 7, 2001 we entered into a series of agreements pursuant to
which investors paid us an aggregate of $10,018,250 in consideration for (1)
3,643 shares of our Series A Convertible Participating Preferred Stock
convertible into shares of our common stock at an initial conversion price of
$2.75 per share and (2) Series A Warrants to purchase up to 3,643,000 shares of
our common stock at initial exercise price of $3.75 per share. The conversion
price of the preferred stock may be subject to certain adjustments. The
investors may not convert their shares of preferred stock or exercise their
Series A Warrants to the extent the number of shares of our common stock issued
upon such conversion or exercise would exceed 19.99% of the total number of
shares of our common stock outstanding on February 7, 2001, unless and until we
receive approval of our stockholders with respect to the issuance as required by
NASD Rule 4350. The beneficial conversion element of these securities will be
accounted for analogous to a dividend.


     One of the investors (1) will also receive a Series B Warrant to purchase
up to 666,667 shares of our common stock at an initial exercise price of $3.00
per share and (2) will, promptly after the effectiveness of the registration
statement covering the resale of the underlying common stock, invest an
additional $1,999,250 in consideration for 727 shares of preferred stock and a
Series A Warrant to purchase up to 727,000 shares of our common stock.

     Certain of our executive officers also agreed to pay us an aggregate of
$761,750 in consideration for 277 shares of preferred stock and Series A
Warrants to purchase 277,000 shares of our common stock. The investment by these
officers is contingent upon approval by our stockholders of the issuance as
required by NASD Rule 4350. The officers have deposited the $761,750 into an
escrow account pending our receipt of this approval.

     As compensation for services rendered to us by our financial advisor in
connection with the transaction, we agreed to issue (1) Placement Agent Warrants
to purchase 464,700 shares of our common stock at an exercise price of $3.75 per
share, (2) Placement Agent Warrants to purchase 66,667 shares of our common
stock at an exercise price of $3.00 per share and (3) Placement Agent Warrants
to purchase 464,700 shares of our common stock at an exercise price of $2.75 per
share.

                                       F-22
<PAGE>   64

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<S>                      <C>
        2.1(1)           Asset Purchase Agreement dated June 12, 1997 by and among
                         ijob, Inc., Human Technologies, Inc., David C. Mitchell and
                         Ron Beasley
        2.2(2)           Asset Acquisition Agreement dated August 31, 1998 by and
                         between the Registrant and The NetPlex Group, Inc.
        2.2(2)           First Amendment to Asset Acquisition Agreement dated
                         September 9, 1998 by and between Registrant and The NetPlex
                         Group, Inc.
        2.3(3)           Stock Purchase Agreement dated December 31, 1998 by and
                         among Registrant, DCM Company, Inc., David C. Mitchell and
                         ijob, Inc.
        3.1(4)           Form of Certificate of Incorporation
        3.2(5)           Form of Certificate of Amendment to Certificate of
                         Incorporation
        3.3(6)           Amended and Restated Bylaws
        3.4(6)           Bylaw Amendment
        4.1(7)           Form of Certificate of Common Stock
        4.2(8)           Form of Series A Convertible Participating Preferred Stock
                         Certificate.
        4.3(8)           Designations, Preferences and Rights of Series A Convertible
                         Participating Preferred Stock of The viaLink Company
        4.4              See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the
                         Registrant's Certificate of Incorporation and Bylaws
                         defining rights of holders of common stock of the Registrant
        4.5(9)           Form of Underwriter's Warrant Agreement by and between
                         Barron Chase Securities Inc. and the Registrant
        4.6(10)          Shareholder Agreement dated as of February 4, 1999 by and
                         between Registrant and Hewlett-Packard Company
        4.7(3)           Stock Option Agreement dated as of December 18, 1998 by and
                         between Registrant and Brian Herman
        4.8(11)          Registration Rights Agreement dated May 3, 1999 by and
                         between the Registrant and Cap Gemini Ernst & Young LLP
        4.9(12)          Common Stock Purchase Warrant dated October 12, 1999, issued
                         by the Registrant to i2 Technologies, Inc.
        4.9(12)          Registration Rights Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
        4.10(13)         Common Stock Purchase Warrant dated March 24, 2000, by the
                         Registrant in favor of Hewlett-Packard Company
        4.11(13)         Common Stock Purchase Warrant dated March 24, 2000, by the
                         Registrant in favor of i2 Technologies, Inc.
        4.12(13)         Amendment No. 1 to Registration Rights Agreement dated as
                         March 22, 2000, by and among the Registrant and
                         Hewlett-Packard Company
        4.13(13)         Amendment No. 1 to Registration Rights Agreement dated as
                         March 22, 2000, by and among the Registrant and i2
                         Technologies, Inc.
        4.14(13)         Registration Rights Agreement dated as of March 22, 2000, by
                         and between the Registrant and Millennium Partners, L.P.
        4.15(14)         Common Stock Purchase Warrant dated March 24, 2000 by the
                         Registrant in favor of AGE Investments, Inc.
        4.15(14)         Registration Rights Agreement dated as of April   , 2000 by
                         and between the Registrant and AGE Investments, Inc.
        4.16(15)         Common Stock Warrant dated May 31, 2000, by the Registrant
                         in favor of RGC International Investors, LDC
        4.17(15)         Common Stock Purchase Warrant dated May 31, 2000 by the
                         Registrant in favor of AGE Investments, Inc.
        4.18(15)         Registration Rights Agreement dated as of May 31, 2000 by
                         and between the Registrant and RGC International Investors,
                         LDC
</TABLE>
<PAGE>   65


<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<S>                      <C>
        4.19(15)         Amendment No. 1 to Registration Rights Agreement dated as
                         May 31, 2000, by and among the Registrant and AGE
                         Investments, Inc.
        4.20(16)         Registration Rights Agreement dated as of December 29, 2000
                         by and between The viaLink Company and RGC International
                         Investors, LDC.
        4.21(17)         Form of Series A Warrant
        4.22(17)         Series B Warrant dated February 7, 2001 by The viaLink
                         Company in favor of Velocity Investment Partners Ltd.
        4.23(17)         Form of Registration Rights Agreement by and among The
                         viaLink Company and certain investors
       10.1(10)          Note Purchase Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.2(12)          Securities Purchase Agreement dated October 12, 1999, by and
                         between the Registrant and i2 Technologies, Inc.
       10.3(4)           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(12)          Security Agreement dated as of February 4, 1999 by and
                         between the Registrant and Hewlett-Packard Company
       10.5(2)           Earn-out Agreement dated September 30, 1998 by and between
                         the Registrant and The NetPlex Group, Inc.
       10.6(18)          Software Remarketing and Reselling Agreement effective as of
                         September 1, 1998 by and between the Registrant and The
                         NetPlex Group, Inc.
       10.7(3)           Form of Indemnification Agreement dated February 9, 1998 by
                         and between the Registrant and the Registrant's executive
                         officers
       10.8(3)           Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Lewis B. Kilbourne
       10.9(3)           Employment Agreement dated October 1, 1998 by and between
                         the Registrant and Robert N. Baker
       10.10(4)          The viaLink Company 1999 Stock Option/Stock Issuance Plan
       10.11(9)          1999 Stock Option/Stock Issuance Plan Form of Stock Option
                         Agreement
       10.12(9)          1999 Stock Option/Stock Issuance Plan Form of Stock Issuance
                         Agreement
       10.13(9)          1999 Stock Option/Stock Issuance Plan Form of Automatic
                         Stock Option Agreement
       10.14(4)          The viaLink Company 1999 Employee Stock Purchase Plan
       10.15(11)         Amended and Restated Alliance Agreement dated as of May 3,
                         1999 by and between the Registrant and Cap Gemini Ernst &
                         Young LLP
       10.16(11)         Master Services Agreement dated May 3, 1999 by and between
                         the Registrant and Cap Gemini Ernst & Young LLP
       10.17(3)          Office Building Sublease effective as of December 16, 1999,
                         between Kerr-McGee Corporation and the Registrant
       10.18(3)          Employment Agreement made as of April 9, 1999, by and
                         between the Registrant and David M. Lloyd
       10.19(3)          Employment Agreement made as of April 8, 1999, by and
                         between the Registrant and Robert I. Noe Registrant and
                         Robert I. Noe
       10.20(13)         Securities Purchase Agreement dated as of March 22, 2000, by
                         and among the Registrant and the Purchasers listed on
                         Schedule I thereto
       10.21(14)         Addendum to Employment Agreement effective as of March 10,
                         2000 by and between the Registrant and David M. Lloyd
       10.22(14)         Addendum to Employment Agreement effective as of March 14,
                         2000 by and between the Registrant and Robert I. Noe
       10.23(15)         Securities Purchase Agreement dated as of May 31, 2000 by
                         and between the Registrant and RGC International Investors,
                         LDC.
       10.24(5)          Amendment No. 1 to The viaLink Company 1999 Stock
                         Option/Stock Issuance Plan
</TABLE>

<PAGE>   66

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
       10.25(15)         Employment Agreement effective April 21, 2000 by and between
                         the Registrant and Mark L. Bromberg
       10.26(17)         Securities Purchase Agreement dated as of February 2, 2001,
                         by and between The viaLink Company and Velocity Investment
                         Partners Ltd.
       10.27(17)         Form of Securities Purchase Agreement by and among The
                         viaLink Company and certain investors
       10.28(19)         Employment Agreement effective September 25, 2000 by and
                         between the Registrant and Jack Scott
       10.29(19)         Employment Agreement effective as September 4, 2000 by and
                         between the Registrant and Christopher R. Riley
       10.30(19)         Employment Agreement effective as of August 29, 2000 by and
                         between the Registrant and William P. Creasman
       10.31(19)         First Amendment to Employment Agreement dated as of August
                         27, 1999 by and between the Registrant and Lewis B.
                         Kilbourne
       10.32(19)         Addendum to Employment Agreement effective as of June 5,
                         2000 between the Registrant and Lewis B. Kilbourne
       10.33(19)         Addendum to Employment Agreement effective as of October 1,
                         2000 between the Registrant and Lewis B. Kilbourne
       10.34             Service Level Agreement for Operations Services prepared by
                         Hewlett-Packard for the Registrant dated June 3, 1999
       10.35             Addendum to Service Level Agreement for Operation Services
                         dated September 15, 2000
       21(19)            Subsidiaries of Registrant
       23.1              Consent of KPMG LLP
       23.2              Consent of PricewaterhouseCoopers LLP
</TABLE>

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

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

 (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 Annual Report on Form
     10-KSB for the year ending December 31, 1999.

 (4) Incorporated herein by reference to the Registrant's Definitive Proxy
     Statement on Schedule 14A filed April 19, 1999.

 (5) Incorporated herein by reference to the Registrant's Definitive Proxy
     Statement on Schedule 14A filed April 24, 2000.

 (6) Incorporated herein by reference to the Registrant's Quarterly Report on
     Form 10-QSB for the quarter ending September 30, 2000.

 (7) Incorporated herein by reference to the Registrant's Registration Statement
     on Form 8-A/A Amendment No. 2 filed under Section 12(g) of the Exchange Act
     filed on June 21. 2000.

 (8) Incorporated herein by reference to the Registrant's Current Report of Form
     8-K dated February 7, 2001.

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

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

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

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