<PAGE>

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

                                    FORM 10-K

Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of
1934 for the fiscal year ended July 31, 2000

                                       OR

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from      to      .


                        COMMISSION FILE NUMBER: 000-29365

                              VICINITY CORPORATION
             (Exact name of Registrant as Specified in its Charter)

                   DELAWARE                            77-0414631
         (STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)            IDENTIFICATION NO.)


                              370 SAN ALESO AVENUE
                           SUNNYVALE, CALIFORNIA 94085
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 543-3000

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         COMMON STOCK, $0.001 PAR VALUE


     Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ X ] Yes [ ] No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K/A. [ ]

    The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of September 30, 2000 based on the closing sales price of the
Company's Common Stock, as reported on The Nasdaq National Market, was
approximately $157,122,000. Shares of Common Stock held by each officer and
director have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.

     The number of shares of Common Stock, par value $0.001 per share, of
Vicinity Corporation outstanding as of September 30, 2000 was 28,198,214.

    Portions of the Proxy Statement for the annual stockholders' meeting are
incorporated by reference into Part II and Part III.

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                              VICINITY CORPORATION

                           ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS


<TABLE>
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                                                                                                                   PAGE
                                                                                                                   ----
PART I  1
<S>            <C>                                                                                                <C>
    ITEM 1.     BUSINESS.............................................................................................1
    ITEM 2.     PROPERTIES..........................................................................................12
    ITEM 3.     LEGAL PROCEEDINGS...................................................................................12
    ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................................13

PART II.............................................................................................................13
    ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                    STOCKHOLDER MATTERS.............................................................................13
    ITEM 6.     SELECTED CONSOLIDATED FINANCIAL DATA................................................................13
    ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS.............................................................14
    ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........................................30
    ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.........................................................30
    ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                    ACCOUNTING AND FINANCIAL DISCLOSURE.............................................................30

PART III............................................................................................................30
    ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.......................................................30
    ITEM 11.   EXECUTIVE COMPENSATION...............................................................................30
    ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......................................30
    ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................................30

PART IV.............................................................................................................31
    ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.......................................31
</TABLE>



CERTAIN DEFINED TERMS

      Unless the context otherwise requires, references herein to "we," "us,"
"the company" or "Vicinity" are to Vicinity Corporation, a Delaware
corporation. References in this Annual Report to fiscal years refer to the
fiscal year of our company ended on July 31 of that year. We were
incorporated as a California corporation in October 1995 and reincorporated
as a Delaware corporation in January 2000. Vicinity-Registered Trademark-,
MapBlast!-Registered Trademark- and GeoSearch-Registered Trademark- are
registered marks of our company. Each trademaRK, trade name or service mark
of any other company appearing in this Annual Report belongs to its holder.

FORWARD LOOKING STATEMENTS

      The statements contained in this Annual Report that are not historical
facts may be deemed to contain forward-looking statements. Such statements
are indicated by words or phrases such as "anticipate," "estimate,"
"projects," "believes," "intends," "expects" and similar words and phrases.
Actual results may differ materially from those expressed or implied in any
forward-looking statement as a result of certain risks and uncertainties,
including, without limitation, the risks and uncertainties detailed herein
under "Item 7. Mangement's Discussion and Analysis of Financial Condition and
Results of Operations--Factors That May Affect Future Results" and in our
other filings with the Securities and Exchange Commission. We disclaim any
obligation to update any of the forward-looking statements contained herein
to reflect future events or developments.

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                               PART I

ITEM 1.  BUSINESS

OVERVIEW

      We are a leading provider of marketing infrastructure services for Global
2000 branded companies on the Internet and on wireless platforms. We use our
expertise in designing and maintaining complex spatial databases to provide a
suite of Internet-based marketing infrastructure services, ranging from store
locators for clients with a few hundred locations to the design and maintenance
of complex, multi-attribute databases for clients with millions of product
records that include information such as regularly stocked products and current
promotional offers.

      By providing marketing services through our unique distribution network
of Internet, wireless and wireline channels, we seek to generate high quality
leads, store visits and incremental sales for our brick-and-mortar customers.
Our clicks-and-mortar solution, available in 18 countries and in 10
languages, enables our customers to direct consumers searching for a specific
product or service to the nearest brick-and-mortar store that carries that
product or service. Our customers include FedEx, Ford, General Motors, Hilton
Hotels, Marriott, McDonald's, NEC, Pizza Hut, Starbucks, Starwood Hotels,
Taco Bell, Toyota, Levi Strauss and United Parcel Service.

      Historically, we have generated substantially all of our revenues from our
Web Business Finder, maps, driving directions and directory services. During
recent fiscal quarters, however, we have begun to generate significant revenue
from service and transaction fees, principally project-related professional
services.

      During fiscal 2000, we expanded our operations into Europe. During the
latter part of our fiscal third quarter, and the early part of our fiscal
fourth quarter, we opened sales offices in France, Germany and the United
Kingdom. We earned approximately 9% of our revenue internationally during
fiscal 2000 and we expect that an increased percentage of our revenue will be
derived from international sources during fiscal 2001 as a result of our
recent international expansion.

      We are currently focusing our efforts on expanding our BrandFinder
service and building a distribution platform to enable unique lead generation
opportunities for our customers. In conjunction with these efforts, we began
syndicating MapBlast! and BrandFinder and expect to emphasize this approach
over the option of building MapBlast! -located at www.mapblast.com- as a
unique business to consumer destination site. We believe that MapBlast!
provides unique value to our company by offering both lead-generation for our
brands as well as a branded platform for syndicating our content.
Increasingly, we expect to place more emphasis on the Vicinity Network in
order to utilize it as a syndicated platform on which we can deliver traffic,
high quality leads and incremental sales opportunities for our
brick-and-mortar clients through the Web, wireless and broadband channels.

INDUSTRY BACKGROUND

      The Internet is a very important element in commerce. Together with other
relatively new communications mediums such as wireless telephones and other
wireless devices, the Internet is reshaping the way consumers and businesses
obtain and disseminate information, purchase goods and transact business. People
frequently go online to research products for possible purchase. According to
Jupiter Communications, an industry research firm, 72% of Internet users use the
Web to research products and services, with only electronic mail and search
engines attracting a higher percentage of Internet users. In response, consumer
products companies and national chains have established Web sites to promote
their brands. This has resulted in a proliferation of Web sites where businesses
provide information, market goods and services, and conduct business.

      While retailers are increasingly focusing attention on the Internet, the
overwhelming majority of consumer spending still occurs in traditional
brick-and-mortar locations. We believe the reasons for consumers' continuing
preference for "real world" shopping include the ability to physically inspect
and compare products, the possibility of same-day fulfillment and the relative
ease with which products can be returned to the store where purchased. In
addition, many merchants, such as restaurants, hotels and gas stations, offer
goods and services that cannot be provided online. These merchants require
customers to visit a physical location to complete a transaction.

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      The challenge for retailers and consumer product companies is to find
compelling ways to direct consumers researching products online to the nearest
brick-and-mortar store where they can complete a purchase. Advocates of
integrating a retailer's online presence with its real world presence have
dubbed this approach "clicks-and-mortar." One clicks-and-mortar strategy for a
retailer is to provide product information to potential customers online and
then direct those customers to convenient store locations that carry a desired
product. Existing consumer awareness of national brands and traditional off-line
marketing and advertising efforts already combine to direct consumers to the Web
sites maintained by these companies. Once on a brand's Web site, consumers can
be motivated to make a purchase and, if a consumer prefers to transact business
off-line, directed to the nearest store carrying the brand's products. In many
cases, retailers prefer that transactions be completed in physical stores where
shoppers can be exposed to other product offerings.

OUR SOLUTION

      We provide a suite of Internet-based marketing infrastructure services to
our business clients. We host our clients' store location and product
information and deliver that information to potential customers on demand over
the Internet, land-line telephones, wireless telephones or other wireless
devices. Using our services, our clients are able to direct potential customers
to the nearest store location, introduce those consumers to local retailers
through store-specific Web sites, display product and product availability
information and provide a timely incentive to motivate potential customers to
make a purchase.

      Our services provide the necessary infrastructure for companies to exploit
the growing potential of Internet marketing while leveraging their real world
presence. Our Internet-based marketing infrastructure services link traditional
off-line marketing programs, such as advertising and direct mail, to online Web
marketing initiatives.

      Our services offer the following features and benefits to our clients:

      CLICKS-AND-MORTAR SOLUTION. Our services provide our clients a means of
directing online consumers who are interested in purchasing our clients'
products to local brick-and-mortar stores where the overwhelming majority of
transactions still occur.

      EXPANDED LEAD GENERATION. Our services extend the reach of our clients'
Internet presence by providing a link through major portals and search engines
to consumers using the Internet to research products and services prior to
making a purchase decision.

      MULTIPLE PLATFORM ACCESS. Our services enable potential customers to
access information regarding our clients' products and services not only over
the Internet, but also via land-line telephones, wireless telephones and other
wireless devices, such as the Palm VII.

      LOCAL WEB MARKETING WITH BRAND INTEGRITY. Our SiteMaker product allows
each of our clients' locations to create a unique Web presence and extend local
store specific promotions while maintaining national brand integrity.

      COST EFFICIENT OUTSOURCED SERVICES. Our automated services provide our
clients' customers with accurate and easy to use location and product
availability information on demand 24 hours per day, seven days per week.

      RAPID DEPLOYMENT. We are able to deploy our clicks-and-mortar
infrastructure solutions in an average of three to four weeks.

      REPORTING AND FEEDBACK. Our record keeping and reporting features allow
our clients to refine their online marketing approach and effectively coordinate
and evaluate off-line marketing efforts.

      Finally, our location and product information provide consumers
researching products and services with the information that they need to choose
the most convenient means of purchasing goods or services.


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STRATEGY

  Key elements of our business strategy include:

  EXPAND OUR CLIENT BASE. We currently target large companies with established
consumer brands that offer their products or services in multiple locations. Our
sales channels include our direct sales force and our international channel
partners. We intend to expand our direct sales force and our network of channel
partners both to refer business to us and to sell our services under
private-label arrangements. We will also continue to maintain strong
relationships with advertising, promotional and Web marketing agencies that
often incorporate our services into the projects they manage for their clients.

  CONTINUE TO DEVELOP RELATIONSHIPS WITH STRATEGIC PARTNERS. Our technology
expertise and strong customer base have allowed us to attract numerous
partners with whom we have agreed to co-develop and co-market new products
and services. We have entered into agreements with several leading wireless
carriers to provide versions of our BrandFinder service on Internet-enabled
wireless telephones. These and other partnerships extend our clients' Web
presence beyond their Web sites by allowing product searches on portals and
via Internet-enabled wireless devices to return local stores that carry our
clients' products. We intend to continue to identify and develop mutually
beneficial partnerships with search engines, portals, wireless data providers
and other strategic partners.

  EXPAND INTERNATIONAL PRESENCE. Our multinational clients have reacted to the
world-wide growth in Internet use by requesting application of our services
in markets outside the United States. We are responding to these requests by
making our services available in markets that support the widespread consumer
use of Internet and wireless devices. We launched our services in Europe in
June 1999 and currently have offices in the United Kingdom, France and
Germany. We expect that Europe will continue to precede the United States
both in deployment and market acceptance of wireless product offerings,
including products such as Wireless Business Finder and BrandFinder.

  EXPAND PRODUCT OFFERINGS. Through internal product development and through
partnerships, we have implemented services that deliver our clients' data to
potential customers through landline and wireless telephones and through
Internet-enabled wireless devices such as the Palm VII and WAP telephones. We
intend to continue to develop additional products and services, tailored to
the needs of large multi-location retailers and service companies by
enhancing our technology, delivering localized content, expanding our
directory services and offering effective data management capabilities. We
intend to continue to develop new products internally and to build
partnerships and work closely with manufacturers of smart phones, in-car
devices, broadband service providers and other new devices to offer our
clients' data across any capable device or platform.

  DEVELOP TRANSACTIONAL REVENUE MODEL. Historically, we have generated most
of our revenue through annual license fees charged to our clients for hosting
and delivery services principally related to our Business Finder
applications. We are currently offering distribution of this same data, on
behalf of our customers, across several highly trafficked

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Web sites and via wireless telephones and other wireless devices.
Additionally, through our partnerships with Internet-based promotion
companies, we are beginning to deploy services that generate
transaction-based fees as a result of driving a consumer from a national
brand's Web site to a participating local merchant's store. We can offer
similar distribution arrangements for advertisers who participate in regional
yellow pages listings. These initiatives are at a very early stage of
development and as of the date of this Annual Report represent an
insignificant portion of present revenues.

OUR SERVICES

      We provide a suite of Internet-based marketing infrastructure services to
our business clients. We host our clients' store location and product
information and deliver that information to potential customers on demand over
the Internet, land-line telephones, wireless telephones or other wireless
devices. Using our services, our clients are able to direct potential customers
to the nearest store location, introduce those consumers to local retailers
through store-specific Web sites, display product and product availability
information and provide a timely incentive to motivate potential customers to
make a purchase.

      Our services provide the necessary infrastructure for companies to
exploit the growing potential of Internet marketing and mobile commerce, or
mCommerce, while leveraging their real world presence. Our Internet-based
marketing infrastructure services link traditional off-line marketing
programs, such as advertising and direct mail, to online Web marketing
initiatives.

      VICINITY BUSINESS FINDER

      Business Finder uses our proprietary proximity spatial search technology
to allow a client's customers to find the store location nearest to an address
input by the customer using the Internet, land line telephones, wireless
telephones and other wireless devices. Because Business Finder is able to search
hundreds of attributes, it can also be used to locate a specific product stocked
at a retailer. For example, Levi Strauss utilizes a version of Web Business
Finder to direct customers from its Web site to the nearest store that carries
the product the customer is searching for, such as a specific style of Levi blue
jeans. There are currently four search categories employed by Vicinity Business
Finder: proximity, attribute, keyword and custom. These different categories can
be used singly or in combination with each other. While we have not yet been
asked to provide the service, Business Finder is also capable of serving as a
real-time outsourced inventory management system.

      We refer to our search capabilities as "boundary-less" (i.e., searches
for the nearest items without regard for boundaries such as city, state, zip
code, or latitude-longitude boundaries). This search methodology starts where
the consumer is located and then spirals outward to find the nearest store or
product selected by the consumer. We believe this methodology to be superior
to other search methods because it takes into account the users' location and
the density of the locations they are searching. This capability is also
scalable and allows us to support the millions of queries that we receive per
day. While most Business Finder applications return locations in order of
proximity, some of our clients, such as Dominos Pizza, require other
orderings, or require that searches respect dealer territory restrictions.
Business Finder has the flexibility to handle these requirements.

      WEB BUSINESS FINDER. Web Business Finder is a private-label service
incorporated into our clients' Web sites. Though the pages viewed by customers
are often hosted and served by Vicinity, the end user is unaware that he has
left the branded site he chose to visit. Using Web Business Finder, our clients'
customers can quickly and easily obtain a listing of our clients' nearest store
locations with the distance to each location provided. Web Business Finder can
be customized to provide information about each location, such as its address,
telephone number and hours of operation. For example, McDonald's uses this
service to indicate whether a particular restaurant features a McDonald's
Playland and to allow customers to locate every McDonald's location along a
given route. Another client, VISX, Inc., uses our telephone and Internet
services to help potential customers interested in laser vision correction to
locate VISX-certified doctors within their community. Our clients have the
option of including within the search results dynamic maps showing a specified
number of nearby locations and customized driving directions to those locations.
We currently offer Web Business Finder services in the United States, 18
European nations and in ten languages.

      TELEPHONE BUSINESS FINDER. Telephone Business Finder gives potential
customers telephone access to the same database we maintain for each of our
clients' Web Business Finder service. Telephone Business Finder provides street
addresses automatically and is able to connect a caller directly to a store or
to the client's customer

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service representatives. The service uses an interactive voice response system
to provide automated interaction with callers. Caller identification can be used
to instantly recognize the location of a caller and direct him to the nearest
store locations or the service can be set to allow callers to search for stores
in their locality or another area simply by entering in a zip code or telephone
area code. The Wherehouse, a chain of retail music stores, is currently
utilizing Telephone Business Finder. Callers dialing 1-800-WHEREHOUSE can find
nearby Wherehouse locations by inputting their zip code or telephone number.

WIRELESS BUSINESS FINDER. Through our partnership with GTE Telecommunications
Services, Inc., we are developing Wireless Business Finder to identify the area
in which a wireless device user is located. Once operational, the caller will be
automatically directed to the client location closest to his current position
and, if desired, connected to that store or transferred to a customer service
representative. This technology can also be used to assist human operators or to
send short text messages to advanced wireless phones and other devices. Since
the penetration of wireless devices currently surpasses the penetration of
personal computers into U.S. households, we believe this ability to address the
wireless market will be a distinct competitive advantage for participating
branded merchants.

      VICINITY SITEMAKER

      With consumers increasingly turning to the Internet as their preferred
source for store and product information, many retailers are beginning to
realize that their stores require, in addition to physical addresses, a Web
address to provide information specific to those locations, to give store
managers an easy to use interface to modify their data and to report relevant
usage statistics. We address this need with SiteMaker, a component of the
Business Finder marketing services solution that enables individual stores
within an enterprise to easily tailor their own Web presence, while allowing
the corporate parent to protect its valuable brand identity. SiteMaker is
designed to allow these changes to be made by any authorized person,
regardless of whether he or she is knowledgeable in Internet programming
languages such as HTML. Capable of including customized information such as
store hours, incentives, photos, job openings and event listings for speakers
and workshops, SiteMaker enables global and national enterprises to create
individual and community-oriented identities while still conforming to parent
company standards. SiteMaker assists a national brand to address the retail
trend towards creating local community around a store brand. In October 2000,
we acquired NetCreate Systems, Inc. ("NetCreate"), a privately held company
located in San Diego, California. We intend to integrate NetCreate's advanced
online Web generator technology into our SiteMaker offering.

      VICINITY BRANDFINDER

      BrandFinder is designed to generate "store visits" for our client base.
BrandFinder is a powerful aggregation of our industry-leading unique database of
product and location information that enables consumers to choose between brands
to find the nearest location selling a particular product or service. Vicinity
offers BrandFinder through Web portals, Internet-enabled wireless telephones and
other wireless devices such as the Palm VII.

      A consumer may utilize BrandFinder in a number of ways. For example, if an
individual is interested in purchasing a pair of blue jeans, he or she might
start out on a partnering Internet portal by typing in a generic search request,
such as "pants," or a brand-specific request, such as "Levi's." Alternatively,
if the individual did not have current access to a computer, he or she could
make a similar request via a Palm VII, a wireless telephone utilizing the
Wireless Applications Protocol, or WAP, or through other Internet-enabled
devices. With BrandFinder, users can instantly generate information on a wide
array of businesses from banks and cash machines, to restaurants, gas stations
and hotels.

      Once a search has been initiated, BrandFinder returns a list of the stores
that carry the desired product in the area in which the individual is searching.
If the consumer is online, he or she might also be presented the option to visit
a local store's Web site powered by SiteMaker. On the store's local Web site,
the individual might be exposed to promotional incentives from one of our
partners, which, if acted on, would appear as rebates on his or her credit card
statement.

      To date, we have partnered with the following Web and wireless
distribution outlets for BrandFinder:

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           Internet Partners: AltaVista, fodors.com, Inktomi, Lycos, NBC,
Northern Light,

           Wireless Partners: AT&T, Lycos Anywhere, Nextel, OmniSky, Oracle
Mobile, Palm, Verizon

      The combination of the access to a large number of shoppers and the
ability to offer each of those shoppers a specific incentive to visit a client's
retail location leaves us well positioned to take advantage of the explosive
growth of Internet and wireless telephone usage. We link shoppers searching for
their preferred brands and the brick-and-mortar stores that carry those brands.

      MAPBLAST!, SYNDICATION AND THE VICINITY NETWORK

      We operate MapBlast!, located at www.mapblast.com, a leading consumer
destination site that attracts approximately two million unique users and
regularly serves more than 28 million pages a month. In addition to providing
interactive U.S. and European maps and driving directions, the MapBlast! Web
site offers information on services and products near a user's address or
travel route, lodging information and reservation capabilities, traffic
reports and local points of interest. MapBlast! also provides maps and
driving directions to many small businesses and several Internet portals as
well as notable destination sites, including AltaVista, Deja.com, Lycos.com
and RandMcNally.com. MapBlast! commerce partners include AvantGo, Barnes &
Noble, Hilton Hotels and WorldRes, Inc.

      Beginning in fiscal 2000, we began making our MapBlast! and BrandFinder
content available as a syndicated platform. Syndication provides another
opportunity to provide lead generation for our customers by bundling our
brand data with maps, driving directions and other location-based services
and distributing that data across a multitude of platforms such as the Web,
personal digital assistants, Internet-enabled wireless telephones, and
broadband channels. Current "Vicinity Network" syndicated distribution
partners include AltaVista, AT&T, DoDots, fodors.com, Lycos, NBC, OmniSky,
Palm and Verizon.

      PROFESSIONAL SERVICES

      While our regular service offerings have been designed for scalability and
ease of implementation, our clients frequently request special features and
applications that must be custom built. In addition, we are frequently
approached by companies desiring our help in the design and maintenance of large
databases that incorporate geographic or location-based information. Because
these projects require special skills, we have created a professional services
organization within our company to manage these projects. Our professional
services group seeks to apply our specialized knowledge to specific business
problems and develop solutions that would be impractical for our clients to
design or implement themselves. Services, for which we charge on an hourly or
project basis, range from concept development and project design of
clicks-and-mortar solutions to the tracking, data-mining and analysis of
Internet users' online activity.

CLIENTS

      We had 371 clients as of July 31, 2000, including many of the leading
names in the retail, hospitality, food and beverage, shipping, banking,
automotive, technology and manufacturing industries. Our existing clients
include:

Consumer Brands:   Harley-Davidson, Levi Strauss, Olympus, Tommy Hilfiger
Retailers:         Barnes & Noble, The Gap, Home Depot, Kmart, Nordstrom,
                   WalMart
Hospitality:       British Airways, Choice Hotels, Hilton Hotels, Marriott,
                   Starwood Hotels
Food and Beverage: KFC, McDonald's, Pizza Hut, Starbucks, Taco Bell
Shipping:          Airborne Express, DHL, FedEx, U-Haul, United Parcel Service
Automotive:        Ford, General Motors, Honda, Mercedes-Benz, Toyota

     Our services are sold through an in-house direct sales team and a
professional services team, as well as through an outsourced telemarketing
agency. We also utilize our network of channel partners to both refer business
to us and to sell our services under their own private labels. We also maintain
relationships with advertising, promotional and Web marketing agencies that
often incorporate our services into projects they manage for their clients. We
are

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working aggressively to expand our existing internal sales and marketing
capabilities as well as our channel partner program.

     Our target markets for sale of our clicks-and-mortar services include:

         - large companies with an established consumer brand;

         - companies with a branded product line sold through retail
           distribution;

         - companies with a branded chain of stores;

         - advertising agencies servicing national brands;

         - Web development agencies servicing national brands;

         - direct marketing agencies servicing national brands;

         - franchisers and their franchisees; and

         - shopping and search engines.

      We build awareness and demand for our services through marketing programs,
including direct marketing, print and Internet advertising, trade shows and
events, public relations, international marketing, channel marketing and
telemarketing. Sales are implemented through a team of direct sales
representatives and channel partners. The sales cycle, from identifying a
prequalified lead to the signing of a services contract, is typically two to
four months, though in some cases this cycle is accelerated due to a client's
desire to implement a solution quickly or meet a promotional or season deadline,
such as the holiday shopping season. Frequently with a potential new client, the
initial competitor to our service offering is the client's own in- house
information systems department which may initially believe that it can duplicate
our services at a lower cost. This often delays the sales process, but we are
currently unaware of any retailer or merchant that has decided to build its own
solution after having been exposed to our service offerings.

TECHNOLOGY AND INFRASTRUCTURE

      Our core competency is the ability to design, build, implement and manage
projects involving large spatial databases that contain product, location and
attribute information. Our technical expertise spans many software development
specialties including system-level programming, cross-platform solutions, user
interface and template design, production system operation and localization. Our
most important skill is the development of high performance spatial databases
that are used to manage our location-specific data and to manage large amounts
of client information, including store location and product availability data.
Through an automated process, our customers update this data set based on their
own business rules.

      The architectural model for our services is a general-purpose
template-processing engine utilizing Java/JSP that handles user events, controls
program flow and calls component sub-servers that manage our Web Business Finder
service to handle all content-specific transactions. The sub-servers handle
service requests as socket-based stateless transaction processors. Since the
engine and the various sub-servers are all continuously running processes, it is
not necessary to start-up any processes in order to handle a request. These
processes are adjusted to respond to system load as well as recovery from the
occasional system error. This architecture allows maximum flexibility of
resource deployment across multiple networked machines.

      We deliver our services to customers through either an application
programming interface, or API, or through our web development organization that
produces a specific template set for an individual customer. The API allows the
customer to control the interface and provides the customer with maximum
flexibility in terms of creative control. Whether delivered via templates
generated by us or using the API, the service is built around customer supplied
data that may be updated in batch mode, net change, or on a transaction basis
depending on customer needs. Our

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<PAGE>

customer service organization maintains contact with customers to help them work
through any issues before, during and after deployment of their application.

      The usage and reporting data generated by the system are measured in
gigabytes per day and are a valuable tool for customers to understand the
effectiveness of their marketing efforts. We report usage results through
standard secure reports by customer, category, keyword, designated marketing
area or other custom requirements.

      We have invested significant resources in the hardware systems that
deliver our services with the objective of 99.9% availability in a fully
scalable environment across multiple data centers. Our front-end Web servers and
database servers are Sun Enterprise systems designed for reliability,
availability and serviceability to support the operation of our customer's
mission-critical applications. We have designed the servers to tolerate power,
cooling, or storage failures without affecting system operation and to recover
from most failures with minimal disruption. These systems are optimized to
provide extremely high throughput.

      Our services are monitored on a 24 hours per day, seven days per week
basis. At the present time, our system is generally running at less than 50% of
rated capacity at peak usage to permit quick application response. Our
production system is designed with excess capacity to ensure availability
despite partial system failure. In addition, the system is protected by a high
performance firewall and balanced through a state-of-the-art load balancing
solution.

      We currently operate two geographically separate data centers. A typical
data center configuration has front-end servers processing requests from our
customers through switches connected to a load balancing solution. These
front-end servers make specific requests to multiple back-end database machines
as well as systems that process geographic content, such as maps and driving
directions. For security reasons, back-end systems cannot be accessed from the
Internet and process only specially formed queries from the front-end machines.
Each of these sub-systems is fully redundant both in terms of software and
hardware. In the event of a sub-system failure, the load is automatically
transferred to the next available machine. Monitoring software automatically
notifies the on-duty operator of a problem so that immediate action can be
taken.

COMPETITION

      The market in which we compete is relatively new and our services are
highly specialized. While competition exists for most of our service offerings,
the number of companies with which we compete is relatively small and we are
unaware of any one company that competes against us across our full range of
services. We expect competition with our services to increase over time as the
market for our services grows. Competition may also increase as a result of
industry consolidation.

      In the markets occupied by our higher-end products such as Web Business
Finder, we face competition from InfoNow Corporation, which provides outsourced
Web-based inquiry management services, and Where 2 Get It, Inc., which provides
an Internet-based dealer locator services. Our SiteMaker service competes
indirectly with companies that provide free or low cost web creation and hosting
services in conjunction with Internet service provider, or ISP, services. Our
syndicated services compete with InfoSpace, MapQuest, and Switchboard and, to a
lesser degree, with other smaller, location-based content providers. Finally,
with many potential new clients, the initial competitor to our service offerings
is the client's own in-house information systems department which may initially
believe that it can duplicate our services at a lower cost. In each competitive
situation that we face, we believe the factors that cause potential clients to
consider our services include the depth of our service offerings, our ability to
integrate our services into larger marketing initiatives, the quality and
reliability of our services, our speed of implementation and the overall quality
of our technology and client service.

      We believe that our ability to compete depends upon many factors,
including our ability to provide depth and accuracy of destination
information, to increase our sales force and to implement our sales and
marketing initiatives, in addition to the introduction, acceptance and ease
of use of new and enhanced products and services developed either by us or
our competitors.

                                       8
<PAGE>

INTELLECTUAL PROPERTY

      We have filed several applications for U.S. patents in order to protect
proprietary intellectual property that we believe is important to our business.
These include applications entitled "Method and Apparatus for Efficient
Proximity Searching," "A Method and Apparatus of Expanding Web Searching
Capabilities" and "A Method and System for Providing a Web-Shareable Personal
Database."

      Vicinity-Registered Trademark-, MapBlast!-Registered Trademark- and
GeoSearch-Registered Trademark- are registered service marks of our company.
We are in the process of obtaining service marks on other marks used to
describe our primary services. We intend to seek protection for these marks
in all markets where we anticipate providing our services.

      Our products and services rely on the availability and accuracy of
geographic data. We have licensed a significant portion of our geographic data
from a limited number of sources through non-exclusive, short-term contractual
arrangements. If any of these third parties were to merge or be acquired, the
number of sources providing this geographic data would be further reduced. Given
the short terms of our geographic data licenses, we will have to renegotiate our
contracts in the foreseeable future which may result in contractual terms that
are not as favorable to us as the existing data licenses. If we cannot maintain
these data licenses or any other third-party license arrangement on commercially
reasonable terms, the accuracy of our services may suffer.

GOVERNMENT REGULATION

      We are subject, both directly and indirectly, to various laws and
governmental regulations relating to our business. There are currently few laws
or regulations directly applicable to commercial online services or the
Internet. However, due to increasing popularity and use of commercial online
services and the Internet, it is possible that a number of laws and regulations
may be adopted with respect thereto. These laws and regulations may cover issues
such as user privacy, liability for information retrieved from or transmitted
over the Internet, online content regulation, user privacy, taxation and domain
name registration. Moreover, the applicability to the Internet of existing laws
governing issues such as intellectual property ownership and infringement,
copyright, patent, trademark, trade secret, obscenity, libel, employment and
personal privacy is uncertain and developing. Any new legislation or regulation
or the application of existing laws and regulations to the Internet could have a
material and adverse effect on our business.

      As our services are available over the Internet anywhere in the world,
multiple jurisdictions may claim that we are required to qualify to do business
as a foreign corporation in each of those jurisdictions. Our failure to qualify
as a foreign corporation in a jurisdiction where we are required to do so could
subject us to taxes and penalties for the failure to qualify. It is possible
that state and foreign governments might also attempt to regulate our
transmissions of content on our Web site or on the Web sites of others or
prosecute us for violations of their laws. We cannot assure you that violations
of local laws will not be alleged or charged by state or foreign governments,
that we might not unintentionally violate these laws or that these laws will not
be modified, or new laws enacted, in the future.

                                       9
<PAGE>


EMPLOYEES

      As of July 31, 2000, we had 193 employees, including 28 employed in
general and administrative functions, 77 in sales and marketing, 37 in research
and development, and 65 in operations. None of our employees is represented by a
labor union, and we consider our relations with our employees to be good.

      The following table sets forth, as of July 31, 2000, the name, age and
position of each of our directors and executive officers:

<TABLE>
<CAPTION>
            Name                   Age                                      Position
------------------------------   --------  -------------------------------------------------------------------
<S>                             <C>        <C>
Emerick Woods..............        44       President and Chief Executive Officer, Director
Howard Bain................        54       Executive Vice President and Chief Financial Officer
Scott Young................        41       Senior Vice President, Products and Strategy, Chief Technology Officer
Dinesh Wadhawan............        42       Senior Vice President, Worldwide Sales
Gregory Beasley............        37       Vice President, Business Development
Mary Gavin.................        43       Vice President, Engineering
Eric Winkler...............        34       Vice President, Marketing
David Cherner..............        36       Vice President and General Manager, Syndication
Scott Shuda................        34       General Counsel and Secretary
Herbert M. Dwight, Jr. (1)(2)      69       Chairman of the Board of Directors
Jonathan Callaghan.........        31       Director
James J. Geddes, Jr. ......        49       Director
Fred Gibbons (2)...........        50       Director
Peter Mills................        48       Director
Norman Nie (1).............        56       Director
Michael Sears (2)..........        43       Director
Peter Ziebelman (1)........        43       Director
</TABLE>

-------------------
(1)  Member of the Compensation Committee.
(2)  Member of the Audit Committee.

      EMERICK WOODS has served as our President and Chief Executive Officer
since August 1997 and as a Director since February 1998. From August 1996 to
August 1997, Mr. Woods was the President and Chief Executive Officer of
TuneUp.com, Inc., an Internet based computing updating service. In May 1997,
TuneUp.com filed a voluntary petition for Chapter 11 bankruptcy, after which it
was reorganized and sold to Quarterdeck Corporation, a provider of software
utilities. From November 1994 to June 1997, Mr. Woods was a Vice President and
General Manager of Quarterdeck Corporation. Mr. Woods holds a B.S. in Computer
Science from Yale University and an M.B.A. from Harvard University. Mr. Woods is
also a Director of ClickAction, Inc., a provider of Internet marketing
solutions.

      HOWARD A. BAIN III has served as our Executive Vice President and Chief
Financial Officer since March 2000. Prior to joining Vicinity, Mr. Bain served
as Executive Vice President and Chief Financial Officer of Informix Software,
Inc., a manufacturer of enterprise software, from January 1999 to March 2000.
From October 1991 to December 1998, Mr. Bain was Vice President, Worldwide
Operations and Chief Financial Officer at Symantec Corporation, a manufacturer
of packaged software products. Mr. Bain graduated from California Polytechnic
University in 1971 with a B.S. in business and is a Certified Public Accountant.

      SCOTT YOUNG has served as our Senior Vice President, Products and
Strategy, Chief Technology Officer since June 2000. Previously, Mr. Young was
our Senior Vice President of Operations, beginning in October 1997. From
October 1996 to October 1997, Mr. Young was our Director of Operations. From
February 1994 to October 1996, Mr. Young was the Vice President of Sales and
Marketing for Infrastructures for Information, Inc., a provider of integrated
information management systems software. From August 1989 to October 1994,
Mr. Young was the Director of Technology and Government Relations for
Semiconductor Equipment and Materials International, an industry consortium
for the semiconductor industry. Mr. Young holds a B.A. and a J.D. from the
University of Kansas.

                                       10
<PAGE>

      DINESH WADHAWAN has served as our Senior Vice President, Worldwide
Sales since September 2000. Previously, from March 1999 until August 2000,
Mr. Wadhawan served as our Vice President, Sales. From October 1995 to March
1999, Mr. Wadhawan was the Director of Operations, Western North America of
Systems Union, Inc., a provider of international business and financial
software. From January 1994 to September 1995, Mr. Wadhawan was the Global
Manager, Oil and Gas, of Systems Union Limited, the United Kingdom component
of Systems Union. Mr. Wadhawan holds a B.S. and a Post Graduate Diploma in
Business Management from the University of Delhi, India.

      GREGORY BEASLEY has served as our Vice President, Business Development
since August 1998. From 1996 to 1998, Mr. Beasley was the Chief Executive
Officer of Skytech, Inc., an Internet business development company. From 1994 to
1996, Mr. Beasley was Co-Founder, Vice President of Marketing and General
Manager of the Consumer Division of Worlds, Inc., a developer of graphic chat
spaces on the Internet. Mr. Beasley holds a B.A. in Computer Science and
Psychology from Dartmouth College, and an M.B.A. from Harvard University.

      MARY GAVIN has served as our Vice President, Engineering since August
1999. From October 1997 to August 1999, Ms. Gavin was our Director of
Engineering Projects. From March 1997 to October 1997, Ms. Gavin was our Project
Manager. In 1996, Ms. Gavin was a Marketing Manager of NetRights, LLC, a
start-up Internet company. In 1995, Ms. Gavin was a Support and Training Manager
of Codman Research Group, a developer of decision support systems for the health
care industry. Ms. Gavin holds a B.A. from Ripon College.

      ERIC WINKLER has served as our Vice President, Marketing since January
1999. From 1998 to 1999, Mr. Winkler was a Director of Consumer Marketing for
the consumer software division of IBM. From 1994 to 1998, Mr. Winkler was a
Marketing and Communications Department Manager and then Director for Broderbund
Software, a software publisher. Mr. Winkler holds a B.A. from the Allen School
of Advertising at the University of Oregon.

      DAVID CHERNER has served as our Vice President and General Manager,
Syndication since June 2000. Previously, from April 1999 until May 2000, Mr.
Cherner served as our Vice President and General Manager, MapBlast!. From
October 1997 through April 1999, Mr. Cherner was a management consultant to
several early-stage Internet companies, including Third Age Media, eWork
Exchange and Vicinity. In February 1996, Mr. Cherner founded i-Health, Inc., an
Internet health content community, where he served as President and Chief
Executive Officer until September 1997. From 1994 to 1996, Mr. Cherner was a
senior manager, business development of Access Health, Inc., an information
services company. Mr. Cherner holds a B.A. in Economics from Emory University
and an M.B.A. from the Haas School of Business at the University of California,
Berkeley.

      SCOTT SHUDA has served as our General Counsel and Secretary since May
1999. From May 1998 to May 1999, Mr. Shuda was a corporate associate in the
Silicon Valley office of the law firm of Latham & Watkins. From September 1996
to May 1998, Mr. Shuda was a corporate associate in the law firm of O'Sullivan,
Graev & Karabell in New York. From September 1994 to August 1996, Mr. Shuda was
a corporate associate in the law firm of Roger & Wells in New York. Mr. Shuda
holds a B.A., an M.B.A. and a J.D. from Georgetown University.

      HERBERT M. DWIGHT, JR. has served as Chairman of the Board of Directors
since October 1999. Mr. Dwight previously served in a number of positions for
Optical Coating Laboratory, Inc., a manufacturer of optical thin films,
including Chairman of the Board, from August 1991 until February 2000, President
from August 1991 to November 1997, Chief Executive Officer from August 1991 to
April 1998 and Chief Financial Officer from December 1993 to April 1995. Mr.
Dwight was Chairman, President and Chief Executive Officer of Superconductor
Technologies, Inc., a telecommunications technology company, from 1988 through
August 1991 and continued to served as Chairman from 1991 until May 1994. Mr.
Dwight holds a B.S. and an M.S. in Electrical Engineering from Stanford
University. Mr. Dwight is also a Director of Applied Materials, Inc., Applied
Magnetics Corporation and Advanced Fiber Communications, Inc.

      JONATHAN CALLAGHAN has served as a Director since May 1997. Since May
1997, Mr. Callaghan has been a General Partner of CMG@Ventures, a venture
capital firm. From June 1991 to June 1995, Mr. Callaghan was an associate of
Summit Partners, a venture capital firm. Mr. Callaghan holds a B.A. from
Dartmouth College and an M.B.A. from Harvard University. Mr. Callaghan is also a
Director of Chemdex Corporation, Hotlinks Corporation, Exp.com, Inc. and several
private companies.

                                       11
<PAGE>

      JAMES J. GEDDES, JR. has served as a Director since August 1999. Since
September 1995, Mr. Geddes has been the Managing Director of Trans Cosmos USA,
Inc., an investment management company, which is an affiliate of the EnCompass
Group, Inc. From August 1993 to August 1995, Mr. Geddes was the President and
Chief Executive Officer of InVision Systems Corporation, a provider of
Internet-based desktop video software. Mr. Geddes holds a B.S. in Electrical
Engineering from the University of Maryland.

      FRED GIBBONS has served as a Director since October 1995. From October
1995 to October 1999, Mr. Gibbons was the Chairman of the Board of Directors.
From 1995 to 1999, Mr. Gibbons was a Lecturer at Stanford University's Graduate
School of Engineering. Since 1994, Mr. Gibbons has been the principal of
Venture-Concept.com, a concept stage venture management firm. Mr. Gibbons holds
a B.S. in Science Engineering and a M.S. in Computer Engineering from the
University of Michigan and an M.B.A. from Harvard University. Mr. Gibbons is
also a Director of MIPS technologies, Inc., Inverse Networks, Inc. and several
private companies.

      PETER MILLS has served as a Director since February 1996. Since March
1995, Mr. Mills has been a General partner of CMG@Ventures, a venture capital
firm. From March 1992 to March 1994, Mr. Mills was the Chief Executive Officer
of the United States Display Consortium, a non-profit consortium for the
development of flat panel displays. Mr. Mills holds a B.S. in Communications
from Ithaca College and an M.B.A. from Columbia University.

      NORMAN NIE has served as a Director since December 1998. Since 1997, Mr.
Nie has been a Technology Partner of Oak Investments, a venture capital firm.
From 1975 to 1991, Mr. Nie was the Chief Executive Officer of SPSS, Inc., a
provider of statistical software and service solutions. Mr. Nie holds a B.A.
from the University of Washington and an M.A. and a Ph.D from Stanford
University. Mr. Nie is also a director of SPSS, Inc. and several private
companies.

      MICHAEL SEARS has served as a Director since June 1998. Mr. Sears is
currently the President and Chief Executive Officer of Black Pearl Software,
Inc., a provider of Internet enterprise software tools. From 1997 to 1999, Mr.
Sears was the General Manager of Spyglass, Inc., a provider of Internet
connectivity solutions. From 1996 to 1997, Mr. Sears was an independent
consultant, and from 1990 to 1996, Mr. Sears was a General Manager of Sun
Microsystems, Inc. Mr. Sears holds a B.S. from the United States Naval Academy,
and a J.D. and an M.B.A. from Stanford University.

      PETER ZIEBELMAN has served as a Director since June 1997. Mr. Ziebelman is
a Founding Partner of 21st Century Internet Venture Partners, a venture capital
firm. From 1988 to October 1996, Mr. Ziebelman was a partner of Thompson Clive
Venture Capital, an international venture capital firm. Mr. Ziebelman holds a
B.S. in Computer Science and Psychology from Yale University, and an M.S. in
Management from Stanford University.

ITEM 2. PROPERTIES

         In September 2000, we moved into a new headquarters facility
consisting of approximately 53,000 square feet located in Sunnyvale,
California, which we occupy under a lease expiring in September 2008. We
occupy 11,500 square feet in New Hampshire under a three-year lease that is
used for engineering and product development. We also currently lease
approximately 1,200 square feet in San Francisco, California for satellite
office space. We recently signed a lease for approximately 2,200 square feet
in San Francisco, California to replace the existing San Francisco satellite
office under a lease expiring in August 2005. With the acquisition of
NetCreate Systems, Inc. in October 2000, we assumed a lease for approximately
12,000 square feet of office space in San Diego, California under a
three-year lease expiring in August 2003. We also lease space in a number of
data centers in which we locate our equipment.

ITEM 3. LEGAL PROCEEDINGS

         In May 1999, Eddie Babcock, a founder and former employee of our
company, filed a complaint against us and several of our officers in California
Superior Court for reformation of contract alleging various contract and tort
causes of action and seeking declaratory relief. In his complaint, Mr. Babcock
seeks, among other things, the issuance to him of at least 281,250 shares of our
common stock, an unspecified amount of compensatory damages and punitive
damages, plus attorneys' fees. In November 1999, the court stayed Mr. Babcock's
claim and granted our motion to compel arbitration. Such arbitration is
currently scheduled to commence in November 2000. We plan to vigorously defend
against these allegations.

                                       12
<PAGE>

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

         We did not submit any matters to a vote of security holders during the
fourth quarter of fiscal year 2000.

                                     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
"VCNT." The following table lists the high and low sales prices of our common
stock for the periods indicated.

<TABLE>
<CAPTION>
                                                                                          HIGH            LOW
                                                                                     --------------    -----------
<S>                                                                                  <C>               <C>
FISCAL YEAR ENDING JULY 31, 2000
   Fourth quarter.................................................................    $     28.50       $  11.88
   Third quarter (beginning February 9, 2000).....................................    $     76.25       $   9.50
</TABLE>

      At July 31, 2000, there were approximately 5,000 stockholders of record
of our common stock, as shown in the records of our transfer agent.

      We have never declared or paid cash dividends on our common stock. We
expect to retain future earnings, if any, for use in the operation of our
business and do not anticipate paying any cash dividends on our common stock in
the foreseeable future.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

      The following selected consolidated financial data should be read in
conjunction with "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations," our consolidated financial statements and
the notes thereto included elsewhere in this Annual Report. The consolidated
statement of operations data for the years ended July 31, 2000, 1999, 1998, 1997
and the period ended July 31, 1996, and the consolidated balance sheet data as
of July 31, 2000, 1999, 1998, 1997 and 1996, are derived from our audited
consolidated financial statements.

<TABLE>
<CAPTION>
                                                                                                  OCTOBER 15, 1995
                                                                                                      (INCEPTION)
                                                            YEAR ENDED JULY 31,                       TO JULY 31,
                                        ---------------------------------------------------------
                                           2000            1999           1998            1997           1996
                                        -----------    -----------     -----------    -----------    -----------
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                     <C>            <C>             <C>            <C>             <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues................................$   15,190     $    6,424      $    4,810     $    1,419      $      20
Operating expenses.......................   25,206          7,939           4,432          5,790            880
Loss from operations.....................  (19,083)        (5,464)         (2,469)        (6,347)          (869)
Net loss.................................  (15,417)        (5,515)         (2,481)        (6,238)          (864)
Net loss applicable to common
  stockholders...........................  (16,466)        (6,553)         (2,999)        (6,621)          (898)
Basic and diluted net loss per share.....$   (1.08)    $    (1.67)     $   (1.00)     $    (1.61)     $   (0.20)
Weighted average shares used in
  basic and diluted net loss per
    share calculation....................   15,309          3,913           2,986          4,102          4,458
</TABLE>

<TABLE>
<CAPTION>
                                                                     AS OF JULY 31,
                                           2000            1999           1998            1997           1996
                                        -----------    -----------     -----------    -----------    -----------
<S>                                     <C>            <C>             <C>            <C>             <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...............$   48,195     $    9,060      $      264     $      912      $   1,015
Working capital..........................  114,616          4,196          (2,381)          (106)           931
Total assets.............................  134,494         13,203           1,821          1,623          1,509
Capital lease obligations, excluding
  current portion........................      270            298              --             --             --
Redeemable convertible preferred
  stock and warrants.....................       --         21,403           7,972          7,454          2,094
Total stockholders' equity (deficit).....  120,391        (16,569)        (10,287)        (7,512)          (890)
</TABLE>


                                       13
<PAGE>



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

       The following discussion of the financial condition and results of
operations of our company should be read in conjunction with our consolidated
financial statements and the notes thereto included elsewhere in this Annual
Report. This discussion contains forward-looking statements that involve
risks and uncertainties.

OVERVIEW

       We are a leading provider of marketing infrastructure services for
Global 2000 branded companies on the Internet and on wireless platforms. We
use our expertise in designing and maintaining complex spatial databases to
provide a suite of Internet-based marketing infrastructure services, ranging
from store locators for clients with a few hundred locations to the design
and maintenance of complex, multi-attribute databases for clients with
millions of product records that include information such as regularly
stocked products and current promotional offers.

       COMPANY HISTORY AND EVOLUTION. Our company was formed in October 1995,
and our initial revenues were derived from providing maps, driving directions
and directory services to regional telephone companies and large portal
companies. In fiscal 1997, we restructured our company by cutting staff and
expenses, hiring a new chief executive officer and refocusing our strategy on
our Business Finder service. In fiscal 1998, we grew our clients from 102
companies to 193 companies as a result of the continued concentration of our
efforts on Business Finder. We continued to increase our revenues in fiscal
1998 despite the loss of our biggest customer at the time, Yahoo!. In fiscal
1999, we recruited additional key members of our management team and expanded
our product offerings to include Telephone Business Finder, SiteMaker and
Print Maps.

       Historically, we have generated substantially all of our revenues from
our Web Business Finder, maps, driving directions and directory services. During
recent fiscal quarters, however, we have begun to generate significant revenue
from service and transaction fees, principally project-related professional
services. We have continued to grow our client base in fiscal 2000 and, as of
July 31, 2000, we had 371 clients.

       In February 2000, we completed our initial public offering ("IPO"). As a
result, we issued 8,050,000 shares of common stock at a price of $17.00 per
share and received approximately $125.9 million in cash, net of underwriting
discounts and other offering costs.

       On October 18, 2000, the Company reached a definitive agreement (the
"NetCreate Agreement") to acquire NetCreate Systems, Inc. ("NetCreate"), an
Internet products company that provides tools and services to build or
enhance the features and functionality of web sites. In accordance with the
NetCreate Agreement, we paid $250,000 in cash and will issue approximately
441,000 shares of our common stock in exchange for all outstanding shares of
NetCreate common stock. In addition, we will issue options to purchase
approximately 90,000 shares of our common stock in exchange for outstanding
options to purchase NetCreate common stock. The aggregate purchase price to
be allocated to acquired assets and liabilities is expected to be
approximately $5.0 to $5.5 million, which includes acquisition-related costs.
The acquisition will be accounted for using the purchase method of accounting.

       INTERNATIONAL EXPANSION. During fiscal 2000, we expanded our
operations into Europe. During the latter part of our fiscal third quarter,
and the early part of our fiscal fourth quarter, we opened sales offices in
France, Germany and the United Kingdom. We earned approximately 9% of our
revenue internationally during fiscal 2000 and we expect that an increased
percentage of our revenue will be derived from international sources during
fiscal 2001 as a result of our recent international expansion.

       MAPBLAST!, BRANDFINDER AND THE VICINITY NETWORK. We are currently
focusing our efforts on expanding our BrandFinder service and building a
distribution platform to enable unique lead generation opportunities for our
customers. In conjunction with these efforts, we began syndicating MapBlast!
and BrandFinder and expect to emphasize this approach over the option of
building MapBlast!, located at www.mapblast.com, as a unique business to
consumer destination site. We believe that MapBlast! provides unique value to
our company by offering both lead-generation for our brands as well as a
branded platform for syndicating our content. Increasingly, we expect to
place more emphasis on the Vicinity Network in order to utilize it as a
syndicated platform on which we can deliver traffic, high quality leads and
incremental sales opportunities for our brick-and-mortar clients through the
Web, wireless and broadband channels. We have recently entered into contracts
with partners including Alta Vista, fodors.com, Lycos, NBC, OmniSky and Palm.
We also continue to pursue strategic partnerships in the wireless arena and
recently entered into agreements with Nextel and OracleMobile.

       PROFITABILITY. We have not achieved profitability on a quarterly or
annual basis and expect to continue to incur net losses through at least the
first three fiscal quarters of fiscal 2001. We expect that our intention to
accelerate our

                                       14
<PAGE>

efforts directed at international expansion, wireless and emerging markets, and
the expansion of MapBlast!, BrandFinder and the Vicinity Network will require us
to increase operational expenses, primarily in sales and marketing, over the
next nine months. We expect this increased rate of spending to slow slightly on
a sequential basis as we move through fiscal 2001.

RESULTS OF OPERATIONS

COMPARISON OF FISCAL 2000 TO FISCAL 1999

      LICENSE AND HOSTING FEES. Revenue from license and hosting fees is
recognized in accordance with Statement of Position (SOP) No. 97-2, "Software
Revenue Recognition." As such, this revenue is recognized ratably over the life
of the contracts, which typically have one-year, non-refundable terms.

      In fiscal 2000, we recognized $11.1 million of license and hosting fees
revenue, an increase of $5.4 million, or 96%, compared to $5.7 million in fiscal
1999. The increase in license and hosting fees revenue was generally
attributable to growth in our customer base and, specifically, to growth in
demand for Business Finder services. We grew the total number of our customers
to 371 as of July 31, 2000 from 237 as of July 31, 1999, an increase of 57%.

      Deferred revenue consists of customer payments received and accounts
receivable recorded in advance of recognizing revenue for license and hosting
services. Deferred revenue as of July 31, 2000 was $7.6 million, compared to
$5.0 million as of July 31, 1999, representing an increase of $2.7 million, or
54%.

      SERVICE AND TRANSACTION FEES. Revenue from service and transaction fees
consists of revenue generated from project-related professional services and, to
a lesser degree, from advertising, sponsorship and e-commerce transactions.
This revenue is recognized as the services are performed.

      In fiscal 2000, we recognized $4.1 million of service and transaction fees
revenue, an increase of $3.4 million, or 438%, from $0.8 million for fiscal
1999. This increase in service and transaction fees revenue is primarily
attributable to an increase in demand for professional services, mostly web
development services for our customers, as well as increased advertising and
transaction revenue derived mainly from customers utilizing our Vicinity
Network.

      COST OF REVENUES. Cost of revenues includes salaries and benefits of our
operations personnel, the cost of acquiring data and content, leasing and
depreciation costs for our computer hosting equipment and Internet connection
and data center charges. Cost of revenues increased $5.1 million, or 130%, to
$9.1 million in fiscal 2000 compared to $3.9 million for fiscal 1999. The
increase in cost of revenues is attributable to increases in personnel to
support our business growth, equipment costs related to the expansion of our
data centers and content fees as a result of additions to our set of content
providers.

      PRODUCT DEVELOPMENT. Product development expense consists primarily of
salaries and benefits, consulting expenses and equipment costs. Product
development expense increased $1.6 million, or 91%, to $3.3 million for fiscal
2000 from $1.7 million for fiscal 1999. The increase in product development
expense in fiscal 2000 was primarily attributable to increases in personnel and
personnel-related costs due to our expanded product offerings.

      SALES AND MARKETING. Sales and marketing expense consists primarily of
salaries, commissions, promotion costs, advertising and travel-related expenses.
Sales and marketing expense increased $12.6 million, or 350%, to $16.1 million
for fiscal 2000 from $3.6 million for fiscal 1999. The number of sales and
marketing personnel, and the amount of personnel-related, promotion and
advertising costs increased during fiscal 2000 to support our expanded sales and
marketing efforts. As noted above, we expect that our intention to accelerate
our efforts directed at international expansion, wireless and emerging markets,
and the expansion of our MapBlast/BrandFinder distribution network will require
us to increase operational expenses, primarily in sales and marketing, over the
first nine months of fiscal 2001.

      GENERAL AND ADMINISTRATIVE. General and administrative expense consists
primarily of salaries and related costs for our executive, administrative,
finance and human resources personnel as well as accounting, legal and other
professional fees. General and administrative expense increased $2.7 million, or
136%, to $4.7 million for fiscal 2000 from $2.0 million for fiscal 1999. During
fiscal 2000 personnel and personnel-related costs increased, primarily as a

                                       15
<PAGE>

result of the need to support and grow our business as well as to support the
requirements related to the operation of our company as a publicly-traded
company. We expect general and administrative expenses to grow moderately as
additional personnel are hired and additional expenses are incurred in
connection with the growth of our business and our operation as a public
company.

      STOCK-BASED COMPENSATION. As of July 31, 2000, we had recorded deferred
stock-based compensation expense aggregating $2.3 million in stockholders'
equity (deficit) for the difference at the date of grant between the exercise
price and the fair value of the common stock underlying stock options granted in
fiscal 2000 and 1999. Of this amount, we recognized as expense a total of $1.0
million and $0.2 million for fiscal 2000 and 1999, respectively. In addition, we
expect to recognize $0.6 million for fiscal 2001, $0.4 million for fiscal 2002
and $0.1 million for fiscal 2003.

      OTHER INCOME/EXPENSE, NET. Other income/expense in fiscal 2000 was
comprised of approximately $3.7 million of interest income earned on the cash
proceeds received from our IPO in February 2000, offset by less than $0.1
million of interest expense related to capital lease obligations.

COMPARISON OF FISCAL 1999 TO FISCAL 1998

      LICENSE AND HOSTING FEES. Revenues associated with license and hosting
fees were $5.7 million in fiscal 1999, compared to $4.4 million in fiscal 1998,
representing an increase of $1.3 million, or 29%. This increase was primarily
attributable to growth in our customer base due to increased market acceptance
in our targeted markets. In addition, we grew our clients from 193 companies as
of August 1, 1998 to 237 companies as of July 31, 1999.

      Deferred revenues as of July 31, 1999 were $5.0 million, compared to $2.5
million as of July 31, 1998, representing an increase of $2.5 million, or 100%.

      SERVICE AND TRANSACTION FEES. Our service and transaction fees were $0.8
million in fiscal 1999, compared to $0.4 million in fiscal 1998, representing an
increase of $0.4 million, or 81%. This increase was due primarily to increased
demand for customized development work, including web development services for
our customers.

      COST OF REVENUES. Cost of revenues was $3.9 million for fiscal 1999,
compared to $2.8 million for fiscal 1998, representing an increase of $1.1
million, or 39%. This increase was due to increases in each of the elements
described above to support our revenue growth.

      PRODUCT DEVELOPMENT. Product development expense was $1.7 million for
fiscal 1999, compared to $1.6 million for fiscal 1998, representing an increase
of $0.2 million, or 13%. This increase was primarily attributable to increases
in personnel and personnel-related costs due to our expanded product offerings.

      SALES AND MARKETING. Sales and marketing expense was $3.6 million for
fiscal 1999, compared to $1.7 million for fiscal 1998, representing an increase
of $1.9 million, or 114%. This increase was primarily attributable to increases
in personnel and personnel-related costs to support our expanded sales and
marketing efforts.

      GENERAL AND ADMINISTRATIVE. General and administrative expense was $2.0
million for fiscal 1999, compared to $1.2 million for fiscal 1998, representing
an increase of $0.8 million, or 66%. This increase was primarily attributable to
an increase in personnel and personnel-related costs to support and grow our
business.

      OTHER. This expense was $0.4 million for fiscal 1999 representing a charge
to settle a patent infringement claim and obtain a perpetual license. There was
no similar expense for fiscal 1998.

      STOCK-BASED COMPENSATION. Stock-based compensation expense was $0.2
million for fiscal 1999. There was no stock-based compensation expense in fiscal
1998.

                                       16
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>
                                                                                    Years ended July 31,
                                                                         -------------------------------------------
                                                                            2000            1999           1998
                                                                         ------------  --------------  -------------
                                                                                        (In millions)
<S>                                                                      <C>            <C>             <C>
   Cash, cash equivalents and short-term investments...................  $     121.8    $       9.1     $      0.3
   Working capital.....................................................  $     114.6    $       4.2     $      2.4
   Cash used in operating activities...................................  $     (10.0)   $      (3.5)    $     (1.7)
   Cash used in investing activities...................................  $     (79.2)   $      (0.2)    $       --
   Cash provided by financing activities...............................  $     128.3    $      12.6     $      1.1
</TABLE>

      In February 2000, we completed our IPO and, as a result, issued 8,050,000
shares of common stock at a price of $17.00 per share. We received approximately
$125.9 million in cash from our IPO, net of underwriting discounts and other
offering costs. We intend to use these proceeds to expand our sales and
marketing efforts, to expand our international business, to develop new
technologies and products and improve our technology infrastructure and for
working capital and other general corporate purposes. Pending this use, we have
invested these proceeds in interest-bearing securities, primarily government
securities, municipal bonds, time deposits, Eurodollar deposits, certificates of
deposit with approved financial institutions, commercial paper rated
A-1/P-1/F-1, corporate notes and bonds and other money market instruments of
similar liquidity and credit quality.

      Cash used in operating activities was $10.0 million for fiscal 2000
compared to $3.5 million for fiscal 1999. This increase was primarily as a
result of the increase in our net loss to $15.4 million for fiscal 2000 from
$5.5 million for fiscal 1999, partially offset by non-cash charges for
depreciation, stock-based compensation, and increases in our accounts payable,
accrued liabilities and deferred revenue balances in excess of the growth in our
operating asset balances.

      Cash used in investing activities increased to $79.2 million in fiscal
2000 from $0.2 million used in fiscal 1999. This increase was due in large part
to the investment in available-for-sale securities of the cash we received from
our IPO in February 2000. Cash used in investing activities also included
capital expenditures for computers and other equipment, primarily for our data
centers.

      Cash provided by financing activities increased to $128.3 million for
fiscal 2000 compared to $12.6 million for fiscal 1999, due primarily to net
proceeds of approximately $125.9 million received as a result of our IPO.

      As part of our business strategy, we intend to invest significant amounts
of capital over the next 12 to 24 months to expand our sales and marketing
resources, including expanding our international business, and to develop new
technologies and products and improve our technology infrastructure. This
investment could be in the form of direct investment or through the formation of
joint ventures, strategic partnerships or similar arrangements.

      Future capital requirements will depend upon many factors, including the
rate of expansion of our sales and marketing resources and the timing and
magnitude of our research and product development efforts. We expect to continue
to expend significant amounts on expansion of facility infrastructure; computers
and related data center equipment, as well as personnel. We believe that our
cash, cash equivalents and short-term investments will be sufficient to satisfy
our cash requirements for at least the next 12 months.

DISCLOSURES ABOUT MARKET RATE RISK

      We develop products in the United States and market our products in North
America and Europe. As a result, our financial results could be affected by
factors such as changes in foreign currency exchange rates or weak economic
conditions in foreign markets. Since all of our sales are currently made in U.S.
dollars, a strengthening of the dollar could make our products less competitive
in foreign markets.

      The primary objective of our investment activities is to preserve
principal and assure sufficient liquidity to meet anticipated needs, while at
the same time maximizing the income we receive from our investments within such

                                       17
<PAGE>

constraints. Some of the securities that we invest in may be subject to market
risk. This means that a change in prevailing interest rates may cause the
principal amount of the investment to fluctuate. For example, if we hold a
security that was issued with a fixed interest rate at the then-prevailing rate
and the prevailing interest rate later rises, the principal amount of our
investment will probably decline. To minimize this risk in the future, we intend
to maintain our portfolio of cash equivalents and short-term investments in a
variety of securities, including government securities, municipal bonds, time
deposits, Eurodollar deposits, certificates of deposit, commercial paper,
corporate notes and bonds and other specific money market instruments. We
classify our cash equivalents and short-term investments as "fixed-rate" if the
rate of return on such instruments remains fixed over their term. We classify
our cash equivalents and short-term investments as "variable rate" if the rate
of return on such investments varies based on the change in a predetermined
index or set of indices during their term. The table below presents the amounts
and related weighted interest rates of our investment portfolio at July 31,
2000:

<TABLE>
<CAPTION>
                                                                             AVERAGE                       FAIR
                                                                          INTEREST RATE     COST           VALUE
                                                                          ------------- --------------  ------------
                                                                                             (In thousands)
<S>                                                                       <C>           <C>             <C>
Cash equivalents:
   Fixed rate..........................................................         6.61%   $     7,634     $     7,623
   Variable rate.......................................................         7.56            304             304

Short-term investments:
   Fixed rate..........................................................         6.56         56,684          58,437
   Variable rate.......................................................         6.57         15,705          15,662
</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS

      In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments (including derivative instruments embedded in other contracts) and
for hedging activities. SFAS No. 133, as amended by SFAS No. 137, is effective
for all fiscal quarters of fiscal years beginning after June 15, 2000. To date,
we have not entered into any derivative financial instruments or hedging
activities.

      In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," as amended by
SAB No. 101B, to provide guidance on the recognition, presentation and
disclosure of revenue in financial statements; however, SAB No. 101 does not
change existing literature on revenue recognition. SAB No. 101 explains the
staff's general framework for interpretation of revenue recognition rules. We
believe that our current revenue recognition policy is in compliance with this
guidance; however, we continue to evaluate the impact, if any, of SAB No. 101
and any possible subsequent interpretations of SAB No. 101 on our policies and
procedures. SAB No. 101 is effective beginning with our fiscal quarter ending
July 31, 2001.

      In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an Interpretation of APB
Opinion No. 25" (FIN No. 44). FIN No. 44 clarifies the application of Opinion 25
for only certain issues such as the following: (a) the definition of employee
for purposes of applying Opinion 25, (b) the criteria for determining whether a
plan qualifies as a noncompensatory plan, (c) the accounting consequence of
various modifications to the terms of a previously fixed stock option or award,
and (d) the accounting for an exchange of stock compensation awards in a
business combination. We believe that our current accounting treatment for
transactions involving stock compensation is in compliance with this guidance.

                                       18
<PAGE>


FACTORS THAT MAY AFFECT FUTURE RESULTS

      Current and potential stockholders should consider carefully each of the
following factors in making their investment decisions. These factors should be
considered together with the other information included or incorporated by
reference in this Annual Report.

OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING
HISTORY AND HAVE BEEN FOCUSED ON OUR CURRENT BUSINESS STRATEGY FOR ONLY
APPROXIMATELY THREE YEARS.

      Our company was founded in October 1995, and our initial revenues were
derived from providing maps, driving directions and directory services. Not only
is our operating history short, but we also refocused our business strategy on
our Business Finder service in early 1997. Accordingly, we have a limited
operating history from which you can evaluate our present business and future
prospects. As a relatively new entrant to the Internet-based marketing services
business, we face risks and uncertainties relating to our ability to implement
our business plan successfully. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving
markets such as the Internet. If we are unsuccessful in addressing these risks
and uncertainties, our business, results of operations, financial condition and
prospects will be materially adversely affected.

WE HAVE A HISTORY OF LOSSES AND NEGATIVE CASH FLOWS AND ANTICIPATE CONTINUED NET
LOSSES BECAUSE WE INTEND TO CONTINUE TO INVEST IN DEVELOPING OUR BUSINESS.

      We have not generated enough revenues to exceed the substantial amounts we
have spent to develop our business. We incurred net losses of approximately
$15.4 million for fiscal 2000, $5.5 million for fiscal 1999, $2.5 million for
fiscal 1998 and $6.2 million for fiscal 1997. We expect to continue to lose
money for the foreseeable future because we plan to continue to incur
significant expenses as we expand our sales and marketing resources, including
expanding our business in Europe and Asia, and develop new technologies and
products and improve our technology infrastructure. Moreover, we base current
and future expense levels on our operating plans and our estimates of future
revenues. If our revenues grow at a slower rate than we anticipate, or if our
spending exceeds our expectations or cannot be adjusted to reflect slower
revenue growth, we may not generate sufficient revenues to achieve
profitability. If we do achieve profitability, we may be unable in the future to
sustain or increase profitability on a quarterly or annual basis.

OUR BUSINESS IS SUBJECT TO QUARTERLY FLUCTUATIONS IN OPERATING RESULTS, WHICH
MAY NEGATIVELY IMPACT THE PRICE OF OUR COMMON STOCK.

      You should not rely on quarter-to-quarter comparisons of our operating
results as an indication of future performance. It is possible that in future
periods our quarterly operating results may fall below the expectations of
public market analysts and investors. In this event, the price of our common
stock is likely to fall.

      Our quarterly net loss was approximately $4.5 million for the fiscal
quarter ended July 31, 2000, $4.5 million for the fiscal quarter ended April 30,
2000, $3.6 million for the fiscal quarter ended January 31, 2000, $2.9 million
for the fiscal quarter ended October 31, 1999, $2.4 million for the fiscal
quarter ended July 31, 1999, $1.5 million for the fiscal quarter ended April 30,
1999 and $0.9 million for the fiscal quarter ended January 31, 1999. We expect
to continue to incur net losses over the next several quarters as we incur
expenses to expand our sales and marketing resources, including expanding our
international business, and develop new technologies and products and improve
our technology infrastructure. However, our quarterly operating results may
fluctuate significantly in the future due to a variety of factors. These factors
include the following, which are generally outside of our control:

      -    competition in the markets for our services;

      -    variation in the demand for our Internet-based marketing
           infrastructure services and seasonal trends relating to marketing
           spending;

                                       19

<PAGE>

      -    our ability to protect our systems from telecommunications failures,
           power loss or equipment or software-related system failures;

      -    the availability and cost of geographic data and content from third
           party providers; and

      -    economic conditions specific to the Internet as well as general
           economic and market conditions.

      Other factors that may cause our quarterly operating results to fluctuate
significantly which are at least partially under our control include:

      -    the rate of new customer acquisitions;

      -    whether revenues related to new customer acquisitions are recognized
           currently or deferred over future time periods;

      -    the timing and effectiveness of our development of new services;

      -    the timing and effectiveness of potential strategic alliances or
           other business combinations; and

      -    changes in our operating expenses.

      In addition, our operating expenses are based on our expectations of our
future revenues and some of our operating expenses are relatively fixed in the
short term, including personnel costs, data support expenses and the cost of
licensing necessary information. We may be unable to reduce our expenses quickly
enough to offset any revenue shortfall.

THE MARKET PRICE OF OUR COMMON STOCK HAS BEEN AND MAY CONTINUE TO BE HIGHLY
VOLATILE.

      The market price of our common stock has fluctuated widely and may
continue to do so. For example, during the period following our IPO in February
2000 through the period ended October 4, 2000, the trading price of our common
stock has ranged from a high of $76.25 per share to a low of $8.75 per share.
Many factors could cause the market price of our common stock to rise and fall
in the future. Some of these factors include:

        -    actual or anticipated variations in our operating results;

        -    announcement of technological innovations;

        -    conditions or trends in the Internet and marketing infrastructure
             services industries;

        -    acquisitions and alliances by us or others in the industry;

        -    changes in estimates of our performance or recommendations by
             financial analysts;

        -    market conditions in the industry and the economy as a whole;

        -    introduction of new services by our competitors;

        -    changes in the market valuations of other Internet service
             companies;

        -    announcements by us or our competitors of significant acquisitions,
             strategic partnerships, joint ventures or capital commitments;

        -    additions or departures of key personnel; and


                                       20
<PAGE>

        -    other events or factors, many of which are beyond our control or
             only partially in our control.

      The overall financial markets have recently experienced significant price
and volume fluctuations, and the market prices of technology companies,
particularly Internet-related companies, have been and continue to be extremely
volatile. Volatility in the price of our common stock may be caused by factors
outside of our control and may be unrelated or disproportionate to our operating
results. In the past, following periods of volatility in the market price of a
public company's securities, securities class action litigation has often been
instituted against that company. Securities class action litigation could result
in substantial costs and a diversion of our management's attention and
resources.

IF DEMAND FOR INTERNET-BASED MARKETING SERVICES FAILS TO DEVELOP OR DEVELOPS
MORE SLOWLY THAN WE EXPECT, WE MAY NOT GENERATE SUFFICIENT REVENUES TO ACHIEVE
PROFITABILITY.

      Our future success is highly dependent on an increase in the use of the
Internet as a marketing medium. If significant demand for Internet-based
marketing services fails to develop or develops more slowly than we expect, we
may not generate sufficient revenues to achieve profitability. The market for
Internet-based marketing services is new and rapidly evolving, and it cannot yet
be compared with traditional marketing media to gauge its effectiveness.
Companies that have historically relied on traditional marketing methods may be
reluctant or slow to adopt online marketing. As a result, demand and market
acceptance for Internet-based marketing solutions cannot yet be determined. Many
of our current and potential clients have little or no experience using the
Internet for marketing purposes and may allocate only a limited portion of their
marketing budgets to the Internet. Companies that have invested substantial
resources in traditional methods of marketing may be reluctant to reallocate
those resources to online marketing. In addition, companies that have invested a
significant portion of their marketing budget in online marketing may decide
after a time to return to more traditional methods if they find that online
marketing is a less effective method of promoting their products and services
than traditional marketing methods.

WE WILL CONTINUE TO DEDICATE SIGNIFICANT RESOURCES TOWARD DEVELOPING NEW CLIENTS
INTERNATIONALLY; ANY SUCCESS IN THESE EFFORTS MAY PROVE NOT TO HAVE BEEN WORTH
THE ASSOCIATED EXPENSE.

      Our current business plan includes expanding internationally. We recently
opened sales offices in France, Germany and the United Kingdom. To date, we have
limited experience in marketing our services internationally, and we cannot
predict our success in these international markets. In order to expand overseas,
we intend to continue to enter into relationships with foreign businesses, and
we cannot predict whether those relationships will be successful. Our plans to
expand internationally are subject to inherent risks, including:

      -    the impact of economic fluctuations in economies outside of the
           United States;

      -    greater difficulty in accounts receivable collection and longer
           collection periods;

      -    unexpected changes in regulatory requirements, tariffs and other
           trade barriers;

      -    difficulties and costs of staffing and managing foreign operations
           due to distance, as well as language and cultural differences;

      -    political instability, currency exchange fluctuations and potentially
           adverse tax consequences; and

      -    reduced protection for intellectual property rights outside the
           United States.

      We cannot predict whether the expansion of our business internationally
will be successful. The results of our efforts may prove not to have been worth
the associated expense and opportunity cost.

HISTORICALLY, WE HAVE DEPENDED ON A LIMITED NUMBER OF SERVICES FOR MOST OF OUR
REVENUES.

      Historically, we have derived most of our revenues from our Web Business
Finder, maps, driving directions and directory services, which represented
approximately 65% of our revenues in fiscal 2000, 86% of our revenues in fiscal

                                       21
<PAGE>

1999 and 91% of our revenues in fiscal 1998. Our results of operations would be
materially and adversely affected by a reduction in demand or a change in the
pricing structure for these services, unless and until we are able to generate
revenue from other services.

WE HAVE RELIED ON OUR ABILITY TO SELL EXISTING CUSTOMERS ADDITIONAL SERVICES TO
GENERATE REVENUE AND THE CONTINUED GROWTH OF OUR BUSINESS DEPENDS ON OUR ABILITY
TO CONTINUE TO DO SO IN THE FUTURE.

      Much of our past sales growth is the result of selling additional services
to existing clients. Our growth strategy depends on the introduction of new
services that we hope to sell to our existing clients. We may not develop any of
these new services in a cost-effective and timely manner, and we have
insufficient experience with these new service offerings to know whether they
will be well received by our clients. Any new service we introduce that is not
favorably received could damage our relationships with our clients. If our
existing clients decide to maintain their current level of service and not
upgrade to additional services, we might fall short of our projected sales and
would have to cultivate other sales opportunities, which might be expensive and
might not materialize.

WE MAY BE UNABLE TO MAINTAIN OUR CURRENT PRICING STRUCTURE BECAUSE OUR BUSINESS
IS CHANGING RAPIDLY AS ARE THE SERVICES THAT WE PROVIDE.

      Our current business model is to provide marketing infrastructure services
to our business clients. We may not achieve an acceptable level of
profitability, or become profitable at all, if our clients' marketing executives
do not perceive that the use of our services will improve the effectiveness of
their marketing efforts or if they are otherwise unable to generate a
significant return on investment from using our services. Internet-based
marketing services are relatively new and unproven and may not achieve
widespread customer acceptance. To be successful, we must adapt to our rapidly
changing market by continually enhancing the technologies used in our services
and introducing new technology to address the changing needs of our clients.
Under our current pricing structure, clients pay for most of our services
through set-up and annual fees. There is a risk that competition with respect to
the services we provide will eventually result in very low prices for our
services. If we are unable to maintain an adequate pricing structure, we will
not generate sufficient revenues to achieve and maintain profitability.

OUR BUSINESS IS DEPENDENT ON THE CONTINUOUS, RELIABLE AND SECURE OPERATION OF
OUR DATABASES AND THE RELATED SERVICES THAT WE PROVIDE, AND A SYSTEM FAILURE
COULD NEGATIVELY IMPACT OUR BUSINESS.

      Our operations are dependent on our ability to maintain our databases,
servers and communications equipment in effective working order and to protect
them from fire, natural disaster, sabotage, power loss, telecommunications
failure, human error or similar events. Although we currently maintain two
geographically dispersed data centers, a system failure or natural disaster
could significantly disrupt our operations. Any system failure, including a
network, software or hardware failure, that causes an interruption in the
performance of our services or a decrease in responsiveness of our services
could result in lost clients, reduced revenue and harm to our reputation.
Despite the implementation of security measures and standard operating
procedures, our infrastructure may also be vulnerable to computer viruses,
hackers, human error or similar problems caused by our employees, clients or
Internet users. A party who is able to circumvent our security measures could
misappropriate proprietary database information or cause interruptions in our
operations. As a result, we may be required to expend significant capital and
other resources to help protect against, or to alleviate problems caused by,
these security breaches. Our insurance may not adequately compensate us for any
losses that may occur due to any failure in our system or interruption in our
service. In addition, the growth of our business may strain the capacity of our
servers and telecommunications systems. If we are unable or otherwise fail to
maintain or upgrade our systems, they could fail or suffer degradation in
performance. Any damage, failure or delay that causes significant interruption
in our databases or other systems would adversely affect our operating results
and could cause the price of our common stock to decline.

OUR CURRENT BUSINESS PLAN DEPENDS IN SIGNIFICANT PART ON THIRD PARTY
RELATIONSHIPS, MANY OF WHICH ARE SHORT-TERM OR TERMINABLE.

      We presently rely on our strategic partners to provide key services,
marketing opportunities, technologies, clients and users. These arrangements can
be terminated by our partners in some circumstances. If our relationships with
our strategic partners were terminated, we would have to adapt our operations or
business plan, which may take

                                       22
<PAGE>

time and may interrupt the provision of the affected services. In addition, if
we do not establish additional, and maintain existing, strategic relationships
on commercially reasonable terms or if our strategic relationships do not result
in an increase in the number of users of our services, we may be unable to
continue to offer existing products or to develop new products and we may not
experience a significant portion of the anticipated growth in our clients and
the number of end-users of our services. As a result, we may not generate
sufficient revenues to achieve profitability, and the price of our common stock
is likely to fall. Finally, new strategic relationships that are entered into
may prove difficult to implement and may fail to provide some or all of the
anticipated benefits.

WE ARE DEPENDENT ON A LIMITED NUMBER OF THIRD PARTIES FOR A SIGNIFICANT PORTION
OF OUR GEOGRAPHIC DATA.

      Most of our services rely on the availability and accuracy of geographic
data. We have licensed a significant portion of our geographic data from a
limited number of sources through non-exclusive, short-term contractual
arrangements. If any of these third parties were to merge with or be acquired by
another company, the number of sources providing this geographic data could be
further reduced. Given the short terms of our geographic data licenses, we will
have to renegotiate our contracts in the foreseeable future, which may result in
contractual terms that are not as favorable to us as our existing data licenses.
If we cannot maintain these data licenses or any other third-party license
arrangement on commercially reasonable terms, the scope and quality of our
services may suffer.

IF WE ARE UNABLE TO GENERATE FAST AND ACCURATE RESPONSES TO QUERIES, THE
MARKETABILITY OF OUR SERVICES WILL BE REDUCED.

      If we are unable to generate responses quickly or if the responses we
generate are not accurate, the marketability of our services will be reduced and
we may experience a decline in the number of users of our services. The accuracy
of our services is substantially dependent on the accuracy of data that we
license from third parties. We plan to update our geographic databases
periodically. However, in view of the complexity of updating multiple databases
and revising software, and the need to obtain geographic data for address
information from third parties, we may not be able to perform these updates as
planned. This could harm our business, financial condition and results of
operations.

WE HAVE RECENTLY EXPERIENCED AND CURRENTLY ANTICIPATE RAPID GROWTH IN OUR
BUSINESS, AND ANY INABILITY TO MANAGE THIS GROWTH COULD HARM OUR BUSINESS.

      In order to execute our business plan, our company has grown
significantly. The number of our employees grew from 49 as of October 31, 1998
to 193 as of July 31, 2000. This growth has placed, and our anticipated future
growth combined with the requirements we will face as a public company will
continue to place, a significant strain on our management systems and resources.
We expect that we will need to continue to improve our financial and managerial
controls and reporting systems and procedures. We will also need to continue to
expand and maintain close coordination among our technical, finance, sales and
marketing groups.

WE WILL NOT BE ABLE TO EXECUTE OUR BUSINESS PLAN IF WE CANNOT INCREASE OUR
DIRECT AND INDIRECT SALES CHANNELS.

      We will need to expand substantially our direct and indirect sales
operations, both domestically and internationally, in order to increase market
awareness and sales of our products. Our services require a sophisticated sales
effort targeted at several people within our prospective clients' organizations.
We have recently expanded our direct sales force and plan to hire additional
sales personnel. Competition for qualified sales personnel is intense, and we
might not be able to hire the kind and number of sales personnel we are
targeting. In addition, we believe that our future success is dependent upon
establishing and maintaining productive relationships with a variety of
distribution partners, resellers, and joint marketing partners. We cannot be
sure that we will be successful in signing up desired partners or that our
partners will devote adequate resources or have the technical and other sales
capabilities to sell our products.

      Similarly, the complexity of our products and the difficulty of installing
them require highly trained customer service and support personnel. We currently
have a small customer service and support organization, and we will need to
increase our staff to support new services, new customers and the expanding
needs of existing customers.

                                       23
<PAGE>

Competition for customer service and support personnel is intense in our
industry due to the limited number of people available with the necessary
technical skills and understanding of the Internet.

ACQUISITIONS OR STRATEGIC INVESTMENTS MAY DISRUPT OR OTHERWISE HAVE A NEGATIVE
IMPACT ON OUR BUSINESS.

      In October 2000, we acquired NetCreate Systems, Inc. ("NetCreate"), and
in the future may acquire or make investments in other complementary
businesses, technologies, services or products, or enter into strategic
partnerships with parties who can provide access to those assets, if
appropriate opportunities arise. From time to time we have had discussions
and negotiations with companies regarding our acquiring, investing in or
partnering with their businesses, products, services or technologies, and we
regularly engage in these discussions and negotiations in the ordinary course
of our business. Some of those discussions also contemplate the other party
making an investment in our company or a subsidiary of our company. We may
not identify other suitable acquisition, investment or strategic partnership
candidates, or if we do identify other suitable candidates, we may not
complete those transactions on commercially acceptable terms or at all. We
could have difficulty in assimilating NetCreate's personnel, operations,
technology and software or those of another company that we acquire. In
addition, the key personnel of NetCreate or another company that we acquire
may decide not to work for us. If we make other types of acquisitions, we
could have difficulty in integrating the acquired products, services or
technologies into our operations. These difficulties could disrupt our
ongoing business, distract our management and employees and increase our
expenses. Furthermore, we may incur indebtedness or issue equity securities
to pay for any future acquisitions. The issuance of equity securities would
dilute the ownership interests of the holders of our common stock.

WE FACE COMPETITION AND MAY FACE FUTURE COMPETITION FROM COMPANIES WITH
DIFFERENT BUSINESS STRATEGIES THAT COULD CAUSE US TO LOWER OUR PRICES OR TO LOSE
A SIGNIFICANT PORTION OF OUR MARKET SHARE.

      We may be unable to compete successfully with current or future
competitors. We face competition from many companies, both traditional and
online. Increased competition could result in price reductions for our services,
reduced gross margins and loss of our market share.

      Many of our existing competitors, as well as potential future competitors,
have longer operating histories, greater name recognition, larger customer bases
and significantly greater financial, technical and marketing resources than our
company. These advantages may allow them to respond more quickly and effectively
to new or emerging technologies and changes in customer requirements. It may
also allow them to engage in more extensive research and development, undertake
farther-reaching marketing campaigns, adopt more aggressive pricing policies and
make more attractive offers to potential employees and strategic partners. One
or more of these companies could adopt a different business strategy for
achieving profitability that could allow them to charge fees that are lower than
ours in order to attract clients. In addition, current and potential competitors
have established or may establish cooperative relationships among themselves or
with third parties to increase the ability of their products or services to
address the needs of our current and prospective clients.

      Online marketing is a rapidly developing industry, and new types of
products and services may emerge that are more attractive to consumers and
marketers than the types of services we offer. As a result, it is possible that
new competitors may emerge and rapidly acquire significant market share.

WITHOUT THE CONTINUED GROWTH IN USE OF THE INTERNET AND WIRELESS DEVICES, WE MAY
NOT EXPERIENCE A SIGNIFICANT PORTION OF THE GROWTH CURRENTLY ANTICIPATED.

      Our future success is substantially dependent upon continued growth and
use of the Internet and wireless devices such as cellular telephones. Rapid
growth in the use of and interest in the Internet and wireless devices is a
relatively recent phenomenon and may not continue to grow at their current
rates. Internet usage may be inhibited for many reasons, including the
following:

      -    the inability of Web sites to provide security and authentication of
           confidential information contained in transmissions over the
           Internet; and

                                       24
<PAGE>

      -    the inability of Web sites to respond to privacy concerns of
           potential users, including concerns related to the placement by Web
           sites of information, so-called cookies, on a user's hard drive
           without the user's knowledge or consent.

      Even if the Internet and wireless services continue to experience
significant growth in the number of users and level of use, the Internet and
wireless services infrastructures may not be able to support the demands placed
upon them by this growth. Our success and the viability of the Internet and
wireless services as information media and commercial marketplaces will depend
in large part upon the development of robust telecommunications infrastructure
for providing Internet access and carrying Internet and wireless traffic. If the
use of the Internet and wireless services do not continue to grow, if the
necessary telecommunications infrastructure or complementary products are not
developed or do not effectively support growth that may occur or if the Internet
and wireless services do not become viable information media and commercial
marketplaces, we may not experience a significant portion of the growth
currently anticipated and the price of our common stock is likely to fall.

WE FACE A COMPETITIVE LABOR MARKET FOR HIGHLY SKILLED EMPLOYEES THAT WE MUST
ATTRACT, RETAIN AND MOTIVATE IN ORDER TO EXECUTE OUR GROWTH PLAN.

      Our future success depends on our ability to attract, train, motivate and
retain highly skilled employees. Competition for employees among Internet and
software companies is intense, particularly in the Silicon Valley area in which
our headquarters are located. Market wages for employees include expectations
for significant stock-based compensation. We may be unable to retain our key
employees or attract, assimilate or retain other highly qualified employees in
the future. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications. The inability to attract
additional qualified personnel could disrupt the implementation of our growth
strategy upon which the success of our business depends.

WE ARE HIGHLY DEPENDENT ON THE ACCEPTANCE AND EFFECTIVENESS OF THE INTERNET AS A
MEDIUM FOR CONSUMER TRANSACTIONS AND ON THE INCREASED USE OF THE INTERNET BY
CONSUMERS TO LOCATE OUR CLIENTS' PRODUCTS.

      The future success of a number of our services is dependent in large part
on an increase in the use of the Internet for business transactions with
consumers and on the increased use of the Internet by consumers to locate our
clients' products. The electronic commerce market is new and rapidly evolving
and the extent of consumer acceptance of the Internet cannot yet be determined.
If a sufficiently broad base of consumers do not accept the use of the Internet
for transacting business or do not use the Internet to locate our clients'
products, our business, financial condition and results of operations could be
materially and adversely affected.

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

      Our success depends significantly upon our proprietary technology. We
currently rely on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect our proprietary
rights. Our employees are generally required to execute confidentiality and
assignment agreements that transfer any rights they may have in copyrightable
works or patentable technologies to us. In addition, prior to entering into
discussions with strategic partners, we generally require that these parties
enter into a non-disclosure agreement. If these discussions result in a license
or other business relationship, we also generally require that the agreement
setting forth the parties' respective rights and obligations include provisions
for the protection of our intellectual property rights. Our failure to enter
into these agreements when appropriate or our inability to enforce our rights
under one or more of these agreements could jeopardize our ability to protect
our intellectual property. This could materially and adversely affect our
business.

      We have applied for registration of a number of service marks and
trademarks, including "Vicinity," "Vicinity Business Finder," "Vicinity
BrandFinder" and "MapBlast!," in the United States and in other countries, and
will seek to register additional service marks and trademarks, as appropriate.
We may be unsuccessful in obtaining the service marks and trademarks for which
we have applied. We may not be granted certain patents with respect to our
technology, and any patent that is granted may be challenged or invalidated. We
may not develop proprietary

                                       25
<PAGE>

products or technologies that are patentable, and any issued patent may not
provide us with any competitive advantages or withstand challenges by third
parties. In addition, the patents of others may adversely affect our ability to
conduct our business. Despite our efforts to protect our proprietary rights,
unauthorized parties may copy aspects of our products or services or obtain and
use information that we regard as proprietary. The laws of some foreign
countries do not protect proprietary rights to as great an extent as do the laws
of the United States, and we do not currently have any patents or patent
applications pending in any foreign country. Our means of protecting our
proprietary rights may not be adequate, and our competitors may independently
develop similar technology or duplicate our products or design around patents
issued to us or our other intellectual property rights. Our failure to protect
our proprietary rights adequately or our competitors' successful duplication of
our technology could harm our operating results and cause the price of our
common stock to decline.

                                       26
<PAGE>


LITIGATION OVER INTELLECTUAL PROPERTY RIGHTS COULD DISRUPT OR OTHERWISE HAVE A
NEGATIVE IMPACT ON OUR BUSINESS.

      There has been frequent litigation in the computer industry regarding
intellectual property rights. We have in the past been subject to claims
regarding the alleged intellectual property rights of third parties. In fiscal
1999, we entered into a settlement agreement and agreed to pay $441,000 for a
patent license with respect to an intellectual property rights claim. Third
parties may make additional claims of infringement by us with respect to current
or future products, trademarks or other proprietary rights. These claims could
be time-consuming, result in costly litigation, divert our management's
attention, cause product or service release delays, require us to redesign our
products or services or require us to enter into costly royalty or licensing
agreements.

PRIVACY CONCERNS MAY ADVERSELY AFFECT OUR ABILITY TO IMPLEMENT OUR INTERNET
SOLUTIONS.

      Web sites and Internet ad servers typically place a small file commonly
known as a "cookie" on a user's hard drive, generally without the user's
knowledge or consent. We may introduce services or features that are dependent
on the use of cookies to collect, sort and analyze information about Internet
users. Most currently available Internet browsers allow users to modify their
browser settings to prevent cookies from being stored on their hard drive or to
delete cookies at any time. In addition, some Internet commentators and privacy
advocates have suggested limiting or eliminating the use of cookies and the
Federal Trade Commission is investigating these issues in response to recent
publicity regarding Internet advertising companies. The effectiveness of future
services could be limited by a significant reduction or limitation in the use of
cookies. In addition, privacy concerns may cause some Web users to be less
likely to visit Web sites that use cookies. If enough Web users choose not to
visit sites that use cookies, our ability to sell our services or features that
are dependent on the use of cookies would be adversely affected and could
require us to alter or adjust our business practices.

LEGISLATION OR REGULATIONS MAY BE ADOPTED THAT COULD AFFECT OUR ABILITY TO
GENERATE OR USE INFORMATION FOR PROFILES AND MAY HINDER OUR ABILITY TO CONDUCT
BUSINESS.

      The legal and regulatory environment governing the Internet and the use of
information about Internet users is constantly evolving. United States
legislators in the past have introduced a number of bills aimed at regulating
the collection and use of personal data from Internet users and additional
similar bills may be considered during any congressional session. Although we
believe no current legislation has had a material adverse effect on our
business, it is possible that a bill may be enacted into law that negatively
affects our ability to collect and use data about Internet users or that
otherwise affects our business. The European Union has adopted a directive
addressing data privacy that may result in limitations on the collection and use
of specific personal information regarding Internet users. In addition, Germany
has imposed its own laws protecting data that can become personally identifiable
through subsequent processing. Other countries may also enact limitations on the
use of personal data.

      To date, these regulations have not materially restricted the use of our
products. However, legislation or regulations may in the future be adopted which
may limit our ability to target advertising or collect and use information in
one or more countries. Further, a number of laws and regulations have been and
may be adopted covering issues such as pricing, acceptable content, taxation and
quality of products and services on the Internet. This legislation could dampen
the growth in use of the Internet generally and decrease the acceptance of the
Internet as a communications and commercial medium. In addition, due to the
global nature of the Internet, it is possible that multiple federal, state or
foreign jurisdictions might inconsistently regulate our activities or the
activities of ad networks or Web sites.

OUR MANAGEMENT WILL HAVE BROAD DISCRETION IN USING THE PROCEEDS FROM OUR IPO AND
THEREFORE INVESTORS WILL BE RELYING ON THE JUDGMENT OF OUR MANAGEMENT TO INVEST
THOSE FUNDS EFFECTIVELY.

      We intend to use the net proceeds of our IPO to expand our sales and
marketing resources, including expanding our business in Europe and Asia, to
develop new technologies and products and improve our technology infrastructure
and for working capital and other general corporate purposes. The amounts and
timing of these expenditures will vary significantly depending upon a number of
factors, including the amount of cash generated or consumed by our operations,
the progress of our development activities and the market response to the
introduction of any new services. In addition, we may use a portion of the net
proceeds from our IPO to acquire or invest in

                                       27
<PAGE>

businesses, products, services or technologies complementary to our current
business, through mergers, acquisitions, joint ventures or otherwise. Our
management will retain broad discretion with respect to the expenditure of
proceeds. Stockholders will be relying on the judgment of our management
regarding the application of the proceeds of our IPO.

WE MAY BE UNABLE TO RAISE ADDITIONAL FINANCING.

      We may need to raise additional funds in the future in order to implement
our business plan, to fund more aggressive marketing programs or to acquire
complementary businesses, technologies or services. Any required additional
financing may be unavailable on terms favorable to us, or at all. If we raise
additional funds by issuing equity securities, you may experience significant
dilution of your ownership interest and these securities may have rights senior
to those of the holders of our common stock. If additional financing is not
available when required or is not available on acceptable terms, we may be
unable to fund our expansion, develop or enhance our services, take advantage of
business opportunities or respond to competitive pressures.


THE LARGE NUMBER OF SHARES ELIGIBLE FOR PUBLIC SALE COULD CAUSE OUR STOCK PRICE
TO DECLINE.

      In February 2000, we issued 8,050,000 shares of common stock pursuant to
our IPO. These shares are freely tradable with the exception of those shares
purchased by our affiliates. We had an aggregate of approximately 28.1 million
shares of our common stock outstanding as of September 30, 2000, which includes
the shares sold in our IPO. The shares not registered as part of our IPO may be
sold only pursuant to a registration statement under the Securities Act or an
exemption from the registration requirements of the Securities Act. The market
price of our common stock could decline as a result of the sales of a large
number of these shares or the perception that sales could occur. In addition,
the large number of shares eligible for sale may make it more difficult for us
to sell common stock in the future at a time and at a price that we deem
appropriate.

WE DO NOT PLAN TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.

      We do not anticipate paying cash dividends to the holders of our common
stock in the foreseeable future. Accordingly, stockholders must rely on sales of
their common stock after price appreciation, which may never occur, as the only
way to realize on their investment. Investors seeking cash dividends should not
purchase our common stock.

A THIRD PARTY'S ABILITY TO ACQUIRE US MIGHT BE MORE DIFFICULT BECAUSE OF ANTI-
TAKEOVER PROVISIONS IN OUR CERTIFICATE OF INCORPORATION AND BYLAWS.

      We are authorized to issue five million shares of undesignated preferred
stock. Our Board of Directors has the authority to issue the preferred stock in
one or more series and to fix the price, rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting a series or the designation of
any series, without any further vote or action by our stockholders. The issuance
of preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
delaying, deferring or preventing a change in control of our company without
further action by our stockholders and may adversely affect the market price of
our common stock and the voting and other rights of our stockholders. The
issuance of preferred stock with voting and conversion rights may adversely
affect the voting power of the holders of our common stock, including the loss
of voting control to others. We have no current plans to issue any shares of
preferred stock.

      Provisions of our Certificate of Incorporation and Bylaws eliminate the
right of stockholders to act by written consent without a meeting, eliminate the
right of stockholders to call a special meeting of stockholders, specify
procedures for nominating directors and submitting proposals for consideration
at stockholder meetings and provide for a staggered Board of Directors, so that
no more than approximately one-third of our directors could be replaced each
year and it would take three successive annual meetings to replace all
directors. These provisions are intended to enhance the likelihood of continuity
and stability in the composition of our Board of Directors and in the policies

                                       28
<PAGE>

formulated by our Board of Directors and to discourage some transactions that
may involve an actual or threatened change of control of our company. These
provisions are designed to reduce the vulnerability of our company to an
unsolicited acquisition proposal and, accordingly, could discourage potential
acquisition proposals and delay or prevent a change in control of our company.
These provisions are also intended to discourage tactics that may be used in
proxy fights but could, however, have the effect of discouraging others from
making tender offers for our common stock and, consequently, may also inhibit
fluctuations in the market price of our common stock that could result from
actual or rumored takeover attempts. These provisions may also have the effect
of preventing changes in the management of our company.

MANY CORPORATE ACTIONS WILL BE CONTROLLED BY OFFICERS, DIRECTORS AND AFFILIATED
ENTITIES REGARDLESS OF THE OPPOSITION OF OTHER INVESTORS OR THE DESIRE OF OTHER
INVESTORS TO PURSUE AN ALTERNATIVE COURSE OF ACTION.

      Our executive officers, directors and entities affiliated with them, in
the aggregate, beneficially own a significant percentage of our outstanding
common stock. These stockholders, if acting together, would be able to
significantly influence all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers or other
business combination transactions.

                                       29
<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The information required by this item is set forth in the section of Item
7 - Management's Discussion and Analysis of Financial Condition and Results of
Operations captioned "Disclosures about Market Rate Risk."

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The information required by this item is set forth in our consolidated
financial statements and notes thereto beginning at page F-1 of this Annual
Report.

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

      None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The information required by Item 10 is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A under the
Securities Exchange Act in connection with our annual stockholders' meeting.

ITEM 11. EXECUTIVE COMPENSATION

      The information required by Item 11 is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A under the
Securities Exchange Act in connection with our annual stockholders' meeting.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The information required by Item 12 is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A under the
Securities Exchange Act in connection with our annual stockholders' meeting.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by Item 13 is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A under the
Securities Exchange Act in connection with our annual stockholders' meeting.

                                       30
<PAGE>

                                     PART IV


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

      The following are filed as a part of this Annual Report and included in
Item 8:

(a)   1. FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                                     <C>
         Index to Consolidated Financial Statements.................................................     F-1
         Independent Auditors' Report...............................................................     F-2
         Consolidated Balance Sheets................................................................     F-3
         Consolidated Statements of Operations......................................................     F-4
         Consolidated Statements of Redeemable Convertible
            Preferred Stock and Stockholders' Equity (Deficit)......................................     F-5
         Consolidated Statements of Cash Flows......................................................     F-6
         Notes to Consolidated Financial Statements.................................................     F-7
</TABLE>

      2. FINANCIAL STATEMENT SCHEDULE

         Schedule II - Valuation and Qualifying Accounts

      3. EXHIBITS

<TABLE>
<CAPTION>
Exhibit
  No.      Description of Exhibit
-------    ----------------------
<S>       <C>
  3.1      Certificate of Incorporation (Incorporated by reference to Exhibit
           3.1 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
  3.2      Bylaws (Incorporated by reference to Exhibit 3.2 of the Company's
           Registration Statement on Form S-1 (Registration No. 333-90253)).
  4.1      Specimen Common Stock certificate (Incorporated by reference to
           Exhibit 4.1 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.1      1995 Stock Option Plan (Incorporated by reference to Exhibit 10.1
           of the Company's Registration Statement on Form S-1 (Registration
           No. 333-90253)).
 10.2      1996 Incentive Stock Option Plan (Incorporated by reference to
           Exhibit 10.2 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.3      2000 Equity Participation Plan (Incorporated by reference to
           Exhibit 10.3 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.4      2000 Employee Stock Purchase Plan (Incorporated by reference to
           Exhibit 10.4 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.5      Amended and Restated Registration and Information Rights
           Agreement, dated as of December 9, 1998, by and among Vicinity
           Corporation, Rama Aysola, Eddie Babcock, Timothy Bacci, James
           DiSanto and the investors named on Schedule I thereto
           (Incorporated by reference to Exhibit 10.5 of the Company's
           Registration Statement on Form S-1 (Registration No. 333-90253)).
 10.6      Amended and Restated Shareholders Agreement, dated as of December 9,
           1998, by and among Vicinity Corporation, Rama Aysola, Eddie Babcock,
           Timothy Bacci, James DiSanto and the investors named in Schedule I
           thereto (Incorporated by reference to Exhibit 10.6 of the Company's
           Registration Statement on Form S-1 (Registration No. 333-90253)).
 10.7      Voting Agreement, dated as of December 12, 1996, by and among
           Vicinity Corporation, Rama Aysola, Eddie Babcock, Timothy Bacci,
           James DiSanto and the investors named in Schedule I thereto
           (Incorporated by reference to Exhibit 10.7 of the Company's
           Registration Statement on Form S-1 (Registration No. 333-90253)).
 10.8      Employment Agreement, dated June 17, 1998, by and between Vicinity
           Corporation and Emerick M. Woods (Incorporated by reference to
           Exhibit 10.8 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.9      Loan Agreement, dated July 14, 1999, by and between Vicinity
           Corporation and Emerick M. Woods (Incorporated by reference to
           Exhibit 10.9 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.10     Form of 1996 Incentive Stock Option Plan Stock Option  Agreement
           (Incorporated  by reference to Exhibit 10.10 of the
           Company's Registration Statement on Form S-1 (Registration No.
           333-90253)).
 10.11     Amendment to Incentive Stock Option Plan Agreement dated August 19,
           1998, by and between Vicinity Corporation and Scott Young
           (Incorporated by reference to Exhibit 10.11 of the Company's
           Registration Statement on Form S-1 (Registration No. 333-90253)).
 10.12     Amendment to Incentive Stock Option Plan Agreement dated August
           19, 1998, by and between Vicinity Corporation and David Seltzer
           (Incorporated by reference to Exhibit 10.12 of the Company's
           Registration Statement on Form S-1 (Registration No. 333-90253)).

                                       31
<PAGE>

 10.13     Amendment to Incentive Stock Option Plan Agreement dated August 19,
           1998, by and between Vicinity Corporation and Mary Gavin
           (Incorporated by reference to Exhibit 10.13 of the Company's
           Registration Statement on Form S-1 (Registration No. 333-90253)).
 10.14+    Management Support Agreement dated June 11, 1999, by and between
           Vicinity Corporation and Aperto Multimedia GmbH (Incorporated by
           reference to Exhibit 10.14 of the Company's Registration Statement on
           Form S-1 (Registration No. 333-90253)).
 10.15     Management Support Agreement dated July 27, 1999, by and between
           Vicinity Corporation and Invision AG (Incorporated by reference to
           Exhibit 10.15 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.16     Master Lease and Financing Agreement dated July 27, 1999, by and
           between Vicinity Corporation and Compaq (Incorporated by reference to
           Exhibit 10.16 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.17     Capital Lease Agreement dated April 24, 1996, by and between Vicinity
           Corporation and Pacific Atlantic (Incorporated by reference to
           Exhibit 10.17 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.18+    Joint Marketing Agreement dated June 23, 1999, by and between
           Vicinity Corporation and Prio, Inc. (Incorporated by reference to
           Exhibit 10.18 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.19+    Service and Distribution Agreement, dated June 14, 1999, by and
           between Vicinity Corporation and Inktomi Corporation (Incorporated by
           reference to Exhibit 10.19 of the Company's Registration Statement on
           Form S-1 (Registration No. 333-90253)).
 10.20     NaviSite Siteharbor Co-Location Services Agreement, dated June 30,
           1998, by and between Vicinity Corporation and NaviSite Internet
           Services Corporation (Incorporated by reference to Exhibit 10.20 of
           the Company's Registration Statement on Form S-1 (Registration No.
           333-90253)).
 10.21     Sublease Agreement, dated October 1, 1996, by and between Vicinity
           Corporation and Attachmate Corporation (Incorporated by reference to
           Exhibit 10.21 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.22     First Sublease Agreement Amendment, dated August 6, 1997, by and
           between Vicinity Corporation and Attachmate Corporation (Incorporated
           by reference to Exhibit 10.22 of the Company's Registration Statement
           on Form S-1 (Registration No. 333-90253)).
 10.23     Second Sublease Agreement Amendment, dated September 22, 1998, by and
           between Vicinity Corporation and Attachmate Corporation (Incorporated
           by reference to Exhibit 10.23 of the Company's Registration Statement
           on Form S-1 (Registration No. 333-90253)).
 10.24     Sub-Sublease Agreement, dated August 1, 1999, by and between Vicinity
           Corporation and E*Trade Group, Inc. (Incorporated by reference to
           Exhibit 10.24 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253))
 10.25     Lease Agreement, dated August 10, 1999, by and between Vicinity
           Corporation and Gordon E. and Blanche M. Bagley (Incorporated by
           reference to Exhibit 10.25 of the Company's Registration Statement on
           Form S-1 (Registration No. 333-90253)).
 10.26     Vicinity Corporation Elaine Hamilton Non-Statutory Stock Option
           Agreement, dated October 13, 1999, by and between Vicinity
           Corporation and Elaine Hamilton (Incorporated by reference to Exhibit
           10.26 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.27     Form of Indemnification Agreement (Incorporated by reference to
           Exhibit 10.27 of the Company's Registration Statement on Form S-1
           (Registration No. 333-90253)).
 10.28+    Master Agreement dated January 11, 2000, between Vicinity Corporation
           and AltaVista Company (Incorporated by reference to Exhibit 10.28 of
           the Company's Registration Statement on Form S-1 (Registration No.
           333-90253)).
 10.29     Lease Agreement, dated February 25, 2000, by and between Vicinity
           Corporation and San Aleso, LLC (Incorporated by reference to Exhibit
           10.1 of the Company's Form 10-Q for the quarterly period ended April
           30, 2000).
 10.30     Second Amendment to Security Agreement, dated April 1, 2000, by and
           between Vicinity Corporation and Emerick M. Woods (Incorporated by
           reference to Exhibit 10.2 of the Company's Form 10-Q for the
           quarterly period ended April 30, 2000).
 10.31     Offer of Employment Letter, dated January 15, 2000, by and between
           Vicinity Corporation and Howard A. Bain III (Incorporated by
           reference to Exhibit 10.3 of the Company's Form 10-Q for the
           quarterly period ended April 30, 2000).
 23.1      Consent of KPMG LLP.
 24.1      Power of Attorney (Included on signature page).
 27.1      Financial Data Schedule.
</TABLE>


-------------------
+  Registrant has obtained confidential treatment pursuant to Rule 406 for a
   portion of the referenced exhibit and has separately filed such exhibit with
   the Commission.

(b)   REPORTS ON FORM 8-K

         None.

                                       32
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized as of this 24th day of October 2000.

                                      VICINITY CORPORATION

                                            /s/ Emerick M. Woods
                                     ------------------------------------------
                                      Emerick M. Woods
                                      Chief Executive Officer and Director


                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS EMERICK M. WOODS AND SCOTT A.
SHUDA AND EACH ONE OF THEM, ACTING INDIVIDUALLY AND WITHOUT THE OTHER, AS HIS
ATTORNEY-IN-FACT, EACH WITH FULL POWER OF SUBSTITUTION, FOR HIM IN ANY AND ALL
CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS TO THIS REPORT ON FORM 10-K AND TO
FILE THE SAME, WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND
CONFIRMING ALL THAT EACH OF SAID ATTORNEYS-IN-FACT, OR HIS SUBSTITUTE OR
SUBSTITUTES MAY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF
THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATED INDICATED.

<TABLE>
<CAPTION>
                  Signature                                   Title                                      Date
                  ---------                                   -----                                      ----
<S>                                            <C>                                                 <C>
          /s/ Emerick M. Woods                  Chief Executive Officer and Director                October 24, 2000
---------------------------------------------        (Principal Executive Officer)
         Emerick M. Woods

         /s/ Howard A. Bain III                 Chief Financial Officer (Principal                  October 24, 2000
---------------------------------------------    Financial and Accounting Officer)
         Howard A. Bain III

       /s/ Herbert M. Dwight, Jr.               Chairman of the Board of Directors                  October 24, 2000
 --------------------------------------------
         Herbert M. Dwight, Jr.

         /s/ Jonathan Callaghan                 Director                                            October 24, 2000
 --------------------------------------------
         Jonathan Callaghan

        /s/ James J. Geddes, Jr.                Director                                            October 24, 2000
 --------------------------------------------
         James J. Geddes, Jr.

            /s/ Fred Gibbons                    Director                                            October 24, 2000
 --------------------------------------------
         Fred Gibbons

             /s/ Peter Mills                    Director                                            October 24, 2000
 --------------------------------------------
         Peter Mills

             /s/ Norman Nie                     Director                                            October 24, 2000
 --------------------------------------------
         Norman Nie

            /s/ Michael Sears                   Director                                            October 24, 2000
 --------------------------------------------
         Michael Sears

           /s/ Peter Ziebelman                  Director                                            October 24, 2000
 --------------------------------------------
         Peter Ziebelman
</TABLE>

                                       33
<PAGE>

                      VICINITY CORPORATION AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


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

Consolidated Balance Sheets........................................................................................F-3

Consolidated Statements of Operations..............................................................................F-4

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)...............F-5

Consolidated Statements of Cash Flows..............................................................................F-6

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


<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
Vicinity Corporation:

We have audited the accompanying consolidated balance sheets of Vicinity
Corporation and subsidiaries (the Company) as of July 31, 2000 and 1999, and the
related consolidated statements of operations, redeemable convertible preferred
stock and stockholders' equity (deficit) and cash flows for each of the years in
the three year period ended July 31, 2000. In connection with our audits of the
consolidated financial statements, we have also audited the related financial
statement schedule. These consolidated financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Vicinity Corporation
and subsidiaries as of July 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended July 31, 2000, in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

                                                /s/ KPMG LLP

Mountain View, California
August 21, 2000, except as to Note 14,
which is as of October 18, 2000

                                      F-2
<PAGE>

                      VICINITY CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                               July 31,
                                                                                     -----------------------------
                                                                                        2000              1999
                                                                                     -------------    ------------
                                                       ASSETS
<S>                                                                                   <C>               <C>
CURRENT ASSETS
   Cash and cash equivalents......................................................    $    48,195       $     9,060
   Short-term investments.........................................................         73,609                --
   Accounts receivable, net.......................................................          4,333             2,847
   Prepaid expenses and other current assets......................................          2,312               360
                                                                                      -----------       -----------
Total current assets..............................................................        128,449            12,267

PROPERTY AND EQUIPMENT, net.......................................................          5,717               912
OTHER ASSETS......................................................................            328                24
                                                                                      -----------       -----------
Total Assets ....................................................................    $    134,494   $       13,203
                                                                                     ============   ==============

                                   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
   Bank note......................................................................    $        --       $     1,000
   Accounts payable...............................................................          1,399               491
   Accrued liabilities............................................................          3,773             1,245
   Deferred revenue...............................................................          7,619             4,955
   Capital lease obligations, current portion.....................................          1,042               380
                                                                                      -----------       -----------
Total current liabilities.........................................................         13,833             8,071

CAPITAL LEASE OBLIGATIONS.........................................................            270               298
                                                                                      -----------       -----------
Total liabilities.................................................................         14,103             8,369

SERIES A, B, C, D, E and F REDEEMABLE
   CONVERTIBLE PREFERRED STOCK and SERIES E
   WARRANTS, $0.001 par value; authorized - none and 12,520,000 at July 31, 2000
    and 1999, respectively; issued and outstanding - none and 11,217,000 at July
    31, 2000 and 1999, respectively; aggregate liquidation preference of $32,067
    at July 31, 1999; aggregate redemption
    amount of $22,642 at July 31, 1999............................................             --            21,403

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
   Preferred stock, $0.001 par value; 5,000,000 shares authorized;
      outstanding - none..........................................................             --                --
   Common stock, $0.001 par value; 100,000,000 shares authorized; issued and
      outstanding - 28,094,000 and 5,288,000 at July 31,
      2000 and 1999, respectively.................................................             28                 5
   Additional paid-in capital.....................................................        152,565              (301)
   Deferred stock-based compensation..............................................         (1,160)           (1,044)
   Notes receivable from employees................................................           (232)              (98)
   Accumulated other comprehensive loss...........................................           (262)               --
   Accumulated deficit............................................................        (30,548)          (15,131)
                                                                                      -----------       -----------
Total stockholders' equity (deficit)..............................................        120,391           (16,569)
                                                                                      -----------       ------------
Total Liabilities and Stockholders' Equity (Deficit)..............................    $   134,494       $    13,203
                                                                                      ===========       ============
</TABLE>

                See Notes to Consolidated Financial Statements.

                                      F-3
<PAGE>



                      VICINITY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                                    Years Ended July 31,
                                                                         ------------------------------------------
                                                                            2000            1999           1998
                                                                         -----------    -----------     -----------
<S>                                                                      <C>            <C>             <C>
REVENUES
   License and hosting fees............................................  $    11,065    $     5,657     $     4,386
   Service and transaction fees........................................        4,125            767             424
                                                                         -----------    -----------     -----------
                                                                              15,190          6,424           4,810
COST OF REVENUES  (1)..................................................        9,067          3,949           2,847
                                                                         -----------    -----------     -----------
   Gross profit........................................................        6,123          2,475           1,963
OPERATING EXPENSES
   Product development  (1)............................................        3,330          1,747           1,551
   Sales and marketing  (1)............................................       16,148          3,589           1,676
   General and administrative  (1).....................................        4,711          1,995           1,205
   Stock-based compensation............................................        1,017            167               -
   Other...............................................................            -            441               -
                                                                         -----------    -----------     -----------
                                                                              25,206          7,939           4,432
                                                                         -----------    -----------     -----------
LOSS FROM OPERATIONS...................................................      (19,083)        (5,464)         (2,469)
OTHER INCOME (EXPENSE)
   Interest income.....................................................        3,728             36               8
   Interest expense....................................................          (67)           (97)            (24)
   Other...............................................................            5             10               4
                                                                         -----------    -----------     -----------
NET LOSS...............................................................      (15,417)        (5,515)         (2,481)
Accretion on redeemable convertible preferred stock and warrants.......        1,049          1,038             518
                                                                         -----------    -----------     -----------
NET LOSS APPLICABLE TO
  COMMON STOCKHOLDERS..................................................  $   (16,466)   $    (6,553)    $    (2,999)
                                                                         ============   ============    ============

BASIC AND DILUTED NET LOSS PER SHARE...................................  $     (1.08)   $     (1.67)    $     (1.00)
                                                                         ============   ============    ============

WEIGHTED AVERAGE SHARES USED
  IN BASIC AND DILUTED NET LOSS
  PER SHARE CALCULATION................................................       15,309          3,913           2,986
                                                                         ===========    ===========     ===========

--------------------------------------
(1)  Excludes stock-based compensation of:
   Cost of revenues....................................................  $        49    $         5     $        --
   Product development.................................................          107              5              --
   Sales and marketing.................................................          527            120              --
   General and administrative..........................................          334             37              --
                                                                         -----------    -----------     -----------
                                                                         $     1,017    $       167     $        --
                                                                         ===========    ===========     ===========
</TABLE>


                See Notes to Consolidated Financial Statements.

                                      F-4
<PAGE>
                     VICINITY CORPORATION AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
                         SHAREHOLDERS' EQUITY (DEFICIT)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                        REDEEMABLE
                                        CONVERTIBLE                                                           NOTES
                                      PREFERRED STOCK        COMMON STOCK       ADDITIONAL     DEFERRED     RECEIVABLE
                                    -------------------   -------------------    PAID-IN     STOCK-BASED       FROM
                                     SHARES     AMOUNT     SHARES     AMOUNT     CAPITAL     COMPENSATION   EMPLOYEES
                                    --------   --------   --------   --------   ----------   ------------   ----------
<S>                                 <C>        <C>        <C>        <C>        <C>          <C>            <C>
Balances, July 31, 1997...........     7,137   $ 7,454      2,466      $ 2       $   (377)     $    --        $  (2)
Net loss..........................        --        --         --       --             --           --           --
Accretion on redeemable preferred
  stock...........................        --       518         --       --           (518)          --           --
Exercise of common stock
  warrant.........................        --        --        275        0            208           --           --
Issuance of common stock..........        --        --      1,019        1             15           --           --
                                    --------   -------     ------      ---       --------      -------        -----
Balances, July 31, 1998...........     7,137     7,972      3,760        3           (672)          --           (2)
Net loss..........................        --        --         --       --             --           --           --
Issuance of preferred stock and
  warrants........................     4,080    12,393         --       --             --           --           --
Accretion on redeemable preferred
  stock and warrants..............        --     1,038         --       --         (1,038)          --           --
Issuance of common stock for cash
  and note receivable.............        --        --      1,528        2            198           --          (96)
Deferred compensation related to
  option grants...................        --        --         --       --          1,211       (1,211)          --
Amortization of stock-based
  compensation....................        --        --         --       --             --          167           --
                                    --------   -------     ------      ---       --------      -------        -----
Balances, July 31, 1999...........    11,217    21,403      5,288        5           (301)      (1,044)         (98)
Comprehensive income
  Net loss........................        --        --         --       --             --           --           --
  Other comprehensive income
    Unrealized loss on
      available-for-sale
      securities, net of
      reclassification
      adjustments.................
  Total other comprehensive
    income........................
Comprehensive income..............
Issuance of preferred stock and
  warrants........................     1,302     3,750         --       --             --           --           --
Accretion on redeemable preferred
  stock and warrants..............        --     1,049         --       --         (1,049)          --           --
Issuance of common stock for cash
  and note receivable.............        --        --      1,655        2            689           --         (134)
Conversion of preferred stock into
  common stock....................   (12,519)  (26,202)    13,116       13         26,189           --           --
Issuance of common stock through
  initial public offering, net....        --        --      8,050        8        125,901           --           --
Repurchase of unvested common
  stock...........................        --        --        (15)      --             (9)          --           --
Deferred compensation related to
  option grants...................        --        --         --       --          1,133       (1,133)          --
Amortization of stock-based
  compensation....................        --        --         --       --             --        1,017           --
Other.............................        --        --         --       --             12           --           --
                                    --------   -------     ------      ---       --------      -------        -----
Balances, July 31, 2000...........        --   $    --     28,094      $28       $152,565      $(1,160)       $(232)
                                    ========   =======     ======      ===       ========      =======        =====

<CAPTION>

                                                      ACCUMULATED                       TOTAL
                                                         OTHER                      SHAREHOLDERS'
                                    COMPREHENSIVE    COMPREHENSIVE   ACCUMULATED       EQUITY
                                         LOSS            LOSS          DEFICIT        (DEFICIT)
                                    --------------   -------------   ------------   -------------
<S>                                 <C>              <C>             <C>            <C>
Balances, July 31, 1997...........                       $  --         $ (7,135)     $    (7,512)
Net loss..........................       (2,481)            --           (2,481)          (2,481)
                                       ========
Accretion on redeemable preferred
  stock...........................                          --               --             (518)
Exercise of common stock
  warrant.........................                          --               --              208
Issuance of common stock..........                          --               --               16
                                                         -----         --------      -----------
Balances, July 31, 1998...........                          --           (9,616)         (10,287)
Net loss..........................       (5,515)            --           (5,515)          (5,515)
                                       ========
Issuance of preferred stock and
  warrants........................                          --               --               --
Accretion on redeemable preferred
  stock and warrants..............                          --               --           (1,038)
Issuance of common stock for cash
  and note receivable.............                          --               --              104
Deferred compensation related to
  option grants...................                          --               --               --
Amortization of stock-based
  compensation....................                          --               --              167
                                                         -----         --------      -----------
Balances, July 31, 1999...........                          --          (15,131)         (16,569)
Comprehensive income
  Net loss........................      (15,417)            --          (15,417)         (15,417)
  Other comprehensive income
    Unrealized loss on
      available-for-sale
      securities, net of
      reclassification
      adjustments.................         (262)          (262)                             (262)
                                       --------
  Total other comprehensive
    income........................         (262)
                                                         -----
Comprehensive income..............     ($15,679)
                                       ========
Issuance of preferred stock and
  warrants........................                          --               --               --
Accretion on redeemable preferred
  stock and warrants..............                          --               --           (1,049)
Issuance of common stock for cash
  and note receivable.............                          --               --              557
Conversion of preferred stock into
  common stock....................                          --               --           26,202
Issuance of common stock through
  initial public offering, net....                          --               --          125,909
Repurchase of unvested common
  stock...........................                          --               --               (9)
Deferred compensation related to
  option grants...................                          --               --               --
Amortization of stock-based
  compensation....................                          --               --            1,017
Other.............................                          --               --               12
                                                         -----         --------      -----------
Balances, July 31, 2000...........                       $(262)        $(30,548)     $   120,391
                                                         =====         ========      -----------
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-5
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    Years Ended July 31,
                                                                        ----------------------------------------------
                                                                            2000            1999              1998
                                                                        ------------    ------------    --------------
<S>                                                                      <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss............................................................  $   (15,417)   $    (5,515)    $    (2,481)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
       Depreciation and amortization...................................        1,672            191              14
       Allowance for doubtful accounts.................................           54             80              --
       Stock-based compensation........................................        1,017            167              --
       Changes in operating assets and liabilities:
           Accounts receivable.........................................       (1,540)        (1,746)         (1,023)
           Prepaid expenses and other current assets...................       (1,952)           (73)             99
           Accounts payable............................................          908              6              62
           Payable to related party....................................           --           (164)            (53)
           Accrued liabilities.........................................        2,542          1,035              54
           Deferred revenue............................................        2,664          2,478           1,592
                                                                         -----------    -----------     -----------
   Net cash used in operating activities...............................      (10,052)        (3,541)         (1,736)
                                                                         ------------   ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Investments of excess cash:
       Purchases of available-for-sale securities......................      (79,871)            --              --
       Sales of available-for-sale securities..........................        6,000             --              --
   Deposit on building.................................................         (304)            --              --
   Proceeds from sale of property and equipment........................           --             --              97
   Purchases of property and equipment.................................       (4,980)          (214)           (106)
                                                                         ------------   ------------    ------------
   Net cash used in investing activities...............................      (79,155)          (214)             (9)
                                                                         ------------   ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock, net.........................      126,464            104              16
   Proceeds from issuance of redeemable preferred stock, net...........        3,750         12,393              --
   Proceeds from bank note.............................................           --            200             800
   Payment of bank note................................................       (1,000)            --              --
   Proceeds from factoring receivables.................................           --             --              73
   Proceeds from exercise of common stock warrant......................           --             --             208
   Repurchase of unvested common stock.................................           (9)            --              --
   Principal payments on capital leases................................         (863)          (146)             --
                                                                         ------------   ------------    -----------
   Net cash provided by financing activities...........................      128,342         12,551           1,097
                                                                         -----------    -----------     -----------
Increase (decrease) in cash and cash equivalents.......................       39,135          8,796            (648)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.........................        9,060            264             912
                                                                         -----------    -----------     -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR...............................  $    48,195    $     9,060     $       264
                                                                         ===========    ===========     ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for interest..............................................  $        67    $        97     $        24
                                                                         ===========    ===========     ===========
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Equipment purchased under capital lease.............................  $     1,497    $       824     $        --
                                                                         ===========    ===========     ===========
   Accretion on redeemable preferred stock and warrants................  $     1,049    $     1,038     $       518
                                                                         ===========    ===========     ===========
   Common stock issued for notes receivable............................  $       134    $        96     $        --
                                                                         ===========    ===========     ===========
   Deferred compensation related to stock option grants................  $     1,133    $     1,211     $        --
                                                                         ===========    ===========     ===========
   Conversion of redeemable preferred stock into common stock..........  $    26,202    $        --     $        --
                                                                         ===========    ===========     ===========
   Unrealized loss on available for sale securities....................  $       262    $        --     $        --
                                                                         ===========    ===========     ===========
</TABLE>

              See Notes to Consolidated Financial Statements.

                                      F-6
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      DESCRIPTION OF BUSINESS. Vicinity Corporation (the "Company") was formed
in 1995. A leading provider of Internet-based marketing infrastructure services
designed to help clients turn Web traffic into store traffic, Vicinity began its
operations by providing maps, driving directions and directory services to
regional telephone companies and large portal companies. During fiscal 2000, the
Company completed its initial public offering ("IPO"), and expanded operations
into Europe. In its IPO, the Company issued 8,050,000 shares of common stock at
a price of $17.00 per share and received approximately $125.9 million in cash,
net of underwriting discounts and other offering costs.

      USE OF ESTIMATES. The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

      PRINCIPALS OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries in the United
Kingdom, France and Germany. All material intercompany balances and transactions
have been eliminated in consolidation.

      FOREIGN CURRENCY TRANSLATION. For foreign operations with the local
currency as the functional currency, assets and liabilities are translated at
year-end exchange rates, and statements of operations are translated at the
exchange rates during the year. Exchange gains or losses arising from
translation of such foreign entity financial statements are included as a
component of other comprehensive loss. Through July 31, 2000, the Company's
exchange gains or losses from translation of foreign entity financial statements
have not been significant.

      REVENUE RECOGNITION. The Company derives its revenues from license and
hosting fees and service and transaction fees. Revenues from license and hosting
are recognized in accordance with Statement of Position (SOP) No. 97-2,
"Software Revenue Recognition." As such, these revenues are recognized ratably
over the life of the contract, which typically has one year, non- refundable
terms. Service and transaction fees consist of revenue generated from
project-related professional services and, to a lesser degree, from fees derived
from advertising, sponsorship and e-commerce transactions. These revenues are
recognized as the services are performed. The Company has no barter agreements,
and no revenues have been derived from barter transactions to date. Accounts
receivable consists of amounts due from customers under signed contracts where
performance on the contract has commenced. Deferred revenue consists of customer
payments received and accounts receivable recorded in advance of recognizing
revenue for license and hosting fees.

      COST OF REVENUES. Cost of revenues includes salaries and benefits of the
Company's operations personnel, the cost of acquiring data and content, the
leasing and depreciation cost of the Company's computer hosting equipment and
Internet connection and data center charges.

      CONCENTRATION OF CREDIT RISK. Financial instruments that subject the
Company to concentration of credit risk consist primarily of cash and cash
equivalents, short-term investments and trade accounts receivable. The Company
places its cash and cash equivalents primarily in depository accounts and money
market accounts of recognized financial institutions. The Company's short-term
investments consist primarily of interest-bearing securities, including
government securities, municipal bonds, time deposits, Eurodollar deposits,
certificates of deposit with approved financial institutions, commercial paper
rated A-1/P-1/F-1, corporate notes and bonds and other money market instruments
of similar liquidity and credit quality. To reduce credit risk with trade
accounts receivable, the Company performs evaluations of the credit worthiness
of its customers on an ongoing basis. The Company does not generally require
collateral or other security. The Company historically has not experienced any
significant credit losses. As of July 31, 2000, one customer comprised 17% of
the Company's trade accounts receivable balance. As of July 31, 2000 and 1999,
the allowance for doubtful accounts was approximately $134,000 and $80,000,
respectively.

      CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS. The Company considers
all highly liquid investments purchased with original maturities of three months
or less at the date of acquisition to be cash equivalents. The

                                      F-7
<PAGE>

                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Company considers investments with original maturities of more than three months
but less than one year at the date of acquisition to be short-term investments.
Where the original maturity is more than one year, the investments are
classified as short-term as the Company's intention is to convert them into cash
for operations. Short-term investments are classified as available-for-sale and
are carried at fair value.

      SECURITIES AVAILABLE-FOR-SALE. Marketable equity securities and debt
securities are classified as available-for-sale. Available-for-sale securities
are carried at fair value, with the unrealized gains and losses, net of tax,
reported as a component of other comprehensive loss. The amortized cost of debt
securities in this category is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization is included in interest
income. Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are included in other
income (expense), net. The cost of securities sold is based on the specific
identification method. Interest on securities classified as available-for-sale
is included in interest income. Through July 31, 2000, the Company has not
realized significant gains or losses on the sale of available-for-sale
marketable securities.

      FAIR VALUE OF FINANCIAL INSTRUMENTS. The carrying amount of the Company's
financial instruments, which include cash, cash equivalents, short-term
investments, accounts receivable, accounts payable, accrued liabilities and debt
obligations, approximate their fair values as of July 31, 2000 and 1999.

      PROPERTY AND EQUIPMENT. Property and equipment are stated at cost less
accumulated depreciation. Depreciation is calculated using the straight-line
method over the estimated useful lives of the equipment, generally three to five
years. Leasehold improvements are amortized over the lesser of the remaining
life of the lease, or five years.

      INCOME TAXES. The Company accounts for income taxes using the asset and
liability method. In accordance with this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using the
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

      SOFTWARE DEVELOPMENT COSTS. Costs related to the development of new
products and enhancements to existing products are charged to operations as
incurred. Software development costs are required to be capitalized when a
product's technological feasibility has been established by completion of a
working model of the product. To date, completion of a working model of the
Company's products and general release have substantially coincided. As a
result, the Company has not capitalized any software development costs.

      The Company accounts for the costs of computer software developed or
obtained for internal use in accordance with the American Institute of Certified
Public Accountants' Statement of Position 98-1 (SOP 98-1), "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use," which was
effective for fiscal years beginning after December 15, 1998. This statement
requires that certain costs incurred during a software development project be
capitalized. These costs generally include external direct costs of materials
and services consumed in the project, and internal costs such as payroll and
benefits of those employees directly associated with the development of the
software. During the year ended July 31, 2000, the Company capitalized
approximately $0.3 million under SOP 98-1, which will be amortized over the
estimated useful life of the software developed, which is generally three years.

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

                                      F-8
<PAGE>

                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

      ADVERTISING EXPENSE. The cost of advertising is expensed as incurred.
Advertising costs totaled approximately $2,079,000, $287,000 and $1,200 for the
years ended July 31, 2000, 1999 and 1998, respectively.

      RECLASSIFICATIONS. Certain prior period amounts have been reclassified to
conform to the current period presentation.

      PER SHARE COMPUTATIONS. Basic net loss per share is computed by dividing
net loss applicable to common stockholders by the weighted-average number of
common shares outstanding for the period. Diluted net loss per share is computed
by dividing net loss applicable to common stockholders by the weighted-average
number of common and, when dilutive, potential common equivalent shares
outstanding during the period. Common equivalent shares include the effect of
outstanding redeemable convertible preferred stock, warrants and stock options.
All potential common shares have been excluded from the computation of diluted
net loss per share for all periods presented because the effect would be
anti-dilutive.

      Diluted net loss per share does not include the effect of the following
anti-dilutive common equivalent shares (in thousands):

<TABLE>
<CAPTION>
                                                                                     Years Ended July 31,
                                                                         ------------------------------------------
                                                                             2000          1999             1998
                                                                         -----------    -----------     -----------
<S>                                                                      <C>            <C>             <C>
Stock options..........................................................      2,212          2,064           2,873
Shares of common stock subject to repurchase...........................      1,079            738              --
Convertible preferred warrants.........................................         --            952              --
Convertible preferred stock (as if converted)..........................         --          9,152           7,733
                                                                         -----------    -----------     -----------
                                                                             3,291         12,906          10,606
                                                                         ===========    ===========     ===========
</TABLE>


      The weighted-average exercise prices of stock options were, $10.63, $0.22
and $0.11 as of July 31, 2000, 1999 and 1998, respectively. The weighted-average
exercise price of shares of common stock subject to repurchase was $0.48 and
$0.15 as of July 31, 2000 and 1999, respectively.

      STOCK-BASED COMPENSATION. The Company accounts for its stock-based
compensation arrangements for employees using the intrinsic-value method.
Compensation expense is recorded for the Company's stock options on the date of
grant, to the extent the fair value of the underlying common stock exceeds the
exercise price for stock options or the purchase price for common stock. Options
granted to consultants and other non-employees are considered compensatory and
are accounted for at fair value. The Company amortizes deferred stock-based
compensation in accordance with Financial Accounting Standards Board ("FASB")
Interpretation No. 28.

      COMPREHENSIVE LOSS. The following table sets forth the calculation of
comprehensive loss for the years ended July 31, 2000, 1999 and 1998 (in
thousands):
<TABLE>
<CAPTION>
                                                                                     Years Ended July 31,
                                                                         ------------------------------------------
                                                                             2000          1999             1998
                                                                         ------------   ------------    ------------
<S>                                                                      <C>            <C>             <C>
Net loss...............................................................  $   (15,417)   $    (5,515)    $    (2,481)
Unrealized losses on available-for-sale securities.....................         (262)            --              --
                                                                         ------------   -----------     -----------
Comprehensive loss.....................................................  $   (15,679)   $    (5,515)    $    (2,481)
</TABLE>

                                      F-9
<PAGE>
                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE 2 - BALANCE SHEET COMPONENTS

<TABLE>
<CAPTION>
                                                                                               July 31,
                                                                                      -----------------------------
                                                                                          2000              1999
                                                                                      -----------       -----------
                                                                                           (In thousands)
<S>                                                                                   <C>               <C>
Cash and cash equivalents:
   Cash...........................................................................    $       772       $       121
   Money market funds.............................................................         39,789             8,939
   Commercial paper...............................................................          7,634                --
                                                                                      -----------       -----------
                                                                                      $    48,195       $     9,060
                                                                                      ===========       ===========

Property and equipment, net:
   Furniture and fixtures.........................................................    $       348       $        15
   Computer equipment.............................................................          3,600               144
   Software.......................................................................          1,041               103
   Equipment under capital lease..................................................          2,321               824
   Leasehold improvements.........................................................            282                29
                                                                                      -----------       -----------
                                                                                            7,592             1,115

   Accumulated depreciation and amortization......................................          1,875               203
                                                                                      -----------       -----------
                                                                                      $     5,717       $       912
                                                                                      ===========       ===========

Accrued liabilities:
   Accrued compensation...........................................................    $     2,729       $       433
   Accrued expenses...............................................................          1,044               371
   Accrued legal settlement.......................................................             --               441
                                                                                      -----------       -----------
                                                                                      $     3,773       $     1,245
                                                                                      ===========       ===========
</TABLE>

      Accumulated amortization on equipment under capital lease totaled
approximately $1,035,000 and $151,000 as of July 31, 2000 and 1999,
respectively. Amortization of assets under capital leases is included in
depreciation and amortization expense.

      In fiscal 1999, the Company entered into a settlement agreement and agreed
to pay approximately $441,000 for a patent license with respect to an
intellectual property rights claim. The payment was made in August 1999.

                                      F-10
<PAGE>

                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 3 - INVESTMENTS

      The following is a summary of available-for-sale debt and marketable
equity securities:

<TABLE>
<CAPTION>
                                                                            AVAILABLE-FOR-SALE
                                                                                SECURITIES
                                                                       -----------------------------
                                                                          GROSS             GROSS        ESTIMATED
                                                                       UNREALIZED        UNREALIZED        FAIR
                                                           COST           GAINS            LOSSES          VALUE
                                                       -----------     -----------      ------------    -----------
                                                                              (IN THOUSANDS)
<S>                                                    <C>             <C>              <C>             <C>
JULY 31, 2000
-------------

U.S. treasury securities.............................  $     3,036     $        --      $        (7)    $     3,029
Commercial paper, corporate bonds and
  medium-term notes..................................       63,281              --             (253)         63,028
Municipal bonds......................................       15,188              --              (13)         15,175
                                                       -----------     -----------      ------------    -----------
   Total debt securities.............................  $    81,505     $        --      $      (273)    $    81,232
                                                       ===========     ===========      ============    ===========

Amounts included in cash and cash equivalents........  $     7,634     $        --      $       (11)    $     7,623
Amounts included in short-term investments...........       73,871              --             (262)         73,609
                                                       -----------     -----------      ------------    -----------
                                                       $    81,505     $        --      $      (273)    $    81,232
                                                       ===========     ===========      ============    ===========

   Maturities of debt securities at market value at July 31, 2000 are as
follows (in thousands):

   Mature in one year or less...........................................................................$    38,240
   Mature after one year through five years.............................................................$    29,392
   Mature after five years..............................................................................$    13,600
                                                                                                        -----------
                                                                                                        $    81,232
</TABLE>

NOTE 4 - LINE OF CREDIT

In fiscal 1998, the Company entered into a line of credit agreement with a
credit limit of $1,000,000 and a variable interest rate. The debt was guaranteed
by CMGI, Inc., an affiliate of the Company's largest stockholder, CMGI@Ventures,
and was secured by the assets of the Company. In August 1999, the Company paid
the outstanding balance of $1,000,000. This line of credit agreement expired in
May 2000.

NOTE 5 - REDEEMABLE CONVERTIBLE PREFERRED STOCK

    A summary of redeemable convertible preferred stock follows:

<TABLE>
<CAPTION>
                                         Shares outstanding
                                           as of July 31,        Liquidation       Liquidation          Redemption      Redemption
                                      ------------------------   preference        premium              price           premium
                                         2000         1999        per share        per share            per share       per share
                                      -----------  -----------  -------------      -------------     --------------     ---------
<S>                                   <C>          <C>          <C>                <C>               <C>                <C>
Series A............................           --    1,852,000        $0.27           $0.019             $0.270          $0.019
Series B............................           --    1,981,000        $0.80           $0.056             $0.800          $0.056
Series C............................           --    3,304,000        $1.51           $0.110             $1.510          $0.110
Series D............................           --    2,301,000        $4.35           $0.152             $2.173          $0.152
Series E............................           --       59,000        $4.20           $0.147             $2.100          $0.147
Series F............................           --    1,720,000        $7.50               --             $5.000          $0.350
                                      -----------  -----------
                                               --   11,217,000
                                      ===========  ===========
</TABLE>



                                      F-11
<PAGE>

                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


    In the event of any liquidation event, the holders of the Series A, B, C, D
and E preferred stock were entitled to receive the liquidation preference per
share plus the liquidation premium per share per annum from the date of issuance
of these shares, plus all declared but unpaid dividends. Shares of Series F
preferred stock had a liquidation preference of $7.50 per share, plus all
declared but unpaid dividends, in the event of a dissolution or winding up,
either voluntary or involuntary, of the Company. Upon the sale of the Company,
shares of Series F preferred stock had a liquidation preference of $5.00 per
share, plus all declared but unpaid dividends.

    The holders of the redeemable convertible preferred stock could request
redemption of their shares plus the redemption premium per share per annum from
the date of issuance of these shares, plus all declared but unpaid dividends.
The redemption could be requested on or after January 31, 2003 and the
redemption amount was payable in cash by the Company within two years and three
months from the date that a written request for redemption is received. The
redemption premium was charged to the statements of operations as accretion on
redeemable convertible preferred stock. For the years ended July 31, 2000, 1999
and 1998 the amount of accretion recorded by the Company was $1,049,000,
$1,038,000 and $518,000, respectively.

    A summary of the liquidation and redemption amounts follows:

<TABLE>
<CAPTION>
                                                            Liquidation Amount                 Redemption Amount
                                                       ---------------------------      ---------------------------
                                                                                 JULY 31,
                                                       ------------------------------------------------------------
                                                           2000           1999              2000           1999
                                                       -----------     -----------      -----------     -----------
                                                                              (IN THOUSANDS)
<S>                                                    <C>             <C>              <C>             <C>
Series A.............................................  $        --     $       614      $        --     $       614
Series B.............................................           --           1,923               --           1,923
Series C.............................................           --           5,953               --           5,953
Series D.............................................           --          10,424               --           5,416
Series E.............................................           --             253               --             128
Series F.............................................           --          12,900               --           8,608
                                                       -----------     -----------      -----------     -----------
                                                       $        --     $    32,067      $        --     $    22,642
                                                       ===========     ===========      ===========     ===========
</TABLE>

      Each share of Series A, C, D, E and F preferred stock is convertible into
1.0 share of common stock. Each share of Series B preferred stock was
convertible into 1.3 shares of common stock. Upon completion of the Company's
IPO in fiscal 2000, all shares were automatically converted to common stock and
the holders of the shares were not eligible to be paid the redemption premium.
The redemption premium accrued through that date was credited to additional paid
in capital.

      Holders of Series A, B, C, D, E and F preferred stock voted equally with
holders of common stock on an as-if-converted basis.

      No dividends have been declared or paid on the preferred stock or common
stock since the Company's inception.

NOTE 6 - STOCKHOLDERS' EQUITY (DEFICIT)

WARRANTS. In connection with the Series D preferred stock issuance, the
Company issued warrants to a venture capital firm to purchase 952,381 shares
of Series E preferred stock with an exercise price of $2.10 per share. These
warrants, which were exercised prior to the Company's IPO, were valued at
approximately $551,000 using the Black-Scholes option pricing model with the
following assumptions: a risk-free interest rate of approximately 5.6%; a
contractual life of one year; no dividends; and an expected volatility of
65%. The value of these warrants was recorded as a reduction in the value of
the Series D preferred stock and was being charged to the statements of
operations as a component of accretion on redeemable convertible preferred
stock.

                                      F-12
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

      In addition, in June and July 1999, the Company entered into agreements
with two separate business partners whereby the Company agreed to issue warrants
for the purchase of common stock contingent upon the attainment of performance
milestones.

      The first agreement, signed in June 1999, provided for the issuance of
warrants exercisable for up to 50,000 shares of common stock at an exercise
price of $0.50 per share as performance milestones are achieved, and had en
expiration date of June 2002. Upon issuance of the warrants, the difference
between the fair value and the exercise price at the date of achievement of the
performance milestone would be recorded as an expense. This agreement was
superceded by another agreement in May 2000 that does not involve the issuance
of warrants. No performance milestones under the first agreement had been met or
determined to be probable and, accordingly, no warrants were ever issued under
the first agreement.

      The second agreement, signed in July 1999, provides for the issuance of
warrants exercisable for up to 275,000 shares of common stock, contingent upon
the attainment of performance milestones and expires in July 2002. The exercise
price for these warrants shall be determined as of the date when a specific
milestone is achieved and shall be equal to the price per share received by the
Company in the most recent private equity financing round of the Company or,
following an IPO, the average trading price of the Company's common stock over
the five trading days immediately prior to the date of issuance of these
warrants. Upon issuance of the warrants, any difference between the fair value
and the exercise price at the date of achievement of the performance milestone
will be recorded as an expense. At July 31, 2000, no performance milestones
under either agreement had been met or determined to be probable and,
accordingly, no warrants have been issued or related expense recorded.

      COMMON STOCK. In February 2000, the Company completed its initial public
offering ("IPO"), which resulted in the sale by the Company of 8,050,000 shares
of common stock at $17.00 per share. The Company's net proceeds from the IPO,
after deducting underwriting discounts and offering expenses, were approximately
$125.9 million.

NOTE 7 - EMPLOYEE BENEFIT PLANS

RETIREMENT PLAN

      Effective March 1997, the Company established a qualified 401(k) plan (the
Plan) available to all employees who meet the Plan's eligibility requirements.
Participants may elect to contribute a percentage of their compensation to the
Plan up to a statutory maximum amount. The Company may make matching
contributions to the Plan on a discretionary basis. The Company did not make any
contributions to the Plan in fiscal 2000, 1999 or 1998.

OPTION PLANS

      1995 STOCK OPTION PLAN. In October 1995, the Company's Board of Directors
approved the 1995 Stock Option Plan (1995 Plan) and reserved 1,000,000 shares of
common stock for issuance under the Plan. In fiscal 1996, an additional
1,000,000 shares of common stock were approved by the Board of Directors and
reserved for issuance under the 1995 Plan. The Board of Directors elected to
reduce the number of shares of common stock reserved under the 1995 Plan and
296,448 and 28,281 shares were retired from the 1995 Plan in fiscal 1998 and
1999, respectively. The 1995 Plan provides for stock options to be granted to
employees, consultants, officers, and directors. Options may be granted at an
exercise price not less than 100% of the estimated fair market value, as
determined by the Company's Board of Directors, for incentive stock options, and
85% of the estimated fair market value at the date of grant for nonqualified
stock options. All options are granted at the discretion of the Company's Board
of Directors and have a term not greater than ten years from the date of grant.
Options issued generally vest ratably over four years (25% one year after the
grant date and at a rate of 1/48 per month thereafter).

      1996 INCENTIVE STOCK OPTION PLAN. In November 1996, the Company's Board of
Directors approved the 1996 Incentive Stock Option Plan (1996 Plan), which is
effective for a term of ten years. The Board of Directors reserved 809,132
shares of common stock for issuance under the 1996 Plan at that time. During
fiscal 1998 and 1999, additional shares of common stock of 2,482,185 and
600,000, respectively, were approved by the Board of Directors and reserved for

                                      F-13
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

issuance under the 1996 Plan. Options may be granted at an exercise price not
less than 100% of the estimated fair market value, as determined by the
Company's Board of Directors, for incentive stock options, and 85% of the
estimated fair market value at the date of grant for nonqualified stock options.
All options are granted at the discretion of the Company's Board of Directors
and have a term not greater than ten years from the date of grant. Options
issued generally vest ratably over four years (25% one year after the grant date
and at a rate of 1/48 per month thereafter).

      2000 EQUITY PARTICIPATION PLAN. In December 2000, the Company's Board of
Directors approved the 2000 Equity Participation Plan (2000 Plan), which is
effective for a term of ten years. The 2000 Plan is a successor equity plan to
the Company's 1996 Incentive Stock Option Plan. As a result, shares that become
available for issuance as a result of stock options expiring or becoming
exercisable under the 1996 Plan may be issued under the 2000 Plan. As of July
31, 2000, there were outstanding under the 1996 Plan stock options to purchase
an aggregate of 860,545 shares which, if expire or become unexercisable, may be
issued under the 2000 Plan. Under the 2000 Plan, a total of 1,823,900 shares of
common stock have been reserved for issuance. Options may be granted at an
exercise price not less than 100% of the estimated fair market value, as
determined by the Company's Board of Directors, for incentive stock options, and
85% of the estimated fair market value at the date of grant for nonqualified
stock options. With respect to any participant who owns stock possessing more
than 10% of the voting power of all classes of our outstanding capital stock,
the exercise price of any incentive stock option granted must be at least equal
110% of the fair market value on the grant date and the term must not exceed
five years. All options are granted at the discretion of the Company's Board of
Directors and have a term not greater than ten years from the date of grant.
Options issued generally vest ratably over four years (25% one year after the
grant date and at a rate of 1/48 per month thereafter). In addition, the 2000
Plan provides that, in the event of a merger of the Company with or into another
corporation, the administrator will have the authority, but not the obligation
to accelerate the vesting of each outstanding option and other award, except
that options issued to non-employee directors will vest in full upon the closing
of a merger transaction.

                                      F-14
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   The following is a summary of activity for all stock option plans for the
three years ended July 31, 2000:

<TABLE>
<CAPTION>
                                                                           Options                       Weighted-
                                                                          available                       average
                                                                         for future        Options       exercise
                                                                            grant        outstanding          price
                                                                         -----------    ------------    -----------
<S>                                                                      <C>            <C>             <C>
Balances as of July 31, 1997...........................................      403,632        994,500     $      0.10
Authorized.............................................................    2,482,185             --              --
Shares retired.........................................................     (296,448)            --              --
Options granted........................................................   (2,530,637)     2,530,637            0.11
Options exercised......................................................           --       (136,135)           0.10
Options canceled.......................................................      516,365       (516,365)           0.11
                                                                         -----------    ------------    -----------

Balances as of July 31, 1998...........................................      575,097      2,872,637            0.11
Authorized.............................................................      600,000             --              --
Shares retired.........................................................      (28,281)            --              --
Options granted at fair value..........................................     (349,000)       349,000            0.15
Options granted below fair value.......................................     (822,500)       822,500            0.42
Options exercised......................................................           --     (1,527,586)           0.13
Options canceled.......................................................      452,551       (452,551)           0.10
                                                                         -----------    ------------    -----------

Balances as of July 31, 1999...........................................      427,867      2,064,000            0.22
Authorized.............................................................    1,900,000             --              --
Options granted at fair value..........................................   (1,644,500)     1,644,500           14.12
Options granted below fair value.......................................     (338,250)       338,250            3.72
Options exercised......................................................    1,655,317     (1,655,317)           0.42
Options canceled.......................................................      179,596       (179,596)           4.10
                                                                         -----------    ------------    -----------
Balances as of July 31, 2000...........................................    2,180,030      2,211,837     $     10.63
                                                                         ===========    ===========     ===========
</TABLE>

      There were 870,493 and 692,470 options exercisable as of July 31, 2000 and
1999, respectively. The weighted-average fair value of employee stock options
granted at fair value during fiscal 2000, 1999 and 1998 was $3.15, $0.03, and
$0.02, respectively. The weighted average fair value of employee stock options
granted below fair value during fiscal 2000 and 1999 was $4.10 and $1.51,
respectively. The fair value of employee options granted was estimated on the
date of grant using the Black-Scholes option-pricing model.

      Several of the Company's stock option plans allow for the issuance of
stock options, which may be exercised by full recourse note or by cash to
purchase common stock at any time subsequent to issuance. These shares of common
stock may be subject to vesting. The Company has the right to repurchase all
unvested shares at the original exercise price in the event of employee
termination. The number of shares subject to the repurchase right decreases as
the shares vest under the original option terms, generally four years. As of
July 31, 2000, there were 1,079,000 shares subject to repurchase at prices
ranging from $0.10 to $8.00, with a weighted-average repurchase price of $0.48
per share.

                                      F-15
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


      The following table summarizes information about stock options under the
plans as of July 31, 2000:

<TABLE>
<CAPTION>
                                                     OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE
                                        --------------------------------------------    ---------------------------
                                                           WEIGHTED-       WEIGHTED-                      WEIGHTED-
                                                            AVERAGE        AVERAGE                        AVERAGE
                                           NUMBER OF     REMAINING LIFE    EXERCISE       NUMBER OF       EXERCISE
RANGE OF EXERCISE PRICES                    SHARES         (IN YEARS)       PRICE          SHARES          PRICE
------------------------------------    -----------    --------------    -----------    -----------     -----------
<S>                                     <C>            <C>               <C>            <C>             <C>
$0.10 - 1.00............................    367,687               8.2    $      0.31        367,687     $      0.31
$1.25 - 5.00............................    242,150               9.1           3.73        207,150            3.86
$8.00 - 12.00...........................    919,250               9.4          10.78        295,656            8.25
$13.00 - 27.00..........................    622,750               9.6          15.99             --              --
$30.50 - 64.00..........................     60,000               9.6          43.54             --              --
                                        -----------    --------------    -----------    -----------     -----------

                                          2,211,837               9.3    $     10.63        870,493     $      3.85
                                        ===========    ==============    ===========    ===========     ===========
</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

      In December 1999, the Company's Board of Directors adopted the Vicinity
Corporation 2000 Employee Stock Purchase Plan ("2000 ESPP"). A total of 200,000
shares of common stock may be sold under the 2000 ESPP. The 2000 ESPP permits
participants to purchase common stock through payroll deductions of up to 15% of
the participant's base compensation. Base compensation is defined as the
participant's total compensation that he or she receives on each payday as
compensation for services to the Company. The purchase plan, which is intended
to qualify under Section 423 of the Internal Revenue Code, contains consecutive
offer periods that are generally 12 months in duration. The offer periods start
on March 1 and end on the last day of February of each year. Each offer period
is comprised of two consecutive six-month purchase periods. The price of Common
Stock purchased under the 2000 ESPP is 85% of the lesser of the fair market
value of the Common Stock (1) the first day of the purchase period or (2) the
last day of the purchase period in which an eligible employee participates. As
of July 31, 2000, no shares had been issued under the 2000 ESPP.

STOCK-BASED COMPENSATION

      The Company uses the intrinsic-value method in accounting for its
stock-based compensation arrangements with employees. Stock- based compensation
expense is recognized for employee stock option grants in those instances in
which the fair value of the underlying common stock exceeds the exercise price
of the stock options at the date of grant. The Company recorded deferred
stock-based compensation expense before taxes of $1,133,000 and $1,211,000
during the years ended July 31, 2000 and 1999, respectively. Compensation
expense is amortized in accordance with Financial Accounting Standards Board
(FASB) Interpretation No. 28. Approximately $1,017,000 and $167,000 of
stock-based compensation expense was recognized in the years ended July 31, 2000
and 1999, respectively. No stock-based compensation expense was recognized in
the year ended July 31, 1998.

      The fair value of the Company's stock-based awards to employees was
estimated using a Black-Scholes option-pricing model. The following
weighted-average assumptions were used in these calculations: (i) Option Plans -
a risk-free interest rate of 6.4%, 5.2% and 5.6% for the years ended July 31,
2000, 1999 and 1998, respectively; an expected life of four years for the years
ended July 31, 2000 and 1999, and six years for the years ended July 31, 1998
and; dividend yield of 0%; and volatility of 100%, 0% and 0% for the years ended
July 31, 2000, 1999 and 1998, respectively; (ii) ESPP - a risk-free interest
rate of 5.8%, an expected life of six months and volatility of 130% for the year
ended July 31, 2000, which was the first fiscal year of existence for the
Company's ESPP.

                                      F-16
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


      Had compensation cost for the Company's stock-based compensation plans
been determined consistent with the fair value approach set forth in Statement
of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for
Stock-Based Compensation," the Company's net losses for the years ended July 31,
2000, 1999 and 1998 would have been as follows:

<TABLE>
<CAPTION>
                                                                                    Years Ended July 31,
                                                                         -------------------------------------------
                                                                            2000            1999           1998
                                                                         ------------   ------------    ------------
<S>                                                                      <C>            <C>             <C>
Net loss applicable to common stockholders - as reported...............  $   (16,466)   $    (6,553)    $    (2,999)
Pro forma stock-based compensation expense.............................       (1,744)           (37)            (16)
                                                                         ------------   ------------    ------------
Net loss applicable to common stockholders - pro forma.................  $   (18,210)   $    (6,590)    $    (3,015)
                                                                         ============   ============    ============

BASIC AND DILUTED NET LOSS PER SHARE - as reported.....................  $     (1.08)   $     (1.67)    $     (1.00)
                                                                         ============   ============    ============
BASIC AND DILUTED NET LOSS PER SHARE - pro forma.......................  $     (1.19)   $     (1.67)    $     (1.00)
                                                                         =============  ============    ============
</TABLE>


NOTE 8 - INCOME TAXES

      The Company incurred no income tax expense for the years ended July 31,
2000, 1999 and 1998. The income tax expense differed from the amounts computed
by applying the U.S. federal income tax rate of 34% to pretax income as a result
of the following:

<TABLE>
<CAPTION>
                                                                                    Years Ended July 31,
                                                                         -------------------------------------------
                                                                            2000            1999           1998
                                                                         ------------   ------------    ------------
<S>                                                                      <C>            <C>             <C>
Computed expected tax (benefit)........................................  $    (5,242)   $    (1,875)    $      (844)
Stock-based compensation...............................................          377             --              --
Current year net operating losses and temporary differences
   for which no tax benefit is recognized..............................        4,865          1,863             838
Other..................................................................           --             12               6
                                                                         -----------    -----------     -----------
                                                                         $        --    $        --     $        --
                                                                         ===========    ===========     ===========
</TABLE>

      The effects of temporary  differences  that give rise to significant
portions of deferred tax assets as of July 31 are as follows:

<TABLE>
<CAPTION>
                                                                                               July 31,
                                                                                      -----------------------------
                                                                                        2000              1999
                                                                                      -----------       -----------
                                                                                              (In thousands)
<S>                                                                                   <C>               <C>
Deferred tax assets:
   Accruals and reserves..........................................................    $     4,499       $     2,428
   Net operating loss carryforwards and credits...................................          8,310             3,853
                                                                                      -----------       -----------
       Total gross deferred tax assets before valuation allowance                          12,809             6,281

Valuation allowance...............................................................        (12,809)           (6,281)
                                                                                      ------------      ------------
                                                                                      $        --       $        --
                                                                                      ===========       ===========
</TABLE>

      As of July 31, 2000, the Company has available net operating losses for
federal and state income tax purposes of $18,721,000 and $18,034,000,
respectively. The federal net operating loss carryforward will expire, if not
utilized, in the years 2011 through 2020. The California net operating loss
carryforwards will expire, if not utilized, in the years 2004 through 2005. The
Company has research credit carryforwards for federal income tax purposes of
$351,000. The Company has a valuation allowance for the full amount of the
deferred tax assets as of July 31, 2000 and 1999, as management does not believe
it is more likely than not that the value of the assets is recoverable.

                                      F-17
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE 9 - COMMITMENTS

      LEASES. The Company leases equipment and its facilities under
non-cancelable operating and capital leases with expiration dates through 2008.
Future minimum lease payments under the Company's non-cancelable operating and
capital leases as of July 31, 2000 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                       Capital           Operating
                                                                                       Leases              Leases
                                                                                      -----------       -----------
<S>                                                                                   <C>               <C>
YEAR ENDING JULY 31,
--------------------
   2001...........................................................................    $     1,142       $     1,806
   2002...........................................................................            294             1,722
   2003...........................................................................             --             1,708
   2004...........................................................................             --             1,710
   2005...........................................................................             --             1,712
   thereafter.....................................................................             --             4,689
                                                                                      -----------       -----------
       Total minimum lease payments...............................................          1,436       $    13,347
                                                                                                        ===========

Less: amount representing interest................................................           (124)
                                                                                      ------------
Present value of minimum lease payments...........................................          1,312

Less current portion..............................................................          1,042
                                                                                      -----------
                                                                                      $       270
                                                                                      ===========
</TABLE>

      Rental expense amounted to approximately $1,616,000, $1,142,000 and
$771,000 for the years ended July 31, 2000, 1999 and 1998, respectively.
Rental expense of approximately $47,000 for the year ended July 31, 2000 and
$142,000 during the years ended July 31, 1999 and 1998 was paid to Navisite,
an affiliate of CMGI.

      LICENSE FEES. The Company has entered into agreements with several content
providers. As of July 31, 2000, the terms of such agreements include the
following future minimum license fees (in thousands):


<TABLE>
<S>                                                                                                   <C>
2001....................................................................................................$     1,084
2002....................................................................................................$     1,044
2003....................................................................................................$        81
2004....................................................................................................$         7
                                                                                                        -----------
                                                                                                        $     2,216
                                                                                                        ===========
</TABLE>

NOTE 10 - SEGMENT INFORMATION

      The Company's chief operating decision maker (CODM) is considered to be
the Company's CEO. The CODM evaluates performance, makes operating decisions and
allocates resources based on financial data consistent with the presentation in
the accompanying financial statements. Therefore, the Company operates in a
single segment for purposes of disclosure under SFAS No. 131.

                                      F-18
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

      The Company's revenues in fiscal 2000 have been earned from customers in
the United States with the exception of approximately $1.3 million, which was
earned from customers in Europe. For the year ended July 31, 2000, no customer
accounted for 10% or more of the Company's revenues. For the years ended July
31, 1999 and 1998, one customer accounted for approximately 11% and 26%,
respectively, of the Company's revenues.

      All of the Company's long-lived assets are located in the United States.

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

      In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments (including derivative instruments
embedded in other contracts) and for hedging activities. SFAS No. 133, as
amended by SFAS No. 138, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. To date, the Company has not entered into any
derivative financial instruments or hedging activities.

      In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin No. 101, "Revenue Recognition" (SAB No. 101), as
amended by SAB No. 101B, to provide guidance on the recognition, presentation
and disclosure of revenue in financial statements; however, SAB No. 101 does not
change existing literature on revenue recognition. SAB No. 101 explains the
staff's general framework for interpretation of revenue recognition rules. The
Company believes that its current revenue recognition policy is in compliance
with this guidance; however, the Company continues to evaluate the impact, if
any, of SAB No. 101 and any possible subsequent interpretations of SAB No. 101
on the Company's policies and procedures. SAB No. 101 is effective beginning
with the Company's fiscal quarter ending July 31, 2001.

      The FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation - an Interpretation of APB Opinion No.
25" (FIN No. 44) in March 2000. The Interpretation clarifies the application of
Opinion 25 for only certain issues such as the following: (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. The Company believes that its current
accounting treatment for transactions involving stock compensation is in
compliance with this guidance.

      In March 2000, the Emerging Issues Task Force ("EITF") issued EITF No.
00-2, "Accounting for Web Site Development Costs." EITF No. 00-2 establishes
accounting and reporting standards for capitalization of web site development
costs in accordance with AICPA Statement of Position No. 98-1. The Company
adopted EITF No. 00-2 during the fiscal quarter ended April 30, 2000. The
adoption of EITF No. 00-2 did not have a material impact on the Company's
results of operations or financial position.

NOTE 12 - CONTINGENCIES

      In May 1999, a founder and former employee of the Company filed a
complaint against the Company and several of the Company's officers in
California Superior Court for reformation of contract alleging various contract
and tort causes of action and seeking declaratory relief. In the complaint, the
founder and former employee seeks, among other things, the issuance of at least
281,250 shares of the Company's common stock, an unspecified amount of
compensatory damages and punitive damages, plus attorneys' fees. In November
1999, the court stayed the claim and granted the Company's motion to compel
arbitration. Such arbitration is currently scheduled to occur in November 2000.
The Company plans to vigorously defend against these allegations.

NOTE 13 - RELATED PARTY TRANSACTIONS

During the year ended July 31, 2000, the Company recognized license and
hosting revenue of $62,500 related to a contract with an affiliate of CMGI.

                                      F-19
<PAGE>


                      VICINITY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of July 31, 1998, the Company had a noninterest bearing payable to
Navisite Internet Services, an affiliate of CMGI, for $163,686, relating to
the lease of computer equipment that was paid during fiscal 1999.

In addition to rental expense paid to Navisite, approximately $40,000, $49,000
and $8,000 was paid for data center services during the years ended July 31,
2000, 1999 and 1998, respectively.

NOTE 14 - SUBSEQUENT EVENT

On October 18, 2000, the Company reached a definitive agreement (the
"NetCreate Agreement") to acquire NetCreate Systems, Inc. ("NetCreate"), an
Internet products company that provides tools and services to build or
enhance the features and functionality of web sites. In accordance with the
NetCreate Agreement, the Company paid $250,000 in cash and issued
approximately 441,000 shares of its Common Stock in exchange for all
outstanding shares of NetCreate Common Stock. In addition, the Company will
issue options to purchase approximately 90,000 shares of the Company's Common
Stock in exchange for outstanding options to purchase NetCreate Common Stock.
The aggregate purchase price to be allocated to acquired assets and
liabilities is expected to be approximately $5.0 to $5.5 million, which
includes acquisition-related costs. The acquisition will be accounted for
using the purchase method of accounting.

NOTE 15 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     FISCAL YEAR ENDED JULY 31, 2000
                                                      ------------------------------------------------------------
                                                           FIRST         SECOND           THIRD         FOURTH
                                                          QUARTER        QUARTER         QUARTER        QUARTER
                                                      --------------  -------------  -------------  --------------
                                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                   <C>             <C>            <C>            <C>
Revenues..............................................$      2,531    $      3,318   $      4,340   $      5,001
Operating expenses....................................$      3,847    $      4,902   $      7,814   $      8,644
Loss from operations..................................$     (2,927)   $     (3,627)  $     (6,022)  $     (6,507)
Net loss..............................................$     (2,872)   $     (3,575)  $     (4,454)  $     (4,515)
Net loss applicable to common stockholders............$     (3,374)   $     (4,078)  $     (4,499)  $     (4,515)
Basic and diluted net loss per share..................$      (0.71)   $     (0.79)   $      (0.18)  $      (0.17)
Weighted average shares used in basic and
  diluted net loss per share calculation...............      4,745           5,139         24,742         26,908
</TABLE>


<TABLE>
<CAPTION>
                                                                     FISCAL YEAR ENDED JULY 31, 1999
                                                      ------------------------------------------------------------
                                                           FIRST         SECOND           THIRD         FOURTH
                                                          QUARTER        QUARTER         QUARTER        QUARTER
                                                      --------------  -------------  -------------  --------------
                                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                   <C>             <C>            <C>            <C>
Revenues..............................................$      1,492    $      1,421   $      1,427   $      2,084
Operating expenses....................................$      1,269    $      1,437   $      1,874   $      3,359
Loss from operations..................................$       (651)   $       (923)  $     (1,482)  $     (2,408)
Net loss..............................................$       (669)   $       (928)  $     (1,490)  $     (2,428)
Net loss applicable to common stockholders............$       (798)   $     (1,149)  $     (1,779)  $     (2,828)
Basic and diluted net loss per share..................$      (0.21)   $     (0.30)   $      (0.45)  $      (0.69)
Weighted average shares used in basic and
  diluted net loss per share calculation...............      3,813           3,872          3,928          4,069
</TABLE>


                                      F-20
<PAGE>


                              VICINITY CORPORATION

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS






<TABLE>
<CAPTION>
                                                                        ADDITIONS
                                                         BALANCE         CHARGED                        BALANCE
                                                           AT              TO                             AT
                                                        BEGINNING       COSTS AND                        END
                                                         OF YEAR        EXPENSES       DEDUCTIONS       OF YEAR
                                                      ------------    ------------   ------------   ------------
                                                                              (IN THOUSANDS)
<S>                                                   <C>             <C>            <C>            <C>
Year ended July 31, 1998:
   Allowance for doubtful accounts....................$         --    $         --   $         --   $         --
                                                      ============    ============   ============   ============
Year ended July 31, 1999:
   Allowance for doubtful accounts....................$         --    $         80   $         --   $         80
                                                      ============    ============   ============   ============
Year ended July 31, 2000:
  Allowance for doubtful accounts.....................$         80    $         54   $         --   $        134
                                                      ============    ============   ============   ============
</TABLE>


                                      F-21