UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

(Mark One)

|o | Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the fiscal year ended
|- | ---------------------------------------------------------------------------------------------------------------

OR

|ý | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from August 1, 2001 to June 30, 2002.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------

Commission file number: 000-29365

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

DELAWARE

77-0414631(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
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. ý YES    o 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. o

The
aggregate market value of the voting stock held by non-affiliates of the Registrant as of August 31, 2002 based on the closing sales price of the Company's Common
Stock, as reported on The Nasdaq National Market, was approximately $53,184,000. 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 August 31, 2002 was 27,028,725.

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

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VICINITY CORPORATION

REPORT ON FORM 10-K

TABLE OF CONTENTS

|                                           |          |    |                                                                                                | PAGE
|------------------------------------------ | -------- | -- | ---------------------------------------------------------------------------------------------- | ----
|PART I                                     |          | 1 
|                                           | ITEM 1.  |    | BUSINESS                                                                                       |     
|                                           | ITEM 2.  |    | PROPERTIES                                                                                     |     
|                                           | ITEM 3.  |    | LEGAL PROCEEDINGS                                                                              |     
|                                           | ITEM 4.  |    | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            |     
|PART II                                    |          | 11
|                                           | ITEM 5.  |    | MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                          |     
|                                           | ITEM 6.  |    | SELECTED CONSOLIDATED FINANCIAL DATA                                                           |     
|                                           | ITEM 7.  |    | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          |     
|                                           | ITEM 7A. |    | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                     |     
|                                           | ITEM 8.  |    | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                       |     
|                                           | ITEM 9.  |    | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           |     
|PART III                                   |          | 31
|                                           | ITEM 10. |    | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                             |     
|                                           | ITEM 11. |    | EXECUTIVE COMPENSATION                                                                         |     
|                                           | ITEM 12. |    | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |     
|                                           | ITEM 13. |    | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                 |     
|PART IV                                    |          | 35
|                                           | ITEM 14. |    | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                                |     
|SIGNATURES                                 |          | 36
|CERTIFICATIONS                             |          | 37
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |          | 38

Unless the context otherwise requires, references herein to "we," "us," "our company," "the Company" or "Vicinity" are to Vicinity Corporation, a
Delaware corporation. We were incorporated as a California corporation in October 1995 and reincorporated as a Delaware corporation in January 2000. "Vicinity," "MapBlast!," "GeoSearch,"
"Powered by Vicinity," "Vicinity Business Finder," "Vicinity Telephone Business Finder," "Vicinity Wireless Business Finder," and "Vicinity Brandfinder" are registered marks of our company. We have
filed applications for the marks "Vicinity Location Server," "Vicinity Web Locator," "Vicinity Wireless Locator," "Vicinity Speech Locator," "Vicinity Data Manager," "VLS," "Vicinity Location
Analyzer" and "Power of Location" with the United States Patent and Trademark Office, and these applications are currently pending. Each trademark, trade name or service mark of any other company
appearing in this Form 10-K belongs to its holder.

References
in this report to past fiscal years refer to the fiscal year of our company ended on July 31 of that year. We recently changed the last day of our fiscal year from
July 31 to June 30, commencing with the present fiscal year 2002. As a result, fiscal year 2003 will commence on July 1, 2002 and end on June 30, 2003. The period from
August 1, 2001 through June 30, 2002 is a transition period and resulted in a fiscal year 2002
that contains eleven months. Accordingly, our fiscal fourth quarter of fiscal year 2002, ending on June 30, 2002, contains two months.

Forward Looking Statements

The statements contained in this Form 10-K that are not historical facts may be deemed to contain forward-looking statements
which are subject to safe harbors created under the U.S. federal securities laws. These forward-looking statements include, among other things, statements about our anticipated future revenues,
anticipated profitability, anticipated growth of our customer base, and more generally other projections of our future financial performance, our anticipated growth and anticipated trends in our
business. In some cases, you can identify these statements by words or phrases such as "anticipate," "estimate," "projects," "believes," "intends," "expects" and similar words and phrases. These
statements are only predictions, based on our current expectations about future events, and we cannot guarantee that they will be accurate. Actual results may differ materially from those expressed or
implied in any forward-looking statement as a result of several risks and uncertainties, including, without limitation, the risks and uncertainties detailed herein under "Item 7. Management'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, unless we are required to do so by law.

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PART I

ITEM 1. BUSINESS

OVERVIEW

We are a leading provider of Enterprise Location Services (ELS) to Global 2000 companies across Web, wireless and speech platforms, enabling businesses,
governments and agencies to market the local availability of their products and services. We unify and enrich Web, wireless and speech inquiries in order to catalyze a fundamental improvement in the
customer experience. We turn location information into a coherent, rich source of knowledge and embed location intelligence into the fabric of the organization.

We
provide technology-based solutions to a blue-chip customer base that includes such well-known companies as Bank of America, Hilton Hotels, FedEx, Ford Motor
Company, and McDonald's. Our solutions are available across the globe and in multiple languages.

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. Historically, we generated substantially all of our revenues from our product
formerly known as Web Business Finder. In February 2000, we completed our initial public offering in which we issued 8,050,000 shares of common stock at a price of $17.00 per share and received
net proceeds of $125.9 million in cash. We currently target our service offerings towards several vertical markets, including automotive, financial services, food services, government, health
care, hospitality and retail. Historically, we have generated substantially all of our revenues from licensing our Locator (Web, wireless and speech), and Maps and Driving Directions services.

During
fiscal 2002, we reorganized our business and rebuilt our management team, including a new president and CEO, CTO, senior VP of worldwide sales and senior VP of marketing and
business development. During the fourth quarter of fiscal 2002, we experienced customer renewal rates of approximately 90% and a large portion of our customers that renewed their annual license
agreements with us also increased the value of their licensed services.

We
are currently focusing our efforts on expanding our service offerings to bring even more value to our customers. We expect that as we roll out new applications, our current and target
customers will recognize the importance of reaching their customers via multiple digital channels with dynamic, accurate local information. Our new applications focus on the value of location to the
enterprise. One application analyzes the distribution of multiple sets of locations for purposes such as Request for Proposal (RFP) generation, creation of location-specific marketing literature, and
new store location analyses. Another application lets large companies distribute the management of maintaining store location information to the store owners themselves for real-time store
locator updates. This has the added benefit of bringing store location and contact information into a single corporate system that can be used for reporting, research, and analysis.

INDUSTRY BACKGROUND

For many companies, physical locations remain the focal point for their business and the primary "face" of their companies to customers. In response to
competitive pressures, many businesses are now operating hundreds or even thousands of unique locations throughout the world. Simultaneously, the adoption of new digital technologies has fueled a
demand by many customers for personalized Web, wireless and speech access to information about these physical locations. The intersection of these two trends magnifies the problems of managing
location attributes and the importance of responding to larger volumes of digital interaction.

Today,
many organizations are ill-equipped to manage this increasingly important information asset. This intensifies the challenges for businesses, governments and agencies
that are trying to cost-effectively

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manage larger amounts of location attributes while responding to digital interactions demanded by customers across the world. The ability of a company to manage and harness these information assets
and put them to work is an opportunity for cost savings and technological advantage.

Vicinity
services can help to manage and harness this under-utilized information asset. Some of the characteristics of our solutions are:



The
maturity of the Internet market and the resurgence of enterprise solutions create an opportunity for us to leverage our enterprise customer base and unique location technology to
take a leadership position in the ELS area.

OUR SOLUTION

Our solution allows our customers to manage location information as a corporate asset throughout the enterprise by delivering an enterprise platform. As such,
locations become a diverse source of information surrounded by digital streams of rich and valuable customer activity. We unify and enrich these digital interactions in order to catalyze a fundamental
improvement in the customer experience while turning location information into a coherent, rich source of knowledge. Our solution puts location assets to work for today's global businesses.

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

Full lifecycle of services.The core of our solution, the Vicinity Location Server, is a technology platform that captures,
manages and transforms data into geo-coded information, such as maps, driving directions and attributes about companies' stores, branches or offices. Built upon a patented spatial
database, the Vicinity Location Server supports hundreds of attributes, collected from a variety of sources. The Vicinity Location Server is scalable to the largest global enterprise and can handle a
large volume of digital interaction. We populate this database with mapping content that has been collected and optimized by our team of location technologists. Local and corporate content is
aggregated from a variety of data sources within the enterprise to compile a rich set of location information. We automate and streamline the process for managing location information and digital
interactions. A fundamental improvement in the process for populating, updating and maintaining location content across the world can lead to significantly reduced costs, while putting these valuable
information assets to work.

Unified, 360-degree access.For many companies, the customer experience across the different digital media is
either not available and/or inconsistent. Our solution unifies Web, wireless and speech interactions, significantly improving the consistency and accuracy of location information from these new
channels.

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Embed location intelligence into the organization.Our solution allows our customers to embed location intelligence into the
fabric of their organizations. Application services, advanced application programming interface, or API, capabilities and surrounding customization services integrate our solution into a client's
existing enterprise applications and business rules. With the Vicinity solution, businesses leverage their existing information technology and data investments and configure the service to meet their
specific needs.

It's a service: just turn it on!Unlike client server software, our service is delivered over the Internet; there is nothing
to install or maintain. Our "pay as you go" pricing can help to eliminate financial and implementation risks and offers immediate customer benefit.

Strategic benefits.For forward-thinking enterprises, location information can be an under-utilized asset and can represent a
new source of cost savings and competitiveness. As such, location information assets can become a significant opportunity for fundamentally improving the customer experience and reducing the burden
placed on customers that are digitally interacting with location information. Our solution enables a new way of doing business by turning location information into a coherent, rich source of customer
knowledge and increasing the flow and availability of this information to improve the brand experience.

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 telephones, wireless telephones and other wireless devices, such as the Palm VII.

Local Web Marketing with Brand Integrity.Our services allow 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 are designed to 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 solutions in an average of three to four weeks.

Reporting and Analysis.Our reporting and analysis 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.

In
summary, the new nature of the old economy melds business and information technology strategies to achieve new levels of efficiency and sustained competitive advantage. Crisp
execution along the new digital platforms of Web, wireless and speech requires a new technology infrastructure and specialized expertise for generating value from locations. Our solution puts location
assets to work for today's global businesses.

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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 channel partners. We intend to expand our network of channel partners over the next couple of years. We
believe we have an attractive service offering to be made available to systems integrators, web developers and application/platform specific integrators focused on vertical markets that complement our
market focus. We will establish a robust business development environment working closely with our channel partners to more effectively penetrate these markets.

Execute to Profitability.We are focusing on positioning our company to become profitable. Our efforts in this direction
include the implementation of careful cost controls and a focus on acquiring new customers and increasing the value of the services that we sell to our current customers.

Invest in Sales and Marketing.We have recently rebuilt our marketing organization, which is currently focused on rolling out
vertical marketing plans. Our sales team has also been recently reorganized geographically, rather than managed by vertical market as in the recent past. This effort has included the hiring of
regional sales people as well as a director of government business. We believe that sales management from a regional level will better serve our customer needs as well as having an economic benefit.
Additionally, we have a significant opportunity to develop a strong government presence over the next two years, and intend to invest in that opportunity.

Expand Product & Service Offerings.Through internal product development and through partnerships, we have implemented
services that deliver our clients' data to potential customers through telephones, wireless telephones and Internet-enabled wireless devices, such as the Palm VII and WAP telephones. With the addition
of our new Chief Technology Officer who started in June 2002, we plan to continue to make investments in our research and development organization for expanded and new product initiatives. We
intend to develop additional products and services that are tailored to the needs of large multi-location businesses, governments and agencies by focusing on expanding our business intelligence,
speech and wireless and support services across a larger global coverage area. We intend to continue to develop new products internally and to build partnerships and work closely with alliance
partners and other strategic partners to offer our clients' data across any capable device or platform.

OUR SERVICES

Our services are designed to capture, manage and transform data into geo-coded information, such as maps, driving directions and attributes about a
company's stores, branches or offices.



The Vicinity Location Server is a technology platform that captures, manages and transforms data into geo-coded information, such as maps, driving
directions and attributes about a company's stores, branches or offices. Built upon a patented, spatial database, the Vicinity Location Server supports hundreds of attributes, collected from a variety
of sources. Vicinity Location Server is scalable to large global enterprises and can handle a large volume of digital interaction. We populate this database with mapping content that has been
collected and optimized by our team of location technologists. Local and corporate content is aggregated from a variety of data sources within the enterprise to compile a rich set of location
information. We automate and streamline the process for managing location information and digital interactions. A fundamental improvement in the process for populating, updating and maintaining
location content across the world can lead to significantly reduced costs, while putting these valuable information assets to work.

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The VLS Console is a web-based application that allows our clients to manage their locator information, perform geospatial analyses against their
locations, view a set of monthly reports on their locator usage, and access Vicinity support services. This single application ties all of Vicinity's services into one easily accessible location.



Location Analyzer is an application that performs geospatial analyses against a client's locations and a second set of locations, such as their customers,
prospects, or partners. The resulting reports provide many valuable functions, such as proof points for Requests for Proposal (RFP), location-specific data for personalized direct mail pieces, and
data to assist in the process of locating new stores, branches, or offices.



Location Customizer redistributes the management of location information from a centralized corporate function to the individual storeowners. Rich role and
permission information provides control over the information each user can access. Higher-level managers can use Location Customizer to oversee sets of locations, manage system users, and see
transaction histories. They can also use the accumulated location and user information to discover and analyze trends in the distribution of their products and services.

We
believe that the Vicinity Location Server, along with an accompanying array of function-specific applications, will form the nucleus of our services going forward. Our target markets
for sale of VLS include:



CLIENTS

As of June 30, 2002, our clients included many of the leading names in the retail, hospitality, food and beverage, shipping/transportation, automotive and
financial services industries, including:

Retailers

Ace Hardware, Bed Bath & Beyond, Best Buy, Home DepotHospitality

Best Western International, Hilton Hotels Corporation, Marriott International, Starwood Hotels & Resorts WorldwideFood and Beverage

Allied Domecq (Baskin-Robbins, Dunkin' Donuts, Togo's), McDonald's, Tricon Restaurants (KFC, Taco Bell and Pizza Hut)Shipping/Transportation

Airborne Express, DHL, FedExAutomotive

Equiva (Shell & Texaco), Ford Motor Company, Harley Davidson, Lexus, SubaruFinancial Services

Bank of America, CitiBank, U.S. Bank, Wells Fargo


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Our
target markets for sale of our services include:



We
build awareness and demand for our services through marketing programs, including trade shows and events, public relations, channel marketing and telemarketing. Our services are
primarily sold through our direct regionally-based sales organization. Additionally, we sell our services through an in-house direct sales team, an outsourced telesales organization, and
an outsourced telemarketing agency. We have aggressively built our outsourced sales and marketing capability while focusing on the development of a strong and capable reseller channel. The sales
cycle, from identifying a pre-qualified 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.

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.

We
face primary competition from AOL/MapQuest, Microsoft and Maporama. In addition, we compete with InfoNow Corporation, InfoSpace, MapInfo, Where 2 Get It, Inc., Switchboard, and
to a lesser degree, with other smaller, location-based content providers and with companies that provide free or low cost web creation and hosting services in conjunction with Internet service
provider, or ISP, services. 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.

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

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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 large amounts of client information, including store location and
product attribute 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 call component
sub-servers that manage our enterprise location services solutions to handle all content-specific transactions. The sub-servers handle service requests as socket-based
stateless transaction processes. Since the engine and the various sub-servers are all continuously running processes, it is not necessary to start-up any process in order to
handle a request. These processes are adjusted to respond to system load as well as to recover 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 Professional Services 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 Client
Services 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 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 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 sophisticated 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.

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INTELLECTUAL PROPERTY

We currently hold four United States patents and have filed several other applications for United States patents in order to protect proprietary intellectual
property that we believe is important to our business.

Vicinity,
MapBlast! and GeoSearch are registered service marks of our company. We are in the process of obtaining other service marks 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, be acquired or cease to do business, 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 to do business as a foreign corporation in a jurisdiction where we are required to do so could subject us to taxes and penalties. 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.

EMPLOYEES

As of June 30, 2002, we had 126 employees, including 15 employed in general and administrative functions, 52 in sales and marketing, 30 in research and
development, and 29 in operations. None of our employees is represented by a labor union, and we consider our relations with our employees to be good.

ITEM 2. PROPERTIES

Our headquarters facility is located in Sunnyvale, California and consists of approximately 53,000 square feet in a two-story building under a lease
expiring in September 2008. We currently occupy most of the first floor of this building, or approximately 20,500 square feet. The second floor and a portion of the first floor of the building
are being subleased under a sublease agreement expiring in July 2005. In

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addition, we occupy 11,500 square feet in a building that we own in New Hampshire that is used for engineering and product development. A small portion of our building in New Hampshire is also leased
to other tenants.

We
also currently lease approximately 2,200 square feet of office space in San Francisco, California under a lease expiring in August 2005, of which we have subleased all the
space under a sublease agreement expiring in December 2003.

We
also lease remote sales office space in New York, Pennsylvania and Windsor in the United Kingdom.

In
addition, we also lease space in a number of data centers in which we locate our equipment.

We
believe that our facilities are adequate for current needs and that additional or substitute space will be available as needed to accommodate any future expansion of our operations.

ITEM 3. LEGAL PROCEEDINGS

Our company and certain of our former officers and directors have been named as defendants in four lawsuits filed in the United States District Court for the
Southern District of New York, which have been consolidated into the case MBH Inc. v. Vicinity Corporation et al. By order dated April 19, 2002, Robert Elka has been named as the lead
plaintiff. This lawsuit is purportedly being brought as a class action on behalf of individuals who purchased shares of our company's common stock between February 9, 2000 and
December 6, 2000 in connection with and traceable to our initial public offering, although no class has been certified. According to the Amended Complaint filed on April 20, 2002, this
lawsuit alleges that our company, certain of our former officers and directors, and our securities underwriters violated various sections of the Securities Act of 1933, the Securities Exchange Act of
1934, and related rules, including Rule 10b-5, by reason of alleged false statements and omissions relating to underwriting discounts and market stabilization transactions. The
plaintiffs seek unquantified actual damages, recissionary damages and other relief to compensate losses allegedly incurred by purchasers of our common stock in connection with our initial public
offering.

This
lawsuit is one of a large number of such actions brought against numerous securities underwriters and issuers of securities that appear to be related to an investigation currently
being conducted by the United States Securities and Exchange Commission of the conduct of certain securities underwriters. These lawsuits, including the consolidated action brought against our
company, have been transferred
to a consolidated docket for coordination and decision of pre-trial motions, discovery and related matters other than trial. Certain underwriter defendants have brought a motion to recuse
the judge charged with managing the consolidated docket. The judge has denied the motion and the Second Circuit has denied a petition for a writ of mandamus ordering the recusal. The court recently
set a schedule for defendants to make motions to dismiss, such that the motions are expected to be fully submitted to the Court by the end of September 2002.

The
Company has made motions to dismiss all claims which motions should be fully submitted by the end of September 2002. We believe that the claims against our company and certain
of our former officers and directors are without merit and we intend to vigorously defend against them.

On
December 13, 2001, Murex Securities Limited and Murex Licensing Corporation ("Murex") filed a complaint in the United States District Court for the Eastern District of Virginia
(Murex Securities Limited, et al.v Vicinity Corporation, et al, Civil Action No. 01-1895-A) naming Vicinity and two of our customers as defendants. In the Complaint, the
plaintiffs alleged that our Enterprise Location Services infringed claims of a number of the plaintiffs' patents, and the plaintiffs sought unspecified damages and permanent injunctive relief. In our
response to the Complaint, we denied that we infringed any valid claims of the patents-in-suit. In May 2002, we reached a mutual settlement agreement with Murex
regarding this matter. Under the settlement agreement, we were granted a license by Murex in exchange for cash

9

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payments. In addition, the settlement agreement includes a fee for past damages. Payments for past damages, as well as litigation costs, were largely paid by our insurance provider. Future payments
under the Settlement Agreement are included in our license fee commitments in Footnote 10 in the Notes to the Consolidated Financial Statements. Our insurance provider has contacted us to discuss the
finalization of the amount of the claim that was covered under the Murex settlement. We are unable at this time to evaluate the outcome of these discussions.

We
have received correspondence from Unisys Corporation ("Unisys") asserting that our services infringe various claims of a patent owned by Unisys covering LZW compression. Unisys has
offered us a license under this patent, which expires in 2003. We are currently evaluating Unisys' offer. In the event that this matter cannot be resolved through negotiation and Unisys files a claim
against us under the patent, the litigation could involve significant costs of defense and would involve significant risks and uncertainties.

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 2002.

10

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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 bid prices of our common stock for
the periods indicated.

|                                 |                                                            | High |   | Low  
|-------------------------------- | ---------------------------------------------------------- | ---- | - | -----
|Fiscal year ending June 30, 2002 |                                                            |      |   |      
|                                 | Fourth quarter (May 1, 2002 through June 30, 2002)         |      | $ | 2.07 
|                                 | Third quarter (February 1, 2002 through April 30, 2002)    |      | $ | 2.23 
|                                 | Second quarter (November 1, 2001 through January 31, 2002) |      | $ | 2.29 
|                                 | First quarter (August 1, 2001 through October 31, 2001)    |      | $ | 1.71 
|Fiscal year ending July 31, 2001 |                                                            |      |   |      
|                                 | Fourth quarter                                             |      | $ | 2.40 
|                                 | Third quarter                                              |      | $ | 2.94 
|                                 | Second quarter                                             |      | $ | 10.63
|                                 | First quarter                                              |      | $ | 20.13

At
June 30, 2002, 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.

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 Form 10-K. The consolidated statement of operations data for the
eleven months ended June 30, 2002 and the years ended July 31, 2001, 2000, 1999 and 1998, and the consolidated balance sheet data as of June 30, 2002 and July 31, 2001,
2000, 1999 and 1998, are derived from our audited consolidated financial statements. We have changed our fiscal year end, resulting in a fiscal 2002 that is only eleven months long, when comparing
this period to prior fiscal years. Historical results are not necessarily indicative of the results to be expected in the future.

|                                                                                 |  |   |         | Year ended July 31, |  
|-------------------------------------------------------------------------------- |  | - | ------- | ------------------- | -
|
|
|
|Consolidated Statement of Operations Data:                                       |  |   |         |                     |  
|Revenues                                                                         |  | $ | 16,259  |                     | $
|Operating expenses                                                               |  |   | 22,921  |                     |  
|Loss from operations                                                             |  |   | (14,647 | )                   |  
|Net loss                                                                         |  |   | (11,534 | )                   |  
|Net loss applicable to common stockholders                                       |  |   | (11,534 | )                   |  
|Basic and diluted net loss per share                                             |  | $ | (0.42   | )                   | $
|Weighted average shares used in basic and diluted net loss per share calculation |  |   | 27,448  |                     |  

11

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|                                                     |  |   |        | July 31, |  
|---------------------------------------------------- |  | - | ------ | -------- | -
|
|
|Consolidated Balance Sheet Data:                     |  |   |        |          |  
|Cash and cash equivalents                            |  | $ | 12,782 |          | $
|Working capital                                      |  |   | 77,947 |          |  
|Total assets                                         |  |   | 96,377 |          |  
|Capital lease obligations, excluding current portion |  |   |       |          |  
|Redeemable convertible preferred stock and warrants  |  |   |       |          |  
|Total stockholders' equity (deficit)                 |  |   | 86,428 |          |  

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

The following discussion contains forward-looking statements which are subject to the safe harbors created under the U.S. federal securities laws. These
statements, including statements about revenue growth, earnings and trends in our business, are subject to risks and uncertainties. See "Factors That May Affect Future Results." This section should
also be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Form 10-K.

Overview

Vicinity is a leading provider of Enterprise Location Services, or ELS, solutions to Global 2000 companies across Web, wireless and speech platforms. Our
solutions enable our clients to direct their customers searching for a specific product or service to the nearest brick-and-mortar store that carries that product or service.
Our customers include such well-known companies as Best Western International, Citibank, FedEx, Ford Motor Company and McDonald's. Our suite of private-label and co-branded
content and servicesavailable via the Internet, cellular phones, wireless application protocol, or WAP, phones, wireless devices and landline telephonesincludes the Vicinity
Location Server along with a comprehensive portfolio of application services and application programming interfaces, or APIs, for embedding location intelligence deep within existing enterprise
applications.

Change in fiscal year end date.In March 2002, we announced that we changed the last day of our fiscal year from
July 31 to June 30, commencing with the eleven months ended June 30, 2002 ("fiscal year 2002"). As a result, fiscal year 2003 will commence on July 1, 2002 and end on
June 30, 2003. The period from August 1, 2001 through June 30, 2002 was a transition period and resulted in a fiscal year 2002 that contained eleven months. Accordingly, our
fiscal fourth quarter of fiscal year 2002, which ended on June 30, 2002, contained two months.

Recent Events

Adoption of Stockholder Rights Plan.On August 6, 2002, our board of directors declared a dividend of one stock
purchase right ("Right") for each outstanding share of Vicinity common stock. On August 9, 2002, we entered into a Rights Agreement pursuant to which the Rights were issued, and the dividend
was issued to stockholders of record. In addition, one Right will be issued with each share of Vicinity common stock that becomes outstanding between August 9, 2002 and the earliest of the date
the Rights become exercisable, the date the Rights are redeemed or the expiration or termination of the Rights Agreement. Each Right will become exercisable only upon the occurrence of certain events
specified in the Rights Agreement, including the acquisition of 15% of the outstanding shares of Vicinity common stock by a person or group. Each Right entitles the holder, as defined under the Rights
Agreement, to acquire shares of Vicinity common stock at a 50% discount to the then prevailing market price. As defined under the

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Rights Agreement, our board of directors may redeem outstanding Rights at a price of $0.001 per Right. Prior to such time, the terms of each Right may be amended, or the Rights Agreement may be
amended or terminated, by our board of directors without the approval of the holder of each Right.

Settlement of Murex Patent Litigation.In May 2002, we reached a mutual settlement agreement with Murex regarding
litigation brought by Murex alleging patent infringement. Under the settlement agreement, we were granted a license by Murex in exchange for cash payments. In addition, the settlement agreement
includes a fee for past damages. We expect that payments for past damages, as well as our litigation costs, will be largely covered by our insurance. Future payments under this settlement are included
in license fees under contractual obligations, which is disclosed in Footnote 10 in the Notes to the Consolidated Financial Statements. Our insurance provider has contacted us to discuss the
allocation of the prior payments made for damages and litigation costs in conjunction with the Murex settlement. We are unable at this time to evaluate the outcome of these discussions.

Results of Operations

Comparison of fiscal 2002 to fiscal 2001

License and hosting fees.Revenue from license and hosting fees is recognized ratably over the life of the contracts, which
typically have one-year, non-refundable terms.

For
the eleven months ended June 30, 2002, we recognized $13.4 million of license and hosting fees revenue, a decrease of $2.6 million, or 16%, compared to
$16.0 million in fiscal 2001. The decrease in license and hosting fees revenue was primarily due to fiscal 2002 consisting of eleven months ("shortened fiscal year") as compared to the
twelve-month fiscal year ended July 31, 2001 and also due to a reduction in the number of sales contracts for our ELS solution entered into during fiscal 2002 when compared fiscal 2001.

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
June 30, 2002 and July 31, 2001 was $7.1 million and $7.6 million, respectively.

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 and other transactions. This revenue is recognized as the services are performed.

For
the eleven months ended June 30, 2002, we recognized $2.9 million of service and transaction fees revenue, a decrease of approximately $1.2 million, or 29%, from
$4.0 million for fiscal 2001. This
decrease in service and transaction fees revenue was primarily attributable to fiscal 2002 being a shortened fiscal year and a decrease in demand for, and our decreasing focus on providing, web
development services for our customers.

Cost of revenues.Cost of revenues includes salaries and benefits of our operations personnel, 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 decreased $4.6 million, or 37%, to
$8.0 million for the eleven months ended June 30, 2002 compared to $12.6 million for fiscal 2001. The decrease in cost of revenues was primarily attributable to the decreased
equipment costs related to our data centers and content fees paid to our content providers, a decrease in headcount and fiscal 2002 being a shortened fiscal year. Gross margin for the eleven months
ended June 30, 2002 was 51%, compared to 37% for fiscal 2001. The increase in gross margin for fiscal 2002 primarily reflects a decrease in headcount and a decrease in content fees paid to our
content providers.

Product development.Product development expense consists primarily of salaries and benefits, consulting expenses and
equipment costs. Product development expense decreased $1.7 million, or 25%, to $5.1 million for the eleven months ended June 30, 2002 from $6.8 million for fiscal 2001.
The decrease in

13

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product development expense for the eleven months ended June 30, 2002 was primarily attributable to the decrease in amortization of intangible assets that resulted from the
write-off of the remaining goodwill and developed product technology related to our acquisition of NetCreate in October 2000, headcount reductions and fiscal 2002 being a shortened
fiscal year. Those decreases were partially offset by the amortization of intangible assets related to our BeeLine technology purchase, which did not begin until the third quarter of fiscal 2001.

Sales and marketing.Sales and marketing expense consists primarily of salaries, commissions, promotion costs, advertising
and travel-related expenses. Sales and marketing expense decreased $7.3 million, or 41%, to $10.3 million for the eleven months ended June 30, 2002 from $17.6 million for
fiscal 2001. The decrease in sales and marketing expense for the eleven months ended June 30, 2002 as compared to fiscal 2001 was primarily attributable to the decrease in sales and marketing
personnel, decreased promotional expenses and fiscal 2002 being a shortened fiscal year.

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 decreased $4.4 million, or 53%, to
$3.9 million for the eleven months ended June 30, 2002 from $8.3 million for fiscal 2001. These decreases were primarily attributable to a significant decrease in personnel and
personnel-related costs for the eleven months ended June 30, 2002 as compared to fiscal 2001. In addition, bad debt expense decreased in the eleven months ended June 30, 2002 as compared
to fiscal 2001 as a result of significant improvements in our collections of accounts receivable. In the eleven months ended June 30, 2002, we also recorded a recovery of $0.2 million in
legal fees that had been previously incurred in defending against a claim by a former employee. Further, the shortened fiscal year by one month also accounted for part of the decrease in general and
administrative expenses.

Impairment of intangible assets.Impairment of intangible assets consists of charges to write off goodwill related to the
NetCreate acquisition. We recorded impairment charges of approximately $3.8 million in the eleven months ended June 30, 2002 in connection with the decision to retire the SiteMaker
product as an actively marketed product. During fiscal 2001, we recorded impairment charges of approximately $0.8 million related to the write-off of goodwill, developed product
technology and the assembled workforce related to the NetCreate acquisition. See Note 7 in the Notes to Consolidated Financial Statements for additional details on these write-offs.

Restructuring costs and other special charges.Restructuring costs and other special charges primarily consist of charges
related to severance and employment related costs, the closure of facilities, equipment costs associated with the termination of employees and costs associated with the write-off of
software. We recorded a credit of approximately $0.1 million in the eleven months ended June 30, 2002 in connection with the reversal of previously anticipated but unincurred expenses.
We recorded approximately $3.6 million in restructuring costs and other special charges in fiscal 2001 in connection with multiple restructuring plans during the year. See Note 7 in the
Notes to Consolidated Financial Statements for more details on the restructuring plans.

Stock-based compensation.As of July 31, 2000, we had recorded deferred stock-based compensation expense aggregating
$2.3 million in stockholders' equity 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. During fiscal 2001, we recorded an additional $0.2 million of deferred stock-based compensation in connection with the NetCreate acquisition. Of these amounts, we recognized as
expense a total of $0.1 million, $0.5 million and $1.0 million for the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 2000, respectively. We
expect to recognize the remaining balance of less than $0.1 million in stock-based compensation expense in fiscal 2003.

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Other income/expense, net.Other income for the eleven months ended June 30, 2002 and fiscal
2001 was comprised of
approximately $3.0 million and $6.2 million, respectively, of interest income earned on the cash proceeds received from our initial public offering in February 2000. The decrease
in interest income was primarily a result of lower average cash and cash equivalent balances in the eleven months ended June 30, 2002, the overall decrease in interest rates on investment
balances and also fiscal 2002 being a shortened fiscal year. In addition, during fiscal 2001, we realized a loss of approximately $3.2 million related to the write-down to fair
market value of an investment in an equity fund made during the year.

Comparison of fiscal 2001 to fiscal 2000

License and hosting fees.In fiscal 2001, we recognized $16.0 million of license and hosting fees revenue, an increase
of $4.9 million, or 44%, compared to $11.1 million in fiscal 2000. The increase in license and hosting fees revenue was generally attributable to the growth in our customer base over
past fiscal years and to the approximately 90% contract renewal rate by our existing customers, specifically for our Business Finder services.

Deferred
revenue as of both July 31, 2001 and July 31, 2000 was $7.6 million.

Service and transaction fees.In fiscal 2001, we recognized $4.0 million of service and transaction fees revenue, a
decrease of $0.1 million, or 2%, from $4.1 million for fiscal 2000. This slight decrease in service and transaction fees revenue is primarily attributable to a decrease in demand for,
and our decreasing focus on providing, Web development services for our customers.

Cost of revenues.Cost of revenues increased $3.5 million, or 39%, to $12.6 million in fiscal 2001 compared to
$9.1 million for fiscal 2000. The increase in cost of revenues is attributable to the increased number of personnel in fiscal 2001 when compared to fiscal 2000, equipment costs related to our
data centers and content fees paid to our content providers. Gross margin for fiscal 2001 was 37%, compared to 40% for fiscal 2000. The decrease in gross margin for fiscal 2001 reflects the impact of
the slower than
expected growth of our revenues when compared to our cost of revenues over the period. We implemented certain cost reduction programs during our third and fourth quarters of fiscal 2001 that resulted
in overall improvement in our gross margin.

Product development.Product development expense increased $3.5 million, or 104%, to $6.8 million for fiscal
2001 from $3.3 million for fiscal 2000. The increase in product development expense in fiscal 2001 was primarily attributable to increases in personnel and personnel-related costs as well as
the amortization of intangible assets related to our acquisition of NetCreate and the BeeLine technology purchase.

Sales and marketing.Sales and marketing expense increased $1.4 million, or 9%, to $17.6 million for fiscal
2001 from $16.1 million for fiscal 2000. The number of sales and marketing personnel, and the corresponding amount of personnel costs increased during fiscal 2001 when compared to fiscal 2000,
primarily to support the expansion of sales and marketing efforts during the first half of fiscal 2001.

General and administrative.General and administrative expense increased $3.6 million, or 76%, to $8.3 million
for fiscal 2001 from $4.7 million for fiscal 2000. These increases were caused mainly by the increase in personnel and personnel-related costs, primarily related to the need to support the
requirements related to the operation of our company as a publicly-traded company.

Stock-based compensation.As of July 31, 2000, we had recorded deferred stock-based compensation expense aggregating
$2.3 million in stockholders' equity 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. During fiscal 2001, we recorded an additional $0.2 million of deferred stock-based compensation in connection with the NetCreate acquisition. Of these amounts, we recognized as
expense a total of $0.5 million, 1.0 million and $0.2 million for the years ended July 31, 2001, 2000 and 1999, respectively.

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Other income/expense, net.Other income for fiscal 2001 and 2000 was comprised of approximately $6.2 million and
$3.7 million, respectively, of interest income earned on the cash proceeds received from our initial public offering in February 2000, offset by approximately $0.1 million in both
fiscal 2001 and 2000 of interest expense related to capital lease obligations. In addition, during fiscal 2001, we realized a loss of approximately $3.2 million related to the
write-down to fair market value of an investment in an equity fund made during the year.



Overview.In February 2000, we completed our initial public offering 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 initial public offering, net of underwriting discounts and other offering costs. We have
used a portion of these proceeds to expand our sales and marketing efforts, to expand our international business, to develop and acquire new technologies and products and improve our technology
infrastructure, and for working capital and other general corporate purposes. We intend to continue to use the proceeds to develop new technologies and products and improve our technology
infrastructure, for working capital and other general corporate purposes. Pending these uses, we have invested the proceeds primarily 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. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" for further information related to
our investments.

We
intend to maintain spending levels relatively constant until such time as we experience adequate growth rates in revenues.

Future
capital requirements will depend upon many factors, including overall market conditions and the rate of growth of our revenues. We believe that our cash, cash equivalents and
short-term investments will be sufficient to satisfy our cash requirements for at least the next year.

Comparative cash flow information.The following table compares cash, cash equivalents and short-term investment
and working capital balances as well as sources and uses of cash as of and for the eleven months ended June 30, 2002 and the years ended, July 31, 2001 and 2000 (in millions):

Years Ended
July 31,Eleven Months
Ended
June 30,
20022001

2000(In millions)Cash, cash equivalents and short-term investments

$
83.6

$
93.7

$
121.8Working capital

$
77.9

$
84.9

$
114.6Cash used in operating activities

$
(6.2
)
$
(15.1
)
$
(10.0
)Cash provided by (used in) investing activities

$
9.3

$
(20.5
)
$
(79.2
)Cash provided by (used in) financing activities

$
(2.8
)
$
(0.2
)
$
128.3


Cash
used in operating activities was $6.2 million for the eleven months ended June 30, 2002 compared to $15.1 million for the year ended July 31, 2001. This
decrease was primarily as a result of the decrease in our net loss to $11.5 million for the eleven months ended June 30, 2002 from $27.3 million for the year ended July 31,
2001, partially offset by non-cash charges for the impairment of intangible assets, depreciation and amortization, stock-based compensation and the net change in operating assets and
liabilities.

Cash
provided by investing activities was $9.3 million for the eleven months ended June 30, 2002. Cash provided by investing activities primarily resulted from the proceeds
from sales and maturities of short-term investments partially offset by the purchases of short-term investments.

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Cash
used in financing activities was $2.8 million for the eleven months ended June 30, 2002. Cash used in financing activities primarily reflects the purchase of stock
under our stock repurchase program of $2.7 million.

Stock repurchase program.In September 2001, we announced a stock repurchase program of up to $5.0 million.
Under this program, stock repurchases may be made from time to time in the open market, through block trades or otherwise. As of June 30, 2002, we had repurchased approximately 1,785,000 shares
for an aggregate purchase price equal to approximately $2.7 million under the stock repurchase program. We did not repurchase any shares during the two month period ended June 30, 2002.

CONTRACTUAL OBLIGATIONS

Leases.We lease equipment and its facilities under non-cancelable operating leases with expiration dates through
2008. Excluding sublease income, future minimum lease payments under our non-cancelable operating leases as of June 30, 2002 are as follows (in thousands):

Year ending June 30,

Operating
Leases2003

$
1,9162004


1,8842005


1,9352006


1,8592007


1,888Thereafter


2,435Total minimum lease payments

$
11,917


During
fiscal 2001, we entered into a sublease agreement for approximately 50% of the rentable square footage of its headquarters facility. In July 2002, we renegotiated the
sublease agreement to rent out approximately an additional 12% of the space. The future minimum rentals to be received under the renegotiated agreement total approximately $1.1 million,
$0.7 million and $0.6 million for the years ending June 30, 2003, 2004 and 2005, respectively.

License Fees.We have entered into agreements with several content providers. Some of these agreements call for fixed annual
payments. Other agreements contain fixed annual minimum payments as well as variable components that require additional payments if our usage exceeds certain content usage thresholds. As of
June 30, 2002, the terms of such agreements include the following future minimum license fees (in thousands):

2003

$
8852004


1252005


252006


502007


175Thereafter


1,225Total non-cancelable license fees

$
2,485


CRITICAL ACCOUNTING POLICIES AND PRACTICES

In preparing our financial statements, we make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and any related disclosures of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the
greatest potential impact on our financial statements.

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Impairment of intangible assets and other long-lived assets.At June 30, 2002, our intangible assets
consisted of assets related to the Technology Purchase Agreement (the "BeeLine Agreement") with BeeLine LLC ("BeeLine"), under which we paid $3.0 million to purchase technology and related
consulting services from BeeLine. The technology was purchased for internal use. We are amortizing the costs over three years, which represents the estimated economic life of the services into which
this technology is incorporated. The net book value of these intangible assets was $1.7 million as of June 30, 2002. Commencing July 1, 2002, we will adopt Statement of Financial
Accounting Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which superseded SFAS 121, for impairment of intangible
assets and other long-lived assets. Following the adoption of SFAS 144, we will continue to evaluate whether any event has occurred which might indicate that the carrying value of an intangible
asset or other long-lived asset is not recoverable.

Accounts receivable.As of June 30, 2002, the net accounts receivable balance on our balance sheet, after accounting
for the allowance for doubtful accounts, was $2.4 million. We continually review our accounts receivable for recoverability and estimate an allowance for doubtful accounts based on analysis of
the portion of the outstanding accounts receivable that has been recognized as revenue. We review all receivables and make a determination of collectibility based on the age of the receivable and the
historical collection experience with that customer. Historically, our write-offs for doubtful accounts have not been significant.

Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 142 requires that goodwill no longer be amortized to
earnings, but instead be reviewed for impairment. The Company will be required to implement SFAS 142 as of the beginning of its fiscal year 2003. The adoption of this statement will not have a
material impact on the Company's operating results, financial position or cash flows.

In
October 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 applies to all
long-lived assets (including discontinued operations). SFAS 144 develops one accounting model for long-lived assets that are to be disposed of by sale. SFAS 144
requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS 144 expands the scope
of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing
operations of the entity in a disposal transaction. SFAS 144 will be effective for the Company in fiscal 2003. The adoption of this statement will not have a material impact on the Company's
operating results, financial position or cash flows.

In
June 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 supersedes previous accounting guidance. The
Company will adopt the provisions of SFAS 146 for restructuring activities initiated after December 31, 2002. SFAS 146 requires that the liability for costs associated with an
exit or disposal activity be recognized when the liability is incurred. Under previous guidance, a liability for an exit cost was recognized at the date of a company's commitment to an
exit plan. SFAS 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly, SFAS 146 may affect the timing of recognizing future
restructuring costs as well as the amounts recognized. We have not yet evaluated the effects that this standard will have on our consolidated financial statements.

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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 Form 10-K.

Economic, political and market conditions can adversely affect our revenue growth.

Our revenue growth and profitability depends on the overall demand for computer software and services. Because we are targeting our sales efforts primarily at
corporate and government customers, our business depends on general economic and business conditions. The general weakening of the global economy and the weakening of business conditions, particularly
in the high technology, telecommunications and manufacturing industry sectors, as well as governmental budgetary constraints, may result in delays, decreases and cancellations of customer purchases.
In addition, terrorist attacks upon the United States have contributed to economic, political and other uncertainties that could adversely affect our revenue growth and results. If economic and market
conditions do not improve, our business may be adversely affected.

Our business is difficult to evaluate because we have a limited operating history.

Our company was founded in October 1995, and our initial revenues were derived from providing maps, driving directions and directory services. We have a
limited operating history from which you can evaluate our present business and future prospects. As a relatively new entrant to the business of providing ELS solutions for companies on the Internet,
wireless and speech platforms, 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.

We have not generated enough revenues to exceed the amounts we have spent to develop and operate our business. We incurred net losses of approximately
$11.5 million for the eleven months ended June 30, 2002, $27.3 million for fiscal 2001 and $15.4 million for fiscal 2000. We expect to continue to experience losses through
the immediately foreseeable future. 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 such 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
operating results in the immediate future will be particularly difficult to use for purposes of comparison due to the change in our fiscal year end to June 30 from
July 31. As a result, year-by-year comparisons will be difficult, as our fiscal year 2002 consisted of eleven months, as compared to the twelve months for our prior
fiscal years. In addition, renewals of contracts by our customers have historically occurred most often in the last month of each of our previous fiscal quarters and as a result of changing

19

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our fiscal year, such renewals will now occur most often in the first month of each fiscal quarter, rather than the last month.

Our
quarterly net loss was approximately $1.4 million for the two months ended June 30, 2002, $1.5 million for the three months ended April 30, 2002,
$6.0 million for the three months ended January 31, 2002 and $2.6 million for the three months ended October 31, 2001. 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:



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



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 additional future revenue shortfalls and may incur
costs, such as additional severance costs, imposed by any such additional expense reduction programs.

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 initial public offering in
February 2000 through the period ended August 31, 2002, the trading price of our common stock has ranged from a high of $76.25 per share to a low of $1.19 per share (low of $1.25 and
high of $2.29 in fiscal 2002). Many factors could cause the market price of our common stock to rise and fall in the future. Some of these factors include:



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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 adverse and 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 ELS solutions 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 and wireless platforms as marketing channels including, in particular, the
deployment and acceptance of wireless and broadband platforms. If significant demand for ELS solutions fails to develop or develops more slowly than we have planned for, we may not generate sufficient
revenues to achieve profitability. The market for ELS solutions 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 or wireless marketing. As a result, demand and market acceptance for Internet and wireless-based
marketing solutions cannot yet be determined. Many of our current and potential clients have little or no experience using the Internet or wireless platforms for marketing purposes and may allocate
only a limited portion of their marketing budgets to these platforms. Companies that have invested substantial resources in traditional methods of marketing may be reluctant to reallocate those
resources to online or wireless marketing. In addition, companies that have invested a significant portion of their marketing budget in online or wireless marketing may decide after a time to return
to more traditional methods if they find that online or wireless marketing is a less effective method of promoting their products and services than traditional marketing methods.

We might experience significant undetected errors or "bugs" in our products.

Software products frequently contain errors or security flaws, especially when first introduced or when new versions are released. Software errors that are
undetected in testing prior to product release could affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new
versions of products and could adversely affect market acceptance of our products. Customers who critically rely on our products that to run their businesses may have a greater sensitivity to product
errors and security vulnerabilities than customers for general software products. If we experience errors or delays in releasing new products or new versions of products, we could lose revenues.
Software product errors could also subject us to product liability, performance and/or warranty claims, which could adversely affect our business and operating results.

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Our management team must successfully integrate new members in order for our business to be successful.

We face challenges in managing our operations due to the addition of new members to our management team and the departures of other executives. In particular, we
hired Charles W. Berger as our new President and Chief Executive Officer in December 2001, Teri Dahlbeck as our Senior Vice President, Marketing and Business Development in March 2002,
Daniel Shaver as Senior Vice President, Worldwide Sales in April 2002, and Steven Weinstein as Chief Technology Officer in June 2002, and several former senior executives left the
company during 2001 and late 2000, including our former Chief Executive Officer and Chief Financial Officer. It may take time for our new executives to become acclimated into the company. New members
of our management team may bring management styles, philosophies and policies that could take time to implement. All of our executives serve "at will", and therefore it is possible additional turnover
could occur in the future, resulting in limited management continuity and added expenses to the company, including recruitment and severance costs.

Our ability to grow our business depends on whether existing customers renew their contracts with us and whether we are able to sell existing customers
additional services.

We generally enter into one-year license agreements with our customers, and our business model is centered around maintaining and growing these
customer relationships. If a significant number of customers fail to renew their contracts with us, this would have an immediate negative impact on our revenues and earnings, as we would likely be
unable to adjust our expense levels accordingly. In addition, because much of our past sales growth is the result of selling additional services to existing clients, losses of existing customers would
also have a negative long-term impact. Our growth strategy depends in part on the introduction of new services that we hope to sell to our existing clients, including by means of internal
development or through acquisitions. 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.

Our strategy to tailor our ELS solutions around specific vertical markets is unproven and may not be successful.

One of our strategies to increase sales to existing customers and to sign up new customers is to further tailor our ELS solutions offerings around specific
vertical markets. To be successful, we will need to develop additional expertise in our target vertical markets. We may be required to hire new employees to implement this strategy, and any inability
or delay in hiring any such new employees may impair our ability to execute on this strategy quickly. In particular, we intend to target the governmental market, and we do not have much experience in
selling into this vertical. Targeting the governmental market may introduce new risks, including the requirement to develop sales strategies that are different from those that we use with our
corporate customers, longer sales cycles and complex approval processes, and reliance on the governmental budget process. Focusing around specific vertical markets may also make it more difficult to
move into new vertical markets in the future. If this strategy is not successful, we may not achieve desired sales growth.

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 ELS solutions 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. ELS solutions are

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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.

We may seek to acquire other companies as one means of growing our business, which gives rise to a number of risks that could have adverse consequences
to future operating results.

In the future we may acquire or make investments in 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. We may not identify suitable
acquisition, investment or strategic partnership candidates, or if we do identify suitable candidates, we may not complete those transactions on commercially acceptable terms or at all. We could have
difficulty in assimilating the personnel, operations, technology
and software of another company that we acquire. In addition, the key personnel of a company that we acquire may decide not to work for us. If we make 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 need to incur indebtedness or issue equity securities to pay for any future acquisitions, which could be dilutive to our existing stockholders. Also, acquisitions could result in
other expenses, such as restructuring charges, or could require us to record non-cash charges to earnings, including amortization of certain types of intangible assets or
write-offs of acquired in-process research and development costs, as well as future impairment charges related to goodwill that we acquire. Any of the above or other factors
could harm our ability to achieve profitability or to realize anticipated benefits of an acquisition.

Litigation over intellectual property rights could disrupt or otherwise have a negative impact on our business.

There has been frequent litigation in the high-technology industry regarding intellectual property rights. We cannot be certain that our products do
not and will not infringe issued patents, patents that may be issued in the future, or other intellectual property rights of others, and like others in our industry, we are from time to time subject
to claims regarding the alleged intellectual property rights of third parties. For instance, in December 2001, we were sued by Murex Licensing Corporation, which alleged that our ELS solution
infringed their patents and sought damages and permanent injunctive relief. We settled this litigation in May 2002 by entering into a patent license. We also resolved a different patent
infringement claim in fiscal 1999. We have received, and expect in the future to receive, claims of infringement by us with respect to current or future products, trademarks or other proprietary
rights. We may likewise be subject to claims from customers for indemnification with respect any such claims made against customers. Regardless of the merits, 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.

We have dedicated significant resources toward developing new clients internationally; any success in these efforts may prove not to have been worth the
associated expense.

Our business plan in the recent past has included the expenditure of significant resources internationally. To date, we have limited experience in marketing our
services internationally, and we cannot predict our success in these international markets. In order to generate greater revenues overseas, we intend to

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continue to enter into relationships with foreign businesses, and we cannot predict whether those relationships will be successful. Our international plans are subject to inherent risks, including:



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

We have experienced fluctuation in the number of our employees, and any inability to manage this fluctuation could harm our business.

The number of our employees has fluctuated significantly over the last two fiscal years in response to changing market conditions and the evolution of our
business. The number of our employees grew from 106 as of October 31, 1999 to 224 as of October 31, 2000, and then decreased to approximately 126 as of June 30, 2002. This
fluctuation has placed a significant strain on our management, systems and resources. We expect that we will need to continue to maintain close coordination among our technical, finance, sales and
marketing groups in order to successfully manage such fluctuations in personnel.

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. Competition for qualified sales personnel is intense,
and we may not be able to hire the kind and number of sales personnel that we are targeting. Also, the decline in our stock price may significantly increase the difficulty in hiring new qualified
sales personnel. 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 may need to increase our staff to support new services, new customers and the expanding needs of existing customers. 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.

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, earthquakes and other natural disasters, 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

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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 or if any of our strategic partners were to go out of business, we would have to
adapt our operations or business plan, which may take 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 or to go out of
business, 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.

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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, several of
which are affiliated with companies much larger than our company. 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.

ELS
solutions 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. Use of and interest
in the Internet and wireless devices may not continue to grow at their current rates. Internet usage may be inhibited for many reasons, including the following:



Even
if the Internet and wireless services 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, especially in light of the financial troubles of many telecommunications companies whose networks comprise much of the Internet infrastructure. 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 grow adequately, 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.

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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 qualified 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
and, in light of the disappointing performance of our stock price, we may be unable to offer attractive equity packages to potential employees, and may also be unable to retain and motivate our
existing employees whose stock options are out-of-the-money. These circumstances could require additional stock option grants or restructurings of existing grants,
either of which would be dilutive to holders of our common stock. Additionally, there are several proposals in the Congress and in the accounting industry to require corporations to include
compensation expense in their statement of operations relating to the issuance of employee stock options. If such a measure is approved, we may decide to issue fewer stock options in the future. 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 relatively 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 are unable to protect our proprietary rights adequately, our competitors might gain access to our technology and we might not compete successfully
in our market.

Our success depends significantly upon our proprietary technology. We currently rely on a combination of copyright and trademark laws, trade secrets, patents,
confidentiality procedures and contractual provisions to protect our proprietary rights. These legal protections provide only limited protection and
may be time consuming and expensive to obtain and enforce. If we fail to protect our proprietary rights adequately, our competitors might gain access to our technology. As a result, our competitors
might offer similar products and w might not be able to compete successfully in our market. Moreover, despite our efforts to protect our proprietary rights, unauthorized parties may copy aspects of
our products and obtain and use information that we regard as proprietary. Also, our competitors may independently develop similar, but not infringing, technology, duplicate our products, or design
around our patents or our other intellectual property. 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.

In
particular, we enter into confidentiality and invention assignment agreements with employees, non-disclosure agreements with strategic partners, and other confidentiality
and intellectual property-related agreements. 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. We have several applications pending for trade and service mark registrations in the United States and in other countries, and it is possible that
these applications may not be approved. We

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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 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.

Privacy concerns may adversely affect our ability to implement our Internet solutions.

Web sites and Internet advertisement 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 our 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 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 advertising networks or Web sites.

A third party's ability to acquire us might be more difficult because of anti-takeover provisions in our Restated Certificate of
Incorporation and Bylaws and our adoption of a stockholder rights plan.

Our Restated Certificate of Incorporation authorizes us to issue shares of preferred stock, with rights, preferences and privileges designated by our Board of
Directors, without further stockholder approval. While this provides desirable flexibility in connection with possible acquisitions and other corporate purposes, any issued preferred stock could have
the effect of delaying, deferring or preventing a change in control of our company. Any issuance of preferred stock may adversely affect the voting power of our common stockholders. In addition,
provisions of our Restated Certificate of Incorporation and Bylaws eliminate the right of stockholders to act by written consent without a meeting, eliminate the right of

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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.
While continuity of the board was an important factor in adopting these provisions, these provisions also have the effect of reducing 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.

In
addition, in August 2002, we adopted a stockholder rights plan. This plan may provide the Board of Directors with leverage in negotiating for a premium in the event of a change
of control of Vicinity, but may also have the effect of discouraging or delaying a change of control of the 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.

If we were deemed to be an "investment company" under the Investment Company Act of 1940, this would harm our business.

The Investment Company Act of 1940 regulates mutual funds and closed-end investment companies that are traded on the public stock markets. Due to that
fact that a large percentage of our assets consist of cash equivalents and investment securities, from time to time we could be viewed as holding a larger portion of our assets in these vehicles than
is presumptively permitted by the 1940 Act for a company not registered as an investment company. The 1940 Act and its associated contain provisions and set forth principles that are designed to
differentiate "true" operating companies from companies that may be considered to have sufficient investment company-like characteristics to require regulation by the 1940 Act. At this
time, we believe that we qualify as an operating company under these provisions. In the future, however, our situation may change which might require us to seek an alternate solution such as exemptive
or no-action relief from the SEC. Alternative solutions could involve increasing the portion of our investment securities into government obligations with a likely reduction in the yield
we earn on those investments. Further, any determination that we are an unregistered investment company would have a material adverse effect on our company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosures About Market Rate Risk

The following discussion about our market rate risk involves forward-looking statements. Actual results could differ materially from those projected in the
forward-looking statements. We are exposed to market risk related to changes in interest rates, foreign currency exchange rates and equity security price risk.

Interest rate risk.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 constraints. Some of the securities that we invest in may be

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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 June 30, 2002 (dollars in thousands):

Average
Interest Rate

Cost

Fair
ValueCash equivalents:Fixed rate







Variable rate

1.82%

$
12,303

$
12,303Short-term investments:Fixed rate

3.30%

$
70,601

$
70,781Variable rate










Foreign Currency Exchange 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.

Equity Security Price Risk.In October 2000, we invested $5.0 million in a newly organized,
non-diversified, closed-end management investment company, or the Fund, that is subject to market price volatility. The Fund has an investment objective of
long-term capital appreciation and seeks to achieve its objective by investing in equity securities of small, medium and large capitalized United States and foreign companies considered to
significantly benefit from, or derive revenue from, the Internet. In addition, this fund may also invest in securities of private investment funds that invest primarily in venture capital companies.
Investments in technology companies and, in particular, venture capital companies, pose special risks. Due to an overall decline in equity prices in fiscal 2001, particularly in the technology sector,
the value of this investment had declined by approximately $3.2 million to $1.8 million as of July 31, 2001. In an attempt to minimize future risk posed by overall market
declines, we offered up our shares in the Fund for sale prior to July 31, 2001. In August 2001, we realized proceeds from the sale of all of our shares in the Fund of approximately
$1.8 million.

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 38 of this
Form 10-K.

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

None.

30

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth, as of June 30, 2002, the name, age and position of each of our directors and executive officers:

|Name                    |  | Age |  | Position                                                    
|----------------------- |  | --- |  | ------------------------------------------------------------
|Charles W. Berger       |  | 48  |  | President and Chief Executive Officer                       
|Maury Austin            |  | 44  |  | Senior Vice President and Chief Financial Officer; Secretary
|Scott P. Sullivan       |  | 38  |  | Vice President, Human Resources                             
|Michael T. Torgersen    |  | 58  |  | Vice President, Operations and Chief Information Officer    
|Teri Dahlbeck           |  | 40  |  | Senior Vice President, Marketing and Business Development   
|Dan Shaver              |  | 60  |  | Senior Vice President, Sales                                
|Steve Weinstein         |  | 47  |  | Chief Technology Officer                                    
|Ronald S. Smith (1),(2) |  | 60  |  | Chairman of the Board of Directors                          
|Barton Faber (1)        |  | 55  |  | Director                                                    
|Gerald R. Gallagher (1) |  | 60  |  | Director                                                    
|Douglas A. McIntyre (2) |  | 46  |  | Director                                                    
|Michael E. Sears (2)    |  | 45  |  | Director                                                    

---

Charles W. Bergerhas served as our President and CEO and as a director since December 2001. Prior to joining Vicinity,
Mr. Berger served as president and CEO of AdForce, Inc., a provider of on-line ad management and delivery services from July 1997 to June 2001. Prior to
Adforce, Mr. Berger was chairman and CEO of Radius, Inc., a Macintosh peripheral and software developer from March 1993 to July 1997. He has also held various senior
management positions at Sun Microsystems, Inc. and Apple Computer, Inc. Mr. Berger holds an MBA degree from the University of Santa Clara, and a Bachelors of Science in Business
Administration degree from Bucknell University.

Maury Austinhas served as our Senior Vice President, Chief Financial Officer and Secretary since December 2000. Prior to joining
Vicinity, Mr. Austin served as Chief Financial Officer at Symmetricom, a networking equipment supplier. Prior to joining Symmetricom, Austin was Chief Financial Officer and Chief Operating
Officer of Flashpoint Technology, a digital imaging operating software company. Mr. Austin also spent eight years at Apple Computer where, in his last position, he served as Vice
President/General Manager in the Imaging Division. He also held financial leadership positions at the General Electric Company. Mr. Austin earned his Master of Business Administration degree at
Santa Clara University and his Bachelor of Science degree at the University of California at Berkeley.

Scott P. Sullivanhas served as our Vice President, Human Resources since October 2000. From 1994 to 2000, Mr. Sullivan was
a Managing Consultant at Towers Perrin and Diamond Technology Partners.
Before that, he was in the Army Corp of Engineers and held various positions including Company Commander, Personnel Officer and Leadership Instructor at West Point. Mr. Sullivan holds a
Bachelor of Science degree from the United States Military Academy at West Point and a Master of Business Administration from Harvard University.

Michael T. Torgersenhas served as our Vice President, Operations and Chief Information Officer since September 2000. From
August 1999 to September 2000, Mr. Torgersen was our Director of Information

31

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Technology. Prior to joining Vicinity in August 1999, he served as Vice President, Operations at SocialNet from 1998 to 1999 and Communities.com from 1997 to 1998. In addition, he has held
other senior positions at Fujitsu S/W Corp., Apple Computer and Hewlett-Packard Company. Mr. Torgersen earned his Master of Business Administration degree at the University of Chicago and holds
a Bachelor of Science degree from the University of Illinois.

Teri Dahlbeckhas served as our Senior Vice President of Marketing and Business Development since March 2002. Prior to joining
Vicinity, Ms. Dahlbeck was a founder and president of GotMarketing.com, an e-mail marketing software company from December 1998 to July 2001. Prior to joining
GotMarketing.com, Ms. Dahlbeck was president of Component Integration Laboratories, an IBM and Apple joint venture from August 1996 to July 1997. Ms. Dahlbeck started her
career with an eleven year tenure at Apple Computer in various positions, including programmer, business development and marketing manager. She holds a Bachelor of Science and Masters of Business
Administration degree from California Polytechnic State University, San Luis Obispo.

Dan Shaverhas served as our Senior Vice President of Worldwide Sales since April 2002. Prior to joining Vicinity,
Mr. Shaver was the managing partner and information technology consultant at The Kenwood Group from October 1997 to April 2002. Prior to joining The Kenwood Group,
Mr. Shaver held VP-level tenures in sales and marketing at AdForce, Inc. from October 2000 to July 2001. Prior to AdForce, Inc., Mr. Shaver held
VP-level tenures in sales and marketing at Radius, Inc. from March 1993 to September 1995. Prior to joining Radius, Inc., Mr. Shaver worked in channel
strategy at Sun Microsystems, in marketing at MicroAge, Inc., and in several positions over 8 years at Apple Computer, Inc., most notably as vice president of channel strategy and
reseller development. Earlier in his career Mr. Shaver worked as a consultant helping to restructure companies such as The Jubry Group and H&F Medical, and began his sales career by spending
ten years at IBM Corporation. He holds a bachelor of arts degree in economics from Dickinson College, and has completed an executive program at the INSEAD Graduate School of Business in Fountaine
Bleau, France.

Steven Weinsteinhas served as our Chief Technology Officer since June 2002, where he is responsible for determining the technology
strategy and expanding the core intellectual property of the company. Prior to joining Vicinity, Mr. Weinstein was the president of Backstage Pass, a business focused on digital identities and
online communities for major music talent from 2001 to 2002. Prior to joining Backstage Pass, Mr. Weinstein was a founding executive and Chief Technology Officer of Liberate Technologies from
1996 to 2001. From 1993 to 1996, Mr. Weinstein was the studio head/general manager of gaming company Microprose, Inc. (now part of Hasbro Interactive), and before that served as the VP
of software engineering at Electronics for Imaging, Inc. Other career experience includes leadership roles
in engineering at Media Cybernetics, Inc. and Ship Analytics, Inc. Mr. Weinstein holds a Bachelor of Science degree in mathematics from Vanderbilt University.

Ronald S. Smithwas named a Director in August 2001 and has served as our Chairman of the Board of Directors since
October 2001. Mr. Smith is currently President and Chief Executive Officer and a member of the Board of Directors of Beyond.com. Prior to joining Beyond.com, Mr. Smith was
President of Merisel, North American Distribution from December 1999 to June 2000 and President of Merisel Canada from June 1998 to November 1999. Prior to joining Merisel,
Mr. Smith was Chief Executive Officer of Cygnet Storage Systems from November 1997 to June 1998. From 1994 through August 1997, Mr. Smith was President and Chief
Executive Officer of NCR Canada, Ltd., the Canadian affiliate of NCR Corporation. Mr. Smith holds a Bachelor of Science degree in Mathematics and Physics from Dalhousie University in
Nova Scotia and a Bachelor of Mechanical Engineering degree from the Technical University of Nova Scotia.

Barton Faberwas named a Director in May 2002. Faber is general partner in Atrium Partners, a venture fund focused on information
technology, and has served in numerous executive level positions over a 30-year career. Faber was recently Chairman of Metromail Corporation. He also served on the executive

32

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management team of R.R. Donnelley & Sons Company for ten years, most recently as president of the Information Resources unit. His early career experiences include executive positions at
Continental Bank N.A., Mobil Oil Corporation, Ramada Inc. and Ramada Europe Inc. Faber currently serves on the board of directors of Document Sciences Corporation, IPT Limited UK,
Intervisual Communications, and Looking Glass Technologies. He attended Arizona State University for his undergraduate studies and received his MBA from New York University.

Gerald R. Gallagherwas named a Director in August 2001. Since 1987, Mr. Gallagher has been a General Partner of Oak
Investment Partners, a venture capital partnership. For 30 years Mr. Gallagher has been involved with the retail industry, holding positions as an analyst, manager and venture
capitalist. Before joining Oak Investment Partners, Mr. Gallagher was Vice Chairman of Dayton Hudson Corporation. Prior to 1977 Mr. Gallagher was the retail industry analyst at
Donaldson, Lufkin & Jenrette. Mr. Gallagher received an undergraduate degree from Princeton University and a Masters of Business Administration degree from the University of Chicago.

Douglas A. McIntyrewas named a Director in July 2001. Mr. McIntyre has been the President and Chief Executive Officer and
Chairman of On2 Technologies, Inc. since April and May 2000, respectively. From 1998 to March of 2000, he served as President and Chief Executive Officer of FutureSource/Bridge L.L.C.
From 1996 to 1997, he served as President of Switchboard.com Inc. Mr. McIntyre also serves as a Director of TheStreet.com. Mr. McIntyre graduated magna cum laude from Harvard
University in 1977.

Michael E. Searshas served as a Director since June 1998. Mr. Sears is currently the CEO of Chronadio, Inc. Prior to
joining Chronadio, Inc., Mr. Sears was 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 Bachelor of Science degree from the United States Naval Academy, and Juris Doctorate and Master of
Business Administration degrees from Stanford University.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference from our definitive proxy statement or an amendment to this report on
Form 10-K/A to be filed on or before October 28, 2002.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                   AND RELATED STOCKHOLDER MATTERS

The information concerning security ownership of certain beneficial owners and management required by Item 12 is incorporated by reference from our definitive
proxy statement or an amendment to this report on Form 10-K/A to be filed on or before October 28, 2002.

33

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The following table summarizes options, warrants and rights as of June 30, 2002:

|Plan Category                                              |  | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights |  | Weighted-average
exercise price of
outstanding options,
warrants (1) and rights |      | Number of securities
remaining available for
future issuance under
equity compensation plans |        
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- | ---- | -------------------------------------------------------------------------------------------- | -------
|Equity compensation plans approved by security holders     |  | 3,590,556                                                                                   |  | $                                                                               | 3.10 |                                                                                              | 912,521
|Equity compensation plans not approved by security holders |  | 1,061,000                                                                                   |  | $                                                                               | 1.67 |                                                                                              |       
|                                                           |  |                                                                                             |  |                                                                                 |      |                                                                                              |        
|Totals                                                     |  | 4,651,556                                                                                   |  | $                                                                               | 2.75 |                                                                                              | 912,521
|                                                           |  |                                                                                             |  |                                                                                 |      |                                                                                              |        

---

The
total number of shares to be issued upon exercise does not include approximately 3,080 outstanding options as of June 30, 2002 that were assumed as part of our acquisition of
NetCreate Systems. The weighted average exercise price of these outstanding options was $6.82 as of June 30, 2002. In connection with this acquisition, we only assumed outstanding options
granted under the NetCreate Employee Stock Option Plan, but not the plan itself, and therefore no further options may be granted under that plan.

We
do not have any non-stockholder approved equity compensation plans, other than an individual compensation arrangement with our Chief Executive Officer, Chuck Berger, in
connection with the commencement of his employment in December 2001. In accordance with his offer letter dated December 5, 2001, we granted him an option to purchase 1,300,000 shares of
our common stock, of which 239,000 were granted under our 2000 Equity Participation Plan. The option exercise price is 100% of the fair market value on the date of grant, and the option has a term
life of ten years. The option vests as to 25% of the shares on the one-year anniversary of the date of grant, and as to 2.08% of the shares each month thereafter over the next three years.
However, upon a change of control of Vicinity, the option will instead vest as to 50% of the then-unvested shares, and thereafter shall vest according to the original vesting schedule as
if the original option had been exercisable for 650,000 shares.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated by reference from our definitive proxy statement or an amendment to this report on
Form 10-K/A to be filed on or before October 28, 2002.

34

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PART IV

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

The following are filed as a part of this Form 10-K and included in Item 8:

(a) 1. Financial Statements

| | Index to Consolidated Financial Statements                |  | 38
| | --------------------------------------------------------- |  | --
| | Independent Auditors' Report                              |  | 39
| | Consolidated Balance Sheets                               |  | 40
| | Consolidated Statements of Operations                     |  | 41
| | Consolidated Statements of Stockholders' Equity (Deficit) |  | 42
| | Consolidated Statements of Cash Flows                     |  | 45
| | Notes to Consolidated Financial Statements                |  | 46



The following financial statement schedule of Vicinity Corporation for the eleven months ended June 30, 2002, and for the years ended
July 31, 2001 and 2000 is filed as part of this Form 10-K and should be read in conjunction with the Consolidated Financial Statements of Vicinity Corporation:

|Schedule |  |                                   |  |   
|-------- |  | --------------------------------- |  | --
|II       |  | Valuation and Qualifying Accounts |  | 65

Schedules
other than that listed above have been omitted since they are either not required, not applicable or the information is otherwise included.



The
exhibits listed in the Exhibit Index which appears at the end of this Form 10-K are filed as part of or incorporated by reference into this report.

(b) Reports on Form 8-K

We filed a current report on Form 8-K on May 31, 2002 announcing that we had settled our patent litigation with Murex Licensing
Corporation.

35

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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 25th day of September 2002.

| | VICINITY CORPORATION                                     
| | ---------------------------------------------------------
| | /s/CHARLES W. BERGERPresident and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Charles W. Berger and Maury Austin 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 Form 10-K has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dated indicated.

|Signature                                 |  | Title                                             |  | Date              
|----------------------------------------- |  | ------------------------------------------------- |  | ------------------
|                                          |  |                                                   |  |                   
|/s/CHARLES W. BERGERCharles W. Berger     |  | President and Chief Executive Officer             |  | September 25, 2002
|/s/MAURY AUSTINMaury Austin               |  | Senior Vice President and Chief Financial Officer |  | September 25, 2002
|/s/RONALD S. SMITHRonald S. Smith         |  | Chairman of the Board of Directors                |  | September 25, 2002
|/s/BARTON FABERBarton Faber               |  | Director                                          |  | September 25, 2002
|/s/GERALD R. GALLAGHERGerald R. Gallagher |  | Director                                          |  | September 25, 2002
|/s/DOUGLAS A. MCINTYREDouglas A. McIntyre |  | Director                                          |  | September 25, 2002
|/s/MICHAEL E. SEARSMichael E. Sears       |  | Director                                          |  | September 25, 2002

36

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CERTIFICATIONS

I,
Charles W. Berger, certify that:

1.    I
have reviewed this report on Form 10-K of Vicinity Corporation;

2.    Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and

3.    Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

Date:
September 25, 2002

|/s/CHARLES W. BERGERPresident and Chief Executive Officer | 
|--------------------------------------------------------- | 

I,
Maury Austin, certify that:

1.    I
have reviewed this report on Form 10-K of Vicinity Corporation;

2.    Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and

3.    Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

Date:
September 25, 2002

|/s/MAURY AUSTINSenior Vice President and Chief Financial Officer | 
|---------------------------------------------------------------- | 

37

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VICINITY CORPORATION AND SUBSIDIARIES    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                          |  | PAGE
|--------------------------------------------------------- |  | ----
|Independent Auditors' Report                              |  | 39  
|Consolidated Balance Sheets                               |  | 40  
|Consolidated Statements of Operations                     |  | 41  
|Consolidated Statements of Stockholders' Equity (Deficit) |  | 42  
|Consolidated Statements of Cash Flows                     |  | 45  
|Notes to Consolidated Financial Statements                |  | 46  

38

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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 June 30, 2002 and July 31, 2001, and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 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 June 30,
2002 and July 31, 2001, and the results of their operations and their cash flows for the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 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
July 19, 2002, except as to Note 17,
    which is as of August 9, 2002

39

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VICINITY CORPORATION AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS  (In thousands, except share and per share data)

|                                           |                                                                                                                                                                  | June 30,
2002 |        | July 31,
2001 |  
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | ------ | ------------- | -
|ASSETS                                     |                                                                                                                                                                  |               |        |               |  
|CURRENT ASSETS                             |                                                                                                                                                                  |               |        |               |  
|                                           | Cash and cash equivalents                                                                                                                                        |               | $      | 12,782        |  
|                                           | Short-term investments                                                                                                                                           |               |        | 70,781        |  
|                                           | Accounts receivable, net                                                                                                                                         |               |        | 2,437         |  
|                                           | Prepaid expenses and other current assets                                                                                                                        |               |        | 1,472         |  
|                                           |                                                                                                                                                                  |               |        |               |  
|Total current assets                       |                                                                                                                                                                  |               | 87,472 |               |  
|Property and equipment, net                |                                                                                                                                                                  |               | 6,364  |               |  
|Intangible assets, net                     |                                                                                                                                                                  |               | 1,658  |               |  
|Other assets                               |                                                                                                                                                                  |               | 883    |               |  
|                                           |                                                                                                                                                                  |               |        |               |  
|Total Assets                               |                                                                                                                                                                  | $             | 96,377 |               | $
|                                           |                                                                                                                                                                  |               |        |               |  
|LIABILITIES AND STOCKHOLDERS' EQUITY       |                                                                                                                                                                  |               |        |               |  
|CURRENT LIABILITIES                        |                                                                                                                                                                  |               |        |               |  
|                                           | Accounts payable                                                                                                                                                 |               | $      | 255           |  
|                                           | Accrued liabilities                                                                                                                                              |               |        | 2,151         |  
|                                           | Deferred revenue                                                                                                                                                 |               |        | 7,119         |  
|                                           | Capital lease obligations, current portion                                                                                                                       |               |        |              |  
|                                           |                                                                                                                                                                  |               |        |               |  
|Total current liabilities                  |                                                                                                                                                                  |               | 9,525  |               |  
|Other liabilities                          |                                                                                                                                                                  |               | 424    |               |  
|                                           |                                                                                                                                                                  |               |        |               |  
|Total Liabilities                          |                                                                                                                                                                  |               | 9,949  |               |  
|Commitments and contingencies              |                                                                                                                                                                  |               |        |               |  
|STOCKHOLDERS' EQUITY                       |                                                                                                                                                                  |               |        |               |  
|                                           | 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26,851,000 and 28,526,000 at June 30, 2002 and July 31, 2001, respectively |               |        | 27            |  
|                                           | Additional paid-in capital                                                                                                                                       |               |        | 155,619       |  
|                                           | Deferred stock-based compensation                                                                                                                                |               |        | (32           | )
|                                           | Notes receivable from stockholder                                                                                                                                |               |        |              |  
|                                           | Accumulated other comprehensive income                                                                                                                           |               |        | 180           |  
|                                           | Accumulated deficit                                                                                                                                              |               |        | (69,366       | )
|                                           |                                                                                                                                                                  |               |        |               |  
|Total Stockholders' Equity                 |                                                                                                                                                                  |               | 86,428 |               |  
|                                           |                                                                                                                                                                  |               |        |               |  
|Total Liabilities and Stockholders' Equity |                                                                                                                                                                  | $             | 96,377 |               | $
|                                           |                                                                                                                                                                  |               |        |               |  

See
Notes to Consolidated Financial Statements.

40

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VICINITY CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)

|                                                                                 |                                               |   |         | Years Ended
July 31, |  
|-------------------------------------------------------------------------------- | --------------------------------------------- | - | ------- | -------------------- | -
|
|
|REVENUES                                                                         |                                               |   |         |                      |  
|                                                                                 | License and hosting fees                      |   | $       | 13,397               |  
|                                                                                 | Service and transaction fees                  |   |         | 2,862                |  
|                                                                                 |                                               |   |         |                      |  
|                                                                                 |                                               |   | 16,259  |                      |  
|COST OF REVENUES (1)                                                             |                                               |   | 7,985   |                      |  
|                                                                                 |                                               |   |         |                      |  
|                                                                                 | Gross profit                                  |   |         | 8,274                |  
|OPERATING EXPENSES                                                               |                                               |   |         |                      |  
|                                                                                 | Product development (1)                       |   |         | 5,069                |  
|                                                                                 | Sales and marketing (1)                       |   |         | 10,294               |  
|                                                                                 | General and administrative (1)                |   |         | 3,870                |  
|                                                                                 | Stock-based compensation                      |   |         | 69                   |  
|                                                                                 | Impairment of Intangible Assets               |   |         | 3,752                |  
|                                                                                 | Restructuring costs and other special charges |   |         | (133                 | )
|                                                                                 |                                               |   |         |                      |  
|                                                                                 |                                               |   | 22,921  |                      |  
|                                                                                 |                                               |   |         |                      |  
|LOSS FROM OPERATIONS                                                             |                                               |   | (14,647 | )                    |  
|OTHER INCOME (EXPENSE)                                                           |                                               |   |         |                      |  
|                                                                                 | Interest income                               |   |         | 2,988                |  
|                                                                                 | Interest expense                              |   |         | (4                   | )
|                                                                                 | Loss on investment                            |   |         |                     |  
|                                                                                 | Other                                         |   |         | 129                  |  
|                                                                                 |                                               |   |         |                      |  
|                                                                                 |                                               |   | 3,113   |                      |  
|                                                                                 |                                               |   |         |                      |  
|NET LOSS                                                                         |                                               |   | (11,534 | )                    |  
|Accretion on redeemable convertible preferred stock and warrants                 |                                               |   |        |                      |  
|                                                                                 |                                               |   |         |                      |  
|NET LOSS APPLICABLE TO COMMON STOCKHOLDERS                                       |                                               | $ | (11,534 | )                    | $
|                                                                                 |                                               |   |         |                      |  
|BASIC AND DILUTED NET LOSS PER SHARE                                             |                                               | $ | (0.42   | )                    | $
|                                                                                 |                                               |   |         |                      |  
|WEIGHTED AVERAGE SHARES USED IN BASIC AND DILUTED NET LOSS PER SHARE CALCULATION |                                               |   | 27,448  |                      |  
|                                                                                 |                                               |   |         |                      |  
|                                                                                 |                                               |   |         |                      |  
|(1) Excludes stock-based compensation of:                                        |                                               |   |         |                      |  
|Cost of revenues                                                                 |                                               | $ | 23      |                      | $
|Product development                                                              |                                               |   | 29      |                      |  
|Sales and marketing                                                              |                                               |   | 11      |                      |  
|General and administrative                                                       |                                               |   | 6       |                      |  
|                                                                                 |                                               |   |         |                      |  
|                                                                                 |                                               | $ | 69      |                      | $
|                                                                                 |                                               |   |         |                      |  

See
Notes to Consolidated Financial Statements.

41

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VICINITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands)

|                                                              |                                | Redeemable
convertible
preferred stock           |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|------------------------------------------------------------- | ------------------------------ | ------------------------------------------------ | - | - | ------- | - | ------ | - | - | -- | - | - | ------- | - | - | ------ | - | - | ---- | - | -
|
|
|
|Balances, July 31, 1999                                       |                                | 11,217                                           |   | $ | 21,403  |   | 5,288  |   | $ | 5  |   | $ | (301    | ) | $ | (1,044 | ) | $ | (98  | ) |  
|Comprehensive loss                                            |                                |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|                                                              | Net loss                       |                                                  |  |   |         |  |        |  |   |    |  |   |         |  |   |        |  |   |      |  |  
|                                                              | Other comprehensive loss       |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|                                                              |                                | Unrealized loss on available-for-sale securities |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|                                                              |                                |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|                                                              | Total other comprehensive loss |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|                                                              |                                |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|Comprehensive loss                                            |                                |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   | $
|                                                              |                                |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  
|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      |   |   |       |   |   |     |   |  
|                                                              |                                |                                                  |   |   |         |   |        |   |   |    |   |   |         |   |   |        |   |   |      |   |  

42

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|                                                                                  |                                  | Redeemable
convertible
preferred stock                                                |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|--------------------------------------------------------------------------------- | -------------------------------- | ------------------------------------------------------------------------------------- |  | - | - |  | ------ | - | - | -- |  | - | ------- | - | - | ------ | - | - | ---- | - | -
|
|
|
|Balances, July 31, 2000                                                           |                                  |                                                                                      |  | $ |  |  | 28,094 |   | $ | 28 |  | $ | 152,565 |   | $ | (1,160 | ) | $ | (232 | ) |  
|Comprehensive loss                                                                |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|                                                                                  | Net loss                         |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|                                                                                  | Other comprehensive income       |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|                                                                                  |                                  | Unrealized gain on available-for-sale securities, net of reclassification adjustments |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|                                                                                  |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|                                                                                  | Total other comprehensive income |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|                                                                                  |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|Comprehensive loss                                                                |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   | $
|                                                                                  |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|Issuance of common stock for cash                                                 |                                  |                                                                                       |  |   |   |  | 142    |   |   |   |  |   | 56      |   |   |        |   |   |      |   |  
|Issuance of common stock under the ESPP plan                                      |                                  |                                                                                       |  |   |   |  | 231    |   |   |   |  |   | 1,122   |   |   |        |   |   |      |   |  
|Common stock exchanged and options assumed in the NetCreate purchase              |                                  |                                                                                       |  |   |   |  | 441    |   |   | 1  |  |   | 5,323   |   |   |        |   |   |      |   |  
|Common stock issued for services                                                  |                                  |                                                                                       |  |   |   |  | 50     |   |   |   |  |   | 139     |   |   |        |   |   |      |   |  
|Repurchase and cancellation of notes receivable for unvested common stock         |                                  |                                                                                       |  |   |   |  | (432   | ) |   |   |  |   | (417    | ) |   |        |   |   | 143  |   |  
|Deferred compensation related to option grants                                    |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   | (185   | ) |   |      |   |  
|Reversal of deferred compensation associated with canceled unvested stock options |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   | (592    | ) |   | 592    |   |   |      |   |  
|Amortization of stock-based compensation                                          |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   | 490    |   |   |      |   |  
|Repayment of note receivable                                                      |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  
|Allowance for doubtful notes receivable                                           |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   | 50   |   |  
|Stock-based compensation associated with the modification of option grants        |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   | 172     |   |   |        |   |   |      |   |  
|Other                                                                             |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   | (5      | ) |   |        |   |   |      |   |  
|                                                                                  |                                  |                                                                                       |  |   |   |  |        |   |   |    |  |   |         |   |   |        |   |   |      |   |  

43

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|                                                                                  |                                  | Common stock                                     |   |   |    |   |   | Notes
receivable
from
stockholders |   |   |      | Accumulated
other
comprehensive
income (loss) |   |     |   | Total
stockholders'
equity
(deficit) |        
|--------------------------------------------------------------------------------- | -------------------------------- | ------------------------------------------------ | - | - | -- | - | - | ---------------------------------- | - | - | ---- | --------------------------------------------- | - | --- | - | ------------------------------------ | -------
|
|
|Balances, July 31, 2001                                                           |                                  | 28,526                                           |   | $ | 29 |   | $ | 158,364                            |   | $ | (263 | )                                             | $ | (39 | ) |                                      |        
|Comprehensive loss                                                                |                                  |                                                  |   |   |    |   |   |                                    |   |   |      |                                               |   |     |   |                                      |        
|                                                                                  | Net loss                         |                                                  |  |   |    |  |   |                                    |  |   |      |                                              |   |     |  |                                      | $      
|                                                                                  | Other comprehensive income       |                                                  |   |   |    |   |   |                                    |   |   |      |                                               |   |     |   |                                      |        
|                                                                                  |                                  | Unrealized loss on available-for-sale securities |   |  |    |   |  |                                    |   |  |      |                                               |  |     |   |                                     |        
|                                                                                  |                                  |                                                  |   |   |    |   |   |                                    |   |   |      |                                               |   |     |   |                                      |        
|                                                                                  | Total other comprehensive income |                                                  |  |   |    |  |   |                                    |  |   |      |                                              |   |     |  |                                      |        
|                                                                                  |                                  |                                                  |   |   |    |   |   |                                    |   |   |      |                                               |   |     |   |                                      |        
|Comprehensive loss                                                                |                                  |                                                 |   |   |   |   |   |                                   |   |   |     |                                               |   |    |   | $                                    | (11,693
|                                                                                  |                                  |                                                  |   |   |    |   |   |                                    |   |   |      |                                               |   |     |   |                                      |        
|Issuance of common stock for cash                                                 |                                  | 29                                               |   |   |   |   |   | 35                                 |   |   |     |                                               |   |    |   |                                      |        
|Issuance of common stock under the ESPP plan                                      |                                  | 216                                              |   |   |   |   |   | 272                                |   |   |     |                                               |   |    |   |                                      |        
|Repurchase and cancellation of notes receivable for unvested common stock         |                                  | (135                                             | ) |   |   |   |   | (219                               | ) |   |     |                                               |   | 39  |   |                                      |        
|Stock purchased under stock repurchase program                                    |                                  | (1,785                                           | ) |   | (2 | ) |   | (2,710                             | ) |   |     |                                               |   |    |   |                                      |        
|Amortization of stock-based compensation                                          |                                  |                                                 |   |   |   |   |   |                                   |   |   | 69   |                                               |   |    |   |                                      |        
|Compensation from option grants                                                   |                                  |                                                 |   |   |   |   |   | 39                                 |   |   |     |                                               |   |    |   |                                      |        
|Reversal of deferred compensation associated with canceled unvested stock options |                                  |                                                 |   |   |   |   |   | (162                               | ) |   | 162  |                                               |   |    |   |                                      |        
|                                                                                  |                                  |                                                  |   |   |    |   |   |                                    |   |   |      |                                               |   |     |   |                                      |        
|Balances, June 30, 2002                                                           |                                  | 26,851                                           |   | $ | 27 |   | $ | 155,619                            |   | $ | (32  | )                                             |   |    |   |                                      |        
|                                                                                  |                                  |                                                  |   |   |    |   |   |                                    |   |   |      |                                               |   |     |   |                                      |        

See Notes to Consolidated Financial Statements.

44

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VICINITY CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands)

|                                                    |                                                                                     |                                                       |                                           | Years Ended
July 31, |         
|--------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | -------------------- | --------
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES                |                                                                                     |                                                       |                                           |                      |         
|                                                    | Net loss                                                                            |                                                       | $                                         | (11,534              | )       
|                                                    | Adjustments to reconcile net loss to net cash used in operating activities:         |                                                       |                                           |                      |         
|                                                    |                                                                                     | Depreciation and amortization                         |                                           |                      | 4,789   
|                                                    |                                                                                     | Provision for doubtful accounts                       |                                           |                      | 47      
|                                                    |                                                                                     | Stock-based compensation                              |                                           |                      | 108     
|                                                    |                                                                                     | Loss on investment                                    |                                           |                      |        
|                                                    |                                                                                     | Provision for note receivable from stockholder        |                                           |                      |        
|                                                    |                                                                                     | Impairment of fixed assets                            |                                           |                      |        
|                                                    |                                                                                     | Impairment of intangible assets                       |                                           |                      | 3,752   
|                                                    |                                                                                     | Changes in operating assets and liabilities:          |                                           |                      |         
|                                                    |                                                                                     |                                                       | Accounts receivable                       |                      |         
|                                                    |                                                                                     |                                                       | Prepaid expenses and other current assets |                      |         
|                                                    |                                                                                     |                                                       | Accounts payable                          |                      |         
|                                                    |                                                                                     |                                                       | Accrued liabilities                       |                      |         
|                                                    |                                                                                     |                                                       | Deferred revenue                          |                      |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Net cash used in operating activities                                               |                                                       |                                           | (6,200               | )       
|                                                    |                                                                                     |                                                       |                                           |                      |         
|CASH FLOWS FROM INVESTING ACTIVITIES                |                                                                                     |                                                       |                                           |                      |         
|                                                    | Investments of excess cash:                                                         |                                                       |                                           |                      |         
|                                                    |                                                                                     | Purchases of available-for-sale securities            |                                           |                      | (103,752
|                                                    |                                                                                     | Sales and maturities of available-for-sale securities |                                           |                      | 114,095 
|                                                    | Purchases of property and equipment                                                 |                                                       |                                           | (519                 | )       
|                                                    | Purchase of technology                                                              |                                                       |                                           |                     |         
|                                                    | Purchase of NetCreate                                                               |                                                       |                                           |                     |         
|                                                    | Increase in other assets                                                            |                                                       |                                           | (540                 | )       
|                                                    | Sublease deposit received                                                           |                                                       |                                           |                     |         
|                                                    | Building lease deposits                                                             |                                                       |                                           | 6                    |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Net cash provided by (used in) investing activities                                 |                                                       |                                           | 9,290                |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|CASH FLOWS FROM FINANCING ACTIVITIES                |                                                                                     |                                                       |                                           |                      |         
|                                                    | Proceeds from issuance of common stock, net                                         |                                                       |                                           | 307                  |         
|                                                    | Proceeds from issuance of redeemable preferred stock, net                           |                                                       |                                           |                     |         
|                                                    | Repurchase of common stock                                                          |                                                       |                                           | (2,827               | )       
|                                                    | Principal payments on capital leases                                                |                                                       |                                           | (227                 | )       
|                                                    | Payment of bank note                                                                |                                                       |                                           |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|Net cash provided by (used in) financing activities |                                                                                     |                                                       | (2,747                                    | )                    |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|Increase (decrease) in cash and cash equivalents    |                                                                                     |                                                       | 343                                       |                      |         
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR      |                                                                                     |                                                       | 12,439                                    |                      |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|CASH AND CASH EQUIVALENTS AT END OF YEAR            |                                                                                     | $                                                     | 12,782                                    |                      | $       
|                                                    |                                                                                     |                                                       |                                           |                      |         
|NONCASH INVESTING AND FINANCING ACTIVITIES:         |                                                                                     |                                                       |                                           |                      |         
|                                                    | Equipment purchased under capital lease                                             |                                                       | $                                         |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Reclassification of long-term investments to short-term                             |                                                       | $                                         |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Accretion on redeemable preferred stock and warrants                                |                                                       | $                                         |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Common stock issued for notes receivable                                            |                                                       | $                                         |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Deferred compensation related to stock option grants                                |                                                       | $                                         |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Reversal of deferred compensation related to stock option grants                    |                                                       | $                                         | 162                  |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Conversion of redeemable preferred stock into common stock                          |                                                       | $                                         |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Unrealized gain (loss) on available for sale securities                             |                                                       | $                                         | (159                 | )       
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Common stock and options assumed in purchase business combination                   |                                                       | $                                         |                     |         
|                                                    |                                                                                     |                                                       |                                           |                      |         
|                                                    | Cancellation of notes receivable upon surrender of unvested common stock collateral |                                                       | $                                         | 104                  |         
|                                                    |                                                                                     |                                                       |                                           |                      |         

See Notes to Consolidated Financial Statements.

45

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VICINITY CORPORATION AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1Description of Business and Summary of Significant Accounting Policies

Description of Business.Vicinity Corporation (the "Company") was formed in 1995. The Company is a leading provider of
enterprise location services solutions to Global 2000 companies across Web, wireless and speech platforms. The Company's enterprise solutions, available across the globe and in multiple languages,
turn location information into a coherent, rich source of knowledge and embed location intelligence into the fabric of the organization.

Change in Fiscal Year End.In March 2002, the Company announced a change to its fiscal year end. Effective
February 22, 2002, the Audit Committee of the Board of Directors of the Company, in accordance with authority delegated by the Board of Directors, adopted a resolution changing the last day of
the Company's fiscal year from July 31 to June 30, commencing with fiscal year 2002. As a result, fiscal year 2003 will commence on July 1, 2002 and end on June 30, 2003.
The period from August 1, 2001 through June 30, 2002 was a transition period and resulted in a fiscal year 2002 that contained eleven months. Accordingly, the fourth quarter of fiscal
year 2002, which ended on June 30, 2002, contained two months.

Comparable
financial information for the eleven-month period ended June 30, 2001 is as follows (unaudited):

Eleven Months
Ended
June 30, 2001(In thousands, except per share data)Revenues

$
18,352Gross profit

$
6,629Loss from operations

$
(28,427
)Net loss

$
(22,691
)Basic and diluted net loss per share

$
(0.80
)Weighted average shares used in basic and diluted net loss per share calculation


28,201


Use of Estimates.The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America 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.

Principles of Consolidation.The consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries. 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 comprehensive loss. Through June 30, 2002, 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 fees consist of annual recurring fees for hosting

46

---

services and are recognized ratably over the life of the contracts, which typically have one-year, non-refundable terms. The Company's services provide customers and their end
users rights to access applications, customer service, and upgrades and updates as provided by the Company. The Company's customers generally do not have the right to take possession of the software
at any time during the hosting agreement. Contracts also often include monthly or quarterly minimum volume limits which, when exceeded result in additional fees for actual volume usage. Actual volume
usage that exceeds designated minimums is recognized as transaction revenue when amounts due are earned by the Company. Service and transaction revenue includes revenues from implementation services,
project-related professional services, customer support, training, volume usage, and, to a lesser degree, from fees derived from advertising 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. As of June 30, 2002 and July 31, 2001, no customers comprised greater than 10% of the
Company's trade accounts receivable balance. As of June 30, 2002 and July 31, 2001, the allowance for doubtful accounts was approximately $261,000 and $299,000, 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 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 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). 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. The Company has not realized significant gains or losses on the

47

---

sale of available-for-sale marketable securities. However, during the fourth quarter of fiscal 2001, the Company determined that the decline in value of a $5.0 million
investment was other than temporary and the cost basis of the investment was written down to its fair value of $1.8 million and a loss of $3.2 million was recognized. During the first
quarter of fiscal 2002, the investment was sold at which time the loss of $3.2 million was realized.

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 capital lease obligations, approximate their fair values as of June 30, 2002 and
July 31, 2001.

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. Depreciation on the building is calculated using the straight-line method over the estimated useful life of the building, which is 30 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.The Company capitalizes certain costs of computer software developed or obtained for internal
use. 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 eleven months ended June 30, 2002, the Company did not capitalize any software development costs. During the year ended July 31, 2001, the
Company capitalized approximately $0.4 million, which is being 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.

Intangible Assets.The purchase price of businesses acquired, accounted for as purchase business combinations, is allocated
to the tangible and identifiable intangible assets acquired based on their estimated fair values with any amount in excess of such allocations being designated as goodwill. Other intangible assets
subject to amortization are amortized on a straight-line basis over their useful economic lives, which is generally three years. As of June 30, 2002, the Company's gross carrying
value of intangible assets was $3.0 million, with accumulated amortization of $1.3 million. Management periodically reviews intangible assets for impairment indicators. At the time
management determines the existence of such indicators, the Company uses discounted cash flows of the acquired business if separable and identifiable

48

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over the remaining amortization period to initially determine whether impairment should be recognized. The Company then performs a subsequent calculation to measure the amount of the impairment loss
based on the excess of the carrying value over the fair value of the impaired assets. If quoted market prices for the assets are not available, the fair value is calculated using the present value of
estimated expected future cash flows. The cash flow calculation would be based on management's best estimates, using appropriate assumptions and projections at the time. The carrying value of
identifiable intangible assets is reviewed in a manner consistent with the policy for reviewing impairment of property and equipment, as described above.

Advertising Expense.The cost of advertising is expensed as incurred. Advertising costs totaled approximately $23,000 for the
eleven months ended June 30, 2002 and $829,000 and $2,079,000 for the years ended July 31, 2001 and 2000, respectively.

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, common stock subject to repurchase 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):

Years Ended
July 31,Eleven Months
Ended
June 30,
20022001

2000Stock options

4,377

2,623

2,212Shares of common stock subject to repurchase



40

1,0794,377

2,663

3,291


The
weighted-average exercise price of outstanding stock options was $2.75, $4.72 and $10.63 as of June 30, 2002 and July 31, 2001 and 2000, respectively. The
weighted-average exercise price of shares of common stock subject to repurchase was $0.68 and $0.48 as of July 31, 2001 and 2000, respectively.

Stock-Based Compensation.The Company accounts for its stock-based compensation arrangements for employees using the
intrinsic-value method for stock-based awards to employees. 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 accounted for at fair value. The
Company amortizes deferred stock-based compensation using an accelerated method.

49

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Comprehensive Loss.The following table sets forth the calculation of comprehensive loss for the eleven months ended
June 30, 2002 and the years ended July 31, 2001 and 2000 (in thousands):

Years Ended
July 31,Eleven Months
Ended
June 30,
20022001

2000Net loss

$
(11,534
)
$
(27,284
)
$
(15,417
)Unrealized gain/(losses) on available-for-sale securities


(159
)

601


(262
)Comprehensive loss

$
(11,693
)
$
(26,683
)
$
(15,679
)


The
Company recorded a reclassification adjustment of $2.7 million for a loss on investment included in net loss in fiscal 2001.

Note 2Balance Sheet Components

|                             |                                                       | June 30,
2002 |        | July 31,
2001 |  
|---------------------------- | ----------------------------------------------------- | ------------- | ------ | ------------- | -
|
|Cash and cash equivalents:   |                                                       |               |        |               |  
|                             | Cash                                                  |               | $      | 6,545         |  
|                             | Money market funds                                    |               |        | 3,435         |  
|                             | Commercial paper                                      |               |        | 2,802         |  
|                             |                                                       |               |        |               |  
|                             |                                                       | $             | 12,782 |               | $
|                             |                                                       |               |        |               |  
|Property and equipment, net: |                                                       |               |        |               |  
|                             | Furniture and fixtures                                |               | $      | 1,404         |  
|                             | Computer equipment                                    |               |        | 8,812         |  
|                             | Software                                              |               |        | 2,399         |  
|                             | Equipment under capital lease                         |               |        |              |  
|                             | Leasehold improvements                                |               |        | 690           |  
|                             | Land and building                                     |               |        | 2,100         |  
|                             |                                                       |               |        |               |  
|                             |                                                       |               | 15,405 |               |  
|                             | Accumulated depreciation and amortization             |               |        | (9,041        | )
|                             |                                                       |               |        |               |  
|                             |                                                       | $             | 6,364  |               | $
|                             |                                                       |               |        |               |  
|Intangible assets, net:      |                                                       |               |        |               |  
|                             | BeeLine purchased technology                          |               | $      | 2,985         |  
|                             | Goodwill                                              |               |        |              |  
|                             | Developed product technology                          |               |        |              |  
|                             |                                                       |               |        |               |  
|                             |                                                       |               | 2,985  |               |  
|                             | Accumulated amortization                              |               |        | (1,327        | )
|                             |                                                       |               |        |               |  
|                             |                                                       | $             | 1,658  |               | $
|                             |                                                       |               |        |               |  
|Accrued liabilities:         |                                                       |               |        |               |  
|                             | Accrued compensation                                  |               | $      | 828           |  
|                             | Accrued expenses                                      |               |        | 904           |  
|                             | Accrued restructuring costs and other special charges |               |        | 419           |  
|                             |                                                       |               |        |               |  
|                             |                                                       | $             | 2,151  |               | $
|                             |                                                       |               |        |               |  

50

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During the period ended June 30, 2002, the capital leases were fully paid and the equipment under capital lease has been classified as computer equipment.

Note 3Financial Instruments

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

|                                                        |  |   |        | Available-for-Sale
Securities |   |    
|------------------------------------------------------- |  | - | ------ | ----------------------------- | - | ---
|
|June 30, 2002                                           |  |   |        |                               |   |    
|Money market funds                                      |  | $ | 9,500  |                               | $ |   
|U.S. treasury securities                                |  |   | 30,389 |                               |   | 145
|Commercial paper, corporate bonds and medium-term notes |  |   | 37,985 |                               |   | 111
|Municipal bonds                                         |  |   | 5,030  |                               |   |   
|                                                        |  |   |        |                               |   |    
|                                                        |  | $ | 82,904 |                               | $ | 256
|                                                        |  |   |        |                               |   |    
|Amounts included in cash and cash equivalents           |  | $ | 12,303 |                               | $ |   
|Amounts included in short-term investments              |  |   | 70,601 |                               |   | 256
|                                                        |  |   |        |                               |   |    
|                                                        |  | $ | 82,904 |                               | $ | 256
|                                                        |  |   |        |                               |   |    
|July 31, 2001                                           |  |   |        |                               |   |    
|U.S. treasury securities                                |  | $ | 3,010  |                               | $ | 6  
|Commercial paper, corporate bonds and medium-term notes |  |   | 62,181 |                               |   | 330
|Municipal bonds                                         |  |   | 21,852 |                               |   | 16 
|                                                        |  |   |        |                               |   |    
|Total debt securities                                   |  |   | 87,043 |                               |   | 352
|U.S. marketable equity securities                       |  |   | 1,831  |                               |   |   
|                                                        |  |   |        |                               |   |    
|                                                        |  | $ | 88,874 |                               | $ | 352
|                                                        |  |   |        |                               |   |    
|Amounts included in cash and cash equivalents           |  | $ | 7,929  |                               | $ |   
|Amounts included in short-term investments              |  |   | 80,945 |                               |   | 352
|                                                        |  |   |        |                               |   |    
|                                                        |  | $ | 88,874 |                               | $ | 352
|                                                        |  |   |        |                               |   |    

Maturities
of debt securities at market value at June 30, 2002 are as follows (in thousands):

|Mature in one year or less               |  | $ | 43,874
|---------------------------------------- |  | - | ------
|Mature after one year through five years |  |   | 26,907
|                                         |  |  
|                                         |  | $ | 70,781
|                                         |  |  

Note 4Stockholders' Equity

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

51

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Company's net proceeds from the IPO, after deducting underwriting discounts and offering expenses, were approximately $125.9 million.

Warrants.In July 1999, the Company entered into an agreement with a business partner whereby the Company agreed to
issue warrants for the purchase of common stock contingent upon the attainment of performance milestones. This agreement provides for the issuance of warrants exercisable for up to
275,000 shares of common stock, contingent upon the attainment of performance milestones. The exercise price for these warrants would be determined based on the date when a specific milestone would be
achieved and would have been 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 would be recorded as an expense. The agreement expired in July 2002 and the warrants were never issued.

Redeemable convertible preferred stock.The Company had issued and outstanding 12,519,000 shares of
Series AF redeemable convertible preferred stock and warrants, all of which converted into shares of the Company's common stock as of the date of the Company's initial public
offering in February 2000. These shares were redeemable at a redemption premium per annum from the date of issuance of these shares, plus all declared but unpaid dividends. The redemption
premium was charged to the statements of operations as accretion on redeemable convertible preferred stock.

Note 5Employee Benefit Plans

Retirement Plan

The Company has 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 2002, 2001 or 2000.

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, which was subsequently approved by the Company's stockholders. In fiscal 1996, an additional 1,000,000 shares of common
stock were approved by the Board of Directors and stockholders 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). As of June 30, 2002, no shares were available for grant under the
1995 Plan.

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

52

---

Directors reserved 809,132 shares of common stock for issuance under the 1996 Plan, which was subsequently approved by the Company's stockholders. 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 stockholders and reserved for 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). As of June 30, 2002, no shares were available for grant
under the 1996 Plan.

2000 Equity Participation Plan.In December 1999, the Company's Board of Directors approved the 2000 Equity
Participation Plan (2000 Plan), which is effective for a term of ten years, and authorized the issuance of up to 1,500,000 shares of common stock under this plan. The 2000 Plan was subsequently
approved by the Company's stockholders. In fiscal 2001, the Board of Directors and stockholders approved an amendment to the 2000 Plan authorizing the issuance of up to an additional 1,400,000 shares
of common stock under this plan. 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 June 30, 2002, there were outstanding under the 1996 Plan stock options to purchase an
aggregate of 123,130 shares which, if expire or become unexercisable, may be issued under the 2000 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. With respect to
any participant who owns stock possessing more than 10% of the voting power of all classes of the Company's 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),
however the Plan does allow for different vesting terms and therefore some options granted by the Company have deviated from the four year vesting term that is generally used by the Company. 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. As of June 30,
2002, 557,521 shares were available for grant under the 2000 Plan.

NetCreate Employee Stock Option Plan.In October 2000, in conjunction with the Company's acquisition of NetCreate
Systems, Inc., the Company assumed 90,513 options under the NetCreate Employee Stock Option Plan (NetCreate Plan.). The NetCreate Plan provided for stock options to be granted to employees,
officers, and directors at an exercise price not less than 100% of the estimated fair market value for incentive stock options, and 85% of the estimated fair market value at the date of grant for
nonqualified stock options. All options have a term not greater than ten years from the date of grant. Options issued generally vest ratably over five years (20% one year after the grant date and at a
rate of 20% per year thereafter). The Company assumed the outstanding options under the NetCreate Plan, but not the NetCreate Plan itself. Accordingly, no further options may be granted under the
NetCreate Plan.

In
December 2001, the Company granted to an officer of the Company a nonqualified stock option to purchase 1,061,000 shares. This grant was issued outside of the Company's
existing equity compensation

53

---

plans. The option exercise price was based on 100% of the fair market value on the date of grant, and the option has a term life of ten years. The option vests over the term of four years. In
addition, in the event of a change of control of the Company, the option's vesting will be accelerated according to the terms of the option agreement.

The
following is a summary of activity for all stock option plans for the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 2000:

|                                 |  | Options
outstanding |   | Weighted-
average
exercise
price
|-------------------------------- |  | ------------------- | - | --------------------------------
|Balances as of July 31, 1999     |  | 2,064,000           |   | $                               
|Options granted at fair value    |  | 1,644,500           |   |                                 
|Options granted below fair value |  | 338,250             |   |                                 
|Options exercised                |  | (1,655,317          | ) |                                 
|Options canceled                 |  | (179,596            | ) |                                 
|                                 |  |                     |   |                                 
|Balances as of July 31, 2000     |  | 2,211,837           |   |                                 
|Options granted at fair value    |  | 2,586,025           |   |                                 
|Options assumed                  |  | 90,513              |   |                                 
|Options exercised                |  | (194,392            | ) |                                 
|Options canceled                 |  | (2,071,063          | ) |                                 
|                                 |  |                     |   |                                 
|Balances as of July 31, 2001     |  | 2,622,920           |   |                                 
|Options granted at fair value    |  | 2,603,750           |   |                                 
|Options exercised                |  | (28,765             | ) |                                 
|Options canceled                 |  | (821,556            | ) |                                 
|                                 |  |                     |   |                                 
|Balances as of June 30, 2002     |  | 4,376,556           |   | $                               
|                                 |  |                     |   |                                 

There
were 1,136,292 and 273,531 options exercisable as of June 30, 2002 and July 31, 2001, respectively. The weighted-average fair value of employee stock options granted
at fair value during fiscal 2002, 2001 and 2000 was $0.66, $2.36 and $11.73, respectively. The weighted average fair value of employee stock options granted below fair value during fiscal 2000 was
$4.10. 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 June 30, 2002, there were no shares
subject to repurchase.

54

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The
following table summarizes information about stock options under the plans as of June 30, 2002:

|             |  | Options Outstanding |  | Options Exercisable
|------------ |  | ------------------- |  | -------------------
|
|$0.101.58   |  | 1,045,643           |  | 8.9                
|$1.601.80   |  | 1,449,000           |  | 9.5                
|$1.822.97   |  | 1,240,165           |  | 9.5                
|$3.006.82   |  | 340,932             |  | 8.3                
|$8.0012.50  |  | 206,706             |  | 7.8                
|$15.2524.19 |  | 85,110              |  | 7.8                
|$50.0056.63 |  | 9,000               |  | 7.7                
|             |  |                     |  |                    
|             |  | 4,376,556           |  | 9.1                
|             |  |                     |  |                    

Employee Stock Purchase Plan

In December 1999, the Company's Board of Directors adopted and the Company's stockholders approved the Vicinity Corporation 2000 Employee Stock Purchase
Plan ("2000 ESPP") under which the issuance of up to 200,000 shares of common stock was approved. In fiscal 2001, the Board of Directors and stockholders approved an amendment to the 2000 ESPP
authorizing the issuance of up to an additional 600,000 shares of common stock under this plan. 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 June 30, 2002 and July 31, 2001, approximately 445,000 and 231,000 shares, respectively, 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 $0, $185,000 and $1,133,000 during the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 2000,
respectively. Compensation expense is amortized in accordance with Financial Accounting Standards Board Interpretation (FIN) No. 28 "Accounting for Stock Appreciation Rights and Other Variable
Stock Option or Award Plans." Approximately $69,000, $490,000 and $1,017,000 of stock-based compensation expense was amortized for the eleven months ended June 30, 2002 and the years ended
July 31, 2001 and 2000, respectively.

55

---

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:

|                        |  | Stock Option Plans |   | Employee Stock Purchase Plan
|----------------------- |  | ------------------ | - | ----------------------------
|
|Risk-free interest rate |  | 3.8                | % | 4.7                         
|Volatility              |  | 41                 | % | 130                         
|Dividend yield          |  | 0.0                | % | 0.0                         

The
expected life of options under the Company's Stock Option Plans was estimated at 4 years, 3.25 years and 4 years for the eleven months ended June 30, 2002
and the years ended July 31, 2001 and 2000, respectively. The expected life of options under the ESPP was estimated at six months. The Company's first ESPP purchase was in August 2000.

Had
compensation cost for the Company's stock-based compensation plans been determined consistent with the fair value method, the Company's net losses for the eleven months ended
June 30, 2002 and the years ended July 31, 2001 and 2000 would have been as follows:

|                                                       |  | Eleven Months
Ended
June 30, |         | Years Ended
July 31, |  
|------------------------------------------------------ |  | ---------------------------- | ------- | -------------------- | -
|
|
|Net loss applicable to common stockholdersas reported |  | $                            | (11,534 | )                    | $
|Pro forma stock-based compensation expense             |  |                              | (4,168  | )                    |  
|                                                       |  |                              |         |                      |  
|Net loss applicable to common stockholderspro forma   |  | $                            | (15,702 | )                    | $
|                                                       |  |                              |         |                      |  
|BASIC AND DILUTED NET LOSS PER SHAREas reported       |  | $                            | (0.42   | )                    | $
|                                                       |  |                              |         |                      |  
|BASIC AND DILUTED NET LOSS PER SHAREpro forma         |  | $                            | (0.57   | )                    | $
|                                                       |  |                              |         |                      |  

Note 6Income Taxes

The Company incurred no income tax expense for the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 2000. 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:

|                                                                                                   |  | Eleven Months
Ended
June 30, |        | Years Ended
July 31, |  
|-------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | -------------------- | -
|
|
|Computed expected tax benefit                                                                      |  | $                            | (3,922 | )                    | $
|Stock-based compensation                                                                           |  |                              | 23     |                      |  
|Current year net operating losses and temporary differences for which no tax benefit is recognized |  |                              | 2,504  |                      |  
|Other                                                                                              |  |                              | 1,395  |                      |  
|                                                                                                   |  |                              |        |                      |  
|                                                                                                   |  | $                            |       |                      | $
|                                                                                                   |  |                              |        |                      |  

56

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The effects of temporary differences that give rise to significant portions of deferred tax assets as of June 30, 2002 and July 31, 2001 are as
follows:

|                     |                                              | June 30,
2002                                              |   | July 31,
2001 |       
|-------------------- | -------------------------------------------- | ---------------------------------------------------------- | - | ------------- | ------
|
|Deferred tax assets: |                                              |                                                            |   |               |       
|                     | Net operating loss carryforwards and credits |                                                            | $ | 19,285        |       
|                     | State taxes                                  |                                                            |   | 8             |       
|                     | Deferred revenue                             |                                                            |   | 2,787         |       
|                     | Property and equipment                       |                                                            |   | 599           |       
|                     | Accruals and reserves                        |                                                            |   | 428           |       
|                     | Other                                        |                                                            |   | 415           |       
|                     |                                              |                                                            |   |               |       
|                     |                                              | Total gross deferred tax assets before valuation allowance |   |               | 23,522
|                     | Valuation allowance                          |                                                            |   | (23,522       | )     
|                     |                                              |                                                            |   |               |       
|                     |                                              | $                                                          |  |               | $     
|                     |                                              |                                                            |   |               |       

As
of June 30, 2002 and July 31, 2001, the deferred tax assets were fully offset by a valuation allowance. The net change in the total valuation allowance for the year
ended June 31, 2002 was an increase of $2,741,000 respectively.

In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management does not
believe it is more likely than not that the deferred tax assets will be realized; accordingly, a full valuation allowance has been established and no deferred tax asset and related tax benefit have
been recognized in the accompanying financial statements.

As
of June 30, 2002, the Company has net operating loss carryforwards for federal and state income tax purposes of approximately $50,608,000 and $27,656,000 respectively. The
federal net operating loss carryforwards expire beginning in 2011 through 2022. The California net operating loss carryforwards expire beginning in 2004 through 2012. The Company has research credit
carryforwards for federal income tax purposes of $653,000, which, if not utilized, will expire beginning in the year 2012.

The
Tax Reform Act of 1986 and similar California legislation impose substantial restrictions on the utilization of net operating losses and tax credits in the event of an "ownership
change" of a corporation. Accordingly, the Company's ability to utilize net operating losses and credit carryforwards may be limited as the result of such an "ownership change" as defined in this
legislation.

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.

57

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Note 7Impairment of Intangible Assets, Restructuring Costs and Other Special Charges

In fiscal 2002, the Company approved a plan to retire the Company's SiteMaker product ("SiteMaker") as an actively marketed product. SiteMaker was acquired in the
acquisition of NetCreate Systems, Inc., or NetCreate, in October 2000. The decision to retire SiteMaker was arrived at due to two primary factors. First, an analysis of the revenue
stream from SiteMaker indicated that actual and currently forecasted revenues from SiteMaker are significantly lower than the estimated revenue levels that were used in the original valuation of
NetCreate. Secondly, in future releases of Vicinity Location Server, the Company intends to market components/functionalities that are similar to SiteMaker, but based on an entirely different code
base. As a result, during the eleven months ended June 30, 2002, the Company recorded an impairment charge totaling approximately $3.8 million for the remaining goodwill and developed
product technology related to the NetCreate acquisition.

During
the year ended July 31, 2001, the Company recorded restructuring costs, other special charges and charges for the impairment of intangible assets of $4.4 million,
including restructuring costs of $2.8 million, other special charges of $0.8 million and charges for the impairment of intangible assets of $0.8 million. In November 2000,
the Company approved a plan to restructure certain of its operations in order to reduce expenses. Expenses associated with this restructuring plan were approximately $0.6 million. Essentially
all of this restructuring charge was for severance and benefits related costs, which included the plan to reduce approximately 29 worldwide employees in all functional areas of the Company. In
addition, during fiscal 2001, the Company recorded $0.5 million of severance-related special charges in conjunction with the departure of four senior executives. In February and
April 2001, the Company approved plans to further restructure certain of its operations in order to reduce expenses. Expenses associated with this restructuring plan were approximately
$2.2 million for severance and employment related costs for approximately 73 worldwide employees across all functions of the Company, the closure of facilities, and equipment costs associated
with the termination of employees. In addition, during fiscal 2001, the Company recorded approximately $0.8 million in charges for the impairment of intangible assets related to the
write-off of goodwill, developed product technology and the assembled workforce related to the NetCreate acquisition, reflecting the Company's de-emphasis on providing custom
Web development services going forward, and special charges of approximately $0.3 million for the write-off of software and other similar costs related to the downsizing of the
Company's operations. In fiscal 2002, the Company recorded adjustments of $0.1 million in connection with the reversal of previously anticipated but unincurred expenses.

The
following analysis sets forth the significant components of total restructuring costs and other special charges recorded by the Company during the eleven months ended June 30,
2002 and fiscal 2001 (in thousands):

|                            |  | Severance and
employment costs |        | Facility and
equipment costs |   | Impairment of
intangible assets |   | Total |     
|--------------------------- |  | ------------------------------ | ------ | ---------------------------- | - | ------------------------------- | - | ----- | ----
|Accrual as of July 31, 2000 |  | $                              |       |                              | $ |                                |   | $     |    
|Charges                     |  |                                | 2,528  |                              |   | 1,118                           |   |       | 754 
|Deductions                  |  |                                | (2,271 | )                            |   | (328                            | ) |       | (754
|                            |  |                                |        |                              |   |                                 |   |       |     
|Accrual as of July 31, 2001 |  |                                | 257    |                              |   | 790                             |   |       |    
|Charges                     |  |                                |       |                              |   |                                |   |       |    
|Deductions                  |  |                                | (213   | )                            |   | (283                            | ) |       |    
|Adjustments                 |  |                                | (44    | )                            |   | (89                             | ) |       |    
|                            |  |                                |        |                              |   |                                 |   |       |     
|Accrual as of June 30, 2002 |  | $                              |       |                              | $ | 418                             |   | $     |    
|                            |  |                                |        |                              |   |                                 |   |       |     

58

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Payments
on the remaining facility costs of $418,000 extend through approximately August 2005.

Note 8Business Combination

In October 2000, the Company acquired NetCreate, an Internet products and services company providing tools and services to build or enhance the features
and functionality of web sites. In connection with the acquisition, the Company paid $250,000 in cash and issued 441,405 shares of its common stock in exchange for all outstanding shares of NetCreate
common stock. In addition, the Company reserved an additional 90,513 shares of the Company's common stock for issuance in connection with the assumption of NetCreate's outstanding stock options and
warrants. The acquisition was accounted for using the purchase method of accounting and results of NetCreate have been included in the Company's consolidated financial statements from
October 18, 2000. A summary of the purchase price for the acquisition is as follows (in thousands):

Stock and stock options, net of issuance costs

$
5,169Cash


250Direct acquisition costs


253Total

$
5,672


The
purchase price was allocated as follows:

Tangible liabilities acquired

$
(262
)Capitalized software


66Deferred stock-based compensation


185Intangible assets acquired:Goodwill


4,313Developed product technology


990Assembled workforce


380Total

$
5,672


As
discussed in Note 7, during the year ended July 31, 2001, the Company wrote off approximately $0.8 million of goodwill, developed product technology and assembled
workforce related to the NetCreate acquisition, reflecting the Company's de-emphasis on providing custom Web development services. In January 2002, the Company approved a plan to
retire the Company's SiteMaker product ("SiteMaker"), which was acquired in the NetCreate acquisition. The decision to retire SiteMaker was arrived at due to two primary factors. First, an analysis of
the revenue stream from SiteMaker indicated that actual and currently forecasted revenues from SiteMaker are significantly lower than the estimated revenue levels that were used in the original
valuation of NetCreate. Secondly, in future releases of Vicinity Location Server, the Company intends to market components/functionalities that are similar to SiteMaker, but based on an entirely
different code base. As a result, the Company recorded an impairment charge in the eleven months ended June 30, 2002 totaling approximately $3.8 million for the remaining goodwill and
developed product technology related to the NetCreate acquisition. Pro forma comparative combined financial information has not been disclosed, as the results of NetCreate have not been significant.

Note 9Technology Purchase

In September 2000, the Company entered into a Technology Purchase Agreement (the "BeeLine Agreement") with BeeLine LLC ("BeeLine"), under which the Company
agreed to pay up to $3.0 million

59

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to purchase technology and related consulting services from BeeLine. The technology was purchased for internal use. The Company is amortizing the costs over the estimated economic life of the
services into which the technology is incorporated, which is generally three years. For the eleven months ended June 30, 2002 and the year ended July 31, 2001, the Company recorded
amortization of $0.9 million and $0.4 million, respectively.

Note 10Commitments

Leases.The Company leases equipment and its facilities under non-cancelable operating leases with expiration
dates through 2008. Excluding sublease income, future minimum lease payments under the Company's non-cancelable operating leases as of June 30, 2002 are as follows (in thousands):

Operating
LeasesYear ending June 30,2003

$
1,9162004


1,8842005


1,9352006


1,8592007


1,888Thereafter


2,435Total minimum lease payments

$
11,917


During
fiscal 2001, the Company entered into a sublease agreement for approximately 50% of the rentable square footage of its headquarters facility. In July 2002, the Company
renegotiated the sublease agreement to rent out approximately an additional 12% of the space. The future minimum rentals to be received under the renegotiated agreement total approximately
$1.1 million, $0.7 million and $0.6 million for the years ending June 30, 2003, 2004 and 2005, respectively.

Rental
expense amounted to approximately $888,000, $2,105,000 and $1,616,000 for the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 2000,
respectively, net of sublease income of approximately $1.4 million in the eleven months ended June 30, 2002 and approximately $0.5 million in fiscal 2001.

License Fees.The Company has entered into agreements with several content providers. Some of these agreements call for fixed
annual payments. Other agreements contain fixed annual minimum payments as well as variable components that require additional payments if certain content usage thresholds are exceeded by the Company.
As of June 30, 2002, the terms of such agreements include the following future minimum license fees (in thousands):

2003

$
8852004


1252005


252006


502007


175Thereafter


1,225Total non-cancelable license fees

$
2,485


60

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Note 11Segment Information

The
Company's chief operating decision maker (CODM) is considered to be the Company's Chief Executive Officer or, in the event that the Company's Chief Executive Officer position is
vacant, the Company's Chairman of the Board of Directors will act as CODM. The CODM evaluates performance, makes operating decisions and allocates resources based on financial data consistent with the
presentation in the accompanying consolidated financial statements. Therefore, the Company operates in a single segment.

Revenue
information by geographic area is summarized below for the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 2000:

Years Ended
July 31,Eleven Months
Ended
June 30,
20022001

2000(In thousands)North America

$
13,340

$
16,860

$
13,888Europe


2,919


3,134


1,302$
16,259

$
19,994

$
15,190


The
Company makes allocations of revenue to geographic areas depending on the location of the country where the order is placed or the service is delivered. For the eleven months ended
June 30, 2002 and the years ended July 31, 2001 and 2000, no customer accounted for 10% or more of the Company's revenues.

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

Note 12Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards, or SFAS, No. 141 "Business
Combinations." SFAS 141 requires that all business combinations be accounted for under the purchase method. Use of the pooling-of-interests method is no longer permitted. SFAS 141
requires that the purchase method be used for business combinations initiated after June 30, 2001. The adoption of SFAS 141 had no impact to the Company's operating results, financial
position or cash flows.

In
July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 142 requires that goodwill no longer be amortized to earnings, but instead
be reviewed for impairment. The Company will be required to implement SFAS 142 as of the beginning of its fiscal year 2003. The adoption
of this statement will not have a material impact on the Company's operating results, financial position or cash flows.

In
October 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 applies to all
long-lived assets (including discontinued operations). SFAS 144 develops one accounting model for long-lived assets that are to be disposed of by sale. SFAS 144
requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS 144 expands the scope
of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing
operations of the entity in a disposal transaction. SFAS 144 will be

61

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effective for the Company in fiscal 2003. The adoption of this statement will not have a material impact on the Company's operating results, financial position or cash flows.

In
June 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities," which addresses accounting for restructuring and similar costs.
SFAS 146 supersedes previous accounting guidance. The Company will adopt the provisions of SFAS 146 for restructuring activities initiated after December 31, 2002. SFAS 146
requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. Under previous guidance, a liability for an exit cost was recognized at
the date of the Company's commitment to an exit plan. SFAS 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly, SFAS 146 may
affect the timing of recognizing future restructuring costs as well as the amounts recognized. The Company has not yet evaluated the effects that this standard will have on its consolidated financial
statements.

Note 13Litigation

The Company and certain of its former officers and directors have been named as defendants in four lawsuits filed in the United States District Court for the
Southern District of New York, which have been consolidated into the case MBH Inc., v. Vicinity Corporation, et al. By order dated April 19, 2002, Robert Elka has been named as the lead
plaintiff. This lawsuit is purportedly being brought as a class action on behalf of individuals who purchased shares of the Company's common stock between February 9, 2000 and
December 6, 2000 in connection with and traceable to the Company's initial public offering, although no class has been certified. According to the Amended Complaint filed on April 20,
2002, this lawsuit alleges that the Company, certain of its former officers and directors, and its securities underwriters violated various sections of the Securities Act of 1933, the Securities
Exchange Act of 1934, and related rules, including Rule 10b-5, by reason of alleged false statements and omissions relating to underwriting discounts and market stabilization
transactions. The plaintiffs seek unquantified actual damages, recissionary damages and other relief to compensate losses allegedly incurred by purchasers of the Company's common stock in connection
with the Company's initial public offering.

This
lawsuit is one of a large number of such actions brought against numerous securities underwriters and issuers of securities that appear to be related to an investigation currently
being conducted by the United States Securities and Exchange Commission of the conduct of certain securities underwriters. These lawsuits, including the consolidated action brought against the
Company, have been transferred to a consolidated docket for coordination and decision of pre-trial motions, discovery and related matters other than trial. Certain underwriter defendants
have brought a motion to recuse the judge charged with managing the consolidated docket. The judge has denied the motion and the Second Circuit Court's has denied a petition for a writ of mandamus
ordering the recusal. The Court recently set a schedule for defendants to make motions to dismiss, such that the motions are expected to be fully submitted to the Court by the end of
September 2002. The Company has made motions to dismiss all claims which motions should be fully submitted by the end of September 2002. The Company believes that the claims against the
Company and certain of its former officers and directors are without merit and the Company intends to vigorously defend against them.

On
December 13, 2001, Murex Securities Limited and Murex Licensing Corporation ("Murex") filed a complaint in the United States District Court for the Eastern District of Virginia
(Murex Securities Limited, et al.v Vicinity Corporation, et al, Civil Action No. 01-1895-A) naming the Company and two of its customers as defendants. In the Complaint,
the plaintiffs alleged that the Company's Enterprise Location Services infringed claims of a number of the plaintiffs' patents, and it sought unspecified damages and permanent injunctive relief. In
its response to the complaint, the Company denied that it infringed any valid claims of the patents-in-suit. In May 2002, the Company and Murex reached a mutual
settlement

62

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agreement (the "Settlement Agreement") regarding this matter. Under the Settlement Agreement, the Company was granted a license by Murex in exchange for cash payments. In addition, the Settlement
Agreement includes a fee for past damages. Payments for past damages, as well as litigation costs, were largely paid by the Company's insurance provider. Future payments under the Settlement Agreement
are included in the Company's license fee commitments in Footnote 10 in the Notes to the Consolidated Financial Statements. The Company's insurance provider has contacted the Company to discuss the
finalization of the amount of the claim that was covered under the Murex settlement. The Company is unable at this time to evaluate the outcome of these discussions.

The
Company has received correspondence from Unisys Corporation ("Unisys") asserting that the Company's services infringe various claims of a patent owned by Unisys covering LZW
compression. Unisys has offered the Company a license under this patent, which expires in 2003. The Company is currently evaluating Unisys' offer. In the event that this matter cannot be resolved
through negotiation and Unisys files a claim against the Company under the patent, the litigation could involve significant costs of defense and would involve risks and uncertainties.

Note 14Stock Repurchase Program

In September 2001, the Company announced a stock repurchase program of up to $5.0 million. Under this program, stock repurchases may be made from
time to time in the open market, through block trades or otherwise. As of June 30, 2002, the Company had repurchased and retired approximately
1,785,000 shares for an aggregate purchase price equal to approximately $2.7 million under the stock repurchase program.

Note 15Related Party Transactions

During the eleven months ended June 30, 2002 and the years ended July 31, 2001 and 2000, the Company recognized license and hosting revenue of $0,
$97,100 and $62,500 related to a contract with a related party.

The
Company paid approximately $40,000 during the fiscal year ended July 31, 2000 to a related party for data center services.

Note 16Quarterly Results of Operations (Unaudited)

|                                                                                 |  | Twelve Months Ended June 30, 2002 (1) |       
|-------------------------------------------------------------------------------- |  | ------------------------------------- | ------
|
|
|Revenues                                                                         |  | $                                     | 4,699 
|Operating expenses                                                               |  | $                                     | 5,939 
|Loss from operations                                                             |  | $                                     | (3,814
|Net loss                                                                         |  | $                                     | (5,977
|Basic and diluted net loss per share                                             |  | $                                     | (0.21 
|Weighted average shares used in basic and diluted net loss per share calculation |  |                                       | 28,533

---

63

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|                                                                                 |  | Fiscal Year Ended June 30, 2002 (2) |       
|-------------------------------------------------------------------------------- |  | ----------------------------------- | ------
|
|
|Revenues                                                                         |  | $                                   | 4,718 
|Operating expenses                                                               |  | $                                   | 5,879 
|Loss from operations                                                             |  | $                                   | (3,633
|Net loss                                                                         |  | $                                   | (2,595
|Basic and diluted net loss per share                                             |  | $                                   | (0.09 
|Weighted average shares used in basic and diluted net loss per share calculation |  |                                     | 28,253

---

|                                                                                 |  | Fiscal Year Ended July 31, 2001 (3) |       
|-------------------------------------------------------------------------------- |  | ----------------------------------- | ------
|
|
|Revenues                                                                         |  | $                                   | 5,430 
|Operating expenses                                                               |  | $                                   | 9,302 
|Loss from operations                                                             |  | $                                   | (7,102
|Net loss                                                                         |  | $                                   | (5,184
|Basic and diluted net loss per share                                             |  | $                                   | (0.19 
|Weighted average shares used in basic and diluted net loss per share calculation |  |                                     | 27,311

---

Note 17Subsequent Event

On August 6, 2002, the Company's board of directors declared a dividend of one stock purchase right ("Right") for each outstanding share of Vicinity common
stock. On August 9, 2002, the Company entered into a Rights Agreement pursuant to which the Rights were issued, and the dividend was issued to stockholders of record. In addition, one Right
will be issued with each share of Vicinity common stock that becomes outstanding between August 9, 2002 and the earliest of the date the Rights become exercisable, the date the Rights are
redeemed or the expiration or termination of the Rights Agreement. Each Right will become exercisable only upon the occurrence of certain events specified in the Rights Agreement, including the
acquisition of 15% of the outstanding shares of Vicinity common stock by a person or group. Each Right entitles the holder, as defined under the Rights Agreement, to acquire shares of Vicinity common
stock at a 50% discount to the then prevailing market price. As defined under the Rights Agreement, the Company's board of directors may redeem outstanding Rights at a price of $0.001 per Right. Prior
to such time, the terms of each Right may be amended, or the Rights Agreement may be amended or terminated, by the Company's board of directors without the approval of the holder of each Right.

64

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VICINITY CORPORATION    SCHEDULE II    VALUATION AND QUALIFYING ACCOUNTS

|                            |                                 | Balance
at
Beginning
of Period |   | Additions
Charged
to
Costs and
Expenses |  | Write-Offs |     | Balance
at
End
of Period
|--------------------------- | ------------------------------- | ------------------------------ | - | --------------------------------------- |  | ---------- | --- | ------------------------
|
|Year ended July 31, 2000:   |                                 |                                |   |                                         |  |            |     |                         
|                            | Allowance for doubtful accounts |                                | $ | 80                                      |  | $          | 54  |                         
|                            |                                 |                                |   |                                         |  |            |     |                         
|Year ended July 31, 2001:   |                                 |                                |   |                                         |  |            |     |                         
|                            | Allowance for doubtful accounts |                                | $ | 134                                     |  | $          | 350 |                         
|                            |                                 |                                |   |                                         |  |            |     |                         
|Period ended June 30, 2002: |                                 |                                |   |                                         |  |            |     |                         
|                            | Allowance for doubtful accounts |                                | $ | 299                                     |  | $          | 47  |                         
|                            |                                 |                                |   |                                         |  |            |     |                         

65

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EXHIBIT INDEX

|      |  |                                                                                                                                                                          |  | Incorporated by Reference |  |          
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- |  | ---------
|
|
|3.1   |  | Restated Certificate of Incorporation, as filed with the Delaware Secretary of State on February 14, 2000.                                                               |  | S-1                       |  | 333-90253
|3.2   |  | Certificate of Designations specifying the terms of the Series A Junior Participating Preferred Stock, as filed with the Delaware Secretary of State on August 12, 2002. |  | 8-A                       |  |          
|3.3   |  | Amended and Restated Bylaws, adopted as of February 2000.                                                                                                                |  |                           |  |          
|3.4   |  | Amendments to Bylaws, adopted in December 2001 and August 2002.                                                                                                          |  |                           |  |          
|4.1   |  | Rights Agreement dated August 9, 2002 between Vicinity Corporation and American Stock Transfer and Trust Company, as Rights Agent.                                       |  | 8-A                       |  |          
|4.2   |  | Specimen common stock certificate.                                                                                                                                       |  | S-1                       |  | 333-90253
|10.1  |  | 1995 Stock Option Plan.                                                                                                                                                  |  | S-1                       |  | 333-90253
|10.2  |  | 1996 Incentive Stock Option Plan.                                                                                                                                        |  | S-1                       |  | 333-90253
|10.3  |  | 2000 Equity Participation Plan.                                                                                                                                          |  | S-1                       |  | 333-90253
|10.4  |  | 2000 Employee Stock Purchase Plan.                                                                                                                                       |  | S-1                       |  | 333-90253
|10.5  |  | Form of 1996 Incentive Stock Option Plan Stock Option Agreement.                                                                                                         |  | S-1                       |  | 333-90253
|10.6  |  | Form of Indemnification Agreement entered into between Vicinity Corporation and executive officers and directors of Vicinity Corporation.                                |  | S-1                       |  | 333-90253
|10.7  |  | Offer of Employment Letter, dated December 5, 2001, between Vicinity Corporation and Charles Berger.                                                                     |  | 8-K                       |  |          
|10.8  |  | Non-Statutory Stock Option Agreement dated as of December 10, 2001 between Vicinity Corporation and Charles W. Berger.                                                   |  | S-8                       |  | 333-83526
|10.9  |  | Offer of Employment Letter, dated December 30, 2000, between Vicinity Corporation and Maury Austin.                                                                      |  | 10-Q                      |  |          
|10.10 |  | Offer of Employment Letter, dated May 21, 2002, between Vicinity Corporation and Steven Weinstein.                                                                       |  |                           |  |          
|      |  |                                                                                                                                                                          |  |                           |  |          

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|10.11 |   | Executive Employment Agreement, dated April 30, 2002, between Vicinity Corporation and J. Daniel Shaver.                                                                                                                                 |  | 10-Q |  |           |  | 10.47 |  | 06/12/02 |  | 
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | --------- |  | ----- |  | -------- |  | 
|10.12 |   | Executive Employment Agreement, dated February 12, 2002, between Vicinity Corporation and Teri Dahlbeck.                                                                                                                                 |  | 10-Q |  |           |  | 10.46 |  | 3/13/02  |  | 
|10.13 |   | Letter Agreement, dated April 24, 2001, by and between Vicinity Corporation and Norman Nie.                                                                                                                                              |  | 10-Q |  |           |  | 10.38 |  | 6/14/01  |  | 
|10.14 |   | Executive Employment Agreement, dated April 24, 2001, between Vicinity Corporation and Tim McMullen.                                                                                                                                     |  | 10-Q |  |           |  | 10.39 |  | 6/14/01  |  | 
|10.15 |   | Executive Employment Agreement, dated April 30, 2001, between Vicinity Corporation and Daniel M. Shapero.                                                                                                                                |  | 10-Q |  |           |  | 10.40 |  | 6/14/01  |  | 
|10.16 |   | Amended and Restated Registration and Information Rights Agreement, dated as of December 9, 1998, among Vicinity Corporation and Rama Aysola, Eddie Babcock, Timothy Bacci, James DiSanto and the investors named in Schedule I
thereto. |  | S-1  |  | 333-90253 |  | 10.5  |  | 11/03/99 |  | 
|10.17 |   | Lease Agreement, dated February 25, 2000, between Vicinity Corporation and San Aleso, LLC.                                                                                                                                               |  | 10-Q |  |           |  | 10.29 |  | 6/13/00  |  | 
|10.18 |   | Lease Agreement, dated August 10, 1999, between Vicinity Corporation and Gordon E. and Blanche M. Bagley.                                                                                                                                |  | S-1  |  | 333-90253 |  | 10.25 |  | 11/03/99 |  | 
|10.19 |   | Master Lease and Financing Agreement dated July 27, 1999, between Vicinity Corporation and Compaq.                                                                                                                                       |  | S-1  |  | 333-90253 |  | 10.16 |  | 12/17/99 |  | 
|10.20 |   | Capital Lease Agreement dated April 24, 1996, between Vicinity Corporation and Pacific Atlantic.                                                                                                                                         |  | S-1  |  | 333-90253 |  | 10.17 |  | 12/17/99 |  | 
|10.21 |  | Master Agreement dated January 11, 2000, between Vicinity Corporation and AltaVista Company.                                                                                                                                             |  | S-1  |  | 333-90253 |  | 10.28 |  | 2/07/00  |  | 
|10.22 |   | Management Support Agreement dated July 27, 1999, between Vicinity Corporation and Invision AG.                                                                                                                                          |  | S-1  |  | 333-90253 |  | 10.15 |  | 11/03/99 |  | 
|10.23 |  | Joint Marketing Agreement dated June 23, 1999, between Vicinity Corporation and Prio, Inc.                                                                                                                                               |  | S-1  |  | 333-90253 |  | 10.18 |  | 11/03/99 |  | 
|10.24 |  | Service and Distribution Agreement, dated June 14, 1999, between Vicinity Corporation and Inktomi Corporation.                                                                                                                           |  | S-1  |  | 333-90253 |  | 10.19 |  | 11/03/99 |  | 
|      |   |                                                                                                                                                                                                                                          |  |      |  |           |  |       |  |          |  | 

67

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|10.25 |  | Management Support Agreement, dated June 11, 1999, between Vicinity Corporation and Aperto Multimedia GmbH.                                       |  | S-1 |  | 333-90253 |  | 10.14 |  | 11/03/99 |  |  
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------- |  | --- |  | --------- |  | ----- |  | -------- |  | -
|10.26 |  | NaviSite Siteharbor Co-Location Services Agreement, dated June 30, 1998, between Vicinity Corporation and NaviSite Internet Services Corporation. |  | S-1 |  | 333-90253 |  | 10.20 |  | 11/03/99 |  |  
|23.1  |  | Consent of Independent Auditors.                                                                                                                  |  |     |  |           |  |       |  |          |  | X
|24.1  |  | Power of Attorney (included on signature page).                                                                                                   |  |     |  |           |  |       |  |          |  | X
|99.1  |  | Certification of Chief Executive Officer.                                                                                                         |  |     |  |           |  |       |  |          |  | X
|99.2  |  | Certification of Chief Financial Officer.                                                                                                         |  |     |  |           |  |       |  |          |  | X

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