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UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A



Amendment No. 1



|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------



For the year ended October 31, 2002



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



Commission file number: 0-29757



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VERSATA, INC.

(Exact name of registrant as
specified in its charter)



|Delaware                                                       |  | 68-0255203                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



300
Lakeside Drive Suite 1500 Oakland, CA 94612 (510) 238-4100

(Address including zip code, of principal executive offices
and

Registrants telephone number including area code)



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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



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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. Yes x 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. x





Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ̈No x





The aggregate market value of voting stock held by
non-affiliates of the registrant as of April 30, 2002, was $12,017,824 based on the last reported sale price of the registrants common stock as reported by the NASDAQ National Market for the last trading day prior to that date.



On January 15, 2003, 7,374,435 shares of the registrants
common stock were outstanding.



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EXPLANATORY
NOTE



This Form 10-K/A is being filed to
include the information required by Part III and IV.



PART III



Item
10.Directors and Executive Officers of the Registrant



The following table sets forth certain information regarding our Named Executive Officers and other officers and directors.



|Name                       |  | Age |  | Position                                                       
|-------------------------- |  | --- |  | ---------------------------------------------------------------
|Eugene Wong (3)            |  | 68  |  | Chief Executive Officer, Director                              
|James A. Doehrman          |  | 45  |  | Executive Vice President, Chief Operating and Financial Officer
|Tim Child                  |  | 48  |  | Vice President, Engineering and Product Management             
|Val Huber                  |  | 53  |  | Chief Technology Officer                                       
|Rahul Patel                |  | 38  |  | Chief Architect and Product Strategy Officer                   
|Rocco Quaglietti           |  | 50  |  | Vice PresidentSales, Americas                                 
|Gary Morgenthaler(1)(2)(4) |  | 54  |  | Chairman of the Board                                          
|Robert Davoli(1)( 2)(5)    |  | 54  |  | Director                                                       
|Kanwal Rekhi(1)(2)(3)      |  | 57  |  | Director                                                       
|William Smartt (1)(5)      |  | 60  |  | Director, Chairman of the Audit Committee                      

---

|(1) |  | Member of Audit Committee.
|--- |  | --------------------------

|(2) |  | Member of Compensation Committee.
|--- |  | ---------------------------------

|(3) |  | Term of office expires at 2003 Annual Meeting of Stockholders. Mr. Rekhi is not up for re-election at the Annual Meeting.
|--- |  | -------------------------------------------------------------------------------------------------------------------------

|(4) |  | Term of office expires at 2004 Annual Meeting of Stockholders.
|--- |  | --------------------------------------------------------------

|(5) |  | Term of office expires at 2005 Annual Meeting of Stockholders.
|--- |  | --------------------------------------------------------------



Eugene Wong. Dr. Wong has served as a director of Versata since May 1998, and as Versatas Chief
Executive Officer since May 2002. Since 1997, Dr. Wong has served as a technical consultant and chief scientist to Versata. Dr. Wong has served as Professor Emeritus at the University of California on assignment with the National Science Foundation
since June 1998. Dr. Wong acted as Associate Director of the office of Science and Technology Policy in the Bush White House from 1990 to 1993. Dr. Wong holds a B.S.E., an A.M., and a Ph.D., all in Electrical Engineering, all from Princeton
University.



James A. Doehrman. Mr. Doehrman
serves as Versatas Executive Vice President, Chief Operating and Financial Officer. Mr. Doehrman joined Versata in February 2001 as Executive Vice President and Chief Financial Officer and was appointed as Chief Operating Officer in March
2001. From June 2000 through February 2001, Mr. Doehrman served as Executive Vice President, Chief Administrative Officer and Treasurer at E.piphany, Inc. From January 2000 through May 2000, Mr. Doehrman was Senior Vice President and Chief Financial
and Administrative Officer at Octane Software, a web-centric customer relationship management software company that merged with E.piphany in May 2000. From July 1997 to January 2000 Mr. Doehrman was the Vice President and Chief Financial Officer of
technology publisher IDG Books Worldwide. Mr. Doehrmans previous experience includes over 18 years of progressive management, financial and operational assignments with companies like Simon & Schuster, Federated Department Stores and
Arthur Andersen & Co. Mr. Doehrman holds a B.A. degree from Southern Methodist University. He is also a Certified Public Accountant.



Tim Child. Mr. Child joined Versata in November of 2002 as Vice President of Engineering and Product Management. Prior to joining Versata,
from November 2001 to November 2002, Mr. Child provided technical consulting to various companies. From April 2001 to November 2001, Mr. Child was Chief Technology Officer for Telamon, a subsidiary of Vytek, a company providing wireless data
applications. From October 2000 to March 2001, Mr. Child served as Vice President, Engineering at Quios a wireless data applications company in San Francisco. From January 1996 through November 1999, Mr. Child held various strategic positions at
Informix, including Senior Vice President  Research and Development. From November 1994 to January 1996, Mr. Child served as Director of Software Development for Illustra Inc., a company which developed advanced object-relation database
management systems. Mr. Child earned a degree in Materials Science from Imperial College, University of London in 1977.





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Val Huber. Mr.
Huber joined Versata in 1995 as Vice President of Product Management and currently serves as Versatas Chief Technology Officer. Prior to joining Versata, from 1989 to 1994, Mr. Huber served as a lead architect on various technology projects at
Sybase. Prior to working with Sybase, from 1980 to 1989, Mr. Huber served as Director of Business Computer Systems at Wang Labs. Mr. Huber holds a B.A. in Chemistry from Vanderbilt University.



Rahul Patel. Mr. Patel serves as Versatas Chief
Architect and Product Strategy Officer Mr. Patel joined Versata in 1995 as a Lead Engineer. Mr. Patel was promoted to Director of Research and Development and the Lead Architect for Versata in 1998, prior to becoming the Vice President of Research
and Development in June 2000. He assumed his current role in November 2002. Before joining Versata, from December 1990 to April 1992, Mr. Patel was a Senior Software Engineer for Sun Microsystems. From 1992 to January 1995, Mr. Patel was a Lead
Engineer in the advanced tools technology group for Sybase. Mr. Patel holds a Master of Science degree in Computer Engineering from the University of Florida in Gainesville. He also holds a Bachelor of Science degree in Engineering from Gujarat
University in Ahmedabad, India.



Rocco
Quaglietti. Mr. Quaglietti joined Versata in January 2000 as Vice President of Channel Sales. In October 2001, Mr. Quaglietti was promoted to Vice PresidentSales, Americas. Prior to joining Versata, from October 1997 to December 1999 Mr.
Quaglietti was Vice President of Sales at Cloudscape, producer of a Java-based Object Relational Database Management System. Mr. Quaglietti was Director of Channels Sales at Pilot Software from October 1995 through September 1997. Mr. Quaglietti
also served as Director of Channel Sales at Ingres for 6 years. Mr. Quaglietti previous experience includes over 10 years of sales with companies like GEISCO and Pansophic Systems. Mr. Quaglietti holds a BS degree from North Adams State College and
an MBA from Golden Gate University.



Gary
Morgenthaler. Mr. Morgenthaler has served as a director of Versata since 1997. Mr. Morgenthaler is a general partner of Morgenthaler Ventures. Mr. Morgenthaler is a co-founder and former Chairman of Illustra Information Technologies, Inc., a
database applications Company. Prior to becoming a partner of Morgenthaler Ventures, Mr. Morgenthaler was Chairman, Chief Executive Officer and a co-founder of Ingres, a relational database management systems company. Mr. Morgenthaler is a director
of Catena Networks, Nuance Communications, Westwave, and Yotta Networks. Mr. Morgenthaler holds a B.A. in International Relations from Harvard University.



Robert Davoli. Mr. Davoli has served as a director of Versata since November 1999. Prior to becoming a director, Mr. Davoli served as a
technical consultant to Versata from 1995. Since November 1995, Mr. Davoli has served as a general partner at Sigma, a venture capital firm. From February 1993 to September 1994, Mr. Davoli served as President and Chief Executive Officer of Epoch
Systems, a software vendor. Previous to working with Epoch Systems, Mr. Davoli served as President and Chief Executive Officer of SQL Solutions, a services and tools provider for the relational database market. From 1990 to 1992, Mr. Davoli served
as an executive officer of Sybase. Mr. Davoli is a director of Internet Security Systems, Inc., StorageNetworks, Inc., and Vignette Corporation. Mr. Davoli holds a B.A. in History from Ricker College and studied Computer Science at Northeastern
University for two years.



William Smartt. Mr.
Smartt was elected to Versatas Board in February 2003. From 1992 until September 2001, Mr. Smartt served as executive vice president, chief financial officer and chief administrative officer at DHL Airways, the US component of DHL Worldwide
Express. From 1986 until 1990, Mr. Smartt served as CFO, treasurer, and senior vice president of finance and administration for Ingres Corporation, a relational data base software company. Mr. Smartt has over 35 years of industry experience and he
holds a Bachelor of Science in Business Administration from the University of California, Berkeley.



Kanwal Rekhi. Mr. Rekhi has served as a director of Versata since 1995. Since 1994, Mr. Rekhi has been a mentor to and investor in
early-stage technology companies. From March 1998 to September 1998, Mr. Rekhi served as Chief Executive Officer and Chairman of the Board of Cybermedia, a software Company. Prior to 1994, Mr. Rekhi served as Executive Vice President and Chief
Technology Officer at Novell, Inc. From 1989 to 1995 Mr. Rekhi also served as a director of Novell. Mr. Rekhi holds an M.S. in Electrical Engineering from Michigan Technical University and a degree in Electrical Engineering from the Indian Institute
of Technology in Bombay.



Item
11.Executive Compensation



Summary of Cash and Certain Other Compensation



The following table sets forth the compensation for the three most recent completed fiscal years of (i) each person that served as our Chief Executive Officer during the fiscal year ended October 31, 2002, and (ii) our four
other most highly compensated executive officers whose aggregate cash compensation exceeded $100,000 during the year ended October 31, 2002. These officers are referred to herein as the Named Executive Officers.





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Annual
compensation listed in the following table excludes other compensation in the form of perquisites and other personal benefits that constitutes the lesser of $50,000 or 10% of the total annual salary and bonus of each of the Named Executive Officers
in the fiscal year ended October 31, 2002. The options listed in the following table were granted under our 2000 Stock Incentive Plan.



|                            |  | Annual Compensation |     |  | Long-Term Compensation |         |     |      
|--------------------------- |  | ------------------- | --- |  | ---------------------- | ------- | --- | -----
|                            |  |                     |     |  |                        |         |     |      
|Name and Principal Position |  | Year                |     |  | Salary                 |         |     | Bonus
|Eugene Wong                 |  | 2002                |     |  | $                      | 102,000 |     |      
|Chief Executive Officer     |  | 2001                | (1) |  |                        |        |     |      
|                            |  | 2000                |     |  |                        |        |     |      
|                            |  |                     |     |  |                        |         |     |      
|Douglas L. Roberts          |  | 2002                |     |  | $                      | 128,125 | (2) |      
|Former Chief Executive      |  | 2001                | (1) |  | $                      | 217,800 |     |      
|Officer                     |  | 2000                |     |  |                        |        |     |      
|                            |  |                     |     |  |                        |         |     |      
|James A. Doehrman           |  | 2002                |     |  | $                      | 190,000 | (2) |      
|Chief Operating Officer,    |  | 2001                | (1) |  | $                      | 145,500 |     |      
|Chief Financial Officer     |  | 2000                |     |  |                        |        |     |      
|and Secretary               |  |                     |     |  |                        |         |     |      
|                            |  |                     |     |  |                        |         |     |      
|Val Huber                   |  | 2002                |     |  | $                      | 166,250 | (2) |      
|Chief Technology            |  | 2001                | (1) |  | $                      | 140,800 |     |      
|Officer                     |  | 2000                |     |  | $                      | 155,000 |     |      
|                            |  |                     |     |  |                        |         |     |      
|                            |  |                     |     |  |                        |         |     |      
|Rahul Patel                 |  | 2002                |     |  | $                      | 166,250 | (2) |      
|Chief Architect and         |  | 2001                | (1) |  | $                      | 140,800 |     |      
|Product Strategy Officer    |  | 2000                |     |  | $                      | 140,000 |     |      
|                            |  |                     |     |  |                        |         |     |      
|Rocco Quaglietti            |  | 2002                |     |  | $                      | 142,500 | (2) |      
|Vice President, Sales       |  | 2001                | (1) |  | $                      | 122,099 |     |      
|Americas                    |  | 2000                |     |  | $                      | 113,750 |     |      

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|(1) |  | Represents the transition period from January 1, 2001 to October 21, 2001 (Transition Period).
|--- |  | ------------------------------------------------------------------------------------------------

|(2) |  | Our management team took a 10% pay reduction for six months in the fiscal year ended October 31, 2002. The salary shown represents amount paid after the 10% salary
reduction.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Represents amounts paid in connection with the grant of restricted stock and as a retention measure for our Named Executive Officers. in April 2001, we paid the
Named Executive Officers a bonus to cover the estimated personal income tax impact of making an IRS Code Section 83b election following the grant of the restricted shares. At that time we determined that this plan was a preferable form of executive
retention than if the company had issued a comparable number of options, in lieu of restricted stock, to the Named Executive Officers and then advanced them funds to early exercise the options, which has been a practice for executive
retention in the industry, but which, in hindsight, in our opinion it is generally an ineffective form of executive retention.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Represents the grant of restricted common stock. In order to calculate the aggregate value of the shares in the table, we used the closing price of our common stock
as traded on the Nasdaq National Market on April 16, 2001, the grant date. Each officer received 2 grants of restricted shares of common stock, which are subject to our repurchase right. The first grants vest over a period of 50 months, with 12.5%
of the shares vesting six months from the date of issuance (April 16, 2001), and the balance vesting in equal monthly installments thereafter. The second grants vest as follows: 25% of the shares vest six months from the date of issuance, another
25% vest one year from the date of issuance and the balance vest monthly over the next 12 months. Mr. Roberts received 125,000 post split shares of common stock, which had an aggregate value of $307,500 as of October 31, 2001. Mr. Doehrman received
125,000 post split shares of common stock, which had an aggregate value of $307,500 as of October 31, 2001 and which have an aggregate value of $133,750 at October 31, 2002. Mr. Huber received 33,333 shares of common stock, which had an aggregate
value of $82,000 as of October 31, 2001 and which have an aggregate value of $35,666 at October 31, 2002. Mr. Patel received 33,333 shares of common stock, which had an aggregate value of $82,000 as of October 31, 2001 and which have an aggregate
value of $35,666 at October 31, 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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|(5) |  | All the options granted in the Transition Period were cancelled. On April 16, 2001, the Compensation Committee of our Board of Directors approved an Equity Incentive
Program (EIP) to retain the services of the Executive Officers essential to the Companys future financial success. Under the terms of the EIP, certain officers of the Company were given the opportunity to exchange certain
underwater outstanding unexercised options for a restricted share grant. As a condition to participation in the EIP, all stock options granted after October 16, 2000 were replaced by a restricted share grant. The purchase price of the
restricted stock was $0.006 per share.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Options granted in fiscal year ended October 31, 2002 as more fully set forth below in this item under the Section entitled Options Granted in Fiscal Year
2002.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Granted an option to purchase up to 1,666 shares on February 9, 2001. As of October 31, 2002, 300 shares were vested. The remaining 1,366 shares vest monthly through
March 1, 2006. Granted an option to purchase up to 13,749 shares on April 6, 2001. As of October 31, 2002, 10,314 shares were vested. The remaining 3,435 shares vest monthly through April 6, 2003. Granted an option to purchase up to 1,666 shares on
September 6, 2001. As of October 31, 2002, 833 shares were vested. One half of the remaining 833 shares vest on March 6, 2003 and the balance vests on September 6, 2003.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | Granted on January 3, 2000. As of October 31, 2002, 12,132 shares were vested. The remaining 4,533 shares vest monthly through March 3, 2004.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

|(9) |  | Mr. Doehrmans offer letter provided him with a guaranteed bonus of $20,000 per quarter. During 2001, in order to conserve the Companys cash, Mr. Doehrman
voluntarily waived, $50,000 of the 2001 guaranteed bonus. For 2002, Mr. Doehrman waived $30,000 of his guaranteed quarterly bonus.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) |  | This amount includes severance of $114,583 paid to Doug Roberts in accordance with Executive Severance Agreement issued in April 2001, and relocation
expense reimbursement of $15,511. Mr. Roberts served as the Companys president and chief executive officer from October 2001 until his resignation in May 2002.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Option Grants in Fiscal Year 2002



The following table sets forth information regarding option grants to each of the Named Executive Officers
during the year ended October 31, 2002. No stock appreciation rights were granted to the Named Executive Officers during the fiscal year.



Stock Option Grants in the year Ended October 31, 2002



|                 |  | Individual Grants                       |     |  |                                               |  |                |  |            |  |                                                                                                |       
|---------------- |  | --------------------------------------- | --- |  | --------------------------------------------- |  | -------------- |  | ---------- |  | ---------------------------------------------------------------------------------------------- | ------
|                 |  | Number of Securities Underlying Options |     |  | Percent of Total Options Granted to Employees |  | Exercise Price |  | Expiration |  | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for
Option Term
|Name             |  | Granted(#)                              |     |  | in 2002                                       |  | ($/share)      |  | Date       |  | 0%($)                                                                                          |       
|Eugene Wong      |  | 100,000                                 | (1) |  | 16.2                                          |  | 1.56           |  | 05/16/2012 |  | $                                                                                              | 66,000
|Douglas Roberts  |  | 2,264                                   | (2) |  | < 1                                           |  | 5.52           |  | 01/11/2012 |  |                                                                                                | N/A   
|James Doehrman   |  | 1,811                                   | (3) |  | < 1                                           |  | 5.52           |  | 01/11/2012 |  |                                                                                                | N/A   
|James Doehrman   |  | 50,000                                  | (4) |  | 8.1                                           |  | .93            |  | 07/16/2012 |  |                                                                                                | N/A   
|Val Huber        |  | 1,585                                   | (3) |  | < 1                                           |  | 5.52           |  | 01/11/2012 |  |                                                                                                | N/A   
|Rahul Patel      |  | 1,585                                   | (3) |  | < 1                                           |  | 5.52           |  | 01/11/2012 |  |                                                                                                | N/A   
|Rocco Quaglietti |  | 8,333                                   | (5) |  | 1.4                                           |  | 2.16           |  | 11/12/2011 |  |                                                                                                | N/A   
|Rocco Quaglietti |  | 1,358                                   | (3) |  | < 1                                           |  | 5.52           |  | 01/11/2012 |  |                                                                                                | N/A   
|Rocco Quaglietti |  | 30,000                                  | (4) |  | 4.8                                           |  | .93            |  | 07/16/2012 |  |                                                                                                | N/A   

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|(1) |  | Options were granted on May 16, 2002 when Eugene Wong became our interim Chief Executive Officer. The grant vests monthly over 24 months.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The options granted to Mr. Roberts were cancelled upon the termination of his severance agreement on November 18, 2002. Mr. Roberts served as the Companys
president and chief executive officer from October 2001 until his resignation in May 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Granted on January 11, 2002. The grants vest monthly over six months.
|--- |  | ---------------------------------------------------------------------

|(4) |  | Granted on July 16, 2002. The grant vests monthly over 24 months.
|--- |  | -----------------------------------------------------------------

|(5) |  | Granted on November 12, 2001. The grant vests over one year with 50% of the shares vesting six months from the date of issuance and the balance vesting one year from
the date of issuance.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In 2002, we
granted options to purchase up to a total of 615,749 shares to employees under our 2000 Stock Incentive Plan at exercise prices equal to the fair market value of our common stock on the date of grant, as determined by the closing price of our common
stock as traded on the Nasdaq National Market.





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Option Exercises in the
fiscal year and Option Values as of October 31, 2002



The following table sets forth information concerning the number and value of shares of common stock underlying the unexercised options held by the Named Executive Officers as of October 31, 2002. The table also sets forth the value
realized upon the exercise of stock options during the period which is calculated based on the fair market value of our common stock on the date of exercise, as determined by the closing price of our common stock as traded on the Nasdaq National
Market, less the exercise price paid for the shares. The value of unexercised in-the-money options represents the positive spread between the exercise price of the stock options and the fair market value of our common stock as of October 31, 2002,
which was $1.07 per share. No stock appreciation rights were exercised during the fiscal year and no stock appreciation rights were outstanding as of October 31, 2002.



Aggregated Option Exercises in fiscal 2002 and

Option Values at October 31, 2002



|                 |  |                                 |  |                      |  | Number of Securities Underlying Unexercised Options at Year-End(#) |  | Value of Unexercised In-the-Money Options at Year-End($)(2)
|---------------- |  | ------------------------------- |  | -------------------- |  | ------------------------------------------------------------------ |  | -----------------------------------------------------------
|Name             |  | Shares Acquired on Exercise (#) |  | Value Realized($)(1) |  | Exercisable                                                        |  | Unexercisable                                              
|Eugene Wong      |  |                                |  |                     |  | 27,598                                                             |  | 89,768                                                     
|Douglas Roberts  |  |                                |  |                     |  | 2,264                                                              |  |                                                           
|Jim Doehrman     |  |                                |  |                     |  | 8,061                                                              |  | 43,750                                                     
|Val Huber        |  |                                |  |                     |  | 7,835                                                              |  |                                                           
|Rahul Patel      |  |                                |  |                     |  | 7,418                                                              |  |                                                           
|Rocco Quaglietti |  |                                |  |                     |  | 32,853                                                             |  | 40,584                                                     

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|(1) |  | Calculated by multiplying the number of shares acquired on exercise by the difference between the fair market value of the shares on the date of exercise and the
exercise price.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Calculated by determining the difference between the fair market value of our common stock as of October 31, 2002 and the exercise price of the option.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



Severance Agreements, and Employment
Agreements, and Change in Control Agreements with Named Executive Officers



In April 2001, we entered into severance agreements with our Named Executive Officers (the Executive Severance Agreement). The Company has not entered into a severance agreement with Eugene
Wong. The Executive Severance Agreement provides for certain benefits including the payment of equivalent of either 3 or 6 months base salary and an additional 3 or 6 months of vesting of options, if the Named Executive Officers employment
with Versata is involuntarily terminated without cause, if the Named Executive Officer resigns from Versata due to an involuntary change in the Named Executive Officers position, or if the Named Executive Officers employment with the
Company is involuntarily terminated without cause after a change in control of the Company. Additionally, in April 2001 we entered into a Restricted Stock Issuance Agreement with Messrs. Douglas Roberts, Jim Doehrman, Val Huber and Rahul Patel. The
Restricted Stock Issuance Agreement provides for one hundred percent (100%) accelerated vesting of restricted stock if the Named Executive Officers employment with the Company is involuntarily terminated without cause after a change in control
of the Company.



Compensation Committee Interlocks and Insider
Participation



The Compensation Committee of
the Board of Directors was formed in July 1998, and the current members of the Compensation Committee are Messrs. Morgenthaler, Feddersen and Rekhi. None of the members of the compensation committee of the Board of Directors was at any time since
the formation of Versata an officer or employee of Versata. No executive officer serves as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or our
compensation committee of the Board of Directors.





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Item 12.Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters



PRINCIPAL STOCKHOLDERS



The table below sets forth information regarding the beneficial ownership of our common stock as of December 31, 2002 by the following individuals or groups:



| |  |  | each person or entity who is known by us to own beneficially more than 5% of our outstanding stock;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | each of the named executive officers appearing in the Summary Compensation table above (the Named Executive Officers);
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | each of our directors; and
| | - |  | --------------------------



| |  |  | all directors and Named Executive Officers as a group.
| | - |  | ------------------------------------------------------



Each stockholders percentage ownership in the following table is based on 7,374,435 shares of common stock outstanding as of
December 31, 2002. Unless otherwise indicated, the principal address of each of the stockholders below is c/o Versata, Inc., 300 Lakeside Drive, Suite 1500, Oakland, California 94612. Except as otherwise indicated, and subject to applicable
community property laws, except to the extent authority is shared by both spouses under applicable law, we believe the persons named in the table have sole voting and investment power with respect to all shares of common stock held by them.



|Name of Beneficial Owner                        |  | Shares Owned |  | Shares Acquirable within 60 Days of December 31, 2002 |  | Percentage of Shares Beneficially Owned |  
|----------------------------------------------- |  | ------------ |  | ----------------------------------------------------- |  | --------------------------------------- | -
|Morgenthaler Venture Partners IV, L.P. (1)      |  | 953,125      |  |                                                      |  | 12.9                                    | %
|Sigma Management V, LLC (2)                     |  | 864,807      |  |                                                      |  | 11.7                                    | %
|Douglas Roberts (3)                             |  | 71,856       |  |                                                      |  | 1                                       | %
|Eugene Wong (4)                                 |  | 36,813       |  | 48,865                                                |  | 1.2                                     | %
|James Doehrman (5)                              |  | 125,000      |  | 16,394                                                |  | 1.9                                     | %
|Val Huber (6)                                   |  | 101,739      |  | 7,835                                                 |  | 1.5                                     | %
|Rahul Patel (7)                                 |  | 62,191       |  | 7,418                                                 |  | *                                       |  
|Timothy Child                                   |  |             |  |                                                      |  | *                                       |  
|Kanwal Rekhi (8)                                |  | 109,758      |  | 8,000                                                 |  | 1.6                                     | %
|William Smartt                                  |  |             |  |                                                      |  | *                                       |  
|Robert Davoli (9) (2)                           |  | 905,017      |  | 5,500                                                 |  | 12.3                                    | %
|Gary Morgenthaler (1)(10)                       |  | 955,891      |  | 8,000                                                 |  | 13.1                                    | %
|All directors and executive officers as a group |  | 2,368,265    |  | 102,012                                               |  | 33.0                                    | %
|(10 people)                                     |  |              |  |                                                       |  |                                         |  

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|* |  | Less than 1%
|- |  | ------------

|1. |  | Principal address is 2730 Sand Hill Road, Suite 280, Menlo Park, CA 94025. Includes 500 shares held by Morgenthaler Management Partners. Mr. Morgenthaler disclaims
beneficial ownership of all of the 953,125 shares except to the extent of his pecuniary interest in these shares. The general partner of Morgenthaler Venture Partnership IV, L.P. is Morgenthaler Management Partners IV, L.P. The general partners of
Morgenthaler Management Partners IV, L.P. are Gary Morgenthaler, a director of Versata, J. Morgenthaler, Robert Pavey, Robert Bellas, Jr., and John Lutsi, who have dispositive and voting powers with respect to the shares held by Morgenthaler Venture
Partnership IV, L.P.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Principal address is 1600 El Camino Real, Suite 280, Menlo Park, CA 94025.
|-- |  | --------------------------------------------------------------------------

|3. |  | Mr. Roberts served as the Companys president and chief executive officer from October 2001 until his resignation in May 2002.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------

|4. |  | Shares held in the Wong Family Trust of which Eugene Wong is a Trustee.
|-- |  | -----------------------------------------------------------------------

|5. |  | Includes 52,945 shares of common stock subject to the Companys right of repurchase.
|-- |  | ------------------------------------------------------------------------------------

|6. |  | Includes 12,691 shares of common stock subject to the companys right of repurchase.
|-- |  | ------------------------------------------------------------------------------------

|7. |  | Includes 12,691 shares of common stock subject to the Companys right of repurchase.
|-- |  | ------------------------------------------------------------------------------------

|8. |  | Includes 71,556 shares held by the Rekhi Family Trust, 10,351 shares held by the Benjamin Rekhi Trust and 10,351 shares of the Raj-Ann Kaur Rekhi Trust of which Mr.
Rekhi is a trustee. Mr. Rekhi disclaims beneficial ownership except to the extent of his pecuniary interest in these shares.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. |  | Includes 864,807 shares held by entities affiliated with Sigma Partners. Mr. Davoli disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest in these shares.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. |  | Includes 2,766 shares of common stock held by Mr. Morgenthaler in his personal 401(K) account.
|--- |  | ----------------------------------------------------------------------------------------------





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Item
13.Certain Relationships and Related Transactions



The following is a description of transactions since January 1, 2000 to which we have been a party and in which the amount involved
exceeded $60,000 with any director, executive officer, or security holder that we know owns more than five percent of our capital stock had or will have a direct or indirect material interest.



During 2000, we held a $1 million investment in the preferred
stock of TruMarkets, Inc., a privately held corporation. Our Chairman of the Board of Directors held a membership interest in the general partner of a partnership that owned a controlling interest in the outstanding capital stock of TruMarkets, Inc.
In January 2001, we provided the investee with a $500,000 bridge loan. As of December 31, 2000, the investee was in the process of developing its products and was actively negotiating with third parties for additional financing to fund its
operations. During March 2001, the investees attempts to obtain additional financing failed and the investee began efforts to sell the company. The $500,000 loan was recorded in restructuring and other expenses in the first quarter of fiscal
2001. In June 2001, TruMarkets, Inc. was acquired by MortgageSight Holding LLC (MortgageSight) and our investment and loan were converted to 22,122 shares of preferred stock, or less than 1% of MortgageSight. MortgageSight has
subsequently ceased its operations; therefore, no amount has been recorded on the balance sheet.



In November 1999, our former Chief Financial Officer, Kevin Ferrell, delivered a full-recourse promissory note to us in payment for 100,000 shares of Series F preferred stock. The principal amount
secured under the note was $556,000. The note bore interest at the rate of 7.00% per annum, compounded annually, and was secured by the purchased shares. The principal balance would become due and payable in one lump sum on the third anniversary of
the signing of the note (November 2002). In 2000, Mr. Ferrell paid down approximately $103,000 in principal and $35,000 in interest towards this note.



In December 1999, Mr. Ferrell delivered a full-recourse promissory note to us in payment of the exercise price of 400,000 outstanding
stock options under our 1997 stock option plan. The principal amount secured under the note was $1.2 million. In 2000, Mr. Ferrell paid down $84,000 approximately in interest towards this note. Mr. Ferrell resigned in February 2001. In February
2001, we exercised our right to repurchase 240,000 unvested shares of Mr. Ferrells 400,000 option shares. We paid par value to repurchase the shares, which reduced the principal amount of the note by $720,000. The offset to the reduction in
the note was recorded as a reduction in paid in capital.



In October 2001, we wrote down $632,000 in principal in connection with both of Mr. Ferrells notes. In April 2002, we cancelled both promissory notes and related accrued interest of $301,000 in exchange for a pledge of 260,000
shares of our Companys common stock owned by Mr. Ferrell. On that date, the fair market value of the 260,000 shares was $109,000 and was recorded as treasury stock. We recorded $192,000 in restructuring and other expenses as a result of this
transaction.



In January 2000, Mr. Hewitt
delivered a full recourse promissory note to us in payment of the exercise price of stock options issued pursuant to our 1997 Stock Option Plan. The principal amount secured under the note was $1 million. The note had a term of three years and bore
interest at the rate of 7.00% per annum, compounded annually. The note was secured by the purchased shares and additional collateral. The entire unpaid balance of the note was due and payable upon termination of employment, failure to pay any
installment of principal or interest when due, or insolvency or bankruptcy, or in the event we are acquired. None of the shares serving as security for the note could have been sold unless the principal portion of the note attributable to those
shares and the accrued interest on that principal portion was paid to us. In December 2000, Mr. Hewitt delivered to us another full recourse promissory note in the amount of $375,000. The note was secured by shares of our common stock held by us for
the previous loan. The note was due and payable on January 31, 2002, and bore interest at the prime rate as reported in The Wall Street Journal from time to time and compounded annually. Accrued interest was due on each anniversary of the signing of
the note. Mr. Hewitt resigned in March 2001. In June 2001, in connection with Mr. Hewitts termination of employment, we cancelled both promissory notes and related accrued interest totaling $1.5 million in exchange for a pledge of 770,000
shares of our Companys common stock owned by the officer. On that date, the fair market value of the 770,000 shares was $919,000 and was recorded as treasury stock and $598,000 was included in restructuring and other expenses. In the first
quarter of fiscal 2002 the Company received $978,000 in cash from the sale of Mr. Hewitts shares held in escrow.



Item 14.Controls and Procedures



(a)    Evaluation of disclosure controls and procedures. Our chief executive officer and
our chief financial officer, after evaluating the effectiveness of the Companys disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date (the Evaluation
Date) within 90 days before the filing date of this annual report, have concluded that as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that material information relating to us and our
consolidated subsidiaries would be made known to them by others within those entities.



(b)    Changes in internal controls. There were no significant changes in our internal controls or to our knowledge, in other factors that could significantly affect our disclosure
controls and procedures subsequent to the Evaluation Date.







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PART IV



Item 15.    Exhibits, Financial Statement Schedules, and Reports On Form 8-K



(C) Exhibits.



|    
|----
|99.1
|    
|99.2





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SIGNATURES



Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 26, 2003.



VERSATA, INC./s/    EUGENE WONGEugene Wong Chief Executive Officer and Director/s/    JAMES DOEHRMANJames Doehrman Chief Operating Officer, Chief Financial
Officer, Secretary and Executive Vice President




|Date: |  | March 26, 2003
|----- |  | --------------



POWER OF ATTORNEY



KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eugene Wong and James Doehrman, and each of them, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K/A, and to file
the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or
his substitutes, may lawfully do or cause to be done by virtue thereof.



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|Name                                      |  | Title                                                                                          |  | Date          
|----------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | --------------
|                                         
|/s/    EUGENE WONGEugene Wong             |  | Chief Executive Officer and Director (Principal Executive Officer)                             |  | March 26, 2003
|                                         
|/s/    JAMES DOEHRMANJames Doehrman       |  | Executive Vice President, Chief Operating and Financial Officer (Principal Accounting
Officer) |  | March 26, 2003
|                                         
|/s/    GARY MORGENTHALERGary Morgenthaler |  | Chairman of the Board                                                                          |  | March 26, 2003
|                                         
|/s/    ROBERT DAVOLIRobert Davoli         |  | Director                                                                                       |  | March 26, 2003
|                                         
|/s/    KANWAL REKHIKanwal Rekhi           |  | Director                                                                                       |  | March 26, 2003







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CERTIFICATION OF CHIEF EXECUTIVE OFFICER

REQUIRED PURSUANT TO RULES 13A-14 OR

15-D14 OF THE 1934 SECURITIES EXCHANGE ACT



I, Eugene Wong, certify that:



1.    I have reviewed this annual report on Form 10-K/A of Versata, Inc.;



2.    Based on my knowledge, this annual
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 annual report;



3.    Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report.



4.    The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:



a)    designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;



b)    evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the
Evaluation Date); and



c)    presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;



5.    The registrants other
certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):



a)    all significant
deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, suarize and report financial data and have identified for the registrants auditors any material
weaknesses in internal controls; and



b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and



6.    The registrants other
certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and material weaknesses.



By:

/s/    EUGENE WONGEugene Wong Chief Executive Officer and Director




|Date: |  | March 26, 2003
|----- |  | --------------







---



CERTIFICATION OF CHIEF FINANCIAL OFFICER

REQUIRED PURSUANT TO RULES 13A-14 OR

15-D14 OF THE 1934 SECURITIES EXCHANGE ACT



I, James Doehrman, certify that:



1.     I have reviewed this annual report on Form 10-K/A of Versata, Inc.;



2.    Based on my knowledge, this annual
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 annual report;



3.    Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report.



4.    The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:



a)    designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;



b)    evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the
Evaluation Date); and



c)    presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;



5.    The registrants other
certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):



a)    all significant
deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material
weaknesses in internal controls; and



b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and



6.    The registrants other
certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and material weaknesses.



By:

/s/ JAMES DOEHRMANJames Doehrman Executive Vice President, Chief Operating
Officer and Chief Financial Officer




|Date: |  | March 26, 2003
|----- |  | --------------