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

                                   FORM 10-K
                                AMENDMENT NO. 1
                            ------------------------

     [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

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

                            COMMISSION FILE NUMBER: 0-28041

                                     IMANAGE, INC.
                 (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S>                                            <C>
                   DELAWARE                                      36-4043595
       (STATE OF OTHER JURISDICTION OF                         (IRS EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)
</TABLE>

       2121 SOUTH EL CAMINO REAL, SUITE 400, SAN MATEO, CALIFORNIA 94403
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)

                                 (650) 356-1166
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                             NASDAQ NATIONAL MARKET
                         COMMON STOCK, $.001 PAR VALUE
                                (TITLE OF CLASS)

     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]

     Aggregate market value of the voting stock held on March 23, 2001 by
non-affiliates of the registrant: $29,015,176

     Number of shares of Common Stock outstanding at March 23, 2001: 23,315,234

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive proxy statements for the 2001 Annual Meeting are
incorporated by reference into Part III hereof.

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                                 IMANAGE, INC.

                        2000 ANNUAL REPORT ON FORM 10-K

                                AMENDMENT NO. 1

                               TABLE OF CONTENTS

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                                   PART I

Item 1.   Business....................................................    1
Item 2.   Properties..................................................    9
Item 3.   Legal Proceedings...........................................   10
Item 4.   Submission of Matters to a Vote of Security Holders.........   10

                                  PART II

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.........................................   11
Item 6.   Selected Financial Data.....................................   11
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................   12
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   24
Item 8.   Consolidated Financial Statements and Supplementary Data....   25
Item 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure....................................   25

                                  PART III

Item 10.  Directors and Executive Officers of the Registrant..........   26
Item 11.  Executive Compensation......................................   26
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   26
Item 13.  Certain Relationships and Related Transactions..............   26

                                  PART IV

Item 14.  Exhibits, Financial Statements, Schedules and Reports on
          Form 8-K....................................................   27
Signatures............................................................   51
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                                     PART I

ITEM 1. BUSINESS

     Certain statements contained in this Annual Report on Form 10-K/A that are
not purely historical statements are forward-looking statements within the
meaning of the Private Securities Reform Act of 1995. These forward-looking
statements, containing words such as "believes", "expects," "intends," "plan"
and similar words and phrases, involve risks and uncertainties. Actual results
could vary materially from those expressed in the statements. Readers are
referred to the "Factors That May Impact Future Results" section contained in
this Annual Report on Form 10-K, which identifies some of the important factors
or events that could cause actual results or performances to differ materially
from those contained in the forward-looking statements.

COMPANY OVERVIEW

     iManage, Inc. provides content and collaboration management software. The
Company's products provide a unified content platform that organizes and
delivers content from a variety of sources in a centralized manner throughout
the extended enterprise of a business and its customers, partners and suppliers.
The Company's web-based collaboration tools allow users within and across the
extended enterprise to dynamically interact with each other on discrete projects
by contributing, modifying and exchanging information. We believe that our
solution features a highly scalable, reliable and robust platform designed to
provide security, accountability and the timely delivery of relevant content,
including electronic documents, email, faxes and voicemail. Our core technology
architecture has been developed over the last five years and licenses have been
sold to over 800 customers.

     We were originally incorporated in Illinois in October 1995 under the name
NetRight Technologies, Inc. and we reincorporated in Delaware in December 1996.
In April 1999, we changed our name to iManage, Inc. During 1999, we formed a
subsidiary in the United Kingdom and in 2000 we formed a subsidiary in France.
Our principal offices are located at 2121 South El Camino Real, Suite 400, San
Mateo, California 94403, and our telephone number is (650) 356-1166.

INDUSTRY BACKGROUND

     Technological developments in recent years have given rise to two closely
related issues in modern commerce. First, there has been an explosion in the
sheer quantum, variety and forms of business information. Second, the Internet
has been rapidly adopted as a medium for electronic business transactions, or
e-business, in the global economy. Most would agree that e-business has lowered
costs by creating efficiencies. However, the rise in the volume, variety and
forms of business information has led to the development of an e-business
environment where the dynamic exchange, timely dissemination and use of
information is essential to conducting business.

     The development of e-business has led to a dramatic increase in the amount
of information available to the average employee. This increase in information
has not only transformed the business world but has also introduced new
complexities and challenges as employees struggle to cope with the volume and
diversity of information that they are required to process on a daily basis. The
average employee receives a broad range of information, content and documents
through a variety of sources including email, voicemail, enterprise and desktop
applications, facsimiles and photocopies, the Internet, and intranet and
extranet web sites. In addition, the growth of e-business has resulted in a
proliferation of the various forms in which employees receive and exchange
information. These new forms include media such as graphics, video, text, audio
and data. The e-business requirement that the right information be delivered to
the right person at the right time is threatened by the overwhelming amount and
variety of information that is now disseminated through these disparate media
sources.

     Other collaboration solutions do not adequately address the dynamically
interactive requirements that will support the extended enterprise.
Organizations have either developed a custom approach through a combination of
email and intranet and extranet web sites or used packaged applications that are
not specifically designed to meet the requirements of e-business. Organizations
that have implemented a custom
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approach often fail to achieve the integrated delivery and management of
critical information and content for several reasons. Email, while easy-to-use
and convenient, lacks effective collaboration and project management, control,
accountability and security, and is not integrated with intranet information and
content. Intranets and extranets, while more effective mechanisms for
disseminating information, typically lack the scalable content management
infrastructure to ensure that posted information is accurate, up-to-date,
organized and actually viewed by the intended audience.

     Alternatively, other organizations have attempted to address the
information challenges of e-business by deploying a variety of packaged
applications, including enterprise information portals, web-based information
delivery systems, and knowledge and document management solutions. Enterprise
information portals and web-based information delivery systems are effective
means of accessing and distributing information. However, they lack the
comprehensive infrastructure to manage and organize all forms of information,
content and documents and to enable collaboration and project management across
the extended enterprise. Client-server based knowledge and document management
systems are capable of organizing and storing documents but are expensive to
maintain and are not designed to deliver and exchange information over the web
to thousands of concurrent users. As the custom approach and use of packaged
applications demonstrate, we believe there is no comprehensive solution that
addresses the key aspects of content and collaboration management to enable more
effective information management, organization and delivery across the extended
enterprise.

SOLUTION

     We provide the infoCommerce Suite as a unified platform that allows users
to contribute, manage, and exchange content across the extended enterprise. The
infoCommerce Suite includes the infoCommerce Server and a number of client
interfaces, including: infoLook, a Microsoft Outlook(R)-based client; infoRite,
a content authoring client, and infoLink, a Web portal interface. Our solution
allows users to dynamically interact with each other -- rather than simply
consume and respond to content. The infoCommerce Suite allows users within and
across the extended enterprise to contribute, modify and exchange a wide variety
of content in real-time.

     Our solution provides the following key benefits:

     Comprehensive Business Content and Collaboration Management. Our iManage
infoCommerce Server provides a comprehensive e-business content and
collaboration management solution that addresses key aspects of managing,
organizing and delivering information and content to the right person at the
right time throughout the extended enterprise. Our server provides users with a
centralized online location to access content, such as graphics, video, text,
audio and data. In addition to offering a robust underlying content management
infrastructure, our solution is designed to ensure effective content access,
delivery and notification based on relevance to particular projects, processes
and individuals. We believe our comprehensive solution enables our customers to
more effectively collaborate and exchange information over the web.

     Highly Scalable, Reliable and Robust Platform. We believe our solution
features a highly scalable, reliable and robust platform. Our software has been
designed to accommodate the demands of e-business and to scale to tens of
thousands of concurrent users and millions of information objects.

     Timely Delivery of Relevant Information. Our solution ensures the timely
delivery of relevant information by notifying the appropriate users of the
information and providing them with access to the information through the web
and email. Through the use of rules and profiles, a user can limit the
information he receives to meet his specified criteria. The delivery of and
access to relevant information is immediate through our automatic publication
and notification features. This functionality is designed to ensure that the
right information is delivered to the right person at the right time.

     Security and Accountability. Our solution offers the ability to centrally
enforce security privileges based on individual or group access level
permissions within an organization or across the extended enterprise. For
example, rather than attaching documents to email, which is a highly insecure
method of distributing information, our solution only sends a link to the
content which resides on a secure content server. This approach enhances
security in contrast to other forms of information distribution. The use of
links also ensures accountability by preserving control of the content in a
single location. As a result, organizations using our

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solution can now track when documents were sent, when they were received and
reviewed, when project folders were accessed and who accessed them.

     Our solution has been designed to address the needs of a broad range of
markets, such as financial services, manufacturing and distribution, banking and
professional services. Initially, we targeted substantially all of our sales and
marketing efforts to the legal applications market. The customers in this market
require management and organization of a large volume of critical information in
a scalable and secure environment. We now intend to leverage on our success and
experience in the legal applications market to market our solution to other
markets.

PRODUCTS

     The infoCommerce Suite, which we have developed over the last five years,
provides a comprehensive set of application modules that work in concert with
each other and the same underlying server. Our current product line consists of
the iManage infoCommerce Server, iManage infoLink, iManage infoLook and iManage
infoRite application modules.

     The following table describes the major features and benefits of our
iManage suite of products.

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            PRODUCT                         FEATURES                          BENEFITS
            -------                         --------                          --------
<S>                               <C>                            <C>
iManage infoCommerce Server       Application server failover    Ensures server uptime by splitting
Content and Collaboration server                                 server processes across multiple
                                                                 servers so that if any one server
                                                                 fails, users are automatically
                                                                 routed to the next available
                                                                 server.
                                  Transaction processing         Ensures all server transactions are
                                                                 completed in full or the
                                                                 information is restored to the
                                                                 previous state before the
                                                                 transaction commenced.
                                  Content indexing               Allows users to use search criteria
                                                                 to find specific information.
                                  Roles-based security           Protects content from unauthorized
                                                                 access and allows users to be
                                                                 assigned security privileges based
                                                                 on their role in an organization.
iManage infoLook                  Auto-notification              Automatically alerts subscribers
Microsoft Outlook integration                                    when new content has been
module                                                           contributed to a project folder.
                                  Auto-publishing                Automates the process of publishing
                                                                 content to an intranet, extranet or
                                                                 Internet web site.
                                  Link/URL routing               Allows users to email links and
                                                                 uniform resource locators, or URLs,
                                                                 to specific server content instead
                                                                 of physically transferring content
                                                                 by email, ensuring system security,
                                                                 accountability and network
                                                                 efficiency.
                                  Rules-based processing         Provides the ability to route to
                                                                 specific project folders incoming
                                                                 email, content and facsimiles based
                                                                 on specific user defined rules.
</TABLE>

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            PRODUCT                         FEATURES                          BENEFITS
            -------                         --------                          --------
<S>                               <C>                            <C>
iManage infoLink                  Security-based navigation      Enables navigation through project
Web-portal module                                                folders and review of content based
                                                                 on security privileges.
                                  User-definable search folders  Allows content from multiple
                                                                 projects to be dynamically grouped
                                                                 together using search criteria.
                                  Secured content contribution   Allows secure content contribution
                                                                 into iManage repositories security
                                                                 over the Internet.
iManage infoRite                  Content profiling and history  Adds context to content and enables
Content-authoring module                                         users to track usage of content and
                                                                 access history.
                                  Integrated online research     Allows users to search the content
                                                                 of iManage repositories and online
                                                                 information services.
                                  Microsoft Office(R)            Provides access to iManage
                                  integration                    repositories and the ability to
                                                                 submit content directly from within
                                                                 Microsoft Word(R), Excel(R) and
                                                                 PowerPoint(R) products.
                                  Content relationship grouping  Enables information to be grouped
                                                                 so that users can track information
                                                                 that is relevant to a project,
                                                                 process or individual.
</TABLE>

     Our iManage infoCommerce Server provides the core functionality of our
content and collaboration management solution. Each of our application modules,
iManage infoLook, iManage infoLink and iManage infoRite, works in conjunction
with the iManage infoCommerce Server and with one another. Each of these modules
delivers additional functionality for different client configurations and
applications. An organization can elect to use any combination of iManage
infoLink, iManage infoLook and iManage infoRite with the iManage infoCommerce
Server as its needs dictate. Additionally, multiple organizations using iManage
infoLink with iManage infoCommerce Server enjoy the benefits of using an iManage
virtual private network upon which they can collaborate and share information.

     iManage infoLook integrates with Microsoft Outlook and enables users to
manage, organize and deliver e-business information, content and documents
through the familiar, easy-to-use Outlook environment. iManage infoLink is a
web-based user interface that provides full access to all iManage infoCommerce
Server content through a web browser. iManage infoRite is a dedicated
content-authoring interface that integrates with Microsoft Office publishing
tools, such as Excel, Word and PowerPoint and is designed for heavy publishing
uses. These application modules allow different users with different interfaces
to share and exchange information and content. The overall objective in the
design of each element of the iManage suite of products is to provide a
simplified mechanism to enable intra-business and business-to-business content
and collaboration management capabilities for organizations over their existing
email, intranet and Internet networks.

     We also provide the following products:

     iManage QuickTeam: A web portal application that creates an on-line site
for collaboration. Acquired through the acquisition of ThoughtStar, Inc. in
2000, QuickTeam is a platform-neutral application that can run on a wide variety
of operating systems.

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     iManage Notes Module. The iManage Notes Module enables users of the Lotus
Notes(R) application environment to integrate their Notes content and email
correspondence directly into an iManage e-business server repository.

     iManage GroupWise Module. The iManage GroupWise Module enables users of the
Novell GroupWise(R) application environment to integrate their GroupWise content
and email correspondence directly into an iManage e-business server repository.

     iManage Software Development Kit, or SDK. iManage SDK is a software
development kit developed primarily for third-party developers who wish to
integrate their applications with iManage infoCommerce Server repositories.
Software integrators also use the iManage SDK to develop their own applications
based on the iManage suite of e-business content and collaboration management
products.

     Our products are licensed to customers on a per server and a per user
basis. We do not license our products on a concurrent user basis, nor are they
currently available on a rental or service basis. Our products may be licensed
on a perpetual licensing model whereby the customer owns the software or on a
subscription licensing model whereby the customer licenses the product,
generally for one year subscription periods.

CUSTOMERS

     To date, we have licensed over 800 customers, with over 200,000 users. We
have focused our sales and marketing resources primarily on law firms. We
derived 89.0%, 93.3% and 76.6% of our total license revenues for the years ended
December 31, 1998, 1999 and 2000, respectively, from the sale of licenses to law
firms and professional service firms. There were no customers that accounted for
more than 10% of our total revenues for 1998, 1999 or 2000.

STRATEGY

     Our objective is to become the leading provider of e-business content and
collaboration management software. Key elements of our strategy to achieve this
objective include:

     Pursue New Vertical Markets. In 2000, we began to market and sell licenses
to new vertical markets, including the financial services, high technology and
health and pharmaceuticals industries. Whereas approximately 77% of our license
revenues came from the legal vertical market in 2000, we have augmented our
sales and marketing team in an effort to penetrate these new markets. We believe
that the same factors that are valuable to the legal vertical market apply to
these new markets.

     Focus on Extended Enterprise Sales. Our principal growth strategy is to
develop and market our solution to the extended enterprise of a business and its
customers, partners and suppliers. We believe that, infoLink, our web portal
collaboration application, is central to our approach to "value" selling to the
extended enterprise. Thus, we intend to target new vertical markets by, in part,
emphasizing the return on investment of our collaboration product.

     Capture Market Share. Our strategy is to become the market leader in
providing software to enable unified e-business content and collaboration
management over the Internet. As our customers deploy our solution, their
customers, partners and suppliers will be exposed to the benefits and
functionality of our products. We believe that the introduction of our products
to these non-customers will accelerate recognition and adoption of our products.
As more and more organizations deploy our e-business solution, we believe that
the management, organization and delivery of relevant information will improve,
which will drive greater usage.

     Leverage Installed Customer Base. We believe there are significant
opportunities to leverage the use of our products throughout our current
customer base. Our corporate customers generally deploy our products initially
on a departmental basis and we believe that initial customer satisfaction with
these deployments will lead to significant opportunities for enterprise-wide
adoption. In addition, most companies and professional service firms, including
our customers, are just beginning to exploit the business opportunities that the
web has

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created. As they increasingly migrate their business processes to the web, we
believe they will need additional licenses of our software to support and enable
e-business content and collaboration applications.

     Expand and Leverage Key Business Relationships. To accelerate the
acceptance of our solution and to promote the adoption of e-business content and
collaboration management over the web, we intend to develop over the next 12
months additional cooperative alliances and relationships with leading
information technology consultants, system integrators and independent software
vendors. We believe that these alliances and relationships will provide
additional marketing and sales channels for our products, enable us to more
rapidly incorporate additional functions and platforms into our e-business suite
of products, and facilitate the successful deployment of customer applications.

     Maintain Technological Leadership. In 2000, we continued to devote
significant resources to research and development in order to improve our
architecture. We are in the process of introducing a new platform-neutral server
product, which will, among other things, operate on Sun and HP servers. We also
executed licensing agreements in 2000 that will increase the functionality of
our solution, including workflow and other functionality. We believe that we
offer the most complete e-business content and collaboration management solution
available today. We intend to extend our leadership position by continuing to
enhance our technology through significant investment in research and
development activities.

     Strengthen International Presence. We believe that there will be
significant international opportunities for our products and services and intend
to strengthen our global sales, marketing and distribution efforts to address
the range of markets and applications for our e-business content and
collaboration management solution. We currently have a direct sales presence in
Canada, the United Kingdom, France and the United States. In 2000, the Company
established a wholly owned subsidiary in France that also services the Middle
East. In the Asia/Pacific region, we sell our products through third-party
distributors. During the next 12 months, we intend to strengthen our
international presence by adding direct sales personnel and increasing our
indirect sales channels to fully capitalize on international market
opportunities.

ACQUISITIONS

     On June 21, 2000, we acquired all the outstanding stock and assumed all
outstanding stock options of ThoughtStar, Inc. ("ThoughtStar") a software
company based in Salt Lake City, Utah, in exchange for approximately $5.2
million in cash and forgiveness of debt and 1,006,717 shares of our common
stock. We also assumed options to purchase shares of ThoughtStar common stock
that have been converted into options to purchase approximately 89,000 shares of
our common stock. ThoughtStar developed a web-based collaboration application
called QuickTeam, which now forms part of the infoCommerce Suite.

SALES AND MARKETING

     Our sales process consists of engaging senior business managers at our
potential customers to explain the benefits of our solution, and to illustrate
how iManage products can deliver high-value, revenue generating solutions. With
our web portal strategy and emphasis on the extended enterprise, we emphasize to
our customers the return on investment of our solution. In 2000, we augmented
our sales and marketing team by acquiring staff with experience in enterprise
software sales, and by growing the total worldwide sales and marketing staff to
76. In addition, we have established subsidiaries in the United Kingdom and
France to facilitate sales in Europe and the Middle East.

     Our distribution network of over 130 reseller partners and systems
integrators complements our direct sales force and represents us in Australia,
Canada, France, New Zealand, the United Kingdom and the United States. Our
application specialists provide pre-sales support and post-sales implementation
for our customers.

     Our marketing programs focus on creating overall awareness of e-business
content and collaboration management. To generate market awareness, we
participate in market research, industry analyst product and strategy updates,
trade shows and seminars and engage in web site marketing to generate qualified
sales leads. We use market research in a formal feedback process to determine
specific industry segment needs, which we use to define and direct our product
development efforts.

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     With our technical professionals and systems integration partners, we
assess the specific needs of an enterprise and create demonstrations and
proposals to satisfy customer requirements. We have certified and trained over
650 third-party consultants to assist our customers in the technical
implementation of our solution.

     We believe that strategic alliances will be increasingly important in
marketing and selling our solution and developing customer applications. Over
the next 12 months, we intend to broaden the number of alliances we have with
key systems integrators. Furthermore, we intend during the next 12 months to
expand our sales and marketing staff and devote substantial resources to our
sales and marketing activities.

CUSTOMER SUPPORT, SERVICES AND TRAINING

     We believe that customer satisfaction is essential for our long-term
success. Our technical support group provides dependable and timely resolution
of customer technical inquiries and is available to customers by telephone,
email and over the web. We use a customer service automation system to track
each customer's inquiry until it is resolved. Our professional services group
delivers consulting services to our customers and partners on a time and
materials basis. Our training services group delivers education and training to
our customers and partners. We offer a comprehensive series of classes to our
customers to provide them with the knowledge and skills to successfully deploy,
use and maintain our products. These classes focus on the technical aspects of
our products as well as related business issues and processes. We regularly hold
our classes in various locations throughout the United States and in our
training facilities at our research and development headquarters in Chicago,
Illinois.

RESEARCH AND DEVELOPMENT

     We believe that our future success will depend in large part on our ability
to enhance our product family, develop new products, maintain technological
leadership, and satisfy an evolving range of customer requirements for
large-scale interactive online content and collaboration management
applications. Our product development organization is responsible for product
architecture, core technology, product testing, quality assurance, documentation
and expanding the ability of our products to operate with leading hardware
platforms, operating systems, database management systems, and key electronic
commerce transaction processing standards.

     We believe that our product development team and core technologies
represent a significant competitive advantage. Our product development team
includes key members of other past research and development organizations that
have developed scalable, reliable, critical online applications. We believe our
technically skilled, quality-oriented and highly productive development
organization is a key component of the success of our new product offerings. We
must attract and retain highly qualified employees to further our product
development efforts. Our business and operating results could be seriously
harmed if we are not able to hire and retain a sufficient number of these
individuals.

     Our research and development expenditures (excluding stock-based
compensation expense) were approximately $2.5 million for 1998, $4.7 million for
1999 and $9.1 million for 2000. All research and development expenditures have
been expensed as incurred. We expect to continue to devote substantial resources
to our research and development activities.

COMPETITION

     We have experienced and expect to continue to experience increased
competition from current and potential competitors. Many of these companies have
greater name recognition, longer operating histories, larger customer bases and
significantly greater financial, technical, marketing, public relations, sales,

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distribution and other resources than we have. We expect to face competition
from these and other competitors, including:

     - companies addressing segments of our market including BroadVision, Inc.,
       Documentum, Inc., eRoom Technology, Inc., Hummingbird Communications
       Ltd., Niku Corporation, and Open Text Corporation;

     - enterprise web portal companies, as well as web-content management
       companies;

     - intranet and groupware companies including IBM and its subsidiary Lotus
       Development Corporation, Microsoft and Novell; and

     - in-house development efforts by our customers and potential customers or
       partners.

     We believe that we may face additional competition from operating system
vendors, online service providers, client/server applications and tools vendors.
If any of our competitors were to become the industry standard or were to enter
into or expand relationships with significantly larger companies through
mergers, acquisitions or other similar transactions, our business could be
seriously harmed. In addition, potential competitors may bundle their products
or incorporate functionality into existing products in a manner that discourages
users from purchasing our products.

     We believe that the principal competitive factors in the e-business content
and collaboration management market are:

     - product performance, features, functionality and reliability;

     - price/performance characteristics;

     - timeliness of new product introductions;

     - adoption of emerging industry standards;

     - brand name; and

     - access to customers.

     We believe we compete favorably with our competitors on each of the above
factors. However, because many of our existing and potential competitors have
greater name recognition, longer operating histories, larger customer bases and
significantly greater financial, technical, marketing, public relations, sales,
distribution and other resources, they may have stronger brand names and access
to more customers than we do. These competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to distribution partners than we can. To remain
competitive, we believe we must invest significant resources in enhancing our
current products and developing new ones, and maintain customer satisfaction. If
we fail to do so, our products will not compete favorably with those of our
competitors and our business will be significantly harmed.

     We expect that competition will continue to increase and that our primary
competitors may not have entered the market yet. Increased competition could
result in price reductions, fewer customer orders, reduced gross margin and loss
of market share, any of which could cause our operating results to suffer.

INTELLECTUAL PROPERTY

     We believe that our success and ability to compete is dependent on our
ability to develop and protect our technology. To protect our proprietary
technology, we rely primarily on patent, trademark, service mark, trade secret
and copyright laws and contractual restrictions.

     Most of our customers' use of our software is governed by shrink-wrap or
signed written license agreements. We also enter into written agreements with
each of our channel partners for the distribution of our products. In addition,
we seek to avoid disclosure of our trade secrets by requiring each of our
employees and others with access to our proprietary information to execute
confidentiality agreements with us. We protect

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our software, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection.

     We currently have one U.S. patent issued, we have applied for two other
U.S. patents and we have one pending foreign patent application. It is possible
that no patents will be issued from our currently pending patent applications
and that our potential future patents may be found invalid or unenforceable, or
may be successfully challenged. It is also possible that any patent issued to us
may not provide us with any competitive advantages or that we may not develop
future proprietary products or technologies that are patentable. Additionally,
we have not performed any comprehensive analysis of patents of others that may
limit our ability to do business.

     Despite our efforts to protect our proprietary rights, we may be unable to
prevent others from infringing upon or misappropriating our intellectual
property. Any steps we take to protect our intellectual property may be
inadequate, time consuming and expensive. In addition, the laws of some foreign
countries do not protect our proprietary rights to as great an extent as the
laws of the United States.

     Substantial litigation regarding intellectual property rights exists in the
software industry. To date, we have not been notified that our technologies
infringe the proprietary rights of anyone. We cannot assure you that others will
not claim that we have infringed proprietary rights relating to past, current or
future technologies. We expect that we could become subject to intellectual
property infringement claims as the number of our competitors grows and our
services overlap with competitive offerings. These claims, even if without
merit, could be expensive, time-consuming to defend, divert management's
attention from the operation of iManage and cause product shipment delays. If we
become liable for infringing intellectual property rights, we would be required
to pay a substantial damage award and to develop non-infringing technology,
obtain a license or cease selling the products that contain the infringing
intellectual property. We may be unable to develop non-infringing technology or
obtain a license on commercially reasonable terms, if at all.

     We license indexing and searching technologies from third parties. We
cannot assure you that these technology licenses will not infringe the
proprietary rights of others or will continue to be available to us on
commercially reasonable terms, if at all. We license Application Builder(R) from
Autonomy, Inc. and Search '97(R) from Verity, Inc. for search functionality in
the iManage infoCommerce Server. These agreements expire in March 2005 and
January 2003, respectively, and are renewable with the written agreement of the
parties. Either party may terminate the agreement for cause before the
expiration date with 90 days written notice. In addition, we license Outside In
Viewer Technology(R) and Outside In HTML Export(R) from IntraNet Solutions Inc.
for file viewing functionality in our solution. This agreement expires in
December 2004 and is renewable with the written consent of the parties. Either
party may terminate the agreement for cause before the expiration date. If we
cannot renew these licenses, shipments of our products could be delayed until
equivalent software could be developed or licensed and integrated into our
products. These types of delays could seriously harm our business.

EMPLOYEES

     As of December 31, 2000, we had 214 full-time employees. Of these
employees, 75 were in product development, 76 in sales, marketing and business
development, 33 in customer support, professional services and training and 30
in finance and administration. None of our employees is subject to a collective
bargaining agreement. Our future success depends on our ability to attract,
motivate and retain highly qualified technical and management personnel. From
time to time we also employ independent contractors to support our product
development, sales, marketing and business development organizations.

ITEM 2. PROPERTIES

     Our principal offices are located in a leased facility in San Mateo,
California and consist of approximately 23,000 square feet under leases that
expire from December 2001 to March 31, 2003. Our engineering and customer
support personnel and our training facility are located in a leased facility in
Chicago, Illinois. This facility consists of approximately 28,000 square feet
and our lease is non-cancelable through 2004 and expires
                                        9
<PAGE>   12

in 2009. We believe that our existing facilities are adequate for our current
needs and that suitable additional or alternative space will be available in the
future on commercially reasonable terms.

ITEM 3. LEGAL PROCEEDINGS

     We are not currently involved in any material legal proceedings.

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

     Not applicable.

                                        10
<PAGE>   13

                                    PART II

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

     Our common stock is traded on the Nasdaq National Market under the symbol
"IMAN." Public trading in our common stock commenced on November 19, 1999. Prior
to that date there was no public market for our common stock. The following
table sets forth, for the periods indicated, the high and low sale price per
share of our common stock on The Nasdaq National Market in each of the last five
fiscal quarters.

<TABLE>
<CAPTION>
                                                               HIGH      LOW
                                                              ------    ------
<S>                                                           <C>       <C>
November 19, 1999 to December 31, 1999......................  $40.06    $20.00
Year ended December 31, 2000
  First quarter.............................................  $34.94    $15.75
  Second quarter............................................   18.75      6.63
  Third quarter.............................................   14.00      7.63
  Fourth quarter............................................    8.13      2.63
</TABLE>

     As of March 23, 2001, there were approximately 329 holders of record of our
common stock. We believe the number of beneficial holders of our common stock
exceeds 5,000.

     We have never paid any cash dividends on our capital stock, and do not
expect to pay any cash dividends in the foreseeable future. In addition, the
covenant restrictions on our lines of credit limit our ability to declare and
pay dividends.

     On June 21, 2000, we acquired all of the outstanding stock of ThoughtStar.
In exchange for that stock we paid approximately $5.2 million in cash and
forgiveness of debt, assumed options to purchase shares of ThoughtStar common
stock which were converted into options to purchase approximately 89,000 shares
of our common stock and issued 1,006,717 shares of our common stock to the
shareholders of ThoughtStar. The 1,006,717 shares of our common stock were
issued in reliance on Regulation D of the Securities and Exchange Commission and
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. Among the factors relied upon to determine that these
exemptions were available were the existence of fewer than 35 non-accredited
investors that were to receive shares of our common stock in the transaction,
the representation of each non-accredited investor by a purchaser representative
and legends on the certificates evidencing shares of our common stock issued on
the merger to the effect the shares had not been registered under the Securities
Act of 1933 and may only be transferred pursuant to an exemption from the
registration requirements of the Securities Act of 1933.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                  PERIOD FROM YEARS ENDED DECEMBER 31,
                                           ---------------------------------------------------
                                            1996      1997       1998       1999        2000
                                           ------    -------    -------    -------    --------
                                              (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S>                                        <C>       <C>        <C>        <C>        <C>
Total revenues...........................  $   74    $ 1,530    $ 7,741    $18,570    $ 30,008
Loss from operations.....................    (688)    (3,609)    (2,979)    (3,461)    (11,611)
Net loss.................................    (692)    (3,596)    (2,840)    (2,775)     (9,114)
Net loss per share -- basic and
  diluted................................  $(0.12)   $ (0.57)   $ (0.38)   $ (0.28)   $  (0.41)
Shares used in net loss per
  share -- basic and diluted.............   6,004      6,292      7,455      9,988      22,130
Total assets.............................  $  511    $ 3,260    $13,495    $63,921    $ 73,347
Long-term obligations....................  $   --    $    --    $    --    $ 1,388    $    944
</TABLE>

                                        11
<PAGE>   14

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

     The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with "Selected Financial
Data" and our consolidated financial statements and related notes appearing
elsewhere in this report. This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. The actual results
may differ materially from those anticipated in these forward-looking statements
as a result of certain factors, such as those set forth under "Factors That May
Impact Future Results" and the risks discussed in our other SEC filings,
including our Reports on Form 10-Q and Form 8-K.

OVERVIEW

     We supply e-business content and collaboration software platforms and
applications that provide organizations with a centralized web-based unified
content platform for information and collaboration management, both for internal
use and for use across the extended enterprise. We believe we are a leading
provider of e-business content and collaboration management software, based on
the number of customers we serve and the features our software provides. Since
1996, we have licensed our products to over 800 customers for use by over
200,000 end users.

     We were incorporated in October 1995 and commenced operations shortly after
that time. During the period October 1995 through September 1996 we were a
development stage company and had no revenues. Our operating activities during
this period related primarily to developing our product, building our corporate
infrastructure and raising capital. In October 1996, we released the first
version of our iManage infoCommerce Server and iManage infoRite, and in June
1997, we began shipping iManage infoLink. We began shipping our iManage infoLook
in August 1999. Several enhancements of our software platforms and applications
have been made since they were first released and shipped. We generally release
enhanced versions of our software platforms and applications on an annual basis.

     Through December 31, 2000, substantially all of our total revenues were
derived from licenses of the iManage suite of applications and related services.
Our license revenues are generally based on the number of users and servers and
can be licensed on either a perpetual or subscription license basis. Support and
services revenues consist of customer support, training and consulting.
Customers who license our products generally purchase support contracts, which
are billed on a subscription basis typically covering a 12-month period.
Training services are billed on a per student or per class session basis and
consulting is customarily billed at a fixed daily rate plus our out-of-pocket
expenses.

     We market our software and services primarily through our direct sales
organization, resellers and system integrators in Canada, the United Kingdom,
France and the United States, and through distributors in Australia and New
Zealand. Revenues from the iManage suite of applications and related services to
customers outside the United States and Canada have been immaterial to date.

     Through 1997, we recognized revenues based on the American Institute of
Certified Public Accountants Statement of Position 91-1. Commencing in 1998, we
began recognizing revenues based on the American Institute of Certified Public
Accountants Statement of Position 97-2, Software Revenue Recognition, or SOP
97-2, as amended by Statements of Position 98-4 and 98-9. Further implementation
guidelines relating to these standards may result in unanticipated changes in
our revenue recognition practices, and these changes could affect our future
revenues and earnings.

     We recognize license revenues upon shipment of a product master if a signed
contract exists, the fee is fixed and determinable, collection of resulting
receivables is probable, product returns can be reasonably estimated and, if
applicable, acceptance criteria have been met. Under a subscription licensing
model, the customer licenses the product generally for one-year subscription
periods under an arrangement that includes customer support and software updates
during the term of the license. Revenues associated with this software product
and related services are recognized ratably over the applicable license period.
Provisions for estimated warranty costs and sale returns are recorded at the
time of shipment.

                                        12
<PAGE>   15

     For contracts with multiple obligations, for example, support and other
service, we allocate revenues to the undelivered element of the contract using
the residual method based on objective evidence of its fair value. This
objective evidence is the sales price of the element when sold separately by us
or the renewal rate specified in the arrangement for licensing arrangements with
terms of generally one year that include customer support and software updates.
We generally do not allow the right of return but have accepted returns in
isolated instances when resellers, system integrators and distributors have
incorrectly ordered product. We recognize support and services revenues,
including amounts allocated from contracts with multiple obligations and for
ongoing customer support, ratably over the period of the support contract. Our
support and service arrangements entitle customers to telephone support and
unspecified upgrades and enhancements. Payments for support and services are
generally made in advance and are non-refundable. For revenues allocated to
training and consulting services or derived from the separate sales of these
services, we recognize revenues as the related services are performed.

     Our cost of license revenues includes royalties due to third parties for
integrated technology, the cost of manuals and product documentation, production
media used to deliver our products, packaging and shipping costs, salaries and
an allocation of overhead expenses. Our cost of support and services revenues
includes salaries and related expenses for the customer support, professional
services and training organization and an allocation of overhead expenses.

     Our operating expenses are classified as sales and marketing, research and
development, general and administrative and amortization of goodwill. We
classify all charges to these operating expense categories based on the nature
of the expenditures. Although each category includes expenses that are unique to
the category type, there are common recurring expenditures that are typically
included in all operating expense categories, including salaries, employee
benefits, incentive compensation, bonuses, travel costs, professional fees,
telephone, communication and rent and allocated facilities costs. The sales and
marketing category of operating expenses includes additional expenditures
specific to the sales group, such as commissions, and expenditures specific to
the marketing group, including public relations and advertising, trade shows and
marketing collateral materials. In the development of our new products and
enhancements of existing products, the technological feasibility of the software
is not established until substantially all product development is complete.
Historically, software development costs eligible for capitalization have been
insignificant, and we have expensed all costs related to internal research and
development as we have incurred them.

     In connection with the granting of stock options to our employees and
consultants, we have recorded deferred stock-based compensation totaling
approximately $11.4 million through December 31, 2000, of which approximately
$1.285 million remains to be amortized. This amount represents the difference
between the exercise price and the current estimated fair value of our common
stock on the date these stock options were granted. This amount is included as
part of stockholders' equity and is being amortized by charges to the
appropriate operating expense classification over the vesting period of the
options, consistent with the method described in Financial Accounting Standards
Board, or FASB, Interpretation No. 28. We recognized stock-based compensation
expense of approximately $1.1 million in 1998, $3.6 million in 1999 and $2.1
million in 2000, which includes stock-based compensation expense amounts for
services provided before the grant date of the options. Future compensation
expense from options granted through December 31, 2000 is estimated to be
approximately $993,000 for 2001, $247,000 for 2002 and $45,000 for 2003.

     We anticipate that our operating expenses will increase substantially as we
intend to continue to invest heavily in the expansion of our sales, marketing
and support organizations to build an infrastructure to support our long-term
growth strategy. The number of our full-time employees increased from 119 as of
December 31, 1999 to 214 as of December 31, 2000. We will seek to hire
additional employees in the future. As a result of investments relating to the
expansion of our business, we have incurred net losses in each quarter since
inception and, as of December 31, 2000, had an accumulated deficit of $19.1
million. To achieve profitability, we will have to increase our total revenues
significantly. We cannot assure you that we will ever attain or maintain
profitability.

                                        13
<PAGE>   16

     In view of the rapidly changing nature of our market and our limited
operating history, we believe that period-to-period comparisons of our revenues
and operating results are not necessarily meaningful and should not be relied
upon as indicative of future performance. Our historic revenue growth rates are
not necessarily sustainable or indicative of our future growth. Our prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered by companies in early stages of development, particularly companies
in new and rapidly evolving markets. We cannot assure you we will be successful
in addressing these risks and difficulties.

REVENUES

<TABLE>
<CAPTION>
                                                                                   % CHANGE
                                                                                --------------
                                                 1998      1999       2000      98/99    99/00
                                                ------    -------    -------    -----    -----
                                                                (IN THOUSANDS)
<S>                                             <C>       <C>        <C>        <C>      <C>
License.......................................  $6,509    $14,257    $20,213    119.0%    41.8%
Support and services..........................   1,232      4,313      9,795    250.1%   127.1%
                                                ------    -------    -------
          Total revenues......................  $7,741    $18,570    $30,008    139.9%    61.6%
                                                ======    =======    =======
</TABLE>

     License Revenues. Our license revenues increased by $7.7 million, or
119.0%, from 1998 to 1999, and $6.0 million, or 41.8%, from 1999 to 2000. The
increase in our license revenues from 1998 to 1999 and from 1999 to 2000 was
primarily due to increased market acceptance of the iManage suite of products.

     Support and Services Revenues. Our support and services revenues increased
$3.1 million, or 250.1%, from 1998 to 1999, and $5.5 million, or 127.1% from
1999 to 2000. Support and services revenues consisted primarily of customer
support and, to a lesser extent, training and consulting services, associated
with the increasing license revenues during these periods. The increase in
support and services revenues for the above periods reflects the increasing
customer installation base of our iManage suite of products.

COST OF REVENUES

<TABLE>
<CAPTION>
                                                                                    % CHANGE
                                                                                 --------------
                                                    1998      1999      2000     98/99    99/00
                                                   ------    ------    ------    -----    -----
                                                                  (IN THOUSANDS)
<S>                                                <C>       <C>       <C>       <C>      <C>
License..........................................  $  414    $  773    $1,165     86.7%   50.7%
Support and services.............................   1,255     2,875     4,841    129.1%   68.4%
</TABLE>

     Cost of revenues as a percent of related revenue

<TABLE>
<CAPTION>
                                                              1998     1999    2000
                                                              -----    ----    ----
<S>                                                           <C>      <C>     <C>
License.....................................................    6.4%    5.4%    5.8%
Support and services........................................  101.9%   66.6%   49.4%
</TABLE>

     Cost of License Revenues. Cost of license revenues increased $359,000, or
86.7%, from 1998 to 1999, and $392,000, or 50.7%, from 1999 to 2000. The
increase in 1998 to 1999 was primarily the result of increased costs of media
associated with the increasing license revenues during this period. The increase
in 1999 to 2000 primarily relates to increased costs associated with personnel
costs and related overhead from order fulfillment headcount additions as a
result of the increasing license revenues during this period.

     Cost of Support and Services Revenues. Cost of support and services
revenues increased $1.6 million, or 129.1%, from 1998 to 1999 and $2.0 million,
or 68.4%, from 1999 to 2000. The increases from 1998 to 1999 resulted primarily
from an increase of $843,000 in personnel-related expenses from increases in
technical support, professional services personnel and training personnel and an
increase of $538,000 in facilities-related expenses. The increases from 1999 to
2000 resulted primarily from an increase of $1,001,000 in facilities-related
expenses and an increase of $789,000 in personnel-related expenses, principally
from increases in professional services and training personnel.

                                        14
<PAGE>   17

OPERATING EXPENSES

<TABLE>
<CAPTION>
                                                                                   % CHANGE
                                                                                --------------
                                                 1998      1999       2000      98/99    99/00
                                                ------    -------    -------    -----    -----
                                                       (IN THOUSANDS)
<S>                                             <C>       <C>        <C>        <C>      <C>
Sales and marketing...........................  $5,097    $10,929    $17,845    114.4%    63.3%
Research and development......................   2,498      4,680      9,094     87.3%    94.3%
General and administrative....................   1,456      2,774      4,222     90.5%    52.2%
Amortization of goodwill and other
  intangibles.................................      --         --      4,452       --       --
Net interest income...........................     139        718      2,619    416.5%   264.8%
Provision for income taxes....................      --         32        122       --    281.3%
</TABLE>

     Operating expenses as a percent of total revenue

<TABLE>
<CAPTION>
                                                              1998    1999    2000
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Sales and marketing.........................................  65.8%   58.9%   59.5%
Research and development....................................  32.3%   25.2%   30.3%
General and administrative..................................  18.8%   14.9%   14.1%
Amortization of goodwill and other intangibles..............    --      --    14.8%
Net interest income.........................................   1.8%    3.9%    8.9%
Provision for income taxes..................................    --     0.2%    0.4%
</TABLE>

     Sales and Marketing. Sales and marketing expenses increased $5.8 million
from 1998 to 1999 and $6.9 million from 1999 to 2000. The increases from 1998
through 2000 primarily reflected investments in our sales and marketing
infrastructure related marketing programs and activities, additional headcount,
increased facilities and overhead related expenses and increased travel and
entertainment. Marketing programs and activities increased $238,000 in 1999 and
$3.2 million in 2000 related to increased public relations, trade show and
advertising activities. Personnel-related expenses, including salaries, benefits
and commissions, stock based compensation, recruiting fees, and related costs of
hiring sales management, sales representatives, sales engineers and marketing
personnel, increased $3.9 million in 1999 and $0.4 million in 2000. Sales and
marketing employees totaled 23 as of December 31, 1998, 47 as of December 31,
1999 and 76 as of December 31, 2000, representing increases of 104.3% from 1998
to 1999 and 61.7% from 1999 to 2000. Facilities and overhead related expenses
increased $475,000 in 1999 and $2.1 million in 2000 to support the increased
sales and marketing activities and increased headcount. Travel and entertainment
expenses increased $483,000 in 1999 and $782,000 in 2000 as a result of
increased headcount.

     Research and Development. Research and development expenses increased $2.2
million from 1998 to 1999 and $4.4 million from 1999 to 2000. The increases from
1998 through 2000 were primarily related to increased personnel costs resulting
from the increase in the wage rates, benefits, stock based compensation and the
number of software developers and quality assurance personnel and third-party
consultants to support our product development and testing activities related to
the development of the iManage suite of products. Personnel related expenses
increased $1.8 million in 1999 and $3.0 million in 2000. Our research and
development employees totaled 16 as of December 31, 1998, 33 as of December 31,
1999 and 75 as of December 31, 2000, representing increases of 106.3% from 1998
to 1999 and 127.3% from 1999 to 2000. The increase from 1998 to 2000 is also due
to increased facility and overhead costs of $424,000 in 1999 and $1.3 million in
2000.

     General and Administrative. General and administrative expenses increased
$1.3 million from 1998 to 1999 and $1.4 million from 1999 to 2000. The increase
from 1998 to 1999 was primarily the result of increased personnel costs of
$836,000 resulting from additional finance, executive and administrative
personnel and an increase of $524,000 in facility and overhead related costs.
The increase in 1999 to 2000 was primarily the result of $308,000 in increased
personnel costs resulting from additional finance, executive and administrative
personnel, an increase of $489,000 in professional service costs, primarily
accounting and legal, and an increase of $439,000 in facility and overhead
expenses to support the growth of our business during these periods.

                                        15
<PAGE>   18

     Amortization of Goodwill and Other Intangibles. We accounted for our
acquisition of Thoughtstar on June 21, 2000 as a purchase business combination.
In connection with that acquisition we recorded goodwill and intangibles of
approximately $17.0 million, which is being amortized to expenses over its
estimated useful life of two years. For the year ended December 31, 2000, we
recognized approximately $4,452,000 in expense. At December 31, 2000,
approximately $12,509,000 remains to be amortized and will be charged to
operations through the second quarter of 2002.

     Net Interest Income. Net interest income increased $579,000 from 1998 to
1999 and $1.9 million from 1999 to 2000. The increases from 1998 through 2000
were primarily related to higher invested cash balances as a result of proceeds
received from the issuance of our Series A, B and C preferred stock and our
initial public offering in the fourth quarter of 1999, offset by interest
expense from our equipment line of credit and other miscellaneous expenses.

     Provision for Income Taxes. Income taxes are accounted for in accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", which requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the temporary difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amounts expected to be realized. Income tax expense is the tax
payable and the change during the period in deferred tax assets and liabilities.
The provision for income taxes recorded in 1999 and 2000 related primarily to
federal and state alternative minimum taxes.

LIQUIDITY AND CAPITAL RESOURCES

     In November 1999, we completed the initial public offering of our common
stock and realized net proceeds from the offering of approximately $41.2
million. Prior to the offering, we had funded our operations primarily through
sales of convertible preferred stock, resulting in net proceeds of $10.9 million
through September 30, 1999. To a lesser extent, we have financed our operations
through lending arrangements. As of December 31, 2000, we had cash, cash
equivalents and marketable securities of approximately $41.8 million.

     Net cash used in operating activities was $622,000 in 1998; $5.9 million
was provided by operating activities in 1999; and $8.6 million was used in
operating activities in 2000. For the 1998 and 2000 periods, cash used in
operating activities was primarily a result of funding ongoing losses and
increases in accounts receivable and other assets. Cash provided by operations
in 1999 was primarily the result of non-cash charges associated with
depreciation and amortization and stock-based compensation expense and receipt
of cash associated with license and support and service revenues in advance of
revenue recognition.

     For the last three years, our investing activities have consisted of
purchases of property and equipment, in 1999 and 2000, the purchase of
short-term and long-term investments, and in 2000 the acquisition of
ThoughtStar. Net cash used in investing activities totaled $431,000 in 1998,
$8.3 million in 1999 and $20.7 million in 2000. We finance the acquisition of
property and equipment primarily through a line of credit. Our property and
equipment largely consists of computer hardware and software and furniture and
fixtures for our increasing employee base as well as for our management
information systems. We anticipate that we will experience an increase in our
capital expenditures consistent with our anticipated growth in operations,
infrastructure and personnel.

     Our financing activities provided $6.9 million in 1998, $42.7 million in
1999 and $5.4 million in 2000. In 1998, cash provided by financing activities
consisted primarily of $7.0 million received in connection with the sale of
Series B and Series C preferred stock. In 1999, cash provided by financing
activities consisted primarily of $41.2 million generated from our initial
public offering. In 2000, cash provided by financing activities consisted
primarily of $4.9 million provided by borrowings from the equipment line of
credit.

     As of December 31, 2000, we had a revolving line of credit with a bank for
$4.0 million, which bears interest at the lending bank's prime rate plus 0.25%.
Borrowings were limited to the lesser of 80% of eligible accounts receivable or
$4.0 million and were secured by substantially all of our assets. As of December
31,

                                        16
<PAGE>   19

2000, we borrowed approximately $3.0 million. In addition, as of December 31,
2000, we had an equipment line of credit with a bank for $4.0 million, which
bears interest at the lending bank's prime rate plus 0.5%. As of December 31,
2000, we had $3.4 million outstanding under the equipment line of credit.

     In March 2001, we amended both lines of credit covenant restrictions. As
amended, the restrictions require us to:

          (a) maintain a monthly quick assets to current liabilities ratio of at
     least two to one;

          (b) not incur a cash loss, as defined, in any fiscal quarter greater
     than:

             $5,500,000 for the quarter ended March 31, 2001;

             $5,000,000 for the quarter ended June 30, 2001;

             $4,500,000 for the quarter ended September 30, 2001;

             $1,500,000 for the quarter ended December 31, 2001; and

             $1,000,000 for the quarter ended March 31, 2002 and thereafter, and

          (c) limit our ability to declare and pay dividends.

The cash loss is determined based upon our operating results, excluding charges
for certain items such as depreciation and amortization.

     We currently anticipate that our cash, cash equivalents, and marketable
securities, together with our existing lines of credit, will be sufficient to
meet our anticipated needs for working capital and capital expenditures at least
through the next 12 to 24 months. However, we may be required, or could elect,
to seek additional funding before that time. Our future capital requirements
will depend on many factors, including our future revenue, the timing and extent
of spending to support product development efforts and expansion of sales,
general and administrative activities, the timing of introductions of new
products and market acceptance of our products. We cannot assure you that
additional equity or debt financing, if required, will be available on
acceptable terms or at all.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, or SFAS 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS 133, establishes new standards of
accounting and reporting for derivative instruments and hedging activities. SFAS
133 requires that all derivatives be recognized at fair value in the statement
of financial position, and that the corresponding gains or losses be reported
either in the statement of operations or as a component of comprehensive income,
depending on the type of hedging relationship that exists. In July 1999, the
Financial Accounting Standard Boards issued SFAS No. 137, or SFAS 137,
Accounting for Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of SFAS No. 133, SFAS 137 deferred the effective date of SFAS 133
until the first fiscal quarter beginning after June 15, 2000. We do not
currently hold derivative instruments or engage in hedging activities. The
adoption of SFAS 133 and SFAS 137 is not expected to have a material effect on
our financial position or results of operations.

     In December 1999, the SEC issued Staff Accounting Bulletin No. 101, or SAB
101, "Revenue Recognition in Financial Statements." SAB 101 summarizes certain
of the SEC's views in applying generally accepted accounting principles to
revenue recognition in financial statements. We were required to adopt SAB 101
in the fourth quarter of fiscal 2000, effective as of January 1, 2000. The
adoption of SAB 101 did not have a material effect on our financial position or
results of operations.

     In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, or FIN 44, "Accounting for Certain Transactions Involving
Stock Compensation an Interpretation of APB 25." FIN 44 became effective July 1,
2000, but certain conclusions cover specific events that occurred after either
December 15, 1998 or January 12, 2000. The adoption of FIN 44 did not have a
material effect on our financial position or results of operations.
                                        17
<PAGE>   20

FACTORS THAT MAY IMPACT FUTURE RESULTS

Our limited operating history may prevent us from achieving success in our
business.

     We were founded in October 1995 and began shipping our first product in
October 1996. Because of our limited operating results and lack of experience
with enterprise wide sales, we have limited insight into trends that may emerge
and affect our business. As a result, an evaluation of our prospects is
difficult to make. The potential revenues and income of our business and many of
the markets we intend to target are unproven.

     We face significant risks because of our limited operating history,
including:

     - we have a limited number of product offerings and will need to continue
       to successfully introduce new products and enhance our existing product
       offerings;

     - we need to expand our customer base beyond legal and other professional
       service firms to include other businesses, particularly extended
       enterprises and large multi-national corporations, and sell additional
       licenses and software products to our existing customers; and

     - we need to expand our sales and marketing and customer support
       organization to focus on a broad range of markets and build strategic
       relationships with independent software vendors, information technology
       consultants, systems integrators, original equipment manufacturers and
       others to increase sales.

     If we do not successfully address any of these and other challenges, our
business and operating results will be seriously harmed.

We have an accumulated deficit of approximately $19.1 million as of December 31,
2000 and may not be able to achieve profitability.

     Our failure to significantly increase our total revenues would seriously
harm our business and operating results. To increase our revenues, we must incur
significant expenses to increase our research and development, sales and
marketing and general and administrative resources. If our revenues do not grow
to offset these increased expenses, we will not be profitable. We may not be
able to sustain our recent revenue growth rates. In fact, we may not have any
revenue growth, and our revenues could decline, as was the case in the three
months ended September 30, 2000.

Our quarterly operating results are volatile and difficult to predict. If we
fail to meet the expectations of public market analysts or investors, the market
price of our common stock may decrease significantly.

     Our quarterly operating results have varied significantly in the past and
will likely vary significantly in the future. As a result, we believe that
period-to-period comparisons of our operating results are not meaningful and
should not be relied upon as indicators of our future performance. In the
future, our operating results may be below the expectations of securities
analysts and investors. Our failure to meet these expectations would likely
cause the price of our common stock to decline further. Operating results vary
depending on a number of factors, including:

     - the size, timing, terms and fluctuations of customer orders; and

     - the timing of the introduction or enhancement of products by us.

     In addition, depending on the manner in which we sell existing or future
products, this could have the effect of extending the length of time over which
we recognize revenues. Our quarterly revenues could be significantly affected
based on how applicable accounting standards are amended or interpreted over
time.

     Also, the adoption of our subscription licensing model, which requires the
recognition of license revenue over the term of the agreement, may result in
lower quarterly revenues in the period when the products were sold when compared
to quarters in which subscription licenses were not sold.

                                        18
<PAGE>   21

     Furthermore, our expense levels are relatively fixed and are based, in
part, on expectations of future revenues. Therefore, if revenue levels fall
below our expectations, our net loss will increase because only a small portion
of our expenses varies with our revenues.

Our revenues will decline significantly if the market does not continue to
accept our iManage suite of products.

     In the years ending December 31, 1999 and December 31, 2000, we derived
substantially all of our license revenues from the sale of licenses for our
iManage infoCommerce Server, iManage infoRite, iManage infoLook and iManage
infoLink products. We currently expect to continue to derive a majority of our
license revenues from these products. If the market does not continue to accept
these products, our revenues will decline significantly and this could
negatively affect our operating results. Factors that may affect the market
acceptance of these products include the performance, price and total cost of
ownership of our products and the availability, functionality and price of
competing products and technologies. Many of these factors are beyond our
control.

     We have always been heavily dependent upon law firm customers. If we do not
expand sales of our products to other customers, particularly extended
enterprises and large multi-national corporations, we may not be able to grow
our revenues consistent with past growth rates and our operating results will
suffer.

     We derived 93.3% and 76.6% of our total license revenues in the years
ending December 31, 1999 and December 31, 2000, respectively, from the sale of
licenses to law firms and professional service firms. We do not expect to see
any significant growth in these markets; therefore, our future success is
substantially dependent on our ability to sell a significant number of licenses
to customers in other businesses, particularly large multi-national
corporations. To sell a significant number of licenses to these businesses, we
must devote time and resources to train our sales employees to work in
industries outside law firms and professional service firms. We may not be
successful in our efforts. Unlike law firms and professional service
organizations, customers in other industries, including large multi-national
corporations, may not require or perceive the value of our content and
collaboration software platform and applications. If we cannot license our
products to customers in other industries, our business could be significantly
adversely affected.

We may be unable to penetrate additional markets and grow our revenues if we do
not successfully obtain leads or referrals from our marketing activities, new
partnerships, alliances and customers.

     To increase sales of our e-business content and collaboration software
platform and applications and grow our total revenues, we will try to obtain
leads or referrals from our marketing activities, new partnerships and
alliances, and current customers. If we are not successful in these marketing
activities, or fail to establish additional relationships, we will have to
devote substantially more resources, both financial and personnel, to the sales
and marketing of our products. As a result, our success depends in part on the
ultimate success of these activities, including current relationships and the
willingness of our customers, new partners and allies to provide us with these
introductions, referrals and leads. Our current customer relationships are not,
and any future relationships we establish may not, be exclusive arrangements and
at any time, our customers may terminate their relationships with us, pursue
other relationships with our competitors or develop or acquire products that
compete with our products.

If the emerging market for e-business content and collaboration software does
not develop as quickly as we expect, our business will suffer.

     The market for e-business content and collaboration software platform and
applications has only recently begun to develop, is rapidly evolving and will
likely have an increasing number of competitors. We cannot be certain that a
viable market for our products will emerge or be sustainable. If the e-business
content and collaboration software market fails to develop, or develops more
slowly than expected, demand for our products will be less than anticipated and
our business and operating results would be seriously harmed.

     Furthermore, to be successful in this emerging market, we must be able to
differentiate our business from our competitors through our product and service
offerings and brand name recognition. We may not be successful in
differentiating our business or achieving widespread market acceptance of our
products and
                                        19
<PAGE>   22

services. In addition, enterprises that have already invested substantial
resources in other methods of managing their content and collaborative process
may be reluctant or slow to adopt a new approach that may replace, limit or
compete with their existing systems.

Due to our lengthy and variable sales cycle, we may not be able to predict when
or if sales will be made and we may experience unplanned shortfalls in revenues.

     Our products have an unpredictable sales cycle that contributes to the
uncertainty of our future operating results. Customers often view the purchase
of our products as a significant and strategic decision, and this decision
typically involves a considerable commitment of resources and is influenced by
the customers' budget cycles. Selling our products also requires us to educate
potential customers on their use and benefits because our e-business content and
collaboration software is a new category of product. As a result, our products
have a lengthy sales cycle, which has historically ranged from approximately two
to nine months. We are finding that the sales cycle in the multi-national
corporate market is lengthier than in our traditional legal and professional
services market. Thus, as we enter these multi-national corporations our sales
cycle will increase.

     As potential customers evaluate our products and before they place an order
with us, we typically expend significant sales and marketing expenses. Larger
customers may purchase our products as part of multiple, simultaneous purchasing
decisions, which may result in additional unplanned administrative processing
and other delays in our product sales. If sales forecasted from a specific
customer for a particular quarter are not realized, we may experience unplanned
shortfalls in revenues. As a result, we have only a limited ability to forecast
the timing and size of sales of our products.

Competition from providers of software enabling content and collaboration
management among businesses may increase, which could cause us to reduce our
prices, and result in reduced gross margins or loss of market share.

     The market for products that enable companies to manage and share content
and collaborate throughout an extended enterprise is new, highly fragmented,
rapidly changing and increasingly competitive. We expect competition to continue
to intensify, which could result in price reductions for our products, reduced
gross margins and loss of market share, any of which would have a material
adverse effect on our business and financial condition.

     If our efforts to enhance existing products and introduce new products are
not successful, we may not be able to generate demand for our products.

     Our future success depends on our ability to provide a comprehensive
e-business content and collaboration software solution. To provide this
comprehensive solution, we must continually develop and introduce high quality,
cost-effective products as well as product enhancements on a timely basis. If
the market does not accept our new products, our business will suffer and our
stock price will likely fall.

     In addition, while our current product offerings have the ability to manage
many types of content, such as graphics, video, text, audio and data, we are
dependent upon third parties to develop additional interfaces that will enable
the deposit of other types of structured relational data, particularly data
generated by enterprise resource planning systems, into the iManage infoCommerce
Server. These third parties may not be able to develop these technologies, and
we may therefore not be able to continue to offer a comprehensive e-business
content and collaboration software solution. Our failure to offer a
comprehensive solution would seriously harm our business.

If our products cannot scale to meet the demands of tens of thousands of
concurrent users, our targeted customers may not license our solutions, which
will cause our revenue to decline.

     Our strategy is to target large organizations that, because of the
significant amounts of information and content that they generate and use,
require our e-business content and collaboration software solution. For this
strategy to succeed our software products must be highly scalable; that is, they
must be able to accommodate tens of thousands of concurrent users. If our
products cannot scale to accommodate a large number of

                                        20
<PAGE>   23

concurrent users, our target markets will not accept our products and our
business and operating results will suffer.

     While independent test laboratories and we have tested the scalability of
our products in simulations, we have not had the opportunity to observe the
performance of our products in the context of an actual large-scale, that is,
tens to hundreds of thousands of concurrent users, customer implementation. If
our customers cannot successfully implement large-scale deployments, or if they
determine that our products cannot accommodate large-scale deployments, our
customers will not license our solutions and this will materially adversely
affect our financial condition and operating results.

Our products might not be compatible with all major platforms, which could
inhibit sales and harm our business.

     We must continually modify and enhance our products to keep pace with
changes in computer hardware and software and database technology, as well as
emerging technical standards in the software industry. For example, we have
designed our products to work with databases and servers such as Informix,
Oracle and SQL Server and software applications including Microsoft Office,
Lotus Notes and Novell GroupWise. Any changes to these platforms could require
us to modify our products and could cause us to delay releasing a product until
the updated version of that platform or application has been released. As a
result, customers could delay purchases until they determine how our products
will operate with these updated platforms or applications.

     In addition, the iManage infoCommerce Server currently runs on the Windows
NT(R) or Windows 2000(R) platform. If a customer does not currently use these
platforms and does not choose to adopt these platforms, we will be unable to
license our products to this customer. Furthermore, some of our products do not
yet run on other popular operating systems, such as the UNIX operating system.
If another platform becomes more widely used, we could be required to convert
our product to that platform. We may not succeed in these efforts, and even if
we do, potential customers may not choose to license our product.

Defects in our software products could diminish demand for our products.

     Our software products are complex and may contain errors that may be
detected at any point in the life of the product. We cannot assure you that,
despite testing by us, our implementation partners and our current and potential
customers, errors will not be found in new products or releases after shipment,
resulting in loss of revenues, delay in market acceptance and sales, diversion
of development resources, injury to our reputation or increased service and
warranty costs. If any of these were to occur, our business would be adversely
affected and our stock price could fall.

     Because our products are generally used in systems with other vendors'
products, they must integrate successfully with these existing systems. System
errors, whether caused by our products or those of another vendor, could
adversely affect the market acceptance of our products, and any necessary
revisions could cause us to incur significant expenses.

If we are unable to respond to rapid market changes due to changing technology
and evolving industry standards, our future success will be adversely affected.

     The market for our products is characterized by rapidly changing
technology, evolving industry standards, frequent new service and product
introductions and changes in customer demands. Our future success will depend to
a substantial degree on our ability to offer products and services that
incorporate leading technology, and respond to technological advances and
emerging industry standards and practices on a timely and cost-effective basis.
You should be aware that:

     - our technology or systems may become obsolete upon the introduction of
       alternative technologies, such as products that better manage various
       types of content and enable collaboration; and

     - we may not have sufficient resources to develop or acquire new
       technologies or to introduce new products or services capable of
       competing with future technologies or service offerings.
                                        21
<PAGE>   24

Our products may lack essential functionality if we are unable to obtain and
maintain licenses to third-party software and applications.

     We rely on software that we license from third parties, including software
that is integrated with internally developed software and used in our products
to perform key functions. For example, we license Application Builder from
Autonomy, Inc., we license Search '97(R) from Verity, Inc. and we license
Outside In Viewer Technology(R) and Outside In HTML Export(R) from IntraNet
Solutions Corporation. The functionality of our products therefore depends on
our ability to integrate these third-party technologies into our products.
Furthermore, we may license additional software from third parties in the future
to add functionality to our products. If our efforts to integrate this
third-party software into our products are not successful, our customers may not
license our products and our business will suffer.

     In addition, we would be seriously harmed if the providers from whom we
license software ceased to deliver and support reliable products, enhance their
current products or respond to emerging industry standards. Moreover, the
third-party software may not continue to be available to us on commercially
reasonable terms or at all. Our license agreements with Autonomy, Verity and
IntraNet Solutions expire in December 2004, January 2003 and March 2005,
respectively. Each of these license agreements may be renewed only with the
other party's written consent. The loss of, or inability to maintain or obtain
licensed software, could result in shipment delays or reductions. Furthermore,
we might be forced to limit the features available in our current or future
product offerings. Either alternative could seriously harm our business and
operating results.

If we are unable to protect our intellectual property, we could lose market
share, incur costly litigation expenses or lose valuable assets.

     We believe that our continued success depends on protecting our proprietary
technology. We rely on a combination of patent, trademark, service mark, trade
secret and copyright law and contractual restrictions to protect the proprietary
aspects of our technology. In addition, we enter into confidentiality or license
agreements with our employees and consultants, and control access to and
distribution of our software, documentation and other proprietary information.
These legal and practical protections afford only limited protection. Despite
our efforts to protect our proprietary rights, unauthorized parties may attempt
to copy aspects of our products or to obtain and use our proprietary
information. These attempts, if successful, could cause us to lose market share
and thus harm our business and operating results. Litigation may be necessary to
enforce our intellectual property rights, to protect our trade secrets and to
determine the validity and scope of the proprietary rights of others. Any
litigation could result in substantial costs and diversion of resources and
could seriously harm our business and operating results. In addition, as we
expand our international sales, we may find that the laws of many countries,
particularly those in the Asia/Pacific region, do not protect our proprietary
rights to as great an extent as the laws of the United States.

Others may bring infringement claims against us which could be time consuming
and expensive for us to defend.

     Other companies, including our competitors, may obtain patents or other
proprietary rights that would prevent, limit or interfere with our ability to
make, use or sell our products. For example, we may discover that third parties
have developed similar or competing technologies to manage, organize and deliver
information, and enable collaborative content. As a result, we may be found to
infringe on the proprietary rights of others. Furthermore, companies in the
software market are increasingly bringing suits that allege infringement of
their proprietary rights, particularly patent rights. We could incur substantial
costs to defend any litigation, and intellectual property litigation could force
us to do one or more of the following:

     - cease using key aspects of our e-business content and collaboration
       software solution that incorporate the challenged intellectual property;

     - obtain a license from the holder of the infringed intellectual property
       right; and

     - redesign some or all of our products to avoid infringing.

                                        22
<PAGE>   25

In the event of a successful claim of infringement against us and our failure or
inability to license the infringed technology, our business and operating
results would be significantly harmed.

We could be subject to product liability claims if our customers' information or
content is damaged through the use of our products.

     If software errors or design defects in our products cause damage to
customers' data and our agreements do not protect us from related product
liability claims, our business, financial condition and operating results may be
materially adversely affected. Errors, bugs or viruses may result in the loss of
market acceptance or the loss of customer data. Our agreements with customers
that attempt to limit our exposure to product liability claims may not be
enforceable in jurisdictions where we operate.

We may be unable to retain our current key personnel and attract additional
qualified personnel to operate and expand our business.

     Our success depends largely on the skills, experience and performance of
the members of our senior management and other key personnel, such as Mahmood
Panjwani, our president and chief executive officer, and Rafiq Mohammadi, our
chief technology officer. We may not be successful in attracting, assimilating
or retaining qualified personnel in the future. None of our senior management or
other key personnel is bound by an employment agreement. If we lose one or more
of these key employees, our business and operating results could be seriously
harmed. In addition, our future success will depend largely on our ability to
continue attracting and retaining highly skilled personnel. Like other
high-technology companies, we face intense competition for qualified personnel.

Our total revenues will not increase if we fail to successfully manage our
growth and expansion.

     Our historical growth has placed, and any further growth is likely to
continue to place, a significant strain on our limited resources. We have grown
from 119 employees at December 31, 1999 to 214 employees at December 31, 2000.
To be successful, we will need to implement additional management information
systems, improve our operating, administrative, financial and accounting systems
and controls, train new employees and maintain close coordination among our
executive, research and development, accounting, finance, marketing, sales and
operations organizations. Any failure to manage growth effectively could
seriously harm our business and operating results.

As we expand our operations internationally, we will face significant risks in
doing business in foreign countries.

     A key component to our business strategy is to expand our existing sales
and marketing activities internationally, particularly in Asia, Australia,
Europe, New Zealand and the United Kingdom. If our efforts are successful, we
will be subject to a number of risks associated with international business
activities, including:

     - costs of customizing our products for foreign countries, including
       localization, translation and conversion to international and other
       foreign technology standards;

     - compliance with multiple, conflicting and changing governmental laws and
       regulations, including changes in regulatory requirements that may limit
       our ability to sell our software in particular countries;

     - import and export restrictions, tariffs and greater difficulty in
       collecting accounts receivable; and

     - foreign currency-related risks if a significant portion of our revenues
       become denominated in foreign currencies.

Our failure to successfully address any of these risks will hurt our operations
and may prevent our total revenues from growing.

                                        23
<PAGE>   26

The ThoughtStar acquisition presents risks to our business.

     On June 21, 2000, we completed the acquisition of ThoughtStar, Inc. This
acquisition could present the following risks:

     - the failure to realize the synergies and other perceived advantages
       resulting from the acquisition;

     - unanticipated costs associated with the acquisition;

     - diversion of management's attention from our other business concerns; and

     - adverse effects on our existing business relationships with suppliers and
       customers.

Future acquisitions may be difficult to integrate, disrupt our business, dilute
stockholder value or divert management attention.

     As part of our business strategy, we may find it necessary to acquire
additional businesses, products or technologies that we feel could complement or
expand our business, increase our market coverage, enhance our technical
capabilities or offer other types of growth opportunities. If we identify an
appropriate acquisition candidate, we may not be able to successfully negotiate
the terms of the acquisition, finance the acquisition, or integrate the acquired
business, products or technologies into our existing business and operations.
Furthermore, completing a potential acquisition and integrating an acquired
business will cause significant diversions of management time and other
resources. If we consummate a significant acquisition in which the consideration
consists of stock or other securities, your equity could be significantly
diluted.

     If we were to proceed with a significant acquisition in which the
consideration included cash, we could be required to use a substantial portion
of our available cash to consummate that acquisition. Acquisition financing may
not be available on favorable terms, if at all. In addition, we may be required
to amortize significant amounts of goodwill and other intangible assets in
connection with future acquisitions, which would seriously harm our operating
results.

We may be unable to meet our future capital requirements which would limit our
ability to grow.

     We may need to seek additional funding in the future. We do not know if we
will be able to obtain additional financing on favorable terms, if at all. In
addition, if we issue equity securities, stockholders may experience additional
dilution or the new equity securities may have rights, preferences or privileges
senior to those of existing holders of common stock. If we cannot raise funds on
acceptable terms, if and when needed, we may not be able to develop or enhance
our products, take advantage of future opportunities or respond to competitive
pressures or unanticipated requirements, which could seriously harm our
business.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We develop products in the United States and market our products in North
America, and to a lesser extent in Europe and Asia/Pacific regions. As a result,
our financial results could be affected by changes in foreign currency exchange
rates or weak economic conditions in foreign markets. Because substantially all
of our revenues are currently denominated in U.S. dollars, a strengthening of
the dollar could make our products less competitive in foreign markets. Our
interest income is sensitive to changes in the general level of U.S. interest
rates, particularly since the majority of our investments are in short-term
instruments, including money market funds and commercial paper, and long-term
investments mature between one and two years. Our interest expense is also
sensitive to changes in the general level of U.S. interest rates because the
interest rate charged varies with the prime rate. Due to the nature of our
investments, we believe that there is not a material risk exposure.

     On January 1, 1999, member states of the European Economic Community, or
the EEC, fixed their currencies to a new currency, the euro. On that day, the
euro became a functional legal currency within these countries. Furthermore,
during the three years beginning on January 1, 1999, business in these EEC
member states will be conducted in both the existing national currency, such as
the Netherlands guilder, French franc or Deutsche mark, and the euro. Companies
operating in or conducting business in EEC member states will
                                        24
<PAGE>   27

need to ensure that their financial and other software systems are capable of
processing transactions and properly handling the existing currencies, as well
as the euro. Our enterprise-wide information systems are euro-compliant.

     We maintain an investment portfolio of various issues, types and
maturities. Our investment portfolio consists of both fixed and variable rate
financial investments. These securities are classified as available-for-sale,
and consequently, are recorded on the balance sheet at fair value with
unrealized gains and losses reported in accumulated other comprehensive income
(loss), net of taxes. At any time, a sharp rise in interest rates could
seriously harm the fair value of our investment portfolio. Currently, we do not
hedge these interest rate exposures. The table below presents principal amounts
and related weighted average interest rates by year of maturity for our
investment portfolio.

<TABLE>
<CAPTION>
                                                           2001      2002      TOTAL
                                                          -------    -----    -------
<S>                                                       <C>        <C>      <C>
Corporate notes.........................................  $11,140    6,090    $17,230
                                                          =======    =====    =======
Average interest rate...................................     7.17%    7.13%      7.16%
                                                          =======    =====    =======
Government agencies.....................................  $   500       --    $   500
                                                          =======    =====    =======
Average interest rate...................................     5.82%      --       5.82%
                                                          =======    =====    =======
</TABLE>

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Consolidated Financial Statements and Supplementary Data required by
this Item are set forth at the pages indicated in Item 14(a).

QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                              --------------------------------------------------------------------------
                              MARCH 31,   JUNE 30,   SEPTEMBER 30,   DECEMBER 31,   MARCH 31,   JUNE 30,
                                1999        1999         1999            1999         2000        2000
                              ---------   --------   -------------   ------------   ---------   --------
<S>                           <C>         <C>        <C>             <C>            <C>         <C>
Revenues....................   $3,579     $ 4,295       $4,830          $5,866       $7,182      $8,439
Gross profit................    2,887       3,457        3,869           4,709        5,854       6,944
Net loss....................     (594)     (1,340)        (499)           (342)         (48)        (77)
Net loss per share -- basic
  and diluted...............    (0.06)      (0.15)       (0.05)          (0.02)       (0.00)      (0.00)

<CAPTION>
                                   THREE MONTHS ENDED
                              ----------------------------
                              SEPTEMBER 30,   DECEMBER 31,
                                  2000            2000
                              -------------   ------------
<S>                           <C>             <C>
Revenues....................     $ 6,373        $ 8,014
Gross profit................       4,820          6,384
Net loss....................      (4,555)        (4,434)
Net loss per share -- basic
  and diluted...............       (0.19)         (0.22)
</TABLE>

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

     None.

                                        25
<PAGE>   28

                                    PART III

     The SEC allows us to include information required in this report by
referring to other documents or reports we have already filed or soon will be
filing. This is called "Incorporation by Reference." We intend to file our
definitive Proxy Statement pursuant to Regulation 14A not later than 120 days
after the end of the fiscal year covered by this report, and certain information
therein is incorporated in this report by reference.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item is incorporated by reference from the
section entitled "Proposal Number One Election of Directors -- Directors and
Executive Officers" and "Executive Compensation and Other Matters -- Section
16(a) Beneficial Ownership Reporting Compliance" in our definitive Proxy
Statement.

ITEM 11. EXECUTIVE COMPENSATION

     The information required by this Item is incorporated by reference from the
section entitled "Executive Compensation and Other Matters" in our definitive
Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item is incorporated by reference from the
section entitled "Security Ownership of Certain Beneficial Owners and
Management" in our definitive Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item is incorporated by reference from the
section entitled "Certain Relationships and Related Transactions" in our
definitive Proxy Statement.

                                        26
<PAGE>   29

                                    PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

     (a) The following documents are filed as part of this report:

        1. Financial Statements:

<TABLE>
<CAPTION>
                                                               PAGE
                                                              NUMBER
                                                              ------
<S>                                                           <C>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants...........................    28
Consolidated Balance Sheets as of December 31, 1999 and
  2000......................................................    29
Consolidated Statements of Operations and Other
  Comprehensive Loss for the years ended December 31, 1998,
  1999 and 2000.............................................    30
Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 1998, 1999 and 2000..............    31
Consolidated Statements of Cash Flows for the years ended
  December 31, 1998, 1999 and 2000..........................    32
Notes to Consolidated Financial Statements..................    33
</TABLE>

          2. Financial Statement Schedule:

          Schedule II -- Valuation and Qualifying Accounts and Reserves.

          All other schedules are omitted because they are not required or the
     required information is shown in the financial statements or notes thereto.

          3. Exhibits:

          See Index to Exhibits on page 52 hereof. The exhibits listed in the
     accompanying Index to Exhibits are filed as part of this report.

     (b) Reports on Form 8-K:

     Report on Form 8-K dated June 21, 2000 filed on July 6, 2000.

     Amendment No. 1 to Report on Form 8-K dated June 21, 2000 filed on August
14, 2000.

                                        27
<PAGE>   30

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of iManage, Inc.

     In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 27 present fairly, in all material
respects, the financial position of iManage, Inc. and its subsidiaries at
December 31, 1999 and 2000, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in
the index appearing under Item 14(a)(2) on page 27 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICEWATERHOUSECOOPERS LLP

San Jose, California
January 19, 2001

                                        28
<PAGE>   31

                                 IMANAGE, INC.

                          CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                               1999        2000
                                                              -------    --------
<S>                                                           <C>        <C>
Current assets:
  Cash and case equivalents.................................  $47,985    $ 24,056
  Short-term investments....................................    3,028      11,640
  Trade accounts receivable, net of allowance for doubtful
     accounts of $135 in 1999 and $248 in 2000..............    5,704      10,655
  Other current assets......................................      831       2,041
                                                              -------    --------
          Total current assets..............................   57,548      48,392
Long-term investments.......................................    3,223       6,090
Property and equipment, net.................................    1,913       3,568
Goodwill and other intangible assets........................       --      12,509
Other assets................................................    1,237       2,788
                                                              -------    --------
          Total assets......................................  $63,921    $ 73,347
                                                              =======    ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $ 1,627    $    279
  Accrued liabilities.......................................    2,398       4,001
  Bank lines of credit, current portion.....................      612       4,083
  Deferred revenue..........................................    9,068       8,902
                                                              -------    --------
          Total current liabilities.........................   13,705      17,265
Bank lines of credit, less current portion..................    1,388       2,345
                                                              -------    --------
          Total liabilities.................................   15,093      19,610
                                                              -------    --------
Commitments
Stockholders' Equity:
  Common stock, $0.001 par value, authorized: 100,000 shares
     in 1999 and 2000; issued and outstanding: 21,916 shares
     in 1999 and 23,165 shares in 2000......................       22          23
  Additional paid-in capital................................   63,863      74,542
  Deferred stock-based compensation.........................   (4,046)     (1,285)
  Notes receivable for common stock.........................   (1,002)       (490)
  Accumulated other comprehensive income (loss).............      (42)         28
  Accumulated deficit.......................................   (9,967)    (19,081)
                                                              -------    --------
          Total stockholders' equity........................   48,828      53,737
                                                              -------    --------
          Total liabilities and stockholders' equity........  $63,921    $ 73,347
                                                              =======    ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        29
<PAGE>   32

                                 IMANAGE, INC.

       CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                               1998       1999        2000
                                                              -------    -------    --------
<S>                                                           <C>        <C>        <C>
Revenues:
  Licenses..................................................  $ 6,509    $14,257    $ 20,213
  Support and services......................................    1,232      4,313       9,795
                                                              -------    -------    --------
          Total revenues....................................    7,741     18,570      30,008
                                                              -------    -------    --------
Cost of revenues:
  Licenses..................................................      414        773       1,165
  Support and services (inclusive of stock-based
     compensation expense of $42, $143 and $127 for 1998,
     1999 and 2000, respectively)...........................    1,255      2,875       4,841
                                                              -------    -------    --------
          Total cost of revenues............................    1,669      3,648       6,006
                                                              -------    -------    --------
Gross profit................................................    6,072     14,922      24,002
                                                              -------    -------    --------
Operating expenses:
  Sales and marketing (inclusive of stock-based compensation
     expense of $704, $2,399 and $951 for 1998, 1999 and
     2000, respectively)....................................    5,097     10,929      17,845
  Research and development (inclusive of stock-based
     compensation expense of $147, $500 and $684 for 1998,
     1999 and 2000, respectively)...........................    2,498      4,680       9,094
  General and administrative (inclusive of stock-based
     compensation expense of $161, $547 and $372 for 1998,
     1999 and 2000, respectively )..........................    1,456      2,774       4,222
  Amortization of goodwill and other intangibles............       --         --       4,452
                                                              -------    -------    --------
          Total operating expenses..........................    9,051     18,383      35,613
                                                              -------    -------    --------
Loss from operations........................................   (2,979)    (3,461)    (11,611)
Interest income.............................................      153        813       2,953
Interest expense............................................      (14)       (95)       (260)
Other expense...............................................       --         --         (74)
                                                              -------    -------    --------
Loss before provision for income taxes......................   (2,840)    (2,743)     (8,992)
Provision for income taxes..................................       --         32         122
                                                              -------    -------    --------
Net loss....................................................   (2,840)    (2,775)     (9,114)
Other comprehensive loss:
  Unrealized gain/(loss) on investments.....................       --        (42)        125
  Unrealized loss on foreign exchange rates.................       --         --         (55)
                                                              -------    -------    --------
Comprehensive loss..........................................  $(2,840)   $(2,817)   $ (9,044)
                                                              =======    =======    ========
Net loss per share -- basic and diluted.....................  $ (0.38)   $ (0.28)   $  (0.41)
                                                              =======    =======    ========
Shares used in net loss per share -- basic and diluted......    7,455      9,988      22,130
                                                              =======    =======    ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        30
<PAGE>   33

                                 IMANAGE, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                       PREFERRED STOCK          COMMON STOCK
                                     --------------------   --------------------                    NOTES       ACCUMULATED
                                               PAR VALUE              PAR VALUE                   RECEIVABLE       OTHER
                                              AND CAPITAL            AND CAPITAL     DEFERRED        FOR       COMPREHENSIVE
                                               IN EXCESS              IN EXCESS    STOCK-BASED      COMMON        INCOME
                                     SHARES     OF PAR      SHARES     OF PAR      COMPENSATION     STOCK         (LOSS)
                                     ------   -----------   ------   -----------   ------------   ----------   -------------
<S>                                  <C>      <C>           <C>      <C>           <C>            <C>          <C>
BALANCES, DECEMBER 31, 1997........   4,128    $  3,992      6,516     $ 2,828       $  (482)      $    --         $ --
Issuance of Series B Preferred
  Stock, net of issuance costs of
  $17..............................   1,926       3,007         --          --            --            --           --
Issuance of Series C preferred
  stock, net of issuance costs of
  $4...............................   1,879       3,943         --          --            --            --           --
Issuance of Series C preferred
  stock to prepay rent.............     100         210         --          --            --            --           --
Exercise of common stock options...      --          --      1,682         372            --          (372)          --
Options issued in exchange for
  services.........................      --          --         --          89            --            --           --
Deferred stock-based
  compensation.....................      --          --         --       1,204        (1,204)           --           --
Amortization of deferred
  stock-based compensation.........      --          --         --          --           866            --           --
Non-employee deferred stock-based
  compensation.....................      --          --         --          49            50            --           --
Net loss...........................      --          --         --          --            --            --           --
                                     ------    --------     ------     -------       -------       -------         ----
BALANCES, DECEMBER 31, 1998........   8,033      11,152      8,198       4,542          (770)         (372)          --
Exercise of common stock options...      --          --      1,712         917            --          (630)          --
Options issued in exchange for
  services.........................      --          --         --         208            --            --           --
Deferred stock-based
  compensation.....................      --          --         --       6,612        (6,612)           --           --
Amortization of deferred
  stock-based compensation.........      --          --         --          --         3,355            --           --
Non-employee stock-based
  compensation.....................      --          --         --          47           (19)           --           --
Purchase of treasury stock.........      --          --       (167)       (750)           --            --           --
Conversion of preferred to common
  upon initial public offering.....  (8,033)    (11,152)     8,033      11,152            --            --           --
Stock issued on initial public
  offering, including treasury
  stock, net of expenses...........      --          --      4,140      41,157            --            --           --
Other comprehensive loss...........      --          --         --          --            --            --          (42)
Net loss...........................      --          --         --          --            --            --           --
                                     ------    --------     ------     -------       -------       -------         ----
BALANCES, DECEMBER 31, 1999........      --          --     21,916      63,885        (4,046)       (1,002)         (42)
Exercise of common stock options...      --          --        322         149            --            11           --
Stock issued for ThoughtStar
  acquisition, net of expenses.....      --          --      1,007      10,821            --            --           --
Additional expenses of initial
  public offering..................      --          --         --         (93)           --            --           --
Repurchase of stock subject to
  repurchase upon employee
  termination......................      --          --       (149)       (134)           --            --           --
Stock issued for employee stock
  purchase plan....................      --          --         69         564            --            --           --
Deferred stock-based compensation
  related to the Thoughtstar
  acquisition......................      --          --         --         982          (982)           --           --
Amortization of deferred
  stock-based compensation.........      --          --         --        (777)        2,911            --           --
Cancellation of options upon
  termination......................      --          --         --        (832)          832            --           --
Repayment of notes receivable......      --          --         --          --            --           501           --
Other comprehensive income.........      --          --         --          --            --            --           70
Net loss...........................      --          --         --          --            --            --           --
                                     ------    --------     ------     -------       -------       -------         ----
BALANCES, DECEMBER 31, 2000........      --    $     --     23,165     $74,565       $(1,285)      $  (490)        $ 28
                                     ======    ========     ======     =======       =======       =======         ====

<CAPTION>

                                     ACCUMULATED
                                       DEFICIT      TOTAL
                                     -----------   -------
<S>                                  <C>           <C>
BALANCES, DECEMBER 31, 1997........   $ (4,352)    $ 1,986
Issuance of Series B Preferred
  Stock, net of issuance costs of
  $17..............................         --       3,007
Issuance of Series C preferred
  stock, net of issuance costs of
  $4...............................         --       3,943
Issuance of Series C preferred
  stock to prepay rent.............         --         210
Exercise of common stock options...         --          --
Options issued in exchange for
  services.........................         --          89
Deferred stock-based
  compensation.....................         --          --
Amortization of deferred
  stock-based compensation.........         --         866
Non-employee deferred stock-based
  compensation.....................         --          99
Net loss...........................     (2,840)     (2,840)
                                      --------     -------
BALANCES, DECEMBER 31, 1998........     (7,192)      7,360
Exercise of common stock options...         --         287
Options issued in exchange for
  services.........................         --         208
Deferred stock-based
  compensation.....................         --          --
Amortization of deferred
  stock-based compensation.........         --       3,355
Non-employee stock-based
  compensation.....................         --          28
Purchase of treasury stock.........         --        (750)
Conversion of preferred to common
  upon initial public offering.....         --          --
Stock issued on initial public
  offering, including treasury
  stock, net of expenses...........         --      41,157
Other comprehensive loss...........         --         (42)
Net loss...........................     (2,775)     (2,775)
                                      --------     -------
BALANCES, DECEMBER 31, 1999........     (9,967)     48,828
Exercise of common stock options...         --         160
Stock issued for ThoughtStar
  acquisition, net of expenses.....         --      10,821
Additional expenses of initial
  public offering..................         --         (93)
Repurchase of stock subject to
  repurchase upon employee
  termination......................         --        (134)
Stock issued for employee stock
  purchase plan....................         --         564
Deferred stock-based compensation
  related to the Thoughtstar
  acquisition......................         --          --
Amortization of deferred
  stock-based compensation.........         --       2,134
Cancellation of options upon
  termination......................         --          --
Repayment of notes receivable......         --         501
Other comprehensive income.........         --          70
Net loss...........................     (9,114)     (9,114)
                                      --------     -------
BALANCES, DECEMBER 31, 2000........   $(19,081)    $53,737
                                      ========     =======
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        31
<PAGE>   34

                                 IMANAGE, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                               1998       1999        2000
                                                              -------    -------    --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  $(2,840)   $(2,775)   $ (9,114)
  Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
    Depreciation and amortization of goodwill and other
     intangibles............................................      313        545       6,048
    Amortization of prepaid rent............................       12        216          --
    Amortization of deferred stock-based compensation.......      965      3,383       2,134
    Amortization of technology licenses.....................       --         --         244
    Stock issued for services...............................       89        208          --
  Provision for doubtful accounts...........................      100         40         164
  Provision for sales returns...............................      122          2         100
  Changes in operating assets and liabilities:
    Trade accounts receivable...............................   (3,317)    (1,552)     (5,269)
    Other current assets....................................       --       (604)     (1,210)
    Other assets............................................   (1,021)      (479)     (1,795)
    Accounts payable........................................      407      1,032      (1,348)
    Accrued liabilities.....................................    1,868        208       1,603
    Deferred revenue........................................    2,680      5,718        (166)
                                                              -------    -------    --------
        Net cash provided by (used in) operating
        activities..........................................     (622)     5,942      (8,609)
                                                              -------    -------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment.......................     (431)    (1,975)     (3,251)
  Purchases of investments..................................       --     (6,293)    (11,355)
  Acquisition of business, net of cash acquired.............       --         --      (6,140)
                                                              -------    -------    --------
        Net cash used in investing activities...............     (431)    (8,268)    (20,746)
                                                              -------    -------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from equipment line of credit....................       --      2,000       4,872
  Repayment of equipment line of credit.....................       --         --        (444)
  Repayment of notes receivable from stockholders...........       --         --         501
  Purchases of common stock.................................       --       (750)       (134)
  Other.....................................................      (69)        --         (93)
  Issuance of common stock, net.............................       --     41,444         724
  Issuance of preferred stock, net..........................    6,950         --          --
                                                              -------    -------    --------
        Net cash provided by financing activities...........    6,881     42,694       5,426
                                                              -------    -------    --------
  Net increase (decrease ) in cash and cash equivalents.....    5,828     40,368     (23,929)
  Cash and cash equivalents at beginning of period..........    1,789      7,617      47,985
                                                              -------    -------    --------
  Cash and cash equivalents at end of period................  $ 7,617    $47,985    $ 24,056
                                                              =======    =======    ========
SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid for interest....................................  $    17    $    96    $    260
                                                              =======    =======    ========
  Cash paid for income taxes................................  $     2    $   111    $    122
                                                              =======    =======    ========
SUPPLEMENT DISCLOSURES OF NONCASH FINANCING ACTIVITIES
  Issuance of common stock in exchange for notes
    receivable..............................................  $   372    $   630    $     --
                                                              =======    =======    ========
  Issuance of Series C preferred stock to prepay rent.......  $   210    $    --    $     --
                                                              =======    =======    ========
  Deferred stock-based compensation.........................  $ 1,253    $ 6,612    $    982
                                                              =======    =======    ========
  Unrealized (loss) gain on investments.....................  $    --    $   (42)   $    125
                                                              =======    =======    ========
  Unrealized loss on foreign exchange rates.................  $    --    $    --    $    (55)
                                                              =======    =======    ========
  Issuance of common stock in Thoughtstar acquisition.......  $    --    $    --    $ 10,821
                                                              =======    =======    ========
  Conversion of preferred stock to common stock.............  $    --    $11,152    $     --
                                                              =======    =======    ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        32
<PAGE>   35

                                 IMANAGE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND NATURE OF OPERATIONS

     iManage, Inc. (the "Company") provides content and collaboration management
software. The Company's products provide a unified content platform that
organizes and delivers content from a variety of sources in a centralized manner
throughout the extended enterprise of a business and its customers, partners and
suppliers. The Company's web-based collaboration tools allow users within and
across the extended enterprise to dynamically interact with each other on
discrete projects by contributing, modifying and exchanging information. The
Company markets and sells its software and services primarily through its direct
sales organization, resellers and system integrators in the United States,
Canada, the United Kingdom and France, and through distributors in Australia and
New Zealand. In 1998, 1999 and 2000, 55.0%, 61.0% and 54.2%, of revenues,
respectively, were through resellers. The Company's license and support and
services revenues to date have substantially been derived from the sale of
iManage's suite of products, including iManage infoCommerce Server, iManage
infoLink, iManage infoLook and iManage infoRite, to customers primarily located
in the United States.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its subsidiaries after elimination of intercompany accounts and
transactions. The functional currency of the Company's subsidiaries is the U.S.
dollar. All gains and losses arising from the translation into U.S. dollars of
amounts denominated in foreign currencies are included in shareholder's equity.

  Use of Estimates

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

  Financial Instruments

     Cash equivalents represent commercial paper, money market funds, government
agencies, and corporate notes with original or remaining maturities at the date
of purchase of three months or less. The carrying amounts reported for cash and
cash equivalents are considered to approximate fair values based upon the short
maturities of those financial instruments.

     The Company's investments comprise U.S. government agencies and corporate
debt obligations and are accounted for as available for sale. Investments with
maturities of less than one year are classified as short-term investments and
investments with maturities greater than one year are classified as long-term
investments. Realized gains and losses are calculated using the specific
identification method. There were no realized gains and losses in 1998, 1999 or
2000. In 1999 and 2000 there were unrealized (losses) gains of $(42,000) and
$125,000, respectively. Unrealized gains and losses are included as a separate
component of other comprehensive loss and stockholders' equity. See "Balance
Sheet Accounts" for the fair value of the Company's short-term and long-term
investments.

     The carrying amounts of certain of the Company's other financial
instruments including accounts receivable, accounts payable and accrued
liabilities approximate fair value due to their short maturities. The carrying
amounts of notes payable under the equipment line of credit approximates fair
value based on the terms of similar borrowing arrangements available to the
Company.

                                        33
<PAGE>   36
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

  Certain Risks and Concentrations

     Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investments, accounts receivable and long-term investments. The
Company maintains substantially all of its cash and cash equivalent balances and
short- and long-term investments with two major financial institutions domiciled
in the United States. The Company performs ongoing credit evaluations of its
customers, generally does not require collateral of its customers and maintains
allowances for potential credit losses.

     Two different customers accounted for 33.0% of trade accounts receivable at
December 31, 1998. Additionally, 89.0%, 93.3% and 76.6% of the Company's
revenues for 1998, 1999 and 2000, respectively, were derived from law firms.

     The Company relies on software licensed from third parties, including
software that is integrated with internally developed software and used in the
Company's products to perform key functions. The functionality of the Company's
products, therefore, depends on its ability to integrate these third party
technologies into its products. If these licenses cannot be renewed, shipments
of the Company's products could be delayed until equivalent software can be
developed or licensed and integrated into the products. These types of delays
could seriously harm the Company's business.

  Property and Equipment

     Property and equipment are recorded at cost and depreciated using the
straight-line method over estimated useful lives of three years. Depreciation
for leasehold improvements is recorded using the straight-line method over the
lesser of the estimated useful lives of the assets or the lease term, generally
three years. Upon sale or retirement of assets, cost and related accumulated
depreciation are removed from the balance sheet and the resulting gain or loss
is reflected in operations.

  Long-Lived Assets

     The Company reviews property and equipment and goodwill and other
intangible assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability is measured by comparison of its carrying amount to future net
cash flows the assets are expected to generate. If such 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 projected discounted future cash
flows arising from the asset.

     The Company also assesses the impairment of enterprise level goodwill
periodically in accordance with the provision of Accounting Principles Board
(APB) Opinion No. 17, Intangible Assets. An impairment review is performed
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. Factors the Company consider important which could trigger
an impairment review include, but are not limited to, significant
underperformance relative to expected historical or projected future operating
results, significant changes in the manner of use of the acquired assets or the
strategy for the overall business, significant negative industry or economic
trends, a significant decline in stock price for a sustained period, and our
market capitalization relative to net book value. When the Company determines
that the carrying value of goodwill and other intangible assets may not be
recoverable based upon the existence of one or more of the above indicators of
impairment, any impairment is measured based on a projected discounted cash flow
method using a discount rate commensurate with the risk inherent in our current
business model.

  Software Development Costs

     Costs related to research and development of new software products are
charged to research and development expenses as incurred. Software development
costs are capitalized beginning when a product's
                                        34
<PAGE>   37
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

technological feasibility has been established, which to date has been when the
Company has a working model of the software, and ending, when a product is
available for general release to customers. Substantially all development costs
are incurred prior to establishing a working model. As a result, the Company has
not capitalized any software development costs since such costs have not been
significant.

  Revenue Recognition

     The Company's revenues are derived from two sources as follows: (i)
software license revenue, derived primarily from product sales on a per server
and per user basis, including software modules, to end users, resellers, systems
integrators and distributors and (ii) support and services revenue, derived
primarily from providing customer support and software updates and to a lesser
extent, training and consulting services to end users. The Company recognizes
license revenues upon shipment of a product master, which allows the customer to
make the number of copies specified in the contract if a signed contract exists,
the fee is fixed and determinable, collection of resulting receivables is
reasonably assured and product returns can be reasonably estimated and, if
applicable, acceptance criteria have been met. During the fourth quarter of
1999, the Company implemented a subscription licensing model for a newly
released product whereby the customer licenses the product generally for one
year under an arrangement that includes customer support and software updates
during the term of the license. Revenues associated with this software product
and related services are recognized ratably over the applicable subscription
license period. Provisions for estimated warranty costs and sales returns are
recorded at the time of shipment.

     For contracts with multiple obligations (e.g. support and other services),
the Company allocates revenues to the undelivered element of the contract using
the residual method based on objective evidence of its fair value. This
objective evidence is the sales price of the element when sold separately by the
Company or the renewal rate specified in the arrangement for licensing
arrangements with terms of generally one year that include customer support and
software updates. The Company generally does not allow the right of return but
has accepted returns in isolated instances when resellers, system integrators
and distributors have incorrectly ordered product. The Company recognizes
support and services revenues, including amounts allocated from contracts with
multiple obligations and for ongoing customer support, ratably over the period
of the support contract. The Company's support and service arrangements entitle
customers to telephone support and unspecified upgrades and enhancements.
Payments for support and services are generally made in advance and are
non-refundable. For revenues allocated to training and consulting services or
derived from the separate sales of these services, the Company recognizes
revenues as the related services are performed.

     As of December 31, 1998, 1999 and 2000 deferred revenue included advance
payments received for support and services and license revenues received or due
under the terms of the contracts for which customer acceptance had not been
received or vendor specific objective evidence was not available for elements of
the contracts.

     In December 1999, the SEC issued Staff Accounting Bulletin No. 101, or SAB
101, Revenue Recognition in Financial Statements." SAB 101 summarizes certain of
the SEC's views in applying generally accepted accounting principles to revenue
recognition in financial statements. The Company was required to adopt SAB 101
in the fourth quarter of fiscal 2000 effective as of January 1, 2000. The
adoption of SAB 101 did not have a material effect on the Company's financial
position or results of operations.

  Income Taxes

     Income taxes are accounted for using the liability method under which
deferred tax assets and liabilities are determined based on differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the period in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.
                                        35
<PAGE>   38
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

  Stock-based Compensation

     The Company accounts for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25 or APB 25,
"Accounting for Stock Issued to Employees" and has elected to adopt the
disclosure-only provisions of Statement of Financial Accounting Standards No.
123, or SFAS 123, "Accounting for Stock-Based Compensation." The resulting
stock-based compensation is amortized over the estimated term of the option,
generally four years, using the multiple option approach. Stock-based
compensation to non-employees is based on the fair value of the option estimated
using the Black-Scholes model on the date of the grant and revalued until
vested. Compensation expense resulting from non-employee options is amortized to
expense using the multiple options approach.

     In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, or FIN 44, "Accounting for Certain Transactions Involving
Stock Compensation an Interpretation of APB 25." FIN 44 becomes effective July
1, 2000, but certain conclusions cover specific events that occur after either
December 15, 1998 or January 12, 2000. The adoption of FIN 44 did not have a
material effect on the Company's financial position or results of operations.

  Advertising

     The Company expenses advertising costs as incurred. During 1998, 1999 and
2000, the Company incurred $286,000, $540,000 and $1,938,000, respectively, of
advertising cost.

  Segments

     The Company uses the management approach to identify segments for external
reporting purposes, which designate the internal organization that is used by
management for making operating decisions and assessing performance as the
source of the Company's reportable segments.

     The Company operates in one disclosable segment, using one measurement of
profitability for its business. Although the Company has sales outside North
America, such sales are not material. All long-lived assets are maintained in
the United States.

  Comprehensive Loss

     Comprehensive loss is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources.

  Net Loss Per Share

     Basic net loss per share is computed based on the weighted average number
of shares outstanding during the period. Diluted net loss per share is also
computed based on the weighted average number of shares outstanding during the
period. Diluted net loss per share does not include the weighted average effect
of dilutive potential common shares including convertible preferred stock,
options to purchase common stock and common stock subject to repurchase in any
period presented because the effect is antidilutive.

                                        36
<PAGE>   39
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The following table presents information necessary to reconcile basic and
diluted net loss per common and common equivalent share (in thousands):

<TABLE>
<CAPTION>
                                                         1998       1999       2000
                                                        -------    -------    -------
<S>                                                     <C>        <C>        <C>
Net loss..............................................  $(2,840)   $(2,775)   $(9,114)
Weighted average shares used in net loss per
  share -- basic and diluted..........................    7,455      9,988     22,130
                                                        -------    -------    -------
Net loss per share -- basic and diluted...............  $ (0.38)   $ (0.28)   $ (0.41)
                                                        =======    =======    =======
Anti-Dilutive Securities:
  Convertible preferred stock.........................    8,033         --         --
  Options to purchase common stock....................    1,620      1,567      3,479
  Common stock subject to repurchase..................      452        697        262
                                                        -------    -------    -------
                                                         10,105      2,264      3,741
                                                        =======    =======    =======
</TABLE>

  Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, or SFAS 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 establishes new standards of
accounting and reporting for derivative instruments and hedging activities. SFAS
133 requires that all derivatives be recognized at fair value in the statement
of financial position, and that the corresponding gains or losses be reported
either in the statement of operations or as a component of comprehensive income,
depending on the type of hedging relationship that exists. In July 1999, the
Financial Accounting Standard Boards issued SFAS No. 137, or SFAS 137,
Accounting for Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of SFAS No. 133. SFAS 137 deferred the effective date of SFAS 133
until the first fiscal quarter beginning after June 15, 2000 requiring the
Company to adopt SFAS 133 in the first quarter of 2001. The Company does not
currently hold derivative instruments or engage in hedging activities. The
adoption of SFAS 133 and SFAS 137 is not expected to have a material effect on
the Company's financial position or results of operations.

  Acquisition

     On June 21, 2000, the Company completed the acquisition of ThoughtStar,
Inc. ("Thoughtstar"). The Company issued 1,007,000 shares of its common stock
with a fair market value on the closing date of $11,036,000 and paid cash
consideration of $5,200,000 for all of the outstanding stock of Thoughtstar,
including additional monies loaned prior to the completion of the merger,
incurred transaction costs consisting primarily of professional fees of $725,000
and incurred stock issuance costs of $215,000, resulting in a total purchase
price of $16,961,000. The acquisition was accounted for as a purchase business
combination, which means that the purchase price was allocated to the assets
acquired and the liabilities assumed based on the estimated fair values at the
date of acquisition. The results of operations of Thoughtstar have been included
with the Company's results of operations since June 21, 2000, the date of
acquisition.

                                        37
<PAGE>   40
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The fair value of the assets of Thoughtstar was determined through
established valuation techniques used in the software industry. No significant
tangible assets or liabilities were acquired. A summary of the consideration
exchanged for these assets is as follows (in thousands):

<TABLE>
<S>                                                          <C>
Total purchase price.......................................  $16,961
                                                             =======
Assets acquired:
  Purchased technology.....................................  $ 1,900
  Assembled workforce......................................      400
  Non-compete agreements...................................      400
  Goodwill.................................................   14,261
                                                             -------
                                                             $16,961
                                                             =======
</TABLE>

     Amounts allocated to goodwill, assembled work force and non-compete
agreements are amortized on a straight-line over two years. At December 2000,
accumulated amortization related to these items totaled $4,452,000.

     In addition to the consideration noted above, iManage granted 89,000
iManage stock options with an exercise price of $0.01 with a two year vesting
and exercise schedule to former Thoughtstar employees in exchange for 1,648,000
fully vested and exercisable Thoughtstar options. At the date of grant these
options had an intrinsic value of $982,000 which was recorded as deferred
stock-based compensation and is amortized over two years (see "Deferred Stock
Compensation").

     Pro forma condensed results of operations for the combined company as if
the transaction had consummated at the beginning of each of the periods
presented are as follows:

<TABLE>
<CAPTION>
                                                              YEAR ENDED
                                                             DECEMBER 31,
                                                         --------------------
                                                           1999        2000
                                                         --------    --------
                                                            (IN THOUSANDS)
<S>                                                      <C>         <C>
Revenues...............................................  $ 18,570    $ 30,008
Cost of revenues.......................................     3,648       6,006
                                                         --------    --------
Gross profit...........................................  $ 14,922    $ 24,002
                                                         ========    ========
Net loss...............................................  $(13,329)   $(14,876)
                                                         ========    ========
Net loss per share -- basic and diluted................  $  (1.21)   $  (0.66)
                                                         ========    ========
Shares used in net loss per share -- basic and
  diluted..............................................    11,005      22,634
                                                         ========    ========
</TABLE>

     The above amounts are based upon certain assumptions and estimates which we
believe are reasonable and do not reflect any benefit from economies which might
be achieved from combined operations. The pro forma financial information
presented above is not necessarily indicative of either the results of
operations that would have occurred had the acquisition taken place at the
beginning of the periods presented or of future results of operations of the
combined companies.

                                        38
<PAGE>   41
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

BALANCE SHEET ACCOUNTS

  Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                    ----------------------------------------------
                                                            1999                     2000
                                                    ---------------------    ---------------------
                                                     COST      FAIR VALUE     COST      FAIR VALUE
                                                    -------    ----------    -------    ----------
                                                                    (IN THOUSANDS)
<S>                                                 <C>        <C>           <C>        <C>
Cash..............................................  $    91     $    91      $   504     $   504
Money market......................................    2,037       2,037       15,807      15,807
Government agencies...............................    3,480       3,480           --          --
Commercial paper..................................   42,377      42,377        2,492       2,492
Corporate notes...................................       --          --        5,253       5,253
                                                    -------     -------      -------     -------
                                                    $47,985     $47,985      $24,056     $24,056
                                                    =======     =======      =======     =======
</TABLE>

  Investments

<TABLE>
<CAPTION>
                                                                 GROSS         GROSS
                                                  AMORTIZED    UNREALIZED    UNREALIZED
                                                    COST         GAINS         LOSSES      FAIR VALUE
                                                  ---------    ----------    ----------    ----------
                                                                    (IN THOUSANDS)
<S>                                               <C>          <C>           <C>           <C>
DECEMBER 31, 1999
U.S. government agencies........................   $1,499          $--          $ (5)        $1,494
Corporate notes and bonds.......................    4,794          --            (37)         4,757
                                                   ------          --           ----         ------
                                                   $6,293          $--          $(42)        $6,251
                                                   ======          ==           ====         ======
Reported as:
  Short-term investments........................                                             $3,028
  Long-term investments.........................                                              3,223
                                                                                             ------
                                                                                             $6,251
                                                                                             ======
</TABLE>

<TABLE>
<CAPTION>
                                                                 GROSS         GROSS
                                                  AMORTIZED    UNREALIZED    UNREALIZED
                                                    COST         GAINS         LOSSES      FAIR VALUE
                                                  ---------    ----------    ----------    ----------
                                                                    (IN THOUSANDS)
<S>                                               <C>          <C>           <C>           <C>
DECEMBER 31, 2000
U.S. government agencies........................   $   500        $ --           $--        $   500
Corporate notes and bonds.......................    17,105         125           --          17,230
                                                   -------        ----           --         -------
                                                   $17,605        $125           $--        $17,730
                                                   =======        ====           ==         =======
Reported as:
  Short-term investments........................                                            $11,640
  Long-term investments.........................                                              6,090
                                                                                            -------
                                                                                            $17,730
                                                                                            =======
</TABLE>

                                        39
<PAGE>   42
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Long-term investments mature one year through two years.

  Property and Equipment, Net

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                            -----------------
                                                             1999      2000
                                                            ------    -------
                                                             (IN THOUSANDS)
<S>                                                         <C>       <C>
Furniture and fixtures....................................  $  625    $ 1,261
Computer software and equipment...........................   1,602      3,930
Leasehold improvements....................................     496        783
                                                            ------    -------
                                                             2,723      5,974
Less accumulated depreciation.............................    (810)    (2,406)
                                                            ------    -------
                                                            $1,913    $ 3,568
                                                            ======    =======
</TABLE>

     Depreciation expense was $185,000, $545,000 and $1,596,000 for 1998, 1999
and 2000, respectively.

  Other Assets

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             ----------------
                                                              1999      2000
                                                             ------    ------
                                                              (IN THOUSANDS)
<S>                                                          <C>       <C>
Technology licenses........................................  $  844    $1,420
Less accumulated amortization..............................    (302)     (546)
                                                             ------    ------
                                                                542       874
                                                                695     1,914
                                                             ------    ------
                                                             $1,237    $2,788
                                                             ======    ======
</TABLE>

     In 1998 and 2000, the Company entered into technology license agreements
including non-cancelable minimum payments. The present value of payments under
these agreements is recorded as an asset and amortized over the terms of the
agreements (generally three years) as the technological feasibility had been
established for the product, which included the technology. Each of these
license agreements may be renewed only with the other party's written consent.
The loss of, or inability to maintain or obtain licensed software, could result
in shipping delays. Furthermore, the Company may be forced to limit the features
available in our current or future product offerings. Either alternative could
seriously harm the Company's business and operating results.

  Accrued Liabilities

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             ----------------
                                                              1999      2000
                                                             ------    ------
                                                              (IN THOUSANDS)
<S>                                                          <C>       <C>
Technology licenses........................................  $   76    $  412
Payroll and related........................................   1,451     1,965
Other......................................................     871     1,624
                                                             ------    ------
                                                             $2,398    $4,001
                                                             ======    ======
</TABLE>

COMMITMENTS

     The Company leases its office facilities in San Mateo, California and
Chicago, Illinois under non-cancelable operating leases which expire in December
2001 and March 2003 for the San Mateo facility and April 2009, for the Chicago
facility.

                                        40
<PAGE>   43
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Under the terms of the San Mateo leases, the Company issued 100,000 shares
of Series C preferred stock in lieu of future rental payments (see accompanying
notes). In addition, the lease has two one-year options to extend upon six
months written notice to the landlord.

     Future minimum payments under the non-cancelable operating leases as of
December 31, 2000 are as follows (in thousands):

<TABLE>
<CAPTION>
                            YEAR
                            ----
<S>                                                           <C>
2001........................................................  $1,244
2002........................................................     843
2003........................................................     488
2004........................................................     378
2005........................................................     392
and thereafter..............................................   1,382
                                                              ------
                                                              $4,727
                                                              ======
</TABLE>

     Rent expense was $216,000, $684,000 and $1,069,000 for 1998, 1999 and 2000,
respectively. See accompanying notes for sublease income received.

LINE OF CREDIT AGREEMENT

     In March 1999, the Company entered into a line of credit agreement with a
bank, comprised of a revolving line of credit and an equipment line of credit.
The line of credit agreement, which is collateralized by substantially all of
the Company's assets, intangible assets and intellectual property, includes
covenant restrictions requiring the Company to maintain certain minimum
financial ratios and profitability levels and limits the Company's ability to
declare and pay dividends. At December 31, 2000, the company was in default of
the covenant to maintain a quarterly minimum operating level; however, the
lending bank waived the default. In March 2001, the Company renegotiated the
quarterly minimum operating level covenant.

     The revolving line of credit provides for borrowings of up to $4,000,000,
which can be used at the discretion of the Company through March 31, 2001.
Borrowings are limited to the lesser of 80% of eligible accounts receivable or
$4,000,000, ($1,000,000 was available at December 31, 2000) bear interest at
prime plus 0.25% and are due at March 31, 2001. At December 31, 2000, $3,000,000
was drawn against this facility.

     The equipment line of credit, which bears interest at prime plus 0.50%,
provides for borrowings of up to $4,000,000 to finance the Company's purchases
of property and equipment. At December 31, 2000, amounts outstanding on the line
totaled $3,427,000. Principal repayment began in March 2000 and continues
through February 2004 in monthly installments of principal and interest. The
company repaid $444,000 of principal in 2000.

     Principal payments due under the facility as of December 31, 2000 are as
follows (in thousands):

<TABLE>
<CAPTION>
                  YEAR ENDING DECEMBER 31,
                  ------------------------
<S>                                                           <C>
       2001.................................................  $4,083
       2002.................................................   1,083
       2003.................................................   1,082
       2004.................................................     180
                                                              ------
                                                              $6,428
                                                              ======
</TABLE>

                                        41
<PAGE>   44
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

STOCKHOLDERS' EQUITY

  Common Stock

     In November 1998, the Company issued 100,000 shares of preferred stock,
which converted to common stock due to the initial public offering, in
conjunction with an office lease agreement. The Company determined the fair
value of the stock was $210,000, which was the price paid per share by third
party investors for the Series C preferred stock (described below) in November
1998 multiplied by the number of shares issued. This amount was recorded as
prepaid rent and was fully amortized as of December 31, 1999.

     At December 31, 1998, 1999 and 2000, 452,000 shares, 697,000 and 262,000
shares of common stock were subject to the Company's right of repurchase at the
shares' original issuance price, respectively. Weighted average original
issuance price, per share, of these shares was $0.28, $0.72 and $0.55 in 1998,
1999 and 2000 respectively. The Company's right to repurchase these shares
lapses ratably over periods through September 2003.

     On November 17, 1999, the Company completed an initial public offering in
which it sold 4.1 million shares of common stock, including 540,000 shares in
connection with the exercise of the underwriters' over-allotment option, at
$11.00 per share. The Company received $41.2 million of cash, net of
underwriting discounts, commissions and other offering costs.

     On June 21, 2000, the Company issued 1,007,000 shares of its common stock
as part consideration for all of the outstanding stock of Thoughtstar, Inc.
Further details of this transaction are detailed in the section headed
"Acquisition."

  Employee Stock Purchase Plan

     In November 1999, the Company adopted an Employee Stock Purchase Plan
("ESPP"). Under the terms of the ESPP, the maximum aggregate number of shares of
stock that may be issued under the ESPP is 500,000, cumulatively increased on
January 1, 2001 and each January 1 thereafter until and including January 1,
2009 by an amount equal to the lesser of (a) two percent (2%) of the issued and
outstanding shares of stock as of the preceding December 31, (b) 500,000 shares,
or (c) a lesser amount of shares determined by the Board. During each six month
offering period, employees can choose to have up to 15% of their annual base
earnings withheld to purchase the Company's common stock. The purchase price of
the common stock is 85% of the lesser of the fair value as of the beginning or
ending of the offering period. The first offering period ended July 31, 2000.
During 2000, 69,000 shares of common stock were issued under the ESPP and at
December 31, 2000, 894,308 shares were available for issuance.

                                        42
<PAGE>   45
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

  Stock Option Plans

     1997 Stock Option Plan

     The Company has reserved 6,000,000 shares of common stock for issuance
under the 1997 Stock Incentive Plan (the "Plan"). Automatic annual increases
occur beginning in 2001 equal to the lesser of (i) 1,200,000 common shares, (ii)
5% of the outstanding common shares of the Company at the last day of the
preceding year, or (iii) a lesser amount as determined by the Board. Under the
Plan, automatic grants for non-employee directors are as follows: (i) initial
grants of options to purchase common shares to vest over three years for any
newly elected directors following the initial public offering and (ii) annual
grants of options to purchase common stock to be granted at the Company's annual
meeting which will vest over one year. Under the Plan, the Board of Directors
issued incentive stock options to employees and nonqualified stock options to
consultants or nonemployee directors of the Company, and stock purchase rights
to employees or nonemployee directors of, or consultants to, the Company.

     The Board of Directors has the authority to determine to whom options will
be granted, the number of shares, the term and exercise price. The options vest
and are exercisable at times and increments as specified by the Board of
Directors, and expire ten years from date of grant. Options granted under the
Plan generally vest and become exercisable 25% one year after the date of the
optionholders' date of employment and thereafter ratably over three years.

     2000 Stock Option Plan

     The Company has reserved 1,000,000 shares of common stock for issuance
under the 2000 Non-Officer Stock Option Plan. Options are granted at the
discretion of the Board of Directors to eligible employees and consultants.

     The Board of Directors has the authority to determine to whom options will
be granted, the number of shares, the term and exercise price. The exercise
price shall not be less than 85% of the fair market value of a share of stock on
the effective date of the grant of the Option. Options granted under the Plan
generally vest and become exercisable 25% one year after the date of the option
holders' date of employment and thereafter ratably over three years and expire
ten years from the date of the grant.

                                        43
<PAGE>   46
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Activity under the Plan does not include options to purchase 180,000 shares
of common stock granted outside the plan in 1998 and is as follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                               OUTSTANDING OPTIONS
                                                                                             WEIGHTED
                                                SHARES                                       AVERAGE
                                             AVAILABLE FOR    NUMBER OF       EXERCISE       EXERCISE
                                                 GRANT         SHARES          PRICE          PRICE
                                             -------------    ---------    --------------    --------
<S>                                          <C>              <C>          <C>               <C>
Balances, December 31, 1997................      1,201          2,174               $0.20     $0.20
Additional shares reserved.................        400             --                  --        --
Options granted............................       (967)           967      $0.30 -   0.40      0.32
Options exercised..........................         --         (1,502)               0.20      0.20
Options canceled...........................         19            (19)      0.20 -   0.30      0.28
                                                ------         ------
Balances, December 31, 1998................        653          1,620       0.20 -   0.40      0.27
Additional shares reserved.................      2,000             --                  --        --
Options granted............................     (1,740)         1,740       0.60 -   3.31      3.63
Options exercised..........................         --         (1,712)      0.20 -   1.65      0.53
Options canceled...........................         81            (81)      0.30 -   1.80      0.86
                                                ------         ------
Balances, December 31, 1999................        994          1,567       0.20 -  33.10      3.69
Additional shares reserved.................      2,856             --                  --        --
Options granted............................     (2,542)         2,542       0.01 -  11.00      3.51
Options exercised..........................         --           (321)      0.20 -   4.50      0.50
Options canceled...........................        309           (309)      0.30 -   9.00      5.22
                                                ------         ------
Balances, December 31, 2000................      1,617          3,479      $0.01 - $11.00     $3.78
                                                ------         ------
</TABLE>

     The options outstanding and currently exercisable by exercise price at
December 31, 2000 are as follows:

                               OPTIONS CURRENTLY

<TABLE>
<CAPTION>
                         OUTSTANDING
                 ---------------------------
                                 WEIGHTED                               EXERCISABLE
                                  AVERAGE                       ----------------------------
                  NUMBER OF      REMAINING        WEIGHTED                       WEIGHTED
                   SHARES       CONTRACTUAL       AVERAGE         NUMBER         AVERAGE
EXERCISE PRICE   OUTSTANDING   LIFE-IN-YEARS   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
--------------   -----------   -------------   --------------   -----------   --------------
<S>              <C>           <C>             <C>              <C>           <C>
$0.01 - $ 1.00      384,000        6.79            $0.35           204,000        $0.36
$1.50 - $ 2.00      183,000        8.56            $1.77            52,000        $1.77
$2.88 - $ 3.44    2,225,000        9.80            $3.20           972,000        $2.90
         $4.50      145,000        8.48            $4.50            45,000        $4.50
$7.13 - $ 8.37      140,000        9.30            $7.43             2,000        $7.13
$9.00 - $11.00      402,000        8.91            $9.60           324,000        $9.59
                  ---------                                      ---------
                  3,479,000        9.22                          1,599,000        $3.94
                  =========                                      =========
</TABLE>

     At December 31, 1998, 1999 and 2000, options to purchase 775,000, 467,000
and 1,599,000 shares of the Company's common stock, respectively, were
exercisable at weighted average exercise prices of $0.24, $6.46 and $3.94 per
share, respectively.

     During 1998, the Company granted options to purchase 180,000 shares of the
Company's common stock at an exercise price of $0.40 per share to an officer of
the Company, which were issued outside the terms of the Plan and were
immediately exercisable. The weighted average fair value of these options was
$1.80 per common stock option. Shares issued upon exercise of these options are
subject to the Company's right of

                                        44
<PAGE>   47
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

repurchase, which lapse as to 25% of the shares one year from the date of grant
and thereafter ratably over three years. The options expire ten years from the
date of grant. During November 1998 and as permitted by the option agreement,
these options were exercised in exchange for a full recourse note receivable
from the officer totaling $72,000 due November 12, 2002.

     In February 1998, two other non-officer employees exercised options issued
under the Plan to purchase 1,500,000 shares of the Company's common stock at
$0.20 per share in exchange for full recourse notes receivable totaling $300,000
that are payable in equal installments through September 1, 2001. These notes
receivable bear interest at 4.5% to 4.83% per annum.

     In March 1999, a non-officer of the Company exercised options to purchase
172,000 common shares in exchange for a full recourse note receivable of
approximately $34,000, which is due in March 2003 and bears interest at 4.57%.

     In April and May 1999, an officer of the Company exercised options to
purchase approximately 178,000 and 127,000 common shares, respectively, in
exchange for two full recourse notes receivable of approximately $53,000 and
$39,000, respectively. These notes receivable are due in March and May 2003 and
bear interest at 4.71% and 4.83%, respectively.

     In July 1999, two officers of the Company exercised options to purchase
230,000 and 180,000 shares of common stock, respectively, in exchange for full
recourse notes receivable of approximately $207,000 and $297,000, respectively.

     These notes receivable are due in July 2003 and July 2001 and bear interest
at 5.22% and 4.90%, respectively. Additionally, three non-officers exercised
options to purchase common shares in exchange for full recourse notes receivable
totaling approximately $100,000. These notes receivable are due in July through
August 2003 and bear interest at rates ranging between 5.22% and 5.37%.

  Stock-based Compensation

     The Company has adopted the disclosure only provision of SFAS 123. Had
compensation cost been determined for options issued under the Plan, outside the
Plan and under the ESPP based on the fair value of the options at the grant date
consistent with the provisions of SFAS 123, the Company's net loss would have
been increased to the pro forma amounts indicated below (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
                                                        1998       1999        2000
                                                       -------    -------    --------
<S>                                                    <C>        <C>        <C>
Net loss:
  As reported........................................  $(2,840)   $(2,775)   $ (9,114)
                                                       =======    =======    ========
  Pro forma..........................................  $(2,882)   $(3,067)   $(14,239)
                                                       =======    =======    ========
Net loss per share -- basic and diluted as
  reported...........................................  $ (0.38)   $ (0.28)   $  (0.41)
                                                       =======    =======    ========
Net loss per share -- basic and diluted pro-forma....  $ (0.39)   $ (0.31)   $  (0.64)
                                                       =======    =======    ========
</TABLE>

     As the provisions of SFAS 123 have only been applied to stock options
granted since the Plan's inception in 1997, the impact of the pro forma stock
compensation cost will likely continue to increase as the vesting period for the
Company's options and the period over which the stock compensation is charged to
expense is generally four to five years.

     The estimated weighted average value of options granted under the Plan,
during 1998, 1999 and 2000 was $0.06, $1.02 and $3.77 per share, respectively.
The value of each is estimated on the date of grant using the

                                        45
<PAGE>   48
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

minimum value method prior to the effective date of the Company's initial public
offering and the Black-Scholes option valuation method thereafter, with the
following weighted-average assumptions:

<TABLE>
<CAPTION>
                                                   1998       1999       2000
                                                  -------    -------    -------
<S>                                               <C>        <C>        <C>
Expected life of option.........................  5 years    5 years    5 years
Risk-free interest rate.........................    4.96%      5.68%      6.03%
Dividend yield..................................       0%         0%         0%
Volatility (used in the Black-Scholes model
  after initial public offering)................       --        70%     158.2%
</TABLE>

     The estimated weighted-average value of purchase rights granted under the
ESPP during 2000 (the year in which the first right grants were made) was $8.18
per share. The fair value of each stock purchase right granted under the ESPP is
estimated using the Black-Scholes option valuation method, with the following
weighted-average assumptions:

<TABLE>
<CAPTION>
                                                                2000
                                                              --------
<S>                                                           <C>
Expected life of option.....................................  6 months
Risk-free interest rate.....................................     5.85%
Dividend yield..............................................        0%
Volatility..................................................    158.2%
</TABLE>

     The aggregate fair value of purchase rights granted in 2000 was $729,000.

  Deferred Stock Compensation

     During 1998 and 1999, the Company issued options to purchase shares of its
common stock to certain employees totaling 967,000 and 1.7 million respectively,
under the Plan and outside the Plan with weighted average exercise prices of
$0.32 and $3.63 per share, respectively, which were below the deemed fair value
of the Company's common stock at the date of grant. The weighted average deemed
fair value of the underlying common stock was $1.47 and $7.02 in 1998 and 1999,
respectively. In accordance with the requirements of APB 25, the Company has
recorded deferred stock based compensation for the difference between the
exercise price of the stock options and the deemed fair value of the Company's
stock at the date of grant. This deferred compensation is amortized to expense
over the period during which the Company's right to repurchase the stock lapses
or options become exercisable, generally four or five years consistent with the
method described in FASB Interpretation No. 28. At December 31, 2000, the
Company had recorded deferred compensation related to these options in an amount
of $10.2 million, of which $866,000, $3.4 million and $2.3 million had been
amortized to expense during 1998, 1999 and 2000, respectively.

  Deferred Non-Employee Stock-Based Compensation

     In November 1997, the Company granted 165,000 options to purchase common
stock at an exercise price of $0.20 per share to various non-employee engineers
for consulting services, when the deemed fair market value of the Company's
common stock was $1.26 per share. Approximately 40,000 of these options were
100% vested upon grant and were valued at $47,000 using the Black-Scholes
pricing model with the following assumptions: 10 year term, 55% volatility,
5.73% discount rate and 0% dividend rate. This $47,000 was expensed immediately
as these options related to services provided prior to the grant date. The
remaining options were 50% vested at the grant date with the other 50% vesting
monthly over the next two years. Accordingly, these shares were valued under the
Black-Scholes pricing model with the same assumptions as those above at
$146,000, which was amortized in accordance with the vesting terms. Subsequent
to the initial valuation, these remaining options have been accounted for under
variable accounting, which requires that the fair value of the options be
remeasured at each balance sheet date using the Black-Scholes pricing model. An

                                        46
<PAGE>   49
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

additional $11,000 and $4,000 in stock-based compensation has been recorded in
1998 and 1999, respectively, related to these options.

     In 1998, the Company granted approximately 76,000 options to purchase
common stock at exercise prices ranging between $0.30 and $0.40 per share to
various non-employee engineers for consulting services, when the deemed fair
market value of the Company's common stock ranged from $1.30 to $1.90 per share.
Approximately 51,000 of these options were 100% vested upon grant and were
valued at a total of $89,000 using the Black-Scholes pricing model with the
following assumptions: 5 to 10 year terms, 55% volatility, 5.73% discount rate
and 0% dividend rate. This $88,000 was expensed immediately as these options
related to services provided prior to the grant date. The remaining options were
50% vested at the grant date with the other 50% vesting monthly over the next
two years. Accordingly, these shares were valued under the Black-Scholes pricing
model with the same assumptions as those above. Subsequent to the initial
valuation, these remaining options have been accounted for under variable
accounting, which requires their fair value to be remeasured at each balance
sheet date using the Black-Scholes pricing model. Stock-based compensation of
$24,000 was recorded in 1999 related to these options.

     During 1999, the Company granted options to purchase common stock at
exercise prices ranging from $0.60 to $1.50 per share to various non-employee
engineers for consulting services, when the deemed fair market value of the
Company's common stock ranged from $4.29 to $7.41 per share. These options were
100% vested upon grant and were valued at a total of $208,000 using the
Black-Scholes pricing model with the following assumptions: 10 year terms, 55%
volatility, 5.73% discount rate and 0% dividend rate. This $208,000 was expensed
immediately as these options related to services provided prior to the grant
date.

  Other

     In November 1999, the Company purchased approximately 167,000 shares of
outstanding common stock from an officer of the Company for approximately
$750,000. These shares were recorded as treasury shares by the Company and
subsequently reissued in the initial public offering.

INCOME TAXES

     The tax effects of temporary differences that give rise to significant
portions of deferred tax assets are as followed (in thousands):

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                           ------------------
                                                            1999       2000
                                                           -------    -------
<S>                                                        <C>        <C>
Net operating loss carryforwards.........................  $ 1,620    $ 1,668
Depreciation.............................................       99        337
Allowance for doubtful accounts..........................       75         83
Accrued liabilities......................................      248        803
Research and development credit..........................      195        512
                                                           -------    -------
Total deferred tax assets................................  $ 2,237    $ 3,403
Less valuation allowance.................................   (2,237)    (3,403)
                                                           -------    -------
Net deferred tax asset...................................  $    --    $    --
                                                           =======    =======
</TABLE>

     The valuation allowance increased by $1.0 million, $495,000 and $1.2
million for 1998, 1999 and 2000, respectively.

     Due to uncertainty surrounding the realization of the favorable tax
attributes in future tax returns, the Company has placed a valuation allowance
against its deferred tax assets. At such time as it is determined that it is
more likely than not that the deferred tax assets are realizable, the valuation
allowance will be reduced.

                                        47
<PAGE>   50
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The principal items accounting for the difference between income tax
provision at the U.S. statutory rate and the provision for income taxes
reflected in the statement of operations are as follows:

<TABLE>
<CAPTION>
                                                              1998    1999    2000
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Federal statutory rate......................................    34%    34%     34%
State taxes.................................................     5      5       5
Tax credits.................................................     5      5      --
Amortization................................................    --     --     (17)
Other.......................................................     4      4      (1)
Deferred compensation.......................................   (12)   (44)     (8)
Net operating losses and tax credits, not benefited.........   (36)    --     (13)
                                                              ----    ---     ---
                                                                --%     4%     --%
                                                              ====    ===     ===
</TABLE>

     At December 31, 2000, the Company has federal and state net operating loss
carryforwards of approximately $5.1 million and $3.9 million for federal and
state tax purposes available to reduce future taxable income. Deferred tax
assets and the related valuation allowance include approximately $500,000
related to certain U.S. operating loss carryforwards resulting from the exercise
of stock options, the tax benefit, when recognized, will be accounted for as a
credit to additional paid-in capital rather than a reduction of its income tax
provision.

     These carryforwards expire 2003 to 2020. In addition, the Company has
research and development tax credit carryforwards of approximately $350,000 for
federal income tax purposes and $245,000 for Illinois purposes at December 31,
2000, which expire in 2013 to 2020.

     Pursuant to the provisions of Section 382 of the Internal Revenue Code,
utilization of the net operating losses are subject to annual limitations due to
a greater than 50% change in the ownership of the Company which occurred during
1998, 1999 and 2000.

RELATED PARTY TRANSACTIONS

     In 1995 and 1996, the Company borrowed a total of $29,000 from one of its
stockholders for working capital purposes at a 10% interest rate and received
advances from another stockholder totaling $50,000. Such notes and advances and
the related accrued interest were repaid $10,000 in 1997 and $69,000 in 1998.

     One of the founders and shareholders of the Company is the owner of a
consulting company, which subleased space to the Company and provided other
services including accounting and payroll assistance and employee recruitment in
1998, 1999 and 2000. In addition, the Company reimbursed the consulting company
for certain travel expenses and janitorial services incurred on its behalf and
for the use of certain assets in 1998, 1999 and 2000. In 1999 and 2000, the
Company subleased office space to this consulting company. Additionally, the
Company hired certain of the consulting company's consultants to provide
software development services in 1999 and 2000.

     Amounts included in net loss which were paid, received or due to or from
this related party are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              1998    1999    2000
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Sublease rent expense.......................................  $ 54    $ --     --
Sublease rent income........................................    --      85     92
Consulting and other service expense........................   467     757    439
</TABLE>

     On April 5, 2000, the Company made a loan to its Chief Financial Officer
for $1,000,000. The loan bears interest at 5% per annum and principal and
interest were due October 31, 2000. The loan was subsequently

                                        48
<PAGE>   51
                                 IMANAGE, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

amended such that the loan will become due on the earlier of (i) December 31,
2008 or (ii) the date upon which the Chief Financial Officer will have the
ability to sell iManage common stock, subject to the Company's trading window
and insider trading policy, if applicable, at a price of $20 per share or
higher. In the event of a change in control of the Company and a change in the
job or a termination in the employment of the Chief Financial Officer the loan
will become due in the amount of the lessor of i) $1,000,000 plus accrued
interest or ii) the then fair value of the collateral, net of taxes. The loan is
collateralized by 165,000 shares of iManage common stock currently beneficially
owned by the Chief Financial Officer and any additional shares of iManage common
stock that became beneficially owned as a consequence of the exercise of 170,000
common stock options currently held by the Chief Financial Officer. The loan was
included within Other Assets.

401(K) PLAN

     The Company sponsors an employee savings and retirement plan intended to
qualify under section 401(k) of the Internal Revenue Code. Eligible employees,
at least 21 years old and having completed 1 hour of service, may contribute up
to 20% of eligible compensation, subject to annual limitations, and are fully
vested in their own contributions. The Company made matching contributions of
25% up to the first 6% of the employees' salary, which is contributed and vests
ratably over a four-year period, of $141,000 in 2000.

                                        49
<PAGE>   52

                                                                     SCHEDULE II

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             ADDITIONS
                                              BALANCE AT     CHARGED TO
                                             BEGINNING OF    COSTS AND                    BALANCE AT
                DESCRIPTION                     PERIOD        EXPENSES     DEDUCTIONS    END OF PERIOD
                -----------                  ------------    ----------    ----------    -------------
<S>                                          <C>             <C>           <C>           <C>
Allowance for doubtful accounts:
  Year Ended December 31, 1998.............     $   75         $  100         $--           $  175
  Year Ended December 31, 1999.............        175             40          80              135
  Year Ended December 31, 2000.............        135            164          51              248
Allowance for sales returns:
  Year Ended December 31, 1998.............         40            122          87               75
  Year Ended December 31, 1999.............         75              2          --               77
  Year Ended December 31, 2000.............         77            100          43              134
Deferred tax valuation allowance:
  Year Ended December 31, 1998.............        711          1,031          --            1,742
  Year Ended December 31, 1999.............      1,742            495          --            2,237
  Year Ended December 31, 2000.............      2,237          1,166          --            3,403
</TABLE>

                                        50
<PAGE>   53

                                   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, in the City of Palo
Alto, County of Santa Clara, State of California, on the second day of April,
2001.

                                          iMANAGE, INC.

                                          By:     /s/ MAHMOOD PANJWANI
                                            ------------------------------------
                                                      Mahmood Panjwani
                                             President, Chief Executive Officer
                                                             and
                                                   Chairman of the Board

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Mahmood Panjwani and Mark Culhane,
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution, each with power to act alone, to sign and execute on
behalf of the undersigned any and all amendments to this Report on Form 10-K,
and to perform any acts necessary in order to file the same, with all exhibits
thereto and other documents in connection therewith with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requested 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 attorney-in-fact and agent, or their or his or her substitutes, shall
do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
                     SIGNATURE                                     TITLE                     DATE
                     ---------                                     -----                     ----
<C>                                                  <C>                                <S>
               /s/ MAHMOOD PANJWANI                     President, Chief Executive      April 2, 2001
---------------------------------------------------               Officer
                 Mahmood Panjwani                        and Chairman of the Board
                                                       (Principal Executive Officer)

                 /s/ MARK CULHANE                         Chief Financial Officer       April 2, 2001
---------------------------------------------------      and Secretary (Principal
                   Mark Culhane                                  Financial
                                                          and Accounting Officer)

                /s/ RAFIQ MOHAMMADI                      Chief Technology Officer,      March 30, 2001
---------------------------------------------------     Vice President, Engineering
                  Rafiq Mohammadi                              and Director

                  /s/ MARK PERRY                                 Director               March 31, 2001
---------------------------------------------------
                    Mark Perry

                  /s/ MOEZ VIRANI                                Director               March 30, 2001
---------------------------------------------------
                    Moez Virani

               /s/ DUWAYNE PETERSON                              Director               March 30, 2001
---------------------------------------------------
                 Duwayne Peterson

               *By /s/ MARK CULHANE                                                     April 2, 2001
  -----------------------------------------------
                   Mark Culhane
                 Attorney-in-Fact
</TABLE>

                                        51
<PAGE>   54

                                 IMANAGE, INC.

                                    EXHIBITS
                                            TO
                                  FORM 10-K ANNUAL REPORT
                           FOR THE YEAR ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
<C>       <S>
 2.1*     Agreement and Plan of Reorganization, dated as of April 11,
          2000 by and among iManage, Inc., a Delaware corporation,
          NetRight Technologies, Inc., a Delaware corporation and a
          wholly-owned subsidiary of iManage, Inc., and ThoughtStar,
          Inc., a Delaware corporation.
 3.1**    Restated Certificate of Incorporation of iManage, Inc.
 3.2**    Amended and Restated Bylaws of iManage, Inc.
 4.1      Amended and Restated Rights Agreement as of May 5, 2000.
10.1**    Form of Indemnification Agreement for directors and
          executive officers.
10.2**    1997 Stock Option Plan and forms of Incentive Stock Option
          Agreement and Nonstatutory Stock Option Agreement
          thereunder.
10.3**    1999 Employee Stock Purchase Plan and form of subscription
          agreement thereunder.
10.4**    Loan and Security Agreement dated March 31, 1999 between
          Silicon Valley Bank and the Company.
10.5      Loan Modification Agreement dated March 30, 2001 between
          Silicon Valley Bank and the Company.
10.6***   Office Lease for 2121 S. El Camino Real, San Mateo,
          California between Cornerstone Properties I, LLC and the
          Company dated November 30, 1998, as amended to date.
10.7**    Office Building Lease for 55 East Monroe Street between TST
          55 East Monroe, LLC and the Company dated January 1999, as
          amended to date.
10.8**    Sublease between the Company and Q-Image Corporation dated
          December 5, 1998.
10.9      Employment Agreement, dated July 2, 1998, between iManage,
          Inc. and Owen Carton
10.10     Employment Agreement, dated September 25, 1998, between
          iManage, Inc. and Mark Culhane.
10.11     Employment Agreement, dated May 4, 1999, between iManage,
          Inc. and Philip B. Uchno.
10.12     Employment Agreement, dated September 7, 2000, between
          iManage, Inc. and Joseph Campbell.
10.13     Secured Promissory Note dated April 5, 2000 by Mark Culhane
          to iManage, Inc.
10.14     Stock Pledge Agreement dated April 5, 2000 by and between
          Mark Culhane, the Culhane Family Revocable Trust and
          iManage, Inc.
21        Subsidiaries of iManage, Inc.
23.1      Consent of Independent Accountants.
24.1      Power of Attorney (see signature page).
</TABLE>

---------------
*   Filed with the Registrant's Report on Form 8-K for June 21, 2000.

**  Filed with the Registrant's Registration Statement on Form S-1 (File No.
    333-86353) on September 1, 1999, as amended

*** Filed with the Registrant's Report on Form 10-K for the year ended December
    31, 1999.

                                        52