================================================================================

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


                                    FORM 10-Q


(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the quarterly period ended June 30, 2001

OR

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 FOR THE TRANSITION PERIOD FROM _________ TO __________

Commission file number: 0-27741


                                   Viador Inc.
              (Exact name of registrant as specified in its charter)

             DELAWARE                                 94-3234636
 (State or other jurisdiction of        (I.R.S. Employer Identification Number)
  incorporation or organization)



                               977 Benecia Avenue
                               Sunnyvale CA 94085
              (Address of principal executive offices) (Zip Code)

                         Telephone Number (408) 735-5956
              (Registrant's telephone number, including area code)



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  [  ]




As of August 15, 2001, there were 33,132,812 shares of the Registrant's Common
Stock outstanding, par value $0.001 per share.


================================================================================

<PAGE>

                                   VIADOR INC.

                                    FORM 10-Q

                                      INDEX

                         FOR QUARTER ENDED June 30, 2001

<TABLE>
<CAPTION>



                                                                                                              Page
                                                                                                              ----
<S>              <C>                                                                                         <C>
                         PART I - FINANCIAL INFORMATION

   item 1.        Condensed Consolidated Financial Statements

                  Condensed Consolidated Balance Sheets - June 30, 2001 (unaudited) and December 31,
                      2000.................................................................................     3

                  Condensed Consolidated Statements Of Operations - Three and Six Months Ended June 30,
                      2001 and 2000 (unaudited)............................................................     4

                  Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2001 and
                      2000 (unaudited).....................................................................     5

                  Notes to Condensed Consolidated Financial Statements (unaudited).........................     6

   ITEM 2.        Management's Discussion and Analysis of Financial Condition and Results of Operations....    13

   ITEM 3.        Quantitative and Qualitative Disclosures about Market Risk...............................    32


                           PART II - OTHER INFORMATION

   ITEM 1.        Legal Proceedings........................................................................    33

   ITEM 2.        Changes in Securities and Use of Proceeds................................................    33

   ITEM 4.        Submission of Matters to a Vote of Security Holders......................................    34

   ITEM 5.        Other Information........................................................................    35

   ITEM 6.        Exhibits and Reports on Form 8-K.........................................................    35

   Signatures............................................................................................      39


</TABLE>

                                       2

<PAGE>



PART I - FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS



                                   VIADOR INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                        June 30,            December 31,
                                                                                          2001                  2000
                                                                                          ----                  ----
                                                                                      (Unaudited)
<S>                                                                                    <C>                      <C>
ASSETS
Current assets:
   Cash and cash equivalents...............................................             $     47                $ 15,955
   Accounts receivable, net of allowance of $3,145 and $2,033, respectively                3,389                   7,072
   Other current assets....................................................                  257                   1,870
                                                                                        --------                --------
     Total current assets..................................................                3,693                  24,897
Equipment held for sale, net...............................................                  243                      --
Property and equipment, net................................................                1,425                   4,357
Capitalized software development costs, net................................                   --                   2,453
Goodwill and other intangibles, net........................................                   --                   1,705
Other assets...............................................................                  143                   2,203
                                                                                        --------                --------
     Total assets..........................................................             $  5,504                $ 35,615
                                                                                        ========                ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable...........................................................             $     --                $  6,000
   Accounts payable........................................................                2,419                   1,376
   Accrued liabilities.....................................................                1,335                   3,640
   Accrued vacation........................................................                  455                   1,052
   Accrued bonus...........................................................                  320                   1,035
   Accrued restructuring expense...........................................                  145                     693
   Deferred revenue........................................................                3,753                   4,654
                                                                                        --------                --------
     Total liabilities.....................................................                8,427                  18,450
                                                                                        --------                --------

Stockholders' equity (deficit):
   Convertible preferred stock, $0.001 par value; 10,000,000 shares authorized
     as of June 30, 2001 and December 31, 2000; none issued and
     outstanding as of June 30, 2001 and December 31, 2000.................                   --                      --
   Common stock, $0.001 par value: 100,000 shares authorized as of June 30,
     2001 and December 31, 2000; 18,316,087 and 18,199,399 shares issued and
     outstanding as of June 30, 2001 and December 31, 2000, respectively...
                                                                                              19                      19
   Additional paid-in capital..............................................               70,607                  71,431
   Deferred stock-based compensation.......................................                 (599)                 (1,759)
   Treasury stock..........................................................                  (34)                    (34)
   Notes receivable from stockholders......................................                   --                    (123)
   Accumulated deficit.....................................................              (72,962)                (52,316)
   Accumulated other comprehensive income (loss)...........................                   46                     (53)
                                                                                        --------                --------
     Total stockholders' equity (deficit)..................................               (2,923)                 17,165
                                                                                        --------                --------
     Total liabilities and stockholders' equity (deficit)..................             $  5,504                $ 35,615
                                                                                        ========                ========

</TABLE>


See accompanying notes to condensed consolidated financial statements.

                                       3


<PAGE>

                                   VIADOR INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                    Unaudited

<TABLE>
<CAPTION>
                                                            Three Months Ended                Six Months Ended
                                                     -------------------------------  --------------------------------
                                                        June 30,         June 30,          June 30,         June 30,
                                                          2001             2000              2001             2000
                                                          ----             ----              ----             ----
<S>                                                    <C>               <C>              <C>               <C>
Revenue:
   License........................................      $  1,330          $  5,382         $  3,585          $  9,575
   Service........................................         1,347             2,063            2,707             3,188
                                                        --------          --------         --------          --------
     Total revenue................................         2,677             7,445            6,292            12,763
                                                        --------          --------         --------          --------

Cost of revenue:
   Amortization of capitalized software...........         3,031               109            3,454               109
   License and service cost of revenue............           727             2,220            2,518             3,837
                                                        --------          --------         --------          --------
     Total cost of revenue........................         3,758             2,329            5,972             3,946
                                                        --------          --------         --------          --------

     Gross profit (loss)..........................        (1,081)            5,116              320             8,817
                                                        --------          --------         --------          --------

Operating expenses:
   Sales and marketing............................         4,605             7,191            9,191            13,447
   Research and development.......................         1,754             2,053            3,703             3,359
   General and administrative.....................         1,219             1,401            2,706             2,786
   Amortization of goodwill.......................           109               146              216               213
   Restructuring charges..........................           217                --              217                --
   Loss on lease termination......................         2,634                --            2,634                --
   Impairment loss - goodwill and other assets....         1,993                --            1,993                --
   Impairment loss - equipment held for sale......           550                --              550                --
   Amortization of stock-based compensation*......          (375)              278             (171)              612
                                                        --------          --------         --------          --------

     Total operating expenses.....................        12,706            11,069           21,039            20,417
                                                        --------          --------         --------          --------

Operating loss....................................       (13,787)           (5,953)         (20,719)          (11,600)
Other income and expense, net.....................            13               410              104               845
                                                        --------          --------         --------          --------

     Net loss before income taxes.................       (13,774)           (5,543)         (20,615)          (10,755)
Provision for income taxes........................            28                --                31               --
                                                        --------          --------         --------          --------

     Net loss.....................................      $(13,802)         $ (5,543)        $(20,646)         $(10,755)
                                                        ========          ========         ========          ========

Basic and diluted net loss per share..............      $  (0.76)         $  (0.32)        $  (1.13)         $  (0.62)
                                                        ========          ========         ========          ========

Shares used in computing basic and diluted net
   loss per share.................................        18,258            17,373           18,205            17,210
                                                        ========          ========         ========          ========

</TABLE>


* The allocation of the amortization of stock-based compensation relates to the
expense categories is set forth below (in thousands):


<TABLE>
<CAPTION>

                                                            Three Months Ended                Six Months Ended
                                                     -------------------------------  --------------------------------
                                                        June 30,         June 30,          June 30,         June 30,
                                                          2001             2000              2001             2000
                                                          ----             ----              ----             ----
<S>                                                    <C>               <C>              <C>               <C>
 Cost of revenue..................................      $     (1)         $      3         $      1          $      7
 Sales and marketing..............................          (208)               73             (157)              167
 Research and development.........................            (9)               90               44               192
 General and administrative.......................          (157)              112              (59)              246
                                                        --------          --------         --------          --------
                                                        $   (375)         $    278         $   (171)         $    612
                                                        ========          ========         ========          ========

</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       4

<PAGE>



                                   VIADOR INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                    Unaudited

<TABLE>
<CAPTION>

                                                                                                Six Months Ended
                                                                                    --------------------------------------
                                                                                        June 30,               June 30,
                                                                                          2001                   2000
                                                                                          ----                   ----
<S>                                                                                    <C>                     <C>
Cash flows from operating activities:
Net loss...................................................................             $(20,646)               $(10,755)
Adjustments to reconcile net loss to net cash used in operating activities:
   Reserve on stockholder notes receivable.................................                  123                      --
   Depreciation and amortization...........................................                  958                   1,180
   Amortization of capitalized software....................................                3,454                     109
   Amortization of deferred stock-based compensation.......................                 (171)                    612
   Amortization of warrants for corporate lease............................                   46                      --
   Issuance of warrants to non-employees...................................                    1                      --
   Issuance of warrants in conjunction with joint marketing................                   48                      --
   Issuance of options to non-employees....................................                   28                      28
   Loss on lease termination...............................................                2,634                      --
   Impairment loss - goodwill and other assets ............................                1,993                      --
   Impairment loss - equipment held for sale...............................                  550                      --
   Changes in operating assets and liabilities:
     Accounts receivable...................................................                3,683                  (3,826)
     Other current assets..................................................                1,545                  (1,055)
     Other assets..........................................................                  (49)                    117
     Accounts payable, accrued liabilities and accrued vacation............               (2,574)                  3,496
     Accrued restructuring expense.........................................                 (548)                     --
     Deferred revenue......................................................                 (901)                 (1,021)
                                                                                        --------                --------
       Net cash used in operating activities...............................               (9,826)                (11,115)
                                                                                        --------                --------
Cash flows from investing activities:
   Capital expenditures....................................................                  (13)                 (4,340)
   Purchase of short-term investment.......................................                   --                 (22,090)
   Rent paid in advance....................................................                   --                    (500)
   Security deposit........................................................                   --                  (1,697)
   Capitalization of software development costs............................                 (198)                 (2,694)
   Acquisition of business, net of cash acquired...........................                   --                    (883)
                                                                                        --------                --------
       Net cash used in investing activities...............................                 (211)                (32,204)
                                                                                        --------                --------
Net cash provided by financing activities:
   Repayment of (proceeds from) bank line of credit........................               (5,000)                  2,000
   Repayment of note payable from business acquisition.....................               (1,000)                     --
   Proceeds from issuance of common stock..................................                   30                     856
                                                                                        --------                --------
       Net cash provided by (used in) financing activities.................               (5,970)                  2,856
   Effect of exchange rate on cash and cash equivalents....................                   99                      (4)
                                                                                        --------                --------
       Net decrease in cash and cash equivalents...........................              (15,908)                (40,467)
                                                                                        --------                --------
Cash and cash equivalents, beginning of period.............................               15,955                  44,720
                                                                                        --------                --------
Cash and cash equivalents, end of period...................................             $     47                $  4,253
                                                                                        ========                ========

Supplemental disclosures of cash flow information:
   Cash paid for interest..................................................             $    135                $     28
                                                                                        ========                ========
   Cash paid for income taxes..............................................             $     31                $     28
                                                                                        ========                ========
Non-cash financing activities:
   Warrants issued.........................................................             $     --                $  1,529
                                                                                        ========                ========
   Notes receivable for options exercised..................................             $     --                $    529
                                                                                        ========                ========


</TABLE>


See accompanying notes to condensed consolidated financial statements.

                                       5

<PAGE>



                                   VIADOR INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.  Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation  S-X.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring adjustments, except as indicated) considered necessary for a
fair presentation have been included.  The results of operations for the interim
periods presented are not necessarily indicative of the results expected for any
subsequent  quarter or for the entire  year  ending  December  31,  2001.  These
condensed consolidated financial statements and the notes included herein should
be read in conjunction with the Company's audited financial statements and notes
for the year ended December 31, 2000 included in the Company's  Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.

     The condensed consolidated financial statements have been prepared on a
going concern basis, which contemplates, among other things, the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company's recurring net losses, including net losses of $13.8 million, $20.6
million and $29.3 million for the three and six months ended June 30, 2001 and
for the year ended December 31, 2000, respectively, raise substantial doubt
regarding the Company's ability to continue as a going concern. In 2000, the
Company's revenue was not sufficient to support its operations, and revenue will
not be sufficient to support operations until such time, if any, that the
Company's enterprise information portal software gains substantial market
acceptance. The Company expects to continue to use cash in operations and incur
operating losses in the foreseeable future. The Company needs to obtain
additional funding to sustain its operations through 2001 and is currently in
discussions with third parties to obtain such funding, although to date no
commitments for funding have been obtained. Management believes that the
successful completion of these actions will allow the Company to continue as a
going concern. However, the consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amount and classification of liabilities or any other adjustments
that might be necessary should the Company be unable to continue as a going
concern. If the Company does not obtain additional cash funding, the carrying
amounts of certain assets, including property, equipment and other assets may
not be recovered.


Note 2.  Summary of Significant Accounting Policies

    (a) Use of Estimates

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

    (b) Revenue Recognition

     The Company licenses its software products to end user customers, original
equipment manufacturers (OEM) and value added resellers (VAR). Software license
revenue from sales to end users is generally recognized upon receipt of a signed
contract or purchase order and delivery of the software, provided the related
fee is fixed and determinable and collectibility of the fee is probable and
vendor-specific objective evidence for all undelivered elements has been
established. The Company has established sufficient vendor-specific objective
evidence to ascribe a value to consulting services and post-contract customer
support based on the price charged when these elements are sold separately.
Accordingly, license revenue is recorded under the residual method described in
SOP 98-9 for arrangements in which licenses are sold with consulting services,
post-contract customer support or both. However, the entire fee related to
arrangements that require the Company to deliver specified additional features
or upgrades is deferred until delivery of the feature and/or upgrade has
occurred, unless the Company has sufficient vendor-specific objective evidence
of fair value to allocate revenue to the various elements in these arrangements.
Fees related to arrangements that require the Company to deliver unspecified
additional products are deferred and recognized ratably over the term of the
contract. All of the contract software revenue related to arrangements involving
consulting services that are essential to the functionality of the software at
the customer site is deferred and recognized as the services are performed.


                                       6

<PAGE>


                                   VIADOR INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                                   (Unaudited)


     Software revenue related to arrangements to maintain the compatibility of
the company's software products with the software products or platforms of the
customer or other vendor is recognized ratably over the term of the arrangement.
License revenue from OEM arrangements in which the Company earns a royalty based
on a specified percentage of OEM sales to end users incorporating the Company's
software is recognized upon delivery by the OEM to the end user. Nonrefundable
prepaid royalty fees received by the Company from OEM customers are recognized
when evidence provides that all the other conditions of SOP 97-2, as amended,
have been satisfied.

     Professional service revenue consists of fees from professional services
including integration of software, application development, training and
software installation. The Company bills professional services fees on a time
and materials basis. The Company recognizes professional services fees as the
services are performed.

     Customers typically purchase post-contract customer support agreements
annually, which are priced based on a fixed percentage of the product license
fee. The Company recognizes revenue allocated to post-contract customer support
agreements ratably over the term of the agreements, which are typically one
year.

     Cost of license revenue includes royalties due to third parties for
integrated technology, the cost of manuals and product documentation, production
media used to deliver our products and shipping costs, including the costs
associated with the electronic transmission of software to new customers,
amortization of capitalized software development costs, and an allocation of our
facilities, communications and depreciation expenses. In the quarter ended June
30, 2001, the remaining balance of previously capitalized software development
costs was fully amortized as projection of any future revenues from software
sales was deemed to be uncertain for purposes of evaluating recoverability.

     Cost of service revenue includes salaries and related expenses for
consulting services, customer support, implementation and training services
organizations, and costs of contracting with third parties that provide services
to customers.

      (c) Comprehensive Income (Loss)

     SFAS No. 130 "Reporting Comprehensive Income," establishes standards for
the reporting and display of comprehensive income and its components in the
financial statements. Items of comprehensive income (loss) that the Company
currently reports are unrealized gains and losses on marketable securities
categorized as available-for-sale and foreign currency translation adjustments.
The Company displays comprehensive income and its components on its Consolidated
Statements of Stockholders' Equity.

     The components of comprehensive loss, net of tax, for the three and six
months ended June 30, 2001 and 2000 were as follows (in thousands):



<TABLE>
<CAPTION>
                                                            Three Months Ended                Six Months Ended
                                                     -------------------------------  --------------------------------
                                                        June 30,         June 30,          June 30,         June 30,
                                                          2001             2000              2001             2000
                                                          ----             ----              ----             ----
<S>                                                    <C>               <C>              <C>               <C>
Net loss..........................................      $(13,802)         $ (5,543)        $(20,646)         $(10,755)
Other comprehensive income (loss):
    Unrealized gains (losses) of investments, net
     of tax.......................................            --                 1               --               (14)
   Foreign currency translation adjustments.......            71                (4)              99                (4)
                                                        --------          --------         --------          --------
     Total comprehensive loss.....................      $(13,731)         $ (5,546)        $(20,547)         $(10,773)
                                                        ========          ========         ========          ========

</TABLE>

      (d) Foreign Currency and Equity Hedging Instruments

     Effective January 1, 2001, we adopted Financial Accounting Standards Board
("FASB") SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and reporting standards for
derivative financial instruments and hedging activities related to those
instruments, as well as other hedging activities.


                                       7

<PAGE>


                                   VIADOR INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                                   (Unaudited)

Because the Company does not currently hold any derivative  instruments and does
not engage in hedging  activities,  the  adoption of SFAS No. 133 did not have a
material impact on our financial position, results of operations or cash flows.

     (e) Software Development Costs

     The Company accounts for its software development expenses in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed". This
statement requires that, once technological feasibility of a new product
enhancement has been established, all subsequent costs incurred in developing
that product or enhancement to a commercially acceptable level be capitalized
and amortized. The Company uses a detailed program design working model approach
in determining technological feasibility. Net capitalized software development
costs amounted to approximately $0 and $2.7 million as of June 30, 2001 and
2000, respectively. All software costs are amortized as a cost of revenue either
on a straight-line basis, or on the basis of each product's projected revenues,
whichever results in greater amortization, over the remaining estimated economic
life of product, which historically has been estimated to be one to two years.
In the quarter ended June 30, 2001, the remaining balance of previously
capitalized software development costs was fully amortized as projection of any
future revenues from underlying product sales was deemed to be uncertain for
purposes of evaluating recoverability.

      (f) Impairment of Long-Lived Assets

     The Company evaluates its long-lived assets, including goodwill, for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future undiscounted net cash flows expected to be generated by the asset. 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
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount of the assets or estimated fair value less costs to sell.

      (g) Recent Accounting Pronouncements

          In June 2001, the FASB issued SFAS 141 "Business Combinations," which
addresses financial accounting and reporting for business combinations and
supersedes Accounting Principles Board Opinion No. 16 ("APB 16"), "Business
Combinations," and SFAS 38, "Accounting for Preacquisition Contingencies of
Purchased Enterprises." All business combinations in the scope of SFAS 141 are
to be accounted for using one method, the purchase method. This Statement
requires that intangible assets be recognized as assets apart from goodwill if
they meet one of two criteria--the contractual-legal criterion or the
separability criterion. SFAS 141 also requires disclosure of the primary reasons
for a business combination and the allocation of the purchase price paid to the
assets acquired and liabilities assumed by major balance sheet caption. This
Statement does not change many of the provisions of APB 16 and SFAS 38 related
to the application of the purchase method. Also, SFAS 141 does not change the
requirement to write off certain research and development assets acquired in a
business combination as required by FASB Interpretation No. 4, "Applicability of
FASB  Statement  No. 2 to Business  Combinations  Accounted  for by the Purchase
Method." The provisions of SFAS 141 apply to all business combinations initiated
after June 30, 2001 and applies to all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001 or later.

     In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible
Assets," which supersedes APB 17, "Intangible Assets." SFAS 142 addresses the
accounting treatment for goodwill and other intangible assets acquired
individually or with a group of other assets upon their acquisition, but not
acquired in a business combination. This statement also addresses how goodwill
and other intangible assets should be accounted for after they have been
initially recognized in the financial statements. With the adoption of SFAS 142,
goodwill is no longer subject to amortization over its estimated useful life;
rather, goodwill will be subject to at least an annual assessment for impairment
by applying a fair-value-based test. However, equity-method goodwill is not
subject to the new impairment rules. Also, if the benefit of an intangible asset
is obtained through contractual or other legal rights, or if the intangible
asset can be sold, transferred, licensed, rented or exchanged, an acquired
intangible asset should be separately recognized. The terms of SFAS 142 are
effective as of the beginning of the first quarter of the fiscal year beginning
after December 15, 2001. Certain provisions of SFAS 142 shall be applied to
goodwill and other acquired intangible assets for which the acquisition date is
after June 30, 2001. The Company is currently determining the effect of SFAS 142
on its financial statements.


                                       8

<PAGE>


                                   VIADOR INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                                   (Unaudited)

Note 3.  Stock-Based Compensation

     The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," in accounting for its employee stock option
plan. As such, compensation expense would be recorded on the date of grant only
if the current market price of the underlying stock exceeded the exercise price.
In April 2000, Financial Accounting Standard Board (FASB) issued FASB
Interpretation No.44 ("FIN No. 44"), "Accounting for Certain Transactions
Involving Stock Compensation: An Interpretation of APB No. 25." The Company has
adopted the provisions of FIN No. 44, and such adoption did not materially
impact the Company's results of operations. Statement of Financial Accounting
Standard ("SFAS") No. 123, "Accounting for Stock-Based Compensation," ("SFAS No.
123") established accounting and disclosure requirements using a fair
value-based method of accounting for stock-based employee compensation plans. As
allowed by SFAS No. 123, the Company has elected to continue to apply the
intrinsic value-based method of accounting described above, and has adopted the
disclosure requirements of SFAS No. 123.


Note 4.  Net Loss Per Share

     Basic net loss per share is computed using the weighted-average number of
outstanding shares of common stock excluding shares of restricted stock subject
to repurchase summarized below. Diluted net loss per share is computed using the
weighted-average number of shares of common stock outstanding excluding shares
of restricted stock subject to repurchase and, when dilutive, shares of
restricted stock to repurchase and potential common shares from restricted stock
options and warrants to purchase common stock using the treasury stock method
and from convertible securities using the "as if converted" basis. The following
potential common shares have been excluded from the computation of diluted net
loss per share for all periods presented because the effect would have been
antidilutive (in thousands):


<TABLE>
<CAPTION>
                                                            Three Months Ended                Six Months Ended
                                                     -------------------------------  --------------------------------
                                                        June 30,         June 30,          June 30,         June 30,
                                                          2001             2000              2001             2000
                                                          ----             ----              ----             ----
<S>                                                    <C>               <C>              <C>               <C>
Shares issuable under stock options...............       5,304             4,733            5,304             4,733
Shares of restricted stock subject to repurchase..          24               146               24               146
Shares issuable pursuant to warrants to purchase
     common stock.................................           5               100                5               100


</TABLE>


     The weighted-average exercise price of stock options was $0.48 and $12.89
per share for the three months ended June 30, 2001 and 2000. The
weighted-average exercise price of stock options was $0.69 and $26 per share for
the six months ended June 30, 2001 and 2000. The weighted-average purchase price
of restricted stock was $0.34 and $3.33 per share for the three months ended
June 30, 2001 and 2000, respectively. The weighted-average purchase price of
restricted stock was $0.34 and $3.33 per share for the six months ended June 30,
2001 and 2000, respectively. The weighted average exercise price of warrants was
$0.80 and $31.44 per share for the three months ended June 30, 2001 and 2000,
respectively.  The  weighted  average  exercise  price of warrants was $0.80 and
$31.44 per share for the six months ended June 30, 2001 and 2000.

                                       9


<PAGE>


                                   VIADOR INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

Note 5.  Business Acquisition

     On January 20, 2000, the Company acquired a distributor in Switzerland (the
acquired company). The acquisition, recorded under the purchase method of
accounting, included the purchase of all outstanding shares of the acquired
company which, including acquisition costs, resulted in a total purchase price
of $2.0 million. The Company paid $1.0 million in cash at the closing of the
acquisition and issued notes payable of $1.0 million which accrues interest at
six percent per annum; the note payable and related interest were paid in full
in January 2001. The purchase price was allocated to assets acquired and
liabilities assumed based on estimated fair market value at the date of the
acquisition as follows (in thousands):

<TABLE>

<S>                                                              <C>
Current assets (includes cash acquired of $117).........          $  179
Goodwill................................................           2,131
Current liabilities.....................................            (277)
                                                                  ------
Total Purchase Price....................................          $2,033
                                                                  ======

</TABLE>


     Goodwill, which represents the excess of purchase price over value of net
assets acquired, is amortized on a straight-line basis over the expected period
to be benefited, which is five years. Amortization expense related to goodwill
was $109,000 and $216,000 for the three and six months ended June 30, 2001. In
the three months ended June 30, 2001, the remaining unamortized portion of
goodwill was deemed impaired as actual revenues for the acquired company were
below projected revenues and key management personnel terminated employment with
the subsidiary located in Switzerland.


Note 6.  Restructuring Expense, Impairment and Loss on Lease Termination

     In December 2000, the Board of Directors approved a restructuring program
designed to streamline the Company's business and to reduce costs, which
resulted in the accrual of a restructuring expense of $693,000.

     In April and June 2001, the Board of Directors approved a restructuring
program designed to further streamline the Company's business and to reduce
costs. These restructuring programs resulted in an additional restructuring
expense of $217,000 for severance charges associated with reductions in the
Company's United States workforce (55 positions in April and approximately ten
positions subsequent to June). As of June 30, 2001, $145,000 of restructuring
expense remains accrued and is expected to be paid by the end of the third
quarter of fiscal 2001. The following table depicts the activity for the
restructuring accrual for the six months ended June 30, 2001 (in thousands):


<TABLE>
<CAPTION>

                                                                         Severance           Rent            Total
                                                                         ---------           ----            -----
<S>                                                                        <C>              <C>              <C>
Restructuring accrual, December 31, 2000.........................           $234             $459             $693
Additions to Restructuring Accrual, April 2001...................            144               --              144
Additions to Restructuring Accrual, June 2001....................             73               --               73
Cash Payments/Amortization (January 2001 through June 2001)......           (306)            (459)            (765)
                                                                           -----            -----            -----
     Total.......................................................           $145             $ --             $145
                                                                            ====             ====             ====

</TABLE>


     In June 2001, the Company terminated its corporate lease scheduled to
expire in 2005 in order to reduce future operating expenses. As consideration
for early termination, the Company surrendered its restricted lease deposit of
$1 million and a significant amount of its office furniture, leasehold
improvements and other assets associated with the corporate lease (with a net
book value of approximately $1.6 million) to the landlord. The net book value of
surrendered assets associated with this event is included in Loss on Lease
termination in the accompanying Condensed Consolidated Statement of Operations
for the three months ended June 30, 2001.

     In June 2001, management decided to sell certain equipment. In connection
with this decision, the Company recognized an impairment loss on equipment held
for sale of $550,000.


                                      10

<PAGE>

                                   VIADOR INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)


Note 7.  Geographic, Segment and Significant Customer Information

     The Company has adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131 establishes standards for the
manner in which public companies report information about operating segments in
annual and interim financial statements. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. The method for determining what information to report is based on the
way management organizes the operating segments within the Company for making
operating decisions and assessing financial performance.

     The Company's chief operating decision-maker is considered to be the chief
executive officer ("CEO"). The CEO reviews financial information presented on an
entity level basis accompanied by disaggregated information about revenue by
product type for purposes of making operating decisions and assessing financial
performance. The entity level financial information is identical to the
information presented in the accompanying statements of operations. Therefore,
the Company operates in a single operating segment: Enterprise information
portal systems. The disaggregated information is as follows (in thousands):


<TABLE>
<CAPTION>
                                                            Three Months Ended                Six Months Ended
                                                     -------------------------------  --------------------------------
                                                        June 30,         June 30,          June 30,         June 30,
                                                          2001             2000              2001             2000
                                                          ----             ----              ----             ----
<S>                                                    <C>               <C>              <C>               <C>
Revenue:
   License..........................................    $  1,330          $  5,382         $  3,585          $  9,575
   Services.........................................       1,347             2,063            2,707             3,188
                                                        --------          --------         --------          --------
     Total revenue..................................    $  2,677          $  7,445         $  6,292          $ 12,763
                                                        ========          ========         ========          ========


</TABLE>


     Significant customer information is as follows:

<TABLE>
<CAPTION>

                                 Percentage of Total Revenue        Percentage of Total Revenue
                                     Three Months Ended                  Six Months Ended               Percentage of
                                          June 30,                         June 30,                     Total Accounts
                                 ---------------------------        ---------------------------           Receivable
                                    2001             2000              2001             2000             June 30, 2001
                                    ----             ----              ----             ----             -------------
<S>                                <C>               <C>              <C>                <C>                 <C>
Customer A..........................23%...............12%..............10%                7%                  9%
Customer B...........................9%...............10%.............. 4%                6%                  3%


</TABLE>



     The Company markets its products mainly from its operations in North
America. International sales are primarily to customers in Canada, Europe and
the Asia-Pacific region. Revenue derived from international sales was 40% and 8%
of total revenue for the three months ended June 30, 2001 and 2000,
respectively. Revenue derived from international sales were 40% and 12% of total
revenue for the six months ended June 30, 2001 and 2000, respectively.


Note 8.  Subsequent Events

     NASDAQ Notice of Noncompliance

     On July 3, 2001, the Company received a letter from Nasdaq indicating the
Company has failed to comply with the minimum bid price required for continued
listing as set forth in marketplace rule 4450 (a) (5) and that its securities
are, therefore, subject to delisting from Nasdaq. The Company has requested a
hearing before a Nasdaq Listing Qualifications Panel to review this
determination. While consideration to this request will likely be given over the
following months, there is no assurance the panel will grant the company's
request for continued listing.


                                      11

<PAGE>


                                   VIADOR INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)


     Receipt of Financing

     On July 6, 2001, the Company received from three lenders a $500,000 loan at
an interest rate of prime plus 1%, payable on or before September 6, 2001. In
connection with the loan, the Company issued warrants to purchase a total of
1,250,000 shares of the Company's common stock. The warrants are each
immediately exercisable at a price of $0.40 per share. The loan is convertible
into common stock at the option of the lenders at the lower of either the
average price at the time of the loan or the average price at the time of the
conversion or, if the Company and the lenders mutually agree, at the price the
Company sells any equity securities to a third party during the term of the
loan.

     On August 13, 2001, the Company received from three investors $4.0 million
in exchange for 14,814,814 shares of the Company's common stock. In connection
with this investment, the Company issued warrants to purchase a total of
2,962,962 shares of the Company's common stock; the warrants are generally
exercisable after February 12, 2002 at a price of $0.27 per share. There is a
commission payable on the transaction to a third party in the amount of
$240,000.


                                      12

<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

You should read the following in conjunction with the interim unaudited
consolidated financial statements and related notes. Except for the historical
financial information contained herein, the matters discussed in this Quarterly
Report on Form 10-Q may be considered "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended. Such statements include
declarations regarding the intent, beliefs or current expectations of Viador and
our management. Such forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties. Actual results
could differ materially from those indicated by such forward-looking statements
as a result of certain factors, including, but not limited to, those set forth
under "risks factors" and elsewhere in this quarterly report and in our other
documents filed with the Securities and Exchange Commission, including our
Annual Report on Form 10-K for the fiscal year ended December 31, 2000. We
undertake no obligation to publicly release the results of any revision to these
forward-looking statements, which may be made to reflect events or circumstances
after the dates hereof or to reflect the occurrence of unanticipated events.
Important factors which could cause actual results to differ materially from
those in the forward-looking statements, include but are not limited to: the
company's short operating history which makes it difficult to predict its future
results of operations; the dependence of the company's revenue upon the
company's suite of products; the company's history of operating losses and
expected future losses which could impede its ability to address the risks and
difficulties encountered by companies in new and rapidly evolving markets; the
company's future operating results could fluctuate which may cause volatility or
a decline in the price of the company's stock.


Overview

     We develop and market Internet software that enables businesses to create
enterprise information portals for both business-to-business, or B2B, and
business-to-employee, or B2E, use. An enterprise information portal gives users
a single browser-based interface with which to quickly and easily access
information from a variety of enterprise data sources. We believe the Viador
E-Portal offers a comprehensive and integrated enterprise information portal
that is specifically designed for the World Wide Web and works with a customer's
existing hardware and software systems, without the need for additional
technology expenditures. It provides our customers with the ability to manage
and share information on a secure and cost-effective basis that can accommodate
significant increases in the number of users and amount of information. As more
users contribute increasing amounts of information to the portal, we believe our
customers are able to increase business productivity and efficiency.

     Historically, we have focused our selling efforts in North America and
derived a majority of our revenue from North America. However, we believe it is
important to have an international presence and we intend to continue to conduct
business in markets outside the United States through a combination of
subsidiaries and distributors. We conduct business internationally through a
variety of distribution and service partners. In Europe we use distributors in
the Nordic Region (Norway, Sweden, Denmark), Italy, and France. We have our own
direct Sales and Presales Team in Germany, the United Kingdom and Canada. In
Asia, we use distributors in Japan, Korea, Indonesia, China, Hong Kong, and
Thailand.

     We were incorporated as Infospace Inc. in California in December 1995. In
January 1999, we changed our name to Viador Inc., and we subsequently
reincorporated in the State of Delaware. In October 1999, we raised gross
proceeds of $41.4 million through an initial public offering. Since our
inception, we have developed web-based products designed to permit our customers
to search, analyze and deliver relevant information to users within and outside
the enterprise. We delivered our first product, Web-Charts, in September 1996.
Over the last two years, we introduced more sophisticated web products and a
proprietary web security server product. In the first quarter of 1999, we first
shipped a fully integrated web-based product suite called the Viador E-Portal,
which integrated our prior product offerings. In the fourth quarter of 1999, we
introduced the Business-to-Business E-Portal, a product and services offering
that is designed to allow personalized communication and information exchange
between businesses. In the second quarter of 2000, we introduced Viador
Portlets, a technology for easily extending the Viador E-Portal by adding
tightly integrated modules for accessing additional data sources and
applications. In the fourth quarter of 2000, we introduced Viador E-Portal
Express, a portal user interface that set new standards for performance and
scalability.


                                      13

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS-- (Continued)

Recent Events
-------------

     NASDAQ Notice of Noncompliance
     ------------------------------

      On July 3, 2001, we received a letter from Nasdaq indicating Viador has
failed to comply with the minimum bid price required for continued listing as
set forth in marketplace rule 4450 (a) (5) and that its securities are,
therefore, subject to delisting from Nasdaq. We have requested a hearing before
a Nasdaq Listing Qualifications Panel to review this determination. While
consideration to this request will likely be given over the following months,
there is no assurance the panel will grant our request for continued listing.

     Noncompliance with NASDAQ Audit Committee Rules
     -----------------------------------------------

     We are not in compliance with The Nasdaq National Market's Audit Committee
Rules which require audit committees to be comprised of at least three
independent directors. Due to turn over on our Board of Directors, our committee
consists of only two independent directors. While we intend to satisfy the Audit
Committee Rules and are in the process of filling the vacancy on our audit
committee, there is no assurance that we will be successful in our efforts and
may nonetheless be delisted from Nasdaq.


     Private Financing
     -----------------

     On July 6, 2001, we raised $500,000 in financing through a private offering
of debt securities. On August 13, 2001, we raised $4.0 million in financing
through a private offering of equity securities. For further information
regarding the offering, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources" and
"Changes in Securities and Use of Proceeds - Information Required by Item 701 of
Regulation S-K."

     We are currently attempting to raise additional financing to fund our
operations. Any significant increase in planned capital expenditures or other
costs or any decrease in or elimination of anticipated sources of revenue could
cause us to further restrict our business and product development efforts or to
continue to deplete our available cash. Additional funding alternatives may not
be available to us within the necessary timeframe, on favorable terms or at all.
If we do not realize significant additional revenue or raise additional debt or
equity financing, we may be unable to execute our business development efforts,
and we may be unable to continue as a going concern.

     Management Changes
     ------------------

     On May 14, 2001, Dick Warmington was appointed interim chief executive
officer and president of the Company and a member of our Board of Directors. Mr.
Warmington replaces Jonathan Harding who resigned as the Company's chief
executive officer and president and as a member of the Board of Directors on May
14, 2001.

     On May 7, 2001, Donald A. Cochrane was appointed Vice President of
Worldwide Marketing and Sales to replace Steven Dille, who recently resigned.

     Randolph Marks and Virginia  Turezyn  resigned from our Board of Directors.
Mr. Marks resigned in April 2001 and Ms. Turezyn resigned in June 2001.

     In June 2001, Wang Zihan and Jun Song were appointed to the Board of
Directors and Mr. Zihan was appointed to the Audit Committee.

     Restructuring
     -------------

     During the second half of 2000, adverse economic conditions reduced demand
for software products in general and impaired our revenue growth. In response to
these conditions and to shorten our path to profitability, we decided to
streamline our operations and reduce our expenditure levels. In furtherance of
these objectives, on January 5, 2001, we reduced our workforce in the United
States by 87 positions, or 36% of our workforce in the United States, and
aggressively cut costs. On April 6, 2001, we announced that we are restructuring
our business to focus on three distribution models:


                                      14

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS-- (Continued)

e-government  with  systems   integrators,   OEM  partnerships  and  independent
resellers.  As a result of the new focus and an ongoing  effort to reduce  costs
and preserve  cash, we reduced our workforce  further by 55 positions out of the
151 positions, or 37% of our workforce in the United States. The reductions were
made in  functional  areas that do not align with the  streamlined  distribution
model,  primarily in direct sales and marketing  with further  reductions in our
consulting organization.  On June 29, 2001, we announced that a future layoff of
approximately  10 people or 14% of our then  current  workforce  would  occur to
further  reduce  costs.  It is  possible  that we will  have  further  workforce
reductions in the future.

     As part of our restructuring program, we terminated our corporate lease
with Alza Corporation on June 30, 2001, and entered into a new corporate lease
agreement for our current office. As consideration for early termination, we
surrendered our restricted lease deposit of $1.0 million and a significant
amount of our office furniture, leasehold improvements and other assets related
to the corporate lease (with a net book value of approximately $1.6 million) to
the landlord. The costs associated with this event are included in loss on lease
termination in the accompanying Condensed Consolidated Statement of Operations
for the three months ended June 30, 2001. For further information regarding our
restructuring program, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Restructuring Expense, Impairment Loss
and Loss on Lease Termination" on page 20.

     Effect of Economic Conditions
     -----------------------------

     The current economic environment has negatively impacted our business. In
the first half of the year 2000, a more significant portion of our customers
were newly funded dot-coms and internet-related companies that wanted to move
quickly in their buying decisions. Starting with the second half of the year
2000, our customers have tended to be more conservative buyers and have scaled
down their budgets for capital expenditures. In addition, potential customers
have questioned our viability as a company since our stock price and cash
balances have generally decreased throughout the year 2000 and the first and
second quarters of 2001. These changes have lengthened the sales cycle and
reduced the overall demand for our product. Finally, because it is a difficult
environment for companies in the United States to raise additional funds, we
have seen an increase in the age of our accounts receivables. As a result, we
may experience higher levels of customer turnover and bad debt provisions.

     Segment Presentation
     --------------------

     We manage and evaluate the performance of our business through a single
operating segment: Enterprise information portals.

     Fluctuations in Operating Results
     ---------------------------------

     We expect to experience significant fluctuations in our future results of
operations due to a variety of factors, many of which are outside of our
control, including:

     o    demand for and market acceptance of our products and services;

     o    our expansion into international markets;

     o    introductions  of new products and services or  enhancements by us and
          our competitors;

     o    competitive factors that affect our pricing;

     o    the size and timing of customer orders;

     o    hiring and retention of key personnel;

     o    the mix of products and services we sell;

     o    the timing and magnitude of our capital expenditures;

     o    conditions  specific to the enterprise  information  portal market and
          other general economic factors.

     Consequently, we believe that period-to-period comparisons of our operating
results are not necessarily meaningful and that such comparisons cannot be
relied upon as indicators of future performance.


                                      15

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS-- (Continued)


Results of Operations
---------------------

     The following table sets forth certain statement of operations data as a
percentage of total revenue for the periods indicated:



<TABLE>
<CAPTION>
                                                              Three Months Ended             Six Months Ended
                                                        -----------------------------  ----------------------------
                                                           June 30,        June 30,       June 30,       June 30,
                                                             2001            2000           2001           2000
                                                             ----            ----           ----           ----
    <S>                                                    <C>             <C>            <C>             <C>
     Revenue:
        License......................................          50%             72%            57%            75%
        Service......................................          50              28             43             25
                                                            -----           -----          -----          -----
          Total revenue..............................         100             100            100            100
                                                            -----           -----          -----          -----

     Cost of revenue:
        Amortization of capitalized software.........          97              --             55             --
        License and service cost of revenue..........          43              31             40             31
                                                            -----           -----          -----          -----
          Total cost of revenue......................         140              31             95             31
                                                            -----           -----          -----          -----
          Gross profit (loss)........................         (40)             69              5             69
                                                            -----           -----          -----          -----
     Operating expenses:
        Sales and marketing..........................         172              97            146            105
        Research and development.....................          66              28             59             26
        General and administrative...................          46              19             43             22
        Amortization of goodwill.....................           4               2              3              2
        Restructuring................................           8              --              3             --
        Loss on lease termination....................          98              --             42             --
        Impairment loss - goodwill and other assets..          74              --             32             --
        Impairment loss - equipment held for sale....          21                              9
        Amortization of stock-based compensation.....         (14)              4             (3)             5
                                                            -----           -----          -----          -----
          Total operating expenses...................         475             149            334            160
                                                            -----           -----          -----          -----

     Operating loss..................................        (515)            (80)          (329)           (91)
     Other income and expense, net...................          --               6              2              7
                                                            -----           -----          -----          -----
     Net loss before income taxes....................        (515)            (74)          (327)           (84)
     Provision for income taxes......................           1              --              1             --
                                                            -----           -----          -----          -----
          Net loss...................................        (516)%           (74)%         (328)%          (84)%
                                                            =====           =====          =====          =====

</TABLE>



Three and Six Months Ended June 30, 2001 as Compared to Three and Six Months
Ended June 30, 2000

Revenue
-------

     We follow the revenue recognition principles described in Statement of
Position (SOP) 97-2, Software Revenue Recognition, as amended by SOP 98-9.

     We license our products to end user customers, original equipment
manufacturers (OEM) and value added resellers (VAR). Software license revenue
from sales to end users is generally recognized upon receipt of a signed
contract or purchase order and delivery of the software, provided the related
fee is fixed and determinable and collectibility of the fee is probable and
vendor-specific objective evidence for all undelivered elements has been
established. We have vendor-specific objective evidence of fair value for
consulting services and post-contract customer support based on the price
charged when these elements are sold separately. Accordingly, license revenue is
recorded under the residual method described in SOP 98-9 for arrangements in
which licenses are sold with consulting services, post-contract customer support
or both. However, the entire fee related to arrangements that require us to
deliver specified additional features or upgrades is deferred until delivery of
the feature and/or upgrade has occurred, unless we have has sufficient
vendor-specific objective evidence of fair value to allocate revenue to the
various elements in these arrangements. Fees related to arrangements that
require us to deliver unspecified additional products are deferred and
recognized ratably over the term of the contract.


                                      16

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

Revenue related to arrangements involving consulting services that are essential
to the  functionality of the software is deferred and recognized as the services
are performed.

     Software revenue related to arrangements to maintain the compatibility of
our software products with the software products or platforms of the customer or
other vendor is recognized ratably over the term of the arrangement. License
revenue from OEM arrangements in which we earn a royalty based on a specified
percentage of OEM sales to end users incorporating the Company's software is
recognized upon delivery to the end user. Nonrefundable prepaid royalty fees we
receive from OEM customers are recognized when evidence provides that all the
conditions of SOP 97-2, as amended, have been satisfied.

     Service revenue consists of fees from professional services including
integration of software, application development, training and software
installation. We bill professional service fees on a time and materials basis.
We recognize professional services fees as the services are performed. Customers
typically purchase post-contract customer agreements annually, which are priced
based on a fixed percentage of the product license fee. We recognize revenue
allocated to post-contract customer support agreements ratably over the term of
the agreements, which are typically one year.

     Cost of license revenue includes royalties due to third parties for
integrated technology, the cost of manuals and product documentation, production
media used to deliver our products and shipping costs, including the costs
associated with the electronic transmission of software to new customers,
amortization of capitalized software development costs, and an allocation of our
facilities, communications and depreciation expenses. Cost of service revenue
includes salaries and related expenses for consulting services, customer
support, implementation and training services organizations, and costs of
contracting with third parties engaged to provide consulting services to
customers.

     Total Revenue. Total revenue decreased by 64% to approximately $2.7 million
     -------------
for the three months ended June 30, 2001 from approximately $7.4 million for the
similar period in the prior year. Total revenue decreased by 51% to
approximately $6.3 million for the six months ended June 30, 2001 from
approximately $12.8 million for the similar period in the prior year. For the
three months ended June 30, 2001, license revenues and service revenues each
accounted for 50% of total revenues, as compared to 72% and 28% of total
revenue, respectively, for the comparable prior year period. For the six months
ended June 30, 2001, license revenue and service revenue accounted for 57% and
43% of total revenue, respectively, as compared to 75% and 25% of total revenue,
respectively, for the comparable period in the prior year. The decrease in total
revenue was primarily due to reductions in license revenue resulting from
decreased demand for our products and secondarily, a reduction in service
revenue associated with reduced demand for our consulting services.

     License Revenue. License revenue decreased by 75% to approximately $1.3
     ---------------
million for the three months ended June 30, 2001 from approximately $5.4 million
for the same period in the prior year. License revenue decreased by 63% to
approximately $3.6 million for the six months ended June 30, 2001 from
approximately $9.6 million for the same period in the prior year. The decreases
in license revenue were due to a reduction in software purchases attributable to
general adverse economic conditions and customer concerns regarding our
viability.

     Service Revenue. Service revenue decreased by 35% to approximately $1.3
     ---------------
million for the three months ended June 30, 2001 from approximately $2.1 million
for same period in the prior year. Service revenue decreased by 15% to
approximately $2.7 million for the six months ended June 30, 2001 from
approximately $3.2 million for same period in the prior year. The decreases in
service revenue primarily resulted from a decrease in consulting services
provided.

     Channel Mix. We distribute our products directly through a direct sales
     -----------
force and indirectly through Original Equipment Manufacturers ("OEMs"), Value
Added Resellers ("VARs") and systems integrators. Indirect channel revenues for
the three and six months ended June 30, 2001 were 46% and 52% of total revenues,
respectively, as compared to 20% and 19% of total revenues, respectively, for
the three and six months ended June 30, 2000. Indirect channel revenues
increased both as a percentage of total revenues and in absolute dollars from
each corresponding previous year primarily because of the expanded use of
channel partners and their customer base. In general, the distribution of
revenues among channels will fluctuate in future periods depending on the timing
of new product releases, our ability to expand our use of OEMs and VARs, the
timing of direct sales to large customer accounts and customer buying patterns.

     Geographic Mix. International revenue (sales outside of the United States)
     --------------
for the three and six months ended June 30, 2001, each accounted for 40% of
total revenue. International revenue for the three and six months ended June 30,
2000 represented 8% and 12% of total revenue, respectively. International
revenue for the three and six months ended June 30,


                                      17

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

2001 increased in absolute dollars and as a percentage of total revenue from the
similar period in the prior year because of increased  distribution channels and
customer  base in  international  markets.  See  Note 7 of  Notes  to  Condensed
Consolidated Financial Statements for further geographic information.

     We plan to continue to invest in international markets by direct expansion,
acquisition or partnering with OEMs, VARs and distributors throughout the world.
International revenues may fluctuate in future periods as a result of
competition, the general demand for Internet- and intranet-related products in
international markets, and general economic conditions of the regions.


Cost of revenue
---------------

     Our cost of revenue includes salaries and related expenses for our customer
maintenance and support, professional consulting and implementation and training
services organizations and costs of contracting with third parties to provide
consulting services to customers and amortization of software development costs.
Our cost of revenue also includes royalties due to third parties for integrated
technology, the cost of manuals and product documentation, production media used
to deliver our products and shipping costs, including the costs associated with
the electronic transmission of software to new customers and an allocation of
our facilities, and depreciation expenses.

     Total cost of revenue increased by 61% to approximately $3.8 million for
the three months ended June 30, 2001 from approximately $2.3 million for similar
prior year period. Total cost of revenue increased by 51% to approximately $6.0
million for the six months ended June 30, 2001 from approximately $3.9 million
for similar period in the prior year. Total cost of revenue increased to 140% of
total revenue for the three months ended June 30, 2001 from 31% in the similar
prior year period. Total cost of revenue increased to 95% of total revenue for
the six months ended June 30, 2001 from 31% for the similar period in the prior
year. The increase in cost of revenue as a percentage of total revenue for the
three and six months ended June 30, 2001 resulted primarily from a significant
acceleration in software amortization and write-offs of software held for resale
in the amount of $802,000.


Gross Margin
------------

     The gross margin for the three and six months ended June 30, 2001 was (40%)
and 5%, respectively, as compared to 69% for both the three- and six-month
periods ended June 30, 2000. This decrease in gross margins was due to reduced
license revenue, which historically have generated for us higher margins than
service revenues and a significant acceleration of software development costs of
$1.8 million and write-offs of software held for resale in the amount of
$802,000.


Operating Expenses
------------------

     Our operating expenses are classified into five general categories: sales
and marketing, research and development, general and administrative,
amortization of stock-based compensation and amortization of goodwill. In
addition to five general categories, we have recorded special charges for
restructuring expense, loss on lease termination and impairments in fiscal 2000.
We classify all charges to these operating expense categories based on the
nature of the expenditures. Although each category includes expenses that are
category specific, each category includes expenses that may be common to the
other categories, such as salaries, employee benefits, bonuses, travel and
entertainment costs, telephone expenses, rent, facilities costs and third-party
professional service fees. The sales and marketing category of operating
expenses includes expenditures specific to the category, such as sales
commissions, public relations and advertising, trade shows, marketing collateral
materials and web seminars. We allocate the total costs for overhead and
facilities to each of the functional areas that use the overhead and facilities
services based on their estimated usage as measured primarily by employee
headcount. These allocated charges include facility rent and utilities for the
corporate office and depreciation expense for office furniture and equipment.

     Viador's total operating expenses for the three months ended June 30, 2001
and 2000 were $12.7 million and $11.1 million, or 474% and 149% of total
revenue, respectively. Our total operating expenses for the six months ended
June 30, 2001 and 2000 were $21.0 million and $20.4 million, or 334% and 160% of
total revenue, respectively. The


                                      18

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

increase  in  operating  expenses  for the three  months  ended June 30, 2001 as
compared to the corresponding earlier year in absolute dollars resulted from the
recording of approximately  $2.6 million due to the loss of lease,  $2.5 million
impairment  loss.  These charges offset the results of our efforts to streamline
our operations and reduce our expenditure levels.

     In furtherance of these objectives, on April 6, 2001, we further reduced
our workforce in the United States further by 55 positions out of the remaining
151 positions, or 37% of our workforce in the United States. In June 2001, we
announced a future workforce reduction of approximately 10 positions or 14% of
our current workforce. It is possible that we will have further cost reductions
in the future.

     Sales and Marketing
     -------------------

     Sales and marketing expenses consist of operating expenses associated with
Viador's sales, marketing, international and other business development efforts.
Sales and marketing expenses for the three months ended June 30, 2001 and 2000
were $4.6 million and $7.2 million, or 172% and 97% total revenue, respectively.
Sales and marketing expenses for the six months ended June 30, 2001 and 2000
were $9.1 million and $13.4 million, or 146% and 105% total revenue,
respectively. Sales and marketing expenses decreased in absolute dollars for the
three and six months ended June 30, 2001 as compared to the similar period in
2000 primarily due to reduced salaries and related expenses resulting from
decreased staffing associated with an announced restructuring in January and
April 2001. We believe that sales and marketing expenses are likely to decline
in absolute dollars in the near term as a result of the cost containment
procedures that we have recently implemented in response to the decline in our
earnings and general macro-economic conditions.

     Research and Development
     ------------------------

     Research and development expenses consist of operating expenses associated
with software development. Had we not capitalized any software development
costs, research and development expense for the three and six months ended June
30, 2001 would have been 70% and 56% of total revenue, respectively. Research
and development expense decreased by 15% to $1.8 million or 66% of total revenue
without software capitalization for the three months ended June 30, 2001 as
compared $2.1 million or 28% of total revenue for the same period in 2000.
Research and development expense increased by 10% to $3.7 million or 59% of
total revenue for the six months ended June 30, 2001 as compared $3.4 million or
26% of total revenue for the same period in 2000. The decreases in research and
development expenses for the three months ended June 30, 2001 were principally
due to reduced expenses related to our use of outside contractors and reduced
salary-related expenses due to a restructuring in early January 2001. We
capitalized approximately $105,000 additional development costs related to
enhancing this product in the second quarter of 2001. Amortization of
capitalized software development costs is charged to cost of revenue and totaled
approximately $434,000 and $857,000 in the three and six months ended June 30,
2001, respectively.

     General and Administrative
     --------------------------

     General and administrative expenses for all years presented consist
primarily of compensation and fees for professional services. General and
administrative expenses for the three months ended June 30, 2001 and 2000 were
$1.2 million and $1.4 million or 46% and 19% of total revenue, respectively.
General and administrative expenses for the six months ended June 30, 2001 and
2000 were $2.7 million and $2.8 million or 43% and 22% of total revenue,
respectively. We believe that general and administrative expenses are likely to
decline in absolute dollars in the near term as a result of the cost containment
procedures that we have recently implemented in response to the decline in our
earnings and general macro-economic conditions.

     Amortization of Goodwill
     ------------------------

     Amortization of goodwill was attributable to the acquisition of a
distributor in Switzerland in January 2000 and is based on a straight-line
method over the expected period to be benefited, which is five years.
Amortization of goodwill for the three and six months ended June 30, 2001 was
$109,000 and $216,000, or 4% and 2% of total revenue, respectively. Amortization
of goodwill for the three six months ended June 30, 2000 was $146,000 and
$213,000, or 3% and 2% of total revenue, respectively. At December 31, 2000, we
performed an evaluation of goodwill to determine whether recoverable. The
evaluation was based on current year activities and project cash flows as
compared to the carrying value of goodwill. Our evaluation related to our
Switzerland-based subsidiary during the three months ended June 30, 2001
indicated that the $1.6 million of goodwill remaining unamortized was deemed
impaired as actual revenues for the acquired company were


                                      19

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

below projected revenues and key management personnel terminated employment with
the subsidiary located in Switzerland.  Consequently,  we recorded an impairment
charge for the remaining  unamortized balance. For further information regarding
this  impairment  charge,  see Note 5 to the  Condensed  Consolidated  Financial
Statements.

     Restructuring Expense, Impairment Loss and Loss on Lease Termination
     --------------------------------------------------------------------

     In December 2000, we implemented a Board-approved restructuring program to
streamline our business and to reduce costs, which resulted in a restructuring
charge of $693,000. This restructuring charge included $234,000 for severance
charges associated with the reduction in workforce (87 positions or 36% of the
work force) and $459,000 related to estimated losses resulting from obligations
to pay rent on pre-existing space that was then vacant. In connection with the
restructuring, we also recorded charges totaling approximately $1.3 million for
write-downs of leasehold improvements and other assets. These assets were
specifically identified in the restructuring program. In April and June 2001, we
implemented another restructuring program designed to further streamline our
business and reduce costs. These restructuring programs resulted in an
additional restructuring expense of $217,000 for severance charges associated
with reductions in our United States workforce (55 positions in April and
approximately 10 positions subsequent to June). As of June 30, 2001, $145,000 of
restructuring expense remains accrued and is expected to be paid by the end of
the third quarter of fiscal 2001.

     In June 2001, we terminated our corporate lease with Alza Corporation,
which was scheduled to expire in 2005 in order to reduce future operating
expenses. As consideration for early termination, we surrendered our restricted
lease deposit of $1 million and a significant amount of our office furniture,
leasehold improvements and other assets associated with the corporate lease
(with a net book value of approximately $1.6 million) to the landlord. The net
book value of surrendered assets associated with this event is included in loss
on lease termination in the accompanying Condensed Consolidated Statement of
Operations for the three months ended June 30, 2001.

     In June 2001, management decided to sell certain equipment. In connection
with this decision, the Company recognized an impairment loss on equipment held
for sale of $550,000. For further information regarding this impairment loss,
see Note 6 to the Condensed Consolidated Financial Statements.


     Amortization of Stock-based Compensation
     ----------------------------------------

     Amortization of stock-based compensation primarily consists of charges
incurred for employee stock options issued with exercise prices less than the
fair market value of our stock at the date of grant. Amortization of stock-based
compensation for the three and six months ended June 30, 2001 was ($375,000) and
($171,000) or (14%) and (3%) of total revenue, respectively. A credit of
$520,000 to the income statement is due to a write-off of deferred compensation
related to terminated employees. Since we had previously amortized deferred
compensation on an accelerated method as allowed under Financial Accounting
Standard Board Interpretation No. 28, a credit was given in the June 2001
quarter for future periods as calculated using the straight-line method for the
deferred compensation related to these terminated employees. Amortization of
stock-based compensation for the three and six months ended June 30, 2000 was
$278,000 and $612,000 or 4% and 5% of total revenue, respectively.


Other Income and Expense, Net
-----------------------------

     Other income and expense, net, decreased to approximately $13,000 and
104,000 for the three and six months ended June 30, 2001 from approximately
$410,000 and $845,000 for the three and six months ended June 30,2000. This
decrease was due to a reduction in interest-bearing cash and investment
balances.


Provisions of Income Taxes
--------------------------

     Since the Company has incurred losses for each reporting period for both
tax and financial reporting purposes, no income tax provision has been recorded
for the three and six months periods ended June 30, 2001 and 2000. A provision
of $28,000 was recorded during the three months ended June 30, 2001 for taxes on
foreign operations.


                                      20

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

Net Loss
--------

     For the three and six months ended June 30, 2001, we recorded a net loss of
approximately $13.8 million and $20.6 million, or 516% and 328% of total
revenue, respectively, as compared to a net loss for the three and six months
ended June 30, 2000 of approximately $5.5 million and $10.8 million, or 74% and
84% of total revenue, respectively.


Liquidity and Capital Resources
-------------------------------

     From our inception, we have financed our operations primarily through an
initial public offering in which we raised money and private equity placements
totaling approximately $63.8 million. In July 2001, we raised additional
financing totaling $500,000 through a private offering of convertible debt
securities. As of June 30, 2001, we had an accumulated deficit of approximately
$73.0 million and cash and cash equivalents of approximately $47,000. For the
three and six months ended June 30, 2001, we recorded a net loss of
approximately $13.8 million and $20.6 million. For the years ended December 31,
2000, 1999 and 1998, we had net losses of approximately $29.3 million, $13.3
million and $6.2 million, respectively. The size of our accumulated deficit, our
losses since inception and our ongoing need for capital to continue our
operations raises substantial doubt as to our ability to continue operations
during the year 2001.

     On July 6, 2001, we received from three lenders a $500,000 loan at an
interest rate of prime plus 1%, payable on or before September 6, 2001. In
connection with the loan, we issued warrants to purchase a total of 1,250,000
shares of common stock. The warrants are each immediately exercisable at a price
of $0.40 per share. The loan is convertible into common stock at the option of
the lenders at the lower of either the average price at the time of the loan or
the average price at the time of the conversion or, if Viador and the lenders
mutually agree, at the price we sell any equity securities to a third party
during the term of the loan.

     On August 13, 2001, we received from three investors $4.0 million in
exchange for 14,814,814 shares of common stock. In connection with this
investment, the Company issued warrants to purchase a total of 2,962,962 shares
of common stock; the warrants are generally exercisable after February 12, 2002
at a price of $0.27 per share. There is a commission payable on the transaction
to a finder for $240,000.

     We are currently attempting to raise additional financing to fund our
operations. There can be no assurance that we will be successful in our efforts
to reduce expenses or to obtain additional financing. Failure to reduce expenses
and/or to obtain additional financing will result in a material adverse effect
on our ability to meet our business objectives and continue as a going concern.
Based on our assumptions, which we believe are reasonable, we believe we may
have sufficient cash to reach profitability provided that we meet the revenue
and expense goals contained in our business plan.

     Net cash used in operating activities for the six months ended June 30,
2001 and 2000 was approximately $9.8 million and $11.1 million, respectively.
The net use of cash for the six months ended June 30, 2001 resulted primarily
from our net loss and a $2.6 million decrease in accounts payable and accrued
liabilities, partially offset non-cash charges of $2.6 million in loss on lease,
$2.5 million in accrued impairment loss and $1.8 million in depreciation and
amortization combined with a $3.7 million decrease in accounts receivable. Net
cash used in investing activities for the six months ended June 30, 2001 and
2000 was approximately $211,000 and $32.2 million, respectively. Net cash used
in financing activities for the six months ended June 30, 2001 was approximately
$6.0 million and resulted primarily from the $5.0 million repayment of a bank
line of credit and a $1.0 million note payable from a business acquisition.

     Deferred revenue primarily consists of the unrecognized portion of license
and service revenues received pursuant to subscription and support contracts,
consulting and prepaid license royalties. Deferred revenue was approximately
$3.8 million as of June 30, 2001 and $4.6 million as of December 31, 2000.

     Our services consist of maintenance, support, consulting and
implementation. Service revenue represented 50% and 43% of total revenue for the
three and six months ended June 30, 2001, respectively, as compared to 28% and
25% of total revenue for the three and six months ended June 30, 2000,
respectively. We anticipate that service revenue will continue to represent a
significant percentage of total revenue.


                                      21

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

     We believe our cash reserves may be insufficient to fund our ongoing
operations through fiscal 2001 or through the next twelve months. Although we
have received some equity and debt financing, efforts are underway to secure
additional financing to enable us to meet our obligations, as execution of our
business plan may require additional capital to fund. There is currently no
agreement in place with any source of financing and there can be no assurance
that we will be able to raise additional funds or that such funds will be
available on acceptable terms. Funds raised through future equity financing will
likely be substantially dilutive to our current shareholders. Lack of additional
funds will materially affect us and our business and may cause us to cease
operations. Consequently, shareholders could incur a loss of their entire
investment in Viador.

     Customer orders during a particular quarter typically vary considerably in
size, from as low as several thousand dollars to over $500,000. Two customers
accounted for more than 10% of quarterly recognized revenue for the quarter
ended June 30, 2001. Because of the large size of some individual customer
orders relative to total orders during a quarter, our revenue may fluctuate
significantly from one quarter to the next. If a customer who places a large
order cancels or reduces the order, or if we are unable to fulfill the order in
a timely fashion or are otherwise unable to recognize revenue for the order in
the quarter in which it is anticipated, it could result in increased volatility
in our revenue and stock price.

     Our liquidity and capital requirements depend on numerous factors discussed
under the section entitled "Risk Factors" beginning on page 20. Factors such as
the ability to obtain additional financing to continue operations, expand our
customer base, the level of investment in our business, the level of
expenditures for marketing and sales, the level of investment in distribution,
customer service and other capabilities would also increase our liquidity
requirements. The timing and amount of these capital requirements cannot be
accurately predicted.

     Our financial statements were prepared on the assumption that we will
continue as a going concern. The report of our independent accountants for the
year ended December 31, 2000 acknowledges that we have incurred losses in each
of the last three fiscal years and that we will require additional funding to
sustain our operations. These conditions cause substantial doubt as to our
ability to continue as a going concern. Our financial statements included herein
do not include any adjustments that might result should we be unable to continue
as a going concern.

     If we raise additional funds by issuing equity or convertible debt
securities, the percentage ownership of our stockholders will be diluted.
Furthermore, any new securities could have rights, preferences and privileges
senior to those of our common stock. Lack of additional funds will materially
adversely affect us and our business and may cause us to sell assets or to cease
operations. Consequently, our stockholders could incur a loss of their entire
investment in us.


                   RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

                             Risks Related to Viador



We cannot predict whether we will be successful because we have a short
-----------------------------------------------------------------------
operating and sales history.
---------------------------

     We were founded in 1995, and began offering software products in the third
quarter of 1996. Our primary product, the Viador E-Portal, was first shipped in
the first quarter of 1999. We introduced Viador Portlets in the second quarter
of 2000 and Viador E-Portal Express in the fourth quarter of 2000.

     We have made significant investments in our sales and marketing programs,
personnel recruitment, product development and infrastructure and have
experienced significant losses on a quarterly and annual basis in the past. You
must consider us and our prospects in light of the risks and difficulties
encountered by companies in the early stage of development, particularly
companies in new and rapidly evolving markets. The revenue and income potential
of our business and market is unproven, and our limited operating history makes
it difficult to evaluate us and our prospects.


                                      22


<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

     Our ability to address these risks depends on a number of factors, which
include our ability to:

     o    provide  software  that  is  reliable,   cost-effective  and  able  to
          accommodate significant increases in the number of users and amount of
          information;

     o    market the Viador  E-Portal,  our other  products and the Viador brand
          name effectively;

     o    continue to grow our infrastructure to accommodate new developments in
          the enterprise information portal software market and increased sales;

     o    retain and motivate qualified personnel; and

     o    respond to competition.

     We may not be successful in meeting these challenges and addressing these
risks and uncertainties. If we are unable to do so, our business will not be
successful and your investment in our capital stock will decline in value.

We may not be able to continue operating if we cannot raise additional
----------------------------------------------------------------------
financing.
---------

     Our independent certified public accountants have included an explanatory
paragraph in their audit report for the year ended December 31, 2000 with
respect to our financial statements raising a substantial doubt with respect
to our ability to continue as a going concern. Any significant increase in
planned capital expenditures or other costs or any decrease in or elimination of
anticipated sources of revenue could cause us to restrict our business and
product development efforts or to continue to deplete our available cash. We are
attempting to find additional funding to finance our operations. Additional
funding alternatives may not be available to us within the necessary timeframe,
on favorable terms or at all. If we do not realize significant additional
revenue or raise additional debt or equity financing, we may be unable to
execute our business development efforts, and we may be unable to continue as a
going concern or we may have to sell assets. The factors leading to and the
existence of the explanatory paragraph in the audit report will have a material
adverse effect on our ability to obtain additional financing.

Failure to raise additional capital will have a material adverse effect on our
------------------------------------------------------------------------------
ability to operate as a going concern.
-------------------------------------

     We may require additional financing to fund the continuation and growth of
our operations, which involves funding for our working capital requirements. We
believe we may have insufficient capital to fund our operations through the next
12 months. We are actively seeking financing our current capital needs through
the sale of additional equity. However, the significant contraction in the
capital markets, particularly in the technology sector, combined with our early
stage of commercial operations has made it difficult to raise additional
capital. If the Company does not obtain additional cash funding, the carrying
amounts of certain assets, including property, equipment and capitalized
software development costs may not be recovered.

     Additional future equity or debt financing may not be available to us on
favorable terms or at all. Future borrowing instruments such as credit
facilities and lease agreements are also likely to contain restrictive covenants
and will likely require us to pledge assets as security for borrowings under
those future arrangements. Failure to raise sufficient additional capital would
have a material adverse effect on our ability to operate as a going concern or
to achieve our business objectives. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" on page 15.

Our cost-cutting efforts may harm our business.
----------------------------------------------

     Our management is implementing plans designed to reduce our cash
requirements through a combination of reductions in components of working
capital, equipment purchases and operating expenditures, including a significant
reduction in force. However, there can be no assurance that we will be able to
successfully implement these plans or that we will be able to do so without a
material adverse effect on our business, financial condition or results of
operations.


                                      23


<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

As a result of questions concerning our status as a going concern, our customers
--------------------------------------------------------------------------------
and vendors may decide not to do business with us.
-------------------------------------------------

     Due to concerns regarding our ability to continue operations, customers and
vendors may decide not to conduct business with us, or may conduct business with
us on terms that are less favorable than those customarily extended by them.
Additionally, we are currently experiencing some resistance in the marketplace
and we believe that one of the several factors for this resistance is related to
concerns regarding our ability to continue our business as a going concern. In
any event, if customers and vendors decide not to conduct business with us, our
net sales would further decrease, and our business will suffer significantly.

Our business currently depends on revenue related to the Viador E-Portal, and it
is uncertain whether the market will increasingly accept this product.

     We generate most of our revenue from licenses and services related to the
products comprising the Viador E-Portal. We expect that these products, and
future upgraded versions of these products, will continue to account for a large
portion of our revenue for the foreseeable future. Our future financial
performance will depend on increasing acceptance of our current products and on
the successful development, introduction and customer acceptance of new and
enhanced versions of our products. Our business could be harmed if we fail to
deliver the enhancements to our products that customers want.

     The market for enterprise information portal software is still in its
infancy as an emerging technology and there can be no assurance that customers
will adopt our products. Accordingly, we cannot accurately estimate the
potential demand for our products and services. We believe that market
acceptance of our products and services depends principally on our ability to:

     o    effectively  market the Viador  E-Portal,  our other  products and our
          services;

     o    retain a sufficient number of qualified sales and marketing personnel;

     o    provide high-quality and reliable customer support for our products;

     o    distribute  and price our  products  and  services in a manner that is
          more appealing to customers than that of our competitors;

     o    develop  for  Viador  a  favorable  reputation  among  our  customers,
          potential customers and participants in the software industry; and

     o    withstand  downturns in general economic conditions or conditions that
          would slow corporate spending on software products.

     Some of the foregoing factors are beyond our control. If our customer base
does not expand, we may never become profitable and our stock price will likely
decline.

     Our services consist of maintenance, support, consulting and training.
Service revenue represented 50%, 28% and 39% of total revenue for 2001, 2000,
and 1999, respectively. We anticipate that service revenue will decrease as a
percentage of total revenue. If service revenue is less than anticipated, our
fixed costs of providing services will exceed our service revenue and our
operating results could be materially adversely affected.

Continuing uncertainty of the U.S. economy, which has spread to Europe and Asia,
may have serious implications for the growth and stability of our business and
may negatively affect our stock price.

     The revenue growth and profitability of our business depends significantly
on the overall demand for software products, particularly in the product
segments in which we compete. Softening demand for these products caused by
ongoing economic uncertainty may result in decreased revenues or earnings levels
or growth rates. The U.S. economy has weakened and market conditions continue to
be challenging. This weakening has resulted in individuals and companies
delaying or reducing expenditures. Further delays or reductions in spending
could have a material adverse effect on demand for our services, and
consequently on our business, operating results, financial condition, prospects
and stock price.


                                      24

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)


We have a history of losses and may not be able to achieve profitability in the
future.

     Since our inception, we have experienced recurring operating losses,
negative cash flows from operations and net losses in each quarterly and annual
period. As of June 30, 2001, we had an accumulated net deficit of approximately
$71.4 million. Revenue from our software and related services may not be
sufficient to make us profitable in the future. If we do achieve profitability,
we cannot be certain that we can sustain or increase profitability on a
quarterly or annual basis, particularly to the extent that we face a weak
economic environment and significant competition.

If we do not expand our customer base, we may never become profitable and our
stock price will likely decline.

     The market for enterprise information portal software is newly emerging and
there can be no assurance that customers will adopt our products. Accordingly,
we cannot accurately estimate the potential demand for our products and
services. We believe that market acceptance of our products and services
principally depends on our ability to:

     o    retain a sufficient number of qualified sales and marketing personnel;

     o    effectively  market the Viador  E-Portal,  our other  products and our
          services;

     o    distribute  and price our  products  and  services in a manner that is
          more appealing to customers than that of our competitors;

     o    develop  a  favorable  reputation  for  Viador  among  our  customers,
          potential customers and participants in the software industry; and

     o    withstand  downturns in general economic conditions or conditions that
          would slow corporate spending on software products.

     Some of the foregoing factors are beyond our control. If our customer base
does not expand, we may never become profitable and our stock price will likely
decline.

We may not be able to maintain our listing on The Nasdaq National Market.
------------------------------------------------------------------------

     To maintain our listing on The Nasdaq National Market, we must maintain
compliance with several requirements related to the trading price of our stock
and our board of directors. On July 3, 2001, the Company received a letter from
Nasdaq indicating the Company has failed to comply with the minimum bid price
required for continued listing on The Nasdaq National Market and that its
securities are, therefore, subject to delisting from Nasdaq. The Company has
requested a hearing before a Nasdaq Listing Qualifications Panel to review this
determination, but there is no assurance that Nasdaq will not delist our common
stock even after review. In addition, we are not in compliance with The Nasdaq
National Market's Audit Committee Rules, which require audit committees to be
comprised of at least three independent directors on or before June 14, 2001.
Our failure to comply with the Audit Committee Rules may also result in Nasdaq
delisting our common stock. The potential de-listing of our common stock from
The Nasdaq National Market may adversely affect the trading liquidity and the
price of the Company's common stock, as well as our ability to obtain additional
financing.


Our operating results in one or more future periods may fluctuate significantly
-------------------------------------------------------------------------------
and may fail to meet or exceed the expectations of securities analysts or
-------------------------------------------------------------------------
investors, causing our stock price to fall.
------------------------------------------

     We may experience significant fluctuations in our future results of
operations due to a variety of factors, many of which are outside of our
control, including:

     o    demand for and market acceptance of our products and services;

     o    our expansion into international markets;

     o    introduction  of products and services or  enhancements  by us and our
          competitors;

     o    competitive factors that affect our pricing;

     o    the mix of products and services we sell;


                                      25

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

     o    the size and timing of customer  orders,  particularly  large  orders,
          some of  which  represent  more  than 10% of  total  revenue  during a
          particular quarter;

     o    retention of key personnel;

     o    conditions  specific to the enterprise  information  portal market and
          other general economic factors;

     o    changes in generally accepted  accounting  policies,  especially those
          related to the recognition of software revenue; and

     o    new government legislation or regulation.

     We typically receive 50% to 70% of our orders in the last month of each
fiscal quarter because our customers often delay purchases of products until the
end of the quarter and our sales organization and our individual sales
representatives strive to meet quarterly sales targets. Because a substantial
portion of our costs are relatively fixed and based on anticipated revenue, a
failure to book an expected order in a given quarter will likely not be offset
by a corresponding reduction in costs and, therefore, could adversely affect our
operating results for that quarter. Due to these factors, we believe that
period-to-period comparisons of our operating results are not necessarily
meaningful and cannot be relied upon as indicators of future performance. In
future periods, our operating results may be below the expectations of public
market analysts and investors. In this event, the price of our common stock may
fall significantly.

Because our customers' orders vary substantially in size, our quarterly
-----------------------------------------------------------------------
operating results are difficult to forecast and may fluctuate.
-------------------------------------------------------------

     Customer orders during a particular quarter typically vary considerably in
size, from as low as several thousand dollars to over one million dollars.
Because of the large size of some individual customer orders relative to total
orders during a quarter, our revenue may fluctuate significantly from one
quarter to the next. If a customer who places a large order cancels or reduces
the order, or if we are unable to fulfill the order in a timely fashion or are
otherwise unable to recognize revenue for the order in the quarter in which it
is anticipated, it could result in increased volatility in our revenue and stock
price.

Since our sales cycle is long, unpredictable and subject to seasonal
--------------------------------------------------------------------
fluctuations, it is difficult to accurately forecast our revenue; if we fail to
-------------------------------------------------------------------------------
achieve our forecasted revenue, our operating results will suffer and our stock
-------------------------------------------------------------------------------
price may decline.
-----------------

     The typical sales cycle of our products is long and unpredictable and
requires both a significant capital investment decision by our customers and our
education of potential customers regarding the use and benefits of our products.
Our sales cycle is generally between three and nine months. A successful sales
cycle typically includes presentations to both business and technical decision
makers. The implementation of our products involves a significant commitment of
resources by prospective customers. Accordingly, a purchase decision for a
potential customer typically requires the approval of several senior decision
makers. Our sales cycle is also affected by the business conditions of each
prospective customer. Due to the relative importance of many of our individual
product sales, a lost or delayed sale could adversely affect our quarterly
operating results. Our sales cycle is also affected by seasonal fluctuations as
a result of our customers' fiscal year budgeting cycles and slow summer
purchasing patterns overseas. Also, we expect revenue to be higher in the fourth
quarter than in other quarters of the year since many customers strive to spend
unused budgeted dollars before the end of the year.

If our software contains errors, we may lose customers or experience reduced
----------------------------------------------------------------------------
market acceptance of our products.
---------------------------------

     Our software products are inherently complex and may contain defects and
errors that are detected only when the products are in use. In addition, some of
our customers require or may require enhanced customization of our software for
their specific needs, and these modifications may increase the likelihood of
undetected defects or errors. Further, we often render implementation,
consulting and other technical services, the performance of which typically
involves working with sophisticated software, computing and networking systems,
and we could fail to meet customer expectations as a result of any defects or
errors. As a result, we may lose customers, customers may fail to implement our
products more broadly within their organization and we may experience reduced
market acceptance of our products. Our products are designed to facilitate the
secure transmission of sensitive business information to specified parties
outside the business over the Internet. As a result, the reputation of our
software products for providing good security is vital to their acceptance by
customers. Our products may be vulnerable to break-ins, theft or other improper
activity that could jeopardize the security of information for which we are
responsible. Problems caused by product defects, failure to meet project
milestones


                                      26

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

for services or security breaches could result in loss of or delay in
revenue, loss of market share, failure to achieve market acceptance, diversion
of research and development resources, harm to our reputation, increased
insurance costs or increased service and warranty costs. To address these
problems, we may need to expend significant capital resources that may not have
been budgeted.

Product liability claims could harm our business.
------------------------------------------------

     Our license agreements with customers typically contain provisions designed
to limit our exposure to potential product liability claims. All domestic and
international jurisdictions may not enforce these limitations. Although we have
not experienced any product liability claims to date, we may encounter this type
of claim in the future. Product liability claims brought against us, whether or
not successful, could divert the attention of our management and key personnel
and could be expensive to defend.

We may be unable to maintain or grow our international operations, which could
------------------------------------------------------------------------------
slow or undermine our overall growth.
------------------------------------

     During the three months ended June 30, 2001 and 2000, we derived 40% and
8%, respectively, of our total revenue from sales outside the United States.
During the six months ended June 30, 2001 and 2000, we derived 40% and 12%,
respectively, of our total revenue from sales outside the United States. During
the three and six months ended June 30, 2001 and 2000, we derived our
international revenue primarily from sales in Canada, Europe and Asia Pacific.
We intend to expand our international operations and anticipate that in the
foreseeable future a significant portion of our revenue may be derived from
sources outside the United States. If we are unable to maintain or grow our
international operations, it could slow or undermine our overall growth.

     We have not identified any material risk associated with doing business in
Canada, other than risk associated with foreign currency fluctuations. In Japan,
we have an exclusive distribution relationship with Mitsui. We are currently
working on renewing the terms of distributorship. To the extent we are unable to
favorably renew our distribution agreement or make alternative arrangements, we
may have decreased revenue in Japan. We also face country-specific risks in
Europe and Asia pacific region (the region), such as fluctuation in currency,
general economic conditions in the region and regulatory uncertainties
associated with being a foreign company doing business in the region.

     We also have committed additional resources to customizing our products for
selected international markets, including German, French and Spanish-speaking
markets, among others, and in developing international sales and support
organizations. In addition, even if we successfully expand our international
operations and successfully customize our products, there can be no assurance
that we will be able to maintain or increase international market demand for our
products.

     Our international operations are subject to a number of risks, including:

     o    costs of customizing our products for foreign countries;

     o    protectionist laws and business practices favoring local competition;

     o    dependence on the  performance of local  resellers and other strategic
          partners;

     o    adoption  of  general  Internet  technologies  in  each  international
          market;

     o    compliance with multiple,  conflicting and changing  governmental laws
          and regulations;

     o    longer sales and payment cycles;

     o    import and export restrictions and tariffs;

     o    difficulties in staffing and managing international operations;

     o    greater difficulty or delay in accounts receivable collection;

     o    foreign currency exchange rate fluctuations;

     o    multiple and conflicting tax laws and regulations; and


                                      27

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

     o    political and economic instability.


If our plan to sell the Viador E-Portal directly to customers is not successful,
--------------------------------------------------------------------------------
we may not be able to grow our revenue and our stock price may suffer.
---------------------------------------------------------------------

     We sell our products primarily through our domestic direct sales
organization and we support our customers with our technical and customer
support staff in several field offices. Our ability to achieve revenue growth in
the future will depend on our ability to recruit and train sufficient technical,
customer and direct sales personnel. We have in the past and may in the future
experience difficulty in recruiting qualified sales, technical and support
personnel. Our inability to rapidly and effectively expand our direct sales
force and our technical and support staff could reduce or eliminate our growth
and cause our stock price to fall.

We depend on technology licensed from third parties and, if we do not maintain
------------------------------------------------------------------------------
those license arrangements, this could result in delays in shipping our products
--------------------------------------------------------------------------------
and services, which could harm our business.
-------------------------------------------

     We license our search engine technology, which is integrated into the
Viador E-Portal, from Inktomi. This technology provides users of our products
with the ability to search and classify information. We also license JRUN, a
Java servlet engine from Macromedia, which is necessary for users to access the
Viador E-Portal. This software may not continue to be available on commercially
reasonable terms, or at all. Our loss of or inability to maintain either of
these technology licenses could result in delays in the sale of our products and
services until equivalent technology, if available, is identified, licensed and
integrated, which could harm our business.

If we do not manage the recent reduction in our workforce, it could have a
--------------------------------------------------------------------------
material adverse effect on our business.
---------------------------------------

     On January 5, 2001, we reduced our workforce in the United States by 87
positions, or 36% of our workforce in the United States, and aggressively cut
costs. On April 6, 2001, we further reduced our workforce by 55 people, or 37%
of our workforce. On June 29, 2001, we announced another workforce reduction of
approximately 10 people or 14% of the workforce to further reduce costs and it
is possible that we will have additional reductions in our workforce. Any
failure to manage the impact of the workforce reduction on our product
development schedules, our ability to retain remaining personnel, or our ability
to recruit new employees in the future could have a material adverse effect on
our business, operating results and financial condition.


If we are unable to motivate and retain our personnel, it could have a material,
-------------------------------------------------------------------------------
adverse effect on our business.
------------------------------

     Our success depends in large part on our ability to motivate and retain
highly skilled employees on a timely basis. Our workforce reductions and any
future workforce reduction could result in some disruption in our ongoing
operations and harm our efforts to motivate existing employees. Our failure to
retain highly skilled personnel may limit the rate at which we generate revenue
and develop new products or product enhancements. This could have a material
adverse effect on our business, operating results and financial condition.

We have appointed a new interim chief executive officer and a new Vice president
--------------------------------------------------------------------------------
of Sales and Marketing, and the integration of these officers may interfere with
--------------------------------------------------------------------------------
our operations.
--------------

     In January 2001, we announced the appointment of Alice Pilch as our new
chief financial officer. On May 1, 2001, we announced the appointment of Dick
Warmington as interim chief executive officer and president of the Company, and
Donald Cochrane as VP of Sales and Marketing. The transitions of Ms. Pilch, Mr.
Warmington and Mr. Cochrane have resulted and will continue to result in
disruption to our ongoing operations, and these transitions, as well as a
transition to a permanent chief executive officer, may materially harm the way
that the market perceives our company and the price of our common stock.

Loss of any of our executive officers could harm our business.
-------------------------------------------------------------

     Our future success depends to a significant degree on the skills,
experience and efforts of our senior management. In particular, we depend upon
the continued services of Ms. Pilch. The loss of the services of Ms. Pilch or
any of our executive officers could harm our business and operations. In
addition, we have not obtained life insurance benefiting us on any of our
employees or entered into employment agreements with our key employees. If any
of our key employees left or was seriously injured and unable to work and we
were unable to find a qualified replacement, our business could be harmed.


                                      28
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)


If we do not successfully recruit and retain skilled personnel for permanent
----------------------------------------------------------------------------
management positions, we may not be able to effectively implement our business
------------------------------------------------------------------------------
objectives.
----------

     We have experienced significant personnel changes at the senior management
level. In October 2000, our president and chief executive officer and our chief
financial officer resigned. We appointed Jonathan Harding president and chief
executive officer in October 2000 and Alice Pilch chief financial officer in
January 2001. In May 2001, Jonathan Harding resigned as president and chief
executive officer and Steven Dille recently resigned as vice president of
worldwide marketing and sales. We have appointed Dick Warmington as interim
president and chief executive officer and Donald A. Cochrane as vice president
of worldwide marketing and sales. We cannot predict how these changes in
management will affect our business. However, if we fail to recruit and retain
qualified individuals to permanently serve in these senior management positions,
our business, financial condition and results of operations will be seriously
harmed.

We may not be able to recruit and retain personnel, which would impair our
--------------------------------------------------------------------------
growth.
------

     We are highly dependent on certain members of our management and
engineering staff, including, without limitation, our chief executive officer,
our chief technology officer, our senior vice president of worldwide sales and
marketing, and our chief financial officer. The loss of one or more of these
officers might impede the achievement of our business objectives. Furthermore,
recruiting and retaining qualified financial and technical personnel is critical
to our success. If our business grows, we will also need to recruit a
significant number of management, technical and other personnel for our
business. Competition for employees in our industry is intense. We may not be
able to continue to attract and retain skilled and experienced personnel on
acceptable terms.

If we are unable to effectively protect our proprietary rights, our competitors
-------------------------------------------------------------------------------
may be able to copy important aspects of our products or product presentation,
------------------------------------------------------------------------------
which would undermine the relative appeal of our products to customers and
--------------------------------------------------------------------------
reduce our sales.
----------------

     We believe that proprietary rights are important to our business. We
principally rely upon a combination of patent, copyright, trademark and trade
secret laws as well as contractual restrictions to protect our proprietary
technology. We have filed applications seeking U.S. patents on two inventions.
However, patents for these inventions may not issue and it is possible that
these and any other patents issued to us may be circumvented by our competitors
or otherwise may not provide significant proprietary protection or commercial
advantage to us. Similarly, our trademark, service mark and copyright rights may
not provide significant proprietary protection or commercial advantage to us,
and the measures we take to maintain the confidentiality of our trade secrets
may be ineffective. If we are unable to effectively protect our proprietary
rights, our competitors may be able to copy important aspects of our products or
product message, which would undermine the relative appeal of our products to
customers and thus reduce our sales.

If our products infringe upon the proprietary rights of others, we may be forced
--------------------------------------------------------------------------------
to pay high prices to license new technology or stop selling our products.
-------------------------------------------------------------------------

     Our commercial success will also depend in part on our not infringing the
proprietary rights of others and not breaching technology licenses that cover
technology used in our products. It is uncertain whether any third-party
proprietary rights will require us to develop alternative technology or to alter
our products or processes, obtain licenses or cease certain activities. If any
licenses of that type are required, we may not be able to obtain those licenses
on commercially favorable terms, if at all. Our failure to obtain a license to
any technology that we may require to commercialize our products and services
could cause our business and prospects to suffer. Litigation, which could result
in substantial cost to us, may also be necessary to enforce any patents issued
or licensed to us or to determine the scope and validity of third-party
proprietary rights.

                          Risks Related To Our Industry


The markets in which we compete are highly competitive, and we may not be able
------------------------------------------------------------------------------
to compete effectively.
----------------------

     The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other market
activities of industry participants. Our primary source of direct competition
comes from independent software vendors of corporate portal software. We also
compete with business intelligence


                                      29

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)


software vendors,  large application  software vendors,  and application  server
vendors providing a portal add-on.  Business  intelligence software is installed
on a personal computer and permits the analysis of information in databases.  We
also face indirect  competition from potential  customers' internal  development
efforts.  We cannot assure that we will be able to successfully  compete against
current and future competitors,  or that competitive  pressures we face will not
materially  adversely  affect our  business,  prospects,  operating  results and
financial condition.

If we fail to manage technological change or effectively respond to changes in
------------------------------------------------------------------------------
customer needs, demand for our products and services will drop and our business
-------------------------------------------------------------------------------
will suffer.
-----------

     The market for enterprise information portals is still in an early stage of
development and 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:

     o    our technology or systems may become obsolete upon the introduction of
          alternative technologies;

     o    the  technological  life  cycles  of our  products  are  difficult  to
          estimate;

     o    we may not  have  sufficient  resources  to  develop  or  acquire  new
          technologies  or to introduce new services  capable of competing  with
          future technologies or service offerings; and

     o    the price of the  products  and  services  we provide  may  decline as
          rapidly  as,  or  more  rapidly  than,  the  cost  of any  competitive
          alternatives.

     We may not be able to effectively respond to the technological requirements
of the changing market for enterprise information portals. To the extent we
determine that new technologies and equipment are required to remain
competitive, the development, acquisition and implementation of those
technologies and equipment are likely to continue to require significant capital
investment by us. We may not have sufficient capital for this purpose in the
future, and even if it is available, investments in new technologies may not
result in commercially viable technological processes and there may not be
commercial applications for those technologies. If we do not develop and
introduce new products and services and achieve market acceptance in a timely
manner, demand for our products and services will drop and our business will
suffer.

Our business and prospects will suffer if we are unable to adequately respond to
--------------------------------------------------------------------------------
customer demands.
----------------

     We expect that our customers increasingly will demand additional
information and reports with respect to the services we provide. In addition, if
we are successful in implementing our marketing strategy, we also expect the
demands on our technical support resources to grow rapidly, and we may
experience difficulties in responding to customer demand for our services and
providing technical support in accordance with our customers' expectations. We
expect that these demands will require not only the addition of new management
personnel, but also the development of additional expertise by existing
management personnel and the establishment of long-term relationships with
third-party service vendors. We may not be able to keep pace with any growth,
successfully implement and maintain our operational and financial systems or
successfully obtain, integrate and utilize the employees, facilities,
third-party vendors and equipment, or management, operational and financial
resources necessary to manage a business in our evolving and increasingly
competitive industry. If we are unable to address these customer demands, our
business and prospects will suffer.

Our future success will depend upon the ability of our products to work with a
------------------------------------------------------------------------------
large variety of hardware, software, database and networking systems.
--------------------------------------------------------------------

     We currently serve, and intend to continue to serve, a customer base with a
wide variety of hardware, software, database and networking systems. To gain
broad market acceptance, we believe that we may have to support an increased
number of systems in the future. We currently develop our products on Microsoft
Windows NT and Solaris. Therefore, we experience a delay when we adapt our
products to be installed on other major servers. A delay in any rollout of our
product onto a new system could adversely affect our revenues and operating
results. There can be no assurance that we will adequately expand our data
source and system coverage to service potential customers, or that the expansion
will be sufficiently rapid to meet or exceed the system and data source coverage
of our competitors. The success of our products will depend on various factors,
including the ability of our products to integrate and be compatible with
customer systems, particularly hardware systems, operating systems and data
sources, as well as or better than competitive offerings. The success of our
products will also depend on the ability of our existing products to work well
with one another, with new products we are developing and with new software
being developed by third parties. We cannot assure you that we will


                                      30

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- (Continued)

successfully  develop  and market  product  enhancements  or new  products  that
respond to these  technological  changes,  shifting  customer tastes or evolving
industry standards, or that we will not experience difficulties that could delay
or prevent the  successful  development,  introduction  and  marketing  of these
products. If we are unable to develop and introduce new products or enhancements
of  existing  products  in a timely  manner  or if we  experience  delays in the
commencement  of  commercial  shipments of new products  and  enhancements,  our
business will suffer.

If our stock price is volatile or decreases significantly, you may not be able
------------------------------------------------------------------------------
to sell your stock at a favorable price at any given time or ever.
-----------------------------------------------------------------

     Stock prices and trading volumes for many Internet-related companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations. This market volatility,
as well as general domestic or international economic, market and political
conditions, could materially adversely affect the price of our common stock
without regard to our operating performance. In addition, our operating results
may not meet the expectations of public market analysts and investors. If this
were to occur, the market price of our common stock would likely decrease
significantly. Volatility in our stock price may prevent you from selling our
stock at a favorable price at any given time or knowing the appropriate time to
sell our stock. If our stock price drops, it is possible that you may never be
able to sell our stock at a favorable price.

Our officers, directors and affiliates may be able to control all matters
-------------------------------------------------------------------------
submitted for stockholder approval, and you will be subject to their decisions.
------------------------------------------------------------------------------

     Some of our stockholders own a large enough stake in us to have a
significant influence on the matters presented to stockholders. As a result,
these stockholders may be able to control all matters requiring stockholder
approval, including the election and removal of directors, the approval of
significant corporate transactions, such as any merger, consolidation or sale of
all or substantially all of our assets, and the control of our management and
affairs. Accordingly, that concentration of ownership may delay, defer or
prevent a change in control of Viador, impede a merger, consolidation, takeover
or other business combination involving Viador or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of
Viador, any of which could have a material adverse effect on the market price of
our common stock.

We have certain anti-takeover defenses that could prevent an acquisition of our
-------------------------------------------------------------------------------
business that you might favor.
-----------------------------

     Provisions of our certificate of incorporation and bylaws and the
provisions of Delaware law could have the effect of delaying, deferring or
preventing an acquisition of our business. For example, our board of directors
is divided into three classes to serve staggered three-year terms, we may
authorize the issuance of up to 10,000,000 shares of "blank check" preferred
stock, our stockholders may not take actions by written consent and our
stockholders are limited in their ability to make proposals at stockholder
meetings.

Reliance on Continuous Power Supply
-----------------------------------

     California is in the midst of an energy crisis that could disrupt our
operations and increase our expenses of our California facilities. In the event
of an acute power shortage, that is, when power reserves for the State of
California fall below certain critical levels, California has on some occasions
implemented, and may in the future continue to implement, rolling blackouts
throughout California. We currently do not have adequate backup generators or
alternate sources of power in the event of a blackout, and our current insurance
does not provide coverage for any damages we or our customers may suffer as a
result of any interruption in our power supply. If blackouts interrupt our power
supply, we would be temporarily unable to continue operations at our California
facilities. Any such interruption in our ability to continue operations at our
facilities could damage our reputation, harm our ability to retain existing
customers and to obtain new customers, and could result in lost revenue, any of
which could substantially harm our business and results of operations.


                                      31

<PAGE>



ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Investment Portfolio
--------------------

     Viador places its investments in instruments that meet high credit quality
standards, as specified in Viador's investment policy guidelines; the policy
also limits the amount of credit exposure to any one issue, issuer, or type of
instrument. Our interest income is sensitive to changes in the general level of
U.S. interest rates, particularly since the majority of our cash or cash
equivalent are in short-term instruments. Due to the short-term nature of our
investments, we believe that there is no material risk exposure. As of June 30,
2001, our cash and short-term investments had a weighted average interest rate
of 0%. The fair value of our cash and short- term investments approximates the
book value as of June 30, 2001 and December 31, 2000 of $1.0 million, and $16.0
million, respectively. We have limited exposure to financial market risks,
including changes in interest rates. The fair value of our investment portfolio
and the related income would not be significantly impacted by a 10% increase or
decrease in interest rates due mainly to the short-term nature of our investment
portfolio.

Impact of Foreign Currency Exchange Rate Change
-----------------------------------------------

     We develop products in the United States and market our products in North
America, Europe and the Asia-Pacific region. As a result, our financial results
could be affected by factors such as changes in foreign currency exchange rates
or weak economic conditions in foreign markets. No foreign currency derivatives
were purchased or written during the three months ended June 30, 2001.


                                      32

<PAGE>


PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS.

         None.


ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS.

     (a) Modification to Instruments Defining the Rights of Common Stockholders.
         ----------------------------------------------------------------------

         None.

     (b) Material   Limitations   or   Qualifications   on   Rights  of  Common
         ----------------------------------------------------------------------
         Stockholders  Resulting  from the  Issuance or  Modification  of Other
         ----------------------------------------------------------------------
         Securities.
         ----------

     On July 6, 2001, we issued convertible debt securities in a private
offering. This issuance of convertible debt securities may materially affect the
rights evidenced by the common stock since such debt securities would have
priority over the common stock in the distribution of proceeds from any sale of
our assets and any subsequent distribution.


      (c) Information Required by Item 701 of Regulation S-K.
          --------------------------------------------------

     On July 6, 2001, we raised $500,000 in financing through a private offering
of convertible debt securities, in connection with which we issued warrants and
convertible promissory notes. We issued three notes to the individuals and in
the amounts listed in the Schedule of Convertible Promissory Notes Issued under
Exhibit 10.24 in the Index to Exhibits on page 37, and three warrants to the
individuals and for the number of shares listed in the Schedule of Warrants
Issued under Exhibit 10.25 in the Index to Exhibits on page 37.

     The securities were offered and issued to certain private investors,
including Dick Warmington, our chief executive officer. The offering and
issuance was exempt from registration under the Securities Act of 1933, as
amended, pursuant to section 4(2) thereof, as a transaction not involving any
public offering.

     The notes each mature on September 6, 2001, on which date the outstanding
principal amount and unpaid accrued interest thereon will be due and payable.
Until the maturity date, interest accrues on the outstanding principal amount at
an annual rate of one percent plus the prime rate, compounded quarterly. After
the maturity date, interest accrues at an annual rate of three percent plus the
prime rate, compounded quarterly. The notes are each convertible at the option
of the lenders into shares of our common stock at a conversion price equal to
the lower of either the average closing bid price of our common stock on Nasdaq
during the 20 days before July 6, 2001 or the average closing bid price of our
common stock on Nasdaq during the 20 days before the date of conversion. The
lenders also have the option, but only upon our mutual agreement, to convert the
notes into equity securities we issue to any third party in any equity financing
during the term of the note at a conversion price equal to the price per share
at which the securities are sold to the third party. The notes are in no event
convertible into a number of shares that, combined with all other shares
acquired by the converting lender directly or indirectly from us or any person
acting on our behalf, such as an officer, director, substantial shareholder or
underwriter, would exceed 19.9% of our total issued and outstanding shares of
voting stock as of the date of conversion.

     The warrants each expire on July 6, 2003 and are exercisable at any time or
from time to time, in whole or in part, for an aggregate number of 1,250,000
shares of our common stock at a price per share of $0.40. The warrants are in no
event exercisable into a number of shares that, combined with all other shares
acquired by the converting lender directly or indirectly from us or any person
acting on our behalf, such as an officer, director, substantial shareholder or
underwriter, would exceed 19.9% of our total issued and outstanding shares of
voting stock as of the date of exercise.

     On August 13, 2001, we raised $4.0 million in financing through a private
offering of equity securities. As consideration for the funds, we issued
14,814,814 shares of common stock and warrants to purchase a total of 2,962,962
shares of common stock. A commission of $240,000 is payable to a third-party
finder.


                                      33

<PAGE>


     The warrants were issued to the individuals and in the amounts listed in
the Schedule of Warrants Issued in Equity Financing under Exhibit 10.31 in the
Index of Exhibits on page 37. The warrants each expire on February 12, 2006
and are exercisable at any time or from time to time, in whole or in part, after
February 12, 2002 at a price of $0.27 per share.

     The offering and issuance were exempt from registration under the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof, as a
transaction not involving a public offering.

     (d) Use of Proceeds.  Paragraph  references herein refer to the respective
         ---------------
         paragraphs of Item 701(f) of Regulation S-K.

         (1)  The effective date of the registration statement for which the use
              of proceeds is being disclosed is October 25, 1999 and the
              Commission file number assigned to the registration statement is
              333-84041.

         (4)  Information regarding the offering.

                  (v)  Amount of expenses incurred for the Company's account:


<TABLE>

             <S>                                                   <C>
              Underwriting discount                                 $2,898,000
              Other expenses                                        $1,270,000
                                                                    ----------
                   Total expenses                                   $4,168,000
                                                                    ==========
</TABLE>


              (B)  All of such total expenses were payments to others (i.e., not
                   to directors, officers and 10%


                  (vi)  Net proceeds:                               $37,232,000


(vii)    Estimated amount of net proceeds used for:

<TABLE>
             <S>                                                                   <C>
              Construction of plant, building and facilities                        $         --
              Purchase and installation of machinery and equipment                     3,000,000
              Purchases of real estate                                                        --
              Acquisition of other businesses                                          1,000,000
              Repayment of indebtedness                                                       --
              Working capital                                                         33,232,000
              Short-term investments including certificates of deposit,
              corporate bonds, federal bonds, money market funds and
              commercial paper                                                                --
                                                                                     -----------
                   Total                                                             $37,232,000
                                                                                     ===========

</TABLE>


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

     The annual meeting of stockholders of Viador Inc., a Delaware corporation,
was held on May 30, 2001 at 10:00 a.m., local time, at the Company's
headquarters located at 2000 Charleston Road, Suite 1000, Mountain View,
California 94043.


                                      34

<PAGE>


     At the annual stockholder meeting, matters voted upon and the results of
the voting with respect to each such matter were as follows:

     1. To approve the amendment to the Company's 1999 Stock Incentive Plan to
increase the total number of shares authorized for issuance thereunder by 2.5
million shares to a total of 11,235,741 shares:

<TABLE>
<CAPTION>

                                                                                                               BROKER
                IN FAVOR                         OPPOSED                       ABSTAINED                      NON-VOTES
     -------------------------------- ------------------------------ ------------------------------ ------------------------------
              <S>                                <C>                             <C>                          <C>
               5,619,281                          614,045                         5,960                        8,811,247

</TABLE>


     2. To ratify the  appointment of KPMG LLP as our  independent  auditors for
the year ending December 31, 2001:


<TABLE>
<CAPTION>

                IN FAVOR                         OPPOSED                       ABSTAINED
     -------------------------------- ------------------------------ ------------------------------
             <S>                                  <C>                            <C>
              15,031,480                           11,765                         7,288


</TABLE>



ITEM 5.  OTHER INFORMATION.

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Recent Events" on page 13.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

       (a)    Exhibits.
              --------

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>

     Exhibit
       No.                       Exhibit Description
    --------    ----------------------------------------------------------------
   <S>         <C>
     ****3.1    Amended and Restated Certificate of Incorporation
     ****3.2    Amended and Restated Bylaws
        *4.1    Reference is made to Exhibit 3.1
        *4.2    Reference is made to Exhibit 3.2
        *4.3    Specimen Common Stock certificate
        *4.4    Amended and Restated Investors' Rights Agreement, among the
                Registrant and the parties listed on Schedule A thereto, dated
                May 21, 1999
       *10.1    Form of Amended and Restated 1997 Stock Option and Incentive Plan
       *10.2    Form of 1999 Stock Incentive Plan
       *10.3    Form of 1999 Employee Stock Purchase Plan
       *10.4    Form of Indemnification Agreement for Officers and Directors


                                      35

<PAGE>

     Exhibit
       No.                       Exhibit Description
    --------    ----------------------------------------------------------------

       *10.5    Assignment of Lease, by and between the Registrant and Valley of
                California, Inc., and Consent to Assignment, dated as of
                December 16, 1997 and related office leases
       *10.6    Collateral Assignment, Patent Mortgage and Security Agreement,
                by and between the Registrant and Comerica Bank -- California,
                dated March 4, 1997
       *10.7    Revolving Credit Loan and Security Agreement, by and between the
                Registrant and Comerica Bank -- California, dated March 17, 1999
       *10.8    SpaceSQL Version 4.0 License Agreement by and between the
                Registrant and IBM Corporation, dated September 18, 1998.
       *10.9    Software Marketing and Distributorship Agreement by and between
                the Registrant and Mitsui & Co. Ltd, dated June 26, 1997
       *10.10   Variable Rate Single Payment Note by and between the Registrant
                and Comerica Bank--California, dated June 29, 1999
      **10.11   Alza Corporation Sublease to Viador Inc., by and between the
                Registrant and Alza Corporation, dated January 31, 2000
      **10.12   Stock Purchase Agreement, by and among Messrs. Andreas Zwimpfer,
                David Keat, Charles Fraefel, Chula de Silva and Tim Moser and
                the Registrant, dated January 20, 2000
     ***10.13   Note Secured by Stock Pledge Agreement, by and between Mr. Raja
                Venkatesh and the Registrant, dated April 14, 2000
     ***10.14   Stock Pledge Agreement, by and between Mr. Raja Venkatesh and
                the Registrant, dated April 14, 2000
     ***10.15   Note Secured by Stock Pledge Agreement, by and between Mr. Raja
                Venkatesh and the Registrant, dated May 26, 2000
     ***10.16   Stock Pledge Agreement, by and between Mr. Raja Venkatesh and
                the Registrant, dated May 26, 2000
    ****10.17   Note Secured by Stock Pledge Agreement, by and between Mr. Steve
                Dille and the Registrant, dated July 13, 2000
    ****10.18   Stock Pledge Agreement, by and between Mr. Steve Dille and the
                Registrant, dated July 13, 2000
    ****10.19   Employment Agreement between Mr. Steve Dille and the Registrant
                dated November 30, 2000
    ****10.20   Employment Agreement by and between Mr. Johnathan Harding and
                the Registrant dated October 5, 2000
    ****10.21   Mutual Release Agreement by and between Viador GmbH and the
                Registrant Dated November 27, 2000
        10.22   Sublease Termination Agreement by and between the Registrant and
                Alza Corporation, dated May 31, 2001.
        10.23   Convertible Note and Warrant Purchase Agreement by and among the
                Registrant and Messrs. Dick Warmington, Zhihan Wang and Kin Lui,
                dated July 6, 2001.


                                      36

<PAGE>
     Exhibit
       No.                       Exhibit Description
    --------    ----------------------------------------------------------------

        10.24   Form of Convertible Promissory Note issued in connection with
                Convertible Note and Warrant Purchase Agreement by and among the
                Registrant and Messrs. Dick Warmington, Zhihan Wang and Kin Lui,
                dated July 6, 2001.

                         Schedule of Convertible Promissory Notes Issued:
                         (a) Convertible Promissory Note for $300,000 issued to
                             Mr. Zhihan Wang;
                         (b) Convertible Promissory Note for $100,000 issued to
                             Mr. Dick Warmington;
                         (c) Convertible Promissory Note for $100,000 issued to
                             Mr. Kin Lui.

        10.25   Form of Warrant issued in connection with Convertible Note and
                Warrant Purchase Agreement by and among the Registrant and
                Messrs. Dick Warmington, Zhihan Wang and Kin Lui, dated July 6,
                2001.

                         Schedule of Warrants Issued:
                         (a) Warrant for $750,000 issued to Mr. Zhihan Wang;
                         (b) Warrant for $250,000 issued to Mr. Dick Warmington;
                         (c) Warrant for $250,000 issued to Mr. Kin Lui.
        10.26   Convertible Promissory Note issued to Mr. Dick Warmington in
                connection with Convertible Note and Warrant Purchase Agreement
                by and among the Registrant and Mssrs. Dick Warmington, Zhihan
                Wang and Kin Lui, dated July 6, 2001.
        10.27   Warrant issued to Mr. Dick Warmington in connection with
                Convertible Note and Warrant Purchase Agreement by and among the
                Registrant and Messrs Dick Warmington, Zhihan Wang and Kin Lui,
                dated July 6, 2001.
        10.28   Sublease Agreement by and between the Registrant and Techspan,
                Inc., dated July 2, 2001.
        10.29   Severance Agreement by and between the Registrant and Jonathan
                Harding, dated May 8, 2001.
        10.30   Stock Purchase Agreement by and among Registrant and Messrs.
                Hungyeung Yeung, Zhihan Wang, and Magison Investment Ltd., dated
                August 13, 2001.
        10.31   Form of Warrant issued in connection with Stock Purchase
                Agreement by and among Registrant, and Messrs. Hungyeung Yeung,
                Zhihan Wang, and Magison Investment Ltd., dated August 13, 2001.

                         Schedule of Issued Warrants in Equity Financing
                         a.       Warrant to Mr. Hungyeung Yeung
                         b.       Warrant to Mr. Zhihan Wang
                         c.       Warrant to Magison Investment Ltd.

        10.32   Employment Agreement by and between the Registrant and Alice
                Pilch dated June 25, 2001.
-------------------------
<FN>
*      Incorporated by reference to Exhibits of the Registrant's Registration
       Statement on Form S-1 (File No. 333-84041) filed on October 25, 1999.

**     Incorporated by reference to Exhibits of the Registrant's Annual Report
       on Form 10-K for the fiscal year ended December 31, 1999, filed with the
       Securities and Exchange Commission on March 30, 2000.

***    Incorporated by reference to the Registrant's Quarterly Report on Form
       10-Q, filed on August 14, 2000.

****   Incorporated by reference to the Registrant's Annual Report on Form 10-K
       for the fiscal year ended December 31, 2000, with the Securities and
       Exchange Commission dated June 30, 2001.
</FN>
</TABLE>


                                     37

<PAGE>

       (b)    Reports on Form 8-K. The Company did not file a Current Report on
              Form 8-K with the Securities and Exchange Commission during the
              quarter ended June 30, 2001.


                                      38

<PAGE>



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                                       VIADOR INC.
                                                       -----------
                                                      (Registrant)




Date: August 20, 2001                     By:      /s/  Dick Warmington
                                             -----------------------------------
                                                      Dick Warmington
                                                  Chief Executive Officer
                                                    (Authorized Officer)







Date: August 20, 2001                      By:         /s/ Alice Pilch
                                              ----------------------------------
                                                         Alice Pilch
                                                  Vice President of Finance
                                                  and Corporate Controller
                                                (Principal Financial Officer
                                               and Principal Accounting Officer)


                                      39