VIALINK CO
8-K, 2000-11-14
COMPUTER PROGRAMMING SERVICES
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<PAGE>   1
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------


                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934


       DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 14, 2000


                        COMMISSION FILE NUMBER: 000-21729


                               THE viaLINK COMPANY
                 (Name of Small Business Issuer in its Charter)

               DELAWARE                                         73-1247666
     (State of Other Jurisdiction                            (I.R.S. Employer
     Incorporation or Organization)                         Identification No.)

       13155 NOEL ROAD, SUITE 800
             DALLAS, TEXAS                                         75240
(Address of Principal Executive Offices)                         (Zip Code)


                   COMPANY'S TELEPHONE NUMBER: (972) 934-5500

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

<PAGE>   2

ITEM 9. REGULATION FD DISCLOSURE.

        We are furnishing the information set forth in this Item 9 in connection
with a conference call in which we expect to discuss with securities analysts
and stockholders the outlook for our company. We are furnishing this
information, without expressing any view as to whether it is material
information, solely to avoid any issues relating to our compliance with
Regulation FD.

        The Projected Statements of Operations set forth below, including the
notes thereto, are intended to speak only as of the date of this Report and
should not be construed as representing projections of our anticipated results
of operations, or assumptions or estimates as to future events or outcomes, as
of any subsequent date. By furnishing the Projected Statements of Operations,
including the notes thereto, we are not undertaking, and we disclaim any
obligation to furnish updated or revised projections of our anticipated results
of operations, or assumptions or estimates as to future events or outcomes, to
reflect any events or circumstances occurring or existing at any time after the
date of this Report (irrespective in any such case of whether the projections,
assumptions or estimates set forth in this Report, in light of events or
circumstances occurring or existing at any time after the date of this Report,
shall have ceased to have a reasonable basis). Consequently, the projections of
our anticipated results of operations, assumptions and estimates set forth in
this Report should not be regarded as a representation by us that the projected
results of operations can or will be achieved. Our regular annual and quarterly
financial statements, and the accompanying discussions and analysis of our
financial condition and results of operations, contained in our Annual Reports
on Form 10-KSB and our Quarterly Reports on Form 10-QSB filed with the
Securities and Exchange Commission after the date of this Report will contain
disclosure regarding our actual results of operations for fiscal periods covered
by the Projected Statements of Operations. Our actual results could vary
significantly from the results in the Projected Statements of Operations based
upon changes in operations, factors effecting our business and the degree and
timing to which management executes its business plan.

        The Projected Statements of Operations and all statements of our
management's intentions, beliefs, anticipations, expectations, assumptions and
similar expressions concerning future events or outcomes contained in this
Report constitute "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). As with any future
event or outcome, we cannot assure you that the events or outcomes described in
forward-looking statements contained in this Report will occur or that future
events or outcomes will not vary materially from those described in the
forward-looking statements. These forward-looking statements reflect our
management's current views and projections regarding economic conditions,
industry environments and our performance. Important factors that could cause
our actual performance and operating results to differ materially from the
forward-looking statements include, but are not limited to, changes in the
general level of economic activity in the markets served by us, introduction of
new products or services by competitors, adoption of our services by consumer
packaged goods (CPG), grocery and foodservice industry participants, sales
performance, expense levels, interest rates, changes in our financial condition,
availability and terms of capital sufficient to support our current and
anticipated level of activity, delays in implementing further enhancements to
our services and our ability to implement our business strategies.

        Our expectations with respect to future results of operations that may
be embodied in oral and written forward-looking statements, including any
forward-looking statements that may be included in this Report, are subject to
risks and uncertainties that must be considered when evaluating the likelihood
of our realization of such expectations. Our actual results could differ
materially. Factors that could cause or contribute to such differences include,
but are not limited to, those discussed in "Additional Factors That May Affect
Future Results."

        We have incurred operating losses and negative cash flow in the past and
expect to incur operating losses and negative cash flow for the foreseeable
future. We expect our spending to increase for the foreseeable future for
further technology and product development, sales and marketing expenditures and
other technology and database costs. We also expect to hire additional
management, development and support/service employees. To support our current
level of spending, we must obtain additional capital in the near term. We do not
currently have any binding commitments from third parties to provide capital to
us.

        Our future capital requirements will depend on our revenue growth,
profitability, working capital requirements, level of investment in long term
assets and other financing sources. Increases in these capital requirements or a
lack of revenue due to delayed or less than expected market acceptance of our
viaLink services would accelerate the use of our cash, cash equivalents and
short-term investments.


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<PAGE>   3

        We are currently working, with the assistance of our financial advisors,
to address our future capital requirements. Although we expect that these
efforts will result in the procurement of capital in the near term, there can be
no assurance as to whether, when or the terms upon which any such capital may be
obtained. Any failure to timely obtain an adequate amount of additional capital
on commercially reasonable terms could have a material adverse effect on our
business, financial condition and results of operations, including our viability
as an enterprise.

FINANCIAL PROJECTIONS

                               THE VIALINK COMPANY

                       PROJECTED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDING DECEMBER 31,
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       2001              2002
                                                     --------          --------
<S>                                                  <C>               <C>
Revenues, subscription .....................         $  6,200          $ 29,100
Revenues, implementation and
  licensing ................................            5,900            14,700
                                                     --------          --------
      Total revenues .......................           12,100            43,800
Operating expenses:
   Customer operations .....................            8,600            14,700
   Development .............................            8,700             9,400
   Selling and marketing ...................            8,200             9,200
   General and administrative ..............            9,500            10,600
   Depreciation and Amortization ...........            3,100             3,300
                                                     --------          --------
      Total operating expenses .............           38,100            47,200
                                                     --------          --------
Loss from operations .......................          (26,000)           (3,400)
Income taxes ...............................
                                                     --------          --------
Net income (loss) ..........................         $(26,000)         $ (3,400)
                                                     ========          ========
</TABLE>

         The accompanying notes are an integral part of these projected
                              financial statements.


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<PAGE>   4

                               THE VIALINK COMPANY

                   NOTES TO PROJECTED STATEMENTS OF OPERATIONS

1. DESCRIPTION OF BUSINESS

        We provide subscription-based, business-to-business electronic commerce
services that enable food industry participants to efficiently manage their
highly complex supply chain information. Our core service, syncLink (SM), allows
manufacturers, wholesalers, distributors, sales agencies (such as food brokers),
retailers and food service operators to communicate and synchronize item, price
and promotion information in a more cost-effective and accessible way than has
been possible using traditional electronic and paper-based methods. Our
additional services, which are all built on the syncLink foundation, include
clearLink(SM) for item movement data, distribuLink(SM) for chain pricing and
sbtLink(SM) for scan-based trading.

2. BASIS OF PRESENTATION

        We have prepared the accompanying projected financial statements using
estimates and assumptions based upon management's beliefs and judgement for
conditions and data available as of the date of this Report. Sensitive
assumptions and estimates include, among other things, our ability to obtain
additional capital, the number of supplier and retailer customers we add and the
timing of our customer signings. These assumptions are subject to significant
uncertainties and contingencies, many of which are beyond our control.

        Our independent auditors have not examined or compiled the Projected
Statements of Operations presented in this Report and, accordingly assume no
responsibility for them. Moreover, the Projected Statements of Operations have
not been prepared with a view to compliance with published guidelines for the
Securities and Exchange Commission regarding projections or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections.

        The financial projections included herein should be read in conjunction
with the historical financial statements and related notes included in our
Annual Report on Form 10-KSB, for the year ended December 31, 1999 and our
Quarterly Reports on Form 10-QSB, for the periods ended March 31, 2000, June 30,
2000 and September 30 2000, as well as with the accompanying discussion and
analysis of our financial condition and results of operations contained in those
reports.

3. ASSUMPTIONS EFFECTING FUTURE RESULTS OF OPERATIONS

Sales Performance and Revenue Assumptions

        We expect to generate our future revenues primarily from monthly
subscriptions to our services. For use of our syncLink service, retailers pay us
a flat monthly subscription rate or by trading partner connection and suppliers
pay us either a flat monthly subscription rate or based on the number of
retailers that subscribe to their data. Our basic syncLink subscription service
fee is a monthly flat fee per trading partner depending on the size and
complexity of the trading relationship. Our other services are available for
additional fees.

        We recognize revenues for our subscription and Web-hosting services as
they are provided. Revenues collected in advance are deferred and recognized as
earned. Revenues for implementations are recognized as the implementations are
completed. We expect Web-Hosting revenues to continue to decrease in the future.

syncLink Revenue

        Under viaLink's pricing model implemented in July 2000, a user pays a
one-time implementation (set-up) fee and a monthly subscription fee based on its
size and complexity. Each retailer and supplier choosing the flat fee pricing is
able to share product, price and promotion data with an unlimited number of
trading partners. For


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<PAGE>   5

instance, once a retailer is signed up, the flat fee structure motivates the
retailer to have as many of its suppliers connected as possible since the
additional connections will not cost the retailer additional subscription fees.

        viaLink's one-time implementation fee is charged on a cost-plus basis
and ranges from $1,200 for a simple browser implementation to over $100,000 for
a more complex customer.

        Our tiered pricing structure for retailers ranges from $5,000 per month
for a small chain retailer up to $35,000 per month for the largest retailer.
These rates are for unlimited supplier connections. A subscription rate of $25
per supplier, per month is in effect for retailers with less than 25 stores.

        Our tiered flat rate pricing structure for suppliers ranges from $10,000
per month in the first year increasing to a maximum of $40,000 per month in the
third year for a supplier with up to $100 million in annual sales. Flat rate
pricing for the largest suppliers ranges from $33,000 per month in the first
year increasing to $100,000 per month in the third year for unlimited retailer
connections. By the connection pricing ranges from $25 per month for each
retailer connection for the smallest suppliers up to $2,000 per month per
retailer for the largest suppliers.

        The number of customers will vary significantly depending on the degree
of penetration within each supply chain. Each retailer and supplier could have
thousands of trading partners which could be influenced by the retailer and
supplier to use our services. A fully deployed trading community of a single
retailer or supplier, with all of its trading partners subscribing to our
services could yield annual recurring revenues for our syncLink services,
ranging from $100,000 to over $16.0 million.

        Our services and subscription agreements generally have a term of 1 to 3
years but include certain cancellation provisions with 30 days notice. Due to
the unique nature of our services and the current stage of development and
adoption of our services, our prices are subject to change in response to
changing operating costs and market demands.

        Our projections, and in particular implementation and subscription
revenues, are prepared using the estimates of customer additions presented in
the following table.

<TABLE>
<CAPTION>
                                                 2001          2002
                                                -----         -----
<S>                                             <C>           <C>
            TOTAL RETAILER CUSTOMERS ADDED         17            67
            TOTAL SUPPLIER CUSTOMERS ADDED      1,000         2,401
</TABLE>

        Our 2001 and 2002 estimates were prepared assuming the addition of five
retailers with over 200 stores in 2001, and twelve retailers with over 200
stores in 2002. Our 2001 and 2002 estimates were prepared assuming the addition
of four manufacturers with annual revenues in excess of $500 million in 2001 and
2002.

        REVENUE ESTIMATES COULD VARY SIGNIFICANTLY DEPENDING ON THE EXTENT THAT
THESE ESTIMATES ARE EXCEEDED OR NOT REALIZED.

        Factors that could cause the syncLink implementation revenues to vary
significantly include, but are not limited to: (a) the total number of supplier
and retailer customers added, (b) the mix of customer size, (c) the complexity
of each implementation, price for which will be independently negotiated with
each new customer, (d) the timing of customer signings and (e) the extent that
our services are integrated into the customers supply chain systems.

        Factors that could cause the syncLink subscription revenues to vary
significantly include, but are not limited to: (a) the total number of supplier
and retailer customers, (b) the mix of customer size, (c) the timing of customer
signings, (d) the extent that our services are integrated into the customers
supply chain systems, and (e) the variance from basic pricing as required in
individual contract negotiations or overall changes in pricing policies.


                                       5

<PAGE>   6

sbtLink Revenue

        For our sbtLink service, we charge each retailer and supplier based upon
the number of stores participating in in each scan based trading relationship.
Fees vary depending on the number of stores and the number of unique items
managed through our sbtLink service. In addition, we charge an implementation
fee charged at time and materials on a cost-plus basis.

        Our sbtLink revenue projections assume that we add 14 customers in 2001
and 20 customers in 2002. We have assumed that each customer will generate
revenues for us of $20,000 per quarter through 2002.

Foodservice Revenue

        As in the CPG and grocery industry, viaLink charges a one time
implementation fee plus ongoing monthly subscription fees to the foodservice
industry for its syncLink services. Implementation fees are the same as in the
CPG and grocery industry and are based upon time and materials.

        Monthly syncLink subscription fees are charged "by the connection" for
manufacturers and brokers as they connect to each distributor. Operators will
pay a flat fee per location per month. Distributors will pay for each
manufacturer connection. We would expect to offer unlimited connection fees
similar to those offered in the CPG and grocery industry.

        Our projections assume that we have 1,825 foodservice locations at the
end of 2001 and increasing to 3,200 at the end of 2002. We have assumed that
each operating unit will generate revenues for us of $150 per quarter through
2002.

        Current foodservice pricing is preliminary and subject to change to
respond to market and customer conditions.

Operating Expense Assumptions

Customer Operations

        Customer operations expense consists of personnel costs associated with
implementation, consulting and other services and costs of operating,
maintaining and accessing our technical operations and hosting facilities.
Customer operations expense also includes the cost of providing support and
maintenance to customers.

        Employee costs represent a significant portion of these costs and have
been calculated using the following assumptions: (a) 50 employees at the
beginning of 2001, (b) an even distribution of internally staffed and
out-sourced implementation labor, and (c) a mix of internal employee growth and
out-sourced labor for call center and customer support to represent 12% of
subscription revenues.

        The cost of operation and maintenance of our technical operations and
hosting facilities has been estimated using current and planned hosting
contracts with Hewlett-Packard. The planned architecture includes a single site
hosted by Hewlett-Packard and including their `virtual vault' secure
application, dual ISP's and future modular expandability to 24 terabytes. We
have estimated the cost of incremental data storage over the base capacity at
10% of subscription revenues. Our estimates do not include any increased costs
to expand the platform to multiple sites.

        Customer operations costs could vary significantly for changes in
factors including, but not limited to: (a) changes in the number of employees or
cost per employee, (b) the mix of internally staffed versus out-sourced
implementation and customer service labor, (c) increased customer service
requirements, (c) expansion beyond planned capacity, (d) expansion into
international and other vertical markets, and (e) requirements to operate
multiple sites.


                                       6

<PAGE>   7

Development

        Development expense includes personnel and contract labor costs and
professional fees incurred for product development, enhancements, upgrades,
quality assurance and testing. We are utilizing and expect to increase our
reliance on our alliance partners and other vendors to advance our development
efforts.

        Employee costs represent a significant portion of these costs and have
been calculated using the following assumptions: (a) 41 employees at the
beginning of 2001, and (b) 47 employees at the end of 2002.

        Development projects performed by alliance partners and other vendors
have been estimated using the following assumptions: (a) base project cost of
approximately $2.9 million for 2001, and (b) annual growth of 8.5% in 2002.

        All other development costs have been estimated using the following
assumptions: (a) base cost of approximately $1.4 million for 2001, and (b)
annual growth of 8.5% in 2002.

        Development costs could vary significantly for changes in factors
including, but not limited to: (a) changes in employee costs, (b) the number and
complexity of projects performed by alliance partners, (c) expansion into
international and other vertical markets, (d) unplanned modifications or
enhancements to our services, and (e) amortization for additional options or
warrants which could be granted to vendors as compensation to perform
development activities.

Selling and Marketing

        Selling and marketing expense consists primarily of personnel costs,
travel, promotional events, including trade shows, seminars and technical
conferences, advertising and public relations programs.

        Employee costs represent a significant portion of these costs and have
been calculated using the following assumptions: (a) 22 employees at the
beginning of 2001, and (b)and 26 employees at the end of 2002.

        Professional fees, sales collateral costs, media insertion fees, travel
expenses and all other selling and marketing costs have been estimated using the
following assumptions: (a) estimated costs of approximately $6.1 million for
2001 based on current run-rates, and (b) annual growth of 13% in 2002.

        Selling and marketing costs could vary significantly for changes in
factors including, but not limited to: (a) changes in the number of employees,
(b) the frequency and type of media campaigns, (c) expansion into international
and other vertical markets, and (d) amortization for additional options or
warrants which could be granted to vendors as compensation to perform selling
and marketing activities.

General and Administrative (G&A)

        G&A expense consists primarily of the personnel and other costs of the
finance, human resources, administrative and executive departments and the fees
and expenses associated with legal, accounting and other services.

        Employee costs represent a significant portion of these costs and have
been calculated using the following assumptions: (a) 26 employees at the
beginning of 2001, and (b) 32 employees at the end of 2002.

        Professional fees for recruiting and relocation, legal, accounting and
other services have been estimated using the following assumptions: (a)
estimated base cost of approximately $2.2 million for 2001, and (b) annual
growth of 22% in 2002.

        All other G&A expenses including travel, rent, and insurance have been
estimated using the following assumptions: (a) base cost of approximately $3.7
million for 2001, and (b) annual growth of 13% in 2002.


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<PAGE>   8

        G&A expense could vary significantly for changes in factors including,
but not limited to: (a) changes in the number of employees and the associated
costs, (b) the level of business activities requiring legal, accounting or other
services, (c) expansion into international and other vertical markets, and (d)
amortization for additional options or warrants which could be granted to
vendors as compensation.

Depreciation and Amortization

        Depreciation and amortization expense is estimated based on using useful
lives ranging from 3 - 10 years. Estimates for 2001 are calculated using a
depreciable asset base of approximately $9.0 million in 2001 increasing by 6.6%
in 2002. The depreciable asset base assumes that the technical operations and
hosting facilities are funded through a capital lease and result in depreciation
expense. To the extent that the facilities are funded through an operating
lease, these expenses will be reflected in customer operations as rental
expenses.

        Depreciation expense could vary significantly for changes in factors
including, but not limited to increases or decreases in the depreciable asset
base and changes in the estimated useful lives of existing assets.

Interest Expense, Net

        Interest expense, net, is primarily comprised of interest on the
promissory note we issued to Hewlett-Packard in February 1999 for $6.0 million
at 11.5% interest. Interest will continue to accrue until the note is converted
by Hewlett-Packard. Interest expense is expected to be offset by interest income
on short-term investments at current rates.

        Interest expense could vary significantly for changes in factors
including, but not limited to: (a) structure of capital raising activities, (b)
extent to which we execute capital leases, (c) amount of cash on hand and
investment rates, and (d) interest rates in effect at the time we enter into any
other financing arrangement.

Tax Provision

        Our projections have assumed that no tax benefit is being realized until
we generate net operating income. We have assumed that all losses until the
point at which we generate net income will generate net operating loss
carryforwards and will be used to offset current income taxes due. We have
assumed that our tax rate will be 40% once we have utilized all net operating
loss carryforwards and have current taxes due.

        Our estimated tax provision could vary significantly for changes in
factors including, but not limited to: (a) changes in tax rates, (b) our ability
to utilize net operating loss carryforwards, and (c) the extent to which our
operating income is generated in taxing jurisdictions with unfavorable tax
rates.

Liquidity and Capital Resource Requirements

    Our principal potential sources of liquidity are cash on hand, cash
generated from operations and cash provided from financing activities. As of
September 30, 2000, we had cash and cash equivalents of $8.5 million.

        We have incurred operating losses and negative cash flow in the past and
expect to incur operating losses and negative cash flow for the foreseeable
future. We expect our spending to increase for the foreseeable future for
further technology and product development, sales and marketing expenditures and
other technology and database costs. We also expect to hire additional
management, development and support/service employees. To support our current
level of spending, we must obtain additional capital in the near term. We do not
currently have any binding commitments from third parties to provide capital to
us.

        Our future capital requirements will depend on our revenue growth,
profitability, working capital requirements, level of investment in long-term
assets and other financing sources. Increases in these capital requirements or a
lack of revenue due to delayed or less than expected market acceptance of our
viaLink services would accelerate the use of our cash and cash equivalents.


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<PAGE>   9

        We are currently working, with the assistance of our financial advisors,
to address our future capital requirements. Although we expect that these
efforts will result in the procurement of capital in the near term, there can be
no assurance as to whether, when or the terms upon which any such capital may be
obtained. Any failure to timely obtain an adequate amount of additional capital
on commercially reasonable terms could have a material adverse effect on our
business, financial condition and results of operations, including our viability
as an enterprise.

        Our projections result in estimated cash flow break-even during
mid-2002. We estimate that our cash flow needs (including the proceeds of any
near-term financing) through the point at which we reach cash flow break-even,
would require us to complete a financing in the near-term and to raise
additional capital in the middle of 2001. In total, we estimate we would need to
raise approximately $30 million to meet the cash requirements of the company
through cash flow break-even.

        Our estimated cash used in operations could vary significantly for
changes in operating revenues and expenses outlined above and factors discussed
in "Additional Factors That May Affect Future Results."

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

        You should carefully consider these factors that may affect future
results, together with all of the other information included in this Form 8-K,
in evaluating our business. The risks and uncertainties described below are
those that we currently believe may materially affect us. Additional risks and
uncertainties that we are unaware of or that we currently deem immaterial also
may become important factors that affect us.

        Keep these risks in mind when you read "forward-looking" statements
elsewhere in this Form 8-K. These are statements that relate to our expectations
for future events and time periods. Generally, the words "anticipate," "expect,"
"intend," and similar expressions identify forward-looking statements.
Forward-looking statements involve risks and uncertainties, and future events
and circumstances could differ significantly from those anticipated in the
forward-looking statements. Please see "Special Cautionary Note Regarding
Forward-Looking Statements" below.

WE MAY BE UNABLE TO OBTAIN THE ADDITIONAL CAPITAL REQUIRED TO SUSTAIN AND GROW
OUR BUSINESS

         We intend to continue our investment in and development of our services
and technology, expansion of our sales and marketing activities and expansion
into other industries and geographic markets. We have incurred operating losses
and negative cash flow in the past and expect to incur operating losses and
negative cash flow in the future. Our ability to fund our planned working
capital and capital expenditures will depend largely upon our ability to obtain
sufficient capital. Our future capital requirements will depend on a number of
factors, including our:

        o       Services achieving market acceptance;

        o       Services producing a sustainable revenue stream;

        o       Working capital requirements; and

        o       Level of our investment in and development of our services and
                technology.

        We may not be able to obtain the additional capital resources necessary
to satisfy our cash requirements or to implement our growth strategy
successfully. If we obtain additional capital, we cannot be certain that it will
be on favorable terms. If we cannot obtain adequate additional capital
resources, we will be forced to curtail our planned business expansion. We may
also be unable to fund our ongoing operations, including investment in and
development of our services and technology, expansion of our sales and marketing
activities and expansion into other industries and geographic markets. If we
issue equity securities, stockholders may experience additional dilution or the
new equity securities may have rights, preferences or privileges senior to those
of our common stock.

        We are a developing company, and most of our customers are well
established. Until our services become widely accepted in the food and
foodservice industries, we may need to make concessions to individual large
customers in order to gain industry acceptance.


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<PAGE>   10
DUE TO THE SALE OF OUR CONSULTING AND SYSTEMS INTEGRATION ASSETS AND THE SALE
OF OUR SUBSIDIARY, iJOB, INC. IN 1998, WE NEED TO REPLACE MOST OF OUR HISTORICAL
REVENUES WITH REVENUES FROM OUR viaLINK SERVICES.

        We have historically derived substantially all of our revenues from
providing management consulting services and computer systems integration
services to the retail and wholesale distribution industries. In order to permit
us to focus our resources primarily on developing and marketing our viaLink
services, we sold the assets underlying our management consulting services and
computer systems integration services, and we sold our wholly-owned subsidiary,
ijob, Inc. We had previously generated over 90% of our total revenues from these
operations.

        As a result of these sales, we are now substantially dependent on
revenues generated from our viaLink services. Our viaLink services have achieved
limited market acceptance and, to date, have accounted for an insignificant
amount of our historical revenues. Consequently, we resemble a development stage
company and will face many of the inherent risks and uncertainties that
development stage companies face.

        These risks include, but are not limited to, our:

        o       Need for our services to achieve market acceptance and produce a
                sustainable revenue stream;

        o       Need to expand sales, support and product development
                capabilities;

        o       Need to manage rapidly changing operations;

        o       Dependence upon key personnel;

        o       Reliance on strategic alliances and relationships;

        o       Ability to obtain financing on acceptable terms; and

        o       Ability to offer greater value than our competitors.

        Our business strategy may not successfully address these risks. If we
fail to recognize significant revenues to replace the revenues lost in these
sales, our business, financial condition and operating results would be
materially adversely affected.

WE ARE SUBSTANTIALLY DEPENDENT ON OUR VIALINK SERVICES. IF OUR VIALINK SERVICES
FAIL TO BECOME ACCEPTED BY THE CONSUMER PACKAGED GOODS AND GROCERY INDUSTRIES,
OUR BUSINESS WILL BE MATERIALLY ADVERSELY AFFECTED.

        Virtually all of our revenues for the foreseeable future will be derived
from implementation fees and subscription revenues from our viaLink services,
which may not achieve market acceptance. To date we have received an
insignificant amount of revenues from these services. The acceptance of our
syncLink service as an industry-wide shared database will depend upon
subscriptions from a large number of industry manufacturers, suppliers and
retailers. We cannot predict when a significant number of manufacturers,
suppliers and retailers will subscribe to our services, if ever. If our services
do not achieve market acceptance, or if market acceptance develops more slowly
than expected, our business, operating results and financial condition will be
seriously damaged.

        A number of factors will determine whether our services achieve market
acceptance, including:

        o       Performance and functionality of our services;

        o       Ease of adoption;

        o       Satisfaction of our initial subscribers;

        o       Success of our marketing efforts;

        o       Success of our strategic relationships and alliances;


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<PAGE>   11

        o       Continued acceptance of the Internet for business use.

        The market for business-to-business electronic commerce services is
evolving rapidly. As the market evolves, customers, including our current
customers, may not choose our services.

WIDESPREAD INDUSTRY ADOPTION OF OUR SERVICES IS DEPENDENT UPON A CRITICAL MASS
OF LARGE NATIONAL RETAILERS AND SUPPLIERS SUBSCRIBING TO OUR SERVICES.

        Our success depends on a significant number of large retailers using our
services and linking with manufacturers, wholesalers and distributors over the
Internet through syncLink. To encourage purchasers to use our services, syncLink
must offer a broad range of product, price and promotion information from a
large number of suppliers. However, to attract suppliers to subscribe to
syncLink, we must increase the number of retailers who use our services. If we
are unable to quickly build a critical mass of retailers and suppliers, we will
not be able to benefit from a network effect where the value of our services to
each subscriber significantly increases with the addition of each new
subscriber. Our inability to achieve this network effect would reduce the
overall value of our services to retailers and suppliers and, consequently,
would harm our business.

OUR SALES CYCLE CAUSES UNPREDICTABLE VARIATIONS IN OUR OPERATING RESULTS WHICH
COULD CAUSE OUR STOCK PRICE TO DECLINE.

        Our customers often view the purchase of our services as a strategic
decision. As a result of the importance of this decision, the length of our
sales cycle is uncertain, which may cause our revenues and operating results to
vary from quarter to quarter. We spend considerable time and expense providing
information to prospective customers about the use and benefits of our services
without generating corresponding revenue. Our expense levels are relatively
fixed and there is substantial uncertainty as to when particular sales efforts
will begin to generate revenues.

        Prospective customers of our services often require long testing and
approval processes before making a purchase decision. The process of entering
into a subscription arrangement with a potential customer may involve lengthy
negotiations. Our sales cycle has been and may continue to be unpredictable. Our
sales cycle is also subject to delays because we have little or no control over
customer-specific factors, including customers' budgetary constraints and
internal acceptance procedures. Because our technology must often be integrated
with the products and services of other vendors, there may be a significant
delay between entering into a subscription agreement and generation of revenues
from the agreement. The length of the sales cycle makes it difficult to
accurately forecast the quarter in which our implementation and subscription
services will occur. This may cause our revenues from those services to be
delayed from the expected quarter to a subsequent quarter or quarters.

        We also have a limited implementation services backlog, which makes
revenues in any quarter substantially dependent upon agreements entered into in
that quarter. Because of these factors, our revenues and results of operations
in any quarter may not meet market expectations or be indicative of future
performance and it may be difficult for you to evaluate our prospects. Our
failure to meet these expectations would likely cause the market price of our
common stock to decline.

WE DO NOT HAVE AN ADEQUATE HISTORY WITH THE RECENT CHANGE IN OUR PRICING
STRUCTURE FOR OUR syncLINK SERVICES TO PREDICT OUR REVENUE OR OPERATING RESULTS,
WHICH MAY PREVENT INVESTORS FROM ASSESSING OUR PROSPECTS.

        Previously, we priced our syncLink service for retailers based on the
number of suppliers from whom they received data and for suppliers based on the
number of retailers that subscribed to their data. We recently introduced a new
pricing structure for our syncLink services pursuant to which retailers pay us a
flat monthly subscription rate and suppliers can either pay a flat subscription
rate or pay us based on the number of retailers that subscribe to their data. We
believe the changes in the pricing structure will result in accelerating the
network effect critical to achieving long-term revenue growth. However, we do
not have an adequate history with this new pricing


                                       11
<PAGE>   12

structure to be able to predict customers' acceptance of this arrangement or to
forecast our revenue or operating results accurately.

BECAUSE OUR CUSTOMERS MAY NOT RENEW THEIR SUBSCRIPTIONS, OUR REVENUES MAY NOT
INCREASE AS ANTICIPATED.

        We have only recently made our services available and we do not have a
history of customers renewing their subscriptions with us. If a significant
portion of our customers do not renew their subscriptions for our services, our
revenues could decline and our business could be harmed.

WE DEPEND ON SUPPLIERS FOR THE SUCCESS AND ACCURACY OF OUR SERVICES.

        We depend on suppliers to subscribe to our services in sufficient and
increasing numbers to make our services attractive to retailers and,
consequently, other suppliers. In order to provide retailers accurate data, we
rely on suppliers to update their item, price and promotion information stored
in our database. We cannot guarantee that the item, price and promotion
information available from our services will always be accurate, complete and
current, or that it will comply with governmental regulations. Incorrect
information could expose us to liability if it harms users of our services or
result in decreased adoption and use of our services.

THE UNPREDICTABILITY OF OUR QUARTER-TO-QUARTER RESULTS COULD CAUSE OUR STOCK
PRICE TO BE VOLATILE OR DECLINE.

        Our future operating results may vary significantly from quarter to
quarter due to a variety of factors, many of which are outside our control. Our
expense levels are based primarily on our estimates of future revenues and are
largely fixed in the short term.

        Due in large part to our uncertainty regarding the success of our
services, we cannot predict with certainty our quarterly revenues and operating
results. We may be unable to adjust spending rapidly enough to compensate for
any unexpected revenue shortfall caused by factors such as delayed or lack of
market acceptance of our services. Further, we believe that period-to-period
comparisons of our operating results are not necessarily a meaningful indication
of future performance, especially in light of the significant changes in our
business that we have undertaken. It is possible that in one or more future
quarters, our results may fall below the expectations of securities analysts or
investors. If this occurs, the trading price of our common stock would likely be
volatile or decline.

OUR STOCK PRICE MAY BE VOLATILE.

        The market price of our common stock has been volatile in the past and
may be volatile in the future. The market price of our common stock may be
significantly affected by various factors, including but not limited to:

        o       Fluctuations in our operating results;

        o       Changes in financial estimates by securities analysts or our
                failure to perform in line with these estimates;

        o       Timing of large national retailers and suppliers subscribing to
                our services;

        o       Changes in market valuations of other technology companies;

        o       Announcements by us or our potential competitors relating to
                significant technical innovations, acquisitions, strategic
                alliances and relationships, joint ventures or investments;

        o       Additions or departures of key personnel;

        o       Fluctuations in the stock market price and volume of traded
                shares generally, especially fluctuations in the traditionally
                volatile technology sector; and


                                       12
<PAGE>   13

        o       Downturns in the general economy.

IF OUR STRATEGIC ALLIANCES AND RELATIONSHIPS DO NOT PRODUCE THE ANTICIPATED
BENEFITS OR IF WE ARE UNABLE TO ENTER INTO ADDITIONAL FUTURE ALLIANCES AND
RELATIONSHIPS, OUR SERVICES MAY NOT ACHIEVE MARKET ACCEPTANCE.

        Our business depends substantially on developing and maintaining
strategic alliances and relationships to develop, market and sell our services.
We believe our current and future strategic alliances and relationships will
help us to validate our technology, facilitate broad market acceptance of our
services and enhance our sales and marketing. Our current strategic alliances
and relationships may not provide the benefits we expect or the access to new
customers we anticipate, and they may not be sustained on favorable terms, if at
all. Further, we may not be able to enter into successful new strategic
alliances and relationships in the future. If we are unable to develop key
alliances and relationships or maintain and enhance existing alliances and
relationships, our business, operating results and financial condition would be
harmed.

A PROMISSORY NOTE WE ISSUED TO HEWLETT-PACKARD HAS LEVERAGED US CONSIDERABLY,
CAUSING FINANCIAL AND OPERATING RISK, AND MAY RESULT IN SIGNIFICANT DILUTION TO
OUR STOCKHOLDERS.

        As a result of our issuing a $6.0 million subordinated secured
convertible promissory note to Hewlett-Packard, our debt service requirements
will increase substantially when we are required to repay the note in February
2004. The degree to which we are leveraged could materially adversely affect our
ability to obtain future financing and could make us more vulnerable to industry
downturns, general economic downturns and competitive pressures. Our ability to
meet our debt obligations will be dependent upon our future performance, which
will be subject to financial, business and other factors affecting our
operations. Additionally, beginning in August 2000, all principal and interest
due under the note may be converted into shares of our common stock at $1.75 per
share, a substantial discount from our current stock price, which would result
in substantial dilution to our stockholders.

WE ARE DEPENDENT UPON THE OPERATION OF HEWLETT-PACKARD'S DATA CENTER FOR THE
TIMELY AND SECURE DELIVERY OF OUR SERVICES.

        We use Hewlett-Packard's data center as the host for our services. We
are dependent on our continued relationship with Hewlett-Packard and on their
data center for the timely and secure delivery of our services. If
Hewlett-Packard's data center fails to meet our expectations in terms of
reliability and security, our ability to deliver our services will be seriously
harmed, resulting in the potential loss of customers and subscription revenue.
Furthermore, if our relationship with Hewlett-Packard were terminated, we would
be forced to find another service provider to host our services. The transition
to another service provider could result in interruptions of our services and
could increase the cost of providing our services.

OUR SINGLE-SITE INFRASTRUCTURE AND SYSTEMS MAY BE VULNERABLE TO NATURAL
DISASTERS AND OTHER UNEXPECTED EVENTS, AND LOSSES WE INCUR AS A RESULT OF THESE
EVENTS COULD EXCEED THE AMOUNT OF INSURANCE WE CARRY.

        The performance of our server and networking hardware and software
infrastructure is critical to our business, reputation and ability to provide
high quality services and attract and retain users of our services. We depend on
our single-site infrastructure and systems which are located at a secure,
Hardened Class Four underground Hewlett-Packard facility in Atlanta, Georgia.
Any disruption to this infrastructure resulting from a natural disaster or other
event could result in an interruption in our services. These interruptions, if
sustained or repeated, could impair our reputation, the quality of our services
and our ability to attract and retain users of our services.

        Our systems and operations may be vulnerable to damage or interruption
from human error, natural disasters, power loss, telecommunications failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events. We do not have a formal disaster recovery plan or alternative provider
of hosting services. In addition, our business interruption insurance may not be
sufficient to compensate us for losses that could occur. Any system failure that
causes an interruption in services could result in fewer transactions and, if
sustained

                                       13
<PAGE>   14

or repeated, could impair our reputation and the attractiveness of our services
or prevent us from providing our services entirely.

THE ROYALTIES WE MUST PAY TO CAP GEMINI ERNST & YOUNG AND i2 TECHNOLOGIES MAY
IMPACT OUR ABILITY TO BECOME PROFITABLE.

        Pursuant to an alliance agreement, we must pay Cap Gemini Ernst & Young
a royalty of 7% of our total revenues, subject to certain exceptions, until May
2001. Upon meeting specified milestones relating to significant Cap Gemini Ernst
& Young clients becoming our customers by May 2001 and May 2002, these royalty
payments to Cap Gemini Ernst & Young will continue in perpetuity.

        Pursuant to a separate alliance agreement, we must pay i2 Technologies a
royalty of 5% of syncLink and Chain Pricing subscription services revenues over
the term of the agreement through December 31, 2003. The royalty payments we are
obligated to pay could inhibit our ability to become profitable and could have
an adverse effect on our operating results and financial condition.

WE EXPECT TO FACE INCREASED COMPETITION. IF WE ARE UNABLE TO COMPETE
SUCCESSFULLY, OUR BUSINESS WILL BE HARMED.

        Currently, we do not know of any direct competition for our electronic
commerce services. However, we believe direct competition for our services will
develop and increase in the future. If we face increased competition, we may not
be able to sell our viaLink services on terms favorable to us. Furthermore,
increased competition could reduce our market share or require us to reduce the
price of our services.

        To achieve market acceptance and thereafter to increase our market
share, we will need to continually develop additional services and introduce new
features and enhancements. Our potential competitors may have significant
advantages over us, including:

        o       Significantly greater financial, technical and marketing
                resources;

        o       Greater name recognition;

        o       Broader range of products and services; and

        o       Larger customer bases.

        Consequently, they may be able to respond more quickly to new or
emerging technologies and changes in customer requirements.

WE MUST ADAPT TO TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS TO REMAIN
COMPETITIVE.

        The Web-based electronic commerce market is characterized by rapid
changes due to technological innovation, evolving industry standards and changes
in subscriber needs. Our future success will depend on our ability to continue
to develop and introduce a variety of new services and enhancements that are
responsive to technological change, evolving industry standards and customer
requirements on a timely basis. We cannot be certain that technological
developments and products and services our competitors introduce will not cause
our existing services, and new technologies in which we invest, to become
obsolete.

OUR OPERATING RESULTS MAY BE HARMED IF BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE
OVER THE INTERNET DOES NOT CONTINUE TO GAIN ACCEPTANCE, PARTICULARLY IN THE
CONSUMER PACKAGED GOODS, GROCERY AND FOOD SERVICE INDUSTRIES.

        Our ability to achieve market acceptance depends upon the consumer
packaged goods, grocery and food service industries' widespread acceptance of
the Internet as a vehicle for business-to-business electronic commerce.


                                       14
<PAGE>   15

There are a number of critical issues concerning commercial use of the Internet,
including security, reliability, cost, quality of service and ease of use and
access. Organizations that have already invested substantial resources in other
means of exchanging information may be reluctant to implement Internet-based
business strategies. Internet-based information management utilizing viaLink, or
any other product, may not become widespread. If the Internet fails to become
widely accepted by the consumer packaged goods, grocery and food service
industries, our subscribers may be forced to use private communications networks
which would materially adversely affect our operating results.

UNDETECTED SOFTWARE ERRORS OR FAILURES FOUND IN OUR PRODUCTS MAY RESULT IN LOSS
OF OR DELAY IN MARKET ACCEPTANCE OF OUR PRODUCTS WHICH COULD MATERIALLY
ADVERSELY AFFECT OUR OPERATING RESULTS.

        Errors or defects in our database or software may result in loss of
revenues or delay in market acceptance of our services and could materially
adversely affect our business, operating results and financial condition.
Applications such as ours may contain errors or defects, sometimes called
"bugs," particularly when first introduced or when new versions or enhancements
are released. Despite our testing, current versions, new versions or
enhancements of our products may still have defects and errors after
commencement of commercial operation. As a result of "bugs" in our database or
software, customers may experience data loss, data corruption or other business
disruption, which could subject us to potential liability.

PERFORMANCE PROBLEMS WITH OUR DATABASE OR SOFTWARE COULD SUBJECT US TO PRODUCT
LIABILITY CLAIMS WHICH, WHETHER OR NOT SUCCESSFUL, COULD MATERIALLY ADVERSELY
AFFECT OUR BUSINESS.

        Our subscribers depend on our database to provide, access, manage and
share item, pricing and promotion information in an efficient and cost-effective
manner. Any errors, defects or other performance problems with our database,
software or services could result in financial or other damages to our
subscribers. A product liability claim, whether or not successful, could damage
our reputation and our business, operating results and financial condition. Our
service agreements with our subscribers typically contain provisions designed to
limit our exposure to potential liability claims. However, these contract
provisions may not preclude all potential claims. Product liability claims in
excess of insurance limits could require us to spend significant time and money
in litigation or to pay significant damages.

THE SECURITY OF OUR DATABASE COULD BE BREACHED, WHICH COULD DAMAGE OUR
REPUTATION AND DETER CUSTOMERS FROM USING OUR SERVICES.

        We must protect our computer systems and networks from break-ins,
security breaches and other disruptive problems associated with the unauthorized
use of the Internet. Our database and services may be vulnerable to break-ins
and similar security breaches that jeopardize the security of the information
stored in our database and transmitted through our computer systems and networks
and those of our subscribers. In addition, we could, in the future, be subjected
to denial of service, vandalism and other attacks on our systems by Internet
hackers. Due to the highly proprietary information that we retain in our
database, any security breach could adversely affect our ability to attract and
retain subscribers, damage our reputation and subject us to litigation.
Moreover, the security and privacy concerns of potential subscribers, as well as
concerns related to computer viruses, may inhibit the marketability of our
services.

        Our services contain security protocols. We have also contracted with
third-party providers to provide security protocols for the transmission of data
over the Internet. Although we intend to continue our current security efforts
and to implement security technology and operational procedures to prevent
break-ins, damage and failures, these security efforts may fail. Our insurance
coverage may be insufficient in certain circumstances to cover claims that may
result from these events.

WE EXPECT OUR PLANNED AGGRESSIVE GROWTH TO STRAIN OUR RESOURCES.

        We intend to expand our operations rapidly in the foreseeable future to
pursue existing and potential market opportunities. If this rapid growth occurs,
it will place significant demands on our management and operational resources.
We will need to hire additional sales and marketing, research and development
and technical personnel to

                                       15
<PAGE>   16

increase and support our sales. We will also need to hire additional support and
administrative personnel, expand our customer service capabilities, contract for
third-party implementation resources and expand our information management
systems. From time to time, we have experienced, and we expect to continue to
experience, difficulty in hiring and retaining talented and qualified employees.
Our failure to attract and retain the highly trained technical personnel that
are essential to our product development, marketing, service and support teams
may limit the rate at which we can generate revenue and develop new products or
product enhancements. In order to manage our growth effectively, we must
implement and improve our operational systems, procedures and controls on a
timely basis. If we fail to implement and improve these systems, our business,
operating results and financial condition may be materially adversely affected.

WE ARE EXPANDING INTO INTERNATIONAL MARKETS, WHICH WILL CAUSE OUR BUSINESS TO
BECOME SUSCEPTIBLE TO ADDITIONAL RISKS.

        As part of our strategy, we are expanding our presence and the sales of
our services outside the United States. Conducting international operations
subjects us to risks we do not face in the United States including:

        o       Currency exchange rate fluctuations;

        o       Unexpected changes in regulatory requirements;

        o       Longer accounts receivable payment cycles and difficulties in
                collecting accounts receivables;

        o       Difficulties in managing and staffing international operations;

        o       Potentially adverse tax consequences, including restrictions on
                the repatriation of earnings;

        o       The burdens of complying with a wide variety of foreign laws and
                regulatory requirements;

        o       Reduced protection for intellectual property rights in some
                countries; and

        o       Political and economic instability.

        Each country may have unique operational characteristics in each of
their food industries that may require significant modifications to our existing
services. In addition, we have limited experience in marketing, selling and
supporting our services in foreign countries. Development of these skills may be
more difficult or take longer than we anticipate, especially due to language
barriers, currency exchange risks and the fact that the Internet may not be used
as widely in other countries, and the adoption of electronic commerce may evolve
slowly or may not evolve at all. As a result, we may not be successful in
marketing our services to retailers and suppliers in markets outside the United
States.

OUR SUCCESS IS SUBSTANTIALLY DEPENDENT ON OUR ABILITY TO RETAIN AND ATTRACT KEY
PERSONNEL.

        Our future performance depends on the continued service of our key
senior management team, Smalltalk programmers and sales personnel. The loss of
the services of one or more of our key personnel, in particular Lewis B.
Kilbourne, our Chief Executive Officer, could seriously harm our business. On
October 1, 1998, we entered into an employment agreement with Dr. Kilbourne.
This agreement has a three-year term, with year-to-year renewals. We do not
maintain a key man life insurance policy for Dr. Kilbourne. Our future success
also depends on our continuing ability to attract, hire, train and retain a
substantial number of highly skilled managerial, technical, sales, marketing and
customer support personnel. Competition for qualified personnel is intense, and
we may fail to retain our key employees or to attract or retain other highly
qualified personnel.


                                       16

<PAGE>   17

IF WE MAKE FUTURE ACQUISITIONS OR ENTER INTO JOINT VENTURES OR ADDITIONAL
ALLIANCE ARRANGEMENTS, OUR MANAGEMENT'S ATTENTION MAY BE DIVERTED FROM OUR
OPERATIONS, WE MAY INCUR ADDITIONAL LIABILITIES AND WE MAY NOT SUCCESSFULLY
INTEGRATE ACQUIRED OPERATIONS.

        In the future we may acquire additional businesses, products and
technologies, or enter into joint ventures or alliance arrangements that could
complement or expand our business. Management's negotiations of potential
acquisitions or joint ventures and alliance agreements and management's
integration of acquired businesses, products or technologies could divert their
time and resources. Any future acquisitions could require us to issue dilutive
equity securities, incur debt or contingent liabilities, amortize goodwill and
other intangibles or write-off in-process research and development and other
acquisition-related expenses. Further, we may not be able to successfully
integrate any acquired business, product or technology into our existing
operations or retain the key employees of the acquired business. If we are
unable to fully integrate an acquired business, product or technology, we may
not receive the intended benefits of that acquisition.

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

        Our success is in part dependent upon our proprietary software
technology. Companies in the software industry have experienced substantial
litigation regarding intellectual property. Our subscription agreements contain
provisions prohibiting the unauthorized use, copying and transfer of our
proprietary information. We own no patents; rather, we rely on a combination of
trade secret, copyright and trademark laws as well as non-disclosure and
confidentiality agreements to protect our proprietary technology. However, these
measures provide only limited protection, and we may not be able to detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights.

        Any litigation to enforce our intellectual property rights may divert
management resources and may not be adequate to protect our business. We also
could be subject to claims that we have infringed the intellectual property
rights of others. In addition, we may be required to indemnify our subscribers
for similar claims made against them. Any claims against us or any claims we may
seek to bring against others could require us to spend significant time and
money in litigation, pay damages, develop new intellectual property or acquire
licenses to intellectual property that is the subject of the infringement
claims. These licenses, if required, may not be available on acceptable terms.
Intellectual property claims against us could have a material adverse effect on
our business, operating results and financial condition.

WE DEPEND ON THIRD-PARTY TECHNOLOGY FOR USE IN OUR PROPRIETARY TECHNOLOGY. IF WE
ARE UNABLE TO CONTINUE TO USE THESE SOFTWARE LICENSES, OUR BUSINESS MAY BE
MATERIALLY ADVERSELY AFFECTED.

        We currently, and in the future we expect to continue to, license or
otherwise obtain access to intellectual property of third parties. We rely upon
software that we license from third parties, including software that is
integrated with our internally developed software to perform key functions as
part of our service offerings. These third-party software licenses may not
continue to be available to us on commercially reasonable terms. The loss of, or
inability to maintain or obtain, any of these software licenses, could result in
delays in our ability to provide our services or in reductions in the services
we provide until we integrate equivalent software that we develop internally or
that we identify and license from a third-party. Any delay in product
development or in providing our services could damage our business, operating
results and financial condition.

OUR CUSTOMER BASE IS CONCENTRATED AND OUR SUCCESS DEPENDS IN PART ON OUR ABILITY
TO RETAIN EXISTING CUSTOMERS AND SUBSCRIBERS.

        If one or more of our major customers were to substantially reduce or
terminate their use of our services, our business, operating results and
financial condition would be harmed. In 1999, we derived 70% of our total
revenues from our five largest customers. Our largest customer in 1999 accounted
for approximately 27% of our

<PAGE>   18

total revenues. The amount of our revenues attributable to specific customers is
likely to vary from year to year. We do not have long-term contractual
commitments with any of our current subscribers, and our subscribers may
terminate their contracts with little or no advance notice and without
significant penalty. As a result, we cannot be certain that any of our current
subscribers will be subscribers in future periods. A subscriber termination
would not only result in lost revenue, but also the loss of subscriber
references that are necessary for securing future subscribers.

THE PRICE OF OUR COMMON STOCK MAY DECLINE DUE TO SHARES ELIGIBLE FOR FUTURE
SALE.

        Sales of a substantial number of shares of common stock could adversely
affect the market price of the common stock and could impair our ability to
raise capital through the sale of equity securities. As of September 30, 2000,
we had outstanding 21,423,688 shares of common stock. Of these shares:

        o       17,367,070 shares are freely tradable without restriction or
                further registration under the Securities Act unless purchased
                by our "affiliates;" and

        o       4,056,618 shares of common stock are "restricted securities" as
                defined in Rule 144 of the Securities Act.

        An additional 2,078,950 shares of common stock are issuable upon the
exercise of currently exercisable options. Substantially all shares issued
following the exercise of these options will be freely tradable.

        An additional 768,492 shares of common stock are issuable upon the
exercise of currently exercisable warrants. These warrants are subject to
certain exercise price reset provisions that, after one year from the date of
issuance, could result in an additional warrants to purchase 714,390 shares of
common stock which would be immediately exercisable. All of the shares issued
upon the exercise of these warrants will be freely tradable.

        An additional 40,000 shares of common stock are issuable upon the
exercise of currently exercisable warrants. All of the shares issued upon the
exercise of these warrants will be freely tradable.

        Pursuant to the $6.0 million subordinated secured convertible promissory
note we issued to Hewlett-Packard, Hewlett-Packard may convert the note into
shares of our common stock at a conversion price of $1.75 per share beginning in
August 2000. Hewlett-Packard is also entitled to request the registration of
66,801 shares of our common stock purchased by them and 10,670 shares of our
common stock currently issuable to them upon the exercise of a warrant we issued
to them in connection with a private placement.

        Pursuant to our agreement with Cap Gemini Ernst & Young, Cap Gemini
Ernst & Young is entitled to request the registration of 750,000 shares of our
common stock which were purchased by them upon the exercise of a warrant.

        Pursuant to our agreements with i2 Technologies, i2 Technologies is
entitled to request the registration of 962,337 shares of our common stock which
were purchased by them and 766,979 shares of common stock issuable to them upon
exercise of the warrants.

        Pursuant to our agreement with AGE Investments, Inc., we have granted
AGE unlimited piggyback registrations rights prior to March 22, 2005 with
respect to the 48,452 shares of our common stock issuable upon exercise of the
warrants we issued to AGE.

PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT, DELAY OR
IMPEDE A CHANGE IN CONTROL OF US AND MAY REDUCE THE MARKET PRICE OF OUR COMMON
STOCK.

        Provisions of our certificate of incorporation and bylaws, including
those relating to our classified board and our ability to offer "blank check"
preferred stock, could have the effect of discouraging, delaying or preventing a
merger or acquisition that a stockholder may consider favorable. We are also
subject to the anti-takeover laws of Delaware which may discourage, delay or
prevent someone from acquiring or merging with us, which may


                                       18
<PAGE>   19

adversely affect the market price of our common stock. Please see "Description
of Securities -- Anti-Takeover Effects" for more information concerning
anti-takeover provisions.

        This Form 8-K contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "will," "expect," "intend," "anticipate,"
"believe," "estimate," "continue" and other similar words. You should read
statements that contain these words carefully because they discuss our future
expectations, make projections of our future results of operations or of our
financial condition or state other "forward-looking" information. We believe
that it is important to communicate our future expectations to our investors.
However, there may be events in the future that we are not able to accurately
predict or control. The factors listed in the sections captioned "Additional
Factors That May Affect Future Results" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," as well as any
cautionary language in this Form 8-K, provide examples of risks, uncertainties
and events that may cause our actual results to differ materially from the
expectations we describe in our forward-looking statements.


                                       19
<PAGE>   20

                                   SIGNATURES

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

                                     THE VIALINK COMPANY
                                       (Registrant)


                                     By:        /s/ William P. Creasman
                                         ---------------------------------------
                                                    William P. Creasman
                                         Vice President,Chief Financial Officer,
                                             General Counsel, and Secretary
                                          (principal financial and accounting
                                                        officer)

Date: November 14, 2000


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