Business Update

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Business Update

• February 2003

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Versata, Inc.
This presentation contains information about
management's current expectations for future
earnings and losses and plans and prospects that
constitute forward-looking statements for
purposes of the safe harbor provisions under The
Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not
limited to, statements regarding the Company's
expectations, beliefs, hopes, intentions or
strategies regarding the future. These statements
involve risks and uncertainties that may cause
the Company's actual results to differ materially
from those expressed or implied by such
forward-looking statements. Factors that could
cause or contribute to such differences include,
but are not limited to market acceptance of our
products and services and enhancements thereto
our ability to develop and expand our sales and
marketing capabilities development of the
marketplace for our products our ability to
maintain and expand our strategic relationships
with system integrators, independent software
vendors, and resellers our ability to adapt to
rapid technological changes our reliance on the
Java programming language the possibility of
errors or defects in our software products our
ability to grow our customer base or generate
repeat business our ability to develop and
enhance our products and services our ability to
continue using third-party software in our
products protection of our intellectual
property and other risk factors that are
discussed in the Company's reports and
registration statements filed from time to time
with the SEC including, but not limited to, the
Company's annual report on form 10-K for the year
ended October 31, 2002. All forward looking
statements included in this presentation are
based upon information available to the Company
as of the date hereof, and the Company does not
assume any obligation to update such statements
or the reasons why actual results could differ
materially from those projected in such
statements.
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Agenda

• Company History and Product/Market Update
• Customer Update
• Financial Update

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Company History and Product/Market Update
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Versata History

• Founded in 1991 as Professional Services
  Consulting Company.
• Began selling application development software
  tools in 1994.
• Began development of Web and rules-based products
  in 1996 hiring of former senior Wang
  Laboratories and Sybase engineers key to this
  product development effort.
• Released first Web-based product in late 1997.

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Versata History

• Business grew with Internet in 1998 and 1999
• 2000 was watershed year
• IPO March 2000. Raised 96M.
• Acquired German and French distributors.
• Acquired work-flow technology.
• Launched first Java (J2EE/EJB) products in fall
  2000.

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Versata History

• 2001/2002 Economic softness/focus on core
  competencies
• Transitioned existing Entrepreneurial Management
  Team to Professional Team (CEO, COO/CFO, Sales
  VP, Marketing VP) in March 2001
• Continued cost cutting efforts
• Headcount stabilized at 115 in May 2002
• Flat revenue achieved Q2-Q3-Q4 2002

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European Restructuring

• Purpose Provide for better direct U.S. support
  of EMEA customers

Jim Doehrman (COO)
Jim Liddle (UK)
Achim von Montigny (Germany)
Nicolas Ognov/ Jacques Lasisz (France)

• Additional investment in local support and
  technical resources planned

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Executive Team 2003

• Eugene Wong CEO 5/02 Ingres
• Jim Doehrman CFO, COO 2/01 E.piphany, Octane
  Software
• Tim Child VP, RD 11/02 Informix
• Val Huber CTO 1/95 Sybase, Wang
• Rahul Patel Chief Architect 1/95 Sun, Sybase
• Rocco Quaglietti VP, Sales 1/00 Cloudscape,
  Arbor Software, Americas INGRES
• Bill Fallis Dir., Prof. 4/00 ATT, Bell
  Labs Services

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Product/Market Update
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What We Do

• Versata provides a solution for building
  managing large-scale, enterprise applications
  that are
• Driven by business processes
• Involve complex business rules
• Require high-volume transactions
• reducing the risk the expense of keeping pace
  with the rapid change of business,
• enabling faster delivery of J2EE applications
  on time, within budget, using your existing
  development teams

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Why We Do It

• So our customers can
• Get to Market Faster
• Change Applications Faster
• Deliver with Limited J2EE Resources
• Deliver Business Value through IT (ROI)

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Versata Logic Suite
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Enterprise Architecture
Web Container
Supports multiple, simultaneous interfaces
presentation layer
Business Logic Container
process layer
Maps systems to the processes of your business
J2EE App Server
service layer
Delivers reusable business transactions
data logic layer
Applies business logic to your corporate data
Data Container
integration layer
Integrates with the rest of your enterprise
back office value chain
Leverages the back office enterprise systems
By 2006, the service-oriented architecture (SOA)
Web and non-Web will be the mainstream
practice for enterprise software engineering (0.7
probability).Source Gartner
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An Example of an Enterprise Architecture

• Separating the presentation from business logic
  from data
• Reusing components in the Business Logic
  Container across application interfaces

Application Front-Ends Customer Self-Service
Online Banking Call Center
Web Container
JSP
HTML
Web Services
Java
XML
Business Logic Container
Process Layer ?
The Business Logic As Reusable Components
Services Layer ?
J2EE App Server
Data Logic Layer ?
Data Container
Integration EAI, Point to Point, Messaging
CRM
Billing
Shipping
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Productivity Issues
Java IDEs, HTML Java Editors, JSP Wizards
Dreamweaver, JBuilder, VA Java, Vignette, Visual
Cafe
presentation layer
process layer
50 Automated / 50 Manual
Workflow Servers FileNet, InConcert, Home-grown
approaches
service layer
20 Automated / 80 Manual
Java IDEs,Wizards, Frameworks JBuilder, VA
Java, Visual Cafe
data logic layer
20 Automated / 80 Manual
integration layer
Integration EAI Vendors WebMethods, Mercator,
Vitria, Tibco, IBM MQSeries, WRQ
back office value chain
Enterprise Application SAP, PeopleSoft, Siebel,
home-grown solutions
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Versata Fills the Business Logic Gap
presentation layer
HTML, Java, JSP Wizards Dreamweaver, JBuilder,
VA Java, Vignette, Visual Cafe
process layer
Process Design, Management, Execution
Versata Logic Server
97 Automated / 3 Manual
service layer
Automation of Business Transactions Versata
Logic Server
97 Automated / 3 Manual
data logic layer
Enforcement of Business Logic Across Data
Sources Versata Logic Server
97 Automated / 3 Manual
Integration EAI Vendors WebMethods, Mercator,
Vitria, Tibco, IBM
integration layer
Enterprise Application SAP, PeopleSoft, Siebel,
home-grown solutions
back office value chain
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Analyst Confirmations About Versata

• Coding business logic is not a viable option in
  dynamic environments. Organizations must invest
  in technologies and infrastructures that can
  automate and optimize processes strategically.
• - Andrew Warzecha, Meta Group

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More Support From Industry Analysts What they
said last year

• Gartner
• Cited Versata as a Visionary Vendor with
  growing demand
• Bottom Line Versata IDE is a viable tool for
  rapid business-logic generation.
• Versata and IBM have developed a toolset for
  creation, definition, discovery and execution of
  Web services.
• Forrester
• IBM recommends Versata as a strong RAD tool.
• Giga
• Mentioned Versata in articles about Application
  Development, Workflow, and Architecture
• Meta
• Fundamentally enhancing J2EE services, Versata
  frees developers from routine infrastructure
  programming and from virtually all business logic
  programming.

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Gartner Magic Quadrant January 2002
Challengers
Leaders
Oracle
Fair Isaac
Sybase
HNC/Blaze
Fujitsu/Amdahl
CA
Silverstream
ILog
Magic
Pegasystems
Versata
MindBox
Savvionn
Usoft
Inference-driven vendors underlined
Haley
ClearTech
Q-Link
BsoftB
Elity
Sapiens
ESI
MBA
Synthean
Corticon
Rules Machine
Cogito
Tenfold
SOURCE Gartner
Entreon
EasyBase
Visionaries
Niche Players
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IT Benefits

• Involving the business user from the ground up
  allowing the business user to see, monitor, and
  manage the logic as a business asset,
• Creating business logic dramatically faster - in
  initial development and as requirements change
• Leveraging internal IT resources, J2EE and
  non-J2EE
• Achieving application performance better than
  hand-coding
• Providing re-use across any transaction input
  source HTML, Java, Web Service, Mobile Device,
  etc.

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Business Benefits

• Deliver higher-quality systems that completely
  meet user requirements
• Accelerate IT response to business change
  dramatically reduce maintenance costs
• Increase operational efficiency to reduce costs
• Focus developers on business logic rather than
  infrastructure code
• Better User Self-Service with less human
  intervention across all applications
• Leverage existing development staff and skills

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Market/Partner Updates
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IBM Relationship

• Versata included with first launch of WebSphere
  as part of development suite of products
• Reseller relationship started in Q3 2000
• Reseller relationship expanded to include
  Passport Advantage in September 2001

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IBM Relationship

• Passport Advantage
• Same terms as other IBM products
• IBM Paper
• IBM Support (Level 1, 2)
• Fixed Pricing
• Directly generating 20 of license revenue

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ILOG Alliance

• Partnership developed to provide a more complete
  business logic offering
• ILOG gains value
• Business Object Model ready to call JRules with
  dramatically less effort
• Workflow capabilities that can immediately
  leverage JRules and JViews
• Application Development platform for Enterprise
  IT developers
• Versata gains value
• Completes vision of Business Logic
• Decision Logic for complex transactions and
  processes
• End-user modifiable rules
• Natural Language
• Runtime change

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Customer Update
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Versata Customers (in production)
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Stable Quarterly Customer Addition
Software License Sales Only
New 9
Total 21
New 9
Total 20
New 11
Total 19
New 9
Total 33
New 4
Total 14
New 10
Total 19
New 5
Total 18
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2002 Customers
New Customers
Americas
EMEA
Blue Shield (LA) Boeing Catholic Charities
(Chicago) Fleet Bank Boston Fluor Intel
Microelectrics McKesson Supply Solutions Orix
(Australia) Premier Group/Dreamworks State of
Utah (Workforce Service) Strategic Dimension Talk
America TeleGea The University of Chicago Vitro
Corporation (Mexico)
Active Logistics Herdecke Ametras BRZ
Vienna Daimler Chrysler Hoogovens/Corus Steel La
Poste (France) UK Coal Authority VSK Sweden
(Stalror)
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2002 Customers
Repeat Customers
Americas
EMEA
Alltel Bank of America CAE Electronics
(Canada) Ceres Covendis Fiserv GTSI IBM Interpat
h Koch Oil Manitoba Blue Cross
Chantiers de l'atlantique Cosmo
Insurance Electricite de France Focal Hella Holool
(Saudi Arabia) Micropole Steria Valtech VSK
Sweden (Wirsbo) VTG
Maricopa County Courts MO Dept of
Transportation Northeastern University SCT Spherio
n State of Utah / ITS State of Utah Courts TAL
Asset Management TJ Maxx (Marmaxx) WestGroup
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Current Active Customers Paying Maintenance
93
48
141
141 Total Active Customers
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Financial Update
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Pro Forma Net Loss Per Share Progress
3.53
1.44
1.21
2.05
2.48
1.25
0.92
0.22
0.36
0.18
0.14
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Expense Analysis
(in millions)
29.6
19.6
12.4
8.0
7.2
28.3
6.0
5.6
Total cash operating and cost of goods sold
expenses.
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Cash Burn Rate
(in millions)
13.7
21.7
17.1
4.4
3.9
2.0
1.4
.9
4.9
16.8
3.2
13.9
0.4
4.0
Non-operating and extraordinary items
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Cash Flow Months of Cash in the Bank
Months
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Our Model
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Our Model Other Metrics
Excluding large BT deal Excludes reimbursable
revenue expenses
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VATA Ownership Composition
Fully Diluted
Current Ownership
Directors 31
Directors Officers 32


Public 57
Public 63.8
Current/Former Employees 5.2
Current/Former Employees 11
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Executive Team CEO Eugene Wong

• Versata Director and Chief Scientist since 1998
  appointed CEO in May 2002.
• Career Highlights
• Former Head of EECS Department at University of
  California Berkeley
• Co-founder of Ingres (pioneer in development of
  relational database)
• Associate Director, Office of Science and
  Technology, George Bush, Sr. White House
• Co-founder, Hong Kong Supernet, one of SE Asias
  largest ISPs
• Assistant Director, National Science Foundation