<PAGE>

                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 March 31, 2001

                                       or

/_/ TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                    to

                         Commission file number 1-14355
                                24/7 MEDIA, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                      13-3995672
(STATE OR OTHER JURISDICTION OF                       (IRS EMPLOYER
INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NO.)


                                      7319
                    (STANDARD INDUSTRIAL CLASSIFICATION CODE)

1250 BROADWAY, NEW YORK, NY                                     10001
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                     (ZIP CODE)

                                 (212) 231-7100
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant 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
                                      ---   ---

                    APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

           CLASS                                    OUTSTANDING AT May 11, 2001
Common Stock, par value $.01 per share                     47,020,972 Shares

<PAGE>

                                24/7 MEDIA, INC.
                                 MARCH 31, 2001
                                    FORM 10-Q
                                      INDEX


Part I.  Financial Information
Item 1.  Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 2001 (unaudited)
  and December 32, 2000 ....................................................  2
Consolidated Statements of Operations for the three month periods ended
        March 31, 2001 and  2000 (unaudited)................................  3
Consolidated Statements of Cash Flows for the three month periods ended
        March 31, 2001 and 2000 (unaudited).................................  4
Notes to Unaudited Interim Consolidated Financial Statements................  5
Item 2. Management's Discussion and Analysis of Financial Condition and
  Results of Operations..................................................... 18
Item 3.  Quantitative and Qualitative Disclosure about Market Risk.......... 36
Part II. Other Information
Item 1.  Legal Proceedings.................................................. 37
Item 2.  Changes in Securities and Use of Proceeds.......................... 37
Item 3.  Defaults Upon Senior Securities.................................... 37
Item 4.  Submission of Matters to a Vote of Security Holders................ 37
Item 5.  Other Information.................................................. 37
Item 6.  Exhibits and Reports on Form 8-K................................... 37
Item 7.  Signatures......................................................... 37



                                       1
<PAGE>

                                24/7 MEDIA, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                       March 31,    December 31,
                                                                         2001           2000
                                                                     -----------    ------------
                                                                     (unaudited)
                               ASSETS
<S>                                                                  <C>            <C>
Current assets:
   Cash and cash equivalents (including restricted cash of $800
     in 2001 and 2000) ...........................................   $    13,651    $    29,697
   Accounts receivable, less allowances of $9,453
     and $8,815, respectively ....................................        29,477         48,511
   Prepaid expenses and other current assets .....................         5,174          4,336
                                                                     -----------    -----------

       Total current assets ......................................        48,302         82,544

Property and equipment, net ......................................        44,164         45,537
Intangible assets, net ...........................................        73,065        124,792
Investments ......................................................         2,447         11,267
Other assets .....................................................         4,133          4,787
                                                                     -----------    -----------
       Total assets ..............................................   $   172,111    $   268,927
                                                                     ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                  <C>            <C>
Current liabilities:
   Accounts payable ..............................................   $    14,007    $    22,518
   Accrued liabilities ...........................................        27,959         33,958
   Current installments of obligations under capital leases ......            99             99
   Deferred revenue ..............................................         2,322          4,095
                                                                     -----------    -----------
       Total current liabilities .................................        44,387         60,670
                                                                     -----------    -----------

Obligations under capital leases, excluding current installments .           144            154
Minority interest ................................................           105            105

Commitments and contingencies

Stockholders' equity:
    Preferred stock, $.01 par value; 10,000,000 shares authorized;
      and no shares issued or outstanding ........................          --             --
    Common stock, $.01 par value; 70,000,000 shares authorized;
      46,550,084 and 42,475,807 shares issued and outstanding,
      respectively ...............................................           465            425
    Additional paid-in capital ...................................     1,069,211      1,069,445
    Deferred stock compensation ..................................        (3,833)        (5,578)
    Accumulated other comprehensive income .......................            37          3,425
    Accumulated deficit ..........................................      (938,405)      (859,719)
                                                                     -----------    -----------
        Total stockholders' equity ...............................       127,475        207,998
                                                                     -----------    -----------

       Total liabilities and stockholders' equity ................   $   172,111    $   268,927
                                                                     ===========    ===========
</TABLE>

 See accompanying notes to unaudited interim consolidated financial statements.


                                       2
<PAGE>

                                24/7 MEDIA, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (IN THOUSANDS, EXPECT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                                      Three months ended March 31,
                                                                                      ----------------------------
                                                                                         2001            2000
                                                                                      ------------    ------------
                                                                                               (unaudited)
<S>                                                                                   <C>             <C>
Revenues:
   Network ........................................................................   $     11,387    $     36,483
   Email ..........................................................................          3,883           6,884
   Technology .....................................................................         10,008           2,864
                                                                                      ------------    ------------
       Total revenues .............................................................         25,278          46,231
                                                                                      ------------    ------------

Cost of revenues:
   Network ........................................................................         11,007          28,692
   Email ..........................................................................          2,667           4,266
   Technology (exclusive of $157 and $0, respectively
     reported below as stock-based compensation) ..................................          3,268           1,127
                                                                                      ------------    ------------
       Total cost of revenues .....................................................         16,942          34,085
                                                                                      ------------    ------------

       Gross profit ...............................................................          8,336          12,146
                                                                                      ------------    ------------

Operating expenses:
   Sales and marketing (exclusive of $1,473 and $1,369 , respectively
     reported below as stock-based compensation) ..................................         11,734          11,890
   General and administrative (exclusive of $745 and $596,
     respectively, reported below as stock-based compensation) ....................         15,810          10,619
   Product development (exclusive of $140 and $945, respectively
     reported below as stock-based compensation) ..................................          5,887           1,039
   Amortization of goodwill, intangible assets and advances .......................         11,676          16,929
   Stock-based compensation .......................................................          2,515           2,910
   Write-off of acquired in process technology and other merger related costs......           --             4,762
   Restructuring costs ............................................................            490            --
   Impairment of intangible assets ................................................         40,106            --
                                                                                      ------------    ------------
       Total operating expenses ...................................................         88,218          48,149
                                                                                      ------------    ------------

       Loss from operations .......................................................        (79,882)        (36,003)
Interest income, net ..............................................................            286             474
Gain on sale of investments, net ..................................................          3,998          11,682
Impairment of investments .........................................................         (3,089)           --
                                                                                      ------------    ------------

       Net loss ...................................................................   $    (78,687)   $    (23,847)
                                                                                      ============    ============


Net loss per common share - basic and diluted .....................................   $      (1.84)   $      (0.93)
                                                                                      ============    ============

Weighted average common shares outstanding ........................................     42,691,843      25,560,667
                                                                                      ============    ============
</TABLE>

See accompanying notes to unaudited interim consolidated financial statements.

                                       3
<PAGE>

                                24/7 MEDIA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                Three Months Ended March 31,
                                                                                ----------------------------
                                                                                     2001        2000
                                                                                ------------   --------
                                                                                        (unaudited)
<S>                                                                                <C>         <C>
Cash flows from operating activities:
Net loss .......................................................................   $(78,687)   $(23,847)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization of fixed assets ..................................      4,291       1,131
Write-off of acquired in-process technology ....................................       --         4,700
Provision for doubtful accounts and sales reserves, net ........................        638         535
Amortization of goodwill and other intangible assets ...........................     11,676      16,229
Amortization of partner agreements .............................................       --           700
Non-cash compensation ..........................................................      2,515       2,571
Gain on sale of investment .....................................................     (3,998)    (11,682)
Warrants issued for service ....................................................        100        --
Impairment of investments ......................................................      3,089        --
Impairment of intangible and other assets ......................................     40,106        --
Changes in operating assets and liabilities, net of
  effect of acquisitions:
    Accounts receivable ........................................................     17,854     (11,181)
    Prepaid assets and other current assets ....................................       (838)        117
    Other assets ...............................................................        654         195
    Accounts payable and accrued liabilities ...................................    (18,815)      1,926
    Deferred revenue ...........................................................     (1,231)        832
                                                                                   --------    --------

         Net cash  used in operating activities ................................    (22,646)    (17,774)
                                                                                   --------    --------

Cash flows from investing activities:
Proceeds from the sale of investments ..........................................      6,113      12,103
Capital expenditures ...........................................................        232      (7,459)
Cash paid for acquistions, net of cash acquired ................................       --        (1,455)
Cash paid for investments ......................................................       --        (4,122)
                                                                                   --------    --------

         Net cash provided by (used in) investing activities ...................      6,345        (933)
                                                                                   --------    --------

Cash flows from financing activities:
Proceeds from exercise of stock options and conversion of warrants .............         36       3,942
Payment of capital lease obligations ...........................................         (9)        (24)
                                                                                   --------    --------

         Net cash provided by financing activities .............................         27       3,918
                                                                                   --------    --------

         Net change in cash and cash equivalents ...............................    (16,274)    (14,789)
         Net effect of foreign currency adjustments ............................        228         (92)
Cash and cash equivalents at beginning of period ...............................     29,697      42,786
                                                                                   --------    --------

Cash and cash equivalents at end of period .....................................   $ 13,651    $ 27,905
                                                                                   ========    ========
</TABLE>

See accompanying notes to unaudited interim consolidated financial statements.

                                       4
<PAGE>

(1)  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF OPERATIONS

24/7 Media together with its subsidiaries is a provider of customer acquisition
and customer retention marketing solutions for Web publishers, online
advertisers, advertising agencies, e-marketers and e-commerce merchants. The
Company operates in three principal lines of business: 24/7 Network, 24/7 Mail
and 24/7 Technology Solutions.

The 24/7 Network operates globally, with operations in the United States, Europe
and Canada, providing ad sales solutions for Web-based advertising including
banner ads, sponsorships, loyalty reward programs and promotions. 24/7 Mail has
operations in the United States, Canada and Europe where the Company serves as a
list manager for permission-based email lists. 24/7 Technology Solutions
provides email based direct marketing services, targeted search traffic
delivery, broadband solutions and professional services principally in the
United States. The Company added to its technology offerings after the first
quarter in 2000 with the acquisitions of Exactis.com ("Exactis") and Website
Results ("WSR").

The Company's business is characterized by rapid technological change, new
product development and evolving industry standards. Inherent in the Company's
business are various risks and uncertainties, including its limited operating
history, unproven business model and the limited history of commerce and
advertising on the Internet. The Company's success may depend, in part, upon the
continued expansion of the Internet as a communications medium, prospective
product development efforts and the acceptance of the Company's solutions by the
marketplace.

ORGANIZATION AND BASIS OF PRESENTATION

PRINCIPLES OF CONSOLIDATION

The Company's consolidated financial statements as of March 31, 2001 and
December 31, 2000 and for the three month periods ended March 31, 2001 and 2000
include the accounts of the Company and its majority-owned and controlled
subsidiaries from their respective dates of acquisition (see note 2). All
significant intercompany transactions and balances have been eliminated in
consolidation.

INTERIM RESULTS

The consolidated financial statements as of March 31, 2001 and for the three
month periods ended March 31, 2001 and 2000 have been prepared by 24/7 Media and
are unaudited. In the Company's opinion, the unaudited consolidated financial
statements have been prepared on the same basis as the annual consolidated
financial statements and reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the financial position as of
March 31, 2001 and the results of the Company's operations and cash flows for
the interim periods ended March 31, 2001 and 2000. The financial data and other
information disclosed in these notes to the consolidated results for the three
month periods ended March 31, 2001 are not necessarily indicative of the
results to be expected for any subsequent quarter or the entire fiscal year
ending December 31, 2001.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission's rules and regulations. It is suggested that these unaudited
consolidated financial statements be read in conjunction with our audited
consolidated financial statements and notes thereto for the year ended December
31, 2000 as included in the Company's report on Form 10-K.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid securities, with original maturities of
three months or less, to be cash equivalents. Cash and cash equivalents
consisted principally of money market accounts. At March

                                       5
<PAGE>

31, 2001, cash and cash equivalents includes $0.8 million in restricted cash,
related to leases, that becomes available within the next year. In addition,
there is $1.8 million related to these leases that becomes available at varying
dates through December 31, 2002, which are included in other assets on the
consolidated balance sheet.

INTANGIBLE ASSETS

Goodwill and intangible assets relate to the Company's acquisitions accounted
for under the purchase method of accounting. Under the purchase method of
accounting, the excess of the purchase price over the identifiable net tangible
assets of the acquired entity is recorded as identified intangible assets and
goodwill. Intangible assets are estimated by management to be primarily
associated with the acquired workforce, contracts, technological know how and
goodwill. As a result of the rapid technological changes occurring in the
Internet industry and the intense competition for qualified Internet
professionals and customers, recorded intangible assets are amortized on the
straight-line basis over the estimated period of benefit, which is two to four
years (see notes 2 and 3).

INVESTMENTS

The Company accounts for investments in marketable securities in accordance with
Statements of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Available-for-sale securities are
carried at fair value, with the unrealized gains or losses, net of tax, reported
as a separate component of stockholders' equity. Realized gains and losses and
the cost of available-for-sale securities sold are computed on the basis of the
specific identification method. Realized gains and losses and declines in value
judged to be other-than-temporary, are included in other income (expense).

Investments in non-marketable equity securities of companies in which the
Company owns less than 20% of a company's stock and does not have the ability to
exercise significant influence are accounted for on the cost basis. Such
investments are stated at the lower of cost or market value. On an ongoing
basis, the Company assesses the need to record impairment losses on investments
and records such losses when the impairment is determined to be
other-than-temporary (see notes 4).


REVENUE RECOGNITION

MEDIA
The Company's network revenues are derived principally from short-term
advertising agreements in which it delivers advertising impressions for a fixed
fee to third-party Web sites comprising the 24/7 Network. Revenues from
advertising are recognized in the period the advertising impressions are
delivered provided that no significant Company obligations remain outstanding
and collection of the resulting receivable is probable.

Third party Web sites that register Web pages with the Company's networks and
display advertising banners on those pages are commonly referred to as
"Affiliated Web sites." These third party Web sites are not "related party"
relationships or transactions as defined in Statement of Financial Accounting
Standards No. 57, "Related Party Disclosures." The Company pays Affiliated Web
sites a fee for providing advertising space to the Company's networks. The
Company becomes obligated to make payments to such Affiliated Web sites, which
have contracted to be part of the Company's networks, in the period the
advertising impressions are delivered. Such expenses are classified as cost of
revenues in the consolidated statements of operations.

EMAIL
The Company's email related revenues are derived principally from short-term
delivery based agreements in which the Company delivers advertisements to email
lists for advertisers and Web sites. Revenues are recognized as services are
delivered provided that no significant Company obligations remain outstanding
and collection of the resulting receivable is probable.

                                       6
<PAGE>

The Company also has agreements with various list owners in which the Company
services its advertisers and other customers through the use of these lists.
Revenues are recognized as services are delivered provided that no significant
Company obligations remain outstanding and collection of the resulting
receivable is probable. The royalties paid for the use of these email lists are
classified as cost of revenues.

TECHNOLOGY
The Company's technology revenues are derived from adserving, software
consulting, service, development and maintenance contracts. Revenues under fixed
price contracts are recognized on a percentage of completion basis based on
labor hours incurred to total estimated contract hours. Revenues under time and
materials contracts are recognized as the hours are incurred. Fixed monthly
maintenance contracts are recognized in the corresponding months. Service
revenue is derived from driving traffic to a client website or the delivery of
email messages for clients and is recognized upon delivery.

At March 31, 2001 and December 31, 2000, accounts receivable included
approximately $2.8 million and $4.0 million, respectively, of earned but
unbilled receivables, which are a normal part of the Company's business, as
receivables are generally invoiced only after the revenue has been earned. The
decrease in unbilled receivables from December 31, 2000 to March 31, 2001
resulted from the decrease in revenues generated in the first quarter of 2001.
The terms of the related advertising contracts typically require billing at the
end of each month. All unbilled receivables as of March 31, 2001 have been
subsequently billed.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company assesses the need to record impairment losses on long-lived assets,
including fixed assets, goodwill and other intangible assets, to be held and
used in operations whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable, the Company estimates the undiscounted future cash flows to result
from the use of the asset and its ultimate disposition. If the sum of the
undiscounted cash flows is less than the carrying value, the Company recognizes
an impairment loss, measured as the amount by which the carrying value exceeds
the fair value of the asset. Assets to be disposed of are carried at the lower
of the carrying value or fair value less costs to sell.

On an on-going basis, management reviews the value and period of amortization or
depreciation of long-lived assets, including goodwill and other intangible
assets. During this review, the Company reevaluates the significant assumptions
used in determining the original cost of long-lived assets. Although the
assumptions may vary from transaction to transaction, they generally include
revenue growth, operating results, cash flows and other indicators of value.
Management then determines whether there has been an impairment of the value of
long-lived assets based upon events or circumstances, which have occurred since
acquisition. The impairment policy is consistently applied in evaluating
impairment for each of the Company's wholly owned subsidiaries and investments.

In 2001, the Company wrote off $40.1 million in goodwill and intangible assets
(see note 3). It is reasonably possible that the impairment factors evaluated by
management will change in subsequent periods, given that the Company operates in
a volatile business environment. This could result in significant additional
impairment charges in the future.

RESTRUCTURING ACTIVITIES

Restructuring activities are accounted for in accordance with the guidance
provided in the consensus opinion of the Emerging Issues Task Force ("EITF") in
connection with EITF Issue 94-3 ("EITF 94-3"). EITF 94-3 generally requires,
with respect to the recognition of severance expenses, management approval of
the restructuring plan, the determination of the employees to be terminated, and
communication of benefit arrangement to employees (see note 5).


                                       7
<PAGE>


COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) for the three month periods ended March 31,
2001 and 2000 was $(82.1) million and $(38.2) million, respectively.
Comprehensive loss resulted primarily from net losses of $(78.7) million and
$(23.8) million, respectively, as well as a change in unrealized gains (losses),
net of tax, of marketable securities of $(3.6) million and $(14.3) million,
respectively, and foreign currency translation adjustments of $0.2 million and
$(0.1) million, respectively. The net change in unrealized gains (losses) of
$(3.6) million for the three month period ended March 31, 2001 is comprised of
net unrealized holding losses arising during the period of $5.1 million related
to chinadotcom, a reclassification adjustment of $4.0 million for net gains on
the sale of investments in marketable securities and a reclassification
adjustment of $2.5 million for other-than-temporary losses related to
available-for-sale securities of Network Commerce and i3Mobile.

LOSS PER SHARE

Loss per share is presented in accordance with the provisions of Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("EPS"). Basic EPS
excludes dilution for potentially dilutive securities and is computed by
dividing income or loss available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock and resulted in the
issuance of common stock. Diluted net loss per share is equal to basic net loss
per share since all potentially dilutive securities are anti-dilutive for each
of the periods presented. Diluted net loss per common share for the three months
ended March 31, 2001 and 2000 does not include the effects of options to
purchase 11.9 million and 4.5 million shares of common stock, respectively; 2.8
million and 3.0 million common stock warrants, respectively, on an "as if"
converted basis, as the effect of their inclusion is anti-dilutive during each
period.

RECLASSIFICATIONS

Certain reclassifications have been made to prior year consolidated financial
statements to conform to current year's presentation.

(2)  BUSINESS COMBINATIONS

ACQUISITION OF 24/7 EUROPE

On January 1, 2000, the Company acquired the remaining interest in 24/7 Media
Europe through the issuance of common stock. The Company issued 428,745 shares
of 24/7 Media common stock, valued at approximately $24.1 million, resulting in
additional goodwill and other intangible assets of $24.1 million. The goodwill
and other intangible assets are being amortized over the remaining period of
benefit of three years.

ACQUISITION OF IMAKE

On January 13, 2000, the Company acquired IMAKE, a provider of technology
products that facilitate the convergence of Internet technologies with broadband
video programming. The purchase price of approximately $34.7 million, excluding
contingent consideration of 916,000 shares, consists of 400,000 shares
originally valued at approximately $18.7 million, fair value of options assumed
of $9.9 million, $5.8 million of deferred compensation and $0.3 million in
acquisition costs. The deferred compensation relates to 124,000 shares of
restricted stock issued to employees of IMAKE. The contingent shares will be
issued when certain revenue targets are attained, as amended. The valuation of
in-process technology of $4.7 million in connection with the acquisition of
IMAKE is based on an independent appraisal which determined that the e.merge
technology acquired from IMAKE had not been fully developed at the date of
acquisition. As a result, the Company will be required to incur additional costs
to successfully develop and integrate the e.merge platform. The remaining
purchase price in excess of the value of identified assets and liabilities
assumed of $24.9 million has been allocated $1.0 million to workforce and $23.9
million to goodwill. Goodwill and workforce are being amortized over their
expected period of benefit which is four years for goodwill and two years for
workforce. The acquisition was accounted for as a purchase business combination,
effective as of January 1, 2000, for accounting purposes.

                                       8
<PAGE>

On July 20, 2000, the Company issued 880,000 contingent shares. The shares had a
value of $11.9 million, which was considered additional goodwill. At September
30, 2000, an additional 18,000 contingent shares were earned pursuant to the
agreement, resulting in $0.2 million of additional goodwill. The additional
amounts of goodwill are being amortized over the remaining period of benefit.

ACQUISITION OF SABELA

On January 9, 2000, the Company acquired Sabela, a global ad serving, tracking
and analysis company with products for online advertisers and Web publishers.
The purchase price of approximately $65.0 million consists of approximately 1.2
million shares of 24/7 Media common stock valued at approximately $58.3 million,
cash consideration of $2.1 million, fair value of warrants assumed of $1.2
million, fair value of options assumed of $1.7 million and $1.7 million in
acquisition costs. The purchase price in excess of the value of identified
assets and liabilities assumed of $64.7 million has been allocated $7.1 million
to technology, $1.1 million to workforce and $56.5 million to goodwill. Goodwill
and other intangible assets are being amortized over their expected period of
benefit which is four years for goodwill and technology; and two years for
workforce. The acquisition was accounted for as a purchase business combination,
effective as of January 1, 2000, for accounting purposes.

ACQUISITION OF AWARDTRACK

On February 11, 2000, the Company acquired AwardTrack, Inc. ("AwardTrack"),
which offers a private label loyalty customer relationship management program
that enables Web retailers and content sites to issue points to Web users as a
reward for making purchases, completing surveys or investigating promotions. The
purchase price of approximately $69.3 million consists of approximately 1.1
million shares of 24/7 Media common stock valued at approximately $64.0 million,
fair value of options assumed of $4.6 million and $0.7 million in acquisition
costs. The purchase price in excess of the value of identified assets and
liabilities assumed of $69.4 million has been allocated $7.7 million to
technology, $0.5 million to tradename, $0.4 million to workforce and $60.8
million to goodwill. Goodwill and other intangible assets are being amortized
over their expected period of benefit which is four years for goodwill,
technology and tradename; and two years for workforce. The acquisition was
accounted for as a purchase business combination effective as of February 11,
2000 for accounting purposes.

ACQUISITION OF EXACTIS

On June 28, 2000, the Company acquired all of the outstanding common stock of
Exactis.com, Inc., a provider of email based direct marketing services, in
exchange for Company common stock. Exactis.com stockholders received shares of
24/7 Media common stock based on an exchange ratio of 0.6 shares of 24/7 Media
common stock for each share of Exactis.com common stock. The purchase price of
approximately $475.6 million consists of approximately 8.2 million shares of
24/7 Media common stock valued at approximately $383.0 million, fair value of
options assumed of $82.9 million, fair value of warrants assumed of $2.3
million, deferred compensation of $2.9 million and acquisition costs of $4.5
million. The purchase price in excess of the value of identified assets and
liabilities assumed of $428.8 million has been allocated $60.8 million to
technology, $1.0 million to tradename, $3.2 million to workforce, $2.1 million
to customer base and $361.7 million to goodwill. Goodwill and other intangible
assets are being amortized over their expected period of benefit which is four
years for goodwill, technology, customer base and tradename; and two years for
workforce. The acquisition was accounted for as a purchase business combination
effective as of June 30, 2000 for accounting purposes.

ACQUISITION OF WSR

On August 24, 2000, the Company acquired WSR, which engages in the business of
delivering targeted search traffic on behalf of its clients. The purchase price
of approximately $66.7 million, excluding contingent consideration of 2.8
million shares, consists of approximately 4.3 million shares of 24/7 Media
common stock valued at approximately $61.3 million, fair value of options
assumed of $4.1 million and acquisition costs of $1.3 million. The purchase
price in excess of the value of identified assets acquired of $63.0 million has
been allocated $1.1 million to deferred compensation and $61.9 to goodwill which
is

                                       9
<PAGE>

being amortized over its expected period of benefit of four years. The
acquisition was accounted for as a purchase business combination.

On March 15, 2001, the Company signed an amendment to the WSR purchase agreement
dated August 24, 2000. The amendment changed the earn out criteria as it related
to the contingent consideration to be based on revenue rather than EBIT, as
defined in the original agreement. Based on the new criteria 710,000 shares
related to the period ended December 31, 2000 were issued on March 23, 2001
valued at approximately $0.2 million. In addition, former principal
stockholder loans amounting to $0.3 million were forgiven. These amounts were
recorded as compensation expense in the 2001 consolidated statement of
operations, $0.2 million included in stock based compensation and $0.3
million included in sales and marketing expense. An additional cash earn out
of up to $1.5 million in cash was put into place for two employees who were
the former principal stockholders of WSR. Payments under the cash earn out
are based on the availability of monthly cash flows of WSR, as defined in the
agreement. These amounts will be recognized as compensation expense when, and
if, earned.

ACQUISITION OF KENDRO COMMUNICATIONS

On April 1, 2000, our subsidiary 24/7 Media Europe NV acquired Kendro
Communications, a Swiss based banner network service, for approximately
26,000 shares of the Company's common stock valued at approximately $527,000,
excluding contingent consideration of up to $6.7 million to be paid in the
Company's common stock, which is subject to performance standards and other
contractual requirements. The performance standards are based on revenues of
the acquired business for the fiscal years ended March 31, 2001 and 2002, and
the price of the Company's common stock at March 31, 2001 and 2002,
respectively, and will be payable by 24/7 Europe within fourteen days after
the delivery of audited revenue statements provided that the sellers are
employees of the Company. If all requirements are met, then, based on the
closing price of our common stock on March 30, 2001, and a preliminary
estimate of revenues of the acquired company by the Company versus the
sellers' estimate of revenue for the twelve month period ended March 31,
2001, the number of shares that would be required to be delivered to the
sellers ranges from 3.2 million shares up to 5.1 million shares. As of March
31, 2001, the Company accrued an estimate of $1.1 million for the settlement
of this contingency. The Company believes that it may have certain remedies
related to the purchase agreement that could significantly lower this
estimate. This expense is recorded as stock based compensation in the 2001
consolidated statement of operations.

ACQUISITION OF IPROMOTIONS

On April 17, 2000, the Company acquired iPromotions, Inc., a Seattle based
promotions and sweepstakes management firm. The purchase price of $3.5 million
consists of $2.0 million in cash, approximately 33,000 shares of common stock
valued at approximately $654,000, fair value of options assumed of $736,000 and
$100,000 in acquisition costs.

SUMMARY

The acquisitions of Sabela, IMAKE, AwardTrack, Exactis, Kendro Communications,
iPromotions, WSR and the purchase of the remaining interest in Europe have been
accounted for using the purchase method of accounting, and accordingly, each
purchase price has been allocated to the tangible and identifiable intangible
assets acquired and liabilities assumed on the basis of their fair values on the
respective acquisition dates. The following summarizes the purchase price
allocation for each of the acquisitions:


                                       10
<PAGE>

<TABLE>
<CAPTION>

                              NET TANGIBLE
                  ACQUISITION    ASSETS     IN-PROCESS    DEFERRED    INTANGIBLES/   USEFUL LIFE
ACQUIRED ENTITY       COSTS   (LIABILITIES) TECHNOLOGY  COMPENSATION    GOODWILL      (IN YEARS)

<S>                 <C>        <C>           <C>        <C>           <C>            <C>
IMAKE ...........   $ 46,750   $   (793)     $  4,700     $  5,785    $  37,058           2-4
24/7 Media Europe     24,117       --            --           --         24,117            3
Sabela ..........     65,026        317          --           --         64,709           2-4
Award Track .....     69,293        (82)         --           --         69,375           2-4
Exactis .........    475,636     43,939          --          2,870      428,827           2-4
WSR .............     66,675      3,720          --          1,072       61,883            4
Kendro ..........        527         17          --           --            510            4
iPromotions .....      3,489       (127)           97         --          3,519           2-4
                    -----------------------------------------------------------
                    $751,513   $ 46,991      $  4,797     $  9,727    $ 689,998
                    ===========================================================
</TABLE>


The following unaudited pro forma consolidated amounts give effect to all of the
above acquisitions accounted for by the purchase method of accounting as if they
had occurred at the beginning of the period by consolidating the results of
operations of the acquired entities for the three month periods ended March 31,
2000.

The unaudited pro forma consolidated statements of operations are not
necessarily indicative of the operating results that would have been achieved
had the transactions been in effect as of the beginning of the periods presented
and should not be construed as being representative of future operating results.

<TABLE>
<CAPTION>

                                                           Three Months Ended
                                                             March 31, 2000
                                                    -------------------------------
                                                    (in thousands, except share and
                                                                 per share data)

<S>                                                             <C>
Total revenues.......................................           $        54,218
Net loss.............................................                   (58,695)
Net loss per share -  basic and diluted..............           $         (1.36)
Weighted average shares used
  in net loss per share calculation (1)..............                43,316,906
</TABLE>


(1) The weighted average shares used to compute pro forma basic and diluted net
loss per share for the period ended March 31, 2000 includes the 1,129,344,
916,000, 8,156,843, 4,970,000 and 3,217,335 shares issued for AwardTrack, IMAKE,
Exactis, WSR and Kendro, respectively as if the shares were issued on January 1,
2000.

(3)  INTANGIBLE ASSETS, NET

The Company's management performs on-going business reviews and, based on
quantitative and qualitative measures, assesses the need to record impairment
losses on long-lived assets used in operations when impairment indicators are
present. Where impairment indicators were identified, management determined the
amount of the impairment charge by comparing the carrying values of goodwill and
other long-lived assets to their fair values.

Through August 2000, the Company completed numerous acquisitions that were
financed principally with shares of the Company's common stock, and were valued
based on the price of the Company's common stock at that time (see note 2).
During the fourth quarter of 2000 and the first quarter of 2001, the

                                       11
<PAGE>

Company reevaluated the carrying value of its businesses. The Company's
revaluation was triggered by the continued decline in the Internet advertising
and marketing sectors throughout 2000 which has continued in 2001. This decline
has significantly impacted current projected advertising revenue generated from
these entities. In addition, each of these entities have experienced declines in
operating and financial metrics over the past several quarters, primarily due to
the continued weak overall demand of on-line advertising and marketing services,
in comparison to the metrics forecasted at the time of their respective
acquisitions. These factors significantly impacted current projected revenue
generated from these businesses. The Company's evaluation of impairment was also
based on achievement of the unit's business plan objectives and milestones, the
fair value of each business unit relative to its carrying value, the financial
condition and prospects of each business unit and other relevant factors. The
business plan objectives and milestones that were considered included, among
others, those related to financial performance, such as achievement of planned
financial results, and other non-financial milestones such as successful
deployment of technology or launching of new products and the loss of key
employees and/or significant customers. The impairment analysis also considered
when these properties were acquired and that the intangible assets recorded at
the time of acquisition was being amortized over useful lives of 2 - 4 years.
The amount of the impairment charge was determined by comparing the carrying
value of goodwill and other long-lived assets to fair value at the end of each
reporting period.

Where impairment was indicated, the Company determined the fair value of its
business units based on a market approach, which included an analysis of market
price multiples of companies engaged in similar businesses. To the extent that
market comparables were not available, the Company used discounted cash flows in
determining the value. The market price multiples are selected and applied to
the business based on the relative performance, future prospects and risk
profile of the business in comparison to the guideline companies. The
methodology used to test for and measure the amount of the impairment charge was
based on the same methodology used during the Company's initial acquisition
valuations. As a result, during management's review of the value and periods of
amortization of both goodwill and certain other intangibles it was determined
that the carrying value of goodwill and certain other intangible assets were not
recoverable. The other intangible assets that were determined to be impaired
related to the decline in fair market value of acquired technology, a
significant reduction in the acquired customer bases and turnover of workforce
which was in place at the time of the acquisition of these companies.

As a result of the review at March 31, 2001, the Company's management determined
that the fair value of goodwill and other intangible assets attributable to
Mail, Exactis, Europe and WSR were less than their recorded carrying values. The
Company recognized $40.1 million in impairment charges to adjust the carrying
values of these entities in the first quarter of 2001. Of this amount, $20.1
million related to Mail, $11.0 million to WSR, $4.5 million to Exactis and $4.5
million to Europe (including $0.4 million related to Kendro). The impairment
factors evaluated by management may change in subsequent periods, given that the
Company's business operates in a highly volatile business environment. This
could result in significant additional impairment charges in the future.

After giving effect to the aforementioned impairment charges of $40.1 million,
the remaining amount of goodwill and other intangibles, net, as of March 31,
2001 was $73.1 million: $21.8 million related to WSR, $21.7 million related to
IMAKE, $13.8 million related to Europe, $11.4 million related to Mail, $2.6
million related to ClickThrough, and $1.8 million related to Exactis.

                                       12
<PAGE>

<TABLE>
<CAPTION>

                                March 31,   December 31,
                                   2001        2000
                                ---------    ---------
                                    (in thousands)
<S>                             <C>          <C>
Goodwill ....................   $  64,923    $ 122,871
Technology ..................      35,011       50,471
Other intangible assets .....       6,378        6,375
                                ---------    ---------
                                  106,312      179,717
Less accumulated amortization     (33,247)     (54,925)
                                ---------    ---------
                                $  73,065    $ 124,792
                                =========    =========
</TABLE>


(4)  INVESTMENTS

The fair value of the Company's available-for-sale marketable securities of
approximately $1.0 million is based on the quoted market values as of March
31, 2001 as reported on NASDAQ. As of March 31, 2001, unrealized gains
related to such securities amounted to $0.2 million. The Company also has
cost based investments of $1.5 million.

During the three months ended March 31, 2001, the Company sold approximately 1.1
million shares of chinadotcom stock at prices ranging from $2.38 to $7.69 per
share. The shares had a cost basis of $1.5 million, which resulted in a gain of
approximately $4.5 million. The Company also sold a portion of its investments
in Network Commerce and i3Mobile, which resulted in a loss of approximately $0.5
million. The Company's net gain on the sale of these investments are included
in "Gain on sale of investments, net" within other income (expense) in the
Company's 2001 consolidated statement of operations.

As of March 31, 2001, the Company wrote down certain of its investments and
recognized impairment charges of approximately $3.1 million for
other-than-temporary declines in value of certain investments. The Company's
management made an assessment of the carrying value of its cost-based
investments and determined that they were in excess of their carrying values due
to the significance and duration of the decline in valuations of comparable
companies operating in the Internet and technology sectors. The write down of
cost based investments was $0.6 million related to Media-Asia. The Company's
management also recognized that the decline in value of its available-for-sale
investments in Network Commerce and i3Mobile were other-than-temporary and
recorded an impairment of $2.3 million and $0.2 million, respectively. These
impairment charges totaling $3.1 million are included in "Impairment of
investments" within other income (expense) in the Company's 2001 consolidated
statement of operations.

(5)  RESTRUCTURING CHARGE

During the first quarter of 2001, a restructuring charge of approximately $0.5
million was recorded by the Company in accordance with the provisions of EITF
94-3, and Staff Accounting Bulletin No. 100. The Company's restructuring
initiatives were to reduce employee headcount by the involuntary termination of
approximately 100 employees. The Company paid the majority of these costs in the
first quarter of 2001.


                                       13
<PAGE>

The following sets forth the activities in the Company's restructuring reserve
which is included in accrued expenses in the consolidated balance sheet (in
thousands):

<TABLE>
<CAPTION>
                               Beginning  Current year  Current year    Ending
                                Balance     provision   utilization    Balance
                                -------     ---------   -----------    -------
<S>                             <C>          <C>          <C>          <C>
Employee termination benefits   $2,446       $  487       $1,636       $1,297
Office closing costs ........    1,738         --            529        1,209
Other exit costs ............      309         --             28          281
                                ------       ------       ------       ------
                                $4,493       $  487       $2,193       $2,787
                                ======       ======       ======       ======
</TABLE>


(6)  COMMON STOCK

On March 23, 2001, the Company issued 710,000 shares of common stock to
employees of the Company for meeting the earn-out provisions in the WSR merger
agreement, as amended. The related compensation expense of approximately $0.2
million is included as part of sales and marketing in the statements of
operations.

On May 23, 2000, the Company offered certain members of management the option
of exchanging their January 1, 2000 option grants for restricted stock in a
ratio of one share for three options. As a result, the Company cancelled
832,500 options and issued approximately 285,000 shares of restricted stock
to these employees of the Company, which vest over a period of three to four
years. Such grants resulted in a deferred compensation expense of
approximately $4.5 million, which is being amortized over the vesting period
of those shares. In accordance with their original vesting schedule, on
January 1 and March 31, 2001, approximately 111,000 and 9,000 shares became
vested.

 (7)  STOCK INCENTIVE PLAN

For the three month period ended March 31, 2001, the Company granted
approximately 3.5 million stock options under the 1998 Stock Incentive Plan and
2.3 million stock options under the 2001 Stock Incentive Plan for Non-officers
to employees at exercise prices based on the fair market value of the Company's
common stock at the respective dates of grant.

(8)  SEGMENT INFORMATION

The Company's business is comprised of network sales, email services and
technology sales. The network sales segment generates the majority of its
revenues by delivering advertisements and promotions to affiliated Web sites.
The revenue related to the email segment of the business is comprised of
marketing services to target online users compiled by list management. The
technology segment generates revenue by providing third party ad serving, email
delivery service bureau, search engine traffic delivery, broadband software
solutions and technology services. The Company's management reviews corporate
assets and overhead expenses for each segment. The summarized segment
information as of and for the three months ended March 31, 2001 and 2000, is as
follows:


                                       14
<PAGE>

<TABLE>
<CAPTION>

                                    NETWORK      MAIL   TECHNOLOGY    TOTAL
                                    -------      ----   ----------    -----
                                                 (IN THOUSANDS)
<S>                                 <C>        <C>        <C>        <C>
THREE MONTHS ENDED MARCH 31, 2001
Revenues ........................   $ 11,387   $  3,883   $ 10,008   $ 25,278
Gross profit ....................        380      1,216      6,740      8,336
Amortization of goodwill,
   intangibles and advances .....      3,182      3,367      5,127     11,676
Impairment of intangible assets .      4,559     20,087     15,460     40,106

THREE MONTHS ENDED MARCH 31, 2000
Revenues ........................   $ 36,483      6,884      2,864     46,231
Gross profit ....................      7,791      2,618      1,737     12,146
Amortization of goodwill,
   intangibles and advances .....      7,830      3,320      5,779     16,929

TOTAL ASSETS:
  March 31, 2001 ................     75,632     18,246     78,233    172,111
  December 31, 2000 .............    102,387     51,114    115,426    268,927
</TABLE>

Geographical information is as follows:

<TABLE>
<CAPTION>

                                           US     INTERNATIONAL   TOTAL
                                           --     -------------   -----
                                                 (IN THOUSANDS)
<S>                                      <C>        <C>          <C>
THREE MONTHS ENDED MARCH 31, 2001
Revenues .............................   $ 17,486   $  7,792     $ 25,278
Long-lived assets ....................     96,894     20,335      117,229

THREE MONTHS ENDED MARCH 31, 2000
Revenues .............................   $ 38,389      7,842       46,231
Long-lived assets at December 31, 2000    144,481     25,848      170,329
</TABLE>


(9)  SUPPLEMENTAL CASH FLOW INFORMATION

The amount of cash paid for interest was $4,000 for both the three month periods
ended March 31, 2001 and 2000.

(10)  SIGNIFICANT CONTRACTS

NBC

In March 1999, the Company signed an exclusive agreement with NBC-Interactive
Neighborhood (NBC-IN) that would allow the Company to sell advertising on NBC
network television stations and their associated Web sites at the local market
level in exchange for services to be provided by the Company. As part of this
agreement, the Company issued to NBC warrants to purchase up to 150,000 shares
of common stock for $26.05 per share. The first 75,000 warrants vested on March
11, 1999 and will expire on March 11, 2002, The remaining 75,000 shares covered
by this warrant were to vest in eighteen increments of approximately 4,167
shares each on the first day of every month beginning with October 1, 2000 and
ending on March 1, 2002 at $26.05 per share. In the event that NBC terminates
the agreement, the portion of the shares that have not vested as of such
termination date shall immediately expire. In August 2000, as a result of the
termination of the agreement, 75,000 unvested warrants expired. As a result, the
Company reversed the original value ascribed to the warrants issued in
connection with this partner agreement of $1.8

                                       15
<PAGE>

million which remained unamortized, against additional paid in capital related
to the expired warrants. On April 19, 2001, the Company settled with NBC and
received $222,000 as reimbursement of costs. This amount will be reflected as an
offset to sales and marketing expense in the second quarter of 2001.

SONY

In December 1998, Exactis sold its online publishing business, including rights
to the InfoBeat brand, the consumer newsletters and the subscriber lists to Sony
Music, a Group of Sony Music Entertainment Inc. Exactis also entered into a
service agreement to manage the production and delivery of the InfoBeat
newsletters for Sony Music through December 2001. Exactis received $11.8 million
under the sales agreement and related service agreement. The agreement also
provides for additional minimum payments of $3.0 million over the term of the
service agreement. The separate fair values of the sales and service agreements
were not objectively determinable. Therefore, the proceeds of the sales and
service agreements are being recognized as technology service revenue over the
term of the service agreement based on the monthly minimum number of email
messages to be provided under the service agreement. At March 31, 2001,
approximately $1.7 million in deferred revenue is related to the Sony Music
agreements.


                                       16
<PAGE>


COMMON STOCK PURCHASE AGREEMENT

On March 21, 2001, the Company entered into a Common Stock Purchase Agreement
and a Registration Rights Agreement with Maya Cove Holdings Inc. ("Maya").
Pursuant to the terms of these agreements, beginning on the date that a
registration statement covering a number of shares estimated to be issued under
the Common Stock Purchase Agreement is declared effective by the SEC, and
continuing for 18 months thereafter, the Company has the right, but not the
obligation, subject to the satisfaction or waiver of certain conditions as set
forth in the Common Stock Purchase Agreement, to sell up to $50 million of its
common stock to Maya pursuant to such periodic draw downs as the Company may
elect to make (the "Equity Line"). Maya will purchase such shares at a discount
of between 3.0% and 3.5%, depending on the market capitalization of the
Company's outstanding common stock at the time of issuance. The minimum amount
that may be drawn down at any one time is $250,000. No amounts were drawn under
this facility through March 31, 2001.

In conjunction with this agreement the Company issued to Maya and Pacific Crest
Securities, Inc., who acted as the Company's financial advisors, warrants to
purchase up to 100,000 shares each of the Company's Stock. The fair value of the
warrants relating to the term of the common stock purchase agreement for the
purchase of the 200,000 shares were valued at approximately $0.1 million based
on a Black Scholes pricing model. The warrants were immediately charged to
operations and included in general and administrative expense in the 2001
consolidated statement of operations. The Black-Scholes pricing model was
used with the following assumptions at the date of issuance: risk free
interest rate of 4.59%, dividend yield of 0%, expected life of 3 years and
volatility of 150%.

(11)  SUBSEQUENT EVENTS

On April 9, 2001, the Board of Directors approved a new restructuring plan to
further leverage the Company's infrastructure and improve/preserve its cash
position. The plan calls for the divestitures of our non-core assets, a
reduction of our headcount of approximately 100 employees, closing of one office
and downsizing of four other offices as well as the elimination of certain
redundancies related to our technology costs.

During May 2001, the Company sold certain technology assets and intellectual
property of Sabela and AwardTrack. The Company has retained the remaining assets
of these subsidiaries. AwardTrack operations were closed in 2000 and the Company
is now in the process of closing down the remaining operations of Sabela.
Proceeds associated with these sales amounted to approximately $5.5 million
before shut down and disposal costs.

Subsequent to March 31, 2001, the Company has sold all of its remaining
investments in marketable securities. The proceeds were $0.8 million. The
investments had a cost basis of $0.7 million, resulting in a $0.1 million gain.

                                       17
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE TERMS "WE" AND "OUR COMPANY" MEAN 24/7 MEDIA, INC., OUR SUBSIDIARIES AND
EACH OF OUR PREDECESSOR ENTITIES.

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, and Section 21E of the Securities Exchange
Act of 1934. We intend such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and we are including this statement
for purposes of complying with these safe harbor provisions. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions, including
those set forth under "--Risk Factors" below.

Words such as "expect", "anticipate", "intend", "plan", "believe", "estimate"
and variations of such words and similar expressions are intended to identify
such forward-looking statements. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this report might not
occur.

GENERAL

We are a leading global provider of end-to-end advertising and marketing
solutions for Web publishers, online advertisers, advertising agencies,
e-marketers and e-commerce merchants. We provide a comprehensive suite of media
and technology products and services that enable such Web publishers, online
advertisers, advertising agencies and e-marketers to attract and retain
customers worldwide, and to reap the benefits of the Internet and other
electronic media. Our solutions include advertising and direct marketing sales,
ad serving, promotions, email list management, email list brokerage, email
delivery, email service bureau, data analysis, search engine result
optimization, and broadband/convergence solutions, all delivered from our
industry-leading data and technology platforms. Our technology solutions are
designed specifically for the demands and needs of advertisers and agencies, Web
publishers and e-commerce merchants.

Our business is organized into three principal lines of business:

      o     24/7 Network

      o     24/7 Mail

      o     24/7 Technology Solutions

THE 24/7 NETWORK

The 24/7 Network is a global online advertising network. The 24/7 Network
aggregates the advertising inventory of thousands of Web sites globally that are
attractive to advertisers, generate a high number of ad impressions and
contribute a variety of online content to the network. Web publishers seeking to
join the network must meet our affiliation criteria, including high quality
content, brand name recognition, significant existing and projected page views,
attractive user demographics, and sponsorship opportunities. For Web sites on
the 24/7 Network, we sell Web site-specific advertising campaigns and also
bundle

                                       18
<PAGE>

advertisements for sale in content channels or across the entire global network
in regional, pan-regional or global buys. For our flagship Web sites on the
network, we solicit sponsorships and integrate sales efforts with the Web site's
management. The 24/7 Network consists of over 400 high profile Web sites as well
as 3,000 small to medium-sized Web sites in North America and Europe to which we
delivered an aggregate of approximately 3.3 billion advertisements in March
2001. In North America, we deliver advertising using 24/7 Connect, our next
generation Internet ad serving system that is one of the industry's fastest and
most reliable ad serving systems. 24/7 Connect enables us to offer advertisers
the ability to target Internet users based on a variety of criteria including on
a geo-targeted basis.

Through the 24/7 Network, we also offer network-related value-added solutions to
advertisers, marketers and Web publishers. For example, our Website Results
subsidiary offers Web sites that seek to drive highly-qualified traffic to their
site the opportunity to appear prominently in search engine result pages of many
of the Internet's leading search engines. We also offer creative design
services, sponsorship opportunities and syndication services.

24/7 MAIL

24/7 Mail provides email direct marketing services. Our permission-based email
marketing database of more than 30 million email addresses enables direct
marketers to target promotional campaigns to consumers who elect to receive
commercial messages. The users can opt out of the database and stop receiving
these messages, at any time. Currently, 24/7 Mail has U.S. operations that serve
as list manager for permission-based email lists that collectively contained
more than 30 million email addresses as of March 2001, and European and Canadian
operations that currently serve as list manager for permission-based email lists
that collectively contained more than three million email addresses as of March
2001.

24/7 TECHNOLOGY SOLUTIONS

24/7 Technology Solutions is comprised of comprehensive service and software
solutions designed specifically for the needs of three targeted customer
segments: advertisers and agencies, Web publishers, and e-commerce merchants.
Our technical service team of over 150 employees provides consulting services.
Products within 24/7 Technology Solutions include:

      o     24/7 Exactis, which provides companies a suite of permission-based
            e-mail marketing and communications products and services that allow
            them to precisely, efficiently and personally interact with
            customers, and retain and grow these valuable customer
            relationships. We acquired 24/7 Exactis in June 2000;

      o     e.mergeTM, a fully integrated, customizable suite of back office
            business applications designed to enable digital media service
            providers to offer cutting edge services to their customers
            including Interactive Advertising, Video on Demand (VOD), Broadband
            Internet, e-Commerce, and Targeted Broadband Advertising which we
            acquired with our acquisition of IMAKE in January 2000; and

      o     24/7 Website Results, which delivers targeted search engine traffic
            on behalf of its clients. We acquired Website Results in August
            2000.


RESULTS OF OPERATIONS

REVENUES

NETWORK REVENUES. Network revenues were $11.4 million for the three month period
ended March 31, 2001 compared to $36.5 million for the three month period ended
March 31, 2000, representing a 69% decrease. Due to a contraction in the overall
advertising market especially in the online sector, we have

                                       19
<PAGE>

been experiencing declines in revenue since the quarter ended June 30, 2000 and
we anticipate that network revenue will continue to remain flat in the second
quarter.

EMAIL REVENUES. Email revenues were $3.9 million for the three month period
ended March 31, 2001 compared to $6.9 million for the three month period ended
March 31, 2000, representing a decrease of 44%. We expect Email revenues will be
flat or slightly lower in the second quarter.

TECHNOLOGY REVENUES. Technology revenues were $10.0 million for the three month
period ended March 31, 2001 compared to $2.9 million for the three month period
ended March 31, 2000, representing an increase of 249%. The acquisition of
Exactis in June 2000 and WSR in August 2000 added approximately $6.8 million in
revenue for the three month period ended March 31, 2001. Technology revenues
will be affected by the closing down of our Sabela subsidiary.

COST OF REVENUE AND GROSS PROFIT

NETWORK COST OF REVENUES AND GROSS PROFIT. The cost of network revenues consists
primarily of fees paid to affiliated Web sites, which are calculated as a
percentage of revenues resulting from ads delivered on our networks. Cost of
revenues also includes third party ad serving costs, depreciation of our Connect
ad serving system and Internet access. We completed the transition of our 24/7
Network in the United States to 24/7 Connect in the third quarter of 2000 and of
our 24/7 Network in Canada in the first quarter of 2001. We plan to convert the
24/7 Network in Europe to 24/7 Connect in the second half of 2001.

Gross profit dollars decreased significantly and the gross margin, which is
network gross profit as a percent of total network revenues, was 3% for the
three month period ended March 31, 2001 compared to 21% for the three month
period ended March 31, 2000. The decrease is due to the fixed costs, primarily
depreciation, associated with 24/7 Connect as we greatly increased capacity,
functionality and reliability in the second and third quarter of 2000. In the
first quarter of 2001, we began the process of optimizing capacity to match
market conditions. We expect to see benefits in the future.

EMAIL COST OF REVENUES AND GROSS PROFIT. The cost of email revenues consists
primarily of list provider royalties and delivery costs. Gross margin decreased
from 38% for the three month period ended March 31, 2000 to 31% for the three
month period ended March 31, 2001. This decrease in margin is due to the mix of
revenues in the quarter being weighted more toward lower margin products.

TECHNOLOGY COST OF REVENUES AND GROSS PROFIT. The cost of technology revenues
consists of time and materials for consulting contracts, the cost of equipment
and bandwidth. Gross margin increased to 67% for the three month period ended
March 31, 2001 compared to 61% for the period ended March 31, 2000. The increase
is due to the acquired businesses having a higher margin.

OPERATING EXPENSES

Operating expenses increased for the three month period ended March 31, 2001
compared to the three month period ended March 31, 2000 as a result of numerous
acquisitions from July 1999 through August 2000 and expenses incurred in
connection with the internal growth of our business. Beginning in November 2000,
we began a restructuring process to reduce employee headcount, consolidate
operations and reduce office space in order to better align our sales,
development and administrative organization and to position us for profitable
growth consistent with our long-term objectives. This restructuring involved the
involuntary terminations of employees, closure or downsizing of certain offices
and the sale of certain non-core assets. The restructuring effort has positively
impacted our financial results in the first quarter of 2001 as compared to the
fourth quarter of 2000 and we anticipate further reductions in operating
expenses in the future.

SALES AND MARKETING EXPENSES. Sales and marketing expenses consist primarily of
sales force salaries and commissions, advertising expenditures and costs of
trade shows, conventions and marketing

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<PAGE>

materials. Sales and marketing expenses were consistent with the prior period.
Increased headcount largely due from acquisition was offset by lower advertising
expense.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
primarily of compensation, facilities expenses and other overhead expenses.
General and administrative expenses increased 46% to $15.8 million for the three
month period ended March 31, 2001 compared to $10.9 million for the three month
period ended March 31, 2000. General and administrative expenses increased
primarily as a result of acquisitions and increased bad debt expense.

PRODUCT DEVELOPMENT EXPENSES. Product development expenses consist primarily
of compensation and related costs incurred to further develop our ad serving
and other technology capabilities. The expense increased $4.8 million to $5.9
million for the three month period ended March 31, 2001 compared to $1.0
million for the three month period ended March 31, 2000. The increase is due
to acquisitions, primarily Exactis.

AMORTIZATION OF GOODWILL, INTANGIBLE ASSETS AND ADVANCES. Amortization of
goodwill, intangible assets and advances was $11.7 million for the three month
period ended March 31, 2001 compared to $16.7 million for the three month period
ended March 31, 2000. Although additional acquisitions were completed,
amortization has decreased due to impairment charges reducing the gross amount
of goodwill and other intangible assets. In addition, the three month period
ended March 31, 2000 included amortization related to our NBC and AT&T partner
agreements which commenced in April 1999 and October 1999, respectively, and
were fully amortized by December 31, 2000.

STOCK-BASED COMPENSATION. Stock based compensation of $2.5 million for the three
month period ended March 31, 2001 consists of an estimated accrual of $1.1
million for contingent consideration related to the acquisition of Kendro
Communications, $0.7 million in amortization of deferred compensation for
restricted shares issued to certain employees, $0.5 million in amortization of
deferred compensation from acquisitions and a $0.2 million charge for purchase
consideration given to certain employees.

Stock based compensation of $2.9 million for the three month period ended March
31, 2000 consists of a $1.9 million charge for shares issued to employees and
$1.0 million in amortization of deferred compensation from acquisitions.

WRITE-OFF OF IN PROCESS TECHNOLOGY AND OTHER MERGER RELATED COSTS. Write-off of
in process technology and other merger related costs of $4.7 million for the
three month period ended March 31, 2000 is acquired in-process technology from
the acquisition of IMAKE that was immediately charged to operations.

RESTRUCTURING AND EXIT COSTS. The restructuring charge of $0.5 million for the
period ended March 31, 2001 related to the reduction of employee headcount. This
restructuring involved the involuntary termination of approximately 100
employees.

IMPAIRMENT OF INTANGIBLE ASSETS. Management performs on-going business reviews
and, based on quantitative and qualitative measures, assesses the need to record
impairment losses on long-lived assets used in operations when impairment
indicators are present. Where impairment indicators were identified, management
determined the amount of the impairment charge by comparing the carrying values
of goodwill and other long-lived assets to their fair values.

Through August 2000, we completed numerous acquisitions that were financed
principally with shares of our common stock, and were valued based on the price
of our common stock at that time. During the fourth quarter of 2000 and the
first quarter of 2001, we reevaluated the carrying value of our businesses. Our
revaluation was triggered by the continued decline in the Internet advertising
and marketing sectors throughout 2000 which has continued in 2001. This decline
has significantly impacted current projected advertising revenue generated from
these entities. In addition, each of these entities have experienced declines in
operating and financial metrics over the past several quarters, primarily due to
the continued weak overall demand of on-line advertising and marketing services,
in comparison to the metrics forecasted at the time of their respective
acquisitions. These factors significantly impacted current projected revenue

                                       21
<PAGE>

generated from these businesses. Our evaluation of impairment was also based on
achievement of the unit's business plan objectives and milestones, the fair
value of each business unit relative to its carrying value, the financial
condition and prospects of each business unit and other relevant factors. The
business plan objectives and milestones that were considered included, among
others, those related to financial performance, such as achievement of planned
financial results, and other non-financial milestones such as successful
deployment of technology or launching of new products and the loss of key
employees and/or significant customers. The impairment analysis also considered
when these properties were acquired and that the intangible assets recorded at
the time of acquisition was being amortized over useful lives of 2 - 4 years.
The amount of the impairment charge was determined by comparing the carrying
value of goodwill and other long-lived assets to fair value at the end of each
reporting period.

Where impairment was indicated, we determined the fair value of its business
units based on a market approach, which included an analysis of market price
multiples of companies engaged in similar businesses. To the extent that market
comparables were not available, we used discounted cash flows in determining the
value. The market price multiples are selected and applied to the business based
on the relative performance, future prospects and risk profile of the business
in comparison to the guideline companies. The methodology used to test for and
measure the amount of the impairment charge was based on the same methodology
used during the Company's initial acquisition valuations. As a result, during
management's review of the value and periods of amortization of both goodwill
and certain other intangibles it was determined that the carrying value of
goodwill and certain other intangible assets were not recoverable. The other
intangible assets that were determined to be impaired related to the decline in
fair market value of acquired technology, a significant reduction in the
acquired customer bases and turnover of workforce which was in place at the time
of the acquisition of these companies.

As a result of the review at March 31, 2001, management determined that the fair
value of goodwill and other intangible assets attributable to Mail, Exactis,
Europe and WSR were less than their recorded carrying values. We recognized
$40.1 million in impairment charges to adjust the carrying values of these
entities in the first quarter of 2001. Of this amount, $20.1 million related to
Mail, $11.0 million to WSR, $4.5 million to Exactis and $4.5 million to Europe
(including $0.4 million related to Kendro). The impairment factors evaluated by
management may change in subsequent periods, given that the Company's business
operates in a highly volatile business environment. This could result in
significant additional impairment charges in the future.

INTEREST INCOME, NET. Interest income, net was $0.3 million for the three month
period ended March 31, 2001 compared to $0.5 million for the three month period
ended March 31, 2000. The decrease is attributable to lower cash balances.

GAIN ON SALE OF INVESTMENTS. This gain relates to the sale of a portion of our
investment in marketable securities. In the three months ended March 31, 2001,
the Company sold approximately 1.1 million shares of chinadotcom stock at prices
ranging from $2.38 to $7.69 per share. The shares had a cost basis of $1.5
million, which resulted in a gain of approximately $4.5 million. The Company
also sold a portion of its investments in Network Commerce and i3Mobile, which
resulted in a loss of approximately $0.5 million. The gain for the three month
period ended March 31, 2000 relates to the sale of a portion of our chinadotcom
stock.

IMPAIRMENT OF INVESTMENTS. As of March 31, 2001, the Company wrote down certain
of its investments and recognized impairment charges of approximately $3.1
million for other-than-temporary declines in value of certain investments.
Management made an assessment of the carrying value of our cost-based
investments and determined that they were in excess of their carrying values due
to the significance and duration of the decline in valuations of comparable
companies operating in the Internet and technology sectors. The write down of
cost based investments was $0.6 million related to Media-Asia. Management also
recognized that the decline in value of our available-for-sale investments in
Network Commerce and i3Moble were other-than-temporary and recorded an
impairment charge of $2.3 million and $0.2 million, respectively.


                                       22
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      At March 31, 2001, we had cash and cash equivalents of $13.7 million
including restricted cash of $0.8 million versus $27.9 million at March 31,
2000. Cash and cash equivalents are comprised of highly liquid short term
investments with maturities of three months or less. The value of our
investments totaled $2.4 million at March 31, 2001 and $11.3 million at December
31, 2000. These investments generally relate to equity and cash transfers from
us for minority equity ownership positions. Such investments included, but are
not limited to, chinadotcom, Network Commerce, i3Mobile, Naviant, Inc. and
idealab!. We used approximately $4.1 million in cash to fund these investments
in the first quarter of 2000 and more in the first quarter of 2001. In addition,
we acquired majority and full ownership positions in IMAKE, Sabela and
AwardTrack in the first quarter of 2000 through the transfer of common stock and
cash. Cash paid for our 2000 acquisitions approximated $1.5 million.

      We generated a portion of our liquidity through our monetization of our
investment in marketable securities which generated approximately $6.1 million
and $12.1 million in the three month periods ended March 31, 2001 and 2000,
respectively. We used approximately $22.6 million and $17.8 million of cash in
operating activities during the three month periods ended March 31, 2001 and
2000, respectively, generally as a result of our net operating losses, adjusted
for certain non-cash items such as amortization of goodwill and other intangible
assets, gains on sales of investments, impairment of investments and intangibles
and non-cash related equity transactions and restructuring and exit costs, and
also by significant changes in accounts receivable, accounts payable and
deferred revenue.

      Net cash provided by investing activities was approximately $6.3 million
in 2001 versus net cash used by us in 2000 of approximately $0.9 million. The
majority of the cash provided by investing activities related to proceeds
received from our sale of a portion of our investment in marketable
securities which amounted to $6.1 million in 2001 and $12.1 million in 2000.
In 2000, we continued investment in technology and efforts to develop our
infrastructure through capital expenditures, including capitalized software.
Cash used for such expenditures totaled approximately $7.5 million for 2000.
To the extent we continue to acquire additional ad serving hardware, invest
in enhancing or expending our current product lines, make cash investments in
other businesses or acquire other businesses, net cash used in investing
activities could continue to be significant. In addition, since March 31,
2001, we have sold substantially all of our investment in marketable
securities which yielded proceeds of $0.8 million. Currently, we have various
capital and operating leases relating to the use of computer hardware,
software and office space.

      As of March 31, 2001, we have approximately $2.8 million remaining of cash
outlays relating to restructuring and exit costs. These amounts consist
primarily of severance and rent exit costs which are being paid ratably. We paid
the majority of this amount in the second quarter and are scheduled to pay all
remaining amounts by the end of the third quarter of 2001.


       Our capital requirements depend on numerous factors, including market
demand of our services, the capital required to maintain our technology, and the
resources we devote to marketing and selling our services. We have received a
report from our independent accountants on our December 31, 2000 consolidated
financial statements containing an explanatory paragraph stating that our
recurring losses from operations since inception raises substantial doubt about
our ability to continue as a going concern. Moreover, management's plans to
continue as a going concern rely heavily on achieving revenue targets, further
rationalizations, our ability to monetize our non-core assets which includes
selling certain divisions, and or raising additional financing, as well as,
reducing our operating expenses. In addition, management is currently exploring
a number of strategic alternatives and is also continuing to identify and
implement

                                       23
<PAGE>

internal actions to improve our liquidity. These alternatives may include
selling core assets which could result in significant changes in our business
plan. To the extent we encounter additional opportunities, we may need to sell a
portion of our current investments in affiliates, or we may sell additional
equity or debt securities which would result in further dilution of our
stockholders. Stockholders may experience extreme dilution due both to our
current stock price and the significant amount of financing we would be required
to raise. These securities may have rights senior to those of holders of our
common stock. We do not have any contractual restrictions on our ability to
incur debt. Any indebtedness could contain covenants, which restrict our
operations. See "Risk Factors - We may need to raise additional funds, including
the issuance of debt."

On March 21, 2001, we entered into a common stock purchase agreement with Maya
Cove Holdings . The agreement gives us the ability to sell up to $50 million of
our common stock to Maya pursuant to periodic draw downs. The draw downs are
subject to our ability to continue trading on the NASDAQ and our trading volumes
and prices. As a result, our ability to utilize this equity credit line is
limited and there can be no assurances that it will provide the resources
necessary to fund our needs. As of March 31, 2001, we have not drawn down on
this facility. We are continuing to evaluate other fund raising vehicles.

We believe that our current cash may not be sufficient to meet our anticipated
operating cash needs for the12 months commencing January 1, 2001. We have
limited operating capital and no current access to any meaningful funds from our
credit facilities. Ours continued operations therefore will depend on its
ability to raise additional funds through sale of certain divisions, bank
borrowings or equity or debt financing. We cannot be certain that we will be
able to sell additional equity or issue debt securities in the future or that
additional financing will be available to us on commercially reasonable terms,
or at all.


MARKET FOR COMPANY'S COMMON EQUITY

The shares of our Common Stock are currently listed on the Nasdaq national
market. Due to the decline in the share price of our Common Stock and our
continued operating losses, we received a letter from the Nasdaq stating that
they have determined that we have failed to meet Nasdaq's minimum listing
requirements and as a result, our Common Stock could be delisted if we do not
satisfy these requirements by July 5, 2001.

Our failure to meet NASDAQ's maintenance criteria may result in the
discontinuance of the inclusion of our securities in NASDAQ. In such event,
trading, if any, in the securities may then continue to be conducted in the non-
NASDAQ over-the-counter market in what are commonly referred to as the
electronic bulletin board and the "pink sheets". As a result, an investor may
find it more difficult to dispose of or obtain accurate quotations as to the
market value of the securities. In addition, we would be subject to a Rule
promulgated by the Securities and Exchange Commission that, if we fail to meet
criteria set forth in such Rule, imposes various practice requirements on
broker-dealers who sell securities governed by the Rule to persons other than
established customers and accredited investors. For these types of transactions,
the broker-dealer must make a special suitability determination for the
purchaser and have received the purchaser's written consent to the transactions
prior to sale. Consequently, the Rule may have a materially adverse effect on
the ability of broker-dealers to sell the securities, which may materially
affect the ability of shareholders to sell the securities in the secondary
market.

Delisting could make trading our shares more difficult for investors,
potentially leading to further declines in share price. It would also make it
more difficult for us to raise additional capital. We would also incur
additional costs under state blue-sky laws to sell equity if we are delisted.

RISK FACTORS

You should carefully consider the following risk factors before you decide to
buy our common stock. These risks may adversely impair our business operations.


                                       24
<PAGE>

WE WILL NEED TO RAISE ADDITIONAL FUNDS TO CONTINUE OPERATIONS AND OUR RECURRING
OPERATING LOSSES RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN.

We believe that our current cash may not be sufficient to meet our
anticipated operating cash needs for the 12 months commencing April 1, 2001
and there can be no assurance that new funds can be secured by March 31,
2002. The support of our vendors, customers, stockholders and employees will
continue to be key to our future success. There can be no assurance that we
will be able to monetize our non-core assets, raise additional financing to
meet our cash and operational needs or reduce our operating expenses to
address this going concern issue.

Since our inception, we have incurred significant operating losses and we
believe we will continue to incur operating losses for the foreseeable future.
We also expect to incur negative cash flows for the foreseeable future as a
result of our operating losses and our need to fund future capital expenditures.

We have received a report from our independent accountants on our December
31, 2000 consolidated financial statements containing an explanatory "going
concern" paragraph stating that our recurring losses from operations since
inception raises substantial doubt about our ability to continue our business
as a going concern. Management's plans to continue as a going concern rely
heavily on achieving revenue targets, further cost rationalizations, our
ability to monetize our non-core assets which includes selling certain
divisions and or raising additional financing, as well as, reducing operating
expenses. Management is currently exploring a number of strategic
alternatives and is also continuing to identify and implement internal
actions to improve our liquidity. These alternatives may include selling core
assets, which could result in significant changes in our business plan.

To the extent we encounter additional opportunities to raise cash, to do so we
may need to sell a portion of our current investments in affiliates, or we may
sell additional equity or debt securities which would result in further dilution
of our stockholders. Stockholders may experience extreme dilution due to our
current stock price and the significant amount of financing we need to raise and
these securities may have rights senior to those of holders of our common stock.
We do not have any contractual restrictions on our ability to incur debt. Any
indebtedness could contain covenants, which restrict our operations.

We have extremely limited access, if any, to the capital markets to raise
capital. The capital markets have been unpredictable in the past, especially for
early stage companies such as ours. In addition, it is difficult to raise
capital in the current market conditions. The amount of capital that a company
such as ours is able to raise often depends on variables that are beyond our
control, such as share price of our stock and its trading volume. As a result,
there is no guarantee that our efforts to secure financing will be available on
terms attractive to us, or at all. Due to our operating losses, it will be
difficult to obtain debt financing. If we are able to consummate a financing
arrangement, there is no guarantee that the amount raised will be sufficient to
meet our future needs. If adequate funds are not available on acceptable terms,
when needed, or at all, our business, results of operation, financial condition
and continued viability will be materially adversely effected.

THE LOW PRICE OF OUR COMMON STOCK COULD RESULT IN ITS DELISTING FROM THE
NASDAQ NATIONAL MARKET.

The shares of our common stock are currently listed on the Nasdaq national
market. Due to the recent decline in the share price of our common stock and
our continued operating losses, we received a letter from Nasdaq stating that
they have determined that we have failed to meet Nasdaq's minimum listing
requirements and as a result, our common stock could be delisted. Nasdaq
listing requirements include a series of financial tests relating to net
tangible assets, public float, number of market makers and shareholders, and
maintaining a minimum bid price for our share price of $1.00. Our share price
has traded at levels below $1.00 for more than 50 consecutive days and it may
not return to a minimum bid price of $1.00 or higher.

                                       25
<PAGE>

Our failure to meet NASDAQ's maintenance criteria may result in the delisting of
our common stock from Nasdaq. In such event, trading, if any, in the securities
may then continue to be conducted in the non-NASDAQ over-the-counter market in
what are commonly referred to as the electronic bulletin board and the "pink
sheets". As a result, an investor may find it more difficult to dispose of or
obtain accurate quotations as to the market value of the securities. In
addition, we would be subject to a Rule promulgated by the Securities and
Exchange Commission that, if we fail to meet criteria set forth in such Rule,
imposes various practice requirements on broker-dealers who sell securities
governed by the Rule to persons other than established customers and accredited
investors. For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to sale. Consequently, the
Rule may have a materially adverse effect on the ability of broker-dealers to
sell the securities, which may materially affect the ability of shareholders to
sell the securities in the secondary market.

Delisting could make trading our shares more difficult for investors,
potentially leading to further declines in share price. It would also make it
more difficult for us to raise additional capital. We would also incur
additional costs under state blue sky laws to sell equity if we are delisted.

HIGH VOLATILITY OF STOCK PRICE.

The market price of our common stock has fluctuated in the past and may continue
to be volatile. In addition, the stock market has experienced extreme price and
volume fluctuations. The market prices of the securities of Internet-related
companies have been especially volatile. Investors may be unable to resell their
shares of our common stock at or above the purchase price. In the past,
following periods of volatility in the market price of a particular company's
securities, securities class action litigation has often been brought against
that company. Many companies in our industry have been subject to this type of
litigation in the past. We may also become involved in this type of litigation.
Litigation is often expensive and diverts management's attention and resources,
which could materially and adversely affect our business, financial condition
and results of operations.

REVENUE GROWTH IN PRIOR PERIODS MAY NOT BE INDICATIVE OF FUTURE GROWTH.

At times in the past and in certain segments, our revenues have grown
significantly. Our limited operating history makes prediction of future revenue
growth difficult. Accurate predictions of future revenue growth are also
difficult because of the rapid changes in our markets and the possible need by
us to sell assets to fund operations. Accordingly, investors should not rely on
past revenue growth rates as a prediction of future revenue growth.

WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN INVESTOR CAN EVALUATE OUR
BUSINESS.

We were formed as a result of the combination of three companies in February
1998. None of the companies nor any company that we have since acquired had an
operating history of more than four years prior to acquisition or merger. We,
therefore, have an extremely limited operating history. You must consider the
risks, expenses and difficulties typically encountered by companies with limited
operating histories, particularly companies in new and rapidly expanding markets
such as Internet advertising. These risks include our ability to:

      o     develop new relationships and maintain existing relationships with
            our Web sites, advertisers, and other third parties;

      o     further develop and upgrade our technology;

      o     respond to competitive developments;

      o     implement and improve operational, financial and management
            information systems; and

      o     attract, retain and motivate qualified employees.

                                       26
<PAGE>

WE ANTICIPATE CONTINUED LOSSES AND WE MAY NEVER BE PROFITABLE.

We have not achieved profitability in any period and we may not be able to
achieve or sustain profitability in the future. We incurred net losses
attributable to common stockholders of $78.7 million and $23.8 million for the
three months ended March 31, 2001 and 2000, respectively. Each of our
predecessors had net losses in every year of their operation. We anticipate that
we will incur operating losses for the foreseeable future due to a high level of
planned operating and capital expenditures. Even if we do achieve profitability,
we cannot assure you that we can sustain or increase profitability on a
quarterly or annual basis in the future.

OUR FUTURE REVENUES AND RESULTS OF OPERATIONS MAY BE DIFFICULT TO FORECAST.

Our results of operations have fluctuated and may continue to fluctuate
significantly in the future as a result of a variety of factors, many of which
are beyond our control. These factors include:

      o     the addition of new or loss of existing clients;

      o     changes in fees paid by advertisers, direct marketers or other
            clients;

      o     changes in service fees payable by us to owners of Web sites or
            email lists, or ad serving fees payable by us to third parties;

      o     the demand by advertisers, Web publishers and direct marketers
            for our advertising solutions;

      o     the introduction of new Internet marketing services by us or our
            competitors;

      o     variations in the levels of capital or operating expenditures and
            other costs relating to the maintenance or expansion of our
            operations, including personnel costs;

      o     changes in governmental regulation of the Internet; and

      o     general economic conditions.


Our future revenues and results of operations may be difficult to forecast due
to the above factors. In addition, our expense levels are based in large part on
our investment plans and estimates of future revenues. Any increased expenses
may precede or may not be followed by increased revenues, as we may be unable
to, or may elect not to, adjust spending in a timely manner to compensate for
any unexpected revenue shortfall. As a result, we believe that period-to-period
comparisons of our results of operations may not be meaningful. You should not
rely on past periods as indicators of future performance. In future periods, our
results of operations may fall below the expectations of securities analysts and
investors, which could adversely affect the trading price of our common stock.

OUR FINANCIAL PERFORMANCE AND REDUCTION OF OUR WORKFORCE MAY AFFECT THE
MORALE AND PERFORMANCE OF OUR PERSONNEL.

We have incurred significant net losses since our inception. In an effort to
reduce our cash expenses, we began to implement certain restructuring
initiatives and cost reductions. In the past six months we reduced our workforce
by approximately 400 employees. We anticipate additional reductions in workforce
in the near future. We have also left positions unfilled when certain employees
have left the company. In addition, recent trading levels of our common stock
have decreased the value of the stock options granted to employees pursuant to
our stock option plan. As a result of these factors, our remaining personnel may

                                       27
<PAGE>

seek employment with larger, more stable companies they perceive to have better
prospects. Our failure to retain qualified employees to fulfill our current and
future needs could impair our future growth and have a material adverse effect
on our business.

OUR CLOSING OF SEVERAL OFFICES AND CONSOLIDATION OF FUNCTIONS MAY IMPAIR
OPERATIONS

As a result of our efforts to reduce expenses and sell non-core assets,
several critical functions have been moved from one of our offices to
another, often with new personnel discharging the function. Key functions
that have been moved included the finance department of our 24/7 Mail
business and our Website Results business. If the transition of these
operations encounters unexpected diffuculties, they could adversely affect
the financial results of the Company.

OUR FINANCIAL PERFORMANCE MAY AFFECT OUR ABILITY TO ENTER INTO NEW BUSINESS
RELATIONSHIPS AND TO COLLECT REVENUES.

The publicity we receive in connection with our financial performance and our
measures to remedy negative press, may negatively affect our reputation and our
business partners' and other market participants' perception of our company. If
we are unable to maintain the existing relationships and develop new ones, our
revenues and collections could suffer materially.

OUR BUSINESS MAY NOT GROW IF THE INTERNET ADVERTISING MARKET DOES NOT
CONTINUE TO DEVELOP.

The Internet as a marketing medium has not been in existence for a sufficient
period of time to demonstrate its effectiveness. Our business would be adversely
affected if the Internet advertising continues to remain soft or fails to
develop in the near future. There are currently no widely accepted standards to
measure the effectiveness of Internet marketing other than clickthrough rates,
which generally have been declining. We cannot be certain that such standards
will develop to sufficiently support Internet marketing as a significant
advertising medium. Actual or perceived ineffectiveness of online marketing in
general, or inaccurate measurements or database information in particular, could
limit the long-term growth of online advertising and cause our revenue levels to
decline.

OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO SUCCESSFULLY IMPLEMENT OUR
BUSINESS MODEL

A significant part of our business model is to generate revenue by providing
interactive marketing solutions to advertisers, ad agencies and Web publishers.
The profit potential for this business model is unproven. To be successful, both
Internet advertising and our solutions will need to achieve broad market
acceptance by advertisers, ad agencies and Web publishers. Our ability to
generate significant revenue from advertisers will depend, in part, on our
ability to contract with Web publishers that have Web sites with adequate
available ad space inventory. Further, these Web sites must generate sufficient
user traffic with demographic characteristics attractive to our advertisers. The
intense competition among Internet advertising sellers has led to the creation
of a number of pricing alternatives for Internet advertising. These alternatives
make it difficult for us to project future levels of advertising revenue and
applicable gross margin that can be sustained by us or the Internet advertising
industry in general. Intensive marketing and sales efforts may be necessary to
educate prospective advertisers regarding the uses and benefits of, and to
generate demand for, our products and services, including our newer products and
services such as Website Results. Enterprises may be reluctant or slow to adopt
a new approach that may replace, limit or compete with their existing direct
marketing systems. In addition, since online direct marketing is emerging as a
new and distinct business apart from online advertising, potential adopters of
online direct marketing services will increasingly demand functionality tailored
to their specific requirements. We may be unable to meet the demands of these
clients. Acceptance of our new solutions will depend on the continued emergence
of Internet commerce, communication and advertising, and demand for its
solutions. We cannot assure you that demand for its new solutions will emerge or
become sustainable.

BANNER ADVERTISING, FROM WHICH WE CURRENTLY DERIVE MUCH OF OUR REVENUE, MAY
NOT BE AN EFFECTIVE ADVERTISING METHOD IN THE FUTURE.

The majority of our revenues are derived from the delivery of banner
advertisements. Online banner advertising has dramatically decreased since the
middle of 2000 and has continued to decline into the first quarter of 2001 and
is expected to continue through the second quarter of 2001, which could have a
material adverse effect on our business. If advertisers determine that banner
advertising is an ineffective or unattractive advertising medium, we cannot
assure you that we will be able to effectively make the transition to any other
form of Internet advertising. Also, there are "filter" software programs that
limit or prevent advertising from being delivered to a user's computer. The
commercial viability of Internet advertising, and our business, results of
operations and financial condition, would be materially and

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adversely affected by Web users' widespread adoption of such software. In
addition, many online advertisers have been experiencing financial difficulties,
which could materially impact our revenues and our ability to collect our
receivables.

GROWTH OF OUR BUSINESS DEPENDS ON THE DEVELOPMENT OF ONLINE DIRECT MARKETING.

Adoption of online direct marketing, particularly by those entities that have
historically relied upon traditional means of direct marketing, such as
telemarketing and direct mail, is an important part of our business model.
Intensive marketing and sales efforts may be necessary to educate prospective
advertisers regarding the uses and benefits of our products and services to
generate demand for our direct marketing services. Enterprises may be reluctant
or slow to adopt a new approach that may replace, limit, or compete with their
existing direct marketing systems. In addition, since online direct marketing is
emerging as a new and distinct market apart from online advertising, potential
adopters of online direct marketing services will increasingly demand
functionality tailored to their specific requirements. We may be unable to meet
the demands of our clients.

IF WE FAIL TO SUCCESSFULLY CROSS-MARKET OUR PRODUCTS OR TO DEVELOP NEW PRODUCTS,
WE MAY NOT INCREASE OR MAINTAIN OUR CUSTOMER BASE OR OUR REVENUE.

We offer a broad range of solutions to our customers. The failure of our
cross-marketing efforts may diminish the benefits we realize from the
acquisition or development of these various products and services. In addition,
we intend to develop new products and services that combine the knowledge and
resources of our Media, Mail and Technology divisions. We cannot assure you that
these products or services will be developed or, if developed, will be
successful or that we can successfully integrate or realize the anticipated
benefits of these developments. As a result, we may not be able to increase or
maintain our customer base. We cannot assure you that we will be able to
overcome the obstacles in developing new products and services, or that there
will be a demand for the new products or services developed by us. An inability
to overcome such obstacles or a failure of such demand to develop could
materially and adversely affect our business, financial condition and results of
operations or could result in loss of key personnel.

LOSS OF OUR MAJOR WEB SITES WOULD SIGNIFICANTLY REDUCE OUR REVENUES.

The 24/7 Network generates a substantial portion of our revenues, and we expect
that the 24/7 Network will continue to account for a substantial portion of our
revenue for the foreseeable future. The 24/7 Network consists of a limited
number of our Web sites that have contracted for our services under agreements
cancelable generally upon a short notice period. For the three month periods
ended March 31, 2001 and 2000, approximately 14% and 33%, respectively, of our
total revenues were derived from advertisements on our top ten Web sites. For
the three month period ended March 31, 2001, the top ten Web sites included MSN
- Europe, AT&T WorldNet Service, Community Connect Inc., Epeip, Inc. (180
Solutions), Womensforum.com, Inc., Spedia.com, Inc., 2GK Inc. (Quotetracker),
Hasbro, Inc. (Games.com) and DesktopDollars, Inc We experience turnover from
time to time among our Web sites, and we cannot be certain that the Web sites
named above will remain associated with us or that such Web sites will not
experience a reduction in online traffic on their sites. We cannot assure you
that we will be able to replace any departed Web site in a timely and effective
manner with a Web site with comparable traffic patterns and user demographics.
Our business, results of operations and financial condition would be materially
adversely affected by the loss of one or more of the Web sites that account for
a significant portion of our revenue from the 24/7 Network.

LOSS OF MAJOR CUSTOMERS WOULD REDUCE OUR REVENUES.

We generate a significant portion of our revenues from a limited number of
customers. We expect that a limited number of these entities may continue to
account for a significant percentage of our revenues for the foreseeable future.
For the three month period ended March 31, 2001, our top ten customers accounted
for approximately 24% of our total revenues. Customers typically purchase
advertising or services under agreements on a short term basis. Since these
contracts are short-term, we will have to negotiate new

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contracts or renewals in the future that may have terms that are not as
favorable to us as the terms of existing contracts. We cannot be certain that
current customers will continue to purchase advertising or services from us or
that we will be able to attract additional customers successfully, or that
customers will make timely payment of amounts due to us. In addition, current
and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our prospective clients. Our
business, results of operations and financial condition would be materially
adversely affected by the loss of one or more of our customers that account for
a significant portion of our revenue.

WE HAVE GROWN OUR BUSINESS THROUGH ACQUISITION.

We were formed in February 1998 to consolidate three Internet advertising
companies and have since acquired twelve more companies. In combining these
entities, we have faced risks and continue to face risks of integrating and
improving our financial and management controls, ad serving technology,
reporting systems and procedures, and expanding, training and managing our work
force. This process of integration may take a significant period of time and
will require the dedication of management and other resources, which may
distract management's attention from our other operations. We may continue
pursuing selective acquisitions of businesses, technologies and product lines as
a key component of our growth strategy. Any future acquisition or investment may
result in the use of significant amounts of cash, potentially dilutive issuances
of equity securities, incurrence of debt and amortization expenses related to
goodwill and other intangible assets. In addition, acquisitions involve numerous
risks, including:

      o     the difficulties in the integration and assimilation of the
            operations, technologies, products and personnel of an acquired
            business;

      o     the diversion of management's attention from other business
            concerns;

      o     the availability of favorable acquisition financing for future
            acquisitions; and

      o     the potential loss of key employees of any acquired business.

Our inability to successfully integrate any acquired company could adversely
affect our business.


OUR ADVERTISING CUSTOMERS AND THE COMPANIES WITH WHICH WE HAVE STRATEGIC
RELATIONSHIPS MAY EXPERIENCE ADVERSE BUSINESS CONDITIONS THAT COULD ADVERSELY
AFFECT OUR BUSINESS.

As a result of unfavorable conditions in the public equity markets, some of our
customers may have difficulty raising sufficient capital to support their
long-term operations. As a result, these customers have reduced their spending
on Internet advertising, which has materially and adversely affected our
business, financial condition and results of operations. In addition, from time
to time, we have entered into strategic business relationships with other
companies, the nature of which varies, but generally in the context of customer
relationships. These companies may experience similar adverse business
conditions that may render them unable to meet our expectations for the
strategic business relationship or to fulfill their contractual obligations to
us. Such an event could have a material adverse impact on our business,
financial condition and results of operations.

OUR REVENUES ARE SUBJECT TO SEASONAL FLUCTUATIONS.

We believe that our revenues are subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarters of each year and direct marketers mail substantially more
marketing materials in the third quarter each year. Furthermore, Internet user
traffic typically drops during the summer months, which reduces the number of
advertisements to sell and deliver. Expenditures by advertisers and direct
marketers tend to vary in cycles that reflect overall economic conditions as
well as budgeting and buying patterns. Our revenue could be materially reduced
by a decline in the economic prospects of advertisers, direct marketers or the
economy in general, which could alter

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current or prospective advertisers' spending priorities or budget cycles or
extend our sales cycle. Due to such risks, you should not rely on
quarter-to-quarter comparisons of our results of operations as an indicator of
our future results.

OUR TECHNOLOGY SOLUTIONS MAY NOT BE SUCCESSFUL AND MAY CAUSE BUSINESS
DISRUPTION.

24/7 Connect is our proprietary next generation ad serving technology that is
intended to serve as our sole ad serving solution. We launched 24/7 Connect in
early 2000, and we must, among other things, ensure that this technology will
function efficiently at high volumes, interact properly with our database, offer
the functionality demanded by our customers and assimilate our sales and
reporting functions. This development effort could fail technologically or could
take more time than expected. Our 24/7 Connect technology resides on a computer
system located in our data centers in Virginia, and our 24/7 Exactis technology
resides in our Denver, Colorado office. These systems' continuing and
uninterrupted performance is critical to our success. Customers may become
dissatisfied by any system failure that interrupts our ability to provide our
services to them, including failures affecting our ability to deliver
advertisements without significant delay to the viewer. Sustained or repeated
system failures would reduce the attractiveness of our solutions to advertisers,
ad agencies and Web publishers and result in contract terminations, fee rebates
and make goods, thereby reducing revenue. Slower response time or system
failures may also result from straining the capacity of our deployed software or
hardware due to an increase in the volume of advertising delivered through our
servers. To the extent that we do not effectively address any capacity
constraints or system failures, our business, results of operations and
financial condition could be materially and adversely affected. Our operations
are dependent on our ability to protect our computer systems against damage from
fire, power loss, water damage, telecommunications failures, vandalism and other
malicious acts, and similar unexpected adverse events. In addition,
interruptions in our solutions could result from the failure of our
telecommunications providers to provide the necessary data communications
capacity in the time frame we require. Despite precautions that we have taken,
unanticipated problems affecting our systems have from time to time in the past
caused, and in the future could cause, interruptions in the delivery of our
solutions. Our business, results of operations and financial condition could be
materially and adversely affected by any damage or failure that interrupts or
delays our operations.

FUTURE SALES OF OUR COMMON STOCK MAY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.

As of May 11, 2001, we had 47,020,972 shares of common stock outstanding. We
cannot predict the effect, if any, that future sales of common stock or the
availability of shares of common stock for future sale, will have on the market
price of our common stock prevailing from time to time. Sales of substantial
amounts of common stock (including shares issued upon the exercise of stock
options), or the perception that such sales could occur, may materially and
adversely affect prevailing market prices for our common stock.

OUR FAILURE TO SUCCESSFULLY COMPETE MAY HINDER OUR GROWTH.

The markets for Internet advertising and related products and services are
intensely competitive and such competition is expected to increase. Our failure
to successfully compete may hinder our growth. We believe that our ability to
compete depends upon many factors both within and beyond our control, including:

      o     the timing and market acceptance of new products and enhancements
            of existing services developed by us and our competitors;
      o     changing demands regarding customer service and support;
      o     shifts in sales and marketing efforts by us and our competitors;
            and
      o     the ease of use, performance, price and reliability of our
            services and products.

      Many of our competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than ours. In addition, current and potential
competitors have established or may establish cooperative relationships among

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themselves or with third parties to increase the ability of their products or
services to address the needs of our prospective clients. We cannot be certain
that we will be able to successfully compete against current or future
competitors. In addition, the Internet must compete for a share of advertisers'
total budgets with traditional advertising media, such as television, radio,
cable and print, as well as content aggregation companies and other companies
that facilitate Internet advertising. To the extent that the Internet is
perceived to be a limited or ineffective advertising or direct marketing medium,
advertisers and direct marketers may be reluctant to devote a significant
portion of their advertising budgets to Internet marketing, which could limit
the growth of Internet marketing.

CHANGES IN LAWS AND STANDARDS RELATING TO DATA COLLECTION AND USE PRACTICES AND
THE PRIVACY OF INTERNET USERS AND OTHER INDIVIDUALS COULD HARM OUR BUSINESS.

The U.S. federal and various state governments have recently proposed
limitations on the collection and use of information regarding Internet users.
In October 1998, the European Union adopted a directive that may limit our
collection and use of information regarding Internet users in Europe. The
effectiveness of our 24/7 Connect technology could be limited by any regulation
limiting the collection or use of information regarding Internet users. Since
many of the proposed laws or regulations are just being developed, we cannot yet
determine the impact these regulations may have on its business. In addition,
growing public concern about privacy and the collection, distribution and use of
information about individuals has led to self-regulation of these practices by
the Internet advertising and direct marketing industry and to increased federal
and state regulation. The Network Advertising Initiative, or NAI, of which 24/7
Media is a member along with other Internet advertising companies, has developed
self-regulatory principles for online preference marketing. These principles
were recently endorsed by the Federal Trade Commission, and are in the process
of being adopted by the NAI companies. The Direct Marketing Association, or DMA,
the leading trade association of direct marketers, has adopted guidelines
regarding the fair use of this information which it recommends participants,
such as us, through our services, in the direct marketing industry follow. We
are also subject to various federal and state regulations concerning the
collection, distribution and use of information regarding individuals. These
laws include the Children's Online Privacy Protection Act, and state laws that
limit or preclude the use of voter registration and drivers license information,
as well as other laws that govern the collection and use of consumer credit
information. Although our compliance with the DMA's guidelines and applicable
federal and state laws and regulations has not had a material adverse effect on
us, we cannot assure you that the DMA will not adopt additional, more burdensome
guidelines or that additional, more burdensome federal or state laws or
regulations, including antitrust and consumer privacy laws, will not be enacted
or applied to us or our clients, which could materially and adversely affect our
business, financial condition and results of operations.

IF WE LOSE OUR CEO OR OTHER SENIOR MANAGERS OUR BUSINESS WILL BE ADVERSELY
EFFECTED.

Our success depends, to a significant extent, upon our senior management and key
sales and technical personnel, particularly David J. Moore, Chief Executive
Officer. The loss of the services of one or more of these persons could
materially adversely affect our ability to develop our business. Our success
also depends on our ability to attract and retain qualified technical, sales and
marketing, customer support, financial and accounting, and managerial personnel.
Competition for such personnel in the Internet industry is intense, and we
cannot be certain that we will be able to retain our key personnel or that we
can attract, integrate or retain other highly qualified personnel in the future.
We have experienced in the past, and may continue to experience in the future,
difficulty in hiring and retaining candidates with appropriate qualifications,
especially in sales and marketing positions.

WE MAY BE UNABLE TO CONTINUE TO SUCCESSFULLY MANAGE RAPID GROWTH.

In recent years, we have experienced significant growth both internally and
through acquisition. We may, where appropriate, continue to increase the scope
of our operations both domestically and internationally, in both sales and
marketing as well as technological development. We expect that we will need to
continue to improve our financial and managerial controls, reporting procedures
and systems. Our recent growth and expansion in operations have placed a
significant strain on our managerial, operational and financial resources. To
successfully compete in the evolving Internet industry, we must:

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      o     continue to improve our financial and management controls;
      o     enhance our reporting systems and procedures;
      o     continue to scale our ad serving systems and upgrade their
            functional capabilities; and expand, train and manage our work
            force; and
      o     train, retain and manage our work force.

We cannot be certain that our systems, procedures or controls will be adequate
to support our operations, or that management will be able to respond
effectively to such growth. Our future results of operations also depend on the
efficient management of our sales, marketing and customer support departments.

OUR INTERNATIONAL OPERATIONS MAY POSE LEGAL AND CULTURAL CHALLENGES.

We have operations in a number of international markets, including Canada,
Europe and Asia. To date, we have limited experience in marketing, selling and
distributing our solutions internationally. International operations are subject
to other risks, including:

      o     changes in regulatory requirements;
      o     reduced protection for intellectual property rights in some
            countries;
      o     potentially adverse tax consequences;
      o     general import/export restrictions relating to encryption technology
            and/or privacy;
      o     difficulties and costs of staffing and managing foreign operations;
      o     political and economic instability;
      o     fluctuations in currency exchange rates; and
      o     seasonal reductions in business activity during the summer months in
            Europe and certain other parts of the world.

In addition to these factors, due to our minority stake in the 24/7 Network in
Asia, we are relying on chinadotcom corporation to conduct operations, build the
network, aggregate Web publishers and coordinate sales and marketing efforts.
The success of the 24/7 Network in Asia is directly dependent on the success of
chinadotcom corporation and its dedication of sufficient resources to our
relationship.

DEPENDENCE ON PROPRIETARY RIGHTS AND RISK OF INFRINGEMENT.

Our success and ability to compete are substantially dependent on our internally
developed technologies and trademarks, which we protect through a combination of
patent, copyright, trade secret and trademark law. We have received two patents
in the United States, and have filed and intend to file additional patent
applications in the United States. In addition, we apply to register our
trademarks in the United States and internationally. We cannot assure you that
any of our patent applications or trademark applications will be approved. Even
if they are approved, such patents or trademarks may be successfully challenged
by others or invalidated. If our trademark registrations are not approved
because third parties own such trademarks, our use of such trademarks will be
restricted unless we enter into arrangements with such third parties that may be
unavailable on commercially reasonable terms.

We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.

We have licensed, and we may license in the future, elements of our trademarks,
trade dress and similar proprietary rights to third parties. While we attempt to
ensure that the quality of our brand is maintained by these business partners,
such partners may take actions that could materially and adversely affect the
value

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<PAGE>

of our proprietary rights or our reputation. We cannot assure you that any of
our proprietary rights will be viable or of value in the future since the
validity, enforceability and scope of protection of certain proprietary rights
in Internet-related industries is uncertain and still evolving.

We may be subject to claims of alleged infringement of the trademarks and other
intellectual property rights of third parties by us or the Web publishers with
Web sites in the 24/7 Network. Such claims and any resultant litigation could
subject us to significant liability for damages and could result in the
invalidation of our proprietary rights. In addition, even if we prevail, such
litigation could be time-consuming and expensive to defend, and could result in
the diversion of our time and attention, any of which could materially and
adversely affect our business, results of operations and financial condition.
Any claims or litigation from third parties may also result in limitations on
our ability to use the trademarks and other intellectual property subject to
such claims or litigation unless we enter into arrangements with the third
parties responsible for such claims or litigation which may be unavailable on
commercially reasonable terms.

In December 1999, DoubleClick, Inc. filed a patent infringement lawsuit against
our subsidiary, Sabela Media, Inc. in the United States District Court for the
Southern District of New York. The suit alleged that Sabela was infringing, and
inducing and contributing to the infringement by third parties of, a patent held
by DoubleClick entitled "Method for Delivery, Targeting and Measuring
Advertising Over Networks". In May 2000, we filed a patent infringement
litigation suit against DoubleClick which alleged that DoubleClick infringed,
and was inducing and contributing to the infringement of a patent owned by us.
We sought damages in an unspecified amount, an injunction against infringement
of the patent, and our attorneys fees and costs. In October 2000, we settled the
patent litigation initiated by DoubleClick against Sabela and the patent
litigation initiated against DoubleClick by us. Consequently, both of these
lawsuits have been dismissed with prejudice. As part of the settlement, we and
DoubleClick granted each other certain rights in certain of the respective
patents. Under the settlement agreement, no other terms of the settlement are
permitted to be disclosed.

INTELLECTUAL PROPERTY LIABILITY.

We may be liable for content available or posted on the Web sites of our
publishers. We may be liable to third parties for content in the advertising we
serve if the music, artwork, text or other content involved violates the
copyright, trademark or other intellectual property rights of such third parties
or if the content is defamatory. Any claims or counterclaims could be time
consuming, result in costly litigation or divert management's attention.

PRIVACY CONCERNS MAY PREVENT US FROM COLLECTING DEMOGRAPHIC OR OTHER CONSUMER
DATA.

Growing concerns about the use of "cookies" and data collection may limit our
ability to develop user profiles. Web sites typically place small files of
information commonly known as "cookies" on a user's hard drive, generally
without the user's knowledge or consent. Cookie information is passed to the Web
site through the Internet user's browser software. Our 24/7 Connect technology
targets advertising to users through the use of identifying data, or "cookies"
and other non-personally-identifying information. 24/7 Connect enables the use
of cookies to deliver targeted advertising, to help compile demographic
information, and to limit the frequency with which an advertisement is shown to
the user. Most currently available Internet browsers allow users to modify their
browser settings to prevent cookies from being stored on their hard drive, and a
small minority of users are currently choosing to do so. Users can also delete
cookies from their hard drive at any time. Some Internet commentators and
privacy advocates have suggested limiting or eliminating the use of cookies. Any
reduction or limitation in the use of cookies could limit the effectiveness of
our sales and marketing efforts and impair our targeting capabilities. Recently,
Microsoft Corporation announced that it intends to change the design and
instrumentation of its Web browser in such a way as to give users the option to
accept or reject third party cookies. Giving users the option to decline such
cookies could result in a reduction of the number of Internet users we are
capable of profiling anonymously. Such changes also could adversely affect our
ability to determine the reach of advertising campaigns sold and delivered by us
and the frequency with which users of sites in the 24/7 Network see the same
advertisement. A change, such as that announced by Microsoft, would primarily

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affect third-party ad networks like the 24/7 Network, potentially making portal
web sites such as Yahoo.com and MSN.com a relatively more attractive advertising
venue.

If the use or effectiveness of cookies is limited, we would likely have to
switch to other technology that would allow us to gather demographic and
behavioral information. While such technology currently exists, it is
substantially less effective than cookies. Replacement of cookies could require
significant reengineering time and resources, might not be completed in time to
avoid negative consequences to our business, financial condition or results of
operations, and might not be commercially feasible. In addition, privacy
concerns may cause some Web users to be less likely to visit Web sites that
contribute data to our databases. This could have a material adverse effect on
our financial condition. In addition, we are developing our database to collect
data derived from user activity on our networks and from other sources. We
collect and compile information in databases for the product offerings of all
our businesses. Individuals or entities may claim in the future, that our
collection of this information is illegal. Although we believe that we have the
right to use and compile the information in these databases, we cannot assure
you that our ability to do so will remain lawful, that any trade secret,
copyright or other intellectual property protection will be available for our
databases, or that statutory protection that is or becomes available for
databases will enhance our rights. In addition, others may claim rights to the
information in our databases. Further, pursuant to our contracts with Web
publishers using our solutions, we are obligated to keep certain information
regarding each Web publisher confidential and, therefore, may be restricted from
further using that information in our business.

WE MAY HAVE TO CHANGE OUR BUSINESS PLANS BASED UPON CHANGES IN INFORMATION
COLLECTION PRACTICES.

There has been public debate about how fair information collection practices
should be formulated for the online and offline collection, distribution and use
of information about a consumer. Some of the discussion has focused on the fair
information collection practices that should apply when information about an
individual that is collected in the offline environment is associated with
information that is collected over the Internet about that individual. We are
working with industry groups, such as the NAI and the Online Privacy Alliance,
to establish such standards with the U.S. government regarding the merger of
online and offline consumer information. We cannot assure you that we will be
successful in establishing industry standards acceptable to the U.S. government
or the various state governments, or that the standards so established will not
require material changes to our business plans. We also cannot assure you that
our business plans, or any U.S. industry standards that are established, will
either be acceptable to any non-U.S. government or conform to foreign legal and
business practices. As a consequence of governmental legislation or regulation
or enforcement efforts or evolving standards of fair information collection
practices, we may be required to make changes to our products or services in
ways that could diminish the effectiveness of the product or service or their
attractiveness to potential customers. In addition, given the heightened public
discussion about consumer online privacy, we cannot assure you that our products
and business practices will gain market acceptance, even if they do conform to
industry standards.

CHANGES IN GOVERNMENT REGULATION COULD DECREASE OUR REVENUES AND INCREASE OUR
COSTS.

Laws and regulations directly applicable to Internet communications, commerce
and advertising are becoming more prevalent, and new laws and regulations are
under consideration by the United States Congress and state legislatures. Any
legislation enacted or restrictions arising from current or future government
investigations or policy could dampen the growth in use of the Internet
generally and decrease the acceptance of the Internet as a communications,
commercial and advertising medium. State governments or governments of foreign
countries might attempt to regulate our transmissions or levy sales or other
taxes relating to our activities. The European Union has enacted its own privacy
regulations that may result in limits on the collection and use of certain user
information by us. The laws governing the Internet, however, remain largely
unsettled, even in areas where there has been some legislative action. It may
take years to determine whether and how existing laws such as those governing
intellectual property, privacy, libel and taxation apply to the Internet and
Internet advertising. In addition, the growth and development of Internet
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, that may impose additional burdens on companies
conducting business over

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the Internet. Our business, results of operations and financial condition could
be materially and adversely affected by the adoption or modification of laws or
regulations relating to the Internet.

DEPENDENCE ON THE WEB INFRASTRUCTURE.

Our success will depend, in large part, upon the maintenance of the Web
infrastructure, such as a reliable network backbone with the necessary speed,
data capacity and security, and timely development of enabling products such as
high speed modems, for providing reliable Web access and services and improved
content. We cannot assure you that the Web infrastructure will continue to
effectively support the demands placed on it as the Web continues to experience
increased numbers of users, frequency of use or increased bandwidth requirements
of users. Even if the necessary infrastructure or technologies are developed, we
may have to spend considerable amounts to adapt our solutions accordingly.
Furthermore, the Web has experienced a variety of outages and other delays due
to damage to portions of its infrastructure. Such outages and delays could
impact the clients using our solutions and the level of user traffic on Web
sites on our networks.

RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE.

 The Internet and Internet advertising markets are characterized by rapidly
changing technologies, evolving industry standards, frequent new product and
service introductions, and changing customer demands. Our future success will
depend on our ability to adapt to rapidly changing technologies and to enhance
existing solutions and develop and introduce a variety of new solutions to
address our customers' changing demands. We may experience difficulties that
could delay or prevent the successful design, development, introduction or
marketing of our solutions. In addition, our new solutions or enhancements must
meet the requirements of our current and prospective customers and must achieve
significant market acceptance. Material delays in introducing new solutions and
enhancements may cause customers to forego purchases of our solutions and
purchase those of our competitors.

EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT THE ACQUISITION OF OUR
COMPANY.

Some of the provisions of our certificate of incorporation, our bylaws and
Delaware law could, together or separately:

      o     discourage potential acquisition proposals;
      o     delay or prevent a change in control;
      o     impede the ability of our stockholders to change the composition of
            our board of directors in any one year; and
      o     limit the price that investors might be willing to pay in the future
            for shares of our common stock.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk, Market Risk and Currency Rate Fluctuations.

Cash and cash equivalents are investments with original maturities of three
months or less. Therefore, changes in the market's interest rates do not
affect the value of the investments as recorded by 24/7 Media.

Our accounts receivables are subject, in the normal course of business, to
collection risks. We regularly assess these risks and have established
policies and business practices to protect against the adverse effects of
collection risks. Due to the current economic environment, although we
believe that we have sufficiently provided for any material losses in this
area. There can be no assurance that unanticipated material losses may not
result.

Since March 31, 2001 we have disposed of all our investments in marketable
securities, thereby eliminating our market risk.

We transact business in various foreign countries. Accordingly, we are
subject to exposure from adverse movements in foreign currency exchange
rates. This exposure is primarily related to revenue and operating expenses
in the countries in which the currency is the Euro. The effect of foreign
exchange rate fluctuations for 2000 and 1999 was not material. We do not use
derivative financial instruments to limit our foreign currency risk exposure.


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<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits.

none

(b)   Reports on Form 8-K.

We filed a Current Report on Form 8-K dated March 23, 2001. The report contained
information about the Common Stock Purchase Agreement entered into with Maya
Cove Holdings, Inc.

ITEM 7.  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, thereunto duly authorized.

24/7 MEDIA, INC.

Date:  May 15, 2001

                                       By: /s/ David J. Moore
                                          -------------------
                                          David J. Moore
                                          President and Chief Executive Officer

                                       By: /s/ Stuart D. Shaw
                                          -------------------
                                          Stuart D. Shaw
                                          Acting Chief Financial Officer



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