<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, 2000

                                       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 10, 2000
 Common Stock, par value $.01 per share                  26,407,680 Shares


<PAGE>


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



<TABLE>
<S>      <C>

Part I.  Financial Information
Item 1.  Consolidated Financial Statements:
     Consolidated Balance Sheets as of March 31, 2000 (unaudited) and December 31, 1999.................2
     Consolidated Statements of Operations for the three months ended March 31, 2000 (unaudited)
        and 1999 (unaudited) ...........................................................................3
     Consolidated Statements of Cash Flows for the three months ended March 31, 2000 (unaudited)
        and 1999 (unaudited)............................................................................4
     Notes to Unaudited Interim Consolidated Financial Statements.......................................5

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ..........12

Item 3. Quantitative and Qualitative Disclosures about Market Risk .....................................24

Part II. Other Information
Item 1.  Legal Proceedings .............................................................................25
Item 2.  Changes in Securiteis and Use of Proceeds .....................................................25
Item 3.  Defaults Upon Senior Securities ...............................................................25
Item 4.  Submission of Matters to a Vote of Security Holders ...........................................25
Item 5.  Other Information .............................................................................26
Item 6.  Exhibits and Reports on Form 8-K ..............................................................26
Item 7.  Signatures ....................................................................................26

</TABLE>





                                        1
<PAGE>

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



<TABLE>
<CAPTION>
                                                                        March 31,         December 31,
                                                                           2000                1999
                                                                       ------------      ---------------
                               ASSETS                                  (unaudited)

<S>                                                                   <C>                <C>

Current assets:
   Cash and cash equivalents ....................................        $ 27,905          $ 42,786
   Accounts receivable, less allowances of
      $3,057 and $2,522 respectively.............................          45,882            34,004
   Prepaid expenses and other current assets.....................           5,791             4,846
                                                                     ------------         ---------

       Total current assets......................................          79,578            81,636

Property and equipment, net......................................          27,778            18,595
Intangible assets, net...........................................         231,181            62,398
Investments......................................................         348,745           366,630
Deferred cost of partner agreements, net.........................           3,560             4,260
Other assets.....................................................             675               493
                                                                     ------------         ---------
       Total assets..............................................        $691,517          $534,012
                                                                     ============         =========
                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable..............................................        $ 23,064          $ 24,504
   Accrued liabilities...........................................          26,288          $ 13,875
   Current installments of obligations under capital leases......              72                49
   Deferred revenue..............................................           4,567             2,019
                                                                     ------------         ---------
       Total current liabilities.................................          53,991            40,447
                                                                     ------------         ---------

Obligations under capital leases, excluding current installments.             181                13
Long-term loan...................................................             615                 -
Deferred tax liability...........................................          86,840            95,656
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;
      26,322,752 and 22,422,516 shares issued and outstanding,
      respectively...............................................             263               224
    Additional paid-in capital...................................         477,730           282,806
    Deferred stock compensation..................................          (4,977)             (232)
    Accumulated other comprehensive income ......................         180,413           194,790
    Accumulated deficit..........................................        (103,644)          (79,797)
                                                                     ------------         ---------
        Total stockholders' equity...............................         549,785           397,791
                                                                     ------------         ---------
       Total liabilities and stockholders' equity................        $691,517          $534,012
                                                                     ============         =========
</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,
                                                               ----------------------------
                                                                 2000              1999
                                                                 ----              ----
                                                                       (unaudited)
<S>                                                           <C>               <C>

Revenues:
   Network...........................................         $    36,483        $     11,071
   Email.............................................               6,884                 379
   Technology........................................               2,864                  --
                                                              -----------        ------------
       Total revenues................................              46,231              11,450

   Network...........................................              28,692               8,749
   Email.............................................               4,266                  47
   Technology........................................               1,127                  --
                                                             ------------        ------------
       Total cost of revenues........................              34,085               8,796
                                                             ------------        ------------
       Gross profit..................................              12,146               2,654

Operating expenses:
   Sales and marketing (exclusive of other expenses of
       $1,037 in 2000)................................             11,890               3,494
   General and administrative (exclusive of other
       expenses of $1,921 in 2000 and $29 in 1999)....             10,856               3,483
   Product development (exclusive of other expenses of
       $415 in 2000)..................................              1,039                 922
   Other expenses:
      Amortization of goodwill, intangibles and
         advances.....................................             16,692               2,258
      Stock-based compensation........................              2,910                  29
      Merger related costs............................              4,762                  --
                                                             ------------        ------------
          Total operating expenses....................             48,149              10,186
                                                             ------------        ------------
          Loss from operations........................            (36,003)             (7,532)
   Interest income, net...............................                474                 288
   Gain on sale of investment.........................             11,682                  --
                                                             ------------        ------------
          Net loss                                             $  (23,847)        $    (7,244)
                                                             ============        ============

Net loss per common share - basic and diluted.........        $     (0.93)       $      (0.42)
                                                             ============        ============
Weighted average common shares outstanding                     25,560,667          17,129,479
                                                             ============        ============


</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,
                                                                   ----------------------------
                                                                         2000        1999
                                                                      --------     --------
Cash flows from operating activities:                                      (unaudited)
<S>                                                                   <C>          <C>
Net loss........................................................      $(23,847)    $ (7,244)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization of fixed assets....................        1,131          319
Write-off of acquired in-process technology......................        4,700           --
Provision for doubtful accounts and sales reserves...............          535           --
Amortization of goodwill and other intangible assets.............       16,229        2,349
Amortization of partner agreements...............................          463           --
Non-cash compensation............................................        3,045           29
Gain on sale of investment.......................................      (11,682)          --
Changes in operating assets and liabilities, net of
 effect of acquisitions:
    Accounts receivable..........................................      (11,181)      (2,139)
    Prepaid assets and other current assets......................          117         (926)
    Other assets.................................................          195         (140)
    Accounts payable and accrued liabilities.....................        1,926          176
    Deferred revenue.............................................          832          110
                                                                      --------     --------

         Net cash used in operating activities...................      (17,537)      (7,466)
                                                                      --------     --------

Cash flows from investing activities:
Capital expenditures.............................................       (7,459)      (2,542)
Proceeds from the sale of investment.............................       12,103           --
Cash paid for acquisitions, net of cash acquired.................       (1,455)      (1,107)
Cash paid for investments........................................       (4,122)          --
Increase in intangible assets....................................           --           (7)
                                                                      --------     --------
         Net cash used in investing activities...................         (933)      (3,656)
                                                                      --------     --------

Cash flows from financing activities:

Proceeds from exercise of stock options and conversion of warrants       3,705          366
Payment of capital lease obligations.............................          (24)         (62)
Deferred offering costs..........................................           --         (310)
Repayment of notes payable.......................................           --       (1,439)
(Payments)/proceeds from short-term borrowings...................           --         (180)
                                                                      --------     --------

         Net cash (used in) provided by financing activities.....        3,681       (1,625)
                                                                      --------     --------

         Net change in cash and cash equivalents.................      (14,789)     (12,747)
         Net effect of foreign currency adjustments..............          (92)          --
Cash and cash equivalents at beginning of period.................       42,786       34,049
                                                                      --------     --------

Cash and cash equivalents at end of period.......................     $ 27,905     $ 21,302
                                                                      ========     ========


</TABLE>



 See accompanying notes to unaudited interim consolidated financial statements.


                                        4
<PAGE>

                               24/7 MEDIA, INC.
          NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS


(1)  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF OPERATIONS

24/7 Media together with its subsidiaries is a provider of advertising and
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, Canada, Latin America, and, through the Company's partner,
chinadotcom corporation ("chinadotcom"), the 24/7 Asia Network. 24/7 Mail has
operations in the United States, Canada and Europe where the Company serves
as list managers for permission-based email lists. The Company developed 24/7
Technology by combining Sabela Media, Inc. ("Sabela") and IMAKE Software and
Services, Inc. ("IMAKE"), which were acquired in January 2000 (see note 2).

Inherent in our business are various risks and uncertainties, including our
limited operating history, unproven business model and the limited history of
electronic commerce on the Internet. Our success may depend in part upon the
emergence of the Internet as a communications medium, prospective project
development efforts, and the acceptance of our solutions by the marketplace.

ORGANIZATION AND BASIS OF PRESENTATION

PRINCIPLES OF CONSOLIDATION

The Company's consolidated financial statements as of March 31, 2000 and
December 31, 1999 and for the three month periods ended March 31, 2000 and 1999
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 unaudited consolidated financial statements as of March 31, 2000 and for the
three month periods ended March 31, 2000 and 1999 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
financial statements and reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the financial position as of
March 31, 2000 and the results of the Company's operations for the three month
periods ended March 31, 2000 and 1999 and the Company's cash flows for the three
month period ended March 31, 2000 and 1999. The financial data and other
information disclosed in these notes to the consolidated results for the three
month periods ended March 31, 2000 are not necessarily indicative of the results
to be expected for any subsequent quarter or the entire fiscal year ending
December 31, 2000.

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, 1999 as included in the Company's report on Form 10-K.

USE OF ESTIMATES

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and


                                        5
<PAGE>

the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

CAPITALIZED SOFTWARE

As of March 31, 2000, the Company has capitalized approximately $11.1 million
in connection with the 24/7 Connect ad serving system.

INTANGIBLE ASSETS

Intangible assets are estimated by management to be primarily associated with
the acquired workforce, contracts and technological know how. 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.

INVESTMENTS

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. Equity investments in non-marketable equity securities
of companies in which significant influence is not exercised are carried
under the cost method.

The fair value of the available-for-sale marketable securities is based on
the quoted market values as of March 31, 2000 as reported on NASDAQ. Such
values, totaling $312.6 million reflect an unrealized gain of $267.9 million
(net of tax).

On January 13, 2000, the Company sold approximately 150,000 shares of
chinadotcom stock at $80.96 per share. The shares had a cost basis of $0.4
million, which resulted in a gain of approximately $11.7 million.

REVENUE AND EXPENSE RECOGNITION

The Company's network revenues are derived principally from short-term
advertising agreements in which we deliver advertising impressions for a fixed
fee to third-party Web sites comprising The 24/7 Network.


                                        6
<PAGE>

Revenues from advertising are recognized in the period the advertising
impressions are delivered. The Company's email related revenues are derived
principally from short-term delivery based agreements in which the Company
delivers email list to advertisers and Web sites. Revenues are recognized as
services are provided.

The Company's technology revenues are derived from adserving, software
consulting, 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 labor hours. Revenues under time
and materials contracts are recognized as the hours are incurred. Fixed
monthly maintenance contracts are recognized in the corresponding months.

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.

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. The
royalties paid for the use of these email lists are also classified as cost of
revenues.

At March 31, 2000 and December 31, 1999, accounts receivable included
approximately $10.0 million and $7.8 million, respectively, of 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 increase in
unbilled receivables from December 31, 1999 to March 31, 2000 resulted from the
increase in revenues generated during the quarter. The terms of the related
advertising contracts typically require billing at the end of each month. All
unbilled receivables as of March 31, 2000 have been subsequently billed.


COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) for the three month periods ended March 31,
2000 and 1999 was ($14.4) million and $0, respectively. Accumulated other
comprehensive income as of March 31, 2000 amounted to $180.4 million which is
comprised of unrealized gains of $267.9 million on available-for-sale
securities, net of tax of $87.4 million and foreign currency translation
adjustment of $92,000.

LOSS PER SHARE

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, 2000 and 1999 does not
include the effects of options to purchase 4.5 million and 2.3 million shares
of common stock, respectively; 3.0 million and 3.3 million common stock
warrants, respectively, on an "as if" converted basis, as the effect of their
inclusion is anti-dilutive during each period.

Included within weighted average shares outstanding for the three month
period ended March 31, 2000 is 162,000 shares related to contingently
issuable shares of common stock in connection with the IMAKE acquisition (see
note 2) whereby certain performance criteria were achieved as of March 31,
2000.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activity" which delayed the
effective date of SFAS 133 to fiscal years beginning after June 15, 2000. SFAS
133 established accounting and reporting standards for derivative instruments
and for hedging activities. SFAS 133 requires that an entity recognize all
derivatives as either assets or liabilities and measure those instruments at
fair value. The Company has not yet determined the impact of this pronouncement
on the Company's financial position or results of operations.

On December 3, 1999, the SEC staff issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" (SAB 101). SAB 101 summarizes
certain of the staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. On March 24, 2000,
the SEC issued SAB 101A which amends the transition guidance for SAB 101.
Under the revised guidance, the staff will not object if registrants that
have not applied the accounting requirements in SAB 101 do not restate prior
financial statements -- provided they report a change in accounting principle
in accordance with APB Opinion No. 20, "Accounting Changes". The staff
believes that the change must be reported no later than the first fiscal
quarter  of the fiscal year beginning after December 15, 1999, except that
registrants with fiscal years that begin between December 16, 1999 and March
15, 2000 may report a change in accounting principle no later than their
second fiscal quarter of the fiscal year beginning after December 15, 1999.
If a registrant with a fiscal year beginning between December 16, 1999 and
March 15, 2000 elects to avail itself of this delay, the change must be
reported in accordance with FASB Statement No. 3, "Reporting Accounting
Changes in Interim Financial Statements". The Company believes the adoption
of SAB 101 will not have a significant effect on its consolidated financial
statements.

In March 2000, FASB Interpretation No. 44 -- "Accounting for Certain
Transactions involving Stock Compensation, an interpretation of APB Opinion
No. 25" (FIN 44) was issued. FIN 44 clarifies the application of APB No. 25
regarding (a) the definition of EMPLOYEE for purposes of applying APB No. 25,
(b) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (c) the accounting consequence of various modifications to the terms of
a previously fixed stock option or award, and (d) the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 does
not address the application of the fair value method of Statement No. 123.
This Interpretation is effective July 1, 2000, but certain conclusions in
this Interpretation cover specific events that occur after either December
15, 1998, or January 12, 2000. To the extent that this Interpretation covers
events occurring during the period after December 15, 1998 or January 12,
2000, but before the effective date of July 1, 2000, the effects of applying
this Interpretation are recognized on a prospective basis from July 1, 2000.
The Company has not yet assessed the impact of FIN 44.

                                        7
<PAGE>

(2)  ACQUISITIONS

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 $35.1
million, excluding contingent consideration of 916,000 shares valued at $42.7
million, consists of 400,000 shares valued at approximately $18.7 million,
fair value of options assumed of $9.9 million, $5.8 million of deferred
compensation and $0.7 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.
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
will be 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.

PURCHASE OF THE MINORITY INTEREST IN 24/7 MEDIA 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 three years.

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 $66.3 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 $3.0 million in acquisition costs. The purchase price in excess
of the value of identified assets and liabilities assumed of $65.4 million
has been allocated $7.1 million to technology, $1.1 million to workforce and
$57.2 million to goodwill. Goodwill and other intangible assets will be
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 $69.9 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 $1.3 million in acquisition costs. The purchase price in excess of the
value of identified assets and liabilities assumed of $70.5 million has been
allocated $7.7 million to technology, $0.5 million to tradename, $0.4 million
to workforce and $61.9 million to goodwill. Goodwill and other intangible
assets will be 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.

SUMMARY

The acquisitions of Sabela, IMAKE, and AwardTrack 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

                                        8
<PAGE>

basis of their fair values on the respective acquisition dates. The following
summarizes the purchase price allocation for each of the acquisitions:



<TABLE>
<CAPTION>


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

<S>                    <C>              <C>                 <C>                <C>              <C>             <C>

IMAKE...............    $ 35,096         $  (335)            $ 4,700            $ 5,786           $  24,945         2-4
24/7 MEDIA Europe...      24,117              --                  --                 --              24,117          3
Sabela..............      66,312             896                  --                 --              65,416         2-4
AwardTrack..........      69,884            (650)                 --                 --              70,534         2-4
                       ---------         --------            --------           --------          ---------
                        $195,409         $   (89)            $ 4,700            $ 5,786           $ 185,012
                       =========         ========            ========           ========          =========
</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 respective period by
consolidating the results of operations of the acquired entities for the
three month periods ended March 31, 2000 and 1999. The three month period
ended March 31, 1999 includes the effect of the acquisitions of Clickthrough,
ConsumerNet and Netbookings which were completed in 1999 subsequent to March
31.

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              1999
                                                    ---------         ---------

                                          (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                                            (unaudited)
<S>                                                  <C>            <C>




Total revenues......................................  $    46,231    $    14,955
Net loss............................................      (26,188)       (26,333)
Net loss per common share - basic and diluted.......  $     (1.00)   $     (1.18)
Weighted average common shares used in
  net loss per share calculation (1)................   26,219,209     22,403,536


</TABLE>



(1) The weighted average common shares used to compute pro forma basic and
diluted net loss per common share for the period ended March 31, 2000
includes the 1,129,344 and 1,249,487 shares issued for AwardTrack and Sabela,
respectively as if the shares were issued on January 1, 2000. The weighted
average common shares used to compute pro forma basic and diluted net loss
per common share for the period ended March 31, 1999 includes the actual
weighted average common shares outstanding for the historical period ended
March 31, 1999, plus the 1,738,330, 41,677, 428,745, 686,484, 1,249,487 and
1,129,344 common shares issued in connection with the acquisitions of
ConsumerNet, Netbookings, 24/7 Media Europe, IMAKE, Sabela and AwardTrack,
respectively, as if each acquisition occurred on January 1, 1999.

PROPOSED ACQUISITION OF EXACTIS

On February 29, 2000, the Company entered into an agreement to acquire all of
the outstanding common stock of Exactis.com, Inc., a provider of email based
direct marketing services, in exchange for Company common stock. Under the terms
of the agreement, the holders of shares of Exactis.com common stock will be
entitled to receive 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. Warrants and options assumed will also be converted at this ratio. The
transaction is expected to be completed by the end of the second quarter 2000.


MERGER RELATED COSTS

Merger related costs shown separately on the statement of operations include
$4.7 million write-off of in-process technology and $62,000 of integration
related costs which would normally be included in general and administrative
expenses.

                                        9
<PAGE>

(3)  INTANGIBLE ASSETS, NET


<TABLE>
<CAPTION>

                                                                       MARCH 31,          DECEMBER 31,
                                                                          2000                1999
                                                                    ---------------      --------------
                                                                              (IN THOUSANDS)

<S>                                                                  <C>                  <C>

Goodwill..........................................................    $  250,287           $   83,075
Technology........................................................        14,800                   --
Workforce.........................................................         2,500                   --
Tradename.........................................................           500                   --
                                                                      ----------            ---------
                                                                         268,087               83,075
Less accumulated amortization ....................................       (36,906)             (20,677)
                                                                      ----------            ---------
Total.............................................................    $  231,181           $   62,398
                                                                      ==========           ==========
</TABLE>

(4)  COMMON STOCK

On January 18, 2000, the Company issued 31,000 shares of common stock to
employees of the company. The related compensation expense of approximately
$1.8 million is shown as part of stock-based compensation; however, it would
normally be included in general and administrative expenses.

On February 7, 2000, the Company issued approximately 17,000 shares of its
common stock to Internet Financial Network, Inc. in exchange for less than 5%
of IFN. The investment of approximately $1.0 million will be carried at cost.

Warrants to purchase 381,428 shares of our common stock at prices ranging
from $7.62 to $9.96 were exchanged in a cashless exercises, pursuant to their
original terms, for 342,508 shares of common stock during the three months
ended March 31, 2000.


(5)  STOCK INCENTIVE PLAN

For the three month period ended March 31, 2000, we granted approximately
1,974,742 stock options under the 1998 Stock Incentive Plan: 42,299 of such
were issued as a result of the acquisition of Sabela at an exercise price of
$9.62 per share, 297,000 were issued as a result of the acquisition of IMAKE
at an exercise price of $56.25 per share, 88,697 were issued as a result of
the acquisition of AwardTrack at exercise prices ranging from $0.97 to $10.65
per share and 1,546,746 of such were issued to employees at exercise prices
of $43.00 to $61.75 per share, based on the fair market value of the
underlying common stock at the respective times of grant.

(6)  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 email
service bureau, newsletters and marketing services to target online users
compiled by list management. The technology segment generates revenue by selling
software and technology solutions. 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, 2000 and 1999, is as
follows:



<TABLE>
<CAPTION>

                                                  NETWORK        MAIL       TECHNOLOGY       TOTAL
                                                 ---------     --------   -------------    --------
                                                                   (IN THOUSANDS)

<S>                                              <C>          <C>           <C>           <C>

THREE MONTHS ENDED MARCH 31, 2000
Revenues........................................  $ 36,483     $ 6,884       $  2,864       $ 46,231
Segment loss from operations....................   (18,758)     (3,169)       (14,076)       (36,003)
Amortization of goodwill,
  intangibles and advances......................     7,593       3,320          5,779         16,692
                                                  --------     -------       --------       --------

THREE MONTHS ENDED MARCH 31, 1999
Revenues........................................  $ 11,071       $ 379         $   --       $ 11,450
Segment profit (loss) from operations...........    (7,263)         19             --         (7,244)
Amortization of goodwill,
  intangible assets and advances................     2,258          --             --          2,258
                                                  --------     -------       --------       --------
TOTAL ASSETS:
  March 31, 2000................................  $541,562     $56,055       $ 93,900       $691,517
  December 31, 1999.............................   476,939      57,073             --        534,012

</TABLE>


Geographical information is as follows:

<TABLE>
<CAPTION>
                                                      US           INTERNATIONAL             TOTAL
                                                    ------         -------------            -------
<S>                                                 <C>               <C>                   <C>
THREE MONTHS ENDED MARCH 31, 2000
Revenue.........................................     38,389            7,842                 46,231
Long-lived assets...............................    541,280           82,489                611,939

THREE MONTHS ENDED MARCH 31, 1999
Revenue.........................................     11,286              164                 11,450
Long-lived assets at December 31, 1999..........    439,359           13,017                452,370
</TABLE>


(7)  SUPPLEMENTAL CASH FLOW INFORMATION


The amount of cash paid for interest was $4,000 and $24,000 for the
three month periods ended March 31, 2000 and 1999, respectively.



(8) LITIGATION



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 alleges that Sabela is
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". DoubleClick is seeking treble damages
in an unspecified amount, a preliminary and permanent injunction from further
alleged infringement and attorney's fees and costs. This litigation can be
expected to result in significant expenses to us and the diversion of
management time and other resources, the extent of which cannot be quantified
with any reasonable accuracy given the early stage of this litigation. This
case is in the early stages of discovery. We believe we have meritorious
defenses to this lawsuit and intend to defend ourselves vigorously.



On May 4, 2000, we filed suit in the U.S. District Court for the Southern
District of New York against DoubleClick Inc. alleging infringement by
DoubleClick of our U.S. Patent No. 6,026,368, entitled "On-Line Interactive
System and Method for Providing Content and Advertising Information to a
Targeted Set of Viewers." We are seeking monetary damages and have requested
injunctive relief barring DoubleClick from further infringement of the
patent. The litigation may result in significant expense to us and the
diversion of management time and other resources, the extent of which cannot
be quantified with any reasonable accuracy given the early stage of this
litigation.





                                        10
<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".

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, data analysis, loyalty marketing and convergence
solutions, all delivered from our industry-leading data and technology
platforms. Our 24/7 Connect ad serving 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 hundreds of Web sites 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 advertisements for sale in content channels or across the entire network.
For our flagship Web sites on the network, we actively solicit sponsorships and
integrate sales efforts with the Web site's management. We deliver advertising
on our network using our 24/7 Connect technology, which enables us to offer

                                        11
<PAGE>

advertisers the ability to target Internet users based on a variety of criteria
including on a geo-targeted basis. Our Internet advertising network is organized
as follows:

    o    In the U.S., the network consists of over 400 high profile Web sites
         to which we delivered an aggregate of more than 5.8 billion
         advertisements in March 2000;

    o   In Europe, the network consists of over 400 Web sites to which we
        delivered an aggregate of more than 100 million advertisements in
        March 2000. We developed our European operations in 1999 after
        acquiring InterAd Holdings Ltd. (renamed 24/7 Media Europe) in a
        two-step transaction through which we acquired a majority interest in
        January 1999 and the remainder in January 2000;

    o   In Canada, the network consists of over 80 high profile Web sites to
        which we delivered an aggregate of more than 100 million advertisements
        in March 2000. We developed our Canadian operations after acquiring
        Clickthrough Interactive Services, Inc. in July 1999;

    o   In Latin America, the network consists of over 30 Web sites to which we
        delivered an aggregate of more than 40 million advertisements in
        December 1999;

    o   In Asia, through our partner chinadotcom corporation, we support the
        operation of the network, that consists of more than 500 high profile
        Web sites. This network covers Greater China, the ASEAN nations,
        Australia, South Korea and Japan; and

    o   The 24/7 Network also includes The ContentZone, which consists of over
        4,000 small to medium-sized Web sites to which we delivered an
        aggregate of more than 90 million advertisements in March 2000.

Through the 24/7 Network we also offer network-related value-added solutions to
advertisers, marketers and Web publishers. For example, our AwardTrack
subsidiary 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. We also offer our creative design services, sponsorship
opportunities and syndication services.

24/7 MAIL

Our 24/7 Mail business was developed through the integration of our
acquisitions of Sift, Inc. in March 1999 and ConsumerNet, Inc. in August 1999
and subsequent growth. 24/7 Mail provides opt-in email direct marketing
services. Our permission-based email-marketing database of more than 21
million email addresses is the largest such database in the world and enables
direct marketers to target promotional campaigns to consumers who choose to
receive commercial messages. The users can opt out, or stop receiving these
messages, at any time. Currently, 24/7 Mail conducts the majority of its
operations in the U.S. European operations were recently launched, initially
in the UK.

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 and
around-the-clock support for our ad serving clients. Products within 24/7
Technology Solutions include:

   o  24/7 Connect, a next generation Internet ad serving system that is
      available on two platforms: 24/7 Connect for Networks, that will
      initially serve the 24/7 Network in the United States, and 24/7 Connect
      for


                                       12
<PAGE>

   o  Advertisers and Publishers, our third-party ad serving solution. We expect
      to combine the two platforms into a single solution later this year. We
      acquired 24/7 Connect for Advertisers and Publishers through our
      acquisition of Sabela in January 2000; and

   o  e.merge, a fully integrated, customizable suite of business applications
      designed to manage marketing campaigns across multiple forms of electronic
      media including broadband, set-top boxes and wireless (WAP) applications.
      We acquired e.merge through our acquisition of IMAKE in January 2000.

We also operate Profilz, a database of Web user profiles that aids in delivering
targeted advertising and marketing messages based on demographic profiles.


RECENT DEVELOPMENTS


On February 29, 2000, the Company entered into an agreement to acquire all of
the outstanding common stock of Exactis.com, Inc., a provider of email based
direct marketing services, in exchange for Company common stock. Under the
terms of the transaction, the holders of shares of Exactis.com common stock
will be entitled to receive 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. Warrants and options assumed will also be converted
at this ratio.

RESULTS OF OPERATIONS

REVENUES

NETWORK REVENUES. Network revenues were $36.5 million for the three-month
period ended March 31, 2000 compared to $11.1 million for the three-month
period ended March 31, 1999, representing 229% growth. This increase was
fueled by a dramatic expansion in the number of ad impressions sold in the
U.S. and Europe network business, a significantly increasing number of Web
sites that we represent, and our future expansion globally to Canada and
Latin America. In addition, the number of advertisers and the amount of
advertising spending on the Internet increased significantly during this
period.

EMAIL REVENUES. Email revenues increased to $6.9 million for the three-month
period ended March 31, 2000 compared to $0.4 million for the three-month period
ended March 31, 1999, representing 1,625% growth. This increase was fueled by a
significant expansion in the types of email services that we offer to include
email list management and list brokerage services in addition to our service
bureau offerings, as well as a dramatic increase in the number of opt-in email
addresses under management. The expansion into these new service offerings was
supported by our acquisition of ConsumerNet in the third quarter of 1999. We
believe that strong industry acceptance on opt-in email advertising has promoted
this strong historical growth and will continue to increase our revenue in the
future.

TECHNOLOGY REVENUES. The Technology Solutions segment was formed with the
acquisition of Sabela and IMAKE in January 2000. Technology revenues for the
three-month period ended March 31, 2000 were $2.9 million. We expect
significant revenue growth from our technology solutions products as Connect
for Advertisers and Publishers expands its market share for third-party ad
serving and as e.merge further penetrates the expanding market for broadband
convergence.

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. Gross profit dollars
increased significantly

                                        13
<PAGE>

and the gross margin, which is network gross profit as a percent of total
network revenues, remained consistent at 21%.

EMAIL COST OF REVENUES AND GROSS PROFIT.  The cost of email revenues consists
primarily of list provider royalties and delivery costs. Gross profit dollars
increased significantly due to the growth in revenues. Gross margin decreased
from 88% to 38% as the mix of business shifted from service bureau in 1999 to
primarily list management and list brokerage in 2000, each of which has a lower
gross margin.

TECHNOLOGY COST OF REVENUES AND GROSS PROFIT. The cost of technology revenues
consists primarily of the salaries of those who provide the service plus the
cost of equipment and bandwidth for our third-party ad serving. Gross margin
was 60%.

OPERATING EXPENSES

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 materials. Sales and marketing expenses
increased in dollar terms; however, as a percentage of revenue the expenses
decreased from 31% in 1999 to 26% in 2000. Sales and marketing expenses
increased as a result of the growth of our business on a global scale and the
resulting additions to sales staff as well as increased marketing expenses. We
expect sales and marketing expenses to increase in dollar terms as we continue
to invest in sales and marketing personnel, expand into new markets, broaden our
visibility, and embark on a global branding campaign; however, we expect that
sales and marketing expenses as a percentage of revenue will decline as our
business matures across multiple product lines and geographic regions.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of compensation, facilities expenses and other overhead
expenses incurred to support the growth of our business. General and
administrative expenses increased in dollar terms; however, as a percentage
of revenue the expenses decreased from 31% in 1999 to 23% in 2000. General
and administrative expenses increased as a result of the growth of our
business, the addition of new personnel and increased operating expenses. We
expect general and administrative expenses to continue to increase due to the
additional personnel and other expenses required to support our anticipated
business growth; however, we expect that general and administrative expenses
as a percentage of revenues will decline as our business matures across
multiple product lines and geographical regions.

PRODUCT DEVELOPMENT EXPENSES. Product development expenses consist primarily of
compensation and related costs incurred to further develop our ad serving and
other technology capabilities. Product development expenses in 2000 remained
consistent with 1999. 24/7 Connect, our ad serving solution, reached the
application development stage in March 1999 and we began capitalizing costs
related to the project. We continued to capitalize certain costs through March
2000 when 24/7 Connect became operational. Product development expenses should
increase as we are no longer capitalizing the majority of costs from the product
development department. We continue to believe that investment in product
development, particularly for our broad range of technology platforms and
initiatives, is critical to our strategy of providing excellent service, and we
expect to increase the future amounts spent on product development.

AMORTIZATION OF GOODWILL, INTANGIBLES AND ADVANCES. Amortization of goodwill,
intangibles and advances was $16.7 million for the three months ended March
31, 2000 as compared to $2.3 million in the corresponding period in 1999. The
increase is due to the goodwill and intangibles acquired with ConsumerNet,
Clickthrough, Netbookings, IMAKE, Sabela, AwardTrack and the remaining
interest in 24/7 MEDIA Europe. In addition the amortization for partner
agreements is included for the three months ended March 31, 2000.

STOCK-BASED COMPENSATION. Stock based compensation consists of a $1.8 million
one-time charge for restricted shares issued to employees, amortization of
deferred compensation from the IMAKE acquisition and deferred compensation
for restricted shares issued to certain employees.

MERGER RELATED COSTS. Merger related costs consist primarily of acquired
in-process technology of $4.7 million from the acquisition of IMAKE that was
immediate charged to operations. As of the date of the acquisition, the
e.merge technology acquired had not been fully developed and had no
alternative future uses. As a result, the Company will be required to incur
additional costs to successfully develop and integrate the technology. The
value of the acquired in-process technology was determined using an
independent valuation.

                                        13
<PAGE>


INTEREST INCOME, NET. Interest income, net was $0.5 million in for the three
months ended March 31, 2000 and $0.3 million for the comparative period in 1999.
The increase in interest income was attributable to interest earned on the cash
and cash equivalents from the net proceeds due to our secondary offering of
common stock in May 1999, which we are using to fund operations.

GAIN ON SALE OF INVESTMENTS. This gain relates to the sale of a portion of our
chinadotcom stock. On January 13, 2000 we sold approximately 150,000 shares at
$80.96 per share. The shares had a cost basis of $422,000, which resulted in a
gain of approximately $11.7 million.


LIQUIDITY AND CAPITAL RESOURCES


Since our inception we have financed our operations primarily through private
placements of equity securities and public offerings of our common stock.

Net cash used in operating activities was $17.5 million and $7.5 million for the
three month periods ended March 31, 2000 and 1999, respectively. Net cash used
in operating activities resulted from our net operating losses and increases in
accounts receivable, which were partially offset by increases in accounts
payable and accrued expenses.

Net cash used in investing activities was $0.9 million and $3.7 million for the
three month periods ended March 31, 2000 and 1999, respectively. During the
three months ended March 31, 2000, we continued to continued to acquire
equipment and invest in strategic partners both by acquisition and equity
stakes; and we invested the proceeds from the sale of a portion of our
investments.

Net cash provided by financing activities was $3.7 million for the three months
ended March 31, 2000 and net cash used by financing activities was $1.6 million
for the three months ended March 31, 1999. Net cash provided by financing
activities consisted of primarily of exercise of stock options.

As of March 31, 2000, we had $27.9 million of cash and cash equivalents and
$348.7 million in investments in marketable securities. Our principal commitment
is funding on-going operations and that our operating expenses will continue to
be a material use of our cash resources as we will continue to experience
significant growth. Although we have no material commitments for capital
expenditures, we anticipate that we will experience a substantial increase in
our capital expenditure and lease commitments consistent with our anticipated
growth in operations, infrastructure and personnel.

Litigation brought on us by DoubleClick may result in a significant expense
and use of resources (see Part II, Item 1.)

We believe that our existing cash and cash equivalents and investments in
marketable securities will be sufficient to meet our anticipated cash needs for
working capital and capital expenditures for at least the next 12 months.


IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activity" which delayed the effective date of SFAS 133
from June 15, 1999 to June 15, 2000. SFAS 133 established accounting and
reporting standards for derivative instruments and for hedging activities. SFAS
133 requires that an entity recognize all derivatives as either assets or
liabilities and measure those instruments at fair value. We have not yet
determined the impact of this pronouncement on our financial position or results
of operations.

On December 3, 1999, the SEC staff issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" (SAB 101). SAB 101 summarizes
certain of the staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. On March 24, 2000,
the SEC issued SAB 101A which amends the transition guidance for SAB 101.
Under the revised guidance, the staff will not object if registrants that
have not applied the accounting requirements in SAB 101 do not restate prior
financial statements -- provided they report a change in accounting principle
in accordance with APB Opinion No. 20, "Accounting Changes". The staff
believes that the change must be reported no later than the first fiscal
quarter  of the fiscal year beginning after December 15, 1999, except that
registrants with fiscal years that begin between December 16, 1999 and March
15, 2000 may report a change in accounting principle no later than their
second fiscal quarter of the fiscal year beginning after December 15, 1999.
If a registrant with a fiscal year beginning between December 16, 1999 and
March 15, 2000 elects to avail itself of this delay, the change must be
reported in accordance with FASB Statement No. 3, "Reporting Accounting
Changes in Interim Financial Statements". The Company believes the adoption
of SAB 101 will not have a significant effect on its financial statements.


In March 2000, FASB Interpretation No. 44 -- "Accounting for Certain
Transactions involving Stock Compensation, an interpretation of APB Opinion
No. 25" (FIN 44) was issued. FIN 44 clarifies the application of APB No. 25
regarding (a) the definition of EMPLOYEE for purposes of applying APB No. 25,
(b) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (c) the accounting consequence of various modifications to the terms of
a previously fixed stock option or award, and (d) the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 does
not address the application of the fair value method of Statement No. 123.
This Interpretation is effective July 1, 2000, but certain conclusions in
this Interpretation cover specific events that occur after either December
15, 1998, or January 12, 2000. To the extent that this Interpretation covers
events occurring during the period after December 15, 1998 or January 12,
2000, but before the effective date of July 1, 2000, the effects of applying
this Interpretation are recognized on a prospective basis from July 1, 2000.
The Company has not yet assessed the impact of FIN 44.


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.


WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN INVESTOR CAN EVALUATE OUR
BUSINESS.
We were formed as a result of the merger 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.

WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE THE COMPANIES THAT WE HAVE ACQUIRED.
We were formed in February 1998 to consolidate three Internet advertising
companies and have since acquired or agreed to acquire eleven 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 intend to 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


                                       14
<PAGE>

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 the potential loss of key employees of any
        acquired business.


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


WE ANTICIPATE CONTINUED LOSSES AND WE MAY NEVER BE PROFITABLE.
We incurred net loss of $23.8 million and $7.2 million for the three months
ended March 31, 2000 and 1999, respectively and $39.1 million for the year
ended December 31, 1999. In addition, our accumulated deficit was $103.6
million as of March 31, 2000. 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. Although our revenue has grown rapidly in recent
periods, such growth may not continue and may not lead to profitability. 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 may 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 clients;
    o  changes in fees paid by advertisers and direct marketers;
    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 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; 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 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. 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,

                                        15
<PAGE>


direct marketers or the economy in general, which could alter current or
prospective advertisers' spending priorities or budget cycles or extend our
sales cycle.


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 market fails to continue to develop. 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.


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


The majority of our revenues are derived from the delivery of banner
advertisements. 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 adversely affected by Web
users' widespread adoption of such software.

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.


OUR DEVELOPMENT OF A NEXT GENERATION AD SERVING TECHNOLOGY 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 recently launched 24/7
Connect, and to successfully complete the roll-out of 24/7 Connect, we must,
among other things, ensure that this technology will function efficiently at
high volumes, interact properly with our Profilz 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. Even if we successfully address all these
challenges, we must then work with our Web sites, advertisers and direct
marketing clients to transition them to our new system, which would also
create a risk of business disruption and loss of any of our clients.

LOSS OR FAILURE OF OUR THIRD PARTY AD SERVING TECHNOLOGY COULD DISRUPT OUR
BUSINESS.
Unless and until the complete roll-out and transition to 24/7 Connect is
complete, we will be partially dependent on AdForce, Inc. to deliver ads to our
networks and Web sites. If such service becomes



                                        16
<PAGE>

unavailable or fails to serve our ads properly or fails to produce the frequent
operational reports required, our business would be adversely affected.
Additionally, our use of multiple systems to serve ads requires us to employ
significant effort to prepare information for billing, client statements and
financial reporting. We are upgrading our systems to integrate a new accounting
system with our ad serving technologies to improve our accounting, control and
reporting methods. Our inability to upgrade our existing reporting systems and
streamline our procedures may cause delays in the timely reporting of financial
information.


LOSS OF OUR MAJOR WEB SITES WOULD SIGNIFICANTLY REDUCE OUR REVENUES.
The 24/7 Network generates substantially all of our revenues and it 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, 2000 and 1999, approximately 33% and 48%, respectively,
of our total revenues were derived from advertisements on our top ten Web sites.
For the three month period ended March 31, 2000, the top ten Web sites included
All Advantage.com, AT&T WorldNet Service, Mapquest.com, Regent Network Services,
Inc., Goto.com, DesktopDollars, Inc, Community Connect, Inc., Earthlink Network,
Havas Interactive, and Multi-player Games Network. We experience turnover from
time to time among our Web sites, and we cannot be certain that the Web sites
named above remain or will remain associated with us. 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 OUR ADVERTISERS OR AD AGENCIES WOULD REDUCE OUR REVENUES.
We generate our revenues from a limited number of advertisers and ad agencies
that purchase space on our Web sites. 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, 2000, our
top ten advertisers and ad agencies accounted for approximately 31% of our total
revenues.


ADVERTISERS AND AD AGENCIES TYPICALLY PURCHASE ADVERTISING UNDER PURCHASE ORDER
AGREEMENTS THAT RUN FOR A LIMITED TIME.


Typically, we enter into short-term contracts with advertisers and ad
agencies. Since these contracts are short-term, we will have to negotiate new
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 advertisers and ad agencies will continue to purchase advertising
from us or that we will be able to attract additional advertisers and ad
agencies successfully, or that agencies and advertisers 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 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
themselves or with



                                        17
<PAGE>

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.


WE MAY BE UNABLE TO CONTINUE TO SUCCESSFULLY MANAGE RAPID GROWTH.
We 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. We have experienced
rapid growth and expansion in operations that have placed a significant strain
on our managerial, operational and financial resources. We expect the number of
employees to increase in the future. To successfully compete in the evolving
Internet industry, we must:

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

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


OUR INTERNATIONAL EXPANSION MAY POSE LEGAL AND CULTURAL CHALLENGES.
We have operations in a number of international markets, including Canada,
Europe, Asia, Australia and Latin America. We intend to continue to expand our
international operations and international sales and marketing efforts. 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.


IF WE LOSE OUR CEO OR OTHER SENIOR MANAGERS WE MAY NOT BE ABLE TO GROW.
Our success depends 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


                                        18
<PAGE>

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. Although we have not experienced
any material impact from the difficulty in hiring and retaining qualified
employees, we may be materially impacted in the future from such hiring
difficulties.


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 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.


INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD HINDER OUR ABILITY TO DELIVER
ADVERTISEMENTS OVER THE INTERNET.


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 alleges that Sabela is 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". DoubleClick is seeking treble damages in an
unspecified amount, a preliminary and permanent injunction


                                        19
<PAGE>

from further alleged infringement and attorneys' fees and costs. This litigation
can be expected to result in significant expenses to us and the diversion of
management time and other resources, the extent of which cannot be quantified
with any reasonable accuracy given the early stage of this litigation. In
addition, some of our contracts with Web publishers require us to indemnify the
Web publishers for losses they incur arising from any infringement by our ad
serving technology of a third party's intellectual property rights. If
DoubleClick is successful in its claims against Sabela or files a similar suit
against us, we may be hindered or even prevented from competing in the Internet
advertising market and our operations could be severely harmed. The DoubleClick
suit could result in limitations on how we implement our 24/7 Connect for
Advertisers and Publishers product, delays and costs associated with redesigning
our 24/7 Connect for Advertisers and Publishers product and payments of license
fees and other monies. An injunction obtained by DoubleClick could eliminate our
ability to deliver advertisements over the Internet through our 24/7 Connect for
Advertisers and Publishers product. If DoubleClick is successful in its claims
against Sabela, we cannot assure you that we would be able to enter into a
licensing agreement with DoubleClick on commercially reasonable terms, if at all
for our 24/7 Connect for Advertisers and Publishers product. In that case, we
would be required to alter our technology in a way that would not infringe the
DoubleClick patent, and we cannot assure you that these alterations would be
successful.


On May 4, 2000, we filed suit in the U.S. District Court for the Southern
District of New York against DoubleClick Inc. allegeing infringement by
DoubleClick of our U.S. Patent No. 6,026,368, entitled "On-Line Interactive
System and Method for Providing Content and Advertising Information to a
Targeted Set of Viewers." We are seeking monetary damages and have requested
injunctive relief barring DoubleClick from further infringement of the patent.
The litigation may result in significant expense to us and the diversion of
management time and other resources, the extent of which cannot be quantified
with any reasonable accuracy given the early stage of this litigation.


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.


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. Any reduction or
limitation in the use of cookies could limit the effectiveness of our sales
and marketing efforts and impair our targeting capabilities. Due to privacy
concerns, some Internet commentators, advocates and governmental bodies have
suggested that the use of cookies be limited or eliminated. The effectiveness
of our 24/7 Connect technology to deliver targeted advertisements could be
limited by any regulation or limitation in the collection or use of
information regarding Internet users. Since many of the limitations are still
in the proposal stage, we cannot yet determine the full impact of these
regulations on our business.

In addition, we are developing our Profilz 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.


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
Growing public concern regarding privacy and the collection, distribution and
use of information about individuals has led to increased federal and state
scrutiny and legislative and regulatory activity. In


                                       20
<PAGE>

addition, the high-technology and direct marketing industries are considering
various new, additional or different self-regulatory standards. This focus, and
any legislation, regulations or standards promulgated, impacts us.

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. Various
technology and direct marketing industry groups have also been addressing this
issue. The Network Advertising Initiative, an industry self-regulatory group
comprised of third-party ad servers, including us, has proposed a series of
self-regulatory principles. We cannot assure you that the Federal Trade
Commission and the Department of Commerce will endorse these principles, and the
position that these agencies adopt may be more adverse to us than those
currently under discussion. Other trade associations are active as well. The
Online Privacy Alliance, a broad coalition of high-technology companies, is
examining fair information practices and may offer proposals for industry
acceptance. The Direct Marketing Association, or DMA, the leading trade
association of direct marketers, has adopted guidelines regarding the fair use
of information which it recommends that industry participants, including us,
follow.

We are also subject to various federal and state regulations concerning the
collection and use of information regarding individuals. These laws include the
Children's Online Privacy Protection Act, and state laws which 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 applicable federal and state laws, regulations and industry
guidelines has not had a material adverse effect on us, governments, trade
associations and industry self-regulatory groups may enact more burdensome laws,
regulations and guidelines, including antitrust and consumer privacy laws, for
us and our clients. These regulations and guidelines could materially and
adversely affect the business, financial condition and results of operations of
our business.

Furthermore, computer users may also use software designed to filter or prevent
the delivery of advertising to their computers. We cannot assure you that the
number of computer users who employ filtering software will not increase or that
additional Web publishers will not seek contractual provisions barring us from
developing profiles of users of their Web sites, either of which could
materially and adversely affect our business, results of operations and
financial condition.

Also, 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 its attractiveness to
potential customers, which could materially and adversely affect our business,
financial condition or results of operations.


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. The governments of other states or 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. 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 the market for Internet commerce may
prompt calls for more stringent consumer protection laws, both in the United
States and abroad, that may impose additional

                                        21
<PAGE>

burdens on companies conducting business over 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.


POSSIBLE VOLATILITY OF STOCK PRICE.
The market price of our common stock has fluctuated in the past and is likely to
continue to be highly volatile and could be subject to wide fluctuations. 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, companies that
have experienced volatility in the market price of their stock have been the
object of securities class action litigation. If we were the object of
securities class action litigation, it could result in substantial costs and a
diversion of management's attention and resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      CURRENCY RATE FLUCTUATIONS. 24/7 Media's results of operaitons,
financial position and cash flows are not materially affected by changes in
the relative values of non-U.S. currencies to the U.S. dollar. 24/7 Media
does not use derivative financial instruments to limit its foreign currency
risk exposure.

      MARKET RISK. 24/7 Media's accounts receivables are subject, in the
normal course of business, to collection risks. 24/7 Media regularly assesses
these risks and has established policies and business practices to protect
against the adverse effects of collection risks. As a result, 24/7 Media does
not anticipate any material losses in this area.

      INTEREST RATE RISK. 24/7 Media's investments are classified as cash and
cash equivalents 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.

                                        22
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

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 alleges that Sabela is 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". DoubleClick is seeking treble damages in an
unspecified amount, a preliminary and permanent injunction from further alleged
infringement and attorneys' fees and costs. This litigation can be expected to
result in significant expenses to us and the diversion of management time and
other resources, the extent of which cannot be quantified with any reasonable
accuracy given the early stage of this litigation. This case is in the early
stages of discovery. We believe we have meritorious defenses to this lawsuit and
intend to defend ourselves vigorously.

On May 4, 2000, we filed suit in the U.S. District Court for the Southern
District of New York against DoubleClick Inc. allegeing infringement by
DoubleClick of our U.S. Patent No. 6,026,368, entitled "On-Line Interactive
System and Method for Providing Content and Advertising Information to a
Targeted Set of Viewers." We are seeking monetary damages and have requested
injunctive relief barring DoubleClick from further infringement of the patent.
The litigation may result in significant expense to us and the diversion of
management time and other resources, the extent of which cannot be quantified
with any reasonable accuracy given the early stage of this litigation.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On January 9, 2000, we acquired Sabela Media, Inc. through the issuance of
approximately 1.2 million shares of our common stock plus the assumption of
previously outstanding stock options that were converted into options to acquire
approximately 42,000 shares of our common stock. We also assumed approximately
952,414 outstanding warrants of Sabela that were converted into warrants to
purchase approximately 105,000 shares of our common stock.

On January 13, 2000, we acquired IMAKE Software and Services, Inc. for
approximately 1.3 million shares of our common stock plus the assumption of
previously outstanding stock options which were converted into options to
acquire approximately 287,000 shares of our common stock. We also issued
approximately 160,000 shares of restricted common stock to the employees of
IMAKE under our 1998 Stock Incentive Plan.

On January 18, 2000, we issued 31,000 shares of common stock to employees of
the company.

On February 7, 2000, we issued approximately 17,000 shares of Internet
Financial Network, Inc. in exchange for approximately 354,000 shares of their
common shares.

On February 11, 2000, we acquired AwardTrack, Inc. for approximately 1.1
million shares of our common stock plus the assumption of previously
outstanding stock options which were converted into options to acquire
approximately 106,000 shares of our common stock.

For all of the above transactions, no underwriters were involved in connection
with the issuance of these shares and there were no underwriting discounts or
commissions. These securities were issued in reliance upon the exemption from
registration provided under Section 4(2) of the Securities Act of 1934 based
on the fact that we issued the shares of common stock in a sale not involving
a public offering.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

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

None

ITEM 5.  OTHER INFORMATION

                                        23
<PAGE>


None.

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

(a)      Exhibits.

Exhibit 27 Financial data schedule

(b)      Reports on Form 8-K.

We filed a Current Report on Form 8-K dated January 25, 2000, as amended by Form
8-K/A filed March 24, 2000. The report contained information about the
acquisition of Sabela.

We filed a Current Report on Form 8-K dated January 28, 2000, as amended by Form
8-K/A filed March 28, 2000. The report contained information about the
acquisition of IMAKE.

We filed a Current Report on Form 8-K dated February 28, 2000. The report
contained information about the acquisition of AwardTrack.

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, 2000

                                   By:  /S/  DAVID J. MOORE
                                        --------------------------------------
                                        David J. Moore
                                        President and Chief Executive Officer

                                   By:  /S/  C. ANDREW JOHNS
                                        -------------------------------------
                                        C. Andrew Johns
                                        Chief Financial Officer




                                       24