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 September 30, 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 NOVEMBER 10, 2000
  Common Stock, par value $.01 per share              42,460,285 Shares

<PAGE>

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

Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 2000
   (unaudited) and December 31, 1999 ......................................    2
Consolidated Statements of Operations for the three and nine month
   periods ended September 30, 2000 and 1999 (unaudited) ..................    3
Consolidated Statements of Cash Flows for the nine month periods ended
   September 30, 2000 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 .......................................   15
Item 3. Quantitative and Qualitative Disclosure about Market Risk .........   28
Part II. Other Information
Item 1. Legal Proceedings .................................................   29
Item 2. Changes in Securities and Use of Proceeds .........................   29
Item 3. Defaults Upon Senior Securities ...................................   29
Item 4. Submission of Matters to a Vote of Security Holders ...............   29
Item 5. Other Information .................................................   30
Item 6. Exhibits and Reports on Form 8-K ..................................   30
Item 7. Signatures ........................................................   30


                                       1
<PAGE>

                                24/7 MEDIA, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                    September 30,   December 31,
                                                                        2000           1999
                                                                    -------------   ------------
               ASSETS                                                (unaudited)
<S>                                                                  <C>            <C>
Current assets:
   Cash and cash equivalents .....................................   $    23,123    $    42,786
   Accounts receivable, less allowances of $5,702
     and $2,522, respectively ....................................        60,217         34,004
   Prepaid expenses and other current assets .....................         8,789          4,846
                                                                     -----------    -----------

       Total current assets ......................................        92,129         81,636

Property and equipment, net ......................................        46,538         18,595
Intangible assets, net ...........................................       673,629         62,398
Investments ......................................................       165,555        366,630
Deferred cost of partner agreements, net .........................           404          4,260
Other assets .....................................................         5,866            493
                                                                     -----------    -----------
       Total assets ..............................................   $   984,121    $   534,012
                                                                     ===========    ===========

           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable ..............................................   $    26,622    $    24,504
   Accrued liabilities ...........................................        30,040         13,875
   Current installments of obligations under capital leases ......            50             49
   Deferred revenue ..............................................         3,856          2,019
                                                                     -----------    -----------
       Total current liabilities .................................        60,568         40,447
                                                                     -----------    -----------

Obligations under capital leases, excluding current installments .           170             13
Deferred tax liability ...........................................            --         95,656
Deferred revenue .................................................           800             --
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;
      42,367,821 and 22,422,516 shares issued and outstanding,
      respectively ...............................................           424            224
    Additional paid-in capital ...................................     1,069,705        282,806
    Deferred stock compensation ..................................        (9,345)          (232)
    Accumulated other comprehensive income .......................        44,291        194,790
    Accumulated deficit ..........................................      (182,597)       (79,797)
                                                                     -----------    -----------
        Total stockholders' equity ...............................       922,478        397,791
                                                                     -----------    -----------
       Total liabilities and stockholders' equity ................   $   984,121    $   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 September       Nine months ended September
                                                                                  30,                               30,
                                                                     ----------------------------      ----------------------------
                                                                         2000            1999              2000            1999
                                                                     ------------    ------------      ------------    ------------
                                                                             (unaudited)                      (unaudited)
<S>                                                                  <C>             <C>               <C>             <C>
Revenues:
   Network .......................................................   $     26,013    $     21,861      $    103,278    $     49,468
   Email .........................................................          9,729           2,452            25,148           3,450
   Technology ....................................................         12,386              --            18,120              --
                                                                     ------------    ------------      ------------    ------------
       Total revenues ............................................         48,128          24,313           146,546          52,918
                                                                     ------------    ------------      ------------    ------------

Cost of revenues:
   Network .......................................................         21,770          16,368            82,256          37,932
   Email .........................................................          5,639           1,379            15,617           1,673
   Technology ....................................................          3,655              --             6,035              --
                                                                     ------------    ------------      ------------    ------------
       Total cost of revenues ....................................         31,064          17,747           103,908          39,605
                                                                     ------------    ------------      ------------    ------------

       Gross profit ..............................................         17,064           6,566            42,638          13,313
                                                                     ------------    ------------      ------------    ------------

Operating expenses:
   Sales and marketing (exclusive of $651, $0, $2,196 and $0,
     respectively, reported below as stock-based compensation) ...         14,745           6,720            38,452          14,668
   General and administrative (exclusive of $914, $0, $2,809 and
     $0, respectively, reported below as stock-based compensation)         17,469           7,420            41,348          15,808
   Product development (exclusive of $914, $0, $2,809 and $0,
     respectively, reported below as stock-based compensation) ...          7,889             327            11,084           1,569
   Amortization of goodwill, intangibles and advances ............         46,757           4,573            81,998           9,240
   Stock-based compensation ......................................          2,226             228             6,455             285
   Merger related costs ..........................................            152              --             5,323              --
                                                                     ------------    ------------      ------------    ------------
       Total operating expenses ..................................         89,238          19,268           184,660          41,570
                                                                     ------------    ------------      ------------    ------------

       Loss from operations ......................................        (72,174)        (12,702)         (142,022)        (28,257)
Interest income, net .............................................            501           1,034             1,234           2,182
Gain on sale of investments ......................................         14,885              --            37,988              --
                                                                     ------------    ------------      ------------    ------------
       Net loss ..................................................   $    (56,788)   $    (11,668)     $   (102,800)   $    (26,075)
                                                                     ============    ============      ============    ============
Net loss per common share - basic and diluted ....................   $      (1.49)   $      (0.55)     $      (3.39)   $      (1.36)
                                                                     ============    ============      ============    ============
Weighted average common shares outstanding .......................     38,122,316      21,103,871        30,307,724      19,202,112
                                                                     ============    ============      ============    ============
</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>
                                                                 Nine Months Ended September 30,
                                                                 -------------------------------
                                                                        2000         1999
                                                                     ---------    ---------
Cash flows from operating activities:                                     (unaudited)
<S>                                                                  <C>          <C>
Net loss .........................................................   $(102,800)   $ (26,075)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization of fixed assets ....................       7,213        1,598
Write-off of acquired in-process technology ......................       4,700           --
Provision for doubtful accounts and sales reserves ...............       3,180           --
Amortization of goodwill and other intangible assets .............      80,185        8,762
Amortization of partner agreements ...............................       1,813          648
Non-cash compensation ............................................       6,115          285
Gain on sale of investment .......................................     (37,988)          --
Changes in operating assets and liabilities, net of
  effect of acquisitions:
    Accounts receivable ..........................................     (21,321)     (13,354)
    Prepaid assets and other current assets ......................      (1,625)        (986)
    Other assets .................................................      (2,398)        (160)
    Accounts payable and accrued liabilities .....................      (5,166)       9,112
    Deferred revenue .............................................      (4,510)       1,934
                                                                     ---------    ---------
         Net cash  used in operating activities ..................     (72,602)     (18,236)
                                                                     ---------    ---------
Cash flows from investing activities:
Capital expenditures .............................................     (19,646)     (13,338)
Proceeds from the sale of investments ............................      40,243           --
Cash acquired in acquisitions, net of cash paid ..................      23,952       (6,002)
Proceeds from the sale of marketable securities ..................       9,613           --
Cash paid for investments ........................................      (6,120)     (19,619)
Increase in intangible assets ....................................        (108)         (18)
                                                                     ---------    ---------
         Net cash provided by (used in) investing activities .....      47,934      (38,977)
                                                                     ---------    ---------
Cash flows from financing activities:
Proceeds from exercise of stock options and conversion of warrants       5,309        1,107
Payment of capital lease obligations .............................         (58)         (55)
Proceeds from secondary offering, net ............................          --      100,465
Repayment of notes payable .......................................          --       (1,439)
(Payments)/proceeds from short-term borrowings ...................          --         (180)
                                                                     ---------    ---------
         Net cash provided by financing activities ...............       5,251       99,898
                                                                     ---------    ---------
         Net change in cash and cash equivalents .................     (19,417)      42,685
         Net effect of foreign currency adjustments ..............        (246)          72
Cash and cash equivalents at beginning of period .................      42,786       34,049
                                                                     ---------    ---------
Cash and cash equivalents at end of period .......................   $  23,123    $  76,806
                                                                     =========    =========
</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 customer acquisition
and customer retention marketing solutions for Web publishers, online
advertisers, advertising agencies, e-marketers and e-commerce merchants. The
Company operates in three principal lines of business: 24/7 Network, 24/7 Mail
and 24/7 Technology Solutions.

The 24/7 Network operates globally, with operations in the United States,
Europe, Canada, Latin America, and, along with the Company's partner,
chinadotcom corporation ("chinadotcom"), the Asia-Pacific Region, providing ad
sales solutions for Web-based advertising including banner ads, sponsorships,
loyalty reward programs and promotions. 24/7 Mail has operations in the United
States, Canada and Europe where the Company serves as list managers for
permission-based email lists. 24/7 Technology Solutions operates globally,
providing third-party ad serving, email based direct marketing services,
targeted search traffic delivery, broadband solutions and professional services.
The Company launched 24/7 Technology Solutions early in 2000 when the Company
acquired Sabela Media, Inc. ("Sabela") and IMAKE Software and Services, Inc.
("IMAKE") in January 2000 (see note 2). We added to our technology offerings
later in the year with the acquisition of Exactis.com ("Exactis") and Website
Results ("WSR")(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 September 30, 2000 and
December 31, 1999 and for the three and nine month periods ended September 30,
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 September 30, 2000 and for
the three and nine month periods ended September 30, 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 consolidated financial statements and reflect all adjustments,
which include only normal recurring adjustments, necessary to present fairly the
financial position as of September 30, 2000 and the results of the Company's
operations for the three and nine month periods ended September 30, 2000 and
1999 and cash flows for the nine months ended September 30, 2000 and 1999. The
financial data and other information disclosed in these notes to the
consolidated results for the three and nine month periods ended September 30,
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.


                                       5
<PAGE>

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

Use of Estimates

The preparation of consolidated 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
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Capitalized Software

As of September 30, 2000, the Company has capitalized approximately $16.5
million in connection with the 24/7 Connect ad serving system, which is being
amortized over four years.

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 September 30, 2000 as reported on NASDAQ. As of
September 30, 2000, The Company had gross unrealized gains related to such
securities of $51.4 million, and gross unrealized losses of $6.4 million. We
also have $76.1 million in cost based investments, including $39.4 million in
24/7 Media-Asia (see note 8).

In the nine months ended September 30, 2000, the Company sold approximately 1.6
million shares of chinadotcom stock at prices ranging from $17.95 to $40.48 per
share. The shares had a cost basis of $2.3 million, which resulted in a gain of
approximately $38.0 million.

Reclassifications

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

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. 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 lists
to advertisers and Web sites. Revenues are recognized as services are provided.


                                       6
<PAGE>

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

The Company's technology revenues are derived from adserving, software
consulting, service, development and maintenance contracts. Revenues under fixed
price contracts are recognized on a percentage of completion basis based on
labor hours incurred to total estimated contract hours. Revenues under time and
materials contracts are recognized as the hours are incurred. Fixed monthly
maintenance contracts are recognized in the corresponding months. Service
revenue is derived from driving traffic to a client website or the delivery of
email messages for clients and is recognized upon delivery. For revenue
recognition related to Sony, see note 8.

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 September 30, 2000 and December 31, 1999, accounts receivable included
approximately $15.8 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 September 30, 2000 resulted
primarily from the Company's integration and relocation of certain operations.
The terms of the related advertising contracts typically require billing at the
end of each month. Of the unbilled receivables as of September 30, 2000, $9.8
million have been subsequently billed.

Comprehensive Income (Loss)

Total comprehensive income (loss) for the nine month periods ended September 30,
2000 and 1999 was $(253.3) million and $50.5 million, respectively.
Comprehensive loss resulted primarily from net losses of $102.8 million and
$26.1 million respectively as well as a change in unrealized gains, net of tax,
of marketable securities of $(150.3) million and $76.5 million respectively and
foreign currency translation adjustments of $(0.2) million and $0.1 million,
respectively.

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
and nine months ended September 30, 2000 and 1999 does not include the effects
of options to purchase 7.7 million and 2.3 million shares of common stock,
respectively; 2.9 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.


                                       7
<PAGE>

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

(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, consists of 400,000 shares
originally valued at approximately $18.7 million, fair value of options assumed
of $9.9 million, $5.8 million of deferred compensation and $0.7 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 are being amortized over their expected period
of benefit which is four years for goodwill and two years for workforce. The
acquisition was accounted for as a purchase business combination, effective as
of January 1, 2000, for accounting purposes.

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

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 $66.0 million has been allocated $7.1 million
to technology, $1.1 million to workforce and $57.8 million to goodwill. Goodwill
and other intangible assets are being amortized over their expected period of
benefit which is four years for goodwill and technology; and two years for
workforce. The acquisition was accounted for as a purchase business combination,
effective as of January 1, 2000, for accounting purposes.

Acquisition of AwardTrack

On February 11, 2000, the Company acquired AwardTrack, Inc. ("AwardTrack"),
which offers a private label loyalty customer relationship management program
that enables Web retailers and content sites to issue points to Web users as a
reward for making purchases, completing surveys or investigating promotions. The
purchase price of approximately $69.9 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 $69.9 million has been allocated $7.7 million to
technology, $0.5 million to tradename, $0.4 million to workforce and $61.3
million to goodwill. Goodwill and other intangible


                                       8
<PAGE>

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

assets are being amortized over their expected period of benefit which is four
years for goodwill, technology and tradename; and two years for workforce. The
acquisition was accounted for as a purchase business combination effective as of
February 11, 2000 for accounting purposes.

Acquisition of Exactis

On June 28, 2000, the Company acquired all of the outstanding common stock of
Exactis.com, Inc., a provider of email based direct marketing services, in
exchange for Company common stock. Exactis.com stockholders received shares of
24/7 Media common stock based on an exchange ratio of 0.6 shares of 24/7 Media
common stock for each share of Exactis.com common stock. The purchase price of
approximately $475.6 million consists of approximately 8.2 million shares of
24/7 Media common stock valued at approximately $383.0 million, fair value of
options assumed of $82.9 million, fair value of warrants assumed of $2.3
million, deferred compensation of $2.9 million and acquisition costs of $4.5
million. The purchase price in excess of the value of identified assets and
liabilities assumed of $429.1 million has been allocated $60.8 million to
technology, $1.0 million to tradename, $3.2 million to workforce, $2.1 million
to customer base and $362.0 million to goodwill. Goodwill and other intangible
assets are being amortized over their expected period of benefit which is four
years for goodwill, technology, customer base and tradename; and two years for
workforce. The acquisition was accounted for as a purchase business combination
effective as of June 30, 2000 for accounting purposes.

Acquisition of WSR

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

Other Acquisitions

On April 1, 2000, we acquired Kendro Communications, a Swiss based banner
network service, for approximately 26,000 shares of common stock valued at
approximately $487,000, excluding contingent consideration of $6.7 million to be
paid in common stock. On April 17, 2000, we acquired iPromotions, Inc., a
Seattle based promotions and sweepstakes management firm, for $2 million in cash
and approximately 33,000 shares of common stock valued at approximately
$654,000.

Summary

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


                                       9
<PAGE>

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

<TABLE>
<CAPTION>
                                     Net Tangible
                      Acquisition       Assets       In-Process      Deferred     Intangibles/   Useful Life
Acquired Entity          Costs       (Liabilities)   Technology    Compensation     Goodwill      (In Years)
------------------------------------------------------------------------------------------------------------
<S>                    <C>            <C>             <C>            <C>            <C>               <C>
IMAKE                  $  47,146      $    (335)      $   4,700      $   5,786      $  36,995         2-4
24/7 Media Europe         24,117             --              --             --         24,117          3
Sabela                    66,312            317              --             --         65,995         2-4
AwardTrack                69,884            (43)             --             --         69,927         2-4
Exactis                  475,636         43,688              --          2,870        429,078         2-4
WSR                       66,675          3,720                          1,072         61,883          4
Other                      3,378            (13)             --             --          3,391         2-4
                       ----------------------------------------------------------------------
                       $ 753,148      $  47,334       $   4,700      $   9,728      $ 691,386
                       ----------------------------------------------------------------------
</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 and nine month
periods ended September 30, 2000 and 1999.

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                     Nine Months Ended
                                                      September 30,                         September 30,
                                             -------------------------------       -------------------------------
                                                  2000              1999               2000               1999
                                             ------------       ------------       ------------       ------------
                                                          (in thousands, except share and per share data)
<S>                                          <C>                <C>                <C>                <C>
Total revenues ........................      $     50,680       $     30,975       $    165,832       $     74,050
Net loss ..............................           (62,397)           (64,004)          (180,389)          (185,149)
Net loss per common share -
  basic and diluted ...................      $      (1.53)      $      (1.61)      $      (4.51)      $      (4.90)
Weighted average common shares used
  in net loss per share calculation (1)        40,811,012         39,674,771         39,974,313         37,773,012
</TABLE>

(1) The weighted average common shares used to compute pro forma basic and
diluted net loss per common share for the period ended September 30, 2000
includes the 1,129,344, 1,249,487, 880,000, 8,156,843, 880,000, and 4,260,000
shares issued for AwardTrack, Sabela, IMAKE, Exactis and WSR, 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 September 30, 1999 includes the actual weighted average common
shares outstanding for the historical period ended September 30, 1999, plus the
1,738,330, 41,677, 428,745, 1,566,484, 1,249,487, 1,129,344, 8,156,843 and
4,260,000 common shares issued in connection with each of the acquisitions of
ConsumerNet, Netbookings, 24/7 Media Europe, IMAKE, Sabela, AwardTrack, Exactis
and WSR, respectively, as if each acquisition occurred on January 1, 1999.

Merger Related Costs

Merger related costs for the nine months ended September 30, 2000 shown
separately on the statement of operations include a $4.7 million write-off of
in-process technology associated with the IMAKE aquisition and approximately
$0.6 million of integration related costs.


                                       10
<PAGE>

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

(3) INTANGIBLE ASSETS, NET

                                                September 30,       December 31,
                                                     2000               1999
                                                -------------       ------------
                                                         (in thousands)
        Goodwill ..........................       $ 689,366          $  83,075
        Technology ........................          75,600                 --
        Workforce .........................           5,700                 --
        Customer Base .....................           2,100                 --
        Tradename .........................           1,500                 --
        Other .............................             182                 --
                                                  ---------          ---------
                                                    774,448             83,075
                                                  ---------          ---------
        Less accumulated amortization .....        (100,819)           (20,677)
                                                  ---------          ---------
        Total .............................       $ 673,629          $  62,398
                                                  =========          =========

(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 included as part of stock-based compensation in our 2000 statements
of operations, 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.

On May 23, 2000, the Company issued approximately 285,000 shares of restricted
stock to certain employees of the Company, which vest over a period of three to
four years. Such grants resulted in a deferred compensation expense of
approximately $4.5 million, which is being amortized over the vesting period of
those shares.

Warrants to purchase 401,500 shares of our common stock at prices ranging from
$7.62 to $9.96 were exchanged in a cashless exercise, pursuant to their original
terms, for 359,839 shares of common stock during the nine months ended September
30, 2000.

(5) STOCK INCENTIVE PLAN

For the nine month period ended September 30, 2000, we granted approximately 5.8
million 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, 2,051,410 were issued as a result of the acquisition of Exactis at an
exercise price ranging from $1.25 to $51.88 per share, 349,250 were issued as a
result of the acquisition of WSR at an exercise price of $12.68 per share, and
the remaining 2.9 million of such were issued to employees at exercise prices of
$10.00 to $64.63 per share(based on the fair market value of the Company's
common stock at the respective dates of grant).


                                       11
<PAGE>

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

(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
marketing services to target online users compiled by list management. The
technology segment generates revenue by providing third party ad serving, email
delivery service bureau, search engine traffic delivery, broadband software
solutions and technology services. The Company's management reviews corporate
assets and overhead expenses for each segment. The summarized segment
information as of and for the three and nine months ended September 30, 2000 and
1999, is as follows:

<TABLE>
<CAPTION>
                                                                Three months ended September 30,
                                  -----------------------------------------------------------------------------------------
                                                      2000                                            1999
                                  -----------------------------------------------------------------------------------------
                                   Network       Mail       Technology      Total      Network         Mail         Total
                                  --------     --------    ------------   --------    ---------      --------      --------
                                                   (in thousands)                                (in thousands)
<S>                               <C>          <C>           <C>          <C>         <C>            <C>           <C>
Revenues ...................      $ 26,013     $  9,729      $ 12,386     $ 48,128    $ 21,861       $  2,452      $ 24,313
Segment loss from operations       (25,394)      (2,859)      (43,921)     (72,174)    (11,088)        (1,614)      (12,702)
Amortization of goodwill,
intangibles and advances ...         8,417        3,316        35,024       46,757       2,561          1,651         4,212
                                  --------     --------      --------     --------------------       --------      --------

<CAPTION>
                                                                Nine months ended September 30,
                                  -----------------------------------------------------------------------------------------
                                                      2000                                            1999
                                  -----------------------------------------------------------------------------------------
                                   Network       Mail       Technology      Total      Network         Mail         Total
                                  --------     --------    ------------   --------    ---------      --------      --------
                                                   (in thousands)                                (in thousands)
<S>                               <C>          <C>           <C>          <C>         <C>            <C>           <C>
Revenues ...................      $103,278     $ 25,148      $ 18,120     $146,546    $ 49,468       $  3,450      $ 52,918
Segment loss from operations       (64,456)      (9,412)      (68,154)    (142,022)    (26,585)        (1,672)      (28,257)
Amortization of goodwill,
intangibles and advances ...        24,801        9,952        47,245       81,998       6,941          1,651         8,592
                                  --------     --------      --------     --------------------       --------      --------
Total assets:
September 30, 2000 .........       340,335       57,473       586,313      984,121
December 31, 1999 ..........       476,939       57,073            --      534,012
</TABLE>

(7) SUPPLEMENTAL CASH FLOW INFORMATION

The amount of cash paid for interest was $14,000 and $76,000 for the nine month
periods ended September 30, 2000 and 1999, respectively.

During the nine months ended September 30, 2000, the Company entered into
capital leases to acquire equipment totaling $216,000.

(8) SIGNIFICANT CONTRACTS

NBC

In March 1999, the Company signed an exclusive agreement with NBC-Interactive
Neighborhood (NBC-IN) that would allow the Company to sell advertising on NBC
network television stations and their associated Web sites at the local market
level in exchange for services to be provided by the Company. As part of this
agreement, the Company issued to NBC warrants to purchase up to 150,000 shares
of our common stock for $26.05 per share. The first 75,000 warrants vested on
March 11, 1999 and will expire on March 11, 2002, The remaining 75,000 shares
covered by this warrant were to vest in eighteen increments of approximately
4,167 shares each on the first day of every month beginning with October 1, 2000
and ending on March 1, 2002 at $26.05 per share. In August 2000, as a result of
the termination of the agreement, 75,000 unvested warrants expired. As a result,
the Company reversed the original value ascribed to the warrants issued in
connection with this partner agreement of $1.8 million, which remained
unamortized, against additional paid in capital.


                                       12
<PAGE>

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

AT&T

On October 1, 1999, an agreement was reached with AT&T WorldNet to extend the
current strategic marketing arrangement. The agreement includes banner
advertising services, email campaigns and other marketing promotion services for
a term of one year with an optional one year extension. Under this agreement the
Company is subject to certain performance obligations. If the Company fails to
meet these performance obligations additional charges maybe incurred. The
Company issued warrants to purchase 150,000 shares of our common stock in
connection with the agreement. The warrants vest upon attaining certain revenue
targets and the extension of the contract. The warrants relating to the initial
term of the agreement for the purchase of 75,000 shares were valued at
approximately $2.0 million based on an independent valuation. Due to the nature
of the agreement, these warrants one being revalued each month based on the
Company's share price. A ratable portion of the warrants has been expensed, as
applicable, with the offset to additional paid in capital. The Black-Scholes
pricing model was used with the following assumptions at the date of issuance:
risk free interest rate of 6%, dividend yield of 0%, expected life of 4.3 years
and volatility of 90%. Because the vesting of the second warrants to purchase
75,000 shares is dependent upon the extension of the original term and no
obligation exists for either party to extend the agreement, no value has been
ascribed to the warrants due to the contingency associated with the extension
provision.

Sony

In December 1998, Exactis sold its online publishing business, including rights
to the InfoBeat brand, the consumer newsletters and the subscriber lists to Sony
Music, a Group of Sony Music Entertainment Inc. Exactis also entered into a
service agreement to manage the production and delivery of the InfoBeat
newsletters for Sony Music through December 2001. Exactis received $11.8 million
under the sales agreement and related service agreement. The agreements also
provides for additional minimum payments of $3.0 million over the term of the
service agreement. The separate fair values of the sales and service agreements
were not objectively determinable. Therefore, the proceeds of the sales and
service agreements are being recognized as technology service revenue over the
term of the service agreement based on the monthly minimum number of email
messages to be provided under the service agreement. At September 30, 2000,
approximately $4.2 million in deferred revenue is related to the Sony Music
agreements.

chinadotcom

On August 24, 2000, the Company acquired a 19.9% interest in 24/7 Media-Asia, a
subsidiary of chinadotcom ("CDC"), in exchange for 2.5 million shares of the
Company's common stock valued at $39.4 million. Pursuant to the exchange
agreement, CDC is entitled to one Class I member on the Company's board, with a
term expiring in 2002. The Company cannot sell its interest in Media-Asia nor
can CDC sell any of the 2.5 million shares received for a period of twelve
months. Each of the parties received the right of first refusal to purchase the
others shares, except in the case of an IPO. The Company agreed to provide
funding of up to approximately $2 million in additional capital in proportion to
its equity interest, provided 24/7 Media-Asia's 80.1% stockholder, CDC,
provides up to approximately $8.0 million in additional capital. In addition,
24/7 Media received an option to put back our shares in Media-Asia for
approximately 1.8 million shares of CDC (i) upon change of control of CDC or
(ii) upon the third anniversary of the agreement if an IPO of Media-Asia doesn't
occur within conditions as specified in the agreement. The Company has recorded
its investment in Media-Asia as a cost basis investment as of September 30,
2000.

In August 2000, the Company acquired a 19.9% interest in AT-Asia, a subsidiary
of CDC, through our subsidiary AwardTrack. The Company and CDC have committed to
make a minimum investment of $4 million based on our pro-rata shares. The
Company is required to make an initial investment of approximately $200,000. In
addition, the Company has the option to purchase within the first twelve months
additional shares to increase the Company's ownership percentage to 45% in
exchange for $1 million.


                                       13
<PAGE>

The Company has entered into licensing and service agreements with Media-Asia
relating to use of the 24/7 Media name, use of the 24/7 Mail brand and related
technology and rights to sell associated suite of products, service agreements
to provide 24/7 Connect and subsequently on August 31, 2000 a reseller agreement
to provide WSR services. The Company also entered into a license and service
agreement with AT-Asia to use the AT technology and the AT products and rights
to sublicense the AT technology and products to third party websites in the
Territory, as defined in the agreement. The respective agreements call for
exclusive licensing rights which would terminate if minimum revenue amounts
aren't met or if meaningful operations are not established within a twelve
month period. Many of these agreements call for upfront initial licensing fees.
Due to the exclusive nature of these license arrangements, the Company is
required to recognize any upfront licensing fees over the applicable licensing
periods or the expected term of the agreement which ranges from three to five
years. Upfront licensing fees under the respective agreements amounted to $3.3
million. As of September 30, 2000 none of the upfront fees have been received
and therefore are not reflected in the consolidated balance sheet. Some of the
agreements also call for minimum royalty amounts. The Company and Media-Asia
also agreed upon amounts still owed relating to Network royalties under the
former agreement for all of 1999 and through September 30, 2000 of $700,000,
which has been reflected in the three months ended September 30, 2000 statement
of operations. Remaining minimum royalty amounts as they relate to all the
agreements for the years ended December 31, 2000, 2001 and 2002 are $0.3
million, $1.75 million, and $2.4 million respectively.

(9)  SUBSEQUENT EVENTS

In December 1999, DoubleClick, Inc. filed a patent infringement lawsuit against
our subsidiary, Sabela Media, Inc., in the United States District Court for the
Southern District of New York. The suit alleged that Sabela was infringing, and
inducing and contributing to the infringement by third parties of a patent held
by DoubleClick entitled "Method for Delivery, Targeting and Measuring
Advertising Over Networks". DoubleClick was seeking treble damages in an
unspecified amount, a preliminary and permanent injunction from further alleged
infringement and attorney's fees and costs. 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."

On November 6, 2000, the Company and DoubleClick, Inc settled the DoubleClick,
Inc. v. Sabela Media, Inc. and 24/7 Media, Inc. v. DoubleClick, Inc patent
litigation. Both lawsuits have been dismissed with prejudice. As part of the
settlement, 24/7 Media and DoubleClick have granted each other certain rights in
certain of their respective patents. Under the settlement agreement, no other
terms of the settlement were disclosed. Proceeds received will be recorded net
of related legal expenses in the fourth quarter. As a result of the agreement,
the Company has deferred approximately $1.2 million in legal expenses incurred
during the quarter as prepaid expenses and other current assets.


                                       14
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                 OF FINACIAL 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 customer acquisition and customer
retention 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 business is organized into three principal lines of business:

      o     24/7 Network;
      o     24/7 Mail; and
      o     24/7 Technology Solutions.

The 24/7 Network

The 24/7 Network is a global online advertising network which aggregates the
advertising inventory of thousands 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 may 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
advertisers the ability to target Internet users based on a variety of criteria
including on a geo-targeted basis. Our Internet advertising network consists of
over 1,000 high profile Web sites as well as 4,500 small to medium-sized


                                       15
<PAGE>

Web sites to which we delivered an aggregate of approximately 16 billion
advertisements in the third quarter of 2000. In addition, 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.

Through the 24/7 Network we also offer network-related value-added solutions to
advertisers, marketers and Web publishers. For example, 24/7 AwardTrack 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, sweepstakes management and
syndication services.

24/7 Mail

24/7 Mail provides opt-in email direct marketing services. Our permission-based
email-marketing database of more than 25 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:

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 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

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.

Exactis, a provider of permission -based outsourced email marketing and
communications solutions. We acquired Exactis through acquisition in June 2000.

24/7 Website Results, a service that delivers targeted search traffic on behalf
of its clients. We acquired Website Results through our acquisition of Website
Results in August 2000.

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

RESULTS OF OPERATIONS

REVENUES

NETWORK REVENUES. Network revenues were $26.0 million and $103.3 million for the
three and nine month periods ended September 30, 2000, respectively, as compared
to $21.9 million and $49.5 million for the three and nine-month period ended
September 30, 1999, representing 19% and 109% growth, respectively. 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


                                       16
<PAGE>

our expansion globally through acquistions in Canada (July 99) and Latin America
(December 1999). 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 $9.7 million and $25.1 million for
the three and nine month periods ended September 30, 2000, respectively,
compared to $2.5 million and $3.5 million for the three and nine month period
ended September 30, 1999, representing 297% and 629% growth, respectively. 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. A significant portion of our
growth and the expansion into these new service offerings was due to our
acquisitions of Sift in the first quarter of 1999 which was accounted for as a
pooling and of ConsumerNet in the third quarter of 1999.

TECHNOLOGY REVENUES. The Technology Solutions segment was formed with our
acquisitions of Sabela and IMAKE in January 2000 and increased with the
acquisitions of Exactis in June 2000 and Website Results in August 2000.
Technology revenues for the three and nine month periods ended September 30,
2000 were $12.4 million and $18.1 million, respectively.

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 and the gross margin, which is network gross profit as a percent
of total network revenues, was 12% and 29% for the three and nine month period
ended September 30, 2000. The gross profit declined from 25% and 23% for the
three and nine month periods ended September 30, 1999, due to increased
competition in the marketplace and the cost to exit our least profitable
contracts.

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 44% and 52% for the three and nine month periods ended September 30, 1999,
respectively, to 42% and 38% for the three and nine month periods ended
September 30, 2000. The decrease is due to the shift in the mix of business 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 of time and materials for consulting contracts, the cost of equipment
and bandwidth. Gross margin was 70% and 67% for the three and nine month period
ended September 30, 2000, respectively.

OPERATING EXPENSES. Each of sales and marketing, general and administrative,
product development and amortization expenses increased in the three month and
nine month periods from 1999 to 2000 as a result of numerous acquisitions from
July 1999 to August 2000 and expenses in connection with the internal growth of
our business.

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 for the three and nine month periods ended September
30, 2000, however, as a percentage of revenue the expenses decreased from 28%
for the nine month period ended September 30, 1999 to 26% in the similar period
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 for expanding into new markets, broadening our
visibility and our global advertising campaign. We expect sales and marketing
expenses to decrease as we rationalize our sales force and focus on one highly
trained sales force able to sell our full suite of services.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist


                                       17
<PAGE>

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 for the three and nine month periods ended
September 30, 2000; however, as a percentage of revenue the expenses decreased
from 31% for the nine month period ended September 30, 1999 to 28% for the nine
month period ended September 30, 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 decrease as we fully integrate our various acquisitions and
capitalize on the synergies within the Company.

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 as a
percentage of revenue 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 capitalized certain costs
through June 2000 when 24/7 Connect became fully operational. During the third
quarter all enhancements to Connect were expensed as incurred. 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 $46.8 million and $82.0 million for the three and
nine months ended September 30, 2000, respectively, as compared to $4.2 million
and $8.6 million in the corresponding periods in 1999. The increase is due to
the goodwill and intangibles acquired with ConsumerNet, Clickthrough,
Netbookings, IMAKE, Sabela, AwardTrack, iPromotions, Kendro Communications,
Exactis, Website Results and the remaining interest in 24/7 Media Europe. In
addition, our amortization of NBC and AT&T partner agreements which commenced in
April 1999 (terminated July 2000) and October 1999, respectively, is included
for the full three and nine months ended September 30, 2000.

STOCK-BASED COMPENSATION. Stock based compensation of $6.5 million for the nine
months ended September 30, 2000 consists of a $1.9 million charge for
unregistered shares issued to employees, $3.4 million in amortization of
deferred compensation from acquisitions and $1.2 million in amortization of
deferred compensation for restricted shares issued to certain management and
employees. The expense in 1999 relates solely to amortization of deferred
compensation for restricted shares issued to certain employees.

MERGER RELATED COSTS. Merger related costs of $5.3 million for the nine months
ended September 30, 2000 consist primarily of acquired in-process technology of
$4.7 million from the acquisition of IMAKE that was immediately 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. The remaining costs are related
to the integration of our acquisitions in the first nine months of 2000.

INTEREST INCOME, NET. Interest income, net was $0.5 million and $1.2 million for
the three and nine months ended September 30, 2000, respectively and $1.0
million and $2.1 million for the comparative period in 1999. The decrease 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 of 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. In the nine months ended September 30, 2000, the Company sold
approximately 1.6 million shares of chinadotcom stock at prices ranging from
$17.95 to $40.48 per share. The shares had a cost basis of $2.3 million, which
resulted in a gain of approximately $38.0 million.


                                       18
<PAGE>

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 $72.6 million and $18.2 million for
the nine month periods ended September 30, 2000 and 1999, respectively. Net cash
used in operating activities in 2000 resulted from our net operating losses,
increases in accounts receivable and a decrease in accounts payable and accrued
liabilities. The significant increase in accounts receivable is partially
attributable to the increase in unbilled from $7.8 million at December 31, 1999
to $15.8 million at September 30, 2000 resulting from the Company's integration
and relocation of 24/7 Mail operations. Of the unbilled receivables as of
September 30, 2000, $9.8 million have been subsequently billed. In 1999, net
cash used in operating activities resulted from our net operating losses,
increases in accounts receivable, offset by a decrease in accounts payable and
accrued liabilities.

Net cash provided by investing activities was $47.9 million for the nine month
period ended September 30, 2000 and net cash used in investing activities was
$39.0 for the same period in 1999. During the nine months ended September 30,
2000, we continued to acquire equipment and capitalize internally developed
software costs associated with 24/7 connect. In addition, we continue to invest
in strategic partners both by acquisition and equity investments; and we
invested the proceeds from the sale of a portion of our investments. In
addition, we received a net of $24.0 million in cash through the acquisition of
subsidiaries.

Net cash provided by financing activities was $5.3 million and $99.9 million for
the nine months ended September 30, 2000 and 1999, respectively. Net cash
provided by financing activities consisted primarily of exercise of stock
options for the nine months ended September 30, 2000 and proceeds from our
secondary offering for the same period in 1999.

As of September 30, 2000, we had $23.1 million of cash and cash equivalents and
$88.2 million in available for sale 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 maintain a moderate level of capital
expenditure and lease commitments consistent with our anticipated growth in
operations.

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 September 1999, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 137, "Accounting for Derivative Instruments and Hedging Activity" which
delayed the effective date of SFAS 133 from September 15, 1999 to September 15,
2000. SFAS 133 established accounting and reporting standards for derivative
instrumentsand for hedging activities. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. In September 2000, the FASB issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an Amendment of FASB Statement No. 133" which intended to simplify the
accounting for derivative under SFAS 133 and is effective upon adoption of SFAS
133. The Company has not yet determined the impact of this pronouncement on its
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


                                       19
<PAGE>

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 has not yet determined the impact of this
pronouncement on its financial position or results of operations.

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 and
have since acquired twelve companies to date. None of the companies nor any
company that we have since acquired had an operating history of more than five
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 fourteen 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 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; and

      o     the availability of favorable acquisition financing for
            futureacquisitions; and the potential loss of key employees of any
            acquired business.

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


                                       20
<PAGE>

WE ANTICIPATE CONTINUED LOSSES AND WE MAY NEVER BE PROFITABLE

We incurred net loss of $56.8 million and $11.7 million for the three month
periods ended September 30, 2000 and 1999, respectively, and $102.8 million and
$26.1 million for the nine month period ended September 30, 2000 and 1999,
respectively. Each of our predecessors had net losses in every year of their
operation. We anticipate that we will incur operating losses for the foreseeable
future due to a high level of planned operating and capital expenditures.
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 the Company, 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, 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 and its growth rate in recent
quarters has slowed significantly. 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.


                                       21
<PAGE>

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 have substantially
completed the roll-out of 24/7 Connect across the U.S. portion the 24/7 Network,
have launched the system in Canada and intend to commence the transition to 24/7
Connect in Europe in the first quarter of 2001. In order 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,
including mult-currency and language functionality, 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
consummated, we will be partially dependent on AdForce, Inc. to deliver ads to
our networks of Web sites. If such service becomes 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.


                                       22
<PAGE>

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 September 30, 2000 and 1999, approximately 13% and 38%,
respectively, of our total revenues were derived from advertisements on our top
ten Web sites. For the three month period ended September 30, 2000, the top ten
Web sites included Juno Online Services, Inc., AT&T WorldNet Service, Goto.com,
Earthlink Network, Inc., DesktopDollars, Inc., Womensforum.com, Inc., Community
Connect Inc. [Black Planet], Epipo, Inc.[180 Solutions], Regent Network
Services, Inc. [China-Inc], and Times Mirror Magazines, Inc. [Sporting News]. 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 September 30, 2000,
our top ten advertisers and ad agencies accounted for approximately 17% 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 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


                                       23
<PAGE>

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;
      o     continue to scale our ad serving systems and upgrade their
            functional capabilities; and expand, train and manage our work
            force; and
      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 ownership 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 in Asia. 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 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


                                       24
<PAGE>

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.

INTELLECTUAL PROPERTY LIABILITY

We may be liable for content available or posted on the Web sites of our web
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.


                                       25
<PAGE>

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 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, may impact us.

The U.S. federal and various state governments have recently proposed
limitations on the collection and use of information regarding Internet users.
The European Union recently 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 that have been publicly supported by the Federal Trade Commission and
the Department of Commerce. Despite this achievement, the government may propose
and implement legislation that may be more adverse than the network Advertising
Initiative's principles. 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


                                       26
<PAGE>

clients. These regulations and guidelines could materially and adversely affect
the business, financial condition and results of operations of our business.

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 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.


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<PAGE>

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.

The Company is exposed to equity price risks on the marketable portion of its
equity securities. The Company's available-for-sale securities at September 30,
2000 include equity positions in companies in the Internet industry sector,
including chinadotcom corporation, Network Commerce, Inc., and i3Mobile, many of
which have experienced significant historical volatility in their stock prices.
The Company typically does not attempt to reduce or eliminate its market
exposure on these securities. A 20% adverse change in equity prices, based on a
sensitivity analysis of the Company's available-for-sale securities portfolio as
of September 30, 2000, would result in approximately a $17.9 million decrease in
the fair value of the Company's available-for-sale securities.

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.


                                       28
<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.

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.

On November 6, 2000, the Company and DoubleClick Inc settled the DoubleClick
Inc. v. Sabela Media, Inc. and 24/7 Media, Inc. v. DoubleClick Inc patent
litigation. Both lawsuits have been dismissed with prejudice. As part of the
settlement, 24/7 Media and DoubleClick have granted each other certain rights in
certain of their respective patents. Under the settlement agreement, no other
terms of the settlement were disclosed.

Item 2. Changes in Securities and Use of Proceeds

On August 24, 2000, we acquired Website Results, Inc. for approximately 4.3
million shares of our common stock, excluding 2.8 million contingently issuable
shares plus the assumption of previously outstanding stock options to acquire
approximately 350,000 shares of our common stock.

Also on August 24, 2000, we issued 2.5 million shares in exchange for a 19.9%
interest in 24/7 Media-Asia, a subsidiary of chinadotcom corporation.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Securities Holders

At our Annual Meeting of Stockholders on September 7, 2000, we submitted the
following matters to a vote of our stockholders through a proxy solicitation:

      1.    to elect two nominees as Class I Directors of the Company; and
      2.    to amend our 1998 Stock Incentive Plan to increase the number of
            shares that may be subject to awards thereunder by 1,750,000, and to
            provide for an annual automatic increase in such number of shares by
            an amount equal to 3% of the total number of shares of Common Stock
            outstanding on the last trading day of the immediately preceding
            calendar year, provided that no such automatic increase will exceed
            1,750,000.


                                       29
<PAGE>

      The results of the voting at the annual meeting were as follows:

<TABLE>
<CAPTION>
      ---------------------------------------------------------------------------------------------
      Proposal                               Affirmative Votes       Votes Against      Abstentions
      ---------------------------------------------------------------------------------------------
      <S>                                    <C>                     <C>                <C>
      Election of John Barry                 24,640,987              164,153            0
      ---------------------------------------------------------------------------------------------
      Election of Adam Goldman               24,554,785              250,355            0
      ---------------------------------------------------------------------------------------------
      Amendment to Stock Incentive Plan      8,636,322               5,205,784          143,916
      ---------------------------------------------------------------------------------------------
</TABLE>

Item 5. Other Information

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 August 2, 2000. The report contained
information about the CEO's interview with Bloomberg.

We filed a Current Report on Form 8-K dated August 24, 2000. The report
contained information about the acquisition of Website Results and our expanded
strategic relationship with chinadotcom.

We filed a Current Report on Form 8-K dated September 1, 2000. The report
contained information about the acquisition of Website Results.

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: November 14, 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


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