<Page>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark one)

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

                        or

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

For the transition period from          to

                         Commission file number 1-14355
                              24/7 Real 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 9, 2001
Common Stock, par value $.01 per share             49,507,662 Shares

<Page>

                              24/7 REAL MEDIA, INC.
                               SEPTEMBER 30, 2001
                                    FORM 10-Q
                                      INDEX

<Table>
<S>      <C>                                                                                                                  <C>
Part I.  Financial Information

Item 1.  Consolidated Financial Statements

Consolidated Balance Sheets as of September 30, 2001 (unaudited) and December 31, 2000.......................................  2

Consolidated Statements of Operations for the three and nine month periods ended September 30, 2001 and 2000 (unaudited).....  3

Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2001 and 2000 (unaudited)...............  4

Notes to Unaudited Interim Consolidated Financial Statements.................................................................  5

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations..............................  18

Item 3.  Quantitative and Qualitative Disclosure about Market Risk..........................................................  38

Part II. Other Information

Item 1.  Legal Proceedings..................................................................................................  39

Item 2.  Changes in Securities and Use of Proceeds..........................................................................  39

Item 3.  Defaults Upon Senior Securities....................................................................................  39

Item 4.  Submission of Matters to a Vote of Security Holders................................................................  39

Item 5.  Other Information..................................................................................................  39

Item 6.  Exhibits and Reports on Form 8-K...................................................................................  39

Item 7.  Signatures.........................................................................................................  39
</Table>

                                        1
<Page>

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

<Table>
<Caption>
                                                                       September 30,    December 31,
                                                                           2001             2000
                                                                       -------------    ------------
                               ASSETS                                   (unaudited)

<S>                                                                       <C>             <C>
Current assets:
  Cash and cash equivalents (including restricted cash of $488
   in 2001 and $800 in 2000).........................................     $    7,451      $   25,856

  Restricted cash held in escrow.....................................          1,500             -

  Accounts receivable, less allowances of $2,354
   and $5,868, respectively..........................................          6,514          34,737

  Prepaid expenses and other current assets..........................          5,171           3,295
                                                                       -------------    ------------

    Total current assets.............................................         20,636          63,888


Property and equipment, net..........................................         23,165          44,189

Intangible assets, net...............................................         15,856         103,777

Investments..........................................................            -            11,267

Net long-term assets of discontinued operation.......................            -            22,787

Other assets.........................................................            743           4,363
                                                                       -------------    ------------
    Total assets.....................................................     $   60,400      $  250,271
                                                                       =============    ============

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Accounts payable...................................................     $    3,706      $   12,792

  Accrued liabilities................................................          9,696          22,508

  Net current liabilities of discontinued operation..................            -             3,260

  Current installments of obligations under capital leases...........             44              99

  Deferred revenue...................................................            326           3,356

  Deferred gain on sale of non-core assets...........................          2,603               -

                                                                       -------------    ------------
    Total current liabilities........................................         16,375          42,015
                                                                       -------------    ------------

Obligations under capital leases, excluding current installments.....            120             153

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; 140,000,000 shares authorized;
   41,290,794 and 42,475,807 shares issued and outstanding,
   respectively......................................................            413             425

  Additional paid-in capital.........................................      1,068,148       1,069,445

  Deferred stock compensation........................................         (1,335)         (5,578)

  Accumulated other comprehensive income (loss)......................           (344)          3,425

  Accumulated deficit................................................     (1,023,082)       (859,719)

                                                                       -------------    ------------
    Total stockholders' equity.......................................         43,800         207,998
                                                                       -------------    ------------
    Total liabilities and stockholders' equity.......................     $   60,400      $  250,271
                                                                       =============    ============
</Table>

 See accompanying notes to unaudited interim consolidated financial statements.

                                        2
<Page>

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

<Table>
<Caption>
                                                                 Three months ended September 30,   Nine months ended September 30,
                                                                 --------------------------------   -------------------------------
                                                                      2001               2000            2001             2000
                                                                 --------------   ---------------   ---------------   -------------
                                                                           (unaudited)                         (unaudited)
<S>                                                                <C>               <C>              <C>              <C>
Revenues:

  Integrated Media Solutions....................................   $      7,039      $     30,404     $     28,269     $    104,885

  Technology Solutions..........................................          1,271             9,696           12,790           15,430
                                                                 --------------   ---------------   ---------------   -------------
    Total revenues..............................................          8,310            40,100           41,059          120,315
                                                                 --------------   ---------------   ---------------   -------------

Cost of revenues:

  Integrated Media Solutions....................................          7,495            21,846            24,814          77,742

  Technology Solutions (exclusive of $157, $0, $472 and $0,
   respectively, reported below as stock-based compensation)....            600             2,864             4,191           5,244
                                                                 --------------   ---------------   ---------------   -------------
    Total cost of revenues                                                8,095            24,710            29,005          82,986
                                                                 --------------   ---------------   ---------------   -------------

    Gross profit................................................            215            15,390            12,054          37,329
                                                                 --------------   ---------------   ---------------   -------------

Operating expenses:

  Sales and marketing (exclusive of $36, $651, $497 and $1,953,
   respectively, reported below as stock-based compensation)....          3,686            12,809            17,158          32,133

  General and administrative (exclusive of $173, $662, $1,182
   and $1,335, respectively, reported below as stock-based
   compensation)................................................          5,660            14,792            29,442          33,691

  Product development (exclusive of $221, $913, $504 and $2,809,
   respectively, reported below as stock-based compensation)....          2,565             7,889            12,523          11,057

Amortization of goodwill, intangible assets and advances........          3,641            44,056            18,094          73,939

Stock-based compensation........................................            587             2,226             2,655           6,117

Write-off of acquired in process technology and merger related
 costs..........................................................            -                 152               -             5,146

Restructuring and exit costs....................................            521               -               1,011             -

Gain on sale of non-core assets, net............................           (647)              -              (1,529)            -

Impairment of intangible assets.................................         15,052               -              68,169             -
                                                                 --------------   ---------------   ---------------   -------------

    Total operating expenses....................................         31,065            81,924           147,523         162,083
                                                                 --------------   ---------------   ---------------   -------------

    Operating loss..............................................        (38,850)          (66,534)         (135,469)       (124,754)


Interest income, net............................................            133               501               750           1,234

Gain on sale of investments, net................................            882            14,885             4,985          37,988

Impairment of investments.......................................            -                 -              (3,089)            -
                                                                 --------------   ---------------   ---------------   -------------

Loss from continuing operations.................................        (29,835)          (51,148)         (132,823)        (85,532)

Loss from discontinued operation................................         (1,018)           (5,640)          (30,540)        (17,268)
                                                                 --------------   ---------------   ---------------   -------------
Net loss........................................................   $    (30,853)     $    (56,788)    $    (163,363)   $   (102,800)
                                                                 ==============   ===============   ===============   =============

Loss  per common share-basic and diluted

Loss from continuing operations.................................   $      (0.67)     $      (1.34)    $       (3.04)   $      (2.83)

Loss from discontinued operation................................          (0.03)            (0.15)            (0.70)          (0.57)
                                                                 --------------   ---------------   ---------------   -------------
Net loss........................................................   $      (0.70)     $      (1.49)    $       (3.74)   $      (3.39)
                                                                 ==============   ===============   ===============   =============
Weighed average common shares outstanding......................     44,363,935        38,122,316       43,630,239       30,307,724
                                                                 ==============   ===============   ===============   =============
</Table>

 See accompanying notes to unaudited interim consolidated financial statements.

                                        3
<Page>

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

<Table>
<Caption>
                                                                         Nine Months Ended September 30,
                                                                       -----------------------------------
                                                                              2001                2000
                                                                       ------------------  ---------------
                                                                                    (unaudited)
<S>                                                                    <C>                 <C>
Cash flows from operating activities:
Net loss.............................................................. $   (163,363)       $   (102,800)

Adjustments to reconcile net loss to net cash used in operating
activities:

Loss from discontinued operation......................................       30,540              17,268

Depreciation and amortization of fixed assets.........................       10,247               7,008

Write-off of acquired in-process technology...........................          -                 4,700

Provision for doubtful accounts and sales reserves, net of write-offs.       (3,514)              3,180

Amortization of goodwill and other intangible assets..................       18,094              72,126

Amortization of partner agreements....................................          -                 1,813

Non-cash compensation.................................................        2,655               6,117

Gain on sale of investments...........................................       (4,985)            (37,988)

Gain on sale of non-core assets, net..................................       (1,529)                -

Warrants issued for services..........................................          100                 -

Impairment of investments.............................................        3,089                 -

Impairment of intangible and other assets.............................       68,169                 -

Non-cash restructuring and exit costs.................................         (549)                -

Changes in operating assets and liabilities, net of
  effect of acquisitions and dispositions:

    Accounts receivable...............................................       28,625             (16,695)

    Prepaid assets and other current assets...........................         (709)             (1,572)

    Other assets......................................................        3,834              (2,270)

    Accounts payable and accrued liabilities..........................      (19,814)            (14,892)

    Deferred revenue..................................................       (1,474)             (3,393)
                                                                       ------------        ------------
         Net cash used in operating activities........................      (30,584)            (67,398)
                                                                       ------------        ------------
Cash flows from investing activities:

Proceeds from the sale of non-core assets,
  net of $1.0 million in closing expenses.............................       16,807                 -

Proceeds from the sale of investments.................................        6,858              40,243

Capital expenditures..................................................         (648)            (19,019)

Proceeds from the sale of marketable securities.......................          -                 9,613

Cash paid for acquisitions, net of cash acquired.......................          -                23,952

Cash paid for investments.............................................          -                (6,120)

Increase in intangible assets.........................................          -                  (104)
                                                                       ------------        ------------
         Net cash provided by investing activities....................       23,017              48,565
                                                                       ------------        ------------
Cash flows from financing activities:

Proceeds from exercise of stock options and conversion of warrants....           12               5,309

Cash paid in settlement for treasury stock............................         (275)                -

Payment of capital lease obligations..................................          (88)                (58)
                                                                       ------------        ------------
         Net cash (used in) provided by financing activities..........         (351)              5,251
                                                                       ------------        ------------
         Net change in cash and cash equivalents......................       (7,918)            (13,582)

         Cash used by discontinued operations.........................      (10,523)             (8,330)

         Net effect of foreign currency adjustments...................           36                (246)

Cash and cash equivalents at beginning of period......................       25,856              41,170
                                                                       ------------        ------------
Cash and cash equivalents at end of period............................ $      7,451        $     19,012
                                                                       ============        ============
</Table>

 See accompanying notes to unaudited interim consolidated financial statements.

                                        4
<Page>

(1)  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF OPERATIONS AND GOING CONCERN

On November 9, 2001, the Company amended its Certificate of Incorporation
to change its name from 24/7 Media, Inc. to 24/7 Real Media, Inc ("24/7 Real
Media" or the "Company").

24/7 Real Media together with its subsidiaries is a provider of online marketing
solutions for Web publishers, online advertisers, advertising agencies,
e-marketers and e-commerce merchants. The Company operates in two principal
lines of business: Integrated Media Solutions and Technology Solutions.
Integrated Media Solutions provides ad sales solutions for Web-based advertising
including banner ads, sponsorships, targeted search traffic delivery, loyalty
reward programs and promotions as well as serves as a list manager for
permission-based email lists. Technology Solutions provides online ad serving,
broadband solutions and professional services. In October 2001, through the
merger with Real Media, the Company has expanded its operations into Europe,
Latin America and Asia Pacific.

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

The Company's independent public accountants have included a "going concern"
explanatory paragraph in their audit report accompanying the 2000 consolidated
financial statements which have been prepared assuming that the Company will
continue as a going concern. The explanatory paragraph states that the
Company's recurring losses from operations since inception raise substantial
doubt about the Company's ability to continue as a going concern and that the
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

ORGANIZATION AND BASIS OF PRESENTATION

PRINCIPLES OF CONSOLIDATION

The Company's consolidated financial statements as of September 30, 2001 and
December 31, 2000 and for the three and nine month periods ended September 30,
2001 and 2000 include the accounts of the Company and its majority-owned and
controlled subsidiaries from their respective dates of acquisition (see note 2).
All significant intercompany transactions and balances have been eliminated in
consolidation.

INTERIM RESULTS

The consolidated financial statements as of September 30, 2001 and for the three
and nine month periods ended September 30, 2001 and 2000 have been prepared by
24/7 Real 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, 2001 and the results of the Company's
operations and cash flows for the interim periods ended September 30, 2001 and
2000. The financial data and other information disclosed in these notes to the
consolidated results for the three and nine month periods ended September 30,
2001 and 2000 are not necessarily indicative of the results to be expected for
any subsequent quarter or the entire fiscal year ending December 31, 2001.

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

CASH AND CASH EQUIVALENTS

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

                                        5
<Page>

September 30, 2001, cash and cash equivalents includes $0.5 million in
restricted cash related to leases, that becomes available within the next year.

RESTRICTED CASH HELD IN ESCROW

The Company has $1.5 million of cash held in escrow relating to the sale of
Exactis to Experian on May 23, 2001. The balance is due to be released on August
23, 2002 (see note 4).

INTANGIBLE ASSETS

Goodwill and intangible assets relate to the Company's acquisitions accounted
for under the purchase method of accounting. Under the purchase method of
accounting, the excess of the purchase price over the identifiable net tangible
assets of the acquired entity is recorded as identified intangible assets and
goodwill. Intangible assets are estimated by management to be primarily
associated with the acquired workforce, contracts, technological know how and
goodwill. As a result of the rapid technological changes occurring in the
Internet industry and the intense competition for qualified Internet
professionals and customers, recorded intangible assets are amortized on the
straight-line basis over the estimated period of benefit, which is two to four
years (see notes 2 and 5).

INVESTMENTS

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

Investments in non-marketable equity securities of companies in which the
Company owns less than 20% of a company's stock and does not have the ability to
exercise significant influence are accounted for on the cost basis. Such
investments are stated at the lower of cost or market value. On an ongoing
basis, the Company assesses the need to record impairment losses on investments
and records such losses when the impairment is determined to be
other-than-temporary (see note 6).

REVENUE RECOGNITION

INTEGRATED MEDIA SOLUTIONS

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

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 also has agreements with various list owners in which the Company
services its advertisers and other customers through the use of these lists. The
Company becomes obligated to make payments to Affiliated Web sites, which have
contracted to be part of the Company's networks, and list owners in the period
the advertising impressions or emails are delivered. Such expenses are
classified as cost of revenues in the consolidated statements of operations.

TECHNOLOGY SOLUTIONS

                                        6
<Page>

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

At September 30, 2001 and December 31, 2000, accounts receivable included
approximately $1.4 million and $4.0 million, respectively, of earned but
unbilled receivables, which are a normal part of the Company's business, as
receivables are generally invoiced only after the revenue has been earned. The
decrease in unbilled receivables from December 31, 2000 to September 30, 2001
resulted from the decrease in revenues generated in the first nine months of
2001. The terms of the related advertising contracts typically require billing
at the end of each month. All unbilled receivables as of September 30, 2001 have
been subsequently billed.

IMPAIRMENT OF LONG-LIVED ASSETS

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

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

In 2001, the Company wrote off $68.2 million in goodwill and intangible assets
(see note 5). It is reasonably possible that the impairment factors evaluated by
management will change in subsequent periods, given that the Company operates in
a volatile business environment. This could result in significant additional
impairment charges in the future.

RESTRUCTURING ACTIVITIES

Restructuring activities are accounted for in accordance with the guidance
provided in the consensus opinion of the Emerging Issues Task Force ("EITF") in
connection with EITF Issue 94-3 ("EITF 94-3"). EITF 94-3 generally requires,
with respect to the recognition of severance expenses, management approval of
the restructuring plan, the determination of the employees to be terminated, and
communication of benefit arrangement to employees (see note 9).

COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) for the nine month period ended September 30,
2001 and 2000 was $(167.2) million and $(253.3) million, respectively.
Comprehensive loss resulted primarily from net losses of $(163.4) million and
$(102.8) million, respectively, as well as a change in unrealized gains
(losses) (net of tax), of marketable securities of $(3.8) million and $(150.3)
million, respectively, and foreign currency translation adjustments of $0 and
$(0.2) million, respectively. The net change in unrealized losses of $(3.8)
million for the nine month period ended September 30, 2001 is comprised of net
unrealized holding losses

                                        7
<Page>

arising during the period of $6.3 million, a reclassification adjustment of $5.0
million for net gains related to the sale of all of the Company's
available-for-sale securities and some cost based investments and a
reclassification adjustment of $2.5 million for other-than temporary losses
related to available-for-sale securities of Network Commerce and i3Mobile.

LOSS PER SHARE

Loss per share is presented in accordance with the provisions of Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("EPS"). Basic EPS
excludes dilution for potentially dilutive securities and is computed by
dividing income or loss available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock and resulted in the
issuance of common stock. Diluted net loss per share is equal to basic net loss
per share since all potentially dilutive securities are anti-dilutive for each
of the periods presented. Diluted net loss per common share for the three and
nine months ended September 30, 2001 and 2000 does not include the effects of
options to purchase 7.3 million and 7.3 million shares of common stock,
respectively; 3.0 million and 3.0 million common stock warrants and 0.3 million
and 0.1 million of unvested restricted stock, respectively, on an "as if"
converted basis, as the effect of their inclusion is anti-dilutive during each
period.

RECLASSIFICATIONS

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

(2)  BUSINESS COMBINATIONS

ACQUISITION OF 24/7 EUROPE

On January 1, 2000, the Company acquired the remaining interest in 24/7 Media
Europe through the issuance of common stock. The Company issued 428,745 shares
of 24/7 Media common stock, valued at approximately $24.1 million, resulting in
additional goodwill and other intangible assets of $24.1 million. The goodwill
and other intangible assets were being amortized over the expected period of
benefit of three years (see note 3).

ACQUISITION OF IMAKE

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

On July 20, 2000, the Company issued 880,000 contingent shares. The shares had a
value of $11.9 million, which was considered additional goodwill. At September
30, 2000, an additional 18,000 contingent shares were earned pursuant to the
agreement, resulting in $0.2 million of additional goodwill. In the third
quarter, the remaining 14,000 contingent shares, valued at approximately $3,000
were earned.

                                        8
<Page>

The additional amounts of goodwill are being amortized over the remaining
period of benefit (see note 3).

ACQUISITION OF SABELA

On January 9, 2000, the Company acquired Sabela, a global ad serving, tracking
and analysis company with products for online advertisers and Web publishers.
The purchase price of approximately $65.0 million consists of approximately 1.2
million shares of 24/7 Media common stock valued at approximately $58.3 million,
cash consideration of $2.1 million, fair value of warrants assumed of $1.2
million, fair value of options assumed of $1.7 million and $1.7 million in
acquisition costs. The purchase price in excess of the value of identified
assets and liabilities assumed of $64.7 million has been allocated $7.1 million
to technology, $1.1 million to workforce and $56.5 million to goodwill. Goodwill
and other intangible assets are being amortized over their expected period of
benefit which is four years for goodwill and technology; and two years for
workforce. The acquisition was accounted for as a purchase business combination,
effective as of January 1, 2000, for accounting purposes (see note 4).

ACQUISITION OF AWARDTRACK

On February 11, 2000, the Company acquired AwardTrack, Inc. ("AwardTrack"),
which offers a private label loyalty customer relationship management program
that enables Web retailers and content sites to issue points to Web users as a
reward for making purchases, completing surveys or investigating promotions. The
purchase price of approximately $69.3 million consists of approximately 1.1
million shares of 24/7 Media common stock valued at approximately $64.0 million,
fair value of options assumed of $4.6 million and $0.7 million in acquisition
costs. The purchase price in excess of the value of identified assets and
liabilities assumed of $69.4 million has been allocated $7.7 million to
technology, $0.5 million to tradename, $0.4 million to workforce and $60.8
million to goodwill. Goodwill and other intangible assets are being amortized
over their expected period of benefit which is four years for goodwill,
technology and tradename; and two years for workforce. The acquisition was
accounted for as a purchase business combination effective as of February 11,
2000 for accounting purposes (see note 4).

ACQUISITION OF EXACTIS

On June 28, 2000, the Company acquired all of the outstanding common stock of
Exactis.com, Inc., a provider of email based direct marketing services, in
exchange for Company common stock. Exactis.com stockholders received shares of
24/7 Media common stock based on an exchange ratio of 0.6 shares of 24/7 Media
common stock for each share of Exactis.com common stock. The purchase price of
approximately $475.6 million consists of approximately 8.2 million shares of
24/7 Media common stock valued at approximately $383.0 million, fair value of
options assumed of $82.9 million, fair value of warrants assumed of $2.3
million, deferred compensation of $2.9 million and acquisition costs of $4.5
million. The purchase price in excess of the value of identified assets and
liabilities assumed of $428.8 million has been allocated $60.8 million to
technology, $1.0 million to tradename, $3.2 million to workforce, $2.1 million
to customer base and $361.7 million to goodwill. Goodwill and other intangible
assets are being amortized over their expected period of benefit which is four
years for goodwill, technology, customer base and tradename; and two years for
workforce. The acquisition was accounted for as a purchase business combination
effective as of June 30, 2000 for accounting purposes (see note 4).

ACQUISITION OF WSR

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

                                        9
<Page>

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

On September 25, 2001, the company and the former principal stockholders entered
into a settlement and mutual general release (the "Settlement"). The Settlement
rescinded all prior agreements and amendments of the purchase agreement and
called for the former principal stockholders (i) to return approximately 3.3
million shares of outstanding stock held by them, (ii) forfeit their rights to
the potential earn out of another 1.9 million shares and the $1.5 million in
cash and (iii) transfer certain strategic assets and agreements in exchange for
$275,000 in cash and forgiveness of any remaining indebtedness of these
individuals to the Company. The Company has reflected the return of the common
stock as treasury stock amounting to $392,000 using the market price on the
settlement date and immediately retired all shares.

ACQUISITION OF KENDRO COMMUNICATIONS

On April 1, 2000, our subsidiary 24/7 Media Europe NV acquired Kendro
Communications, a Swiss based banner network service, for approximately 26,000
shares of the Company's common stock valued at approximately $487,000, excluding
contingent consideration of up to $6.7 million to be paid in the Company's
common stock, excluding contingent consideration subject to performance
standards and other contractual requirements. The performance standards are
based on revenues of the acquired business for the fiscal years ended March 31,
2001 and 2002, and the price of the Company's common stock at March 31, 2001 and
2002, respectively, and will be payable by 24/7 Europe within fourteen days
after the delivery of audited revenue statements provided that the sellers are
employees of the Company. As of March 31, 2001, the Company accrued an estimate
of $1.1 million for the settlement of this contingency. In May 2001, the
European Board of Directors approved a plan to close down the Swiss operations
as well as certain other offices in an effort to restructure the European
operations. As a part of that restructuring, the Company entered into an
agreement terminating the original Kendro purchase agreement. As full settlement
for termination the Company made a cash payment of $1.1 million and issued 1.0
million shares valued at $490,000 to the former shareholders. The Company has
reflected the share issuance as stock based compensation which along with the
remaining charges are included in the loss from discontinued operations line
item in the 2001 consolidated statement of operations (see note 3).

ACQUISITION OF IPROMOTIONS

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

SUMMARY

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

                                       10
<Page>

<Table>
<Caption>
                                                      NET TANGIBLE
          ACQUIRED ENTITY           ACQUISITION           ASSETS          IN-PROCESS     DEFERRED     INTANGIBLES/   USEFUL LIFE
                                       COSTS          (LIABILITIES)       TECHNOLOGY   COMPENSATION    GOODWILL      (IN YEARS)
---------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                   <C>                 <C>            <C>            <C>                 <C>
IMAKE.......................   $         46,750      $        (793)      $     4,700    $     5,785    $    37,058         2-4

247/7 Media Europe..........             24,117                -                 -              -           24,117          3

Sabela......................             65,026                317               -              -           64,709         2-4

AwardTrack..................             69,293                (82)              -              -           69,375         2-4

Exactis.....................            475,636             43,939               -            2,870        428,827         2-4

WSR.........................             66,675              3,720               -            1,072         61,883          4

Kendro......................                527                 17               -              -              510          4

iPromotions.................              3,489               (127)               97            -            3,519         2-4
                               -----------------------------------------------------------------------------------
                               $        751,513      $      46,991       $     4,797    $     9,727    $   689,998
                               ===================================================================================
</Table>

The following unaudited pro forma consolidated amounts give effect to all of the
Company's acquisitions (listed above) accounted for by the purchase method of
accounting as if they had occurred at the beginning of the period by
consolidating the results of operations of the acquired entities for the three
and nine month periods ended September 30, 2000.

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

<Table>
<Caption>
                                                      Three Months Ended         Nine Months Ended
                                                      September 30, 2000         September 30, 2000
                                                   ------------------------   -----------------------
                                                     (in thousands, except share and per share data)
<S>                                                           <C>                     <C>
Total revenues                                                $      42,652           $       139,601
                                                   ------------------------   -----------------------
Loss from continuing operations                               $     (58,835)          $      (164,812)
Loss from discontinued operation                                     (5,640)                  (17,268)
                                                   ------------------------   -----------------------
Net loss                                                      $     (64,475)          $      (182,080)
                                                   ========================   =======================

Net loss per share from continuing operations                 $       (1.44)          $         (4.12)
Net loss per share from discontinued operation                        (0.14)                    (0.43)
                                                   ------------------------   -----------------------
Net loss per share -  basic and diluted                       $       (1.58)          $         (4.55)
                                                   ========================   =======================
Weighted average shares used
  in net loss per share calculation (1)                          40,825,686                39,978,427
                                                   ========================   =======================
</Table>

(1) The weighted average shares used to compute pro forma basic and diluted net
loss per share for the period ended September 30, 2000 includes the 1,129,344,
916,000, 8,156,843, 4,970,000 and 25,694 shares issued for AwardTrack, IMAKE,
Exactis, WSR and Kendro, respectively, as if the shares were issued on January
1, 2000.

(3)  DISCONTINUED OPERATION

On August 6, 2001, the Company, determined that it would cease funding its
European subsidiaries and communicated that to 24/7 Europe NV's management team
and Board of directors. Management of 24/7 Europe has advised us that 24/7
Europe NV is insolvent and would shut down all operations in the third

                                       11
<Page>

quarter of 2001. The consolidated financial statements of the Company have been
restated to reflect the disposition of the international segment as a
discontinued operation in accordance with APB Opinion No. 30. Accordingly,
revenues, costs and expenses, assets, liabilities, and cash flows of Europe have
been excluded from the respective captions in the Consolidated Statements of
Operations, Consolidated Balance Sheets and Consolidated Statements of Cash
Flows, and have been reported through the date of disposition as "Loss from
discontinued operation," "Net assets of discontinued operation," and "Net cash
used by discontinued operation," for all periods presented.

During the second quarter of 2001, the Company had reduced the carrying value
of the net assets of the European operations to zero.

Summarized financial information for the discontinued operation is as follows
(in thousands):

STATEMENTS OF OPERATIONS DATA

<Table>
<Caption>
                                                                                     Nine months ended September
                                         Three months ended     September 30,                     30,
                                                2001                 2000               2001              2000
                                         ------------------     ------------       ------------       ------------
<S>                                           <C>                <C>               <C>                <C>
Revenues.............................         $          -       $     8,028       $     10,555       $     26,695

Net loss.............................               (1,018)           (5,640)           (30,540)           (17,268)

Gain or loss on disposal.............                    -                 -                  -                  -

<Caption>

BALANCE SHEET DATA                        September 30, 2001    December 31, 2000
                                          ------------------    -----------------
<S>                                           <C>                  <C>
Current assets.......................         $          -         $    18,656

Total assets.........................                    -              22,787

Current liabilities..................                    -              (3,260)

Long-term liabilities................                    -                   -
                                              ------------         -----------
Net assets of discontinued
  operation..........................         $          -         $    19,527
                                              ============         ===========
</Table>

(4)  DISPOSAL OF NON-CORE ASSETS

On May 23, 2001, the Company completed the sale of Exactis to Direct Marketing
Technologies, Inc., a subsidiary of Experian. The purchase price was $15.25
million of which $1.5 million was deposited into escrow until August 2002 as
security for the Company's indemnification obligations under the Stock Purchase
Agreement and $1.75 million was retained as a prepayment for future services
that are to be purchased by the Company from Experian pursuant to a services
agreement that expires on December 31, 2002. The $1.5 million in escrow and
$1.75 million prepayment have been reflected as deferred gain on sale of
non-core assets on the consolidated balance sheet. During the quarter ended
September 30, 2001, the Company has been billed approximately $650,000 in
services which have been reflected as cost of revenues and gain on sale of non
core assets in the statement of operations. Through September 30, 2001, the sale
has resulted in a loss of $4.7 million, not including the remainder of the
aforementioned deferred gains of $2.6 million. The Company has reflected the
remaining $1.1 million of prepaid services in prepaid and other current assets
and the $1.5 million escrow amounts in restricted cash held in escrow on the
consolidated balance sheet.

                                       12
<Page>

Also during May 2001, the Company sold certain technology assets and
intellectual property of Sabela and AwardTrack. The Company has retained the
remaining assets of these subsidiaries. AwardTrack operations were closed in
2000 and the Company completed the shut down of the remaining operations of
Sabela on September 30, 2001. Proceeds associated with these sales amounted to
approximately $5.8 million before shut down and disposal costs. These sales
resulted in approximately a $6.2 million gain.

(5)  INTANGIBLE ASSETS, NET

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

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

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

As a result of its review at each quarter end, the Company's management
determined that the fair value of goodwill and other intangible assets
attributable to Mail, Exactis, Imake and WSR were less than their recorded
carrying values. The Company recognized $68.2 million in impairment charges
throughout the nine months ended September 30, 2001. Of this amount, $25.3
million related to Mail, $26.9 million to WSR, $11.5 million to IMAKE and $4.5
million to Exactis. During the third quarter of 2001, the Company recognized
$15.1 million in impairment charges of which $9.6 million related to WSR and
$5.5 million to IMAKE. The impairment factors evaluated by management may
change in subsequent periods, given that the Company's business operates in
a highly

                                       13
<Page>

volatile business environment. This could result in significant additional
impairment charges in the future. During the second quarter of 2001, management
resolved to cease funding of its European operations. As a result, the Company
recorded an impairment charge of $7.7 million related to Europe which has been
reflected in its loss from discontinued operation in the 2001 consolidated
statement of operations.

After giving effect to the aforementioned impairment charges of $68.2 million,
the sale of Exactis to Experian and the discontinued operations of Europe, the
remaining amount of goodwill and other intangibles, net, as of September 30,
2001 was $15.9 million: $6.8 million related to IMAKE, $4.4 million related to
Mail, $3.1 million related to WSR and $1.6 million related to ClickThrough.

<Table>
<Caption>
                                              September 30,       December 31,
                                                  2001               2000
                                             --------------       ------------
                                                       (in thousands)
<S>                                           <C>                  <C>
Goodwill................................      $     17,590         $    89,793

Technology..............................             3,076              50,471

Other intangible assets.................               403               6,365
                                              ------------         -----------
                                                    21,069             146,629

Less accumulated amortization...........            (5,213)            (42,852)
                                              ------------         -----------
                                              $     15,856         $   103,777
                                              ============         ===========
</Table>

(6)  INVESTMENTS

The fair value of the available-for-sale marketable securities is based on the
quoted market values reported on NASDAQ. As of September 30, 2001, the Company
has sold all of its marketable and cost based securities.

During 2001, the Company sold all its remaining shares of chinadotcom stock
at prices ranging from $2.00 to $7.69 per share. The shares had a cost basis
of $1.7 million, which resulted in a gain of approximately $4.6 million. The
Company also sold all of its investments in Network Commerce and i3Mobile,
which resulted in proceeds of $0.6 million and a loss of approximately $0.5
million. In September 2001, the company sold its interest in Idealab for $2.5
million resulting in a gain of approximately $0.9 million. As a result, a
$2.5 million receivable from Idealab is included in the prepaid and other
current assets as of September 30, 2001, all of which was received in October
2001.

During the first quarter of 2001, the Company wrote down certain of its
investments and recognized impairment charges of approximately $3.1 million for
other-than-temporary declines in value of certain investments. The Company's
management made an assessment of the carrying value of its cost-based
investments and determined that they were in excess of their carrying values due
to the significance and duration of the decline in valuations of comparable
companies operating in the Internet and technology sectors. The write down of
cost based investments was $0.6 million related to Media-Asia. The Company's
management also recognized that the decline in value of its available-for-sale
investments in Network Commerce and i3Moble were other-than-temporary and
recorded an impairment of $2.3 million and $0.2 million, respectively. These
impairment charges are included in "Impairment of investments" within other
income (expense) in the Company's 2001 consolidated statement of operations.

(7)  COMMON STOCK

On September 25, 2001, the Company entered into a Settlement and Mutual release
agreement with the former principal shareholders of Website Results, Inc., which
resulted in the return to the Company of approximately 3.3 million shares of
common stock previously reflected as outstanding. These shares were immediately
retired and are no longer reflected as issued or outstanding.

                                       14
<Page>

On May 19, 2001, the Company issued 1.0 million shares of common stock on behalf
of 24/7 Europe NV as settlement for terminating the Kendro acquisition
agreement. A non-cash charge of approximately $490,000 is reflected in loss from
discontinued operation in the 2001 consolidated statements of operations.

On March 23, 2001, the Company issued 710,000 shares of common stock to
employees of the Company for meeting the earn-out provisions in the WSR
merger agreement, as amended. The related compensation expense of
approximately $0.2 million is reflected as stock based compensation expense
in the consolidated statements of operations. Substantially all of these
shares were returned as part of the settlement with the former principal
stockholders on September 25, 2001.

On May 23, 2000, the Company offered certain members of management the option of
exchanging their January 1, 2000 option grants for restricted stock in a ratio
of one share for three options. As a result, the Company cancelled 832,500
options and issued approximately 285,000 shares of restricted stock to these
employees of the Company, which vest over a period of three to four years. Such
grants resulted in a deferred compensation expense of approximately $4.5
million, which is being amortized over the vesting period of those shares. On
January 1, March 31, June 30, and September 30, 2001, approximately 113,000,
17,000, 10,000 and 13,000 shares became vested.

(8)  STOCK INCENTIVE PLAN

For the nine month period ended September 30, 2001, the Company granted
approximately 3.8 million stock options under the 1998 Stock Incentive Plan and
2.3 million stock options under the 2001 Stock Incentive Plan for Non-officers
to employees at exercise prices based on the fair market value of the Company's
common stock at the respective dates of grant.

During the nine months ended September 30, 2001, approximately 0.4 million
unvested stock options, for which deferred compensation was recorded as part
of the purchases of Exactis, Imake and WSR, were forfeited. A credit of $0.4
million was applied to stock based compensation in the consolidated statement
of operations and $1.3 million of unamortized stock based compensation was
reversed against additional paid in capital.

(9)  RESTRUCTURING CHARGES

During the nine months ended September 30, 2001, restructuring charges of
approximately $1.6 million, were recorded by the Company in accordance with the
provisions of EITF 94-3, and Staff Accounting Bulletin No. 100. The Company's
restructuring initiatives were to reduce employee headcount by the involuntary
termination of approximately 250 employees, divest non-core assets, close one
office and downsize four other offices, as well as eliminate certain
redundancies related to technology costs. The Company paid the majority of these
costs by the end of the third quarter of 2001.

As a result of the sale of Exactis, the unutilized portion of their provision
amounting to $0.6 million was reversed during the second quarter of 2001. The
following sets forth the activities in the Company's restructuring reserve which
is included in accrued expenses in the consolidated balance sheet (in
thousands):

<Table>
<Caption>
                                                                  Current year
                                                   Beginning       provision/       Current year
                                                    Balance        (reversal)        utilization    Ending Balance
                                                --------------- ----------------- ---------------- ----------------
<S>                                                 <C>              <C>              <C>                 <C>
Employee termination benefits............           $    2,446       $     1,166      $     2,967         $     645

Office closing costs.....................                1,738              (489)           1,065               184

Other exit costs.........................                  309               332              573                68
                                                --------------- ----------------- ----------------  ---------------
                                                    $    4,493       $     1,009      $     4,605         $     897
                                                =============== ================= ================  ===============
</Table>

                                       15
<Page>

(10) SEGMENT INFORMATION

On October 30, 2001, the Company merged with Real Media. As a result of this
merger and the restructuring performed by both companies, the Company has
changed how it operates its businesses and views its reportable segments. Based
on these operational changes the consolidated financial statements presented
have been restated to reflect these new reportable segments. The Company's
business is currently comprised of two reportable segments: integrated media
solutions and technology solutions. The integrated media solutions segment
generates the majority of its revenues by delivering advertisements and
promotions to affiliated Web sites, search engine traffic delivery and marketing
services to target online users compiled by list management. The technology
solutions segment generates revenue by providing third party ad serving, email
delivery service bureau, 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, 2001 and 2000, is as follows:

<Table>
<Caption>
                                   Three Months Ended September 30, 2001  Three Months Ended September 30, 2000
                                   -------------------------------------  -------------------------------------
                                   Integrated                             Integrated
                                     Media      Technology       Total      Media      Technology       Total
                                   ----------   ----------   -----------  ----------   ----------   -----------
                                              (in thousands)                         (in thousands)
<S>                                <C>          <C>          <C>          <C>          <C>          <C>
Revenues........................   $   7,039    $   1,271    $   8,310    $  30,404    $   9,696    $  40,100

Segment loss from operations....     (22,202)      (8,648)     (30,850)     (22,955)     (43,579)     (66,534)

Amortization of goodwill,
  intangibles and advances......       2,196        1,445        3,641       10,644       33,412       44,056

Impairment of intangible assets        9,600        5,452       15,052          -            -            -

<Caption>
                                   Nine Months Ended September 30, 2001    Nine Months Ended September 30, 2000
                                   -------------------------------------  -------------------------------------
                                   Integrated                             Integrated
                                     Media      Technology       Total      Media      Technology       Total
                                   ----------   ----------   -----------  ----------   ----------   -----------
                                              (in thousands)                         (in thousands)
<S>                                <C>          <C>          <C>          <C>          <C>          <C>
Revenues........................   $  28,269    $  12,790    $  41,059    $ 104,885    $  15,430    $ 120,315

Segment loss from operations....    (106,638)     (28,831)    (135,469)     (56,942)     (67,812)    (124,754)

Amortization of goodwill,
  intangibles and advances......      11,724        6,370       18,094       28,306       45,633       73,939

Impairment of intangible assets       52,206       15,963       68,169          -            -            -

Total assets:

  September 30, 2001............      48,469       11,931       60,400

  December 31, 2000.............     153,230       74,254      227,484
</Table>

Not included in the segment assets at December 31, 2000 is $22,787 of net
long-term assets of discontinued operation.

(11) SUPPLEMENTAL CASH FLOW INFORMATION

The amount of cash paid for interest was $14,000 and $12,000 for the nine month
periods ended September 30, 2001 and 2000, respectively.

(12) 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

                                       16
<Page>

part of this agreement, the Company issued to NBC warrants to purchase up to
150,000 shares of common stock for $26.05 per share. The first 75,000 warrants
vested on March 11, 1999 and will expire on March 11, 2002. The remaining 75,000
shares covered by this warrant were to vest in eighteen increments of
approximately 4,167 shares each on the first day of every month beginning with
October 1, 2000 and ending on March 1, 2002 at $26.05 per share. In the event
that NBC terminates the agreement, the portion of the shares that have not
vested as of such termination date shall immediately expire. In August 2000, as
a result of the termination of the agreement, 75,000 unvested warrants expired.
As a result, the Company reversed the original value ascribed to the warrants
issued in connection with this partner agreement of $1.8 million which remained
unamortized, against additional paid in capital related to the expired warrants.
On April 19, 2001, the Company settled with NBC and received $222,000 as
reimbursement of costs. This amount has been be reflected as an offset to sales
and marketing expense in the second quarter of 2001.

COMMON STOCK PURCHASE AGREEMENT

On March 21, 2001, the Company entered into a Common Stock Purchase Agreement
and a Registration Rights Agreement with Maya Cove Holdings Inc. ("Maya").
Pursuant to the terms of these agreements, beginning on the date that a
registration statement covering a number of shares estimated to be issued under
the Common Stock Purchase Agreement is declared effective by the SEC, and
continuing for 18 months thereafter, the Company has the right, but not the
obligation, subject to the satisfaction or waiver of certain conditions as set
forth in the Common Stock Purchase Agreement, to sell up to $50 million of its
common stock to Maya pursuant to such periodic draw downs as the Company may
elect to make (the "Equity Line"). Maya will purchase such shares at a discount
of between 3.0% and 3.5%, depending on the market capitalization of the
Company's outstanding common stock at the time of issuance. The minimum amount
that may be drawn down at any one time is $250,000. No amounts were drawn under
this facility through September 30, 2001.

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

(13) SUBSEQUENT EVENTS

On October 30, 2001, the Company entered into a merger agreement with Real
Media, Inc., ("Real Media") a privately-held Delaware Corporation. Pursuant
to the Agreement and Plan of Merger between the Company, Continuum Holding
Corp., PubliGroupe USA Holding, Inc. and Real Media, the Company acquired all
the outstanding common and preferred shares of Real Media in a merger
transaction whereby an indirect subsidiary of the Company was merged with and
into Real Media, in exchange for approximately 8.2 million shares valued at
$2.2 million of the Company's common stock, equal to 19.9 percent of the
Company common stock prior to the merger. In the transaction, the Company
acquired net assets worth $1.2 million. Additionally, PubliGroupe USA Holding
loaned $4.5 million to Real Media in exchange for a five-year note,
guaranteed by the Company, with an interest rate of 4.5%, and agreed to lend
up to an additional $3.0 million to the Company, subject in part to the
achievement of target operating results. The proceeds of the $4.5 million
loan are primarily being used to finance Real Media's restructuring plan
which provides for office closings, workforce reductions, transition and
integration costs and other related obligations.

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

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

FORWARD-LOOKING STATEMENTS

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

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

GENERAL

We provide advertising and marketing solutions for Web publishers, online
advertisers, advertising agencies, e-marketers and e-commerce merchants. We
provide a comprehensive suite of solutions that enable such Web publishers,
online advertisers, advertising agencies and e-marketers to attract and retain
customers, 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, data analysis, search
engine optimization, and broadband/convergence solutions, all delivered from our
industry-leading data and technology platforms. Our technology solutions are
designed specifically for the demands and needs of advertisers and agencies, Web
publishers and e-commerce merchants.

Our business is organized into two principal lines of business:

         -        Integrated Media Solutions

         -        Technology Solutions

INTEGRATED MEDIA SOLUTIONS

Integrated Media Solutions is comprised of an online advertising network, online
promotions and sweepstakes, email list management and brokerage and search
engine optimization. Products within Integrated Media Solutions include;

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

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          advertisements for sale in content channels. For our flagship Web
          sites on the network, we solicit sponsorships and integrate sales
          efforts with the Web site's management. The 24/7 Network consists of
          over 300 high profile Web sites as well as 2,100 small to medium-sized
          Web sites in North America to which we delivered an aggregate of
          approximately 3.0 billion advertisements in September 2001.

     -    24/7 Mail which provides email direct marketing services. Our
          permission-based email marketing database of more than 38 million
          email addresses enables direct marketers to target promotional
          campaigns to consumers who elect to receive commercial messages. The
          users can opt out of the database and stop receiving these messages,
          at any time. Currently, 24/7 Mail has U.S. operations that serve as
          list manager for permission-based email lists that collectively
          contained more than 35 million email addresses as of September 2001,
          and Canadian operations that currently serve as list manager for
          permission-based email lists that collectively contained more than
          three million email addresses as of September 2001.

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

     -    Ipromotions which provides sweepstake and loyalty reward programs. We
          acquired Ipromotions in April of 2000.


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.
Products within 24/7 Technology Solutions include:

     -    24/7 Connect, our next generation Internet ad serving system that is
          one of the industry's fastest and most reliable ad serving systems.
          24/7 Connect enables us to offer advertisers the ability to target
          Internet users based on a variety of criteria including on a
          geo-targeted basis

     -    e.merge-TM-, a fully integrated, customizable suite of back office
          business applications designed to enable digital media service
          providers to offer cutting edge services to their customers including
          Interactive Advertising, Video on Demand (VOD), Broadband Internet,
          e-Commerce, and Targeted Broadband Advertising; and

RESULTS OF OPERATIONS

REVENUES

INTEGRATED MEDIA SOLUTIONS REVENUES. Integrated Media Solutions revenues were
$7.0 million and $28.3 million for the three and nine month period ended
September 30, 2001, respectively, as compared to $30.4 million and $104.9
million for the three and nine month period ended September 30, 2000,
representing a 77% and 73% decrease, respectively. We continued to experience
significant declines in revenue throughout 2001, which were only slightly
offset by the addition of revenue attributable to the acquisition of Website
Results at the end of August 2000. This was due to an overall decrease in
dollars spent on advertising in general which especially impacted the online
sector.

TECHNOLOGY SOLUTIONS REVENUES. Technology Solutions revenues were $1.3 million
and $12.8 million for the three and nine month period ended September 30, 2001
compared to $9.7 million and $15.4 million for the three and nine month period
ended September 30, 2000, representing a decrease of 87% and 17%, respectively.
The decrease is due to closing down of our Sabela subsidiary completed in June
2001, partially offset by Exactis operations which were acquired on June 28,
2000 and sold on May 23, 2001. The current quarter Technology Solutions revenue
is derived solely from the Broadband and Professional

                                       19
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Services unit. Revenues for this unit decreased by 30% for the three months
ended September 30, 2001 compared to the three months ended September 30, 2000
and 18% for the nine months ended September 30, 2001 compared to the nine months
ended September 30, 2000. Broadband and Professional Services continues to come
under pressure due to the reduced implementation budgets of the cable and
telecom industries. However, the medium and long-term outlook appears to be
brightening causing us to reconsider the sale of this asset.

COST OF REVENUE AND GROSS PROFIT (LOSS)

INTEGRATED MEDIA SOLUTIONS COST OF REVENUES AND GROSS PROFIT (LOSS): The cost of
revenues consists of fees paid to affiliated Web sites, which are calculated as
a percentage of revenues resulting from ads delivered on our networks, list
provider royalties and delivery costs. Cost of revenues also includes
depreciation of our Connect ad serving system and bandwidth charges. In October
2001, we began serving our first third party Connect customer, as a result, in
the future these fixed costs will be allocated to Technology solutions with an
arms-length service charge based on actual volume reflected in Integrated Media
Solutions.

Gross profit dollars decreased significantly and the gross margin as a percent
of total revenues, decreased to (6%) and 12% for the three and nine month period
ended September 30, 2001, compared to 28% and 26% for the three and nine month
period ended September 30, 2000, respectively.

The decrease is principally due to the sharp decline in revenues which could not
offset our fixed costs, primarily depreciation, associated with 24/7 Connect as
we significantly increased our ad-serving capacity, functionality and
reliability through the third quarter of 2000. In the first quarter of 2001, we
began the process of reducing capacity to match market conditions. Depreciation
expense as a percentage of revenue increased by 19% and 16% for the three and
nine months ended September 30, 2001 as compared to the comparable period in
2000.

In addition, during the three months ended September 30, 2001, we were billed
approximately $650,000 in initial set up and delivery charges for email and
online promotions pursuant to our prepaid service contract with Experian. These
billings, which are in dispute, have been reflected in cost of revenues,
accounting for approximately 9% and 2% as a percentage of revenue for the three
and nine month period ended September 30, 2001.

The remaining variances in gross margin were related to a change in the mix of
revenues, mainly in mail and targeted search engine traffic.

TECHNOLOGY SOLUTIONS COST OF REVENUES AND GROSS PROFIT. The cost of revenues
consists of time and materials for consulting contracts. Gross margin for the
segment decreased to 53% for the three month period ended September 30, 2001
from 70% for the three month period ended September 30, 2000. Gross margin
increased to 67% for the nine month period ended September 30, 2001 from 66% for
the nine month period ended September 30, 2000. The fluctuation in the margin is
due to the effect of closing down our Sabela subsidiary completed in June 2001,
partially offset by Exactis operations which were acquired on June 28, 2000 and
sold on May 23, 2001. The margin for the Broadband and Professional services
unit decreased to 53% and 57% for the three and nine month period ended
September 30, 2001 from 66% and 68% for the three and nine month period ended
September 30, 2000, respectively. The decrease in margin is due to the
decline in revenue as noted above.

OPERATING EXPENSES

Operating expenses decreased significantly for the three and nine month periods
ended September 30, 2001 compared to the three and nine month periods ended
September 30, 2000 as a result of the sale of Exactis in May 2001, the shutdown
of Sabela in June 2001 and restructuring activities. Beginning in November 2000,
we began a restructuring process to reduce employee headcount, consolidate
operations and reduce office space in order to better align our sales,
development and administrative organization and to position us for

                                       20
<Page>

profitable growth consistent with our long-term objectives. This restructuring
involved the involuntary terminations of employees, closure or downsizing of
certain offices and the sale of certain non-core assets. The restructuring
effort has positively impacted our financial results in the period and we
anticipate further reductions in operating expenses in the future.

SALES AND MARKETING EXPENSES. Sales and marketing expenses consist primarily of
sales force salaries and commissions, advertising expenditures and costs of
trade shows, conventions and marketing materials. Sales and marketing expenses
decreased both for the three and nine month period ended September 30, 2001
compared to the same period ended September 30, 2000. The decrease is due to
headcount reductions and decreased discretionary spending, primarily in
advertising.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
primarily of compensation, facilities expenses and other overhead expenses.
General and administrative expenses decreased for the three and nine month
period ended September 30, 2001 compared to the three and nine month period
ended September 30, 2000. The decrease is due to headcount reductions and
increased operation efficiencies.

PRODUCT DEVELOPMENT EXPENSES. Product development expenses consist primarily of
compensation and related costs incurred to further develop our ad serving and
other technology capabilities. The expense decreased for the three and nine
month period ended September 30, 2001 compared to the three and nine month
period ended September 30, 2000. The decrease is due to headcount reductions and
increased operation efficiencies.

AMORTIZATION OF GOODWILL, INTANGIBLE ASSETS AND ADVANCES. Amortization of
goodwill, intangible assets and advances was $3.6 million and $18.1 million for
the three and nine month period ended September 30, 2001, respectively, compared
to $44.1 million and $73.9 million for the three and nine month period ended
September 30, 2000. Although additional acquisitions were completed,
amortization has decreased due to impairment charges reducing the gross amount
of goodwill and other intangible assets. In addition, the three and nine month
periods ended September 30, 2000 included amortization related to our NBC and
AT&T partner agreements which commenced in April 1999 and October 1999,
respectively, and were fully amortized by December 31, 2000.

STOCK-BASED COMPENSATION. Stock based compensation of $2.7 million for the nine
month period ended September 30, 2001 consists of $1.0 million in amortization
of deferred compensation for restricted shares issued to certain employees, $1.5
million in amortization of deferred compensation from acquisitions and a $0.2
million charge for purchase consideration given to certain employees. Stock
based compensation of $0.5 million incurred in the first quarter of 2001 for
contingent consideration related to the acquisition of Kendro Communications was
reclassed to loss from discontinued operation.

Stock based compensation of $6.1 million for the nine month period ended
September 30, 2000 consists of a $1.6 million charge for shares issued to
employees, $3.3 million in amortization of deferred compensation from
acquisitions and $1.2 million in amortization of deferred compensation for
restricted shares.

WRITE-OFF OF IN PROCESS TECHNOLOGY AND OTHER MERGER RELATED COSTS. Write-off of
in process technology and other merger related costs of $5.1 million for the
nine month period ended September 30, 2000 is primarily acquired in-process
technology from the acquisition of IMAKE, amounting to $4.7 million, that was
immediately charged to operations and costs associated with integrating acquired
operations.

RESTRUCTURING AND EXIT COSTS. The restructuring charges of $1.0 million for the
nine month period ended September 30, 2001 relate to the reduction of employee
headcount and office space. This restructuring involved the involuntary
termination of approximately 100 employees in January, 100 employees in April
and 25 in September. The charges were $0.3 million, 0.2 million and $0.5 million
in the first, second and third quarter of 2001, respectively.

                                       21
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GAIN ON SALE OF NON-CORE ASSETS. The $1.5 million gain for the nine month period
ended September 30, 2001 relates to the sale of our Exactis subsidiary and the
sale of the intellectual property of Sabela and AwardTrack. A portion of the
gain on the sale of Exactis is deferred and is recognized as services from
Exactis are used and at the time the escrow is released.

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

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

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

As a result of our reviews at each quarter end, management determined that the
fair value of goodwill and other intangible assets attributable to Mail,
Exactis, WSR and Imake were less than their recorded carrying values. We
recognized $68.2 million in impairment charges to adjust the carrying values of
these entities in the nine months ended September 30, 2001. Of this amount,
$25.3 million related to Mail, $26.9 million to WSR, $11.5 million to IMAKE and
$4.5 million to Exactis. The impairment factors evaluated by management may
change in subsequent periods, given that the Company's business operates in a
highly volatile business environment. This could result in significant
additional impairment charges in the future. During the second quarter of 2001
management resolved to cease funding of its European operations. As a result,
the net assets including an impairment charge of $7.7 million related to Europe
has been reflected as loss from discontinued operations in the 2001 consolidated
statement of operations.

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INTEREST INCOME, NET. Interest income, net was $0.1 million and $0.8 million for
the three and nine month period ended September 30, 2001 compared to $0.5
million and $1.2 million for the three and nine month period ended September 30,
2000. The decrease is attributable to lower cash balances.

GAIN ON SALE OF INVESTMENTS. The gain on sale of investments was $0.9 million
and $5.0 million for the three and nine month period ended September 30, 2001
and $14.9 million and $38.0 million for the three and nine month period ended
September 30, 2000. These gains relate to sales of the Company's
available-for-sale and securities as well as its cost based investment in
Idealab!. As of September 30, 2001, the Company has sold all of its
available-for-sale securities.

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

LOSS FROM DISCONTINUED OPERATION. On August 6, 2001, the Company determined that
it would cease funding to its European subsidiaries and communicated that to
24/7 Europe NV's Board of directors. Management of 24/7 Europe has shut down all
operations. All revenue, cost and expenses related to the discontinued business
are included in this line for the current period and prior periods have been
reclassified to reflect this presentation.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2001, we had cash and cash equivalents of $7.5 million
including restricted cash of $0.5 million versus $25.9 million including
restricted cash of $0.8 million at December 31, 2000. Cash and cash equivalents
are comprised of highly liquid short term investments with maturities of three
months or less. Not included in the cash and cash equivalents as of September
30, 2001 is restricted cash held in escrow of $1.5 million due to be released in
August 2002.

The value of our investments totaled $11.3 million at December 31, 2000. These
investments generally related to equity and cash transfers from us for minority
equity ownership positions. Such investments included, but were not limited to,
chinadotcom, Network Commerce, i3Mobile, Naviant, Inc. and idealab! We used
approximately $6.1 million in cash to fund these investments in the first half
of 2000. In addition, we acquired majority and full ownership positions in
IMAKE, Sabela, AwardTrack, iPromotions, Exactis and Website Results in the nine
months ended September 30, 2000 through the transfer of common stock and cash.
Cash acquired, primarily related to our acquisition of Exactis, net of cash paid
for our 2000 acquisitions approximated $24.0 million. As of September 30, 2001,
all remaining investments are 100% reserved.

We generated a portion of our liquidity through our monetization of our
investment in marketable securities and available for sale securities which
generated approximately $6.9 million and $49.9 million in the nine month
periods ended September 30, 2001 and 2000, respectively. At the end of
September  2001, we sold our remaining cost based investments for $2.5
million, the proceeds of which were received in October 2001. We used
approximately $30.6 million and $67.4 million of cash in operating activities
from continuing operations during the nine month periods ended September 30,
2001 and 2000, respectively, generally as a result of our operating losses
from continuing operations, adjusted for certain non-cash items such as
amortization of goodwill and other intangible assets, gains on sales of
investments, impairment of investments and intangibles, gain on sale of
non-core assets and non-cash related equity transactions and restructuring
and exit costs, write-off of acquired in-process technology and also by
significant changes in accounts receivable, accounts payable and deferred
revenue.

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Net cash provided by investing activities was approximately $23.0 million and
$48.6 million in 2001 and 2000, respectively. The majority of the cash provided
by investing activities related to proceeds received from our sale of a portion
of our investment in marketable securities and available-for-sale securities
which amounted to $6.9 million in 2001 and $49.9 million in 2001 and 2000,
respectively. In 2000, we continued investment in technology and efforts to
develop our infrastructure through capital expenditures, including capitalized
software. Cash used for such expenditures totaled approximately $19.0 million
for 2000. To the extent we continue to acquire additional ad serving hardware,
invest in enhancing or expending our current product lines, make cash
investments in other businesses or acquire other businesses, net cash used in
investing activities could continue to be significant. Currently, we have
various capital and operating leases relating to the use of computer hardware,
software and office space.

As of September 30, 2001, we have approximately $0.9 million remaining of cash
outlays relating to restructuring and exit costs. These amounts consist
primarily of severance and rent exit costs which are being paid ratably. The
payments are scheduled to be completed in June 2002.

Our capital requirements depend on numerous factors, including market demand of
our services, the capital required to maintain our technology, and the resources
we devote to marketing and selling our services. We have received a report from
our independent accountants on our December 31, 2000 consolidated financial
statements containing an explanatory paragraph stating that our recurring losses
from operations since inception raises substantial doubt about our ability to
continue as a going concern. Moreover, management's plans to continue as a going
concern rely heavily on achieving revenue targets, further rationalizations, our
ability to monetize our non-core assets which includes selling certain
divisions, and or raising additional financing, as well as, reducing our
operating expenses. In addition, management is currently exploring a number of
strategic alternatives and is also continuing to identify and implement internal
actions to improve our liquidity. These alternatives may include selling core
assets which could result in significant changes in our business plan. To the
extent we encounter additional opportunities, we may need to sell a portion of
our current investments in affiliates, or we may sell additional equity or debt
securities which would result in further dilution of our stockholders.
Stockholders may experience extreme dilution due both to our current stock price
and the significant amount of financing we would be required to raise. These
securities may have rights senior to those of holders of our common stock. We do
not have any contractual restrictions on our ability to incur debt. Any
indebtedness could contain covenants, which restrict our operations. See "Risk
Factors - We may need to raise additional funds, including the issuance of
debt."

On March 21, 2001, we entered into a common stock purchase agreement with Maya
Cove Holdings . The agreement gives us the ability to sell up to $50 million of
our common stock to Maya pursuant to periodic draw downs. The draw downs are
subject to our ability to continue trading on the NASDAQ and our trading volumes
and prices. As a result, our ability to utilize this equity credit line is
limited and there can be no assurances that it will provide the resources
necessary to fund our needs. As of September 30, 2001, we have not drawn down on
this facility. We are continuing to evaluate other fund raising vehicles.

On October 30, 2001, we entered into a merger agreement with Real Media,
Inc., a privately-held Delaware Corporation. Pursuant to the Agreement and
Plan of Merger between the Company, Continuum Holding Corp., PubliGroupe USA
Holding, Inc. and Real Media, we acquired all the outstanding common and
preferred shares of Real Media in a merger transaction whereby an indirect
subsidiary of the Company was merged with and into Real Media, in exchange
for approximately 8.2 million shares of our common stock, equal to 19.9
percent of our common stock prior to the merger. In the transaction, we
acquired net assets worth $1.2 million. Additionally, PubliGroupe USA Holding
loaned $4.5 million to Real Media in exchange for a five-year note,
guaranteed by us, with an interest rate of 4.5%, and agreed to lend up to an
additional $3.0 million to us, subject in part to the achievement of target
operating results. The proceeds of the $4.5 million loan are primarily being
used to finance Real Media's restructuring plan, which provides for office
closings, workforce reductions, transition and integration costs and other
related obligations. The additional loans have terms of three years and incur
interest at 6% payable upon maturity. Proceeds of $1.5 million related to the
additional loans are due to be receive on January 2, 2002 and are not subject
to any

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contingencies. The remaining $1.5 million is conditional upon us achieving
targeted operating results in the first quarter of 2002 as set forth in the
agreement.

We believe that our current cash may not be sufficient to meet our anticipated
operating cash needs for the 12 months commencing October 1, 2001. We have
limited operating capital and no current access to any meaningful funds from our
credit facilities. Our continuing operations therefore will depend on our
ability to raise additional funds through sale of certain divisions, bank
borrowings or equity or debt financing. We cannot be certain that we will be
able to sell additional equity or issue debt securities in the future or that
additional financing will be available to us on commercially reasonable terms,
or at all.

MARKET FOR COMPANY'S COMMON EQUITY

The shares of our Common Stock are currently listed on the Nasdaq national
market. Due to the decline in the share price of our Common Stock and our
continued operating losses in April 2001, we received a letter from the Nasdaq
stating that they have determined that we have failed to meet Nasdaq's minimum
listing requirements and as a result, our Common Stock could be delisted if we
do not satisfy these requirements by July 5, 2001. We did not satisfy those
requirements and the Company requested a hearing, which was held on August 24,
2001. Under Nasdaq rules, the scheduled delisting was stayed pending the outcome
of the hearing. On August 31, 2001, the Company announced that, in order to seek
to increase the price per share of its common stock and regain compliance with
Nasdaq requirements, it intended to recommend to its stockholders approval of a
reverse stock split of its common stock, which would result in stockholders
being issued one new share for each ten to 20 shares previously held. In
September 2001 the Company received notice from Nasdaq that due to the recent
events Nasdaq was suspending its minimum share bid price and market
capitalization requirements through at least December 31, 2001. It is currently
the expectation of management that Nasdaq will reinstate its bid price and
market capitalization requirements in some form as of January 2, 2002, and that,
if the Company's stock price remains below $1.00 through May 2002, the Company
will again have to consider a reverse stock split in order to regain compliance
with Nasdaq requirements. There can be no assurance that the Company will be
able to maintain its Nasdaq listing in the future.

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

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

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued Statement No. 141, BUSINESS COMBINATIONS, and
Statement No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001, as well as all purchase method business
combinations completed after June 30, 2001. Statement 141 also specifies
criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, nothing
that any purchase price allocable to an assembled workforce may not be accounted
for separately. Statement 142 will require that goodwill and intangible assets
with indefinite useful lives be amortized over their respective estimated useful
lives to their estimated residual values, and reviewed for

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impairment in accordance with FASB Statement No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.

The Company is required to adopt the provisions of Statement 141 immediately,
and Statement 142 effective January 1, 2002. Furthermore, goodwill and
intangible assets determined to have an indefinite useful like acquired in a
purchase business combination completed after June 30, 2001, but before
Statement 142 is adopted in full, will not be amortized, but will continue to be
evaluated for impairment in accordance with the appropriate pre-Statement 142
accounting literature prior to the full adoption of Statement 142.

Statement 141 will require, upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible assets acquired,
and make any necessary amortization period adjustments by the end of the first
interim period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period.

In connection with Statement 142's transitional goodwill impairment evaluation,
the Statement will require the Company to perform an assessment of whether there
is an indication that goodwill is impaired as of the date of adoption. To
accomplish this, the Company must identify its reporting units and determine the
carrying value of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those reporting units
as of the date of adoption. The Company will then have up to six months from the
date of adoption to determine the fair value of each reporting unit and compare
it to the carrying amount of the reporting unit. To the extent the carrying
amount of a reporting unit exceeds the fair value of the reporting unit, an
indication exists that the reporting unit goodwill may be impaired and the
Company must perform the second step of the transitional impairment test. In the
second step, the Company must compare the implied fair value of the reporting
unit goodwill with the carrying amount of the reporting unit goodwill, both of
which would be measured as of the date of adoption. The implied fair value of
goodwill is determined by allocating the fair value of the reporting unit of all
of the assets (recognized and unrecognized) and liabilities of the reporting
unit in a manner similar to a purchase price allocation, in accordance with
Statement 141. The residual fair value after this allocation is the implied fair
value of the reporting unit goodwill. This second step is required to be
completed as soon as possible, but no later than the end of the year of
adoption. Any transitional impairment loss will be recognized as the cumulative
effect of a change in accounting principle in the Company's statement of
operations.

And finally, any unamortized negative goodwill (and equity method negative
goodwill) existing at the date of Statement 142 adopted must be written off as
the cumulative effect of a change in accounting principle.

Because of the extensive effort needed to comply with adopting Statements 141
and 142, it is not practicable to reasonably estimate the impact of adopting
these Statements on the Company's financial statements at the date of this
report, including whether it will be required to recognize any transitional
impairment losses as the cumulative effect of a change in accounting principle.

In August 2001, the Financial Accounting Standards Board issued FASB Statement
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(Statement 144), which supersedes both FASB Statement No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
(Statement 121) and the accounting and reporting provisions of APB Opinion No.
30, Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions (Opinion 30), for the disposal of a segment of a
business (as previously defined in that Opinion). Statement 144 retains the
fundamental provisions in Statement 121 for recognizing and measuring impairment
losses on long-lived assets held for use and long-lived assets to be disposed of
by sale, while also resolving significant implementation issues associated with
Statement 121. For

                                       26
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example, Statement 144 provides guidance on how a long-lived asset that is used
as part of a group should be evaluated for impairment, establishes criteria for
when a long-lived asset is held for sale, and prescribes the accounting for a
long-lived asset that will be disposed of other than by sale. Statement 144
retains the basic provisions of Opinion 30 on how to present discontinued
operations in the income statement but broadens that presentation to include a
component of an entity (rather than a segment of a business). Unlike Statement
121, an impairment assessment under Statement 144 will never result in a
write-down of goodwill. Rather, goodwill is evaluated for impairment under
Statement No. 142, Goodwill and Other Intangible Assets.

Goodwill is excluded from the scope of Statement No. 144. That is, a goodwill
impairment write-down will never occur as a result of applying Statement 144.
However, it is possible for a long-lived asset group under Statement 144 to
include goodwill. Goodwill will be included in the carrying amount of a
Statement 144 asset group if that group is, or includes, a reporting unit under
Statement 142. This scenario is unlikely for large companies, however, it could
be encountered for small companies. When impairment is measured under Statement
144, the carrying amount of the asset group is compared to the group's fair
value. Any shortfall is recognized as a reduction to the carrying amounts of
only the long-lived assets in the group. The carrying amount of goodwill is then
evaluated for impairment under Statement No. 142, Goodwill and Other Intangible
Assets, once Statement No. 142 is adopted. Companies are required to adopt
Statement No. 142 no later than the year beginning after December 15, 2001.

The Company is required to adopt Statement 144 no later than the year beginning
after December 15, 2001, and plans to adopt its provisions for the quarter
ending March 31, 2002. Management does not expect the adoption of Statement 144
for long-lived assets held for use to have a material impact on the Company's
financial statements because the impairment assessment under Statement 144 is
largely unchanged from Statement 121. The provisions of the Statement for assets
held for sale or other disposal generally are required to be applied
prospectively after the adoption date to newly initiated disposal activities.
Therefore, management cannot determine the potential effects that adoption of
Statement 144 will have on the Company's financial statements.


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

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

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

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

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

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

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

The shares of our common stock are currently listed on the Nasdaq national
market. Due to the recent decline in the share price of our common stock and our
continued operating losses in April 2001, we received a letter from Nasdaq
stating that they have determined that we have failed to meet Nasdaq's minimum
listing requirements and as a result, our common stock could be delisted if we
do not satisfy these requirements by July 5, 2001. On August 31, 2001, the
Company announced that, in order to seek to increase the price per share of its
common stock and regain compliance with Nasdaq requirements, it intended to
recommend to its stockholders approval of a reverse stock split of its common
stock, which would result in stockholders being issued one new share for each
ten to 20 shares previously held. In September 2001 the Company received notice
from Nasdaq that due to the recent events Nasdaq was suspending its minimum
share bid price and market capitalization requirements through at least December
31, 2001. It is currently the expectation of management that Nasdaq will
reinstate its bid price and market capitalization requirements in some form as
of January 2, 2002, and that, if the Company's stock price remains below $1.00
through May 2002, the Company will again have to consider a reverse stock split
in order to regain compliance with Nasdaq requirements. There can be no
assurance that the Company will be able to maintain its Nasdaq listing in the
future.

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

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

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HIGH VOLATILITY OF STOCK PRICE.

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

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

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

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

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

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

        -   further develop and upgrade our technology;

        -   respond to competitive developments;

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

        -   attract, retain and motivate qualified employees.

WE ANTICIPATE CONTINUED LOSSES AND WE MAY NEVER BE PROFITABLE.

We have not achieved profitability in any period and we may not be able to
achieve or sustain profitability in the future. We incurred net losses of $163.4
million and $102.8 million for the nine months ended September 30, 2001 and
2000, respectively. Each of our predecessors had net losses in every year of
their operation. We anticipate that we will incur operating losses for the
foreseeable future due to a high level of planned operating and capital
expenditures. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future.

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

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

                                       29
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        -   the addition of new or loss of existing clients;

        -   changes in fees paid by advertisers and direct marketers or other
            clients;

        -   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;

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

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

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

        -   changes in governmental regulation of the Internet; and

        -   general economic conditions.

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

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

We have incurred significant net losses since our inception. In an effort to
reduce our cash expenses, we began to implement certain restructuring
initiatives and cost reductions. In the past nine months, we reduced our
workforce by over 1,000 employees. We have also left positions unfilled when
certain employees have left the company. In addition, recent trading levels of
our common stock have decreased the value of the stock options granted to
employees pursuant to our stock option plan. As a result of these factors, our
remaining personnel may seek employment with larger, more stable companies they
perceive to have better prospects. Our failure to retain qualified employees to
fulfill our current and future needs could impair our future growth and have a
material adverse effect on our business.

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

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

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

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

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

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

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

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

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

The majority of our revenues are derived from the delivery of banner
advertisements. Online banner advertising has dramatically decreased since the
middle of 2000 and has continued to decline throughout 2001 and is expected to
continue through the second quarter of 2002, which could have a material adverse
effect on our business. If advertisers determine that banner advertising is an
ineffective or unattractive advertising medium, we cannot assure you that we
will be able to effectively make the transition to any other form of Internet
advertising. Also, there are "filter" software programs that limit or prevent
advertising from being delivered to a user's computer. The commercial viability
of Internet advertising, and our business, results of operations and financial
condition, would be materially and adversely affected by Web users' widespread
adoption of such software. In addition, many online advertisers have been
experiencing financial difficulties, which could materially impact our revenues
and our ability to collect our receivables.

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

Adoption of online direct marketing, particularly by those entities that have
historically relied upon traditional means of direct marketing, such as
telemarketing and direct mail, is an important part of our

                                       31
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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.

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

The 24/7 Network generates a substantial portion of our revenues, and we expect
that the 24/7 Network will continue to account for a substantial portion of our
revenue for the foreseeable future. The 24/7 Network consists of a limited
number of our Web sites that have contracted for our services under agreements
cancelable generally upon a short notice period. For the three month periods
ended September 30, 2001 and 2000, approximately 25% and 13%, respectively, of
our total revenues were derived from advertisements on our top ten Web sites.
For the three month period ended September 30, 2001, the top ten Web sites
included Earthlink, Inc., AT&T WorldNet Service, Epipo, Inc. (180 Solutions),
MusicCity.com, 2GK Inc. (Quotetracker), Spedia.com, Inc., Yifan Communications,
Inc., Infogames Inc. (Games.com), Cydoor Desktop Medai and AdOrigin Corp. We
experience turnover from time to time among our Web sites, and we cannot be
certain that the Web sites named above will remain associated with us or that
such Web sites will not experience a reduction in online traffic on their sites.
We cannot assure you that we will be able to replace any departed Web site in a
timely and effective manner with a Web site with comparable traffic patterns and
user demographics. Our business, results of operations and financial condition
would be materially adversely affected by the loss of one or more of the Web
sites that account for a significant portion of our revenue from the 24/7
Network.

LOSS OF MAJOR CUSTOMERS WOULD REDUCE OUR REVENUES.

We generate a significant portion of our revenues from a limited number of
customers. We expect that a limited number of these entities may continue to
account for a significant percentage of our revenues for the foreseeable future.
For the three month period ended September 30, 2001, our top ten customers
accounted for approximately 40% of our total revenues. Customers typically
purchase advertising or services under agreements on a short term basis. Since
these contracts are short-term, we will have to negotiate new contracts or
renewals in the future that may have terms that are not as favorable to us as
the terms of existing contracts. We cannot be certain that current customers
will continue to purchase advertising or services from us or that we will be
able to attract additional customers successfully, or that customers will make
timely payment of amounts due to us. In addition, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to increase the ability of their products or
services to address the needs of our prospective clients. Our business, results
of operations and financial condition would be materially adversely affected by
the loss of one or more of our customers that account for a significant portion
of our revenue.

WE HAVE GROWN OUR BUSINESS THROUGH ACQUISITION.

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

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

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

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

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

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

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

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

OUR REVENUES ARE SUBJECT TO SEASONAL FLUCTUATIONS.

We believe that our revenues are subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarters of each year and direct marketers mail substantially more
marketing materials in the third quarter each year. Furthermore, Internet user
traffic typically drops during the summer months, which reduces the number of
advertisements to sell and deliver. Expenditures by advertisers and direct
marketers tend to vary in cycles that reflect overall economic conditions as
well as budgeting and buying patterns. Our revenue could be materially reduced
by a decline in the economic prospects of advertisers, direct marketers or the
economy in general, which could alter current or prospective advertisers'
spending priorities or budget cycles or extend our sales cycle. Due to such
risks, you should not rely on quarter-to-quarter comparisons of our results of
operations as an indicator of our future results.

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

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

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failures, vandalism and other malicious acts, and similar unexpected adverse
events. In addition, interruptions in our solutions could result from the
failure of our telecommunications providers to provide the necessary data
communications capacity in the time frame we require. Despite precautions that
we have taken, unanticipated problems affecting our systems have from time to
time in the past caused, and in the future could cause, interruptions in the
delivery of our solutions. Our business, results of operations and financial
condition could be materially and adversely affected by any damage or failure
that interrupts or delays our operations.

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

As of November 9, 2001, we had 49,507,662 shares of common stock outstanding. We
cannot predict the effect, if any, that future sales of common stock or the
availability of shares of common stock for future sale, will have on the market
price of our common stock prevailing from time to time. Sales of substantial
amounts of common stock (including shares issued upon the exercise of stock
options), or the perception that such sales could occur, may materially and
adversely affect prevailing market prices for our common stock.

OUR FAILURE TO SUCCESSFULLY COMPETE MAY HINDER OUR GROWTH.

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

        -   the timing and market acceptance of new products and enhancements of
            existing services developed by us and our competitors;

        -   changing demands regarding customer service and support;

        -   shifts in sales and marketing efforts by us and our competitors; and

        -   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 reluctant to devote a significant
portion of their advertising budgets to Internet marketing, which could limit
the growth of Internet marketing.

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

The U.S. federal and various state governments have recently proposed
limitations on the collection and use of information regarding Internet users.
In October 1998, the European Union adopted a directive that may limit our
collection and use of information regarding Internet users in Europe. The
effectiveness of our 24/7 Connect technology could be limited by any regulation
limiting the collection or use of information regarding Internet users. Since
many of the proposed laws or regulations are just being developed, we cannot yet
determine the impact these regulations may have on its business. In addition,
growing public concern about privacy and the collection, distribution and use of
information about individuals has led to self-regulation of these practices by
the Internet advertising and direct marketing industry and to increased federal
and state regulation. The Network Advertising Initiative, or NAI, of which 24/7
Media is a member along with other Internet advertising companies, has developed
self-regulatory principles for online preference marketing. These principles
were recently endorsed by the Federal Trade Commission, and are

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in the process of being adopted by the NAI companies. The Direct Marketing
Association, or DMA, the leading trade association of direct marketers, has
adopted guidelines regarding the fair use of this information which it
recommends participants, such as us, through our services, in the direct
marketing industry follow. We are also subject to various federal and state
regulations concerning the collection, distribution and use of information
regarding individuals. These laws include the Children's Online Privacy
Protection Act, and state laws that limit or preclude the use of voter
registration and drivers license information, as well as other laws that govern
the collection and use of consumer credit information. Although our compliance
with the DMA's guidelines and applicable federal and state laws and regulations
has not had a material adverse effect on us, we cannot assure you that the DMA
will not adopt additional, more burdensome guidelines or that additional, more
burdensome federal or state laws or regulations, including antitrust and
consumer privacy laws, will not be enacted or applied to us or our clients,
which could materially and adversely affect our business, financial condition
and results of operations.

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

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

OUR CESSATION OF INTERNATIONAL OPERATIONS MAY POSE LEGAL CHALLENGES.

On August 5, 2001, we advised our 24/7 Europe subsidiary that we intended not to
provide them with any additional funding. As a result of this decision, 24/7
Europe may not have sufficient resources to fund its operations and may commence
insolvency proceedings. Although it is generally the case that shareholders of
European corporations are not liable for the debts and other obligations of the
corporations, there can be no assurance that creditors of our European
subsidiaries will not seek to impose liability on the Company.

DEPENDENCE ON PROPRIETARY RIGHTS AND RISK OF INFRINGEMENT.

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

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

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

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

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

INTELLECTUAL PROPERTY LIABILITY.

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

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

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

If the use or effectiveness of cookies is limited, we would likely have to
switch to other technology that would allow us to gather demographic and
behavioral information. While such technology currently exists, it is
substantially less effective than cookies. Replacement of cookies could require
significant reengineering time and resources, might not be completed in time to
avoid negative consequences to our business, financial condition or results of
operations, and might not be commercially feasible. In addition, privacy
concerns may cause some Web users to be less likely to visit Web sites that
contribute data to our databases. This could have a material adverse effect on
our financial condition. In addition, we are developing our database to collect
data derived from user activity on our networks and from other sources. We
collect and compile information in databases for the product offerings of all
our businesses. Individuals or entities may claim in the future, that our
collection of this information is illegal. Although we believe

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that we have the right to use and compile the information in these databases, we
cannot assure you that our ability to do so will remain lawful, that any trade
secret, copyright or other intellectual property protection will be available
for our databases, or that statutory protection that is or becomes available for
databases will enhance our rights. In addition, others may claim rights to the
information in our databases. Further, pursuant to our contracts with Web
publishers using our solutions, we are obligated to keep certain information
regarding each Web publisher confidential and, therefore, may be restricted from
further using that information in our business.

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

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

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

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

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infrastructure. Such outages and delays could impact the clients using our
solutions and the level of user traffic on Web sites on our networks.

RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE.

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

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

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

     -    discourage potential acquisition proposals;

     -    delay or prevent a change in control;

     -    impede the ability of our stockholders to change the composition of
          our board of directors in any one year; and - limit the price that
          investors might be willing to pay in the future for shares of our
          common stock.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk, Market Risk and Currency Rate Fluctuations.

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

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

As a result of our acquisition of Real Media, we continue to transact
business in various foreign countries. Accordingly, we are subject to
exposure from adverse movements in foreign currency exchange rates. This
exposure is primarily related to revenue and operating expenses in the
countries in which the currency is the Euro. The effect of foreign exchange
rate fluctuations for 2001 and 2000 has not been material. We do not use
derivative financial instruments to limit our foreign currency risk exposure.

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                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits.

None.

(b)      Reports on Form 8-K.

None.

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 Real Media, Inc.

Date:  November 14, 2001

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

                                            By:  /s/  Stuart D. Shaw
                                                 -------------------
                                                 Stuart D. Shaw
                                                 SVP of Finance & Administration

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