<Page>

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


                                   FORM 10-Q/A


                                   (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, 2002

                                       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 11, 2002
Common Stock, par value $.01 per share               58,474,109 Shares

================================================================================

                                                           [GRAPHIC OMITTED]


<Page>

                              24/7 REAL MEDIA, INC.
                               SEPTEMBER 30, 2002
                                    FORM 10-Q
                                      INDEX

<Table>
<S>                                                                             <C>
Part I.  Financial Information
         Item 1.   Consolidated Financial Statements
                   Consolidated Balance Sheets as of September 30, 2002
                     (unaudited) and December 31, 2001
                   Consolidated Statements of Cash Flows for the nine month
                     periods ended September 30, 2002 and 2001 (unaudited)
         Notes to Unaudited Interim Consolidated Financial Statements
         Item 2.   Management's Discussion and Analysis of Financial
                     Condition and Results of Operations
         Item 3.   Quantitative and Qualitative Disclosure about
                     Market Risk
         Item 4.   Controls and Procedures
Part II. Other Information
         Item 1.   Legal Proceedings
         Item 2.   Changes in Securities and Use of Proceeds
         Item 3.   Defaults Upon Senior Securities
         Item 5.   Other Information
         Item 6.   Exhibits and Reports on Form 8-K
         Item 7.   Signatures
</Table>


                                        1
<Page>

                          PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

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

<Table>
<Caption>
                                                                                               SEPTEMBER 30,    DECEMBER 31,
                                                                                                    2002           2001
                                                                                                -----------     -----------
                                                                                                (UNAUDITED)   (NOTES 1 AND 3)
<S>                                                                                             <C>             <C>
                                            ASSETS
Current assets:
  Cash and cash equivalents                                                                     $    10,625     $     6,974
  Restricted cash                                                                                        --           1,500
  Accounts receivable, less allowances of $1,232 and $2,493, respectively                             6,742           9,623
  Notes and amounts receivable from dispositions                                                      1,775              --
  Net current assets of discontinued operation                                                           --           1,546
  Prepaid expenses and other current assets                                                           1,285           1,931
                                                                                                -----------     -----------
     Total current assets                                                                            20,427          21,574

Property and equipment, net                                                                           4,081           6,308
Intangible assets, net                                                                               10,675          14,518
Notes and amounts receivable from dispositions                                                        1,331              --
Net long-term assets of discontinued operation                                                           --           1,136
Receivable from related party                                                                            --             600
Other assets                                                                                            711           1,452
                                                                                                -----------     -----------
     Total assets                                                                               $    37,225     $    45,588
                                                                                                ===========     ===========

                             LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                                              $     6,755     $     8,781
  Accrued liabilities                                                                                 9,489          15,750
  Net current liabilities of discontinued operations                                                     --             244
  Current installments of obligations under capital leases                                               50              42
  Deferred revenue                                                                                    2,971           2,422
  Deferred gain on sale of subsidiary                                                                    87           2,308
                                                                                                -----------     -----------

     Total current liabilities                                                                       19,352          29,547

Obligations under capital leases, excluding current installments                                         74             112
Loan payable - related party, including interest                                                      7,779           4,534
Other long-term liabilities                                                                             455             522
Minority interest                                                                                        21              21

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $.01 par value; 10,000,000 shares authorized 925,000 and 0 shares issued
     and outstanding, respectively                                                                        9              --
   Common stock, $.01 par value; 140,000,000 shares authorized; 58,474,109 and 49,532,127
     shares issued and outstanding, respectively                                                        585             495
   Additional paid-in capital                                                                     1,082,938       1,070,403
   Deferred stock compensation                                                                         (298)           (670)
   Accumulated other comprehensive income (loss)                                                         84             (62)
   Accumulated deficit                                                                           (1,073,774)     (1,059,314)
                                                                                                -----------     -----------
     Total stockholders' equity                                                                       9,544          10,852
                                                                                                -----------     -----------

     Total liabilities and stockholders' equity                                                 $    37,225     $    45,588
                                                                                                ===========     ===========
</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                NINE MONTHS ENDED
                                                                    SEPTEMBER 30,                     SEPTEMBER 30,
                                                            -----------------------------     -----------------------------
                                                                2002             2001             2002             2001
                                                            ------------     ------------     ------------     ------------
                                                                     (UNAUDITED)                       (UNAUDITED)
<S>                                                         <C>              <C>              <C>              <C>
Revenues:
  Integrated media solutions                                $      6,379     $      7,039     $     21,224     $     28,269
  Technology solutions                                             3,340               --            9,825            8,062
                                                            ------------     ------------     ------------     ------------
     Total revenues                                                9,719            7,039           31,049           36,331
                                                            ------------     ------------     ------------     ------------
Cost of revenues:
  Integrated media solutions                                       4,334            7,495           14,435           24,814
  Technology solutions (exclusive of $0, $0, $7 and $0,
     respectively, reported below as stock-based
     compensation)                                                   847               --            2,586            2,145
                                                            ------------     ------------     ------------     ------------
     Total cost of revenues                                        5,181            7,495           17,021           26,959
                                                            ------------     ------------     ------------     ------------

     Gross profit                                                  4,538             (456)          14,028            9,372
                                                            ------------     ------------     ------------     ------------
Operating expenses:
  Sales and marketing (exclusive of $13, $27, $68 and
     $471, respectively, reported below as stock-based
     compensation)                                                 3,178            3,353            9,456           15,693
  General and administrative (exclusive of $2,169, $140,
     $2,484 and $1,081, respectively, reported below as
     stock-based compensation)                                     3,509            5,158           10,954           27,838
  Product technology (exclusive of $8, $27, $50 and
     ($76), respectively, reported below as stock-based
     compensation)                                                   807            1,370            3,251            9,601
  Amortization of goodwill and intangible assets                     466            2,196            1,475           12,557
  Stock-based compensation                                         2,190              194            2,609            1,476
  Restructuring costs                                                 --              521               --              952
  Loss (gain) on sale of non-core assets, net                        856             (647)             550           (1,529)
  Impairment of intangible assets                                     --            9,600               --           56,707
                                                            ------------     ------------     ------------     ------------

     Total operating expenses                                     11,006           21,745           28,295          123,295
                                                            ------------     ------------     ------------     ------------

     Loss from operations                                         (6,468)         (22,201)         (14,267)        (113,923)

Interest income (expense), net                                       (85)             135             (193)             750
Gain on sale of investments, net                                      --              882               --            4,985
Impairment of investments                                             --               --               --           (3,089)
                                                            ------------     ------------     ------------     ------------

Loss from continuing operations                                   (6,553)         (21,184)         (14,460)        (111,277)
Loss from discontinued operations                                     --           (9,669)              --          (52,086)
                                                            ------------     ------------     ------------     ------------
Net loss                                                          (6,553)         (30,853)         (14,460)        (163,363)

Dividends on preferred stock                                         (50)              --              (50)              --
Preferred stock conversion discount                               (6,628)              --           (6,628)              --
                                                            ------------     ------------     ------------     ------------

Net loss attributable to common stockholders                $    (13,231)    $    (30,853)    $    (21,138)    $   (163,363)
                                                            ============     ============     ============     ============

Loss per common share - basic and diluted
Loss from continuing operations                             $      (0.12)    $      (0.48)    $      (0.28)    $      (2.55)
Loss from discontinued operations                                     --            (0.22)              --            (1.19)
Preferred stock dividends and conversion discount                                                    (0.13)           (0.13)
                                                            ------------     ------------     ------------     ------------
Net loss attributable to common stockholders                $      (0.25)    $      (0.70)    $      (0.41)    $      (3.74)
                                                            ============     ============     ============     ============

Weighted average shares outstanding                           52,540,206       44,363,935       51,051,525       43,630,239
                                                            ============     ============     ============     ============
</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,
                                                                                                -----------------------
                                                                                                  2002          2001
                                                                                                ---------     ---------
                                                                                               (UNAUDITED)   (UNAUDITED)
<S>                                                                                             <C>           <C>
Cash flows from operating activities:
Net loss                                                                                        $ (14,460)    $(163,363)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss from discontinued operations                                                                      --        52,086
Depreciation and amortization                                                                       2,881        10,058
Provision for doubtful accounts and sales reserves                                                   (162)       (5,303)
Amortization of goodwill and other intangible assets                                                1,475        12,557
Non-cash compensation                                                                               2,609         1,476
Gain on sale of investments, net                                                                       --        (4,985)
Loss (gain) on sale of non-core assets, net                                                           550        (1,529)
Common stock issued for services                                                                       47            --
Warrants issued for services                                                                           --           100
Impairment of investments                                                                              --         3,089
Impairment of intangible assets                                                                        --        56,707
Non-cash restructuring costs                                                                           --          (549)
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
   Accounts receivable                                                                              3,066        30,012
   Prepaid assets and other current assets                                                            748           826
   Other assets                                                                                       690         2,556
   Accounts payable, accrued and other liabilities                                                 (7,905)      (19,796)
   Deferred revenue                                                                                   549        (1,518)
                                                                                                ---------     ---------
     Net cash used in operating activities                                                         (9,912)      (27,576)
                                                                                                ---------     ---------

Cash flows from investing activities:
Proceeds from sale of non-core assets, net of expenses                                              2,416        16,807
Cash acquired from acquistion of Now Marketing, net                                                 1,190            --
Proceeds from sale of investments                                                                      --         6,858
Capital expenditures, including capitalized software                                                 (587)         (185)
                                                                                                ---------     ---------
     Net cash provided by investing activities                                                      3,019        23,480
                                                                                                ---------     ---------

Cash flows from financing activities:
Proceed from issuance of Series A preferred stock and warrants, net                                 7,355            --
Proceeds from issuance of loan payable - related party                                              3,000            --
Proceeds from exercise of stock options                                                                73            12
Payment of capital lease obligations                                                                  (30)          (88)
Cash paid in settlement for treasury stock                                                             --          (275)
                                                                                                ---------     ---------
     Net cash provided by (used in) financing activities                                           10,398          (351)
                                                                                                ---------     ---------
     Net change in cash and cash equivalents                                                        3,505        (4,447)
Effect of foreign currency on cash                                                                    146            36
Cash used by discontinued operations                                                                   --       (13,905)
Cash and cash equivalents at beginning of period                                                    6,974        25,653
                                                                                                ---------     ---------
Cash and cash equivalents at end of period                                                      $  10,625     $   7,337
                                                                                                =========     =========
</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

24/7 Real Media provides marketing solutions to the digital advertising
industry. Through its suite of online marketing and technology services, 24/7
Real Media connects media buyers and media sellers across multiple digital
platforms and works closely with individual clients to develop comprehensive,
customized, value-enhancing solutions. The Company focuses on the United States,
Canada and Europe and is organized into two principal lines of business:
Integrated Media Solutions and Technology Solutions.


       o      Integrated Media Solutions connects advertisers to audiences
              through three products: (i) the 24/7 Network of
              Web sites; (ii) promotions; and (iii) a search engine
              results listing service. The Company also acts as a broker for
              permission based email lists.

       o      Technology Solutions, through Open AdStream, the Company's
              proprietary technology, provides advertising delivery and
              management.

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 continued 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 2001 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 and working capital deficiency
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.

FACTORS AFFECTING COMPARABILITY OF 2002 AND 2001

On October 30, 2001, the Company acquired Real Media, Inc. The merger created
cost synergies for the combined company, one of which was to focus on Real
Media's proprietary Open AdStream technology and abandon the existing ad serving
technology, 24/7 Connect. The transition of the network business onto the Open
AdStream platform began in December 2001 and was completed in February 2002,
resulting in the elimination of redundant personnel and operating costs
associated with having two ad serving platforms. Throughout 2001 and into 2002,
in accordance with its business plan, the Company divested or discontinued many
non-core assets and operations, including:

       o      In May 2001, the Company completed the sale of certain technology
              assets and intellectual property of Sabela and completed the shut
              down of Sabela operations on June 30, 2001.

       o      In May 2001, the Company completed the sale of Exactis, an email
              service bureau.

       o      In August 2001, the operations of 24/7 Europe were shut down and
              the consolidated financial statements have been revised to reflect
              this international segment as a discontinued operation.

       o      In January 2002, the Company completed the sale of its IMAKE
              subsidiary. The financial statements of prior periods have been
              revised to reflect the disposition of IMAKE as a discontinued
              operation.

       o      In May 2002, the Company completed the sale of certain assets
              related to the US email management product.


                                        5
<Page>

The revenue attributed to the disposition of these non-core assets for the three
and nine month periods ended September 30, 2002 was approximately $0 and $1.6
million, respectively, all of which related to the US email management product
within the Integrated Media Solutions segment. For the three and nine month
periods ended September 30, 2001 revenue related to disposition of non-core
assets was $1.5 million and $13.9 million, respectively, of which $1.5 million
and $5.8 million, respectively, related to the US email management product
within the Integrated Media Solutions segment and $0 and $8.1 million related to
the Technology Solutions segment. The Technology Solutions segment is not
comparable as the revenue in 2002 is derived solely from operations that were
acquired with Real Media in October 30, 2001, while the revenue in 2001 relates
to operations that have been sold or shut down, including Exactis and Sabela.
This does not include $1.3 million and $15.3 million for the three and nine
month periods ended September 30, 2001, respectively, related to 24/7 Europe and
IMAKE, which are shown as part of discontinued operations in the 2001
consolidated statement of operations.

As a result of the cost-cutting and divestiture efforts, which began in November
2000 through December 31, 2001, the Company reduced its headcount by
approximately 1,000 and closed several offices, both domestic and international
(see notes 2, 3 and 4 for additional information).

On September 19, 2002, the Company acquired certain assets of Elbit Vflash Inc.
and Elbit Vflash Ltd. d/b/a Now Marketing (see note 2) that did not have a
material impact on the Company's results of operation for the third quarter of
2002.

ORGANIZATION AND BASIS OF PRESENTATION

PRINCIPLES OF CONSOLIDATION

The Company's consolidated financial statements as of September 30, 2002 and
December 31, 2001 and for the three and nine month periods ended September 30,
2002 and 2001 include the accounts of the Company and its majority-owned and
controlled subsidiaries from their respective dates of acquisition (see note 2).
When losses applicable to minority interest holders in a subsidiary exceed the
minority interest in the equity capital of the subsidiary, these losses are
included in the Company's results, as the minority interest holder has no
obligation to provide further financing to the subsidiary. All significant
intercompany transactions and balances have been eliminated in consolidation.

INTERIM RESULTS

The consolidated financial statements as of September 30, 2002 and for the three
and nine month periods ended September 30, 2002 and 2001 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, 2002 and the results of the Company's
operations and cash flows for the interim periods ended September 30, 2002 and
2001. The financial data and other information disclosed in these notes to the
consolidated results for the three and nine month periods ended September 30,
2002 and 2001 are not necessarily indicative of the results to be expected for
any subsequent quarter or the entire fiscal year ending December 31, 2002.

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.

In addition, the Company revised the 2001 financial statement information
included in this Form 10-Q in order to reflect the January 2002 sale of IMAKE as
a discontinued operation in accordance with the Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (see note 3).

It is suggested that these unaudited consolidated financial statements be read
in conjunction with our revised audited consolidated financial statements and
notes thereto for the year ended December 31, 2001


                                        6
<Page>

as included in the Company's report on Form 8-K dated October 15, 2002 which
reflects the sale of IMAKE as a discontinued operation.

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.

UNBILLED RECEIVABLES

At September 30, 2002 and December 31, 2001, accounts receivable included
approximately $3.9 million and $2.4 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
terms of the related advertising contracts typically require billing at the end
of each month. The increase is due to the increase in technology revenue from
$1.7 million in the fourth quarter of 2001 to $3.3 million in the third quarter
of 2002. All unbilled receivables as of September 30, 2002 have been
subsequently billed.

CAPITALIZED SOFTWARE

In accordance with SFAS No. 86, "Accounting for the Costs of Computer Software
to Be Sold, Leased, or Otherwise Marketed", the Company capitalizes internal
production costs for software upon reaching technological feasibility. As of
September 30, 2002, the Company capitalized approximately $0.3 million in
connection with the Open Advertiser ad-serving product. Depreciation will be on
the straight-line method over the estimated useful life of the software, or 4
years and begin when the product is available for general release, which is
expected in the fourth quarter of 2002.

COMPREHENSIVE LOSS

Total comprehensive loss for the nine month periods ended September 30, 2002 and
2001 was $(21.0) million and $(167.2) million, respectively. Comprehensive loss
resulted primarily from net losses attributable to common stockholders of
$(21.1) million and $(163.4) million, respectively, as well as a change in
unrealized gains (losses)(net of tax), of marketable securities of $0 and $(3.8)
million, respectively, and foreign currency translation adjustments of $0.1 and
$0, respectively. The net change in unrealized gains (losses) of ($3.8) million
for the nine months ended September 30, 2001 is comprised of net unrealized
holding losses arising during the period of $5.4 million related to chinadotcom,
a reclassification adjustment of $4.1 million for net gains on the sale of
investments in marketable securities and a reclassification adjustment of $2.5
million for other-than-temporary losses related to available-for-sale securities
of Network Commerce and i3Mobile.

LOSS PER SHARE

Loss per share is presented in accordance with the provisions of SFAS No. 128,
"Earnings Per Share" ("EPS"). Basic EPS excludes dilution for potentially
dilutive securities and is computed by dividing net loss attributable to common
stockholders 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 periods ended September 30, 2002 and 2001 does not
include the effects of options to purchase 12.6 million and 7.3 million shares
of common stock, respectively; 8.3 million and 3.0 million common stock
warrants; 32,000 and 0.1 million shares of unvested restricted stock,
respectively, and in 2002, 45.0 million shares from convertible preferred stock
on an "as if" converted basis, as the effect of their inclusion is anti-dilutive
during each period.


                                        7
<Page>

RECLASSIFICATIONS

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

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS
No. 146 addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Forces ("EITF")
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The principal difference between SFAS No. 146 and EITF 94-3
relates to the timing of liability recognition. Under SFAS No. 146, a liability
for a cost associated with an exit or disposal activity is recognized when the
liability is incurred. Under EITF 94-3, a liability for an exit cost was
recognized at the date of an entity's commitment to an exit plan. The provisions
of SFAS No. 146 are effective for exit or disposal activities that are initiated
after December 31, 2002. The adoption of SFAS No. 146 is not expected to have a
material impact on the Company's financial position or results of operations.

(2)  BUSINESS COMBINATIONS

ACQUISITION OF REAL MEDIA

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, 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 of the Company's common stock,
valued at $2.2 million, equal to 19.9 percent of the Company's common stock
prior to the merger. The total purchase price of $6.4 million also included
acquisition and transaction costs of $0.9 million and assumption of $3.3 million
in net liabilities. The merger created opportunities for cost reductions for the
combined Company, a significant portion of which resulted from the Company's
decision to fully adopt Real Media's proprietary Open AdStream technology
("OAS") and abandon the Company's existing ad-serving technology, 24/7 Connect.
Other cost reductions were achieved through the elimination of redundant
personnel, renegotiating affiliate contracts with low split rates on the Real
Media network, renegotiation of supplier contracts at better rates due to
increased volume and the consolidation of numerous offices. The Company also
adopted a new name "24/7 Real Media, Inc." to capitalize on the Real Media and
24/7 Media brand names. The purchase price in excess of the fair value of net
tangible assets and liabilities acquired of $6.4 million has been allocated $3.5
million to acquired technology, $0.5 million to trade name and $2.4 million to
goodwill. The acquired technology and trade name are being amortized over the
expected period of benefit of four years. The acquisition was accounted for as a
purchase business combination in accordance with SFAS No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets".
Accordingly, goodwill was not amortized.

The Company also guaranteed a Promissory Note for $4.5 million issued by
Publigroupe USA Holding, Inc. ("Publigroupe"), former principal shareholder of
Real Media, as of the acquisition date, which was to be used primarily to
finance Real Media's restructuring plan. The note bears interest at 4.5% and
principal and interest are due on October 30, 2006. The restructuring plan
provided for office closings of $0.2 million, workforce reduction of
approximately 120 employees for $3.1 million and other related obligations of
$1.2 million (see note 9). In addition, certain key executives had clauses in
their Real Media employment agreements that called for transactional bonuses to
be paid in the case of a change in control. These bonuses of $0.5 million were
assumed as part of the acquisition and were paid by the Company in November
2001. Publigroupe also promised to provide additional funding in the form of two
three-year notes of $1.5 million each, the first of which was received in
January 2002 and the second funding of $1.5


                                        8
<Page>

million, based on the Company achieving certain target operating results for the
three months ended March 31, 2002, was received on May 13, 2002 (see note 12).

The net liabilities acquired consist of the following:

        ASSET/LIABILITY                                AMOUNT
        ---------------                                ------
        Cash                                         $    6,343
        Accounts receivable                               6,405
        Fixed assets                                      2,248
        Receivable--Publigroupe                             600
        Other assets                                      1,411
        Accounts payable and accrued liabilities        (13,550)
        Deferred revenue                                 (2,249)
        Note payable--Publigroupe                        (4,500)
                                                     ----------
                                                     $   (3,292)
                                                     ==========

ACQUISITION OF NOW MARKETING

On September 19, 2002, the Company acquired certain assets of Elbit Vflash Inc.
and Elbit Vflash Ltd. d/b/a Now Marketing ("Now Marketing"), a New York-based
marketing services firm. The acquisition agreement required Now Marketing's
parent, Elbit Ltd. and Gilbridge, Inc., together ("Now Marketing's Parent"), to
make a $1.25 million investment in exchange for 125,000 shares of Series B
Preferred Stock. Accordingly, the total purchase consideration of $4.3 million
consists of 4.1 million shares of Common Stock valued at $1.7 million, 125,000
shares of Series B Preferred Stock valued at $2.5 million and $60,000 of
transaction costs. The Series B Preferred Stock is convertible into shares of
Common Stock of the Company at any time at the option of the holder thereof at a
conversion price of $0.2066 per share, or 6,050,339 shares of Common Stock on an
as-if converted basis.

Substantially all of the initial terms of the agreement were reached when the
price of the Company's Common Stock approximated the conversion price of $0.2066
per share of Common Stock. By the time the transaction closed on September 19,
2002 and the terms were agreed to and announced to the public, the price of the
Company's Common Stock rose to $0.44 per share. Accordingly, the 125,000 shares
of Series B Preferred Stock issued in connection with Now Marketing's Parent's
$1.25 million investment contained an embedded beneficial conversion feature
which was required to be valued separately as of the date of the business
combination. The intrinsic value of the beneficial conversion feature was
calculated as the difference between the conversion price of $0.2066 per share
of Common Stock and the fair value of the Common Stock into which the Series B
Preferred Stock was convertible into on the closing date of $0.44 per share, or
an intrinsic value of approximately $0.23 per share, however, the amount of the
discount was limited to the amount of cash acquired that was allocable to the
Series B Preferred Stock. Therefore, the Company recorded a non-cash charge of
$1.25 million in the third quarter of 2002, representing the number of common
shares into which the Series B Preferred Stock is convertible (6,050,339 shares
of Common Stock) multiplied by the conversion price of $0.2066 per share of
Common Stock. The non-cash charge of $1.25 million is included in the "Preferred
stock conversion discount" on the consolidated statement of operations in a
manner similar to a Preferred Stock dividend.

The excess purchase price (excluding the $1.25 million Series B Preferred Stock
discount) over the fair market value of net tangible assets of approximately
$1.8 million has initially been allocated to goodwill pending a final allocation
of such amount during the fourth quarter of 2002. The acquisition was accounted
for as a purchase business combination in accordance with SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets".


                                        9
<Page>

The net assets acquired consist of the following:

        ASSET/LIABILITY                                AMOUNT
        ---------------                                ------
        Cash                                          $  1,250
        Accounts receivable                                 23
        Fixed assets                                        85
        Accrued liabilities                                (18)
                                                      --------
                                                      $  1,340
                                                      ========

The following unaudited pro forma consolidated amounts give effect to the
Company's acquisition of Real Media and Now Marketing accounted for by the
purchase method of accounting as if it had occurred at the beginning of the
period by consolidating the results of operations of the acquired entity for the
three and nine month periods ended September 30, 2002 and 2001.

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

<Table>
<Caption>
                                                       THREE MONTHS ENDED           NINE MONTHS ENDED
                                                          SEPTEMBER 30,               SEPTEMBER 30,
                                                     -----------------------     -----------------------
                                                       2002          2001          2002          2001
                                                     ---------     ---------     ---------     ---------
                                                        (IN THOUSAND, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                  <C>           <C>           <C>           <C>
Total revenues                                       $   9,730     $  15,046     $  31,529     $  60,352
Loss from continuing operations                         (7,090)      (28,650)      (23,697)     (133,676)
Loss from discontinued operations                           --        (9,669)           --       (52,086)
Dividends on preferred stock                               (50)           --           (50)           --
Preferred stock conversion discount                     (6,628)           --        (6,628)           --
                                                     ---------     ---------     ---------     ---------
Net loss available to common stockholders            $ (13,768)    $ (38,319)    $ (30,375)    $(185,762)
                                                     =========     =========     =========     =========

Loss per common share - basic and diluted
Loss from continuing operations                      $   (0.13)    $   (0.51)    $   (0.43)    $   (2.39)
Loss from discontinued operations                           --         (0.17)           --         (0.93)
Preferred stock dividends and conversion discount        (0.13)           --         (0.13)           --
                                                     ---------     ---------     ---------     ---------
Net loss available to common stockholders            $   (0.26)    $   (0.68)    $   (0.56)    $   (3.32)
                                                     =========     =========     =========     =========
</Table>

----------
(1) The weighted average shares used to compute pro forma basic and diluted net
loss per share for the three and nine month periods ended September 30, 2001
includes the 8,216,868 and 4,100,000 common shares issued for Real Media and Now
Marketing, respectively, as if the shares were issued on January 1, 2001.

(3)  DISCONTINUED OPERATIONS

EUROPE

On August 6, 2001, the Company ceased funding its European subsidiaries and
communicated that to 24/7 Europe NV's management team and Board of Directors.
Subsequently, management of 24/7

                                       10
<Page>

Europe advised the Company that 24/7 Europe NV was insolvent and shut down all
operations in the third quarter of 2001. During the second quarter of 2001, the
Company reduced the carrying value of the net assets of the European operations
to zero. The write down included $12.3 million in impairment charges related to
goodwill and other intangible assets, which was included in loss from
discontinued operations in the second quarter of 2001 statements of operations.

                STATEMENT OF OPERATIONS DATA

                                          NINE MONTHS ENDED
                                          SEPTEMBER 30, 2001
                                          ------------------
                Revenue                     $   10,555
                Net loss                       (30,540)

IMAKE

In accordance with SFAS No. 144, operations meeting the definition of a
component of an entity are treated as discontinued operations when sold. On
January 22, 2002, the Company completed the sale of its wholly owned subsidiary,
IMAKE Software & Services, Inc., to Schaszberger Corporation, the previous
owner, and an officer of IMAKE. Under the terms of the sale, the purchase price
payable by the buyer was approximately $6.5 million for the stock of IMAKE of
which $2.0 million was in the form of a 6% four year secured note, approximately
$500,000 in cash consideration, a potential earn out of up to $4.0 million over
the next three years based on gross revenue as defined in the agreement and
Series A preferred stock of Schaszberger Corporation, which as of the closing
date represented 19.9% of the buyer. The Note is secured by certain assets of
IMAKE and is guaranteed by Schaszberger Corporation. In the event that the earn
out is not met within the three year period, the Company is entitled to receive
a $1.00 Warrant for common stock equal to the difference between $3.0 million
and the amount of the actual earn out paid to date. The shares to be received
are based on a third-party outside valuation of the buyer at December 31, 2005
and a ratio set forth in the agreement. The consideration paid to the Company
was determined as a result of arms length negotiations between the buyer and the
Company. The Company has discounted the note receivable and recorded the net
present value of the earn out based on its estimates of projected revenues and
reflected $0.5 million and $1.5 million, respectively. In January 2002, the
Company received the upfront cash consideration of $0.5 million and has been
receiving the monthly earn out payments as scheduled. As of September 30, 2002,
there are approximately $0.5 million in short term and $1.3 million in long term
notes and amounts receivable from the disposition related to IMAKE on the
consolidated balance sheet.

During the fourth quarter of 2001, the Company wrote down the carrying value of
the net assets of IMAKE. The write down included $5.9 million in impairment
charges related to goodwill and intangible assets, which was included in loss
from discontinued operations in the fourth quarter of 2001 statement of
operations.

The consolidated financial statements and related footnotes of the Company have
been revised to reflect the sale of the IMAKE subsidiary as a discontinued
operation in accordance with SFAS No. 144. Accordingly, revenues, costs and
expenses, assets, liabilities, and cash flows of IMAKE have been excluded from
the footnotes and the respective captions in the Consolidated Statements.


                                       11
<Page>

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

         STATEMENT OF OPERATIONS DATA
                                        THREE MONTHS ENDED     NINE MONTHS ENDED
                                        SEPTEMBER 30, 2001    SEPTEMBER 30, 2001
                                        ------------------    ------------------
         Revenue                             $  1,271              $  4,728
         Net loss                              (9,669)              (21,546)

         BALANCE SHEET DATA
                                                               DECEMBER 31, 2001
                                                               -----------------
         Current assets                                            $  1,546
         Long-term assets                                             1,136
                                                                   --------
         Total assets                                                 2,682
                                                                   ========
         Current liabilities                                       $   (244)
                                                                   ========

(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 Marketing Solutions, Inc.
("Experian"). The purchase price was $15.25 million of which $12.0 million was
paid in cash, $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 available to be purchased by the Company from Experian pursuant to a
services agreement that expires on December 31, 2002. During the second quarter
of 2001, the $1.5 million in escrow and $1.75 million prepayment had been
reflected as deferred gain on sale of non-core assets on the consolidated
balance sheet. As the prepaid services are used, the deferred gain is
recognized.

In September 2001, the Company received a letter from Experian alleging that the
Company made certain misrepresentations and omissions in connection with the
Stock Purchase Agreement relating to the sale of Exactis. On March 27, 2002, the
Company and Experian reached a settlement agreement whereby the Company
authorized the escrow agent to release $750,000 to Experian, and Experian
authorized the escrow agent to release the remaining balance of approximately
$780,000 to the Company. On March 28, 2002, the funds were released to the
Company. Upon release of the escrow balance, the Company recognized $750,000 of
the deferred gain related to the sale as gain on sale of non-core assets in the
2002 statement of operations and $30,000 as interest income.

During the nine month period ended September 30, 2002, the Company has been
billed approximately $197,000 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, 2002, the sale has resulted in a loss of $3.5 million, not
including the remainder of the aforementioned deferred gains of $0.1 million.
The Company has reflected the remaining $0.1 million of prepaid services in
prepaid and other current assets on the consolidated balance sheet.

SALE OF CERTAIN US EMAIL ASSETS

On May 3, 2002, the Company completed the sale of certain assets related to its
US email management product, including customer contracts, certain intangibles
and employee relationships, to 24/7 Mail, Inc., a wholly owned subsidiary of
Naviant, Inc. Under the terms of the sale, the purchase price payable is up to
$4.5 million. The purchase price is comprised of (i) $1.0 million that was paid
at closing; (ii) $1.0 million in the form of a non-interest bearing installment
note with $350,000 due in ninety days, $350,000 due in one hundred and eighty
days and $300,000 due in two hundred seventy days from closing; (iii) an
earn-out payable quarterly over the next 45 months, based on 5% of Net Revenue
(as defined in the Asset Purchase Agreement), with minimum quarterly payments of
$50,000 and a maximum of $2.0 million, through 2005. Lastly, pursuant to a
$500,000 non-interest bearing installment note, half of which is payable on each
of April 30, 2004 and April 30, 2005, Naviant has the option either to (i) issue
to the Company a number of


                                       12
<Page>

shares currently comprising 19.9% of 24/7 Mail, Inc., or (ii) pay the Company
cash in lieu of the shares. The consideration paid to the Company was determined
as a result of arms-length negotiations between the buyer and the Company. The
Company initially recorded a loss of $0.8 million on the sale in the second
quarter of 2002.

On July 30, 2002, the Company received a letter from Naviant alleging a breach
of that certain of the Company's warranties regarding the assets. Naviant
claimed damages of approximately $2.3 million, which it intended to offset
against the amounts due to the Company. On October 3, 2002, the parties agreed
to resolve the dispute through immediate payment of $1.25 million by Naviant to
the Company in lieu of all future amounts due to the Company. Naviant agreed to
waive further claims with regard to the specific warranty in dispute, however,
certain representations made by the Company under the Purchase Agreement dated
as of April 30, 2002 among the Company, 24/7 Mail Inc and Naviant, Inc. continue
in effect and Naviant may have the right to bring claims with respect to such
representations until June 30, 2003. As a result of the settlement, the Company
wrote off approximately $0.9 million remaining amount due from Naviant in the
third quarter of 2002. The $1.25 million settlement amount is included in the
current portion of notes and amounts receivable from dispositions at September
30, 2002 and was received by the Company on October 4, 2002.

SUMMARY

For the three months ended September 30, 2002, the $0.9 million loss on the sale
of non-core assets primarily relates to the sale of US email management product.
For the nine months ended September 30, 2002, the $0.5 million loss on sale of
non-core assets consists of a $1.7 million loss related to the sale of certain
assets related to US email management product offset by $0.8 million recognized
as a gain from the release of the Exactis escrow amount, $0.3 million related to
the recognition of the deferred gain related to the Exactis sale and $0.1
million related to the reversal of an accrual related to the sale of Exactis
that was deemed unnecessary.

(5)  INTANGIBLE ASSETS, NET

During 2001, the Company performed on-going business reviews and, based on
quantitative and qualitative measures, assessed the need to record impairment
losses on long-lived assets used in operations when impairment indicators were
present. Where impairment indicators were identified, the Company 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 common stock at that time. Starting with the fourth
quarter of 2000 through December 31, 2001, the Company reevaluated the carrying
value of its businesses on a quarterly basis. The revaluation was triggered by
the continued decline in the Internet advertising and marketing sectors
throughout 2000 and 2001. In addition, each of these entities experienced
declines in operating and financial metrics over several quarters in 2001,
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. The impairment analysis also considered when these
properties were acquired and that the intangible assets recorded at the time of
acquisition were 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 each respective period end.


                                       13
<Page>

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 initial acquisition valuations. As
a result, during the Company'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
that was in place at the time of the acquisition of these companies.

As a result, the Company determined that the fair value of goodwill and other
intangible assets attributable to several of its operating units were less than
their recorded carrying values. Accordingly, the Company recognized $35.5
million in impairment charges to adjust the carrying values in the first quarter
of 2001, $11.6 million in the second quarter of 2001 and $9.6 million in the
third quarter of 2001. Of this amount $26.9 million related to Website Results,
$25.3 million related to Mail and $4.5 million related to Exactis.

The impairment factors evaluated 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.

As of September 30, 2002, the goodwill and other intangibles assets, net was
$10.7 million: $5.7 million related to Real Media, $2.1 million related to
Website Results, $1.8 million related to Now Marketing and $1.1 million related
to ClickThrough.

<Table>
<Caption>
                                               SEPTEMBER 30,  DECEMBER 31,     ESTIMATED
                                                   2002           2001        USEFUL LIVES
                                               ------------   -----------     ------------
                                                     (IN THOUSANDS)
<S>                                              <C>            <C>                 <C>
Unamortized intangible assets
   Goodwill(1)(2)                                $  5,949       $  7,901

Amortized Intangible assets with finite lives
   Technology                                       6,005          6,001            4
   Assembled Workforce(2)                              --            730            2
   Trademark                                          500            500            4
                                                 --------       --------
                                                    6,505          7,231
   Less accumulated amortization                   (1,779)          (614)
                                                 --------       --------
                                                    4,726          6,617
                                                 --------       --------
Total                                            $ 10,675       $ 14,518
                                                 ========       ========
</Table>

----------
(1) On May 3, 2002, the Company sold certain assets related to the US email
management product which had $3.8 million of goodwill. On September 19, 2002,
the Company acquired Now Marketing and initially allocated $1.8 million to
goodwill pending final allocation of such amount during the fourth quarter of
2002. During the second quarter of 2002, the Company reversed $0.3 million of
restructuring reserves acquired against goodwill, as they were no longer deemed
necessary.

(2) In connection with the adoption of SFAS No. 142, on January 1, 2002, the
Company reclassified $420 ($730 gross less $310 in accumulated amortization) in
net book value associated with its assembled workforce to goodwill.

Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Asset. SFAS No. 142


                                       14
<Page>

eliminates the amortization of goodwill and indefinite-lived intangible assets,
addresses the amortization of intangible assets with finite lives and addresses
impairment testing and recognition for goodwill and intangible assets. SFAS No.
144 establishes a single model for the impairment of long-lived assets and
broadens the presentation of discontinued operations to include more disposal
transactions. The Company completed its initial transitional goodwill impairment
assessment in the second quarter of 2002 and determined that there was no
impairment of goodwill.

The Company assesses goodwill for impairment annually unless events occur that
require more frequent reviews. Long-lived assets, including amortizable
intangibles, are tested for impairment if impairment triggers occur. Discounted
cash flow analyses are used to assess nonamortizable intangible impairment while
undiscounted cash flow analyses are used to assess long-lived asset impairment.
If an assessment indicates impairment, the impaired asset is written down to its
fair market value based on the best information available. Estimated fair market
value is generally measured with discounted estimated future cash flows.
Considerable management judgment is necessary to estimate undiscounted and
discounted future cash flows. Assumptions used for these cash flows are
consistent with internal forecasts.

The amortization expense and net loss for the three and nine month periods ended
September 30, 2002 and 2001 had SFAS No. 142 been applied for both periods is as
follows:

<Table>
<Caption>
                                                          FOR THE THREE                FOR THE NINE
                                                           MONTHS ENDED                 MONTHS ENDED
                                                     ------------------------     --------------------------
                                                        2002          2001           2002           2001
                                                     ---------     ----------     ----------     -----------
<S>                                                  <C>           <C>            <C>            <C>
Loss from continuing operations                      $  (6,553)    $  (21,184)    $  (14,460)    $  (111,277)
Add back: goodwill amortization                             --          1,148             --           6,716
                                                     ---------     ----------     ----------     -----------
   Adjusted loss from continuing operations          $  (6,553)    $  (20,036)    $  (14,460)    $  (104,561)
                                                     =========     ==========     ==========     ===========

Basic and diluted loss per common share:
Loss per share from continuing operations            $   (0.12)    $    (0.48)    $    (0.28)    $     (2.55)
Add back: goodwill amortization                             --           0.03             --            0.15
                                                     ---------     ----------     ----------     -----------
   Adjusted loss per common share from continuing
     operations                                      $   (0.12)    $    (0.45)    $    (0.28)    $     (2.40)
                                                     =========     ==========     ==========     ===========
</Table>

Although SFAS No. 142 requires disclosure of these amounts to reflect the impact
of adoption on 2001 results, there can be no assurance that the add back of
amortization expense would not have resulted in additional impairment charges in
prior periods.

(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. The Company's net gain on the
sale of these investments is included in "Gain on sale of investments, net" in
the Company's consolidated statement of operations.

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. The


                                       15
<Page>

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

(7)  COMMON AND PREFERRED STOCK

On September 19, 2002, the Company issued 125,000 shares of Series B Preferred
Stock in conjunction with the acquisition of Now Marketing, which are
convertible into 6,050,339 shares of common stock (see note 2). The Series B
Preferred Stock will accrue and cumulate dividends commencing October 1, 2002 at
a rate of 6% per year, compounded monthly, payable when, as and if declared by
the Company's Board of Directors.

SUNRA

On July 2, 2002, the Company entered into a Series A and Series A-1 Preferred
Stock and Common Stock Warrant Purchase Agreement with Sunra Capital Holdings
Limited ("Sunra"), a newly formed investment fund advised by Merchant's Group
International.

On July 2, 2002, Sunra purchased $1.6 million of the Company's newly created
Series A Preferred Stock, $3.4 million of its newly created Series A-1 Non
Voting Convertible Preferred Stock, and on August 8, 2002 Sunra and affiliated
parties agreed to purchase an additional $3.0 million of the Series A Preferred
Stock, for a total investment of $8.0 million. Upon receipt of stockholder
approval on September 10, 2002, the outstanding shares of Series A-1 Preferred
Stock converted into shares of Series A Preferred Stock and Sunra consummated
the purchase of an additional $3.0 million of the Series A Preferred Stock (the
"September 10, 2002 Series A Preferred Stock transactions").

Each share of Series A Preferred Stock is convertible into Common Stock of the
Company at any time at the option of the holder thereof at a conversion price of
$0.20535 per share of common stock, or 38,957,876 shares of Common Stock on an
as-if converted basis. The Company also issued at total of 3,895,788 warrants to
Sunra to purchase shares of Common Stock at an exercise price of $0.20535. All
of the warrants issued may be exercised through a cashless exercise and have a
five year term. Sunra is the beneficial owner of approximately 42,853,664 shares
of Common Stock, or approximately 42.3% of the Company's outstanding Common
Stock at September 30, 2002 on a fully diluted basis. The Company also issued
400,000 warrants to Merchant's Group International as partial payment of a
placement fee and incurred approximately $0.7 million in other related fees. The
Series A Preferred Stock accrue and cumulate dividends at a rate of 6% per year,
compounded monthly, payable when, as and if declared by the Company's Board of
Directors. Accordingly, the $50,000 cumulative dividends are reflected as
"Preferred stock dividends" on the consolidated statement of operations.

The Company definitively agreed to the initial terms of the September 10, 2002
Series A Preferred Stock transactions when the price of the Company's Common
Stock was approximately $0.21 per share. However, Sunra's conversion of the
outstanding shares of Series A-1 Preferred Stock into shares of Series A
Preferred Stock and purchase of an additional $3.0 million of the Series A
Preferred Stock, and associated warrants were subject to stockholder approval
which was approved on September 10, 2002, at which time the price of the
Company's Common Stock was $0.46 per share.

Accordingly, the July 2, 2002 and September 10, 2002 Series A Preferred Stock
transactions contained embedded beneficial conversion features, which were
required to be valued separately. Accordingly, the Company allocated the
proceeds received in each of the transactions to the Series A Preferred Stock
and detachable warrants based on a relative fair value basis. The value ascribed
to the five-year detachable warrants was determined using a Black-Scholes
pricing model (100% volatility factor, $0.46 fair value at September 10, 2002,
$0.21 fair value at July 2, 2002, and $0.20535 exercise price). The intrinsic
value of


                                       16
<Page>

the beneficial conversion feature associated with the July 2, 2002 Series A
Preferred Stock transaction was approximately $0.2 million. The intrinsic value
of the beneficial conversion feature associated with the September 10, 2002
Series A Preferred Stock transactions was calculated as the difference between
the conversion price of $0.20535 per share of Common Stock and the fair value of
the Common Stock into which the Series A Preferred Stock was convertible into on
the stockholder approval date of $0.46 per share, or an intrinsic value of
approximately $0.25465 per share, which is greater than the proceeds allocated
to the September 10, 2002 Series A Preferred Stock transactions. Accordingly,
the amount of the discount was limited to the amount of cash allocable to the
September 10, 2002 Series A Preferred Stock transactions. Therefore, the Company
recorded a non-cash charge of $5.2 million in the third quarter of 2002,
representing the number of common shares into which the September 10, 2002
Series A Preferred Stock transactions were convertible into (31,166,302 shares
of Common Stock) multiplied by the effective conversion price of $0.1675 per
share of Common Stock. The total non-cash charge of $5.4 million is included in
the "Preferred stock conversion discount" on the consolidated statement of
operations similar to a Preferred Stock dividend.

RESTRUCTURING OF EXECUTIVE COMPENSATION AGREEMENTS

In conjunction with the Sunra investment on July 2, 2002, four executives each
agreed to modify their respective employment agreements with the Company to
reduce the amount of severance payable to such executive officers by 50% payable
in one lump sum, and to reduce the notice period for termination or non-renewal
from 180 days to 30 days. In exchange, such executives would receive, in the
aggregate, approximately 2.1 million shares of Common Stock of which the initial
conversion value was based on the approximate fair market value of the Company's
Common Stock as of the date of the July 2, 2002, Sunra investment, or $0.20 per
share in consideration of approximately $0.4 million, out of a total of
approximately $0.8 million future severance benefits forfeited. In addition,
such executives would also receive fully-vested stock options to acquire
approximately 2.1 million shares of the Company's Common Stock with an exercise
price of $0.20 per share. The issuance of the shares and options were subject to
stockholder approval of the 2002 Stock Incentive Plan and the Sunra Series A
Preferred Stock transactions. For accounting purposes, the shares and options
are being valued at $0.46 per share, based on their fair market value using the
closing price of the Company's Common Stock as of the stockholder approval date
on September 10, 2002. In accordance with FASB Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock Stock-Based Compensation",
this approval resulted in a non-cash stock-based compensation charge of
approximately $1.5 million in the aggregate. The compensation charge related to
the options is based on their intrinsic value of $0.26 per option, that is, the
fair market value of the Company's Common Stock on the stockholder approval date
of $0.46 per share less the exercise price of $0.20 per share which resulted in
$0.6 million of the $1.5 million charge.

In addition, the four executives also agreed to receive the Earnings Before
Interest, Taxes and Amortization ("EBITA") portion of their 2002 target bonus,
if earned, in shares of the Company's Common Stock. The number of shares to be
issued in connection with the award is based upon EBITA portion of their 2002
target bonus award divided by $0.20 per share. Accordingly, this modification to
the executives' bonus award resulted in a variable based compensation award
which is required to be measured based upon the fair market value of the
Company's Common Stock at each reporting period, namely at the end of the third
and fourth quarter of 2002. At September 30, 2002, management determined that it
was probable that the EBITA target would be met and determined, at $0.20 per
share, that the bonus equates to approximately 1.35 million common shares.
Accordingly, at September 30, 2002, the four executives' bonus awards resulted
in a non-cash stock-based compensation charge of approximately $0.5 million
based upon the fair market value of the Company's Common Stock of $0.37 per
share as of the end of the reporting period. If it is determined in the fourth
quarter of 2002 that the EBITA target may not be fully achieved and/or the
Company's Common Stock price declines from the $0.37 at September 30, 2002, the
charge may be adjusted downward in the fourth quarter of 2002.

OTHER ISSUANCES

From January to July 2002, approximately 58 employees including members of
senior management agreed to receive between 5 and 20% of their compensation in
the form of the Company's common stock in lieu of cash. As a result,
approximately 1.1 million shares, valued at $0.2 million, were issued.


                                       17
<Page>

In April 2002, the Company issued 416,784 shares, valued at $0.1 million,
principally to the CEO, for 2001 bonuses as reported in the Company's 10-K and
accrued as of December 31, 2001.

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. For
the three and nine month periods ended September 30, 2002 and 2001, 6,646,
19,938, 12,792, and 152,960 shares, respectively, were granted to employees
according to their vesting schedule. At September 30, 2002, approximately 32,000
shares of restricted stock remain, vesting quarterly through December 31, 2003.

ADDITIONAL PAID-IN CAPITAL

During the nine-months ended September 30, 2002, the Company's additional
paid-in capital increased by $12.5 million primarily due to: (i) the $3.1
million of common and Series B preferred stock issued in connection with the Now
Marketing acquisition, net of the $1.25 million preferred stock conversion
discount, (ii) the $7.3 million of net proceeds from the issuances of Series A
preferred stock and warrants; and (iii) the $1.5 million of non-cash
compensation charge associated with the common stock and options issued in
connection with the restructured severance arrangements of four executives.

(8)  STOCK INCENTIVE PLAN

For the nine month period ended September 30, 2002, the Company granted
approximately 7.3 million stock options under the 1998 Stock Incentive Plan, 1.6
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. The Company also granted 2.1
million options from the 2002 Stock Incentive Plan to certain executives at a
strike price of $0.20 per share (see note 7). On January 1, 2002, in accordance
in the terms of the 2001 Plan, shares available under the Plan were increased by
1,485,230.

On September 10, 2002, the stockholders approved the 2002 Stock Incentive Plan
to enable the Company to offer and issue to certain employees, consultants and
non-employee directors of the Company and its affiliates its common stock in
order to strengthen the mutuality of interests between such parties and the
Company's stockholders. The aggregate number of shares of common stock that may
be issued pursuant to the 2002 Stock Incentive Plan shall not exceed 10,000,000
shares. The number of shares available under the 2002 Stock Incentive Plan will
automatically increase on the first trading day of each calendar year, beginning
with 2003 by an amount equal to 3% of the sum of the common stock outstanding
and the preferred stock on an as if converted basis, up to 3,000,000.

As a result of the adoption of the 2002 Stock Incentive Plan, the Board of
directors approved an amendment to the 1998 Stock Incentive Plan to eliminate
the automatic increase of 3% and eliminate any further grants to non-employee
directors.

On April 22, 2002, the Board approved the 24/7 Real Media, Inc. 2002 Equity
Compensation Plan to enable the Company to offer and issue to certain employees,
former employees, advisors and consultants of the Company and its affiliates its
common stock in payment of amounts owed to such third parties. The aggregate
number of shares of common stock that may be issued pursuant to the 2002 Equity
Compensation Plan shall not exceed 3,000,000 shares. The Company may from time
to time issue to employees, former employees, advisors and consultants to the
Company or its affiliates shares of its common stock in payment or exchange for
or in settlement or compromise of amounts due by the Company to such persons for
goods sold and delivered or to be delivered or services rendered or to be
rendered. Shares of the Company's common stock issued pursuant to the 2002
Equity Compensation Plan will be issued at a price per share of not less than
eighty-five percent (85%) of the fair market value per share on the date of
issuance and on such other terms and conditions as determined by the Company.
The Chief Executive Officer of the Company is authorized to issue shares
pursuant to and in accordance with the terms of the 2002 Equity Compensation
Plan, provided that all issuances shall be co-authorized by at least


                                       18
<Page>

one of the President, any Executive Vice President, the Chief Financial Officer
or the General Counsel. The Company may amend the plan at any time.

(9)  RESTRUCTURING CHARGES

During the three and nine month periods ended September 30, 2001, restructuring
charges of approximately $0.5 million and $1.0 million, respectively, were
recorded by the Company in accordance with the provisions of EITF 94-3, and
Staff Accounting Bulletin ("SAB") No. 100. The Company's restructuring
initiatives were to reduce employee headcount by the involuntary termination of
approximately 100 employees.

The Company acquired approximately $4.5 million in restructuring reserves in
connection with the October 31, 2001 acquisition of Real Media (see note 2). The
restructuring plan provided for office closing costs of $0.2 million, a
workforce reduction of approximately 120 employees of $3.1 million and other
related obligations of $1.2 million. During the second quarter of 2002, the
Company reversed $320,000 of restructuring reserves acquired against goodwill as
they were no longer deemed necessary.

The following sets forth the activities in the Company's restructuring reserve
for the nine months ended September 30, 2002, which is included in accrued
expenses in the consolidated balance sheet (in thousands):

<Table>
<Caption>
                                   BEGINNING     CURRENT YEAR   CURRENT YEAR     ENDING
                                    BALANCE      UTILIZATION      REVERSAL       BALANCE
                                   ---------     ------------   ------------     -------
<S>                                 <C>            <C>            <C>            <C>
Employee termination benefits       $ 2,489        $(2,169)       $  (320)       $    --
Office closing costs                    266           (223)            --        $    43
Other exit costs                      1,512         (1,050)       $   462
                                    -------        -------        -------        -------
                                    $ 4,267        $(3,442)       $  (320)       $   505
                                    =======        =======        =======        =======
</Table>

                                       19
<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 revenue by delivering advertisements to affiliated Web sites,
promotions management and search engine traffic delivery. The Technology
Solutions segment generates revenue by providing third-party ad serving and, in
2001, email delivery service bureau. 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 month periods ended September 30,
2002 and 2001, is as follows:

<Table>
<Caption>
                                        THREE MONTHS ENDED SEPTEMBER 30, 2002       THREE MONTHS ENDED SEPTEMBER 30, 2001
                                       ---------------------------------------     ----------------------------------------
                                       INTEGRATED                                  INTEGRATED
                                         MEDIA       TECHNOLOGY                       MEDIA       TECHNOLOGY
                                       SOLUTIONS      SOLUTIONS        TOTAL        SOLUTIONS      SOLUTIONS        TOTAL
                                       ---------      ---------      ---------      ---------      ---------      ---------
                                                                        (IN THOUSANDS)
<S>                                    <C>            <C>            <C>            <C>            <C>            <C>
Revenues                               $   6,379      $   3,340      $   9,719      $   7,039      $      --      $   7,039
Segment loss from operations              (5,640)          (829)        (6,468)       (22,201)            --        (22,201)
Amortization of goodwill and
   intangibles                               216            250            466          2,196             --          2,196
Stock-based compensation(1)                   36              4             40            194             --            194
Restructuring costs                           --             --             --            521             --            521
Loss (gain) on sale of assets, net           856             --            856           (647)            --           (647)
Impairment of intangible assets               --             --             --          9,600             --          9,600

<Caption>
                                         NINE MONTHS ENDED SEPTEMBER 30, 2002        NINE MONTHS ENDED SEPTEMBER 30, 2001
                                       ---------------------------------------     ----------------------------------------
                                       INTEGRATED                                  INTEGRATED
                                         MEDIA       TECHNOLOGY                       MEDIA       TECHNOLOGY
                                       SOLUTIONS      SOLUTIONS        TOTAL        SOLUTIONS      SOLUTIONS        TOTAL
                                       ---------      ---------      ---------      ---------      ---------      ---------
<S>                                    <C>            <C>            <C>            <C>            <C>            <C>
Revenues                               $  21,224      $   9,825      $  31,049      $  28,269      $   8,062      $  36,331
Segment loss from operations             (12,389)        (1,878)       (14,267)      (106,638)        (7,285)      (113,923)
Amortization of goodwill and
   intangibles                               725            750          1,475         11,724            833         12,557
Stock-based compensation(1)                  132             55            187          1,354            122          1,476
Restructuring costs                           --             --             --          1,566           (614)           952
Loss (gain) on sale of assets, net           550             --            550           (992)          (537)        (1,529)
Impairment of intangible assets               --             --             --         52,206          4,501         56,707

Total assets:
   September 30, 2002                     26,457         10,769         37,225
   December 31, 2001(2)                   29,936         12,970         42,906
</Table>

----------
(1) Not included above for the three and nine month periods ended September 30,
2002 is $2.1 million and $2.4 million, respectively, related to corporate
officers.
(2) Not included above at December 31, 2001 are $2.7 million in assets related
to discontinued operations.

Geographical information is as follows:

<Table>
<Caption>
                                                 US       INTERNATIONAL      TOTAL
                                              -------     -------------     -------
                                                         (IN THOUSANDS)
<S>                                           <C>            <C>            <C>
PERIODS ENDED SEPTEMBER 30, 2002
Revenues for three months ended               $ 6,570        $ 3,149        $ 9,719
Revenues for nine months ended                 21,363          9,686         31,049
Long-lived assets                              14,053          2,745         16,798

PERIODS ENDED SEPTEMBER 30, 2001
Revenues for three months ended               $ 6,357        $   682        $ 7,039
Revenues for nine months ended                 33,698          2,633         36,331
Long-lived assets at December 31, 2001         14,313          9,701         24,014
</Table>

(11)  SUPPLEMENTAL CASH FLOW INFORMATION

The amount of cash paid for interest was $10,000 and $14,000 for the nine month
periods ended September 30, 2002 and 2001, respectively.

The Company accrued $245,625 in interest during 2002 on the Publigroupe notes,
which is payable with the principal in 2005 and 2006.

                                       20
<Page>

(12)  RELATED PARTY

LOAN PAYABLE

In conjunction with the merger with Real Media on October 31, 2002, the Company
guaranteed a Promissory Note for $4.5 million to Publigroupe as of the
acquisition date, which was to be used in accordance with Real Media's
restructuring plan and in payment of transactional bonuses. The restructuring
plan provides for office closings, workforce reduction and other related
obligations (see notes 2 and 9 for details).

The note bears interest at 4.5% compounded monthly and principal and interest
are due on October 30, 2006. In addition, in accordance with the Real Media
purchase agreement in January 2002, the Company received cash of $1.5 million
and signed a promissory note bearing interest at 6% compounded monthly, with
interest and principal due in January 2006. Based on the Company achieving
certain target operating results for the three months ended March 31, 2002 it
received another $1.5 million in the form of a 6% three-year promissory note on
May 13, 2002, with principal and interest due in May 2005.

The interest expense related to these notes for the nine months ended September
30, 2002 was approximately $245,625. The interest is accrued and added to the
loan principal, as it is due at maturity.

SUNRA

In connection with its purchase of Series A Preferred Stock in July 2002, Sunra
received the right to designate two seats on the Company's Board of Directors.
To date, Sunra has designated Joseph Waechter as one of its representatives on
the Board. Additionally, Mr. Waechter was affiliated with Merchant's Group
International, to whom the Company paid $320,000 and issued 400,000 warrants to
purchase our common stock at an exercise price of $0.20535 per share as payment
of a placement fee for the sale of the Series A Preferred.


                                       21
<Page>

ITEM 2. 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

24/7 Real Media provides marketing solutions to the digital advertising
industry. Through its comprehensive suite of online marketing and technology
services, 24/7 Real Media connects media buyers and media sellers across
multiple digital platforms and works closely with individual clients to develop
a comprehensive, customized, value-enhancing solution. We focus on the United
States, Canada and Europe and is organized into two principal lines of business:
Integrated Media Solutions and Technology Solutions.


       o      Integrated Media Solutions connects advertisers to audiences
              through three products: (i) the 24/7 Network of Web sites; (ii) a
              comprehensive promotions suite; and (iii) a search engine results
              listing service. We also act as a broker for permission based
              email lists.


       o      Technology Solutions, through Open AdStream, our proprietary
              technology, provides advertising delivery and management.

We hold a patent related to our ad-serving technology. Two other parties have
acquired a license or interest in the patent. We are seeking to license the
patent to a substantial number of additional parties.

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission ("SEC"), requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Note 1 of the Notes to the Consolidated Financial
Statements includes a summary of the significant accounting policies and methods
used by the Company. In addition, Financial Reporting Release No. 61 was
recently released by the SEC to require all companies to include a discussion to
address, among other things, liquidity, off balance sheet arrangements,
contractual obligations and commercial commitments.

                                       22
<Page>

GENERAL

The consolidated financial statements of the Company are prepared in conformity
with accounting principles generally accepted in the United States of America.
As such, the Company is required to make certain estimates, judgments and
assumptions that management believes are reasonable based upon the information
available. These estimates and assumptions affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the
dates of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting periods.

The significant accounting policies which the Company believes are the most
critical to aid in fully understanding and evaluating the reported consolidated
financial results include the following:

REVENUE RECOGNITION

INTEGRATED MEDIA SOLUTIONS

Our network revenues are derived from short-term advertising agreements in which
we deliver advertising impressions for a fixed fee to third-party Web sites
comprising our network. Service revenue is derived from driving traffic to a
client website which are recognized upon delivery. Media revenue is recognized
provided no significant obligations remain outstanding and collection of the
resulting receivable is probable. On May 3, 2002 the Company sold its US email
management product and starting in May 2002 we only recognize commissions from
brokerage sales as revenue in the US upon delivery. Prior to its sale, our email
related revenues were derived from short-term delivery based agreements in which
we deliver advertisements to email lists for advertisers and recognized revenue
upon delivery.

Third party Web sites that register Web pages with our network 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 SFAS No. 57, "Related Party Disclosures." We pay
Affiliated Web sites a fee for providing advertising space to our network. We
become obligated to make payments to Affiliated Web sites, which have contracted
to be part of our network, and list owners in the period the advertising
impressions are delivered. Such expenses are classified as cost of revenues in
the consolidated statements of operations.

TECHNOLOGY SOLUTIONS

Our technology revenues are derived from licensing of our ad serving software
and related maintenance and support contracts. In addition, we derived revenue
from our email service bureau subsidiary, Exactis, and our third party ad
serving subsidiary, Sabela, both of which were sold in May of 2001.

Revenue from software licensing agreements is recognized in accordance with
Statements of Position ("SOP") 97-2, "Software Revenue Recognition," and Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" upon
delivery of the software, which is generally when customers begin utilizing the
software, there is pervasive evidence of an arrangement, collection is
reasonably assured, the fee is fixed or determinable, and vendor-specific
objective evidence exists to allocate the total fees to all elements of the
arrangement. Revenue related to the central ad-serving product is recognized
based on monthly usage fees.

Revenue from software maintenance and support services is recognized ratably
over the life of the maintenance agreements, which typically range from one to
three years. Maintenance revenue invoiced in advance of the related services is
recorded as deferred revenue. Expense from our licensing, maintenance and
support revenues are primarily payroll costs incurred to deliver, modify and
support the software. These expenses are classified as cost of revenues in the
accompanying consolidated statements of operations. Revenue from patent
licensing will be recognized when an agreement is signed for a perpetual license
or during the period in which the revenue is earned from other royalty
arrangements. To date, we have not recorded any revenue from patent licensing.

                                       23
<Page>

ACCOUNTS RECEIVABLE

We perform ongoing credit evaluations of our customers and adjust credit limits
based upon payment history and the customer's current credit worthiness, as
determined by a review of their current credit information. We continuously
monitor collections and payments from our customers and maintain a provision for
estimated credit losses based upon historical experience and any specific
customer collection issues that have been identified. While such credit losses
have historically been within our expectations and the provisions established,
we cannot guarantee that we will continue to experience the same credit loss
rates that have been experienced in the past.

IMPAIRMENT OF LONG-LIVED ASSETS

Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Asset". SFAS 142 eliminates the amortization of goodwill and
indefinite-lived intangible assets, addresses the amortization of intangible
assets with finite lives and addresses impairment testing and recognition for
goodwill and intangible assets. SFAS No. 144 establishes a single model for the
impairment of long-lived assets.

We assess goodwill for impairment annually unless events occur that require more
frequent reviews. Long-lived assets, including amortizable intangibles, are
tested for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Discounted cash flow
analyses are used to assess nonamortizable intangible impairment while
undiscounted cash flow analyses are used to assess long-lived asset impairment.
If an assessment indicates impairment, the impaired asset is written down to its
fair market value based on the best information available. Estimated fair market
value is generally measured with discounted estimated future cash flows.
Considerable management judgment is necessary to estimate undiscounted and
discounted future cash flows. Assumptions used for these cash flows are
consistent with internal forecasts.

On an on-going basis, management reviews the value and period of amortization or
depreciation of long-lived and other intangible assets. During this review, we
reevaluate 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 our wholly owned
subsidiaries and investments.

The impairment factors evaluated by us may change in subsequent periods, given
that our business operates in a highly volatile business environment. This could
result in significant additional impairment charges in the future.

RESULTS OF OPERATIONS

FACTORS AFFECTING COMPARABILITY OF 2002 TO 2001

On October 30, 2001, we acquired Real Media. The merger created cost synergies
for our combined company, one of which was to focus on Real Media's proprietary
Open AdStream technology and abandon our existing ad serving technology, 24/7
Connect. The transition of the network business onto the Open AdStream platform
began in December 2001 and was completed in February 2002 resulting in the
elimination of redundant personnel and operating costs associated with having
two ad serving platforms. Throughout 2001 and into 2002, in accordance with our
business plan, we divested or discontinued many of our non-core assets,
including:

       o      In May 2001, we completed the sale of certain technology assets
              and intellectual property of Sabela and completed the shut down of
              Sabela operations on June 30, 2001.

       o      In May 2001, we completed the sale of Exactis, our email service
              bureau.

                                       24
<Page>

       o      In August 2001, the operations of 24/7 Europe were shut down and
              our consolidated financial statements have been revised to reflect
              this international segment as a discontinued operation.

       o      In January 2002, we completed the sale of our IMAKE subsidiary.
              The financial statements of prior periods have been revised to
              reflect the disposition of IMAKE.

       o      In May 2002, we completed the sale of certain assets related to
              our US email management product.

The revenue attributed to the disposition of these non-core assets for the three
and nine month periods ended September 30, 2002 was approximately $0 and $1.6
million, respectively, all of which relates to the US email management product
within the Integrated Media Solutions segment. For the three and nine month
periods ended September 30, 2001 revenue related to disposition of non-core
assets was $1.5 million and $13.9 million, respectively, of which $1.5 million
and $5.8 million, respectively, related to the US email management product
within the Integrated Media Solutions segment and $0 and $8.1 million related to
the Technology Solutions segment. Our Technology Solutions segment is not
comparable as the revenue in 2002 is derived solely from operations that were
acquired with Real Media in October 30, 2001, while the revenue in 2001 relates
to operations that have been sold or shut down, including Exactis and Sabela.
This does not include $1.3 million and $15.3 million for the three and nine
month periods ended September 30, 2001, related to 24/7 Europe and IMAKE, which
are shown as part of discontinued operations in the 2001 consolidated statement
of operations.

On September 19, 2002, we acquired certain assets of Elbit Vflash Inc. and Elbit
Vflash Ltd. d/b/a Now Marketing (see footnote 2 to the Interim Consolidated
Financial Statements) that did not have a material impact on our results of
operation for the third quarter of 2002.

As a result of our cost-cutting and divestiture efforts, which began in November
2000 through December 31, 2001, we reduced our headcount by approximately 1,000
and closed several offices, both domestic and international. The core elements
of our business that remain are:

       o      Open AdStream ad serving technology;

       o      The 24/7 Network;

       o      24/7 iPromotions; and

       o      24/7 Website Results.

RESULTS OF OPERATIONS

REVENUES

INTEGRATED MEDIA SOLUTIONS. Our Integrated Media Solutions revenues were $6.4
million and $21.2 million for the three and nine month periods ended September
30, 2002, respectively, as compared to $7.0 million and $28.3 million for the
three and nine month periods ended September 30, 2001, respectively,
representing a 9.4% and 24.9% decrease, respectively. The decrease in revenue
was due to a decrease in advertising dollars spent as the economy continued to
deteriorate and the sale of the US email management product on May 3, 2002. The
declines in revenue were partially offset by our merger with Real Media on
October 30, 2001. The US email management product accounted for $0 and $1.5
million for the three months ended September 30, 2002 and 2001, respectively,
and $1.6 million and $5.8 for the nine months ended September 30, 2002 and 2001,
respectively.

                                       25
<Page>

TECHNOLOGY SOLUTIONS. Our Technology Solutions revenues were $3.3 million and
$9.8 million for the three and nine month periods ended September 30, 2002,
respectively, as compared to $0 and $8.1 million for the three and nine month
periods ended September 30, 2001, respectively, representing an increase of
21.9% for the nine month period ended September 30, 2002. The periods are not
comparable as the revenue in 2002 is derived solely from operations that were
acquired with Real Media on October 30, 2001, while the revenue in 2001 relates
to operations that have been sold or shut down, including Exactis and Sabela.

COST OF REVENUES AND GROSS PROFIT

INTEGRATED MEDIA SOLUTIONS COST OF REVENUES AND GROSS PROFIT. The cost of
revenues consists primarily of fees paid to affiliated Web sites, which are
calculated as a percentage of revenues resulting from ads delivered on our
Network; list providers and traffic providers; depreciation of our 24/7 Connect
ad serving system (in 2001) and internet access costs. In 2002, cost associated
with ad serving is accounted for in our Technology Solutions segment cost of
revenues and an allocation based on usage is reflected in the Integrated Media
Solutions cost of revenues, making these costs variable versus fixed as they
were under 24/7 Connect. Gross margins were 32.1% and 32.0% for the three and
nine month periods ended September 30, 2002, respectively, and (6.5%) and 12.2%
for the three and nine month periods ended September 30, 2001. The increase is
due to lower ad serving costs as the operations in 2001 could not support the
fixed costs of 24/7 Connect which adversely affected the gross margin. Excluding
the US email management product in the US, the margins were 32.1% and 34.7% for
the three and nine month periods ended September 30, 2002 and (8.3%) and 13.4%
for the three and nine month periods ended September 30, 2001.

TECHNOLOGY SOLUTIONS COST OF REVENUES AND A GROSS PROFIT. The cost of technology
revenues consists of the cost of equipment and broadband capacity for our third
party ad-serving solutions and payroll costs to deliver, modify and support
software offset by the portion allocated to integrated media solutions for
ad-serving. Gross margins were 74.6% and 73.7% for the three and nine month
periods ended September 30, 2002, respectively, and 73.4% for the nine month
period ended September 30, 2001. As noted above, the periods are not comparable,
as the segment is comprised of completely different operations.

OPERATING EXPENSES. Each of sales and marketing, general and administrative,
product technology expenses decreased significantly in the periods ended
September 30, 2002 compared to the periods ended September 30, 2001 as a result
of our restructuring activities, the decisions to exit Latin America and the
sales of Sabela and Exactis. The decreases were partially offset by the
acquisition of Real Media.

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
were $3.2 million and $9.5 million for the three and nine month period ended
September 30, 2002, respectively, and $3.4 million and $15.7 million for the
three and nine month periods ended September 30, 2001, respectively. As a
percentage of revenue, the expense decreased from 47.6% to 32.7% for the three
month periods ended September 30, 2001 and 2002, respectively, and from 43.2% to
30.4% for the nine month periods ended September 30, 2001 and 2002. This
decrease is due to our successful rationalization efforts and reduction of
discretionary expenses.


GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
primarily of compensation, facilities expenses and other overhead expenses
incurred to support the business. General and administrative expenses were $3.5
million and $11.0 million for the three and nine month periods ended September
30, 2002, respectively, and $5.1 million and $27.8 million for the three and
nine month periods ended September 30, 2001, respectively. As a percentage of
revenue, the expense decreased from 73.3% to 36.1% for the three month periods
ended September 30, 2001 and 2002, respectively, and from 76.6% to 35.3% for the
nine month periods ended September 30, 2001 and 2002. The significant decrease
is due to our reduction of headcount, office space and unnecessary expenses. In
2002, General and administrative expenses include cost recoveries in connection
with patent claims. As the economy deteriorated in 2001, we accrued significant
bad debt reserves, however, positive collection efforts in 2002 have reduced the
required reserves; therefore, we reversed approximately $0.3 million in bad debt
expense during the third quarter. The net benefit from bad debt expense
reversals for the year is approximately $0.2 million.


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PRODUCT TECHNOLOGY EXPENSES. Product technology expenses consist primarily of
compensation and related costs incurred to further enhance our ad serving and
other technology capabilities. Product technology expenses were $0.8 million and
$3.3 million for the three and nine month period ended September 30, 2002,
respectively, and $1.3 million and $9.6 million for the three and nine month
periods ended September 30, 2001, respectively. As a percentage of revenue, the
expense decreased from 19.5% to 8.3% for the three month periods ended September
30, 2001 and 2002, respectively, and from 26.4% to 10.5% for the nine month
periods ended September 30, 2001 and 2002. The decrease is due to the sale of
Exactis on whose technology we spent significant dollars and our focus on OAS
which requires less enhancements than did 24/7 Connect. Also, the expense
decreased in 2002 as the costs related to developing our Open Advertiser (OAD)
product are being capitalized. We capitalized approximately $0.4 million during
the quarter and will continue to capitalize costs until OAD is ready for general
release, which is expected during the fourth quarter.

AMORTIZATION OF GOODWILL AND INTANGIBLES. Amortization of goodwill and
intangibles were $0.5 million and $1.5 million for the three and nine month
period ended September 30, 2002, respectively, and $2.2 million and $12.6
million for the three and nine month periods ended September 30, 2001,
respectively. The decrease is due to impairment charges taken during 2001 for
Exactis, Sabela, AwardTrack, iPromotions, ConsumerNet and Website Results as
well as the sale of Exactis in May 2001 and the adoption of SFAS No. 142 which
states that goodwill is no longer amortized which also contributed to the
decline. The Company's loss from continuing operations for the three and nine
months ended September 30, 2001, excluding goodwill amortization would have been
($20.0) million, or ($0.45) per share and ($104.6) million, or ($2.40) per
share, respectively.

STOCK-BASED COMPENSATION. Stock based compensation was $2.2 million and $2.6
million for the three and nine month periods ended September 30, 2002,
respectively, and $0.2 million and $1.5 million for the three and nine month
periods ended September 30, 2001, respectively. The expense for the nine months
ended September 30, 2002 consists of $0.2 million in salary for certain
employees who elected to receive stock instead of cash, $0.3 million in
amortization of deferred compensation for restricted shares previously issued to
certain employees, $0.1 million in amortization of deferred compensation from
acquisitions, $0.5 million in discretionary bonuses that will be paid in stock
to executives if the Company meets certain earnings targets and $1.5 million in
stock and options grants to executives for restructuring their employment
agreements. The expense for the nine months ended September 30, 2001 consists of
a $1.0 million in amortization of deferred compensation for restricted shares
issued to certain employees, $0.1 million in amortization of deferred
compensation from acquisitions and $0.4 million in stock to be given as bonuses
to certain employees.

RESTRUCTURING COSTS. During the three and nine months ended September 30, 2001 a
restructuring charge of approximately $0.5 million and $1.0 million was recorded
related to the reduction of employee headcount. This restructuring involved the
involuntary termination of approximately 100 employees.

GAIN ON SALE OF NON-CORE ASSETS, NET. The $0.5 million loss for the nine months
ended September 30, 2002 includes a $1.1 million gain related to the sale of
Exactis in May 2001, offset by a $1.6 million loss on the sale of certain assets
related to our US email management product. As part of the sale of Exactis,
there were approximately $1.5 million in deferred gains related to an escrow
balance and $1.75 million in deferred gains related to prepaid service amounts.
The gains are recognized as the escrow balance is released and the prepaid
services are utilized. During the first quarter of 2002, we agreed to pay
Experian, the acquirer of Exactis, $0.75 million of the escrow balance, with the
remainder released to the Company immediately. Therefore, $0.75 million of the
deferred gain was recognized and $0.75 million of deferred gain was reversed
against the escrow balance. During the nine month period ended September 30,
2002, we used approximately $0.2 million is Exactis services and recorded the
related gain. The $0.1 million remaining amount of the gain relates to the
reversal of unnecessary accrual related to Exactis. The $1.5 million for the
nine months ended September 30, 2001 relates to the sale of Exactis and the sale
of intellectual property of Sabela and AwardTrack.

IMPAIRMENT OF INTANGIBLE ASSETS. During 2001, we performed on-going business
reviews and, based on quantitative and qualitative measures, assessed the need
to record impairment losses on long-lived assets used in operations when
impairment indicators were present. Where impairment indicators were

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identified, we 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 the common stock at that time. Starting with the fourth quarter of 2000
through December 31, 2001, we reevaluated the carrying value of our businesses
on a quarterly basis. The revaluation was triggered by the continued decline in
the Internet advertising and marketing sectors throughout 2000 and 2001. In
addition, each of these entities have experienced declines in operating and
financial metrics over several quarters in 2001, 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. The impairment analysis
also considered when these properties were acquired and that the intangible
assets recorded at the time of acquisition were 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 each respective period end.

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 initial acquisition valuations. As a result, during our 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 that was in place at the time of the acquisition of these
companies.

As a result, we determined that the fair value of goodwill and other intangible
assets attributable to several of our operating units were less than their
recorded carrying values. Accordingly, we recognized $56.7 million in impairment
charges to adjust the carrying values in 2001 - $26.9 million related to WSR,
$25.3 million related to Mail and $4.5 million related to Exactis.

The impairment factors evaluated may change in subsequent periods, given that
our business operates in a highly volatile business environment. This could
result in significant additional impairment charges in the future.

Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Asset". SFAS 142 eliminates the amortization of goodwill and
indefinite-lived intangible assets, addresses the amortization of intangible
assets with finite lives and addresses impairment testing and recognition for
goodwill and intangible assets. SFAS No. 144 establishes a single model for the
impairment of long-lived assets and broadens the presentation of discontinued
operations to include more disposal transactions. We have completed our initial
transitional goodwill impairment assessment in the second quarter of 2002 and
determined that there was no impairment of goodwill.

INTEREST INCOME (EXPENSE), NET. Interest income, net includes interest income
from our cash and cash equivalents and short-term investments and interest
expense, net related to our long term debt and capital lease obligations.
Interest expense was $0.1 million and $0.2 million the three and nine month
periods ended September 30, 2002. Interest income, net was $0.1 million and $0.8
million for the three and nine month

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periods ended September 30, 2001. The net decrease was due to the addition of
debt as the related interest expense offset any interest income.

GAIN ON SALE OF INVESTMENTS. The gain on sale of investments was $0.9 million
and $5.0 million for the three and nine months periods ended September 30, 2001.
These gains relate to the sale of our remaining securities.

IMPAIRMENT OF INVESTMENTS. During 2001, we wrote down certain of our investments
and recognized impairment charges of approximately $3.1 million for
other-than-temporary declines in value. 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 OPERATIONS. On August 6, 2001, we ceased funding our
European subsidiaries and communicated that to 24/7 Europe NV's Board of
Directors. Management of 24/7 Europe shut down all operations. Approximately $0
and $30.5 million of the loss from discontinued operations in the three and nine
month periods ended September 30, 2001, respectively, related to 24/7 Europe.
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 in accordance with Accounting Principles Board 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".

On January 22, 2002, we completed the sale of our wholly owned subsidiary,
IMAKE. In accordance with Statement of Financial Accounting Standard No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", we accounted
for the operations of this component as a discontinued operation. Approximately
$9.7 and $21.5 million of the loss from discontinued operations in the three and
nine month periods ended September 30, 2001, related to IMAKE. The consolidated
financial statements have been revised to reflect the sale of the IMAKE
subsidiary as a discontinued operation in accordance with Statement of Financial
Accounting Standard No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". See footnote 3 to the Interim Consolidated Financial
Statements.

DIVIDENDS ON PREFERRED STOCK. The Series A and Series B preferred stock issued
during the third quarter of 2002 accrue and cumulate dividends at a rate of 6%
per year, compounded monthly, payable when, as and if declared by our Board of
Directors. The dividends start accruing on the first day in the month following
original issuance; therefore, only a portion of the Series A and none of the
Series B accumulated dividends in the third quarter of 2002.

PREFERRED STOCK CONVERSION DISCOUNT. During the third quarter of 2002, we issued
Series A and Series B preferred stock, which are convertible into common stock
at prices of $0.20535 and $0.2066 per share, respectively. At the time we agreed
to initial terms of the transactions with the third parties, the conversion
price of the preferred stock approximated the fair value of our underlying
common stock. From the time the agreements were substantially complete until the
transactions closed and all contingencies were resolved (e.g. stockholder
approval), the stock price increased to approximately $0.46 per share for the
Series A and $0.44 per share for the Series B. As a result of the increase in
stock price, the preferred stock was issued at a substantial discount to fair
market value. In accordance with Generally Accepted Accounting Principles, the
beneficial conversion feature, calculated as the difference between fair market
value on the date of issuance and the conversion price, is required to be
expensed immediately, however, the discount was limited to the amount of cash
allocable to each of the preferred stock transactions. Accordingly, we recorded
a non-cash charge of $5.4 million for the Series A preferred stock and $1.25
million for the Series B preferred stock for a total charge of $6.6 million.

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LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2002, we had cash and cash equivalents of $10.6 million versus
$7.0 million at December 31, 2001. Cash and cash equivalents are comprised of
highly liquid short-term investments with maturities of three months or less.

During 2002, our liquidity increased through the receipt of $7.4 million in net
proceeds from issuances of preferred stock, $3.0 million in long-term debt
financing from Publigroupe, a related party, $2.4 million proceeds from the sale
of non-core assets and $1.2 million in net cash acquired in the NowMarketing
acquisition. In 2001, we generated a portion of our liquidity through the sale
of non-core assets and monetization of our investments primarily chinadotcom
common stock, which generated approximately $16.8 million and $6.9 million in
proceeds, respectively. The debt financing and proceeds from the sale of
investments were used to finance restructurings and sustain operations during
periods of declining revenues. We used approximately $9.9 million and $27.6
million of cash in operating activities during 2002 and 2001, respectively,
generally as a result of our net operating losses, adjusted for certain non-cash
items such as amortization of goodwill and other intangible assets, gain on
sales of investments, gain on sale of non-core assets, impairment of investments
and intangibles and non-cash related equity transactions and restructuring and
exit costs, and also significant decreases in accounts receivable and prepaid
and other current assets which were partially offset by decreases in accounts
payable and accrued expenses and deferred revenue. As a result, our working
capital position improved by $9.1 million during 2002, to a positive $1.1
million.

Net cash provided by investing activities was approximately $3.0 million in 2002
versus $23.5 million in 2001. The majority of the cash provided by investing
activities during 2002 and 2001 related to proceeds received from the sale of
our non-core assets and investments in 2001. During 2002, we also received $1.2
million in cash in connection with the Now Marketing acquisition. During 2001,
as a result of divestitures of non-core assets and numerous restructurings, we
had significantly scaled back our capital expenditures. As a result of the
merger with Real Media and the decision to consolidate onto the Open AdStream
technology platform, we had sufficient equipment to support our current
ad-serving volumes and did not budget for a significant amount of capital
expenditures in 2002.

The Company has various employment agreements with employees, the majority of
which are for one year with automatic renewal. The obligation under these
contracts is approximately $2.2 million for 2002 including salary and
performance based target bonuses. These contracts, some of which were
restructured in the third quarter of 2002, call for severance in the event of
involuntary termination, which ranges in amount from two months to one years'
salary. All European employees have employment contracts as required by local
law. The majority of these contracts allow for resignation or termination by
either party at any time, according to the notice period provisions contained in
the employment contracts, or according to the minimum notice period as mandated
by local law. The contracts, or if no expressed provision is included in the
contract, local law, also require severance for involuntary terminations ranging
from one to six months. As of November 1, 2002, there were approximately 73
employees in Europe whose annualized base salaries were approximately $3.0
million.

As of September 30, 2002, we had approximately $0.5 million remaining of cash
outlay obligations relating to restructuring and exit costs. These amounts
consist primarily of costs to exit contracts, which we expect to settle by
December 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 containing an explanatory paragraph stating that our
recurring losses from operations since inception and working capital deficiency
as of December 31, 2001 raise substantial doubt about our ability to continue as
a going concern. Management believes that the support of our vendors, customers,
stockholders, and employees, among others, continue to be key factors affecting
our future success. Moreover, management's plans to continue as a going concern
rely heavily on achieving revenue targets, raising additional financing and
controlling our operating expenses.

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Management believes that significant progress has been made in reducing
operating expenses since the Real Media merger. 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 assets, which could result in changes in our
business plan. To the extent we encounter additional opportunities to raise
cash, we may sell additional equity securities, which would result in further
dilution of our stockholders. Stockholders may experience extreme dilution due
to both our current stock price and the significant amount of financing we may
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 would
restrict our operations.

With the acquisition of Real Media, Inc. in October 2001, we acquired a note
payable of $4.5 million to Publigroupe, which as a result of the merger is a
significant stockholder. The note bears interest at 4.5% and principal and
interest are due on October 30, 2006. In addition, in accordance with the Real
Media purchase agreement in January 2002, we received cash of $1.5 million and
signed a promissory note bearing interest at 6%, with interest and principal due
in January 2005. We achieved certain target operating results for the three
months ended March 31, 2002 and as a result, on May 13, 2002, we received
another $1.5 million in exchange for a 6% three-year promissory note with
interest and principal due in May 2005.

On March 21, 2001, we entered into a common stock purchase agreement with Maya
Cove Holdings. The agreement gives us the ability to sell our common stock to
Maya pursuant to periodic drawdowns once a Registration Statement covering these
shares has been declared effective by the SEC. The draw downs would be subject
to our ability to continue trading on the Nasdaq, our trading volumes and prices
and our ability to comply with securities registration requirements for this
type of facility. Based on current market price, we estimate the maximum
potential draw down is approximately $2.0 million. To date, no amounts have been
drawn under this facility. There can be no assurances that it will provide the
resources necessary to fund our needs and we are continuing to evaluate other
fund raising vehicles.

On January 22, 2002, we completed the sale of our wholly owned subsidiary,
IMAKE, to Schaszberger Corporation. Under the terms of the sale, the purchase
price payable to Schaszberger Corporation payable to us was up to approximately
$6.5 million for the stock of IMAKE consisting of $2.0 million in the form of a
6% four year secured note due in January 2006, approximately $0.5 million in
cash consideration, and a potential earn out of up to $4.0 million over the next
three years based on gross revenue. Additionally, we received Series A preferred
stock of Schaszberger Corp which, as of the closing date, represented 19.9% of
the buyer. The note is secured by certain assets of IMAKE and is guaranteed by
Schaszberger Corporation. We have recorded the consideration received at its
estimated fair value of $0.5 million for the note receivable and $1.5 million
for the earnout as part of assets held for sale at December 31, 2001. In January
2002, we received the cash consideration of $0.5 million and have received
monthly payments for the periods through September 2002.

On May 3, 2002, we completed the sale of certain assets related to our US email
management product, including customer contracts, certain intangibles and
employee relationships, to 24/7 Mail, Inc., a wholly owned subsidiary of
Naviant, Inc. Under the terms of the sale, the purchase price payable is up to
$4.5 million. The purchase price is comprised of (i) $1.0 million that was paid
at closing; (ii) $1.0 million in the form of a non-interest bearing installment
note with $350,000 due in ninety days, $350,000 due in one hundred and eighty
days and $300,000 due in two hundred seventy days from closing; (iii) an
earn-out payable quarterly over the next 45 months, based on 5% of Net Revenue
(as defined in the Asset Purchase Agreement), with minimum quarterly payments of
$50,000 and a maximum of $2.0 million, through 2005. Lastly, pursuant to a
$500,000 non-interest bearing installment note, half of which is payable on each
of April 30, 2004 and April 30, 2005, Naviant has the option either to (i) issue
to us a number of shares currently comprising 19.9% of 24/7 Mail, Inc., or (ii)
pay us cash in lieu of the shares. The consideration paid to us was determined
as a result of arms-length negotiations between the buyer and us.


On July 30, 2002, we received a letter from Naviant alleging the breach of a
warranty with respect to the number of customers included in the assets sold to
Naviant. Naviant claimed damages of approximately $2.3 million, which it
intended to offset against the amounts due to us. On October 3, 2002, the
parties agreed to resolve the dispute through immediate payment of $1.25 million
by Naviant to us in lieu of all future amounts that Naviant may owe us. Naviant
agreed to


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waive further claims with regard to the specific warranty in dispute. Other
customary representations made by us under the Purchase Agreement dated as of
April 30, 2002 among us, 24/7 Mail Inc and Naviant, Inc. continue in effect and
Naviant has the right to bring claims with respect to such representations until
June 30, 2003; we have no reason to believe that Naviant will bring any further
claims. As result of the settlement, we wrote off approximately $0.9 million of
the remaining amount due from Naviant in the third quarter of 2002. We received
the the $1.25 million on October 4, 2002.


On July 2, 2002, we entered into a Series A and Series A-1 Preferred Stock and
Common Stock Warrant Purchase Agreement with Sunra Capital Holdings Limited
("Sunra"), a newly formed investment fund advised by Merchant's Group
International. On July 2, 2002, Sunra purchased $1.6 million of our newly
created Series A Preferred Stock, $3.4 million of our newly created Series A-1
Non Voting Convertible Preferred Stock, and on August 8, 2002 Sunra and
affiliated parties agreed to subject to stockholder approval purchase an
additional $3.0 million of the Series A Preferred Stock, for a total investment
of $8.0 million. Upon receipt of stockholder approval on September 10, 2002, the
outstanding shares of Series A-1 Preferred Stock converted into shares of Series
A Preferred Stock and Sunra consummated the purchase of an additional $3.0
million of the Series A Preferred Stock (the "September 10, 2002 Series A
Preferred Stock transactions"). Each share of Series A Preferred Stock is
convertible into our Common Stock at any time at the option of the holder
thereof at a conversion price of $0.20535 per share of common stock, or
38,957,876 shares of Common Stock on an as-if converted basis. We also issued at
total of 3,895,788 warrants to Sunra to purchase shares of Common Stock at an
exercise price of $0.20535. All of the warrants issued may be exercised through
a cashless exercise and have a five year term. Sunra is the beneficial owner of
approximately 42,853,664 shares of our Common Stock, or approximately 42.3% of
our outstanding Common Stock at September 30, 2002 on a fully diluted basis. We
also issued 400,000 warrants to Merchant's Group International as partial
payment of a placement fee and incurred transaction costs approximately $0.7
million. The Series A Preferred Stock accrues and cumulates dividends at the
rate of 6% per year, compounded monthly, payable when, as and if declared by our
Board of Directors. Accordingly, the $50,000 cumulative dividends are reflected
as "Preferred stock dividends" on the consolidated statement of operations.

Accordingly, the July 2, 2002 and September 10, 2002 Series A Preferred Stock
transactions contained embedded beneficial conversion features that were
required to be valued separately. We allocated the proceeds received in each of
the transactions to the Series A Preferred Stock and detachable warrants based
on a relative fair value basis. The intrinsic value of the beneficial conversion
feature associated with the July 2, 2002 Series A Preferred Stock transaction
was approximately $0.2 million. The intrinsic value of the beneficial conversion
feature associated with the September 10, 2002 Series A Preferred Stock
transactions was calculated as the difference between the conversion price of
$0.20535 per share of Common Stock and the fair value of the Common Stock into
which the Series A Preferred Stock was convertible into on the stockholder
approval date of $0.46 per share, or an intrinsic value of approximately
$0.25465 per share, which was greater than the proceeds allocated to the
September 10, 2002 Series A Preferred Stock transactions. Accordingly, the
amount of the discount was limited to the amount of cash allocable to the
September 10, 2002 Series A Preferred Stock transactions. Therefore, we recorded
a non-cash charge of $5.2 million in the third quarter of 2002, representing the
number of common shares into which the September 10, 2002 Series A Preferred
Stock transactions were convertible into (31,166,302 shares of Common Stock)
multiplied by the effective conversion price of $0.1675 per share of Common
Stock. The total non-cash charge of $5.4 million is included in the "Preferred
stock conversion discount" on the consolidated statement of operations similar
to a Preferred Stock dividend.

In conjunction with the Sunra investment on July 2, 2002, four executives each
agreed to modify their respective employment agreements with us to reduce the
amount of severance payable to such executive officers by 50% payable in one
lump sum, and to reduce the notice period for termination or non-renewal from
180 days to 30 days. In exchange, such executives would receive, in the
aggregate, approximately 2.1 million shares of our Common Stock of which the
initial conversion value was based on the approximate fair market value of our
Common Stock as of the date of the July 2, 2002 Sunra investment, or $0.20 per
share in consideration of approximately $0.4 million, out of a total of
approximately $0.8 million, future severance benefits forfeited. In addition,
such executives would also receive fully-vested stock options to acquire
approximately 2.1 million shares of our Common Stock with an exercise price of
$0.20 per share. The issuance of the shares and options were subject to
stockholder approval of the 2002 Stock Incentive Plan and the Sunra Series A
Preferred Stock transactions. For accounting purposes, the shares and options
are being valued at $0.46 per share, based on their fair market value using the
closing price of our Common Stock as of the stockholder approval date on
September 10,

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2002. In accordance with FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Stock-Based Compensation", this approval resulted
in a non-cash stock-based compensation charge of approximately $1.5 million in
the aggregate. The compensation charge related to the options is based on their
intrinsic value of $0.26 per option, that is, the fair market value of our
Common Stock on the shareholder approval date of $0.46 per share less the
exercise price of $0.20 per share which resulted in $0.6 million of the $1.5
million charge.

In addition, the four executives also agreed to receive the Earnings Before
Interest, Taxes and Amortization ("EBITA") portion of their 2002 target bonus,
if earned, in shares of our Common Stock. The number of shares to be issued in
connection with the award is based upon EBITA portion of their 2002 target bonus
award divided by $0.20 per share. Accordingly, this modification to the
executives' bonus award resulted in a variable based compensation award which is
required to be measured based upon the fair market value of our Common Stock at
each reporting period, namely at the end of the third and fourth quarter of
2002. At September 30, 2002, management determined that is was probable that the
EBITA target would be met and determined, at $0.20 per share, the bonus equates
to approximately 1.35 million common shares. Accordingly, at September 30, 2002,
the four executives' bonus awards resulted in a non-cash stock-based
compensation charge of approximately $0.5 million based upon the fair market
value of our Common Stock of $0.37 per share as of the end of the reporting
period. If it is determined in the fourth quarter of 2002 that the EBITA target
may not be achieved and/or our common stock price declines from the $0.37 per
share at September 30, 2002, the charge may be adjusted downward in the fourth
quarter of 2002.

On September 19, 2002, we acquired certain assets of Elbit Vflash Inc. and Elbit
Vflash Ltd. d/b/a Now Marketing ("Now Marketing"), a New York-based marketing
services firm. The acquisition agreement required Now Marketing's parent, Elbit
Ltd. and Gilbridge, Inc., together ("Now Marketing's Parent"), to make a $1.25
million investment in exchange for 125,000 shares of Series B Preferred Stock.
Accordingly, the total purchase consideration of $4.3 million consists of 4.1
million shares of Common Stock valued at $1.7 million, 125,000 shares of Series
B Preferred Stock valued at $2.5 million and $60,000 of transaction costs. The
Series B Preferred Stock is convertible into shares of our Common Stock at any
time at the option of the holder thereof at a conversion price of $0.2066 per
share, or 6,050,339 shares of Common Stock on an as-if converted basis. The
excess purchase price (excluding the $1.25 million Series B Preferred Stock
discount) over the fair market value of net tangible assets of approximately
$1.8 million has been initially allocated to goodwill pending final allocation
of such amount during the fourth quarter of 2002. The acquisition was accounted
for as a purchase business combination in accordance with SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets".

MARKET FOR COMPANY'S COMMON EQUITY

         The shares of our common stock were previously listed on the Nasdaq
National Market. Due to the low share price of our common stock, on February 14,
2002, we received a letter from Nasdaq stating that they determined that we
failed to meet Nasdaq's minimum listing requirements and as a result, our common
stock could be delisted if we did not satisfy these requirements by May 15,
2002.

         As a result, the Company transitioned its listing to the Nasdaq
SmallCap Market. Our common stock will remain listed on Nasdaq SmallCap through
at least February 10, 2003. Should our stock price remain consistently below
$1.00, we will be deemed to be out of compliance with the Nasdaq requirements
and will have to explore certain avenues, including a potential reverse stock
split, to increase our stock price above $1.00 and thus regain compliance. 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

                                       33
<Page>

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 stockholders to sell the securities in the
secondary market.

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

RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO BUY OUR COMMON
STOCK. IF ANY OF FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITIONS OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN THIS CASE, THE PRICE
OF OUR SECURITIES COULD DECLINE AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT

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


       Our current cash may not be sufficient to meet our anticipated operating
cash needs for 2003 and we may not be able to secure new funds when needed. The
support of our vendors, customers, stockholders and employees will continue to
be key to our future success. We may not be able to raise additional financing
to meet our cash and operational needs or reduce our operating expenses or
increase revenues significantly 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.

       We have received a report from our independent accountants on our
December 31, 2001 consolidated financial statements containing an explanatory
"going concern" paragraph stating that our recurring losses from operations and
working capital deficiency since inception raise 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, reducing
operating expenses and raising additional financing. 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 assets, which could result in changes in our business plan.

       To the extent we encounter additional opportunities to raise cash, we may
sell additional equity or debt securities. 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 that restrict our
operations.


       We have limited access to the capital markets to raise capital. The
capital markets have been unpredictable in the past, especially for unprofitable
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
the share price of our stock and its trading volume. As a result, we may not be
able to secure financing on terms attractive to us, or at all. Due to our
operating losses, it may be difficult to obtain debt financing. If we are able
to consummate a financing arrangement, the amount raised may not be


                                       34
<Page>

sufficient to meet our future needs. If adequate funds are not available on
acceptable terms, or at all, our business, results of operation, financial
condition and continued viability will be materially adversely affected.

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


       The shares of our common stock were previously listed on the Nasdaq
National Market. Due low share price of our common stock, on February 14, 2002,
we received a letter from Nasdaq stating that it determined that we failed to
meet Nasdaq National Market's minimum listing requirements and as a result, our
common stock could be delisted if we do not satisfy these requirements by May
15, 2002.

       As a result, we transitioned the Company's listing to the Nasdaq SmallCap
Market. Our common stock will remain listed on Nasdaq SmallCap through at least
February 10, 2003. Should our stock price remain consistently below $1.00, we
will be deemed to be out of compliance with the Nasdaq requirements and will
have to explore certain avenues, including a potential reverse stock split, to
increase our stock price above $1.00 and thus regain compliance. We may not be
able to maintain our listing on the Nasdaq 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 material 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.



WE MAY IMPLEMENT A REVERSE STOCK SPLIT OF OUR COMMON STOCK.

        Our stockholders approved a series of amendments to our certificate
of incorporation at aour September 10, 2002 stockholders meeting. These
amendments authorized our board of directors to effect a reverse split of all
outstanding shares of our common stock at an exchange ratio of either
one-to-10, one-to-15, one-to-20, one-to-25, or one-to-30. At any time prior
to the 2003 annual meeting of stockholders, the board of directors has the
sole discretion to elect, as it determines to be in the best interests of our
company and our stockholders, whether or not to effect a reverse stock
split, and if so at which of the approved ratios. If the board of directors
elects to implement one of the approved reverse stock splits, the number of
issued and outstanding shares of common stock would be reduced in accordance
with the exchange ratio for the selected reverse stock split. The par value
of the common stock would remain unchanged at $.01 per share and the number
of authorized shares of common stock would also remain unchanged. In
determining whether or not to implement a reverse stock split, and the
appropriate exchange ratio, the board would assess a variety of factors,
including but not limited to analysis of our most recent fiscal quarter and
general economic conditions, as well as the trading price of our common stock
on the days leading up to the date of the reverse stock split.

       The effect of any reverse stock split upon the market price of our common
stock cannot be predicted, and the history of reverse stock splits for companies
in similar circumstances is varied. The trading price of our common stock may
not rise in exact proportion to the reduction in the number of shares of our
common stock outstanding as a result of the reverse stock split and there may
not be a sustained increase in the trading price of our common stock after
giving effect ot the reverse stock split. Moreover, the trading price may not
remain above the thresholds required by the Nasdaq Stock Market and we may not
be able to continue to meet the other continued listing requirements of the
Nasdaq Stock Market.

       The resulting decrease in the number of shares of our common stock
outstanding could potentially impact the liquidity of our common stock on the
Nasdaq SmallCap Market, especially in the case of larger block trades. The
reverse stock split would result in some stockholders owning "odd-lots" of less
than 100 shares of common stock. Brokerage commissions and other costs of
transactions in odd-lots are generally higher than the costs of transactions in
"round-lots" of even multiples of 100 shares.

       The reverse stock split would also result in in a greater spread between
the number of authorized shares nad the number of outstanding shares, which may
have the effect of discouraging an attempt to change control of the Company,
especially in the event of a hostile takeover bid, and to make more difficult
the removal of incumbent management. Additionally, common stock would be
authorized to be issued in the discretion of the board without shareholder
approval of each issuance, which might be used to increase the stock ownership
or voting rights of persons seeking to obtain control of the Company, and this
anti-takeover effect could benefit incumbent management at the expense of the
shareholders. Issuance of additional shares also could have the effect of
diluting any earnings per share and book value per share of shares outstanding
of common stock, as well as diluting the ownership percentage of current
shareholders.


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, our revenues have grown significantly, primarily as
a result of our numerous acquisitions. 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.

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

       We have an extremely limited operating history. You must consider the
risks, expenses and difficulties typically encountered by companies with limited
operating histories, particularly companies in new and rapidly expanding markets
such as Internet advertising. These risks include our ability to:

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

       o      further develop and upgrade our technology;

       o      respond to competitive developments;

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

       o      attract, retain and motivate qualified employees.

WE 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
$14.5 million and $163.4 million for the nine months ended September 30, 2002
and 2001, respectively. Even if we do achieve profitability, we may not be able
to sustain or increase profitability on a quarterly or annual basis in the
future.


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

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

       o      the addition of new, or loss of existing, clients;

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

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

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

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

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

       o      changes in governmental regulation of the Internet; and

       o      general economic conditions.

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

                                       36
<Page>

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.

A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK MAY BE SOLD IN THE PUBLIC MARKET IN THE
FUTURE, WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.


         Sales of a substantial number of shares of our common stock in the
public market could cause the market price of our common stock to decline. As
of December 17, 2002, we had an aggregate of 59,147,227 shares of common stock
outstanding, substantially all of which were freely tradable. Additionally, as
of November 30, 2002, (i) our Series A and Series B preferred stock was
convertible into approximately 45,008,216 shares of common stock; we have filed
a preliminary registration statement with respect to such shares, and such
shares will become freely tradable upon effectiveness of such registration
statement; (ii) there were outstanding stock options to purchase approximately
15,970,024 shares of our common stock, all of which are freely tradable, and
(iii) there were outstanding warrants to purchase approximately 8,316,200 shares
of our common stock, all of which are either freely tradable or included in the
pending registration statement.



SUNRA, ELBIT LTD. AND PUBLIGROUPE COLLECTIVELY HOLD APPROXIMATELY 55% OF THE
TOTAL OUTSTANDING VOTING POWER OF 24/7 REAL MEDIA AND WILL LIKELY BE ABLE TO
PREVENT A CHANGE OF CONTROL AND INFLUENCE CERTAIN APPROVAL MATTERS.

         Sunra Capital Holdings Ltd. and affiliated parties are currently the
beneficial owner of 42,853,665 shares of our common stock and control
approximately 37.7% of the voting power of our common stock. Elbit Ltd. is
currently the beneficial owner of 8,940,271 shares of our common stock
and controls approximately 9.7% of the voting power. Publigroupe USA
Holdings is the owner of 7,745,518 shares of our common stock and controls 7.5%
of the voting power and has entered into an agreement to vote on all matters
in accordance with the recommendations of our Board of Directors. Additionally,
the terms of the Series A and Series B Preferred Stock, owned principally
by Sunra and Elbit, contain certain protective provisions that provide
such holders an effective veto right over certain corporate matters.

         Based on their voting power, Sunra, Elbit and Publigroupe may
effectively be able to determine the outcome of all matters requiring
stockholder approval, including the election of directors, amendment of our
charter and approval of significant corporate transactions, and will likely
be in a position to prevent a change in control of 24/7 Real Media even if the
other stockholders were in favor of the transaction.

OUR NET OPERATING LOSS CARRYFORWARDS MAY BE LIMITED

         Due to the "change in ownership" provisions of the Internal Revenue
Code, the availability of 24/7 Real Media's net operating loss and credit
carryforwards may be subject to an annual limitation against taxable income
in future periods, which could substantially limit the eventual utilization
of these carryforwards.

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. During 2001, we reduced our workforce by over
1,000 employees. We have also left positions unfilled when 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 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.





UNCERTAINTY OF COLLECTION OF RECEIVABLES.

         While we perform credit checks on all customers, our level of
uncollectible receivables has been significantly affected by our advertising
customers which traditionally have had limited operating histories and modest
financial resources. Additionally, many of the technology customers obtained as
a result of the Real Media acquisition have similar financial histories.
Historically, out uncollectible receivables has been substantially higher than
our current levels.


         Furthermore, as a result of our dispositions of certain assets and
businesses, our balance sheet currently reflects notes and amounts receivable of
approximately $3.1 million. The entities that owe us these monies are
Internet-enabled businesses, which may face significant competition, and their
ability to pay us these amounts in full depends to a large extent on their own
successful financial performance. In addition, these entities may require
additional financing to meet their cash and operational needs; however, whether
these entities will be able to raise such financing, to the extent needed, or on
terms acceptable to them, is beyond our control. If we are unable to collect all
receivables reflected on our balance sheet, we will be required to write-down
our assets in future reporting periods, adversely affecting our financial
results, cash flows, and financial position in the future periods.


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

                                       37
<Page>

         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. 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. Demand for its new solutions may not emerge or become
sustainable.

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. The necessary
standards may not 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 would be adversely affected if
the Internet advertising market 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 are the frequency with which Internet users click on banner
advertisements displayed to them, which generally have been declining as
users become more familiar with the Internet and online advertising. If
advertisers determine that banner advertising is an ineffective or
unattractive advertising medium, we may not 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 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.




                                       38
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LOSS OF MAJOR CUSTOMERS WOULD REDUCE OUR REVENUES.


       We generate a significant portion of our revenues from a limited number
of customers. Although no single customer generates more than 10% of our
revenue, we expect that a limited number of these entities may continue to
account for a significant percentage of our revenues for the foreseeable future.
Our largest customers are advertisers who operate under a large number of
short-term insertion orders to purchase advertising on our Web site network or
search engine results business. 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. Also,
current customers may not continue to purchase advertising or services from us,
we may not be able to attract additional customers successfully, and customers
may not 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.


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:

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

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

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

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

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

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

       As a result of unfavorable conditions in the public and private capital
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

                                       39
<Page>

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.

       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. 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.

       Open AdStream is our proprietary next generation ad serving technology
that is intended to serve as our sole ad serving solution. We launched Open
AdStream Central and Network in mid-2001, 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 Open AdStream
technology resides on a computer system located in our data centers housed by
Exodus Communications. These systems' continuing and uninterrupted performance
is critical to our success. Customers may become dissatisfied by any system
failure that interrupts our ability to provide our services to them, including
failures affecting our ability to deliver advertisements without significant
delay to the viewer. Sustained or repeated system failures would reduce the
attractiveness of our solutions to advertisers, ad agencies and Web publishers
and result in contract terminations, fee rebates and make goods, thereby
reducing revenue. Slower response time or system failures may also result from
straining the capacity of our deployed software or hardware due to an increase
in the volume of advertising delivered through our servers. To the extent that
we do not effectively address any capacity constraints or system failures, our
business, results of operations and financial condition could be materially and
adversely affected. Our operations are dependent on our ability to protect our
computer systems against damage from fire, power loss, water damage,
telecommunications failures, vandalism and other malicious acts, and similar
unexpected adverse events. In addition, interruptions in our solutions could
result from the failure of our telecommunications providers to provide the
necessary data communications capacity in the time frame we require. Despite
precautions that we have taken, unanticipated problems affecting our systems
have from time to time in the past caused, and in the future could cause,
interruptions in the delivery of our solutions. Our business, results of
operations and financial condition could be materially and adversely affected by
any damage or failure that interrupts or delays our operations.

OUR FAILURE TO SUCCESSFULLY COMPETE MAY HINDER OUR GROWTH.

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

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

       o      changing demands regarding customer service and support;

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

       o      the ease of use, performance, price and reliability of our
              services and products.

                                       40
<Page>


       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 may not 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 Open AdStream 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
Real Media is a member along with other Internet advertising companies, has
developed self-regulatory principles for online preference marketing. These
principles were recently endorsed by the Federal Trade Commission, and are in
the process of being adopted by the NAI companies. The Direct Marketing
Association, or DMA, the leading trade association of direct marketers, has
adopted guidelines regarding the fair use of this information which it
recommends participants, such as us, through our services, in the direct
marketing industry follow. We are also subject to various federal and state
regulations concerning the collection, distribution and use of information
regarding individuals. These laws include the Children's Online Privacy
Protection Act, and state laws that limit or preclude the use of voter
registration and drivers license information, as well as other laws that govern
the collection and use of consumer credit information. Although our compliance
with the DMA's guidelines and applicable federal and state laws and regulations
has not had a material adverse effect on us, the DMA may adopt additional, more
burdensome guidelines or additional, more burdensome federal or state laws or
regulations (including antitrust and consumer privacy laws) may 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 may not be able to retain our key personnel or 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.


                                       41
<Page>

OUR INTERNATIONAL OPERATIONS MAY POSE LEGAL AND CULTURAL CHALLENGES.

       We have operations in a number of international markets, including Canada
and Europe. To date, we have limited experience in marketing, selling and
distributing our solutions internationally. International operations are subject
to other risks, including changes in regulatory requirements, reduced protection
for intellectual property rights in some countries, potentially adverse tax
consequences, general import/export restrictions relating to encryption
technology and/or privacy, difficulties and costs of staffing and managing
foreign operations, political and economic instability, fluctuations in currency
exchange rates; and seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world.

       In addition to these factors, due to our minority stake in 24/7 Real
Media Korea in Asia, we are relying on our partner to conduct operations, build
the network, aggregate Web publishers and coordinate sales and marketing
efforts.

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. Our patent
applications or trademark applications may not 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. The steps we have taken may not prevent
misappropriation of our solutions or technologies, particularly in foreign
countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.

       We have licensed, and we may license in the future, elements of our
trademarks, trade dress and similar proprietary rights to third parties. While
we attempt to ensure that the quality of our brand is maintained by these
business partners, such partners may take actions that could materially and
adversely affect the value of our proprietary rights or our reputation. Our
proprietary rights may not be 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.

                                       42
<Page>

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 USER 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 Open AdStream technology
targets advertising to users through the use of identifying data, or "cookies"
and other non-personally-identifying information. Open AdStream enables the use
of cookies to deliver targeted advertising 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 changed 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.


       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. In the future, individuals or entities may claim that our
collection of this information is illegal. Although we believe that we have the
right to use and compile the information in these databases, the laws governing
our ability to do so may change. Furthermore, trade secret, copyright or other
intellectual property protection may not continue to be available for our
databases, and any statutory or common law protection that is or becomes
available for databases may not 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 may not be successful in
establishing industry


                                       43
<Page>


standards acceptable to the U.S. government or the various state governments,
and any standards that are so established may require material changes to
our business plans. Furthermore, our business plans, or any U.S. industry
standards that are established, may not be acceptable to non-U.S. governments
and may not 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, our products and business practices may not 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.

RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE.

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

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

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

       o      discourage potential acquisition proposals;

       o      delay or prevent a change in control;

       o      impede the ability of our stockholders to change the composition
              of our board of directors in any one year; and

       o      limit the price that investors might be willing to pay in the
              future for shares of our common stock.

                                       44
<Page>

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

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 Real Media.

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

We transact business in various foreign countries. Accordingly, we are subject
to exposure from adverse movements in foreign currency exchange rates. This
exposure is primarily related to revenue and operating expenses in the United
Kingdom and in countries which the currency is the Euro. The effect of foreign
exchange rate fluctuations for 2002 and 2001 was not material. We do not use
derivative financial instruments to limit our foreign currency risk exposure.

Our debt is at fixed rates; therefore, there is no rate risk.

ITEM 4.  CONTROLS AND PROCEDURES

(a) Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer along with our Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, our
Chief Executive Officer along with our Chief Financial Officer concluded that
our disclosure controls and procedures are effective in timely alerting them to
material information relating to us (including our consolidated subsidiaries)
required to be included in our periodic SEC filings. It should be noted that the
design of any system of controls is based in part upon certain assumptions about
the likelihood of future events, and there can be no assurance that any design
will succeed in meeting its stated goals under all potential future conditions,
regardless of how remote.

(b) There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
we carried out this evaluation and no corrective actions with regard to
significant deficiencies and material weaknesses.

                                       45
<Page>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS



On July 2, 2002 and September 13, 2002, the Company sold to Sunra Capital
Holdings Limited ("Sunra") and two individuals an aggregate of $8.0 million
of 24/7's newly created Series A Convertible Preferred Stock (the "Series A
Preferred Stock"). These sales involved a total of three purchasers and
therefore were exempt from registration pursuant to Rule 506 of Regulation D
promulgated under, and Section 4(2) of, the Securities Act of 1933, as
amended. All purchasers were accredited investors. Each share of Series A
Preferred Stock is convertible into common stock of the Company (the "Common
Stock") at any time at the option of the holder thereof at a conversion price
of $0.20535 per share of Common Stock (the "Series A Per Share Purchase
Price"). The conversion ratio of the Series A Preferred Stock is subject to
adjustment in the event of certain future issuances of Company equity at an
effective per share purchase price lower than the Series A Per Share Purchase
Price. The Company has also issued warrants to the Purchasers to purchase in
the aggregate 3,895,788 shares of Common Stock at an exercise price per share
equal to the Series A Per Share Purchase Price. Each such warrant will remain
exercisable until the fifth anniversary of the date on which the warrant
first became exercisable. All warrants issued pursuant to this transaction
may be exercised through a cashless exercise. Merchant's Group International
acted as a "finder" for this transaction. The Company issued to Merchant's
Group International a warrant to purchase 400,000 shares of Common Stock at
an exercise price equal to the Series A Per Share Purchase Price.

On September 19, 2002, the Company entered into an Asset Purchase Agreement (the
"Asset Purchase Agreement") with Elbit Vflash Inc. and Elbit Vflash Ltd. (the
"Sellers"). Pursuant to the terms of the Asset Purchase Agreement, the Company
issued to the Sellers 4,100,000 shares of Common Stock.

On September 19, 2002, the Company entered into a Series B Preferred Stock
Purchase Agreement (the "Stock Purchase Agreement") with Elbit Ltd. and
Gilbridge Inc. (the "Purchasers"). The Purchasers purchased 125,000 shares of
the Company's newly created Series B Convertible Preferred Stock, par value
$0.01 per share (the "Series B Preferred Stock") for an aggregate purchase
price of $1.25 million. These sales involved a total of three purchasers and
therefore were exempt from registration pursuant to Rule 506 of Regulation D
promulgated under, and Section 4(2) of, the Securities Act of 1933, as
amended. Both purchasers were accredited investors. Each share of Series B
Preferred Stock is convertible into shares of Common Stock at any time at the
option of the holder thereof at a conversion price of $0.2066 per share of
Common Stock (the "Series B Per Share Purchase Price"). The conversion ratio
of the Series B Preferred Stock is subject to adjustment in the event of
certain future issuances of Company equity at an effective per share purchase
price lower than the Series B Per Share Purchase Price.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

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

At our Annual Meeting of Stockholders on September 10, 2002, we submitted five
proposals to a vote of our stockholders through a proxy solicitation. The
results of the voting at the Annual Meeting were as follows:

<Table>
<Caption>
                                                      AFFIRMATIVE
PROPOSAL                                                 VOTES            VOTES AGAINST        SHARES WITHHELD     BROKER NON-VOTES
-----------------------------------------------       -----------        --------------        ---------------     ----------------
<S>                                                    <C>                   <C>                   <C>             <C>
Election of David J.  Moore as a Class I
   Director                                            49,049,779            1,154,100                     0                    0

Election of Richard  Burns as a Class I
   Director                                            37,804,585               82,900                     0                    0

Conversion of the Company's outstanding
   Series A-1 Preferred stock and issuance
   of additional shares of Series A
   Preferred Stock                                     15,809,119              631,005               409,106           25,780,602

Authorization of Board of Directors to amend
   the certificate of incorporation to
   effect a reverse split of the Company's
   common stock at specified ratios.                   47,422,190            2,785,734                40,955                    0

Adoption of the 2002  Stock Incentive Plan             46,826,623            2,109,318             1,312,938                    0
</Table>

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits.

       99.1   Certification pursuant to 18 U.S.C. Section 1350 as adopted
              pursuant to section 906 of the Sarbanes-Oxley Act of 2002

       99.2   Certification pursuant to 18 U.S.C. Section 1350 as adopted
              pursuant to section 906 of the Sarbanes-Oxley Act of 2002

(b)    Reports on Form 8-K.

       Report on Form 8-K dated July 3, 2002 (file no. 1-14355). The report
       contained information regarding the purchase of Series A and Series A-1
       convertible preferred stock by Sunra Capital Holdings Limited.

       Report on Form 8-K/A dated July 12, 2002 (file no. 1-14355). The report
       contained updated information regarding the purchase of Series A and
       Series A-1 convertible preferred stock by Sunra Capital Holdings Limited.

       Report on Form 8-K dated August 13, 2002 (file no. 1-14355). The report
       contained information regarding an additional $3.0 million purchase of
       Series A convertible preferred stock by Sunra Capital Holdings Limited.

       Report on Form 8-K dated August 14, 2002 (file no. 1-14355). The report
       contained the certification of the second quarter results by the
       Company's Chief Executive Officer and Chief Financial Officer.

                                       46
<Page>

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:  January 24, 2003

                                       By:  /s/ David J. Moore
                                            ------------------------------
                                            David J. Moore
                                            Chairman and Chief Executive Officer
                                            (principal executive officer)

                                       By:  /s/ Norman M. Blashka
                                            ------------------------------
                                            Norman M. Blashka
                                            EVP and Chief Financial Officer
                                            (principal financial and
                                            accounting officer)


                                       47
<Page>

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I, David J. Moore, certify that:

       1. I have reviewed this quarterly report on Form 10-Q/A of 24/7 Real
Media, Inc.;

       2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

       3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

       4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

              (a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

              (b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "EVALUATION DATE"); and

              (c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

       5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

              (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

              (b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and

       6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: January 24, 2003

                                       /s/ David J. Moore
                                       ----------------------
                                       David J. Moore
                                       Chairman and Chief Executive Officer
                                       (principal executive officer)



                                       48
<Page>

                      CERTIFICATION PURSUANT TO SECTION 302
                      OF THE SARBANES-OXLEY ACT OF 2002

I, Norman M. Blashka, certify that:

       1. I have reviewed this quarterly report on Form 10-Q/A of 24/7 Real
Media, Inc.;

       2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

       3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

       4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

              (a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

              (b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "EVALUATION DATE"); and

              (c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

       5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

              (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

              (b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and

       6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: January 24, 2003


                                           /s/ Norman M. Blashka
                                           -------------------------
                                           Norman M. Blashka
                                           EVP and Chief Financial Officer
                                           (principal financial and
                                           accounting officer)



                                       49