<PAGE>

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

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

                               ----------------

                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the quarterly period ended June 30, 1999

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                       Commission file number 000-26275

                               drkoop.com, Inc.
            (Exact name of registrant as specified in its charter)


                  Delaware                             95-4697615
        (State or other jurisdiction of             (I.R.S. Employer
        incorporation or organization)           Identification Number)

                      8920 Business Park Drive, Suite 200
                              Austin, Texas 78759
                   (Address of principal executive offices)

                               ----------------

      (512) 726-5110 (Registrant's telephone number, including area code)

                               ----------------

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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

     (1)  Yes                                 No    X
              -------                            -------
     (2)  Yes                                 No    X
              -------                            -------

     As of July 31, 1999 there were 29,563,169 shares of the Registrant's common
stock outstanding.

================================================================================
<PAGE>

                               drkoop.com, Inc.
                                   FORM 10-Q
                      For the Quarter Ended June 30, 1999
                                     INDEX

PART I.   FINANCIAL INFORMATION                                             PAGE
                                                                            ----

Item 1.   Financial Statements

Condensed Balance Sheets at June 30, 1999 (Unaudited) and December 31,
          1998.................................................................3

Condensed Statements of Operations for the three and six month
          periods ended June 30, 1999 and 1998 (Unaudited).....................4

Condensed Statements of Cash Flows for the six months ended
          June 30, 1999 and 1998 (Unaudited)...................................5

Notes to Condensed Financial Statements (Unaudited)............................6

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...........................................10

Item 3.   Quantitative and Qualitative Disclosures about Market
          Risk................................................................17

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings...................................................30
Item 2.   Changes in Securities and Use of Proceeds...........................30
Item 3.   Defaults Upon Senior Securities.....................................30
Item 4.   Submission of Matters to a Vote of Security Holders.................30
Item 5.   Other Information...................................................31
Item 6.   Exhibits and Reports on Form 8-K....................................31
SIGNATURES....................................................................32


                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements
                               drkoop.com, Inc.
                           Condensed Balance Sheets
                     (in thousands, except share amounts)
<TABLE>
<CAPTION>
                                                                                        June 30,               December 31,
Assets                                                                                    1999                     1998
                                                                                       ---------               ------------
<S>                                                                                   <C>                      <C>
Current assets:                                                                       (Unaudited)
    Cash and cash equivalents                                                          $  85,953                $    --
    Trade accounts receivable                                                                965                       41
    Prepaids and other                                                                     5,852                       22
                                                                                       ---------                ---------
             Total current assets                                                         92,770                       63

Equipment, furniture and fixtures, net                                                       657                      306
Investment in affiliate, at cost                                                           5,000                     --
Intangible assets, net                                                                     3,444                     --
Other assets                                                                                  11                       11
                                                                                       ---------                ---------
             Total assets                                                              $ 101,882                $     380
                                                                                       =========                =========

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
    Trade accounts payable                                                             $   4,710                $     804
    Accrued liabilities                                                                    3,610                      520
    Related party payables                                                                   298                    1,193
    Deferred revenue                                                                         700                     --
    Convertible note payable                                                                 300                     --
    Convertible note payable to stockholder, net of discount of $49 at
     December 31, 1998                                                                      --                        451
                                                                                       ---------                ---------
             Total current liabilities                                                     9,618                    2,968
                                                                                       ---------                ---------

Commitments and contingencies (Note 4)

Mandatorily redeemable convertible (Series B) preferred stock;
    liquidation preference of $2,998 at December 31, 1998                                   --                     18,406

Stockholders' equity (deficit):
    Preferred stock, par value $.001; 15,000,000 shares  authorized
    Series A 750,000 shares designated; -0- and 619,102 shares issued
         and outstanding at June 30, 1999 and December 31, 1998                             --                          1
    Common stock, par value of $.001; 75,000,000 shares authorized at
         June 30, 1999 and 15,000,000 shares authorized at December 31,
         1998; 29,563,169 and 8,550,360 shares issued and outstanding
         at June 30, 1999 and December 31, 1998                                               30                        8
    Additional paid-in capital                                                           132,640                     --
    Deferred stock compensation                                                           (3,859)                  (1,425)
    Accumulated deficit                                                                  (36,547)                 (19,578)
                                                                                       ---------                ---------
             Total stockholders' equity (deficit)                                         92,264                  (20,994)
                                                                                       ---------                ---------

             Total liabilities and stockholders' equity (deficit)                      $ 101,882                $     380
                                                                                       =========                =========
</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       3
<PAGE>

                               drkoop.com, Inc.
                      Condensed Statements of Operations
                     (in thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                               Three Months Ended June 30,        Six Months Ended June 30,
                                                               ---------------------------       ---------------------------
                                                                  1999            1998             1999            1998
                                                               ------------   ------------       ------------   ------------
<S>                                                           <C>             <C>               <C>            <C>
Revenue:
   Content subscription and software license                    $       238    $      --          $       454    $      --
   Advertising and sponsorship                                          781           --                  969           --
                                                               ---------------------------       ---------------------------
       Total revenue                                                  1,019           --                1,423           --
                                                               ---------------------------       ---------------------------
Operating expenses:
   Production, content and product development                        2,110            672              3,145            955
   Sales and marketing                                                8,010            182             10,058            347
   General and administrative                                         1,740            559              2,844            818
   Amortization of deferred stock compensation                          592           --                1,074           --
                                                               ---------------------------       ---------------------------
       Total operating expenses                                      12,452          1,413             17,121          2,120
                                                               ---------------------------       ---------------------------
Loss from operations                                                (11,433)        (1,413)           (15,698)        (2,120)

Interest income and expense, net                                         67             14                 36             13
                                                               ---------------------------       ---------------------------
       Net loss                                                     (11,366)        (1,399)           (15,662)        (2,107)

Accretion of redeemable securitites to fair value                    (6,319)          --              (17,255)          --

Dividend to preferred stockholders                                     --             --               (9,147)          --
                                                               ---------------------------       ---------------------------
Loss attributable to common stockholders                        $   (17,685)   $    (1,399)       $   (42,064)   $    (2,107)
                                                               ===========================       ===========================
Basic and diluted net loss per share attributable
  to common stockholders                                        $     (1.28)   $     (0.16)       $     (3.75)   $     (0.27)
                                                               ===========================       ===========================
Weighted average shares used in computing basic and
  diluted net loss per share attributable to common
  stockholders                                                       13,810          8,550             11,207          7,794
                                                               ===========================       ===========================

</TABLE>

   The accompanying notes are an integral part of the financial statements.

                                       4
<PAGE>

                               drkoop.com, Inc.
                      Condensed Statements of Cash Flows
                                (in thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                                 Six Months Ended June 30,
                                                                 ------------------------
Operating Activities:                                               1999          1998
                                                                 ----------   -----------
<S>                                                              <C>          <C>
    Net loss                                                     $  (15,662)  $    (2,107)
    Adjustments to reconcile net loss to net cash used in
      operating activities:
         Depreciation and amortization                                  654            12
         Amortization of deferred stock compensation                  1,074          --
         Interest accretion on convertible notes payable                 95          --

         Changes in assets and liabilities:
         Accounts receivable                                           (924)         --
         Prepaids and other assets                                   (3,590)          (74)
         Accounts payable                                             3,906           268
         Accrued liabilities                                          3,090           144
         Related party payables                                        (895)         (515)
         Deferred revenue                                               700          --
                                                                 ----------   -----------
              Cash used in operating activities                     (11,552)       (2,272)
                                                                 ----------   -----------
Investing Activities:
    Purchase of furniture, fixtures and equipment                      (450)          (96)
                                                                 ----------   -----------
              Cash used in investing activities                        (450)          (96)
                                                                 ----------   -----------
Financing Activities:
    Proceeds from issuance of preferred stock                         3,500         5,056
    Proceeds from issuance of convertible notes payable               5,775          --
    Proceeds from exercise of stock options                             248
    Proceeds from issuance of common stock, net                      88,432          --
                                                                 ----------   -----------
              Cash provided by financing activities                  97,955         5,056
                                                                 ----------   -----------
    Increase in cash and cash equivalents                            85,953         2,688

    Cash and cash equivalents at beginning of period                   --               8
                                                                 ----------   -----------
    Cash and cash equivalents at end of period                   $   85,953   $     2,696
                                                                 ==========   ===========
</TABLE>


   The accompanying notes are an integral part of the financial statements.

                                       5
<PAGE>

                               drkoop.com, Inc.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 JUNE 30, 1999


NOTE 1 - ORGANIZATION

drkoop.com, Inc. (the "Company"), a Delaware corporation, was incorporated on
July 17, 1997 (date of inception). The Company operates an Internet-based
consumer healthcare network, consisting of an interactive Web site providing
consumers with healthcare information and services, as well as affiliate
relationships with portals, other websites, local healthcare organizations and
traditional media outlets.

Effective June 11, 1999, the Company completed an initial public offering of
10,781,250 shares, including the underwriter's over allotment, at $9 per share.
Offering proceeds, net of aggregate expenses to the Company (including
underwriters' discount) totaled approximately $88.4 million. Simultaneous with
the closing of the initial public offering, each outstanding share of Series A
convertible preferred stock was automatically converted into 1.085 shares of
common stock, Series B redeemable convertible preferred stock was automatically
converted into 1.029 shares of common stock, Series C convertible preferred
stock was automatically converted into one share of common stock. The conversion
resulted in the issuance of 8,594,835 shares of common stock, including the
issuance of 1,345,185 shares of common stock to satisfy in full a purchase
option and related anti-dilution adjustment rights. An additional 876,180 shares
of common stock were issued upon conversion of certain convertible notes
payable.

NOTE 2 - BASIS OF PRESENTATION

The condensed financial statements included herein are unaudited and reflect all
adjustments, consisting only of normal recurring adjustments, which in the
opinion of management are necessary to fairly state the Company's financial
position, results of operations and cash flows for the periods presented. These
financial statements should be read in conjunction with the Company's financial
statements and notes thereto for the year ended December 31, 1998, which are
contained in the Company's Registration Statement filed on Form S-1 with the
Securities and Exchange Commission (File No. 333-73459). The results of
operations for the three month periods ended June 30, 1999 and 1998 are not
necessarily indicative of results that may be expected for any other interim
period or for the full fiscal year.

NOTE 3 - NET LOSS PER SHARE

Diluted net loss per share has not been presented as the effect of the assumed
exercise of stock options and warrants for common stock shares is antidilutive
due to the Company's net loss.

The following pro forma calculation of net loss per share for the three and six
months ended June 30, 1999 and 1998, respectively, assumes the conversion of all
convertible notes payable, preferred stock and mandatorily redeemable
convertible preferred stock into common stock upon the Company's initial public
offering using the if-converted method from their respective dates of issuance.
This presentation is provided as the Company's historical capital structure is
not indicative of its current capital structure due to the automatic conversion
of all shares of convertible notes payable, preferred stock and mandatorily
redeemable convertible preferred stock into common stock concurrent with the
closing of the Company's recent initial public offering.

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                    Three months ended June 30,          Six months ended June 30,
                                                    ---------------------------          -------------------------
    (in thousands, except per share data)              1999             1998               1999             1998
                                                       ----             ----               ----             ----

<S>                                                 <C>            <C>                   <C>              <C>
Net loss                                             $(11,366)        $ (1,399)          $(15,662)        $ (2,107)
                                                     ========         ========           ========         ========

Basic and diluted:
  Shares used in computing basic and diluted
     net loss                                          13,810            8,550             11,207            7,794
                                                     ========         ========           ========         ========

  Basic and diluted net loss per share               $  (0.82)        $   (.16)          $  (3.75)        $   (.27)
                                                     ========         ========           ========         ========

Pro forma:
  Shares used above                                    13,810            8,550             11,207            7,794

Pro forma adjustment to reflect weighted
effect of assumed conversion of convertible
notes payable and preferred stock                       7,669            2,267              7,806            1,174
                                                     --------         --------           --------         --------

Shares used in computing pro forma basic and
diluted net loss per share                             21,479          10,817              19,013            8,968
                                                     ========         ========           ========         ========

Pro forma basic and diluted net loss per
share                                                $   (.53)        $   (.13)          $   (.82)        $   (.23)
                                                     ========         ========           ========         ========
</TABLE>


NOTE 4 - COMMITMENTS & CONTINGENCIES

Infoseek and Buena Vista portal agreements
On April 9, 1999, the Company entered into agreements with Infoseek Corporation
and the Buena Vista Internet Group, a unit of The Walt Disney Company, under
which the Company will be the exclusive provider of health and related content
on three websites of the Go Network: Go.com Health Center on Infoseek, ESPN.com
Training Room and the Family.com Health Channel. Under the Infoseek agreement,
the Company will also be the premier health content provider for ABCnews.com. In
addition, the Company will be the exclusive pharmacy and drugstore, health
insurance and clinical trials partner in the Go.com Health Center. Under these
agreements, users on the Go Network will be able to access various health
information, services, interactive tools and commerce opportunities through a
co-branded website served by the Company. In the event the Company elects not to
provide specific content, content may be obtained from a third party.

The term of both agreements is for three years, except that each of the parties
may elect to terminate the relationship after two years. The Company will pay
Infoseek and the Buena Vista Internet Group $57.9 million in total consideration
consisting of cash and warrants to purchase 775,000 shares of common stock at an
exercise price of $8.60 per share over the full three year term. The cash
portion of this obligation is payable approximately as follows: $16.2 million in
the first year of the agreements, $18.2 million in the second year of the
agreements and $21.3 million in the third year. None of the warrants are
exercisable prior to one year after issuance.

                                       7
<PAGE>

The warrants have been recorded at a fair value of $2.89 per share which was
calculated at the time of issuance using the Black-Scholes option-pricing model
with the following weighted average assumptions: zero dividend yield; 0.5
volatility; risk-free interest rate of 5.0% and an expected life of 3 years.
The Company will recognize the costs associated with the agreements ratably over
the term of agreements.

Purchase Obligation

Effective June 30, 1999, in connection with the America Online, Inc. ("AOL")
agreement (see Note 7), the Company entered into a purchase commitment with
Netscape Communications Corporation ("Netscape") totaling $5.6 million.  The
purchase commitment provides for $5.1 million for software products and
technology and $500,000 for service fees.

Legal Matters

On April 12, 1999, a civil complaint was filed against the Company attempting to
allege, among other things, fraud and breach of contract regarding a terminated
consulting arrangement and seeking recovery of damages of $4 million, punitive
damages exceeding $5 million, attorney's fees and an injunction prohibiting the
Company from offering stock for sale to the public unless and until it
recognizes plaintiff's claim to options to acquire 232,500 shares of the
Company's common stock alleged to be owed under the consulting agreement. The
Company believes that the plaintiff is not entitled to recover and intends to
defend this lawsuit vigorously.

On July 28, 1999 adam.com filed a lawsuit seeking to terminate a content
agreement among the two companies. The lawsuit also seeks relief related to
distribution of some of this content in a manner which adam.com alleges violates
the agreement. The Company believes that the claims are without merit and
intends to defend this lawsuit vigorously.

NOTE 5 - CHANGES IN CAPITAL STRUCTURE

Effective June 11, 1999, the Company completed an initial public offering of
10,781,250 shares, including the underwriter's over allotment, at $9 per share.
(See Note 1).

In June 1999, the Company effected a five-for-two stock split.  The effect of
this stock split has been recorded retroactively to the inception of the Company
in the accompanying financial statements.

In June 1999, the Company increased its authorized capital stock to 75,000,000
shares of common stock, par value $0.001 per share.

                                       8
<PAGE>

NOTE 6 - SUPPLEMENTAL CASH FLOWS INFORMATION


<TABLE>
<CAPTION>
----------------------------------------------------------------------------
                                                                                Six Months Ended
                                                                                    June 30,
------------------------------------------------------------------------------------------------------
                   (in thousands)                                            1999               1998
------------------------------------------------------------------------------------------------------
<S>                                                                         <C>               <C>
Supplemental Disclosure of Noncash Financing Activities:
------------------------------------------------------------------------------------------------------
Conversion of related party payable to common stock                         $      -          $    216
------------------------------------------------------------------------------------------------------
Deferred stock compensation related to options granted                      $  3,507          $      -
------------------------------------------------------------------------------------------------------
Accretion of redeemable securities to fair value                            $ 17,255          $      -
------------------------------------------------------------------------------------------------------
Amortization of deferred stock compensation                                 $  1,074          $      -
------------------------------------------------------------------------------------------------------
Issuance of preferred stock for investment in affiliate                     $  5,000          $      -
------------------------------------------------------------------------------------------------------
Issuance of preferred stock for intangible asset                            $  4,000          $      -
------------------------------------------------------------------------------------------------------
Obligation to issue common stock pursuant to option
cancellation agreement                                                      $  9,147          $      -
------------------------------------------------------------------------------------------------------
Conversion of convertible notes payable to common stock                     $  5,990          $      -
------------------------------------------------------------------------------------------------------
Conversion of Series B preferred stock to common stock at IPO               $ 35,660          $      -
------------------------------------------------------------------------------------------------------
Issuance of warrants                                                        $  2,240          $      -
------------------------------------------------------------------------------------------------------
</TABLE>



NOTE 7 - SUBSEQUENT EVENT

Effective July 1, 1999, the Company and America Online, Inc. ("AOL") signed a
four-year Interactive Services Agreement  (the "Agreement") pursuant to which
the Company was designated as AOL's premier provider of healthcare content.  The
Agreement obligates the Company to make portal payments aggregating $89.0
million in cash and to provide AOL warrants to purchase drkoop.com common stock.
The warrants have the following characteristics:

 .    Warrants to purchase 1,570,932 shares of the Company's common stock for a
     purchase price of $15.94 per share (the closing price on June 30, 1999).
     These warrants are fully vested and may be exercised at any time on or
     after June 30, 2000 and on or prior to June 30, 2008, subject to limited
     exceptions relating to a change in control of drkoop.com or the early
     termination of the Agreement between AOL and drkoop.com.

 .    Warrants to purchase up to 1,570,932 shares of the Company's common stock
     for a purchase price of $20.00 per share. These warrants are not
     exercisable, and will not become exercisable unless the AOL relationship
     delivers to drkoop.com during the four years of the Agreement traffic
     objectives, measured in page views, at or above agreed upon levels.
     Accordingly, one-fourth of these warrants (i.e., 392,733 warrants) could
     become vested in each of the next four years if those performance
     objectives are met. Any warrants that become vested will be exercisable at
     any time on or prior to June 30, 2008 .

 .    Warrants to purchase up to 2,749,131 shares of the Company's common stock.
     These warrants are not exercisable, and will not become exercisable unless
     the AOL relationship delivers specified usage of a new personal medical
     records software tool to be developed by drkoop.com and jointly deployed by
     drkoop.com and AOL. The warrant specifies four performance hurdles,
     measured by usage of the new tool, which if accomplished will result in

                                       9
<PAGE>

     392,733, 392,733, 785,466 and 1,178,199 warrants becoming vested and
     exercisable. The exercise price of these warrants will be established at
     the time they become vested and will be calculated as 80%, 75%, 70% and 65%
     of fair market value at such time. Any warrants that become vested will be
     exercisable at any time on or prior to June 30, 2008.

All of the warrants include customary ancillary provisions, including anti-
dilution adjustments for stock splits, stock dividends and similar structural
changes.  None of the warrants may be transferred prior to December 8, 1999 or
if the related warrants have not vested.  A change in control transaction
involving drkoop.com could result in an acceleration of the vesting of these
warrants.

The parties also entered into a registration rights agreement which could
require that drkoop.com register any shares of common stock issued to AOL upon
exercise of any warrant for resale under the Securities Act of 1933, although
these rights are subordinated to the rights previously granted in the Amended
and Restated Registration Rights Agreement dated January 29, 1999.

Under a separate arrangement AOL will pay $8.0 million to drkoop.com related to
specified technology to be provided to AOL by drkoop.com. As noted above,
drkoop.com  has agreed to purchase software and services totaling $5.6 million
from Netscape in connection with the improvement of the Company's infrastructure
required to support the AOL agreement.


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

Forward-Looking Statements

The following discussion of the financial condition and results of operations
should be read in conjunction with our Financial Statements and the related
Notes thereto included elsewhere in this report. This document contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of our plans, objectives, expectations and intentions.  When used in
this document, the words "expects," "anticipates," "intends" and "plans" and
similar expressions are intended to identify certain of these forward-looking
statements. The cautionary statements made in this document should be read as
being applicable to all related forward-looking statements wherever they appear
in this document. Our actual results could differ materially from those
discussed in this document. We are under no duty to update any of the forward-
looking statements after the date of this filing on Form 10-Q to conform these
statements to actual results. Factors that could cause or contribute to such
differences include those discussed below, as well as those discussed in our
Prospectus dated June 8,1999.

Overview

Our company operates drkoop.com, an Internet-based consumer healthcare network.
Our network consists of a consumer-focused interactive website which provides
users with comprehensive healthcare information and services, as well as
affiliate relationships with portals, other websites, healthcare organizations
and traditional media outlets.  Our website, www.drkoop.com, is a healthcare
portal which integrates dynamic healthcare content on a wide variety of
subjects, interactive communities and tools as well as opportunities to purchase
healthcare related products and services on-line.

Revenues

Sources of revenues for the quarter and six months ended June 30, 1999 were
revenues from content subscription and software licensing fees, and advertising
and sponsorship fees.  Content

                                       10
<PAGE>

subscription and software licensing fees are facilitated through our Community
Partnership Program ("CPP"). Subscriptions to our Community Partnership Program
run from one to three years. Under this program, we develop co-branded Internet
pages and software consisting of visual icons containing embedded links back to
our drkoop.com website for local healthcare organizations, such as hospitals and
payor organizations. Advance billings and collections relating to future
services are recorded as deferred revenue and recognized when revenue is earned.
Sales of software licenses to CPP affiliates are recognized as revenue upon
shipment of the software, provided that the portion of the contract allocated to
the software license is based upon vendor specific objective evidence of fair
value, and collectibility is probable. Content subscription revenue is
recognized ratably over the term of the CPP contract, generally ranging from one
to three years. Software licenses are also sold as a stand-alone product
independent of the Community Partnership Program.

Advertising revenues are derived primarily from short-term advertising contracts
in which we typically guarantee a minimum number of user "impressions" to be
delivered over a specific period of time for a fixed fee.  Impressions are the
number of times that users on our website view an advertisement.  We recognize
advertising revenues at the lesser of the ratio of impressions delivered over
the guaranteed impressions or the straight-line rate over the term of the
contract, provided that no significant obligations remain and collection of the
resulting receivable is probable.  During the quarter and six months ended June
30, 1999, we have utilized a combination of third party firms and in-house staff
for the sales and insertion of advertisements on the drkoop.com website.
Advertising rates, measured on a cost per thousand impressions basis, are
dependent on whether the impressions are for general rotation throughout the
drkoop.com website or for target audiences and properties within specific areas
of the website.

Sponsorship revenues are derived from contracts ranging from one to twelve
months in which we commit to provide sponsors enhanced promotional opportunities
that go beyond traditional banner advertising.  Sponsorships are designed to
support broad marketing objectives, including branding, awareness, product
introductions, research and transactions.  Sponsorship arrangements typically
include the delivery of a guaranteed minimum number of impressions and the
design and implementation of customized pages on the website that enhance the
promotional objective of the sponsor.  Costs associated with the development of
the web pages are minimal and are expensed when occurred.  Sponsorship revenues
are recognized at the lesser of the ratio of impressions delivered over the
total guaranteed impressions or the straight-line rate over the term of the
contract, provided that no significant obligations remain and collection of the
resulting receivable is probable.

From time to time, and dependent upon the complexity of an advertising or
sponsorship revenue arrangement, we provide initial site design and engineering
services which require the development and implementation of specific website
enhancements prior to launching a co-branded site.  Revenues and related costs
for initial site design and engineering services are recognized under contract
accounting.

As our market develops, seasonal and cyclical patterns may emerge. These
patterns may affect our revenues. We cannot yet predict to what extent our
operations will prove to be seasonal.

Results of Operations

Revenues.  Our website, www.drkoop.com, was launched July 1998.  Revenues
increased to $1.0 million and $1.4 million for the three and six months ended
June 30, 1999, respectively, as compared to $0 revenues for the comparable
periods of 1998. Recurring revenue from content

                                       11
<PAGE>

subscription and software licenses for the quarter ended June 30, 1999 totaled
$238,000 or 23% of total revenues, and $454,000 or 32% of total revenue for the
six months then ended. The increase is attributable to the continued expansion
of the Community Partner Program, resulting in the addition of seven new
contracts during the three months ended June 30, 1999, bringing the total number
of contracts to 15 at June 30, 1999.

Advertising and sponsorship revenues totaled $781,000, or 77%, of total
revenues, for the quarter ended June 30, 1999, and $969,000, or 68%, of total
revenues for the six months ended June 30, 1999. Advertising and sponsorship
revenues included non-recurring engineering services revenues of $203,000
recognized in the quarter ended June 30, 1999, which represented 20% and 14% of
total revenues for the three and six months ended June 30, 1999, respectively.
Additionally, included in advertising and sponsorship revenues were recurring
revenues from sponsorship agreements of $245,000, or 24% of total revenues, and
$273,000, or 19% of total revenues, for the quarter and six months ended June
30, 1999, respectively. The remaining advertising revenues of $333,000, or 33%
of total revenues, and $493,000, or 35% of total revenues, for the quarter and
six months ended June 30, 1999 were derived from non-recurring short-term
advertising and sponsorship arrangements. The increase in advertising and
sponsorship revenues was primarily due to an increase in the number of
advertising arrangements combined with an increase in traffic to our website
resulting in a higher number of impressions delivered.

Included in content subscription and software licensing revenues are barter
transactions that accounted for $30,000 and $50,000 for the three and six months
ended June 30, 1999, respectively. Barter revenues accounted for $84,000 and
$116,000 of the advertising and sponsorship revenues for the three and six
months ended June 30, 1999, respectively.  In total, barter revenues represented
$114,000, or 11%, and $166,000, or 12%, of total revenues for the quarter and
six months ended June 30, 1999.

Production, content and product development expenses.  Production, content and
product development expenses consist primarily of salaries and benefits,
consulting fees and other costs related to content acquisition and licensing,
software development, application development and website operations expense.
Production, content and product development expense increased by $1.4 million,
or 214%, from $672,000 for the quarter ended June 30, 1998 to $2.1 million for
the quarter ended June 30, 1999, and by $2.2 million, or 229%, from $955,000 for
the six months ended June 30, 1998 to $3.1 million for the six months ended June
30 1999.  Included in these totals are royalty fees paid to Dr. C. Everett Koop
of $20,000 and $29,000 for the three and six months ended June 30, 1999,
respectively.  The increase in production, content and product development costs
was primarily due to the addition of personnel, resulting in higher salaries,
benefits and travel costs, combined with an increase in consulting fees and
content licensing required as our website has continued to develop and expand.
We believe that in order to remain competitive, significant investments in
content development and operating infrastructure will be required; therefore, we
expect that production, content and product development expenses will continue
to increase in absolute dollars for the foreseeable future.

Sales and marketing expenses.  Sales and marketing expenses consist primarily of
salaries and related costs, portal fees, web-based advertising, commissions,
general advertising and other related expenses.  Sales and marketing expense
increased by $7.8 million, from $182,000 to $8.0 million, for the quarters ended
June 30, 1998 and 1999, respectively, and by $9.7 million, from $347,000 to
$10.1 million, for the six months ended June 30, 1998 and 1999, respectively.
The primary reasons for the increases were costs associated with the portal
distribution agreements totaling $2.8 million for the six months ended June 30,
1999 as compared to $0 for the same period in 1998; increases in advertising and
promotion of the drkoop.com website totaling $4.9 million during the six months
ended June 30, 1999 as compared to less than $1,000 for the comparable period in
the prior year; and a significant increase in sales and marketing personnel,
resulting in increased salary and related expenses of approximately $820,000
during

                                       12
<PAGE>

the six months ended June 30, 1999 over the same period for the prior year. We
anticipate that sales and marketing expenses will continue to increase in
absolute dollars in the foreseeable future as we continue to hire additional
personnel and increase expenditures for distribution, advertising, brand
promotion, public relations and other marketing activities.

General and administrative expenses.  General and administrative expenses
consist primarily of salaries and related costs for general corporate functions,
including executive, finance, accounting, investor relations, human resources,
facilities and fees for professional services.  General and administrative
expenses increased by $1.2 million, or 211%, from $559,000 to $1.7 million for
the quarters ended June 30, 1998 and 1999, respectively, and by $2.0 million, or
248%, from $818,000 to $2.8 million for the six months periods ended June 30,
1998 and 1999, respectively.  The primary reason for the increases were the
addition of personnel, including the investment in a more experienced senior
management team, and the resultant increase in salaries, benefits, facilities
and travel.  We anticipate that general and administrative expenses will
continue to increase in absolute dollars for the foreseeable future, although at
a slower rate than the other expense categories.

Amortization of Deferred stock compensation expense. We have recorded non-cash
deferred stock compensation costs in the aggregate of $5.0 million in connection
with the grant of certain stock options to our employees in 1998 and 1999. The
deferred stock compensation is being amortized over the four-year vesting period
of such options. Of the total deferred stock compensation, $592,000 and $1.1
million was amortized in the three and six months ended June 30, 1999,
respectively. There were no such expenses in the comparable periods in 1998.

Net interest income.   Net interest income includes interest income from our
cash balances offset by interest expenses related to our financing obligations,
particularly on the convertible notes payable prior to conversion.  Net interest
income was $67,000 and $14,000 for the three months ended June 30, 1999 and
1998, respectively, and $36,000 and $13,000 for the six months ended June 30,
1999 and 1998, respectively. The increase was primarily due to higher average
net cash and cash equivalents balances resulting from the investment of the
proceeds from our IPO completed in June 1999.

Income tax.  We have incurred net losses to date.  As of June 30, 1999, we had
net operating loss carryforwards of $14.5 million for financial reporting
purposes.  We have recorded a valuation reserve equal to the amount of the
carryforward due to the uncertain realization of these tax benefits.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through equity sales
and convertible notes payable debt financing.  At June 30, 1999 we had $86.0
million in cash and cash equivalents and working capital of $83.0 million.

In June 1999, we completed an initial public offering and issued 10,781,250
shares of our common stock at a price of $9.00 per share. We received
approximately $88.4 million in cash, net of underwriting discounts, commissions
and other offering costs. Simultaneous with the closing of the initial public
offering, each outstanding share of Series A convertible preferred stock was
automatically converted into 1.085 shares of common stock, Series B redeemable
convertible preferred stock was automatically converted into 1.029 shares of
common stock, Series C convertible preferred stock was automatically converted
into one share of common stock.  Additionally, at the discretion of the
convertible note holders, the principal balance plus accrued

                                       13
<PAGE>

interest was convertible into shares of common stock at a predetermined price.
As of June 30, 1999 the note holders converted principal balances of $6.0
million plus accrued interest of $77,000 into 876,180 shares of common stock. As
of June 30, 1999, a convertible note payable in the principal amount of $300,000
plus accrued interest of $3,000, representing 40,728 shares if converted,
remained outstanding.

Cash used in operating activities for the six months ended June 30, 1999 of
$11.6 million was due primarily to a net operating loss of $15.7 million and
increases in accounts receivable of $924,000 and prepaid expenses of $3.6
million.  These amounts were offset by non cash charges for amortization of
deferred stock compensation of $1.1 million and depreciation of $654,000 and
increases in accounts payable and accrued liabilities of $3.9 million and $3.1
million, respectively.  The increases in accounts payable and accrued
liabilities are attributable to the increased expenses associated with
developing and promoting our website. The increase in prepaid expenses is
primarily the result of prepayments required under the terms of various portal
and content contracts. Cash used in operating activities for the six months
ended June 30, 1998 of $2.3 million was due primarily to a net operating loss of
$2.1 million and a decrease in related party payables of $515,000, offset by
increases in accounts payable of $268,000 and accrued liabilities of $152,000.

Cash used in investing activities was $450,000 and $96,000 for the six months
ended June 30, 1999 and 1998, respectively.  Net cash used for investing
activities for these periods consisted primarily of capital expenditures for
computer equipment.

Net cash provided by financing activities was $98.0 million for the six months
ended June 30, 1999, compared to $5.1 million during the same period of 1998.
Net cash provided by financing activities resulted primarily from proceeds of
our initial public offering which resulted in net proceeds of approximately
$88.4 million and, to a lesser extent, net proceeds from the issuance of Series
C Convertible Preferred Stock of $3.5 million, net proceeds from the issuance of
convertible notes payable of $5.8 million, and the exercise of stock options
resulting in $248,000 of net proceeds. The $5.1 million in proceeds received
during the first six months of 1998 was from the issuance of preferred stock.

We currently believe that our available cash resources are sufficient to meet
our anticipated working capital and capital expenditure requirements for at
least the next 12 months.  No assurance can be given that we will not be
required to raise additional financing prior to such time. If additional funds
are raised through the issuance of equity securities, our stockholders may
experience significant dilution.  Furthermore, there can be no assurance that
additional financing will be available when needed or that if available, such
financing will include terms favorable to our stockholders or us. If such
financing is not available when required or is not available on acceptable
terms, we may be unable to develop or enhance our products and services, take
advantage of business opportunities or respond to competitive pressures, any of
which could have a material adverse effect on our business, financial condition
and results of operations.

Impact of the Year 2000

Many currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
may recognize a date using "00" as the year 1900 rather than the year 2000. As a
result, computer systems and/or software used by many companies and governmental
agencies may need to be upgraded to comply with such Year 2000 requirements or
risk system failure or miscalculations causing disruptions of normal business
activities.

                                       14
<PAGE>

State of Readiness

Costs. To date, we have not incurred any material costs in identifying or
evaluating Year 2000 compliance issues. Most of our expenses have related to,
and are expected to continue to relate to, the operating costs associated with
time spent by employees in the evaluation process and Year 2000 compliance
matters generally. We do not presently anticipate that such expenditures will be
material.

Risks. We have made a preliminary assessment of the Year 2000 readiness of our
operating and administrative systems and the third-party software, hardware and
services used to host the drkoop.com website. Our assessment plan consists of:

     .    contacting third-party vendors of material software, hardware and
          services that are both directly and indirectly related to the delivery
          of drkoop.com services to our users;

     .    assessing and implementing repair or replacement of such components as
          required; and

     .    creating contingency plans in the event of Year 2000 failures.


We plan to perform a Year 2000 simulation on our systems, including the
drkoop.com website, during the third quarter of 1999 to test Year 2000 system
readiness. Many of our vendors of material software, hardware and services have
indicated that the products used by us are currently Year 2000 compliant. We are
not currently aware of any internal Year 2000 compliance problems that could
reasonably be expected to have a material adverse effect on our business,
results of operations and financial condition, without taking into account our
efforts to avoid or fix such problems. However, there can be no assurance that
we will not discover Year 2000 compliance problems in our computer
infrastructure that will require substantial revisions or replacements. In
addition, there can be no assurance that third-party software, hardware or
services incorporated into our material systems or other systems upon which we
are reliant will not need to be revised or replaced, which could be time
consuming and expensive.

In addition, there can be no assurance that governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside of our control will be Year 2000 compliant. The failure by such entities
to be Year 2000 compliant could result in a systemic failure beyond our control,
such as a prolonged Internet, telecommunications or electrical failure, which
could also prevent us from delivering drkoop.com, decrease the use of the
Internet or prevent users from accessing drkoop.com, any of which would have a
material adverse effect on our business, results of operations and financial
condition.

Contingency Plan.

As discussed above, we are engaged in an ongoing Year 2000 assessment and have
developed preliminary contingency plans. The results of our analyses and the
responses received from third-party vendors and service providers will be taken
into account to revise our contingency plans as necessary. It is our goal to
finalize our contingency plans by the end of the third quarter of 1999.

New Accounting Pronouncements

                                       15
<PAGE>

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including derivative instruments
embedded in other contracts, and for hedging activities. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
We currently do not engage in or plan to engage in derivative instruments or
hedging activities.


Item 3.   Quantitative and Qualitative Disclosure About Market Risk

Risks Related to Our Business

Our business is difficult to evaluate because we have an extremely limited
operating history.

We were incorporated in July 1997 and launched our Internet operations in July
1998. Accordingly, we have an extremely limited operating history. An investor
in our common stock must consider the risks, uncertainties, expenses and
difficulties frequently encountered by companies in their early stages of
development, particularly companies in new and rapidly evolving markets,
including the Internet market. These risks and difficulties include our ability
to:

          .    attract a larger audience of users to our Internet-based consumer
               healthcare network;

          .    increase awareness of our brand;

          .    strengthen user loyalty and increase the number of registered
               users;

          .    offer compelling on-line content, services and e-commerce
               opportunities;

          .    maintain our current, and develop new, affiliate relationships;

          .    attract a large number of advertisers who desire to reach our
               users;

          .    respond effectively to the offerings of competitive providers of
               healthcare information on the Internet;

          .    continue to develop and upgrade our technology; and

          .    attract, retain and motivate qualified personnel.

We also depend on the growing use of the Internet for advertising, commerce
and communication, and on general economic conditions. We cannot assure you that
our business strategy will be successful or that we will successfully address
these risks or difficulties. If we fail to address adequately any of these risks
or difficulties our business would likely suffer. Please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our financial statements for detailed information on our extremely limited
operating history.

Our business is changing rapidly, which could cause our quarterly operating
results to vary and our stock price to fluctuate.

                                       16
<PAGE>

Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors, not all of which are within our control. If
we have a shortfall in revenues in relation to our expenses, or if our expenses
precede increased revenues, then our business would be materially adversely
affected. This would likely affect the market price of our common stock in a
manner which may be unrelated to our long-term operating performance.

Important factors which could cause our results to fluctuate materially include:

     .    our ability to attract and retain users;

     .    our ability to attract and retain advertisers and sponsors and
          maintain advertiser and sponsor satisfaction;

     .    traffic levels on our Internet site;

     .    our ability to attract and retain customers and maintain customer
          satisfaction for our existing and future e-commerce offerings;

     .    new Internet sites, services or products introduced by us or our
          competitors;

     .    the level of Internet and other on-line services usage;

     .    our ability to upgrade and develop our systems and infrastructure and
          attract new personnel in a timely and effective manner;

     .    our ability to successfully integrate operations and technologies from
          any acquisitions, joint ventures or other business combinations or
          investments; and

     .    technical difficulties or system downtime affecting the operation of
          our website.

Our revenues for the foreseeable future will remain dependent on user traffic
levels, advertising and e-commerce activity on drkoop.com and the level of
affiliate subscriptions. Such future revenues are difficult to forecast. In
addition, we plan to increase our sales and marketing operations, obtain broader
distribution for our service, expand and develop content and upgrade and enhance
our technology and infrastructure development in order to support our growth.
Many of the expenses associated with these activities-for example, personnel
costs, portal fees, and technology and infrastructure costs-are relatively
fixed in the short-term. We may be unable to adjust spending quickly enough to
offset any unexpected revenue shortfall, in which case our results of operations
would suffer.

We have a history of losses and negative cash flow and anticipate continued
losses.

Since our inception, we have incurred significant losses and negative cash flow,
and as of June 30, 1999, had an accumulated deficit of approximately $36.5
million, which included $11.2 million for accretion to fair value of the
mandatory redeemable Series B convertible preferred stock (all of which has been
converted into common stock). We have not achieved profitability and expect to
continue to incur operating losses for the foreseeable future as we fund
operating and capital expenditures in areas such as expansion of our network,
distribution, advertising, brand promotion, content development, sales and
marketing, and operating infrastructure. Our business model assumes that
consumers will be attracted to and use healthcare information and related
content available on our Internet-based consumer

                                       17
<PAGE>

healthcare network which will, in turn, allow us the opportunity to sell
advertising designed to reach those consumers. Our business model also assumes
that those consumers will access important healthcare needs through electronic
commerce using our website and that local healthcare organizations will
affiliate with us. This business model is not yet proven, and we cannot assure
you that we will ever achieve or sustain profitability or that our operating
losses will not increase in the future.

We must establish, maintain and strengthen our brand in order to attract users
to our network and generate advertising, sponsorship and e-commerce revenue.

In order to expand our audience of users and increase our on-line traffic, we
must establish, maintain and strengthen our brand. For us to be successful in
establishing our brand, healthcare consumers must perceive us as a trusted
source of healthcare information, and advertisers, merchants and manufacturers
must perceive us as an effective marketing and sales channel for their products
and services. We expect that we will need to increase substantially our
marketing budget in our efforts to establish brand recognition and brand
loyalty. Our business could be materially adversely affected if our marketing
efforts are not productive or if we cannot strengthen our brand.


Key elements of our marketing and brand building strategies are dependent on our
relationship with Dr. C. Everett Koop.

A key element of our strategy is to associate our company with former U.S.
Surgeon General C. Everett Koop, Chairman of the Board of our company and a
person who we believe is viewed by consumers as a trustworthy and credible
leader in the healthcare field. We are a party to an agreement, dated January 5,
1999, as amended, with Dr. C. Everett Koop which permits us to use his image,
name and likeness in connection with healthcare-related services and products.
Under this agreement, our use of Dr. C. Everett Koop's name, image or likeness
is subject to his prior written approval of the resulting products, which may
not be unreasonably withheld. As consideration for the Koop agreement, we are
obligated to pay Dr. C. Everett Koop a royalty equal to 2% of our revenues
derived from sales of our current products and up to 4% of our revenues derived
from sales of new products during the term of the agreement, including any
rebranding period. The Koop agreement is exclusive and for a term of five years,
subject to automatic renewal for additional three-year terms unless it is
terminated by either party within 120 days of the end of each term. If a
voluntary termination is requested by Dr. C. Everett Koop and is not the result
of a breach or default by us, we will have the right on a non-exclusive basis
for three years following the end of the term to rebrand and sell approved
products bearing the name, image or likeness of Dr. C. Everett Koop. If we
default in our obligations and do not promptly cure the default, Dr. C. Everett
Koop may terminate the Koop agreement, no rebranding period will apply and we
would immediately lose all rights to use Dr. C. Everett Koop's name and
likeness. Dr. C. Everett Koop may also terminate the Koop agreement upon a
change in control of our company.

If our agreement with Dr. C. Everett Koop were terminated prior to the end of
its current term or not renewed at the end of its current term, we would need to
change the name of our website and devote substantial resources towards building
a new marketing and brand strategy. Without our ability to use Dr. C. Everett
Koop's name and likeness or Dr. C. Everett Koop's participation in our business,
we may not be able to continue to attract a significant amount of user traffic
and advertisers to our website. The potential also exists that if Dr. C. Everett
Koop ends his affiliation

                                       18
<PAGE>

with our company, we could suffer a significant loss of credibility and trust
with healthcare consumers as a result. Any development that would cause Dr. C.
Everett Koop to exercise his right to terminate his relationship with our
company or which otherwise would cause us to lose the benefits of our
affiliation with him would have a material adverse effect on our business,
results of operation and financial condition. We do not maintain "key person"
life insurance for Dr. C. Everett Koop or any of our personnel.

We have committed significant financial and marketing resources to expand our
network; if we are unable to earn revenues in excess of these commitments, our
business will suffer.

In order to expand our network, we have entered into a number of strategic
partnerships which involve the payment of significant funds for prominent or
exclusive carriage of our healthcare information and services. These
transactions are premised on the assumption that the traffic we obtain from
these arrangements will permit us to earn revenues in excess of the payments
made to partners. This assumption is not yet proven, and if we are unsuccessful
in generating sufficient resources to offset these expenditures, we will likely
be unable to operate our business. On April 9, 1999 we entered into agreements
with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt
Disney Company, under which we will be the exclusive provider of health and
related content on three websites of the Go Network. Under the Infoseek
agreement, drkoop.com will also be the premier health content provider for
ABCnews.com.  The term of these agreements is for three years for total
consideration of approximately $57.9 million, including warrants to purchase
shares of our common stock.  Additionally, on July 1, 1999 we entered into
agreements with America Online, Inc under which we will be the premier health
content provider across five AOL brands:  America Online, CompuServe, AOL.COM,
Netscape Netcenter and Digital City.  The term of the agreement is for four
years for cash payments of $89 million, plus fully vested and performance based
warrants to purchase shares of our common stock.

In order to attract and retain our audience of users, we must provide healthcare
content, tools and other features which meet the changing demands of those
users.

One of our fundamental business objectives is for drkoop.com to be a trusted
source for healthcare information and services. As with any form of consumer-
oriented media, we have to provide editorial content and other features such as
interactive tools, that consumers demand in order to continue to attract and
retain our audience of users. We expect that competitive factors will create a
continuing need for us to retain, improve and add to our editorial content,
interactive tools and other features. We will not only have to expend
significant funds and other resources to continue to improve our network, but we
must also properly anticipate and respond to consumer preferences and demands.
Competition for content will likely increase the fees charged by high quality
content providers. The addition of new features will also require that we
continue to improve the technology underlying our website. These requirements
are significant, and we may fail to execute on them quickly and efficiently. If
we fail to expand the breadth of our offerings quickly, or these offerings fail
to achieve market acceptance, our business will suffer significantly.

Our business model relies on Internet advertising and sponsorship activities
which may not be effective or profitable marketing media.

Our future is highly dependent on increased use of the Internet as an
advertising medium. We expect to derive a substantial portion of our revenues
from advertising and sponsorships. The Internet advertising market is new and
rapidly evolving, and we cannot yet predict its

                                       19
<PAGE>

effectiveness as compared to traditional media advertising. As a result,
demand and market acceptance for Internet advertising solutions is uncertain.
Most of our current or potential advertising customers have little or no
experience advertising over the Internet and have allocated only a limited
portion of their advertising budgets to Internet advertising. The adoption of
Internet advertising, particularly by those entities that have historically
relied upon traditional media for advertising, requires the acceptance of a new
way of conducting business, exchanging information and advertising products and
services. Such customers may find Internet advertising to be less effective for
promoting their products and services relative to traditional advertising media.
We cannot assure you that the market for Internet advertising will continue to
emerge or become sustainable. If the market for Internet advertising fails to
develop or develops more slowly than we expect, then our ability to generate
advertising revenues would be materially adversely affected.

Various pricing models are used to sell advertising on the Internet. It is
difficult to predict which, if any, will emerge as the industry standard,
thereby making it difficult to project our future advertising rates and
revenues. Our advertising revenues could be adversely affected if we are unable
to adapt to new forms of Internet advertising. Moreover, "filter" software
programs are available that limit or prevent advertising from being delivered to
an Internet user's computer. Widespread adoption of this software could
adversely affect the commercial viability of Internet advertising.

In order to execute our growth plan we must attract, retain and motivate highly
skilled employees, and we face significant competition from other Internet and
new media companies in doing so.

Our ability to execute our growth plan and be successful also depends on our
continuing ability to attract, retain and motivate highly skilled employees. In
addition to Dr. C. Everett Koop, Chairman of the Board, we depend on the
continued services of key board members, our senior management and other
personnel, particularly Donald W. Hackett, President and Chief Executive
Officer. As we continue to grow, we will need to hire additional personnel in
all operational areas. Competition for personnel throughout the Internet and
related new-media industry is intense. We may be unable to retain our key
employees or attract, assimilate or retain other highly qualified employees in
the future. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications. If we do not succeed in
attracting new personnel or retaining and motivating our current personnel, our
business will be adversely affected.

Due to the factors noted above and the other risks discussed in this section,
you should not rely on quarter-to-quarter comparisons of our results of
operations as indicators of future performance. It is possible that in some
future periods our operating results may be below the expectations of public
market analysts and investors. In this event, the price of our common stock may
underperform or fall. Please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

We depend on third-party relationships, many of which are short-term or
terminable, to generate advertising and provide us with content.

We depend, and will continue to depend, on a number of third-party relationships
to increase traffic on drkoop.com and thereby generate advertising and other
revenues. Outside parties on which we depend include large Portal companies,
including AOL and Infoseek, unrelated website operators that provide links to
drkoop.com, providers

                                       20
<PAGE>

of healthcare content and portals which provide us with carriage. Many of our
arrangements with third-party Internet sites and other third-party service
providers are not exclusive and are short-term or may be terminated at the
convenience of either party. We cannot assure you that third parties regard our
relationship with them as important to their own respective businesses and
operations. They may reassess their commitment to us at any time in the future
and may develop their own competitive services or products.

We intend to produce only a portion of the healthcare content that will be found
on the drkoop.com network. We will rely on third-party organizations that have
the appropriate expertise, technical capability, name recognition, reputation
for integrity, and willingness to syndicate product content for branding and
distribution by others. As health-related content grows on the Internet, we
believe that there will be increasing competition for the best product
suppliers, which may result in a competitor acquiring a key supplier on an
exclusive basis, or in significantly higher content prices. Such an outcome
could make the drkoop.com network less attractive or useful for an end user
which could reduce our advertising and e-commerce revenues.

We cannot assure you that we will be able to maintain relationships with  third
parties that supply us with content, carriage, software or related products or
services that are crucial to our success, or that such content, software,
products or services will be able to sustain any third-party claims or rights
against their use. Also, we cannot assure you that the content, software,
products or services of those companies that provide access or links to our
website will achieve market acceptance or commercial success. Accordingly, we
cannot assure you that our existing relationships will result in sustained
business partnerships, successful product or service offerings or the generation
of significant revenues for us.

We have recently experienced and are currently experiencing rapid growth in our
business, and our inability to manage this growth could harm our business.

We have experienced and are currently experiencing a period of significant
growth. This growth has placed, and the future growth we anticipate in our
operations will continue to place, a significant strain on our resources. As
part of this growth, we will have to implement new operational and financial
systems and procedures and controls, expand, train and manage our employee base,
and maintain close coordination among our technical, accounting, finance,
marketing, sales and editorial staffs. If we are unable to manage our growth
effectively, our business, results of operations and financial condition could
be adversely affected.

Any future acquisitions we make of companies or technologies may result in
disruptions to our business and/or the distraction of our management, due to
difficulties in assimilating acquired personnel and operations.

We may acquire or make investments in complementary businesses, technologies,
services or products if appropriate opportunities arise. For example, we
recently commenced the adoption of Netscape technology to our operations in
connection with our relationship with AOL.  From time to time we
engage in discussions and negotiations with companies regarding our acquiring or
investing in such companies' businesses, products, services or technologies, and
we regularly engage in such discussions and negotiations in the ordinary course
of our business. Some of those discussions also contemplate the other party
making an investment or otherwise obtaining an equity interest in our company.
To date we have entered into such relationships with Superior Consultant
Holdings Corporation, HealthMagic, Inc., Infoseek and AOL. We cannot assure you
that we will be able to identify future suitable acquisition or investment
candidates, or if we do identify suitable candidates, that we will be able to
make such acquisitions or investments on commercially acceptable terms or at
all. If we acquire or invest in another company, we could

                                       21
<PAGE>

have difficulty in assimilating that company's personnel, operations, technology
and software. In addition, the key personnel of the acquired company may decide
not to work for us. If we make other types of acquisitions or enter into new
strategic relationships, we could have difficulty in integrating the related
products, services or technologies into our operations. These difficulties could
disrupt our ongoing business, distract our management and employees, increase
our expenses and adversely affect our results of operations. Furthermore, we may
incur indebtedness or issue equity securities to pay for any future
acquisitions. The issuance of equity securities would be dilutive to our
existing stockholders. As of the date of this prospectus, we have no agreement
to enter into any material investment or acquisition transaction.

If our ability to expand our network infrastructure is constrained in any way we
could lose customers and suffer damage to our operating results.

Presently, a relatively limited number of consumers use our website. We must
continue to expand and adapt our network infrastructure to accommodate
additional users, increase transaction volumes and respond to changing consumer
and customer requirements. We may not be able to accurately project the rate or
timing of increases, if any, in the use of our website or to expand and upgrade
our systems and infrastructure to accommodate such increases. Our systems may
not accommodate increased use while maintaining acceptable overall performance.
Service lapses could cause our users to instead use the on-line services of our
competitors.

Many of our service agreements, such as those with our Community Partners,
contain performance standards. If we fail to meet these standards, our customers
could terminate their agreements with us or require that we refund part or all
of the license fees. The loss of any of our service agreements and/or associated
revenues would directly and significantly impact our business.  We may be unable
to expand or adapt our network infrastructure to meet additional demand or our
customers' changing needs on a timely basis, at a commercially reasonable cost,
or at all.

We may have liability for information we provide on our website or which is
accessed from our website.

Because users of our website access health content and services relating to a
condition they may have or may distribute our content to others, third parties
may sue us for defamation, negligence, copyright or trademark infringement,
personal injury or other matters. We could also become liable if confidential
information is disclosed inappropriately. These types of claims have been
brought, sometimes successfully, against on-line services in the past. Others
could also sue us for the content and services that are accessible from our
website through links to other websites or through content and materials that
may be posted by our users in chat rooms or bulletin boards. While our
agreements, including those with content providers, in some cases provide that
we will be indemnified against such liabilities, such indemnification, if
available, may not be adequate. Our insurance may not adequately protect us
against these types of claims. Further, our business is based on establishing
the drkoop.com network as a trustworthy and dependable provider of healthcare
information and services. Allegations of impropriety, even if unfounded, could
therefore have a material adverse effect on our reputation and our business.

Any failure or inability to protect our intellectual property rights could
adversely affect our ability to establish our brand.

                                       22
<PAGE>

Our intellectual property is important to our business. We rely on a combination
of copyright, trademark and trade secret laws, confidentiality procedures and
contractual provisions to protect our intellectual property.  Federal
registrations are pending for the trademark "drkoop.com," as well as other
service and trademarks which incorporate the Dr. Koop name. Our right to use the
Dr. Koop name is granted to us under an agreement with Dr. C. Everett Koop. If
we lose our right to use the Dr. Koop name, we would be forced to change our
corporate name and adopt a new domain name. These changes could confuse current
and potential customers and would adversely impact our business. We also rely on
a variety of technologies that are licensed from third parties, including our
database and Internet server software, which is used in the drkoop.com website
to perform key functions. These third-party licenses may not be available to us
on commercially reasonable terms in the future.

Year 2000 problems may disrupt our operations which could result in lost
revenues and increased operating costs.

Because our business depends on computer software, we have begun to assess the
Year 2000 readiness of our systems. We are also in the process of contacting
certain third-party vendors, licensors and providers of hardware, software and
services regarding their Year 2000 readiness. Following our Year 2000 assessment
and after contacting these third parties, we will be able to make a final
evaluation of our state of readiness, potential risks and costs, and to
determine to what extent a contingency plan is necessary. Third-party software,
hardware or services incorporated into our systems may need to be revised or
replaced, which could be time consuming and expensive, potentially resulting in
lost revenues and increased costs for us. For a preliminary evaluation of the
potential impact of these Year 2000-related issues on us, please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Impact of the Year 2000."

Business Litigation

In the ordinary course of business we are involved in certain legal disputes
including those disclosed in this document. Such litigation inherently involves
risks and uncertainties.

We do not expect to pay dividends, and investors should not buy our common stock
expecting to receive dividends.

We have never declared or paid any cash dividends on our capital stock. We
presently intend to retain future earnings, if any, to finance the expansion of
our business and do not expect to pay any cash dividends in the foreseeable
future. Investors should not purchase our common stock with the expectation of
receiving cash dividends

We are subject to anti-takeover provisions in our charter and in our contracts
that could delay or prevent an acquisition of our company, even if such an
acquisition would be beneficial to our stockholders.

Certain provisions of our certificate of incorporation, our bylaws, Delaware law
and material contracts to which we are party could make it more difficult for a
third party to acquire us, even if doing so might be beneficial to our
stockholders.

Our business may face additional risks and uncertainties not presently known to
us which could cause our business to suffer.

In addition to the risks specifically identified in this Risk Factors section or
elsewhere in this filing, we may face additional risks and uncertainties not
presently known to us or that we currently deem immaterial which ultimately
impair our business, results of operations and financial condition.

                                       23
<PAGE>

Risks Related to Our Industry

Consumers and the healthcare industry must accept the Internet as a source of
healthcare content and services for our business model to be successful.

To be successful, we must attract to our network a significant number of
consumers as well as other participants in the healthcare industry. To date,
consumers have generally looked to healthcare professionals as their principal
source for health and wellness information. Our business model assumes that
consumers will use healthcare information available on our network, that
consumers will access important healthcare needs through electronic commerce
using our website, and that local healthcare organizations and other
participants in the healthcare industry will affiliate with us. This business
model is not yet proven, and if we are unable to successfully implement our
business model, our business will be materially adversely affected.

The Internet industry is highly competitive and changing rapidly, and we may not
have the resources to compete adequately.

The number of Internet websites offering users healthcare content, products and
services is vast and increasing at a rapid rate. These companies compete with us
for users, advertisers, e-commerce transactions and other sources of on-line
revenues. In addition, traditional media and healthcare providers compete for
consumers' attention both through traditional means as well as through new
Internet initiatives. We believe that competition for healthcare consumers will
continue to increase as the Internet develops as a communication and commercial
medium.

We compete directly for users, advertisers, e-commerce merchants, syndication
partners and other affiliates with numerous Internet and non-Internet
businesses, including:

     .    health-related on-line services or websites targeted at consumers,
          such as accesshealth.com, ahn.com, betterhealth.com, drweil.com,
          healthcentral.com, healthgate.com, intelihealth.com, mayohealth.org;
          mediconsult.com, onhealth.com, thriveonline.com and webmd.com;

     .    on-line and Internet portal companies, such as America Online, Inc.;
          Microsoft Network; Yahoo! Inc.; Excite, Inc.; Lycos Corporation and
          Infoseek Corporation, which commonly distribute multiple sources of
          healthcare data;

     .    electronic merchants and conventional retailers that provide
          healthcare goods and services competitive to those available from
          links on our website;

     .    hospitals, HMOs, managed care organizations, insurance companies and
          other healthcare providers and payors which offer healthcare
          information through the Internet; and

     .    other consumer affinity groups, such as the American Association of
          Retired Persons, SeniorNet and ThirdAge Media, Inc. which offer
          healthcare-related content to specific demographic groups.

Many of these potential competitors are likely to enjoy substantial competitive
advantages compared to our company, including:

                                       24
<PAGE>

     .    the ability to offer a wider array of on-line products and services;

     .    larger production and technical staffs;

     .    greater name recognition and larger marketing budgets and resources;

     .    larger customer and user bases; and

     .    substantially greater financial, technical and other resources.

To be competitive, we must respond promptly and effectively to the challenges of
technological change, evolving standards and our competitors' innovations by
continuing to enhance our products and services, as well as our distribution,
sales and marketing channels. Increased competition could result in a loss of
our market share or a reduction in our prices or margins. Competition is likely
to increase significantly as new companies enter the market and current
competitors expand their services.

Since we operate an Internet-based network, our business is subject to
government regulation relating to the Internet which could impair our
operations.

Because of the increasing use of the Internet as a communication and commercial
medium, the government has adopted and may adopt additional laws and regulations
with respect to the Internet covering such areas as user privacy, pricing,
content, taxation, copyright protection, distribution and characteristics and
quality of production and services.

Since we operate a healthcare network over the Internet, our business is subject
to government regulation specifically relating to medical devices, the practice
of medicine and pharmacology, healthcare regulation, insurance and other matters
unique to the healthcare area.

Laws and regulations have been or may be adopted with respect to the provision
of healthcare-related products and services on-line, covering areas such as:

     .    the regulation of medical devices;

     .    the practice of medicine and pharmacology and the sale of controlled
          products such as pharmaceuticals on-line;

     .    the regulation of government and third-party cost reimbursement; and

     .    the regulation of insurance sales.

FDA Regulation of Medical Devices. Some computer applications and software are
considered medical devices and are subject to regulation by the United States
Food and Drug Administration. We do not believe that the FDA will regulate our
current applications or services; however, our applications and services may
become subject to FDA regulation. Additionally, we may expand our application
and service offerings into areas that subject us to FDA regulation. We have no
experience in complying with FDA regulations. We believe that complying with FDA
regulations would be time consuming, burdensome and expensive and could delay or
prevent our introduction of new applications or services.

                                       25
<PAGE>

Regulation of the Practice of Medicine and Pharmacology. The practice of
medicine and pharmacology requires licensing under applicable state law. We have
endeavored to structure our website and affiliate relationships to avoid
violation of state licensing requirements, but a state regulatory authority may
at some point allege that some portion of our business violates these statutes.
Any such allegation could result in a material adverse effect on our business.
Further, any liability based on a determination that we engaged in the practice
of medicine without a license may be excluded from coverage under the terms of
our current general liability insurance policy.

Federal and State Healthcare Regulation. We earn a service fee when users on our
website purchase prescription pharmacy products from certain of our e-commerce
partners. The fee is not based on the value of the sales transaction.  Federal
and state "anti-kickback" laws prohibit granting or receiving referral fees in
connection with sales of pharmacy products that are reimbursable under federal
Medicare and Medicaid programs and other reimbursement programs. Although there
is uncertainty regarding the applicability of these regulations to our e-
commerce revenue strategy, we believe that the service fees we receive from our
e-commerce partners are for the primary purpose of marketing and do not
constitute payments that would violate federal or state "anti-kickback" laws.
However, if our program were deemed to be inconsistent with federal or state
law, we could face criminal or civil penalties. Further, we would be required
either not to accept any transactions which are subject to reimbursement under
federal or state healthcare programs or to restructure our compensation to
comply with any applicable anti-kickback laws or regulations.  In addition,
similar laws in several states apply not only to government reimbursement but
also to reimbursement by private insurers. If our activities were deemed to
violate any of these laws or regulations, it could cause a material adverse
affect on our business, results of operations and financial condition.

State Insurance Regulation. In addition, we market insurance on-line, offered by
unrelated third parties, and receive referral fees from those providers in
connection with this activity. The use of the Internet in the marketing of
insurance products is a relatively new practice. It is not clear whether or to
what extent state insurance licensing laws apply to our activities. If we were
required to comply with such licensing laws, compliance could be costly or not
possible. This could have a material adverse effect on our business.

There is no established market for the consumer healthcare e-commerce
transactions we facilitate.

We plan to develop relationships with retailers, manufacturers and other
providers to offer healthcare products and services through direct links from
our website to their website. Such a strategy involves numerous risks and
uncertainties. There is no established business model for the sale of healthcare
products or services over the Internet. Accordingly, we have limited experience
in the sale of products and services on-line and the development of
relationships with retailers, manufacturers or other providers of such products
and services, and we cannot predict the rate at which consumers will elect to
engage in this form of commerce or the compensation that we will receive for
enabling these transactions.

Consumers may sue us if any of the products or services that are sold through
our website are defective, fail to perform properly or injure the user, even if
such goods and services are provided by unrelated third parties. Some of our
agreements with manufacturers, retailers and other providers contain provisions
intended to limit our exposure to liability claims. These limitations may not
however prevent all potential claims, and our insurance may not adequately
protect us

                                       26
<PAGE>

from these types of claims. Liability claims could require us to spend
significant time and money in litigation or to pay significant damages. As a
result, any such claims, whether or not successful, could seriously damage our
reputation and our business.

Internet capacity constraints may impair the ability of consumers to access our
website, which could hinder our ability to generate advertising revenues.

Our success will depend, in large part, upon a robust communications industry
and infrastructure for providing Internet access and carrying Internet traffic.
The Internet may not prove to be a viable commercial medium because of:

     .    inadequate development of the necessary infrastructure such as a
          reliable network backbone;

     .    timely development of complementary products such as high speed
          modems;

     .    delays in the development or adoption of new standards and protocols
          required to handle increased levels of Internet activity; or

     .    increased government regulation.

If the Internet continues to experience significant growth in the number of
users and the level of use, then the Internet infrastructure may not be able to
continue to support the demands placed on it.

Our business is dependent on the continuous, reliable and secure operation of
our website and related tools and functions we provide.

We rely on the Internet and, accordingly, depend upon the continuous, reliable
and secure operation of Internet servers and related hardware and software.
Recently, several large Internet commerce companies have suffered highly
publicized system failures which resulted in adverse reactions to their stock
prices, significant negative publicity and, in certain instances, litigation. We
have also suffered service outages from time to time, although to date none of
these interruptions has materially adversely effected our business operations or
financial condition. To the extent that our service is interrupted, our users
will be inconvenienced, our commercial customers will suffer from a loss in
advertising or transaction delivery and our reputation may be diminished. Some
of these outcomes could directly result in a reduction in our stock price,
significant negative publicity and litigation. Our computer and communications
hardware are protected through physical and software safeguards. However, they
are still vulnerable to fire, storm, flood, power loss, telecommunications
failures, physical or software break-ins and similar events. We do not have full
redundancy for all of our computer and telecommunications facilities and do not
maintain a back-up data facility. Our business interruption insurance may be
inadequate to protect us in the event of a catastrophe. We also depend on third
parties to provide potential users with web browsers and Internet and on-line
services necessary for access to our website. In the past, our users have
occasionally experienced difficulties with Internet and other on-line services
due to system failures, including failures unrelated to our systems. Any
sustained disruption in Internet access provided by third parties could
adversely impact our business.

We retain confidential customer information in our database. Therefore, it is
critical that our facilities and infrastructure remain secure and are perceived
by consumers to be secure. Despite

                                       27
<PAGE>

the implementation of security measures, our infrastructure may be vulnerable to
physical break-ins, computer viruses, programming errors or similar disruptive
problems. A material security breach could damage our reputation or result in
liability to us.

                                       28
<PAGE>

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

On April 12, 1999, a civil complaint was filed as Agrawal v. drkoop.com, Inc.,
Donald W. Hackett and John F. Zaccaro in the District Court of Travis County,
Texas, 126 Judicial District, Case No. 99-04294. In the lawsuit, plaintiff
attempts to allege causes of action including fraud, constructive fraud,
promissory estoppel, negligent misrepresentation, breach of contract,
conversion, stock fraud, defamation and misrepresentation. Plaintiff claims,
among other things, that misrepresentations were made to him regarding his
involvement in the early stages of development of drkoop.com and we breached a
consulting agreement entered into between him and our company in September 1998.
Plaintiff seeks recovery of actual damages which he alleges to be $4 million,
punitive damages alleged to be in excess of $5 million, attorneys fees and costs
and a temporary and permanent injunction prohibiting drkoop.com from offering
stock for sale to the public unless and until we recognize plaintiff's alleged
right to options to acquire 232,500 shares of our common stock which he claims
are owed to him under the consulting agreement.  No injunction has been issued.
We believe that plaintiff is not entitled to recover on his claims and intend to
defend this lawsuit vigorously. We filed a counterclaim against the plaintiff on
April 27, 1999 in which we allege causes of action including breach of contract,
fraudulent inducement, breach of fiduciary duty and professional malpractice.

On July 28, 1999 adam.com filed a lawsuit seeking to terminate a content
agreement among the two companies. The lawsuit also seeks relief related to
distribution of some of this content in a manner which adam.com alleges violates
the agreement. The Company believes that the claims are without merit and
intends to defend this lawsuit vigorously.

Item 2.   Changes in Securities and Use of Proceeds

The effective date of our first registration statement, filed on Form S-1 under
the Securities Act of 1933 (File No. 333-73459) relating to an initial public
offering of our common stock, was June 7, 1999. A total of 10,781,250 shares of
our common stock were sold to an underwriting syndicate, including the exercise
of the 15% over allotment. The managing underwriters were Bear, Stearns & Co.
Inc., Hambrecht & Quist LLC, and Wit Capital Corporation. The offering commenced
and completed on June 8, 1999, at an initial public offering price of $9.00 per
share. The initial public offering resulted in gross proceeds of $97.0 million,
$6.8 million of which was applied to the underwriting discount and approximately
$1.8 million of which was applied to related expenses. As a result, net proceeds
of the offering to us were approximately $88.4 million. From the date of receipt
through June 30, 1999, the net proceeds of the initial public offering were used
to fund operating losses and for general corporate purposes, including expansion
of our network, advertising, brand promotion, content development and working
capital or invested in an interest bearing money market account. None of the net
proceeds of the offering were paid, directly or indirectly, to any director,
officer or general partner of drkoop.com, Inc., or any of their associates, or
to any persons owning ten percent or more of any class of our equity securities,
or any affiliates.


Item 3.   Defaults Upon Senior Securities.

          Not Applicable.

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

          None

Item 5.   Other Information.

                                       29
<PAGE>

          None.

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

(a)  Exhibits:

The Exhibit Index attached hereto is hereby incorporated by reference to this
Item.

(b)  Reports on Form 8-K for the quarter ended June 30, 1999.

None

                                       30
<PAGE>

                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                             drkoop.com, Inc.


Date:  August 13, 1999                       /s/ Susan Georgen Saad
                                             -------------------------------
                                             Name:  Susan Georgen Saad
                                             Title: Chief Financial Officer

                                       31
<PAGE>

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)  Exhibits.

 Number           Description
 -------          -----------
  1.1**     Form of Underwriting Agreement
  3.1**     Restated Certificate of Incorporation of drkoop.com, Inc., a
            Delaware corporation, as currently in effect
  3.2**     Bylaws of drkoop.com, Inc., a Delaware corporation, as currently in
            effect
  3.3**     Form of Bylaws of drkoop.com, Inc., a Delaware corporation, as in
            effect after the closing of the offering made under this
            registration statement
  3.4**     Form of Restated Certificate of Incorporation of drkoop.com, Inc., a
            Delaware corporation, to be filed after the closing of the offering
            made under this registration statement
  3.5**     Certificate of Amendment of Restated Certificate of Incorporation of
            drkoop.com, Inc., a Delaware corporation
  4.1**     Specimen common stock certificate
  5.1**     Opinion of Latham & Watkins
  10.1**    Amended and Restated 1997 Stock Option Plan
  10.2**    1999 Equity Participation Plan
  10.3**    Amended and Restated Registration Rights Agreement, dated as of
            January 29, 1999
  10.4**    Employment Agreement dated January 27, 1999 by and between Company
            and Susan M. Georgen-Saad
  10.5**    Employment Agreement dated August 1, 1997 by and between Company and
            Donald W. Hackett
  10.6**    Employment Agreement dated August 1, 1997 by and between Company and
            Robert C. Hackett, Jr.
  10.7**    Employment Agreement dated August 1, 1997 by and between Company and
            Louis A. Scalpati
  10.8**    Employment Agreement dated January 15, 1999 by and between Company
            and Dennis J. Upah
  10.9+**   Distribution Agreement dated April 9, 1999 by and between Company
            and Infoseek Corporation
  10.10+**  Content Agreement dated March 30, 1999 by and between Company and
            the Trustees of Dartmouth College
  10.11+**  D.A.R.T. Service Agreement dated November 15, 1998 by and between
            Company and DoubleClick, Inc.
  10.12+**  Distribution Agreement dated April 9, 1999 by and between Company
            and Buena Vista Internet Group
  10.13**   Software Sale, License and Development Agreement dated January
            29, 1999 by and between Company and HealthMagic, Inc.
  10.14+**  Content License and Distribution Agreement dated March 10, 1999 by
            and between Company and @Home Network
  10.15**   Tradename License Agreement dated January 5, 1999 by and between
            Company and C. Everett Koop, M.D.
  10.16**   Consulting Letter Agreement dated October 1, 1997 by and between
            Company and C. Everett Koop, M.D.
  10.17+**  License Agreement dated
            July 13, 1998 by and between Company and Multum Information
            Services, Inc.
  10.18+**  Linking Agreement dated February 10, 1999 by and between Company and
            Physicians' Online
  10.19+**  Content License Agreement dated December 11, 1998 by and between
            Company and Excite, Inc. (terminated on March 1, 1999)
  10.20+**  Interim Linking Agreement dated January 28, 1999 by and between
            Company and Quotesmith.com
  10.21+**  First Amendment to License Agreement dated March 25, 1999 by and
            between Company and Multum Information Services, Inc.
  10.22**   Tradename License Agreement dated June 1, 1998 by and between
            Company and Nancy Snyderman, M.D.
  10.23     Reserved
  10.24**   Agreement for Sub-Sublease dated May 20, 1998 by and between Company
            and The Software Atelier L.L.C.
  10.25     Reserved
  10.26+**  Internet Advertising Sales Agreement dated October 16, 1998 by and
            between Company and WinStar Interactive Media Sales, Inc.
  10.27**   Consulting Letter Agreement dated October 1, 1997 by and between
            Company and John Zaccaro
  10.28+**  Sponsorship Agreement dated March 11, 1999 by and between Company
            and Vitamin Shoppe Industries, Inc.
  10.29+**  Preferred Partner Agreement dated April 1999 by and between Company
            and Salon Internet, Inc.
  10.30**   Master Community Partner Program Agreement dated January 29, 1999 by
            and between Company and Adventist Health System Sunbelt Healthcare
            Corporation
  10.31     Reserved
  10.32**   Form of Community Partner Program Agreement
  10.33**   Form of Indemnification Agreement
  10.34**   1999 Employee Stock Purchase Plan
  10.35**   Investment Agreement dated January 29, 1999 by and among Company,
            Adventist Health System Sunbelt Healthcare Corporation and
            HealthMagic, Inc .
  10.36**   Letter Agreement dated February 25, 1999 by and among Company,
            Superior Consultant Holdings Corporation and Donald W. Hackett
  10.37**   Letter Agreement dated January 29, 1999 by and among Company,
            Superior Consultant Holdings Corporation, Adventist Health System
            Sunbelt Healthcare Corporation, HealthMagic, Inc. and Donald W.
            Hackett
  10.38**   Stock Restriction Agreement dated January 29, 1999 by and among
            Company, HealthMagic, Inc. and Adventist Health System Sunbelt
            Healthcare Corporation
  10.39**   Loan Agreement dated December 24, 1998 between Company and Neal
            Longwill
  10.40**   Form of Loan Agreement between Company and accredited investors
  10.41**   Loan Agreement dated March 3, 1999 between Company and Adventist
            Health System Sunbelt Healthcare Corporation
  10.42**   Warrant to Purchase Shares of Common Stock Issued to Infoseek
            Corporation as of April 9, 1999
  10.43**   Agreement for Issuance and Sale of Stock between Company and
            Superior Consultant Holdings Corporation dated April 28, 1998
  10.44**   Letter of Donald W. Hackett dated April 28, 1998 constituting a
            Voting Agreement between Donald W. Hackett and Superior Consultant
            Holdings Corporation
  10.45**   Option and Put Agreement dated April 28, 1998 between Company and
            Superior Consultant Holdings Corporation
  10.46**   Service Agreement dated April 29, 1998 between Company and Superior
            Consultant, Inc., a wholly owned subsidiary of Superior Consultant
            Holdings Corporation
  10.47**   Warrant to Purchase Shares of Common Stock Issued to Buena Vista
            Interactive Group as of April 9, 1999
  23.1      Consent of PricewaterhouseCoopers LLP
  10.48     Netscape Agreement
  23.2**    Consent of Latham & Watkins (included in Exhibit 5.1)
  24.1**    Powers of Attorney
  27.1      Financial Data Schedule

  **   Previously filed.
  +    Registrant has requested confidential treatment pursuant to Rule 406 for
       a portion of the referenced exhibit and has separately filed such exhibit
       with the Commission.

(b)  Financial Statement Schedules.



                                       32