<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

(Mark One)

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

      For the quarterly period ended September 30, 1999

                                       OR

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

      For the transition period from _______________ to ______________

                         Commission File Number: 0-26063

                             barnesandnoble.com inc.
             (Exact Name of Registrant as Specified in Its Charter)

               Delaware                                        13-4048787
    (State or Other Jurisdiction of                         (I.R.S. Employer
    Incorporation or Organization)                        Identification No.)

          76 Ninth Avenue, New York, NY                          10011
     (Address of Principal Executive Offices)                  (Zip Code)

                                 (212) 414-6000
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /

Number of shares of $.001 par value Class A Common Stock, Class B Common Stock
and Class C Common Stock outstanding as of October 29, 1999 was 29,214,764 , one
and one, respectively.

<PAGE>

                             barnesandnoble.com inc.

                               September 30, 1999

                               Index to Form 10-Q

                                                                        Page No.
                                                                        --------

PART I          FINANCIAL INFORMATION

Item 1:-        Financial Statements ...................................    3

                Management's Discussion and Analysis of Financial
Item 2:            Condition and Results of Operations .................    7

                Quantitative and Qualitative Disclosure About
Item 3:         Market Risk ............................................   13

PART II -       OTHER INFORMATION

Item 1:         Legal Proceedings ......................................   14

Item 2:         Changes in Securities and Use of Proceeds ..............   14

Item 3:         Defaults upon Senior Securities ........................   14

Item 4:         Submission of Matters to a Vote of Security Holders ....   15

Item 5:         Other Information ......................................   15

Item 6:         Exhibits and Reports on Form 8-K .......................   15

                Signatures .............................................   16


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1: Financial Statements

                             barnesandnoble.com inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (thousands of dollars, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                               Pro forma (2)
                                      Since        Three months ended        Nine months ended
                                    inception    ------------------------  ---------------------
                                    March 10,                Pro forma(2)
                                     1999 to                  September    September   September
                                    September    September       30,          30,         30,
                                  30, 1999 (1)   30, 1999       1998         1999        1998
                                  -----------   ---------    ---------     --------    ---------
<S>                                <C>          <C>          <C>          <C>          <C>
Net sales                          $  66,129    $  49,051    $  15,561    $ 120,433    $  35,954

Cost of sales                         52,370       38,959       12,001       94,457       27,737
                                   ---------    ---------    ---------    ---------    ---------

   Gross profit                       13,759       10,092        3,560       25,976        8,217
                                   ---------    ---------    ---------    ---------    ---------

Operating expenses:
  Marketing and sales                 35,783       26,289       14,685       68,079       40,769
  Product development                  6,871        5,251        2,046       12,819        5,979
  General and administrative          11,437        8,342        5,397       21,386       13,268
                                   ---------    ---------    ---------    ---------    ---------
        Total operating expenses      54,091       39,882       22,128      102,284       60,016
                                   ---------    ---------    ---------    ---------    ---------

Loss from operations                 (40,332)     (29,790)     (18,568)     (76,308)     (51,799)
Interest income, net                  10,636        7,913           --       12,259           --
                                   ---------    ---------    ---------    ---------    ---------
   Loss before minority interest     (29,696)     (21,877)     (18,568)     (64,049)     (51,799)

Minority interest                     23,675       17,502       14,854       51,104       41,439
                                   ---------    ---------    ---------    ---------    ---------
     Net loss                      $  (6,021)   $  (4,375)   $  (3,714)   $ (12,945)   $ (10,360)
                                   =========    =========    =========    =========    =========

Basic and diluted loss
  before minority interest
  per share                        ($   0.21)   ($   0.15)   ($   0.13)   ($   0.45)   ($   0.36)
Basic and diluted weighted
   average shares outstanding
   if converted(3)                   143,923      143,972      143,750      143,831      143,750

Basic and diluted net loss
   per common share                ($   0.21)   ($   0.15)   ($   0.13)   ($   0.45)   ($   0.36)
Basic and diluted weighted
   average common shares
   outstanding                        28,797       28,802       28,750       28,772       28,750
</TABLE>

(1)   barnesandnoble.com inc. was incorporated on March 10, 1999, but had no
      activity until the Company's initial public offering on May 25, 1999.

(2)   Represents pro forma results as if the shares issued in the initial public
      offering of barnesandnoble.com inc. and the acquisition of the interest in
      barnesandnoble.com llc was completed as of the beginning of the earliest
      date presented.

(3)   Represents total shares outstanding as if all outstanding membership units
      in barnesandnoble.com llc had been converted into outstanding shares of
      barnesandnoble.com inc. for all periods presented.

See accompanying notes to financial statements.


                                       3
<PAGE>

                             barnesandnoble.com inc.
                           CONSOLIDATED BALANCE SHEETS
           (in thousands of dollars, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                            September 30,    December 31,
                                                                1999           1998 (1)
                                                             ---------       -----------
ASSETS                                                      (unaudited)
<S>                                                          <C>             <C>
Current assets:
   Cash and cash equivalents                                 $ 269,989       $  96,940
   Marketable securities                                       291,383              --
   Receivables, net                                             11,134           2,387
   Merchandise inventories                                       3,707           1,579
   Prepaid expenses and other current assets                     8,452          10,770
                                                             ---------       ---------
    Total current assets                                       584,665         111,676
                                                             ---------       ---------

Fixed assets, net                                               62,594          39,770
Restricted cash                                                     --          50,393
Other non-current assets                                        34,859             305
                                                             ---------       ---------

   Total assets                                              $ 682,118       $ 202,144
                                                             =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                        $   4,467       $      --
     Accrued liabilities                                        18,276          19,804
     Due to affiliate                                           18,534          13,191
                                                             ---------       ---------
         Total current liabilities                              41,277          32,995
                                                             ---------       ---------

Minority interest                                              511,817         169,149

Stockholders' equity:
      Preferred Stock: $0.001 par value;
        50,000,000 shares authorized; none
        issued and outstanding                                      --              --
      Common Stock Class A; $0.001 par value;
        750,000,000 shares authorized;
        29,093,981 and 0 shares issued and outstanding              29              --
      Common Stock Class B; $0.001 par value; 1,000 shares
        authorized; 1 and 0 shares issued and outstanding           --              --
      Common Stock Class C; $0.001 par value; 1,000 shares
        authorized; 1 and 0 shares issued and outstanding           --              --
      Paid-in capital                                          135,016

      Accumulated deficit                                       (6,021)
                                                             ---------       ---------
            Total stockholders' equity                         129,024              --
                                                             ---------       ---------
Commitments and contingencies
      Total liabilities and stockholders' equity             $ 682,118       $ 202,144
                                                             =========       =========
</TABLE>

(1)   Represents the balance sheet of barnesandnoble.com llc and reflects
      membership interest as minority interest.

See accompanying notes to financial statements.


                                       4
<PAGE>

                             barnesandnoble.com inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                (in thousands of dollars, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                     Pro forma (1)
                                                                                   Nine months ended
                                                           Since inception    ----------------------------
                                                          March 10, 1999 to   September 30,   September 30,
                                                          September 30, 1999      1999            1998
                                                          ------------------   -----------    ------------
<S>                                                           <C>              <C>              <C>
Cash flows from operating activities:
    Net loss                                                  $  (6,021)       $ (12,945)       $ (10,360)
    Adjustments to reconcile net loss to net cash flows
       from operating activities:
         Depreciation and amortization                            4,630            9,142            4,593
         Loss on sale of fixed assets                                --               --              205
         Increase in receivables, net                            (7,508)          (8,747)          (4,091)
         Increase in merchandise inventories                     (1,568)          (2,128)             (61)
         Decrease (increase) in prepaid expenses and
              other current assets                                1,993            2,318           (3,364)
         Increase (decrease) in accounts payable                  1,946            4,467             (769)
         Increase in due to affiliate                            10,303            5,343               --
         Increase (decrease) in accrued liabilities               6,504           (1,528)           1,724
         Decrease in minority interest                          (23,675)         (51,104)         (41,439)
                                                              ---------        ---------        ---------
            Net cash flows from operating activities            (13,396)         (55,182)         (53,562)
                                                              ---------        ---------        ---------
Cash flows from investing activities:
         Purchases of fixed assets                              (24,041)         (31,957)         (21,258)
         Purchases of marketable securities                    (291,383)        (291,383)              --
         Decrease in restricted cash                                 --           50,393               --
         Proceeds from sale of fixed assets                          --               --              200
         Net assets of barnesandnoble.com llc at date
              of acquisition                                     97,729               --               --
         Increase in other non-current assets                   (34,662)         (34,564)          (2,410)
                                                              ---------        ---------        ---------
            Net cash flows from investing activities           (252,357)        (307,511)         (23,468)
                                                              ---------        ---------        ---------
Cash flows from financing activities:
         Proceeds from initial public offering                  484,382          484,382               --
         Capital contributions from members                      50,000           50,000           77,030
           Proceeds from exercise of stock options                1,360            1,360               --
                                                              ---------        ---------        ---------
            Net cash flows from financing activities            535,742          535,742           77,030
                                                              ---------        ---------        ---------

Net change in cash and cash equivalents                         269,989          173,049               --

Cash and cash equivalents at beginning of period                     --           96,940               --
                                                              ---------        ---------        ---------

Cash and cash equivalents at end of period                    $ 269,989        $ 269,989        $      --
                                                              =========        =========        =========
</TABLE>

(1)   Represents pro forma results as if the shares issued in the initial public
      offering of barnesandnoble.com inc. and the acquisition of the interest in
      barnesandnoble.com llc was completed as of the beginning of the earliest
      date presented.

See accompanying notes to financial statements.


                                       5
<PAGE>

                             barnesandnoble.com inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       For the nine months ended September 30, 1999 and September 30, 1998
                (in thousands of dollars, except per share data)
                                   (unaudited)

      The unaudited consolidated financial statements include the accounts of
barnesandnoble.com inc. and barnesandnoble.com llc.

      In the opinion of the Company's management, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly its consolidated
financial position as of September 30, 1999 and the pro forma results of its
operations and its cash flows for the nine months then ended. These consolidated
financial statements are condensed and therefore do not include all of the
information and footnotes required by generally accepted accounting principles.
The consolidated financial statements should be read in conjunction with the
Company's Registration Statement on Form S-1, as amended, filed with the
Securities and Exchange Commission in connection with the Company's initial
public offering. The Company followed the same accounting policies in
preparation of this report as in such Registration Statement. Pro forma
operating results for the nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.

(1) Organization
----------------

      barnesandnoble.com inc. ("the Company") is a holding company whose sole
asset is a 20.2% equity interest in barnesandnoble.com llc ("bn.com") and whose
business is currently acting as the sole manager of bn.com. As sole manager of
bn.com, the Company controls all major business decisions of bn.com. Barnes &
Noble, Inc. and Bertelsmann AG each beneficially own a 39.9% equity interest in
bn.com. The acquisition of the Company's ownership interest in bn.com resulted
in consolidation of the Company with bn.com based on the Company's control as
sole manager of bn.com. As reflected in the consolidated statements of
operations, the loss before minority interest represents the total consolidated
loss for the period and the net loss represents the portion of the loss
attributable to the Company.

(2) Investments
---------------

      The Company invests certain of its excess cash in debt instruments of the
U.S. Government and its agencies, and of high quality corporate issuers. All
highly liquid instruments with an original maturity of three months or less are
considered cash equivalents; those with original maturities greater than three
months are considered marketable securities. The Company classified investments
in accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".

      At September 30, 1999, short-term investments in marketable securities
consist primarily of U.S. Treasury Securities, U.S. government agency securities
and investments in high quality corporate issuers and were classified as
held-to-maturity. Unrealized holding gains and losses at September 30, 1999 were
not significant.

(3) Stockholders' Equity
------------------------

      On May 25, 1999, the Company completed its initial public offering of
28,750,000 shares of its Class A Common Stock. Net proceeds to the Company
aggregated to approximately $484,382.


                                       6
<PAGE>

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

Overview
--------

      The Company is a holding company whose sole asset is its 20.2% equity
interest in bn.com and whose sole business is acting as sole manager of bn.com.
bn.com launched its initial online store in March 1997 and since that time has
become the fourth largest e-commerce Web site, based on the Media Metrix
September 1999 report.

      bn.com has pursued a strategy of focusing on the sale of a broad range of
knowledge, information, education and entertainment related products. Through
September 1999 bn.com has offered for sale both new and out of print books,
music, software and magazine subscriptions. In October 1999, the Company
launched its Prints & Posters Gallery, a unique collection of images that can be
produced on demand on museum-quality canvas or high-quality paper. The Prints &
Poster Gallery features works from more than 200 categories, including
contemporary book jackets, vintage posters and historical images for children.
The site includes an initial collection of more than 4,000 works
never-before-seen in these formats, including popular book jackets and magazine
covers from publications such as The New Yorker and the Saturday Evening Post.
The images for the Prints & Posters Gallery are supplied by BuyEnlarge.com,
Inc., a Philadelphia-based company in which bn.com has made a minority
investment. In October 1999, the Company also launched an electronic greeting
card service ("eCards") offering an exclusive selection of over 1,000 unique
images that can be personalized and enhanced with animation and music. The
eCards can be sent for free through e-mail. The Company intends to continue to
expand its product offering within the broad categories of knowledge,
information, education and entertainment.

      The results of operations discussed hereafter include the consolidated
results of the Company and bn.com. In view of the rapidly changing nature of
bn.com's business and its limited operating history, the Company believes that
period-to-period comparisons of the operating results of bn.com, including gross
profit margin and operating expenses as a percentage of sales are not
necessarily meaningful and should not be relied upon as an indication of future
performance.

Pro Forma Results of Operations
-------------------------------

Net Sales

<TABLE>
<CAPTION>
                                   Three Months Ended                            Nine Months Ended
                      ------------------------------------------    ------------------------------------------
                      September 30,   September 30,                 September 30,   September 30,
                          1999             1998         % Change        1999             1998         % Change
                      ------------    ------------      --------    ------------    ------------      --------
                               (in thousands)                                (in thousands)
<S>                    <C>              <C>               <C>        <C>             <C>                 <C>
Net sales              $ 49,051         $ 15,561          215%       $120,433        $ 35,954            235%
</TABLE>

      Net sales are composed of sales of books, music and related products, net
of returns, as well as outbound shipping and handling charges. Growth in net
sales reflects a significant increase in units sold due to the growth of the
Company's customer base and repeat purchases from the Company's existing
customers in addition to the introduction of music in July 1999. The number of
first-time customers was a record 581,000 during the third quarter of 1999,
bringing the cumulative customer account total to 2.9 million as of September
30, 1999. Repeat customer orders increased to 63% in the third quarter of 1999.
International sales represented 6.8% and 11.1% of net sales for the nine months
ended September 30, 1999 and 1998, respectively.


                                       7
<PAGE>

Gross Profit

<TABLE>
<CAPTION>
                                   Three Months Ended                            Nine Months Ended
                      ------------------------------------------    ------------------------------------------
                      September 30,   September 30,                 September 30,   September 30,
                          1999             1998         % Change        1999             1998         % Change
                      ------------    ------------      --------    ------------    ------------      --------
                               (in thousands)                                (in thousands)
<S>                    <C>              <C>               <C>        <C>             <C>                 <C>
Gross profit          $10,092           $3,560            183%       $25,976         $8,217              216%

Gross margin             20.6%            22.9%                         21.6%          22.9%
</TABLE>

      Gross profit is sales less the cost of sales, which consists of the cost
of merchandise sold to customers, and outbound and inbound shipping costs. Gross
profit increased in absolute dollars due to the Company's increased sales
volume, however, gross margin decreased in the third quarter to 20.6% from
22.9%. The decrease in gross margin is due primarily to the increase, from 40%
to 50%, in the discount offered on New York Times best sellers and the
introduction of music during the third quarter of 1999 which has a lower gross
margin.

      The Company intends to expand its operations by promoting new or
complementary products or sales formats and by expanding the breadth and depth
of its product and service offerings. Gross margins attributable to new business
areas may be lower than those associated with the Company's existing business
activities. Gross margin on music sales is lower than gross margin on new book
sales. Therefore, to the extent music becomes a larger portion of the Company's
product mix, it is expected to have a proportionate impact on overall product
gross margin.

Marketing and Sales

<TABLE>
<CAPTION>
                                   Three Months Ended                            Nine Months Ended
                      ------------------------------------------    ------------------------------------------
                      September 30,   September 30,                 September 30,   September 30,
                          1999             1998         % Change        1999             1998         % Change
                      ------------    ------------      --------    ------------    ------------      --------
                               (in thousands)                                (in thousands)
<S>                    <C>              <C>               <C>        <C>             <C>                 <C>
Marketing and
   Sales               $26,289          $14,685           79%        $68,079         $40,769             67%

Percentage of
   net sales              53.6%            94.4%                        56.5%          113.4%
</TABLE>

      Marketing and sales expenses consist primarily of advertising and
promotional expenditures, as well as payroll and related expenses for personnel
engaged in marketing, selling and fulfillment activities. All fulfillment costs,
including the cost of operating and staffing distribution centers and customer
service, are included in marketing and sales. Marketing and sales expenses
increased primarily due to the increases in the Company's advertising and
promotional expenditures and increased payroll and related costs associated with
fulfilling customer demand. Such expenses decreased as a percentage of net sales
due to the significant increase in net sales. The Company intends to continue
pursuing its aggressive branding and marketing campaign and expects its costs of
fulfillment to increase based on anticipated sales growth. The Company is in the
process of building two new distribution facilities, which are expected to
become operational in 2000.


                                       8
<PAGE>

Product Development

<TABLE>
<CAPTION>
                                   Three Months Ended                            Nine Months Ended
                      ------------------------------------------    ------------------------------------------
                      September 30,   September 30,                 September 30,   September 30,
                          1999             1998         % Change        1999             1998         % Change
                      ------------    ------------      --------    ------------    ------------      --------
                               (in thousands)                                (in thousands)
<S>                    <C>              <C>               <C>        <C>             <C>                 <C>
Product
 development           $5,251           $2,046            157%       $12,819         $5,979              114%

Percentage of
 net sales               10.7%            13.1%                         10.6%          16.6%
</TABLE>

    Product development expenses consist principally of payroll and related
expenses for development, editorial and network operations personnel and
consultants, and infrastructure related to systems and telecommunications. The
increases in product development expenses were primarily attributable to
increased staffing and associated costs related to enhancing the features,
content and functionality of the Company's Web site and transaction-processing
systems. Increased product development expenses are also a result of increased
investments in systems and telecommunications infrastructure, including
investments associated with entry into print and poster sales and the
development of eCards and expenses associated with the significant increase in
net sales. The Company believes that continued investment in product development
is critical to attaining its strategic objectives. As a result, the Company
expects product development expenses to continue to increase.

General and Administrative

<TABLE>
<CAPTION>
                                   Three Months Ended                            Nine Months Ended
                      ------------------------------------------    ------------------------------------------
                      September 30,   September 30,                 September 30,   September 30,
                          1999             1998         % Change        1999             1998         % Change
                      ------------    ------------      --------    ------------    ------------      --------
                               (in thousands)                                (in thousands)
<S>                    <C>              <C>               <C>        <C>             <C>                 <C>
General and
 Administrative        $8,342           $5,397            55%        $21,386         $13,268           61%

Percentage of
 net sales               17.0%            34.7%                         17.8%           36.9%
</TABLE>

      General and administrative expenses consist of payroll and related
expenses for executive, accounting and administrative personnel, recruiting,
professional fees and other general corporate expenses. The increase in general
and administrative expenses was primarily a result of increased salaries and
related expenses associated with the hiring of additional personnel, legal and
other professional fees related to the Company's growth and expanded activities
and an increase in depreciation and amortization. Such expenses decreased as a
percentage of net sales due to the significant increase in net sales and the
effects of leveraging these expenses over a larger sales base. The Company
expects general and administrative expenses to increase as the Company expands
its staff and incurs additional costs related to the growth of its business,
however, the Company expects continued decreases of general and administrative
expenses as a percentage of sales.


                                       9
<PAGE>

Interest Income, Net

<TABLE>
<CAPTION>
                                   Three Months Ended                            Nine Months Ended
                      ------------------------------------------    ------------------------------------------
                      September 30,   September 30,                 September 30,   September 30,
                          1999             1998         % Change        1999             1998         % Change
                      ------------    ------------      --------    ------------    ------------      --------
                               (in thousands)                                (in thousands)
<S>                    <C>              <C>               <C>        <C>             <C>                 <C>
Interest
 Income, net           $7,913           $  --                        $12,259         $  --               --

Percentage of
 Net Sales               16.1%             --                           10.2%           --
</TABLE>

      Interest income on cash and marketable securities increased due to the
higher cash balances resulting from the Company's financing activities. In
addition to the approximately $484.4 million raised through the Company's
initial public offering, the Company has received $200 million of capital
investment by bn.com's members since November 1998.

Income Taxes

      The Company has not generated any taxable income to date and therefore has
not paid any federal income taxes since inception. The Company has provided a
full valuation allowance on the deferred tax asset, consisting primarily of net
operating loss carryforwards, because of uncertainty regarding its
realizability.

Liquidity and Capital Resources
-------------------------------

      As of September 30, 1999, the Company's cash, cash equivalents and
short-term marketable securities were $561.4 million, compared to $96.9 million
on December 31, 1998. On May 25, 1999, the Company completed an initial public
offering of 28,750,000 shares of Class A Common Stock at a price of $18 per
share. The net proceeds to the Company from the offering were approximately
$484.4 million. At the completion of the initial public offering, the Company
received additional capital contributions of $50.0 million and reclassified
$50.4 million from restricted cash to marketable securities.

      Net cash flows used by operating activities were $55.2 million for the
nine months ended September 30, 1999 and $53.6 million for the nine months ended
September 30, 1998. Cash used in 1999 was primarily attributable to a net loss
of $12.9 million and a corresponding decrease in minority interest of $51.1
million. In addition, receivables increased $8.7 million, merchandise
inventories increased $2.1 million and accrued liabilities decreased $1.5
million. This was partially offset by depreciation and amortization of $9.1
million, an increase in payables to affiliates of $5.3 million, a $4.5 million
increase in accounts payable and a decrease of $2.3 million in prepaid and other
currents assets. Cash used in 1998 was primarily attributable to a net loss of
$10.4 million and a corresponding decrease in minority interest of $41.4
million. In addition, net receivables increased $4.1 million, prepaid expenses
and other current assets increased $3.4 million and accounts payable decreased
$0.8 million. This was partially offset by depreciation and amortization of $4.6
million and a $1.7 million increase in accrued liabilities.

      Net cash used in investing activities of $307.5 million for the nine
months ended September 30, 1999 was attributable to a $291.4 million increase in
marketable securities, a $34.6 million increase in other non-current


                                       10
<PAGE>

assets and purchases of fixed assets of $32.0 million, partially offset by a
$50.4 million decrease in restricted cash. Net cash used in investing activities
of $23.5 million for the nine months ended September 30, 1998 was primarily
attributable to purchases of fixed assets.

      Net cash flows from financing activities were $535.7 million in the first
nine months of 1999 due to proceeds of $484.4 million from the Company's initial
public offering and capital contributions of $50.0 million. Net cash flows from
financing activities of $77.0 million for the first nine months of 1998 resulted
from capital contributions.

      As of September 30, 1999, the Company's principal sources of liquidity
consisted of $270.0 million of cash and cash equivalents and $291.4 million of
marketable securities. In August 1999, the Company announced plans to open a
380,000 square foot distribution center in Memphis, Tennessee, in the second
quarter of 2000. Total capital expenditures to establish this facility are
approximately $14 million. The Company expects to establish a second warehouse
location within the next twelve months which will require additional commitments
to lease obligations and to purchase equipment and install leasehold
improvements. The distribution centers are being established to enhance service
and availability to customers and achieve purchasing efficiencies. Expenditures
to stock inventories at both facilities will also occur in 2000. As of September
30, 1999, the Company's remaining principal commitments consisted of obligations
outstanding under operating leases and commitments for advertising, marketing
and promotion arrangements. The Company anticipates a continued increase in its
capital expenditures consistent with anticipated growth in operations,
infrastructure and personnel.

      The Company believes that current cash and cash equivalent balances and
short-term investments will be sufficient to meet its anticipated cash needs for
at least 12 months. However, any projection of future cash needs and cash flows
is subject to substantial uncertainty. If current cash and short term
investments in addition to cash generated from operations is insufficient to
satisfy the Company's liquidity requirements, the Company may seek to sell
additional equity or debt securities or to obtain a credit facility. The sale of
additional equity or convertible debt securities could result in additional
dilution to the Company's stockholders. There can be no assurance that financing
will be available in amounts or on terms acceptable to the Company, if at all.
In addition, the Company will, from time to time, consider the acquisition of or
investment in complementary businesses, products and technologies, which might
increase the Company's liquidity requirements or cause the Company to issue
additional equity or debt securities.

Year 2000
---------

Year 2000 Compliance

      Beginning in the Year 2000, the date fields coded in some software
products and computer systems will need to accept four digit entries in order to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such Year 2000 requirements. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. Significant uncertainty exists in the software industry concerning the
potential effects associated with such compliance issues.

State of Readiness

      bn.com has developed a remediation plan for the Year 2000 issue that
involves identification, assessment and testing of the equipment and systems
affected:


                                       11
<PAGE>

o     an assessment of information technology (IT) equipment and systems, which
      includes web servers and web serving technology, has been done;

o     an assessment of non-information technology (non-IT) embedded systems such
      as building security, voice mail, fire prevention, climate control and
      other systems has been completed; and

o     the readiness of significant third party vendors and suppliers of services
      is being analyzed.

      The evaluation, covers the following phases:

o     development of an inventory of all IT equipment and systems and non-IT
      systems that are potentially affected (100% complete);

o     determination of those systems that require repair or replacement (100%
      complete);

o     repair or replacement of those systems (100% complete);

o     testing of those repaired or replaced systems (100% complete); and

o     creation of contingency plans in the event of Year 2000 failures (90%
      complete).

      To date, less than 10% of assessed systems have required repair or
replacement. Non-IT systems and internally developed programs have been
reviewed, and are not considered to be date sensitive to the Year 2000. Based on
this evaluation, the Company's management does not believe that bn.com's systems
and programs present Year 2000 issues.

      Although the Company's management believes that bn.com will be Year 2000
compliant, third party equipment and software is used that may not be Year 2000
compliant. An evaluation of the Year 2000 compliance of the third party products
used in bn.com internal systems and major vendors has begun, but bn.com is
unable to predict the extent to which:

o     the Year 2000 issue will affect suppliers; or

o     bn.com would be vulnerable to the suppliers' failure to remediate any Year
      2000 issues on a timely basis.

      All vendors and suppliers have been placed in a priority category
according to their importance to bn.com's business. Letters have been sent to
all vendors and suppliers with an operating impact seeking details of the status
of their Year 2000 program. Vendor and supplier readiness is being assessed and
tracked. As of the date of this report, replies to approximately 99% of letters
have been received. These replies generally indicate that the subject vendors
and suppliers are making best efforts but cannot ensure Year 2000 compliance.
The Company's management has received all compliance letters from their key
vendors. These vendors and suppliers include merchandise suppliers such as
Barnes & Noble, Inc., Ingram Book Group, Baker & Taylor, Alliance Entertainment
Corp., and package delivery services such as United Parcel Service and the
United States Postal Service. The failure of one of these principal vendors or
suppliers to convert their systems on a timely basis or in a manner compatible
with bn.com's systems could cause bn.com to incur unanticipated expenses to
remedy any problems and could adversely affect its business. Plans are being
developed to ensure continued availability of service through alternate channels
in the event that satisfactory commitments are not received from vendors and
suppliers with an operating impact. In addition, the software and hardware
products used by affiliate Web sites, advertisers, customers, governmental
agencies, public utilities, telecommunication companies and others, may not be
Year 2000 compliant. If these products are not Year 2000 compliant, customers'
ability to use bn.com's Web site may be disrupted.


                                       12
<PAGE>

Costs to Address Year 2000 Compliance

      To date, bn.com has incurred approximately $0.8 million in connection with
identifying or evaluating Year 2000 compliance issues. Most of these expenses
have related to the opportunity cost of time spent by bn.com's employees
evaluating its software, the current versions of its products and Year 2000
compliance matters generally. The Company expects that bn.com's future Year 2000
costs will be minimal and will be funded from cash on hand. However, the full
impact of the Year 2000 issues cannot be determined at this time. The failure by
certain third parties to address their Year 2000 issues on a timely basis could
adversely affect bn.com's business.

Contingency Plan

      bn.com has completed 90% of its Year 2000 contingency plans. Such plans
include, but are not limited to, using alternative suppliers and establishing
contingent supply arrangements. The worst case scenario related to Year 2000
issues would involve a major shutdown of the Internet, which would result in the
loss of bn.com's principal revenue source until the shutdown was resolved.

Forward-Looking Statements
--------------------------

      This report may contain certain forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995) and
information relating to the Company and bn.com that are based on the beliefs of
the management of the Company as well as assumptions made by and information
currently available to the management of the Company. When used in this report,
the words "anticipate," "believe," "estimate," "expect," "intend," "plan" and
similar expressions, as they relate to the Company, bn.com or the management of
the Company, identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future events, the outcome of which
is subject to certain risks, including among others general economic and market
conditions, changes in product demand, the growth rate of Internet usage and
e-commerce, possible disruptions in the Company's or bn.com's computer or
telephone systems, possible increases in shipping rates or interruptions in
shipping service, effects of competition, the level and volatility of interest
rates, changes in tax and other governmental rules and regulations applicable to
the Company or bn.com and other factors that may be outside of the Company's
control. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or outcomes may
vary materially from those described herein as anticipated, believed, estimated,
expected, intended or planned. Subsequent written and oral forward-looking
statements attributable to the Company, bn.com or persons acting on their behalf
are expressly qualified in their entirety by the cautionary statements in this
paragraph.

Item  3:    Quantitative and Qualitative Disclosure about Market Risk
            ---------------------------------------------------------

            None


                                       13
<PAGE>

                           PART II - OTHER INFORMATION

Item 1: Legal Proceedings
        -----------------

      bn.com is involved in various routine legal proceedings incidental to the
conduct of its business. The Company does not believe that any of these legal
proceedings will have a material adverse effect on the financial condition,
results of operations or cash flows of bn.com.

      In March 1998, the American Booksellers Association and 26 independent
bookstores filed a lawsuit in the United States District Court for the Northern
District of California against Barnes & Noble, Inc. and Borders Group Inc.
alleging violations of the Robinson-Patman Act, the California Unfair Trade
Practice Act and the California Unfair Competition Law. The Complaint seeks
injunctive and declaratory relief; treble damages on behalf of each of the
bookstore plaintiffs, and, with respect to the California bookstore plaintiffs,
any other damages permitted by California law; disgorgement of money, property
and gains wrongfully obtained in connection with the purchase of books for
resale, or offered for resale, in California from March 18, 1994 until the
action is completed and pre-judgment interest on any amounts awarded in the
action, as well as attorney fees and costs. In October 1999, the Company and
bn.com were added as defendants in the action. The Company and bn.com intend to
vigorously defend this action.

      On October 21, 1999, Amazon.com, Inc. ("Amazon") filed a lawsuit against
the Company and bn.com in the United States District Court for the Western
District of Washington alleging that bn.com's use of its Express Lane one-click
ordering system infringes upon Amazon's patent for its 1-Click ordering system.
The complaint seeks injunctive and declaratory relief and treble damages, as
well as attorneys fees and costs. The Company and bn.com intend to vigorously
defend this action.

Item 2: Changes in Securities and Use of Proceeds
        -----------------------------------------

      The effective date of the Company's registration statement, filed on Form
S-1 under the Securities Act of 1933 (File No. 333-64211 ) relating to the
initial public offering (the "Offering") of its Class A Common Stock, was May
25, 1999. Pursuant to the Offering, a total of 28,750,000 shares of the
Company's Class A Common Stock were sold to an underwriting syndicate. The
managing underwriters of the Offering were Goldman, Sachs & Co., Merrill Lynch &
Co., Salomon Smith Barney and Wit Capital Corporation. The Offering was
completed on May 28, 1999, at an initial public offering price of $18.00 per
share. The Offering resulted in gross proceeds to the Company of $517.5 million,
$31.1 million of which were applied to the underwriting discount and
approximately $2.0 million of which were applied to Offering expenses. As a
result, net proceeds of the Offering to the Company were approximately $484.4
million. Such net proceeds were used by the Company to acquire 28,750,000
Membership Units of bn.com. Since May 28, 1999, bn.com has invested
approximately $291.4 million of such net proceeds in short term marketable
securities. Approximately $24.0 million of the net proceeds of the Offering have
been used to fund capital expenditures and approximately $13.4 million of the
proceeds of the Offering have been used to provide working capital in
accordance with the Company's prospectus. Except as indicated in the Company's
prospectus, none of the net proceeds of the Offering were paid by the Company
or bn.com, directly or indirectly, to any director, officer or general partner
of the Company or bn.com or any of their associates, or to any persons owning
ten percent or more of any class of the Company's equity securities, or any
affiliates of the Company or bn.com.

Item 3:     Defaults upon Senior Securities
            -------------------------------

            None


                                       14
<PAGE>

Item 4:     Submission of Matters to a Vote of Securities Holders
            -----------------------------------------------------

            None

Item 5:     Other Information
            -----------------

            None

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

            (a)   Exhibits filed with this Form 10-Q:

                  Exhibit 27        Financial Data Schedule

            (b)   No report on 8-K was filed by registrant during the fiscal
                  quarter for which this report is filed.


                                       15
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      barnesandnoble.com inc.
                                      -----------------------
                                      (Registrant)


Date:  November 12, 1999              By: /s/  Marie Toulantis
                                          -----------------------------
                                          Marie Toulantis
                                          Chief Financial Officer


                                       16