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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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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 March 31, 2003

or

|  |  |                                                                                          
|- |  | -----------------------------------------------------------------------------------------
|o |  | 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(State or Other Jurisdiction of
Incorporation or Organization) |  | 13-4048787(I.R.S. Employer
Identification No.)
|                                                                       |  |                                               
|76 Ninth Avenue, New York, NY(Address of Principal Executive Offices)  |  | 10011(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 o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes o No x

Number of shares of $.001 par value Class A Common Stock, Class B Common
Stock and Class C Common Stock outstanding as of May 9, 2003 was 47,998,566,
one and one, respectively.



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TABLE OF CONTENTS



|                               |                                                                                                 |  |  |  |  |  |  | 
|------------------------------ | ----------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1: Financial Statements                                                                   
|                               | Item 2:   Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3:   Quantitative and Qualitative Disclosures about Market Risk                           
|                               | Item 4:   Controls and Procedures                                                              
|PART II  OTHER INFORMATION   
|                               | Item 1:   Legal Proceedings                                                                    
|                               | Item 2:   Changes in Securities and Use of Proceeds                                            
|                               | Item 3:   Defaults upon Senior Securities                                                      
|                               | Item 4:   Submission of Matters to a Vote of Securities Holders                                
|                               | Item 5:   Other Information                                                                    
|                               | Item 6:   Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|CERTIFICATIONS                
|EX-99.1: CERTIFICATION        
|EX-99.2: CERTIFICATION        



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barnesandnoble.com inc.

March 31, 2003

Index to Form 10-Q

|                                         |  |                                                                                       |  |         
|---------------------------------------- |  | ------------------------------------------------------------------------------------- |  | --------
|                                         |  |                                                                                       |  | Page No.
|                                         |  |                                                                                       |  |         
|PART I-                                  |  | FINANCIAL INFORMATION                                                                 |  |         
|Item 1:                                  |  | Financial Statements                                                                  |  | 3       
|Item 2:                                  |  | Managements Discussion and Analysis of Financial Condition and Results
of Operations |  | 12      
|Item 3:                                  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 16      
|Item 4:                                  |  | Controls and Procedures                                                               |  | 17      
|PART II-                                 |  | OTHER INFORMATION                                                                     |  |         
|Item 1:                                  |  | Legal Proceedings                                                                     |  | 17      
|Item 2:                                  |  | Changes in Securities and Use of Proceeds                                             |  | 17      
|Item 3:                                  |  | Defaults upon Senior Securities                                                       |  | 17      
|Item 4:                                  |  | Submission of Matters to a Vote of Securities Holders                                 |  | 17      
|Item 5:                                  |  | Other Information                                                                     |  | 17      
|Item 6:                                  |  | Exhibits and Reports on Form 8-K                                                      |  | 18      
|Signatures                               |  |                                                                                       |  | 21      
|Certification of
Chief Executive
Officer |  |                                                                                       |  | 22      
|Certification of
Chief Financial
Officer |  |                                                                                       |  | 23      

2



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PART I  FINANCIAL INFORMATION




Item 1:Financial Statements

barnesandnoble.com inc.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share data)
(unaudited)

|                                                    |                                                                                        |   |                    |        |           |   |         |        |  
|--------------------------------------------------- | -------------------------------------------------------------------------------------- | - | ------------------ | ------ | --------- | - | ------- | ------ | -
|                                                    |                                                                                        |   | Three
months ended
|                                                    |                                                                                        |   | March 31,          |        | March 31,
|                                                    |                                                                                        |   | 2003               |        | 2002     
|                                                    |                                                                                        |   |                    |        |          
|Net sales                                           |                                                                                        | $ | 105,964            |        |           | $ | 106,535 |       
|Cost of sales                                       |                                                                                        |   | 79,968             |        |           |   | 83,373  |       
|                                                    |                                                                                        |   |                    |        |           |   |         |       
|                                                    | Gross profit                                                                           |   |                    | 25,996 |           |   |         | 23,162 |  
|                                                    |                                                                                        |   |                    |        |           |   |         |       
|Operating expenses:                                 |                                                                                        |   |                    |        |           |   |         |       
|                                                    | Fulfillment and customer service                                                       |   |                    | 9,005  |           |   |         | 9,472  |  
|                                                    | Marketing, sales and editorial                                                         |   |                    | 9,129  |           |   |         | 10,277 |  
|                                                    | Technology and web site development                                                    |   |                    | 7,390  |           |   |         | 9,576  |  
|                                                    | General and administrative                                                             |   |                    | 6,392  |           |   |         | 6,388  |  
|                                                    | Depreciation and amortization                                                          |   |                    | 7,354  |           |   |         | 8,092  |  
|                                                    | Equity in net loss of equity investments including
related amortization of intangibles |   |                    |       |           |   |         | 528    |  
|                                                    |                                                                                        |   |                    |        |           |   |         |       
|                                                    | Total operating expenses                                                               |   |                    | 39,270 |           |   |         | 44,333 |  
|Loss from operations                                |                                                                                        |   | (13,274            | )      |           |   | (21,171 | )     
|Interest income, net                                |                                                                                        |   | 137                |        |           |   | 634     |       
|                                                    |                                                                                        |   |                    |        |           |   |         |       
|Loss before minority interest                       |                                                                                        |   | (13,137            | )      |           |   | (20,537 | )     
|Minority interest                                   |                                                                                        |   | 9,816              |        |           |   | 14,874  |       
|                                                    |                                                                                        |   |                    |        |           |   |         |       
|                                                    | Net loss                                                                               |   | $                  | (3,321 | )         |   | $       | (5,663 | )
|                                                    |                                                                                        |   |                    |        |           |   |         |       
|Basic net loss per common share                     |                                                                                        | $ | (0.08              | )      |           | $ | (0.13   | )     
|Basic weighted average common shares outstanding(1) |                                                                                        |   | 43,802             |        |           |   | 43,787  |       



---

|(1) |  | Excludes assumed conversion of Membership Units and the elimination of
minority interest, as it is not dilutive.
|--- |  | ----------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

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barnesandnoble.com inc.

CONSOLIDATED BALANCE SHEETS
(in thousands of dollars, except per share data)

|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |              |         |         |  | 
|----------------------------- | ---------------------------------------------------------------------------------------------------------------- | ------------------------- | ------------------------------------------ | ------------------------------------ | ------- | ----------- | ------ | ------------ | ------- | ------- |  | 
|                              |                                                                                                                  |                           |                                            |                                      |         | March 31,   |        | December 31,
|                              |                                                                                                                  |                           |                                            |                                      |         | 2003        |        | 2002        
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              |                                                                                                                  |                           |                                            |                                      |         | (unaudited) |        |              |         |        
|                              |                                                                                                                  |                           |                                            | ASSETS                               |         |             |        |              |         |         |  | 
|Current assets:               |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              | Cash and cash equivalents                                                                                        |                           | $                                          | 47,027                               |         |             | $      | 70,144       |        
|                              | Receivables, net of allowance $1,885 and $4,048, respectively                                                    |                           |                                            | 4,848                                |         |             |        | 14,631       |        
|                              | Merchandise inventories                                                                                          |                           |                                            | 45,420                               |         |             |        | 48,303       |        
|                              | Prepaid expenses and other current assets                                                                        |                           |                                            | 3,496                                |         |             |        | 3,991        |        
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              |                                                                                                                  | Total current assets      |                                            |                                      | 100,791 |             |        |              | 137,069 |        
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|Fixed assets, net             |                                                                                                                  |                           | 52,463                                     |                                      |         |             | 58,871 |             
|Goodwill, net                 |                                                                                                                  |                           | 13,777                                     |                                      |         |             | 13,777 |             
|Other non-current assets      |                                                                                                                  |                           | 19                                         |                                      |         |             | 17     |             
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              |                                                                                                                  |                           | Total assets                               |                                      | $       | 167,050     |        |              | $       | 209,734 | 
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              |                                                                                                                  |                           |                                            | LIABILITIES AND STOCKHOLDERS EQUITY |         |             |        |              |         |         |  | 
|Current liabilities:          |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              | Accounts payable                                                                                                 |                           | $                                          | 10,016                               |         |             | $      | 16,071       |        
|                              | Accrued liabilities                                                                                              |                           |                                            | 49,605                               |         |             |        | 70,456       |        
|                              | Payable to affiliate                                                                                             |                           |                                            | 45,620                               |         |             |        | 48,261       |        
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              |                                                                                                                  | Total current liabilities |                                            |                                      | 105,241 |             |        |              | 134,788 |        
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|Minority interest             |                                                                                                                  |                           | 42,489                                     |                                      |         |             | 52,305 |             
|Commitments and contingencies |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|Stockholders equity:         |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              | Preferred Stock: $0.001 par value; 50,000,000 shares authorized; none
issued and outstanding                     |                           |                                            |                                     |         |             |        |             |        
|                              | Common Stock Series A; $0.001 par value; 750,000,000 shares authorized;
43,802,228 shares issued and outstanding |                           |                                            | 44                                   |         |             |        | 44           |        
|                              | Common Stock Series B; $0.001 par value; 1,000 shares authorized; 1 share
issued and outstanding                 |                           |                                            |                                     |         |             |        |             |        
|                              | Common Stock Series C; $0.001 par value; 1,000 shares authorized; 1 share
issued and outstanding                 |                           |                                            |                                     |         |             |        |             |        
|                              | Paid-in capital                                                                                                  |                           |                                            | 189,294                              |         |             |        | 189,294      |        
|                              | Accumulated deficit (1)                                                                                          |                           |                                            | (170,018                             | )       |             |        | (166,697     | )      
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              |                                                                                                                  |                           | Total stockholders equity                 |                                      |         | 19,320      |        |              |         | 22,641  | 
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             
|                              |                                                                                                                  |                           | Total liabilities and stockholders equity |                                      | $       | 167,050     |        |              | $       | 209,734 | 
|                              |                                                                                                                  |                           |                                            |                                      |         |             |        |             



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|(1) |  | Represents accumulated deficit of barnesandnoble.com inc. since the
Companys initial public offering.
|--- |  | ------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

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barnesandnoble.com inc.

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

|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |           |        |         |         |  
|------------------------------------------------ | ------------------------------------------------------------------------------ | ---------------------------------------------------------------- | --------------------------------------------------------- | ------ | ------------------ | ------- | --------- | ------ | ------- | ------- | -
|                                                 |                                                                                |                                                                  |                                                           |        | Three Months Ended
|                                                 |                                                                                |                                                                  |                                                           |        |                   
|                                                 |                                                                                |                                                                  |                                                           |        | March 31,          |         | March 31,
|                                                 |                                                                                |                                                                  |                                                           |        | 2003               |         | 2002     
|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |          
|Cash flows from operating activities:            |                                                                                |                                                                  |                                                           |        |                    |         |           |       
|                                                 | Net loss                                                                       |                                                                  | $                                                         | (3,321 | )                  |         | $         | (5,663 | )      
|                                                 | Adjustments to reconcile net loss to net cash flows from operating activities: |                                                                  |                                                           |        |                    |         |           |        |        
|                                                 |                                                                                | Depreciation and amortization                                    |                                                           |        | 7,353              |         |           |        | 8,375   |        
|                                                 |                                                                                | Decrease in receivables, net                                     |                                                           |        | 9,783              |         |           |        | 4,403   |        
|                                                 |                                                                                | Decrease in merchandise inventories                              |                                                           |        | 2,883              |         |           |        | 15,585  |        
|                                                 |                                                                                | Decrease (increase) in prepaid expenses and other current assets |                                                           |        | 495                |         |           |        | (2,127  | )      
|                                                 |                                                                                | Increase (decrease) in accounts payable                          |                                                           |        | (6,055             | )       |           |        | 1,869   |        
|                                                 |                                                                                | Decrease in payable to affiliate                                 |                                                           |        | (2,641             | )       |           |        | (15,389 | )      
|                                                 |                                                                                | Decrease in accrued liabilities                                  |                                                           |        | (20,851            | )       |           |        | (15,957 | )      
|                                                 |                                                                                | Minority interest in loss                                        |                                                           |        | (9,816             | )       |           |        | (14,874 | )      
|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |           |       
|                                                 |                                                                                |                                                                  | Net cash flows used in operating activities               |        |                    | (22,170 | )         |        |         | (23,778 | )
|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |           |       
|Cash flows from investing activities:            |                                                                                |                                                                  |                                                           |        |                    |         |           |       
|                                                 | Purchases of fixed assets                                                      |                                                                  |                                                           | (945   | )                  |         |           | (872   | )      
|                                                 | Sales of marketable securities                                                 |                                                                  |                                                           |       |                    |         |           | 3,141  |        
|                                                 | Decrease (increase) in other non-current assets                                |                                                                  |                                                           | (2     | )                  |         |           | 3,124  |        
|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |           |       
|                                                 |                                                                                |                                                                  | Net cash flows provided by (used in) investing activities |        |                    | (947    | )         |        |         | 5,393   |  
|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |           |       
|Net decrease in cash and cash equivalents        |                                                                                |                                                                  | (23,117                                                   | )      |                    |         | (18,385   | )     
|Cash and cash equivalents at beginning of period |                                                                                |                                                                  | 70,144                                                    |        |                    |         | 105,125   |       
|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |           |       
|Cash and cash equivalents at end of period       |                                                                                | $                                                                | 47,027                                                    |        |                    | $       | 86,740    |       
|                                                 |                                                                                |                                                                  |                                                           |        |                    |         |           |       

See accompanying notes to consolidated financial statements.

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barnesandnoble.com inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2003 and March 31, 2002
(in thousands of dollars, except per share data)
(unaudited)

The unaudited consolidated financial statements include the accounts of
barnesandnoble.com inc. (the Company) and barnesandnoble.com llc (B&N.com).

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 March 31, 2003 and the results of its operations and
its cash flows for the three 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 Annual Report on Form 10-K for the year ended December 31, 2002. The
Company followed the same accounting policies in preparation of this report as
in such Annual Report. Operating results for the three months ended March 31,
2003 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2003.

1.     ORGANIZATION

The Company is a holding company whose sole asset is a 29.4% equity
interest in B&N.com, an online retailer of books, music and DVD/video, and
whose sole business is currently acting as sole manager of B&N.com. As sole
manager of B&N.com, the Company controls all of the affairs of B&N.com and as a
result, B&N.com is consolidated with the Company. As of March 31, 2003, Barnes
& Noble, Inc. (Barnes & Noble) and Bertelsmann AG (Bertelsmann)
beneficially own equity interests of 38.1%, (or 57,500 Membership Units and
2,973 shares of Class A Common Stock) and 36.9%, (or 57,500 Membership Units
and 1,126 shares of Class A Common Stock), respectively, in B&N.com. Each
Membership Unit held by these companies is convertible into one share of the
Companys Class A Common Stock. As reflected in the
consolidated statements of operations,
the loss before minority interest represents the total loss for the period and
the net loss represents the portion of the loss attributable to the Company
subsequent to the commencement of its activities.

2.     RECLASSIFICATIONS

Certain prior-period amounts have been reclassified for comparative
purposes to conform to the 2003 presentation.

3.     STOCK OPTIONS

The Company has one stock-based employee compensation plan in effect. The
Company accounts for all transactions under which employees receive shares of
stock or other equity instruments in the Company based on the price of its
stock in accordance with the provisions of Accounting Principles Board Opinion
No. 25 Accounting for Stock Issued to Employees. Options which have been
repriced have been treated as variable options. No stock-based employee
compensation cost is reflected in net loss, as all options granted under the
plan had an exercise price equal to the market value of the underlying common
stock on the date of grant and the market price of the stock subsequent to the
repricing has not exceeded the exercise price.The following table illustrates
the effect on net loss and earnings per share if the Company had applied the
fair value recognition provisions of Statement of Financial
Accounting Standards No. 123 Stock-Based Compensation
(SFAS No. 123).

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barnesandnoble.com inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the three months ended March 31, 2003 and March 31, 2002
(in thousands of dollars, except per share data)
(unaudited)

|                                                                                                                                                                                                                                        |                           |                       |        |                              |        |      |        |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | --------------------- | ------ | ---------------------------- | ------ | ---- | ------ | - | ------ | -
|                                                                                                                                                                                                                                        |                           |                       |        | Three Months Ended March 31,
|                                                                                                                                                                                                                                        |                           |                       |        |                             
|                                                                                                                                                                                                                                        |                           |                       |        | 2003                         |        | 2002
|                                                                                                                                                                                                                                        |                           |                       |        |                              |        |     
|Net loss:                                                                                                                                                                                                                               |                           |                       |        |                              |        |      |        |  
|                                                                                                                                                                                                                                        |                           | As reported           |        | $                            | (3,321 | )    |        | $ | (5,663 | )
|Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards ($944 for three months
ended March 31, 2003 and $3,661
for three months ended March 31,
2002), net of minority
interest |                           |                       | (239   | )                            |        |      | (1,010 | )
|                                                                                                                                                                                                                                        |                           |                       |        |                              |        |      |        |  
|Proforma net loss                                                                                                                                                                                                                       |                           |                       | (3,560 | )                            |        |      | (6,673 | )
|                                                                                                                                                                                                                                        |                           |                       |        |                              |        |      |        |  
|                                                                                                                                                                                                                                        | Basic net loss per share: |                       |        |                              |        |      |        |   |       
|                                                                                                                                                                                                                                        |                           | As reported           |        |                              | (0.08  | )    |        |   | (0.13  | )
|                                                                                                                                                                                                                                        |                           | Proforma SFAS No. 123 |        | $                            | (0.08  | )    |        | $ | (0.15  | )

The fair value for each option granted was estimated at the date of grant
using the Black-Scholes option-pricing model, one of the allowable valuation
methods under SFAS No. 123, with the following assumptions:

|                                 |  |                              |       |      |  |  |        |  
|-------------------------------- |  | ---------------------------- | ----- | ---- |  |  | ------ | -
|                                 |  | Three Months Ended March 31,
|                                 |  |                             
|                                 |  | 2003                         |       | 2002
|                                 |  |                              |       |     
|Average risk free interest rates |  |                              | 4.00  | %    |  |  | 4.00   | %
|Average expected life (in years) |  |                              | 3.52  |      |  |  | 5.00   |  
|Volatility                       |  |                              | 50.13 | %    |  |  | 140.07 | %

The weighted-average fair value of the options granted during the three
months ended March 31, 2003 and 2002 was estimated to be $0.53 and $1.43,
respectively, for options granted at fair market value.

4.     ACCRUED SPECIAL CHARGES

An impairment of fixed assets and other special charges of $88,213 ($0.56
per share assuming conversion of membership units) was recorded as a component
of operating expenses during the fourth quarter of 2001. These charges were
primarily related to the impairment of fixed and other assets, including equity
investments, as well as the consolidation of fulfillment operations and
administrative functions. At March 31, 2003, the accrued liability associated
with the special charges was $5,000 and consisted of the following:

|                                 |  |           |       |          |  |           |     |            |  |           |       |  |  |   |       |  |  |   |       | 
|-------------------------------- |  | --------- | ----- | -------- |  | --------- | --- | ---------- |  | --------- | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                 |  | Balance   |       | 2003     |  | Balance   |     | Due within |  | Due after
|                                 |  | 31-Dec-02 |       | Payments |  | 31-Mar-03 |     | 12 Months  |  | 12 Months
|                                 |  |           |       |          |  |           |     |            |  |          
|Facility/lease termination costs |  | $         | 4,569 |          |  | $         | 263 |            |  | $         | 4,306 |  |  | $ | 1,532 |  |  | $ | 2,774 | 
|Employee termination benefits    |  |           | 80    |          |  |           | 30  |            |  |           | 50    |  |  |   | 50    |  |  |   |      | 
|Other impairment charges         |  |           | 644   |          |  |           |    |            |  |           | 644   |  |  |   | 644   |  |  |   |      | 
|                                 |  |           |       |          |  |           |     |            |  |           |       |  |  |   |       |  |  |   |       | 
|                                 |  | $         | 5,293 |          |  | $         | 293 |            |  | $         | 5,000 |  |  | $ | 2,226 |  |  | $ | 2,774 | 
|                                 |  |           |       |          |  |           |     |            |  |           |       |  |  |   |       |  |  |   |       | 

5.     INVESTMENTS IN EQUITY METHOD INVESTEES

The Company has made certain investments in business entities accounted
for under the equity method of accounting. The Company accounts for an
investment under the equity method if the investment gives the Company the
ability to exercise significant influence over the operating and financial
policies of such entity. An investment of 20% or more of the voting stock
typically denotes such influence, in the absence of other evidence to the
contrary.

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barnesandnoble.com inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the three months ended March 31, 2003 and March 31, 2002
(in thousands of dollars, except per share data)
(unaudited)

The Company has periodically evaluated whether the declines in fair value
of its equity investments are other-than-temporary. This evaluation consisted
of reviewing qualitative and quantitative factors including operating results
and trends, as well as market prices of public companies operating in the same
sector. As of March 31, 2003, all investments in equity method
investees had
no carrying value as the business entities invested in have ceased all
operations and are in the process of being dissolved.

6.     RELATED PARTY TRANSACTIONS

B&N.com has entered into agreements with Barnes & Noble, Bertelsmann and
their affiliates. The Company believes that the transactions and agreements
discussed below (including renewals of any existing agreements) between B&N.com
and its affiliates are at least as favorable to B&N.com as could be obtained
from unaffiliated parties. The Board of Directors and its Audit Committee must
approve in advance any proposed transaction or agreement with affiliates and
will utilize procedures in evaluating the terms and provisions of such proposed
transaction or agreement as are appropriate in light of the fiduciary duties of
directors under Delaware law.

B&N.com entered into a Supply Agreement, dated October 31, 1998, as
amended, with Barnes & Noble (the Supply Agreement), whereby Barnes & Noble
has agreed to supply inventory to B&N.com through Barnes & Nobles distribution
facilities and purchasing departments. Pursuant to the Supply Agreement, Barnes
& Noble charges B&N.com its actual cost to acquire the inventory plus any
incremental overhead incurred by Barnes & Noble in connection with providing
such merchandise supply services. The Company purchased $26,417 and $25,581
from Barnes & Noble representing 36.1% and 37.0% of the Companys purchases for
the three months ended March 31, 2003 and 2002, respectively. The charges for
incremental overhead for the three months ended March 31, 2003 and 2002 were
$922 and $537, respectively.

Under a Services Agreement, dated October 31, 1998, as amended, between
B&N.com and Barnes & Noble (the Services Agreement), B&N.com receives various
administrative services from Barnes & Noble, including, among other things,
services for payroll processing, benefits administration, insurance (property
and casualty, medical, dental and life) and tax administration. In accordance
with the terms of the Services Agreement, B&N.com reimburses Barnes & Noble in
an amount equal to the third-party expenses it incurs to fund and provide such
services, plus any incremental internal costs. B&N.com was charged $730 and
$256 for such services during the three months ended March 31, 2003 and 2002,
respectively.

At March 31, 2003 and 2002, $45,620 and $48,261, respectively, remained
payable to Barnes & Noble in connection with the agreements described above.

B&N.com purchased merchandise directly from Calendar Club, L.L.C.
(Calendar Club), a company engaged in the wholesaling and retailing of
calendars, in which Barnes & Noble owns a 73.9% interest. B&N.coms purchases
from Calendar Club were $0 and $102 for the three months ended March 31, 2003
and 2002, respectively.

B&N.com subleases from Barnes & Noble approximately one-third of a 300,000
square foot warehouse facility located in New Jersey. B&N.com was charged by
Barnes & Noble $144 and $127 for such subleased space during the three months
ended March 31, 2003 and 2002, respectively. The amount paid to Barnes & Noble
by B&N.com approximates the cost per square foot paid by Barnes & Noble as
tenant pursuant to its lease of the space from an unaffiliated third party.

Since 1999, B&N.com has used AEC One Stop Group, Inc. (AEC) as its main
music supplier, and as one of its suppliers of DVD/video. AEC is among the
largest wholesale distributors of music, videos and DVDs in the United States.
AEC also provides B&N.com with a music, DVD and video product database.
Subsequent to the initial supply arrangement between AEC and B&N.com, AECs
parent corporation was acquired by an investor group in which Leonard Riggio,
Chairman of the Board of the Company and B&N.com, became a minority investor.
B&N.com was charged by AEC $9,270 and $7,043 in connection with this agreement
for merchandise purchased during the three months ended March 31, 2003 and
2002, respectively. In addition, B&N.com was charged by AEC $92 and $69 for
database services during the three months

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barnesandnoble.com inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the three months ended March 31, 2003 and March 31, 2002
(in thousands of dollars, except per share data)
(unaudited)

ended March 31, 2003 and 2002, respectively. At March 31, 2003 and 2002, $2,475
and $4,108, respectively, remained payable to AEC.

B&N.com licenses the Barnes & Noble name under a royalty-free license
agreement, dated October 31, 1998, as amended, between B&N.com and B&N College
(the License Agreement), of which Leonard Riggio is the principal
stockholder. Pursuant to the License Agreement, the Company has been granted an
exclusive license to use the Barnes & Noble name and trademark for the
purpose of selling books over the Internet (excluding sales of college
textbooks). Under a separate agreement dated as of January 2001, between the
Company and Textbooks.com, Inc. (Textbooks.com), a corporation owned by
Leonard Riggio, B&N.com was granted the right to sell college textbooks over
the Internet using the Barnes & Noble name. Pursuant to this agreement,
B&N.com pays Textbooks.com a royalty on revenues (net of product returns,
applicable sales tax and excluding shipping and handling) realized by the
Company from the sale of books designated as textbooks. The term of the
agreement is for five years and renews annually for additional one-year periods
unless terminated 12 months prior to the end of any given term. For the three
months ended March 31, 2003 and 2002, the Company recorded royalty expense of
$1,299 and $1,442, respectively, under the terms of this agreement.

B&N.com has various royalty-free non-exclusive licenses dated October 31,
1998, as amended, from Barnes & Noble, and Bertelsmanns Books Online (BOL).
B&N.com licenses from Barnes & Noble the right to use Barnes & Nobles database
of book bibliographic data as well as certain software applications. B&N.com
licenses from BOL, the subsidiary through which Bertelsmann conducts its
Internet business, its name and trademark for use in B&N.coms operations.
Under Technology Sharing License Agreements, B&N.com was granted a royalty-free
license to view, access and use BOLs computer technology and systems, and
B&N.com granted BOL a license to view, access and use B&N.coms computer
technology and systems. All of the agreements described in this paragraph are
subject to certain renewal and termination provisions.

B&N.com and Barnes & Noble commenced a marketing program in November 2000,
whereby a customer purchases a Readers Advantage card for an annual
membership fee of $25.00 which is non-refundable after the first 30 days of the
membership term. With this card, customers can receive discounts of 10 percent
on all Barnes & Noble purchases and 5 percent on all B&N.com purchases.
B&N.com and Barnes & Noble have agreed to share the expenses, net of revenue
from the sale of the cards, related to this program in proportion to the
discounts customers receive on purchases with each company. B&N.coms share of
the card revenue generated from this program for the three months ended March
31, 2003 and 2002 were $557 and $380, respectively.

In 2002, B&N.com entered into an agreement with Marketing Services
(Minnesota) Corp. (MSC), a wholly owned subsidiary of Barnes & Noble, for
marketing services, which includes the issuance of gift cards. Under this
agreement B&N.com has received $5,481 and $0 as of March 31, 2003 and 2002,
respectively from MSC, which represents reimbursement for purchases made with
gift cards purchased in a Barnes & Noble store and redeemed on the B&N.com Web
site.

B&N.com ships, through its fulfillment centers, customer orders on behalf
of Barnes & Noble to Barnes & Noble retail stores as well as to Barnes & Noble
customers homes. B&N.com charges Barnes & Noble the costs associated with such
shipments plus any incremental overhead incurred by B&N.com to process these
orders. For the three months ended March 31, 2003 and 2002, B&N.com recorded
$446 and $165, respectively, as a reimbursement for shipping and handling from
Barnes & Noble. In addition, during the year 2001, B&N.com and Barnes & Noble
entered into an agreement whereby B&N.com receives a commission on all items
ordered by customers at Barnes & Noble stores and shipped directly to
customers homes by B&N.com. Commissions for these sales were recorded as
revenue and amounted to $308 and $301 for the three months ended March 31, 2003
and 2002, respectively.

Barnes & Noble subleased warehouse space from the Company in Reno, Nevada.
B&N.com charged Barnes & Noble $0 and $500 for such
subleased space for the
three months ended March 31, 2003 and 2002, respectively. Additionally, Barnes
& Noble reimbursed B&N.com $6,186 during the three months
ended March 31, 2002, for fixed assets purchased on behalf of
Barnes & Noble for the Reno warehouse. The equipment was sold to Barnes & Noble
at its original cost. In January 2002, B&N.com determined it could not
effectively utilize the full capacity of its Reno, Nevada distribution center.
Accordingly B&N.com agreed to transfer the Reno

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barnesandnoble.com inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the three months ended March 31, 2003 and March 31, 2002
(in thousands of dollars, except per share data)
(unaudited)

warehouse lease and sell B&N.coms inventory located in Reno to Barnes & Noble.
Barnes & Noble purchased the inventory from B&N.com during the three months
ended March 31, 2002, at cost for approximately
$9,877. The Reno lease assignment and the transfer of the operations of the
Reno facility to Barnes & Noble was completed in April 2002. In connection
with the transfer, B&N.com agreed to pay one-half of the rent charged for the
facility through December 31, 2002.

In 2000, B&N.com began purchasing new and used textbooks directly from MBS
Textbook Exchange, Inc. (MBS), a corporation majority-owned by Leonard Riggio
and one of the nations largest wholesalers of college textbooks. B&N.coms
total purchases for the three months ended March 31, 2003 and 2002 were $5,877
and $6,507, respectively. In addition, B&N.com maintains a link on its Web site
called Sell Your Textbooks which is hosted by MBS and through which B&N.com
customers are able to sell back used books purchased at B&N.com directly to
MBS. B&N.com is paid a commission based on the price paid by MBS to the
consumer. Total commissions received and recorded as revenue for the three
months ended March 31, 2003 and 2002 were $21 and $15, respectively.

Under a Strategic Relationship Agreement, dated as of May 1, 2001 (the
Strategic Relationship Agreement), between B&N.com and GameStop Corp.
(GameStop), a majority-owned subsidiary of Barnes & Noble, B&N.coms Web site
refers customers to the GameStop Web site for purchases of video game hardware,
software and accessories and PC entertainment software. GameStop pays B&N.com a
referral fee based on its net sales revenue from certain eligible purchases
made by customers as a result of the redirection from the B&N.com Web site.
Either party may terminate the Strategic Relationship Agreement on 60 days
notice. Commissions of $3 and $57 were recorded as revenue for the three months
ended March 31, 2003 and 2002, respectively, under this agreement.

B&N.com has an approximate 46.8% equity stake in enews, inc. (enews), a
company previously engaged in selling magazine subscriptions on the Internet,
and accounted for this investment under the equity method. Substantially all of
the balance of the shares are owned by Barnes & Noble. In July 2002, the Board
of Directors and stockholders of enews approved a Plan of Complete Liquidation
(the Liquidation Plan). As of March 31, 2003, the implementation of the
Liquidation Plan had been substantially completed and is expected to be
concluded by June 30, 2003. Prior to the implementation of the Liquidation
Plan, B&N.com fulfilled a majority of orders for magazine subscriptions through
enews and recorded a commission on these sales. B&N.com recorded commissions
of $0 and $148 for the three months ended March 31, 2003 and 2002,
respectively, and was reimbursed $49 and $145, respectively, for expenses
incurred on behalf of enews for the three months ended March 31, 2003 and 2002.

Michael N. Rosen, a director of the Company, is also a member of Bryan
Cave LLP, outside counsel to the Company and B&N.com.

7.   RECENT ACCOUNTING PRONOUNCEMENTS

In June 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 146 Accounting for the Costs
Associated with Exit or Disposal Activities (SFAS
No. 146), which requires the
Company to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or
disposal plan. SFAS No. 146 replaces Emerging Issues Task Force Issue No. 94-3
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit and Activity (including Certain Costs Incurred in a
Restructuring). The provisions of SFAS No. 146 are to be applied prospectively to
exit or disposal activities initiated after December 31, 2002. It is
anticipated that the financial impact of SFAS No. 146 will not have a material
effect on the Company.

In November 2002, the EITF reached a consensus on Issue 02-16, Accounting
by a Customer (Including a Reseller) for Certain Consideration Received from a
Vendor (Issue 02-16), addressing the accounting of cash consideration
received by a customer from a vendor, including vendor rebates and refunds.
The consensus reached states that consideration received should be presumed to
be a reduction of the prices of the vendors products or services and should
therefore be shown as a reduction of cost of sales in the income statement of
the customer. The presumption could be overcome if the vendor receives an
identifiable benefit in exchange for the consideration or the consideration
represents a reimbursement of a

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barnesandnoble.com inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the three months ended March 31, 2003 and March 31, 2002
(in thousands of dollars, except per share data)
(unaudited)

specific incremental identifiable cost incurred by the customer in selling the
vendors product or service. If one of these conditions is met, the cash
consideration should be characterized as revenues or a reduction of such costs,
as applicable, in the income statement of the customer. The consensus reached
also concludes that rebates or refunds based on the customer achieving a
specified level of purchases should be recognized as a reduction of cost of
sales based on a systematic and rational allocation of the consideration to be
received relative to the transactions that mark the progress of the customer
toward earning the rebate or refund, provided the amounts are probable and
reasonably estimable. This standard is effective for arrangements entered into
after December 31, 2002. Implementation of this standard will not have a
material effect on the Company.

In November 2002, the FASB issued Interpretation No. 45 Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (Interpretation 45). Interpretation 45
requires a guarantor to include disclosure of certain obligations, and if
applicable, at the inception of the guarantee, recognize a liability for the
fair value of other certain obligations undertaken in issuing a guarantee. The
recognition requirement is effective for guarantees issued or modified after
December 31, 2002. The Company has no obligations regarding Interpretation 45
and it is not expected to have a material impact on the Company.

In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based
Compensation-Transition and Disclosure. This Statement amends SFAS No. 123,
to provide alternative methods of transition for a voluntary change to the
fair-value based method of accounting for stock-based employee compensation. In
addition, this Statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The disclosure provisions of
this standard are effective for fiscal years ending after December 15, 2002.
The Company has elected to continue using the intrinsic value method and has
incorporated these expanded disclosures into the footnotes to the Companys
consolidated financial statements included herein.

In January 2003, the FASB issued Interpretation No. 46 Consolidation of
Variable Interest Entities (Interpretation 46). Interpretation 46 clarifies
the application of Accounting Research Bulletin No. 51 Consolidated Financial
Statements, and applies immediately to any variable interest entities created
after January 31, 2003 and to variable interest entities in which an interest
is obtained after that date. The Company holds no interest in variable
interest entities.

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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 29.4% equity
interest in B&N.com and whose sole business is acting as sole manager of
B&N.com. B&N.com launched its initial online store in March 1997 and is
currently ranked the ninth most-trafficked online shopping site, based on the
ComScore Media Metrix March 2003 report.

B&N.com has pursued a strategy of focusing on the sale of books, music,
DVD/video and online courses. Since opening its online store (www.bn.com) in
March 1997, B&N.com has sold products to more than 14.4 million customers in
230 countries. B&N.coms online bookstore includes the largest in-stock
selection of in-print book titles, supplemented by more than 30 million
listings from its nationwide network of out-of-print, rare and used book
dealers. B&N.com offers its customers fast delivery, easy and secure ordering
and rich editorial content.

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

Critical Accounting Policies

Securities and Exchange Commission Financial Reporting Release No. 60
requests all companies to include a discussion of critical accounting policies
or methods used in the preparation of financial statements. The Company
believes that the following critical accounting policies affect the significant
judgments and estimates used in the preparation of the Companys financial
statements.

Revenue Recognition.The Companys product sales, including outbound
shipping and handling charges, are recognized, net of estimated returns and
discounts, at the time the products are shipped to customers. Commissions
received on sales of magazine subscriptions were recorded at the net amount
earned as the Company was acting as an agent in such transactions. The Company
continuously monitors and tracks product returns and records a provision for
the estimated amount of future returns, based on historical experience. While
returns have historically been within the Companys expectations and the
provisions established, the Company cannot guarantee that it will continue to
experience the same return rates that it has in the past. Any significant
increase in product return rates could have a material adverse impact on the
Companys operating results for the period or periods in which such returns
materialize.

Impairment of Goodwill and Other Long-Lived Assets.The Companys
long-lived assets include fixed assets and goodwill. At March 31, 2003, the
Company had $52.5 million of fixed assets, net of accumulated depreciation, and
$13.8 million of net goodwill, accounting for approximately 39.7% of the
Companys total assets. B&N.com reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable in accordance with SFAS No. 144 Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144). In valuation, assets held and used are
measured by a comparison of the carrying amount of an asset to undiscounted
pre-tax future net cash flows. Future events could cause B&N.com to conclude
that impairment indicators exist and that long-lived assets may be impaired.
Any resulting impairment loss could have a material adverse impact on the
Companys financial condition and results of operations. As
required by SFAS No. 142, Goodwill and Other Intangible
Assets (SFAS No. 142),
which the Company implemented in 2002, the Company completed its annual
impairment test on the goodwill as of November 30, 2002 and deemed that no
impairment charge was necessary. The Company has noted no subsequent
indicators of impairment. Changes in market conditions, among other factors,
could have a material impact on these estimates.

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Results of Operations

Net sales

|          |  |                              |         |      |  |          |         |  |  |  |      |   
|--------- |  | ---------------------------- | ------- | ---- |  | -------- | ------- |  |  |  | ---- | --
|          |  | Three Months Ended March 31,
|          |  |                             
|          |  | (in thousands of dollars)   
|          |  | 2003                         |         | 2002 |  | % Change
|          |  |                              |         |      |  |         
|Net sales |  | $                            | 105,964 |      |  | $        | 106,535 |  |  |  | (0.5 | %)

Net sales are comprised of sales of books, music, DVD/video and online
courses including outbound shipping and handling charges, net of returns and
discounts. Net sales from the Companys consumer customers increased 4.7
percent for the three months ended March 31, 2003, which was more than offset
by the decline in net sales to corporate customers. Net sales of $106.0
million for the three months ended March 31, 2003 reflect the impact of the
lower corporate sales. The Company expects net sales for the second quarter
ending June 30, 2003 to range between $80 million and $85 million.

Gross profit

|             |  |                              |        |      |  |          |        |   |  |  |      |  
|------------ |  | ---------------------------- | ------ | ---- |  | -------- | ------ | - |  |  | ---- | -
|             |  | Three Months Ended March 31,
|             |  |                             
|             |  | (in thousands of dollars)   
|             |  | 2003                         |        | 2002 |  | % Change
|             |  |                              |        |      |  |         
|Gross profit |  | $                            | 25,996 |      |  | $        | 23,162 |   |  |  | 12.2 | %
|Gross margin |  |                              | 24.5   | %    |  |          | 21.7   | % |  |  |      |  

Gross profit is net sales less the cost of sales, which consists of the
cost of merchandise sold to customers and the cost of online courses as well as
inbound and outbound shipping costs. Gross profit and gross margin increased
for the three months ended March 31, 2003 due to an increase in the Companys
internal fulfillment rate resulting in less purchases from more expensive
wholesalers and due to the more efficient utilization of shipping providers
which reduced outbound shipping costs. The Company expects 2003 gross margin
to exceed 2002 results. Quarterly gross margin results will fluctuate due to
the timing of promotional activities.

Fulfillment and customer service

|                                 |  |                              |       |      |  |          |       |   |  |  |      |   
|-------------------------------- |  | ---------------------------- | ----- | ---- |  | -------- | ----- | - |  |  | ---- | --
|                                 |  | Three Months Ended March 31,
|                                 |  |                             
|                                 |  | (in thousands of dollars)   
|                                 |  | 2003                         |       | 2002 |  | % Change
|                                 |  |                              |       |      |  |         
|Fulfillment and customer service |  | $                            | 9,005 |      |  | $        | 9,472 |   |  |  | (4.9 | %)
|Percentage of net sales          |  |                              | 8.5   | %    |  |          | 8.9   | % |  |  |      |   

Fulfillment and customer service expenses consist primarily of the cost of
operating and staffing distribution and customer service centers, including
costs attributable to picking, packing and preparing customer orders for
shipment and responding to inquiries from customers. Fulfillment and customer
service expenses decreased on an absolute basis and as a percentage of net
sales primarily as a result of realizing more efficiency from the consolidation
of the Companys fulfillment operations as well as a decline in customer
contacts per order resulting from improvements to self-service features on the
Web site. The Company expects fulfillment and customer service expenses to
decrease as a percentage of sales during 2003.

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Marketing, sales and editorial

|                               |  |                              |       |      |  |          |        |   |  |  |       |   
|------------------------------ |  | ---------------------------- | ----- | ---- |  | -------- | ------ | - |  |  | ----- | --
|                               |  | Three Months Ended March 31,
|                               |  |                             
|                               |  | (in thousands of dollars)   
|                               |  | 2003                         |       | 2002 |  | % Change
|                               |  |                              |       |      |  |         
|Marketing, sales and editorial |  | $                            | 9,129 |      |  | $        | 10,277 |   |  |  | (11.2 | %)
|Percentage of net sales        |  |                              | 8.6   | %    |  |          | 9.6    | % |  |  |       |   

Marketing, sales and editorial expenses consist primarily of advertising
and promotional expenditures, as well as payroll and related expenses for
personnel engaged in marketing and selling activities. Marketing and sales
expenses decreased primarily due to the Companys increased focus on more
targeted and measurable marketing programs as well as the renegotiation of many
of the Companys online marketing deals at more advantageous terms. The Company
expects to reduce marketing, sales and editorial expenses as a percentage of
net sales in 2003.

Technology and web site development

|                                    |  |                              |       |      |  |          |       |   |  |  |       |   
|----------------------------------- |  | ---------------------------- | ----- | ---- |  | -------- | ----- | - |  |  | ----- | --
|                                    |  | Three Months Ended March 31,
|                                    |  |                             
|                                    |  | (in thousands of dollars)   
|                                    |  | 2003                         |       | 2002 |  | % Change
|                                    |  |                              |       |      |  |         
|Technology and web site development |  | $                            | 7,390 |      |  | $        | 9,576 |   |  |  | (22.8 | %)
|Percentage of net sales             |  |                              | 7.0   | %    |  |          | 9.0   | % |  |  |       |   

Technology and web site development expenses consist principally of
payroll and related expenses for Web page production and computer network
operations personnel and consultants, and costs of infrastructure related to
systems and telecommunications. Certain costs relating to the development of
internal-use software are capitalized and depreciated over three years. The
decrease in technology and web site development was primarily attributable to
increased infrastructure efficiency and price reductions in many expense
categories. The Company expects technology and web site development expenses
to be lower as a percentage of net sales in 2003.

General and administrative

|                           |  |                              |       |      |  |          |       |   |  |  |     |  
|-------------------------- |  | ---------------------------- | ----- | ---- |  | -------- | ----- | - |  |  | --- | -
|                           |  | Three Months Ended March 31,
|                           |  |                             
|                           |  | (in thousands of dollars)   
|                           |  | 2003                         |       | 2002 |  | % Change
|                           |  |                              |       |      |  |         
|General
and
administrative |  | $                            | 6,392 |      |  | $        | 6,388 |   |  |  | 0.1 | %
|Percentage of net sales    |  |                              | 6.0   | %    |  |          | 6.0   | % |  |  |     |  

General and administrative expenses primarily consist of payroll and
related expenses for executive, finance and administrative personnel,
recruiting, professional fees and other general corporate expenses including
costs to process credit card transactions. General and administrative expenses
were $6.4 million for the three-month periods ended March 31, 2003 and 2002,
representing 6% of net sales for each period.

Depreciation and amortization

|                              |  |                              |       |      |  |          |       |   |  |  |      |   
|----------------------------- |  | ---------------------------- | ----- | ---- |  | -------- | ----- | - |  |  | ---- | --
|                              |  | Three Months Ended March 31,
|                              |  |                             
|                              |  | (in thousands of dollars)   
|                              |  | 2003                         |       | 2002 |  | % Change
|                              |  |                              |       |      |  |         
|Depreciation and amortization |  | $                            | 7,354 |      |  | $        | 8,092 |   |  |  | (9.1 | %)
|Percentage of net sales       |  |                              | 6.9   | %    |  |          | 7.6   | % |  |  |      |   

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The decrease in depreciation and amortization expenses was the result of
lower capital expenditures in fiscal 2002 and 2001 as compared with fiscal
2000. The carrying balance of goodwill is assessed for recoverability on a
periodic basis. In 2002 the Company no longer amortized goodwill due to the
adoption of SFAS No. 142.

Equity in net loss of equity investments including related amortization of intangibles

|                                                                                         |  |                              |   |      |  |          |     |   |  |  |      |   
|---------------------------------------------------------------------------------------- |  | ---------------------------- | - | ---- |  | -------- | --- | - |  |  | ---- | --
|                                                                                         |  | Three Months Ended March 31,
|                                                                                         |  |                             
|                                                                                         |  | (in thousands of dollars)   
|                                                                                         |  | 2003                         |   | 2002 |  | % Change
|                                                                                         |  |                              |   |      |  |         
|Equity in net loss of equity investments (including related
amortization of intangibles) |  | $                            |  |      |  | $        | 528 |   |  |  | (100 | %)
|Percentage of net sales                                                                  |  |                              |  |      |  |          | 0.5 | % |  |  |      |   

Equity in net loss of equity investments (including related amortization
of intangibles) consists of losses from the Companys equity investments in
enews for the first quarter ended March 31, 2002. As of December 31, 2002, the
Company had written off its entire investment in enews of $3.3 million. As of
March 31, 2002, there was no remaining goodwill related to equity investments.
In July 2002, the Board of Directors and stockholders of enews approved the
Liquidation Plan. As of March 31, 2003, the implementation of the Liquidation
Plan had been substantially completed and it is expected to be concluded by
June 30, 2003.

Interest income, net

|                        |  |                              |     |      |  |          |     |   |  |  |       |   
|----------------------- |  | ---------------------------- | --- | ---- |  | -------- | --- | - |  |  | ----- | --
|                        |  | Three Months Ended March 31,
|                        |  |                             
|                        |  | (in thousands of dollars)   
|                        |  | 2003                         |     | 2002 |  | % Change
|                        |  |                              |     |      |  |         
|Interest income, net    |  | $                            | 137 |      |  | $        | 634 |   |  |  | (78.4 | %)
|Percentage of net sales |  |                              | 0.1 | %    |  |          | 0.6 | % |  |  |       |   

Interest income decreased compared with last year as cash balances
decreased due to their use as a source of funding the Companys operations. All
available cash is invested in various marketable securities consisting
primarily of money market funds containing highly liquid U.S. Treasury
Securities, U.S. government agency securities and investments in high quality
corporate issuers.

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, due to the uncertainty of its realizability.

Liquidity and Capital Resources

As of March 31, 2003, the Companys cash and cash equivalents were $47.0
million, compared to $70.1 million on December 31, 2002. The Company continues
to have a debt-free balance sheet.

Net cash flows used in operating activities were $22.2 million for the
three months ended March 31, 2003 and $23.8 million for the three months ended
March 31, 2002. Cash used for the three months ended March 31, 2003 was
attributable to a net loss of $3.3 million, and minority interest of $9.8
million, a decrease in accrued liabilities of $20.9 million, a decrease in
payable to affiliate of $2.6 million and a decrease of $6.1 million in accounts
payable. This was offset by a decrease in receivables of $9.8 million,
depreciation and amortization of $7.4 million, a $2.9 million decrease in
merchandise inventories and a decrease in prepaid expenses and other current
assets of $0.5 million. Cash used for the three months ended March 31, 2002 was
attributable to a net loss of $5.7 million, minority interest of $14.9 million,
a decrease in accrued liabilities of $16.0 million, a decrease in payable to
affiliate of $15.4 million and an increase in prepaid expenses and other
current assets of $2.1

15



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##### Table of Contents



million. This was offset by a $15.6 million decrease in merchandise
inventories, a decrease in receivables of $4.4 million, depreciation and
amortization of $8.4 million and an increase of $1.9 million in accounts
payable.

Net cash flows used in investing activities of $0.9 million for the three
months ended March 31, 2003 was attributable to purchases of fixed assets
totaling $0.9 million. Net cash flows provided by investing activities of $5.4
million for the three months ended March 31, 2002 were attributable to a
decrease of $3.1 million in other non-current assets and sales of marketable
securities of $3.1 million, offset by purchases of fixed assets totaling $0.9
million.

At March 31, 2003, the Companys principal sources of liquidity consisted
of $47.0 million in cash and cash equivalents. As of March 31, 2003, the
Companys remaining principal commitments consisted of obligations outstanding
under operating leases. The Company has pledged a portion of its cash and cash
equivalents as collateral for stand-by letters of credit that guarantee certain
of the Companys real property lease obligations. At March 31, 2003 and 2002,
the total amount of collateral pledged under these agreements was $4.2 million
and $4.4 million, respectively. The Company has no unconsolidated
majority-owned subsidiaries and no interests in special purpose entities.

The Company believes that current cash and cash equivalents will be
sufficient to meet its anticipated cash needs for at least twelve months.
However, any projection of future cash needs and cash flows is subject to
substantial uncertainty. If current cash and cash equivalents in addition to
cash generated from operations are 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.

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 B&N.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, B&N.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 B&N.coms computer or
telephone systems, possible increases in shipping rates or interruptions in
shipping service, effects of competition, possible work stoppages or increases
in labor costs or labor shortages, unanticipated adverse litigation results or
effects, the performance of B&N.coms current and future investments and new
product initiatives, unanticipated costs associated with B&N.coms warehouse or
the failure to successfully integrate that warehouse into B&N.coms
distribution network, the level and volatility of interest rates, the
successful integration of acquired businesses, changes in tax and other
governmental rules and regulations applicable to the Company or B&N.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, B&N.com or persons acting on their behalf are expressly qualified
in their entirety by the cautionary statements in this paragraph and elsewhere
described in this report and other reports filed by the Company with the
Securities and Exchange Commission.




Item 3:   Quantitative and Qualitative Disclosures about Market Risk

The Company previously invested in enews and MightyWords, Inc.
(MightyWords) primarily for strategic purposes. Such investments had been
accounted for under the equity method as they gave the Company the ability to
exercise significant influence, but not control, over the investees. This is
generally defined as an ownership interest in voting stock of the investee
between 20% and 50%, although other factors, such as representation on the
investees Board of Directors and the impact of commercial arrangements, are
considered in determining whether the equity method is appropriate. The
Company regularly reviews the carrying value of its investments and identifies
and records impairment losses when events and circumstances indicate that such
assets are permanently impaired. In July 2002, the Board of Directors and
stockholders of enews approved the Liquidation Plan. As of March 31, 2003, the
implementation of the Liquidation Plan had been

16



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##### Table of Contents



substantially completed and it is expected to be concluded by June 30,
2003. As of December 31, 2002, the Company had written off its entire
investment in enews of $3.3 million. In December 2001, B&N.com considered the
MightyWords investment impaired as the MightyWords Board of Directors had voted
to dissolve the company and distribute the remaining cash back to investors
after obligations of the company were met. B&N.com recorded an impairment
charge of $9.2 million related to equity method and other investments in
December 2001. As of December 31, 2002, the Company had no remaining
investments accounted for under the equity method.

B&N.com invests certain of its excess cash in money market funds
consisting of 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 and less than one year are
classified as marketable securities. Long-term marketable securities mature in
periods greater than one year. B&N.com is exposed to interest rate risk on the
debt instruments that it holds. The value of the Companys marketable
securities is subject to market price volatility. As of March 31, 2003, the
Companys cash and cash equivalents totaled approximately $47.0 million.




Item 4:   Controls and Procedures

(a)  Evaluation of Disclosure Controls and Procedures. The Companys
Chief Executive Officer and its Chief Financial Officer, after evaluating the
effectiveness of the Companys disclosure controls and procedures (as defined
in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934) as of
a date within 90 days of the filing date of this quarterly report on Form 10-Q
(the Evaluation Date), have concluded that as of the Evaluation Date, the
Companys disclosure controls and procedures were adequate and effective to
ensure that material information relating to the Company and its consolidated
subsidiaries is recorded, processed, summarized and reported by management of
the Company on a timely basis in order to comply with the Companys disclosure
obligations under the Securities Exchange Act of 1934 and the SEC rules
thereunder.

(b)  Changes in Internal Controls. There were no significant changes in
the Companys internal controls or in other factors that could significantly
affect the Companys internal controls subsequent to the Evaluation Date, nor
any significant deficiencies or material weaknesses in such internal controls
requiring corrective actions.




PART II  OTHER INFORMATION




Item 1:   Legal Proceedings

No material developments have occurred with respect to previously reported
legal proceedings.




Item 2:   Changes in Securities and Use of Proceeds

Not applicable.




Item 3:   Defaults upon Senior Securities

None.




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

None.




Item 5:   Other Information

None.

17



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##### Table of Contents






Item 6:   Exhibits and Reports on Form 8-K

(a)  Exhibits

|        |  |                                                                                                                                                                                                                                                                                                                                              
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                              
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                              
|3.1     |  | Amended and Restated Certificate of Incorporation of the
Company. (Incorporated herein by reference to Exhibit 3.1 in
the Companys Form 10-K for the year ended December 31,
2000, filed April 2, 2001)                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                              
|3.2     |  | Amended and Restated By-laws of the Company. (Incorporated
herein by reference to Exhibit 3.2 in the Companys Form
10-K for the year ended December 31, 2000, filed April 2,
2001)                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.1    |  | Second Amended and Restated Limited Liability Company
Agreement of barnesandnoble.com llc. (Incorporated herein by
reference to Exhibit 10.1 in the Companys Form 10-K for the
year ended December 31, 2000, filed April 2, 2001)                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.2    |  | Amendment No. 1 to Second Amended and Restated Limited
Liability Company Agreement of barnesandnoble.com llc.
(Incorporated herein by reference to Exhibit 10.30 in the
Companys Form 10-K for the year ended December 31, 1999,
filed March 30, 2000)                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.3    |  | Stockholders Agreement between Barnes & Noble, Inc. and
Bertelsmann AG. (Incorporated herein by reference to Exhibit
10.3 in the Companys Form 10-K for the year ended
December31, 2000, filed April 2, 2001)                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.4    |  | 1999 Incentive Plan of the Company. (Incorporated herein by
reference to Exhibit 10.1 in Amendment No. 3 of the
Companys Registration Statement No. 333-64211, filed May
24, 1999)                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.5    |  | Deferred Compensation Plan of the Company. (Incorporated
herein by reference to Exhibit 10.25 in Amendment No. 3 of
the Companys Registration Statement No. 333-64211, filed
May 24, 1999)                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.6    |  | Retirement Plan of the Company. (Incorporated herein by
reference to Exhibit 10.26 in Amendment No. 3 of the
Companys Registration Statement No. 333-64211, filed May
24, 1999)                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.7    |  | Agreement of Lease, dated as of October 1, 1999, between 111
Chelsea LLC, as landlord, and barnesandnoble.com llc, as
tenant. (Incorporated herein by reference to Exhibit 10.33
in the Companys Form 10-K for the year ended December 31,
1999, filed March 30, 2000)                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.8    |  | Indenture of Lease and Amendments thereto, dated as of June
7, 1994, between SDI Technologies, Inc., as Landlord, and B.
Dalton Bookseller, Inc., as Tenant. (Incorporated herein by
reference to Exhibit 10.22 in Amendment No. 1 of the
Companys Registration Statement No. 333-64211, filed March
18, 1999)                              
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.9    |  | Lease, dated as of June 30, 1997, between P.A. Building
Company, as Landlord, and Barnes & Noble, Inc., as Tenant.
(Incorporated herein by reference to Exhibit 10.23 in
Amendment No. 1 of the Companys Registration Statement No.
333-64211, filed March 18, 1999)                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.10   |  | Amended and Restated Industrial Lease Agreement effective as
of July 27, 1999, between Industrial Developments
International (Tennessee), L.P., as landlord, and
barnesandnoble.com llc, as tenant. (Incorporated herein by
reference to Exhibit 10.31 in the Companys Form 10-K for
the year ended December 31, 1999, filed March 30, 2000)
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.11   |  | Supply Agreement, dated as of October 31, 1998, between
barnesandnoble.com llc and Barnes & Noble, Inc.
(Incorporated herein by reference to Exhibit 10.14 in
Amendment No. 1 of the Companys Registration Statement No.
333-64211, filed March 18, 1999)                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.12   |  | Amendment No. 1 to the Supply Agreement, between
barnesandnoble.com llc and Barnes & Noble Inc. (Incorporated
herein by reference to Exhibit 10.14 in the Companys
Form10-K for the year ended December 31, 2000, filed April
2, 2001)                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                              
|10.13   |  | Amended and Restated Services Agreement, dated as of October
31, 1998, among the Company, barnesandnoble.com llc and
Barnes & Noble, Inc. (Incorporated herein by reference to
Exhibit 10.10 in Amendment No. 1 of the Companys
Registration Statement No. 333-64211, filed March 18, 1999)                                                 

18



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|        |  |                                                                                                                                                                                                                                                                                                                  
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                  
|No.     |  | Description                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.14   |  | Amendment No. 1 to the Amended and Restated Services
Agreement, among the Company, barnesandnoble.com llc and
Barnes & Noble, Inc. (Incorporated herein by reference to
Exhibit 10.16 in the Companys Form 10-K for the year ended
December 31, 2000, filed April 2, 2001)                                      
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.15   |  | Technology Sharing and Licensing Agreement, dated as of
October 31, 1998, between barnesandnoble.com llc, as
Licensor and BOL.Global, Inc., as Licensee. (Incorporated
herein by reference to Exhibit 10.8 in Amendment No. 1 of
the Companys Registration Statement No. 333-64211, filed
March 18, 1999)       
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.16   |  | Amendment No. 1 to the Technology Sharing and License
Agreement, between BOL.Global, Inc., as Licensee, and
barnesandnoble.com llc, as Licensor. (Incorporated herein by
reference to Exhibit 10.18 in the Companys Form 10-K for
the year ended December 31, 2000, filed April 2, 2001)                        
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.17   |  | Technology Sharing and Licensing Agreement, dated as of
October 31, 1998, between barnesandnoble.com llc, as
Licensee and BOL.Global, Inc., as Licensor. (Incorporated
herein by reference to Exhibit 10.9 in Amendment No. 1 of
the Companys Registration Statement No. 333-64211, filed
March 18, 1999)       
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.18   |  | Amendment No. 1 to the Technology Sharing and License
Agreement, between BOL.Global, Inc., as Licensor, and
barnesandnoble.com llc, as Licensee. (Incorporated herein by
reference to Exhibit 10.20 in the Companys Form 10-K for
the year ended December 31, 2000, filed April 2, 2001)                        
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.19   |  | Amended and Restated Database and Software License
Agreement, dated as of October 31, 1998, among the Company,
barnesandnoble.com llc and Barnes & Noble, Inc.
(Incorporated herein by reference to Exhibit 10.15 in
Amendment No. 1 of the Companys Registration Statement No.
333-64211, filed March 18, 1999)
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.20   |  | Amendment No. 1 to the Amended and Restated Database and
Software License Agreement, among the Company,
barnesandnoble.com llc and Barnes & Noble, Inc.
(Incorporated herein by reference to Exhibit 10.22 in the
Companys Form 10-K for the year ended December 31, 2000,
filed April 2, 2001)                 
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.21   |  | Trademark License Agreement, dated as of October 31, 1998,
between BOL.Global, Inc. and barnesandnoble.com llc.
(Incorporated herein by reference to Exhibit 10.13 in
Amendment No. 1 of the Companys Registration Statement No.
333-64211, filed March 18, 1999)                                               
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.22   |  | Amendment No. 1 to the Trademark License Agreement, between
BOL.Global, Inc. and barnesandnoble.com llc. (Incorporated
herein by reference to Exhibit 10.24 in the Companys
Form10-K for the year ended December 31, 2000, filed April
2, 2001)                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.23   |  | Amended and Restated Trademark License Agreement, dated as
of October 31, 1998, between Barnes & Noble College
Bookstores, Inc. and barnesandnoble.com llc. (Incorporated
herein by reference to Exhibit 10.12 in Amendment No. 1 of
the Companys Registration Statement No. 333-64211, filed
March 18, 1999)   
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.24   |  | Amendment No. 1 to the Amended and Restated Trademark
License Agreement, between Barnes & Noble College
Bookstores, Inc. and barnesandnoble.com llc. (Incorporated
herein by reference to Exhibit 10.26 in the Companys
Form10-K for the year ended December 31, 2000, filed April
2, 2001)                     
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.25   |  | Web Site Agreement, dated as of January 31, 2001, by and
between Textbooks.com, Inc. and barnesandnoble.com llc.
(Incorporated herein by reference to Exhibit 10.27 in the
Companys Form 10-K for the year ended December 31, 2000,
filed April 2, 2001)                                                        
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.26   |  | Employment Agreement, dated as of October 31, 2002, between
the Company and Marie J. Toulantis. (Incorporated herein by
reference to Exhibit 10.26 in the Companys Form 10-K for
the year ended December 31, 2002, filed March 27, 2003)                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                  
|99.1    |  | Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                  
|99.2    |  | Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                               

19



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(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the first quarter of 2003.

20



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##### Table of Contents






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: May 15, 2003 |  | By:                                  |  | /s/ KEVIN M. FRAIN

Kevin M. FrainChief Financial Officer and Vice President, Operations
(Principal Accounting and Financial Officer)

21



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##### Table of Contents






CERTIFICATION

I, Marie J. Toulantis, Chief Executive Officer, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
barnesandnoble.com inc.;                                                                                                                                                                                                                                                
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|
| | 4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                      



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



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



| | a. |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



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

Date: May 15, 2003

| |  |     |  |                                                                                                                       
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------
| |  | By: |  | /s/ MARIE J. TOULANTIS
Marie J. Toulantis
Chief Executive Officer
(Principal Executive Officer)
barnesandnoble.com inc

22



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##### Table of Contents



CERTIFICATION

I, Kevin M. Frain, Chief Financial Officer, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
barnesandnoble.com inc.;                                                                                                                                                                                                                                                
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|
| | 4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                      



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



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



| | a. |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



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

Date: May 15, 2003

| |  |     |  |                                                                                                                                                             
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | By: |  | /s/ KEVIN M. FRAIN
Kevin M. Frain
Chief Financial Officer and Vice President, Operations
(Principal Accounting and Financial Officer)
barnesandnoble.com inc

23