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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

[ X ] Annual Report  Pursuant to Section 13 or 15(d) of the Securities  Exchange
      Act of 1934

                   For the fiscal year ended December 31, 1999

                                       or

[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                  For the transition period from _____ to _____

                         Commission file number 0-28088


                               STYLECLICK.COM INC.
               --------------------------------------------------
             (Exact name of registrant as specified in its charter)

           California                                   95-4145930
---------------------------------------     ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

  3861 Sepulveda Blvd., Culver City                        90230
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(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code (310) 751-2100
                                                   --------------
Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

    Title of each class               Name of each exchange on which registered:

       Common Stock                             Nasdaq National Market
---------------------------           ------------------------------------------


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  report(s),  and (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes  X  No
                                       ---   ---
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (sect.  229.405 of this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[ ]

The  aggregate  market  value of voting  and  non-voting  common  stock  held by
non-affiliates  of the registrant was  $70,229,579  based on the average bid and
asked  prices of $12.41  per share as quoted on the  NASDAQ  National  Market on
March 27,  2000.  As of March  27,  1999,  there  were  7,722,930  shares of the
Company's common stock outstanding.

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                                     PART I

Item 1. Description of Business

Forward-looking Statements

Discussion of certain  matters  contained in this Annual Report on Form 10-K may
constitute   forward-looking  statements  within  the  meaning  of  the  Private
Securities  Litigation  Reform Act of 1995 (the "Reform Act") and, as such,  may
involve risks and  uncertainties.  Those  forward-looking  statements relate to,
among  other  things,  expectations  of the  business  environment  in which the
Company  operates,  projections of future  performance,  product  introductions,
perceived  opportunities  in the market and  statements  regarding the Company's
mission and vision.  The Company's actual results,  performance and achievements
may differ materially from the results,  performance and achievements  expressed
or implied in such  forward-looking  statements.  From time to time, the Company
details  other risks with  respect to its  business  and  financial  results and
conditions in its filings with the Commission.

The Company

Styleclick.com  Inc.  ("Styleclick.com"  or the  "Company"),  formerly  known as
Modacad,  Inc., is an enabler of electronic commerce in merchandising  intensive
categories of commerce,  including fashion,  accessories,  footwear,  cosmetics,
home furnishing,  decorating and improvement  industries.  Styleclick.com offers
outside  third  parties and  affiliates  services  such as web-site  and content
development,  and  Internet  based  merchandising.   In  addition,  the  Company
facilitates  fulfillment  and customer  services.  Styleclick.com  also owns and
operates its own E-commerce sites.

The Company  provides these services by leveraging its proprietary  technologies
and  capabilities,  including  a complex  technology  platform  used to  manage,
search, and display web-site content and merchandising capabilities by utilizing
highly  experienced  merchandisers  to source best selling  products for various
online  environments  in a context  that  creates  immediacy  in the  purchasing
process.

Styleclick.com  was founded in 1988,  under the name Modacad,  Inc., to develop,
market and support  software  products  based on its  proprietary  modeling  and
rendering  technology  for use in the  apparel,  textile  and  home  furnishings
industries.  Prior to 1998, the Company's  primary focus was in the business and
consumer  software  industry.  In  the  business-to-business   marketplace,  the
Company's initial focus was on designing  computer-aided design ("CAD") products
for the  industrial  design segment of the textile and apparel  industries.  The
Company also offered a variety of electronic  merchandising software products to
manufacturers  and retailers doing business in fashion,  home  furnishings,  and
related   industries,   which  have  been  used  to  support  their   customers'
business-to-business  electronic  commerce  efforts  primarily  in the  area  of
merchandising,  store planning,  assortment planning and product development. In
the consumer software industry the Company, under the name Modacad,  developed a
family of consumer software products aimed at the do-it-yourself home decorating
and design marketplace.  It subsequently  developed consumer software for use by
and in  connection  with the  fashion  industry.  Until  1992,  the  Company was
primarily  engaged in research and  development and generated  limited  revenues
from product sales.

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In 1998,  the  Company  began to shift its focus to the  emerging  consumer  and
business-to-business Internet electronic commerce market, using its technologies
and data bases  developed  for the  business-to-business  market to position the
Company  as  a  key  enabler  of  electronic  commerce  for  the  fashion,  home
furnishings and other related industries.

In early 2000,  Styelclick.com  and USA Networks,  Inc. ("USAi") announced their
intent to form a new  company  by  merging  Styleclick.com  and  USA's  Internet
Shopping Network. The new company,  Styleclick Inc. is expected to launch as one
of the leading  Internet-based  merchandising,  sales and services organizations
providing retail  opportunities to consumers and third-party  retail services to
businesses.

Products and Services

Styleclick.com's   products   are  divided   into  three  major   classes:   (i)
business-to-business   services  that  utilize  the  Company's  core  electronic
merchandising,  content  management and  visualization  technologies  to provide
Internet  solutions  to  retailers  and   manufacturers;   (ii)  Internet  based
E-commerce  sites intended to search and manage  digital  content and facilitate
Internet  commerce  targeted at the  consumer  marketplace;  and (iii)  consumer
software applications on CD-ROM for E-commerce.

Business-to-Business

Styleclick.com's  business-to-business  unit offers  manufacturers and retailers
the following services/products:  web-site development, creation and maintenance
of e-catalogs, site merchandising,  site management, including coordination with
out-source  fulfillment and  tele-service  logistics,  and an efficient reach of
consumers via a distributed network of affiliates, ("Syndication Network").

Styleclick.com  builds  highly  customized  sites via a  proprietary  technology
called "servlet  explosion." This technology allows the Company to use templates
that  can be  customized  with  minimum  programming  and  developed  with  high
efficiency.

The Company also owns  technology for content  management,  allowing it to build
complex electronic catalogs of products efficiently.

In addition,  Styleclick.com  manages  E-commerce  venues inside portals such as
America Online,  Excite,  iVillage,  and Women.com  which it  merchandises  with
products  from  its  customers.   Through  this  product  syndication   network,
Styleclick.com provides its vendors with real-estate in various locations across
the internet, extending the consumer reach of its participating vendors.

Internet Applications

The company's flagship consumer web-site,  www.styleclick.com,  offers consumers
an easy and  convenient  way to find and buy apparel,  accessories,  and related
products  online.  The site  offers  one of the  largest  online  selections  of
designer  brand  original  items for men,  women,  and  children of all ages and
sizes.  The  site  features  state-of-the-art   navigation  and  content  search
technology,  enabling  consumers to make highly informed  purchasing  decisions.

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Additionally,  the site enables consumers to view high resolution product images
with the ability to pan and zoom to inspect details such as fabric texture,  and
stitching.

FashionTrip.com  is the Company's  teen-oriented  web-site.  Styleclick.com  has
incorporated  its  proprietary   E-commerce  and  e-merchandising   platform  to
FashionTrip.com  enabling the site to deliver a state-of-the-art online shopping
and lifestyle  environment catering to the teenage consumer market.  Fashiontrip
offers a comprehensive selection of apparel, shoes,  accessories,  bath & beauty
products, and style related merchandise.

In addition, Styleclick.com also manages a variety of web-sites on behalf of the
brands it works  with.  These  sites  currently  include but are not limited to:
Cindystore.com,  Daisyfuentesstore.com,  Hunterdouglas.com,  Jennalanegroup.com,
Pingcollectionstore.com, Susandunn.com, Pjsalvage.com, Freestyleusa.com.

Consumer Software, CD-ROM Applications

The  precursor to the  Company's  Internet  E-commerce  strategy was a series of
consumer software  applications  which the Company developed  beginning in 1996.
Styleclick.com  developed the software  known as the 3D Home  Interiors  product
line, under a Software Development and Publishing Agreement with Broderbund (the
"Broderbund  Agreement") which appointed  Broderbund as publisher.  This product
line was extended in 1997 with the publication of 3D Home Suite.  These products
offer  consumer  home  design  and  decorating  tools,  including  shopping  and
reference materials for actual products of various  participating  vendors.  The
Company  amended its agreement with  Broderbund in 1998 to provide for the grant
of  exclusive  rights to these  products to  Broderbund  in  consideration  of a
one-time royalty payment.

Fashion  Trip and iStyle were  jointly  developed  by  Styleclick.com  and Intel
Corporation  ("Intel") pursuant to a development  agreement entered into in late
1997. The Sierra Division of Cendant Software Corporation which was subsequently
purchased by Havas Interactive of France  ("Sierra")  published the Fashion Trip
and iStyle CD-ROM's and, pursuant to its agreement with the Company, distributes
portions  of Fashion  Trip and iStyle as  shrink-wrapped  software  applications
through its distribution channels.

Business Strategy

Business-to-Business

The  business  model is based on up-front,  one-time  fees for the creation of a
web-site and related services, plus a revenue share on transactions conducted at
the sites.  The revenue  share rates can be as high as 50%, but are typically in
the 30% range.  Generally  merchandise is placed in inventory under consignment,
so there are no cost of goods or inventory costs with this business.

Internet Applications

The  apparel  market is very brand  driven,  presenting  Styleclick.com  with an
opportunity to develop strong,  possibly  exclusive,  relationships with brands.
Currently  the Company has secured  strong  relationships  with over 200 brands,
many of which are exclusive.  This presents a significant barrier to competitive
entry.

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www.styleclick.com  features a wide  variety of vendor's  products  which may be
viewed and purchased on the site.  The Company  expects  vendors to benefit from
the exposure their  products  receive to a large on-line  consumer  audience and
from the order  fulfillment  and  other  services  offered  in  connection  with
Styleclick.com.  The Company receives  revenues from the services it provides to
its vendors,  and it will share in the revenues generated from sales of products
and  advertising  on  the  site.  By  outsourcing  order  fulfillment  services,
Styleclick.com offers an efficient cost structure and avoids the inventory costs
associated with traditional brick-and-mortar retail operations.

The success of www.styleclick.com  depends largely on the ability of the Company
to solicit  vendors  who wish to display  and sell their  products  on the site.
Vendor  representation  on the web-site  increases the site's  attractiveness to
consumers,  who  wish to find a  broad  assortment  of  fashions,  and to  other
potential vendors, who wish to reach a broad consumer audience and who must meet
their competitors'  efforts.  The Company has already secured the agreement of a
wide assortment of vendors to participate on the site. The Company believes that
it will  continue  to attract  vendors by  removing  barriers  to entry into the
E-commerce  arena and  providing  business  solutions to companies  that have no
end-user  order  fulfillment  capability,  no E-commerce  enabled  web-site,  no
capacity  to image or  create  content  for  E-commerce  catalogs,  no  end-user
customer service capability and/or no end-user transaction capacity.

Additionally,  the  success  of  the  Company's  shopping  site  depends  on the
Company's  execution  of an  aggressive  marketing  campaign  designed to direct
consumer traffic.

FashionTrip.com  features  a  wide  variety  of  vendor's  products,  in a  teen
lifestyle  environment,  which  may be viewed  and  purchased  on the site.  The
Company expects vendors to benefit from the exposure their products receive to a
targeted  on-line  consumer  audience.  The Company  receives  revenues from the
services it provides to its vendors, and it will share in the revenues generated
from sales of products and advertising on the site.

Consumer software, CD-ROM Applications

The  Company  plans to  continue  to  develop  consumer  software  and adapt the
functionality  of such software to the Internet.  Many of the core  technologies
developed  for CD-ROM  products have  applications  to the  broad-band  Internet
market,  and the Company  intends to leverage  them  aggressively  as broad-band
access to the Internet emerges. The Company also intends to link consumer CD-ROM
products with Styleclick.com's on-line shopping site.

Marketing, Sales and Distribution

The Company employs 18 sales and marketing personnel.  The Company maintains, in
addition to its Los Angeles headquarters, an additional sales office in New York
where two members of the sales team are located  and a sales  representative  in
Italy.

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Business-to-Business

The  target  customer  of  Styleclick.com's   business-to-business   unit  is  a
manufacturer  who has a consumer  brand to exploit  on-line  and wishes to begin
selling directly to consumers.  The Company focuses primarily on categories that
involve strong merchandising such as fashion,  accessories,  eyewear,  footwear,
home furnishing,  beauty, and fragrances. The Company believes that these brands
are most likely to seek to partner  with an on-line  licensee,  who will receive
exclusive  use of the  brand  and have  privileged  access  to the  products  in
exchange for building and managing the brand's  on-line  business.  The targeted
consumer brand is middle sized ($200 million to $800 million), since this market
segment  is (1) the  largest  segment  in terms of  number  of  brands,  (2) has
embraced the strategy of outsourcing and the Internet.

The Company currently  provides such services to over 40 brands and expects this
to  increase  steadily.  The  Company's  marketing  strategy  is to reach  these
customers centers on trade activities. The Company has segmented the market into
key verticals and is reaching  executives in those  verticals  with an education
campaign  that  involves  trade  seminars,  trade  shows,  direct  mail  and  PR
activities.

Internet Applications

The Company plans to market its Internet  shopping sites to the consumer through
direct  business-to-consumer  channels  such as the Internet  and other  on-line
services, print and radio advertising, editorial and cross vendor promotions, as
well as through  affiliated  site's  programs.  The Company  expects to deploy a
blend of on-line and  off-line  advertising,  as well as  continued  reliance on
affiliates  and  syndication,  including  the  development  of  person-to-person
multi-level-marketing to enhance customer retention and stimulate repeat buyers.

Consumer Software, CD-ROM Applications

In  June  of  1998,  Styleclick.com  entered  into  an  agreement  (the  "Sierra
Agreement")  with Sierra, a leader in  entertainment  and educational  software.
Under  the  Sierra  Agreement,   Sierra  is  responsible  for  the  publication,
marketing,  promotion and  distribution  in retail  channels of Fashion Trip and
iStyle  a  follow-on  product  developed  by  Styleclick.com  under  the  Sierra
Agreement.

The core  technology  developed for the CD-ROMs are compatible with the Internet
and provide the Company  with a  technology  platform  for  emerging  broad-band
applications  on the  Internet.  As such  broad-band  capabilities  emerge,  the
Company  expects to leverage  these core  technologies  as part of its  consumer
Internet strategies.

Competition

The E-commerce,  electronic  merchandising  and computer software design markets
are  intensely  competitive  and subject to rapidly  changing  technologies  and
evolving  product  standards.  The Company  believes that principal  competitive
factors  in  the  markets  in  which  the  Company   competes   include  product
functionality  and ease of use, product  performance and  reliability,  customer
service and support,  timeliness of product  upgrades,  vendor  credibility  and
brand awareness, technological advantages and price/performance characteristics.
The Company  believes that its products  compete  favorably with the products of
its  competitors  principally  due to the  advantages of the  Company's  imaging
functions,  the ease with which the products may be used with existing operating
systems and its  relationships  with a variety of  manufacturers  and retailers.
Although  the  Company  believes  that it competes  favorably  in the markets it
serves,  there can be no assurance that new or established  competitors will not
offer  products  superior to, or lower in price than,  those of the Company,  or
that completely new technologies might be developed to supplant the technologies
currently being used by the Company.

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Business-to-Business Applications

The Company  believes that the  complexities of delivering all of the integrated
services  and  tools are  significant  and  involve  tremendous  investments  in
technology.  The Company has established itself as an  e-merchandising  services
company, and believes it has no direct competitors as of yet.

The Company,  in the future, may compete with web development  companies such as
US Web or Organic, but believes it is increasingly viewed as providing a service
to those companies, and is steadily becoming considered a subcontractor for many
of the leading US web companies and agencies.

Internet Applications

An increasing  number of entities have entered into the e-commerce  marketplace,
and there are a number of entities whose  activities  may directly  compete with
the  Company.  In  the  apparel  industry,   a  number  of  retailers  who  have
traditionally  conducted their activities out of  brick-and-mortar  premises are
transitioning into the E-commerce arena in order to expand their businesses. The
Company believes that retailers such as Lands' End, J. Crew, the Gap, L.L. Bean,
Macy's,  Bloomingdale's and Eddie Bauer will not significantly  compete with the
Company's  Internet  shopping  web-site  because  they  use the  Internet  as an
additional distribution channel, while retaining their emphasis on sales through
traditional  distribution  channels.  Consequently,  the cost structure of these
retailer's products is significantly  different than the Company's.  There is no
assurance that these  retailers will not alter their  strategies and concentrate
more of their resources in developing  Internet  shopping portals or other sites
or projects that will compete directly with the Company.

The Company faces  competition  in the following  four areas:  on-line  outlets,
which primarily sell seconds or grey-market  goods;  on-line  department stores,
which offer some,  but rarely all, of the selection  their  traditional  brick &
mortar  counterparts  offer;  brand sites such as catalog  companies  and basics
retailers  that only offer  their brand  selection;  and,  aggregators,  such as
on-line malls which link consumers to third party web-sites.  The Company is not
currently  aware of any web-sites  with the Company's  multi-brand  emphasis and
business strategy.

In the Internet  e-commerce  sector,  the Company competes with numerous product
aggregators  and  style  destination  web-sites  such as  Bluefly.com,  Buy.com,
Ivillage.com, Amazon.com, Fashionmall.com,  Shopfind.com, and Girlshop.com. Some
of these  competitors  offer product  guides,  search engine shopping guides and
destination  shopping  sites.  Other  destination  web-sites,  such as Elle.com,
Gurl.com and Cosmopolitan.com, which are sponsored by various fashion magazines,
have targeted the fashion and [glamour]  industries.  While such web-sites often
offer superior  editorial  content,  the Company believes that its technical and
logistical  infrastructure gives it a competitive advantage over such actual and
potential  competitors.   The  Company  cannot  give  any  assurance  that  such
competitors  will not be able to overcome the technical and logistical  barriers
to entry in this market and exert greater competitive pressure on the Company.

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Consumer software, CD-ROM Applications

The  consumer  software  market  is  increasingly  competitive,   with  numerous
suppliers  directing  new  products  into a highly  differentiated  and  rapidly
developing marketplace. The Company's competitors in this market include several
large companies with substantially  greater  financial,  technical and marketing
resources (such as Mattel/The Learning Company and Sierra). Although the Company
entered into agreements with both The Learning Company's Broderbund Division and
with Sierra for the 3D Home  Interiors  product  line,  Fashion Trip and iStyle,
respectively,  and such agreements contain certain mutual non-compete covenants,
the agreements do not prohibit  Broderbund or Sierra, or their parent companies,
from  publishing or distributing  similar  products which could compete with the
Company's products. The Company believes that the core visualization  technology
embodied in its  products  constitute a  competitive  advantage  over  similarly
situated companies in the consumer software market.

Dependence on Significant Customers

During  1999,  Lectra  Systems,  Inc.  and Sierra  Online,  Inc.  accounted  for
approximately 56% and 13%, respectively, of the Company's total revenues. During
1998,  Broderbund Software and Sierra Online,  Inc., accounted for approximately
30% and 24%, respectively,  of the Company's total revenues.  During 1997, Intel
Corporation  accounted  for 34% of the  Company's  total  revenues.  The revenue
earned  from these  customers  cannot be expected to reoccur and the Company may
continue to be dependent on other significant customers, the loss of which could
have a material and adverse effect on the Company's business.

Research and Development

The Company  believes  that its success will depend  primarily on its ability to
develop new  products,  maintain  technological  competitiveness  and fulfill an
expanding range of customer requirements.  To date, the Company has designed and
developed  all of its  key  products  internally.  The  Company's  research  and
development expenditures (including expenses that are required to be capitalized
under generally  accepted  accounting  principle)  totaled $7,177,000 or 117% of
revenues in 1999, $6,592,000 or 99% of revenues in 1998 and $3,000,000 or 67% of
revenues in 1997. The Company's  primary  expenses for research and  development
include the personnel costs of the Company's  engineers and other specialists in
software  infrastructure,  interface development,  database technologies and 3-D
computer  graphic  design.  Research and  development  expenses also include the
depreciation  and cost of maintenance of computer  hardware used in research and
development.  As of  December  31,  1999,  93 of  the  Company's  157  full-time
employees were employed in various  aspects of product  development  and digital
content creation  activities.  During 1999, 1998 and 1997, no significant amount
of the Company's research and development expenditures was customer sponsored.

The Company  believes that it has completed most of the  development of the core
technologies necessary to deploy Styleclick.com. These core technologies include
the search engine, the data harvesting engine,  the visualization  engines,  the
data streaming engine, and the intelligent shopping agents.  Currently the focus
of the Company's product  development efforts is centered on the creation of the
user interface for the site art creation,  content acquisition,  optimizing user
experience for faster access from low bandwidth Internet access,  load balancing
traffic for optimal handling of concurrent transactions, expanding the Company's
content  acquisition   technology  to  include  higher  degrees  of  automation,
developing  data  streaming  technologies  to increase  delivery of rich content
through low bandwidth  environments,  and expanding  the  intelligent  nature of
shopping agents for smarter searches and personal advice.

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The Company's  development teams are continuously working towards new extensions
and  enhancements to its core rendering engine in an on-going effort to maintain
and extend its leadership in the area.  The Company also maintains  research and
development in a variety of advanced technical areas, including  object-oriented
technology,  data management technology,  expert systems and rule-based systems,
rendering and other evolving imaging technologies.

Patents and Proprietary Rights

The Company holds three United States  patents.  One patent covers the Company's
core  rendering  and modeling  technology.  Another  patent  covers 3-D modeling
techniques and the third relates to business-to-business products. Additionally,
the  Company  also has  received a notice of  allowance  of two  pending  patent
applications covering the ability to create an interactive digital dressing room
that allows  apparel to be fitted to specific  body  dimensions.  In addition to
patent  protection,  the Company  relies on a  combination  of (i) trade secret,
copyright and trademark laws, (ii) confidentiality and nondisclosure  agreements
and (iii) other  contractual  and technical  measures to protect its proprietary
rights. There is no assurance that these measures will deter misappropriation of
the Company's  proprietary  rights.  The Company employs a "lock and key" system
with respect to the proprietary information underlying its software. This system
is  designed  to ensure  that only  certain  key  employees  have access to such
information,   all  of  whom  have  signed   confidentiality  and  nondisclosure
agreements.  The  Company has nine  registered  trademarks,  including  the mark
Modacad.   The  Company  believes  that  its  products,   trademarks  and  other
proprietary  rights do not infringe on the proprietary  rights of third parties.
There  can  be no  assurance,  however,  that  third  parties  will  not  assert
infringement claims against the Company in the future with respect to current or
future  products  or that any such  asserted  claims  may not  result  in costly
litigation.

Employees

As of December 31, 1999, the Company employed 157 full-time employees, including
18 in  sales  and  marketing,  55 in  product  development  and  systems,  31 in
product-related  and  fulfillment,  38 in content and  creative  areas and 15 in
general  and  administrative   areas.  None  of  the  Company's   employees  are
represented  by a labor  union,  and the  Company has never  experienced  a work
stoppage.

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Item 2.    Property

In 1998, the Company moved its executive  headquarters  to a three-story  office
building with  approximately  23,000 square feet of office space in Culver City,
California, under a lease that will expire in 2006, with an option to extend the
lease term for additional ten years. The Company anticipates that it may require
additional space in Los Angeles in the first half of 2000 to handle the expected
increased levels of its business activities. The Company believes it can readily
acquire  any  needed  additional  space  when  and  as  needed  on  commercially
reasonable  terms.  The Company  acquired this additional  space at commercially
reasonable  terms.  The Company has  sub-leased  its other Los Angeles  property
under a sub-lease  that will  expire in 2002,  the same  expiration  date of the
original lease.

The  Company  leases  approximately  4,800  square  feet  in High  Point,  North
Carolina,  under a lease  that  expires in 2004,  for  production  and  customer
service activities, directed primarily at electronic merchandising customers and
consumer  product lines. The facility was necessary to accommodate the Company's
recent  growth in its  personnel  in this  office.  The  Company  acquired  this
additional   space  at  commercially   reasonable   terms.  The  Company  leases
approximately 1,500 square feet in New York primarily for facilitating sales and
marketing support  activities in the Northeast region under a lease that expires
in August, 2000. The Company anticipates that it may require additional space in
New York in the first half of 2000 to handle the  expected  increased  levels of
its business activities.

Item 3. Legal Proceedings

     None.

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

     None.

                                       9
<PAGE>
                                     PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters

Trading Prices of Securities

Since  July 19,  1999,  the  Company's  common  stock has  traded on the  Nasdaq
National  Market under the symbol  "IBUY".  From March 1996 until July 19, 1999,
the Company's common stock traded on the Nasdaq National Market under the symbol
"MODA".  The  following  table sets forth the high and low sales  prices for the
Company's common stock for the fiscal years ended December 31, 1998 and 1999, as
reported by Nasdaq:

                                                       Sales Prices
                                                 High               Low
 Fiscal Year Ended December 31, 1998
     1st Quarter                                 20-1/4              11
     2nd Quarter                                 24-7/8            13-3/4
     3rd Quarter                                 23-5/8            10-7/8
     4th Quarter                                 24-3/4               6
 Fiscal Year Ended December 31, 1999
     1st Quarter                                 21-1/2            11-5/8
     2nd Quarter                                 15-1/8             8-3/8
     3rd Quarter                                 12-1/4             6-3/4
     4th Quarter                                   15               6-1/4

At December  31,  1999,  the Company had  approximately  3,500  shareholders  of
record.  The Company did not declare or pay dividends on its common stock during
1998 or 1999 and does not intend to pay dividends in the foreseeable future.

Recent Sales of Unregistered Securities

During 1999 the Company sold the following  securities which were not registered
under the Securities Act of 1933, as amended (the "1933 Act"):

(a)  In March  1999,  the Company  issued  warrants to a third party to purchase
     250,000  shares of common  stock at an exercise  price of $16.80 per share.
     Such warrants were issued in consideration of business  promotion  services
     to be  provided  to the  Company  and were  fully  vested  and  immediately
     exercisable  on the grant date,  and expire in March 2004. In October 1999,
     the Company changed the exercise price to $10.86 per share of common stock,
     which was 110% of the then-current market value.

(b)  In April 1999, in  consideration  of a waiver of the future royalties to be
     paid to its project  co-developer,  the Company issued to such co-developer
     (i) 455,218 shares of common stock, (ii) warrants,  expiring in April 2000,
     to purchase  189,674  shares of common stock at an exercise price of $13.18
     per share,  (iii)  warrants,  expiring in July 2000,  to  purchase  189,674
     shares of common  stock at an  exercise  price of $13.18 per share and (iv)
     warrants,  expiring in April 2004,  to  purchase  159,326  shares of common
     stock at an exercise price of $10.98 per share.

                                       10
<PAGE>

(c)  In April 1999, in  consideration  of $7,721,510 the Company received in net
     proceeds  from a private  placement of its  securities  (after paying costs
     associated  with the  offering),  the Company  issued to four  investors an
     aggregate  of (i)  776,827  shares  of the  Company's  common  stock,  (ii)
     warrants,  expiring in April 2000,  to  purchase  323,677  shares of common
     stock at an exercise price of $13.18 per share, (iii) warrants, expiring in
     July 2000, to purchase  323,677 shares of common stock at an exercise price
     of $13.18 per share, and (iv) warrants, expiring in April 2004, to purchase
     271,889 shares of common stock at an exercise price of $13.73 per share. In
     consideration  of services  rendered to the Company by two placement agents
     in connection  with this private  placement,  the Company issued  warrants,
     expiring in April 2004,  to purchase  15,536  shares of common  stock at an
     exercise price of $10.98 per share.

(d)  During 1999, in  consideration  for services  provided to the Company,  the
     Company  issued (i)  warrants to an outside  promotion  agency  expiring in
     December  2003,  to purchase  8,333  shares of common  stock at an exercise
     price of $16.68 per share,  (ii)  warrants,  expiring in January  2004,  to
     purchase  8,333 shares of common  stock at an exercise  price of $20.00 per
     share, (iii) warrants,  expiring in February 2004, to purchase 8,333 shares
     of common stock at an exercise  price of $16.00 per share,  (iv)  warrants,
     expiring in March  2004,  to purchase  8,333  shares of common  stock at an
     exercise  price of $11.56 per share,  and (v)  warrants,  expiring in April
     2004,  to purchase  8,335  shares of common  stock at an exercise  price of
     $11.88 per share.

(e)  In June 1999, in consideration  for services  provided to the Company,  the
     Company issued warrants to an Internet portal company  expiring in December
     2001, to purchase up to 100,000 shares of common stock at an exercise price
     of $12.34 per share.

(f)  In June, July and August 1999, in  consideration  for services  provided to
     the Company, the Company issued warrants to purchase an aggregate of 30,000
     shares of common stock to a financial  advisor for services provided to the
     Company.  The warrants had an exercise price of $13.00 per common share and
     expire in June, July and August 2002, respectively.

(g)  In October 1999, in consideration of services rendered to the Company,  the
     Company granted to three non-employee directors ten-year warrants, expiring
     October  2009,  to purchase a total of 45,000  shares of common stock at an
     exercise price of $7.50 per share.


Exemption  from  the  registration  provisions  of the  1933  Act for all of the
transactions described above is claimed pursuant to Section 4(2) of the 1933 Act
and/or Rule 504 of Regulation D promulgated  thereunder on the grounds that such
transactions  did not  involve  any  public  offering.  The  purchasers  in such
transactions   represented   their  intention  to  acquire  the  securities  for
investment  only and not with a view to the  distribution  thereof.  Appropriate
legends were affixed to the  certificates  evidencing the  securities  issued in
such transactions. All purchasers either received adequate information about the
Company  or had  access to such  information.  The  Company  filed  Registration
Statements  on  Form  S-3  covering  the  resale  of  securities  referenced  in
paragraphs  (b),  (c),  (d),  and (f).  All net  proceeds  from the sale of such
securities will go to the selling shareholder who offered and sold their shares.

                                       11
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
                                            Years Ended December 31,
                           -----------------------------------------------------
                            1999      1998       1997        1996         1995
                           -----------------------------------------------------
                                     (In thousands, except per share data)
<S>                        <C>        <C>        <C>         <C>        <C>
Net sales                   $6,174    $6,681     $4,450      $ 3,370    $ 1,905
Net income (loss)          (15,879)   (9,688)       354          645          8
Total assets                15,047    13,050     21,404        7,182      1,864
Long-term debt                   -         -          -            -      4,545
Per common share:
Net income (loss) - Basic    (2.24)    (1.59)      0.07         0.20       0.00
           (loss) - Diluted  (2.24)    (1.59)      0.06         0.20       0.00
Cash dividends declared          -         -          -            -          -

</TABLE>
Item 7. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations

The  following  discussion  should  be read in  conjunction  with the  financial
statements  and the notes thereto  appearing  elsewhere in this Form 10-K.  This
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  Our actual results may differ  materially from those anticipated
in these forward-looking  statements as a result of certain factors,  including,
but not limited to, those set forth below and elsewhere in this Form 10-K.

General

The  Company  is in  the  business  of  developing,  marketing,  and  supporting
electronic  commerce   ("E-commerce")   Internet  web-sites,   Internet  enabled
applications  and  business  and  consumer   software   products  based  on  its
proprietary technology for content management,  including modeling and rendering
technology.  The Company has three principal product groups: E-commerce Internet
web-sites, software including CD-ROM products and applications including CAD and
electronic merchandising products, referred to as business software products.

Since 1998,  the Company has  divested  many of its products in the business and
consumer  software  product groups and has shifted its primary business focus to
the emerging Internet  E-commerce market. The Company is focusing its technology
on building and deploying  E-commerce Internet sites, such as comparative search
and shopping  solutions aimed at  facilitating  businesses' use of E-commerce to
reach  consumers  in the  apparel,  footwear,  accessories,  cosmetics  and home
furnishing industries.

                                       12
<PAGE>
Revenues  generated from the Company's  E-commerce  Internet  web-sites  include
revenues  received in connection  with (i) web-site  development and maintenance
fees for services  provided to customers in the  development  and maintenance of
their web-sites, (ii) project participation fees for vendor participation in the
Company's on-line shopping Internet web-sites, (iii) on-line advertising revenue
for advertising on the Company's on-line shopping web-sites,  (iv) transactional
revenue  from the  Company's  fulfillment  services  provided  to the  Company's
on-line shopping Internet web-site  participant vendors and (v) product referral
fees  from  referral  of vendor  products  to  Internet  consumers  through  the
Company's   on-line   shopping   Internet   web-sites.   Revenues  from  project
participation  fees are recognized based upon the  accomplishment of contractual
milestones  in a manner that matches  revenue with the related  costs.  Web-site
development and maintenance fees and on-line  advertising revenue are recognized
over the terms of the corresponding contracts. Transactional revenue and product
referral fees are  recognized  based on a percentage of gross  revenues from the
related  transactions.  Transactional revenue is recognized upon notification of
shipment of the vendors' products by the Company's  fulfillment warehouse or the
participant   vendors.   Product   referral  fees  are  recognized   based  upon
notification of the sales information by the Company's vendors,  the independent
Internet traffic tracking companies or the Company's on-line tracking reports.

Revenues  generated from the Company's consumer CD-ROM products include revenues
received in connection  with sales of the Company's  developed  consumer  CD-ROM
products  and  vendor   participation   in  the   Company's   developed   CD-ROM
applications.  Sales of the  products  are  recognized  at the time of shipment.
Revenues  from  CD-ROM   participation   fees  are  recognized  based  upon  the
accomplishment  of contractual  milestones in a manner that matches revenue with
the related costs.

Revenues  generated  from  the  Company's  business  software  products  include
revenues  received  in  connection  with  sales and  licenses  of the  Company's
developed business software products and software  maintenance  revenues.  Sales
and  licenses of the products are  recognized  at the time of shipment.  Revenue
generated from software  maintenance is recognized on a straight-line basis over
the term of the corresponding contract, which is generally twelve months.

Results of Operations

The following  table sets forth selected  items from the Company's  statement of
operations for the years ended 1999, 1998 and 1997 and the percentages that such
items bear to net revenues:
<TABLE>
<CAPTION>
                                            Year Ended December 31,
                        --------------------------------------------------------
                              1999                 1998                1997
                        ----------------   ------------------   ----------------
                                               (in thousands)
<S>                      <C>      <C>       <C>      <C>       <C>       <C>
Net revenues             $6,174   100.0 %   $6,681   100.0 %   $4,450    100.0 %
Cost of sales               668    10.8         82     1.2         87      2.0
                         ------   -------   ------   -------   ------    -------
Gross profit              5,506    89.2      6,599    98.8      4,363     98.0
Operating costs and
   expenses:
Selling, general and
   administrative        13,362   216.4      8,291   124.1      3,394     76.3
Research and development  6,054    98.1      3,541    53.0        172      3.9
Merger related costs        405     6.6          -       -          -        -
Amortization of software
   development costs      1,842    29.8      4,890    73.2        774     17.4
                         ------   -------   ------   -------   ------    -------
  Total operating costs
     and expenses       21,663    350.9     16,722   250.3      4,340     97.5
                         ------   -------   ------   -------   ------    -------
Loss from operations   (16,157)  (261.7)   (10,123) (151.5)        23      0.5
Investment and other
   income, net             278      4.5        435     6.5        331      7.5
                        -------   -------   ------   -------   ------    -------
  Net loss            $(15,879)  (257.2 %) $(9,688) (145.0 %)   $ 354      8.0 %
                        =======   =======   ======   =======   ======    =======
</TABLE>

                                       13
<PAGE>
1999 Compared with 1998

Net Revenues

Revenues  in the amount of  $4,810,000,  or 78% of total  revenues  for the year
ended  December 31, 1999 were earned from three sources which cannot be expected
to reoccur,  including  product  development  fees ($400,000,  or 6%),  web-site
development  fees  ($910,000,  or 15%)  and the sale of the  Company's  business
software product line ($3,500,000,  or 57% of revenues).  Net revenues decreased
$507,000, or 8%, to $6,174,000 in 1999 from $6,681,000 in 1998. The decrease was
primarily  due to (i) a decrease of  $4,368,000  in revenues  from the Company's
consumer CD-ROM  products,  (ii) a decrease of $54,000 in revenues from training
services and (iii) a decrease of $128,000 in maintenance  fees.  These decreases
were offset by an  increase of  $1,887,000  in sales of the  Company's  business
software  products,  an increase of  $1,623,000 in revenues  generated  from the
Company's  E-commerce Internet web-sites and an increase of $533,000 in revenues
from consulting services.

Revenues  generated  from  the  Company's  E-commerce  Internet  web-sites  were
$1,623,000  in 1999 as  compared  to no such  revenue  generated  in  1998.  The
$1,623,000 in revenues  primarily  consisted of revenues generated from web-site
development  and  maintenance  fees,   project   participation   fees,   on-line
advertising revenue, digital content generation fees, transactional revenues and
product referral fees.

Revenues generated from consumer CD-ROM products decreased  $4,368,000,  or 88%,
to $607,000 in 1999 from  $4,975,000  in 1998  primarily  due to  $1,980,000  of
revenue  generated in 1998 from the one-time  license of the  Company's 3-D Home
Interiors  product  to its  publisher  and  $395,000  of  revenue  generated  in
connection  with consumer  product  developing  services  provided to one of the
Company's major  customers in 1998.  These revenues were not repeated in 1999 as
the Company has shifted its  primary  business  focus to the  emerging  consumer
Internet E-commerce market.  Additionally,  revenue generated in connection with
the Company's developing CD-ROM applications decreased $1,200,000 to $400,000 in
1999 from $1,600,000 in 1998. The $400,000 in revenue generated in 1999 resulted
from the completion of development of one of the CD-ROM  applications  which had
been in  development  since 1998.  Finally,  $793,000 of the decrease was due to
lower CD-ROM participation  revenue generated from the Company's consumer CD-ROM
applications  in 1999 as compared to 1998. The decrease in CD-ROM  participation
revenues  resulted from the Company's  strategy to shift its marketing  focus to
Internet E-commerce during 1999.

Sales of business software products increased $1,887,000, or 135%, to $3,285,000
in  1999  from  $1,398,000  in  1998  primarily  due to the  sale  of two of the
Company's  business  software  product lines and the license of certain  related
technologies  for an up-front  fee of  $3,000,000  in 1999.  In March 1999,  the
Company entered into an agreement with one of its major  competitors.  Under the
agreement,  the Company  sold two of its  business  software  product  lines and
licensed its cataloging software to the buyer for an up-front fee of $3,000,000,
additional  support fees of up to $1,000,000,  and a contingent payment of up to
$1,000,000  depending on future sales over the next 24 months generated from the
product lines sold to the buyer. Except for support services, the Company has no
further obligations to this buyer (including further development of the products
sold or the software  licensed,  as all  development  has been completed on such
products and software).  The sale of these product lines was part of the overall
shift in the Company's primary business focus from the business software product
marketplace to the emerging  consumer Internet  E-commerce  market. As such, the
revenues  recognized  from the sale did not arise from, and are not  necessarily
representative of, the Company's ongoing business.  As a result of the sale, the
Company  generated  less  revenue  from its  business  software  products in the
remaining period of 1999 as compared to the comparable period in 1998.

                                       14
<PAGE>
Revenues from consulting  services  increased  $533,000 to $538,000 in 1999 from
$5,000 in 1998  primarily  due to $500,000 in revenues for  consulting  services
generated from the purchaser of two of the Company's  business  software product
lines in the first quarter of 1999. No such revenue was generated in 1998.

Revenues from training services  decreased  $54,000,  or 73%, to $20,000 in 1999
from  $74,000 in 1998,  and  maintenance  fees  decreased  $128,000,  or 56%, to
$101,000 in 1999 from $229,000 in 1998,  primarily due to the Company's  overall
shift in its primary business focus away from the business software products, as
discussed above, from which most training and maintenance fees were generated.

Cost of Sales

Costs of sales are comprised primarily of product fulfillment costs, credit card
processing fees, direct shipping material and product royalties  associated with
the respective  revenues.  Cost of sales increased  $586,000 to $668,000 in 1999
from  $82,000 in 1998  primarily  due to $117,000  in cost of sales  incurred in
connection  with the  $3,000,000  sale and  license of certain of the  Company's
business  software  products in 1999 and a $475,000  non-cash  charge to royalty
expense.  The Company issued stock and warrants to Intel, the Company's  project
co-developer,  valued at  $5,539,000  in exchange for future  royalties  through
December  2007.  Such  amount  was  recorded  as prepaid  royalties  and will be
continuously  amortized at $158,000 per quarter  until  December  2007.  No such
costs of sales were incurred in 1998.

Selling, General and Administrative Expenses

Selling,  general and administrative  expenses increased $5,071,000,  or 61%, to
$13,362,000  in 1999  from  $8,291,000  in 1998  due to the  following  factors.
Personnel  costs  increased  $1,627,000,  or 58%,  to  $4,418,000  in 1999  from
$2,791,000 in 1998. The increase in personnel costs resulted  primarily from the
hiring of additional  personnel in late 1998 to support the Company's  increased
operating  activities,  increasing  the total number of employees from 121 as of
December 31, 1998 to 157 as of December  31, 1999,  and $200,000 of bonuses paid
to the  Company's  executives  in  1999.  Additionally,  certain  related  costs
including travel,  marketing,  telephone,  office supplies  expenses,  taxes and
licenses,  repair and maintenance and depreciation expense increased $3,571,000,
or 102%,  to  $7,076,000  in 1999 from  $3,505,000  in 1998.  Of that  increase,
$3,522,000 was related to an increase in the Company's  marketing  activities in
1999 to support its new E-commerce products. Additionally, professional services
including accounting,  legal and consulting services increased $693,000, or 75%,
to  $1,612,000  in 1999 from  $919,000 in 1998.  The  increase  in  professional
services was  primarily due to the Company's  increased  requirements  for these
services  in 1999  compared  to 1998,  resulting  from the  Company's  increased
operating  activities in the emerging  E-commerce  market and support of its new
E-commerce  products  and  dispositions  of  certain of the  Company's  business
software product lines. Finally, bad debt expense decreased $857,000, or 93%, to
$60,000 in 1999 from $917,000 in 1998. Such decrease was primarily  attributable
to the  additional  bad debt  reserve in the amount of $865,000  recorded by the
Company during 1998 upon the Company's review of certain specific  accounts.  No
such reserve was needed in 1999.

                                       15
<PAGE>

Research and Development

The Company  incurred  $7,177,000 of research and  development  expenditures  in
1999, of which $1,123,000 was capitalized and $6,054,000 was expensed,  compared
to $6,592,000 in 1998, of which  $3,051,000 was  capitalized  and $3,541,000 was
expensed. The 9% increase in research and development  expenditures from 1998 to
1999 was primarily due to the hiring of additional  personnel in connection with
the further development of the Company's Internet application projects.

Merger Related Costs

The Company incurred $405,000 of expense in connection with its merger plan with
Internet  Shopping  Network,  LLC in the fourth quarter of 1999. No such expense
was incurred in 1998.  The $405,000  expense was primarily  related to legal and
accounting   services.   Costs  related  to  merger  are  expected  to  increase
significantly in the first and second quarter of 2000.

Amortization of Software Development Costs

The amortization of software development costs decreased $3,048,000,  or 62%, to
$1,842,000  in 1999  from  $4,890,000  in  1998  primarily  due to a  $3,193,000
decrease in the  Company's  write-off of its research and  development  costs in
1999 as compared to 1998.  In 1998,  the Company wrote off a total of $3,443,000
of its research and  development  cost.  $1,038,000  of the total  write-off was
related to the exclusive  license of the Company's 3D Home Interiors  product to
its Company's publisher.  The remaining $2,405,000 was primarily attributable to
the software  capitalized  prior to 1998 in relation to certain  products in the
business-to-business  market  place  which the Company is exiting as a result of
its new business strategy to target the emerging E-commerce market. In 1999, the
Company wrote off a total of $250,000 of its research and development  cost. The
write-off  was  related  to the  product  lines  sold  to  one of the  Company's
competitors  in the first quarter of 1999.  The remaining  $145,000  increase in
amortization of software  development costs is due to higher capitalized project
costs being amortized in 1999 as compared to 1998.

Investment and Other Income

Investment and other income decreased $157,000, or 36%, to $278,000 in 1999 from
$435,000 in 1998 due to the  decrease in income  generated  from a money  market
account in which the Company's funds are maintained.  The decrease resulted from
a lower  average cash balance  maintained in this account in 1999 as compared to
1998.

Income Taxes

The Company  recorded no provision  for income taxes in 1999 and 1998 due to net
operating losses in both years.

                                       16
<PAGE>
1998 Compared with 1997

Net Revenues

Net revenues increased $2,231,000, or 50%, to $6,681,000 in 1998 from $4,450,000
in 1997.  The increase was primarily due to (i) an increase in the revenues from
the Company's  consumer CD-ROM  products,  (ii) an increase of $5,000 in revenue
from training  services,  and (iii) an increase of $71,000 in maintenance  fees.
These  increases were offset by a decrease of $887,000 in sales of the Company's
business  software  products  and  a  decrease  of  $131,000  in  revenues  from
consulting services.

Revenue generated from consumer CD-ROM products increased $3,173,000 or 176%, to
$4,975,000 in 1998 from  $1,802,000  in 1997.  The increase was primarily due to
(i) $1,980,000 of revenue  generated from the exclusive license of the Company's
3D Home Interiors product to its publisher, (ii) $1,600,000 of revenue generated
in  connection  with the Company's  developing  two CD-ROM  applications,  (iii)
$395,000 of revenue  generated in connection  with consumer  product  developing
services  provided to one of the Company's  major  customers and (iv) $1,000,000
CD-ROM  participation  revenue  generated  form the  Company's  consumer  CD-ROM
applications  in 1998. No such revenues were generated in 1997. The increase was
offset  by a total of  $1,802,000  revenues  generated  in 1997  which  were not
repeated in 1998,  including a one-time payment of $1,500,000 in connection with
the Company's  fulfillment of certain  obligations under an agreement with Intel
in connection with the co-development of consumer software.

Sales of business software products decreased $887,000, or 39%, to $1,398,000 in
1998 from  $2,285,000  in 1997  primarily  due to $400,000 in the foreign  sales
generated by two of the Company's major customers in Europe in 1997, which sales
were not repeated in 1998.  The remaining  decrease  resulted from the Company's
strategy to shift its marketing focus to Internet E-commerce.

Cost of Sales

Cost of sales  associated with the Company's  CD-ROM consumer  products does not
have a major impact on the total cost of sales since an insignificant  amount of
cost of sales was incurred in connection  with the CD-ROM  consumer  products in
1998 and no such cost of sales was incurred in 1997.

Selling, General and Administrative Expenses

Selling,  general and administrative expenses increased $4,897,000,  or 144%, to
$8,291,000  in  1998  from   $3,394,000  in  1997.   Personnel  costs  increased
$1,218,000,  or 78%, to $2,791,000 in 1998 from $1,573,000 in 1997. The increase
in personnel costs resulted from the hiring of additional personnel in late 1997
and 1998 to support the Company's increased operating activities, increasing the
total number of employees  from 86 as of December 31, 1997 to 121 as of December
31, 1998.  Additionally,  certain  related costs  including  travel,  marketing,
telephone,  office supplies expenses, taxes and licenses, repair and maintenance
and depreciation  expense increased  $2,253,000,  or 180%, to $3,505,000 in 1998
from  $1,252,000  in  1997.  $1,420,000  of such  increase  was  related  to the
Company's  increasing marketing activities in 1998 to support its new E-commerce
products. Also, professional services including accounting, legal and consulting
services increased $477,000, or 108%, to $919,000 in 1998 from $442,000 in 1997.
The  increase  in  professional  services  was  primarily  due to the  Company's
increased  requirements  for these  services in 1998 compared to 1997  resulting
from the Company's increased  operating  activities.  Finally,  bad debt expense
increased  $865,000,  or 1,663%, to $917,000 in 1998 from $52,000 in 1997 due to
the Company's  decision in 1998 to increase its bad debt reserve by $865,000 due
to the  Company's  increasing  sales  volume,  and based on a review of specific
accounts.

                                       17
<PAGE>
Research and Development

The Company  incurred  $6,592,000 of research and development  costs in 1998, as
compared  to  $3,000,000  in  1997.  In  1997,  $3,051,000  of such  costs  were
capitalized as software  development  costs,  while in 1998,  $2,828,000 of such
costs were capitalized as software  development costs. The remaining  $3,541,000
of research and development costs in 1998 were expensed, compared to $172,000 in
1997.  The 102% increase in research and  development  expenditure  from 1997 to
1998 was primarily due to the hiring of additional personnel to perform software
programming services in connection with the further development of the Company's
business software,  consumer software and Internet products.  A lower percentage
of research and development expenditures were capitalized in 1998 as compared to
1997 due primarily to the Company's  completion of two of its major  projects at
the  beginning of 1998. A  significant  portion of the research and  development
expenses  incurred  prior to the  completion  of those  two major  projects  was
capitalized as software development costs.

Amortization of Software Development Costs

The amortization of software development costs increased $4,116,000, or 532%, to
$4,890,000  in 1998 from  $774,000 in 1997  partially  because the Company began
marketing and amortizing  development costs associated with several new versions
of software  products in late 1997 and in 1998. In addition,  the Company took a
one-time  charge  to  write  off a  total  of  $3,443,000  of its  research  and
development  cost in 1998. Of the total write-off  $1,038,000 was related to the
exclusive  license of the Company's 3D Home Interiors  product to its publisher.
The remaining  $2,405,000  write-off was primarily  attributable to the software
capitalized  prior to 1998 in  relation  to  certain  products  in the  business
software  market  which the  Company is exiting as a result of its new  business
strategy to target the emerging E-commerce market.

Investment and Other Income

Investment and other income increased $104,000, or 31%, to $435,000 in 1998 from
$331,000 in 1997. This increase is due to the increase in income  generated from
a money  market  account in which the  proceeds  received  in July 1997 upon the
exercise by warrant  holders of the Company's  public  warrants  after notice of
redemption was given in June 1997, along with other amounts, are maintained.

Income Taxes

The Company  recorded no provision  for income taxes in 1998 and 1997 due to net
operating losses in 1998 and the utilization of net operating loss carryforwards
in 1997.

                                       18
<PAGE>
Liquidity and Capital Resources

The Company's ratio of current assets to current liabilities decreased to 2.6 on
December 31, 1999 from 10.12 at December 31,  1998.  The decrease was  primarily
due to a 32%  decrease  in  the  Company's  current  assets  balance  and a 167%
increase in its current  liabilities  balance from December 31, 1998 to December
31, 1999.  The 32% decrease in current  assets  balance was  primarily  due to a
$4,947,608  decrease in cash.  The decease was offset by a $157,104  increase in
accounts receivable, a $1,396,080 increase in prepaid expenses and other current
assets,  a $632,988  increase in deferred  royalties and a $467,496  increase in
deferred advertising and promotion. The 167% increase in current liabilities was
primarily due to a $1,275,530 increase in accounts payable and accrued expenses.

The  Company's  cash balance  decreased  $4,947,608,  or 78%, to  $1,395,991  at
December  31, 1999 from  $6,343,599  at December  31,  1998  primarily  due to a
decrease of $13,492,734 resulting from cash used by the Company in its operating
activities and a decrease of $894,820  resulting from cash used for the purchase
of fixed assets.  Such  decreases were offset by an increase of $422,750 in cash
received  by the  Company in  connection  with stock  options  exercised  by the
Company's  employees in 1999,  $6,000 received by the Company in connection with
warrants exercised by its IPO principal underwriter,  $1,250,000 received by the
Company in connection with warrants exercised by one of its outside  consultants
and net proceeds of $7,761,196  received by the Company in  connection  with the
issuance of 776,827 shares of its common stock in April 1999.

The  Company's  accounts  receivable  balance  increased  $157,104,  or 18%,  to
$1,042,091  at December  31,  1999 from  $884,987 at  December  31,  1998.  This
increase  was  primarily  due to a $450,000  receivable  balance at December 31,
1999,  which was related to the revenue  generated  in late 1999 from one of the
Company's major customers.  The increase was offset by a decrease resulting from
the  collection  during  1999  from  two of the  Company's  major  customers  of
approximately  $259,000 in accounts  receivable  from such customers at December
31, 1998.

The  Company's  prepaid  expenses and other  current  assets  balance  increased
$1,396,080 to $1,793,181 at December 31, 1999 from $397,101 at December 31, 1998
primarily due to a $3,414,286  prepayment  recorded in 1999 in connection with a
two-year  E-commerce  marketing  agreement  entered  into by the Company with an
Internet  portal company as a prepayment of future  marketing  expense.  Of this
amount, $1,925,000 was expensed in 1999.

The Company had  $5,063,930 in deferred  royalties at December 31, 1999 compared
to none at December 31, 1998. In April 1999, the Company recorded  $5,538,674 in
deferred  royalties in  connection  with the  issuance of 455,218  shares of the
Company's common stock and warrants to purchase a total of 538,674 shares of the
Company's  common  stock to Intel,  its project  co-developer.  Of this  amount,
$474,744 was expensed in 1999.

The Company had  $1,012,917 in deferred  advertising  and  promotion  expense at
December 31, 1999  compared to none at December 31, 1998.  In 1999,  the Company
recorded  $1,402,500 in deferred  advertising and promotion  expenses related to
the issuance of warrants to purchase a total of 250,000  shares of the Company's
common stock in consideration of business  promotion  services to be provided to
the Company. Of this amount, $389,583 was expensed in 1999.


                                       19
<PAGE>
The Company's accounts payable and accrued expenses balance increased $1,275,530
to $1,778,728 at December 31, 1999 from $503,198 at December 31, 1998  primarily
due to a $176,554  increase in accrued legal service fees from December 31, 1998
to December 31, 1999 and a $245,264 increase in accrued bonuses primarily due to
$200,000 in bonuses accrued for the Company's executive officers at December 31,
1999. Finally,  the total balance from the year-end  outstanding bills increased
$730,495  from  December  31,  1998  to  December  31,  1999  primarily  due  to
advertising  bills in a total amount of $588,223  recorded in late 1999 and paid
subsequent  to December  31, 1999.  No such bills were  recorded at December 31,
1998.

The Company's total shareholders'  equity balance increased $761,779,  or 6%, to
$13,071,470 at December 31, 1999 from $12,309,691 at December 31, 1998 primarily
due to  $7,761,196  in net  proceeds  received  from the  issuance of a total of
776,827  shares of the Company's  common stock to four of its investors in April
1999,  $422,750  in proceeds  received  from the  exercise  of stock  options to
purchase a total of 44,500 shares of the Company's  common stock by 18 employees
during  1999,  $6,000 in  proceeds  received  from the  exercise  of warrants to
purchase a total of 1,000 shares of the Company's  common stock by its principal
underwriter  of its  initial  public  offering  and  $1,250,000  received by the
Company  in  connection  with  warrants  exercised  by  an  outside  consultant.
Additionally,  an increase of $5,538,674 resulted from the Company's issuance to
Intel in April 1999 of 455,218  shares of the its common  stock and  warrants to
purchase a total of 538,674 shares of the Company's  common stock.  Finally,  an
increase  of  $1,662,500  resulted  from the  Company's  issuance of warrants to
purchase  466,667  shares of common stock in 1999 in  consideration  of business
promotion and consulting  services  provided (or to be provided) to the Company.
The increase was offset by a net operating  loss in the amount of $15,879,341 in
1999.

As of December 31, 1999,  employee  stock options to purchase a total of 946,286
shares with a weighted  average  exercise price of $11.11 per share and warrants
to purchase a total of  2,225,969  shares of the  Company's  common stock with a
weighted average exercise price of $13 per share were exercisable. Approximately
$40  million  will be received if all of such stock  options  and  warrants  are
exercised  in the future.  However,  the  exercise  of these  stock  options and
warrants is subject to various conditions,  including the Company's stock market
price,  the  option/warrant   holders'   willingness  to  exercise  and  certain
restrictive trading regulations.

In January  2000,  the Company  and USA  Network,  Inc.  ("USAi")  announced  an
agreement  to form a new company by merging the  Company and  Internet  Shopping
Network  ("ISN"),  an indirect wholly owned  subsidiary of USAi. The new company
will own and operate the combined  properties of the Company and ISN.  Under the
terms of the  agreement,  USAi will also invest $40 million in cash,  contribute
$10 million in dedicated media and will receive warrants to purchase  additional
shares of the new  company.  Upon both the closing of the  transaction  and on a
fully diluted basis,  USAi will own approximately 75% of the new company and the
Company's  shareholders  will own  approximately  25%. In the interim,  USAi has
extended a $10 million bridge loan to the Company. Consummation of the merger is
subject to various conditions,  including approval by the Company's shareholders
and the receipt of required regulatory approvals.

The Company  anticipates  continuing  to use its capital  primarily  to fund the
activities related to the design,  development,  marketing, sales and support of
the Company's E-commerce web-sites.  Together with its existing capital, the $10
million credit term provided by USAi and anticipated funds from operations,  the
Company  believes that its capital  resources  will be sufficient to provide its
anticipated cash needs for working capital and capital expenditures for at least
the next 12 months. The Company expects the merger to be completed in the second
quarter  of  2000.  If the  merger  is not  completed  and cash  generated  from
operations is insufficient to satisfy the Company's  capital  requirements,  the
Company may have to sell  additional  equity or debt securities or obtain credit
facilities, assuming it can do so on acceptable terms.

                                       20
<PAGE>
Item 7A. Quantitative and Qualitative Disclosure of Market Risk

     None.

Item 8. Financial Statements and Supplementary Data

     See index to financial statements on page 23.

                                       21
<PAGE>






                          Audited Financial Statements
                               Styleclick.com Inc.

                  Years ended December 31, 1999, 1998 and 1997
                       with Report of Independent Auditors



                                       22

<PAGE>


                               Styleclick.com Inc.

                          Audited Financial Statements


                  Years ended December 31, 1999, 1998 and 1997




                                    Contents

Report of Independent Auditors...............................................24

Audited Financial Statements

Balance Sheets...............................................................26
Statements of Operations.....................................................27
Statements of Stockholders' Equity...........................................28
Statements of Cash Flows.....................................................29
Notes to Financial Statements................................................31





                                       23

<PAGE>


                         Report of Independent Auditors


The Board of Directors
Styleclick.com Inc.

     We have audited the accompanying  balance sheet of Styleclick.com Inc. (the
"Company")  as of December 31, 1999 and the related  statements  of  operations,
stockholders'  equity,  and cash  flows of the  Company  for the year then ended
December 31, 1999.  Our audit also  included the  financial  statement  schedule
listed in the Index at Item 14(d).  These financial  statements and schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audit.

     We conducted our audit in  accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material  respects,  the  financial  position of  Styleclick.com  Inc. at
December 31, 1999,  and the results of its operations and its cash flows for the
year ended December 31, 1999, in conformity with accounting principles generally
accepted in the United  States.  Also,  in our  opinion,  the related  financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.


                                              /s/ERNST & YOUNG LLP
                                              ----------------------
                                                 Ernst & Young LLP


Los Angeles, California
February 21, 2000


                                       24

<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
Styleclick.com Inc. (formerly ModaCAD, Inc.)

We have audited the accompanying  balance sheet of Styleclick.com Inc. (formerly
ModaCAD,  Inc.)  as  of  December  31,  1998,  and  the  related  statements  of
operations, stockholders' equity and cash flows for each of the two years in the
period ended December 31, 1998. Our audits also included the financial statement
schedule listed in the Index at Item 14(d).  These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Styleclick.com  Inc. (formerly
ModaCAD,  Inc.) as of December 31, 1998,  and the results of its  operations and
its cash flows for each of the two years in the period  ended  December 31, 1998
in  conformity  with  generally  accepted  accounting  principles.  Also, in our
opinion,  the related financial statement schedule,  when considered in relation
to the  basic  financial  statements  taken as a whole,  presents  fairly in all
material respects the information set forth therein.



/s/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
-------------------------------------------
    Singer Lewak Greenbaum & Goldstein LLP


Los Angeles, California
March 16, 1999

                                       25

<PAGE>

                               Styleclick.com Inc.

                                 Balance Sheets
<TABLE>
<CAPTION>

                                                              December 31,
                                                          1999          1998
                                                      -----------   -----------
<S>                                                   <C>           <C>
Assets
Current assets:
   Cash and cash equivalents                          $ 1,395,991   $ 6,343,599
   Accounts receivable, net of allowance for
      doubtful accounts of $242,229 and $132,500
      at December 31, 1999 and 1998, respectively         799,862       752,487
   Deferred royalties                                     632,988             -
   Deferred advertising and promotion                     467,496             -
   Prepaid expenses and other current assets            1,793,181       397,101
                                                      -----------   -----------
Total current assets                                    5,089,518     7,493,187

Capitalized computer software development costs,
   net of accumulated amortization of $7,880,904
   and $6,039,105 at December 31, 1999 and
   1998, respectively                                   2,294,914     3,014,043
Fixed assets, net of accumulated depreciation
   of $1,823,850 and $1,069,832 at December 31, 1999
   and 1998, respectively                               2,600,458     2,459,656
Deferred royalties, non-current                         4,430,942             -
Deferred advertising and promotion, non-current           545,421             -
Other assets                                               85,663        83,055
                                                      -----------   -----------
 Total assets                                         $15,046,916   $13,049,941
                                                      ===========   ===========

Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable and accrued expenses              $ 1,778,728   $   503,198
   Deferred income                                        196,718       237,052
                                                      -----------   -----------
Total current liabilities                               1,975,446       740,250

Commitments (Note 3)

Stockholders' equity:
   Common stock; No par value; 15,000,000 shares
      authorized, 7,673,515 shares and 6,143,374
      shares issued and outstanding at December 31,
      1999 and 1998, respectively                      43,216,747    26,575,627
   Accumulated deficit                                (30,145,277)  (14,265,936)
                                                      -----------   -----------
Total stockholders' equity                             13,071,470    12,309,691
                                                      -----------   -----------
Total liabilities and stockholders' equity            $15,046,916   $13,049,941
                                                      ===========   ===========
</TABLE>
See accompanying notes to financial statements.

                                       26

<PAGE>
                               Styleclick.com Inc.

                            Statements of Operations
<TABLE>
<CAPTION>


                                                 Years ended December 31,
                                             1999          1998          1997
                                        ------------   -----------   -----------
<S>                                     <C>            <C>           <C>
Net revenues                            $  6,173,924   $ 6,681,280   $ 4,449,857

Cost of sales                                667,701        82,135        87,470
                                        ------------   -----------   -----------
Gross profit                               5,506,223     6,599,145     4,362,387

Operating costs and expenses:
Selling, general and administrative       13,361,980     8,290,979     3,393,765
Research and development                   6,054,105     3,541,300       171,769
Merger related costs                         405,333             -             -
Amortization of software development
   costs                                   1,841,798     4,889,986       774,135
                                        ------------   -----------   -----------
Total operating costs and expenses        21,663,216    16,722,265     4,339,669
                                        ------------   -----------   -----------

Operating (loss) profit                  (16,156,993)  (10,123,120)       22,718
                                        ------------   -----------   -----------

Other income (expense):
   Loss in equity investment                       -       (55,324)            -
   Other income                                    -         2,067        11,190
   Investment income                         277,652       488,738       320,367
                                        ------------   -----------   -----------
Total other income (expense)                 277,652       435,481       331,557
                                        ------------   -----------   -----------
Net (loss) income                       $(15,879,341)  $(9,687,639)   $  354,275
                                        ============   ===========   ===========

Basic (loss) income per share           $      (2.24)  $     (1.59)   $     0.07
                                        ============   ===========   ===========

Diluted (loss) income per share         $      (2.24)  $     (1.59)   $     0.06
                                        ============   ===========   ===========

Weighted average shares outstanding        7,092,374     6,088,247     4,800,918
                                        ============   ===========   ===========
</TABLE>
See accompanying notes to financial statements.

                                       27


<PAGE>
                               Styleclick.com Inc.

                        Statements of Stockholders' Equity
<TABLE>
<CAPTION>

                                    Common Stock       Accumulated
                              ----------------------
                                Shares       Amount       Deficit      Total
                              ---------  -----------  ------------  -----------
<S>                           <C>        <C>          <C>           <C>
Balance at January 1, 1997    3,865,790  $11,593,905  $ (4,932,572) $ 6,661,333
   Issuance of common
      stock for stock
      options exercised          29,000      149,376             -      149,376
   Warrants exercised         2,128,184   13,369,126             -   13,369,126
   Warrant redemption cost            -     (167,055)            -     (167,055)
   Issuance of  warrants
      for services                    -      572,000             -      572,000
   Net income                         -            -       354,275      354,275
                              ---------  -----------  ------------  -----------
Balance at December 31, 1997  6,022,974   25,517,352    (4,578,297)  20,939,055
   Issuance of common stock
      for stock options
      exercised                  94,000      837,875             -      837,875
   Warrants exercised            26,400      158,400             -      158,400
   Issuance of  warrants for
      services                        -       62,000             -       62,000
   Net loss                           -            -    (9,687,639)  (9,687,639)
                              ---------  -----------  ------------  -----------
Balance at December 31, 1998  6,143,374   26,575,627   (14,265,936)  12,309,691
   Issuance of  common stock    779,423    7,761,196             -    7,761,196
   Issuance of common stock
      for stock options
      exercised                  44,500      422,750             -      422,750
   Issuance of common stock
      for services              455,218    5,000,000             -    5,000,000
   Warrants exercised           251,000    1,256,000             -    1,256,000
   Issuance of  warrants for
      services                        -    2,201,174             -    2,201,174
   Net loss                           -            -   (15,879,341) (15,879,341)
                              ---------  -----------  ------------  -----------
Balance at December 31, 1999  7,673,515  $43,216,747  $(30,145,277) $13,071,470
                              =========  ===========  ============  ===========

</TABLE>
See accompanying notes to financial statements.

                                       28

<PAGE>
                               Styleclick.com Inc.

                            Statements of Cash Flows
<TABLE>
<CAPTION>
                                               Years ended December 31,
                                          1999           1998          1997
                                     ------------     -----------   -----------
<S>                                  <C>              <C>            <C>
Operating activities
Net (loss) income                    $(15,879,341)    $(9,687,639)   $  354,275
Adjustments to reconcile net (loss)
   income to net cash used in
   operating activities
      Depreciation                        754,018         292,671        65,665
      Amortization of capitalized
         software development costs     1,841,797       4,889,986       774,135
      Capitalized computer software
         development costs             (1,122,668)     (2,895,512)   (2,682,956)
      Amortization of deferred costs
         for services rendered            974,327          62,000        12,000
      Fixed assets acquired in
         exchange for sales                     -        (275,000)            -
      Loss in equity investment                 -          55,324             -
      Changes in operating assets
         and liabilities:
           Accounts receivable, net       (47,375)      1,408,665      (818,299)
           Prepaid expenses and other
              current assets           (1,246,080)        350,675       (34,343)
           Other assets                    (2,608)          8,593       (69,208)
           Accounts payable and
              accrued expenses          1,275,530         142,477       (10,022)
           Deferred income                (40,334)        132,772        29,501
                                     ------------     -----------   -----------
Net cash used in operating
   activities                         (13,492,734)     (5,514,988)   (2,379,252)

Investing activities
Purchase of fixed assets                 (894,820)     (1,557,680)     (616,166)
                                     ------------     -----------   -----------
Net cash used in investment
   activities                            (894,820)     (1,557,680)     (616,166)

Financing activities
Payments on officers/stockholders
   note payable                                 -               -       (75,000)
Stock options exercised                   422,750         837,875       149,376
Warrants exercised                      1,256,000         158,400    13,369,126
Issuance of common stock                7,761,196               -      (167,055)
                                     ------------     -----------   -----------
Net cash provided by financing
   activities                           9,439,946         996,275    13,276,447
Net (decrease) increase in cash
   and cash equivalents                (4,947,608)     (6,076,393)   10,281,029
                                     ------------     -----------   -----------
Cash and cash equivalents at
   beginning of year                    6,343,599      12,419,992     2,138,963
                                     ------------     -----------   -----------
Cash and cash equivalents
   at end of year                     $ 1,395,991     $ 6,343,599   $12,419,992
                                     ============     ===========   ===========

</TABLE>
See accompanying notes to financial statements.

                                       29

<PAGE>


                               Styleclick.com Inc.

                            Statements of Cash Flows



Supplemental disclosure of noncash transactions

During 1999, the Company recorded  deferred  royalties and deferred  advertising
and promotion  costs of $7,141,174  due to the issuance of 455,218 shares of the
Company's  common stock,  warrants to purchase a total of 538,674  shares of the
Company's common stock to a project  co-developer,  and the issuance of warrants
to  purchase  a total  of  350,000  shares  of the  Company's  common  stock  in
consideration of business  promotional  services to be provided for the Company.
During 1999, $914,327 of such costs were expensed.

During 1997, the Company  issued  warrants to purchase a total of 126,316 shares
of the Company's  common stock valued at $560,000 for development  expenses that
were performed in 1998.

During the years ended  December 31,  1999,  1998 and 1997,  the Company paid no
income taxes or interest.


See accompanying notes to financial statements.

                                       30

<PAGE>


                               Styleclick.com Inc.

                          Notes to Financial Statements

1. Line of Business and Basis of Presentation

Styleclick.com Inc. ("Styleclick" or the "Company"),  formerly known as Modacad,
Inc., was  incorporated in California on February 4, 1988. The Company is in the
business  of  developing,   marketing,   and  supporting   electronic   commerce
("E-commerce") Internet web-sites;  Internet enabled applications;  and business
and consumer software products,  based on its proprietary technology for content
management, including modeling and rendering technology.

Beginning  in 1999,  the Company  shifted its  primary  business  focus from the
business-to-business  marketplace to the emerging consumer  Internet  E-commerce
market. In connection with this shift in focus, the Company divested many of its
products in the  business-to-business  and consumer software product groups. The
Company is  focusing  its  technology  to build and deploy  E-commerce  Internet
sites,  such a comparative  search and shopping  solutions aimed at facilitating
businesses'  use of  electronic  commerce  to reach  consumers  in the  apparel,
footwear, accessories, cosmetics and home furnishings industries. As a result of
the Company's shift in business focus, revenue of approximately $2.6 million and
$400,000 recorded in 1998 and 1997, respectively, are not expected to reoccur in
future period.


The accompanying  financial  statements have been prepared on the basis that the
Company will continue as a going concern which  contemplates  the realization of
assets and the satisfaction of liabilities in the normal course of business.  As
shown in the accompanying financial statements, the Company incurred significant
operating  losses and negative cash flows from operations for the last two years
and is currently being advanced funds by USA Networks, Inc. ("USAi") pursuant to
USAi's $10 million line of credit  extended to the Company in  contemplation  of
the Company's merger with the Internet Shopping Network (see Note 11).

The Company's  continuation  as a going concern is dependent upon the success of
its merger with the Internet  Shopping Network or the raising of additional debt
or  equity  financing.  The  Company  believes  that the  proceeds  from  USAi's
investment,  in addition to revenue  generated  from  expansion of the Company's
services in the market place will support the Company's operations through 2000.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company  considers all  highly-liquid  investments  purchased  with original
maturities of three months or less to be cash equivalents.

                                       31

<PAGE>

                              Styleclick.com Inc.

                          Notes to Financial Statements


2. Summary of Significant Accounting Policies (continued)

Software Development Costs

Prior to 1999,  software  development  costs were capitalized in accordance with
Statement of Financial  Accounting Standards No. 86, "Accounting for the Cost of
Computer Software to Be Sold,  Leased,  or Otherwise  Marketed ("SFAS No. 86")".
Under  SFAS  No.  86,  software  development  costs  were  capitalized  upon the
establishment of technological feasibility and discontinued when the product was
available  for sale.  Capitalized  software  development  costs  were  comprised
primarily of direct overhead, payroll costs and consultants' fees of individuals
working directly on the development of specific software products.

On January 1, 1999, the Company adopted Statement of Position 98-1,  "Accounting
for the Costs of Computer Software  Developed or Obtained for Internal Use ("SOP
98-1")".  SOP 98-1  identifies  three stages of a typical  software  development
project: preliminary project stage, application development stage, and the post-
implementation  stage. As required by SOP 98-1, the Company  capitalizes certain
qualifying  costs incurred during the application  development  stage. All other
internal use development costs are expensed as incurred.

The carrying value of software and development  costs is periodically  reviewed,
and a loss is  recognized  when the value of  estimated  undiscounted  cash flow
benefit related to the asset falls below the unamortized  cost,  consistent with
the Company's policy regarding long-lived assets.  During 1998, an impairment of
capitalized computer software development costs of approximately  $3,443,000 was
recognized  and has  been  included  in  amortization  of  capitalized  software
development  costs in the statement of  operations.  Costs  capitalized  for the
years  ended  December  31,  1999  and  1998  were  $1,122,668  and  $3,050,471,
respectively.

Amortization  of  capitalized  software  development  costs  is  provided  on  a
project-by-project basis on the straight-line method over the estimated economic
life of the products (not to exceed three years).

In March 2000,  Emerging  Issues  Task Force 00-2 (EITF  00-2),  Accounting  for
Website Development Costs was issued.  EITF 00-2 is effective  prospectively for
all costs incurred for quarters  beginning after June 30, 2000 and addresses how
an entity should account for costs  incurred to develop a web-site.  The Company
does not expect the adoption of EITF 00-2 to have a material impact,  if any, on
its financial position or results of operations.

Fixed Assets

Furniture and equipment are recorded at cost.  Depreciation is computed by using
the  straight-line   method  over  an  estimated  useful  life  of  five  years.
Maintenance and minor replacements are charged to expense as incurred. Gains and
losses on disposals of fixed assets are included in the results of operations.

                                       32

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


2. Summary of Significant Accounting Policies (continued)

Revenue Recognition

Business-to-Business

The Company  recognizes  revenues  generated  from vendor  participation  in the
Company's CD-ROM applications  ("CD-ROM  participation  fees") and the Company's
on-line shopping Internet web-sites  ("project  participation  fees") based upon
the  accomplishment  of contractual  milestones in a manner that matches revenue
with the related costs. Revenue generated from services provided to customers in
the  development  and  maintenance  of  their  Internet   web-sites   ("web-site
development and maintenance  fees") is recognized based on the accomplishment of
contractual  milestone in a manner that matches  revenue with the related costs.
Generally,  the terms of contracts  that  generate  CD-ROM  participation  fees,
project  participation  fees, and web-site  development and maintenance fees are
short term in nature (twelve months or less).

Barter

The Company has entered into several barter transaction  arrangements whereby it
receives  certain  non-monetary  benefits.  The Company has not  recognized  any
revenue  under these  contracts  because it does not have a history of receiving
cash for similar transactions.

Internet Applications

Revenue  generated  from the  Company's  fulfillment  services  provided  to the
Company's on-line shopping Internet web-site participant vendors ("transactional
revenue") is recognized based on a percentage of gross revenues from the related
transactions  upon  notification  of  shipment of the  vendors'  products by the
Company's fulfillment warehouse or the participant vendors.

Revenue  generated  from  referral  of vendors'  products to Internet  consumers
through the Company's on-line shopping  Internet  web-sites  ("product  referral
fees") are  recognized  based on a percentage of gross revenues from the related
transactions  based upon notification of the respective sales information by the
Company's  vendors,  the independent  Internet traffic tracking companies or the
Company's on-line tracking reports.

Other

Revenue generated from advertising on the Company's  on-line shopping  web-sites
("on-line   advertising   revenue")  is   recognized   over  the  terms  of  the
corresponding contracts on a straight-line basis.

Consumer Software, CD-ROM Applications

The Company  recognizes  revenues  related to  software  licenses  and  software
maintenance in accordance with SOP 97-2, "Software Revenue Recognition." Product
revenue is recorded at the time of  shipment,  net of estimated  allowances  and
returns.  Revenue generated from post contract customer support is recognized on
a  straight-line  basis over the term of the  corresponding  contract,  which is
generally twelve months.

                                       33

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


2. Summary of Significant Accounting Policies (continued)

Cost of Sales

Costs of sales are comprised primarily of product fulfillment costs, credit card
processing fees, direct shipping material and product royalties  associated with
the respective revenues.

Impairment of Long-Lived Assets

In accordance  with SFAS No. 121.  "Accounting  for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of" the Company periodically reviews
long-lived  assets for impairment  whenever  events or changes in  circumstances
indicate  that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows (on an undiscounted  basis)
expected  to be  generated  by the asset.  If such assets are  considered  to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.

Advertising Expense

The cost of  advertising  is expensed as incurred.  Advertising  expense for the
years  ended  December 31,  1999,  1998 and 1997 was  $4,513,918,  $992,217  and
$19,629, respectively and is included in the statement of operations as selling,
general and administrative expense.

Research and Development Costs

Research and development  costs are charged to expense as incurred.  These costs
consist primarily of salaries, consulting fees and direct overhead.

Stock-Based Compensation

The Company  accounts for  stock-based  compensation  arrangements in accordance
with the  provisions  of  Accounting  Principles  Board Opinion No. 25 (APB 25),
"Accounting  for Stock Issued to  Employees,"  and complies with the  disclosure
provisions  of  Statement of Financial  Accounting  Standards  No. 123 (SFAS No.
123), "Accounting for Stock-Based Compensation." The Company accounts for equity
securities issued to non-employees in accordance with the provisions of SFAS No.
123.  All stock  options are issued at an exercise  price at or above the deemed
fair value of the Company's stock.

Income Taxes

The Company accounts for income taxes under the liability  method,  and deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
attributed to differences  between the financial  statement  carrying amounts of
existing  assets and liabilities  and their  respective tax bases.  Deferred tax
assets and  liabilities  are measured  using enacted tax rates in effect for the
year in which  those  temporary  differences  are  expected to be  recovered  or
settled.  Deferred tax assets are reduced by a valuation  allowance when, in the
opinion of  management,  it is more likely than not that some  portion or all of
the deferred tax assets will not be realized.

                                       34

<PAGE>


                               Styleclick.com Inc.

                          Notes to Financial Statements


2. Summary of Significant Accounting Policies (continued)

Net Income (Loss) Per Share

Basic net income (loss) per share excludes  dilution and is computed by dividing
net income (loss) by the weighted  average  number of common shares  outstanding
during the reported  period.  Diluted net income  (loss) per share  reflects the
potential  dilution that could occur if stock options and other  commitments  to
issue common stock were exercised using the treasury stock method.

Fair Value of Financial Instruments

The Company  measures its financial  assets and  liabilities in accordance  with
generally accepted accounting  principles.  The Company's financial  instruments
include cash and cash  equivalents  and accounts  receivable  and their carrying
amounts approximate fair value.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk consist of cash and trade  receivables.  The Company places its cash
with high quality financial  institutions.  Amounts of $1,106,074 and $6,026,869
held in a money market account were fully insured at December 31, 1999 and 1998,
respectively.  The  Company  extends  credit  based  on  an  evaluation  of  the
customer's financial condition, generally without requiring collateral. Exposure
to losses on receivables is principally  dependent on each customer's  financial
condition.  The Company  monitors its exposure for credit  losses and  maintains
allowances for anticipated losses.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities  and  disclosures  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

                                       35

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements

3. Fixed Assets

Fixed assets at December 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
                                                     1999              1998
                                                 -----------      ------------
<S>                                              <C>              <C>
Computer equipment and software                  $ 3,365,275      $  2,607,578
Office equipment                                     318,204           233,652
Furniture and fixtures                               268,969           255,510
Leasehold improvements                               471,860           432,748
                                                 -----------      ------------
                                                   4,424,308         3,529,488
Less accumulated depreciation                      1,823,850         1,069,832
                                                 -----------      ------------
                                                 $ 2,600,458      $  2,459,656
                                                 ===========      ============
</TABLE>
Depreciation  expense for the years ended  December 31,  1999, 1998 and 1997 was
$754,018,  $447,628  and  $210,712,  respectively.

4. Commitments

Leases

The Company leases certain  facilities for its corporate and operations  offices
under long-term,  non-cancelable operating lease agreements which expire through
April 30, 2006.

Future minimum  aggregate lease payments under  non-cancelable  operating leases
with initial or remaining terms of one year or more at December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
Years ending                              Sub-lease rental
December 31,        Operating leases           income                 Total
-----------          -----------           -----------            -----------
<S>                  <C>                   <C>                    <C>
  2000               $   559,135           $   105,000            $   454,135
  2001                   528,375               105,000                423,375
  2002                   487,259                52,500                434,759
  2003                   446,142                     -                446,142
  2004                   406,891                     -                406,891
Thereafter               541,326                     -                541,326
                     -----------           -----------            -----------
                     $ 2,969,128           $   262,500            $ 2,706,628
                     ===========           ===========            ===========
</TABLE>
Rent  expense  for  the  years  ended  December 31,  1999,  1998  and  1997  was
approximately $468,557, $451,253 and $192,000, respectively.

                                       36

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements

4. Commitments (continued)

Employment Agreements

In 1998,  the Company  entered into two new employment  agreements,  expiring on
December 31, 2005,  with two key officers of the Company.  Under the agreements,
these  officers  receive  aggregate  annual  salaries  of  $400,000  and monthly
aggregate automobile allowances of $1,200. In addition,  these officers received
aggregate signing bonuses of $200,000.  Further, the Company shall pay an annual
performance  bonus to each officer for each calendar year of the employment term
in an amount determined by the Compensation Committee of the Board of Directors.
In 1999, the Company amended these two employment  agreements to increase annual
salaries  paid to these  officers to an aggregate  amount of $460,000  effective
January 1, 2000 and awarded $200,000 performance bonuses to these officers.

In connection with the employment agreements, the same key officers were granted
five-year  options to  purchase  up to an  aggregate  of  400,000  shares of the
Company's  common  stock at an exercise  price of $15.88.  Such options vest and
become exercisable over the next three years and contain accelerated vesting and
exercisability criteria based on achieving certain operating results. Options to
purchase  133,332  shares are vested and became  exercisable  as of December 31,
1999 and  options to  purchase  133,334  and  133,334  shares will be vested and
become exercisable as of December 31, 2000 and 2001, respectively.

In July 1999,  the Company  entered into a new  employment  agreement with a key
officer of the company that expires on June 30, 2002.  Under the agreement,  the
officer receives an annual salary of $125,000 and a monthly automobile allowance
of $400.

E-Commerce Marketing Agreement

In  June  1999,  the  Company  entered  into a  two-year  interactive  marketing
agreement with an Internet Portal company (the  "Portal").  Under the agreement,
the Portal will promote the Company's  E-commerce  Internet  web-site in several
areas of the Portal's  Internet  web-sites.  In consideration of such promotion,
the Company will make payments to the Portal totaling up to $7.5 million in cash
through  January 2001. As of December 31, 1999, the Company had paid  $3,214,286
in cash to the Portal  under this  agreement.  In  addition,  in June 1999,  the
Company  issued  warrants  to the  Portal  to  purchase  100,000  shares  of the
Company's  common  stock at an exercise  price of $12.34 that expire in December
2001.  The fair value of such  warrants was $200,000  based on the fair value of
the consideration  received. This cash and the value of the warrant was deferred
and is included in prepaid  expenses  and other  current  assets at December 31,
1999,  net of  amortization  of  $1,925,000  in 1999.  The entire amount of $7.7
million is being  amortized to expense over the two-year  term of the  marketing
agreement.

                                       37

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


5. Stockholders' Equity

Common Stock and Warrants

In November  1997,  the Company  issued a warrant to purchase  126,316 shares of
common stock to its project co-developer  ("Co-developer") for services provided
to the Company.  The warrant  expires in November 2002 and has an exercise price
of $19.00 per share of common stock.  Under the Project  Development  Agreement,
the Company had an obligation to the  Co-developer  for certain royalty payments
in the form of cash and common stock purchase warrants.

In April  1999,  the  Company  entered  into a Stock and  Warrant  Purchase  and
Investor Rights Agreement  ("Purchase  Agreement") with the Co-developer.  Under
the Purchase Agreement, the Company issued 455,218 shares of common stock to the
Co-developer.  Further,  in return  for  termination  of the  Company's  royalty
obligation  to the  Co-developer,  the  Company  issued  warrants to purchase an
aggregate of 538,674  shares of common stock with exercise  prices  ranging from
$10.98 to $13.18. The warrants expire as follows:  189,674 shares in April 2000,
189,674  shares in July 2000 and 159,326  shares in April 2004. The value of the
common  stock and warrants of  approximately  $5.5 million has been based on the
expected  future  royalty  obligation  and will be  amortized  over the original
royalty term through December 2007.

Concurrent  with the Purchase  Agreement,  the Company entered into a Securities
Purchase  Agreement with each of four investors.  Under the Securities  Purchase
Agreement,  the  investors  purchased  an  aggregate  of  776,827  shares of the
Company's  common stock and warrants to purchase an aggregate of 919,243  shares
of common stock with exercise  prices  ranging from $13.18 to $13.73 that expire
as follows:  323,677  shares in April  2000,  323,677  shares in July 2000,  and
271,889 shares in April 2004.

As a result of this  offering,  the Company  received net proceeds of $7,721,510
after paying costs associated with the offering.  The Company issued warrants to
purchase  15,536 shares of common stock at an exercise price of $10.98 per share
to two  placement  agents in  connection  with the  Purchase  Agreement  and the
Securities Purchase Agreement. The warrants expire in April 2004.

                                       38

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements

5. Stockholders' Equity (continued)

Warrants

In connection with the Company's  initial public offering ("IPO") in March 1996,
the  Company  issued to the  principal  underwriter  unit  purchase  warrants to
purchase  140,000  units  at a per  unit  exercise  price of  $6.00.  Each  unit
consisted of one share of common stock and one redeemable warrant exercisable to
purchase one share of common stock at an exercise price of $9.10 per share. Such
unit purchase warrants are exercisable for a four-year period, which began March
27, 1997. In 1997, the underwriter (or assignees of the underwriter) exercised a
portion  of the  warrants  to  purchase  an  aggregate  of 88,300  shares of the
Company's common stock and 88,300  redeemable common stock purchase warrants for
an aggregate  exercise  price of $529,800.  The  underwriter  (or its assignees)
further  exercised  redeemable common stock purchase warrants to purchase 30,800
shares of the Company's common stock for $280,280.  In 1998, the underwriter (or
its assignees)  exercised  redeemable common stock purchase warrants to purchase
an aggregate of 26,400  shares of the Company's  common stock for  $158,400.  In
1999, the  underwriter  (or its  assignees)  exercised  redeemable  common stock
purchase  warrants to purchase an  aggregate  of 1,000  shares of the  Company's
common stock for $6,000.

In December  1996,  the Company  issued  warrants to purchase  250,000 shares of
common stock to an outside consultant for services provided to the Company.  The
warrants had an exercise price of $5.00 per share and were to expire in December
1999. In 1999,  the warrant  holder  exercised its warrants to purchase  250,000
shares of the Company's common stock for $1,250,000.

In July 1997, the Company issued  warrants to purchase  100,000 shares of common
stock to a financial advisor for services provided to the Company.  The warrants
expire in July 2002 and have an exercise  price of $14.38 per common  share.  In
accordance  with SFAS No. 123,  the Company  valued  these  warrants at $36,000,
which was the  current  market  value of the  services  rendered  by the warrant
holder.  Such amount was  recognized  as consulting  expense  during 1998. As of
December 31, 1999, these warrants had not been exercised.

In June 1998,  the Company issued  warrants to purchase  50,000 shares of common
stock to an outside promotion agency for services  provided to the Company.  The
warrants  expire in May 2003 and have an  exercise  price of $17.75  per  common
share. In December 1998, the Company issued warrants to purchase 8,333 shares of
commons  stock to the same  agency for  services  provided to the  Company.  The
warrants expire in November 2003 and have an exercise price of $20.00 per common
share.  During  1999,  the Company  issued  warrants to purchase an aggregate of
41,667 shares of common stock with exercise prices ranging from $11.56 to $20.00
that expire in January 2004 through May 2004. In  accordance  with SFAS No. 123,
the Company valued these warrants at $15,000, which was the current market value
of the  services  rendered by the  warrant  holder.  During  1999 and 1998,  the
Company recognized  $15,000 and $21,000,  respectively,  of promotional  expense
related to these warrants.  As of December 31, 1999, these warrants had not been
exercised.

                                       39

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements

5. Stockholders' Equity (continued)

Warrants (continued)

In March 1999, the Company issued warrants to a third party to purchase  250,000
shares of common stock at an exercise  price of $16.80 per share.  Such warrants
were issued in  consideration of business  promotion  services to be provided to
the Company and were fully vested and immediately exercisable on the grant date,
and expire in March 2004.  In October  1999,  the Company  changed the  exercise
price to $10.86 per share of common  stock,  which was 110% of the  then-current
market value. In accordance with SFAS No. 123, the Company valued these warrants
using an option  pricing model and recorded  $1,402,500 as deferred  advertising
and  promotion  services  to be  amortized  over  the  three-year  term  of  the
advertising and promotion services,  of which $389,583 was expensed during 1999.
As of December 31, 1999, these warrants had not been exercised.

In June,  July and August  1999,  the  Company  issued  warrants  to purchase an
aggregate of 30,000  shares of common stock to a financial  advisor for services
provided to the Company. The warrants had an exercise price of $13.00 per common
share and expire in June, July and August 2002. In accordance with SFAS No. 123,
the Company  valued these warrants at $45,000 which was the current market value
of the services  rendered by the warrant  holder.  Such amount was recognized as
consulting expense during 1999. As of December 31,  1999, these warrants had not
been exercised.

The Company has granted non-employee directors warrants to purchase an aggregate
of 77,000 shares of common stock at exercise  prices ranging from $4.25 to $9.50
that expire at various  times from May 2001 through  October  2009.  Warrants to
purchase  4,000  common  shares  were  canceled  in July  1999  when  one of the
directors  was not  re-elected  during the  Company's  1999 annual  shareholders
meeting.  These  warrants have been accounted for under the provisions of APB 25
as allowed under SFAS No. 123.

                                       40

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


6. Stock Option Plan

In 1995,  the Company  adopted the 1995 Stock  Option  Plan (the  "Plan")  which
expires in 2006. The Plan provides for options for 2,500,000  shares that may be
granted to any  employee,  officer  and  director of the  Company.  The Board of
Directors or its  committee  selects the optionees  and  determines  the type of
option (incentive or non-statutory) and number of shares subject to each option.

A summary of changes in outstanding  options under the Plan and warrants  issued
outside of the plan follows:
<TABLE>
<CAPTION>
                                               Weighted                Weighted
                                    Stock      Average                 Average
                                   Options     Exercise     Other      Exercise
                                 Outstanding    Price      Warrants     Price
                                  ---------    -------     ---------    -------
<S>                               <C>          <C>        <C>           <C>
Balance at December 31, 1996        204,000    $  4.96     2,202,000    $  6.07
   Granted                          733,454    $ 16.29       528,616    $ 11.58
   Exercised                        (29,000)   $  5.15    (2,128,184)   $  6.28
   Canceled                          (6,000)   $  9.50          (916)   $ (6.50)
                                  ---------    -------     ---------    -------
Balance at December 31, 1997        902,454    $ 14.10       601,516    $ 10.16
   Granted                          840,000    $  8.92       100,733    $ 13.47
   Exercised                        (94,000)   $  6.03       (26,400)   $  6.00
   Canceled                        (181,000)   $ 15.70             -          -
                                  ---------    -------     ---------    -------
Balance at December 31, 1998      1,467,454    $ 11.47       675,849    $ 10.99
   Granted                          725,000    $  8.90     1,941,120    $ 12.62
   Exercised                        (44,500)   $  9.50      (251,000)   $  5.00
   Canceled                        (181,500)   $  9.47        (4,000)   $  9.50
                                  ---------    -------     ---------    -------
Balance at December 31, 1999      1,966,454    $ 10.95     2,361,969    $ 12.94
                                  =========    =======     =========    =======
Exercisable at December 31, 1999    946,286    $ 11.11     2,225,969    $ 13.00
                                  =========    =======     =========    =======
Shares available for future grant   366,046
                                  =========
</TABLE>
                                       41

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


6. Stock Option Plan (continued)

The weighted-average  remaining contractual lives of the options are 7.6 and 9.2
years  at  December  31,  1999  and  1998,  respectively.  The  weighted-average
remaining  contractual  lives of the  warrants are 3.8 and 3.3 years at December
31, 1999 and 1998, respectively.

SFAS No. 123 requires  disclosure  of pro forma net loss and pro forma basic and
diluted  loss per share  based upon the fair value of the  options  issued.  The
Company  calculated the fair value of each option grant on the date of the grant
using an option  pricing model as prescribed by SFAS No. 123 using the following
assumptions:
<TABLE>
<CAPTION>

                                          1999            1998             1997
                                         -----           -----            -----
     <S>                                  <C>           <C>              <C>
     Risk-free interest rate............  5.6%            4.8%             5.7%
     Expected life (in years)...........  5               4.7              4.1
     Dividend yield.....................  0  %            0  %             0  %
     Volatility......................... 70  %           80  %            65  %
</TABLE>

This option valuation model requires the input of highly subjective  assumptions
including the expected stock price  volatility.  Because the Company's  employee
stock options have characteristics  significantly different from those of traded
options and because changes in the subjective  input  assumptions can materially
affect the fair value estimate, in management's opinion, the existing model does
not  necessarily  provide a  reliable  single  measure  of the fair value of its
employee stock options.

During  the  year  ended  December 31,  1998,  outstanding  options  granted  to
employees  in 1997 were  repriced in  December  1998.  The Company has  included
additional  compensation  cost for the excess of the fair value of the  modified
options  issued  over  the  value  of the  original  options  at the date of the
exchange in its pro forma  disclosure  and  recognized the total amount over the
remaining  life of the  options.  For  purposes  of pro forma  disclosures,  the
estimated  fair value of the options is  amortized  to expense over the options'
vesting period. The Company's pro forma information follows:
<TABLE>
<CAPTION>
                                           Years ended December 31,
                                  1999              1998             1997
                                  ----              ----             ----
<S>                           <C>               <C>               <C>
Pro forma net loss            $(19,779,296)     $(15,251,331)     $ (1,365,274)

Pro forma loss per share
   Basic and diluted                $(2.79)           $(2.51)           $(0.28)

</TABLE>
                                       42

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


6. Stock Option Plan (continued)

These pro forma amounts may not be  representative  of future  disclosures since
the  estimated  fair value of stock  options is  amortized  to expense  over the
vesting period, and additional options may be granted in future years.

7. Sales

Major Customers

During 1999,  the Company  conducted  business  with two  customers  whose sales
comprised approximately 56% and 13% of net sales.

During 1998,  the Company  conducted  business  with two  customers  whose sales
comprised approximately 30% and 24% of net sales.

During  1997,  the Company  conducted  business  with one  customer  whose sales
comprised approximately 34% of net sales.

Export Sales

For  the  year  ended  December 31,   1999,  the  Company's  export  sales  were
approximately $507,740, principally comprised of $464,396 in Asia and $43,344 in
other geographic regions.

For  the  year  ended  December 31,   1998,  the  Company's  export  sales  were
approximately $627,422,  principally comprised of $586,725 in Europe and $40,697
in other geographic regions.

For  the  year  ended  December 31,   1997,  the  Company's  export  sales  were
approximately $957,000, principally comprised of $761,000 in Europe, $91,000 in
Asia, and $105,000 in other geographic regions.

8. Deferred Contribution Plan

In 1996, the Company adopted the Styleclick  401(k) Plan,  formerly known as the
Modacad  401(k)  Plan,  (the  "401(k)  Plan").  The 401(k) Plan is  available to
substantially   all   employees   who  meet  service  and  years  of  employment
requirements.  Employees  who  participate  in the  401(k)  Plan  may  elect  to
contribute  from 3% to 15% of their annual  compensation.  The 401(k) Plan has a
Company discretionary contribution provision in which the Company may contribute
up to 5% of income before taxes.  The amount of the  contribution  is determined
each year by the Company. For the years ended December 31,  1999, 1998 and 1997,
employer  contributions  under the  401(k)  Plan were  approximately  $0, $0 and
$22,000, respectively.

                                       43

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


9. Income Taxes

The following is a  reconciliation  of the statutory  federal income tax rate to
the Company's effective income tax rate.
<TABLE>
<CAPTION>
                                                       1999      1998      1997
                                                       ----      ----      ----
<S>                                                   <C>       <C>       <C>
Income tax computed at federal statutory tax rate       34%       34%       34%
State taxes (net of federal benefit)                     3         6         6
Valuation allowance                                    (37)      (40)      (40)
                                                       ----      ----      ----
Total                                                    -%        -%        -%
                                                       ====      ====      ====
</TABLE>
As  of   December 31,   1999,   the  Company  has  federal  net  operating  loss
carryforwards of approximately $29,900,000 which expire through 2019.

Significant  components  of the  Company's  deferred tax assets and  liabilities
consist of the following:
<TABLE>
<CAPTION>
                                                          1999         1998
                                                      -----------   -----------
<S>                                                  <C>            <C>
Deferred tax assets:
   Net operating loss carryforwards                   $11,314,485   $ 4,740,810
   Warrants issued for services                           589,350       253,600
   Computer software development costs                    211,171       133,861
   Research credits                                     1,023,565       798,565
   Other                                                  238,789        96,037
                                                      -----------   -----------
                                                       13,377,360     6,022,873
Valuation allowance for deferred tax assets           (12,724,477)   (5,748,785)
                                                      -----------   -----------
                                                          652,883       274,088
Deferred tax liabilities:
   Furniture and equipment                               (156,697)     (109,942)
   Deferred state taxes                                  (496,186)     (164,146)
                                                      -----------   -----------
Net deferred tax asset                                $         -   $         -
                                                      ===========   ===========
</TABLE>
Due to the uncertainty  surrounding the timing of realizing the net deferred tax
assets in future tax returns, the Company has placed a valuation allowance equal
to its net deferred tax assets.

The net change in the valuation  allowance for the year ended December 31,  1999
and 1998 was an increase of $6,975,692 and $3,920,450, respectively. $887,200 of
the  valuation  allowance  relates to warrants  issued for  services  which,  if
realized, will not reduce tax expense.

                                       44

<PAGE>

                               Styleclick.com Inc.

                          Notes to Financial Statements


10. Earnings Per Share

Earnings per share for the years ended December 31, 1999, 1998, and 1997 were as
follows:
<TABLE>
<CAPTION>
                                                 Year ended December 31,
                                      ------------------------------------------
                                             1999          1998          1997
                                      ------------   -----------    -----------
<S>                                  <C>            <C>            <C>
Net income (loss)                     $(15,879,341)  $(9,687,639)   $   354,275
Weighted average shares                  7,092,374     6,088,247      4,800,918
                                      ------------   -----------    -----------
Basic income (loss) per share         $      (2.24)  $     (1.59)   $      0.07
                                      ============   ===========    ===========
Weighted average shares including
   the dilutive effect of stock
   options and other equity
   securities                            7,092,374     6,088,247      5,507,582
Diluted income (loss) per share       $      (2.24)  $     (1.59)   $      0.06
                                      ============   ===========    ===========
</TABLE>
11. Subsequent Event

Merger of Styleclick.com and Internet Shopping Network

On January 25, 2000, the Company and USA Network, Inc. announced an agreement to
form a new company by merging the Company and Internet Shopping Network ("ISN"),
an indirect  wholly owned  subsidiary  of USAi.  The new company,  which will be
named  Styleclick  Inc.,  will own and operate the  combined  properties  of the
Company  and ISN.  Under the terms of the  agreement,  USAi will also invest $40
million in cash,  contribute  $10 million in  dedicated  media and will  receive
warrants to purchase additional shares of the new company. Upon both the closing
of the transaction and on a fully diluted basis, USAi will own approximately 75%
of the new company and the Company's stockholders will own approximately 25%. In
the  interim,  USAi has  agreed  to extend a $10  million  lien of credit to the
Company. The transaction is expected to close in the second quarter of 2000.

                                       45
<PAGE>
Item 9.  Changes  in  and  Disagreements  With  Accountants  on  Accounting  and
     Financial Disclosure

On April 19,  1999,  Styleclick.com  Inc.  dismissed  Singer  Lewak  Greenbaum &
Goldstein LLP ("SLGG") as its independent  accountants and engaged Ernst & Young
LLP as its new independent accountants. Stylelick's Audit Committee participated
in and approved the decision to change  independent  accountants.  In connection
with its audits for the two most recent fiscal years and through April 19, 1999,
there  have  been  no  disagreements  with  SLGG  on any  matter  of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of SLGG would
have  caused  it to  make  reference  thereto  in its  report  on the  financial
statements for such years.

                                       46
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of Registrant

Directors

The Directors of the Company,  and certain information about them, are set forth
below:

Name                  Age              Positions
Joyce Freedman         65   Chairman of the Board and Co-Chief Executive Officer
Maurizio Vecchione     38   President, Co-Chief Executive Officer and Director
Lee Freedman           76   Executive Vice President and Director
F. Stephen Wyle(1)(2)  56   Director
Peter Frank(1)         74   Secretary and Director
Leslie Saleson(1)(2)   47   Director
-----------------------------
(1)  Member of the Compensation Committee
(2)  Member of the Audit Committee

Joyce  Freedman is a founder of the  Company and has served as a director  since
its  incorporation  in February 1988. Ms. Freedman has served as Chairman of the
Board of the  Company  since  its  incorporation,  a  position  to which she was
formally  elected in January  1996.  From February  1988 to December  1997,  Ms.
Freedman  also served as President of the Company and, in January  1998,  became
Chief  Executive  Officer.  From January 1986 to February 1988, Ms. Freedman was
the Chief Executive  Officer of Compu-Arch,  a sole  proprietorship in which she
authored and marketed computer software for architects,  interior  designers and
engineers.  Ms. Freedman holds a Master of Architecture degree from the Southern
California  Institute  of  Architecture  and  engaged in private  practice as an
architect  from December 1984 to January 1986.  Ms. Freedman  is the wife of Lee
Freedman.

Maurizio  Vecchione  is a founder  of the  Company  and has served as a director
since its  incorporation  in February 1988. Mr. Vecchione has served as Co-Chief
Executive  Officer of the Company  since May 1999.  From  January  1998 to April
1999, he was Chief  Operating  Officer and President,  and from February 1988 to
December  1997,  he was  Executive  Vice  President.  Prior to  co-founding  the
Company, Mr. Vecchione held various executive, technical and marketing positions
with CAECO a developer of CAD/CAM  software,  Tektronix  Corporation  a computer
graphics and  instrumentation  manufacturer,  and  Photomatrix  and  Proprietary
Software, developers of imaging and computer graphics software.

Lee  Freedman  has  served  as the  Company's  Vice  President,  Finance,  Chief
Financial Officer and as a director since its incorporation.  From 1983 to 1988,
Mr. Freedman was engaged in private practice as a business consultant. From 1957
to 1983, he was employed by HRT Industries  Inc., then a New York Stock Exchange
listed  company,  which  operated  a chain of  discount  department  and  retail
specialty stores,  and held the position of Executive Vice President for most of
that time. Mr. Freedman is the husband of Joyce Freedman.

                                       47
<PAGE>
F. Stephen Wyle became a director of the Company in January 1996.  Since January
1999,  Mr. Wyle has been  Chairman and Chief  Executive  Officer of CyberMDx,  a
developmental stage company producing portable diagnostic  telemedicine  systems
for primary  health care  application.  From December 1994 to January 1999,  Mr.
Wyle was Chairman of Wyle  Laboratories,  a diversified  engineering and testing
company serving aerospace,  nuclear power and commercial markets.  From February
1991  to  December  1994,  Mr.  Wyle  was an  independent  consultant  providing
strategic  marketing and financing  assistance to early-stage,  technology-based
companies.  From October 1988 to February  1991,  Mr. Wyle was the  President of
Trancel  Corporation  (formerly  Cell  Biotech,  Inc.)  which was engaged in the
development of a long-term treatment for Type I diabetes.

Peter Frank became a director of the Company in November  1996.  Since 1965, Mr.
Frank has been President of Los Angeles-based Managing Directors, Ltd., which he
founded as an independent investment banking firm specializing in the funding of
small cap companies as well as in mergers and  acquisitions.  In 1993, Mr. Frank
founded,  and is President of, Baltic Treasures,  Ltd. (operating as Bamburi), a
manufacturer  and importer of antique  furniture  from Latvia and Western Russia
which is sold to retail stores in the United States.

Leslie Saleson became a director of the Company in November 1997. Since November
1998,  Ms.  Saleson has been  President  and Chief  Operating  Officer of Abbott
Resource Group, Inc., a privately held company based in Irvine, California. From
April 1997 to November 1998,  Ms.  Saleson  served as an  independent  financial
advisor to several  corporations.  From February 1994 to April 1997, Ms. Saleson
was a managing  director of The Wescott  Group, a Beverly  Hills-based  merchant
bank. From 1990 to 1993 Ms. Saleson was an owner, Co-Chief Executive Officer and
Chief  Financial  Officer of Pogens,  Inc., a packaged cookie  manufacturer.  In
1981, Ms. Saleson founded Saleson and Company, Inc., an investment banking firm,
where she served as President until 1990.

Executive Officers

The executive officers of the Company,  and certain  information about them, are
as follows:

    Name              Age             Positions
Joyce Freedman        65    Chairman of the Board and Co-Chief Executive Officer
Maurizio Vecchione    38    President, Co-Chief Executive Officer and Director
Barry Hall            51    Executive Vice President, Finance and Chief
                            Financial Officer
Lee Freedman          76    Executive Vice President and Director

Officers are appointed by and serve at the discretion of the Board of Directors.
All officers were  appointed  for terms ending upon their deaths,  resignations,
removal  or  appointment  and  qualification  of a  successor.  For  information
concerning Joyce Freedman,  Maurizio Vecchione and Lee Freedman, see "Directors"
above.

Barry Hall,  Executive Vice President and Chief  Financial  Officer,  joined the
Company in October 1999. From May 1998 until August 1999, he was Chief Operating
Officer  of  Interactive  Light,  Inc.  a  developer  and  marketer  of  digital
interactive  entertainment  systems and  platforms.  From  January 1998 to April
1998,  Mr.  Hall was Chief  Financial  Officer of Apparel  Technologies,  Inc. a
developer  of digital  printing  technologies  for the  apparel  industry.  From
January  1996 to September  1997,  he was  Executive  Vice  President  and Chief
Financial  Officer of Earthlink  Networks,  Inc. a nationwide  Internet  Service
Provider.  Prior to that Mr. Hall was  Chairman and Chief  Executive  Officer at
California  Amplifier,  a developer,  manufacturer  and  marketer of  electronic
components used in the reception of microwave and satellite television signals.

                                       48
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance

Under  Section  16(a) of the  Securities  Exchange Act of 1934,  as amended (the
"Exchange Act"),  the Company's  directors and officers and persons holding more
than ten percent of the  Company's  Common  Stock are  required to report  their
ownership of the Company's Common Stock and any changes in that ownership to the
Securities and Exchange Commission (the "SEC"). The specific due dates for these
reports  have been  established  by the SEC,  and the  Company  is  required  to
disclose  in this  report  any  failure  to file by the  established  dates.  On
February 14, 2000,  each of the following  officers  and/or  directors  filed an
individual  Form 5, which  reported  the  following  grants of stock  options or
warrants to purchase  shares of common stock of the Company.  Joyce Freedman and
Lee Freedman  both  reported on a separate  Form 5 options  granted to (i) Joyce
Freedman on December 31, 1997, (ii) Lee Freedman on April 8, 1998, and (iii) Lee
Freedman  on  April 16,  1998.  Maurizio  Vecchione  and Andrea  Vecchione  (who
resigned  as a director  of the  Company on  July 16,  1999) each  reported on a
separate Form 5 (i) a warrant granted on October 27,  1997 to Andrea  Vecchione,
which was  subsequently  cancelled  and regranted on  October 9,  1998,  (ii) an
option granted to Maurizio  Vecchione on December 31,  1997, and (iii) a warrant
granted to Andrea Vecchione on October 9,  1998. Linda Freedman (who resigned as
an officer of the Company effective  December 31, 1999) reported options granted
on (i) January 2, 1997, (ii) August 28, 1997, which was  subsequently  cancelled
and regranted on October 9, 1998, (iii) October 27, 1997, which was subsequently
cancelled and regranted on October 9,  1998, and (iv) April 16,  1998, which was
subsequently cancelled and regranted on October 9,  1998. Steven Gentry reported
options granted on (i) April 1,  1996, (ii) March 3,  1997,  (iii)  December 23,
1997, and (iv) April 16, 1998, which was subsequently cancelled and regranted on
October 9,  1998.  Stephen Wyle reported warrants granted on (i) May 8, 1996 and
(ii) July 30, 1997, which was subsequently cancelled and regranted on October 9,
1998.  Leslie Saleson reported  warrants granted on (i) October 27,  1997, which
was subsequently cancelled and regranted on October 9,  1998 and (ii) October 9,
1998.  Peter Frank  reported a warrant  granted on October 9,  1998.  All of the
transactions   listed  above  were  not  timely   reported.   Additionally,   on
February 14,  2000, Barry Hall filed a Form 5, that among other things, reported
the date on which he became an officer of the Company  (October 1,  1999), which
information  should have been included in a Form 3 within ten (10) days after he
attained such status.

                                       49
<PAGE>

Item 11.   Executive Compensation

Summary Compensation Table

The following table summarizes the  compensation  paid during each of 1998, 1997
and 1996 to the Company's chief executive  officer and other executive  officers
whose compensation exceeded $100,000 in 1999:
<TABLE>
<CAPTION>
                                                                Long-Term
                                                           Compensation Awards
                                                   Other  ----------------------
  Name and                                         Annual Restricted  Securities
  Principal          Fiscal                       Compen-   Stock     Underlying
  Position            Year    Salary     Bonus    sation(1) Awards       Options
--------------------------------------------------------------------------------
<S>                   <C>    <C>         <C>        <C>        <C>     <C>
Joyce Freedman        1999   $200,000    $200,000   $7,200     $ 0           0
Chairman of the       1998   $200,000    $100,000   $7,200     $ 0     200,000
Board & Co-Chief      1997   $150,000    $ 20,999   $4,800     $ 0      37,227
Executive Officer

Maurizio Vecchione    1999   $200,000    $200,000   $7,200     $ 0           0
President & Co-Chief  1998   $200,000    $100,000   $7,200     $ 0     200,000
Executive Officer     1997   $150,000    $ 20,999   $4,800     $ 0      37,227

Barry Hall            1999   $ 37,500(2) $   0      $1,600     $ 0     150,000
Executive Vice        1998   $      0    $   0      $    0     $ 0           0
President, Finance    1997   $      0    $   0      $    0     $ 0           0
& Chief Financial
Officer

Lee Freedman          1999   $125,000    $   0      $4,800     $ 0      25,000
Executive Vice        1998   $125,000    $   0      $4,800     $ 0      50,000
President             1997   $125,000    $   0      $4,800     $ 0           0

</TABLE>
___________________

(1)  Other Annual Compensation consists  of automobile allowances.
(2)  Mr.  Hall was only  employed  with the Company  over three  months in 1999,
     during  which time he received a monthly  salary of $12,500 and  automobile
     allowance of $400 per month.


Option Grants in Last Fiscal Year

The  following  table sets forth  information  concerning  option  grants during
fiscal  year  1999  to each  of the  executive  officers  named  in the  Summary
Compensation Table who received stock option grants in 1999. The Company has not
granted any stock appreciation rights (SARs).  Unless otherwise indicated in the
footnotes, all options had vested and were exercisable as of December 31, 1999.
<TABLE>
<CAPTION>

                               Individual Grants
--------------------------------------------------------------------------------
                 Number of         Percent of Total   Exercise or
              Shares Underlying    Options Granted    Base Price      Expiration
  Name         Options Granted     to Employees in      ($/Sh)           Date
                                    Fiscal Year(1)
------------  ------------------   -----------------  -------------   ----------
<S>                   <C>                <C>            <C>            <C>
Barry Hall            150,000            20.9%          $ 6.93         09/30/09
Lee Freedman           25,000             3.4%          $10.18         05/24/04
</TABLE>
____________________

(1)  The Company  granted  options to purchase an aggregate of 725,000 shares to
     employees in 1999.

                                       50
<PAGE>

Option Exercises and Year End Value Table

The following table sets forth  information  concerning  option exercises during
the last fiscal year by the executive officers named in the Summary Compensation
Table and the value of options held by such officers as of December 31, 1999:
<TABLE>
<CAPTION>


                                  Number of Securities     Value of Unexercised
                                  Underlying Options at  In-the-Money Options at
                                    December 31, 1999       December 31, 1999(1)
                                  ---------------------  -----------------------
                  Shares
                 Acquired    Value
 Name           on Exercise Realized  Exercisable         Exercisable
                    (#)        ($)             Unexercisable       Unexercisable
-----------------  --------  --------  ---------  ---------  ---------  --------
<S>                 <C>      <C>     <C>        <C>       <C>       <C>
Joyce Freedman       0        0      103,893    133,334          0          0
Maurizio Vecchione   0        0      103,893    133,334          0          0
Barry Hall           0        0            0    150,000          0   $750,300
Lee Freedman         0        0       70,000      5,000    $35,200   $  8,800
</TABLE>
  ____________________

(1)  Dollar value is based on the market value of the Company's  Common Stock of
     $11.94 per share at December 31, 1998 minus the per share exercise price.


Compensation of Directors

Three  non-employee  members  of the Board of  Directors,  Peter  Frank,  Leslie
Saleson,  and Stephen  Wyle,  received  compensation  in the form of warrants to
purchase  shares of Common  Stock from the Company in 1999 for their  service on
the Board. In October 1999, the Company  granted to each of Peter Frank,  Leslie
Saleson and Stephen Wyle ten-year  warrants to purchase  15,000 shares of Common
Stock at an  exercise  price of $7.50 per share,  5,000  shares of which  vested
immediately  and the  balance of which vest in two 5,000 share  installments  on
October 21 of 2000 and 2001.

Employment Contracts

In 1998, the Company  entered into employment  agreements,  expiring on December
31, 2005,  with Joyce  Freedman,  Chairman of the Board and  Co-Chief  Executive
Officer, and Maurizio Vecchione, President and Co-Chief Executive Officer. Under
the agreements, Ms. Freedman and Mr. Vecchione each was paid an annual salary of
$200,000 and a monthly  automobile  allowance of $600. In addition,  each of Ms.
Freedman and Mr. Vecchione received a signing bonus of $100,000.  Further, under
such agreements,  the Company was to pay an annual  performance bonus to each of
Ms. Freedman and Mr.  Vecchione for each calendar year of the employment term in
an  amount  determined  by  the  Compensation  Committee  of  the  Board  of the
Directors.  Effective  October,  1999, the Company  amended these two employment
agreements  to increase the annual  salary paid to each of Ms.  Freedman and Mr.
Vecchione to $230,000, effective January 1, 2000

In connection with the employment  agreements entered into with Ms. Freedman and
Mr.  Vecchione in 1998, each was granted  five-year stock options to purchase up
to 200,000 shares of the Company's  common stock at an exercise price of $15.88,
the  vesting  of  which  were  tied to the  attainment  of  certain  performance
criteria.  Effective October 1999, the stock option agreements pursuant to which
such  options  were  granted  were  amended to provide that the options vest and
become exercisable in three annual installments  commencing on December 31, 1999
and to  provide  for  accelerated  vesting  upon  the  satisfaction  of  certain
conditions  or upon a change in control  of the  Company.  Options  to  purchase
66,666  shares  for each of Ms.  Freedman  and Mr.  Vecchione  vested and became
exercisable as of December 31, 1999, and options to purchase  66,667 shares each
will vest and become  exercisable  on December  31, 2000 and  December 31, 2001,
subject to acceleration as described above.

                                       51
<PAGE>

In July 1999,  the Company  entered  into a new  employment  agreement  with Lee
Freedman,  Executive Vice  President,  that expires on June 30, 2002.  Under the
agreement,  Mr.  Freedman  receives an annual  salary of $125,000  and a monthly
automobile allowance of $400.

Item 12.   Security Ownership of Certain Beneficial Owners and Management

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership  of the  Company's  Common  Stock as of February 29, 2000 by: (i) each
person  who is known by the  Company  to own  beneficially  more  than 5% of the
outstanding  shares of the Company's  Common  Stock;  (ii) each of the Company's
directors;  (iii) each of the  executive  officers of the Company;  and (iv) the
current directors and executive officers of the Company as a group:

<TABLE>
<CAPTION>
Name and Address               Amount and Nature of
of Beneficial Owner (1)        Beneficial Ownership (2)      Percent of Class(3)
-----------------------       -------------------------      -------------------
<S>                                     <C>                          <C>
Joyce Freedman                           1,685,140 (4)                21.3%

Lee Freedman                             1,455,800 (5)                18.4%

Intel Corporation                        1,120,208 (6)                13.4%
2200 Mission College Blvd
Santa Clara, CA  95052

Maurizio Vecchione                         525,512 (7)                 6.7%

USANi Sub LLC                            1,623,686 (8)                17.4%(8)
Carnegie Hall Tower
152 W. 57th St., 42nd Floor
New York, NY 10019

Castle Creek Technology Partners, LLC      628,392 (9)                 7.6%(9)
77 W. Wacker Drive, Suite 4040
Chicago, IL 60601

Barry Hall                                       0                        ---

F. Stephen Wyle                             13,000 (10)                     *
128 Maryland Street
El Segundo, California  90245

Peter Frank                                  9,000 (11)                     *
9903 Santa Monica Blvd., Suite 327
Beverly Hills, California  90210

Leslie Saleson                              11,000 (12)                     *
9925 Anthony Place
Beverly Hills, California 90210

All current directors and officers       2,383,604                       29.7%
as a group (8 persons)
</TABLE>
____________________
*    Less than one percent.

                                       52
<PAGE>


(1) The business address for Joyce Freedman,  Lee Freedman,  Maurizio Vecchione,
and Barry Hall is 3861 Sepulveda Blvd., Culver City, California 90230.

(2) Except to the extent the shares owned are subject to community property laws
or as otherwise indicated,  beneficial ownership represents sole voting and sole
investment  power with  respect to the  Company's  Common  Stock.  Shares that a
person is deemed to  beneficially  own by reason of having  the right to acquire
within 60 days are deemed to be  outstanding  for the purpose of  computing  the
percentage of such person's beneficial ownership.

(3) Based on 8,159,226 total shares outstanding as of February 29, 2000.

(4) Consists of 369,292 shares held by Joyce  Freedman as her separate  property
and with respect to which she does not share voting or investment power with her
husband,  Lee Freedman,  1,136,955 shares held jointly by Joyce Freedman and Lee
Freedman,  as to which shares they share  voting and  investment  power,  37,227
shares  which  may  be  purchased  by  Joyce  Freedman   pursuant  to  currently
exercisable  stock  options at an  exercise  price of $20.06  per share,  66,666
shares  which  may  be  purchased  by  Joyce  Freedman   pursuant  to  currently
exercisable  stock  options at an  exercise  price of $15.87  per share,  25,000
shares which may be purchased by Lee Freedman pursuant to currently  exercisable
stock options at an exercise price of $15.87 per share,  25,000 shares which may
be purchased by Lee Freedman pursuant to currently  exercisable stock options at
an exercise  price of $16.12 per share and 25,000  shares which may be purchased
by Lee Freedman  pursuant to currently  exercisable stock options at an exercise
price of $10.18 per share.

(5) Consists of 139,952 shares held by Lee Freedman as his separate property and
with  respect  to which he does not share  voting or  investment  power with his
wife,  Joyce Freedman,  1,136,955  shares held jointly by Lee Freedman and Joyce
Freedman,  as to which shares they share  voting and  investment  power,  25,000
shares which may be purchased by Lee Freedman pursuant to currently  exercisable
stock options at an exercise price of $15.87 per share,  25,000 shares which may
be purchased by Lee Freedman pursuant to currently  exercisable stock options at
an exercise  price of $16.12 per share,  25,000 shares which may be purchased by
Lee Freedman  pursuant to  currently  exercisable  stock  options at an exercise
price of  $10.18  per  share,  37,227  shares  which may be  purchased  by Joyce
Freedman pursuant to currently exercisable stock options at an exercise price of
$20.06 per share and 66,666  shares  which may be  purchased  by Joyce  Freedman
pursuant to currently  exercisable  stock options at an exercise price of $15.87
per share.

(6)  Consists  of  455,218  shares of  Common  Stock  held by Intel  Corporation
("Intel"), 126,316 shares which may be purchased by Intel upon the exercise of a
currently  exercisable warrant at an exercise price of $19.00 per share, 159,326
shares  which  may be  purchased  by Intel  upon  the  exercise  of a  currently
exercisable  warrant at an exercise price of $10.98 per share and 379,348 shares
which may be  purchased  by Intel upon the  exercise  of  currently  exercisable
warrants at an exercise price of $13.18 per share.

(7)  Consists of 417,619  shares of Common  Stock held  jointly by Maurizio  and
Andrea  Vecchione,  37,227  shares which may be purchased by Maurizio  Vecchione
pursuant to currently  exercisable  stock options at an exercise price of $20.06
per share,  66,666 shares which may be purchased by Maurizio  Vecchione pursuant
to currently  exercisable stock options at an exercise price of $15.87 per share
and 4,000 shares which may be purchased by Andrea Vecchione upon the exercise of
vested and  currently  exercisable  warrants at an  exercise  price of $9.50 per
share.

(8)  Relates  to an  option  granted  to USANi  Sub LLC in  connection  with the
agreement and plan of merger  entered into between the Company and USANi Sub LLC
dated  January 24,  2000.  Under such  option,  USANi Sub LLC may purchase up to
19.9% of the common  stock of the  Company  at $17.50  per share.  The option is
exercisable at any time following  certain events which may adversely affect the
proposed  merger.
                                       53
<PAGE>

(9) Consists of 89,718  shares of Common  Stock held by Castle Creek  Technology
Partners  LLC  ("Castle  Creek"),  159,326  shares of Common  Stock which may be
purchased by Castle Creek upon the exercise of a currently  exercisable  warrant
at an  exercise  price of  $13.73  per  share and  379,348  shares  which may be
purchased by Castle Creek upon the exercise of currently exercisable warrants at
an exercise  price of $13.18 per share.  Under the terms of the warrants held by
Castle  Creek,  no holder  thereof can exercise any portion of such  warrants if
such exercise would increase such holder's beneficial  ownership of common stock
to in excess of 9.99%.  Absent such  limitations,  the  warrants  held by Castle
Creek would be exercisable for 538,674 shares of common stock which,  when added
to the 89,718 shares  currently held of record by Castle Creek,  would represent
628,392  shares of common  stock and 12.4% of the  outstanding  shares of common
stock upon such  exercise.  Pursuant to a  management  agreement,  Castle  Creek
Partners,  LLC may be deemed to  beneficially  own the securities held by Castle
Creek. Castle Creek Partners,  L.L.C. disclaims such beneficial ownership.  John
Ziegelman  and Daniel  Asher,  as  managing  members of Castle  Creek  Partners,
L.L.C., may be deemed to be beneficial owners of such securities.  Messrs. Asher
and Ziegelman disclaim such beneficial ownership.

(10) Consists of 2,000 shares of Common Stock which may be purchased by Mr. Wyle
upon the exercise of vested and  currently  exercisable  warrants at an exercise
price of $4.25 per share, 6,000 shares of Common Stock which may be purchased by
Mr. Wyle upon the exercise of vested and  currently  exercisable  warrants at an
exercise  price of $9.50 per share and 5,000 shares of Common Stock which may be
purchased  by Mr.  Wyle upon the  exercise of vested and  currently  exercisable
warrants at an exercise price of $7.50 per share.


(11)  Consists of 4,000  shares of Common  Stock which may be  purchased  by Mr.
Frank upon the  exercise  of vested and  currently  exercisable  warrants  at an
exercise  price of $9.50 per share and 5,000 shares of Common Stock which may be
purchased  by Mr. Frank upon the  exercise of vested and  currently  exercisable
warrants at an exercise price of $7.50 per share.


(12)  Consists of 6,000  shares of Common  Stock which may be  purchased  by Ms.
Saleson upon the  exercise of vested and  currently  exercisable  warrants at an
exercise  price of $9.50 per share and 5,000 shares of Common Stock which may be
purchased by Ms.  Saleson upon the exercise of vested and currently  exercisable
warrants at an exercise price of $7.50 per share.


Item 13.   Certain Relationships and Related Transactions

The Company has  employment  agreements  with certain  executive  officers.  See
"Executive Compensation-Employment Contracts" above.

                                       54
<PAGE>
                                     PART IV

Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K

     (a) (1) and (2)

          The following financial statements of Registrant are presented in Item
          8 of this report:

          Balance sheets-December 31, 1999 and 1998

          Statements of operations-Years ended December 31, 1999, 1998 and 1997

          Statements of stockholders' equity-Years ended December 31, 1999, 1998
          and 1997

          Statements of cash flows-Years ended December 31, 1999, 1998 and 1997

          Notes to financial statements-December 31, 1999

          (3) Listing of Exhibits

          The exhibits  required by Item 601 of Regulation S-K filed as part of,
          or  incorporated  by reference in, this report are listed in (c) below
          and in the accompanying Exhibit Index.

     (b) Reports on Form 8-K filed in the fourth quarter of 1999:

          None.

                                       55
<PAGE>
     (c) Exhibits.

          3.1  Amended and Restated Articles of Incorporation(1)

          3.2  Certificate of Amendment of Articles of Incorporation(2)

          3.3  Bylaws of Registrant, as amended(1)

          3.4  Amendment to Bylaws dated May 4, 1999(2)

          4.1  Amendment No. 5 to 1995 Stock Option Plan(2)

          4.2  Amendment No. 6 to 1995 Stock Option Plan(2)

          10.1 Employee Agreement between Registrant and Joyce Freedman dated as
               of January 1, 1998(2)

          10.2 Employee  Agreement  between  Registrant  and Maurizio  Vecchione
               dated as of January 1, 1998(2)

          10.3 Amendment No. 1 to Employment Agreement dated as of January 1,
                1998 between the Registrant and Joyce Freedman(2)

          10.4 Amendment  No. 1 to Employment  Agreement  dated as of January 1,
               1998 between the Registrant and Maurizio Vecchione(2)

          10.5 Employment  Agreement  dated  as  of  May  5,  1999  between  the
               Registrant and Lee Freedman(2)

          10.6 Securities Purchase Agreement by and among the Company and Castle
               Creek Technology  Partners,  LLC,  Marshall  Capital  Management,
               Inc.,  Winfield Capital Corp. and Spinner Global Technology Fund,
               Ltd. Dated April 7, 1999.(3)

          10.7 Stock and Warrant  Purchase and Investor Rights  Agreement by and
               between the Company  and Intel  Corporation  dated as of April 7,
               1999.(4)

          23.1 Consent of Ernst & Young LLP (2)

          27.1 Financial Data Schedule (2)




(1)  Incorporated by reference to the Company's  Registration  Statement on Form
     SB-2  (Commission  File  No.  333-1166-LA)  filed  with the  Commission  on
     February 7, 1996.

(2)  This  exhibit  is  being  filed  electronically  in the  electronic  format
     specified by EDGAR.

(3)  Incorporated  by reference to the Company's Form 8-K  (Commission  File No.
     33-31166) filed with the Securities Exchange Commission on April 9, 1999.

(4)  Incorporated  by reference to the Company's Form 8-K  (Commission  File No.
     33-31166) filed with the Securities Exchange Commission on April 14, 1999.

                                       56
<PAGE>

(d)  Financial Statement Schedule

     Schedule I: Financial information of Registrant

     None.

     Schedule II: Valuation and qualifying accounts
<TABLE>
<CAPTION>

                                          Additions
                            Balance at Charged  Charged                  Balance
                            Beginning     to    to Other                   at
 Description                   of     Costs and Accounts-  Deductions-    End
                             Period    Expenses Describe   Describe      Period
--------------------------------------------------------------------------------
<S>                          <C>       <C>               <C>           <C>
Balance at December 31, 1999
   Reserves and allowances
      deducted from asset
      accounts:
   Allowance for doubtful
      accounts               $ 132,500 $ 60,000          ($49,729)(1)  $ 242,229

Balance at December 31, 1998
   Reserves and allowances
      deducted from asset
      accounts:
   Allowance for doubtful
      accounts               $  81,500 $917,438          $866,438(1)   $ 132,500

Balance at December 31, 1997
   Reserves and allowances
      deducted from asset
      accounts:
   Allowance for doubtful
      accounts               $ 112,141 $ 52,000          $ 82,641(1)   $  81,500

</TABLE>
(1)  Uncollectible accounts written off, net of recoveries.


                                       57
<PAGE>
                                    SIGNATURE

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       Styleclick.com Inc.


Date:  March 30, 2000                  By:   /s/  JOYCE FREEDMAN
                                          -----------------------------
                                           Joyce Freedman
                                           Chairman of the Board and
                                           Co-Chief Executive Officer
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

<S>                            <C>                                <C>
 /s/ JOYCE FREEDMAN            Chairman of the Board and          March 30, 2000
 --------------------------    Co-Chief Executive Officer         --------------
    Joyce Freedman                                                    Date

/s/ MAURIZIO VECCHIONE         President,                         March 30, 2000
--------------------------     Co-Chief Executive Officer         --------------
    Maurizio Vecchione         Director                               Date


/s/ BARRY HALL                 Executive Vice President, Finance  March 30, 2000
--------------------------     and Chief Financial Officer        --------------
    Barry Hall                                                        Date

/s/ LEE FREEDMAN               Executive Vice President and       March 30, 2000
--------------------------     Director                           --------------
    Lee Freedman                                                      Date

/s/ STEPHEN WYLE               Director                           March 30, 2000
--------------------------                                        --------------
    Stephen Wyle                                                      Date

/s/ PETER FRANK                Director                           March 30, 2000
--------------------------                                        --------------
    Peter Frank                                                       Date

/s/ LESLIE SALESON             Director                           March 30, 2000
--------------------------                                        --------------
    Leslie Saleson                                                    Date

</TABLE>
                                       58
<PAGE>
                                  EXHIBIT INDEX

   Exhibit
   Number               Description

     3.1  Amended and Restated Articles of Incorporation(1)

     3.2  Certificate of Amendment of Articles of Incorporation(2)

     3.3  Bylaws of Registrant, as amended(1)

     3.4  Amendment to Bylaws dated May 4, 1999(2)

     4.1  Amendment No. 5 to 1995 Stock Option Plan(2)

     4.2  Amendment No. 6 to 1995 Stock Option Plan(2)

     10.1 Employee  Agreement between  Registrant and Joyce Freedman dated as of
          January 1, 1998(2)

     10.2 Employee  Agreement between Registrant and Maurizio Vecchione dated as
          of January 1, 1998(2)

     10.3 Amendment  No. 1 to Employment  Agreement  dated as of January 1, 1998
          between the Registrant and Joyce Freedman(2)

     10.4 Amendment  No. 1 to Employment  Agreement  dated as of January 1, 1998
          between the Registrant and Maurizio Vecchione(2)

     10.5 Employment  Agreement  dated as of May 5, 1999 between the  Registrant
          and Lee Freedman(2)

     10.6 Securities  Purchase  Agreement  by and among the  Company  and Castle
          Creek Technology  Partners,  LLC, Marshall Capital  Management,  Inc.,
          Winfield Capital Corp. and Spinner Global  Technology Fund, Ltd. Dated
          April 7, 1999.(3)

     10.7 Stock and  Warrant  Purchase  and  Investor  Rights  Agreement  by and
          between  the  Company  and  Intel  Corporation  dated  as of  April 7,
          1999.(4)

     23.1 Consent of Ernst & Young LLP (2)

     27.1 Financial Data Schedule (2)




(1)  Incorporated by reference to the Company's  Registration  Statement on Form
     SB-2  (Commission  File  No.  333-1166-LA)  filed  with the  Commission  on
     February 7, 1996.

(2)  This  exhibit  is  being  filed  electronically  in the  electronic  format
     specified by EDGAR.

(3)  Incorporated  by reference to the Company's Form 8-K  (Commission  File No.
     33-31166) filed with the Securities Exchange Commission on April 9, 1999.

(4)  Incorporated  by reference to the Company's Form 8-K  (Commission  File No.
     33-31166) filed with the Securities Exchange Commission on April 14, 1999.

                                       59