<PAGE>   1
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-K/A
    
(Mark One)

/X/      Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the fiscal year ended DECEMBER 31, 1996.

                                       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 0-28064

                                  EXCITE, INC.
             (Exact name of registrant as specified in its charter)

          CALIFORNIA                                   77-0378215
(State or Other Jurisdiction of          (I.R.S. Employer Identification Number)
 Incorporation or Organization)
   
                555 BROADWAY AVE., REDWOOD CITY, CALIFORNIA 94063
          (Address of Principal Executive Offices, Including Zip Code)
    
   
                                 (415) 568-6000
              (Registrant's Telephone Number, Including Area Code)
    
Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK, NO 
PAR VALUE

Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

                                 YES   X    NO
                                     -----     -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the 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. [X]

As of February 28, 1997 there were 12,246,816 shares of the Registrant's Common
Stock, no par value, outstanding, which is the only class of common or voting
stock of the registrant issued as of that date. The Aggregate market value of
the voting stock held by non-affiliates computed by reference to the closing
price for the common stock as quoted by the Nadaq National Market as of February
28, 1997 was approximately $76,571,000.


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement to be delivered to shareholders in
connection with the Annual Meeting of Stockholders to be held in June 1997 are
incorporated by reference into Part III.

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

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EXCITE, INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
--------------------------------------------------------------------------------

   
<TABLE>
<CAPTION>
                                                                                          PAGE
PART I                                                                                   NUMBER

<S>         <C>                                                                          <C>
ITEM 1:     Business.....................................................................   3

ITEM 2:     Properties...................................................................  13

ITEM 3:     Legal Proceedings............................................................  13

ITEM 4:     Submission of Matters to a Vote of Security Holders..........................  13


PART II

ITEM 5:     Market for Registrant's Common Equity and Related Stockholder Matters........  14

ITEM 6:     Selected Consolidated Financial Data.........................................  15

ITEM 7:     Management's Discussion and Analysis of Financial Condition and Results of
                Operations...............................................................  16

ITEM 8:     Financial Statements and Supplemental Data...................................  33

ITEM 9:     Changes In and Disagreements With Accountants on Accounting and Financial
                Disclosure...............................................................  33


PART III

ITEM 10:    Directors and Executive Officers of the Registrant...........................  34

ITEM 11:    Executive Compensation.......................................................  36

ITEM 12:    Security Ownership of Certain Beneficial Owners and Management...............  36

ITEM 13:    Certain Relationships and Related Transactions...............................  36


PART IV

ITEM 14:    Exhibits, Financial Statement Schedules and Reports on Form 8-K..............  37


Signatures  .............................................................................  60
</TABLE>
    

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<PAGE>   3
--------------------------------------------------------------------------------
PART I
ITEM 1: BUSINESS
--------------------------------------------------------------------------------

SUMMARY
   
    This Annual Report on Form 10-K/A ("Report") contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including, without limitation, the 
failure of the Company to achieve increases in advertising revenues, the 
failure of the Company to maintain premier positions on certain high traffic
World Wide Web ("Web") access points such as those maintained by America Online,
Inc. ("AOL"), Microsoft Corporation ("Microsoft") and Netscape Communications
Corporation ("Netscape"), the failure of the Company to anticipate and adapt to
a developing market, the rejection of the Company's services by Web consumers
and/or advertisers, the inability of the Company to maintain and increase levels
of traffic on the Excite Network, development of equal or superior services or
products by competitors, the failure of the market to adopt the Web as an
advertising medium, reductions in market prices for Web-based advertising, the
inability of the Company to effectively integrate the technology and operations
of The McKinley Group, Inc. ("McKinley"), the assets relating to AOL's
WebCrawler service (the "WebCrawler Assets") acquired or any other subsequently
acquired businesses or technologies with its operations, the inability to
identify, attract, retain and motivate qualified personnel, general economic
conditions and those risk factors set forth under "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Risk Factors that
May Affect Future Results" and elsewhere in this Report. The following summary
is qualified in its entirety by the more detailed information, including
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Risk Factors that May Affect Future Results," and consolidated
financial statements and notes thereto, appearing elsewhere in this Report.
Unless the context otherwise requires, the term "Company" or "Excite" refers to
Excite, Inc. and its subsidiaries.
    
THE COMPANY

    Excite, Inc., which was formed in June 1994, provides a gateway to the Web
that organizes, aggregates and delivers information to meet the needs of
individual consumers. Designed to help consumers make sense of the Web, the
Excite Network, including the Excite and WebCrawler brands, contains a suite of
specialized information services which combine proprietary search technology,
editorial Web reviews, aggregated content from third parties, bulletin boards,
chat and personalization capabilities. The Company's goal is to be the Web's
leading branded media network with the largest consumer reach, thereby creating
an efficient means of advertising on the Web. To this end, the Excite Network
serves as a home base where consumers can gather, interact and return to during
each Web experience.

     On August 30, 1996, the Company acquired The McKinley Group, Inc. in a
merger transaction accounted for as a pooling of interests (see Note 3 of Notes
to Consolidated Financial Statements.) McKinley was incorporated in December
1993. All financial information has been restated to reflect the combined
operations of the Company and McKinley. From December 7, 1993 (inception)
through December 31, 1993, McKinley had no revenues and insignificant operating
expenses which have been included in the consolidated results of operations for
the year ended December 31, 1994. 
   
    The Company has incurred significant operating losses to date and incurred a
net loss of approximately $43.1 million for the year ended December 31, 1996.
The Company has also experienced significant increases in operating losses on an
annual and quarterly basis since inception. Although the Company does not
anticipate that its operating losses will continue to increase, the Company
anticipates that it will continue to incur operating losses through at least the
next twelve months. As a result of the acquisition of the WebCrawler Assets and
other acquisitions, operating results will be negatively affected by
approximately $10.1 million in amortization in 1997, and $1.1 million of
amortization in 1998, assuming no additional acquisitions and no significant
adjustments to the economic lives of the underlying intangible assets. The
extent of the future losses will be contingent on the amount of the growth in
the Company's advertising revenues. Furthermore, the Company's ability to
achieve profitability will be dependent on a variety of factors, including,
without limitation, the factors described in "Summary" above as well as
elsewhere in this Annual Report on Form 10-K/A. 
    
   
     The Company believes that additional funding will be needed to finance
expected operations in the year ending December 31, 1997. On March 3, 1997 the
Company filed a registration statement on Form S-1 with the United States
Securities and Exchange Commission for the proposed sale of up to 2,300,000
shares of the Company's Common Stock. This registration statement is not yet
effective, and there can be no assurance that the offering proposed to be made
thereby will be consummated. In March 1997, the Company replaced its $1.1
million line of credit with a $6.0 million line of credit with a bank.
Management is also considering a variety of other financing arrangements in the
event that the proposed public offering is not consummated and the proceeds of
its bank line of credit, together with revenues generated from operations are
insufficient to fund the Company's operating losses, although there are
currently no agreements or understandings with respect to such other financing
arrangements. If such additional funding is not available, or if anticipated
operating results are not achieved, management has the intent and believes it
has the ability to delay or reduce expenditures so as not to require additional
financial resources through at least December 31, 1997. 
    

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    The Company derives substantially all of its revenues from selling
advertising on its Web sites to customers in various industries. The Company
currently derives a large percentage of its revenues from advertising through
the "Net Search" buttons on the Netscape home page under the terms of two
agreements entered into with Netscape in April 1996 (see Note 12 of Notes to
Consolidated Financial Statements) which expire on March 31, 1997; however, in
March 1997, Netscape agreed to extend the provisions of these agreements to
April 30, 1997 and entered into new agreements covering the period from May 1,
1997 through April 30, 1998 (see Note 13 of Notes to Consolidated Financial
Statements.)
    
   
    In November 1996, the Company entered into a series of agreements with AOL,
a provider of online services, whereby a co-branded version of Excite's sevice
became the exclusive Internet search and directory service for AOL. Under these
agreements, Excite also acquired AOL's WebCrawler search and directory
technology for consideration consisting of 1,950,000 shares of the Company's
Series E-1 and E-2 Convertible Preferred Stock, that were issued upon closing on
March 27, 1997 (see Notes 3, 7 and 13 of Notes to Consolidated Financial
Statements.)
    


THE EXCITE NETWORK

    The Company offers a network of services under the Excite brand and the
WebCrawler brand that target different segments of Web consumers.

   Excite services

    Excite Search. The Excite Search Web search service helps consumers find
information on the Web by searching through Excite's index of Web documents.
Since October 1995, the Company has substantially increased the size of its
index of Web documents, from 1.5 million Web documents to over 50 million. The
Company's automatic spider technology completely refreshes this index in less
than a month. Excite's search technology allows consumers to search in multiple
ways: by keyword; by concept; by Boolean logic; and by proper name. Excite's
query-by-example technology allows users who find a document of interest to find
similar documents with the click of a button. In addition, Excite's automatic
abstract technology provides consumers with a brief abstract of each document
returned by a search.

    Excite Reviews. The Excite Reviews Web site review service contains over
60,000 professionally-authored reviews of Web sites. Each site reviewed is also
ranked on a scale of one to four. Consumers can find these reviews by browsing a
series of categories and subcategories or by searching directly using the
Company's concept-based searching technology. Excite's reviews are intended to
help narrow information choices to only high-quality and relevant Web sites and
to present information in a lively and entertaining style.

    Excite City.Net. The Excite City.Net travel and destination service helps
consumers locate regional and travel oriented content using a geographically
organized database. This Web database is continually updated to provide access
to information on travel, entertainment, local business, government and
community services for a number of major cities and regions throughout the
world. Currently, the Excite City.Net database provides access to information on
over 4,300 cities and regions.

    Excite Live! The Excite Live!  personalized  information  service  permits  
consumers to personalize their Web interface. Consumers using Excite Live!
create a personal profile to select and update information of interest, such as
personalized stock quotes, news headlines, local and national sports scores,
updates on local and national weather, weekly television listings and horoscopes
as well as personal reminders. In order to use this service, consumers must
register and volunteer interest and demographic information which the Company
then uses to target both content and advertising. Currently, Excite Live! has
approximately 300,000 registered users.

    Excite NewsTracker. The Excite NewsTracker personalized news service is a
personalizable news clipping service. Consumers can define custom topics that
they would like to monitor such as business competition, a local sports team, or
a favorite hobby. Using Excite's "spider" technology, Excite NewsTracker scans
300 magazines and newspapers on the Web twice daily (including such sources as
The New York Times, The Washington Post, The 


                                     - 4 -
<PAGE>   5
Boston Globe, Sports Illustrated, Forbes and Fortune) for articles relevant to
that consumer's selected topics and provides the consumer with a listing of
relevant articles. Consumers can also search a database containing the last two
weeks of news from these publications or browse the news headlines from these
sources by general category, such as top stories, business or entertainment.

    ExciteSeeing Tours. The ExciteSeeing Tours Web guide service is a "how to"
service designed to instruct a consumer how to perform a particular task using
information from the Web. Tours are professionally written and contain a mix of
narrative and hypertext links to relevant Web resources related to a topic.
Currently Excite has over 500 Web tours on such topics as researching
investments, choosing wines and financing a college education. Tours are
organized and can be accessed from a hierarchical menu of categories.
   
     Excite  Talk!  The Excite Talk!  Web  community  service is a bulletin
board and chat service which permits consumers to discuss topics of mutual
interest. Consumers can create their own discussions or choose to participate in
ongoing discussions. The Company believes that its Excite Talk! service
encourages consumer and brand loyalty by fostering a sense of community and
encouraging return visits.
    
    Excite Reference. The Excite Reference online reference service provides
consumers with an interface into multiple information services such as yellow
pages, white pages, email finders, people finders, maps and shareware. The
Company does not develop any of these services itself, but instead has
relationships with third-party providers of these services. Generally, these
third parties co-brand their services and share advertising revenue with the
Company in exchange for distribution on the Company's Excite Reference pages.
Current partners include Big Book, WhoWhere, MapQuest and Quote.com. The Company
believes that this type of relationship is beneficial as it enables the Company
to offer a variety of services to consumers without having to incur development
and maintenance costs while enabling the Company to have the opportunity to
receive revenue from these services.

   WebCrawler services

    WebCrawler Search. The WebCrawler Web Search service helps consumers find
information on the Web by searching through WebCrawler's index of Web documents.
WebCrawler Search enables consumers to search the Web in multiple ways: by
keyword, by Boolean logic, by phrase and by example, or by document similarity.
Search results can be listed by title only or by full listing with an abstract.
Listings which have been reviewed are identified and consumers can easily click
to the review.

    WebCrawler Select. The WebCrawler Select Web site review service contains
over 4,600 professionally-authored Web site reviews organized into 18 top-level
categories. Consumers can find these reviews by selecting one of the top-level
categories, by searching on a topic of interest or by browsing the "what's new"
page. WebCrawler's Select database is intended to help consumers narrow
information choices to only the most valuable Web sites.

    The Company also offers on the WebCrawler service, WebCrawler Map, Search
the Web Backwards and Web Roulette.

MARKETING

    The Company endeavors to achieve broad market penetration and increased
usage of the Excite Network services by:

   Building distribution
   
     The Company believes that obtaining a presence on Web access points and
other high-traffic Web sites is becoming an important factor in obtaining
traffic and attracting advertisers, and that many Web site operators are
increasingly focusing their attention to obtaining distribution for their Web
content. The Company seeks to obtain new consumers by providing multiple
gateways into the Excite Network, thereby increasing its visibility on Web
access points. The Company has established premier positions on Web sites
operated by Microsoft and Netscape, two of the most highly-trafficked Web sites,
and AOL which is the leading online service provider ("OSP"). On the Microsoft
and Netscape Web sites, the Company has such positions for both its Excite and
WebCrawler brands. In addition, the Company has established a number of
"off-Web" 
    


                                     - 5 -
<PAGE>   6
distribution opportunities with companies such as Apple, Sega and WebTV.
Typically, these arrangements feature Excite as the default Web navigation
network. See "-- Strategic Alliances," and "Risk Factors that May Affect Future
Results -- Dependence on Netscape and AOL" and "-- Dependence on Third-Party
Relationships."

   Building brand awareness and recognition

    The Company's marketing goal is to build the brands of the Excite Network
into well-recognized consumer brands. During the fourth quarter of 1996, the
Company launched a national brand-building campaign centered around the Jimi
Hendrix song "Are You Experienced?" and incurred expenses of approximately $5.0
million for this campaign. This campaign included television, national print,
radio and outdoor advertising. The Company believes this campaign resulted in
increased Excite brand awareness. During the first quarter of 1997, the Company
is continuing its brand advertising campaign, although at lower spending levels
as compared with the fourth quarter of 1996. The Company believes that the
WebCrawler brand has strong consumer awareness today and the Company will make
selective marketing investments to maintain that awareness.

   Increasing usage by existing consumers
   
     The Company believes that in an effort to increase page views, Web content
providers are increasingly adding content and other features to their sites to
encourage users to spend more time on their Web sites. The Company regularly
enhances its services and updates the content hosted on the Excite Network in
order to encourage consumers to utilize the Excite Network more frequently. The
Company has also developed personalized services, such as Excite Live! and
Excite NewsTracker, that enable consumers to establish a personal profile and
receive information targeted to their interests. Because customizing these
personalized services typically requires some effort and time on the part of the
consumer, the Company believes that consumers who use these personalized
services will continue to use the Excite Network. The Company also offers
community building services, such as Excite Talk!, designed to increase consumer
usage and loyalty.
    
ADVERTISING AND SALES

    The Company derives substantially all of its revenues from the sale of
advertisements. Advertisements on the Excite Network are banner or billboard
style advertisements and are prominently displayed throughout the Excite
Network. As the consumer interacts with the Excite Network, new advertisements
are displayed. From each advertisement screen, consumers can hyperlink directly
to an advertiser's own Web site, thus enabling the advertiser an opportunity to
directly interact with a consumer who has expressed interest in the
advertisement. The Company believes that since consumers view advertisements
only after they request a new page, the focus of the consumer's attention to the
advertisement is likely to be higher than it is in other forms of media.

    The Company generally enters into agreements with advertisers pursuant to
which the Company guarantees a minimum number of impressions for a fixed fee.
The Company charges higher per impression fees for advertising products that
target a specific audience. The Company's list prices for advertising currently
range from $26 to $65 per thousand impressions ("CPM"). The Company offers a
variety of advertising programs that enable advertisers to target their
audiences at various levels of market segmentation; mass market placement, which
does not have any market segmentation; and affinity placement, which delivers
advertisements to an audience with a specific content interest. In March 1997,
the Company announced a new strategic content direction intended to offer even
more targeted advertisements to consumers of specific demographic profiles by
aligning Excite's services into channels. Each channel will focus on a specific
topic such as Arts & Entertainment, Sports, Business and Computing, among
others. This channels model is intended to allow advertisers to purchase
advertising in a format similar to other media.

    The Company's existing and planned advertising programs range from those
with a broad reach to those that are specifically targeted:

        General Rotation (at a CPM of $26.) The Company offers a general
    rotation program that enables advertisers to reach a large number of
    consumers utilizing the Excite Network. Advertising banners rotate through
    Excite Network pages, including the home page and results pages of Excite
    and 


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    WebCrawler. This program delivers a higher volume of mass market Excite Web
    consumers and provides frequent exposure for advertisers.

        Content (at a CPM of $35.) The Company provides a set of programs that
    provide advertisers with the opportunity to target advertising by content
    within services such as Excite Reviews, Excite NewsTracker, ExciteSeeing
    Tours and WebCrawler Select pages. These programs deliver targeted messages
    to preselected affinity groups in categories such as sports, computing,
    automotive and finance.

        City.Net (at a CPM of $40-$45.) The Company provides a program on its
    Excite City.Net service that enables advertisers to direct advertisements to
    geographical affinity groups. This targeted approach can be used to
    complement a national marketing strategy with local or regional messages.

        Keywords (at a CPM of $48-$65.) The Company's keyword program offers
    advertisers an opportunity to target specific audiences by assigning
    advertisement banners to certain key words or concepts. For example, when
    Windows 95 is searched, a Microsoft advertisement could be displayed on the
    search results page. Because of the ability to customize the targeted nature
    of potential customers, the Company is able to charge premium rates for such
    keyword advertising.

        Excite Live! (to be offered at a CPM of $60-$80.) The Company plans to
    enable advertisers to target Excite Live! consumers at a greater level of
    detail and precision than the other advertising methods described above.
    Based upon the demographic and psychographic information collected from
    subscribers of Excite Live!, advertisers will be able to deliver targeted
    messages to groups of individuals.

    Currently, a substantial majority of the advertisements sold on the Excite
Network are general rotation advertisements. The Company's strategy is to
migrate advertisers to more targeted advertisement placements. The CPM rates
listed above are based on the Company's standard rate card. Actual CPM rates
depend upon a variety of factors, including, without limitation, the duration of
the advertising contract and the number of impressions purchased, and are often
negotiated on a case-by-case basis.

    Through Excite's various advertising programs, advertisers can combine
multiple advertising packages in order to develop a complete advertising plan
that reaches many audience types and that is designed to maximize reach,
frequency of exposure and consumer response. For example, an airline company
might have general rotation as a base of mass exposure. The advertising schedule
could be enhanced based upon topical affinity, by displaying a banner every time
a consumer searches using the word "travel" or "airfare," as well as by
displaying an advertisement to all Excite Live! consumers who have expressed an
interest in travel. The schedule could be further refined by placing banners on
the travel page in Excite Reviews or WebCrawler Select, as well as on a variety
of U.S. and international city pages on Excite City.Net that may correspond to
hubs of national or international business.

    The Company has built a direct sales organization of 32 professionals
located in San Francisco, New York and Los Angeles. The Company believes that
such a sales force dedicated to selling advertising only on the Excite Network
provides a higher level of customer service and satisfaction to advertisers
during both the buying and reporting process. Because the Company's direct sales
organization is focused and educated on the Excite Network, they can best match
high value advertising opportunities with companies who can benefit from them.
Because the Company has a dedicated group of professionals focused on
advertising reporting and measurement, advertisers can receive up-to-date
information on the placement and effectiveness of their advertisements. In
addition, the Company believes that in order to be a leader in Web
advertising and provide the highest level of service, it must continue to
develop technologies for the precise and timely placement, targeting and
measurement of advertising.

    For 1996, over 500 brands from various industries were advertised on the
Excite Network as compared with 13 as of December 31, 1995. The following is a
list of brands or companies for which advertisers purchased more than $10,000 in
advertising on the Excite Network during 1996:


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TECHNOLOGY                              TELECOMMUNICATIONS                
----------                              ------------------                    
Apple                                   AT&T                    
Fujitsu                                 GTE                    
Hewlett-Packard                         MCI                    
Hitachi                                 Pacific Bell                    
IBM                                     Sprint                    
Intel                                   U S West                    
Microsoft                                                   
Netscape                                PUBLISHING                    
Silicon Graphics                        ----------                    
Sun Microsystems                        The Atlanta Journal Constitution   
Toshiba                                 The Chicago Tribune                    
                                        Encyclopedia Brittanica
AUTOMOTIVE                              Newsweek
----------                              The New York Times
Ford                                    The Wall Street Journal  
Honda                                                       
Saturn                                  CONSUMER
Toyota                                  --------            
                                        American Greetings
FINANCIAL                               Disney  
---------                               Duracell
American Express                        FTD            
Charles Schwab                          Glaxo Wellcome                 
Chemical Bank                           J. C. Penney      
Kaufmann Fund                           Kodak        
Metlife                                 L.L. Bean                    
Prudential                              Procter & Gamble                    
Scudder                                 Sears, Roebuck    
Wells Fargo Bank                        Time Warner      
   
    During 1996, Netscape accounted for approximately 12% of total revenues.
No other customer accounted for more than 10% of total revenues during 1996.
    
TECHNOLOGY

   Search and retrieval technology

    The Company's search services are based on proprietary retrieval technology
designed to permit efficient and highly effective searches by emphasizing
quality and precision in the search process. This technology combines a
concept-based retrieval technology with sophisticated browsing tools. In
addition, the Company has developed proprietary spider technology designed to
enhance the quantity and quality of information contained in the Company's
databases, thereby enhancing the quality of information retrieved in a search.

    Concept-based retrieval. The Company believes that most Web navigation
companies use "keyword" searching in their retrieval process, in which only
those documents that contain the keywords specified in the query are retrieved.
While keyword searching is effective in some instances (and may be enhanced by
the use of a built-in thesaurus), it does not allow the user to retrieve
information relevant to a search that does not include the exact text of a
keyword (or synonym, if a thesaurus is used.) For example, a keyword search of
the words "intellectual property" may not return documents relating to software
piracy or copyright law if such documents do not contain the words
"intellectual" or "property." Keyword searching may also result in the retrieval
of a great deal of irrelevant information that happens to contain the keyword.
The Company's concept-based retrieval technology uses advanced statistical
methods which it believes increase the precision or relevance of information
retrieved. The Company's retrieval technology analyzes information for
statistical correlations between terms and documents. These correlations, which
can be loosely described as "concepts," are then used to improve the retrieval
process. Accordingly, a search can retrieve information that is relevant to the
consumer's query even if that information contains none of the keywords in the
original query.


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<PAGE>   9
    Scalability. Because of the size of its database (approximately 50 million
Web documents) as well as the number of searches conducted (approximately 4 to 5
million pages per day), the Company must maintain a strong core competency in
searching large databases efficiently. To this end, the Company has developed a
number of advanced, proprietary techniques to accelerate queries over large
databases while accommodating a large number of users.

    Relevance enhancement. Retrieval of relevant documents on the Web can be
particularly challenging. Many documents may contain keywords which a consumer
may search but which are not relevant to the query. In addition, some authors
create documents which use frequently searched words, an activity referred to as
"stuffing," in an attempt to artificially enhance their relevance to certain
queries. Consequently, the Company has developed technology that is designed to
enhance the relevance of "high-quality" documents and reduce the relevance of
documents that are "low-quality."

    Browsing tools. The Company's technology includes sophisticated browsing
tools that help consumers better understand the information that has been
retrieved. These browsing tools include:

        Query-by-example. If a consumer retrieves a document that he or she
    finds particularly appropriate, the consumer can click on a
    "query-by-example" button. Without requiring the consumer to reformulate the
    query, the system then executes an additional search and retrieves documents
    that it finds to be statistically similar to the example document.

        Automatic abstracting. The Company's technology automatically creates an
    abstract or summary of a Web document by selecting sentences from the
    document that it finds to be statistically likely to closely describe its
    core concepts. This technology lets consumers evaluate the relevancy of Web
    documents without taking the time to visit them or read the entire document.
    The Company believes that this abstracting function is superior to
    abstracting functions of most competitive systems, which it believes
    generally select the first few sentences of a document or select one or more
    sentences containing the keywords of the search.

    Spider technology. Information for the Company's databases is collected
through the use of "spiders," which are software programs that autonomously roam
the Web by following hypertext links, automatically identifying and collecting
material to be included in the Company's databases. The Company's spider
technology completely refreshes its index of 50 million pages in less than a
month. The Company's technology also allows it to refresh millions of the most
popular Web pages on a much more frequent basis (every few days.)

   Personalization technology

    The Company has developed a flexible set of tools to allow access to
customized content for each individual consumer. This technology is utilized in
the Excite Live! service. The Company also utilizes sophisticated learning
technology in its Excite NewsTracker service, which examines the concepts in a
consumer's profile and, over time, suggests related concepts that might also
interest the consumer.

   Network operations

    The Company believes that Web site operational performance is a significant
factor in attracting and maintaining a customer base on the Web. Operational
performance includes reliable 24 hour accessibility and fast page download time.
In order to maintain the highest standards, the Company is building its network
operations center on its own premises in California. This center will enable the
Company to provide direct control over its main Web sites. In addition, the
Company has agreed to enter into a strategic relationship with AOL to host a
mirrored site in Reston, Virginia. The Company believes that this will provide
better access for customers in the Eastern half of the country.

    As of February 1, 1997, there were 77 employees on the Company's research
and development staff. Excluding charges for purchased in-process technology,
product development costs were $415,000, $2.8 million and $8.0 million in 1994,
1995 and 1996, respectively. See "Management's Discussion and Analysis of
Financial Condition 


                                     - 9 -
<PAGE>   10
and Results of Operations - Risk Factors that May Affect Future Results --
Technological Change; Dependence on New and Enhanced Services; Risk of Delays"
and "-- Risk of Capacity Constraints; Dependence on Computer Infrastructure."

STRATEGIC ALLIANCES
   
     Companies offering advertising-supported services on the Web compete with
other providers of Web content and services for user traffic and the number of
page views on their Web sites. As a result, many providers of Web services have
been entering into distribution arrangements, co-branding arrangements, content
arrangements and other strategic partnering arrangements with ISPs, OSPs, Web
browsers, operators of high traffic Web sites and other businesses in an attempt
to increase traffic and page views, and thereby making their Web sites more
attractive to Web advertisers. Accordingly, a key element of the Company's
business strategy is to enter into relationships with both Web access points and
content providers. To this end, the Company has entered into a number of
strategic alliances.
    
   Netscape

    The Company entered into agreements with Netscape in April 1996 pursuant to
which the Company's Excite and McKinley brands were each one of the five
"Premier Providers" on Netscape's "Net Search" page for a one year period. In
March 1997, new agreements were entered into which commence in May 1997 whereby
the Excite brand will be one of four "Premier Providers" and the Company's
WebCrawler brand will be one of several "Marquee Providers" of search and
navigation services accessible from Netscape's "Net Search" page. The Company
believes that a substantial amount of its historic traffic on a weekly basis has
been attributable to Netscape. Under the 1996 agreements, the Company made
payments totaling $5.0 million for each of the two "Premier Provider" positions
over the term of the agreements. Under the terms of the 1997 agreements, the
Company is committed to make minimum payments of $8.25 million of which $5.75
million will be paid in cash ($5.25 million in 1997 and $500,000 in 1998) and
$2.5 million will be applied towards advertising by Netscape on the Excite
Network over the one year term of the agreements based upon delivery of a
specified number of advertising impressions. See Notes 12 and 13 of Notes to
Consolidated Financial Statements and " Management's Discussion and Analysis of
Financial Condition and Results of Operations - Risk Factors that May Affect
Future Results -- Dependence on Netscape and AOL."

     AOL 
   
    In November 1996, the Company entered into a five-year distribution
agreement with AOL pursuant to which the Company will provide to AOL a
co-branded version of Excite and, for a minimum of a two year period, be the
exclusive provider of Web search and directory services for AOL. AOL and Excite
will share advertising revenues derived from the use of these services by AOL
subscribers. If either of the parties does not elect to continue the exclusivity
period for the remaining three year period of the agreement, AOL will be
permitted to offer other Web navigation services on its online service; however,
Excite will remain as the "default" Web navigation service and Excite will
receive a larger percentage of the advertising revenues derived from the use of
Excite through AOL. Excite will also advertise AOL's service on Excite and AOL
will pay a commission to the Company for new AOL subscribers referred from these
advertisements. The Company is also required to satisfy certain technical,
product feature and editorial criteria. As a result of its implementation of a
flat-rate pricing program, there have been numerous reports in the press and
potential litigation regarding, among other things, AOL's capacity to handle a
large number of subscribers. The Company's operating results could be
materially and adversely affected if AOL were to lose market share, experience a
decrease in the number of its subscribers, or experience a decrease in the
number of its subscribers utilizing AOL for their Web search and retrieval
needs, whether as a result of such reports, litigation or otherwise. In
addition, the Company completed the purchase of the WebCrawler Assets from AOL
in March 1997. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Risk Factors that May Affect Future Results --
Dependence on Netscape and AOL, and -- Acquisition Strategy; Integration of Past
and Future Acquisitions." 
    
   Microsoft

    The Company has entered into a distribution and license agreement with
Microsoft pursuant to which Excite is accessible to Microsoft's customers
through The Microsoft Network, Microsoft's Internet Explorer Web Browser and, at
Microsoft's discretion, other channels. The Company and Microsoft share
advertising space availability, or barter, for the traffic that is generated by
Microsoft. This agreement expires in March 1997. The Company is currently
negotiating to extend the term of this agreement. There can be no assurance that
the duration of this agreement will be extended or that a replacement agreement
will be entered into between the Company and Microsoft. To date, this
arrangement has not accounted for a significant portion of the Company's
traffic.


                                     - 10 -
<PAGE>   11
   Content alliances

    The Company has strategic alliances with a number of content providers
pursuant to which the Company engages in licensing of content or technology,
revenue sharing, syndication and co-branding arrangements. For example, Tribune
Media Services ("Tribune") syndicates rights to Excite Reviews. Excite also
licenses television listings and horoscopes from Tribune, stock quotes from
Quote.com, scores from Sportsline, yellow pages from Big Book, white page
listings from WhoWhere, weather reports from Weatherlabs and maps from Mapquest.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Risk Factors that May Affect Future Results -- Dependence on
Third-Party Relationships."

COMPETITION

    The market for Web advertising and Web search and retrieval services is
intensely competitive. The Company believes that the principal competitive
factors in these markets are name recognition, amount of user traffic, pricing,
performance, ease of use and functionality. The Company's primary competitors
are Web search and retrieval companies such as Infoseek Corporation, Lycos, Inc.
and Yahoo!, Inc. and specific search and retrieval services and products offered
by other companies, including Digital Equipment Corporation's Alta Vista,
HotWired Venture's and Inktomi's HotBot, and OpenText. The Company also competes
indirectly with Web content broadcasting services, such as The PointCast
Network's PointCast, and with services from other database vendors, such as
Lexis/Nexis, Dialog and other companies that offer information search and
retrieval capabilities with their core database products. In the future, the
Company may encounter competition from Internet service providers ("ISPs"),
online service providers ("OSPs"), Web site operators, providers of Web browser
software (such as Netscape or Microsoft) and other Internet services and
products that incorporate search and retrieval features into their offerings,
whether through internal development or by acquisition of one or more of the
Company's direct competitors.
   
     In addition, the Company also competes with ISPs, OSPs, Web browsers and
other Web content providers for the sale of advertisements. The Company believes
that the number of companies relying on fees for Web-based advertising has
increased substantially in the past year. Accordingly, the Company may face
increased pricing pressure for the sale of advertisements on its network, which
would have a material adverse effect on the Company's business, results of
operations and financial condition. Companies offering advertising-supported
services on the Web have also begun to compete with other providers of Web
content and services for user traffic and the number of page views on their Web
sites. As a result, many providers of Web services have been entering into
distribution arrangements, co-branding arrangements, content arrangements and
other strategic partnering arrangements with ISPs, OSPs, Web browsers, operators
of high traffic Web sites and other business in an attempt to increase traffic
and page views, and thereby make their Web sites more attractive to Web
advertisers. To the extent that direct competitors or other Web site operators
are able to enter into successful strategic relationships, these competitors and
Web sites could experience increases in traffic and page views, which could have
the effect of making these Web sites appear more attractive to advertisers. This
could materially and adversely affect the amount of advertisements sold on the
Company's network and the Company's business, results of operations and
financial condition would be materially and adversely affected.
    
    Many of the Company's existing competitors, as well as a number of potential
new competitors, have longer operating histories in the Web market, greater name
recognition, larger customer bases and databases and significantly greater
financial, technical and marketing resources than the Company. Such competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, distribution partners, advertisers and content providers. Further,
there can be no assurance that the Company's competitors will not develop Web
search and retrieval services that are equal or superior to those of the Company
or that achieve greater market acceptance than the Company's offerings in the
area of name recognition, performance, ease of use and functionality. There can
also be no assurance that ISPs, OSPs, Web browsers and other Web content
providers will not be perceived by advertisers as having more desirable Web
sites for placement of advertisements. In addition, a number of the Company's
current advertising customers and strategic partners also have established
collaborative relationships with certain of the Company's competitors and a
number of the Company's competitors have established collaborative relationships
with ISPs, OSPs and other Web content providers. Accordingly, there can be no
assurance that the Company will be able to retain a customer base of
advertisers, maintain or increase traffic on its network, that competitors will
not experience greater growth in traffic than the Company as a result of such
relationships, which could have the effect of making their Web sites more
attractive to advertisers or that strategic partners will not sever or will
elect to renew their agreements with the Company. There can also be no assurance
that the Company will be able to compete successfully against its current or
future competitors or that competition will not have a material adverse effect
on the Company's business, results of operations and financial condition.

    The Web, in general, and the Company, specifically, also must compete with
traditional advertising media such as print, radio and television for a share of
advertisers' total advertising budgets. To the extent that the Web is not an
effective advertising medium, advertisers may be reluctant to devote a
significant portion of their advertising budget 


                                     - 11 -
<PAGE>   12
to the Web. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Risk Factors that May Affect Future Results --
Developing Market; Validation of the Web as an Effective Advertising Medium" and
"-- Intense Competition."

LICENSES AND INTELLECTUAL PROPERTY

    The Company regards its technology as proprietary and attempts to protect it
with copyrights, trademarks, trade secret laws, restrictions on disclosure and
transferring title and other methods, and has been issued a patent with respect
to certain aspects of its searching and indexing technology. The Company is also
in the process of preparing three patent applications with respect to other
aspects of its technology. There can be no assurance that the patent that has
been issued or that any that may issue from these pending applications will be
sufficiently broad to protect the Company's technology. In addition, there can
be no assurance that any patents that have been issued or that may be issued
will not be challenged, invalidated or circumvented, or that any rights granted
thereunder would provide proprietary protection to the Company. Failure of any
patents to provide protection of the Company's technology may make it easier for
the Company's competitors to offer technology equivalent to or superior to the
Company's technology. The Company also generally enters into confidentiality or
license agreements with its employees and consultants, and generally controls
access to and distribution of its documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use the Company's services or technology without
authorization, or to develop similar technology independently. In addition,
effective copyright, trademark and trade secret protection may be unavailable or
limited in certain foreign countries, and the global nature of the Web makes it
virtually impossible to control the ultimate destination of the Company's
services. Policing unauthorized use of the Company's technology is difficult.
There can be no assurance that the steps taken by the Company will prevent
misappropriation or infringement of its technology. In addition, litigation may
be necessary in the future to enforce the Company's intellectual property
rights, to protect the Company's trade secrets or to determine the validity and
scope of the proprietary rights of others. Such litigation could result in
substantial costs and diversion of resources and could have a material and
adverse effect on the Company's business, results of operations and financial
condition.

    Many parties are actively developing search, indexing and related Web
technologies at the present time. The Company believes that they will take steps
to protect these technologies, including seeking patent protection. As a result,
the Company believes that disputes regarding the ownership of such technologies
are likely to arise in the future.

    From time to time, the Company has received, and may receive in the future,
notice of claims of infringement of other parties' proprietary rights, including
claims for infringement resulting from the downloading of materials by the
online or Web services operated or facilitated by the Company. Although the
Company investigates claims and responds as it deems appropriate, there can be
no assurance that infringement or invalidity claims (or claims for
indemnification resulting from infringement claims) will not be asserted or
prosecuted against the Company or that any assertions or prosecutions will not
materially and adversely affect the Company's business, results of operations
and financial condition. Irrespective of the validity or the successful
assertion of such claims, the Company would incur significant costs and
diversion of resources with respect to the defense thereof which could have a
material adverse effect on the Company's business, results of operations and
financial condition. If any claims or actions were asserted against the Company,
the Company might seek to obtain a license under a third party's intellectual
property rights. There can be no assurance, however, that under such
circumstances a license would be available on commercially reasonable terms, or
at all. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Risk Factors that May Affect Future Results -- Liability
for Information Retrieved from the Web."

    The Company currently owns and also licenses from third parties its
technologies. As it continues to introduce new services that incorporate new
technologies, it may be required to license technology from others. There can be
no assurance that these third-party technology licenses will be available to the
Company on commercially reasonable terms, if at all. The inability of the
Company to obtain any of these technology licenses could result in delays or
reductions in the introduction of new services or could adversely affect the
performance of its services until equivalent technology could be identified,
licensed and integrated. See " Management's Discussion and 


                                     - 12 -
<PAGE>   13
Analysis of Financial Condition and Results of Operations - Risk Factors that
May Affect Future Results -- Liability for Information Retrieved from the
Web."

EMPLOYEES

    As of February 1, 1997, the Company had 191 full-time employees, including
77 in research and development, 80 in marketing and sales, 21 in finance and
administration and 13 in operations and support. The Company's future success
will depend, in part, on its ability to continue to attract, retain and motivate
highly qualified technical and management personnel, particularly highly skilled
technical personnel and engineers involved in new product development, for whom
competition is intense. From time to time, the Company also employs independent
contractors to support its research and development, marketing, sales and
support and administrative organizations. The Company's employees are not
represented by any collective bargaining unit, and the Company has never
experienced a work stoppage. The Company believes its relations with its
employees are good. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Risk Factors that May Affect Future
Results -- Management of Growth."




--------------------------------------------------------------------------------
ITEM 2: PROPERTIES
--------------------------------------------------------------------------------
   
    As of December 31, 1996, the Company's headquarters were located in a leased
facility in Mountain View, California, consisting of approximately 13,500 square
feet of office space occupied under a lease expiring February 1, 1999 with a
renewal option for an additional year. The Company and the lessor of the
Mountain View facility have agreed that the Company shall surrender such
facility in May 1997 and that the lease for such facility shall be canceled upon
such surrender. In April 1997, the Company moved its headquarters to a leased
facility in Redwood City, California, consisting of approximately 88,000 square
feet of office space under a ten year lease with a renewal option for an
additional five years. The Company's communications hardware and certain of its
computer hardware, which were previously located at a leased facility in San
Jose, California were also moved to the Redwood City facility. The Company
believes that its existing and proposed facilities and offices are adequate to
meet its requirements for the foreseeable future. There can be no assurance that
a system failure at its Redwood City facility would not adversely affect the
performance of the Company's services. See " Management's Discussion and
Analysis of Financial Condition and Results of Operations - Risk Factors that
May Affect Future Results -- Risk of Capacity Constraints; Dependence on
Computer Infrastructure." 
    

--------------------------------------------------------------------------------
ITEM 3: LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

    On November 18, 1996, Kristine Paaso and Laura Lindsey filed a complaint in
the California Superior Court, Santa Clara County, against the Company and
certain of its founders alleging breach of an alleged oral agreement, breach of
fiduciary duty and fraud. The plaintiffs allege that they participated in the
creation of the Company's business plan and were entitled to participate as
officers and shareholders of the Company. The complaint seeks an unspecified
amount of damages, including punitive damages. The Company has filed a demurrer
to this complaint and intends to defend this action vigorously. Although it is
too early to ascertain the possible outcome of this litigation, any litigation,
regardless of outcome, could have an adverse effect on the Company's business,
results of operations and financial condition.


--------------------------------------------------------------------------------
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------------------------

There were no submissions of matters to a vote of security holders during the
quarter ended December 31, 1996.


                                     - 13 -
<PAGE>   14
--------------------------------------------------------------------------------
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
--------------------------------------------------------------------------------

     Excite's common stock has been traded on the Nasdaq National Market under
the symbol "XCIT" since April 4, 1996. The high and low closing sales prices of
the Company's Common Stock set forth below are as reported on the Nasdaq
National Market.

<TABLE>
<CAPTION>
                                                     High        Low
                                                    -------     -----
<S>                                                 <C>         <C> 
Year Ended December 31, 1996
     Second Quarter (from April 4, 1996)            $20.00      $8.25
     Third Quarter                                    8.38       5.13
     Fourth Quarter                                  15.25       5.50
</TABLE>
   
     As of December 31, 1996, there were approximately 200 stockholders of
record of the Company's Common Stock, although the Company believes that there
is a larger number of beneficial owners of its Common Stock. The Company has
never paid cash dividends on its stock, and anticipates that it will continue to
retain its earnings, if any, to finance the growth of its business. In
addition, the Company's bank line of credit prohibits the payment of cash
dividends on capital stock without the bank's prior written consent. (See Note
13 of Notes to Consolidated Financial Statements in Part IV, Item 14 of this
Form 10-K/A.)
    


                                     - 14 -
<PAGE>   15
--------------------------------------------------------------------------------
ITEM 6: SELECTED CONSOLIDATED FINANCIAL DATA
--------------------------------------------------------------------------------
   
     The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Annual Report on Form 10-K/A. During
1996, Excite acquired McKinley in a transaction accounted for as a pooling of
interests. All financial information has been restated to reflect the combined
operations of Excite and McKinley. The statements of operations data for each of
the years in the three year period ended December 31, 1996 and the balance sheet
data at December 31, 1995 and 1996, are derived from, and are qualified by
reference to, the audited consolidated financial statements of the Company
included elsewhere in this Report and should be read in conjunction with those
financial statements and notes thereto. The balance sheet data at December 31,
1994 are derived from unaudited financial statements of the Company not included
in this Report.
    
<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31,
                                                      -------------------------------------
                                                       1994(1)         1995         1996(2)
                                                      ---------      --------      --------
 STATEMENTS OF OPERATIONS DATA:                       (In thousands, except per share data)
<S>                                                    <C>           <C>           <C>     
 Revenues:
    Advertising revenues .........................     $     57      $    145      $ 14,030
    Contract and other revenues ..................          236           808           727
                                                       --------      --------      --------
      Total revenues .............................          293           953        14,757
 Cost of revenues ................................           88           228         4,149
                                                       --------      --------      --------
 Gross profit ....................................          205           725        10,608
 Operating expenses:
    Product development ..........................          415         2,810         8,030
    Sales and marketing ..........................           37         1,648        21,103
    Distribution license fees (3) ................           --            --        11,878
    General and administrative ...................          399         2,326         7,081
    Charge for purchased in-process technology ...           --           331         3,500
    Other merger and acquisition related costs,
      including amortization of goodwill and other
      purchased intangibles ......................           --            --         3,134
                                                       --------      --------      --------
        Total operating expenses .................          851         7,115        54,726
                                                       --------      --------      --------
 Operating loss ..................................         (646)       (6,390)      (44,118)
 Interest income (expense) and other .............           (4)          (45)        1,001
                                                       --------      --------      --------
 Net loss ........................................     $   (650)     $ (6,435)     $(43,117)
                                                       ========      ========      ========
 Net loss per share ..............................     $  (0.06)     $  (0.58)     $  (3.65)
                                                       ========      ========      ========
 Shares used in computing net loss per share (4) .       10,576        11,070        11,818
                                                       ========      ========      ========
</TABLE>

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                         --------------------------------
                                                           1994        1995        1996
                                                          ------     --------     -------
 BALANCE SHEET DATA:                                              (In thousands)
<S>                                                       <C>        <C>          <C>    
 Cash, cash equivalents and short-term investments ..     $  12      $ 1,118      $20,834
 Working capital (deficit) ..........................      (442)        (878)       8,124
 Total assets .......................................       157        3,801       47,698
 Long-term obligations ..............................       100          995        3,985
 Redeemable convertible preferred stock .............        --        3,847           --
 Total shareholders' equity (net capital deficiency)       (542)      (4,034)      25,097
</TABLE>

----------
(1) The year ended December 31, 1994 includes the results of operations from
    Inception to December 31, 1994. Inception date is June 9, 1994 for Excite
    and December 7, 1993 for McKinley. The operating results for McKinley from
    December 7, 1993 through December 31, 1993 were immaterial.

(2) During the fourth quarter of 1996, the Company entered into an agreement to
    acquire the WebCrawler Assets from AOL. See " Management's Discussion and
    Analysis of Financial Condition and Results of Operations - Risk Factors
    that May Affect Future Results -- Acquisition Strategy; Integration of Past
    and Future Acquisitions," and Note 3 of Notes to Consolidated Financial
    Statements for a discussion of the Acquisition and associated costs.

(3) During the second quarter of 1996, the Company entered into two distribution
    license agreements with Netscape. See Note 12 of Notes to Consolidated
    Financial Statements for a discussion of these agreements and associated
    costs.

(4) See Note 1 of Notes to Consolidated Financial Statements for an explanation
    of shares used in computing net loss per share.


                                     - 15 -
<PAGE>   16
--------------------------------------------------------------------------------
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
        OF OPERATIONS
--------------------------------------------------------------------------------
   
    The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including, without limitation, the failure of the Company to
achieve increases in advertising revenues, the failure of the Company to
maintain premier positions on certain high traffic World Wide Web ("Web") access
points such as those maintained by America Online, Inc. ("AOL"), Microsoft
Corporation ("Microsoft") and Netscape Communications Corporation ("Netscape"),
the failure of the Company to anticipate and adapt to a developing market, the
rejection of the Company's services by Web consumers and/or advertisers, the
inability of the Company to maintain and increase levels of traffic on the
Excite Network, development of equal or superior services or products by
competitors, the failure of the market to adopt the Web as an advertising
medium, reductions in market prices for Web-based advertising, the inability of
the Company to effectively integrate the technology and operations of The
McKinley Group, Inc. ("McKinley"), the assets relating to AOL's WebCrawler
service (the "WebCrawler Assets") acquired or any other subsequently acquired
businesses or technologies with its operations, the inability to identify,
attract, retain and motivate qualified personnel, general economic conditions
and those risk factors set forth under "Risk Factors that May Affect Future
Results" included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Annual Report on Form
10-K/A ("Report"). The following discussion also should be read in conjunction
with the consolidated financial statements and notes thereto included elsewhere
in this Report.
    
OVERVIEW

     The Company operates the Excite Network, which includes the Excite and
WebCrawler brands, and provides a gateway to the Web that organizes, aggregates
and delivers information to meet the needs of individual consumers. Excite,
formerly Architext Software, Inc., was formed in June 1994 and, from its
inception to September 1995, its operating activities related primarily to
recruiting personnel, raising capital, purchasing operating assets, providing
custom product development and consulting, and developing services. The Company
first launched its Excite search and directory service in October 1995. 
   
    The Company has achieved only limited revenues to date, has incurred
significant operating losses since inception and as of December 31, 1996, the
Company had an accumulated deficit of approximately $50.2 million. The Company
has also experienced significant increases in operating losses on an annual and
quarterly basis since inception. Although the Company has experienced
significant revenue growth during 1996, there can be no assurance that this
growth rate will be sustained or that revenues will continue to grow. There can
also be no assurance that any revenue growth that the Company experiences will
be indicative of future operating results. In addition, the Company has
increased, and plans to significantly increase further, its operating expenses
in order to increase its sales and marketing efforts, fund greater levels of
product development and increase its general and administrative costs to support
the enlarged organization. To the extent that revenues do not grow at
anticipated rates or that increases in such operating expenses precede or are
not subsequently followed by commensurate increases in revenues, or that the
Company is unable to adjust operating expense levels accordingly, the Company's
business, results of operations and financial condition will be materially and
adversely affected. Given the level of planned expenditures, there can be no
assurance that the Company will ever achieve or sustain profitability. Although
the Company does not anticipate that its operating losses will continue to
increase, the Company anticipates that it will continue to incur operating
losses through at least the next twelve months. As a result of the acquisition
of the WebCrawler Assets and other acquisitions, operating results will be
negatively affected by approximately $10.1 million in amortization in 1997, and
$1.1 million in amortization in 1998, assuming no additional acquisitions and
no significant adjustments to the economic lives of the underlying intangible
assets. The extent of the future losses will be contingent on the amount of
the growth in the Company's advertising revenues. Furthermore, the Company's
ability to achieve profitability will be dependent on a variety of factors,
including, without limitation, the factors described under the heading
"Summary" above as well as elsewhere in this Annual Report on Form 10-K/A.
    
    On August 30, 1996, the Company acquired by merger McKinley, a private
company and creator of the Magellan On-Line Guide. The transaction was effected
through the issuance of 850,000 shares of the Company's Common Stock and was
accounted for as a pooling of interests. In connection with the transaction, the
Company incurred approximately $2.2 million in merger related expenses,
including $1.0 million for legal and other professional consulting fees,
$901,000 for personnel severance and outplacement expenses and $345,000 for
termination of contracts and discontinuation of duplicate operations and
facilities. McKinley has experienced operating losses since inception. Because
the merger has been accounted for as a pooling of interests, all financial
information for dates and periods prior to the merger has been restated to
reflect the combined operations of the Company and McKinley. See "Risk Factors
that May Affect Future Results -- Acquisition Strategy; Integration of Past and
Future Acquisitions."


                                     - 16 -
<PAGE>   17
    On November 25, 1996, the Company announced an expansion of its previous
agreement with AOL, pursuant to which a co-branded version of Excite became the
exclusive Web search and directory service on AOL. The Company also acquired the
WebCrawler Assets (the "Acquisition") for an aggregate of 1,950,000 shares of
the Company's Convertible Preferred Stock. The Acquisition, which was
consummated in March 1997 (the "Closing"), was recorded for accounting purposes
as of December 1, 1996. The transaction was accounted for as an acquisition of
rights to developed and purchased in-process technology and distribution rights.
Of the total purchase price, $3.5 million was allocated to purchased in-process
technology and the remaining excess purchase price of approximately $12.6
million was allocated to trademarks, distribution rights, bookmarks, trade
names, goodwill and other. The amount of the purchase price allocated to
purchased in-process technology was charged to the Company's operations as of
December 1, 1996. The identified intangible assets and goodwill are being
amortized over periods ranging from four months to three years.

    In connection with the Acquisition and distribution agreement, the Company
and AOL have agreed that a co-branded version of the Excite search and directory
services will be the exclusive provider of Web search and directory services to
AOL's customers for a minimum of two years. The Company will receive a share of
revenues generated by the co-branded version of the Excite services hosted on
AOL as royalties, and AOL will incur all hosting, advertising and selling
expenses. Upon Closing, AOL will pay to the Company a percentage of AOL's
advertising revenues with respect to the sales of advertising derived from the
WebCrawler Assets for the period between December 1, 1996 and the Closing, less
ordinary and customary reserves, and the Company will reimburse AOL for expenses
relating to the WebCrawler Assets. Revenues recorded and derived from the
WebCrawler Assets during the period from December 1, 1996 through December 31,
1996 were immaterial.

    The Company expects to derive substantially all of its revenue for the
foreseeable future from selling advertising space on the Excite Network as
consumers use its services for their search and retrieval needs. The Company's
advertising revenues are derived principally from short-term advertising
contracts in which the Company guarantees a minimum number of impressions (a
view of an advertisement by a consumer) for a fixed fee. Advertising revenues
are recognized ratably over the term of the contract. To the extent minimum
guaranteed impression levels are not met, the Company defers recognition of the
corresponding revenues until guaranteed levels are achieved. At December 31,
1996, the Company had deferred revenues of $1.8 million.

    Revenues from the sale of certain advertising space are shared with third
parties pursuant to the terms of certain agreements. To date, amounts allocable
to third parties have not been significant. Contract and other revenues during
the years ended December 31, 1994 and 1995 consisted primarily of contract
revenues earned under agreements to modify the Company's Web directory
technology and fees for the licensing of Web directory content and technology.
Contract revenues are recognized as the work is performed using the percentage
of completion method. License revenues are recognized at the time of delivery,
provided that no significant obligations remain and collection of the resulting
receivable is considered probable. See "-Risk Factors that May Affect Future
Results -- Reliance on Advertising Revenues."

    The Company's operating results have varied on a quarterly basis during its
limited operating history, and the Company expects to experience significant
fluctuations in operating results in the future. In addition, because of the
rapidly changing nature of its business and its extremely limited operating
history, the Company believes that period-to-period comparisons of its financial
results are not necessarily meaningful and should not be relied upon as an
indication of future performance. See "-Risk Factors that May Affect Future
Results -- Potential Fluctuations in Quarterly Results; Unpredictability of
Future Revenues."


                                     - 17 -
<PAGE>   18
RESULTS OF OPERATIONS

    The following table sets forth, for the periods indicated, the percentage of
total revenues represented by certain items from the Company's Consolidated
Statement of Operations.

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER  31,
                                                                  ---------------------------
                                                                  1994       1995       1996
                                                                  ----       ----       ----
<S>                                                               <C>        <C>        <C>
 Revenues:
   Advertising revenues .....................................       19%        15%        95%
   Contract and other revenues ..............................       81         85          5
                                                                  ----       ----       ----
     Total revenues .........................................      100        100        100
                                                                  ----       ----       ----
Cost of revenues ............................................       30         24         28
                                                                  ----       ----       ----
Gross profit ................................................       70         76         72
Operating expenses:
   Product development ......................................      141        295         54
   Sales and marketing ......................................       13        173        143
   Distribution license fees ................................       --         --         81
   General and administrative ...............................      136        244         48
   Charge for purchased in-process technology ...............       --         35         24
   Other merger and acquisition related costs, including
     amortization of goodwill and other purchased intangibles       --         --         21
                                                                  ----       ----       ----
       Total operating expenses .............................      290        747        371
                                                                  ----       ----       ----
Operating loss ..............................................     (220)      (671)      (299)
Interest income (expense) and other .........................       (1)        (4)         7
                                                                  ----       ----       ----
Net loss ....................................................     (221)%     (675)%     (292)%
                                                                  ====       ====       ====
</TABLE>

   Revenues

    In October 1995, the Company began selling advertising space on its network.
Accordingly, there were no significant advertising revenues for 1994 or 1995.
Prior to October 1995, contract and other revenues consisted primarily of
revenues derived from custom product development, licensing of the McKinley
database, royalties from sales of the McKinley Internet Yellow Pages and
consulting fees, which are not expected to be significant sources of revenues in
future periods. Total revenues increased from $293,000 for 1994 to $953,000 for
1995, and to $14.8 million for 1996. The increase in 1995 was due to the
introduction of the Company's services in October 1995 and the increase in 1996
was due primarily to increased sales of advertisements on the Company's Web
sites, increased capacity resulting from the merger with McKinley as well as the
creation and increased size of the Company's direct sales force. For 1995 and
1996, 97% and 27%, respectively, of advertising revenues were derived through
two advertising sales agencies. With the addition of its direct sales force, the
Company does not expect to derive a significant portion of its advertising
revenues from advertising sales agencies in the future. There can be no
assurance that advertising over the Web will become widespread, that a market
for the Company's proposed services will emerge, or that the Company's services
will become generally adopted. See "-Risk Factors that May Affect Future Results
-- Reliance on Advertising Revenues," "-- Developing Market; Validation of the
Web as an Effective Advertising Medium" and "-- Dependence on Web
Infrastructure."

    Two customers accounted for 26% and 16%, respectively, of total revenues in
1995. One customer accounted for approximately 12% of total revenues in 1996.

    The increase in advertising revenues is due to increased sales of
advertisements and an increase in sales of targeted advertising with higher
rates per thousand impressions ("CPM") charged to advertisers. The Company
expects to continue to derive substantially all of its total revenue from
selling advertisements on its network. Because the market for advertising on the
Web is intensely competitive, advertising rates could be subject to pricing
pressures in the future. If the Company is forced to reduce its advertising
rates or experiences lower CPMs as a result of such competition or otherwise,
future revenues could be adversely affected. See "-Risk Factors that May Affect
Future Results -- Reliance on Advertising Revenues."


                                     - 18 -
<PAGE>   19


    In connection with its Premier Provider agreements with Netscape, the
Company entered into advertising agreements with Netscape to deliver a
guaranteed number of Netscape advertising impressions on the Excite Network. As
consideration for such advertising services, Netscape agreed to reduce the
Company's $10.0 million in obligations under the Company's Premier Provider
Agreements with Netscape by $3.0 million, which was classified as deferred
revenues to be recognized over the one year term of the agreements based upon
delivery of a specified number of advertising impressions. For the year ended
December 31, 1996, the Company recognized approximately $1.8 million in revenue
as a result of these agreements. See Notes 12 and 13 of Notes to Consolidated
Financial Statements.

   Cost of Revenues

    Cost of revenues consists primarily of expenses related to the maintenance
and technical support of the Excite Network, which are comprised principally of
personnel costs, telecommunications costs, equipment depreciation, royalties,
overhead allocations and costs related to revenue sharing agreements. Cost of
revenues was $4.1 million, or 28% of total revenues for 1996. Cost of revenues
for 1994 and 1995 was not comparable to 1996 as the nature of the Company's
revenues changed significantly from 1995 with the launch of the Company's
services in October 1995. In the fourth quarter of 1996, the Company recognized
$186,000 in non-cash expenses for the amortization of purchased technology
relating to the acquisition of the WebCrawler Assets. Cost of revenues may
increase in absolute dollars and as a percentage of total revenues as the
Company increases costs to support expanded services.

   Gross Margin

    Gross margin was 72% of total revenues for 1996. Gross margins for 1994 and
1995 were not comparable to 1996 as the nature of the Company's revenues changed
significantly from 1995 with the launch of the Company's services in October
1995. In the future, gross margins may be affected by the types of
advertisements sold and revenue-sharing provisions of certain access and content
provider agreements. Advertisements which target a specific audience typically
have higher gross margins than advertisements which target the mass Web consumer
market. Furthermore, pursuant to the provisions of certain agreements with
operators of Web access points and with content providers, the Company shares
advertising revenues based upon the number of consumers directed to its network.
A low level of targeted advertising as a percentage of total advertising sold, a
decrease in targeted or mass Web advertising rates, whether due to the lack of
acceptance of the Web as an effective advertising medium, competition or
otherwise, or an increase in the Company's advertising revenue sharing
obligations could adversely affect gross margins.

   Operating Expenses
   

    The Company's operating expenses have generally increased in absolute dollar
amounts in each consecutive quarter from inception through December 31, 1996.
This trend reflects the Company's rapid transition from the product development
stage to marketing and offering its services. The Company believes that
continued expansion of operations is essential to achieving and maintaining
market leadership. As a consequence, the Company intends to continue to increase
expenditures in all operating areas for the foreseeable future.

    


    Included in operating expenses for 1996 was a $3.5 million charge for
purchased in-process technology related to the Acquisition, $3.1 million in
merger and acquisition related costs relating to the merger with McKinley and
the Acquisition and $11.9 million in distribution license fees including $1.6
million relating to the issuance of a warrant to purchase 650,000 shares of
Common Stock to AOL (the "AOL Warrant," see Note 7 of Notes to Consolidated
Financial Statements) during the first quarter of 1996 and $10.0 million for
distribution license agreements with Netscape ($6.5 million of which had been
paid in cash or services as of December 31, 1996) during the second quarter of
1996. The Company has recorded deferred compensation of $640,000 for the
difference between the exercise price and the deemed fair value of the Company's
Common Stock for shares subject to options granted in 1995. The majority of this
deferred compensation is being charged to general and administrative expenses
and is being amortized over the vesting period of the options, generally on a
monthly basis over a four year period. 


                                     - 19 -
<PAGE>   20
Deferred compensation amortized was $9,000 and $243,000 for 1995 and 1996,
respectively. The amortization of this deferred compensation will continue to
have an adverse effect on the Company's results of operations. See Note 8 of
Notes to Consolidated Financial Statements.

    Product development. Product development expenses consist principally of
engineering and editorial personnel costs, allocation of overhead, equipment
depreciation, consulting and supplies. Costs related to research, design and
development of products have been charged to product development expense as
incurred. See Note 1 of Notes to Consolidated Financial Statements. Product
development expenses increased from $415,000, or 141% of total revenues for
1994, to $2.8 million, or 295% of total revenues for 1995, and increased in
absolute dollars to $8.0 million, or 54% of total revenues for 1996. This dollar
increase is due primarily to increased engineering and editorial staff required
to develop and enhance the Company's services as well as increased product
development activities resulting from the Acquisition and the merger with
McKinley. The Company believes that a significant level of product development
expenses is required to remain competitive and, accordingly, the Company
anticipates that it will continue to devote substantial resources to product
development and that these costs will continue to increase in absolute dollars.

    Sales and marketing. Sales and marketing expenses consist principally of
sales and marketing personnel costs, consulting fees, commissions, allocation of
overhead, creative services and promotional and advertising expenses. Sales and
marketing expenses were immaterial for 1994 and increased in absolute dollars
from $1.6 million, or 173% of total revenues for 1995, to $21.1 million, or 143%
of total revenues for 1996. This dollar increase was due primarily to the launch
of a significant media advertising campaign during the fourth quarter of 1996
and to increased sales personnel costs resulting from the transition during the
first half of 1996 from the use of outside advertising sales firms for the sales
of advertisements to a direct sales force and, to a lesser extent, the hiring of
other additional sales and marketing personnel and to increases in other
advertising and promotional expenses. The Company expects to incur significant
promotional and advertising expenses and to continue to hire additional sales
and marketing personnel, and anticipates that these costs will continue to
increase in absolute dollars. In particular, the Company is continuing, although
to a lesser degree, its media campaign which was launched during the fourth
quarter of 1996.

    Distribution license fees. Distribution license fees were $11.9 million for
1996. There were no distribution license fees for 1994 or 1995. Distribution
license fees included a one-time, non-cash charge of approximately $1.6 million
during the first quarter of 1996 related to the issuance of the AOL Warrant in
connection with a nonexclusive agreement entered into in March 1996, which will
be amended to be exercisable into an equivalent number of shares of Series E-3
Convertible Preferred Stock. Distribution license fees also included a $10.0
million charge in the second quarter of 1996 relating to the Company's Premier
Provider Agreements with Netscape, which expire in April 1997. In the future, it
is anticipated that any such consideration will be expensed over the term of the
distribution agreement. See Notes 12 and 13 of Notes to Consolidated Financial
Statements. In March 1997, the Company entered into an agreement to continue the
Premier Provider arrangement for the Excite brand, and entered a Marquee
Provider agreement for the WebCrawler brand. Under the terms of these new
agreements, the Company is committed to minimum payments of $8.25 million of
which $5.75 million will be paid in cash ($5.25 million in 1997 and $500,000 in
1998) and $2.5 million will be applied towards advertising by Netscape on the
Excite Network over the one year term of the agreements based upon delivery of a
specified number of advertising impressions. See "-Risk Factors that May Affect
Future Results -- Dependence on Netscape and AOL."

    General and administrative. General and administrative expenses consist
principally of administrative and executive personnel costs, provision for
doubtful accounts, allocation of overhead and fees for professional services.
General and administrative expenses increased from $399,000, or 136% of total
revenues for 1994, to $2.3 million, or 244% of total revenues for 1995, to $7.1
million, or 48% of total revenues for 1996. This dollar increase in general and
administrative expenses was due to increased personnel, professional service
fees, provision for doubtful accounts and relocation to new facilities to
support the Company's growth. The Company anticipates that its general and
administrative expenses will continue to increase significantly in absolute
dollars as the Company expands its administrative and executive staff, adds
infrastructure, relocates to a new facility during the second quarter of 1997,
negotiates and assimilates acquisitions of acquired technologies and businesses
and incurs 


                                     - 20 -
<PAGE>   21
additional costs related to operating as a public company, such as expenses
related to directors' and officers' insurance, investor relations programs and
increased professional fees.

    Charge for purchased in-process technology. The Company recognized a charge
of $3.5 million in the fourth quarter of 1996 for purchased in-process
technology related to the Acquisition. The $331,000 charge for purchased
in-process technology related to the acquisition of City.Net in November 1995.
There were no charges for purchased in-process technology for 1994.

    Other merger and acquisition related costs, including amortization of
goodwill and other purchased intangibles. Other merger and acquisition related
costs, including amortization of goodwill and other purchased intangibles,
totaled $3.1 million in 1996. The charge included approximately $2.2 million
related to the merger with McKinley, which consisted primarily of legal and
other professional consulting fees, personnel severance and outplacement
expenses and expenses related to the termination of contracts and
discontinuation of duplicate operations and facilities in the third quarter of
1996, and approximately $769,000 related to the amortization of goodwill and
other intangible assets in 1996 resulting from the Acquisition and the
acquisition of City.Net and other intangible assets. There were no other
significant merger and acquisition related costs for 1994 and 1995.

    Interest income (expense) and other. Interest income increased from $5,000
for 1995 to $1.4 million for 1996. This increase reflects larger amounts of
interest being earned on higher average investment balances, due primarily to
cash received from the Company's Series D Preferred Stock financing and initial
public offering in the first half of 1996. Interest expense increased from
$50,000 for 1995 to $409,000 for 1996. This increase was due primarily to
increased expenses associated with capital lease obligations and, to a lesser
extent, interest paid on bank borrowings. Interest income and interest expense
were immaterial for 1994.

   Income Taxes

    At December 31, 1996, the Company had federal and state net operating loss
carryforwards of approximately $37.9 million and $37.7 million, respectively.
The federal net operating loss carryforwards will expire beginning in 2009
through 2011, if not utilized. The state net loss operating carryforwards will
expire at various dates beginning in 1999 through 2001. An ownership change, as
defined in the Tax Reform Act of 1986, may restrict the utilization of
carryforwards. A valuation allowance has been recorded for the entire deferred
tax asset as a result of uncertainties regarding the realization of the asset
due to the lack of earnings history of the Company. See Note 9 of Notes to
Consolidated Financial Statements.


                                     - 21 -
<PAGE>   22
QUARTERLY RESULTS OF OPERATIONS

    The following table sets forth a summary of the Company's unaudited
quarterly results for the eight quarters in the period ended December 31, 1996,
together with the percentage of total revenues represented by such results. This
information has been derived from unaudited consolidated financial statements of
the Company that, in the opinion of management, reflect all recurring
adjustments necessary to fairly present this information when read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto appearing elsewhere herein. The Company believes that quarterly
operating results for 1995 are not comparable to those for 1996 as the nature of
the Company's business changed significantly from 1995 with the launch of the
Company's services in October 1995. The results of operations for any quarter
are not necessarily indicative of the results to be expected for any future
period. See "-Risk Factors that May Affect Future Results -- Potential
Fluctuations in Quarterly Results; Unpredictability of Future Revenues."

<TABLE>
<CAPTION>
                                                                      QUARTER ENDED
                                     ------------------------------------------------------------------------------
                                     MAR. 31,  JUNE 30, SEPT. 30,  DEC. 31,  MAR. 31,  JUNE 30, SEPT. 30,  DEC. 31,
                                       1995      1995     1995       1995      1996      1996      1996      1996
                                     -------   -------   -------   -------   -------   -------   -------   -------
                                                                (In thousands; unaudited)
<S>                                  <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>    
 Total revenues...................   $    28   $   314   $    37   $   574   $ 1,374   $ 2,816   $ 4,049   $  6,518
 Cost of revenues.................        20       104        19        85       389       427     1,165      2,168
                                     -------   -------   -------   -------   -------   -------   -------   --------
 Gross profit.....................         8       210        18       489       985     2,389     2,884      4,350
                                     -------   -------   -------   -------   -------   -------   -------   --------
 Operating expenses:
   Product development............       258       403       785     1,364     1,376     2,109     2,038      2,507
   Sales and marketing............        31       193       460       964     2,489     3,203     6,304      9,107
   Distribution license fees......        --        --        --        --     1,625    10,000       253         --
   General and administrative.....       158       386       495     1,287     1,141     2,782     1,753      1,405
   Charge for purchased in-process
       technology.................        --        --        --       331        --        --        --      3,500
   Other merger and acquisition
       related costs including
       amortization of goodwill
       and other purchased
       intangibles................        --        --        --        --        --        73     2,292        769
                                     -------   -------   -------   -------   -------   -------   -------   --------
        Total operating expenses..       447       982     1,740     3,946     6,631    18,167    12,640     17,288
                                     -------   -------   -------   -------   -------   -------   -------   --------
 Operating loss...................      (439)     (772)   (1,722)   (3,457)   (5,646)  (15,778)   (9,756)   (12,938)
                                     -------   -------   -------   -------   -------   --------  -------   --------
 Net loss.........................   $  (442)  $  (769)  $(1,739)  $(3,485)  $(5,644) $(15,408)  $(9,354)  $(12,711)
                                     =======   =======   =======   =======   =======   ========  =======   ========

 AS A PERCENTAGE OF TOTAL REVENUES:
 Total revenues...................       100 %     100 %     100 %     100 %     100 %     100 %     100 %      100 %
 Cost of revenues.................        71        33        51        15        28        15        29         33
                                     -------   -------   -------   -------   -------   -------   -------   --------
 Gross profit.....................        29        67        49        85        72        85        71         67
                                     -------   -------   -------   -------   -------   -------   -------   --------
 Operating expenses:
   Product development............       921       129     2,122       237       100        75        50         38
   Sales and marketing............       111        61     1,243       168       181       114       156        140
   Distribution license fees......        --        --        --        --       119       355         6         --
   General and administrative.....       564       123     1,338       224        83        99        43         21
   Charge for purchased in-process
       technology.................        --        --        --        58        --        --        --         54
   Other merger and acquisition
       related costs including
       amortization of goodwill
       and other purchased
       intangibles................        --        --        --        --        --         2        57         12
                                     -------   -------   -------   -------   -------   -------   -------   --------
        Total operating expenses..     1,596       313     4,703       687       483       645       312        265
                                     -------   -------   -------   -------   -------   -------   -------   --------
 Operating loss...................    (1,567)     (246)   (4,654)     (602)     (411)     (560)     (241)      (198)
                                     -------   -------   -------   -------   -------   -------   -------   --------
 Net loss.........................    (1,579)%    (245)%  (4,700)%    (607)%    (411)%    (547)%    (231)%     (195)%
                                     =======   =======   =======   =======   =======   =======   =======   ========
</TABLE>

    With the exception of the third quarter of 1995, the Company's total
revenues have increased in each of the eight quarters ending December 31, 1996.
The decline in revenues in the third quarter of 1995 was due primarily to a
reduction in contract revenue, which was not a significant source of revenues in
1996. Gross margins for 1995 are not comparable to gross margins for 1996 as the
nature of the Company's revenues changed significantly in 1996 with the launch
of the Company's services in October 1995. Gross margins have generally declined
during 1996, due primarily to the growth in infrastructure associated with the
acquisition of McKinley and the amortization 


                                     - 22 -
<PAGE>   23
of purchased in-process technology arising from the Acquisition and the
expansion of operations to support an expanded Excite Network.

    During the fourth quarter of 1996, the Company entered into an agreement,
which closed in March 1997, to acquire the WebCrawler Assets from AOL in
exchange for 1,250,000 and 700,000 shares of the Company's Series E-1 and E-2
Convertible Preferred Stock, respectively, and recorded the Acquisition as of
December 1, 1996. In addition, as part of the transaction contemplated by the
Acquisition Agreement relating to the Acquisition and distribution agreement
with AOL, AOL will have the right, for a 90 day period following the closing of
the Acquisition, to have 680,330 shares of Common Stock currently owned by AOL
canceled and an equivalent number of shares of Series E-4 Convertible Preferred
Stock issued to it, and the AOL Warrant, which previously was exercisable into
650,000 shares of Common Stock at an exercise price of $8.00 per share will be
amended to become exercisable into 650,000 shares of Series E-3 Convertible
Preferred Stock at the same exercise price per share. As a result of the
Acquisition, during the fourth quarter of 1996, the Company expensed $3.5
million for purchased in-process technology and recorded amortization of other
purchased intangibles of $769,000. See Note 3 of Notes to Consolidated Financial
Statements. During the second quarter of 1996, the Company entered into two
distribution license agreements with Netscape for total consideration of $10.0
million ($6.5 million of which had been paid in cash or services as of December
31, 1996), which was expensed during the second quarter of 1996. In the future,
it is anticipated that any such consideration will be expensed over the term of
the agreement. See Notes 12 and 13 of Notes to Consolidated Financial
Statements. Operating expenses other than distribution license fees and other
merger and acquisition related costs including amortization of goodwill and
other purchased intangibles generally increased during 1996. The increase in
such other operating expenses during 1996 is due to: increased personnel costs
to support the growth in headcount across all operating departments; recording
of the merger with McKinley in the third quarter of 1996 and of the Acquisition
in the fourth quarter of 1996, which resulted in additional product development
and general and administrative expenses; and the creation and launch of the
Excite brand advertising and promotion campaign, which resulted in additional
sales and marketing expenses of approximately $5.0 million in the fourth quarter
of 1996.

LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 1996, the Company had $20.8 million in unrestricted cash,
cash equivalents and short-term investments. Prior to its initial public
offering, the Company financed its operations and met its capital expenditure
requirements primarily from proceeds of the private sale of equity and debt
securities totaling approximately $18.2 million. In April 1996, the Company
completed its initial public offering of Common Stock. The Company sold
2,300,000 shares of its Common Stock for net proceeds of approximately $35.4
million, net of underwriting discounts and other offering costs. During the
third quarter of 1996, the Company completed its merger with McKinley, resulting
in a significant increase in headcount and overhead, as well as the assumption
and payment of additional liabilities. The Company maintains its cash and cash
equivalents in short-term and medium-term investment-grade interest-bearing
securities until required for other purposes. 

   

     In connection with the merger with McKinley, the Company assumed McKinley's
obligations pursuant to a commitment letter with a bank. Pursuant to this
commitment, McKinley had a revolving line of credit and note of up to $1.1
million which bear interest at the bank's prime rate plus 1%. Outstanding
amounts under this commitment were due March 31, 1997. As of December 31, 1996,
$1.1 million was outstanding under these commitments, which were secured by
substantially all of McKinley's assets and were guaranteed by the Company. In
March 1997, the Company entered into a new line of credit, which replaced the
McKinley line of credit, for $6.0 million, of which $3.0 million will mature on
September 30, 1997 with the remainder maturing in March, 1998. This new line of
credit bears interest at rates ranging from the bank's prime rate to prime plus
 .25% and is collateralized by a security interest in all assets of the Company.
This line of credit agreement also contains certain financial covenants,
including minimum requirements for tangible net worth, quick ratio and accounts
receivable balances, as well as prohibiting the declaration and payment of cash
dividends on capital stock.  As of March 31, 1997, the Company had outstanding
borrowings against this line of credit of $6.0 million, and was in compliance
with all financial covenants. See Notes 4 and 13 of Notes to Consolidated
Financial Statements. 

    

    The Company's operating activities used cash of $4.7 million and $26.1
million in 1995 and 1996, respectively. The increased use of cash in 1996 was
primarily attributable to increased operating expenses and increases in accounts
receivable and prepaid expenses, reduced in part by increases in accrued
distribution license fees, accounts payable and other accrued liabilities.
Although the Company expensed $10.0 million in distribution license fees during
the second quarter of 1996 for its obligations under its Premier Provider
Agreements with Netscape, $2.3 million of this liability remained on the
Company's balance sheet as accrued distribution license fees at December 31,
1996. The Company expects that this amount, together with approximately $5.0
million in accounts payable related to the Company's advertising campaigning
launched during the fourth quarter of 1996, will be paid during 


                                     - 23 -
<PAGE>   24
the first quarter of 1997, which payments, together with operating losses for
such period, will significantly reduce the Company's cash balances during such
period.

    Investing activities used cash of $1.3 million and $19.4 million in 1995 and
1996, respectively, primarily for net purchases of short-term investments and
property and equipment. Financing activities generated cash of $6.7 million and
$48.7 million in 1995 and 1996, respectively, due to the issuance of Preferred
Stock and Common Stock and promissory notes and proceeds from the exercise of
warrants and options.

    The Company's principal commitments at December 31, 1996 consisted of
obligations under operating and capital leases comprising $15.7 million and $7.1
million, respectively. In addition, in March 1997 the Company entered into
agreements resulting in a $5.75 million minimum cash guarantee to Netscape for
the Premier and Marquee Provider agreements for the Excite and WebCrawler
brands. See Note 13 of Notes to Consolidated Financial Statements.

    Capital expenditures have been, and future expenditures are anticipated to
be, primarily for facilities and equipment to support expansion of the Company's
operations and management information systems. The Company expects that its
capital expenditures will increase as its employee base grows. As of December
31, 1996, the Company did not have any material commitments for capital
expenditures, although the Company anticipates that its planned purchases of
capital equipment and leasehold improvements will require additional
expenditures of approximately $7.5 million for 1997, a portion of which may be
financed by the sale of equity securities and a portion of which may be financed
through equipment leases and bank borrowings.

     The Company has incurred operating losses to date and incurred a net
loss of approximately $43.1 million for the year ended December 31, 1996. The
Company believes that additional funding will be needed to finance expected
operations in the year ending December 31, 1997. On March 3, 1997 the Company
filed a registration statement on Form S-1 with the United States Securities
and Exchange Commission for the proposed sale of up to 2,300,000 shares of the
Company's Common Stock. This registration statement is not yet effective, and
there can be no assurance that the proposed offering to be made thereby will be
consummated. If such additional funding is not available, or if anticipated
operating results are not achieved, management has the intent and believes it
has the ability to delay or reduce expenditures so as not to require additional
financial resources through at least December 31, 1997.


                                     - 24 -

<PAGE>   25
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

    This Report contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Report.

   
EXTREMELY LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT AND ANTICIPATION OF
CONTINUED LOSSES

    The Company was founded in June 1994 and commenced offering Excite services
in October 1995. McKinley, which was acquired by the Company in August 1996,
originally began operations in December 1993 and generated only limited revenues
prior to 1996. Accordingly, the Company has an extremely limited operating
history upon which an evaluation of the Company and its current business can be
based. The Company's business must be considered in light of the risks, expenses
and problems frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets such as
the Web and Web-based advertising markets. Specifically, such risks include,
without limitation, the failure of the Company to maintain premier positions on
certain high traffic Web access points such as those maintained by AOL,
Microsoft and Netscape, the failure of the Company to anticipate and adapt to a
developing market, the rejection of the Company's services by Web consumers
and/or advertisers, the inability of the Company to maintain and increase the
levels of traffic on the Excite Network, development of equal or superior
services or products by competitors, the failure of the market to adopt the Web
as an advertising medium, reductions in market prices for Web-based advertising,
the inability of the Company to effectively integrate the technology and
operations of McKinley, the WebCrawler Assets or any other subsequently acquired
businesses or technologies with its operations, and the inability to identify,
attract, retain and motivate qualified personnel. There can be no assurance that
the Company will be successful in addressing such risks. The Company has
achieved only limited revenues to date, has incurred significant  operating
losses since inception and as of December 31, 1996, the Company had an
accumulated deficit of approximately $50.2 million. Although the Company has
experienced significant revenue growth during 1996, there can be no assurance
that this growth rate will be sustained or that revenues will continue to grow.
There can also be no assurance that any revenue growth that the Company
experiences will be indicative of future operating results. In addition, the
Company has increased, and plans to significantly increase further, its
operating expenses in order to increase its sales and marketing efforts, fund
greater levels of product development and increase its general and
administrative costs to support the enlarged organization. To the extent that
revenues do not grow at anticipated rates or that increases in such operating
expenses precede or are not subsequently followed by commensurate increases in
revenues, or that the Company is unable to adjust operating expense levels
accordingly, the Company's business, results of operations and financial
condition will be materially and adversely affected. Given the level of planned
expenditures, there can be no assurance that the Company will ever achieve or
sustain profitability. See "Overview."
    

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS; UNPREDICTABILITY OF FUTURE REVENUES

    As a result of the Company's extremely limited operating history, the
Company has no meaningful historical financial data upon which to base planned
operating expenses. Accordingly, the Company's expense levels are based in part
on its expectations as to future advertising revenues and to a large extent are
fixed. There can be no assurance that the Company will be able to accurately
predict the levels of future advertising revenues, particularly in light of the
intense competition for the sale of Web-based advertisements and the uncertainty
as to the viability of the Web as an advertising medium, and the failure to do
so would have a materially adverse effect on the Company's business, results of
operations and financial condition. In addition, the Company derives
substantially all of its revenues from the sale of advertising pursuant to
short-term advertising contracts. As a result, quarterly sales and operating
results are entirely dependent on advertising revenues received within the
quarter, which are difficult to forecast, and are also dependent on the
Company's ability to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall. The cancellation or deferral of a small number of
existing advertising contracts or the failure to obtain new advertising
contracts in any quarter could materially and adversely affect the Company's
business, results of operations and financial condition for such quarter.
Furthermore, the Company derives advertising revenue based on the amount of
traffic, or page views, on the Excite Network. Accordingly, any significant
shortfall of traffic on the Excite Network in relation to the Company's
expectations or the expectations of existing or potential advertisers, would
have an immediate material adverse effect on the Company's business, results of
operations and financial condition. In addition, certain of the Company's
short-term advertising contracts require the Company to guarantee a minimum
number of impressions. In the event that these minimum impressions are not met,
the Company could be required to refund a portion of the fees from such
advertisers. If the Company fails to meet this guaranteed number of impressions,
the ability of the Company to sell advertising to new or existing advertisers
could be adversely affected. See "-- Reliance on Advertising Revenues."

    The Company's operating results have varied on a quarterly basis during its
limited operating history and the Company expects to experience significant
fluctuations in future quarterly operating results. Such fluctuations have been
and may in the future be caused by numerous factors, many of which are outside
the Company's control, including, without limitation, specific economic
conditions relating to the Internet and the Web, usage of the Web, demand for
advertising on the Excite Network as well as demand for Web-based advertising in
general, changes in advertising rates as a result of competition or otherwise,
seasonal trends in advertising sales, the advertising budgeting cycles of
advertisers, incurrence of charges in connection with the Company's distribution
relationships with Netscape, AOL and other Internet service providers ("ISPs")
and online service providers ("OSPs") or other third parties, demand for the
Company's services, incurrence of costs relating to acquisitions of businesses
or technologies, introduction or enhancement of services by the Company and its
competitors, market acceptance of new services, delays in the introduction of
services or enhancements by the Company or its competitors, changes in the
Company's pricing policies or those of its competitors, mix of types of
advertisements sold, such as the amount of targeted advertising sold as a
percentage of total advertising sold, capacity constraints and dependencies on
computer infrastructure and general economic conditions. In order to promote and
maintain awareness of the Company's brands, the Company has in the past and may
in the future significantly increase its advertising and/or promotion budgets
for a particular quarter which could materially and adversely affect the
Company's business, results of operations and financial condition for such
period. As a strategic response to a changing competitive environment, the
Company may elect from time to time to make certain other pricing, service or
marketing decisions or acquisitions that could have a material adverse effect on
the Company's business, results of operations and financial condition. As a
result, the Company believes that period-to-period comparisons of its results of
operations will not necessarily be meaningful and should not be relied upon as
an indication of future performance. Due to all of the foregoing factors, it is
likely that in some future quarter or quarters the Company's operating results


                                     - 25 -
<PAGE>   26
will be below the expectations of public market analysts and investors. In such
event, the price of the Company's Common Stock would be materially and adversely
affected. See "-- Volatility of Stock Price."

DEPENDENCE ON NETSCAPE AND AOL

    The Company entered into agreements with Netscape in April 1996 pursuant to
which the Company's Excite and McKinley brands were each one of the five
"Premier Providers" on Netscape's "Net Search" page for a one year period in
exchange for which the Company was required to make payments totaling $10.0
million in cash and advertising services over the term of the agreements. See
Note 12 of Notes to Consolidated Financial Statements. In March 1997, new
agreements were entered into which commence in May 1997 whereby the Excite brand
will be one of four "Premier Providers" and the Company's WebCrawler brand will
be one of several "Marquee Providers" of search and navigation services
accessible from Netscape's "Net Search" page. Under the terms of these new
agreements, the Company is committed to make minimum payments of $8.25 million
of which $5.75 million will be paid in cash ($5.25 million in 1997 and $500,000
in 1998) and $2.5 million will be applied towards advertising by Netscape on the
Excite Network over the one year term of the agreements based upon delivery of a
specified number of advertising impressions. See Note 13 of Notes to
Consolidated Financial Statements. The Company believes that it has been, and
will continue to be, substantially dependent on its relationship with Netscape
for a significant percentage of its user traffic.

   
    The Company has also entered into a five-year distribution agreement with
AOL pursuant to which a co-branded version of the Excite search and directory
services are designated as the exclusive Web search and retrieval service for
AOL for at least a two year period. Pursuant to this agreement, the Company and
AOL will share advertising revenues attributable to the co-branded version of
the Excite services hosted on AOL. After the expiration of this initial two year
exclusivity period, the parties can extend the exclusive arrangement only by
mutual agreement. If the exclusivity period does not extend beyond the initial
two year term, the Excite services would become the "default" search and
directory services on AOL, however, AOL could enter into a strategic
relationship with a competitor of the Company or offer its own competing
services. In such an event, the amount of traffic on the Excite Network and the
amount of advertising revenues could be materially and adversely affected. In
addition, if the Company fails to satisfy certain technical, product feature and
editorial criteria during the term of the agreement, if the Company and AOL fail
to renew this agreement upon the expiration of the five year term or, if any
renewal is on materially worse terms than the initial agreement with AOL, there
could be a material adverse effect on the Company's business, results of
operations and financial condition. 
    

   
    In addition, the Company's operating results could be materially and
adversely affected if AOL were to lose market share, a decrease in the number of
its subscribers, or a decrease in the number of its subscribers utilizing AOL
for their Web search and retrieval needs. As a result of its implementation of a
flat-rate pricing program, there have been numerous reports in the press and
reports of potential litigation regarding, among other things, AOL's capacity to
handle a large number of subscribers. There can be no assurance that AOL will
not experience a decline in the number of its subscribers as a result of these
reports or as a result of the problems reported. In the event of a significant
decline in the number of AOL subscribers for any reason, the Company's business,
results of operations and financial condition would be materially and adversely
affected. See "-- Acquisition Strategy; Integration of Past and Future
Acquisitions," below and "Business -- Strategic Alliances."
    

RELIANCE ON ADVERTISING REVENUES

    There is a lack of proven business models for companies like Excite which
rely substantially upon the sale of advertisements on the Web. The Company's
current business model, which evolves as the Web develops, is based on deriving
substantially all of its revenues from selling advertising space on its network
as consumers utilize the Company's services for their Web search and retrieval
needs. A majority of the Company's advertising customers purchase advertisements
on a short-term basis. There can be no assurance that current advertisers will
continue or increase the level of, or that potential new advertisers will
purchase, advertisements on the Excite Network. The Company's ability to
generate significant advertising revenues will depend, among other things, on
advertisers' acceptance of the Web as an effective and sustainable advertising
medium, the development of a large base of users of the Company's services
possessing demographic characteristics attractive to advertisers and the ability
of the Company to develop and update effective advertising delivery and
measurement systems. The Company believes that establishing and maintaining the
Excite and WebCrawler brands is a critical aspect of developing a large user
base and that the importance of brand recognition as competition increases. In
addition, there is intense competition in the sale of advertising on the Web,
resulting in a wide range of rates quoted and a variety of pricing models
offered by different vendors for a variety of advertising services which makes
it difficult to project future levels of advertising revenues and rates. It is
also difficult to predict which pricing models will be adopted by the industry
or advertisers. For example, advertising rates based on the number of "click
throughs" from the Company's network to 


                                     - 26 -
<PAGE>   27
the advertiser's pages, instead of rates based solely on the number of
impressions, would materially adversely affect the Company's revenues. Moreover,
"filter" software programs that limit or remove advertising from a Web user's
desktop are available. Widespread adoption of such software by users could have
a material adverse effect upon the viability of advertising on the Web.
Accordingly, there can be no assurance that the Company will be successful in
generating significant future advertising revenues, and a failure to do so would
have a material adverse effect on the Company's business, results of operations
and financial condition. See "-- Developing Market; Validation of the Web as an
Effective Advertising Medium," "-- Intense Competition," "-- Technological
Change; Dependence on New and Enhanced Services; Risk of Delays," and "Business
-- Advertising and Sales."

ACQUISITION STRATEGY; INTEGRATION OF PAST AND FUTURE ACQUISITIONS

    The Company has in the past and may, in the future, acquire businesses,
technologies, services, product lines, content databases, or access to content
databases that are complementary to the Company's business. In August 1996, the
Company completed the acquisition of McKinley and in November 1996, the Company
entered into an agreement with AOL to acquire the WebCrawler Assets which closed
effective on March 27, 1997.

    Although the Company believes that its previous acquisitions were in the
best interests of the Company and its shareholders, acquisitions involve a
number of special risks. For example, the assimilation of McKinley's and the
Company's operations required, among other things, the integration of service
offerings, coordination of the research and development and sales and marketing
efforts of the two companies, the assumption by the Company of approximately
$10.0 million in liabilities, the addition of approximately 50 personnel and the
distraction of the Company's management from the day-to-day business of the
Company. The Company could face similar integration issues with respect to the
Acquisition. There can also be no assurance that a given acquisition, if
consummated, would not have a material adverse effect on the Company's business,
results of operations and financial condition.

DEVELOPING MARKET; VALIDATION OF THE WEB AS AN EFFECTIVE ADVERTISING MEDIUM

    The market for the Company's services has recently begun to develop, is
rapidly evolving and is characterized by an increasing number of market entrants
who have introduced or developed services and products for use on the Web or who
seek to derive significant revenues from the sale of advertisements on the Web.
As a result, the Company's mix of services and advertising packages may undergo
substantial changes as the Company reacts to competitive and other developments
in the overall Web market. The Company is highly dependent upon the increased
use of the Web for information, publication, distribution and commerce. In
particular, the Web is an unproven medium for advertising supported services.
Accordingly, the Company's future operating results will depend substantially
upon the increased use of the Web for information, publication, distribution and
commerce and the emergence of the Web as an effective advertising medium. Many
of the Company's advertisers have only limited experience with the Web as an
advertising medium, have not yet devoted a significant portion of their
advertising expenditures to Web-based advertising, and may not find such
advertising to be effective for promoting their products and services relative
to traditional print and broadcast media. For instance, advertisers of consumer
products have not yet engaged in significant advertising on the Web and may not
do so in the future. No standards have been widely accepted for the measurement
of the effectiveness of Web-based advertising, and there can be no assurance
that such standards will develop sufficiently to support the Web as an effective
advertising medium. Moreover, critical issues concerning the commercial use of
the Web (including security, reliability, cost, ease of use, access, quality of
service and acceptance of advertising) remain unresolved and may impact the
growth of Web use or the placement of advertisements on the Web. If widespread
commercial use of the Web does not develop, or if the Web does not develop as an
effective advertising medium, the Company's business, results of operations and
financial condition will be materially and adversely affected. See "-- Reliance
on Advertising Revenues," "-- Risk of Capacity Constraints; Dependence on
Computer Infrastructure" and "-- Dependence on the Web Infrastructure."


                                     - 27 -
<PAGE>   28
INTENSE COMPETITION

    The market for Web advertising and Web search and retrieval services is
intensely competitive. The Company believes that the principal competitive
factors in these markets are name recognition, amount of user traffic, pricing,
performance, ease of use and functionality. The Company's primary competitors
are Web search and retrieval companies such as Infoseek Corporation, Lycos,
Inc., and Yahoo!, Inc. and specific search and retrieval services and products
offered by other companies, including Digital Equipment Corporation's Alta
Vista, HotWired Venture's and Inktomi's HotBot, and OpenText. The Company also
competes indirectly with Web content broadcasting services, such as The
PointCast Network's PointCast, and with services from other database vendors,
such as Lexis/Nexis, Dialog and other companies that offer information search
and retrieval capabilities with their core database products. In the future, the
Company may encounter competition from ISPs, OSPs, Web site operators, providers
of Web browser software (such as Netscape or Microsoft) and other Internet
services and products that incorporate search and retrieval features into their
offerings, whether through internal development or by acquisition of one or more
of the Company's direct competitors.

   
    In addition, the Company also competes with ISPs, OSPs, Web browsers and
other Web content providers for the sale of advertisements. The Company believes
that the number of companies relying on fees from Web-based advertising has
increased substantially during the past year. Accordingly, the Company may face
increased pricing pressure for the sale of advertisements on its network, which
would have a material adverse effect on the Company's business, results of
operations and financial condition. Companies offering advertising-supported
services on the Web have also begun to compete with other providers of Web
content and services for user traffic and the number of page views on their Web
sites. As a result, many providers of Web services have been entering into
distribution arrangements, co-branding arrangements, content arrangements and
other strategic partnering arrangements with ISPs, OSPs, Web browsers,
operators of high traffic Web sites and other businesses in an attempt to
increase traffic and page views, and thereby make their Web sites more
attractive to Web advertisers. To the extent that direct competitors or other
Web site operators are able to enter into successful strategic relationships,
these competitors and Web sites could experience increases in traffic and page
views, which could have the effect of making these Web sites appear more
attractive to advertisers. This could materially and adversely affect the
amount of advertisements sold on the Company's network and the Company's
business, results of operations and financial condition would be materially and
adversely affected.
    

    Many of the Company's existing competitors, as well as a number of potential
new competitors, have longer operating histories in the Web market, greater name
recognition, larger customer bases and databases and significantly greater
financial, technical and marketing resources than the Company. Such competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, distribution partners, advertisers and content providers. Further,
there can be no assurance that the Company's competitors will not develop Web
search and retrieval services that are equal or superior to those of the Company
or that achieve greater market acceptance than the Company's offerings in the
area of name recognition, performance, ease of use and functionality. There can
also be no assurance that ISPs, OSPs, Web browsers and other Web content
providers will not be perceived by advertisers as having more desirable Web
sites for placement of advertisements. In addition, a number of the Company's
current advertising customers and strategic partners also have established
collaborative relationships with certain of the Company's competitors and a
number of the Company's competitors have established collaborative relationships
with ISPs, OSPs and other Web content providers. Accordingly, there can be no
assurance that the Company will be able to retain a customer base of
advertisers, maintain or increase traffic on its network, that competitors will
not experience greater growth in traffic than the Company as a result of such
relationships, which could have the effect of making their Web sites more
attractive to advertisers or that strategic partners will not sever or will
elect to renew their agreements with the Company. There can also be no assurance
that the Company will be able to compete successfully against its current or
future competitors or that competition will not have a material adverse effect
on the Company's business, results of operations and financial condition.

    The Web, in general, and the Company, specifically, also must compete with
traditional advertising media such as print, radio and television for a share of
advertisers' total advertising budgets. To the extent that the Web is not an
effective advertising medium, advertisers may be reluctant to devote a
significant portion of their advertising budget to the Web. See "-- Reliance on
Advertising Revenues," "-- Developing Market; Validation of the Web as an
Effective Advertising Medium" and "Business -- Competition."

TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW AND ENHANCED SERVICES; RISK OF DELAYS

    The market in which the Company competes is characterized by rapidly
changing technology, evolving industry standards, frequent new service and
product announcements, introductions and enhancements and changing customer
demands. These market characteristics are exacerbated by the emerging nature of
the Web and the apparent need of companies from a multitude of industries to
offer Web-based products and services. Accordingly, the Company's future success
will depend on its ability to adapt to rapidly changing technologies, its
ability to adapt 


                                     - 28 -
<PAGE>   29
its services to evolving industry standards and its ability to continually
improve the performance, features and reliability of its network in response to
both evolving demands of the marketplace and competitive service and product
offerings. The failure of the Company to adapt to such changes and evolution
would have a materially adverse effect on the Company's business, results of
operations and financial condition.

    Because the attractiveness of the Excite Network to advertisers is based
substantially upon the amount of traffic on the Excite Network, broad acceptance
of the Excite Network by consumers is critical to the Company's future success.
The Company's business model contemplates offering a variety of Web-related
services. Some of these services have been recently introduced, including its
Excite Live!, Excite NewsTracker, ExciteSeeing Tours and Excite Reference
services. Failure of the Company to successfully design, develop, test,
introduce and market such new services or the failure of the Company's recently
introduced services to achieve market acceptance could result in reduced traffic
on the Excite Network. Furthermore, there can be no assurance that the Company
will not experience difficulties that could delay or prevent the successful
design, development, testing, introduction or marketing of these services, or
that its new services and enhancements will adequately meet the requirements of
the marketplace and achieve any degree of significant market acceptance.
Furthermore, existing services or new releases by the Company, whether improved
versions of existing services or introductions of new services, may contain
undetected errors that require significant design modifications, resulting in a
loss of consumer confidence and consumer support. Delays in the commencement of
or errors contained in new services and enhancements may result in customer
dissatisfaction and delay or loss of advertising revenue. If the Company is
unable, for technological or other reasons, to develop and introduce new
services or enhancements in a timely manner in accordance with its business
model or in response to changing market conditions or consumer requirements, or
if the recently introduced services or enhancements contain errors or do not
achieve a significant degree of market acceptance, the Company's business,
results of operations and financial condition would be materially and adversely
affected.

MANAGEMENT OF GROWTH

    The rapid execution necessary for the Company to successfully offer services
and implement its business plan requires an effective planning and management
process. The Company's rapid growth has placed, and is expected to continue to
place, a significant strain on the Company's managerial, operational and
financial resources. As of February 1, 1997, the Company had grown to 191
employees from 38 employees at March 1, 1996. As a result of the acquisition of
McKinley by the Company in August 1996, the Company added approximately 50
employees. The Company expects that the number of its employees will
significantly increase over the next 12 months. In addition, the Company has
recently hired, and expects to continue to hire, a number of new executive
officers. The Company's financial and management controls, reporting systems and
procedures are also very limited. Although the Company has implemented controls,
systems and procedures, it has limited experience with such controls, systems
and procedures. The Company still must improve its financial and management
controls, reporting systems and procedures and expand, train and manage its work
force. Further, the Company is required to manage multiple relationships with
various customers, strategic partners and other third parties. These
requirements will be exacerbated in the event of further growth in the Company
or in the number of its third-party relationships. Although the Company believes
that it has made adequate allowances for the costs and risks associated with
this expansion, there can be no assurance that the Company's systems, procedures
or controls will be adequate to support the Company's operations or that Company
management will be able to achieve the rapid execution necessary to successfully
offer its services and implement its business plan. The Company's future
operating results will also depend on its ability to expand its sales and
marketing organization and expand its support organization commensurate with the
growth of its business and the Web. If the Company is unable to manage growth
effectively, the Company's business, results of operations and financial
condition will be materially and adversely affected.

DEPENDENCE ON THIRD-PARTY RELATIONSHIPS

    The Company is currently and will be in the future significantly dependent
on a number of third-party relationships to create traffic and provide content
on the Excite Network, and to make it more attractive to advertisers and
consumers. These relationships include arrangements relating to the positioning
of the Excite Network on Web browsers such as those offered by Netscape and
Microsoft and agreements with ISPs and OSPs 


                                     - 29 -
<PAGE>   30
such as AOL and Microsoft and also include arrangements for providing content
for certain services offered by the Company. The Company is also generally
dependent on other Web site operators that provide links to the Excite Network.
Most of these arrangements do not require future minimum commitments to use the
Company's services, to provide access or links to the Excite Network or to
provide content to the Company, are not exclusive and are short-term or may be
terminated at the convenience of the other party. Moreover, the Company does not
have agreements with many Web site operators who provide links to the Excite
Network, and such Web site operators may terminate such links at any time
without notice to the Company. In addition, there can be no assurance that such
third parties regard their relationship with the Company as important to their
own respective businesses and operations, that they will not reassess their
commitment to the Excite Network at any time in the future, or that they will
not develop their own competitive services or products, either during their
relationship with the Company or after their relationship with the Company
expires. Further, there can be no assurance that the services of those companies
that provide access or links to the Excite Network will achieve market
acceptance or commercial success. Accordingly, there can be no assurance that
the Company's existing relationships will result in sustained business
partnerships, successful service offerings, or the generation of significant
traffic on the Excite Network or significant revenues for the Company.

    The Company believes that certain of its third-party relationships are
important to its ability to attract traffic and advertisers. The failure of one
or more of the third-party relationships which the Company regards as strategic
to achieve or maintain market acceptance or commercial success or the
termination of one or more of such strategic relationships could significantly
reduce traffic on the Excite Network, which would have a material adverse effect
on the Company's business, results of operations and financial condition. In
addition, the termination of, or the failure of the Company to renew, the
Company's position on a Web browser or its relationship with an ISP or OSP would
significantly reduce traffic on the Company's Web sites which would also have a
material adverse effect on the Company's business, results of operations and
financial condition. See "-- Dependence on Netscape and AOL" and "Business --
Strategic Alliances."

RISK OF CAPACITY CONSTRAINTS; DEPENDENCE ON COMPUTER INFRASTRUCTURE

    The Company is dependent on its ability to generate a high volume of traffic
to the Excite Network. Accordingly, the performance of the Excite Network is
critical to the Company's reputation, its ability to attract advertisers and to
achieve market acceptance of the network. Any system failure that causes
interruptions in the availability or increases response time of the Company's
services could reduce user satisfaction and traffic to the Excite Network and,
if sustained or repeated, would reduce the attractiveness of the Excite Network
to advertisers and consumers. An increase in the volume of searches conducted
through the Excite Network could strain the capacity of the software or hardware
deployed by the Company, which could lead to slower response time or system
failures. In addition, as the amount of Web pages and traffic increases, there
can be no assurance that the Excite Network will be able to scale
proportionately. The Company is also dependent upon Web browsers, ISPs, OSPs and
other Web site operators, which have experienced significant outages in the
past, for access to its network, and consumers have experienced difficulties due
to system failures unrelated to the Company's systems and services. Additional
difficulties could also materially and adversely affect consumer and advertiser
satisfaction. The Company is also dependent on hardware suppliers for prompt
delivery, installation and service of servers and other equipment and services
used to provide its services. In addition, in order to improve performance, the
Company may have to make substantial investments to deploy one or more copies of
its Web sites in order to mirror its online resources. To the extent that the
capacity restraints described above are not effectively addressed by the
Company, such constraints would have a material adverse effect on the Company's
business, results of operations and financial condition.

   
    Substantially all of the Company's communications hardware and operations
are located at leased facilities in Redwood City, California, an area
susceptible to earthquakes. The Company has experienced system failures or
outages from time to time in the past, which have disrupted the operation of the
Excite Network. There can be no assurance that a system failure at these
locations would not adversely affect the performance of the Excite Network.
These systems are vulnerable to damage from fire, floods, earthquakes, power
loss, telecommunications failures, break-ins and similar events. The 
    


                                     - 30 -
<PAGE>   31
Company does not presently have a disaster recovery plan. Although the Company
carries property and business interruption insurance with low coverage limits,
its coverage may not be adequate to compensate the Company for all losses that
may occur. Despite the implementation of network security measures by the
Company, its servers are also vulnerable to computer viruses, physical or
electronic break-ins and similar disruptive problems. Computer viruses,
break-ins or other problems caused by third parties could lead to interruptions,
delays or cessations in service to users of the Excite Network. The occurrence
of any of these risks could have a material adverse effect on the Company's
business, results of operations and financial condition.

DEPENDENCE ON THE WEB INFRASTRUCTURE

    The success of the Excite Network will depend in large part upon the
development of a Web infrastructure, such as a reliable network backbone with
the necessary speed, data capacity and security, or timely development of
complementary products such as high speed modems, for providing reliable Web
access and services. Because global commerce and online exchange of information
on the Web and other similar open wide area networks are new and evolving, it is
difficult to predict with any assurance whether the Web will prove to be a
viable commercial marketplace. The Web has experienced, and is expected to
continue to experience, significant growth in the number of users and amount of
traffic. To the extent that the Web continues to experience increased numbers of
users, frequency of use or increased bandwidth requirements of users, there can
be no assurance that the Web infrastructure will continue to be able to support
the demands placed on it by this continued growth or that the performance or
reliability of the Web will not be adversely affected by this continued growth.
In addition, the Web could lose its viability due to delays in the development
or adoption of new standards and protocols (for example, the next-generation
Internet Protocol) to handle increased levels of activity or due to increased
governmental regulation. There can be no assurance that the infrastructure or
complementary products or services necessary to make the Web a viable commercial
marketplace will be developed, or, if they are developed, that the Web will
become a viable commercial marketplace for services such as those offered by the
Company. If the necessary infrastructure standards or protocols or complementary
products, services or facilities are not developed, or if the Web does not
become a viable commercial marketplace, the Company's business, results of
operations and financial condition will be materially and adversely affected.
Even if such infrastructure, standards or protocols or complementary products,
services or facilities are developed and the Web becomes a viable commercial
marketplace, there can be no assurance that the Company will not be required to
incur substantial expenditures in order to adapt its services to changing Web
technologies, which could have a material adverse effect on the Company's
business, results of operations and financial condition.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

    The Company is not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to or commerce
on the Web. However, due to the increasing popularity and use of the Web, it is
possible that a number of laws and regulations may be adopted with respect to
the Web, covering issues such as user privacy, pricing, characteristics and
quality of products and services. For example, the Company may be subject to the
provisions of the recently enacted Communications Decency Act (the "CDA").
Although the constitutionality of the CDA, the manner in which the CDA will be
interpreted and enforced and its effect on the Company's operations cannot be
determined, it is possible that the CDA could expose the Company to substantial
liability. The CDA could also dampen the growth in use of the Web generally and
decrease the acceptance of the Web as a communications and commercial medium,
and could, thereby, have a material adverse effect on the Company's business,
results of operations and financial condition. Other nations, including Germany,
have taken actions to restrict the free flow of material deemed to be
objectionable on the Web. In addition, several telecommunications carriers are
seeking to have telecommunications over the Web regulated by the Federal
Communications Commission (the "FCC") in the same manner as other
telecommunications services. For example, America's Carriers Telecommunications
Association ("ACTA") has filed a petition with the FCC for this purpose. In
addition, because the growing popularity and use of the Web has burdened the
existing telecommunications infrastructure and many areas with high Web use have
begun to experience interruptions in phone service, local telephone carriers,
such as Pacific Bell, have petitioned the FCC to regulate ISPs and OSPs in a
manner similar to long distance telephone carriers and to impose access fees on
the ISPs and OSPs. If either of these petitions are granted, or the relief
sought therein is 


                                     - 31 -
<PAGE>   32
otherwise granted, the costs of communicating on the Web could increase
substantially, potentially slowing the growth in use of the Web. The adoption of
any additional laws or regulations may decrease the growth of the Web, which
could in turn decrease the demand for the Excite Network and increase the
Company's cost of doing business or otherwise have an adverse effect on the
Company's business, results of operations and financial condition. Moreover, the
applicability to the Web of existing laws in various jurisdictions governing
issues such as property ownership, libel and personal privacy is uncertain and
will take years to resolve. Any such new legislation or regulation or
application or interpretation of existing laws could have a material adverse
effect on the Company's business, results of operations and financial condition.

    Due to the global nature of the Web, it is possible that, although
transmissions of the Excite Network originate in the State of California, the
governments of other states and foreign countries might attempt to regulate the
Company's transmissions or prosecute the Company for violations of their laws.
There can be no assurance that violations of local laws will not be alleged or
charged by state or foreign governments, that the Company might not
unintentionally violate such law or that such laws will not be modified, or new
laws enacted, in the future. Any of the foregoing developments could have a
material adverse effect on the Company's business, results of operations and
financial condition.

LIABILITY FOR INFORMATION RETRIEVED FROM THE WEB

    Because materials may be downloaded through the services offered by the
Company and be subsequently distributed to others, there is a potential that
claims may be made against the Company for defamation, negligence, copyright or
trademark infringement or other theories based on the nature and content of such
materials. Such types of claims have been brought, and sometimes successfully
pressed, against OSPs and ISPs in the past. Although the Company carries general
liability insurance, the Company's insurance may not cover potential claims of
this type, or may not be adequate to indemnify the Company for all liability
that may be imposed. Any imposition of liability that is not covered by
insurance or is in excess of insurance coverage could have a material adverse
effect on the Company's business, results of operations and financial condition.

VOLATILITY OF STOCK PRICE

    The market price of the Company's Common Stock is highly volatile and is
subject to wide fluctuations (for example, during the four months ended February
28, 1997, the high and low closing prices of the Common Stock were $21.13 and
$5.50, respectively) in response to quarterly variations in operating results,
announcements of technological innovations or new services by the Company or its
competitors, changes in financial estimates by securities analysts, or other
events or factors. In addition, the stock market has experienced significant
price and volume fluctuations that have particularly affected the market prices
of equity securities of many high technology companies and that often have been
unrelated to the operating performance of such companies. In the past, following
periods of volatility in the market price of a company's securities, securities
class action litigation has often been instituted against such a company. If
brought, such litigation could result in substantial costs and a diversion of
management's attention and resources, which would have a material adverse effect
on the Company's business, results of operations and financial condition. These
broad market fluctuations may adversely affect the market price of the Company's
Common Stock. See "Market for Registrant's Common Equity and Related Shareholder
Matters."


                                     - 32 -


<PAGE>   33
--------------------------------------------------------------------------------
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------------------------------

   
ANNUAL FINANCIAL STATEMENTS:  See Part IV, Item 14 of this Form 10-K/A.
    

   
SELECTED QUARTERLY DATA: The following selected quarterly data should be read in
conjunction with the Consolidated Financial Statements and notes thereto and
"Management's Discussion and Analysis of Results of Operations" appearing
elsewhere in this Form 10-K/A. During fiscal 1996, Excite acquired McKinley in a
transaction accounted for as a pooling of interests. All financial information
has been restated to reflect the combined operations of Excite and McKinley.
During the fourth quarter of fiscal 1996 the Company entered into an agreement,
which closed effective on March 27, 1997, to acquire the WebCrawler Assets from
AOL in exchange for 1,950,000 shares of Convertible Preferred Stock. As a result
of this acquisition, during the fourth quarter of 1996, the Company expensed
$3.5 million for in-process technology, as well as recording amortization of
other purchased intangibles. See Note 3 of Notes to Consolidated Financial
Statements for a further discussion of this acquisition and related costs.
During the second quarter of 1996, the Company entered into two distribution
license agreements with Netscape for total consideration of $10.0 million which
was expensed during the second quarter of 1996. In the future, it is anticipated
that any such consideration will be expensed over the term of the agreement. See
Notes 12 and 13 of Notes to Consolidated Financial Statements.
    

<TABLE>
<CAPTION>
                                                                  Quarter Ended
                               ------------------------------------------------------------------------------------
                                Mar. 31,  June 30,  Sep. 30,  Dec. 31,    Mar. 31,  June 30,   Sep. 30,  Dec. 31,
                                 1995      1995       1995     1995        1996       1996      1996       1996
                                 ----      ----       ----     ----        ----       ----      ----       ----
                                                (In thousands, except per share data; unaudited)
<S>                             <C>       <C>       <C>       <C>         <C>       <C>        <C>       <C>     
Total revenues...............   $    28   $   314   $    37   $   574     $ 1,374   $  2,816   $ 4,049   $  6,518
Gross profit.................         8       210        18       489         985      2,389     2,884      4,350
Distribution license fees....        --        --        --        --       1,625     10,000       253         --
Merger and acquisition
   costs, including charge
   for purchased technology
   and amortization of               --        --        --       331          --         73     2,292      4,269
   intangibles...............
Total operating expenses.....       447       982     1,740     3,946       6,631     18,167    12,640     17,288

Net loss.....................   $  (442)  $  (769)  $(1,739)  $(3,485)    $(5,644)  $(15,408)  $(9,354)  $(12,711)

Net loss per share...........   $ (0.04)  $ (0.07)  $ (0.16)  $ (0.31)    $ (0.50)  $  (1.29)  $ (0.78)  $  (1.06)
</TABLE>

--------------------------------------------------------------------------------
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
--------------------------------------------------------------------------------

None.


                                     - 33 -
<PAGE>   34
--------------------------------------------------------------------------------
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------------------------------------

DIRECTORS

     Information concerning the Company's directors may be found in the section
captioned "Proposal No. 1 Election of Directors" appearing in the Proxy
Statement to be delivered to shareholders in connection with the Annual Meeting
of Shareholders to be held in June 1997. Such information is incorporated herein
by reference.

EXECUTIVE OFFICERS

    The following table sets forth certain information regarding the executive
officers of the Company:

<TABLE>
<CAPTION>
NAME                        AGE      POSITION
----------------------      ---      ----------------------------------------------------------
<S>                          <C>     <C>                                               
George Bell                  40      President, Chief Executive Officer and Director
Brett T. Bullington          43      Executive Vice President
Robert C. Hood               55      Executive Vice President, Chief Administrative Officer
                                     and Chief Financial Officer
Cary H. Masatsugu            40      Vice President, Development
Richard B. Redding           41      Vice President, Finance and Administration and Secretary
Jed L. Simmons               36      Senior Vice President and Managing Director, Excite
                                     International
Graham F. Spencer            25      Chief Technology Officer
William B. White, Jr.        39      Senior Vice President, Marketing
Joseph R. Kraus, IV          25      Senior Vice President and Director
</TABLE>                         

----------

    Mr. Bell has been  President,  Chief  Executive  Officer and a director of 
the Company since January 1996. From December 1995 until January 1996, he was a
consultant to the Company. From May 1991 to December 1995, Mr. Bell was employed
by The Times Mirror Company, a publishing and cable television company, most
recently as President -- The Skiing Company for Times Mirror Magazines and
previously as President -- The Outdoor Company and Vice President, Multimedia
for Times Mirror Magazines. Prior to joining The Times Mirror Company, Mr. Bell
worked as an independent producer, writer and packager of television sports and
documentary programming and as a staff producer and writer for the ABC
television network. Mr. Bell has received four Emmy Awards. He received a B.A.
in English from Harvard College.

    Mr. Bullington has been Executive Vice President of the Company since
January 1997. From November 1995 to January 1997, he served as Senior Vice
President, Marketing and Sales of the Company and, from August 1995 until
November 1995, he was a consultant to the Company. From May 1995 to August 1995,
Mr. Bullington worked as an independent marketing and sales consultant. From May
1994 to May 1995, Mr. Bullington served as Vice President of Marketing and Sales
for Planning & Logic, Inc., a software company. From January 1992 to May 1994,
he was employed by Taligent, Inc., a software company, as Director of Worldwide
Channel Development. From 1986 to January 1992, Mr. Bullington was employed by
Computer Associates, a software company, where he served most recently as Vice
President, Sales and Marketing. He received a B.A. in Political Science from the
University of California at Santa Barbara.

    Mr. Hood has been Executive Vice President,  Chief  Administrative  Officer 
and Chief Financial Officer of the Company since December 1996. From November
1996 to December 1996, he was a consultant to the Company. From July 1995 to
February 1996, Mr. Hood served as Chief Operating Officer of RockShox Inc., a
mountain bike component manufacturer. From March 1992 to April 1995, he served
as Senior Vice President and Chief Financial Officer of Crowley Maritime
Corporation, a transportation services company. From April 1991 to February
1992, 


                                     - 34 -
<PAGE>   35
Mr. Hood served as Executive Vice President and Chief Financial Officer of Qume
Corp., a computer peripherals company. He received a B.A. in Economics from
Bates College and an M.B.A. from Dartmouth College.

    Mr.  Masatsugu  has  been  employed  by the  Company  since  April  1996,  
most recently as Vice President, Development. From February 1996 to April 1996,
he was a consultant to the Company. From May 1995 to April 1996, Mr. Masatsugu
was employed by Caere Corporation, a software company, most recently as Vice
President, Engineering. From July 1994 to December 1994, he served as Vice
President, Engineering for Calera Recognition, a software company. From February
1994 to July 1994, Mr. Masatsugu was employed by EO, Inc., a computer company,
most recently as Vice President, Engineering. From 1988 to February 1994, he was
employed by GO Corporation, a software company, most recently as Director of
Product Marketing. Mr. Masatsugu received a B.S. in Electrical Engineering from
Stanford University.

    Mr. Redding has been Vice President, Finance and Administration since
January 1997 and Secretary of the Company since February 1996. From February
1996 to January 1997, Mr. Redding served as Director of Finance and Acting Chief
Financial Officer of the Company, and from October 1995 until February 1996, he
was a consultant to the Company. From July 1994 to January 1996, Mr. Redding was
employed by Vivus, Inc., a medical technology company, as Controller and
Manager, Financial Planning & Analysis. From November 1993 to July 1994, he
worked as an independent consultant. From 1990 to November 1993, Mr. Redding was
employed by Scios Nova Inc., a biotechnology company, most recently as
Treasurer. He received a B.A. in Biology from the University of California at
Santa Cruz and an M.B.A. from the University of Santa Clara.

    Mr. Simmons has been Senior Vice President and Managing  Director,  Excite  
International of the Company since January 1997. From November 1996 to January
1997, he was a consultant to the Company. From January 1992 to December 1996,
Mr. Simmons was employed by Hanna-Barbera Cartoons, Inc., an entertainment
company, most recently as Executive Vice President, International. Mr. Simmons
has a B.A. in Public Policy from Duke University and an M.B.A. from Dartmouth
College.

    Mr. Spencer has been Chief  Technology  Officer of the Company since June 
1994. From June 1994 to January 1997, he also served as Vice President,
Technology of the Company, and from June 1994 to March 1996, he was also a
director of the Company. Prior to joining the Company, Mr. Spencer was a student
at Stanford University and worked as an engineer for Apple Computer during June
1992 to September 1992 and June 1993 to September 1993. Mr. Spencer was also
employed, on a part-time basis, as an engineer at Stanford University from 1989
to 1994. He received a B.S. and an M.S. in Computer Science from Stanford
University.

    Mr. White has been Senior Vice  President,  Marketing of the Company since 
September 1996 and has been employed by the Company since September 1996. From
June 1993 to September 1996, Mr. White was employed by Sega Entertainment, Inc.,
a computer games company, most recently as Senior Vice President and General
Manager. From 1987 to March 1993, Mr. White served as Director of Marketing and
Corporate Communications for Nintendo of America, a computer games company. He
received a B.S. in Business Administration from the University of Southern
California and an M.B.A. from Loyola Marymount University.

    Mr. Kraus has been Senior Vice President of the Company since January 1997
and a director of the Company since June 1994. He served as Senior Vice
President, Business Development of the Company from January 1996 to January 1997
and, from June 1994 to January 1996, served as President of the Company. Prior
to joining the Company, Mr. Kraus was a student at Stanford University. He
received a B.A. in Political Science from Stanford University.

    Executive officers are chosen by, and serve at the discretion of, the Board
of Directors. There are no family relationships among any of the executive
officers of the Company.


                                     - 35 -

<PAGE>   36
--------------------------------------------------------------------------------
ITEM 11: EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

Information required by this Item may be found in the section captioned
"Executive Compensation" appearing in the Proxy Statement to be delivered to
shareholders in connection with the Annual Meeting of Shareholders to be held in
June 1997. Such information is incorporated herein by reference.

--------------------------------------------------------------------------------
ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------

Information required by this Item may be found in the section captioned
"Security Ownership of Certain Beneficial Owners and Management" appearing in
the Proxy Statement to be delivered to shareholders in connection with the
Annual Meeting of Shareholders to be held in June 1997. Such information is
incorporated herein by reference.

--------------------------------------------------------------------------------
ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

Information required by this Item may be found in the section captioned
"Executive Compensation - Certain Transactions" appearing in the Proxy Statement
to be delivered to shareholders in connection with the Annual Meeting of
Shareholders to be held in June 1997. Such information is incorporated herein by
reference.


                                     - 36 -
<PAGE>   37
--------------------------------------------------------------------------------
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

Upon written request, the Company will provide, without charge, a copy of the
Company's annual report on Form 10-K, including the consolidated financial
statements, financial statement schedules and any exhibits for the Company's
most recent fiscal year. All requests should be sent to:

   
Excite, Inc.
Investor Relations
555 Broadway Ave
Redwood City, CA 94063
(415) 568-6000
    

   
<TABLE>
<CAPTION>
                                                                                                          Page
(a)   The following documents are filed as part of this report:                                          Number
                                                                                                         ------ 
     <S>                                                                                                 <C>
     1.  Consolidated Financial Statements:
         Report of Ernst & Young LLP, Independent Auditors..............................................   41
         Report of Price Waterhouse LLP, Independent Accountants........................................   42
         Consolidated Balance Sheets as of December 31, 1995 and 1996...................................   43
         Consolidated Statements of Operations for the years ended December 31, 1994, 1995
              and 1996..................................................................................   44
         Consolidated Statements of Shareholders' Equity (Net Capital Deficiency) for the years
              ended December 31, 1994, 1995 and 1996....................................................   45
         Consolidated Statements of Cash Flows for the years ended December 31, 1994,
              1995 and 1996.............................................................................   46
         Notes to Consolidated Financial Statements.....................................................   47
</TABLE>
    

     2.  Financial Statement Schedules.
         All schedules have been omitted because the information required to be
         set forth therein is not applicable or is shown in the financial
         statements or notes thereto.

   
     3.  Exhibits.
         The following exhibits are files as part of, or incorporated by
         reference into, this Form 10-K/A:
    

Exhibit
Number   Exhibit Title
------   -----------------------------------------------------------------------

2.01   - Agreement and Plan of Reorganization dated as of August 7, 1996 by
         and among the Registrant, Excite Acquisition Corporation, The McKinley
         Group, Inc., Isabel Maxwell, Christine Maxwell, David Hayden, Roger
         Malina and Daniel Lynch. (1)
2.02   - Agreement of Merger dated as of August 30, 1996 by and between Excite
         Acquisition Corporation and the McKinley Group, Inc. (1)
3.01   - Registrant's Amended and Restated Articles of Incorporation. (2)
3.02   - Registrant's Bylaws, as amended. (3)
4.01   - Form of Specimen Certificate for Registrant's Common Stock. (4)
4.02   - Restated and Amended Investors' Rights Agreement. (4)
4.03   - Amendment to Restated and Amended Investors' Rights Agreement dated
         as of August 1, 1996. (9)
   
4.04   - Amendment to Restated and Amended Investors' Rights Agreement dated
         as of November 25, 1996.(10)
    
4.05   - Registration Rights Agreement dated as of November 25, 1996 by and
         among the Registrant, America Online, Inc. and AOL Ventures, Inc. (9)


                                     - 37 -
<PAGE>   38
   
 4.06  - Voting Agreement dated as of November 25, 1996 by and among the
         Registrant and certain shareholders.(10)
 4.07  - Letter Agreement dated as of November 25, 1996 by and among certain
         shareholders of Excite, Inc.(10)
    
 9.01  - Voting Trust Agreement dated as of November 25, 1996 by and among the
         Registrant, America Online, Inc., AOL Ventures, Inc. and Richard
         Redding. (9)
*10.01 - Registrant's 1995 Equity Incentive Plan. (3)
*10.02 - Registrant's 1996 Equity Incentive Plan, as amended. (9)
*10.03 - Registrant's 1996 Directors Stock Option Plan. (3)
*10.04 - Registrant's 1996 Employee Stock Purchase Plan. (3)
*10.05 - Registrant's 401(k) Plan. (9)
 10.06 - Form of Indemnity Agreement entered into by Registrant with each of
         its directors. (3)
 10.07 - Bridge Line of Credit Agreement, dated as of February 23, 1996, among
         the Registrant and Kleiner Perkins Caufield & Byers VII, KPCB VII
         Founders Fund, KPCB Information Sciences Zaibatsu Fund II,
         Institutional Venture Partners VI, Institutional Venture Management VI
         and IVP Founders Fund I, L.P., and Form of Convertible Promissory Note
         and Form of Promissory Note, as amended. (3)
*10.08 - Promissory Note, dated as of February 27, 1996, issued by
         Graham F. Spencer to the Registrant. (3)
*10.09 - Secured Full Recourse Promissory Note, dated as of March 15,
         1996, issued by Brett T. Bullington to the Registrant. (9)
*10.10 - Stock Pledge Agreement dated as of March 15, 1996 by and
         between the Registrant and Brett T. Bullington. (9)
*10.11 - Offer Letter dated January 25, 1996, as amended, to Richard B.
         Redding. (3)
*10.12 - Offer Letter dated November 30, 1995, as amended, to Brett T.
         Bullington. (3)
*10.13 - Offer Letter dated March 6, 1996, to Cary H. Masatsugu. (3)
*10.14 - Offer Letter dated January 16, 1996, as amended, to George
         Bell. (3)
*10.15 - Offer Letter dated as of November 15, 1996, to Robert C. Hood.
         (9)
*10.16 - Offer Letter dated as of September 23, 1996 to William White
         Jr. (9)
*10.17 - Offer Letter dated as of November 21, 1996, to Jed Simmons. (9)
*10.18 - Consulting Agreement dated as of November 19, 1996 by and
         between the Registrant and Robert C. Hood. (9)
*10.19 - Consulting Agreement dated as of November 22, 1996 by and
         between the Registrant and Jed Simmons. (9)
 10.20 - Office Lease, dated as of January 22, 1996, by and between the
         Registrant and McCandless Land and Cattle Company. (3)
 10.21 - Series D Preferred Stock Purchase Agreement dated as of March 8, 1996
         by and among the Registrant and various investors. (5)
 10.22 - Warrant to purchase 650,000 shares of Common Stock dated March 8,
         1996 issued to AOL Ventures, Inc. (5)
#10.23 - Net Search Program -- Premier Provider Agreement dated as of
         March 28, 1996 between the Registrant and Netscape Communications
         Corporation. (6)
 10.24 - Office Lease, dated as of August 9, 1996, by and between the
         Registrant and Martin/Campus Associated, L.P. (7)
 10.25 - Acquisition Agreement dated as of November 25, 1996 by and among the
         Registrant, America Online, Inc. and Global Network Navigator, Inc. (9)



                                     - 38 -
<PAGE>   39
 10.26 - Net Search Program - Premier Provider Agreement dated as of March 27,
         1996, and as amended March 27, 1996 and January 21, 1997, between The
         McKinley Group, Inc. and Netscape Communications Corporation. (8)
 11.01 - Statement of earnings per share. (9)
 21.01 - List of Subsidiaries. (9)
 23.01 - Consent of Ernst & Young LLP, Independent Auditors.
   
 23.02 - Consent of Price Waterhouse LLP, Independent Accountants.
 24.01 - Power of Attorney. (10)
 27.01 - Financial Data Schedule (EDGAR version only.)(10)
    

----------

    *    Indicates a management contract or compensatory plan or arrangement.
    
    #    Confidential treatment was ordered or has been requested with respect
         to certain portions of these agreements. Such portions have been
         omitted from this filing and have been filed separately with the
         Securities and Exchange Commission.
    
    (1)  Previously filed with the Commission on September 12, 1996, as an
         exhibit to the Registrant's Form 8-K (File No. 0-28064) regarding the
         acquisition of The McKinley Group, Inc.
    
    (2)  Previously filed with the Commission on July 4, 1996, as an exhibit to
         the Registrant's Registration Statement on Form S-8 (File No.
         333-07625).
    
    (3)  Previously filed with the Commission on March 11, 1996, as an exhibit
         to the Registrant's Registration Statement on Form SB-2 (File No.
         333-2328-LA)
    
    (4)  Previously filed with the Commission on March 29, 1996, as an exhibit
         to Amendment No. 1 to the Registrant's Registration Statement on Form
         SB-2 (File No. 333-2328-LA)
    
    (5)  Previously filed with the Commission on April 3, 1996, as an exhibit to
         Amendment No. 2 to the Registrant's Registration Statement on Form SB-2
         (File No. 333-2328-LA)
    
    (6)  Previously filed with the Commission on April 3, 1996, as an exhibit to
         Amendment No. 3 to the Registrant's Registration Statement on Form SB-2
         (File No. 333-2328-LA)
    
    (7)  Previously filed with the Commission on November 8, 1996, as an exhibit
         to the Registrant's Form 10-Q SB (File No. 0-28064) for the period
         ended September 30, 1996.
    
    (8)  Previously filed with the Commission on February 28, 1997, as an
         exhibit to the Registrant's Form 10-Q SB/A (File No. 0-28064).
    
    (9)  Previously filed with the Commission on March 3, 1997, as an exhibit to
         the Registrant's Registration Statement on Form S-1 (File No.
         333-22669)

   
   (10)  Previously filed with the Commission on March 31, 1997, as an exhibit
         to the Registrant's Form 10-K (File No. 0-28064)
    

   
(b)  Reports on Form 8-K: On November 12, 1996 the Company filed a Form 8-K/A
     (amending a Form 8-K filed on September 12, 1996) regarding the acquisition
     of The McKinley Group, Inc. There were no other reports on Form 8-K filed
     during the quarter ended December 31, 1996. 
    

(c)  Exhibits: See item 14(a)3 above.

(d)  Financial Statement Schedules: See Item 14(a)2 above.


                                     - 39 -
<PAGE>   40
--------------------------------------------------------------------------------
EXCITE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

   
<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                       Number
                                                                                                       ------
<S>                                                                                                    <C>
Report of Ernst & Young LLP, Independent Auditors..................................................      41

Report of Price Waterhouse LLP, Independent Accountants............................................      42

Consolidated Balance Sheets as of December 31, 1995 and 1996.......................................      43

Consolidated Statements of Operations for the years ended December 31, 1994, 1995

    and 1996.......................................................................................      44

Consolidated Statements of Shareholders' Equity (Net Capital Deficiency) for the years
    ended December 31, 1994, 1995 and 1996.........................................................      45

Consolidated Statements of Cash Flows for the years ended December 31, 1994,

    1995 and 1996..................................................................................      46

Notes to Consolidated Financial Statements.........................................................      47
</TABLE>
    


                                     - 40 -
<PAGE>   41
                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Excite, Inc.

    We have audited the accompanying consolidated balance sheets of Excite, Inc.
as of December 31, 1995 and 1996, and the related consolidated statements of
operations, shareholders' equity (net capital deficiency) and cash flows for
each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. In August 1996, the Company merged
with the McKinley Group, Inc. in a transaction that was accounted for as a
pooling of interests. We did not audit the financial statements of The McKinley
Group, Inc. for the years ended December 31, 1994 or 1995 , which statements
reflect total assets constituting approximately 54% of the related consolidated
financial statement totals at December 31, 1995, and net losses constituting
approximately 92% and 49% of the consolidated financial statement totals for the
years ended December 31, 1994 and 1995, respectively. Those statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to data included for The McKinley Group, Inc. is
based solely on the report of the other auditors.

    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 and the report of other auditors provide a reasonable
basis for our opinion.

    In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Excite, Inc. at
December 31, 1995 and 1996, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, after giving retroactive effect to the business combination with The
McKinley Group, Inc. as described in the notes to the consolidated financial
statements, in conformity with generally accepted accounting principles.


                                            ERNST & YOUNG LLP

Palo Alto, California
January 29, 1997


                                     - 41 -
<PAGE>   42

   
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
The McKinley Group, Inc.

        In our opinion, the balance sheets and the related statements of
operations, stockholders' deficit, and cash flows present fairly, in all
material respects, the financial position of The McKinley Group, Inc. at
December 31, 1994 and 1995, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. 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 which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

        The financial statements have been prepared assuming the Company will
continue as a going concern. The Company has suffered recurring losses from
operations, has a net capital deficiency and is not in compliance with certain
covenants underlying outstanding bank borrowings. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

        On August 6, 1996, the Company entered into an Agreement and Plan of
Reorganization (the "Agreement") with Excite, Inc. Upon the effectiveness of
the Agreement, the Company's stockholders will exchange all of their shares of
Common Stock for shares of Common Stock of Excite, Inc., in a business
combination to be accounted for as a pooling of interests.

/s/ PRICE WATERHOUSE LLP

PRICE WATERHOUSE LLP
San Jose, CA
August 6, 1996

    

                                     - 42 -
<PAGE>   43
                                  EXCITE, INC.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                                      ---------------------------
                                                                                         1995             1996
                                                                                      -----------     -----------
                                                                                            (In thousands)
<S>                                                                                   <C>             <C>        
                                     ASSETS
Current assets:
   Cash and cash equivalents...................................................       $       760     $     3,971
   Short-term investments......................................................               358          16,863
   Restricted investments......................................................               452           1,496
   Accounts receivable, net....................................................               338           3,340
   Prepaid expenses and other current assets...................................               207           1,070
                                                                                      -----------     -----------
       Total current assets....................................................             2,115          26,740
Property and equipment, net....................................................             1,450           8,194
Intangible assets..............................................................               190          11,841
Other assets...................................................................                46             923
                                                                                      -----------     -----------
                                                                                      $     3,801     $    47,698
                                                                                      ===========     ===========

          LIABILITIES AND SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
   Notes payable, current portion..............................................       $       899     $     1,200
   Accounts payable............................................................             1,111           6,699
   Accrued compensation........................................................               428             861
   Accrued distribution license fees...........................................                --           2,300
   Capital lease obligations, current portion..................................               213           2,325
   Deferred revenues...........................................................               105           1,784
   Other accrued liabilities...................................................               237           3,447
                                                                                      -----------     -----------
       Total current liabilities...............................................             2,993          18,616
                                                                                      -----------     -----------
Notes payable..................................................................               587              --
Capital lease obligations......................................................               408           3,985
Commitments and contingencies
Redeemable convertible preferred stock, no par value; issuable in series: 4,000
   shares authorized at December 31, 1995 (none at December 31, 1996), 1,890
   shares issued and outstanding at December 31, 1995 (none at December
   31, 1996)...................................................................             3,847              --
Shareholders' equity (net capital deficiency):
   Convertible preferred stock issuable, no par value
     Authorized -- 4,000 shares issuable in series
     Issuable at December 31, 1996 -- 1,950 shares; aggregate liquidation
     preference of $1,445......................................................                --          15,816
   Common stock, no par value
     Authorized -- 25,000 shares
     Issued and outstanding -- 2,448 and 12,108 shares at December 31, 1995
     and 1996, respectively....................................................             3,530          59,999
   Deferred compensation.......................................................              (631)           (388)
   Unrealized gain (loss) on available-for-sale investments....................               152            (128)
   Accumulated deficit.........................................................            (7,085)        (50,202)
                                                                                      -----------     -----------
          Total shareholders' equity (net capital deficiency)..................            (4,034)         25,097
                                                                                      -----------     -----------
                                                                                      $     3,801     $    47,698
                                                                                      ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                     - 43 -
<PAGE>   44
                                  EXCITE, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                     --------------------------------------------
                                                                        1994             1995            1996
                                                                     -----------      -----------     -----------
                                                                      (In thousands, except per share data)
<S>                                                                  <C>              <C>             <C>        
Revenues:
   Advertising revenues........................................      $        57      $       145     $    14,030
   Contract and other revenues.................................              236              808             727
                                                                     -----------      -----------     -----------
       Total revenues..........................................              293              953          14,757
Cost of revenues:
   Cost of advertising revenues................................               --               65           3,296
   Cost of contract and other revenues.........................               88              163             667
   Amortization of purchased technology........................               --               --             186
                                                                     -----------      -----------     -----------
        Total cost of revenues..................................              88              228           4,149
                                                                     -----------      -----------     -----------
Gross profit...................................................              205              725          10,608
Operating expenses:
   Product development.........................................              415            2,810           8,030
   Sales and marketing.........................................               37            1,648          21,103
   Distribution license fees...................................               --               --          11,878
   General and administrative..................................              399            2,326           7,081
   Charge for purchased in-process technology..................               --              331           3,500
   Other merger and acquisition related costs, including
     amortization of goodwill and other purchased intangibles..               --               --           3,134
                                                                     -----------      -----------     -----------
        Total operating expenses................................             851            7,115          54,726
                                                                     -----------      -----------     -----------
Operating loss.................................................             (646)          (6,390)        (44,118)
Interest income................................................               --                5           1,410
Interest expense and other.....................................               (4)             (50)           (409)
                                                                     -----------      -----------     -----------
Net loss.......................................................      $      (650)     $    (6,435)    $   (43,117)
                                                                     ===========      ===========     ===========
Net loss per share.............................................      $     (0.06)      $    (0.58)     $    (3.65)
                                                                     ===========      ===========     ===========
 Shares used in computing net loss per share....................          10,576           11,070          11,818
                                                                     ===========      ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      -44-

<PAGE>   45
                                  EXCITE, INC.

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)

<TABLE>
<CAPTION>
                                                                                        
                                                                                                                     TOTAL    
                                                                                        UNREALIZED               SHAREHOLDERS'
                                  PREFERRED STOCK       COMMON STOCK                    GAIN/(LOSS)                 EQUITY    
                                  ----------------    -----------------     DEFERRED        ON      ACCUMULATED  (NET CAPITAL
                                  SHARES    AMOUNT    SHARES     AMOUNT   COMPENSATION  INVESTMENTS   DEFICIT     DEFICIENCY)
                                  ------    ------    ------     ------   ------------  -----------   -------     -----------
                                                                         (In thousands)
<S>                               <C>      <C>        <C>        <C>      <C>           <C>          <C>      
Balance at December 31, 1993..        --   $    --        35     $    1      $   --       $   --     $     --     $       1
   Issuance of common stock
     for cash.................        --        --       899        100          --           --           --           100
   Issuance of common stock
     for services.............                  --       356          7          --           --           --             7
   Net loss...................        --        --        --         --          --           --         (650)         (650)
                                  ------   -------    ------     ------      ------       ------     --------     --------- 
Balance at December 31, 1994..        --        --     1,290        108          --           --         (650)         (542)
   Issuance of common stock
     for cash.................        --        --     1,024      1,921          --           --           --         1,921
   Exercise of stock options..        --        --         1          6          --           --           --             6
   Issuance of common stock
     for equity securities....        --        --        33        300          --           --           --           300
   Issuance of common stock
     for services.............        --        --         8        196          --           --           --           196
   Note payable conversion....        --        --        22        275          --           --           --           275
   Issuance of common stock
     and warrant in connection
     with asset purchase 
     agreement................        --        --        70         84          --           --           --            84
   Deferred compensation
     related to stock options,
     net of amortization......        --        --        --        640        (631)          --           --             9
   Unrealized gain on
     available-for-sale
     investments..............        --        --        --         --          --          152           --           152
   Net loss...................        --        --        --         --          --           --       (6,435)       (6,435)
                                  ------   -------    ------     ------      ------       ------     --------     --------- 
Balance at December 31, 1995..        --        --     2,448      3,530        (631)         152       (7,085)       (4,034)
   Issuance of common stock
     for cash.................        --        --       283      1,412          --           --           --         1,412
   Notes payable conversions..        --        --        87        400          --           --           --           400
   Issuance of warrant in
     connection with
     distribution agreement...        --        --        --      1,625          --           --           --         1,625
   Issuance of shares, note
     payable conversion and
     exercise of outstanding
     warrants in connection
     with the Company's IPO, net
     of issuance costs of
     $3,682.....................      --        --     3,651     36,418          --           --           --        36,418
   Conversion of redeemable
     preferred stock in
     connection with the 
     Company's IPO............        --        --     5,324     16,129          --           --           --        16,129
   Exercise of stock options..        --        --       300        375          --           --           --           375
   Amortization of deferred
     compensation, net of
     cancellations............        --        --        --          7         243           --           --           250
   Issuance of common and
     preferred stock
     issuable in
     connection with asset  
     purchase agreements......     1,950    15,816        15        103          --           --           --        15,919
   Unrealized loss on
     available-for-sale
     investments..............        --        --        --         --          --         (280)          --          (280)
   Net loss...................        --        --        --         --          --           --      (43,117)      (43,117)
                                  ------   -------    ------     ------      ------       ------     --------     --------- 
Balance at December 31, 1996..     1,950   $15,816    12,108    $59,999      $ (388)      $ (128)    $(50,202)    $  25,097
                                  ======   =======    ======    =======      ======       ======     ========     =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                     - 45 -
<PAGE>   46
                                  EXCITE, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

   
<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                       ----------------------------------------
                                                                         1994           1995            1996
                                                                       --------       ---------       ---------
                                                                                    (in thousands)
<S>                                                                    <C>            <C>             <C>      
Cash flows from operating activities:
   Net loss ....................................................       $  (650)       $ (6,435)       $(43,117)
   Adjustments to reconcile net loss to net cash used in
     operating activities:
       Amortization of deferred compensation ...................            --               9             243
       Issuance of warrants ....................................            --              --           1,625
       Equity securities issued for services ...................             7             196              --
       Depreciation ............................................            11             140           2,189
       Amortization of intangible assets .......................            --              19             954
       Charge for purchased in-process technology ..............            --             331           3,500
       Loss on disposal of property and equipment ..............            --              --              96
       Provision for loan impairment ...........................            --              --             629
       Changes in assets and liabilities:
         Accounts receivable ...................................            (3)           (335)         (2,957)
         Prepaid expenses and other current assets .............           (11)           (168)           (863)
         Other assets ..........................................           (23)            (36)           (873)
         Accounts payable ......................................           136           1,021           5,515
         Accrued compensation ..................................            44             384             425
         Accrued distribution license fees .....................            --              --           2,300
         Other accrued liabilities .............................           122             117           2,533
         Deferred revenues .....................................            --             105           1,679
                                                                       -------        --------        --------
           Net cash used in operating activities ...............          (367)         (4,652)        (26,122)
                                                                       -------        --------        --------
Cash flows from investing activities:
   Purchases of property and equipment .........................           (85)           (811)           (892)
   Purchases of investments ....................................            --            (358)        (49,765)
   Sales and maturities of investments .........................            --              --          31,936
   Notes and advances to Novo MediaGroup, Inc. .................            --              --            (629)
   Payment on asset purchase ...................................            --            (150)             --
                                                                       -------        --------        --------
           Net cash used in investing activities ...............           (85)         (1,319)        (19,350)
                                                                       -------        --------        --------
Cash flows from financing activities:
   Payments on capital lease obligations .......................            --             (69)         (1,875)
   Proceeds from notes payable .................................           344           1,277           3,490
   Payments on notes payable ...................................            --            (263)         (2,426)
   Proceeds from sale of redeemable convertible preferred stock             --           3,847          12,282
   Proceeds from sale of common stock and common stock warrants            100           1,927          37,212
                                                                       -------        --------        --------
           Net cash provided by financing activities ...........           444           6,719          48,683
                                                                       -------        --------        --------
Net increase (decrease) in cash and cash equivalents ...........            (8)            748           3,211
   Cash and cash equivalents at beginning of period ............            20              12             760
                                                                       -------        --------        --------
   Cash and cash equivalents at end of period ..................       $    12        $    760        $  3,971
                                                                       =======        ========        ========
Non-cash financing activities:
   Conversion of redeemable convertible preferred stock to
     common stock ..............................................       $    --        $     --        $ 16,129
   Conversion of notes payable to common stock .................       $    --        $    275        $  1,400
   Fixed assets acquired under capital leases ..................       $    --        $    676        $  7,564
Supplemental cash flow disclosure:
   Cash paid for interest ......................................       $    --        $     17        $    379
</TABLE>
    


          See accompanying notes to consolidated financial statements.


                                     - 46 -
<PAGE>   47
                                  EXCITE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   The Company and Basis of Presentation

    Excite, Inc. ("Excite" or the "Company"), formerly Architext Software, Inc.,
which was formed in June 1994, provides a gateway to the World Wide Web ("the
Web") that organizes, aggregates and delivers information to meet the needs of
individual consumers. Designed to help consumers make sense of the Web, the
Excite Network, including the Excite and WebCrawler brands, contains a suite of
specialized information services which combine proprietary search technology,
editorial Web reviews, aggregated content from third parties, bulletin boards,
chat and personalization capabilities. The Company's goal is to be the Web's
leading branded media network with the largest consumer reach, thereby creating
an efficient means of advertising on the Web. To this end, the Excite Network
serves as a home base where consumers can gather, interact and return to during
each Web experience. The Company derives a substantial portion of its revenues
from selling advertising on its Web sites to customers in various industries.

    The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated. On August 30, 1996, the Company acquired The
McKinley Group, Inc. ("McKinley") in a merger transaction accounted for as a
pooling of interests (see Note 3.) McKinley was incorporated in December 1993.
All financial information has been restated to reflect the combined operations
of the Company and McKinley. From December 7, 1993 (inception) through December
31, 1993, McKinley had no revenues and insignificant operating expenses which
have been included in the consolidated results of operations for the year ended
December 31, 1994.

    The Company has incurred operating losses to date and incurred a net loss of
approximately $43.1 million for the year ended December 31, 1996. The Company
believes that additional funding will be needed to finance expected operations
in the year ending December 31, 1997. If such additional funding is not
available, management believes that available resources will provide sufficient
funding to enable the Company to meet its obligations through at least December
31, 1997. If anticipated operating results are not achieved, management has the
intent and believes it has the ability to delay or reduce expenditures so as not
to require additional financial resources if such resources were not available.

    The Company currently derives a large percentage of its revenues from
advertising through the "Net Search" buttons on the Netscape home page. Under
the terms of the April 1996 agreements with Netscape (see Note 12,) this
facility expires on March 31, 1997; however, in March 1997, Netscape agreed to
extend the provisions of these agreements to April 30, 1997, and entered into
new agreements covering the period from May 1, 1997 through April 30, 1998 (see
Note 13.)

   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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

   Reclassifications

    Certain previously reported amounts have been reclassified to conform to the
current presentation format.


                                     - 47 -
<PAGE>   48
   Long-Lived Assets

    In 1995, the Financial Accounting Standards Board released Statement of
Financial Accounting Standard No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121").
SFAS 121 requires recognition of impairment of long-lived assets in the event
the net book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. The adoption of SFAS 121 in fiscal 1996 had no
impact on the Company's financial condition or operating results.

    The carrying value of goodwill and intangible assets is reviewed on a
regular basis for the existence of facts or circumstances, both internally and
externally, that may suggest impairment. To date no such impairment has been
indicated. Should there be an impairment in the future, the Company will measure
the amount of the impairment based on undiscounted expected future cash flows
from the impaired assets. The cash flow estimates that will be used will contain
management's best estimates, using appropriate and customary assumptions and
projections at the time.

   Revenue Recognition

    Advertising revenues are derived principally from short-term advertising
contracts in which the Company guarantees a minimum number of impressions (a
view of an advertisement by a consumer) for a fixed fee. Advertising revenues
are recognized ratably over the term of the contract. To the extent minimum
guaranteed impression levels are not met, the Company defers recognition of the
corresponding revenues until guaranteed levels are achieved.

    Revenues from the sale of certain advertising space are shared with third
parties pursuant to the terms of certain agreements. To date, amounts allocable
to third parties have not been significant. Contract and other revenues during
the years ended December 31, 1994 and 1995 consisted primarily of contract
revenues earned under agreements to modify the Company's Internet directory
technology and fees for the licensing of Internet directory content and
technology. Contract revenues are recognized as the work is performed using the
percentage of completion method. License revenues are recognized at the time of
delivery, provided that no significant obligations remain and collection of the
resulting receivable is considered probable.

   Advertising

    Costs related to advertising are expensed as incurred. Advertising expense
was insignificant for the year ended December 31, 1994 and was approximately
$144,000 and $10.4 million for the years ended December 31, 1995 and 1996,
respectively.


                                     - 48 -
<PAGE>   49
   Cash, Cash Equivalents, Short-Term Investments and Fair Value of Financial 
Instruments

    The Company considers investments in highly liquid instruments purchased
with an original maturity of 90 days or less to be cash equivalents. All of the
Company's cash equivalents and short-term investments, consisting principally of
commercial paper and government securities, are classified as available-for-sale
as of the balance sheet date. These securities are recorded at fair market
value. Unrealized gains and losses on these investments are included in
shareholders' equity. The cost of securities sold is based on specific
identification. There were no material gross realized gains or losses from sales
of securities in the periods presented. The fair value of investments is based
on quoted market prices at December 31, 1996. The estimates presented herein are
not necessarily indicative of the amounts that the Company could realize in a
current market exchange. All available-for-sale investments generally mature in
one year or less.

<TABLE>
<CAPTION>
                                                              GROSS UNREALIZED
                                             HISTORICAL      -------------------               
                                                COST         GAIN           LOSS        FAIR VALUE
                                                ----         ----           ----        ----------
                                                                (In thousands)
<S>                                          <C>             <C>          <C>           <C>    
Cash and cash equivalents:
   Cash ................................       $   758       $  --        $     --        $   758
   U.S. Government securities ..........         1,604          --              --          1,604
   Money market funds ..................         1,609          --              --          1,609
                                               -------       -----        --------        -------
                                               $ 3,971       $  --        $     --        $ 3,971
                                               =======       =====        ========        =======
Short-term investments:
   Commercial paper ....................       $ 3,882       $   3        $     --        $ 3,885
   U.S. Government securities ..........        12,203           5              --         12,208
   Corporate notes .....................           770          --              --            770
                                               -------       -----        --------        -------
                                               $16,855       $   8        $     --        $16,863
                                               =======       =====        ========        =======
Restricted investments:
   Restricted certificate of deposit ...       $ 1,332       $  --        $     --        $ 1,332
   Restricted investment in common stock           300          --            (136)           164
                                               -------       -----        --------        -------
                                               $ 1,632       $  --        $   (136)       $ 1,496
                                               =======       =====        ========        =======
</TABLE>

    The restricted certificate of deposit is being held as collateral by a
financial institution against a letter of credit for tenant improvements at the
Company's new headquarters (see Note 5.)

    The restricted investment in common stock is being held as collateral by a
financial institution against the Company's line of credit borrowings (see Note
4.)

   Property and Equipment

    Property and equipment are stated at cost, net of accumulated amortization
and depreciation. Property and equipment are depreciated on a straight-line
basis over the estimated useful lives of the assets (one to five years.)
Equipment purchased under capital leases is amortized on a straight-line basis
over the lesser of the estimated useful life of the asset or the lease term.
Property and equipment, at cost, consist of the following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                             ------------------------
                                                               1995            1996
                                                             --------        --------
                                                                  (In thousands)
<S>                                                          <C>             <C>     
Purchased computer equipment and internal use software       $    901        $  1,968
Leased computer equipment and internal use software ..            673           7,891
Purchased furniture and fixtures .....................             13             370
Leased furniture and fixtures ........................              3             297
Leasehold improvements ...............................             16              60
                                                             --------        --------
                                                                1,606          10,586
Less accumulated depreciation and amortization .......           (156)         (2,392)
                                                             --------        --------
                                                             $  1,450        $  8,194
                                                             ========        ========
</TABLE>


                                     - 49 -
<PAGE>   50
   Intangible Assets

    Intangible assets consist primarily of goodwill, developed technology,
distribution rights, trademarks, bookmarks and trade names, and are being
amortized generally over periods ranging from four months to three years. These
purchased intangibles and goodwill relate to the acquisitions of certain assets
from other companies.

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                        LIFE IN        -----------------------
                                         MONTHS          1995            1996
                                         ------        --------         ------
                                                            (In thousands)
<S>                                     <C>            <C>             <C>
Trademarks, trade names, goodwill 
 and other............................  24 - 36        $    209        $   2,708
Developed technology..................     13                --            8,400
Operating agreement...................      4                --            1,200
Distribution agreement................     24                --              500
                                                       --------        ---------
                                                            209           12,808
Less accumulated amortization.........                      (19)            (967)
                                                       --------        --------- 
                                                       $    190        $  11,841
                                                       ========        =========
</TABLE>

   Concentration of Credit Risk

    The Company performs ongoing credit evaluations of its customers' financial
condition and, generally, does not require collateral on accounts receivable.
When required, the Company maintains allowances for credit losses and such
losses have been within management's expectations. The Company's services are
provided to customers in several industries, primarily in North America.

    Provisions for doubtful accounts were insignificant in 1995 and $670,000 for
the year ended December 31, 1996. Accounts receivable are stated net of
allowances for doubtful accounts of $425,000 at December 31, 1996 (none at
December 31, 1995.)

    Two customers accounted for approximately 52% and 17% respectively, of total
revenues in 1994. Two customers accounted for approximately 26% and 16%
respectively, of total revenues in 1995. One customer accounted for
approximately 12% of total revenues in 1996.

   Product Development Costs

    Product development expenditures are charged to operations as incurred.
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed," requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility. Based on the Company's product
development process, technological feasibility is established upon completion of
a working model. Costs incurred by the Company between completion of the working
model and the point at which the product is ready for general release have been
insignificant. Therefore, all product development costs have been charged to
operations as incurred.

   Per Share Amounts

    Net loss per share is computed using the weighted average number of shares
of Common Stock outstanding during the period and excludes all common stock
equivalents as they are anti-dilutive. However, pursuant to Securities and
Exchange Commission Staff Accounting Bulletins, for the periods prior to the
Company's initial public offering, such computations include all common and
common equivalent shares issued within twelve months of the filing date as if
they were outstanding for all periods presented. Common equivalent shares
consist of the 


                                     - 50 -
<PAGE>   51
incremental common shares issued upon conversion of Redeemable Convertible
Preferred Stock (using the if-converted method) and shares issuable upon the
exercise of stock options and warrants (using the treasury stock method.)

2. INITIAL PUBLIC OFFERING

    In April 1996, the Company completed its initial public offering and issued
2,300,000 shares of its Common Stock at a price of $17.00 per share. The Company
received approximately $35.4 million in cash, net of underwriting discounts,
commissions and other offering costs. Simultaneously with the closing of the
initial public offering, each outstanding share of Redeemable Convertible
Preferred Stock was automatically converted into two shares of Common Stock,
outstanding warrants were exercised (on a net exercise basis) at an exercise
price of $17.00 per share, resulting in the issuance of 1,191,176 shares of
Common Stock, and $1.0 million principal amount of notes payable was converted
into 160,000 shares of Common Stock.

3. MERGER AND ASSET PURCHASES

   Merger

    In August 1996, the Company acquired McKinley, a closely held private
company and creator of the Magellan On-Line Guide. The transaction was effected
through the issuance of approximately 850,000 shares of the Company's Common
Stock and was accounted for as a pooling of interests. In connection with the
transaction, the Company incurred approximately $2.2 million in merger related
expenses, including $1.0 million for legal and other professional fees, $901,000
for personnel severance and outplacement expenses and $345,000 for termination
of distribution contracts and discontinuation of duplicate operations and
facilities. A total of approximately $524,000 was included in other accrued
liabilities at December 31, 1996 for the remaining merger related liabilities.

    Separate results of the combined entities for the years ended December 31,
1994 and 1995, and for the eight month period ended August 30, 1996 (date of
merger) are as follows:

<TABLE>
<CAPTION>
                                                                      UNAUDITED
                                                                     EIGHT MONTHS
                                     YEARS ENDED DECEMBER 31,           ENDED
                                   ----------------------------       AUGUST 30,
                                      1994             1995              1996
                                   -----------      -----------      -----------
                                                  (In thousands)
<S>                                <C>              <C>              <C>        
Revenues:
   Excite......................    $        83      $       435      $     5,182
   McKinley....................            210              518            1,661
                                   -----------      -----------      -----------
                                   $       293      $       953      $     6,843
                                   ===========      ===========      ===========
Net loss:
   Excite......................    $       (51)     $    (3,257)     $   (13,793)
   McKinley....................           (599)          (3,178)         (12,306)
                                   -----------      -----------      -----------
                                   $      (650)     $    (6,435)     $   (26,099)
                                   ===========      ===========      ===========
</TABLE>

     There were no significant inter-company transactions between the two
companies and no significant conforming accounting adjustments.

   Asset Purchases

    In November 1995, the Company entered into an asset purchase agreement with
City.Net Express ("City.Net"), a company which develops automated software
systems for managing content and links over the Internet. Under the terms of the
agreement, the Company purchased certain assets of City.Net in exchange for cash
of $150,000, 70,000 shares of Common Stock, a promissory note of $300,000, and a
warrant to purchase 45,000 shares of Common Stock at an exercise price of $3.33
per share for a total purchase consideration valued at $534,000. Of the purchase


                                     - 51 -
<PAGE>   52
price, $203,000 was allocated to identified intangible assets and $331,000 was
allocated to purchased in-process technology which was charged to operations at
the time of the acquisition. The Company determined the amounts to be allocated
to developed and in-process technology based on whether technological
feasibility had been achieved and whether there was an alternative future use
for the technology.

   
    In November 1996, the Company entered into a series of agreements with
America Online, Inc.("AOL"), a provider of Internet online services, whereby a
co-branded version of Excite became the exclusive Internet search and directory
service for AOL. Under these agreements, Excite acquired AOL's WebCrawler search
and directory technology (the "WebCrawler Assets"), for 1,950,000 shares of the
Company's Series E-1 and E-2 Convertible Preferred Stock, that are issuable upon
closing (see Notes 7 and 13.) In addition, as part of the transactions
contemplated by these agreements, AOL will have the right, for a 90 day period
following the closing, which was effective on March 27, 1997, to have 680,330
shares of common stock beneficially owned by AOL canceled and an equivalent
number of shares of series E-4 Convertible Preferred Stock issued to it, and a
warrant held by AOL (which previously was exercisable into 650,000 shares of
common stock at an exercise price of $8.00 per share) will be amended to become
exercisable into 650,000 shares of series E-3 Convertible Preferred Stock at the
same exercise price per share. The Company valued the Series E-1 and E-2
Convertible Preferred Stock using the average market price of the Company's
Common Stock over a reasonable period of time before and after the announcement
of the asset purchase. In addition, an independent appraisal of the premium
attributable to the preferred stock preferences for Series E-1, E-2, E-3 and E-4
was obtained. Accordingly, the value attributed to the issuable Series E-1 and
E-2 Convertible Preferred Stock was $8.08 per share. The acquisition was
recorded as of December 1, 1996. Upon closing, AOL will pay to the Company a
percentage of AOL's advertising revenues with respect to the sales of
advertising derived from the WebCrawler Assets for the period between December
1, 1996 and the closing, less ordinary and customary reserves, and the Company
will reimburse AOL for expenses relating to the WebCrawler Assets. Revenues
recorded in the period ended December 31, 1996 were immaterial. Shareholders'
equity at December 31, 1996 includes the 1,950,000 shares of Convertible
Preferred Stock issuable to AOL.
    

    The series of agreements have been accounted for as the acquisition of
rights to developed and in-process technologies and distribution rights. The
intangible assets were recorded based on their independently appraised fair
values as of December 1, 1996. Of the total purchase price, $3.5 million was
allocated to purchased in-process technology and the remaining excess purchase
price of approximately $12.6 million was allocated to trademarks, distribution
rights, bookmarks, trade names, goodwill and other. The amount of the purchase
price allocated to purchased in-process technology was charged to the Company's
operations as of December 1, 1996.

    The Company determined the amounts to be allocated to developed and
in-process technology based on whether technological feasibility had been
achieved (as defined and utilized by the Company in assessing software
capitalization) and whether there was any alternative future use for the
technology. Other considerations included the time and cost to complete each
project, expected income, and associated risks which included the inherent
difficulties and uncertainties in completing the project and thereby achieving
technological feasibility and risks related to the viability of and potential
changes to future target markets. The Company concluded that the in-process
technology had no alternative future use after taking into consideration the
potential for usage of the technology in different products, resale of the
technology and internal usage.

4. BANK LINE OF CREDIT AND NOTES PAYABLE

    Bank borrowings and other notes payable are as follows:

<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                  ---------------------------
                                                                     1995             1996
                                                                  -----------     -----------
                                                                         (In thousands)
<S>                                                               <C>             <C>        
Bank line of credit..........................................     $       796     $     1,100
Note payable in connection with asset purchase (Note 3)......             300              --
Other notes payable..........................................             390             100
                                                                  -----------     -----------
                                                                        1,486           1,200
Less current portion.........................................            (899)         (1,200)
                                                                  -----------     -----------
                                                                  $       587     $        --
                                                                  ===========     ===========
</TABLE>


                                     - 52 -
<PAGE>   53
   Bank Line of Credit

    The Company has a $1.0 million revolving line of credit with a bank
available through March 31, 1997. Additionally, in May 1996, the Company
received $100,000 from the same bank under a demand note. Borrowings at December
31, 1996 totaled $1.1 million and are secured by substantially all of McKinley's
assets and are guaranteed by the Company. Interest on borrowings is payable
monthly at the bank's prime rate (8.25% at December 31, 1996) plus 1%. At
December 31, 1996, a short-term investment with a carrying amount of $164,000
was held by the bank as collateral for borrowings under the line of credit and
is not available to the Company.

   Notes Payable

    In 1996, the Company repaid $150,000 of the note payable which arose in
connection with an asset purchase, and converted the remaining $150,000 into
45,000 shares of Common Stock. Other notes payable represent amounts due to
individuals with interest rates ranging from 6% to 11%. In 1996, the Company
converted $250,000 of other notes payable into 41,604 shares of Common Stock.

5. COMMITMENTS

   Capital Leases

    In March 1996, the Company entered into a master equipment lease which
provides for the purchase of up to $2.5 million of property and equipment under
capital leases. At December 31, 1996, $132,000 was available under this lease
line. In the second half of 1996, the Company entered into additional equipment
leases, not included in the master lease line, totaling $4.8 million. These
leases generally have terms of 30 to 36 months.

   Building Lease

    In August 1996, the Company entered into a lease for new corporate offices
located in Redwood City, California. The Company anticipates that this lease,
which has a ten year term, will commence during the second quarter of 1997 at
which time the Company will move from its present offices in Mountain View,
Sausalito and San Jose, California.

    Annual minimum commitments under these leases are as follows:

<TABLE>
<CAPTION>
                                                                                      OPERATING         CAPITAL
                                                                                        LEASES           LEASES
                                                                                     ------------     -----------
YEARS ENDING DECEMBER 31,                                                                   (In thousands)
<S>                                                                                  <C>              <C>        
     1997...................................................................         $      1,257     $     2,812
     1998...................................................................                1,849           2,707
     1999...................................................................                1,586           1,576
     2000...................................................................                1,514              --
     2001...................................................................                1,514              --
     Thereafter.............................................................                7,948              --
                                                                                     ------------     -----------
Total minimum payments required.............................................         $     15,668     $     7,095
                                                                                     ============
Less amounts representing interest..........................................                                 (785)
                                                                                                      -----------
Present value of future lease payments......................................                                6,310
Less current portion........................................................                               (2,325)
                                                                                                      -----------
                                                                                                      $     3,985
                                                                                                      ===========
</TABLE>

    Rent expense under operating leases was approximately $24,000,  $152,000 and
$722,000 for the years ended December 31, 1994, 1995 and 1996, respectively.


                                     - 53 -
<PAGE>   54
6. REDEEMABLE CONVERTIBLE PREFERRED STOCK

    Each share of Redeemable Convertible Preferred Stock outstanding at December
31, 1995 automatically converted to two shares of Common Stock upon the closing
of the Company's initial public offering in April, 1996.

7. SHAREHOLDERS' EQUITY

   Convertible Preferred Stock

    Information regarding Convertible Preferred Stock, including the amounts
issuable under the acquisition of certain assets from AOL, consists of the
following (no par value):

<TABLE>
<CAPTION>
                                                                    SHARES
                                                                  ISSUABLE AT
                                                  SHARES          DECEMBER 31,    LIQUIDATION
                                                AUTHORIZED            1996        PREFERENCE
                                               ------------       -----------     -----------
                                                                 (In thousands)
<S>                                            <C>                <C>             <C>        
Series E-1...............................             1,250             1,250     $     1,438
Series E-2...............................               700               700               7
Series E-3...............................               650                --              --
Series E-4...............................               680                --              --
                                               ------------       -----------     -----------
          Total Series E.................             3,280             1,950     $     1,445
                                                                  ===========     ===========
Undesignated.............................               720
                                               ------------
          Total authorized...............             4,000
                                               ============
</TABLE>

    Holders of the Series E Convertible Preferred Stock will be entitled to
non-cumulative dividends, as and if declared by the Board of Directors ("The
Board"), on a pro rata basis with the common stock holders.

    The holders of Series E-1, E-2, E-3 and E-4 Convertible Preferred Stock will
be entitled to liquidation preferences of $1.15, $0.01, $8.0 and $8.819 per
share respectively, prior to and in preference to any payment or distribution to
holders of Common Stock.

    Each holder of shares of Convertible Preferred Stock shall be entitled to a
number of votes equal to the number of shares of Common Stock into which such
shares of Preferred Stock could convert and, so long as at least 1,640,165
shares of Series E Convertible Preferred Stock are outstanding, the Preferred
Stock as a class shall be entitled to elect one director. Subject to adjustment,
the Preferred Stock holders are entitled, upon conversion, to the same number of
Common shares as represented by their Preferred Stock holdings. At the option of
the holder, each share of Preferred Stock shall be convertible, at any time or
from time to time, into shares of Common Stock.

   Common Stock

    At December 31, 1996, 1,780,020 shares of Common Stock issued by the Company
were subject to stock repurchase agreements whereby the Company has the option
to repurchase the unvested shares upon termination of employment for any reason,
with or without cause, at the original price paid for the shares. Generally the
stock vests 30% immediately with the remaining 70% vesting ratably over 48
months from the date of issuance. At December 31, 1996, 493,226 shares of Common
Stock were subject to repurchase at the option of the Company at the original
exercise price ranging from $0.00045 to $0.035.

   Warrants

    During 1995, the Company issued warrants to purchase 30,000 shares of Series
A and 16,000 shares of Series B Redeemable Convertible Preferred Stock at
exercise prices of $0.67 and $1.25 per share, respectively, in connection 


                                     - 54 -
<PAGE>   55
with an equipment lease agreement. These warrants converted into warrants to
purchase Common Stock upon the Company's initial public offering in April 1996.
In January 1997, the holder of these warrants elected to exercise the warrants
and receive a lesser number of shares in exchange for a reduction in the
exercise price resulting in the issuance of 43,466 shares of Common Stock.

    During 1995, the Company issued warrants to purchase 1,200,000 shares of
Common Stock at an exercise price of $0.125 per share in connection with the
sale of Series B Redeemable Convertible Preferred Stock. These warrants were
exercised in April 1996 in connection with the Company's initial public
offering.

    During 1995, the Company issued warrants to purchase 36,000 and 28,540
shares of Common Stock at exercise prices of $0.67 and $1.25 per share,
respectively, in connection with an employment offer. These warrants were
exercised in 1996.

    During 1995, the Company issued warrants to purchase 2,356 shares of Common
Stock at an exercise price of $32.66 per share in connection with obtaining a
working capital line of credit from a bank (see Note 4.) These warrants expire
in September 2001.

    In February 1996, the Company issued warrants to purchase 7,095 shares of
Common Stock at an exercise price of $101.27 per share in connection with a
consulting services agreement. These warrants fully vest on January 31, 1997 and
expire on January 31, 1999.

   
    In March 1996, the Company entered into an agreement with AOL whereby, in
return for certain distribution rights, the Company issued a warrant to purchase
650,000 shares of Common Stock at an exercise price of $8.00 per share. The
warrant expires in March 2001. The value of the warrant was established though
an independent appraisal. A charge to operations of $1.6 million for the fair
value of the warrant was recorded at the time of issuance. Upon the closing of
the acquisition of the WebCrawler Assets, this warrant was converted into a
warrant to purchase an equivalent number of shares of Series E-3 Convertible
Preferred Stock at the same exercise price per share. The value attributed to
the amendment of the warrant terms from Common Stock to Series E-3 Convertible
Preferred Stock was minimal, as the expiration date of the warrant was also
amended such that 325,000 shares exercisable under this warrant will now
expire, if unexercised, on September 30, 1997, instead of in March, 2001.
    

   Stock Splits

    In July 1995, the Company completed a one-for-nine reverse stock split. In
addition, in February 1996, the Company completed a two-for-one stock split. All
of the share and per share data have been adjusted to reflect these stock
splits.

8. EMPLOYEE BENEFIT PLANS

   Stock Option Plans

    During 1995, the Company adopted the 1995 Equity Incentive Plan (the "1995
Plan") under which incentive stock options or non-qualified stock options to
purchase Common Stock may be granted to eligible participants. Under the 1995
Plan, options to purchase Common Stock may be granted at prices no less than 85%
of the fair market value on the date of grant (110% of fair value in certain
instances.) Options generally vest over a 48-month period. Options granted under
the 1995 Plan before its termination in April 1996 remain outstanding in
accordance with their terms, but no further options have been granted under the
1995 Plan after the date of its termination.

    Additionally, in February 1996 the Company's Board of Directors adopted, and
in March 1996 the Company's shareholders approved, increases to the number of
shares authorized for issuance under the 1995 Plan totaling 550,000 shares, the
1996 Equity Incentive Plan (the "1996 Plan") and 1996 Directors Stock Option
Plan (the "Directors Plan") which authorized the issuance of 1,500,000 and
150,000 shares of Common Stock, respectively, upon exercise of stock options
granted to eligible participants under the 1996 Plan and to directors under the
Directors Plan. In November 1996 and January 1997, the Board approved amendments
to the 1996 Plan, subject to shareholder approval, to increase the number of
shares thereunder by 800,000 and 2,455,000 shares, respectively.


                                     - 55-
<PAGE>   56
The 1996 Plan serves as the successor equity incentive program to the Company's
1995 Plan. The 1996 Plan provides for the grant of either incentive stock
options (as defined in Section 422 of the Internal Revenue Code of 1986, as
amended) or non qualified stock options and stock bonuses and the issuance of
restricted stock by the Company to eligible participants at a price no less than
85% of the fair value on the date of grant. Options generally vest over a 48
month period. No person is eligible to receive more than 500,000 shares in any
calendar year pursuant to grants under the 1996 Plan, other than new employees
of the Company who will be eligible to receive up to a maximum of 800,000 shares
in the calendar year in which they commence employment with the Company. Shares
that (i) are subject to issuance upon exercise of an option but cease to be
subject to such stock option for any reason other than exercise of such stock
option, (ii) are subject to an award granted under the 1996 Plan but are
forfeited or are repurchased by the Company at the original issue price or (iii)
are subject to an award that otherwise terminates without shares being issued
will again be available for grant and issuance in connection with future awards
under the 1996 Plan. The 1996 Plan will terminate in February 2006, unless
terminated earlier in accordance with the provisions of the 1996 Plan.

    A summary of activity under the Plans is as follows:

<TABLE>
<CAPTION>
                                           SHARES                OPTIONS OUTSTANDING
                                          AVAILABLE     -------------------------------------        WEIGHTED
                                             FOR        NUMBER OF                                     AVERAGE
                                            GRANT        SHARES            PRICE PER SHARE         EXERCISE PRICE
                                         ----------     ---------        --------------------      --------------
                                                                   (Shares in thousands)
<S>                                      <C>            <C>              <C>                       <C>    
Initial shares authorized..........           1,650            --                          --                --
  Options granted..................          (1,375)        1,375        $0.035 -    $ 34.612        $     0.31
  Options exercised................              --            (1)                   $  8.194        $     8.19
                                         ----------     ---------
Balance at December 31, 1995.......             275         1,374        $0.035 -    $ 34.612        $     0.31
  Additional shares authorized.....           3,000            --                          --                --
  Options granted..................          (2,836)        2,836        $2.500 -    $ 67.757        $     6.80
  Options exercised................              --          (300)       $0.035 -    $  5.750        $     0.33
  Options canceled.................             263          (263)       $0.035 -    $ 67.757        $    10.50
  Options expired..................            (528)           --                          --                --
                                         ----------     ---------
Balance at December 31, 1996.......             174         3,647        $0.035 -    $ 67.757        $     4.66
                                         ==========     =========
</TABLE>

    At December 31, 1996, options totaling 758,703 shares have been granted
under the 1996 Plan subject to shareholder approval.

   Deferred Compensation

    The Company has recorded deferred compensation expense of $640,000 for the
difference between the exercise price and the deemed fair value of certain of
the Company's Common Stock options granted in 1995. This amount is being
amortized over the vesting period of the individual options, generally a
48-month period. Deferred compensation expense recognized in the years ended
December 31, 1995 and 1996 totaled $9,000 and $243,000, respectively.

   Accounting for Stock-Based Compensation

    The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation" ("Statement 123"),
requires use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, if the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation is recognized.


                                     - 56 -
<PAGE>   57
   
    Pro forma information regarding net income and earnings per share is
required by Statement 123, which also requires that the information be
determined as if the Company had accounted for its employee stock options
granted subsequent to December 31, 1994 under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1995 and 1996, respectively: risk-free interest rates of
approximately 5.7%, and 5.9%; dividend yields of 0%, volatility factors of the
expected market price of the Company's Common Stock of 0.0, and 0.75; and a
weighted-average expected life of the options of 4.5 years.
    

    The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require 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 models do not necessarily provide a reliable single
measure of the fair value of its employee stock 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,
                                        ------------------------------
                                            1995              1996
                                        ------------       -----------
                                          (In thousands, except per   
                                                  share data)
<S>                                     <C>                 <C>        
 Net loss-- as reported .............   $     (6,435)       $  (43,117)
                                        ============        ==========
 Net loss-- pro forma ...............   $     (6,437)       $  (44,104)
                                        ============        ==========
 Net loss per share-- as reported....   $      (0.58)       $    (3.65)
                                        ============        ==========
 Net loss per share-- pro forma .....   $      (0.58)       $    (3.73)
                                        ============        ==========
</TABLE>

    The following table summarizes information about fixed stock options
outstanding at December 31, 1996:

<TABLE>
<CAPTION>
                                              OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                                -----------------------------------------------      -----------------------------
                                  NUMBER           WEIGHTED-
                                OUTSTANDING         AVERAGE           WEIGHTED-          NUMBER         WEIGHTED-
                                AT DEC. 31,        REMAINING          AVERAGE        EXERCISABLE AT     AVERAGE 
        RANGE OF EXERCISE          1996           CONTRACTUAL         EXERCISE        DEC. 31, 1996     EXERCISE  
             PRICES            (In thousands)        LIFE              PRICE         (In thousands)      PRICE
    ----------------------     --------------     ------------       ---------       --------------     ---------   
    <S>                        <C>                <C>                <C>             <C>                <C>      
    $   0.035 -  $   0.290           1,005          8.3  years       $    0.19                186       $    0.20
        2.500 -      2.500             236          9.1                   2.50                 18            2.50
        5.500 -      9.875           2,248          9.5                   6.26                 24            6.53
       11.190 -     17.125             155          9.3                  12.62                  4           12.00
       67.757 -     67.757               3          9.3                  67.67                 --             --
                                 ---------                                             ----------
                                     3,647                                                    232            1.22
                                 =========                                             ==========
</TABLE>

Employee Stock Purchase Plan

    In February 1996 the Company's Board of Directors adopted, and in March 1996
the Company's shareholders approved, the 1996 Employee Stock Purchase Plan (the
"ESPP") to provide employees of the Company with an opportunity to purchase
Common Stock through payroll deductions. Under the ESPP, 150,000 shares of
Common Stock have been reserved for issuance, subject to anti-dilution
adjustments. The ESPP became effective in December 1996. The Board of Directors
has the authority to determine the duration of offering periods, up to a maximum
of 24 months. Eligible employees may participate in the ESPP by authorizing
payroll deductions of an 


                                     - 57 -
<PAGE>   58
amount determined by the Board of Directors. The amount of authorized payroll
deductions may not be less than 2% nor more than 10% of an employee's
compensation, not to exceed $21,250 per year. Amounts withheld are applied at
the end of every six-month accumulation period to purchase shares of Common
Stock, but not more than the number of shares as the Board of Directors shall
determine.

    Participants may withdraw their contributions at any time prior to fifteen
days before the stock is purchased, and such contributions will be returned to
the participants without interest. The purchase prices is equal to 85% of the
lower of (i) the market price of the Company's Common Stock immediately before
the beginning of the applicable period or (ii) the market price of the Company's
Common Stock at the time of the purchase. As of December 31, 1996, no shares had
been purchased under the ESPP.

Employee Benefit Plan

    The Company has a savings plan (the "Savings Plan") that qualifies as a
deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the Savings Plan, participating employees may defer a percentage (not to
exceed 15%) of their pretax earnings up to the Internal Revenue Service's annual
contribution limit. The Company is not required to contribute to the Savings
Plan and has made no contributions since the inception of the Savings Plan.

9. INCOME TAXES

    As of December 31, 1996, the Company had federal and state net operating
loss carryforwards of approximately $37.9 million and $37.7 million,
respectively. The federal net operating loss carryforwards will expire at
various dates beginning in 2009 through 2011. The state net operating loss
carryforwards will expire at various dates beginning in 1999 through 2001.

    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes.

Significant components of the Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                                  ------------------------
                                                    1995           1996
                                                  -------        --------
                                                      (In thousands)
<S>                                               <C>            <C>     
Net operating loss carryforwards ..........       $ 2,200        $ 15,200
Research credits (expiring 2009-2011) .....           100             400
Non-deductible merger and acquisition costs            --           1,300
Purchased in-process technology ...........           140           1,400
Other .....................................           120             900
                                                  -------        --------
     Total deferred tax assets ............         2,560          19,200
Valuation allowance for deferred tax assets        (2,560)        (19,200)
                                                  -------        --------
     Net deferred tax assets ..............       $    --        $     --
                                                  =======        ========
</TABLE>

    Because of the Company's lack of earnings history, the deferred tax assets
have been fully offset by a valuation allowance. The valuation allowance
increased by $2.5 million and $16.6 million during the years ended December 31,
1995 and 1996, respectively.

    Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the ownership change provisions of the
Internal Revenue Code of 1986. The annual limitation may result in the
expiration of net operating losses and credits before utilization.


                                     - 58 -
<PAGE>   59
10. NOVO MEDIAGROUP, INC. NOTE RECEIVABLE

    During 1996, the Company advanced amounts under notes and advances
receivable to Novo MediaGroup, Inc. ("Novo") in the amount of $629,000, of which
$330,000 was evidenced by an 8% promissory note convertible into shares of Novo
common stock. Based on management's assessment of the financial uncertainty with
regard to Novo's ability to repay the outstanding amounts, an impairment reserve
of $629,000 was provided in the quarter ended June 30, 1996.

11. LITIGATION

    On November 18, 1996, Kristine Paaso and Laura Lindsey filed a complaint in
the California Superior Court, Santa Clara County, against the Company and
certain of its founders alleging breach of an alleged oral agreement, breach of
fiduciary duty and fraud. The plaintiffs allege that they participated in the
creation of the Company's business plan and were entitled to participate as
officers and shareholders of the Company. The complaint seeks an unspecified
amount of damages, including punitive damages. The Company has filed a demurrer
to this complaint and intends to defend this action vigorously. Although it is
too early to ascertain the possible outcome of this litigation, an unfavorable
outcome could have an adverse effect on the Company's business, results of
operations and financial condition.

    The Company is subject to other legal proceedings and claims that arise in
the ordinary course of business. Management currently believes that the ultimate
amount of liability, if any, with respect to any pending actions, either
individually or in the aggregate, will not materially affect the financial
position, results of operations or liquidity of the Company. However, the
ultimate outcome of any litigation is uncertain. If an unfavorable outcome were
to occur, the impact could be material. Furthermore, any litigation, regardless
of the outcome, can have an adverse impact on the Company's results of
operations as a result of defense costs, diversion of management resources, and
other factors.

12. SIGNIFICANT AGREEMENTS

    In April 1996, the Company (including McKinley) entered into two agreements
with Netscape Communications Corporation ("Netscape") under which the Company
and McKinley were each designated as one of five "Premier Providers" of search
and navigation services accessible from the "Net Search" button on the Netscape
home page. These agreements provide that the "Premier Provider" status will be
established for one year from April 1, 1996, in exchange for which the Company
will make payments totaling $10.0 million over the course of the year.
Management considered that there was significant uncertainty regarding the
recoverability of the amount from future operations; therefore, the $10.0
million total consideration was expensed as distribution license fee costs
during the quarter ended June 30, 1996 (see Note 13.)

    In May 1996, the Company entered into advertising agreements with Netscape
to deliver a guaranteed number of Netscape advertising impressions through the
Company's services. As consideration for such advertising services, Netscape
agreed to reduce the $10.0 million Premier Provider obligation by $3.0 million,
contingent upon delivery of a specified number of advertising impressions, which
was reclassified to deferred revenue to be recognized over the term of the
agreement (one year) based upon delivery of a specified number of advertising
impressions. As of December 31, 1996, approximately $1.8 million in revenue has
been recognized as a result of these agreements.

13. EVENTS SUBSEQUENT TO DATE OF AUDITOR'S REPORT

    On February 25, 1997, the Board of Directors authorized management of the
Company to file a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its Common Stock to the
public.

    In March 1997, Netscape agreed to extend the provisions of the agreements
discussed in Note 12 to April 30, 1997. In March 1997, the Company also entered
into an agreement to continue the Premier Provider arrangement for the Excite
brand, and entered a Marquee Provider agreement for the WebCrawler brand
covering the period 


                                     - 59 -
<PAGE>   60
from May 1, 1997 through April 30, 1998. Under the terms of these new
agreements, the Company is committed to make minimum payments of $8.25 million
in exchange for a guaranteed number of impressions. Of the $8.25 million, $5.75
million will be paid in cash ($5.25 million in 1997 and $500,000 in 1998) and
$2.5 million will be applied towards advertising by Netscape on the Excite
Network over the one year term of the agreements based upon delivery of a
specified number of advertising impressions. To the extent that the number of
impressions provided by Netscape under the Premier Provider and Marquee Provider
agreements exceed the minimum guarantees, the Company will be subject to
additional fees based on the actual number of impressions delivered above the
minimum.

    Effective on March 27, 1997, the Company issued to AOL a total of 1,950,000
shares of the Company's Series E-1 and E-2 Convertible Preferred Stock in
connection with the closing of the asset purchase agreement relating to the
WebCrawler Assets.

   
    In March 1997, the Company entered into a line of credit, which replaced the
existing line of credit (see Note 4,) for $6.0 million of which $3.0 million
will mature on September 30, 1997 with the remainder maturing in March, 1998.
This line of credit bears interest at rates ranging from the bank's prime rate
to prime plus .25% and is collateralized by a security interest in all assets of
the Company. This line of credit agreement also contains certain financial
covenants, including minimum requirements for tangible net worth, quick ratio
and accounts receivable balances, as well as prohibiting the declaration and
payment of cash dividends on capital stock. As of March 31, 1997, the Company
had outstanding borrowings against this line of credit of $6.0 million, and was
in compliance with all financial covenants. 
    


                                     - 60 -
<PAGE>   61
                                   SIGNATURES

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

                                    EXCITE, INC.

   
Date:  April 15, 1997               By:           /s/ ROBERT C. HOOD
                                       -----------------------------------------
                                                    ROBERT C. HOOD
                                             Executive Vice President, Chief 
                                               Administrative Officer and
                                                 Chief Financial Officer
    

                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints George Bell and Robert C. Hood, and each of them,
his or her true and lawful attorneys-in-fact, with full power of substitution,
for him and in his name, place and stead in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Report, and to
file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

   
Pursuant to the requirements of the Securities Act, this Amendment has been
signed below by the following persons in the capacities and on the dates
indicated. 
    

   
<TABLE>
<CAPTION>
NAME                             TITLE                                        DATE
-----------------------          ----------------------------------           ---------------
<S>                              <C>                                          <C>  
PRINCIPAL EXECUTIVE OFFICER:

/s/ GEORGE BELL                  President, Chief Executive Officer           April 15, 1997
-----------------------          and Director
    George Bell                                

PRINCIPAL FINANCIAL AND PRINCIPLE ACCOUNTING OFFICER:


/s/ ROBERT C. HOOD               Executive Vice President, Chief              April 15, 1997
-----------------------          Administrative Officer and Chief
    Robert C. Hood               Financial Officer            
                                               
ADDITIONAL DIRECTORS:

           *                     Senior Vice President and                    April 15, 1997
-----------------------          Director
    Joseph R. Kraus                            

           *                     Director                                     April 15, 1997
-----------------------
     Vinod Khosla

           *                     Director                                     April 15, 1997
-----------------------
     Donn Davis

           *                     Director                                     April 15, 1997
-----------------------
     Geoffrey Y. Yang

           *                     Director                                     April 15, 1997
-----------------------
     Stephen M. Case



*/s/ ROBERT C. HOOD              Attorney-in-Fact                             April 15, 1997
-----------------------
Robert C. Hood             

</TABLE>
    


                                     - 61 -




<PAGE>   62
Exhibit
Number   Exhibit Title
------   -----------------------------------------------------------------------

2.01   - Agreement and Plan of Reorganization dated as of August 7, 1996 by
         and among the Registrant, Excite Acquisition Corporation, The McKinley
         Group, Inc., Isabel Maxwell, Christine Maxwell, David Hayden, Roger
         Malina and Daniel Lynch. (1)
2.02   - Agreement of Merger dated as of August 30, 1996 by and between Excite
         Acquisition Corporation and the McKinley Group, Inc. (1)
3.01   - Registrant's Amended and Restated Articles of Incorporation. (2)
3.02   - Registrant's Bylaws, as amended. (3)
4.01   - Form of Specimen Certificate for Registrant's Common Stock. (4)
4.02   - Restated and Amended Investors' Rights Agreement. (4)
4.03   - Amendment to Restated and Amended Investors' Rights Agreement dated
         as of August 1, 1996. (9)
   
4.04   - Amendment to Restated and Amended Investors' Rights Agreement dated
         as of November 25, 1996.(10)
    
4.05   - Registration Rights Agreement dated as of November 25, 1996 by and
         among the Registrant, America Online, Inc. and AOL Ventures, Inc. (9)


<PAGE>   63
   
 4.06  - Voting Agreement dated as of November 25, 1996 by and among the
         Registrant and certain shareholders.(10)
 4.07  - Letter Agreement dated as of November 25, 1996 by and among certain
         shareholders of Excite, Inc.(10)
    
 9.01  - Voting Trust Agreement dated as of November 25, 1996 by and among the
         Registrant, America Online, Inc., AOL Ventures, Inc. and Richard
         Redding. (9)
*10.01 - Registrant's 1995 Equity Incentive Plan. (3)
*10.02 - Registrant's 1996 Equity Incentive Plan, as amended. (9)
*10.03 - Registrant's 1996 Directors Stock Option Plan. (3)
*10.04 - Registrant's 1996 Employee Stock Purchase Plan. (3)
*10.05 - Registrant's 401(k) Plan. (9)
 10.06 - Form of Indemnity Agreement entered into by Registrant with each of
         its directors. (3)
 10.07 - Bridge Line of Credit Agreement, dated as of February 23, 1996, among
         the Registrant and Kleiner Perkins Caufield & Byers VII, KPCB VII
         Founders Fund, KPCB Information Sciences Zaibatsu Fund II,
         Institutional Venture Partners VI, Institutional Venture Management VI
         and IVP Founders Fund I, L.P., and Form of Convertible Promissory Note
         and Form of Promissory Note, as amended. (3)
*10.08 - Promissory Note, dated as of February 27, 1996, issued by
         Graham F. Spencer to the Registrant. (3)
*10.09 - Secured Full Recourse Promissory Note, dated as of March 15,
         1996, issued by Brett T. Bullington to the Registrant. (9)
*10.10 - Stock Pledge Agreement dated as of March 15, 1996 by and
         between the Registrant and Brett T. Bullington. (9)
*10.11 - Offer Letter dated January 25, 1996, as amended, to Richard B.
         Redding. (3)
*10.12 - Offer Letter dated November 30, 1995, as amended, to Brett T.
         Bullington. (3)
*10.13 - Offer Letter dated March 6, 1996, to Cary H. Masatsugu. (3)
*10.14 - Offer Letter dated January 16, 1996, as amended, to George
         Bell. (3)
*10.15 - Offer Letter dated as of November 15, 1996, to Robert C. Hood.
         (9)
*10.16 - Offer Letter dated as of September 23, 1996 to William White
         Jr. (9)
*10.17 - Offer Letter dated as of November 21, 1996, to Jed Simmons. (9)
*10.18 - Consulting Agreement dated as of November 19, 1996 by and
         between the Registrant and Robert C. Hood. (9)
*10.19 - Consulting Agreement dated as of November 22, 1996 by and
         between the Registrant and Jed Simmons. (9)
 10.20 - Office Lease, dated as of January 22, 1996, by and between the
         Registrant and McCandless Land and Cattle Company. (3)
 10.21 - Series D Preferred Stock Purchase Agreement dated as of March 8, 1996
         by and among the Registrant and various investors. (5)
 10.22 - Warrant to purchase 650,000 shares of Common Stock dated March 8,
         1996 issued to AOL Ventures, Inc. (5)
#10.23 - Net Search Program -- Premier Provider Agreement dated as of
         March 28, 1996 between the Registrant and Netscape Communications
         Corporation. (6)
 10.24 - Office Lease, dated as of August 9, 1996, by and between the
         Registrant and Martin/Campus Associated, L.P. (7)
 10.25 - Acquisition Agreement dated as of November 25, 1996 by and among the
         Registrant, America Online, Inc. and Global Network Navigator, Inc. (9)


<PAGE>   64
 10.26 - Net Search Program - Premier Provider Agreement dated as of March 27,
         1996, and as amended March 27, 1996 and January 21, 1997, between The
         McKinley Group, Inc. and Netscape Communications Corporation. (8)
 11.01 - Statement of earnings per share. (9)
 21.01 - List of Subsidiaries. (9)
 23.01 - Consent of Ernst & Young LLP, Independent Auditors.
   
 23.02 - Consent of Price Waterhouse LLP, Independent Accountants.
 24.01 - Power of Attorney.(10)
 27.01 - Financial Data Schedule (EDGAR version only.)(10)
    

----------

    *    Indicates a management contract or compensatory plan or arrangement.
    
    #    Confidential treatment was ordered or has been requested with respect
         to certain portions of these agreements. Such portions have been
         omitted from this filing and have been filed separately with the
         Securities and Exchange Commission.
    
    (1)  Previously filed with the Commission on September 12, 1996, as an
         exhibit to the Registrant's Form 8-K (File No. 0-28064) regarding the
         acquisition of The McKinley Group, Inc.
    
    (2)  Previously filed with the Commission on July 4, 1996, as an exhibit to
         the Registrant's Registration Statement on Form S-8 (File No.
         333-07625).
    
    (3)  Previously filed with the Commission on March 11, 1996, as an exhibit
         to the Registrant's Registration Statement on Form SB-2 (File No.
         333-2328-LA)
    
    (4)  Previously filed with the Commission on March 29, 1996, as an exhibit
         to Amendment No. 1 to the Registrant's Registration Statement on Form
         SB-2 (File No. 333-2328-LA)
    
    (5)  Previously filed with the Commission on April 3, 1996, as an exhibit to
         Amendment No. 2 to the Registrant's Registration Statement on Form SB-2
         (File No. 333-2328-LA)
    
    (6)  Previously filed with the Commission on April 3, 1996, as an exhibit to
         Amendment No. 3 to the Registrant's Registration Statement on Form SB-2
         (File No. 333-2328-LA)
    
    (7)  Previously filed with the Commission on November 8, 1996, as an exhibit
         to the Registrant's Form 10-Q SB (File No. 0-28064) for the period
         ended September 30, 1996.
    
   
    (8)  Previously filed with the Commission on February 28, 1997, as an
         exhibit to the Registrant's Form 10-Q SB/A (File No. 0-28064)
    
    
    (9)  Previously filed with the Commission on March 3, 1997, as an exhibit to
         the Registrant's Registration Statement on Form S-1 (File No.
         333-22669)

   
    (10) Previously filed with the Commission on March 31, 1997 as an exhibit to
         the Registrant's Annual Report on Form 10-K (File No. 0-28064)