<PAGE>

                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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

                                       OR

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

              For the transition period from _________ to _________

                         Commission File Number 0-23901

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

                  Delaware                          13-3979226
      -------------------------------   ------------------------------------
      (State or other jurisdiction of   (I.R.S. Employer Identification No.)
      incorporation or organization)

                    116 Newark Avenue, Jersey City, NJ      07302
               (Address of principal executive offices)   (Zip Code)

        Registrant's telephone number, including area code (201) 234-5000

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

                                 Yes /X/ No / /

The number of shares of the Registrant's common stock, par value $.001 per
share, outstanding on November 5, 1999 was 9,398,012 shares.
<PAGE>

                      CYBERSHOP.COM, INC. AND SUBSIDIARIES
                    (Formerly Cybershop International, Inc.)

                               INDEX TO FORM 10-Q

                                                                           Page
PART I.  FINANCIAL INFORMATION                                            Number
                                                                          ------
Item 1.  Financial Statements:

         Consolidated Balance Sheets as of September 30, 1999
         (unaudited) and December 31, 1998                                    2

         Consolidated Statements of Operations for the
         Three and Nine Months ended September 30, 1999 and 1998 (unaudited)  3

         Consolidated Statements of Cash Flows for the Nine
         Months ended September 30, 1999 and 1998 (unaudited)                 4

         Notes to Consolidated Financial Statements                           5

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            8

PART II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds                           16

Item 6.  Exhibits and Reports on Form 8-K                                    18

SIGNATURES                                                                   20
<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. - Financial Statements

                      CYBERSHOP.COM, INC. AND SUBSIDIARIES
                    (Formerly Cybershop International, Inc.)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                             September 30,  December 31,
                                                                 1999           1998
                                                             ------------   ------------
                                                             (Unaudited)
<S>                                                          <C>            <C>
         ASSETS
Current Assets:
    Cash and cash equivalents                                $  5,714,000   $ 12,285,000
    Accounts receivable, net of allowance for doubtful
      accounts of $65,000 and $5,000, as of September 30,
      1999 and December 31, 1998, respectively                    789,000        176,000
    Inventories                                                 1,043,000        526,000
    Prepaid expenses and other                                    708,000        375,000
                                                             ------------   ------------
      Total current assets                                      8,254,000     13,362,000
Property and equipment, net                                     1,945,000      1,944,000
Goodwill, net                                                  13,880,000             --
Other assets                                                       63,000        160,000
                                                             ------------   ------------
      Total assets                                           $ 24,142,000   $ 15,466,000
                                                             ============   ============
      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                         $  4,247,000   $  2,403,000
    Accrued liabilities                                           911,000      1,953,000
    Acquisition related payable                                   102,000             --
    Deferred revenues                                              49,000         72,000
                                                             ------------   ------------
      Total current liabilities                                 5,309,000      4,428,000
Deferred rent                                                      26,000         49,000
Capital lease obligation                                           71,000             --
                                                             ------------   ------------
      Total liabilities                                         5,406,000      4,477,000
                                                             ------------   ------------
Stockholders' equity:
    Common stock, $.001 par value; 75,000,000 shares
      authorized; 9,396,678 and 7,493,350 shares issued and
      outstanding as of September 30, 1999 and
      December 31, 1998, respectively                               9,000          7,000
    Additional paid-in capital                                 31,936,000     18,318,000
    Accumulated deficit                                       (13,209,000)    (7,336,000)
                                                             ------------   ------------
      Total stockholders' equity                               18,736,000     10,989,000
                                                             ------------   ------------

      Total liabilities and stockholders' equity             $ 24,142,000   $ 15,466,000
                                                             ============   ============
</TABLE>

    The accompanying notes to the unaudited consolidated financial statements
                 are an integral part of these balance sheets.


                                        2
<PAGE>

                      CYBERSHOP.COM, INC. AND SUBSIDIARIES
                    (Formerly Cybershop International, Inc.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                           Three Months Ended           Nine Months Ended
                                              September 30,               September 30,
                                       --------------------------  -------------------------
                                          1999           1998          1999         1998
                                       -----------   ------------  -----------   -----------
<S>                                    <C>           <C>           <C>           <C>
Revenues:
    Product sales                      $ 2,780,000   $   470,000   $ 5,890,000   $ 1,400,000
    Advertising & set up fees                8,000        30,000        40,000        92,000
                                       -----------   -----------   -----------   -----------
      Total revenues                     2,788,000       500,000     5,930,000     1,492,000
Cost of revenues                         1,828,000       360,000     4,205,000     1,055,000
                                       -----------   -----------   -----------   -----------
Gross profit                               960,000       140,000     1,725,000       437,000
Operating expenses:
    Sales and marketing                    812,000       526,000     2,268,000     1,999,000
    General and administrative           1,584,000       979,000     4,804,000     2,483,000
    Amortization of goodwill and
      other merger and acquisition
      related costs                        750,000            --     1,009,000            --
                                       -----------   -----------   -----------   -----------
      Total operating expenses           3,146,000     1,505,000     8,081,000     4,482,000
                                       -----------   -----------   -----------   -----------
Loss from operations                    (2,186,000)   (1,365,000)   (6,356,000)   (4,045,000)
Interest income, net                        15,000       212,000       230,000       461,000
Minority interest                            9,000            --       253,000            --
                                       -----------   -----------   -----------   -----------

Net loss                               $(2,162,000)  $(1,153,000)  $(5,873,000)  $(3,584,000)
                                       ===========   ===========   ===========   ===========

Net loss per share, basic and diluted  $     (0.25)  $     (0.15)  $     (0.73)  $     (0.56)

Weighted average common shares
    outstanding, basic and diluted       8,602,000     7,470,000     8,002,000     6,409,000
</TABLE>

    The accompanying notes to the unaudited consolidated financial statements
             are an integral part of these consolidated statements.


                                        3
<PAGE>

                      CYBERSHOP.COM, INC. AND SUBSIDIARIES
                    (Formerly Cybershop International, Inc.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Nine Months Ended September 30,
                                                       -------------------------------
                                                             1999           1998
                                                         ------------   ------------
<S>                                                      <C>            <C>
Cash flows from operating activities:
  Net loss                                               $ (5,873,000)  $ (3,584,000)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
      Depreciation                                            508,000        128,000
      Amortization of goodwill                                990,000             --
      Non-cash compensation expense                            36,000             --
      Minority interest                                      (253,000)       (12,000)
      Increase (decrease) in cash from changes in:
          Accounts receivable, net                           (613,000)        20,000
          Inventories                                        (517,000)       (35,000)
          Prepaid expenses and other                          (80,000)      (261,000)
          Other assets                                         97,000         84,000
          Accounts payable                                  1,844,000        911,000
          Accrued liabilities                              (1,027,000)      (213,000)
          Deferred revenues                                   (23,000)       (75,000)
          Deferred rent                                       (23,000)        15,000
                                                         ------------   ------------
              Net cash used in operating activities        (4,934,000)    (3,022,000)
                                                         ------------   ------------
Cash flows from investing activities:
    Purchases of property and equipment                      (438,000)    (1,960,000)
    Acquisitions of businesses, net of cash acquired       (6,658,000)            --
                                                         ------------   ------------
              Net cash used in investing activities        (7,096,000)    (1,960,000)
                                                         ------------   ------------
Cash flows from financing activities:
    Net proceeds from sale of common stock                  5,038,000     18,851,000
    Minority capital contribution in joint venture                 --         98,000
    Proceeds from exercise of stock options                   421,000             --
    Proceeds of short-term loan                                    --        500,000
    Repayment of short-term loan                                   --       (500,000)
    Payments of capital lease obligations                          --        (28,000)
                                                         ------------   ------------
              Net cash provided by financing activities     5,459,000     18,921,000
                                                         ------------   ------------

              Net increase (decrease) in cash              (6,571,000)    13,939,000

Cash and cash equivalents, beginning of period             12,285,000        787,000
                                                         ------------   ------------

Cash and cash equivalents, end of period                 $  5,714,000   $ 14,726,000
                                                         ============   ============
Supplemental cash flow information:
    Common stock issued in connection with acquisition   $  8,125,000             --
    Assets acquired under capital lease obligation       $     71,000             --
</TABLE>

    The accompanying notes to the unaudited consolidated financial statements
             are an integral part of these consolidated statements.


                                        4
<PAGE>

                      CYBERSHOP.COM, INC. AND SUBSIDIARIES
                    (Formerly Cybershop International, Inc.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Description of the Business and Basis of Presentation

      During the second quarter 1999 stockholders voted to change the Company's
name from Cybershop International, Inc. to Cybershop.com, Inc. (the "Company").
The Company is an online and direct to consumer retailer. The flagship store
located at www.cybershop.com offers discounted designer and brand-name apparel,
electronics, home accessories, toys, gifts and watches all at closeout prices.
electronics.net, located at www.electronics.net, offers a broad assortment of
consumer electronics, appliances and home office equipment for sale online.

      The information presented as of September 30, 1999, and for the three and
nine-month periods ending September 30, 1999 and 1998, is unaudited, but, in the
opinion of management of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring adjustments) which the Company considers necessary for the fair
presentation of the Company's financial position as of September 30, 1999, the
results of its operations for the three and nine-month periods ended September
30, 1999 and 1998 and its cash flows for the nine-month periods ended September
30, 1999 and 1998. The consolidated financial statements included herein have
been prepared in accordance with generally accepted accounting principles and
the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These consolidated financial statements should
be read in conjunction with the Company's audited consolidated financial
statements and accompanying notes for the year ended December 31, 1998, included
in the Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission. Certain prior period amounts have been reclassified to
conform to the current period presentation.

2. Business Combinations

      Effective June 1, 1999 the Company acquired all of the outstanding common
stock of The Magellan Group, Inc. ("Magellan"), an online and direct response
retailer of high quality personal care, home and health related products, in
exchange for 1,000,000 shares of the Company's common stock and $5,000,000 in
cash. The acquisition was accounted for as a purchase with essentially all of
the $14,870,000 purchase price allocated to goodwill. The goodwill in the
accompanying consolidated balance sheets is being amortized on a straight-line
basis over five years. The results of Magellan are included in the Company's
consolidated financial results beginning on the date of acquisition. In
addition, the Company is required to pay the former shareholders of Magellan
earn-out payments based upon the profitability of a particular product. As of
September 30, 1999, $361,000 of earnout payments have been made, and $102,000
are payable, to the former shareholders, which are reflected as Acquisition
related payable in the accompanying consolidated balance sheet. Concurrent with
the acquisition, one of these former shareholders of Magellan was appointed a
member of the Company's board of directors.


                                        5
<PAGE>

      The pro forma combined consolidated financial information for the nine
months ended September 30, 1999 and 1998, as though Magellan had been acquired
on January 1, 1998, would have resulted in net sales of $8,701,000 and
$5,368,000, net loss of $7,574,000 and $5,825,000, and basic and diluted net
loss per share of ($0.89) and ($0.79), respectively. The pro forma net loss
includes amortization of goodwill of $2,190,000 and $2,160,000 for the nine
months ended September 30, 1999 and 1998, respectively. This unaudited pro forma
combined consolidated financial information is presented for illustrative
purposes only and is not necessarily indicative of the consolidated results of
operations in future periods or the results that actually would have been
realized had the Company and Magellan been a combined company during the
specified periods.

      On March 24, 1999 the Company issued 250,000 shares of common stock in
exchange for all of the outstanding common stock of Dealaday, Inc ("Dealaday").
Dealaday, an Internet retailer targeting off-price branded women's and
children's apparel and accessory products, began operations in February 1998.
The transaction was accounted for as a pooling of interests and, as a result,
the Company's financial statements have been restated for all periods presented.

      Separate results for Dealaday included in the Company's results for the
periods prior to the acquisition consisted of net sales and net losses for the
nine-month period ending September 30, 1999 of $90,000 and $42,000,
respectively, and net sales and net losses for the nine-month period ending
September 30, 1998 of $92,000 and $71,000, respectively.

3. Advertising and Promotion Costs

      The recognition of advertising costs is in accordance with the provisions
of the AICPA Statement of Position 93-7, Reporting of Advertising Costs.
Advertising costs other than direct response are expensed at the time the
initial advertising takes place. Direct response advertising costs are amortized
over the period, during which associated net revenues are expected, generally
approximating three months or less.

4. Commitments and Contingencies

      Marketing Agreements

      The Company has entered into certain marketing agreements, which include
fixed fees through the end of the current year ending December 31, 1999. The
expenses associated with these agreements are recognized on a systematic basis
over the term of the related agreements as services are received. Future minimum
commitments under the terms of these agreements are $112,000 during the
remainder of 1999 and $159,000 during 2000. During July 1999 the Company and an
internet media company providing promotions and advertising for the Company's
stores, agreed to terminate their existing agreement which as of September 30,
1999 had represented future commitments of $375,000 through the year 2000.


                                        6
<PAGE>

5. Shareholders' Equity

      On September 30, 1999 the Company completed a private placement of equity
securities raising gross proceeds of $5.1 million. The financing involved the
issuance of 784,616 shares of common stock at $6.50 per share and warrants to
purchase an aggregate of 156,922 shares of common stock at an exercise price of
$7.50 per share. The sale price of the Company's common stock and the exercise
price of the warrants issued in the private placement were both higher than the
last reported sale price of $5.81 on the Nasdaq National Market on September 30,
1999. As part of the financing another class of warrants was issued. These
warrants provide the investors with the right to receive additional shares if
the price of the Company's stock trades below certain levels. During each of
three consecutive 22 business day periods, after the effective date of a
registration statement filed with the Securities and Exchange Commission (the
SEC), a formula is applied to one-third of the shares sold. That formula is
based on determining the average of the twelve lowest closing bid prices in the
22 business day period. This average lowest bid price is divided into a number
equal to one-third of the shares sold multiplied by the difference between $7.56
and the average lowest bid price. If the average lowest bid price is higher than
$7.56 no additional shares will be issued. If the average lowest bid price is
less than $5.00 the Company has the option to pay the cash economic equivalent
instead of issuing shares. The Company agreed to register with the SEC, at the
Company's expense, on a Form S-3, the resale of the 784,616 shares sold in
addition to the shares underlying the warrants. None of the investors, together
with any affiliate thereof, may beneficially own shares in excess of 4.999% of
the outstanding shares of common stock following such conversion. Such
restrictions may be waived by each selling stockholder as to itself upon not
less than 61 days' notice to the Company. The Company is obligated to use its
best efforts to keep the Form S-3 effective for up to two years. The Company
will incur substantial penalties if it fails to meet these obligations.

      At the Company's Annual Meeting of Stockholders held on June 3, 1999, the
Company's stockholders approved an amendment to the Company's Certificate of
Incorporation to increase the number of shares of Common Stock that the Company
is authorized to issue from 25,000,000 to 75,000,000.

6. Stock Option Plan

      At the Company's Annual Meeting of Stockholders held on June 3, 1999 the
Company's stockholders approved an amendment to the Company's 1998 Stock Option
Plan (the Plan) increasing the number of shares available for issuance from
1,000,000 to 3,000,000. During the nine months ended September 30, 1999, options
to purchase approximately 598,650 shares of the Company's Common Stock were
granted, at market value on date of grant, to employees under the Plan.

7. Subsequent event

      In October 1999 Tops Appliance City, Inc. (TOPS), the Company's joint
venture partner in electronics.net, announced that it was discontinuing the sale
of consumer electronics products. The products which are currently offered by
electronics.net are obtained from TOPS. We believe that electronics.net will
have sufficient inventory available to it from TOPS to fulfill customer orders
for the near term, however, the Company is currently considering long term
alternatives for electronics.net including alternative supplier arrangements.


                                        7
<PAGE>

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

Safe Harbor for Forward-Looking Statements

      From time to time, the Company may publish statements which are not
historical fact, but are forward-looking statements relating to matters such as
anticipated financial performance, business prospects, technological
developments, new products, research and development activities and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical and anticipated results or other expectations
expressed in the Company's forward looking statements. Such forward-looking
statements may be identified by the use of certain forward-looking terminology,
such as "may," "will," "expect," "anticipate," "intend," "estimate," "believe,"
"goal," or "continue," or comparable terminology that involves risks or
uncertainties. Actual future results and trends may differ materially from
historical results or those anticipated depending on a variety of factors,
including, but not limited to those set forth under "Overview" and "Liquidity
and Capital Resources" included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations. Except as required by law, the
Company undertakes no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise. Readers,
however, should carefully review the factors set forth in other reports or
documents that the Company has filed or files from time to time with the
Securities and Exchange Commission.

Overview

The Company is an online and direct to consumer retailer. The flagship store
located at www.cybershop.com offers discounted designer and brand-name apparel,
electronics, home accessories, toys, gifts and watches all at closeout prices.
electronics.net, the Company's joint venture with Tops Appliance City (Tops),
located at www.electronics.net, offers a broad assortment of consumer
electronics, appliances and home office equipment for sale online.

      Beginning in the first quarter of the current year, the Company began
implementing several operating initiatives at its flagship store, cybershop.com,
designed to better serve its customers and streamline its operations. The
Company has completed a shift in its merchandising strategy to focus on offering
off-price branded merchandise such as that found in outlets and traditional
discount retailers. The Company initiated a significant overhaul of its
infrastructure, migrating its web-based order processing onto a new platform,
redesigning the web site and integrating it with a new order fulfillment system.
The transition to an inventory-based model was completed in the third quarter
with the development of a new distribution and fulfillment center. In addition,
the Company launched two new online auction sites. With this initiative, the
Company introduced the excitement of the online auction experience to all its
customers, complementing its existing product offerings. The initiative also
offers the Company a new way to attract customers, learn more about their
shopping preferences and provide an effective mechanism to manage excess
inventory.


                                        8
<PAGE>

      Effective June 1, 1999 the Company acquired all of the outstanding common
stock of The Magellan Group, Inc. ("Magellan"), an online and direct response
retailer of high quality personal care, home and health related products, in
exchange for 1,000,000 shares of the Company's common stock and $5,000,000 in
cash. The acquisition was accounted for as a purchase with essentially all of
the $14,870,000 purchase price allocated to goodwill. The goodwill in the
accompanying consolidated balance sheets is being amortized on a straight-line
basis over five years. The results of Magellan are included in the Company's
consolidated financial results beginning on the date of acquisition. In
addition, the Company is required to pay the former shareholders of Magellan
earn-out payments based upon the profitability of a particular product. As of
September 30, 1999, $361,000 of earnout payments have been made, and $102,000
are payable, to the former shareholders, which are reflected as Acquisition
related payable in the accompanying consolidated balance sheet. Concurrent with
the acquisition, one of these former shareholders of Magellan was appointed a
member of the Company's board of directors.

Results of Operations

Three Months Ended September 30, 1999 compared to Three Months Ended September
30, 1998.

Revenues: Revenue is comprised of sales of products, net of returns, outbound
shipping and handling charges, advertising and vendor set-up fees. Total
revenues increased 458% in the third quarter, or $2,288,000, to $2,788,000 as
compared to $500,000 in the third quarter of 1998. This increase was primarily
attributable to greater marketing efforts, an expanded customer base, repeat
purchases from existing customers, acquisitions, and strong sales of four
products, which represented approximately 45% of total revenues in the three
months ended September 30, 1999. Advertising and set-up fees decreased by 73%,
or $22,000, to $8,000 in the third quarter of 1999 from $30,000 in the third
quarter of 1998, as a result of a decrease in emphasis on this revenue stream
and an increased focus on the Company's merchandising strategies.

Cost of revenues: Cost of revenues consists of the cost of products sold to
customers and shipping costs. Costs of revenues increased by 408%, or
$1,468,000, to $1,828,000 in the third quarter of 1999 from $360,000 in the
third quarter of 1998. Gross profit margins were 34% in the third quarter of
1999 compared to 28% in the third quarter of 1998. The increase in gross margin
is the result of improvements in merchandise mix and pricing, and shipping
costs, offset by additional inventory allowances taken to reflect anticipated
future markdowns on closeout and auction related merchandise.

Sales and marketing: Sales and marketing primarily consists of advertising,
fulfillment, promotional costs and related payroll expenses. Sales and marketing
increased by 54%, or $286,000, to $812,000 in the third quarter of 1999 from
$526,000 in the third quarter of 1998. As a percentage of total revenues, Sales
and marketing was 29% in the third quarter of 1999 versus 105% in the third
quarter of 1998. This reflects the Company's strategy to optimize the
effectiveness of its marketing campaigns by regularly evaluating the return on
investment on marketing dollars spent versus increased customer traffic and
revenues. As a result of this ongoing evaluation, effective June 30, 1999 the
Company terminated its two-year agreement with Excite. The Company intends to
continue to evaluate new and existing marketing relationships in this manner and
may as a result increase or decrease its operating expenses to fund marketing
and advertising expenditures and to establish strategic relationships which
satisfy this evaluation and which are considered important to the success of the
Company. The Company expects to increase such advertising and marketing
expenditures significantly in the fourth quarter of 1999.


                                        9
<PAGE>

General and administrative: General and administrative expenses consist
primarily of payroll and payroll related expenses for administrative,
information technology, accounting, and management personnel, recruiting, legal
fees, and general corporate expenses. General and administrative expenses
increased by 62%, or $605,000 to $1,584,000 in the third quarter of 1999 from
$979,000 in the third quarter of 1998. The increase is primarily attributable to
increased payroll related expenses, recruiting, legal, and general corporate
expenses to support the Company's increased infrastructure. As a percentage of
total revenues, general and administrative expenses decreased to 57% in the
third quarter of 1999 from 196% in the third quarter of 1998.

Amortization of goodwill and other merger and acquisition related costs:
Amortization of goodwill and other merger and acquisition related costs consist
primarily of goodwill associated with the purchase of Magellan.

Interest income, net: Interest income decreased $197,000 to $15,000 in the third
quarter of 1999 from $212,000 in the third quarter of 1998. The decrease is
primarily the result of a decrease in average cash and cash equivalents to
$1,718,000 during the third quarter of 1999 as compared to $15,646,000 during
the third quarter of 1998.

Minority interest: Minority interest represents Tops' 49% interest in the losses
of the joint venture, electronics.net, which is 51% owned by the Company and
accounted for as a subsidiary in its consolidated financial statements.

Net loss: As a result of the factors discussed above, the Company reported a
consolidated net loss of $2,162,000 during the third quarter of 1999 compared
with a net loss of $1,153,000 during the third quarter of 1998. During the third
quarter, the net loss per common share, basic and diluted was ($0.25) per share
compared with a net loss of $(0.15) per share during the third quarter of 1998.

Pro forma results, reflecting the exclusion of amortization of goodwill and
other merger and acquisition related costs are as follows:

                                                    Three Months   Three Months
                                                        Ended,         Ended,
                                                    September 30,  September 30,
                                                        1999           1998
                                                    -------------  -------------
  Pro forma net loss                                $ (1,412,000)  $ (1,153,000)
  Pro forma net loss per share, basic and diluted   $      (0.16)  $      (0.15)

The Company expects that it will continue to incur net losses and generate
negative cash flow from operations for the foreseeable future as it continues to
develop its business and no assurance can be given as to when, if at all, the
Company will achieve profitability.


                                       10
<PAGE>

Nine Months Ended September 30, 1999 compared to Nine Months Ended September 30,
1998.

Revenues: Total revenues increased 298% during the nine months ended September
30, 1999, or $4,438,000, to $5,930,000 as compared to $1,492,000 during the
first nine months of 1998. This increase was primarily attributable to greater
marketing efforts, an expanded customer base, repeat purchases from existing
customers and strong sales of four products, which represented approximately 42%
of total revenues for the nine months ended September 30, 1999. Advertising and
set-up fees decreased by 57%, or $52,000, to $40,000 during the first nine
months of 1999 from $92,000 during the first nine months of 1998, as a result of
a decrease in emphasis on this revenue stream and an increased focus on the
Company's merchandising strategies.

Cost of revenues: Costs of revenues increased by 299%, or $3,150,000, to
$4,205,000 during the first nine months of 1999 from $1,055,000 during the first
nine months of 1998. Gross profit margins remained unchanged at 29% for both the
first nine months of 1999 and 1998. Gross profit margins have steadily improved
throughout the first three quarters of 1999, beginning at 14% in the first
quarter, rising to 30% in the second quarter and ending at 34% in the third
quarter. This trend is primarily the result of improving merchandise mix and
pricing resulting in a greater proportion of higher margin products, as well as
a proportional decrease in shipping costs.

Sales and marketing: Sales and marketing increased by 14%, or $269,000, to
$2,268,000 during the first nine months of 1999 from $1,999,000 during the first
nine months of 1998. As a percentage of total revenues, sales and marketing
expenses decreased to 38% during the first nine months of 1999 from 134% during
the first nine months of 1998, reflecting the Company's strategy of continuously
evaluating the productivity and return on investment of its marketing
expenditures. The Company expects to increase such advertising and marketing
expenditures significantly in the fourth quarter of 1999.

General and administrative: General and administrative expenses increased by
94%, or $2,321,000 to $4,804,000 during the first nine months of 1999 from
$2,483,000 during the first nine months of 1998. The increase is primarily
attributable to increased payroll related expenses, recruiting, legal and
general corporate expenses to support the Company's increased infrastructure

Amortization of goodwill and other merger and acquisition related costs:
Amortization of goodwill and other merger and acquisition related costs consist
primarily of goodwill associated with the purchase of Magellan.

Interest income, net: Interest income decreased $231,000 to $230,000 during the
first nine months of 1999 from $461,000 during the first nine months of 1998.
The decrease is primarily the result of a decrease in average cash and cash
equivalents to $6,599,000 during the first nine months of 1999 as compared to
$12,691,000 during the first nine months of 1998.

Minority interest: Minority interest represents Tops' 49% interest in the losses
of the joint venture, electronics.net, which is 51% owned by the Company and
accounted for as a subsidiary in its consolidated financial statements.


                                       11
<PAGE>

Net loss: As a result of the factors discussed above, the Company reported a
consolidated net loss of $5,873,000 for the nine months ended September 30, 1999
as compared with a net loss of $3,584,000 during the first nine months of 1998.
During the first nine months of 1999, the net loss per common share, basic and
diluted was ($0.73) per share compared with a net loss of $(0.56) per share
during the third quarter of 1998.

Pro forma results, reflecting the exclusion of amortization of goodwill and
other merger and acquisition related costs are as follows:

                                                     Nine Months   Nine Months
                                                        Ended         Ended
                                                    September 30,  September 30,
                                                        1999           1998
                                                    -------------  ------------
  Pro forma net loss                                $ (4,864,000)  $ (3,584,000)
  Pro forma net loss per share, basic and diluted   $      (0.61)  $      (0.56)

The Company expects that it will continue to incur net losses and generate
negative cash flow from operations for the foreseeable future as it continues to
develop its business and no assurance can be given as to when, if at all, the
Company will achieve profitability.


                                       12
<PAGE>

Liquidity and Capital Resources

      On September 30, 1999 the Company completed a private placement of equity
securities raising gross proceeds of $5.1 million. The financing involved the
issuance of 784,616 shares of common stock at $6.50 per share and warrants to
purchase an aggregate of 156,922 shares of common stock at an exercise price of
$7.50 per share. The sale price of the Company's common stock and the exercise
price of the warrants issued in the private placement were both higher than the
last reported sale price of $5.81 on the Nasdaq National Market on September 30,
1999. As part of the financing another class of warrants was issued. These
warrants provide the investors with the right to receive additional shares if
the price of the Company's stock trades below certain levels. During each of
three consecutive 22 business day periods, after the effective date of a
registration statement filed with the SEC, a formula is applied to one-third of
the shares sold. That formula is based on determining the average of the twelve
lowest closing bid prices in the 22 business day period. This average lowest bid
price is divided into a number equal to one-third of the shares sold multiplied
by the difference between $7.56 and the average lowest bid price. If the average
lowest bid price is higher than $7.56 no additional shares will be issued. If
the average lowest bid price is less than $5.00 the Company has the option to
pay the cash economic equivalent instead of issuing shares. The Company agreed
to register with the SEC, at the Company's expense, on a Form S-3, the resale of
the 784,616 shares sold in addition to the shares underlying the warrants. None
of the investors, together with any affiliate thereof, may beneficially own
shares in excess of 4.999% of the outstanding shares of common stock following
such conversion. Such restrictions may be waived by each selling stockholder as
to itself upon not less than 61 days' notice to the company. The Company is
obligated to use its best efforts to keep the Form S-3 effective for up to two
years. The Company will incur substantial penalties if it fails to meet these
obligations.

      Net cash used in operations increased $1,912,000 to $4,934,000 during the
first nine months of 1999 from $3,022,000 during the first nine months of 1998.
The net use of cash in operations in the current period is primarily attributed
to current period net losses of $5,873,000. Increases in inventories and
accounts receivable totaling $1,130,000 were largely offset by increases in
accounts payable and accrued liabilities totaling $817,000, during the first
nine months of 1999. Inventories increased $517,000 as the Company continued
stocking is new distribution and fulfillment center and began preparing for the
fourth quarter holiday selling season. Accounts receivable increased $613,000
reflecting both the significant period over period sales increase as well as the
effect of a customer installment payment plan on one of the Company's most
significant products. The increase in accounts payable and accrued liabilities
reflects the increase in inventory as well as an increased focus on cash
management.

      Net cash used in investing activities during the first nine months of 1999
was $7,096,000 as compared to $1,960,000 in the same period of the prior year.
The current periods use of cash was primarily for two purposes. The first
consisted of $438,000 in purchases of property and equipment, primarily for
computer equipment and software to support the Company's expansion and increased
infrastructure. The second consisted of $6,658,000 related to business
acquisitions, primarily Magellan, $361,000 of which relates to earn-out payments
paid to the former shareholders of Magellan during the third quarter of 1999.
Earn-out payments are required to be paid to these former shareholders, as part
of the purchase agreement, based upon the profitability of a particular product.
As of September 30, 1999 $102,000 in earn-out payments are due to be paid in the
fourth quarter of 1999 to these former shareholders, and are reflected in the
accompanying consolidated balance sheets as Acquisition related payable.


                                       13
<PAGE>

      On March 26, 1998, the Company completed its initial public offering
("IPO") of 3,220,000 shares of Common Stock at a price of $6.50 per share. Net
proceeds from the IPO, net of underwriting discounts and offering costs, were
$18,749,000. Prior to the IPO, the Company had financed its operations primarily
from capital contributions from private investors. At September 30, 1999, the
Company had cash and cash equivalents of $5,714,000, positive working capital of
$2,945,000, stockholders' equity of $18,736,000 and no debt. The Company
believes that its existing capital resources will enable it to maintain its
operations at existing levels at least through the first quarter of 2000. The
Company also has the option available to it, through the mutual agreement of the
Company and the investors in the September 30, 1999 private placement, to raise
an additional $9.9 million of equity financing. The Company is also considering
additional debt and/or equity financing through a public offering or other
private placements. There can be no assurance that any additional financing or
other sources of capital will be available to the Company upon acceptable terms,
if at all. The inability to obtain additional financing, when needed, would have
a material adverse effect on the Company's business, financial condition and
operating results, its ability to continue operating at existing levels, and
significantly slow the pace of both customer and revenue growth.

Subsequent event

      In October 1999 Tops Appliance City, Inc. (TOPS), the Company's joint
venture partner in electronics.net LLC, announced that it was discontinuing the
sale of consumer electronics products. The products which are currently offered
by electronics.net are obtained from TOPS. We believe that electronics.net will
have sufficient inventory available to it from TOPS to fulfill customer orders
over the near term, however, the Company is currently considering long term
alternatives for electronics.net including alternative supplier arrangements.


                                       14
<PAGE>

Year 2000

      The Company believes that its computer systems and software products are
fully year 2000 compliant. However, it is possible that certain computer systems
or software products of the Company's suppliers or customers may not accept
input of, store, manipulate and output dates in the year 2000 or thereafter
without error or interruption. The Company is querying its current suppliers as
to their progress in identifying and addressing problems that their computer
systems will face in correctly processing date information as the year 2000
approaches. However, there can be no assurance that all date-handling problems
of its suppliers will be identified by the Company or its suppliers in advance
of their occurrence, or that the Company or the suppliers will be able to
successfully remedy problems that are discovered. In the event that problems are
discovered with its current suppliers which cannot be remedied the Company
intends to seek alternative suppliers who are fully year 2000 compatible. The
Company believes that most of its current customers who access its website are
using software that is fully year 2000 compatible. The Company may, however, be
required to make significant expenditures to address or remedy any year 2000
problems of its customers or vendors which are not identified in advance, or to
satisfy liabilities to which the Company may become subject as a result of such
problems.


                                       15
<PAGE>

PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

Use of Proceeds:

      On March 20, 1998 the Company's Registration Statement on Form S-1 (File
No. 333-42707) was declared effective by the Securities and Exchange Commission.
Pursuant to the Registration Statement the Company registered and sold 3,220,000
shares of Common Stock at a price of $6.50 per share. The managing underwriters
were C.E. Unterberg, Towbin and Fahnestock & Co. Inc. The aggregate price of the
amount offered and sold was $20,930,000.

      The net offering proceeds to the Company after deducting underwriting
discounts and commissions and other expenses was $18,749,000.

      From the effective date of the Registration Statement through September
30, 1999 the Company used the following amounts from the net offering proceeds
for the purposes set forth below:

    Construction of plant                                            $        --
    Building, facilities and leasehold improvements                  $   349,000
    Purchase and installation of machinery, equipment and software   $ 1,999,000
    Purchase of real estate                                          $        --
    Acquisitions of other businesses                                 $ 6,658,000
    Repayment of indebtedness                                        $   500,000
    Working capital                                                  $ 9,243,000
    Temporary investments                                            $        --

Acquisitions of other businesses relates primarily to the June 1, 1999
acquisition of The Magellan Group, Inc. ("Magellan"). Pursuant to this
acquisition $2,740,000 has been paid to one of the two former shareholders of
Magellan who is also currently a director of the Company.

      The use of proceeds set forth above does not represent a material change
in the use of proceeds described in the Registration Statement.

      On September 30, 1999 the Company completed a private placement of equity
securities raising gross proceeds of $5.1 million. The financing involved the
issuance of 784,616 shares of common stock at $6.50 per share and warrants to
purchase an aggregate of 156,922 shares of common stock at an exercise price of
$7.50 per share. As part of the financing another class of warrants was issued.
These warrants provide the investors with the right to receive additional shares
if the price of the Company's stock trades below certain levels.


                                       16
<PAGE>

Changes in Securities

Increase in Authorized Shares: At the Company's Annual Meeting of Stockholders
held on June 3, 1999 the Company's shareholders approved an amendment to the
Company's Amended Certificate of Incorporation to increase the number of shares
of Common Stock, par value $.001 per share, that the Company is authorized to
issue from 25,000,000 to 75,000,000. The additional authorized shares will
provide the Company with flexibility in connection with possible future stock
splits, equity financings, joint ventures and acquisitions, in raising
additional capital, for grants and as incentives to employees, officers,
directors and consultants of the Company, and other general corporate purposes.


                                       17
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

a.    The following is a list of exhibits filed as part of this Form 10-Q:

2.    Plan of acquisition, reorganization, arrangement, liquidation or
      succession: None

3.    Articles of Incorporation:

      3.1   Certificate of Incorporation, as amended and as currently in effect
            (Incorporated by reference to Exhibit 3.1 to the Company's
            Registration Statement on Form S-1 (File No. 333-42707).

      3.2   Certificate of Amendment of The Certificate of Incorporation of
            Cybershop International, Inc. (Incorporated by reference to Exhibit
            3.2 of the Registrant's Report on Form 10Q for the fiscal quarter
            ended June 30, 1999. File No. 000-23901)

      By-Laws:

      3.3   By-Laws as currently in effect (Incorporated by reference to Exhibit
            3.2 to the Company's Registration Statement on Form S-1 (File No.
            333-42707).

4.    Instruments defining the rights of security holders, including debentures:

      4.1   Form of Warrant dated September 30, 1999 issued to Strong River
            Investments, Inc. and Montrose Investments L.P. (Incorporated by
            reference to Exhibit 4 D to the Company's Registration Statement on
            Post Effective Amendment on Form S-3. File No. 333-75507).

      4.2   Form of Warrant dated September 30, 1999 issued to Strong River
            Investments, Inc. and Montrose Investments L.P. (Incorporated by
            reference to Exhibit 4 E to the Company's Registration Statement on
            Post Effective Amendment on Form S-3. File No. 333-75507).

10.   Material Contracts:

      10.1  Agreement and Plan of Merger by and among Cybershop International,
            Inc., MG Acquisition Corp., The Magellan Group, Inc., Ian S.
            Phillips and Howard J. Kuntz III dated as of June 1, 1999
            (incorporated by reference to Exhibit 2.1 of the Registrant's
            Current Report on Form 8-K. File No. 0-23901)

      10.2  Employment Agreement dated June 1, 1999, by and between Ian S.
            Phillips and MG Acquisition Corp which is a wholly owned subsidiary
            of Cybershop International, Inc. (Incorporated by reference to
            Exhibit 10.2 of the Registrant's Report on Form 10Q for the fiscal
            quarter ended June 30, 1999. File No. 000-23901)

      10.3  Employment Agreement dated June 1, 1999, by and between Howard J.
            Kuntz III and MG Acquisition Corp which is a wholly owned subsidiary
            of Cybershop International, Inc. (Incorporated by reference to
            Exhibit 10.3 of the Registrant's Report on Form 10Q for the fiscal
            quarter ended June 30, 1999. File No. 000-23901)


                                       18
<PAGE>

      10.4  Securities Purchase Agreement dated September 30, 1999 among
            Cybershop.com, Inc., Strong River Investments, Inc. and Montrose
            Investments, L.P. (Filed herewith).

      10.5  Registration Rights Agreement dated September 30, 1999 among
            Cybershop.com, Inc., Strong River Investments, Inc. and Montrose
            Investments, L.P. (Filed herewith).

11.   Statement re computation of per share earnings: Statement regarding
      computation of per share earnings is not required because the computation
      can be readily determined from the material contained in the financial
      statements included herein.

15.   Letter re unaudited financial information: None

16.   Letter re change in accounting principles: None

19.   Report furnished to security holders: None

22.   Published report regarding matters submitted to vote of security holders:
      None

23.   Consents of Experts and Counsel: None

24.   Power of Attorney: None

27.   Financial Data Schedule, which is submitted electronically to the
      Securities and Exchange Commission for information only (Filed herewith).

99.   Additional Exhibits: None

b.    Reports on Form 8-K, 1999:  None


                                       19
<PAGE>

SIGNATURES

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


Date: November 12, 1999         By: /s/ Jeffrey S. Tauber

                                    Jeffrey S. Tauber
                                    President, Chief Executive Officer and
                                    Chairman of the Board of Directors
                                    (Principal Executive Officer)


Date: November 12, 1999         By: /s/Jeffrey A. Leist

                                    Jeffrey A. Leist
                                    Senior Vice President and Chief Operating
                                    and Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       20
<PAGE>

Exhibit Index

      10.4  Securities Purchase Agreement dated September 30, 1999 among
            Cybershop.com, Inc., Strong River Investments, Inc. and Montrose
            Investments, L.P. (Filed herewith).

      10.5  Registration Rights Agreement dated September 30, 1999 among
            Cybershop.com, Inc., Strong River Investments, Inc. and Montrose
            Investments, L.P. (Filed herewith).

      27    Financial Data Schedule.