---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES

EXCHANGE ACT OF 1934



For the Quarterly Period Ended MARCH 31, 2004

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 000-50562

MarketWatch, Inc.(Formerly MarketWatch.com, Inc.) 
(Exact name of Registrant as specified in its Charter)



|Delaware                                                       | 27-0064104                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)



825 Battery Street, San Francisco, California 94111
                  (Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code: (415) 733-0500

Indicate by check mark whether the registrant (1) has
filed all reports required 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 [ ]

Indication by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act): YES [ ] NO [X]

The number of shares of the registrant's Common Stock outstanding as of
August 31, 2004 was 25,228,515.

EXPLANATORY NOTE

This amended Quarterly Report on Form 10-Q is being filed
for the purpose of amending and restating Items 1, 2 and 4 of Part I and Item 6
of Part II of the Form 10-Q for the quarterly period ended March 31, 2004 to (i)
reflect the restatement of our condensed consolidated financial statements as of
and for the period ended March 31, 2004 for the adoption of a corrected method
in which the Company calculates its quarterly CBS royalty expenses as described
in Note 8 to the condensed consolidated financial statements, (ii) make
revisions to "Management's Discussion and Analysis of Financial Condition and
Results of Operations" as warranted by the restatement, (iii) make revisions to
Item 4 of Part I to reflect our evaluation of controls and procedures as of the
date of the filing of this amended Quarterly Report on Form 10-Q and (iv) update
the Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 to the filing date of this amended Quarterly Report on Form 10-Q. We have
made no further changes to the originally filed Form 10-Q. Although this
amendment incorporates certain revisions, as noted, to historical financial data
and related descriptions, all other information in this amended Quarterly Report
on Form 10-Q is as of the date the Quarterly Report on Form 10-Q was originally
filed. This amended Quarterly Report on Form 10-Q is not intended to provide an
update of, and does not reflect, any subsequent information or events after the
Quarterly Report on Form 10-Q was originally filed.

In addition, the Company is filing amended Quarterly Reports on Form 10-Q for
each of the first three quarterly periods in fiscal year 2003 to restate its
condensed consolidated statements of operations and cash flows for the quarterly
periods ended March 31, 2003 and 2002, June 30, 2003 and 2002, and September 30,
2003 and 2002 and its condensed consolidated balance sheets as of March 31, 2003
and 2002, June 30, 2003 and 2002, and September 30, 2003 and 2002.

---



MarketWatch, Inc.

Quarterly Report on Form 10-Q/A for the Period Ended March 31, 2004

Table of Contents



|PART I. FINANCIAL INFORMATION                                                                                                       | Page No.
|----------------------------------------------------------------------------------------------------------------------------------- | --------
|Item 1. Interim Condensed Consolidated Financial Statements:                                                                        |         
|Condensed Consolidated Balance Sheets 
at March 31, 2004 (unaudited) (restated) and December 31, 2003                               | 4       
|Unaudited Condensed Consolidated Statements of Operations 
for the three months ended March 31, 2004 (restated) and 2003 (restated) | 5       
|Unaudited Condensed Consolidated Statements of Cash Flows 
for the three months ended March 31, 2004 (restated) and 2003 (restated) | 6       
|Notes to Condensed Consolidated Financial Statements (unaudited)                                                                    | 7       
|                                                                                                                                    |         
|Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations                                       | 13      
|Item 3. Quantitative and Qualitative Disclosures About Market
Risk                                                                  | 31      
|Item 4. Controls and Procedures                .                                                                                    | 32      
|                                                                                                                                    |         
|PART II. OTHER INFORMATION                                                                                                          |         
|Item 1. Legal Proceedings                                                                                                           | 32      
|Item 4. Submission of Matters to a Vote of Security Holders                                                                         | 33      
|Item 6. Exhibits and Reports on Form 8-K                                                                                            | 34      
|                                                                                                                                    |         
|SIGNATURES                                                                                                                          | 35      
|                                                                                                                                    |         
|INDEX TO EXHIBITS                                                                                                                   | 36      

---

Part I -- FINANCIAL INFORMATION

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



MarketWatch, Inc.
                  Condensed Consolidated Balance Sheets                  (in thousands)



|                                           | March 31, 2004            |           | December 31, 2003
|------------------------------------------ | ------------------------- | --------- | -----------------
|                                           | (as restated) (unaudited) |           |                  
|Assets                                     |                           |           |                  
|Current assets:                            |                           |           |                  
|Cash and cash equivalents                  | $                         | 44,845    |                  
|Restricted cash                            |                           | 1,121     |                  
|Accounts receivable, net                   |                           | 13,545    |                  
|Prepaid expenses                           |                           | 1,892     |                  
|Total current assets                       |                           | 61,403    |                  
|                                           |                           |           |                  
|Property and equipment, net                |                           | 4,692     |                  
|Goodwill                                   |                           | 87,854    |                  
|Intangibles, net                           |                           | 7,802     |                  
|Prepaid acquisition costs                  |                           | --        |                  
|Restricted cash                            |                           | 842       |                  
|Other assets                               |                           | 1,284     |                  
|Total assets                               | $                         | 163,877   |                  
|                                           |                           |           |                  
|Liabilities and Stockholders' Equity       |                           |           |                  
|Current liabilities:                       |                           |           |                  
|Accounts payable                           | $                         | 7,254     |                  
|Accrued expenses                           |                           | 8,068     |                  
|Current portion of lease obligations       |                           | 757       |                  
|Deferred revenue                           |                           | 5,798     |                  
|Total current liabilities                  |                           | 21,877    |                  
|Stockholders' equity:                      |                           |           |                  
|Preferred stock                            |                           | --        |                  
|Common stock                               |                           | 247       |                  
|Additional paid-in capital                 |                           | 390,579   |                  
|Deferred stock-based compensation          |                           | (77)      |                  
|Comprehensive income                       |                           | (2)       |                  
|Accumulated deficit                        |                           | (248,747) |                  
|Total stockholders' equity                 |                           | 142,000   |                  
|                                           |                           |           |                  
|Total liabilities and stockholders' equity | $                         | 163,877   |                  

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

---



MarketWatch, Inc.
                  Unaudited Condensed Consolidated Statements of Operations                  (in thousands, except per share data)



|                                                                       |  | Three Months Ended March 31,
|---------------------------------------------------------------------- |  | ----------------------------
|                                                                       |  |                             
|Net revenues:                                                          |  |                             
|Advertising                                                            |  | $                           
|Licensing                                                              |  |                             
|Subscription                                                           |  |                             
|Total net revenues                                                     |  |                             
|Cost of net revenues                                                   |  |                             
|Gross profit                                                           |  |                             
|                                                                       |  |                             
|Operating expenses:                                                    |  |                             
|Product development                                                    |  |                             
|General and administrative                                             |  |                             
|Sales and marketing                                                    |  |                             
|Amortization of intangibles                                            |  |                             
|Total operating expenses                                               |  |                             
|Loss from operations                                                   |  |                             
|Interest income, net of expense                                        |  |                             
|Income tax                                                             |  |                             
|Net loss                                                               |  | $                           
|                                                                       |  |                             
|Basic and diluted net loss per share                                   |  | $                           
|Shares used in the calculation of basic and diluted net loss per
share |  |                             

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

---

MarketWatch, Inc.
                  Unaudited Condensed Consolidated Statements of Cash Flows                  (in thousands)



|                                                                                          | Three Months Ended March 31,
|----------------------------------------------------------------------------------------- | ----------------------------
|                                                                                          | 2004                        
|                                                                                          | (as restated)               
|Cash flows provided by (used in) operating
activities:                                    |                             
|Net loss                                                                                  | $                           
|Adjustments to reconcile net loss to net cash provided by
(used in) operating activities: |                             
|Depreciation and amortization                                                             |                             
|Non-cash charges from stockholder                                                         |                             
|Amortization of deferred stock compensation                                               |                             
|Changes in operating assets and liabilities, net of acquired
amounts:                     |                             
|Accounts receivable                                                                       |                             
|Prepaid expenses and other assets                                                         |                             
|Accounts payable and accrued expenses                                                     |                             
|Deferred revenue                                                                          |                             
|Net cash provided by (used in) operating activities                                       |                             
|                                                                                          |                             
|Cash flows used in investing activities:                                                  |                             
|Purchase of property and equipment                                                        |                             
|Acquisition of business, net of cash acquired                                             |                             
|Net cash used in investing activities                                                     |                             
|                                                                                          |                             
|Cash flows provided by financing activities:                                              |                             
|Principal payments under capital lease obligations                                        |                             
|Issuance of common stock                                                                  |                             
|Net cash provided by financing activities                                                 |                             
|                                                                                          |                             
|Effect of exchange rate changes on cash and cash equivalents                              |                             
|                                                                                          |                             
|Net change in cash and cash equivalents                                                   |                             
|Cash and cash equivalents at the beginning of the period                                  |                             
|Cash and cash equivalents at the end of the period                                        | $                           



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

---

MarketWatch, Inc.
                  Notes to Condensed Consolidated Financial Statements
                  (unaudited)



Note 1 - Organization and Nature of Business

The Company

MarketWatch, Inc. (the "Company"), a leading multi-media publisher of
business and financial news and provider of information and analytical tools,
was formed on October 29, 1997 in the state of Delaware as a limited liability
company and was jointly owned by Data Broadcasting Corporation ("DBC"), now
known as Interactive Data Corporation ("IDC"), and CBS Broadcasting Inc.
("CBS"), with each member owning a 50% interest in the Company.In
January 1999, the Company reorganized as a corporation and completed an initial
public offering of 3,162,500 shares of common stock. After the initial public
offering, CBS and IDC each owned approximately 38% of the Company. In January
2001, an affiliate of Pearson plc ("Pearson") acquired IDC's 34.1% stake in the
Company. On January 16, 2004, the Company completed the acquisition of Pinnacor
Inc. ("Pinnacor"), formerly known as ScreamingMedia, a provider of information
services and analytical applications to financial services companies and global
corporations. After the acquisition, CBS and Pearson each owned approximately
24% of the Company.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the Company, the interim
data includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim periods. The
results of operations for the three months ended March 31, 2004 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004. The balance sheet at December 31, 2003 has been derived from
the audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. These consolidated financial statements
should be read in conjunction with the consolidated financial statements and
related notes included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2003.

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

Note 2 - Stock-Based Compensation

The Company accounts for its stock-based employee compensation agreements
in accordance with the provisions of Accounting Principles Board Opinion No. 25
(APB No.25), "Accounting for Stock Issued to Employees," and its related
interpretations, and has adopted the disclosure-only alternative of Statement of
Financial Accounting Standards No. 123 (SFAS 123), as amended by Statement
of Financial Accounting Standards No. 148 (SFAS 148), "Accounting for
Stock-Based Compensation." In accounting for stock-based transactions with non-
employees, the Company records compensation expense in accordance with SFAS 123
and Emerging Issues Task Force 96-18, "Accounting for Equity Instruments That
are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services."

The following table illustrates the effect on income (loss) and earnings per
share if the Company had applied the fair-value recognition provisions of SFAS
123 to stock-based employee compensation. The estimated fair value of each
Company option is calculated using the Black-Scholes option-pricing model.



|                                                                                   | Three Months Ended March 31,         
|---------------------------------------------------------------------------------- | -------------------------------------
|                                                                                   | 2004                                 
|                                                                                   | (as restated)                        
|                                                                                   | (in thousands, except per share data)
|Net loss:                                                                          |                                      
|As reported                                                                        | $                                    
|Stock-based employee compensation expense determined
Under fair value based method |                                      
|Pro forma net loss                                                                 | $                                    
|                                                                                   |                                      
|Net loss per share:                                                                |                                      
|As reported, basic and diluted                                                     | $                                    
|Pro forma, basic and diluted                                                       | $                                    

The Company calculated the fair value compensation expense associated with
its stock-based employee compensation plans using the Black-Scholes model. The
following weighted average assumptions were used related to option
grants:



|                             | Three Months Ended March 31,
|---------------------------- | ----------------------------
|                             | 2004                        
|Stock Options                |                             
|Expected dividend            |                             
|Risk-free interest rate      |                             
|Expected volatility          |                             
|Expected life (in years)     |                             
|                             |                             
|Employee Stock Purchase Plan |                             
|Expected dividend            |                             
|Risk-free interest rate      |                             
|Expected volatility          |                             
|Expected life (in months)    |                             

The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options that 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 stock options have characteristics
significantly different from those of traded options, and because changes with
respect to the subjective 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 stock options.

Because additional stock options are expected to be granted each year, the
above pro forma disclosures are not representative of pro forma effects on
reported financial results for future periods.

Note 3 - Net Loss Per Share

The Company computes net loss per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").
Under the provisions of SFAS No. 128, basic net loss per common share ("Basic
EPS") is computed by dividing net loss by the weighted average number of common
shares outstanding. Diluted net loss per common share ("Diluted EPS") is
computed by dividing net loss by the weighted average number of common shares
and dilutive common share equivalents then outstanding and net income per share
is computed dividing the net income by the weighted average number of common
shares plus the common stock equivalent shares of employee stock options.

Diluted loss per share for the three-month periods ended March 31, 2004 and
2003 are based only on the weighted-average number of shares outstanding during
the periods, and excludes common stock equivalents, as the inclusion of any
common share equivalents would have been anti-dilutive. Options to purchase
2,460,262 and 3,261,054 shares of common stock were excluded from the
computation of diluted net loss per share for three months ended March 31, 2004
and 2003, respectively, as the inclusion would have been anti-dilutive.

Note 4 - Acquisitions

On January 16, 2004, the Company completed the acquisition of Pinnacor
Inc. Under the terms of the agreement, a new company ("Holdco") with two
wholly-owned subsidiaries, Pine Merger Sub, Inc. ("Pine Merger Sub") and Maple Merger
Sub, Inc. ("Maple Merger Sub"), were formed to combine the businesses of the
Company and Pinnacor. Each Company stockholder received one share of Holdco
common stock for each share of the Company common stock held by such
stockholder. Each Pinnacor stockholder received either $2.42 in cash or 0.2659
of a share of Holdco common stock for each share of Pinnacor common stock held
by such stockholder, subject to proration. Upon closing of the acquisition,
Maple Merger Sub merged with and into MarketWatch, which was the surviving
corporation, and Pine Merger Sub merged with and into Pinnacor, which was the
surviving corporation. MarketWatch and Pinnacor became a wholly-owned subsidiary
of Holdco, which was renamed "MarketWatch.com, Inc." MarketWatch, one of
Holdco's operating subsidiaries after the merger, was renamed "MarketWatch
Media, Inc." and Pinnacor, the other Holdco operating subsidiary after the
merger, continued to be named "Pinnacor Inc." Shortly after the acquisition,
each of MarketWatch Media, Inc. and Pinnacor Inc. merged into MarketWatch.com,
Inc.

The purchase price of $107.7 million was determined as follows (in
thousands):

|Fair value of common stock         | $ | 53,676  | 
|---------------------------------- | - | ------- | 
|Fair value of options and warrants |   | 6,718   | 
|Cash                               |   | 44,002  | 
|Direct transaction costs           |   | 3,342   | 
|                                   | $ | 107,738 | 

The fair value of the common stock was determined based on
6,141,435 shares issued and priced using the average market price of the common
stock over the five-day period surrounding the date the acquisition was
announced in July 2003.  The fair value of the Company's stock options and
warrants issued was determined using the Black-Scholes option-pricing model.

The preliminary allocation of the purchase price to the assets acquired and
liabilities assumed based on their estimated fair values was as follows (in
thousands):

|Cash acquired                       | $ | 41,270  |  
|----------------------------------- | - | ------- | -
|Other tangible assets acquired      |   | 6,355   |  
|Amortizable intangible assets:      |   |         |  
|Developed technology                |   | 4,050   |  
|Acquired customer base              |   | 3,750   |  
|In-process research and development |   | 300     |  
|Goodwill                            |   | 65,425  |  
|                                    |   | 121,150 |  
|                                    |   |         |  
|Liabilities assumed                 |   | (13,499 | )
|Deferred stock-based compensation   |   | 87      |  
|Total                               | $ | 107,738 |  

The assets will be amortized over a period of years shown on the following
table:

|Developed technology   | 4      | years
|---------------------- | ------ | -----
|Acquired customer base | 7      | years
|Fixed assets acquired  | 1 to 5 | years

A preliminary estimate of $65.4 million has been allocated to
goodwill.  Goodwill represents the excess of the purchase price over the
fair value of the net tangible and intangible assets acquired, and is not
deductible for tax purposes.  Goodwill will not be amortized and will be
tested for impairment, at least annually.  The purchase price allocation
for Pinnacor is subject to revision as more detailed analysis is completed and
additional information on the fair value of Pinnacor's assets and liabilities
becomes available.  Any change in the fair value of the net assets of
Pinnacor will change the amount of the purchase price allocable to goodwill.

The following attributes of the combination of the two businesses were
considered significant factors to the establishment of the purchase price,
resulting in the recognition of goodwill:

- Pinnacor's acquired technology includes certain additional products that may
allow the combined company to develop more comprehensive products and pursue
expanded market opportunities.
- The ability to hire the Pinnacor workforce, which will include a significant
number of experienced engineering, development and technical staff with
specialized knowledge of the sector in which the combined company will operate.
- Potential operating synergies are anticipated to arise and are more likely
to include cost savings from the elimination of redundant data content
provision, data center operations and expenses associated with operating as a
public company and limited reductions in overlapping staffing positions and
general facility costs.

The following unaudited pro forma information presents a summary of results
of operations of the Company assuming the acquisition of Pinnacor occurred on
January 1, 2004 and 2003, respectively (in thousands, except per share
amounts):

|                                     |  | Three Months Ended March 31,
|------------------------------------ |  | ----------------------------
|                                     |  |                             
|                                     |  |                             
|Net revenues                         |  | $                           
|Net loss                             |  | $                           
|Basic and diluted net loss per share |  | $                           

Note 5 - Goodwill and Intangible Assets

Intangible Assets

Intangible assets consisted of the following (in thousands):

|                       | March 31, 2004 |                      
|---------------------- | -------------- | ---------------------
|                       |                | Gross Carrying Amount
|Developed technology   | $              | 4,214                
|Acquired customer base |                | 3,915                
|                       | $              | 8,129                

The fair value underlying the $300,000 assigned to acquired
in-process research and development ("IPR&D") in the Pinnacor acquisition was
expensed immediately during the quarter ended March 31, 2004 and was determined
by identifying the research projects in areas which technological feasibility
had not been established and there was no alternative future use. Intangibles
for developed technology and acquired customer base are being amortized over a
period of 4 to 7 years, respectively. The amortization expense related to
identifiable intangible assets is expected to be $1.9 million for the year
ending December 31, 2004 and $1.7 million, $1.7 million, $1.6 million and
$578,000 for the years ending December 31, 2005, 2006, 2007 and 2008,
respectively.

Goodwill

Goodwill consisted of the following (in thousands):

|                                |   |        | 
|------------------------------- | - | ------ | 
|Balance at December 31, 2003    | $ | 22,429 | 
|Goodwill acquired during period |   | 65,425 | 
|Balance at March 31, 2004       | $ | 87,854 | 

The increase in goodwill at March 31, 2004 was due to the
acquisition of Pinnacor on January 16, 2004 (See Note 4).

Note 6 - Related Party Transactions

Under its license agreement with CBS, the Company expensed $478,000 and
$717,000 for the three months ended March 31, 2004 and 2003, respectively,
related to the licensing of CBS news content and trademarks. In addition, the
Company recorded advertising expenses of $0 and $45,000 at rate card value for
the three months ended March 31, 2004 and 2003, respectively, for in-kind
advertising and promotion provided by CBS. Rental payments to CBS for leasing of
certain facilities were $241,000 and $309,000 for the three months ended March
31, 2004 and 2003, respectively.

Licensing revenues from FT.com and Financial Times, subsidiaries of Pearson,
were $317,000 and $427,000 for the three months ended March 31, 2004 and 2003,
respectively. The Company recognized costs to IDC of $175,000 and $239,000 for
the three months ended March 31, 2004 and 2003, respectively, for data feeds. In
March 2003, IDC purchased Comstock, Inc. and the Company expensed $376,000 for
data feeds from Comstock, Inc. for the three months ended March 31, 2004. Direct
charges for subscription revenues for certain IDC data feeds were $7,000 and
$11,000 for the three months ended March 31, 2004 and 2003, respectively. In
addition, the Company recognized revenues of $541,000 and $628,000 for the three
months ended March 31, 2004 and 2003, respectively, from television and radio
programming on CBS stations. The Company recognized costs to CBS of $341,000 and
$266,000 for the three months ended March 31, 2004 and 2003, respectively, for
production of television and radio programming.

At March 31, 2004 and December 31, 2003, $6,000 and $453,000, respectively,
were included in accounts receivable for radio and television revenue due from
CBS. In addition, $0 and $11,000, respectively, were included in the Company's
accounts receivable related to licensing and subscription revenues due from IDC,
and $26,000 and $92,000, respectively, were included in the Company's accounts
receivable related to licensing revenues due from FT.com and Financial Times,
subsidiaries of Pearson. At March 31, 2004 and December 31, 2003, the Company
had a liability of $478,000 and $972,000, respectively, recorded for CBS royalty
fees, a liability of $341,000 and $266,000, respectively, owed to CBS for
television production and facilities costs, and a liability of $528,000 and
$203,000, respectively, to IDC and Comstock, Inc. for data feeds.

Note 7 - Segment Reporting

The Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information," establishes standards
for reporting information about operating segments in a company's financial
statements. Operating segments are defined as components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance. The Company operates in one
segment.

Note 8 - Restatement

The Company has restated its condensed consolidated statements of
operations and cash flows for the three months ended March 31, 2004 and 2003 and
its condensed consolidated balance sheets as of March 31, 2004 and 2003. The
restatement reflects the adoption of a corrected method in which the Company
calculates its quarterly CBS royalty expenses by recognizing royalty expenses
based on the estimated effective annual royalty rate, which requires management
to estimate the annual gross revenues subject to the CBS royalty fees and
excluded revenues not subject to the CBS royalty fees, and apply the derived
effective annual royalty rate to all revenues in each of the quarters within a
fiscal year. Historically, the Company recognized CBS royalty expenses in the
quarter in which it became obligated to pay such expenses based on the specified
royalty rate applied to the relevant revenue of that quarter. The restatement
has an effect on the Company's cost of net revenues, gross profits, net income
(loss) and earnings (loss) per share for the periods ended March 31, 2004 and
2003.

The restatement has no impact on the Company's annual operating results, cash
flow or royalty due to CBS, including fiscal 2003 results, as the restatement
relates only to the timing of the accruals of the CBS royalty expenses among the
quarters within a fiscal year.

The following table presents the impact of the restatement adjustments on
statements of operations for the three months ended March 31, 2004 and 2003 (in
thousands, except per share data):



|                                                                      | Three Months Ended March 31, 2004 |                        | Three Months Ended March 31, 2003
|--------------------------------------------------------------------- | --------------------------------- | ---------------------- | ---------------------------------
|                                                                      |                                   | As Previously Reported |                                  
|Cost of net revenues                                                  | $                                 | 5,468                  |                                  
|Gross profit                                                          |                                   | 12,348                 |                                  
|Loss from operations                                                  |                                   | (451)                  |                                  
|Net income (loss)                                                     |                                   | (325)                  |                                  
|Net income (loss) per share basic and diluted                         |                                   | (0.01)                 |                                  
|Shares used in the calculation of basic net income (loss) per
share   |                                   | 23,101                 |                                  
|Shares used in the calculation of diluted net income (loss) per
share |                                   | 23,101                 |                                  

The following table presents the impact of the restatement adjustments on the
balance sheet of as of March 31, 2004 and 2003 (in thousands):



|                           | March 31, 2004 |                        | March 31, 2003
|-------------------------- | -------------- | ---------------------- | --------------
|                           |                | As Previously Reported |               
|Accrued expenses           | $              | 7,802                  |               
|Total liabilities          |                | 21,611                 |               
|Accumulated deficit        |                | (248,481)              |               
|Total stockholders' equity |                | 142,266                |               

Note 9 - Litigation and Asserted Claims

From time to time, the Company is subject to legal proceedings and claims
in the ordinary course of business. The Company is not currently aware of any
legal proceedings or claims that will have a material adverse effect on the
Company's financial position or results of operations.

In 2001, several plaintiffs filed class action lawsuits in federal court
against the Company, certain of its current and former officers and directors
and its underwriters in connection with its January 1999 initial public
offering. The complaints generally assert claims under the Securities Act, the
Exchange Act and rules promulgated by the Securities and Exchange Commission.
The complaints seek class action certification, unspecified damages in an amount
to be determined at trial, and costs associated with the litigation, including
attorneys' fees. The action against the Company is being coordinated with
approximately three hundred other nearly identical actions filed against other
companies. On June 25, 2003, a committee of the Company's board of directors
approved a Memorandum of Understanding ("MOU") and related agreements that set
forth the terms of a settlement between the Company, the plaintiff class and the
vast majority of the other approximately 300 issuer defendants. It is
anticipated that any potential financial obligation of the Company to plaintiffs
pursuant to the terms of the MOU and related agreements will be covered by
existing insurance. Therefore, the Company does not expect that the settlement
will involve any payment by the Company. The MOU and related agreements are
subject to a number of contingencies, including the negotiation of a settlement
agreement and its approval by the Court.

On July 24, 2003, a shareholder class action lawsuit was filed against
Pinnacor, Pinnacor's then-current directors, a then-current Pinnacor officer,
and the Company in the Delaware Court of Chancery. The lawsuit alleged that
Pinnacor's directors breached their fiduciary duties in proceeding with the
acquisition by agreeing to an inadequate proposed purchase price and alleged
that the Company aided and abetted these breaches of fiduciary duty in some
unspecified way. The parties have reached a settlement of the action, subject to
execution of a final settlement agreement and court approval. The settlement
provides, among other things, that the action will be dismissed with prejudice
and that all defendants will be released from liability, in recognition of
certain additional disclosures contained in the proxy solicitation material
distributed to Pinnacor stockholders. The settlement also provides for a payment
to plaintiff's counsel of $300,000 in attorneys' fees and up to $15,000 in
actual costs.

On June 7, 2002, an action was commenced against Pinnacor alleging a breach
of contract claim against Pinnacor and, as amended, sought damages in the amount
of $290,280. On February 7, 2003, Pinnacor filed counterclaims against the
plaintiff for breach of contract, breach of warranty and misrepresentation.
Motions for summary judgment were filed early 2003. These motions are still
pending.

On September 8, 2003, an action was commenced in the Supreme Court of the
State of New York against Pinnacor and several unnamed defendants. The lawsuit
alleged a breach of contract claim and a fraudulent conveyance claim. In April
2004, the Company served upon the parties its cross motion for summary judgment
seeking dismissal of the complaint with prejudice. In May 2004, the Company was
served with plaintiff's cross motion seeking dismissal of the action in its
entirety, without prejudice, or alternatively, additional time to respond to
defendants' summary judgment motions. The Company is preparing opposition to
plaintiff's cross motion.

There are no other material legal proceedings to which the Company is a
party.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, without limitation, statements regarding our
expectations, beliefs, intentions or future strategies that are signified by the
words "expects", "anticipates", "intends", "believes", or similar language. All
forward-looking statements included in this document are based on information
available to us on the date hereof, and we assume no obligation to update any
such forward-looking statements. Actual results could differ materially from
those projected in the forward-looking statements. In evaluating our business,
prospective investors should carefully consider the information set forth below
under the caption "Factors That May Affect Our Operating Results" in addition to
the other information set forth herein. We caution investors that our business
and financial performance are subject to substantial risks and
uncertainties.

Overview

Since our formation, we have operated as a multi-media provider of
financial news and information, with services including news articles, feature
columns, financial programming and analytic tools, such as stock quotes and
charting.

We generate our net revenues from three primary sources: the sale of
advertising on our Web sites, broadcast properties and membership center; the
license of our content; and our newsletter and other subscription products. We
operate in one segment.

Online advertising revenues, which account for a significant portion of our
total revenues, are derived from the sale of advertisements and sponsorships on
our Web sites. We believe advertising on our Web properties will continue to be
a significant revenue opportunity. We believe our Web sites attract the type of
users desirable to advertisers and our products offer advertisers a strong,
consistent brand with the opportunity to target their campaigns on the site of
their choice or run a campaign across all our Web sites. In the second half of
calendar 2003 and the first quarter of 2004, with the improvement in the U.S.
economy and the movement of some traditional advertisers onto the Internet, our
advertising sales have improved. A recent study by eMarketer, an aggregator of
market research, indicates that online advertising spending in the United States
is estimated to grow 13% in 2004. We believe we are positioned to take advantage
of the increased interest of advertisers in the Web. However, advertising
spending is particularly sensitive to economic and market conditions, as
evidenced by the softening in our advertising revenues during the uncertain
times in the U.S. economy the last several years. In addition, there continues
to be a level of uncertainty by advertisers as to whether the Internet is a
viable advertising vehicle for branding. As a result, we may not be able to grow
or sustain our advertising sales, which would impact our ability to be cash flow
positive and generate net income.

Licensing revenues, which account for a significant portion of our total
revenues, consist of revenues earned from the licensing of our content and
tools. In January 2004, we acquired Pinnacor, an outsource provider of
information and analytical applications to financial services companies and
global corporations. With the acquisition of Pinnacor, we believe we have
positioned ourselves to be a leading provider of online business news and
financial applications and a more effective competitor in a rapidly changing and
expanding, as well as highly competitive environment. We also expect the
addition of Pinnacor's technological expertise and staff will improve our
ability to develop and bring new products and services to market. However, we
also face the challenges of integrating Pinnacor successfully and correcting the
disruption to sales momentum caused by the uncertainties created by the six-
month delay between signing of the acquisition agreement and closing of the
transaction. In addition, we have incurred declines in licensing sales in recent
years as a substantial portion of our licensing revenue is derived from
financial services companies, which have been adversely affected by economic
downturns. We could continue to experience a decline if we fail to integrate
Pinnacor successfully or do not diversify our client base, both of which would
adversely impact our ability to be cash flow positive and generate net
income.

Subscription revenue is derived from customer subscriptions to our
newsletters and third-party online services. Our subscriptions services were
launched in April 2002 with the acquisition of the Hulbert Digest. Our
subscription products also include the Retirement Weekly and The Technical
Indicator newsletters and Hulbert Interactive, an online investment screener. We
expect our subscription revenue to remain relatively insignificant for the
foreseeable future. We have recently implemented a new e-commerce system that we
believe will enable us to develop and launch a variety of subscription products.
As subscriptions are a relatively new service for us, we may not be able to
develop products marketable to our users or launch them in a timely manner, both
of which would cause a decline in revenues and adversely affect our financial
results and cash flow.

We currently have several agreements with our principal stockholders,
including a license agreement with CBS Broadcasting Inc., or CBS, whereby it
licenses its trademark and certain news content to us for royalties
approximating 8% of all of our net revenues other than revenue attributable to
Pearson plc and certain other revenue. The license agreement expires in October
2005. As of March 31, 2004, CBS and an affiliate of Pearson plc collectively
hold approximately 46% of our outstanding common stock.

On April 1, 2004, we announced the signing of an agreement in which we agreed
to produce an exclusive real-time financial newswire service for distribution by
Thomson Financial and its affiliates. As part of the agreement, Thomson
Financial will pay us fees for our production and editorial support for the term
of the agreement. Beginning on the first anniversary date of the signing of the
agreement, we will share in the profits of the news service after Thomson
Financial's recovery of certain marketing and distribution costs. The build-up
of our editorial and production infrastructure is expected to take up to nine
months, with the service to launch by December 31, 2004.

Our ability to generate significant revenue or obtain profitability in the
future is uncertain. Further, in view of the rapidly evolving nature of our
business and our limited operating history, we have little experience
forecasting our revenues. Therefore, we believe that period-to-period
comparisons of our financial results are not necessarily meaningful and you
should not rely upon them as an indication of our future performance. To date,
we have incurred substantial costs to create, introduce and enhance our
services, to develop content, to build brand awareness and to grow our business.
Although we achieved net income and generated cash flow in the past, we reported
a net loss and our cash and cash equivalents decreased during the three months
ended March 31, 2004. We may not generate net income or positive cash flow for
fiscal 2004 or any particular fiscal quarter. We may also incur additional costs
and expenses related to content creation, technology, marketing or acquisitions
of businesses and technologies to respond to changes in our rapidly changing
industry. These costs could have an adverse effect on our future financial
condition or operating results.

Restatement

We restated our condensed consolidated statements of operations and cash
flows for the three months ended March 31, 2004 and 2003 and our condensed
consolidated balance sheets as of March 31, 2004 and 2003. The restatement
reflects the adoption of a corrected method in which we calculate our quarterly
CBS royalty expenses by recognizing royalty expenses based on the estimated
effective annual royalty rate, which requires management to estimate the annual
gross revenues subject to the CBS royalty fees and excluded revenues not subject
to the CBS royalty fees, and apply the derived effective annual royalty rate to
all revenues in each of the quarters within a fiscal year. Historically, we
recognized CBS royalty expenses in the quarter in which it became obligated to
pay such expenses based on the specified royalty rate applied to the relevant
revenue of that quarter. The restatement has an effect on our cost of net
revenues, gross profits, net loss and loss per share for the periods ended March
31, 2004 and 2003. Note 8 to the condensed consolidated financial statements in
Item 1 of Part I of this report provides a summary of the restatement for the
periods ended March 31, 2004 and 2003. In addition, we restated our condensed
consolidated statements of operations and cash flows for each of the quarters in
fiscal years 2003 and 2002 and condensed consolidated balance sheets as of March
31, 2003 and 2002, June 30, 2003 and 2002, and September 30, 2003 and 2002.

This restatement has no impact on our annual operating results, cash flow or
royalty due to CBS, including fiscal 2003 and 2002 results, as the restatements
relates to the timing of the accrual of the CBS royalty expenses among the
quarters within a fiscal year.

Results of Operations

Net Revenues

Net revenues are derived from the sale of advertising on our Web
sites, advertising revenue from sponsored links, advertising revenues from our
television and radio broadcasts, other premium products and fees from our
membership center, licensing of our content, and subscription sales of our
newsletters.

Net revenues increased by 60% to $17.8 million for the three months ended
March 31, 2004 from $11.1 million for the three months ended March 31, 2003. For
the three months ended March 31 2004, advertising revenue increased $2.5
million, or 48%, as compared to the same period in 2003. The increase in
advertising revenue for the three months ended March 31, 2004, as compared to
prior year, was primarily due to a 20% increase in the number of advertisers on
our Web sites and a 24% increase in the average revenue per advertiser. For the
three months ended March 31, 2004, licensing revenue increased $4.1 million, or
74%, as compared to the same period in 2003. For the three months ended March
31, 2004, as compared to prior year, the increase in licensing revenue was
primarily due to the acquisition of Pinnacor, which accounted for 117% of the
increase. The increase in license revenue from the Pinnacor acquisition was
offset by a decrease due to a loss of several existing licensing customers and
also a reduction of services of existing customers, which accounted for 12% and
8%, respectively of the decrease, and the consolidation of the financial
services industry.

For the three months ended March 31, 2004, subscription revenue increased
$74,000, or 23%, as compared with the same period in 2003. For the three months
ended March 31, 2004, the increase in subscription revenue, as compared to prior
year, was primarily due to the launch of The Technical Indicator subscription
product in July 2003 and the Retirement Weekly subscription product in October
2003, which represented 75% and 40%, respectively, of the total increase, as
compared with the same period in 2003.

Substantially all of our advertising customers purchase advertising under
short-term contracts. Customers have ceased advertising on short notice without
penalty. Our advertising revenues would be adversely affected if we were unable
to renew advertising contracts with existing customers or obtain new customers.
We expect to continue to derive a significant amount of our future net revenues
from selling advertisements. The market for Web advertising is intensely
competitive, therefore advertising rates could be subject to additional pricing
pressure in the future. If we are forced to reduce our advertising rates or we
experience lower CPMs (cost per thousand page views) across our Web sites for
any reason, future advertising revenues could be adversely affected.

Licensing revenues depend on customer contract renewals and could decrease
further if customers choose to renew for lesser amounts, terminate early or
forego renewal, or we do not obtain new customers. A significant amount of our
licensing revenue is earned from brokerages and financial services companies,
which have experienced hardship due to the recent economic downturns. The amount
of licensing revenues depends, in part, on the number of users these customers
have each month. If the number of users were to decrease, our licensing revenue
would decrease. The growth of our licensing revenues could also be limited as
there are a limited number of brokerages and financial services companies to
license our content. In addition, certain license contracts guarantee the
performance of our Web sites. If our sites do not perform as guaranteed,
licensing revenue would be adversely affected.

Cost of Revenues

Cost of net revenues primarily consists of news staff compensation,
royalties payable to CBS and content providers, bandwidth costs associated with
serving pages on our Web properties and licensing clients, fees paid for data,
Web site infrastructure costs, costs of serving ads, exchange fees for
communication lines, amortization of purchased technology and costs related to
subscriptions, including printing and mailing costs.

Cost of net revenues increased by 33% to $5.7 million for the three months
ended March 31, 2004 from $4.3 million for the three months ended March 31,
2003. Of the aggregate increase in cost of net revenues for the three month
periods, 75% of the increase was attributable to additional data production
fees, primilarily due to the additional feeds to serve the contracts purchased
in the Pinnacor acquisition. Employee costs for news and operations attributed
to 9% of the increase, primarily resulting from a 5% addition in headcount due
to the Pinnacor acquisition. In addition, 15% of the increase was due to
additional amortization expense relating to the intangible assets purchased in
conjunction with the acquisition of Pinnacor, offset by a 33% reduction from the
same quarter in the prior year in CBS royalty fees due to the exclusion of the
acquired license revenue from Pinnacor. As a percentage of net revenues, cost of
net revenues was 32% and 39% for the three months ended March 31, 2004 and 2003,
respectively.

Product Development

Product development expenses primarily consist of fees paid for data,
compensation and benefits for Web site developers, designers and engineers to
maintain the sites and software engineers and expenses for contract programmers
and developers.

Product development expenses increased by 150% to $4.5 million for the three
months ended March 31, 2004 from $1.8 million for the three months ended March
31, 2003. Of the aggregate increase in product development expenses for the
three months ended March 31, 2004, 56% of the increase was attributable to
higher compensation expense and overhead costs primarily due to a 140% addition
in headcount from the Pinnacor acquisition, and 31% of the increase was
attributable to an increase in data feeds, also as a result of the Pinnacor
acquisition. Product development expenses were 25% and 17% of net revenues for
the three months ended March 31, 2004 and 2003, respectively.

General and Administrative

General and administrative expenses primarily consist of compensation
and benefits for finance, business development and administrative personnel,
public company expenses, professional fees, corporate depreciation charges and
charges for bad debt.

General and administrative expenses increased by 45% to $4.2 million for the
three months ended March 31, 2004 from $2.9 million for the three months ended
March 31, 2003. The aggregate increase in general and administrative expenses
for the three months ended March 31, 2004 was primarily attributable to a 24%
increase in compensation expense due to a 14% addition in headcount as a result
of the Pinnacor acquisition and the hiring of an in-house general counsel, and a
42% increase in legal fees, of which 77% of this increase was attributable to
legal costs associated with the SEC investigation of a former employee. In
addition, an increase in taxes attributed to 24% of the aggregate increase
primarily due to the increased presence in New York and higher asset valuation
due to the acquisition of Pinnacor. As a percentage of net revenues, general and
administrative costs were 24% and 26% for the three months ended March 31, 2004
and 2003, respectively.

Sales and Marketing

Sales and marketing expenses primarily consist of online and offline
advertisements, promotional materials and compensation, benefits and sales
commissions to our direct sales force and marketing personnel.

Sales and marketing expenses increased 50% to $3.6 million for the three
months ended March 31, 2004 from $2.4 million for the three months ended March
31, 2003. Of the aggregate increase in sales and marketing expenses for the
three months ended March 31, 2004, 64% of the increase was attributable to
higher compensation expense and overhead costs primarily due to a 99% increase
in commissions for higher advertising sales, and a 37% increase in headcount and
41% increase in commissions for licensing sales as a result of the Pinnacor
acquisition. In addition, there was an increase in marketing costs which
attributed to 7% of the aggregate increase. As a percentage of net revenues,
sales and marketing expenses were 20% and 22% for the three months ended March
31, 2004 and 2003, respectively.

Amortization of Acquired Intangibles

Amortization of acquired intangibles was $627,000 and $0 for the
three months ended March 31, 2004 and 2003, respectively, of which $213,000 was
expensed to cost of revenues. In January 2004, we assigned $300,000 to acquired
in-process research and development in the Pinnacor acquisition and determined
that technological feasibility had not been established and there was no
alternative future use. We expensed the value of the acquired in-process
research and development of $300,000 at the time of acquisition.

Interest Income, net of expense

Interest income, net of expense, was $126,000 and $134,000 for the
three months ended March 31, 2004 and 2003, respectively. The decrease of $8,000
for the three months ended March 31, 2004 as compared to prior year was
primarily due to interest paid on our capital leases, which were acquired in the
Pinnacor acquisition.

Liquidity and Capital Resources

Since our inception in October 1997, we have funded our operations
primarily from cash contributed and advanced by IDC and CBS, revenues from
advertising, licensing and subscription sales and the proceeds from our initial
public offering. Our cash and cash equivalents totaled $44.8 million at March
31, 2004, compared to $48.1 million at December 31, 2003.

Cash used in operating activities was $3.8 million for the three months ended
March 31, 2004, primarily due to a net loss of $591,000, an increase in accounts
receivable and prepaid expenses of $5.6 million and a decrease in deferred
revenue of $262,000, offset by an adjustment for the effect of non-cash charges
for depreciation and amortization of $1.5 million and an increase in accounts
payable and accrued expenses of $1.2 million. Cash used in operations was
increased by $1.4 million from amounts previously announced due to a
reclassification of the cash changes in other receivables from the sale of
common stock to cash provided by financing activities.

Cash provided by operating activities was $73,000 for the quarter ended March
31, 2003, primarily due to non-cash charges for depreciation and amortization of
$1.1 million, an increase in deferred revenue of $222,000 and an increase in
accounts payable and accrued expenses of $287,000, offset by a net loss of
$249,000 and an increase in prepaid expenses and accounts receivable.

Cash used in investing activities was $5.7 million for the three months ended
March 31, 2004 and consisted of net cash paid for the acquisition of Pinnacor
and capital expenditures for purchases of computer hardware, computer software
and leasehold improvements related to leased facilities.

Cash used in investing activities was $215,000 for the three months ended
March 31, 2003 and consisted of capital expenditures for purchases of computer
hardware and software.

Cash provided by financing activities was $6.3 million for the three months
ended March 31, 2004 and reflected proceeds from the sale of common stock
through our employee stock purchase plan in February 2004 and stock option
exercises during the three-month period, offset by $162,000 in principal
payments under capital lease obligations assumed in the Pinnacor acquisition.

Cash provided by financing activities was $574,000 for the three months ended
March 31, 2003 and primarily reflected proceeds from the sale of common stock
through the employee stock purchase plan in February 2003 and stock option
exercises during the quarter.

We believe our current cash position will be sufficient to meet our
anticipated needs for working capital and capital expenditures for at least the
next 12 months. We may need to raise funds sooner if we acquire any additional
businesses, products or technologies. If additional funds were raised through
the issuance of equity securities, the percentage ownership of our then-current
stockholders would be reduced. However, if CBS and/or Pearson elect to maintain
their percentage interest pursuant to the exercise of their participation rights
under their stockholders' agreement with us, then CBS and/or Pearson would not
necessarily suffer a reduction in their respective ownership. Furthermore, such
equity securities may have rights, preferences or privileges senior to those of
our common stock.

Contractual Obligations and Commercial Commitments

We incur various contractual obligations and commercial commitments
in our normal course of business. Such obligations and commitments consisted of
the following as of March 31, 2004.

Operating lease obligations - We have various operating leases
covering facilities in San Francisco, California; Minneapolis, Minnesota; New
York, New York; Washington DC; Los Angeles, California; Chicago, Illinois;
Boston, Massachusetts; Dallas, Texas; Coralville, Iowa; and London.

Net operating lease commitments as of March 31, 2004 can be summarized as
follows (in thousands):

|                  |   | Gross Lease Commitments |  |   | Sublease
   Income |  |   | Net Lease Commitments | 
|----------------- | - | ----------------------- |  | - | ------------------ |  | - | --------------------- | 
|2004              | $ | 2,338                   |  | $ | (260)              |  | $ | 2,078                 | 
|2005              |   | 2,801                   |  |   | (187)              |  |   | 2,614                 | 
|2006              |   | 2,670                   |  |   | --                 |  |   | 2,670                 | 
|2007              |   | 2,751                   |  |   | --                 |  |   | 2,751                 | 
|2008              |   | 1,802                   |  |   | --                 |  |   | 1,802                 | 
|Due after 5 years |   | 743                     |  |   | --                 |  |   | 743                   | 
|Total             | $ | 13,105                  |  | $ | (447)              |  | $ | 12,658                | 

As of March 31, 2004, principal payments required on our capital
lease obligations are $582,000 and $175,000 for the years ended December 31,
2004 and 2005, respectively.

Commercial commitments - As of March 31, 2004, we are committed to pay
$415,000 to AOL through December 31, 2004.

Factors that May Affect Our Operating Results

We may fail to realize the anticipated benefits of our acquisition of
Pinnacor if we do not successfully implement our integration strategy.

Our failure to meet the challenges involved in successfully integrating
our operations with Pinnacor's operations or otherwise to realize any of the
anticipated benefits of the acquisition, including cost savings, could seriously
harm the results of our operations. Integrating Pinnacor's operations is a
complex, time-consuming and expensive process that, without proper planning and
implementation, could cause significant disruptions. The successful integration
of Pinnacor's operations involves a number of risks, many of which are outside
of our control:

- the impairment of relationships with Pinnacor's customers as a result of the
acquisition and our ability to re-engage these customers during the integration
process;
- the difficulty of assimilating the operations and personnel of Pinnacor,
which are principally located in New York and Iowa, with and into our
operations, which are headquartered in Northern California and Minneapolis;
- the potential disruption of our ongoing business and distraction of
management;
- the difficulty of incorporating acquired technology and rights into our
products and unanticipated expenses related to such integration;
- the failure to further successfully develop acquired technology resulting in
the impairment of amounts currently capitalized as intangible assets;
- the impairment of relationships with Pinnacor's former employees or our own
employees as a result of any integration of new management personnel;
- the incurrence of charges relating to impairment of goodwill or other
intangible assets acquired in the acquisition; and
- undiscovered and unknown liabilities, or misrepresentations of liabilities,
relating to Pinnacor's business that become known to us after the
acquisition.

To realize the anticipated benefits of the acquisition, management must
implement a business plan that will:

- effectively combine Pinnacor's financial applications and customization
capabilities with our news, tools and charting capabilities to offer new and
existing customers a broader set of content and applications;
- successfully leverage the opportunities for cross-promotion of our expanded
products and services to our existing customers and Pinnacor's former customers
and coordinate sales and marketing efforts to effectively communicate these new
capabilities; and
- retain existing customer and vendor relationships by demonstrating to them
that the acquisition did not adversely affect customer service standards or
business focus.

Our management may not succeed in minimizing the risks associated with
integrating Pinnacor's business or executing its integration goals. We cannot
assure you that any cost savings, greater economies of scale and other
operational efficiencies, as well as revenue enhancement opportunities
anticipated from the acquisition, will occur. For example, during the six-month
period between signing and closing of the acquisition, the Pinnacor business
slowed significantly because its customers held off signing or upgrading
contracts until completion of the acquisition. The revenue contribution from
Pinnacor to our organic licensing business also was much smaller than
anticipated. In addition, our operating expenses increased due to the increased
headcount, expanded operations and expenses and charges related to the
acquisition. To the extent that our expenses increase but revenues do not, there
are unanticipated expenses relating to the integration process, or there are
significant costs associated with presently unknown liabilities, our business,
operating results and financial condition may be materially and adversely
affected. Failure to successfully integrate Pinnacor's business also may
adversely affect the trading price of our stock.

We may fail to realize the anticipated benefits of our service production
agreement with Thomson Financial.

Our failure to meet the challenges involved in successfully developing a
real-time financial newswire service with Thomson Financial or otherwise to
realize any of the anticipated benefits of the relationship, could adversely
affect our results of operations. Developing the real-time newswire service for
Thomson is a complex, time-consuming and expensive process that, without proper
planning and implementation, could cause significant disruptions to our
business. The successful development of the newswire service involves a number
of risks, many of which are outside of our control:

- the ability to hire quality journalists in accordance with the development
timeline;
- the potential disruption of our ongoing business and distraction of
management;
- the failure to budget our costs accurately; and
- the failure by Thomson to aggressively market and promote the newswire
service or to establish a sufficient price for the newswire service.

To realize the anticipated benefits of the relationship with Thomson
Financial, management must implement a business plan that will:

- effectively develop the editorial production support for the newswire
service; and
- successfully leverage the opportunities for cross-promotion of our expanded
products and services to our existing customers and Thomson's
customers.

Our management may not succeed in minimizing the risks associated with
developing the financial newswire service with Thomson which could adversely
affect our results of operations.

We have a limited operating history and may not be able to implement our
growth strategy.

We were formed in 1997. As a consequence of our limited operating
history, we are subject to the risks and uncertainties frequently encountered by
early stage companies that operate primarily in the new and rapidly evolving
markets for Internet products and services. In order to successfully achieve our
growth strategy, we must diversify our revenue stream by penetrating new market
segments, including financial services firms and institutional users, as well as
increase our advertising and licensing revenues. Also, we must develop
competitive content, products and services or acquire them to attract new
customers.

However, our growth will be affected by factors outside our control,
including the introduction of new content, products and services by competitors
and the increased use of the Web, particularly as an effective advertising
medium. Also, circumstances relating to our existing and potential customers may
also affect the growth of our business, including the consolidation of customers
or potential customers in market segments within which we will predominately
operate, potentially reducing customers and revenues, and a freeze or reduction
in spending by customers or potential customers.

Our future growth may not be as rapid as currently anticipated, and lower
than anticipated growth will likely materially and adversely affect our stock
price.

We may experience potential fluctuations in our quarterly operating
results, face unpredictability of future revenue and incur losses in the
future.

Because of our limited operating history, our quarterly operating results
may fluctuate significantly in the future as a result of a variety of factors,
many of which are outside our control. These factors include:

- fluctuations in traffic levels on our Web sites, which can be significant as
a result of business, financial and other news events;
- fluctuating and unpredictable demand for advertising on our Web sites as
well as on the Web in general;
- reductions in rates paid for Web advertising resulting from softening
demand, competition, disruption of business due to threats of conflict or
military action involving the United States, or other factors;
- changes in demand for licenses of our technology and news;
- our development efforts and the efforts of our competitors to introduce new
products and services;
- our ability to enter into or renew on favorable terms our marketing and
distribution agreements;
- seasonal fluctuations of advertising revenue as advertisers spend less in
the first and third calendar quarters and user traffic on our Web sites have
historically been lower during the summer and during year-end vacation and
holiday periods;
- the amount and timing of our costs related to our marketing efforts or other
initiatives;
- fees we may pay for distribution or content agreements or other costs we
incur;
- the level of Web usage such as time spent online or number of pages viewed;
- costs associated with restructuring activity;
- technical difficulties or system downtime affecting the Web generally or the
operation of our Web sites; and
- economic conditions specific to the Web as well as general economic
conditions.

Although we generated net income for the year ended December 31, 2003 and
were cash flow positive for the twelve months ended December 31, 2003 and 2002,
we reported a net loss and our cash and cash equivalents decreased during the
three months ended March 31, 2004. You should not rely on the results for prior
periods as an indication of future performance. In particular, the uncertainty
related to the extent and speed of recovery of the advertising market, and the
operating expenses and other charges we may incur in connection with the
Pinnacor acquisition, we may not be cash flow positive or generate net income
for future periods.

Over time, our revenues have come from a mix of advertising, content
licensing and subscription service fees. Licensing revenue declined in the year
ended December 31, 2003 primarily due to difficult market conditions faced by
companies in the financial services industry. We expect our quarterly revenues
and operating results to be particularly affected by changes in the level of our
advertising and licensing revenue for each quarter. Our operating expenses are
based on our current expectations of our future revenues and are relatively
fixed in the short term. In addition, our operating expenses may increase in the
short term as a result of our integration of Pinnacor's operations. If we have
lower revenues than we expect, we may not be able to quickly reduce our spending
in response. We also may, from time to time, make certain pricing, service or
marketing decisions that adversely affect our revenues in a given quarterly or
annual period. Any shortfall in our revenues would have a direct impact on our
operating results for a particular quarter and these fluctuations could affect
the market price of our common stock in a manner unrelated to our long-term
operating performance.

We depend on advertising revenues to grow our business and maintain
profitability, and if advertising revenues were to decline, our results of
operations and business would be harmed.

Revenues from advertising are important to our business. In the past few
years there was a significant softening in demand for advertising services due
to decreased spending on Web advertising by companies and general uncertainty
about the economy. In addition, threats of conflict or military action involving
the United States disrupted businesses, which curbed spending by companies or
otherwise, slowed down economic recovery. In the latter quarters of 2003, web
advertising expenditures began to show widespread signs of recovery. However,
continued uncertainty about the extent and speed of recovery of the Web
advertising market could harm our company's business.

A portion of our online advertising revenue comes from financial services
companies that were adversely affected by the market downturns over the last
several years, which resulted in these companies spending less for online
advertising or going out of business. Furthermore, some of the existing
brokerage and financial services companies and customers that we target have
merged, and additional mergers may occur in the future, which would further
reduce the number of our existing and potential customers. If we do not
diversify our advertiser base and continue to attract advertisers from other
industries, our business could be adversely affected. Moreover, diversification
of our advertising base may require that we adapt to different requirements and
expectations that new advertisers may have with respect to advertising programs
that could result in our incurrence of significant marketing, sales, development
and other expenses that may depress our earnings.

In addition, sales of advertisements occur under short-term contracts, which
are difficult to forecast accurately. Advertisers generally have the right to
cancel an advertising campaign on short notice without penalty. However, a
portion of our expense levels is fixed over the short term. We may not be able
to adjust spending quickly enough to compensate for any unexpected revenue
shortfall. Accordingly, the cancellation or deferral of advertising agreements
could have a material adverse effect on our financial results.

Changes in current advertising pricing models could seriously harm our
operating results.

No standard has been widely accepted to measure the effectiveness of Web
advertising, so different pricing models are used to sell advertising on the
Web. It is difficult to predict which, if any, will emerge as the industry
standard. This makes it difficult to project our future advertising rates and
revenues. For example, advertising rates based on the number of "click
throughs," or user requests for additional information made by clicking on the
advertisement, instead of rates based solely on the number of impressions, or
times an advertisement is displayed, could adversely affect our revenues

The growth of our advertising business depends on the
acceptance of the Web as an effective advertising medium.

Generally, we compete with traditional advertising media, such as print,
radio and television, for a share of advertisers' total advertising budgets. Our
advertising business would fail to expand or our advertising revenue would
decrease if the Web were not perceived as an effective advertising medium. Also,
advertisers that have traditionally relied upon other advertising media may be
reluctant to advertise on the Web, especially given the general uncertainty in
the economy. Advertisers that already have invested substantial resources in
other advertising methods may be reluctant to adopt a new advertising strategy
and may find it more difficult to measure the effectiveness of Web advertising.
In addition, our advertising revenues could be adversely affected if we were
unable to adapt to new forms of Web advertising or if "filter" software programs
that limit or prevent advertising from being delivered to a Web user's computer
are widely adopted and limit the commercial viability of Web advertising.
Therefore, advertising revenues would be adversely affected if our Web sites are
not perceived to offer desirable opportunities for online advertising.

We may be susceptible to third-party software programs that serve pop-up
advertisements on our Web sites.

Third-party software programs are increasingly used to deliver selected
advertisements based on Web sites visited by a user. These advertisements
usually are in the form of pop-up ads that are often based on the content the
user is viewing at a particular time. Often this software is downloaded onto the
user's computer without the user's knowledge, understanding or consent, as the
software often comes bundled with other applications that the user downloads,
such as file-sharing software or media players. The software can then track the
user's Web surfing habits and display content, such as pop-up ads, that most
users do not realize are not connected to the Web site they are then viewing.
The pop-up ads may compete with the advertising, services and products that we
may sell on our Web sites, potentially infringe third-party intellectual
property rights, and could lead to confusion for our customers as the pop-up
software deceives the user as to the origin of the advertisement. Also, our
customers may blame us for defects in the services and products promoted by the
pop-up ads or for fraud perpetrated against them in connection with such pop-up
ads, either of which could damage our reputation or result in the incurrence of
significant damages by us. If the prevalence of such forms of software continues
to increase and no restrictions are placed on their usage, our business may be
harmed.

We depend on licensing revenues to grow our business and maintain
profitability, and if licensing revenues were to decline, our business could be
harmed.

Revenues from the licensing of our content, applications and tools to
customers are important to our business. Licensing revenues depend on new
customer contracts and customer contract renewals, and could decrease if we do
not generate new licensing business or existing customers renew for lesser
amounts, terminate early or forego renewal. Our ability to retain existing
customers and attract new customers depends on our ability to develop new
products and services and market acceptance of such products and services,
neither of which may occur. Furthermore, we derive a significant percentage of
our licensing revenue from specific market segments such as brokerages,
financial services companies, banks and asset management providers.
Consolidation in these market segments have in the past caused, and could in the
future cause, us to have a reduced number of existing and potential customers.
If we do not diversify our client base and continue to attract customers from
other industries, our business could be adversely affected.

Furthermore, we receive a portion of the data incorporated in our licensing
products from third parties, some of which are competitors. For example, we
receive data from Dow Jones. If they or others perceive us as a competitor, they
may discontinue providing services to us. Also, some of our third-party data
providers have restrictions on access to and use of their data, which may make
our licensing of products incorporating such data less attractive to our
existing and potential customers which in turn may adversely affect our
licensing revenue.

We are in a highly competitive industry and some of our competitors may be
more successful in attracting and retaining customers.

The market for Internet services and products is relatively new,
intensely competitive and rapidly changing. The number of Web sites on the
Internet competing for consumers' attention and spending has proliferated and we
expect that competition will continue to intensify.

We compete, directly and indirectly, for advertisers, viewers, members,
licensing customers and content providers with the following categories of
companies:

- publishers and distributors of traditional off-line media, such as
television, radio and print, including those targeted to business, finance and
investing needs, many of which have established or may establish Web sites, such
as The Wall Street Journal and CNN;
- general purpose consumer online services such as AOL and MSN, each of which
provides access to financial and business-related content and services;
- Web sites targeted to business, finance and investing needs, such as
TheStreet.com and the Motley Fool;
- Web search and retrieval and other online services, such as Google, Yahoo!,
Lycos and other high- traffic Web sites, which offer quotes, financial news and
other programming and links to other business and finance-related Web sites;
- data companies that provide value-added tools, including charts, portfolios
and stock screeners, such as Reuters;
- providers of standardized and customized investment research tools, such as
SmartMoney;
- publishers of financial news for an institutional audience, such as Reuters
and Dow Jones;
- application service providers and information aggregators, such as Edgar
Online, who aggregate information and either host private-label applications
that use such data or deliver such data in the form of feeds to customers;
- financial software vendors, that have already, or may in the future, develop
extensions to their software capabilities to be able to manage external
information as efficiently as internal information; and
- in-house development staffs of customers who develop technology solutions,
often in conjunction with consulting and systems integration firms.

We anticipate that the number of direct and indirect competitors will
increase in the future. We also expect consolidation among our current
competitors, potentially increasing their size and viability. Many of our
existing competitors, as well as a number of potential new competitors, have
longer operating histories in the Web market, greater name and brand
recognition, a larger customer base, higher amounts of user traffic and
significantly greater financial, technical and marketing resources. Such
competitors may be able to undertake more extensive marketing campaigns, adopt
more aggressive pricing policies, make more attractive offers to potential
employees, marketing and distribution partners, advertisers and content
providers and may be able to respond more quickly to new or emerging
technologies and changes in Web user requirements.

Further, we cannot assure you that our competitors will not develop products
and services that are equal or superior to, or that achieve greater market
acceptance than, our offerings. Increased competition could also result in price
reductions for our advertising or licensed content and tools, reduced margins,
operating losses or loss of market share, any of which would materially
adversely affect our business, results of operations and financial
condition.

If we cannot continue to develop and market new and enhanced products and
services that achieve market acceptance in a timely manner, our revenues may
suffer.

We believe that our Web sites will be more attractive to advertisers if
we develop a larger audience comprised of demographically favorable users which
depends substantially on the introduction of enhanced products and services. For
example, it is our goal to launch one new subscription product each quarter. If
the subscription products or other services we introduce are not favorably
received, we may not attract new users and our current users may not continue to
access our Web sites or use our services as frequently, which would make us less
attractive to advertisers. New users could also choose competitive Web sites or
services over ours. Moreover, if our new services do not achieve sufficient
market acceptance and generate the anticipated revenues, we would not be able to
recoup the costs of developing, marketing and maintaining such services.

We may also experience difficulties that could delay or prevent us from
introducing new services. Furthermore, these services may contain errors that
are discovered after the services are introduced. We may need to significantly
modify the design of these services on our Web sites to correct these errors.
Our business could be adversely affected if we experience difficulties in
introducing new services or if users do not accept these new services.

If we do not effectively manage the transition from existing products and
services to new products and services, our revenues may suffer.

If we do not make an effective transition from existing products and
services to new products and services, our revenues may be seriously affected.
Transition from current products and services to new products and services can
be difficult due to delays in product and service development, variations in
product and service costs, delays in customer purchases of existing products or
services in anticipation of new product or service introductions and customer
demand for the new products and services. Our difficulties may be compounded by
the Pinnacor acquisition, which requires us to integrate products and services
offered by Pinnacor with ours, while at the same time migrate to new products
and services to attract additional customers.

Our revenues and gross margins also may suffer due to the timing of product
or service introductions by our competitors, particularly when a product has a
short life cycle or a competitor introduces a new product just before our own
product introduction.

If we were to experience delays in new product or service introductions, or
inaccurately estimate the market effects of new product or service introductions
by our competitors, future demand for our products and services and our revenues
may be adversely affected.

Undetected errors or failures found in new products and services may
result in loss of or delay in market acceptance of our products and services,
which could seriously harm our business.

Our products may contain undetected software errors or failures when
first introduced or as new versions are released. Despite testing by us and by
our customers, errors may not be found in new products until after delivery to
our customers. Similarly, we may experience difficulties that could delay or
prevent us from introducing new services. These new services may contain errors
that are discovered only after the services are introduced. We may need to
significantly modify the design of the products or implementation of the
services to correct these errors. Our business could be adversely affected if
undetected errors cause our user and customer base to reject the new products
and services.

In addition, the products and services that we acquired from Pinnacor may
have undetected errors not currently known to us. Our unfamiliarity with
Pinnacor's products and services may cause delays in, or prevent us from, fixing
the problems should they arise and thereby impede our efforts to re-engage
Pinnacor's customers during the integration process.

We depend on key personnel who may not continue to work for the company.

We believe that our future success will depend in part on our continued
ability to attract, integrate, retain and motivate highly qualified sales,
technical, editorial and managerial personnel, and on the continued service of
our senior management. Although we have employment agreements with some of our
key executives, none of them will be bound by an employment agreement that
prevents them from terminating their employment with us, at any time, for any
reason. If we cannot successfully attract, retain and motivate a sufficient
number of qualified personnel, it may harm our ability to successfully conduct
our business in the future.

Our business will be adversely affected if we do not develop and maintain
an effective sales force.

We depend on our sales force to sell advertising on our Web sites and
license our content. This involves a number of risks including:

- our sales personnel have, in a number of cases, only worked for us for a
short period of time;
- our ability to hire, retain, integrate and motivate sales and sales support
personnel;
- the length of time it takes new sales personnel to become productive; and
- the competition we face from other companies in hiring and retaining sales
personnel.

If we are unable to attract and retain an appropriate sales force, our
revenue may fail to increase or may decline.

Several large stockholders beneficially own a substantial amount of our
common stock, and acting together have substantial control over the management
of our company.

As of March 31, 2004, CBS and Pearson collectively beneficially own
approximately 46% of our outstanding common stock, and together with General
Atlantic Partners 69, L.P. and their affiliates, collectively own approximately
54% of our outstanding common stock. As a result of their ownership, they
collectively will be able to control all matters requiring stockholder approval,
should they act together, including the election of directors, amendments to our
charter documents and approval of significant corporate transactions. Such
concentration of ownership may also have the effect of delaying or preventing a
change in control of us even if such a change of control may be beneficial to
our stockholders. In addition, each of CBS and Pearson has two representatives
on our board of directors, and General Atlantic Partners has one representative,
and pursuant to contractual rights granted to them, each of CBS and Pearson has
the right to nominate one additional representative to our board. The interests
of our directors and significant stockholders may differ from yours and they may
not necessarily act in accordance with your interests.

We depend on CBS for a number of services and other rights, and our
business would be materially adversely affected if CBS were to terminate its
strategic relationship with us.

We have a license agreement with CBS to use the CBS name and logo, as
well as CBS Television Network news content in connection with the operation of
the CBS.MarketWatch.com Web site. This license agreement will expire on October
29, 2005 and CBS has no obligation to renew it. Also, under specific
circumstances, CBS may terminate the license agreement earlier. If we were not
able to renew our license agreement with CBS or if CBS were to terminate the
license agreement earlier than October 29, 2005, we would need to change the
name of the CBS.MarketWatch.com Web site and devote substantial resources toward
building a new brand name for the Web site. Regardless of such expenditures, we
may not be able to continue to attract a sufficient amount of user traffic and
advertisers to our Web sites without the CBS name and logo or promotion from
CBS.

Furthermore, we are subject to a number of restrictions in consideration for
the license grant and the provision of news content from CBS. For example, CBS
can require us to remove any content on our Web sites that CBS determines
conflicts with, interferes with or is detrimental to its reputation or business
or that CBS deems inappropriate. We are also required to conform to CBS's
guidelines for the use of its trademarks. CBS has the right to approve all
materials, such as marketing materials, that include any CBS trademarks. CBS
also has control over the visual and editorial presentation of television news
content provided by CBS on our Web sites. Because of these restrictions, we may
be limited in performing our desired marketing and branding activities using the
CBS trademark, and if we fail to comply with CBS's restrictions, CBS may
terminate the license agreement.

The interests of CBS and Pearson could conflict with the interests of our
other stockholders and, given their substantial stock ownership in the Company,
we may not be able to resolve any future conflict with either of them on terms
favorable to us.

CBS and Pearson may experience conflicts of interest in their business
dealings with us with respect to decisions involving business opportunities and
other similar matters. For example:

- CBS could license its name and logo to other Web sites or Internet services
that deliver general news, sports and entertainment. These sites or services
could also offer financial news, so long as delivering comprehensive stock
quotes and financial news to consumers in the English language is not their
primary function and their principal theme and format;
- Pearson could also establish an advertising-supported Web site that does not
have as its primary function and its principal theme and format the delivery of
financial news and stock quotes;
- CBS or Pearson could license their respective content to other Web sites or
Internet services; or
- CBS or Pearson could make certain investments in other Web sites or Internet
services.

The occurrence of any of the above actions could adversely affect our
business. For example, these sites or services supported by CBS or Pearson could
compete with us or CBS and Pearson might promote these other sites or services
more actively than they promote our Web sites and services.

The successful operation of our business depends upon the supply of
critical elements from other companies and any interruption in that supply could
cause service interruptions or reduce the quality of our product and service
offerings.

We depend on multiple information providers, such as Comtex, FT
Interactive Data, Dow Jones, Reuters and Thomson Financial Corporation, to
provide information and data feeds on a timely basis. Our Web sites could
experience disruptions or interruptions in service due to the failure or delay
in the transmission or receipt of this information by our information providers
which would be beyond our control. In addition, our customers depend on Internet
service providers, online service providers and other Web site operators for
access to our Web sites. We have experienced outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems in the future. These occurrences could diminish Web
users' experience or even result in users perceiving our Web sites as not
functioning properly and therefore result in the loss of these users to other
Web sites or sources to obtain their business, financial and other news and
information.

Furthermore, we incorporate the data we receive from third parties, such as
Dow Jones, into our licensing products. If such third party data providers or
others perceive us as a competitor, they may discontinue providing services to
us. Also, some of our third party data providers have restrictions on access to
and use of these data, which may make our licensing products incorporating such
data less attractive to our existing and potential customers, which in turn may
adversely affect our licensing revenue.

We depend on the continued growth in use of the Web, particularly for
financial news and information, as well as in the continued performance and
reliability of the Web.

Because we expect to depend significantly on advertising revenue for the
foreseeable future, our business depends on businesses and consumers continuing
to increase their use of the Web for obtaining news and financial information as
well as for conducting commercial transactions. Our advertising revenue and
therefore our business would be adversely affected if Web usage does not
continue to grow. Web usage may be inhibited for a number of reasons, such as:

- inadequate network infrastructure;
- security concerns;
- inconsistent quality of service; and
- availability of cost-effective, high-speed service.

In the event Web usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth or its performance and
reliability may decline. Web sites have experienced interruptions in their
service as a result of outages and other delays occurring throughout the
Internet network infrastructure. If these outages or delays frequently occur in
the future, Web usage in general and usage of our Web sites in particular, could
grow more slowly or decline.

We depend on our strategic relationships with other Web sites.

We depend on establishing and maintaining distribution relationships with
high-traffic Web sites for a portion of our traffic. There is intense
competition for placements on these sites, and we may not be able to enter into
such relationships on commercially reasonable terms, if at all. Even if we enter
into distribution relationships with these Web sites, they themselves may not
attract a significant number of users and therefore, our Web sites may not
receive the desired traffic from these relationships. Moreover, we may have to
pay significant fees to establish or maintain these types of relationships.

Occasionally, we enter into agreements with advertisers, content providers or
other high-traffic Web sites that require us to exclusively feature these
parties in certain sections of our Web sites. Existing and future exclusivity
arrangements may prevent us from entering into other content agreements,
advertising or sponsorship arrangements or other strategic relationships. Many
companies we may pursue for a strategic relationship also offer competing
services. As a result, these competitors may be reluctant to enter into
strategic relationships with us. Our business could be adversely affected if we
do not establish and maintain additional strategic relationships on commercially
reasonable terms or if any of our strategic relationships do not result in
increased use of our Web sites.

We depend on third-party software to track and measure the delivery of
advertisements and it could be difficult to replace these services.

It is important to our advertisers that we accurately measure the
demographics of our user base and the delivery of advertisements on our Web
sites. We depend on third-party software to provide these measurement services.
If the third-party is unable to provide these services in the future, we would
be required to perform them ourselves or obtain them from another provider. This
could cause us to incur additional costs or cause interruptions in our business
during the time we are replacing these services. We have implemented and are
implementing additional systems designed to record demographic data on our
users. If we are not successful in developing these systems, we may not be able
to accurately evaluate the demographic characteristics of our users. As a
result, companies may not advertise on our Web sites or may pay less for
advertising if they do not perceive our measurements or measurements made by
third parties to be reliable.

We depend upon the stability and success of the financial markets.

The target customers for some of our products include a range of
financial services organizations, including investment advisors, brokerage firms
and banks. The success of many of our customers is intrinsically linked to the
financial markets. We believe that demand for our products could be
disproportionately affected by fluctuations, disruptions, instability or
downturns in the financial markets that may cause customers or potential
customers to exit the industry or delay, cancel or reduce any planned
expenditures for our products. In addition, a slowdown in the formation of new
financial services organizations could cause a decline in demand for our
products. The uncertainty about the extent and speed of recovery of the
financial markets could negatively impact the demand for our products, which
could have a materially adverse effect on our business and results of
operations.

Acquisitions and strategic investments may result in increased expenses,
difficulties in integrating target companies and diversion of management's
attention.

We anticipate that from time to time we may review one or more
acquisitions or strategic investments or other opportunities to expand our range
of technology, services and products and to gain access to new markets. Growth
through acquisitions or strategic investments entails many risks, including the
following:

- management's attention may be diverted during the acquisition and
integration process;
- costs, delays and difficulties of integrating the acquired company's
operations, technologies and personnel into our existing operations,
organization and culture; and
- higher than expected expenses resulting from any undisclosed or potential
legal liabilities of the acquired company, including intellectual property,
employment, warranty, or product liability-related problems.

If realized, any of these risks could have a material adverse effect on our
business, financial condition and operating results. Also, the issuance of new
equity or debt securities to pay for acquisitions would dilute the holdings of
existing stockholders.

Protecting our intellectual property rights may be costly and
difficult.

We rely primarily on a combination of copyrights, trademarks, trade
secret laws, our user policy and content license agreement and user agreement
restrictions on disclosure and use to protect our intellectual property, such as
our content, copyrights, trademarks and trade secrets. We also enter into
confidentiality agreements with our employees and consultants, and seek to
control access to and distribution of our proprietary information. Despite these
precautions, it may be possible for a third-party to copy or otherwise obtain,
misappropriate, infringe and use the content on our Web sites or our other
intellectual property without authorization. A failure to protect our
intellectual property could seriously harm our business, operating results and
financial condition. In addition, we may need to engage in litigation in order
to enforce our intellectual property rights in the future or to determine the
validity and scope of the proprietary rights of others. Such litigation could
result in substantial costs and diversion of management and other resources,
either of which could have an adverse effect on our business, operating results
and financial condition.

We may be subject to intellectual property infringement claims, relating
to third party technology that would be costly to defend and may limit our
ability to use certain technologies in the future.

We license certain technology, data and content from third parties. In
these license agreements, the licensors generally agree to defend, indemnify and
hold us harmless from any claim by a third-party that the licensed technology or
content infringes any third party's intellectual property rights. However, we
cannot assure you that the outcome of any litigation between such licensors and
a third-party or between us and a third-party will not lead to royalty
obligations for which we are not indemnified or for which such indemnification
is insufficient or unavailable from the licensors, or that we will be able to
obtain any additional license on commercially reasonable terms, if at all. The
loss of or inability to obtain or maintain any of these technology or content
licenses could result in delays in the introduction of new services until
equivalent technology or content, if available, is identified, licensed and
integrated.

Our content license arrangements may subject it to intellectual property
infringement and indemnification claims that would be costly to defend.

In our content license agreements, we generally agree to defend,
indemnify and hold our licensees harmless from any claim by a third party that
the licensed content infringes any third party's intellectual property rights.
Infringement or other claims may be asserted or prosecuted against us and/or our
clients in the future whether resulting from our internally developed
intellectual property or technology or content licensed from third parties. Any
future assertions or prosecutions could materially adversely affect our
business, results of operations or financial condition. Any such claims, whether
they are with or without merit, could be time-consuming, result in costly
litigation and divert the attention of technical personnel and management or
require us to introduce new content, technology or trademarks, develop non-
infringing technology or content or enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on
acceptable terms, if at all.

In the event of a successful claim of infringement against us and our failure
or inability to introduce new technology or content, develop non-infringing
technology or content or license the infringed or similar technology or content
on a timely basis, our business, results of operations or financial condition
could be materially adversely affected.

We may be subject to liability for financial information included in our
online services.

We disseminate financial information through a variety of services,
including general reporting of financial information on our web sites, and stock
recommendations, commentary and analysis to subscribers of our subscription
products. In addition, we also periodically enter into arrangements to offer
third-party financial products, services, or content via distribution on our web
properties, including real-time stock quotes, trading information and research
reports. It is possible that, if any financial information provided directly by
us contains errors or is otherwise negligently provided to users, claims may be
made against us. We also may be subject to claims concerning errors in financial
products, services or content provided by third parties by virtue of our
involvement in marketing, branding, or providing access to them, even if we do
not ourselves host, operate or provide these products, services or content.
While our web properties contain cautionary language disclaiming liability for
errors contained in the financial information we provide, and our agreements
with third party providers often provide that we will be indemnified against
liabilities relating to errors contained in such parties' products, services or
content, our cautionary language and indemnification protection may not be
adequate. Claims have been threatened and have been brought against us, and we
may continue to receive claims, from individuals for trading losses in
securities allegedly incurred as a result of errors contained, or securities
commentary or analysis provided, in financial products, services or content
provided by us or our third-party providers. The law relating to the liability
of providers of online services for activities of their users is currently
unsettled in the United States. Due to the unsettled nature of the law in this
area, our defense of any such claims could be costly, involve significant
distraction of our management and other resources, and damage our reputation,
even if the claims do not ultimately result in liability.

We may have difficulty scaling and adapting our existing architecture to
accommodate increased traffic and technology advances.

Our business relies on our ability to serve Web pages in a consistent and
timely manner. In the past, our Web sites have experienced significant increases
in traffic when there were significant business or financial news stories. In
addition, the number of our users has increased over time and we are seeking to
further increase our user base. If the traffic on our Web sites grows at a rate
that our current communication lines cannot support, our Web pages will be
served at a slower rate or we will be unable to serve pages at all.

We also rely on certain third-party providers for a significant amount of our
current bandwidth capacity. If these providers are unable to maintain their
service level agreements or we are unable to obtain additional bandwidth as our
traffic grows, our business would be adversely affected. Our Web sites have in
the past and may in the future experience slower response times and other
problems for a variety of reasons. Also, our Web sites have in the past and may
in the future experience down time and other problems due to server problems or
capacity.

If we fail to keep pace with rapid technological change, changing customer
demands and evolving industry standards, we will not be able to compete.

Our market is characterized by rapidly changing technology, evolving
industry standards and frequent new product announcements, which are exacerbated
by the growth of the Web and the intense competition in our industry. The
process of developing new products and services related to our business is
complex and uncertain, and failure to anticipate the changing needs of our users
and customers and emerging technological and market trends could significantly
harm our results of operations. In order to successfully adapt to our rapidly
changing market, we must continually improve the performance, features and
reliability of our products and services. We could incur substantial costs
improving our products, services or infrastructure in order to adapt to these
changes and compete within our industry. Our business could be adversely
affected if we were to incur significant costs without adequate results or if we
were unable to successfully adapt to these changes.

Legal uncertainties and government regulation of the Internet could
inhibit the growth of the Internet.

Many legal questions relating to the Internet remain unclear and these
areas of uncertainty may be resolved in ways that damage our business. It may
take years to determine whether and how existing laws governing matters such as
intellectual property, privacy, libel and taxation apply to the Internet. In
addition, new laws and regulations that apply directly to Internet
communications, commerce and advertising are becoming more prevalent. For
example, the U.S. Congress has passed Internet-related legislation concerning
copyrights, taxation and the online privacy of children. Further, President Bush
recently signed into law the "Controlling the Assault of Non-Solicited
Pornography and Marketing Act of 2003," also known as the "CAN-SPAM Act of
2003." This federal law, which became effective on January 1, 2004, established
uniform standards, penalties, and an enforcement regime for the sending of
unsolicited commercial email. As the use of the Internet grows, there may be
calls for further regulation, such as more stringent consumer protection laws.
Finally, our distribution arrangements and customer contracts could subject us
to the laws of foreign jurisdictions in unpredictable ways.

These developments could affect us adversely in a number of ways. New
regulations could make the Internet less attractive to users, resulting in
slower growth in its use and acceptance than is currently expected. The new
legislations, such as the anti-spam laws, could lessen our ability to
effectively market our products and services. Moreover, we may be affected
indirectly by legislation that fundamentally alters the practicality or cost-
effectiveness of utilizing the Internet, including the cost of transmitting over
various forms of network architecture, such as telephone networks or cable
systems, or the imposition of various forms of taxation on Internet-related
activities. Complying with new regulations could result in additional cost to
us, which could reduce our profit margins or leave us at risk of potentially
costly legal action.

Web security concerns could hinder Internet commerce.

The need to securely transmit confidential information over the Internet
has been a significant barrier to electronic commerce and communications over
the Web. Any well-publicized compromise of security could deter more people from
using the Web or from using it to conduct commercial transactions that involve
transmitting confidential information, such as stock trades or purchases of
goods or services. Because many of our advertisers seek to encourage people to
use the Web to conduct financial transactions or purchase goods or services, our
business could be adversely affected if Internet commerce declines due to
security concerns.

We could face liability related to our storage of personal information
about our users.

Our data privacy policy is not to willfully disclose any individually
identifiable information about any user to a third party without the user's
consent. Despite this policy, however, if unauthorized third persons were able
to penetrate our network security or otherwise misappropriate our users'
personal information or credit card information, we could be subject to
liability, including claims for unauthorized purchases with credit card
information, impersonation or other similar fraud claims, and misuses of
personal information, such as for unauthorized marketing purposes. New privacy
legislation may further increase this type of liability. California, for
example, recently passed a privacy law that would apply to a security breach
that affects unencrypted, computerized personal information of a California
resident. Furthermore, we could incur additional expenses if additional
regulations regarding the use of personal information were introduced or if
federal or state agencies were to investigate our privacy practices.

Furthermore, some of the licensing tools we have created and currently market
to existing and potential customers require users to disclose personally
identifiable information and allow us access to such confidential information.
Due to concerns about user privacy issues, existing and potential licensing
customers may be deterred from licensing these tools, which could harm our
future licensing revenue.

We could face liability for the information displayed on our Web sites or
distributed to our customers.

We may be subject to claims for libel, slander, defamation, negligence,
copyright or trademark infringement or claims based on other theories of legal
liability relating to the information we publish on our Web sites or license to
our customers. These types of claims have been brought, sometimes successfully,
against online services as well as other print publications in the past. We
could also be subject to claims based upon the content that is accessible from
our Web sites through links to other Web sites. Moreover, because we license
some data and content from third parties, we may have further exposure to these
types of claims. Although we generally will obtain representations as to the
origin and ownership of content licensed from third parties and generally will
obtain indemnification from these third parties to cover a breach of any such
representation, we may not receive representations or indemnification that are
sufficient to cover all liability relating to the third-party content.

Moreover, the indemnification provided by these parties may be insufficient
to provide adequate compensation for any breach of such representations. Our
defense of any action brought against us based upon the content that is
accessible from our Web sites could be costly and involve significant
distraction of our management's time and other resources. Although we carry
general liability insurance, our insurance may not cover claims of these types
or may be inadequate to indemnify us for all liability that may be imposed on
us.

Unauthorized break-ins and other disruptions to our site could harm our
business.

Our servers are vulnerable to computer viruses, physical or electronic
break-ins and similar disruptions, which could lead to interruptions, delays or
loss of data. In addition, unauthorized persons may improperly access our data.
A number of popular Web sites have experienced attacks from "hackers" and other
intrusions. Any disruption resulting from these actions may harm our business
and may be very expensive to remedy, may not be fully covered by our insurance
and could damage our reputation and discourage new and existing users from using
our site. We may also incur significant costs to protect our Web sites against
the threat of security breaches. We also provide indemnification to some of our
licensing customers for unauthorized access to and use of customer data as a
result of break-ins and other unauthorized access. Our defense of any action
brought against us based upon improper access to confidential customer data or
indemnification of our licensing customers for similar claims brought against
them could be costly and involve significant distraction of our management and
other resources. Also, our operations are dependent upon our ability to protect
systems against damage from fire, earthquakes, power loss, telecommunications
failure, and other events beyond our control. Our insurance policies have
coverage limits and therefore our insurance may not adequately compensate us for
any losses that may occur due to any failures or interruptions in our
systems.

Market prices of Internet companies have been highly volatile and the
market price for our common stock may be volatile as well.

The stock market has experienced significant price and trading volume
fluctuations, and the market prices of shares of Internet companies generally
have been extremely volatile and have experienced sharp declines. Broad market
fluctuations may adversely affect the trading price of our common stock
regardless of our actual performance. In the past, following periods of
volatility in the market price of a public company's securities, securities
class action litigation has often been instituted against that company. Such
litigation could result in substantial costs and a diversion of management's
attention and resources.

Our stock price is volatile and could fluctuate significantly.

The trading price of our stock has been and may continue to be subject to
wide fluctuations. During the last 52 week period ended March 31, 2004, the
closing sale prices of our common stock on the NASDAQ National Market ranged
from $7.00 to $13.94. Our stock price may fluctuate in response to a number of
events and factors, such as quarterly variations in operating results,
announcements of technological innovations or new products and media properties
by us or our competitors, changes in financial estimates and recommendations by
securities analysts, the operating and stock price performance of other
companies that investors may deem comparable, news reports relating to trends in
our markets and general economic conditions. In addition, the stock market in
general, and the market prices for Internet-related companies in particular,
have experienced extreme volatility. These broad market and industry
fluctuations may adversely affect the price of our common stock, regardless of
our operating performance.

Our ability to pay dividends is limited.

We currently intend to retain all future earnings to fund the development
and growth of our business and, therefore, do not anticipate paying any
dividends. We cannot predict if and when we will achieve sufficient net profits
to declare dividends. Our plan not to declare any dividends could adversely
affect the market price of our common stock particularly in light of the recent
market trend to favor dividend paying stocks due to the equalization of tax
rates on dividend income as compared to capital gains.

New laws and regulations affecting corporate governance may impede our
ability to retain and attract Board members and executive officers, and may
increase the costs associated with being a public company.

On July 30, 2002, President George W. Bush signed into law the
Sarbanes-Oxley Act of 2002. The new act is designed to enhance corporate
responsibility through new corporate governance and disclosure obligations,
increase auditor independence, and tougher penalties for securities fraud. In
addition, the Securities and Exchange Commission and NASDAQ have adopted rules
in furtherance of the act. This act and the related new rules and regulations
will likely have the effect of increasing the complexity and cost of our
company's corporate governance and the time our executive officers spend on such
issues, and may increase the risk of personal liability for our board members,
Chief Executive Officer, Chief Financial Officer and other executives involved
in our company's corporate governance process. As a result, it may become more
difficult for us to attract and retain board members and executive officers
involved in the corporate governance process. In addition, we have experienced,
and will continue to experience, increased costs associated with being a public
company, including additional professional and independent auditor fees.

Some anti-takeover provisions contained in our bylaws, as well as
provisions of Delaware law, could limit a takeover attempt.

Pursuant to our bylaws, a special meeting of stockholders may be called
only by the Chairman of the board of directors, a majority of the board of
directors, the Chief Executive Officer or by any holder of at least 25% of our
common stock. Also, nomination of directors at the annual meeting and the
bringing of business before an annual or special meeting of stockholders require
prior written notice and adherence to specific procedures.

As a Delaware corporation, we are also subject to provisions of Delaware law,
including Section 203 of the Delaware General Corporation law, which prevents
some stockholders from engaging in certain business combinations without
specified required approvals of either our board of directors or our
stockholders.

Any provision of our bylaws or Delaware law that has the effect of delaying
or deterring a change in control could limit the opportunity for our
stockholders to receive a premium for their shares of our common stock, and
could have a continuing negative impact on the price that some investors are
willing to pay for our common stock.

We Are Involved in Litigation and Are At Risk of Additional Litigation

We are a party to the litigation described in Part II, Item 1, "Legal
Proceedings." The defense of such litigation has increased our expenses and
diverted our management's attention and resources. Furthermore, we may in the
future be the target of other litigation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate sensitivity. The primary objective of our investment
activities is to preserve principal while maximizing the income we receive from
our investments without significantly increasing risk. Some of the securities
that we have invested in may be subject to market risk. This means that a change
in prevailing interest rates may cause the principal amount of the investment to
fluctuate. For example, if we hold a security that was issued with a fixed
interest rate at the then-prevailing rate and the prevailing interest rate later
rises, the principal amount of our investment will probably decline. To minimize
this risk, we maintain our portfolio of cash in money market funds and cash
equivalents. In general, money market funds and short-term investments are not
subject to market risk because the interest paid on such funds fluctuates with
the prevailing interest rate. As of March 31, 2004, all of our investments
mature in 90 days or less.

Exchange Rate Sensitivity. We consider our exposure to foreign
currency exchange rate fluctuations to be minimal, as we do not have any
material sales denominated in foreign currencies. We have not engaged in any
hedging transactions to date.

ITEM 4. CONTROLS AND PROCEDURES

We restated our condensed consolidated statement of operations and cash
flows for the three months ended March 31, 2004 and 2003 and condensed
consolidated balance sheet as of March 31, 2004. For a description of the
restatement, see Note 8 to the condensed consolidated financial statements in
Item 1 of Part I of this report.

As of the end of the period covered by this quarterly report on Form 10-Q/A,
we carried out an evaluation, under the supervision and with the participation
of our Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures.

In making this evaluation, our Chief Executive Officer and Chief Financial
Officer considered matters relating to our restatement of previously issued
financial statements, including the processes that were undertaken to ensure
that all material adjustments necessary to correct the previously issued
financial statements were recorded. The restatements reflect the adoption of a
corrected method by which we calculate the quarterly royalty fees due to CBS as
a result of licensing of CBS news content and trademarks. In light of, among
other things, the facts and circumstances relating to the restatement, our Chief
Executive Officer and Chief Financial Officer concluded that the restatement was
not reflective of any material weakness (as defined under standards established
by the Public Company Accounting Oversight Board) in our disclosure
controls.

Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective in
timely alerting them to material information required to be included in this
quarterly report on Form 10-Q/A.

There has been no change in our internal controls over financial reporting
that occurred during our most recent fiscal quarter that has materially affected
or is reasonably likely to materially affect our internal controls over
financial reporting.



PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On and after April 17, 2001, five shareholder class action lawsuits were
filed against MarketWatch, certain of its current and former officers and
directors, and a number of investment banks, including some of the underwriters
of its initial public offering. The lawsuits were filed in the Southern District
of New York. The complaints were consolidated into a single action. Plaintiffs
allege that the underwriter defendants agreed to allocate stock in the initial
public offering to certain investors in exchange for excessive and undisclosed
commissions and agreements by those investors to make additional purchases of
stock in the aftermarket at pre-determined prices. Plaintiffs allege that the
prospectus for MarketWatch's initial public offering was false and misleading in
violation of the securities laws because it did not disclose these arrangements.
The action seeks damages in an unspecified amount. The action against
MarketWatch is being coordinated with approximately three hundred other nearly
identical actions filed against other companies. On June 25, 2003, a committee
of MarketWatch's board of directors approved a Memorandum of Understanding
("MOU") and related agreements which set forth the terms of a settlement between
MarketWatch, the plaintiff class and the vast majority of the other
approximately 300 issuer defendants. Among other provisions, the settlement
contemplated by the MOU provides for a release of MarketWatch and the individual
defendants for the conduct alleged in the action to be wrongful. MarketWatch
would agree to undertake certain responsibilities, including agreeing to assign,
not assert, or release certain potential claims MarketWatch may have against its
underwriters. It is anticipated that any potential financial obligation of
MarketWatch to plaintiffs pursuant to the terms of the MOU and related
agreements will be covered by existing insurance. Therefore, MarketWatch does
not expect that the settlement will involve any payment by the company. The MOU
and related agreements are subject to a number of contingencies, including the
negotiation of a settlement agreement and its approval by the Court.

On July 24, 2003, a shareholder class action lawsuit was filed against
Pinnacor, Pinnacor's then-current directors, a then-current Pinnacor officer,
and MarketWatch in the Delaware Court of Chancery. The lawsuit purported to be a
class action filed on behalf of holders of Pinnacor's common stock as of the
date of the announcement of the acquisition of Pinnacor. The lawsuit alleged
that Pinnacor's directors breached their fiduciary duties in proceeding with the
acquisition by agreeing to an inadequate proposed purchase price which failed
adequately to compensate Pinnacor stockholders for the loss of control of the
company. The lawsuit alleged that MarketWatch aided and abetted these breaches
of fiduciary duty in some unspecified way. The lawsuit sought an unspecified
amount of damages and an injunction against consummation of the proposed
transaction. The parties have reached a settlement of the action. The settlement
is subject to execution of a final settlement agreement and court approval. The
settlement provides, among other things, that the action will be dismissed with
prejudice and that all defendants will be released from liability, in
recognition of certain additional disclosures contained in the proxy
solicitation material distributed to Pinnacor stockholders. The settlement also
provides for a payment to plaintiff's counsel of $300,000 in attorneys' fees and
up to $15,000 in actual costs.

On June 7, 2002, an action was commenced in the United States District Court
for the District of Massachusetts by Teragram Corporation against Pinnacor. The
lawsuit alleged a breach of contract claim against Pinnacor and, as amended,
sought damages in the amount of $290,280. On February 7, 2003, Pinnacor filed
counterclaims against Teragram for breach of contract, breach of warranty and
misrepresentation. Teragram and Pinnacor each filed the respective Motions for
Summary Judgment on March 13, 2003 and April 3, 2003. These motions are still
pending before the Court.

On September 8, 2003, an action was commenced in the Supreme Court of the
State of New York by Praedium II Broadstone LLC against Tendagio, Inc.
(formerly, "Inlumen, Inc."), Pinnacor Inc., and several unnamed defendants. The
lawsuit alleged a breach of contract claim against Tendagio and a fraudulent
conveyance claim against Tendagio and Pinnacor, and sought damages in excess of
$6,000,000 and an order setting aside the conveyance of assets made by Inlumen
to Pinnacor in October 2002 in connection with Pinnacor's purchase of certain
assets from Inlumen. Pinnacor filed an answer to the lawsuit in which it sought
dismissal of all claims against Pinnacor. On March 10, 2004, Defendant Tendagio
filed a Motion for Summary Judgment to dismiss the Complaint. On April 26, 2004,
MarketWatch served upon the parties its Cross Motion for Summary Judgment
seeking dismissal of the Complaint, with prejudice. On May 10, 2004, MarketWatch
was served with Plaintiff's Cross Motion seeking dismissal of the action in its
entirety, without prejudice, or alternatively, additional time to respond to
Defendant's Summary Judgment Motions. MarketWatch is preparing opposition to
Plaintiff's Cross Motion.

On December 19, 2003, the Securities and Exchange Commission notified Thom
Calandra, MarketWatch's former chief commentator and author of The Calandra
Report, that it was conducting an inquiry regarding possible violations of the
federal securities laws by Mr. Calandra. In connection with the SEC's inquiry,
MarketWatch has received an informal request and a subpoena from the SEC to
produce documents and other relevant information concerning these matters. In
addition, four executives of MarketWatch received a subpoena to produce their
stock trading records. MarketWatch and the individual employees are fully
cooperating with the SEC. The SEC has stated that the inquiry should not be
construed as an indication that Mr. Calandra or anyone else has violated the
law, and the Company does not believe that it or any other MarketWatch employee
has been implicated in the SEC investigation.

There are no other material pending legal proceedings to which MarketWatch is
a party.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

On January 15, 2004, MarketWatch Media, Inc. (formerly known as
MarketWatch.com, Inc.) held a Special Meeting of Stockholders. At the meeting,
the MarketWatch Media stockholders approved a proposal to adopt a merger
agreement for the merger of MarketWatch Media and Pinnacor Inc. whereby
MarketWatch Media and Pinnacor would become wholly owned subsidiaries of
MarketWatch, and each share of MarketWatch Media's common stock outstanding on
the closing date of the merger would be exchanged for one share of MarketWatch's
common stock. Of the aggregate number of shares of MarketWatch Media common
stock present in person or by proxy at the meeting, 14,414,486 shares voted in
favor of the merger proposal, 4,289 shares against, 570 shares abstained and
zero shares were broker non-votes. The MarketWatch Media stockholders also
approved a proposal to adopt a 2004 Stock Incentive Plan for MarketWatch with
12,626,287 shares in favor of the proposal, 1,790,215 shares against, 2,843
shares abstained and zero shares were broker non-votes. The MarketWatch Media
stockholders further approved a proposal to adopt a 2004 Employee Stock Purchase
Plan for MarketWatch with 12,679,280 shares in favor of the proposal, 1,736,857
shares against, 3,208 shares abstained and zero shares were broker non-votes.

On January 15, 2004, Pinnacor held a Special Meeting of Stockholders. At the
meeting, the Pinnacor stockholders approved a proposal to adopt a merger
agreement for the merger of MarketWatch Media and Pinnacor whereby MarketWatch
and Pinnacor would become wholly owned subsidiaries of MarketWatch, and each
share of Pinnacor's common stock outstanding on the closing date of the merger
would be exchanged, at the election of the holder, for either $2.42 in cash or
0.2659 of a share of MarketWatch's common stock. Of the aggregate number of
shares of Pinnacor common stock present in person or by proxy at the meeting,
26,417,907 shares voted in favor of the merger proposal, 43,883 shares against,
800 shares abstained and zero shares were broker non-votes. The Pinnacor
stockholders also approved a proposal to adopt a 2004 Stock Incentive Plan for
MarketWatch with 23,931,577 shares in favor of the proposal, 2,512,264 shares
against, 18,746 shares abstained and three shares were broker non-votes. The
Pinnacor stockholders further approved a proposal to adopt a 2004 Employee Stock
Purchase Plan for MarketWatch with 23,972,945 shares in favor of the proposal,
2,472,098 shares against, 17,546 shares abstained and one share was a broker
non-vote.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

1. Index to Exhibits
2. Reports on Form 8-K
3. On January 16, 2004, the Company filed a Form 8-K with the Securities and
Exchange Commission to announce, among other things, the deemed registration of
the common stock of the holding company formed to acquire Pinnacor Inc. under
Section 12(g) of the Exchange Act.
4. On January 20, 2004, the Company filed a Form 8-K with the Securities and
Exchange Commission to announce, among other things, the completion of the
acquisition of Pinnacor, Inc. on January 16, 2004.
5. On January 28, 2004, the Company filed a Form 8-K and furnished to the
Securities and Exchange Commission a press release issued by the Company in
connection with the announcement of its fourth quarter 2003 earnings results.

---

MarketWatch, Inc.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| |                  
| | -----------------
| | MarketWatch, Inc.
| | (Registrant)     

Dated: September 3, 2004

| | By:    /s/ JOAN P. PLATT                    
| | --------------------------------------------
| | Joan P. Platt                               
| | Chief Financial Officer                     
| | (Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

|Exhibit Number | Exhibit Title                                                                                          
|-------------- | -------------------------------------------------------------------------------------------------------
|31.1           | Certification of the Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 
|31.2           | Certification of the Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|32.1           | Certification of the Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|32.2           | Certification of the Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

---