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

                              (Mark One)
     [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

              For the fiscal year ended December 31, 2002

                                  OR

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

                     Commission File No. 000-30199


                           CoolSavings, Inc.
        ------------------------------------------------------
        (Exact name of registrant as specified in its charter)


  State of Delaware                          36-4462895
----------------------                 ------------------------
State of Incorporation                 I.R.S. Employer I.D. No.


      360 N. Michigan Avenue, 19th Floor, Chicago, Illinois 60601
                            (312) 224-5000
     ------------------------------------------------------------
     (Address of principal executive offices and telephone number)


          ---------------------------------------------------
          Former name, former address and former fiscal year,
                     if changed since last report

  Securities Registered Pursuant to Section 12(b) of the Act:   None

      Securities Registered Pursuant to Section 12(g) of the Act:
                    Common Stock, Par Value $0.001

     Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [  X  ]   No [   ]

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [   ]

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

     As of June 30, 2002 (the end of the Registrant's most recently
completed second fiscal quarter), the aggregate market value of the
Registrant's voting stock held by non-affiliates of the Registrant
(assuming for this purpose that executive officers, directors and 10%
stockholders that are affiliates) was approximately $707,088, based on the
closing sales price of $0.05 on such date.  As of March 1, 2003, there were
39,093,660 shares of the Registrant's common stock issued and outstanding.




<PAGE>


                           COOLSAVINGS, INC.

                        Form 10-K Annual Report
                  Fiscal Year Ended December 31, 2002

                           TABLE OF CONTENTS


                                                             Page
                                                             ----

PART I

Item 1.   Business. . . . . . . . . . . . . . . . . . . . .     4

Item 2.   Properties. . . . . . . . . . . . . . . . . . . .    23

Item 3.   Legal Proceedings . . . . . . . . . . . . . . . .    24

Item 4.   Submission of Matters to a Vote of
          Security Holders. . . . . . . . . . . . . . . . .    25


PART II

Item 5.   Market for the Company's Common Equity and
          Related Stockholder Matters . . . . . . . . . . .    26

Item 6.   Selected Financial Data . . . . . . . . . . . . .    27

Item 7.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations . .    30

Item 7A.  Quantitative and Qualitative Disclosures
          about Market Risk . . . . . . . . . . . . . . . .    46

Item 8.   Financial Statements and Supplementary Data . . .    47

Item 9.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure. . . . . .    85


PART III

Item 10.  Directors and Executive Officers of the Registrant   85

Item 11.  Executive Compensation. . . . . . . . . . . . . .    89


Item 12.  Security Ownership of Certain Beneficial Owners
          and Management and Related Stockholder Matters. .    92

Item 13.  Certain Relationships and Related Transactions. .    99

Item 14.  Controls and Procedures . . . . . . . . . . . . .    99


PART IV

Item 15.  Exhibits, Financial Statement Schedule and
          Reports on Form 8-K . . . . . . . . . . . . . . .   100


SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . .   101

CERTIFICATIONS. . . . . . . . . . . . . . . . . . . . . . .   103





<PAGE>


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Statements in this annual report regarding our business that are not
historical facts, including the statements under "Business-Overview" and
other statements regarding our expectations, beliefs, hopes, intentions or
strategies, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Where possible, we have
identified such forward-looking statements by use of words such as
"forecast," "believe," "expect," "intend," and similar expressions. Known
and unknown risks, uncertainties and other factors, both general and
specific to the matters discussed in this annual report, may cause our
actual results and performance to differ materially from the future results
and performance expressed in, or implied by, such forward-looking
statements.  These risks, uncertainties and other factors include, without
limitation, our ability to obtain additional debt and/or equity financing,
the uncertainties related to our unproven business model in a rapidly
evolving marketplace, our ability to protect our patents, trademarks and
proprietary rights and the other factors described under "Item 1. Business
- Risk Factors".  Except as expressly required by the federal securities
laws, we undertake no obligation to update or revise any forward-looking
statements as a result of new information, future events or developments,
changed circumstances or any other reason.

     We own United States service mark registrations for the mark
COOLSAVINGS, as well as several other service marks, including, among
others, COOLSAMPLES, SAVINGSCENTER, SQUEALS OF THE DAY, COOLCATALOGS,
COOLCAMPUS, COOLCASH, COOLCOLLEGES, COOLDINING, COOLEVENTS, COOLGROCERS,
COOLNEIGHBORHOODS, COOLSUPERMARKETS, DINELINE, EVENTSLINE, REWARDS WHEREVER
YOU SHOP, and our stylized piggy-bank logo. We also own common law rights
in these and other marks. In addition, we have applied for United States
federal registrations of several service marks, including our SAVE. THEN
SHOP., COOLPOINTS, COOLCOINS, COOLSCHOOLS, COOLSTAMPS, SAVE THEN DINE, and
COOLSAVINGS COUPON MANAGER. We have also obtained a trademark registration
in Australia for COOLSAVINGS and have registration applications pending in
the United Kingdom, Australia and Canada.


<PAGE>


                                PART I

ITEM 1.  BUSINESS

OVERVIEW

     CoolSavings is an online direct marketing and media company with a
database of more than 24 million registered households.  We help marketers
reach their target consumers by leveraging our broad distribution network,
sophisticated analytics and proprietary technology.  Our mission is to be
the leading provider of promotional offers to consumers while most
effectively connecting marketers to their best customers.  Utilizing a
growing database of registered consumers, we supply marketers with a single
resource for accessing and engaging a dynamic group of shoppers. Through
our customized, integrated direct marketing and media products, advertisers
can target a wide array of incentives, including printed and electronic
coupons, personalized e-mails, rebates, trial offers, samples, sales
notices, and sweepstakes, to promote sales of products or services and
drive customers into brick-and-mortar stores or online web sites. In
addition, our proprietary database technology tracks consumer response,
shopping preferences and site behavior at the household and shopper level
to provide our clients with an unprecedented breadth of sophisticated
consumer data from which to make smarter marketing decisions.

     Our web site, coolsavings.com, offers consumers convenient and
personalized incentives for goods and services from a broad range of
advertisers, including brick-and-mortar retailers, online retailers,
consumer packaged goods manufacturers, travel and financial service
providers.  In the last 18 months, we have broadened our offerings to
provide advertisers with the means of distributing promotional offers to
consumers at the advertisers' own web sites, via an Internet distribution
network and through direct mail.  Using our proprietary technology,
advertisers are able to market to their own consumers by providing to them
printable coupons directly from the advertiser web sites, via e-mail and
online advertising banners.  In 2002, we developed and launched the
CoolSavings Marketing Network, an Internet distribution network for our
advertisers to distribute promotional offers to visitors of our network
partners' web sites.  Also in 2002, we launched a cooperative direct mail
service.  This service targets registered CoolSavings members who are
highly active shoppers and proven direct mail responders.

     We were incorporated as Interactive Coupon Marketing Group, Inc. in
Michigan in December 1994.  In November 1998, we changed our corporate name
to coolsavings.com inc.  In September 2001, coolsavings.com inc. merged
with and into CoolSavings, Inc., a Delaware corporation which was then its
wholly owned subsidiary.  Currently, we operate as one business segment.

     Beginning in 2001, we entered into a series of transactions with
Landmark Communications, Inc. and Landmark Ventures VII, LLC (together,
"Landmark") whereby Landmark made loans to and equity investments in our
Company.  This series of transactions, (collectively, the "Landmark
Transaction") resulted in a change in control of our Company.  Landmark's
principal business interests are in the media industry, and it owns and
operates entities engaged in newspaper and other print publishing,
television broadcasting and cable television programming services. Landmark
has experience in building value and improving operating, marketing and
financial performance in companies that it owns or controls.




<PAGE>


THE COOLSAVINGS SOLUTION

     Our web site and marketing network offer convenient and personalized
incentives for goods and services from a broad range of advertisers,
including national brick-and-mortar chains, consumer packaged goods
manufacturers, large consumer service providers, and online retailers.  We
offer a wide array of promotional services for advertisers including
printed and electronic coupons, personalized e-mails, rebates, samples,
trial offers, sales notices, gift certificates, and banner advertisements.
Additionally, our advertisers can reach consumers via our direct mail
product or through promotion on our marketing network.


BENEFITS TO COOLSAVINGS ADVERTISERS

     The benefits to advertisers of using CoolSavings include:

     .     Access to a large audience of qualified, receptive shoppers.
           Advertisers are able to reach millions of active shoppers who
           visit our web site or the web sites of our marketing network
           partners looking for shopping values, and who are willing to
           provide demographic data about themselves and others in their
           households.  Advertisers can reach our database of consumers
           electronically or through traditional direct mail.

     .     Cost-effective performance.  We believe we provide advertisers
           with a cost-effective solution for customer acquisition and
           retention.  Unlike most other direct marketing providers, we
           can test creative elements of a campaign for effectiveness with
           results available in days.  We can quickly learn from each
           campaign, regardless of the promotions used, how to make future
           campaigns more effective, to re-target responding members with
           more focused offers and to convert new customers into loyal
           customers.  Our advertisers are able to target information
           about ongoing sales promotions and events to the appropriate
           customers at the appropriate times and make rapid improvements
           to those efforts.

     .     Insight into shopping behavior.  Most advertisers have only
           limited means of tracking their customers' preferences and
           behavior.  With our member's permission, we acquire information
           from the initial member registration, from each visit by a
           member to our web site, or in response to an email offer. As a
           result, we have rich data that we can analyze to provide
           insight into the interests and preferences of an advertiser's
           customers.  Advertisers can leverage our consolidated database
           to find predictive correlations that can lead to more effective
           targeting, regardless of the types of promotions used. This
           information can be used by our advertisers to acquire new
           customers with appropriate incentives, refine follow-on
           promotions and identify co-promotion opportunities.

     .     Single source online direct marketing solution.  We offer
           advertisers a single source for a full range of promotional
           incentives that can be targeted to any stage in the
           customer lifecycle.  Redeemable both online and in-store,
           these tools include printable coupons for brick-and-mortar
           stores, electronic codes for online purchases, targeted
           e-mails, mail-in rebates, lead generation for trial
           subscriptions and samples, notices of ongoing sales where
           no certificate is necessary, promotional contests and banner
           advertisements.  Advertisers can also use combinations of
           incentives for customized promotions.



<PAGE>


     .     Ability to coordinate online and offline promotions.  For
           advertisers that have both an online and offline presence, we
           can identify prospective customers and then track their
           activities whether shopping online or, with the cooperation of
           the advertiser, in stores.  We enable these businesses to
           provide incentives, such as coupons and savings notices,
           redeemable in their offline stores. With the advertiser's
           support, we can track the redemption of in-store coupons by
           scanning their unique bar codes and adding the shopping
           preference information to our database.  We also help
           offline companies without a web presence identify and reward
           customers with online incentives that their customers can bring
           into a store or use on another web site.

     .     Lower total cost of ownership and improved time to market.  Our
           investments in infrastructure, technology and technical
           personnel allow our advertisers to deploy their promotional
           campaigns without the need to lease, buy or continually upgrade
           the required hardware and software systems, providing
           significant cost savings over an in-house solution.  In
           addition, using both our infrastructure and our targeted
           direct marketing processes and expertise, we enable our
           advertisers to deploy their online marketing campaigns rapidly
           and reliably.  In particular, we power clients' own incentive
           campaign with our proprietary coupon technology solution.
           As a result, our advertisers can remain focused on their
           core businesses while providing compelling offers to consumers.

     .     Multiple distribution vehicles.  Advertisers can reach our
           millions of registered members via promotions at our web site,
           through our marketing network, in cooperative mailings with
           other advertisers, or directly with their own consumers by
           licensing our proprietary technology for use at their own web
           sites.

THE COOLSAVINGS STRATEGY AND SERVICES

     Our mission is to be the leading provider of promotional offers to
consumers while most effectively connecting marketers to their best
customers.  In pursuit of that mission, the key elements of our strategy
are to:

     .     Extend brand awareness and expand our member and advertiser
           base.  We believe strong brand recognition is a powerful
           tool to attract new advertisers and members.  We intend to
           continue to promote our brand online, with advertising
           campaigns on high traffic web sites and cooperative campaigns
           with advertisers and affiliate networks.  We believe our
           marketing efforts will expand our member base while preserving
           its current demographic characteristics, which will strengthen
           the services we provide to advertisers.  As we expand our
           membership, we expect that our services will be attractive to
           additional advertisers, which will in turn make our site more
           attractive to consumers by providing a broader array of
           available promotional offers.

     .     Enhance member profiles.  As we make available additional
           promotional offers and services on our web site and through
           e-mail, we can tailor online promotions to specific members.
           As our members use our site and respond to advertiser
           promotions, we continually enrich our database and develop
           deeper data for predictive modeling and targeting purposes.  We
           plan to continue upgrading our tracking and data mining tools
           to provide additional insight into member interests and
           shopping preferences.

     .     Develop third-party relationships.  We intend to continue to
           pursue relationships to further build our brand, expand our
           reach to consumers and advertisers and enhance our services.


<PAGE>


     DELIVERY OF INCENTIVES

     On behalf of our advertisers, we deliver a variety of promotional
incentives to targeted segments of our member base.  The cost of our
promotional services generally rises with the degree of targeting or
customization we provide because, in our experience, these efforts
generally result in higher response rates for the advertisers.  In
addition, we charge some of our advertisers based upon the performance of
the promotional offers that we deliver for them.

     The coolsavings.com web site is a fast, easy to use experience for
finding coupons and special offers from brands and stores.  To use our
service, consumers register with us, provide demographic data about
themselves, their household and shopping interests, and choose whether to
receive our direct e-mails.  We track our members' page views of and
responses to promotions in our member database.  With an advertiser's
cooperation, we can also track the redemption of incentives.

     The promotional services that we provide our advertisers include:

     .     CoolOffers.  Online and offline businesses can deliver
           incentive offers, including printed and electronic coupons,
           rebates, sales notices and gift certificates, to targeted
           segments of our member base via our web site and our targeted
           e-mail programs.

     .     Solo Targeted and Direct E-Mail.  Our members can elect to
           receive periodic e-mails notifying them of offers that may be
           of personal interest.  This allows us to send targeted e-mails
           to these members on the basis of their demographic profiles and
           shopping preferences.  The e-mails are targeted either through
           pre-selected criteria, our Select Response customized survey
           questions, or using customized models we develop for particular
           campaigns.  Member permission is at the heart of our e-mail
           program.  Therefore, promotional e-mail is only sent to
           registered members who have opted-in to receive them.  In
           addition, we may allow a marketer to send direct mail campaigns
           to our member data file.

     .     Coupon Technology.  Clients with a need to offer secure,
           trackable print-at-home coupons may do so by licensing the use
           of our Coupon Technology ASP Solution.  This allows the client
           to offer an electronic coupon on their website, through their
           e-mails, or through their electronic advertisements.  We
           provide the technology, reporting, tracking and production
           services to the client.

     .     Lead Generation.  We provide advertisers a method of generating
           leads by providing free samples or trial offers of their
           products or services to our members.  These offers are targeted
           to our members by demographic profile and shopping preferences.
           To receive free samples, members voluntarily provide the
           advertiser with contact information such as name, e-mail and
           mailing address, as well as other data about their households.

     .     Category Newsletters. We help our advertisers obtain new
           customers, generate sales and achieve increased brand awareness
           through highly targeted, content-driven monthly e-mails.  These
           e-mails present an advertiser's products and services to
           members in conjunction with topical content which they have
           specifically requested.

     .     Direct Mail.  We provide advertisers an additional communi-
           cation channel by combining postal and e-mail communications
           in convergent campaigns.  Refreshed monthly with new names,
           our postal list currently includes more than 10 million
           consumers that have opted in to receive special offers.




<PAGE>


     ANALYTIC AND RESEARCH SERVICES

     By analyzing individual, demographic and correlative information in
our database, we provide advertisers several methods to gain insight into
our members' preferences.  We can also apply our analytic infrastructure to
analyze the databases of our advertisers upon their request. We use
sophisticated data mining tools to help our advertisers execute effective
promotional campaigns, and we use the collected information to create
predictive models to make future targeting even more effective.  Using e-
mail, we can also contact and survey members who have responded to a
specific offer.


SALES AND MARKETING

     We have built a sales organization dedicated to developing and
maintaining close relationships with advertisers and advertising agencies.
Our sales force is organized into four regions to effectively manage the
breadth and diversity of our 350 key strategic advertisers, manufacturers
and agencies.  We intend to continue to optimize these relationships and
expand our reach into five vertical industry segments:  financial services,
retail, personal and professional services, media and entertainment, and
consumer packaged goods and manufacturing.

     Our marketing department is dedicated to promoting the CoolSavings
brand, acquiring members for our service, and initiating product and
service improvements that meet the needs of our members and advertisers.
In the past, to attract members and increase brand awareness, we have used
a variety of advertising methods, including a national offline branding
campaign that included television, print, outdoor media and radio.
Currently and historically, we have made heavy use of online advertising
consisting of online banner advertisements on high-traffic web sites such
as portals and search engines.  We also have developed network affiliate
programs in which other companies send consumers to the CoolSavings web
site and receive a fee per each resulting member registration.  Some of our
advertisers provide links from their own web sites that click through to
offers on CoolSavings.


OPERATIONS AND TECHNOLOGY

     We have developed a proprietary system to target and personalize
promotional offers from our advertisers to our members.  There are five
main components of our system:

     .     our web server technology, which allows us to display offers of
           interest for each member;

     .     our database, which processes the offers and stores the
           information about our members and their activity on our site;

     .     our data mining and targeting modules, which we use to
           determine the members to whom we will deliver offers and the
           most appropriate offers for each member;

     .     CoolSavings Coupon Manager, our software program that produces
           high-quality coupons and other secure certificates on a
           member's personal computer printer for in-store or mail-in use;
           and

     .     our proprietary administration software, SavingsCenter, which
           we and our advertisers use to create and target our clients'
           offers.



<PAGE>


     Our system has been designed around industry-standard architecture
and is designed to provide availability 24 hours-a-day, seven days-a-week.
Occasionally in the past, we have disconnected our servers to make upgrades
or maintenance checks on our system.  Our system has been available to the
public approximately 99.7% of the time since our launch in 1997.

     Our web servers and the database behind our system, as well as our
data mining servers, are located at the Exodus Communications data center
in Oak Brook, Illinois.  Currently, all site traffic is directed to the
Exodus system, and we maintain a fully redundant version of our entire
system at our Chicago headquarters.


INTELLECTUAL PROPERTY

     We currently hold two United States Patents, No. 5,761,648, entitled
"Interactive Marketing Network and Process Using Electronic Certificates"
and No. 5,855,007, entitled "Electronic Coupon Communication System."

     In addition to our patents, we have registered trademarks, service
marks and copyrights in the United States and other countries.  We also own
common law rights in several other marks, and have registration
applications pending in the United States and other countries.

     We regard the protection of our intellectual property, including our
patents, copyrights, service marks, trademarks, trade dress and trade
secrets, as important to our future success.  We rely on a combination of
these intellectual property rights and contracts to protect the services we
have created and our competitive position in the marketplace. We have
generally entered into confidentiality and invention assignment agreements
with our employees and contractors.  Where we have considered it necessary,
we have required nondisclosure agreements with our suppliers and
advertisers in order to protect confidential information about our business
plans and technology.  Despite these precautions, these arrangements and
the other steps which we have taken may not protect our trade secrets or
prevent another company from copying important parts of our service.  While
we have registered our trademarks and service marks in the U.S. and other
countries, protection of these marks may not be available in every country
where we may do business. See "Item 3. Legal Proceedings" for further
discussion.


COMPETITION

     The market for online direct marketing and media services is rapidly
evolving and intensely competitive.  Barriers to entry for companies in our
market are low, and current and potential competitors can launch new web
sites and/or services at a relatively low cost.

     Our ability to compete depends on many factors, both within and
beyond our control.  These factors include:

     .     advertiser identification and retention;

     .     brand recognition and credibility;

     .     pricing of our services;

     .     breadth of our service offerings for advertisers and consumers;

     .     reliability of service and quality of advertiser support;

     .     advertiser and member acquisition costs;

     .     membership size and demographics;

     .     ability to source and activate members;



<PAGE>


     .     frequency of use and consumer response rates;

     .     technological expertise; and

     .     general demand for online marketing services.

     We believe we are well-positioned to compete in our market as a
result of the breadth and sophistication of our services, the size and
demographics of our member audience, our experienced workforce, our
proprietary technology and our established brand recognition.

     We face competition from traditional direct marketers, including
leading distributors of traditional coupons by mail or newspaper inserts
and from companies offering affinity rewards tied to responses to
advertisements. A leading distributor of traditional newspaper-insert
coupons, which has significant existing relationships with advertisers such
as consumer packaged goods companies, has begun to compete against us
directly by delivering their promotions over the Internet.  We compete with
other web sites, portals and advertising networks, as well as traditional
offline media such as television, radio and print, for a share of
advertisers' total advertising budgets and for consumers' attention.

     We also encounter competition from a number of other sources,
including content aggregation companies, companies engaged in advertising
sales networks, advertising agencies and other companies that facilitate
Internet advertising.


EMPLOYEES

     As of March 1, 2003, we had 108 full-time employees, 39 of whom were
engaged in technology and product development, 35 in sales and marketing,
15 in client and member services and 19 in finance, administration and
operations.  We have never had a work stoppage and our employees are not
covered by any collective bargaining agreement.  We consider our relations
with our employees to be good.


AVAILABLE INFORMATION

     We maintain an Internet web site at http://www.coolsavings.com that
includes a hypertext link to the Securities and Exchange Commission's (SEC)
web site (http://www.sec.gov) where our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all
amendments to those reports are available without charge, as soon as
reasonably practicable following the time that they are filed with or
furnished to the SEC.  Alternatively, all materials that we file with the
SEC may be read and copied at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549.  Information related to the operation
of the Public Reference Room can be obtained by calling the SEC at 1-800-
SEC-0330.


RISK FACTORS

     You should carefully consider the risks, uncertainties and other
factors described below because they could materially and adversely affect
our business, financial condition, operating results, cash flow and
prospects, and/or the market price of our common stock.



<PAGE>


     WE MAY NOT BE ABLE TO SECURE FINANCING TO MEET OUR SHORT AND LONG
TERM CAPITAL NEEDS

     At December 31, 2002, we had $4.9 million of cash and cash
equivalents.  We are in default under the terms of an amended and restated
senior secured loan and security agreement dated July 30, 2001 (the
"Amended and Restated Loan Agreement") with Landmark.  The entire loan plus
accrued interest, totalling $5.7 million at December 31, 2002, is
immediately due and payable at the option of Landmark.  Secondly, Landmark
could redeem its holding of $23.1 million of our Series B Preferred Stock
as of December 31, 2002 at any time.  Although Landmark has funded our
recent cash needs, Landmark has reserved its rights with respect to all
breaches and defaults, and Landmark is under no obligation to advance us
any additional funds.  If we are unable to generate sufficient cash flows
from operations or obtain continuing financing, we may be unable to operate
our business.

     We have received a report from our independent auditors for our
fiscal year ended December 31, 2002 containing an explanatory paragraph
that describes the uncertainty as to our ability to continue as a going
concern due to our historical negative cash flow and because, as of the
date they issued their report, we did not have access to sufficient
committed capital to meet our anticipated needs for at least the next 12
months.  See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."

     WE HAVE A HISTORY OF NET LOSSES AND EXPECT TO CONTINUE TO INCUR NET
LOSSES

     We incurred net losses of $8.3 million in 2002, $29.2 million in 2001
and $39.2 million in 2000.  As of December 31, 2002, our accumulated
deficit was $97.9 million.  We expect to continue to incur net losses
through 2003. We may not be able to achieve or sustain profitability in the
future.

     OUR UNPROVEN BUSINESS MODEL MAKES IT DIFFICULT TO EVALUATE OUR
BUSINESS

     We launched our web site in February 1997, and operate in a market
that continues to change.  We face risks, uncertainties, expenses and
difficulties frequently encountered by companies in new and rapidly
evolving markets, including the Internet advertising and direct marketing
markets. To address these risks and uncertainties, we must, among other
things:

     .     maintain relationships with existing advertisers and attract
           additional advertisers;

     .     attract members who actively and repeatedly take advantage of
           our offers and who make purchases, request information and
           otherwise interact with our advertisers;

     .     attract, integrate, motivate and retain qualified personnel;

     .     enhance our brand recognition;

     .     develop new promotions and services;

     .     continue to upgrade and develop our systems and infrastructure
           to accommodate growth in membership and service enhancements;

     .     anticipate and adapt to the evolving Internet advertising and
           direct marketing markets and changes in advertisers'
           promotional needs and policies;

     .     maintain and defend our intellectual property rights; and

     .     respond to changes in government regulations.



<PAGE>


     We may not be successful in accomplishing these objectives.  Further,
we may not be able to generate or secure the necessary funding to achieve
these objectives.  See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

     OUR COMMON STOCK IS VOLATILE, HAS LIMITED PUBLIC LIQUIDITY AND MAY
LEAD TO LOSSES BY INVESTORS AND RESULT IN SECURITIES LITIGATION

     Our common stock currently trades on the OTC Bulletin Board (OTCBB).
Stockholders may have difficulty buying and selling our stock on the OTCBB.
Since the OTCBB is a broker driven marketplace, we are dependent on
professional market makers to facilitate trading of our stock on the OTCBB.
If market makers do not register to trade our stock on the OTCBB,
stockholders may not have a public market for the purchase and sale of our
securities.

     The market price of our common stock has been volatile and may be
subject to wide fluctuations.  Since our public offering in May 2000, the
per share price of our common stock has fluctuated from a high of $7.13 per
share to a low of $0.03 per share.  Factors that might cause the market
price of our common stock to fluctuate include, without limitation:

     .     quarterly variations in our operating results;

     .     operating results that vary from the expectations of securities
           analysts and investors or from our own forecasts;

     .     interpretation of the effect of our Series B Preferred Stock
           and Series C Preferred Stock on our overall capital structure;

     .     changes in expectations as to our future financial performance,
           including our own forecasts and financial estimates by
           securities analysts and investors;

     .     changes in market valuations of other Internet companies;

     .     changes in governmental regulation of the Internet or Internet
           advertising, including any governmental inquiry of another
           Internet company;

     .     loss of major advertisers;

     .     resolution of our pending or future patent litigation or other
           changes in the status of our intellectual property rights;

     .     pursuit of significant claims or legal proceedings against us;

     .     announcements of technological innovations or new services by
           us or our competitors;

     .     announcements by us or our competitors of significant
           contracts, acquisitions, dispositions, strategic partnerships,
           joint ventures or capital commitments;

     .     changes in our liquidity position;

     .     changes in key personnel;

     .     future sales of our common stock, including sales of common
           stock acquired upon conversion of our Series B Preferred Stock;

     .     announcements of material events related to outstanding loans
           to us; and

     .     volatility in the equity markets.



<PAGE>


     The market prices of the securities of Internet-related and
technology companies are often highly volatile and subject to wide
fluctuations that bear little relation to actual operating performance of
these companies. Also, some companies that have experienced volatility in
the market price of their stock have been subject to securities class
action litigation.  Any securities class action litigation involving us
likely would result in substantial costs and a diversion of senior
management's attention and resources, and likely would harm our stock
price.

     WE DERIVE MOST OF OUR REVENUES FROM CONTRACTS WITH OUR ADVERTISERS
THAT MAY BE CANCELLED ON 30-DAYS NOTICE

     A majority of our current advertising contracts permit either party
to terminate the contract upon 30-days advanced written notice.  We may be
unsuccessful in securing longer commitments. Some advertisers prefer short-
term contracts because they use our service to promote limited-time
promotional events or seasonal products and services.  The possibility that
our advertising contracts can be terminated on 30-days advance written
notice makes it difficult for us to forecast our revenues.  We may not be
able to renew our existing contracts or attract new advertisers.

     OUR OPERATING RESULTS ARE SUBJECT TO SEASONAL FLUCTUATIONS

     Our operating results are subject to seasonal fluctuations that may
make our stock price more volatile.  Advertising sales in traditional
media, such as television and radio, generally are lower in the first and
third calendar quarters of each year.  Further, Internet traffic typically
decreases during the summer months, which in turn may reduce the amount of
advertising to sell and deliver.  We anticipate that our future revenues
will continue to reflect these seasonal patterns.

     WE DEPEND ON COMPELLING PROMOTIONAL OFFERS BY OUR ADVERTISERS

     Our members' usage of our services, and the resulting attractiveness
of our service to advertisers, depends upon the quality of the promotional
offers we deliver and our members' interest in them.  In addition, under
some of our advertising contracts, our revenues depend on members'
responsiveness to specific promotions.  We currently consult with our
advertisers about the type and frequency of incentives they offer, but we
cannot control their choice of promotions or their fulfillment of
incentives.  If our advertisers' promotional offers are not attractive to
our members, we will not be able to maintain or expand our membership or
generate adequate revenues based on the size of our membership or on the
responses we produce. Moreover, if our members are not satisfied with the
offers our advertisers make available to them or with the products or
services they receive upon redemption of offers, their negative experiences
might result in publicity that could damage our reputation, which would
harm our efforts to attract and retain members and advertisers.

     WE DEPEND ON THE SUCCESSFUL INTRODUCTION OF NEW SERVICES AND FEATURES

     To retain and attract members and advertisers, we believe that we
will need to continue to introduce additional services and new features on
our web site.  These new features and services may require us to spend
significant funds on product development and on educating our advertisers
and consumers about our new service offerings.  New services and features
may contain errors or defects that are discovered only after introduction.
Correcting these defects may result in significant costs, service
interruptions, loss of advertisers' and members' goodwill and damage to our
reputation.  In addition, our successful introduction of new technologies
will depend on our advertisers' ability to adapt to using these
technologies, over which we have no control.  If we introduce a service or
feature that is not favorably received, our current members may use our web
site and other services less frequently, our existing advertisers may not
renew their contracts, and we may be unable to attract new members and
advertisers.



<PAGE>


     WE MUST BE ABLE TO ESTABLISH AND MAINTAIN RELATIONSHIPS WITH
OPERATORS OF OTHER WEB SITES TO ATTRACT NEW MEMBERS

     We advertise on third-party web sites using banner advertisements to
attract potential new members. Competition for banner and sponsorship
placements on the highest traffic web sites is intense, and we may not be
able to enter into these relationships on commercially reasonable terms, or
at all.  Even if we enter into or maintain our current relationships with
other web site operators, those sites may not attract significant numbers
of users or increase traffic to our web site.

     INTELLECTUAL PROPERTY LITIGATION AGAINST US CONTINUES TO BE COSTLY
AND COULD RESULT IN THE LOSS OF SIGNIFICANT RIGHTS

     We expect that, as the number of services and competitors in Internet
advertising and direct marketing grows, we will be increasingly subject to
intellectual property infringement, unfair competition and related claims
against us.  Third parties may also seek to invalidate our United States
Patents, No. 5,761,648, entitled "Interactive Marketing Network and Process
Using Electronic Certificates" and No. 5,855,007, entitled "Electronic
Coupon Communication System."  Currently, we are a defendant in two
lawsuits filed by a competitor, each of which alleges that our technology
or business methods infringe on the competitor's patent.  The lawsuits
seek, among other things, to prevent us from using methods that allegedly
violate the competitor's patents.  In addition, competitors have in the
past, and may in the future, name our customers as defendants in these
suits, which may cause these customers to terminate their relationships
with us.  Our efforts to defend these actions may not be successful.  Our
failure to prevail in this litigation could result in:

     .     our paying monetary damages, which could be tripled if the
           infringement is found to have been willful;

     .     an injunction requiring us to stop offering our services in
           their current form;

     .     our having to redesign our technology and business methods,
           which could be costly and time-consuming, even where a redesign
           is feasible; or

     .     our having to pay fees to license intellectual property rights,
           which may result in unanticipated or higher operating costs.

     Because of the ongoing technical efforts of others in our market and
the relatively recent introduction of our technology, we may continue to be
involved with one or more of our competitors in legal proceedings to
determine the parties' rights to various intellectual property, including
the right to our continued ownership of our existing patents.  Our failure
to prevail in these proceedings could harm our business.  See "Item 3 -
Legal Proceedings"

     We cannot predict whether other third parties will assert claims of
infringement or similar charges against us, or whether any past or future
claims will harm our business.  We believe that participants in our market
increasingly are attempting to obtain patent protection for their business
methods.  We cannot predict when or if patents will result from these
efforts, or whether any of these third parties' patents will cover aspects
of our business.  The details of currently pending United States patent
applications are not publicly disclosed until either the patent is issued
or 18 months from filing, depending on the application filing date.  Any
third-party claim, with or without merit, could be time-consuming, result
in costly litigation and damages, cause us to reduce or alter our services,
delay or prevent service enhancements or require us to enter into royalty
or licensing agreements.



<PAGE>


     In addition, legal standards regarding the validity, enforceability
and scope of intellectual property in Internet-related businesses are
unproven and continue to evolve.  In this legal environment, we may be
required to license other parties' proprietary rights in an effort to
clarify our ability to conduct business or develop new services.  Royalty
or licensing agreements, if required, might not be available on terms
acceptable to us, or at all.  If there is a successful claim of
infringement against us and we are unable to develop non-infringing
technology or license the infringed or similar technology on a timely
basis, our business could be substantially harmed.

     PROTECTING OUR PATENTS, TRADEMARKS AND PROPRIETARY RIGHTS MAY BE
COSTLY AND MAY DISTRACT OUR MANAGEMENT

     We regard the protection of our patent rights, copyrights, service
marks, trademarks, trade dress and trade secrets as important to our future
success.  However, the steps we take to protect these and other proprietary
rights will be costly, may require significant management resources and may
be inadequate.  If the steps we take are not adequate, we may lose license
revenues, and potential competitors may be more inclined to offer similar
products and services.  Either of these possibilities could harm our
business.

     PATENTS

     Although we have two issued United States patents and several pending
United States and foreign patent applications directed to different aspects
of our technology and business processes:

     .     our United States patents and any other patent we may obtain
           could be successfully challenged by third parties, which could
           limit or deprive us of the right to prevent others from
           exploiting the electronic certificate issuing and processing
           method or other inventions claimed in our current or future
           patents;

     .     current and future competitors could devise new methods of
           competing with our business that are not covered by our issued
           patents or any other patents we may obtain, or against which
           our issued patents and any other patents we may obtain may be
           ineffective;

     .     our pending patent applications may not result in the issuance
           of patents;

     .     our ability to receive royalties for use of our patents
           by third parties may be limited; and

     .     a third party may have or obtain one or more patents that cause
           specific aspects of our business to be restricted or that
           require us to pay license fees.

     We cannot predict how United States laws and court decisions may
impact our proprietary rights.  Any such impact would need to be assessed
in the context of a particular situation.  We are also uncertain whether
countries other than the United States will grant patents for inventions
pertaining to Internet-related businesses, or as to the extent of
protection those foreign patents would afford if issued. As in the United
States, the legal standards applied abroad for intellectual property in
Internet-related businesses are evolving and unproven.  Any ruling or
legislation that reduces the validity or enforceability of our patents may
seriously harm our business.



<PAGE>


     We presently have one lawsuit pending against a company we believe
has infringed on our patents.  We believe that we have settled that
lawsuit, and the court in that case issued an initial report and
recommendation concurring with our belief and specifying proposed
settlement terms.  That initial report and recommendation has been appealed
by the defendant to the Federal Circuit, and is awaiting disposition. This
litigation has been costly, and, if the above described settlement is not
finalized, the lawsuit may continue over the course of several years.  The
outcome of this lawsuit, as well as any other lawsuits we may file, may not
be favorable to us.  We may not prevail and prevent others from infringing
on our patents and using our proprietary rights. Furthermore, one company
we sued and an affiliate of that company have filed two separate lawsuits
against us seeking damages or to prevent us from using features of our
system or business.  Both companies in the above described lawsuits are
taking steps in the United States Patent and Trademark Office to contest
our patent rights.  On May 2, 2000, the United States Patent and Trademark
Office granted the request for re-examination of our Patent.  Therefore,
our United States Patent No. 5,761,648, "Interactive Marketing Network and
Process Using Electronic Certificates" (the "'648 Patent") will be re-
examined.  The re-examination may result in the '648 Patent being narrowed
in scope or declared invalid.

     We expect that, like other participants in our market, we will
increasingly be subject to infringement claims as the number of services
and competitors in our industry segment grows.  Any infringement claim,
regardless of its merit, could be time-consuming, result in costly
litigation, cause service modifications or delays or require us to enter
into royalty or licensing agreements. Licenses for third party patents
might not be available on terms that are acceptable to us, or at all.

     TRADEMARKS, COPYRIGHTS AND TRADE SECRETS

     We rely on a combination of laws and contractual restrictions to
establish and protect our proprietary rights.  The contractual arrangements
and other steps we have taken to protect our intellectual property may not
prevent misappropriation of our proprietary rights or deter independent
third-party development or use of similar intellectual property. In
addition, we have registered and have applied for registration of
trademarks and service marks in the United States and in other countries.
However, our pending registrations might not be issued and our registered
marks may not prevent others from using similar marks.

     DOMAIN NAMES

     We currently hold the Internet domain name coolsavings.com, as well
as various other related names. The requirements for holding domain names
could change.  As a result, we may not acquire or maintain the
"coolsavings.com" domain name in the United States or all of the countries
in which we wish to conduct business in the future.  This could impair our
efforts to increase brand recognition and to increase traffic to our web
site.  We also could be subject to disputes over our ownership of our
domain names, which could be costly and disruptive.

     LICENSES

     As of March 1, 2003, we have granted licenses to eight competitors
under our patent, several on the condition that they restrict their coupon
distribution in ways acceptable to us. Several of these license agreements
involve the payment to us of royalties or license fees.  Total revenues
generated under these licenses for 2002 were $0.3 million.  If the nature
or scope of the licenses were disputed, we would need to institute
proceedings to enforce our rights under these agreements or under our
patent. In that case, if we did not institute proceedings to enforce our
rights, or if we did not succeed in such proceedings, then our license
revenues could decrease substantially or entirely.



<PAGE>


     WE MAY LOSE BUSINESS OR INCUR LIABILITIES TO OUR ADVERTISERS DUE TO
UNCERTAINTIES OR INACCURACIES IN OUR DATABASE INFORMATION

     It is important to our advertisers that we accurately record our
members' demographics, and track our delivery of offers and advertisements
and, in some instances, redemptions of incentives that are offered to our
members. If the systems we have developed to record information about our
members' demographic profiles, usage of our web site and other member
information do not perform as intended, we may not be able to accurately
evaluate our members' household characteristics or the success of an
advertiser's promotional campaign.  We rely on the accuracy of the
demographic, income and other information provided by our registering
members. If advertisers perceive our tracking and evaluations to be
unreliable or if our members' self-reported information proves to be
inaccurate, we may lose current and potential advertisers, suffer erosion
in our advertising rates or face disputes over proper advertising charges.

     FAILURE TO PROMOTE AND PROTECT OUR BRAND WILL HARM OUR BUSINESS

     We believe that strengthening our brand will be increasingly
important because our market is competitive and has low barriers to entry.
Our ability to promote and position our brand depends on the success of our
marketing efforts and whether we can provide high quality services that
motivate our members to use our services.  If our brand enhancement
strategy is unsuccessful, our business will be harmed.

     WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND FUTURE
COMPETITORS

     The market for e-marketing services is new, rapidly evolving and
intensely competitive. Barriers to entry for companies in our market are
low, and current and potential competitors can launch new web sites and e-
marketing services at relatively low cost.

     Many of our current and potential competitors have longer operating
histories, greater brand recognition, larger customer or user bases, and
significantly greater financial, marketing, technical and other resources
than we do. In addition, our competitors may be acquired by, receive
investments from or enter into other commercial relationships with larger,
well-established and well-financed companies. Therefore, some of our
competitors may be able to devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing policies and devote
substantially more resources to web site and systems development. They may
also try to attract advertisers by offering free services. Increased
competition may cause us to lose brand recognition and market share
and could otherwise harm our business.

     OUR FAILURE TO ATTRACT, ASSIMILATE AND RETAIN HIGHLY SKILLED
PERSONNEL MAY SERIOUSLY HARM OUR BUSINESS

     Our future success depends on the continued services of our senior
management and other key sales and technical personnel, particularly
Matthew Moog, our President and Chief Executive Officer, David Arney, our
Chief Financial Officer, John J. Adams, our Chief Operating Officer, Ken
Treske, our Chief Marketing Officer, Charlie Kingery, our Senior Vice
President of Sales, and David Desser, our Vice President of Business
Affairs and General Counsel.

     Our future success also depends on our ability to identify, attract,
retain and motivate highly skilled employees. Competition for the best
employees in our industry remains intense.  We have occasionally
encountered and may continue to encounter difficulties in hiring and
retaining highly skilled employees, particularly qualified software
developers for our web site and database systems.  We may be unable to
retain our key employees or identify, attract, assimilate or retain other
highly qualified employees in the future.



<PAGE>


     OUR REPUTATION AND BUSINESS COULD BE DAMAGED IF WE ENCOUNTER SYSTEM
INTERRUPTIONS OR CAPACITY LIMITATIONS

     We seek to generate a high volume of traffic and transactions on our
web site.  Our database must also handle a large volume of member data and
information about members' usage of our web site. The satisfactory
performance, reliability and availability of our web site, database systems
and network infrastructure are critical to our reputation and our ability
to attract and retain large numbers of members. Our revenues depend on
promotional offers being readily available for members and our ability to
process their coupon downloads, e-mail responses or other transactions on
our web site.  Any system interruptions that result in the unavailability
of our service or reduced member activity would impair the effectiveness of
our service to advertisers. Interruptions of service may also inhibit our
ability to attract and retain members, which in turn will hinder our sales
and marketing efforts. We have experienced periodic system interruptions,
which may occur from time to time in the future.

     Additionally, acts of sabotage, known as denial of service attacks,
on prominent, high traffic web sites have caused extended interruptions of
service on those web sites. Like other operators of web sites, we could
also face system interruptions or shutdowns as a result of a denial of
service attack.

     A substantial increase in rate of traffic on our web site will
require us to expand and upgrade our technology, processing systems and
network infrastructure. Any unexpected upgrades could be disruptive and
costly. In addition, our existing systems may encounter unexpected problems
as our member base expands. Our failure to handle the growth of our
databases could lead to system failures, inadequate response times or
corruption of our data. We may be unable to expand and upgrade our systems
and infrastructure to accommodate this growth in a timely manner. Any
failure to expand or upgrade our systems could damage our reputation and
our business.

     Furthermore, the increased use of the Internet has caused frequent
interruptions and delays in accessing and transmitting data over the
Internet. If the use of the Internet continues to grow rapidly, the
Internet's infrastructure may not continue to support the demands placed on
it, and its performance and reliability may decline. Interruptions or
delays in Internet transmissions may disrupt our members' ability to access
advertisers' offers on our web site and our ability to send targeted e-
mails.  We also rely on web browser technology to create and target
promotional offers. If access to these web-based systems is interrupted,
our ability to disseminate new offers will be impaired, which could cause
lost revenues or disputes with our advertisers.

     WE RELY ON THIRD-PARTY SERVICE AND EQUIPMENT PROVIDERS, AND ANY
DISRUPTION OR FAILURE IN THE SERVICES OR THE COMPUTER HARDWARE THEY PROVIDE
WILL HARM OUR BUSINESS

     We rely on a third-party service provider to provide access to our
web site and support its operation.  Our web site infrastructure is co-
located at the suburban Chicago facility of Exodus Communications, Inc.
which filed for protection under Chapter 11 of the U.S. Bankruptcy Code in
2001 and was acquired by Cable and Wireless PLC in February 2002.  Our
support arrangement with this provider is for a term of one year and may be
canceled on 30 days notice in certain circumstances. In the event this
arrangement is terminated, we may not be able to find alternative service
providers on a timely basis, on terms acceptable to us or at all.  In
addition, we rely on software licenses from third parties. If these
licenses are terminated or if such software is no longer supported by its
manufacturer, we may not be able to find and install satisfactory alternate
software on a timely basis, on terms acceptable to us or at all.



<PAGE>


     Our success and our ability to attract new members and motivate our
members to respond to our advertisers' offers depends on the efficient and
uninterrupted operation of our computer and communications hardware
systems. Our web servers and the database behind our system, as well as the
servers we use to perform data analysis, are currently located at Exodus, a
Cable and Wireless Service data center in Oak Brook, Illinois. Currently,
all site traffic is directed to the Exodus system and we maintain a
redundant version of our entire system at our Chicago headquarters. The
computer systems at each of our two hosting sites are vulnerable to damage
or interruption from floods, fires, power loss, telecommunication failures,
and other natural disasters. In addition, the backup system in our Chicago
facility has only two hours of emergency back-up power. The occurrence of a
natural disaster or other unanticipated problems at our facility or at the
Exodus facility could result in interruptions in or degradation of our
services. Our business interruption insurance may not adequately compensate
us for resulting losses.

     Furthermore, the computer servers running our system are vulnerable
to general mechanical breakdown or component failure, computer viruses,
physical or electronic break-ins, sabotage, vandalism and similar
disruptions, which could lead to loss or corruption of data or prevent us
from posting offers on our web site, sending e-mail notifications of new
offers or delivering coupons or other certificates to our members.

     WE DEPEND ON INTERNET SERVICE PROVIDERS TO DELIVER OUR E-MAIL
TRANSMISSIONS

     We send e-mail messages on behalf of advertisers to our members who
have requested to receive e-mail from us; we also assemble and transmit e-
mail newsletters to our members which contain promotions from multiple
advertisers.  In order for our members to receive our e-mails, we depend on
Internet Service Providers (ISPs) to accept and deliver those messages to
our members.

     Due to the proliferation of unsolicited e-mail, many ISPs are
developing technologies to limit or eliminate the delivery of unsolicited
e-mail to their members.  Although we send e-mail only to those members who
specifically have requested we do so, the technologies being developed or
currently in use may not respect the choice made by our members.  We, along
with others in the industry that send e-mail, have at various times
experienced the failure of an ISP to deliver e-mails to their customers who
also are our members.

     Many of our members use an e-mail service provided by one of the
relatively small number of large ISPs.  If one or more of those ISPs fails
to deliver our e-mail transmissions, our inability to communicate with
those members could harm our business.  In such a circumstance, we may not
be able to send the volume of e-mail requested by an advertiser.
Additionally, our inability to communicate with those members may cause
them to stop visiting our web site.  If our database of e-mail addresses
shrinks materially as a result of the failure of one or more ISPs to
deliver our e-mail, advertisers may be less willing to purchase our e-mail
products and services.

     WE MAY BE SUBJECT TO CLAIMS OR REGULATORY INVESTIGATIONS AS A RESULT
OF OUR DATA ANALYSIS ACTIVITIES

     The information in our database is an integral part of our business.
We do not sell member identifying information to third parties without the
consent of the member.  Furthermore, we send our e-mail notices and
newsletters to members who have elected to receive them.  Some people who
receive promotions from us may be unhappy that we contacted them.  In
addition, we provide advertisers with aggregate information regarding
member demographics, shopping preferences and past behavior.  Our use of
this aggregated information may cause dissatisfaction among our members or
otherwise lead to negative publicity. There has been substantial publicity,


<PAGE>


governmental investigations and litigation regarding privacy issues
involving the Internet and Internet-based advertising. To the extent that
our data mining and/or other activities conflict with any privacy
protection initiatives or if any private or personally identifiable
information is inadvertently made public, we may become a defendant in
lawsuits or the subject of regulatory investigations relating to our
practices in the collection, maintenance and use of information about, and
our disclosure of these information practices to, our members. Litigation
and regulatory inquiries of these types are often expensive and time
consuming, and their outcome is uncertain. We may need to spend significant
amounts on our legal defense, and senior management may be required to
divert its attention from other aspects of our business.  Furthermore, a
judgment or decree may be entered against us which could require us to pay
damages or to make changes to our present and planned products or services.

     OUR BUSINESS WILL BE HARMED IF OUR ONLINE SECURITY MEASURES FAIL

     Because our efforts to attract and retain members depend, in part, on
potential members' expectations of privacy in using our services, our
business could be damaged by any security breach of our database or web
site. We may be required to spend significant capital and other resources
to protect against security breaches or to alleviate problems caused by
these breaches. Someone circumventing our security measures could
misappropriate proprietary information, corrupt our database or otherwise
interrupt our operations. We could also be subject to liability as a result
of any security breach or misappropriation of our members' personal data.
This could include claims for unauthorized purchases with credit card
information, impersonation or other similar fraud claims, as well as claims
based upon other misuses of personal information, such as unauthorized
marketing. These claims could result in costly litigation and could limit
our ability to attract and retain advertisers and members. Our security
measures may fail to prevent security breaches. Any failure to prevent
security breaches will damage our reputation and harm our business.

     WE MAY BE LIABLE FOR SUPPLYING INACCURATE PROMOTIONAL INFORMATION TO
CONSUMERS

     Our employees may make errors in posting our advertisers' promotions.

We may face liability if the promotional information in the offers
available to our members is inaccurate.  Additionally, any negative
publicity generated as a result of inaccurate information in the offers we
deliver could damage our reputation and diminish the value of our brand
name.

     WE MAY BE HARMED IF OUR ADVERTISERS FAIL TO HONOR THEIR PROMOTIONS ON
OUR WEB SITE OR TO COMPLY WITH APPLICABLE LAWS

     Our success depends largely upon retailers honoring our electronic
and printed coupons and upon advertisers reliably delivering and accurately
representing the listed goods and services. We have occasionally received,
and expect to continue to receive, complaints from our members about
retailers' failure to honor our coupons or about the quality of the goods
and services featured in our promotions. These complaints may be
accompanied by requests for reimbursement or threats of legal action
against us. Any resulting reimbursements or related litigation could be
costly for us, divert management attention, or increase our costs of doing
business.  In addition, our advertisers' promotion of their goods and
services may not comply with federal, state and local laws. Our role in
facilitating advertisers' sales activities may expose us to liability under
these laws. If we are exposed to this kind of liability, we could be
required to pay substantial fines or penalties, redesign our web site or
business processes, discontinue some of our services or otherwise spend
resources to limit our liability.



<PAGE>


     WE DEPEND ON WIDESPREAD ACCEPTANCE OF ONLINE DIRECT MARKETING AND
PROMOTIONS AND THE CONTINUED GROWTH OF ONLINE COMMERCE

     Our success depends on the continued growth and acceptance by both
consumers and advertisers of online direct marketing and other promotional
services available through the Internet. Although incentive promotions and
direct marketing have been provided for many years through newspaper
inserts, direct mailing and other conventional marketing and sales
channels, they have only recently been offered on the Internet. Many of our
current or potential advertising customers, particularly traditional
offline businesses, have little or no experience using the Internet for
advertising purposes, and may be reluctant to spend money on our services.
As a result, we face a longer sales cycle when dealing with traditional
offline businesses. At times, these sales cycles can last more than a year.
In addition, some traditional retailers may not readily accept our
computer-generated certificates as valid, in part because of their
cashiers' lack of familiarity with them and the risk that these coupons can
be counterfeited. The other services we offer, including the use of
targeted e-mails to alert consumers to savings opportunities, also
represent new marketing methods whose acceptance by consumers and
advertisers is less certain than traditional marketing methods. Although we
do not send unsolicited e-mail, commonly known as "spam," negative public
perception associated with "spam" could reduce the demand for our services.

     In addition, we are dependent upon the continued growth of the
Internet as a medium for commerce. Demand for services and products sold
over the Internet is uncertain for a number of reasons, including concerns
related to network reliability and poor performance.  Furthermore, concerns
about the security of transactions conducted on the Internet and consumer
privacy may inhibit the growth of the Internet generally, and online
commerce in particular. Any compromise of security involving Internet-based
transactions could result in negative publicity and deter people from using
the Internet or from using it to conduct transactions that involve
transmitting confidential information, such as registering for membership
or purchasing goods and services.  Changes in or insufficient availability
of telecommunications services to support the Internet also could result in
slower response times and reduced usage of the Internet. If use of the
Internet does not continue to grow, grows more slowly than expected or does
not become a viable commercial marketplace, our business will suffer.

     CHANGES IN CONSUMER AND ADVERTISER TRENDS COULD HARM OUR BUSINESS

     We derive substantially all of our revenues from fees charged to
advertisers for our promotional services. Therefore, we will be affected by
changing trends in retail advertising, such as the trend away from periodic
promotions and toward "everyday low prices." In addition, many of our
advertisers are national retailers and suppliers of consumer products and
services. These businesses are affected by the general economy as well as
consumer confidence, which has at times diminished despite otherwise strong
financial conditions. Consumer spending also can be affected by trends
related to lifestyle, such as changing tastes in fashion or entertainment.

     WE MAY NOT BE ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL DEVELOPMENTS
AND EVOLVING INDUSTRY STANDARDS

     The Internet is characterized by rapidly changing technology,
evolving industry standards, frequent new service and product
announcements, introductions and enhancements, and changing consumer and
advertiser demands. Our future success will depend on our ability to adapt
our services to rapidly changing technologies and evolving industry
standards and to continually improve the performance, features and
reliability of our services. For example, we may be required to adapt our
services to be compatible with Internet-connected devices other than
traditional personal computers, such as handheld and wireless devices. We
may also need to adapt to evolving standards resulting from the convergence


<PAGE>


of the Internet, television and other media. The widespread adoption of new
Internet, networking or telecommunications technologies or other
technological changes could require us to incur substantial expenditures to
modify or adapt our services or infrastructure.

     FEDERAL, STATE AND LOCAL GOVERNMENTS MAY FURTHER REGULATE THE
INTERNET, INTERNET ADVERTISING AND PRIVACY WHICH COULD SUBSTANTIALLY HARM
OUR BUSINESS

     The adoption or modification of laws or regulations relating to the
Internet, Internet-based advertising and privacy, and the application of
traditional legal principles to on-line activities, could harm our
business. In particular, our business could be severely damaged by any
regulatory restrictions on our collection or use of information about our
members.

     Laws and regulations that apply to Internet advertising and
communications and Internet users' privacy are becoming more prevalent. For
example, the United States Congress and Federal Trade Commission have
adopted laws and regulations regarding the online collection and use of
information from children and the content of Internet communications, and
various states regulate e-mail marketing and online privacy.  However, even
in areas where there has been some legislative action, the laws governing
the Internet remain largely unsettled. There is no single government body
overseeing our industry, and some existing state laws have different and
sometimes inconsistent application to our business. It may take years to
determine whether and how existing laws, such as those governing
intellectual property, privacy, libel, taxation, determination of proper
state jurisdiction taxation and the need to qualify to do business in a
particular state, apply to the Internet, Internet advertising and online
activities in general.  Also, we have conducted trivia quizzes and other
contests and sweepstakes on our web site, which may be subject to gaming
and sweepstakes laws. Our attempts to comply with these laws may be
inadequate, in part because the effect of these laws on our activities is
often unclear.  In addition, since our web site can be accessed from
foreign counties, our business may be subject to foreign laws and
regulations.  Activities that may be acceptable in the United States may
not be acceptable in foreign jurisdictions.

     We expect that regulation of the Internet and Internet advertising
will intensify. New laws could slow the growth in Internet use and
otherwise adversely affect the Internet as a commercial medium, which would
harm our business. For example, a number of proposals to restrict the
collection of information about Internet users and to tax Internet-based
transactions are under consideration by federal, state, local and foreign
governmental organizations. A three-year federal moratorium on new taxes on
Internet access expired in October 2001, and was extended in November 2001
for two years. This moratorium does not preempt state tax laws; there is no
federal law preempting the levy of state sales taxes to online e-commerce
activities. The taxation of online transactions or other new regulations
could increase our costs of doing business or otherwise harm us by making
the Internet less attractive for consumers and businesses.  The application
of existing laws such as those governing intellectual property and privacy
to the Internet and Internet advertising lends additional uncertainty to
our business.

     Any application of existing laws and regulations to the Internet; new
legislation or regulation that imposes stricter restrictions on privacy,
consumer protection or advertising practices; any government investigation
of our privacy practices or other business methods; or the application of
laws from jurisdictions whose laws do not currently apply to us could:

     .     create uncertainty in the marketplace that could reduce demand
           for our services;

     .     limit our ability to collect and to use data from our members,
           which could prevent us from attracting and retaining
           advertisers;



<PAGE>


     .     result in expensive litigation, costly and disruptive efforts
           to respond to governmental investigations and burdensome fines
           or penalties;

     .     increase the cost of delivering our services to advertisers;

     .     reduce the effectiveness of our targeted promotional
           services; or

     .     in some other manner harm our business.


     OUR SERIES B PREFERRED STOCKHOLDER HAS THE ABILITY TO EXERCISE
SIGNIFICANT CONTROL OVER US WHICH MAY DETER THIRD PARTIES FROM ACQUIRING US

     The holder of our Series B Preferred Stock has the ability to control
all matters requiring approval by our stockholders, including the election
and removal of directors and the approval of any merger, consolidation or
sale of all or substantially all of our assets. In addition, pursuant to
the terms of our Certificate of Incorporation, the Series B Preferred
stockholder is entitled to designate not less than a majority of the Board
of Directors of the Company. Among other limitations, without the approval
of the holders of at least a majority of the outstanding shares of Series B
Preferred Stock, we may not:

     .     amend our charter document or our bylaws;

     .     merge or consolidate with any other company or sell all or
           substantially all of our assets;

     .     make acquisitions of other businesses or assets or enter into
           joint ventures or partnerships with other entities that would
           involve the payment of consideration of $1 million or more;

     .     purchase, redeem or otherwise acquire for value any shares of
           our capital stock (with certain exceptions); or

     .     authorize or issue equity securities or securities exercisable
           for or convertible into equity securities other than for cash
           and shares issuable upon conversion and exercise of securities
           outstanding on the date of issuance of the Series B Preferred
           Stock and shares issuable under our 2001 Stock Option Plan.

     These restrictions provide the holder of the Series B Preferred Stock
with significant control over us and may discourage others from initiating
potential merger or other change of control transactions.  In addition, if
the holder of the Series B Preferred Stock were to convert a portion of the
Series B Preferred Stock and sell the common stock issued on conversion,
the price of our common stock could decrease substantially.


ITEM 2.  PROPERTIES

     Our executive and operating offices are currently located in Chicago,
Illinois, in a 48,373 square foot leased facility. We occupy 31,919 square
feet, have sublet 6,119 square feet, and are attempting to sublet the
remaining unoccupied space.  The lease expires in 2010.  In 2002, we
terminated the lease agreement for 14,035 square feet of our office
facility. We also lease 3,251 square feet of office space in San Francisco,
California, pursuant to a lease that expires on July 31, 2005, and 3,078
square feet of office space in New York City, New York, pursuant to a lease
that expires on June 30, 2005, each for use as a sales office.




<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

     On October 21, 1998, we instituted a lawsuit in the Northern District
of Illinois against Catalina Marketing International, Inc. ("Catalina
Marketing"), and its affiliate Supermarkets Online, Inc. for infringement
of our '648 Patent seeking unspecified damages and a permanent injunction
against further infringement.  The defendants filed counterclaims alleging
invalidity of our patent and sought unspecified damages and injunctive
relief. In addition, on February 18, 2000, Catalina Marketing filed a
request for re-examination of our '648 Patent with the United States Patent
and Trademark Office, which request was granted on May 2, 2000.  Therefore,
our '648 Patent will be re-examined, which may result in the patent being
narrowed in scope or declared invalid.  On February 21, 2003, we settled
this lawsuit and agreed to pay Catalina Marketing $0.4 million.  The
settlement dismissed all claims and counterclaims of the parties, including
claims for attorneys' fees and expenses, with prejudice.  The payment of
this settlement was shared with a third party, resulting in a net expense
to us of $0.2 million.  We recorded this net expense as a charge to general
and administrative expense in 2002.

     On November 15, 1999, Catalina Marketing filed a separate lawsuit
against us in the United States District Court for the Middle District of
Florida. The complaint alleges that our systems and methods infringe
Catalina Marketing's United States Patent No. 4,674,041 (the "'041
Patent"), and seeks to enjoin us from further infringing its patent. The
case was transferred to the U.S. District Court for the Northern District
of Illinois, which ruled that we did not infringe the '041 patent.  On May
8, 2002, the United States Court of Appeals for the Federal Circuit
affirmed-in-part, reversed-in-part, and vacated-in-part the non-
infringement ruling of the U.S. District Court for the Northern District of
Illinois.  As a result of this ruling, this litigation is not concluded.
The case has been remanded to the Northern District for further proceedings
to determine whether we have any liability for infringement of the '041
patent.  Discovery in this case is ongoing, and trial has been set for
January 2004. We will continue to defend the action vigorously.  An
unfavorable outcome for us is considered neither probable nor remote by
management at this time, and an estimate of possible loss or range of
possible losses cannot currently be made.

     On February 12, 2000, Supermarkets Online, Inc., an affiliate of
Catalina Marketing filed a lawsuit against us in the United States District
Court for the Central District of California. The complaint alleges that
our systems and methods infringe its United States Patent No. 6,014,634
(the "'634 Patent"), and seeks unspecified damages and injunctive relief.
The lawsuit is currently stayed, except that fact discovery is permitted.
This stay may be lifted at any time.  We have filed with the Patent and
Trademark Office a request for re-examination of the '634 patent, which
request for re-examination was granted in March 2001.  An unfavorable
outcome for us is considered neither probable nor remote by management at
this time, and an estimate of possible loss or range of possible losses
currently cannot be made.

     On August 23, 1999, we instituted a lawsuit in the Northern District
of Illinois against Brightstreet.com, Inc. ("Brightstreet") for infringe-
ment of the '648 Patent, seeking unspecified damages and a permanent
injunction against further infringement. Brightstreet filed counterclaims
alleging invalidity and unenforceability of our patent and seeking
unspecified damages and injunctive relief.  The parties agreed to a
settlement of the lawsuit in open court on October 29, 2001.  Subsequently,
Brightstreet objected to the report and recommendation of the court that
the written settlement agreement we presented most accurately reflected the
agreement reached by the parties.  On July 8, 2002, the United States
District Court for the Northern District of Illinois fully adopted the
report and recommendation of the Magistrate Judge concurring with our
belief that the litigation had been settled, denied Brightstreet's
objections to the report and recommendation, adopted the written settlement


<PAGE>


agreement we presented, and dismissed the case with prejudice.  On
August 9, 2002, Brightstreet appealed the ruling of the District Court to
the United States Court of Appeals for the Federal Circuit (the "Federal
Circuit").  Both parties have submitted written positions to the Federal
Circuit.  A date for our argument has not been set by the Federal Circuit.
An unfavorable outcome for us is considered neither probable nor remote by
management at this time, and an estimate of possible loss or range of
possible losses cannot currently be made.

     The foregoing pending lawsuits, while pending for at least three
years, are nevertheless in the pre-trial discovery stage (except to the
extent we may have reached a settlement in the Brightstreet lawsuit) and
may not be resolved favorably to us. For example, we may not prevail and
prevent others from using our proprietary rights.  We may be required to
alter or stop selling our services, or to pay costs and legal fees or other
damages in connection with these cases and the various counterclaims that
have been asserted against us, and our patents or future patents may be
found invalid or unenforceable. Furthermore, additional counterclaims,
separate lawsuits or other proceedings may be brought against us to
invalidate our patents or force us to change our services or business
methods.

     In October 2002, we received a demand for arbitration from Coupco,
Inc. ("Coupco") relating to a dispute over our obligation to pay royalties
under our Patent License Agreement with Coupco which was executed on
April 6, 2000.  We have opposed Coupco's demand and are currently
investigating the factual and legal bases for Coupco's demand;  however, we
have recorded a charge in 2002 of $0.2 million for the full amount of the
demand.

     In February 2003, we received notice of entry of an order by the
United States Bankruptcy Court of the Northern District of California,
Division 3 approving a Settlement Agreement and Mutual Release with
Netcentives, Inc. (the "Settlement").  Pursuant to the Settlement, we
recorded a gain of $0.3 million in our financial statements as a reduction
of cost of revenues in 2002.  In addition, the Settlement with Netcentives,
Inc. released us from any past or future obligation of payments to
Netcentives, Inc.  We had recorded a charge of $0.3 million for unpaid
service fees to Netcentives, Inc. in 2001.  This charge was reversed
against cost of revenues in 2002.

     Currently, we are also involved in other legal proceedings arising in
the ordinary course of business, none of which is expected to have a
material adverse effect on our financial position or results of operations.

     We may be involved in additional litigation, investigations or other
proceedings in the future. Any litigation, investigation or proceeding,
with or without merit, could be costly and time-consuming and could divert
our management's attention and resources, which in turn could harm our
business and financial results.


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

     No matters were submitted to a vote of our security holders during
the fourth quarter of the fiscal year covered by this report.




<PAGE>


                                PART II


ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND
         RELATED STOCKHOLDER MATTERS

MARKET INFORMATION.

     Our common stock is traded on the OTC Bulletin Board under the symbol
"CSAV.OB."  From May 19, 2000 through November 20, 2001, our common stock
was traded on the NASDAQ National Market under the symbol "CSAV."  The
following table presents the per share high and low close prices of our
common stock for the periods indicated as reported by the OTC Bulletin
Board or the NASDAQ National Market, as the case may be.

                                                    High       Low
                                                   -----      -----

Fiscal Year Ended December 31, 2002
     First Quarter 2002                            $0.18      $0.08
     Second Quarter 2002                            0.15       0.05
     Third Quarter 2002                             0.13       0.03
     Fourth Quarter 2002                            0.16       0.06

Fiscal Year Ended December 31, 2001
     First Quarter 2001                            $1.94      $0.42
     Second Quarter 2001                            0.52       0.28
     Third Quarter 2001                             0.42       0.15
     Fourth Quarter 2001                            0.25       0.05

     On March 1, 2003, the closing sales price of our common stock was
$0.30, and our common stock was held by approximately 1,800 holders of
record.

     We have never declared nor paid any cash dividends on our common
stock. We currently anticipate that we will retain any future earnings for
the development and operation of our business. Accordingly, we do not
anticipate paying cash dividends on our capital stock in the foreseeable
future.

     The holders of the Series B Preferred Stock are entitled to receive
8% per annum "in-kind" stock dividends.  As of December 31, 2002, 1,822,567
shares of Series B Preferred Stock were issuable with respect to accrued,
but not declared, dividends.  Dividends are declared quarterly on
January 1, April 1, July 1, and October 1.


RECENT SALES OF UNREGISTERED SECURITIES

     During the fourth quarter of 2002, we issued and sold unregistered
securities in the amounts, at the times and for the aggregate amounts of
consideration listed as follows:

     Under a securities purchase agreement dated November 12, 2001 between
us and Landmark (the "Securities Purchase Agreement"), Landmark was granted
the right to purchase additional shares of Series B Preferred Stock at
$0.1554 per share (the "Landmark Shortfall Rights") upon the occurrence of
certain events (the "Shortfall Events").  As a result of our failure to
maintain current assets at levels specified in the Securities Purchase
Agreement, a Shortfall Event occurred as of June 30, 2002.  On October 24,
2002, Landmark exercised its Landmark Shortfall Rights under the Securities
Purchase Agreement with respect to such Shortfall Event for 17,825,212
shares of Series B Preferred Stock and paid us $2.8 million ($0.1554 per
share). The Series B Preferred Stock has certain conversion rights and has
an 8% annual dividend, payable quarterly in additional shares of Series B


<PAGE>


Preferred Stock. As a result of defaults under an amended and restated
senior secured loan and security agreement dated July 30, 2001 (the
"Amended and Restated Loan Agreement"), Landmark may at its option require
us to redeem all of the issued and outstanding Series B Preferred Stock at
any time.

     In December 2002, at our request, Landmark applied the $8.8 million
of principal and $0.7 million of accrued interest then outstanding under a
grid note, as amended (the "Grid Note") (which principal amount was
advanced by Landmark in multiple drawdowns when additional Shortfall Events
occurred, and includes an additional loan related to our obligation to
reimburse Landmark for legal fees in connection with the Landmark
Transaction) against the purchase of 60,967,777 shares of Series B
Preferred Stock ($0.1554 per share).

     The recipient of the above securities in each such transaction
represented their intention to acquire the securities for investment only
and not with a view to, or for sale in connection with, any distribution
thereof and appropriate legends were affixed to the share certificates and
instruments issued in such transactions. All recipients had access, through
their relationship with us, to information about us.  The above shares were
issued in reliance on the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D
thereunder.


ITEM 6.  SELECTED FINANCIAL DATA

     The statement of operations data set forth below for the years ended
December 31, 2002, 2001 and 2000 and the balance sheet data as of
December 31, 2002 and 2001 have been derived from audited financial
statements included elsewhere within this annual report. The statement of
operations data for the years ended December 31, 1999 and 1998 and the
balance sheet data as of December 31, 2000, 1999 and 1998 are derived from
audited financial statements that do not appear in this report.

     You should read the selected financial data set forth below along
with the financial statements and related notes with "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
which are included elsewhere in this report.


<PAGE>


<table>

<caption>
                                                             Year Ended December 31,
                                 ----------------------------------------------------------------------
                                        2002          2001           2000         1999          1998
                                     ----------    ----------     ----------   ----------    ----------
                                             (in thousands, except share and per share data)

                                 <c>           <c>            <c>          <c>           <c>
Statement of Operations Data:
  Net revenues. . . . . . . . . .    $   26,360    $   22,173     $   39,866   $   12,916    $    1,143
  Cost of revenues. . . . . . . .         3,030         5,739          7,172        1,851           428
                                     ----------    ----------     ----------   ----------    ----------
  Gross profit. . . . . . . . . .        23,330        16,434         32,694       11,065           715
                                     ----------    ----------     ----------   ----------    ----------
  Operating expenses:
    Sales and marketing . . . . .        14,281        17,814         42,335       17,933         2,494
    Product development . . . . .         4,002         6,092          8,353        4,574         1,217
    General and administrative. .         8,858        18,184         21,384        5,691         2,350
    Lease exit costs. . . . . . .         2,110         --             --           --            --
    Loss on asset impairment. . .         1,233         --             --           --            --
                                     ----------    ----------     ----------   ----------    ----------
      Total operating expenses. .        30,484        42,090         72,072       28,198         6,061
                                     ----------    ----------     ----------   ----------    ----------
    Loss from operations. . . . .        (7,154)      (25,656)       (39,378)     (17,133)       (5,346)
      Interest (expense) income,
        net . . . . . . . . . . .        (1,133)         (583)           138          265            40
      Amortization of debt
       discount . . . . . . . . .         --           (3,096)         --           --             (435)
      Other settlement expense. .         --             (219)         --           --            --
      Extraordinary gain. . . . .         --              327          --           --            --
                                     ----------    ----------     ----------   ----------    ----------
    Net loss. . . . . . . . . . .    $   (8,287)   $  (29,227)    $  (39,240)  $  (16,868)   $   (5,741)
                                     ==========    ==========     ==========   ==========    ==========

    Loss applicable to common
      stockholders. . . . . . . .    $   (9,196)   $  (30,658)    $  (59,108)  $  (16,868)   $   (5,741)
                                     ==========    ==========     ==========   ==========    ==========
    Historical loss per common
      share, basic and diluted. .    $    (0.24)   $    (0.78)    $    (1.63)  $    (0.57)   $    (0.27)
                                     ==========    ==========     ==========   ==========    ==========
    Weighted average shares used
      to compute historical basic
      and diluted loss per
      common share. . . . . . . .    39,093,660    39,093,660     36,313,759   29,804,681    21,547,177
                                     ==========    ==========     ==========   ==========    ==========



<PAGE>


                                                                December 31,
                                 ----------------------------------------------------------------------
                                        2002          2001           2000         1999          1998
                                     ----------    ----------     ----------   ----------    ----------
                                                             (in thousands)
Balance Sheet Data:
  Cash and cash equivalents . . .    $    4,867    $    5,144      $   7,041   $   17,489    $    4,895

  Working (deficit) capital . . .        (1,299)      (10,761)        (1,623)      15,703         3,788

  Total assets. . . . . . . . . .        14,005        17,964         29,150       29,590         6,371

  Long-term debt,
    including current portion . .         5,592        14,281          4,389          878           300

  Total convertible redeemable
    preferred stock . . . . . . .        25,041        12,058          --           --            --

  Total stockholders' (deficit)
    equity. . . . . . . . . . . .       (24,219)      (15,023)         9,743       19,120         4,594




</table>


<PAGE>


ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

     You should read the following discussion of our financial condition
and results of operations along with the financial statements and the
related notes included elsewhere in this report. This discussion contains
forward-looking statements based on our current expectations, assumptions,
estimates and projections.  These forward-looking statements involve risks
and uncertainties. Our actual results and performance could differ
materially from those expressed in or implied by these forward-looking
statements as a result of numerous risks, uncertainties and other factors,
many of which are described in "Item 1.  Business - Risk Factors" and
elsewhere in this report.  See "Cautionary Note Regarding Forward-Looking
Statements."


OVERVIEW

     Beginning in 2001, we entered into a series of transactions with
Landmark whereby Landmark made loans to and equity investments in our
business.  This series of transactions resulted in a change in control of
our company.  Landmark's principal business interests are in the media
industry, and it owns and operates entities engaged in newspaper and other
print publishing, television broadcasting and cable television programming
services. Landmark has experience in building value and improving
operating, marketing and financial performance of companies that it owns or
controls.


RECENT DEVELOPMENTS

INVESTMENT BY LANDMARK COMMUNICATIONS, INC. IN COOLSAVINGS, INC.

     GRID NOTE

     Under the terms of that certain Securities Purchase Agreement dated
July 30, 2001, we agreed that if certain events occurred prior to
December 31, 2002, defined therein as "Shortfall Events", Landmark would
have the right to acquire additional shares of Series B Preferred Stock at
a price of $0.1554 per share.  Among other things, Shortfall Events would
occur if we failed to maintain an excess of current assets over current
liabilities at or above prescribed amounts.  The number of shares would
equal the "Shortfall Amount" (generally the cash needed by us in connection
with a Shortfall Event) divided by $0.1554.  Under a letter agreement dated
November 12, 2001, we agreed that when Shortfall Events occurred, Landmark
could elect to loan us the Shortfall Amount under the Grid Note.

     As Shortfall Events occurred during 2001, Landmark loaned us an
aggregate of $17.3 million under the Grid Note.  On November 12, 2001,
pursuant to the Securities Purchase Agreement, Landmark exercised its
rights to apply $10,000 of principal and $108 of accrued interest then
outstanding to the purchase of 65,057,936 shares of the Company's $0.001
par value  Cumulative Preferred Series B stock (the "Series B Preferred
Stock") at a price per share of  $0.1554.  On February 28, 2002, Landmark
loaned us an additional $1.5 million under the Grid Note, bringing the
outstanding principal balance (including advances made in 2001) to $8.8
million.  This balance included $8.0 million related to Shortfall Events
and $0.8 million related to our obligation to reimburse Landmark for legal
fees related to the Landmark Transaction.

     On December 20, 2002, Landmark, at our request, applied the $8.8
million of principal and $0.7 million of accrued interest then outstanding
under the Grid Note against the purchase of 60,967,777 shares of Series B
Preferred Stock ($0.1554 per share).  As of December 31, 2002, the Grid
Note had no outstanding principal or accrued interest balance.  The Grid
Note bears interest at eight percent (8%) per annum and may evidence up to
$20.0 million in advances.



<PAGE>


     SALE OF SERIES B PREFERRED STOCK

     On November 12, 2001, pursuant to the Securities Purchase Agreement,
Landmark exercised its rights to apply $10,000 of principal and $108 of
accrued interest then outstanding to the purchase of 65,057,936 shares of
our Series B Preferred Stock at a price per share of  $0.1554.  On
November 12, 2001, pursuant to the Securities Purchase Agreement, we agreed
that Landmark could elect to loan us the Shortfall Amount under the Grid
Note.

     On October 24, 2002, in connection with one Shortfall Event which
occurred on June 30, 2002 (related to the amount of current assets over
current liabilities at such date), Landmark exercised its right to purchase
17,825,212 shares of Series B Preferred Stock and paid us $2.8 million
($0.1554 per share).

     On December 20, 2002, Landmark, at our request, applied the $8.8
million of the principal and $0.7 million of accrued interest then
outstanding under the Grid Note against the purchase of 60,967,777 shares
of Series B Preferred Stock ($0.1554 per share).

     The Series B Preferred Stock has certain conversion rights and has an
8% annual dividend, payable quarterly in additional shares of Series B
Preferred Stock.  As a result of the defaults under the Amended and
Restated Loan Agreement, Landmark may at its option require us to redeem
for cash all of the issued and outstanding Series B Preferred Stock at any
time.

     As of March 1, 2003, Landmark holds 150,422,669 shares of Series B
Preferred Stock (and has rights with respect to accrued dividends thereon)
and holds a warrant to purchase 11,099,832 shares of our common stock.
Landmark's ownership will continue to grow through the issuance of
additional shares of Series B Preferred Stock and warrants as "in-kind"
payments for dividends and interest accruing on the Series B Preferred
Stock and a $5.0 million senior secured note (the "Senior Secured Note"),
respectively.


CALL OPTION AGREEMENT

     In April 2002, Landmark acquired 10,889,636 shares of our common
stock from Lend Lease International Pty. Limited of Australia. Contem-
poraneously with the purchase, we entered into a call option agreement with
Landmark, whereby we have the right to acquire, subject to certain terms
and conditions, all 10,889,636 shares of common stock from Landmark.  The
call price is $0.08 per share plus seven percent interest thereon,
compounded annually.  We can exercise this call option at any time after
April 5, 2003 and prior to March 31, 2008, subject to certain terms and
conditions.  We do not have any right to call any other shares of our
capital stock held by Landmark.


LEGAL PROCEEDINGS

     In May 2002, the United States Court of Appeals for the Federal
Circuit affirmed-in-part, reversed-in-part, and vacated-in-part the non-
infringement ruling of the U.S. District Court for the Northern District of
Illinois in a lawsuit filed against us by Catalina.  The complaint alleges
that our systems and methods infringe Catalina's '041 Patent, and seeks to
enjoin us from further infringing its patent.  As a result of the ruling,
this litigation is not concluded.  The case has been remanded to the
Northern District for further proceedings to determine whether we have any
liability for infringement of the '041 Patent.  Discovery in this case is
ongoing, and trial has been set for January 2004.  We will continue to
defend the action vigorously.



<PAGE>


     In October 2002, we received a demand for arbitration from Coupco
relating to a dispute over our obligation to pay royalties under our
April 6, 2000 Patent License Agreement with Coupco.  We have opposed
Coupco's demand and are currently investigating the factual and legal bases
for Coupco's demand; however, we have recorded a charge in 2002 for the
full amount of the demand.

     On February 12, 2000, Supermarkets Online, Inc., an affiliate of
Catalina Marketing filed a lawsuit against us in the United States District
Court for the Central District of California. The complaint alleges that
our systems and methods infringe its United States Patent No. 6,014,634
(the "'634 Patent"), and seeks unspecified damages and injunctive relief.
The lawsuit is currently stayed, except that fact discovery is permitted.
This stay may be lifted at any time.  We have filed with the Patent and
Trademark Office a request for re-examination of the '634 patent, which
request for re-examination was granted in March 2001.  An unfavorable
outcome for us is considered neither probable nor remote by management at
this time, and an estimate of possible loss or range of possible losses
currently cannot be made.

     On August 23, 1999, we instituted a lawsuit in the Northern District
of Illinois against Brightstreet.com, Inc. ("Brightstreet") for infringe-
ment of the '648 Patent, seeking unspecified damages and a permanent
injunction against further infringement. Brightstreet filed counterclaims
alleging invalidity and unenforceability of our patent and seeking
unspecified damages and injunctive relief.  The parties agreed to a
settlement of the lawsuit in open court on October 29, 2001.  Subsequently,
Brightstreet objected to the report and recommendation of the court that
the written settlement agreement we presented most accurately reflected the
agreement reached by the parties.  On July 8, 2002, the United States
District Court for the Northern District of Illinois fully adopted the
report and recommendation of the Magistrate Judge concurring with our
belief that the litigation had been settled, denied Brightstreet's
objections to the report and recommendation, adopted the written settlement
agreement we presented, and dismissed the case with prejudice.  On
August 9, 2002, Brightstreet appealed the ruling of the District Court to
the United States Court of Appeals for the Federal Circuit (the "Federal
Circuit").  Both parties have submitted written positions to the Federal
Circuit.  A date for our argument has not been set by the Federal Circuit.
An unfavorable outcome for us is considered neither probable nor remote by
management at this time, and an estimate of possible loss or range of
possible losses cannot currently be made.

     In February 2003, we received notice of entry of an order by the
United States Bankruptcy Court of the Northern District of California,
Division 3 approving the Settlement with Netcentives, Inc.  Pursuant to the
Settlement, we recorded a gain of $0.3 million in the financial statements
as a reduction of cost of revenues in 2002.  In addition, the Settlement
released us from any past or future obligation of payments to Netcentives,
Inc.  We had recorded a charge of $0.3 million for unpaid service fees to
Netcentives, Inc. in 2001.  This charge was reversed against cost of
revenues in 2002.

     On October 21, 1998, we instituted a lawsuit in the Northern District
of Illinois against Catalina Marketing and its affiliate Supermarkets
Online, Inc. for infringement of our United States '648 Patent, seeking
unspecified damages and a permanent injunction against further
infringement.  Catalina Marketing filed counterclaims alleging the
invalidity of our patent and sought unspecified damages, attorneys' fees
and injunctive relief. On February 21, 2003, we settled this lawsuit and
agreed to pay Catalina Marketing $0.4 million.  The settlement dismissed
all claims and counterclaims of the parties, including claims for
attorneys' fees and expenses, with prejudice.  The payment of this
settlement was shared with a third party, resulting in a net expense to us
of $0.2 million.  We recorded this net expense as a charge to general and
administrative expense in 2002.



<PAGE>


     We have incurred and expect to continue to incur significant legal
fees in connection with out current litigation.  We are defending
vigorously these actions and continue to explore the possibility of
settlement.  In addition to the costs of litigation, a final judgement
against the Company in any of the aforementioned litigation could have a
material adverse effect on our business.  See "Item 1. Business - Risk
Factors: Intellectual Property Litigation Against Us Continues To Be Costly
And Could Result In The Loss Of Significant Rights."


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our significant accounting policies are more fully described in
Note 1 of our Notes to Financial Statements.  The financial statements have
been prepared with generally accepted accounting principles.  However,
certain of our accounting policies are particularly important to the
portrayal of our financial position and results of operations and require
significant judgements by our management.  The preparation of the financial
statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods.  Management bases its estimates and judgements on historical
experience and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgements about the carrying value of assets and liabilities that are not
readily apparent from other sources. Our critical accounting policies are
as follows:

     .     revenue recognition

     .     estimation of sales credits and the allowance for doubtful
           accounts

     .     capitalization of web site development costs

     .     valuation of long-lived and intangible assets


REVENUE RECOGNITION

     We recognize revenue from the sale of products and services when a
contract has been signed, the product or service has been provided, the fee
is fixed and determinable and the collection of the resulting receivable is
reasonably assured.  We assess whether the fee is fixed and determinable
based on contract terms for particular products and services.  If the
product or service being provided is derived from activity recorded on our
website, we are able to determine the quantity and value based on contract
terms.  If the product or service is exclusively dependent on tracking from
a customer's website, the revenue is recognized upon confirmation of the
product or service delivered from the customer.  Revenue subject to time-
based contracts is recognized ratably over the duration of the contract.
Deferred revenue represents the portion of revenue that has not been
recognized related to time based contracts.  For contracts based on certain
performance or delivery criteria, revenue is recognized in the month
performance is delivered to the customer.




<PAGE>


ESTIMATION OF SALES CREDITS AND THE ALLOWANCE FOR DOUBTFUL ACCOUNTS

     Sales credits arise in the ordinary course of business.  Adjustments
to the actual billing may arise due to variances in the systems tracking
devices between us and our customers.  We estimate this difference to be
approximately 1.5% of sales and therefore have established a credit memo
reserve as a reduction to the recorded revenue on a monthly basis.  The
adequacy of this reserve is monitored and adjusted as customer trends and
economic trends develop.  We perform ongoing credit evaluations of our
customers and adjust credit limits based upon payment history and
customer's current credit worthiness, as determined by our review of their
current credit information.  We continuously monitor collections and
payments, current economic trends and changes in payment terms when
evaluating the adequacy of the allowance for doubtful accounts.


CAPITALIZATION OF WEB SITE DEVELOPMENT COSTS

     The cost of developing and enhancing the functionality of our web
site, including costs incurred to ensure links to databases and media
sources are working properly, are capitalized and amortized over 24 months.

Management performs periodic reviews of the continued use of web site
functionality in future periods and the related development costs that are
being or have been capitalized.  Write-offs of current and previously
capitalized costs and the related amortization are recognized in the period
management decides there is no future need for the functionality.  Any such
write-off could have a significant negative impact on our earnings.


VALUATION OF LONG-LIVED AND INTANGIBLE ASSETS

     We assess the impairment of identifiable intangibles and long-lived
assets whenever events or changes in circumstances indicate that the
carrying value may not be recoverable.  If the future cash flows
(undiscounted and without interest) expected to result from the use of the
related assets are less than the carrying value of such assets, an
impairment has occurred and a loss is recognized to reduce the carrying
value of the long-lived assets to fair value, which is determined by
discounting estimated future cash flows.


HOW WE GENERATE REVENUE

     ONLINE DIRECT MARKETING SERVICES REVENUE

     We generate substantially all of our revenues by providing online
marketing services to our advertisers.

     We charge our advertisers on a variety of bases, the most common of
which include:

     .     the number of offers delivered to members, commonly sold on a
           cost per thousand, or CPM, basis;

     .     the number of times members click on an incentive linking the
           member to the advertiser's web site (known as a click-through
           response);

     .     the number of purchases made or qualified leads generated; and

     .     the number of registered members in our database.



<PAGE>


     Our pricing depends upon a variety of factors including, without
limitation, the degree of targeting, the duration of the advertising
contract and the number of offers delivered. The degree of targeting refers
to the number of identified household or member attributes, such as gender,
age, or product or service preferences, used to select the audience for an
offer.  Generally, the rates we charge our advertisers increase as the
degree of targeting and customization increases.  Revenues subject to time-
based contracts are recognized ratably over the duration of the contract.
For contracts based on certain performance or delivery criteria, revenues
are recognized in the month performance is delivered to the customer.  Most
of our advertising contracts have stated terms of less than one year and
may include earlier termination provisions.  In 2002, our largest
advertiser accounted for 4.2% of our revenues and our top five advertisers
together accounted for approximately 16.0% of our revenues.

     Our revenues for each period depend on a number of factors including
the number of advertisers sending promotional offers to our members, the
size of our membership base and the responsiveness of our members to each
promotion.  We believe that our revenues are subject to seasonal
fluctuations in accordance with general patterns of retail advertising
spending, which is typically highest during the fourth quarter. In
addition, expenditures by advertisers tend to be cyclical, reflecting
overall general economic conditions and consumer buying patterns. If
purchasing patterns or timing of purchasing by advertisers were to change,
our operations and quarter-to-quarter comparisons could be materially
affected.

     LICENSING REVENUE

     We license portions of our intellectual property, including our
issued patents, to third parties.  Approximately 1% of our revenues was
generated from royalties and license fees and other miscellaneous sources
during the year ended December 31, 2002.


EXPENSES

     COST OF REVENUES

     Our cost of revenues consists primarily of Internet connection
charges, web site equipment depreciation, salaries of operations personnel,
fulfillment costs related to member loyalty incentives and other related
operations costs.

     SALES AND MARKETING

     Sales and marketing expenses include salaries, sales commissions,
employee benefits, travel and related expenses of our direct sales force,
advertising and promotional expenses, marketing, and sales support
functions. Marketing costs associated with increasing our member base are
expensed in the period incurred.

     PRODUCT DEVELOPMENT

     Product development costs include expenses for the development of new
or improved technologies designed to enhance the performance of our
service, including salaries, amortization of capitalized web site
development costs, and related expenses for our technology department, as
well as costs for contracted services and equipment.

     GENERAL AND ADMINISTRATIVE

     General and administrative expenses include salaries, employee
benefits and expenses for our executive, finance, legal and human resources
personnel. In addition, general and administrative expenses include fees
for professional services and occupancy costs.



<PAGE>


     LEASE EXIT COSTS AND LOSS ON ASSET IMPAIRMENT

     In August 2002, following the completion of a study of our future
space requirements, we determined that a significant portion of our
unoccupied leased office space and the assets associated with that office
space were unnecessary for our future operations.  In accordance with SFAS
No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities", we recorded an operating expense of $2.1 million in 2002,
representing the estimated future lease obligations related to the
unoccupied office space, and estimated costs associated with subleasing the
space, net of estimated cash flows from future sublease arrangements.  Any
change in this estimate, based on new or updated information, will be
recorded in the period that it occurs.  In accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", we
determined that the estimated undiscounted cash flows expected to be
generated by the assets were less than their net book value.  Therefore, we
recorded an operating expense of $1.2 million in 2002 to write down the
assets to their estimated fair value.

     Significant assumptions were required concerning the estimated fair
value of the assets and estimates of sublease income.  As provided under
SFAS No. 144, we primarily used discounted cash flow analysis, together
with other available information, to estimate fair values.


     RESULTS OF OPERATIONS

     We have incurred significant losses since our inception.  As of
December 31, 2002, our accumulated deficit was approximately $97.9 million.

We expect to continue to incur net losses during 2003, See "Liquidity and
Capital Resources" below, and "Item 1. Risk Factors" above.

     The following table presents statements of operations data as a
percentage of net revenue.
                                         For the Year Ended
                                             December 31,
                                -----------------------------------
                                     2002       2001        2000
                                  ---------- ----------  ----------
Net revenues. . . . . . . . . . .     100.0%     100.0%      100.0%
Cost of revenues. . . . . . . . .      11.5%      25.9%       18.0%
                                  ---------- ----------  ----------
Gross profit. . . . . . . . . . .      88.5%      74.1%       82.0%
                                  ---------- ----------  ----------
Operating expenses:
  Sales and marketing . . . . . .      54.1%      80.3%      106.2%
  Product development . . . . . .      15.2%      27.5%       21.0%
  General and administrative. . .      33.6%      82.0%       53.6%
  Lease exit costs. . . . . . . .       8.0%      --          --
  Loss on asset impairment. . . .       4.7%      --          --
                                  ---------- ----------  ----------
Total operating expenses. . . . .     115.6%     189.8%      180.8%
                                  ---------- ----------  ----------

Loss from operations. . . . . . .     -27.1%    -115.7%      -98.8%

Other income (expense):
  Interest and other income . . .       0.2%       1.2%        2.9%
  Interest expense. . . . . . . .      -4.5%      -3.8%       -1.1%
  Other settlement expense. . . .       0.0%      -1.0%       --
  Amortization of debt discount .       0.0%     -14.0%       --
  Interest expense representing
    beneficial conversion
    feature of convertible debt .      --         --          -1.4%
                                  ---------- ----------  ----------
Total other income (expense). . .      -4.3%     -17.6%        0.4%
                                  ---------- ----------  ----------



<PAGE>


                                         For the Year Ended
                                             December 31,
                                -----------------------------------
                                     2002       2001        2000
                                  ---------- ----------  ----------
Loss before income taxes and
  extraordinary gain. . . . . . .     -31.4%    -133.3%      -98.4%

Income taxes. . . . . . . . . . .      --          --           --
                                  ---------- ----------  ----------

Loss before extraordinary gain. .     -31.4%    -133.3%      -98.4%

Extraordinary gain. . . . . . . .      --          1.5%         --
                                  ---------- ----------  ----------
Net loss. . . . . . . . . . . . .     -31.4%    -131.8%      -98.4%

Deemed dividend representing
 the beneficial conversion
 feature of Series A Preferred
 Stock. . . . . . . . . . . . . .      --           --       -49.9%
Accretion of convertible
 redeemable Series B Preferred
 Stock to redemption value. . . .      --         -6.0%         --
Cumulative dividends on Series B
  Preferred Stock . . . . . . . .      -3.5%      -0.5%         --
                                  ---------- ----------  ----------
Loss applicable to common
  stockholders. . . . . . . . . .     -34.9%    -138.3%     -148.3%
                                  ========== ==========  ==========


YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

     NET REVENUES

     Net Revenues increased 19% to $26.4 million in 2002 from $22.2
million in 2001.  The increase was primarily due to an increase in the
number of new member registrations and an increase in the number of revenue
producing actions initiated by our members.  The increase in new member
registrations was primarily due to a $0.9 million increase in online
advertising and media purchases.  Partially offsetting this increase was a
reduction in revenue recognized from barter transactions from $1.1 million
in 2001 to $0.2 million in 2002.

     COST OF REVENUES AND GROSS PROFIT

     Cost of Revenues decreased by 47% to $3.0 million in 2002 from $5.7
million in 2001.  Gross profit increased as a percentage of net revenues to
89% in 2002 from 74% in 2001.  The increase in gross profit was partially
due to the costs eliminated when we discontinued our member incentive and
loyalty program, CoolSavings Rewards, in 2001 and a gain of $0.3 million
and the reversal of a $0.3 million expense accrual as a result of the
Settlement.  Additionally, the increase in gross profit reflected the
realization of personnel and personnel-related cost reductions that
occurred during fiscal year 2001, and a reduction in the costs of gift
certificates used as a member incentives.

     OPERATING EXPENSES

     Sales and Marketing.  Sales and marketing expenses decreased to $14.3
million in 2002, or 54% of net revenues, from $17.8 million, or 80% of net
revenues, in 2001.  The $3.5 million decrease was primarily due to the
realization of $3.7 million in personnel and personnel-related cost
reductions that occurred during fiscal year 2001.  The decrease was also
due to lower expenses associated with a decrease in barter transactions of
$0.9 million. These decreases were partially offset by a $0.9 million
increase in spending on advertising to attract new members and a $0.2
million increase in other operating expenses.


<PAGE>


     Product Development.  Product development expenses decreased to $4.0
million in 2002, or 15% of net revenues, from $6.1 million in 2001, or 27%
of net revenues.  The $2.1 million decrease was primarily due to reduced
spending on outside consulting for our web site development efforts of $1.1
million, and the realization of $1.2 million in personnel and personnel-
related cost reductions that occurred during fiscal year 2001 partially
offset by a $0.2 million increase in other product development costs.

     General and Administrative.  General and administrative expenses
decreased to $8.9 million in 2002, or 34% of net revenues, from $18.2
million in 2001, or 82% of net revenues.  The $9.3 million decrease was
primarily due to a $3.7 million charge recorded in 2001 related to the
forgiveness of certain loans and interest owed by related parties, reduced
bad debt expense of $2.1 million, a $1.0 million severance charge recorded
in 2001 related to the termination of an executive, $1.0 in office lease,
maintenance, and supplies expense, $0.7 million relating to Landmark
Transaction costs incurred in 2001, the realization in 2002 of $0.6 million
in personnel and personnel-related cost reductions that occurred during
fiscal year 2001, lower legal fees of $0.5 million, a charge of $0.1
million related to the loss on fixed assets in 2001, $0.5 in other general
and administrative expenses and lower depreciation on furniture and
equipment of $0.4 million.  Partially offsetting these decreases was a $1.5
million decrease in the gains recorded from accounts payable settlements in
2002 as compared to 2001.

     Lease Exit Costs and Loss on Asset Impairment.  In 2002, we recorded
a lease exit cost expense of $2.1 million, compared to $0 in 2001, and a
loss on asset impairment of $1.2 million, compared to $0 in 2001. These
charges were a result of the completion of a study of our future space
requirements and the determination that a significant portion of our
unoccupied leased office space and the assets associated with that space
were unnecessary for our future operations.  The $2.1 million charge
represents the estimated future lease obligations related to the unoccupied
office space and estimated costs associated with subleasing the space, net
of estimated cash flows from future sublease arrangements.  Any change in
this estimate, based on new or updated information, will be recorded in the
period that it occurs.  In accordance with SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets," we determined that the
estimated undiscounted cash flows expected to be generated by the assets
associated with the unoccupied office space were less than their net book
value.  Therefore, we recorded an operating expense of $1.2 million in 2002
to write down the assets to their estimated fair value.

     Significant assumptions were required concerning the estimated fair
value of the assets and estimates of sublease income.  As provided under
SFAS No. 144, we primarily used discounted cash flow analysis, together
with other available information, to estimate fair values.

     OTHER INCOME (EXPENSES), NET

     Net Interest Expense.  During 2002, we incurred net interest expense
of $1.1 million as compared $0.6 million in 2001. The $0.5 million increase
was due to additional interest expense of $0.7 million in 2002 related to
the Senior Secured Loan and the Grid Note.  Additionally, interest income
decreased by $0.2 million due to a lower average cash balance in 2002 as
compared to 2001.  Partially offsetting these increases was a reduction of
$0.4 million of interest expense incurred in 2002 on short term debt.

     Amortization of Debt Discount.  During 2001, we were in default of
the debt covenants in our loan agreement with Landmark.  Therefore, a debt
discount of $3.0 million was immediately amortized to interest expense to
reflect the debt at its callable value.  Additionally, we recorded $0.1
million in interest expense during 2001 related to the amortization of the
debt discount on the Director Notes.



<PAGE>


     Other Settlement Expense.  In 2001, we accepted a mediation award in
connection with a non-operating business related lawsuit pursuant to which
we paid the plaintiff the sum of $0.2 million.

     INCOME TAXES

     On November 12, 2001, the issuance of Series B Preferred Stock to
Landmark triggered tax rules under Section 382 of the Internal Revenue
Code, which limit our ability to offset taxable income earned subsequent to
this date with our pre-November 12, 2001 net operating losses.  As of the
period ended December 31, 2002, we had cumulative tax net operating losses
of $8.0 million.  For financial reporting purposes, the entire amount of
deferred tax assets has been offset by a valuation allowance due to
uncertainty regarding realization of the asset. Accordingly, there is no
provision for income taxes for the years ended December 31, 2002 and 2001.

     EXTRAORDINARY GAIN

     In March 2001, we received proceeds from the sale of our convertible
subordinated promissory notes (the "Convertible Subordinated Promissory
Notes") and warrants in the amount of $2.1 million. Contemporaneously with
the Landmark Transaction, the Convertible Subordinated Promissory Notes and
warrants of $2.1 million of face value plus accrued interest of $0.2
million were converted to Series C Preferred Stock.  The fair market value
of the Series C Preferred Stock was determined to be $2.0 million,
resulting in an extraordinary gain of $0.3 million to us for early
extinguishment of debt.

     NON-CASH CHARGES - IMPACTING LOSS APPLICABLE TO COMMON STOCKHOLDERS

     During 2002, we incurred $0.9 million in charges related to the
accrual of in-kind dividends on the Series B Preferred Stock.  During 2001,
we incurred $1.3 million in charges related to the accretion of Convertible
Redeemable Series B Preferred Stock to its redemption value, and the
accrual of the in-kind dividends on the Series B Preferred Stock.


YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     NET REVENUES

     Net revenues decreased 44% to $22.2 million in 2001 from $39.9
million in 2000.  The revenue decrease was attributable to the slowing
economy in 2001, which caused reduced advertising spending in general,
increased downward pricing pressure from competitors; and our cash
constraints, which reduced our ability to invest in marketing to attract
new members.  Barter revenue and corresponding advertising costs of $1.1
million were recognized in 2001 compared to $2.3 million in 2000.

     COST OF REVENUES AND GROSS PROFIT

     Cost of revenues decreased 20% to $5.7 million in 2001 from $7.2
million in 2000. Gross profit decreased as a percentage of net revenues to
74% in 2001, from 82% in 2000.  The decrease in gross profit reflected the
downward pricing pressure in 2001.  In addition, our cost reduction efforts
in 2001 did not keep pace with the decrease in revenue.  We undertook cost
reduction efforts during the second half of 2001, the full impact of which
was realized in 2002.

     OPERATING EXPENSES

     Sales and Marketing.  Sales and marketing expenses decreased 58% to
$17.8 million in 2001 from $42.3 million in 2000.  We eliminated our
spending on broadcast and cable television advertising, which contributed
$10.9 million of savings in 2001.  We also reduced spending on other
advertising to attract new members in 2001 by $9.9 million.  The remaining
expense reduction was achieved through personnel and personnel-related cost
reductions.


<PAGE>


     Product Development.  Product development expenses decreased 27% to
$6.1 million in 2001 from $8.4 million in 2000.  We eliminated the spending
on outside consulting for our web site development efforts in the first
half of 2001 resulting in a $4.4 million cost reduction.  This reduction
was offset in part by the full year's impact of amortization expense
related to our capitalized web site development costs of $1.5 million and
the write off of web site development costs of $0.8 million.  The remaining
expense reduction was achieved through personnel and personnel related cost
reductions.

     General and Administrative.  General and administrative expenses
decreased 15% to $18.2 million in 2001 from $21.4 million in 2000.  The
decrease was attributable to a decrease in salaries and bonuses of $2.4
million, a decrease in professional fees of $2.0 million, a decrease in
recruiting costs of $1.9 million and the realization of $1.7 million in
gains on settlements of accounts payable.  These expense reductions were
partially offset by a $1.0 million severance obligation to a former
executive, Landmark Transaction costs of $0.8 million, increases in bad
debt expense of $0.7 million and increases in facility costs of $0.6
million.  The 2001 general and administrative expenses included a charge of
$3.7 million related to the forgiveness of notes receivable to some of our
current and former Directors.  The 2000 general and administrative expenses
included a stock-based compensation charge of $4.0 million related to a
termination and consulting agreement with a former president.  The
remaining decrease in general and administrative expenses was achieved
through a reduction in general office expenses.

     Other Income (Expenses), Net

     Net Interest Expense.  During 2001, we incurred net interest expense
of $0.6 million as compared to net interest income of $0.1 million in 2000,
which included a $0.6 million beneficial conversion charge related to our
convertible debt.  During 2001, we earned significantly lower interest
income due to the reduced capital available for investment compared to
2000.  Also, during 2001, we incurred interest expense related to the
Senior Subordinated Convertible Notes, the Senior Secured Loan and the Grid
Note in the amount of $0.4 million.

     Amortization of Debt Discount.  During 2001, we were in default of
the debt covenants in our debt agreement with Landmark.  Therefore, the
debt discount of $3.0 million was immediately amortized to reflect the debt
at its callable value.  Additionally, we recorded $0.1 million in
amortization expense related to the debt discount on the Directors Notes.

     Other Expense Settlement.  In 2001, we accepted a mediation award in
connection with a non-operating business related lawsuit pursuant to which
we paid the plaintiff the sum of $0.2 million.

     INCOME TAXES

     On November 12, 2001, the issuance of Series B Preferred Stock to
Landmark triggered tax rules under Section 382 of the Internal Revenue
Code, which limit our ability to offset taxable income earned subsequent to
this date with our pre-November 12, 2001 net operating losses.  As of the
period ended December 31, 2001, we had cumulative tax net operating losses
of $3.4 million.  For financial reporting purposes, the entire amount of
deferred tax assets has been offset by a valuation allowance due to
uncertainty regarding realization of the asset.  Accordingly, there is no
provision for income taxes for the years ended December 31, 2001 and 2000.

     EXTRAORDINARY GAIN

     Contemporaneously with the Landmark Transaction, the Convertible
Subordinated Promissory Notes and warrants of $2.1 million of face value
plus accrued interest of $0.2 million were converted to Series C Preferred
Stock.  The fair market value of the Series C Preferred Stock was
determined to be $2.0 million resulting in an extraordinary gain of $0.3
million to the Company for early extinguishment of debt.


<PAGE>


     NON-CASH CHARGES - IMPACTING LOSS APPLICABLE TO COMMON STOCKHOLDERS

     During fiscal year 2001, we incurred $1.4 million in charges related
to the accretion of our Convertible Redeemable Series B Preferred Stock to
its redemption value, and the accrual of in-kind dividends on Series B
Preferred Stock. During 2000, we incurred a $19.9 million charge for the
beneficial conversion of our pre-initial public offering shares of Series A
Convertible Preferred Stock into post initial public offering common stock.


LIQUIDITY AND CAPITAL RESOURCES

     LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2002, we had approximately $4.9 million in cash and
cash equivalents.

     Our operations have generated negative cash flows in each year of our
existence. In the fourth quarter of fiscal year 2000, we implemented a cost
reduction plan. This plan included a significant decrease in offline
marketing expenditures and a reduction in salaried personnel and third
party technical consultants. We further reduced salaried personnel and
marketing expenditures in the second half of 2001. This plan has
significantly reduced operating expenses and improved cash flow.

     However, even with these cost reduction plans still in place we do
not expect to reach our goal of cash positive operations during 2003 unless
market conditions in our industry improve significantly and we are
successful in our efforts to increase our revenues while we maintain or
increase our profit margins.  As a result, we expect that we may require
additional debt or equity financing during 2003. Although Landmark has
funded our recent cash needs, it is under no obligation to continue to do
so and we may not be successful in obtaining adequate funds for operations
in the future.

     Our independent auditors have issued their report on our financial
statements for 2002 with an explanatory paragraph. This paragraph describes
the uncertainty as to our ability to continue as a going concern. If
adequate funds are not available to us on acceptable terms, or if Landmark
exercises its rights to accelerate payment under our obligations to
Landmark, we will be unable to operate our business.

     Net cash used in operating activities was $1.8 million in 2002 and
$16.5 million in 2001.

     Net cash used in investing activities was $0.8 million in 2002 and
$3.2 million in 2001.  In both periods, net cash used in investing
activities resulted from purchases of property and equipment and amounts
used in developing our website.

     Net cash provided from financing activities was $2.3 million in 2002
and $17.9 million in 2001.  Net cash provided from financing activities in
2002 can be attributed to the net proceeds of the issuance to Landmark of
17,825,212 shares of our Series B Preferred Stock for an aggregate purchase
price of $2.8 million, and $1.5 million of loans advanced by Landmark under
the Grid Note, offset by debt repayments in the amount of $2.0 million.  We
invested these proceeds in cash equivalents with maturities not exceeding
90 days.  We intend to continue investing our excess cash in various short-
term securities until used.



<PAGE>


     Since our inception, we have financed our operations primarily
through the sale of our stock and the issuance of notes payable.  In May
2000, we completed an initial public offering of 3.3 million shares of our
common stock, resulting in net proceeds to us of approximately $20.0
million.  In March 2001, we received proceeds from the issuance of our
convertible subordinated promissory notes and warrants in the amount of
$2.1 million.  In June and July 2001, we received proceeds of $5.0 million
from loans to us by Landmark (the "Senior Secured Loan"). The Senior
Secured Loan is payable on June 30, 2006 and bore interest at 12.0% per
annum until November 12, 2001, at which time the interest rate was reduced
to 8.0% per annum.  The interest is paid quarterly in arrears in the form
of additional notes and warrants (described below).  We have the right to
prepay the Senior Secured Loan on or after the third anniversary thereof if
certain conditions are met.  The Senior Secured Loan also contains
financial covenants and negative and affirmative covenants that, among
other things, restrict our ability to incur additional indebtedness and
take other actions without the consent of Landmark. At December 31, 2002,
we were not in compliance with certain financial covenants of the Senior
Secured Loan.  This failure to comply constitutes an event of default.
Consequently, the loan including accrued interest is immediately due and
payable at the option of Landmark.  Accordingly, we have classified the
Senior Secured Loan as currently payable as of December 31, 2002, including
the paid-in-kind interest which has been compounded on the principal
balance, totaling $5.6 million.

     In connection with the Senior Secured Loan, we issued a warrant to
Landmark (the "Landmark Warrant").  The Landmark Warrant has a term of
eight years and may be exercised in whole or in part immediately.  The
warrant contains a net exercise feature and was exercisable for 10.0
million shares of our common stock at an exercise price of $0.50 per share
at November 12, 2001 (increasing to $0.75 per share on July 30, 2005 if not
previously exercised).  The number of shares exercisable under the Landmark
Warrant automatically increases by two shares of common stock for each
dollar of interest accrued on the Senior Secured Loan as paid-in-kind
interest.  Under APB 14 "Accounting for Convertible Debt and Debt Issued
with Stock Purchase Warrants," we assigned a $2.4 million value to the
Landmark Warrant and recorded it as additional paid-in-capital.  The entire
discount of $3.0 million (including loan issuance costs of $0.6 million)
from the Senior Secured Loan was amortized immediately to interest expense
in 2001.  This was due to our covenant violations, which caused the entire
loan to be immediately due and payable at the option of Landmark.

      In addition, through October 31, 2001, Landmark funded an additional
$10.0 million to us under the Grid Note, which amount plus accumulated
interest was applied to the purchase of 65,057,936 shares of Series B
Preferred Stock on November 12, 2001.  This stock purchase resulted in
Landmark becoming a related party.  As of December 31, 2001, Landmark had
voting control of our Company.  As a result of various Shortfall Events
that occurred, Landmark made additional loans of $4.0 million and $2.5
million under the Grid Note on November 30, 2001 and December 24, 2001,
respectively.  In addition, the Grid Note reflected in 2001 a loan related
to our obligation to reimburse Landmark's legal expenses incurred in
connection with the Landmark Transaction.

      On February 28, 2002, Landmark loaned us an additional $1.5 million
under the Grid Note in connection with another Shortfall Event, bringing
the outstanding principal balance to $8.8 million. On October 24, 2002, we
received proceeds of $2.8 million from the issuance to Landmark of
17,825,212 shares Series B Preferred Stock in connection with Landmark's
exercise of an existing Shortfall Purchase Option.  On December 20, 2002,
at our request, Landmark applied the $8.8 million of principal and $0.7
million of accrued interest then outstanding under the Grid Note (as
described above) toward the purchase of 60,967,777 shares of Series B
Preferred Stock ($0.1554 per share). The Series B Preferred Stock issued is


<PAGE>


redeemable at Landmark's option at any time. As of March 1, 2003, Landmark
held 150,422,669 shares of Series B Preferred Stock (and has rights with
respect to accrued dividends thereon) and holds a warrant to purchase
11,099,832 shares of our common stock.  Landmark's ownership will continue
to grow through the issuance of additional shares of Series B Preferred
Stock and warrants as "in-kind" payments for dividends and interest
accruing on the Series B Preferred Stock and Senior Secured Note,
respectively.

     Effective August 31, 2002, we entered into a Reimbursement and
Security Agreement (the "Reimbursement Agreement") with Landmark.  On our
behalf, Landmark has applied for and received letters of credit (the
"Landmark Letters of Credit") in the aggregate amount of $1.6 million from
Wachovia Bank to collateralize lease deposits on our office facilities.
Under the Reimbursement Agreement, we have agreed, among other things, to
reimburse Landmark for all amounts that Landmark is required to pay
Wachovia under the bank agreement related to the Landmark Letters of
Credit, including all fees, penalties, interest and amounts in connection
with draws on the Letters of Credit.  We have secured such obligations with
a lien on all of our assets.  We are required to pay Wachovia under the
Reimbursement Agreement.  If we fail to pay Landmark any amount when due,
interest will accrue and compound on all such amounts at the rate of 7% per
annum until such time as Landmark demands payment.  Upon Landmark's demand
for payment, interest shall accrue and compound on all such amounts at the
rate of 10% per annum from the date of the demand, increasing monthly at a
rate of 1%.  We reimbursed Landmark $0.004 million for fees related to the
Landmark Letters of Credit in 2002.  The Landmark Letters of Credit expire
in March and April of 2003.  Landmark has applied to Wachovia for a renewal
of such Letters of Credit and may, at its sole discretion, cancel such
Letters of Credit on 90 days written notice to us.  If the Landmark Letters
of Credit so expire or are cancelled, we will need to enter into an
alternate credit arrangement.

     During 2001 and 2002, we had two separate credit facilities with
American National Bank (the "ANB Facility") and Midwest Guaranty Bank (the
"Midwest Facility"). Both credit facilities expired as of December 31,
2002.  We paid $1.9 million of principal and interest during 2002 and had
no borrowings under either credit facility as of December 31, 2002.

     On June 15, 2001, we entered into a Forbearance and Reaffirmation
Agreement with American National Bank, which was amended by a letter
agreement dated July 27, 2001 ("ANB Forbearance Agreement"), wherein
American National Bank agreed to forbear from accelerating our borrowings
under the ANB Facility for certain stated defaults based on the continued
compliance with the terms of the ANB Forbearance Agreement.  The terms
included an accelerated principal payment schedule with respect to the ANB
Facility.

     On August 21, 2002 we were deemed by American National Bank to be in
default under the ANB Facility due to a banking covenant violation.  Under
the terms of the ANB Facility, as a result of the default, American
National Bank was released from any obligation to advance us additional
funds under the ANB Facility. Additionally, we had $1.5 million of letters
of credit outstanding at the time under the line to collateralize lease
deposits on our office facilities. These letters of credit expired as of
December 31, 2002 and were replaced by the Landmark Letters of Credit. We
also had restricted certificates of deposit relating to the letters of
credit in the aggregate amount of $0.2 million at December 31, 2002.  The
restrictions on these certificates of deposit were lifted on January 1,
2003, after the letters of credit expired.



<PAGE>


     On June 12, 2001, we entered into a Forbearance Letter Agreement with
Midwest Guaranty Bank, and on July 27, 2001, we entered into a Loan
Forbearance and Reaffirmation Agreement with Midwest Guaranty Bank
(collectively, the "Midwest Forbearance Agreement").  Midwest Guaranty Bank
agreed to forbear from accelerating the Midwest Facility for certain stated
defaults based on our continued compliance with the terms of the Midwest
Forbearance Agreement, which included an accelerated principal payment
schedule of $0.005 million per month.  Under the terms of the Midwest
Facility, the deemed default under the ANB Facility released Midwest
Guaranty from any obligation to advance us any additional funds under the
Midwest Facility. The entire indebtedness under the Midwest Facility was
paid as of December 31, 2002.

CONTRACTUAL OBLIGATIONS

     The following summarizes our contractual obligations at December 31,
2002, and the effect such obligations are expected to have on our liquidity
and cash flows in future periods.

December 31                                             There-
(in thousands)        2003   2004   2005   2006   2007  after   Total
--------------      ------- ------ ------ ------ ------ ------ ------

Related party
 debt (1)           $ 5,592                                     5,592
Non-cancelable
 operating lease
 obligations          1,645  1,654  1,526  1,339  1,363  3,273 10,800
Licenses and
 settlements            497    425    340    183   --     --    1,445
                    -------  -----  -----  -----  -----  ----- ------
Total contractual
 cash obligations   $ 7,734  2,079  1,866  1,522  1,363  3,273 17,837
                    ======= ======  =====  =====  =====  ===== ======

     (1)   These obligations relate to the Landmark Transaction.  They are
           categorized as currently due as a result of our defaults under
           the Senior Secured Loan and the Amended and Restated Loan and
           Security Agreement as described above.


RECENT ACCOUNTING PRONOUNCEMENTS

     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS 143") which addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs.  SFAS No. 143
is required to be adopted for fiscal years beginning after June 15, 2002.
We do not expect the adoption of SFAS 143 will have a material impact on
our financial position or results of operations.

      In November 2002, the FASB issued Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
including Indirect Guarantees of Indebtedness of Others," which expands
previously issued accounting guidance and disclosure requirements for
certain guarantees. The Interpretation requires an entity to recognize an
initial liability for the fair value of an obligation assumed by issuing a
guarantee. The provision for initial recognition and measurement of the
liability will be applied on a prospective basis to guarantees issued or
modified after December 31, 2002. We do not expect this Interpretation to
have a material impact on our consolidated financial position or results of
operations.



<PAGE>


     In January 2003, the FASB issued Interpretation No. 46, "Consolida-
tion of Variable Interest Entities ("VIEs"), an Interpretation of ARB
No. 51," which requires all VIEs to be consolidated by the primary
beneficiary. The primary beneficiary is the entity that holds the majority
of the beneficial interests in the VIE. In addition, the Interpretation
expands disclosure requirements for both VIEs that are consolidated as well
as VIEs for which the entity is the holder of a significant amount of the
beneficial interests, but not the majority. The disclosure requirements of
this interpretation are effective for all financial statements issued after
January 31, 2003. The consolidation requirements of this interpretation are
effective for all periods beginning after June 15, 2003. We do not expect
this Interpretation to have a material impact on our financial position or
results of operations.

     In January 2003, the FASB issued EITF No. 00-21, "Revenue
Arrangements with Multiple Deliverables" ("EITF 00-21").  EITF 00-21
provides guidance on how to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting and how
arrangement consideration should be measured and allocated to the separate
units of accounting in the arrangement.  EITF 00-21 will be effective for
arrangements entered into in fiscal periods beginning after June 15, 2003.
We do not expect that the provisions of EITF 00-21 will have a material
impact on our financial position or results of operations.


FACTORS AFFECTING OPERATING RESULTS

     Our results of operations have varied widely in the past and we
expect that they will continue to vary significantly in the future due to a
number of factors, including those set forth in Item 1 of this report. You
should read the section titled "Business - Risk Factors" in Item 1 of this
report carefully.


QUARTERLY FINANCIAL DATA

     The following are our unaudited quarterly results, for the years
ended December 31, 2002 and December 31, 2001:

                             For the three months ended
                ----------------------------------------------------
                   March 31,   June 30,   September 30, December 31,
                     2002        2002          2002         2002
                  ----------- ----------- ------------- ------------
                    (in thousands, except share and per share data)

Net revenues. . .  $    5,763  $    5,126    $    7,123   $    8,348
Gross profit. . .       4,779       4,212         6,241        8,098
Operating
  expenses. . . .       7,053       5,620         9,997        7,814
Profit (loss)
 from operations.      (2,274)     (1,408)       (3,756)         284
Net loss. . . . .      (2,545)     (1,696)       (4,044)          (2)
Loss applicable
 to common
 stockholders
 (a). . . . . . .      (2,749)     (1,905)       (4,257)        (285)
Weighted
 average shares
 outstanding. . .  39,093,660  39,093,660    39,093,660   39,093,660

Basic and
 diluted earn-
 ings per share .  $    (0.07) $    (0.05)   $    (0.11)  $    (0.01)



<PAGE>


                             For the three months ended
                ----------------------------------------------------
                   March 31,   June 30,   September 30, December 31,
                     2001        2001          2001         2001
                  ----------- ----------- ------------- ------------
                    (in thousands, except share and per share data)

Net revenues. . .       6,334       5,263         4,295        6,281
Gross profit. . .       4,401       3,734         2,966        5,333
Operating
 expenses . . . .      12,872      13,612         7,922        7,684
Loss from
 operations . . .      (8,471)     (9,878)       (4,956)      (2,351)
Loss before extra-
 ordinary gain. .      (8,432)    (10,174)       (8,280)      (2,668)
Net loss. . . . .      (8,432)    (10,174)       (8,280)      (2,341)
Extraordinary
 gain . . . . . .       --          --            --             327
Loss applicable
 to common
 stockholders
 (b). . . . . . .      (8,432)    (10,174)       (8,280)      (3,772)
Weighted
 average shares
 outstanding. . .  39,093,660  39,093,660    39,093,660   39,093,660
Basic and
 diluted earn-
 ings per share .  $    (0.22) $    (0.26)   $    (0.21)  $    (0.10)

(a)  Loss applicable to common stockholders includes $909 related to
     accrued cumulative dividends on the Series B Preferred Stock.

(b)  Loss applicable to common stockholders includes $1,318 related to the
     accretion of the convertible redeemable Series B Preferred Stock to
     redemption value immediately following issuance and $113 related to
     accrued cumulative dividends on the Series B Preferred Stock.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We had no holdings of derivative financial or commodity instruments
at December 31, 2002. However, we are exposed to financial market risks
associated with fluctuations in interest rates. Because all of the amounts
in our investment portfolio are cash or cash equivalents, the related
income would not be significantly impacted by increases or decreases in
interest rates due to the short-term nature of our investment portfolio and
we believe our portfolio is at fair value. If market rates were to increase
immediately by 10 percent from levels on December 31, 2002, the fair value
of our investment portfolio would not change by a material amount. A sharp
decline in interest rates could reduce future interest earnings of our
investment portfolio. If market rates were to decrease immediately by 10
percent from levels on December 31, 2002, the resultant decrease in
interest earnings of our investment portfolio would not have a material
impact on our earnings as a whole.  As of December 31, 2002, we had only
fixed rate debt.

     On April 5, 2002, Landmark acquired 10,889,636 shares of our common
stock from Lend Lease International Pty. Limited of Australia.
Contemporaneously with the purchase, we entered into a call option
agreement with Landmark, whereby we have the right to call, subject to
certain terms and conditions, all 10,889,636 shares of common stock from
Landmark.  The call price is $0.08 per share plus seven percent interest
thereon, compounded annually.  We do not have any right to call any other
shares of our capital stock held by Landmark. We accounted for this call
option as permanent equity and a contribution from Landmark under EITF 00-
19 Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock.  We ascribed a value of $1.2
million to the option at issuance.


<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




                     INDEX TO FINANCIAL STATEMENTS






                                                                Page
                                                                ----


Report of Independent Accountants . . . . . . . . . . . .         48


Financial Statements:

  Balance Sheets. . . . . . . . . . . . . . . . . . . . .         49

  Statements of Operations. . . . . . . . . . . . . . . .         52

  Statements of Changes in Convertible Redeemable
  Preferred Stock and Stockholders' (Deficit) Equity. . .         54

  Statements of Cash Flows. . . . . . . . . . . . . . . .         60

  Notes to Financial Statements . . . . . . . . . . . . .         62





<PAGE>








                   REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and
Stockholders of CoolSavings, Inc.:

     In our opinion, the financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of
CoolSavings, Inc. (the "Company") at December 31, 2002 and 2001, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

     The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1
to the financial statements, the Company has negative working capital, is
in non-compliance with certain terms and covenants of its debt agreements
and has sustained losses and negative cash flows from operations since its
inception, which raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The accompanying financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.


PricewaterhouseCoopers LLP



Chicago, Illinois
February 4, 2003
  except for Note 14
  which is as of
  February 21, 2003



<PAGE>


                           COOLSAVINGS, INC.
                            BALANCE SHEETS
            (in thousands, except share and per share data)



                                          December 31,December 31,
                                             2002        2001
                                          ----------- ------------

ASSETS
Current assets:
  Cash and cash equivalents . . . . . . .  $    4,867   $    5,144
  Restricted certificates of deposit. . .         231          231
  Accounts receivable, net of allowance
    of $753 and $881 at December 31, 2002
    and December 31, 2001, respectively .       4,900        3,610
  Prepaid assets  . . . . . . . . . . . .         244          320
  Other assets, including amounts due from
    related parties of $13 and $0 at
    December 31, 2002 and December 31,
    2001, respectively. . . . . . . . . .         360          144
                                           ----------   ----------

          Total current assets. . . . . .      10,602        9,449
                                           ----------   ----------

Property and equipment. . . . . . . . . .       9,051       10,593
Capitalized software costs. . . . . . . .       1,490        1,490
Capitalized web site costs. . . . . . . .       3,152        3,152
                                           ----------   ----------

          Total . . . . . . . . . . . . .      13,693       15,235

Less accumulated depreciation
  and amortization. . . . . . . . . . . .     (10,391)      (7,151)
                                           ----------   ----------

                                                3,302        8,084
Intangible assets, patents and licenses,
  net of accumulated amortization
  of $399 and $245 at December 31, 2002
  and December 31, 2001, respectively . .         101          431
                                           ----------   ----------

          Total assets. . . . . . . . . .  $   14,005   $   17,964
                                           ==========   ==========





















The accompanying notes are an integral part of the financial statements


<PAGE>


                           COOLSAVINGS, INC.
                      BALANCE SHEETS - CONTINUED
            (in thousands, except share and per share data)

                                          December 31,December 31,
                                             2002        2001
                                          ----------- ------------
LIABILITIES
Current liabilities:
  Accounts payable, including amounts
    due to related parties of $55 and
    $110 at December 31, 2002 and
    December 31, 2001, respectively . . .  $    1,091   $    2,902
  Accrued marketing expense, including
    amounts due to related parties of $77
    and $0 at December 31, 2002 and
    December 31, 2001, respectively . . .         989          266
  Accrued compensation. . . . . . . . . .       1,147          440
  Accrued interest, including amounts due
    to related parties of $76 and $113
    at December 31, 2002 and December 31,
    2001, respectively. . . . . . . . . .          76          125
  Accrued expenses, including amounts due
    to related parties of $782 and $405
    at December 31, 2002 and December 31,
    2001, respectively. . . . . . . . . .       2,179        1,845
  Lease exit cost liability . . . . . . .         311        --
  Deferred revenue  . . . . . . . . . . .         516          351
  Notes payable due to related party. . .       --           7,249
  Current maturities of long-term debt. .       --           1,879
  Senior secured note payable due to
    related party . . . . . . . . . . . .       5,592        5,153
                                           ----------   ----------
          Total current liabilities . . .      11,901       20,210
                                           ----------   ----------
Long-term liabilities:
  Deferred revenue  . . . . . . . . . . .         177          241
  Lease exit cost liability . . . . . . .       1,014        --
  Accrued expenses due to related parties          91          478
                                           ----------   ----------
          Total long-term liabilities . .       1,282          719
                                           ----------   ----------
Commitments and contingencies (Note 8)

Convertible redeemable cumulative Series B
  Preferred Stock, $0.001 par value,
  258,000,000 shares authorized at
  December 31, 2002 and 2001, and 148,600,102
  and 65,057,936 issued and outstanding at
  December 31, 2002 and December 31, 2001,
  respectively (liquidation preference
  of $0.1554 per share at December 31,
  2002 and December 31, 2001) . . . . . .      23,091       10,108
Convertible redeemable Series C Preferred
  Stock, $0.001 par value, 13,000,000
  shares authorized and 13,000,000 shares
  issued and outstanding at December 31,
  2002 and December 31, 2001 (liquidation
  preference of $0.1665 per share at
  December 31, 2002 and December 31,
  2001) . . . . . . . . . . . . . . . . .       1,950        1,950







The accompanying notes are an integral part of the financial statements


<PAGE>


                           COOLSAVINGS, INC.
                      BALANCE SHEETS - CONTINUED
            (in thousands, except share and per share data)

                                          December 31,December 31,
                                             2002        2001
                                          ----------- ------------
STOCKHOLDERS' DEFICIT
  Common stock, $0.001 par value per
    share, 379,000,000 shares authorized,
    39,093,660 shares issued and
    outstanding at December 31, 2002
    and December 31, 2001 . . . . . . . .          39           39
Additional paid-in capital  . . . . . . .      73,608       74,517
Accumulated deficit . . . . . . . . . . .     (97,866)     (89,579)
                                           ----------   ----------
          Total stockholders' deficit . .     (24,219)     (15,023)
                                           ----------   ----------
          Total liabilities, convertible
            redeemable preferred stock
            and stockholders' deficit . .  $   14,005   $   17,964
                                           ==========   ==========














































The accompanying notes are an integral part of the financial statements


<PAGE>


                           COOLSAVINGS, INC.
                       STATEMENTS OF OPERATIONS
            (in thousands, except share and per share data)



                                    For the Year Ended December 31,
                                 ------------------------------------
                                      2002         2001       2000
                                   ----------  ----------  ----------
Revenue:
  e-marketing services. . . . . .  $   26,088  $   21,874  $   39,049
  License royalties . . . . . . .         272         299         817
                                   ----------  ----------  ----------
Net revenues. . . . . . . . . . .      26,360      22,173      39,866
Cost of revenues. . . . . . . . .       3,030       5,739       7,172
                                   ----------  ----------  ----------
Gross profit. . . . . . . . . . .      23,330      16,434      32,694
                                   ----------  ----------  ----------
Operating expenses:
  Sales and marketing . . . . . .      14,281      17,814      42,335
  Product development . . . . . .       4,002       6,092       8,353
  General and administrative,
    inclusive of $3.7 million of
    expense related to forgive-
    ness of notes receivable,
    including interest, for 2001
    and $4.0 million of compen-
    sation related to stock
    options for 2000. . . . . . .       8,858      18,184      21,384
  Lease exit costs. . . . . . . .       2,110       --          --
  Loss on asset impairment. . . .       1,233       --          --
                                   ----------  ----------  ----------
        Total operating expenses.      30,484      42,090      72,072
                                   ----------  ----------  ----------

Loss from operations. . . . . . .      (7,154)    (25,656)    (39,378)

Other income (expense):
  Interest and other income . . .          50         258       1,158
  Interest expense. . . . . . . .      (1,183)       (841)       (465)
  Other settlement expense. . . .       --           (219)      --
  Amortization of debt discount .       --         (3,096)      --
  Interest expense representing
    beneficial conversion
    feature of convertible debt .       --         --            (555)
                                   ----------  ----------  ----------
        Total other income
          (expense) . . . . . . .      (1,133)     (3,898)        138
                                   ----------  ----------  ----------
Loss before income taxes and
  extraordinary gain. . . . . . .      (8,287)    (29,554)    (39,240)

Income taxes. . . . . . . . . . .       --          --          --
                                   ----------  ----------  ----------
Loss before extraordinary gain. .      (8,287)    (29,554)    (39,240)

Extraordinary gain (Note 3(c)). .       --            327       --
                                   ----------  ----------  ----------

        Net loss. . . . . . . . .      (8,287)    (29,227)    (39,240)
                                   ----------  ----------  ----------






The accompanying notes are an integral part of the financial statements


<PAGE>


                           COOLSAVINGS, INC.
                 STATEMENTS OF OPERATIONS - CONTINUED
            (in thousands, except share and per share data)


                                    For the Year Ended December 31,
                                 ------------------------------------
                                      2002         2001       2000
                                   ----------  ----------  ----------

Deemed dividend representing the
  beneficial conversion feature
  of Series A Preferred Stock . .       --         --         (19,868)
Accretion of convertible redeem-
  able Series B Preferred Stock
  to redemption value . . . . . .       --         (1,318)      --
Cumulative dividend on Series B
  Preferred Stock . . . . . . . .        (909)       (113)      --
                                   ----------  ----------  ----------
Loss applicable to common
  stockholders. . . . . . . . . .  $   (9,196) $  (30,658) $  (59,108)
                                   ==========  ==========  ==========


Basic and diluted loss per share
  before extraordinary gain . . .  $    (0.24) $    (0.79) $    (1.63)
Extraordinary gain. . . . . . . .       --           0.01       --
                                   ----------  ----------  ----------
Basic and diluted net loss
  per share . . . . . . . . . . .  $    (0.24) $    (0.78) $    (1.63)
                                   ==========  ==========  ==========

Weighted average shares used in
  the calculation of basic and
  diluted net loss per share. . .  39,093,660  39,093,660  36,313,759
                                   ==========  ==========  ==========






























The accompanying notes are an integral part of the financial statements


<PAGE>


<table>
                                              COOLSAVINGS, INC.
     STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
                            For the Years Ended December 31, 2002, 2001 and 2000
                               (in thousands, except share and per share data)
<caption>
                                                                      Stockholders' (Deficit) Equity
                                                               ------------------------------------------
                         Series B Redeemable Series C Redeemable      Series A
                           Preferred Stock     Preferred Stock     Preferred Stock       Common Stock
                        ---------------------------------------- ----------------------------------------
                          Shares     Amount    Shares    Amount    Shares     Amount    Shares    Amount
                        ----------  -------- ---------- --------  ---------  -------- ---------- --------

                     <c>         <c>      <c>        <c>       <c>        <c>      <c>        <c>
Balances,
 December 31, 1999. . .      --     $  --         --    $  --     2,197.650  $  --    31,715,449 $ 27,845

Issuances of common
 stock, net of issuance
 costs. . . . . . . . .                                                                3,300,000   19,625
Common stock issued for
  convertible preferred
  stock . . . . . . . .                                          (2,197.650)   --      2,822,096   19,868
Deemed dividend repre-
  senting the beneficial
  conversion feature of
  preferred stock . . .
Common stock issued for
  convertible subordinated
  notes . . . . . . . .                                                                  793,068    4,996
Deemed dividend repre-
  senting the beneficial
  conversion feature of
  convertible subordinated
  notes . . . . . . . .
Deferred stock compensa-
  tion. . . . . . . . .
Amortization of compensa-
  tion expense. . . . .
Compensatory stock
  option. . . . . . . .
Issuance of common stock
  for patent rights . .                                                                   83,334      500
Exercise of stock
  options . . . . . . .                                                                  379,730      825
Redemption of fractional
  shares. . . . . . . .                                                                      (17)
Net loss. . . . . . . .
                        ----------  -------- ---------- --------   --------  -------- ---------- --------
Balances,
  December 31, 2000 . .      --        --         --       --         --        --    39,093,660   73,659


<PAGE>


                                              COOLSAVINGS, INC.
STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - CONTINUED
                            For the Years Ended December 31, 2002, 2001 and 2000
                               (in thousands, except share and per share data)


                                                                      Stockholders' (Deficit) Equity
                                                               ------------------------------------------
                         Series B Redeemable Series C Redeemable      Series A
                           Preferred Stock     Preferred Stock     Preferred Stock       Common Stock
                        ---------------------------------------- ----------------------------------------
                          Shares     Amount    Shares    Amount    Shares     Amount    Shares    Amount
                        ----------  -------- ---------- --------  ---------  -------- ---------- --------

Issuances of detachable
  warrants. . . . . . .
Forgiveness of notes
  receivable. . . . . .
Conversion from no par
  to $0.001 par common
  stock . . . . . . . .                                                                           (73,620)
Issuance of Series B
  Preferred Stock, net
  of issuance  costs of
  $1.3 million. . . . . 65,057,936     8,790
Accretion of Series B
  Preferred to redemption
  value . . . . . . . .                1,318
Cumulative dividend
  accrued on Series B
  Preferred Stock . . .
Exchange of notes payable,
  accrued interest and
  warrants for Series C
  Preferred Stock . . .                      13,000,000    1,950
Net loss. . . . . . . .
                        ----------  -------- ---------- --------   --------  -------- ---------- --------

Balances,
  December 31, 2001 . . 65,057,936    10,108 13,000,000    1,950      --        --    39,093,660       39



<PAGE>


                                              COOLSAVINGS, INC.
STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - CONTINUED
                            For the Years Ended December 31, 2002, 2001 and 2000
                               (in thousands, except share and per share data)


                                                                      Stockholders' (Deficit) Equity
                                                               ------------------------------------------
                         Series B Redeemable Series C Redeemable      Series A
                           Preferred Stock     Preferred Stock     Preferred Stock       Common Stock
                        ---------------------------------------- ----------------------------------------
                          Shares     Amount    Shares    Amount    Shares     Amount    Shares    Amount
                        ----------  -------- ---------- --------  ---------  -------- ---------- --------

Issuance of Series B
  Preferred Stock . . . 17,825,212     2,770                                                        --
Conversion of Grid Note
  to Series B Preferred
  Stock . . . . . . . . 60,967,777     9,475                                                        --
Cumulative dividend
  declared on Series B
  Preferred Stock . . .  4,749,177       738
Cumulative dividend
  accrued on Series B
  Preferred Stock . . .
Net loss. . . . . . . .
                       -----------  -------- ---------- --------   --------  -------- ---------- --------

Balances,
  December 31, 2002 . .148,600,102  $ 23,091 13,000,000 $  1,950      --     $   --   39,093,660 $     39
                       ===========  ======== ========== ========   ========  ======== ========== ========

















<fn>
                   The accompanying notes are an integral part of the financial statements
</table>


<PAGE>


<table>
                                              COOLSAVINGS, INC.
STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - CONTINUED
                            For the Years Ended December 31, 2002, 2001 and 2000
                               (in thousands, except share and per share data)
<caption>
                                              Stockholders' (Deficit) Equity
                   --------------------------------------------------------------------------------------
                                                                                Notes           Total
                         Additional                                           Receivable     Stockholders'
                          Paid-In       Deferred Stock       Accumulated     From Related     (Deficit)
                          Capital        Compensation          Deficit         Parties          Equity
                         ----------     -------------        -----------     ------------    ------------

                      <c>            <c>                  <c>             <c>             <c>
Balances,
 December 31, 1999. . .  $   15,204        $    --            $  (21,112)      $   (2,817)     $   19,120

Issuances of common
 stock, net of issuance
 costs. . . . . . . . .                                                                            19,625
Common stock issued for
  convertible preferred
  stock . . . . . . . .                                                                            19,868
Deemed dividend repre-
  senting the beneficial
  conversion feature of
  preferred stock . . .     (19,868)                                                              (19,868)
Common stock issued for
  convertible subordinated
  notes . . . . . . . .                                                                             4,996
Deemed dividend repre-
  senting the beneficial
  conversion feature of
  convertible subordinated
  notes . . . . . . . .         555                                                                   555
Deferred stock compensa-
  tion. . . . . . . . .       3,960            (3,960)                                              --
Amortization of compensa-
  tion expense. . . . .                         3,960                                               3,960
Compensatory stock
  option. . . . . . . .         102                                                                   102
Issuance of common stock
  for patent rights . .                                                                               500
Exercise of stock
  options . . . . . . .                                                              (700)            125
Redemption of fractional
  shares. . . . . . . .                                                                             --
Net loss. . . . . . . .                                          (39,240)                         (39,240)
                         ----------        ----------         ----------       ----------      ----------
Balances,
  December 31, 2000 . .         (47)            --               (60,352)          (3,517)          9,743


<PAGE>


                                              COOLSAVINGS, INC.
STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - CONTINUED
                            For the Years Ended December 31, 2002, 2001 and 2000
                               (in thousands, except share and per share data)


                                              Stockholders' (Deficit) Equity
                   --------------------------------------------------------------------------------------
                                                                                Notes           Total
                         Additional                                           Receivable     Stockholders'
                          Paid-In       Deferred Stock       Accumulated     From Related     (Deficit)
                          Capital        Compensation          Deficit         Parties          Equity
                         ----------     -------------        -----------     ------------    ------------

Issuances of detachable
  warrants. . . . . . .       2,762                                                                 2,762
Forgiveness of notes
  receivable. . . . . .                                                             3,517           3,517
Conversion from no par
  to $0.001 par common
  stock . . . . . . . .      73,620                                                                 --
Issuance of Series B
  Preferred Stock, net
  of issuance  costs of
  $1.3 million. . . . .
Accretion of Series B
  Preferred to redemption
  value . . . . . . . .      (1,318)                                                               (1,318)
Cumulative dividend accrued
  on Series B Preferred
  Stock . . . . . . . .        (113)                                                                 (113)
Exchange of notes payable,
  accrued interest and
  warrants for Series C
  Preferred Stock . . .        (387)                                                                 (387)
Net loss. . . . . . . .                                          (29,227)                         (29,227)
                         ----------        ----------         ----------       ----------      ----------
Balances,
  December 31, 2001 . .      74,517             --               (89,579)           --            (15,023)



<PAGE>


                                              COOLSAVINGS, INC.
STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - CONTINUED
                            For the Years Ended December 31, 2002, 2001 and 2000
                               (in thousands, except share and per share data)



                                              Stockholders' (Deficit) Equity
                   --------------------------------------------------------------------------------------
                                                                                Notes           Total
                         Additional                                           Receivable     Stockholders'
                          Paid-In       Deferred Stock       Accumulated     From Related     (Deficit)
                          Capital        Compensation          Deficit         Parties          Equity
                         ----------     -------------        -----------     ------------    ------------
Issuance of Series B
  Preferred Stock . . .                                                                             --
Conversion of Grid Note
  to Series B Preferred
  Stock . . . . . . . .                                                                             --
Cumulative dividend
  declared on Series B
  Preferred Stock . . .        (626)                                                                 (626)
Cumulative dividend
  accrued on Series B
  Preferred Stock . . .        (283)                                                                 (283)
Net loss. . . . . . . .                                           (8,287)                          (8,287)
                         ----------        ----------         ----------       ----------      ----------
Balances,
  December 31, 2002 . .  $   73,608        $    --            $  (97,866)      $    --         $  (24,219)
                         ==========        ==========         ==========       ==========      ==========


















<fn>
                   The accompanying notes are an integral part of the financial statements
</table>


<PAGE>


                           COOLSAVINGS, INC.
                        STATEMENTS OF CASH FLOWS
                            (in thousands)

                                     For the Year Ended December 31,
                                   ----------------------------------
                                       2002        2001       2000
                                    ----------  ---------- ----------
Cash flows used in operating
 activities:
  Net loss. . . . . . . . . . . . . $   (8,287) $  (29,227)$  (39,240)
Adjustments to reconcile net loss to
 net cash used in operating activities:
  Depreciation and amortization . .      4,392       5,064      2,482
  (Gain) loss on disposal of property
    and equipment . . . . . . . . .         (8)        120        286
  Write-off related to website
    project costs . . . . . . . . .        177         781      --
  Write-off related to PeopleSoft
    asset . . . . . . . . . . . . .      --            150      --
  Write-off related to intangible
    asset . . . . . . . . . . . . .         38       --         --
  Forgiveness of notes receivable
    and interest from directors . .      --          3,666      --
  Provision for doubtful accounts,
    net of write-offs . . . . . . .        623       2,432      1,638
  Amortization of debt discount . .      --          3,096        555
  Interest payment in kind. . . . .      1,143         379      --
  Extraordinary gain on exchange
    of debt for preferred stock . .      --           (327)     --
  Landmark reimbursed transaction
    costs (Note 7(b)) . . . . . . .         21         749      --
  Loss on asset impairment. . . . .      1,233       --         --
  Stock option compensation . . . .      --          --         3,960
  Amortization of prepaid
    advertising . . . . . . . . . .      --          --         1,519

Changes in assets and liabilities:
  (Increase) decrease in restricted
    certificates of deposit . . . .      --           (204)        67
  (Increase) decrease in accounts
    receivable. . . . . . . . . . .     (1,913)      3,413     (6,586)
  (Increase) decrease in prepaid
    and other current assets. . . .       (140)        645        774
  (Decrease) increase in accounts
    payable . . . . . . . . . . . .     (1,811)     (3,828)     4,386
  Increase (decrease) in deferred
    revenue . . . . . . . . . . . .        101        (560)       734
  Increase in lease exit cost
    liability . . . . . . . . . . .      1,325       --         --
  Increase (decrease) in accrued
    and other liabilities . . . . .      1,293      (2,863)     3,968
                                    ----------  ---------- ----------
Net cash flows used in
  operating activities. . . . . . .     (1,813)    (16,514)   (25,457)
                                    ----------  ---------- ----------

Cash flows used in investing activities:
  Purchases of property and
    equipment . . . . . . . . . . .       (388)     (1,691)    (6,715)
  Sale of property and equipment. .         54          29        121
  Cash paid for intangible assets .      --          --          (325)
  Capitalized web site development
    costs . . . . . . . . . . . . .       (438)     (1,579)    (2,668)
                                    ----------  ---------- ----------
Net cash used in investing activities     (772)     (3,241)    (9,587)
                                    ----------  ---------- ----------

The accompanying notes are an integral part of the financial statements


<PAGE>


                           COOLSAVINGS, INC.
                  STATEMENTS OF CASH FLOWS - CONTINUED
                            (in thousands)


                                    For the Year Ended December 31,
                                 ------------------------------------
                                       2002        2001       2000
                                    ----------  ---------- ----------
Cash flows from financing activities:
  Proceeds from short-term debt . .      --          1,552      --
  Repayment of debt obligations . .     (1,962)     (4,258)      (621)
  Advances on notes payable . . . .      1,500      23,879      4,132
  Proceeds from exercise of stock
    options . . . . . . . . . . . .      --          --           125
  Proceeds from issuance of
    preferred stock . . . . . . . .      2,770       --         --
  Proceeds from issuance of
    common stock. . . . . . . . . .      --          --        23,100
  Cash overdraft. . . . . . . . . .      --         (1,335)     1,335
  Financing costs . . . . . . . . .      --         (1,980)    (3,475)
                                    ----------  ---------- ----------
Net cash provided by
  financing activities. . . . . . .      2,308      17,858     24,596
                                    ----------  ---------- ----------

Net decrease in cash. . . . . . . .       (277)     (1,897)   (10,448)
Cash and cash equivalents,
  beginning of period . . . . . . .      5,144       7,041     17,489
                                    ----------  ---------- ----------
Cash and cash equivalents,
  end of period . . . . . . . . . . $    4,867  $    5,144 $    7,041
                                    ==========  ========== ==========

Supplemental schedule of cash
 flow information:
  Cash paid for interest. . . . . . $       52  $      355 $      228

Noncash Investing and Financing
 Activity:
  Common stock issued in exchange
    for patent rights . . . . . . . $    --     $    --    $      500
  Common stock issued upon
    conversion of Series A
    Preferred Stock . . . . . . . .      --          --        19,868
  Common stock issued upon
    conversion of subordinated
    notes . . . . . . . . . . . . .      --          --         4,996
  Issuance of common stock in
    exchange for shareholder notes
    upon exercise of stock options
    and warrants. . . . . . . . . .      --          --           700
  Issuance of stock options for
    consulting services . . . . . .      --          --           102
  Conversion of Grid Notes to
    Series B Preferred Stock. . . .      9,475       8,790      --
  Conversion of notes and warrants
    to Series C Preferred Stock . .      --          1,950      --
  Accretion of Series B Preferred
    Stock . . . . . . . . . . . . .      --          1,318      --




The accompanying notes are an integral part of the financial statements.


<PAGE>


                           COOLSAVINGS, INC.
                     NOTES TO FINANCIAL STATEMENTS
            (in thousands, except share and per share data)


1.   DESCRIPTION OF THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES:

     a.    THE COMPANY:  CoolSavings, Inc. ("CoolSavings" or the
"Company") is a direct marketing and media company that provides smarter
solutions to connect marketers to their target consumers using analytics
and incentive technology.  Under the Company's established brand,
advertisers can deliver, target and track a wide array of incentives,
including printed and electronic coupons, personalized e-mails, rebates,
samples, trial offers, sales notices, and gift certificates to promote
sales of products or services in stores or online.

     These financial statements are prepared on a going-concern basis in
accordance with accounting principles generally accepted in the United
States. This preparation requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Estimates are used for, but not limited to, depreciation,
amortization, sales credits, the accounting for doubtful accounts, unearned
revenue, taxes, contingencies, lease exit costs, and asset impairments.
Actual results could differ from those estimates.

     Beginning in 2001, the Company entered into a series of transactions
with Landmark Communications, Inc. and Landmark Ventures VII, LLC
(together, "Landmark") whereby Landmark made loans to and equity
investments in CoolSavings.  This series of transactions resulted in a
change in control of the Company.  Landmark has voting control of the
Company.  Landmark's principal business interests are in the media
industry, and it owns and operates entities engaged in newspaper and other
print publishing, television broadcasting and cable television programming
services.

     b.    PROFITABILITY UNCERTAIN AND LIQUIDITY CONSTRAINTS:  The Company
has negative working capital and has sustained significant net losses and
negative cash flows from operations since inception. In addition, the
Company is not in compliance with certain covenants of its loan agreement
with Landmark.  As a result, Landmark has the right to accelerate payment
of obligations due to Landmark and require redemption of the Convertible
Redeemable Cumulative Series B Preferred Stock at any time.  The Company's
ability to meet its obligations in the ordinary course of business is
dependent upon management's ability to establish profitable operations and
obtain continuing financing from Landmark (described in Note 2 below) or
other sources with acceptable terms and conditions.

     If management is unable to secure additional equity and/or debt
financing or comply with the terms of the Landmark financing or if the
Company fails to achieve and maintain cash flow positive operations, the
Company's ability to continue to operate the business will be jeopardized.
There can be no assurance that the Company will obtain necessary financing.

The ultimate recoverability of property and equipment and other assets is
dependent upon, among other things, the success of the Company in
establishing profitable operations, the attainment of which cannot be
presently assured.  Since there is no assurance that management will
complete their plans, there is substantial doubt about the Company's
ability to continue as a going concern.  The financial statements do not
include any adjustments that may result from the outcome of this
uncertainty.

     c.    CASH AND CASH EQUIVALENTS:  The Company considers all highly
liquid investments with an original maturity of three months or less to be
cash equivalents. Cash equivalents consist primarily of deposits in money
market funds and certificates of deposit.



<PAGE>


     d.  CONCENTRATION OF CREDIT RISK:  Financial instruments that
potentially subject the Company to a concentration of credit risk consist
of cash and cash equivalents and accounts receivable. Cash and cash
equivalents are deposited with high credit quality financial institutions.
The Company's accounts receivable are derived from revenue earned from
customers located primarily in the U.S. and are denominated in U.S.
dollars.  The Company had no customers that represented more than 10% of
net revenues for the year ended December 31, 2002.  One customer
represented 12.7% and 10.3% of net revenues for the years ended
December 31, 2001 and 2000, respectively.  The Company had five customers
that represented 16.0%, 26.2% and 27.7% of net revenues for the years ended
December 31, 2002, 2001 and 2000, respectively.  The Company had no
customers that represented more than 10% of outstanding receivables at
December 31, 2002 or 2001.  The Company had five customers that represented
18.2% and 27.3% of the outstanding receivables at December 31, 2002 and
2001, respectively.

     e.    FAIR VALUE OF FINANCIAL INSTRUMENTS:  The Company's financial
instruments, including cash and cash equivalents, accounts receivable,
accounts payable and notes payable are carried at cost, which approximates
their fair value because of the short-term maturity of these instruments.

     f.    PROPERTY AND EQUIPMENT:  Property and equipment are recorded at
cost. Depreciation and amortization are computed using primarily the
straight-line method over the estimated useful lives of the assets. Useful
lives for computer hardware and software are 3 to 5 years, and are 5 to 7
years for furniture and fixtures. Leasehold improvements are amortized over
the term of the lease or the estimated useful life, whichever is shorter.
Upon sale or retirement of property and equipment, the cost and related
accumulated depreciation or amortization are eliminated from the respective
accounts, and the resulting gain or loss is included in the determination
of net income or loss.  Maintenance and repair costs are expensed as
incurred.

     g.    INTANGIBLE ASSETS:  Intangible assets are comprised of various
licenses and patents that are recorded at cost.  Amortization is computed
using the straight-line method over the estimated useful life of the asset
or the license period, whichever is shorter.  Amortization periods range
from 2 to 7 years.

     h.    LONG-LIVED ASSETS:  The Company assesses the recoverability of
long-lived assets at the asset group level, whenever adverse events or
changes in circumstances or business climate indicate that an impairment
may have occurred. If the future cash flows (undiscounted and without
interest) expected to result from the use of the related assets are less
than the carrying value of such assets, an impairment has incurred and a
loss is recognized to reduce the carrying value of the long-lived assets to
fair value, which is determined by discounting estimated future cash flows.

     In August 2002, following a study of its future space requirements,
the Company determined that a significant portion of its unoccupied leased
office space and the assets associated with that office space were
unnecessary for its future operations (See Note 6).

     i.    REDEEMABLE PREFERRED STOCK:  Preferred stock whose redemption
is not within the control of the Company is classified outside of permanent
equity within the financial statements.  The Company's Series B redeemable
convertible preferred stock is carried at its redemption value because it
is currently redeemable at any time at Landmark's option. The accretion to
redemption value is recorded as a dividend to the holders of the Series B
redeemable convertible preferred stock and is charged against additional
paid-in-capital, to the extent available, and then the accumulated deficit.



<PAGE>


     The Company's Series C redeemable convertible preferred stock is
carried at its fair value at the time of issuance and is redeemable at
CoolSavings' election at any time after the shares of Series B Preferred
Stock have been redeemed or after the third anniversary of the date of
issuance, if the holders of a majority of the shares of Series B Preferred
Stock consent. The holders of the Series C redeemable convertible preferred
stock can deem certain change in control events to be liquidating events if
the holders of the Series B redeemable convertible preferred stock have
deemed these events to be liquidating events.  The Series C redeemable
convertible preferred stock is classified outside of permanent equity
because these events are not considered to be within the Company's
control. Because the Company does not deem the occurrence of a change in
control to be probable as of December 31, 2002, the Series C redeemable
convertible preferred stock is not accreted to its liquidation value.

     j.    REVENUE RECOGNITION:  Revenue subject to time-based contracts
is recognized ratably over the duration of the contract. Deferred revenue
represents the portion of revenue that has not been recognized related to
time based contracts. For contracts based on certain performance or
delivery criteria, revenue is recognized in the month performance is
delivered to the customer.

     Barter revenue includes amounts recorded for barter transactions in
which the Company exchanges promotion or direct marketing services for
advertising.  Pursuant to Emerging Issues Task Force ("EITF") Issue No. 99-
17 "Accounting for Advertising Barter Transactions," barter transactions
have been valued based upon similar cash transactions which have occurred
within six months prior to the date of the barter transaction. In the years
ended December 31, 2002, 2001 and 2000, barter revenues and corresponding
advertising costs were $193, $1,070 and $2,300, respectively.

     k.    ADVERTISING:  Advertising costs are expensed as incurred.
Advertising expense was $8,488, $8,508 and $31,423 during the years ended
December 31, 2002, 2001 and 2000, respectively.

     l.    INCOME TAXES:  Income taxes are accounted for using an asset
and liability approach, which requires the recognition of taxes payable or
refundable for the current year and deferred tax liabilities and assets for
the future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. The measurement of current
and deferred tax liabilities and assets are based on provisions of the
enacted tax law; the effects of future changes in tax laws or rates are not
anticipated. The measurement of deferred tax assets is reduced, if
necessary, by the amount of any tax benefits that, based on available
evidence, are not expected to be realized.

     m.    CAPITALIZED SOFTWARE COSTS:  The Company accounts for software
development costs in accordance with the American Institute of Certified
Public Accountants Statement of Position 98-1 ("SOP 98-1"), "Accounting for
the Cost of Computer Software Developed or Obtained for Internal Use,"
which requires capitalization of certain costs including the cost of
outside consultants. These costs are amortized using the straight-line
method over three years, beginning when individual modules are placed into
service. The Company recognized $406, $497 and $497 in amortization expense
for the years ended December 31, 2002, 2001 and 2000, respectively. No
software development costs were capitalized in the years ended December 31,
2002, 2001 and 2000.

     n.    CAPITALIZED WEB SITE DEVELOPMENT COSTS:  Effective July 1,
2000, the Company adopted the standards of EITF Issue No. 00-2 "Accounting
for Web Site Development Costs," which requires capitalization of certain
web site development costs. The Company capitalized costs of $438, $1,579
and $2,668 related to web site development in the years ended December 31,
2002, 2001 and 2000, respectively.  The Company recognized $1,433, $1,542
and $48 of amortization expense for the years ended December 31, 2002, 2001
and 2000, respectively.  Additionally, the Company wrote off web site
development costs with net book values of $177, $781, and $0 during 2002,
2001 and 2000, respectively.



<PAGE>


     o.    STOCK-BASED COMPENSATION:  Financial Accounting Standards Board
("FASB") Statement of Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation" encourages, but does not require, companies to
record compensation cost for stock-based compensation at fair value. The
Company has chosen to continue to account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and its related
Interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair market value of a share of the
Company's stock at the date of the grant over the amount that must be paid
to acquire the stock. No compensation expense has been recorded in
connection with stock option grants in 2002 and 2001 as all options granted
had an exercise price equal to or greater than the market price of the
underlying stock on the date of grant.  See Note 11e for a discussion of
common stock compensation recorded in 2000 related to the departure of the
former president of the Company.

     p.    BASIC AND DILUTED NET LOSS PER SHARE:  The Company computes net
loss per share in accordance with the provisions of SFAS 128 "Earnings per
Share" ("SFAS 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS 128 and SAB 98, basic and diluted net loss per
share applicable to common stockholders is computed by dividing the net
loss applicable to common stockholders for the period by the weighted
average number of common shares outstanding for the period. The calculation
of diluted net loss per share excludes shares of common stock issuable upon
the exercise of employee stock options (see Note 11) and warrants (See Note
7b), and the conversion of the preferred stocks (See Note 10) as the effect
of such exercises would be anti-dilutive. Refer to Note 12 -- Earnings Per
Share for the reconciliation of the numerator and denominator of the basic
and diluted EPS calculation.

     q.    COMPREHENSIVE EARNINGS:  The Company reports comprehensive
earnings in accordance with SFAS Statement No. 130, "Reporting
Comprehensive Income," which establishes standards for the reporting and
display of comprehensive earnings and its components in general-purpose
financial statements. There were no components of other comprehensive
income during any of the periods presented.

     r.    SEGMENT INFORMATION:  SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information" requires that management identify
operating segments based on the way that management desegregates the entity
for making internal operating decisions. The Company currently operates in
one segment.

     s.    RECENT PRONOUNCEMENTS:  In August 2001, the FASB issued SFAS
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), which
addresses financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the associated asset
retirement costs. SFAS No. 143 is required to be adopted for fiscal years
beginning after June 15, 2002. The Company does not expect the adoption of
SFAS 143 will have a material impact on the financial position or results
of operations.

      In November 2002, the FASB issued Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others," which expands
previously issued accounting guidance and disclosure requirements for
certain guarantees. The Interpretation requires an entity to recognize an
initial liability for the fair value of an obligation assumed by issuing a
guarantee. The provision for initial recognition and measurement of the
liability will be applied on a prospective basis to guarantees issued or
modified after December 31, 2002. The Company does not expect this
Interpretation to have a material impact on its financial position or
results of operations.



<PAGE>


     In January 2003, the FASB issued Interpretation No. 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB
No. 51," which requires all Variable Interest Entities ("VIEs") to be
consolidated by the primary beneficiary. The primary beneficiary is the
entity that holds the majority of the beneficial interests in the VIE. In
addition, the interpretation expands disclosure requirements for both VIEs
that are consolidated as well as VIEs from which the entity is the holder
of a significant amount of the beneficial interests, but not the majority.
The disclosure requirements of this interpretation are effective for all
financial statements issued after January 31, 2003. The consolidation
requirements of this interpretation are effective for all periods beginning
after June 15, 2003.  The Company does not expect this Interpretation to
have a material impact on its consolidated financial position or results of
operations.

     In January 2003, the FASB issued EITF No. 00-21, "Revenue
Arrangements with Multiple Deliverables" ("EITF 00-21").  EITF 00-21
provides guidance on how to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting and how
arrangement consideration should be measured and allocated to the separate
units of accounting in the arrangement.  EITF 00-21 will be effective for
arrangements entered into in fiscal periods beginning after June 15, 2003.
The Company does not expect that the provisions of EITF 00-21 will have a
material impact on the Company's results of operations or financial
position.

     t.    RECLASSIFIED PRIOR-YEAR AMOUNTS:  Certain prior-year amounts
have been reclassified to conform to the current year's presentation.


2.   LANDMARK TRANSACTION - RELATED PARTY

     Beginning in 2001, the Company entered into a series of transactions
with Landmark whereby Landmark made loans to and an equity investment in
the Company.

     SENIOR SECURED NOTE

     During 2001, Landmark loaned the Company $5,000 pursuant to a senior
secured note (the "Senior Secured Note"), which loan is due on June 30,
2006 (the "Senior Secured Loan"). The Senior Secured Note and Senior
Secured Loan are governed by the terms of an amended and restated senior
secured loan and security agreement dated July 30, 2001 (the "Amended and
Restated Loan Agreement").  In connection with the Senior Secured Loan, the
Company issued Landmark a warrant (the "Landmark Warrant") to purchase
shares of its common stock. The warrant was exercisable for 10.0 million
shares of common stock at an exercise price of $0.50 per share at
November 12, 2001. The exercise price of the warrant will automatically
increase to $0.75 per share on July 30, 2005 if not previously exercised.
The Senior Secured Loan bears interest at 8% per annum, which accrues
quarterly and is payable "in-kind."  The Company automatically issues to
Landmark additional warrants to purchase two shares of common stock for
each dollar of interest accrued and paid-in-kind on a quarterly basis
(January 31, April 30, July 31 and October 31) on the Senior Secured Loan.
As of December 31, 2002, the principal and interest owed under the Senior
Secured Loan was $5,668.  As of October 31, 2002, the Landmark Warrants
were exercisable for 10,807,799 shares of the Company's common stock.  The
Senior Secured Note is secured by a lien on all of the Company's assets.
Due to defaults under the Securities Purchase Agreement (defined below),
Landmark may demand payment under the Senior Secured Loan at any time.

     The Amended and Restated Loan Agreement contains financial covenants
and affirmative and negative covenants that, among other things, restrict
the Company's ability to incur additional indebtedness and take other
actions without the consent of the note holder.



<PAGE>


     GRID NOTE

     Under the terms of that certain Securities Purchase Agreement dated
July 30, 2001, the Company agreed that if certain events occurred prior to
December 31, 2002, defined therein as "Shortfall Events", Landmark would
have the right to acquire additional shares of Series B Preferred Stock
(defined below) at a price of $0.1554 per share.  Among other things,
Shortfall Events would occur if the Company failed to maintain an excess of
current assets over current liabilities at or above prescribed amounts.
The number of shares would equal the "Shortfall Amount" (generally the cash
needed by the Company in connection with a Shortfall Event) divided by
$0.1554.  Under a letter agreement dated November 12, 2001, the Company
agreed that when Shortfall Events occurred, Landmark could elect to loan
the Company the Shortfall Amount under the grid note, as amended (the "Grid
Note").

     As Shortfall Events occurred during 2001, Landmark loaned the Company
an aggregate of $17,249 under the Grid Note.  On November 12, 2001,
pursuant to the Securities Purchase Agreement, Landmark exercised its
rights to apply $10,000 of principal and $108 of accrued interest then
outstanding to the purchase of 65,057,936 shares of the Company's $0.001
par value Cumulative Preferred B Stock (the "Series B Preferred Stock") at
a price per share of $0.1554.  On January 29, 2002, Landmark loaned to the
Company, under the Grid Note, an additional $21 related to transaction
costs reimbursable to Landmark.  On February 28, 2002, Landmark loaned the
Company an additional $1,500 under the Grid Note, bringing the outstanding
principal balance (including advances made in 2001) to $8,770.  This
balance included $8,000 related to Shortfall Events and $770 related to the
Company's obligation to reimburse Landmark for legal fees related to the
Landmark Transaction.

     On December 20, 2002, Landmark, at the Company's request, applied the
$8,770 of principal and $705 of accrued interest then outstanding under the
Grid Note against the purchase of 60,967,777 shares of Series B Preferred
Stock ($0.1554 per share).  As of December 31, 2002, the Grid Note had no
outstanding principal or accrued interest.  The Grid Note bears interest at
eight percent (8%) per annum and may evidence up to $20,000 in advances.

     SALE OF SERIES B PREFERRED STOCK

     On November 12, 2001, pursuant to the Securities Purchase Agreement,
Landmark exercised its rights to apply $10,000 of principal and $108 of
accrued interest then outstanding to the purchase of 65,057,936 shares of
the Company's $0.001 par value Cumulative Preferred B Stock (the "Series B
Preferred Stock") at a price per share of $0.1554.  On November 12, 2001,
pursuant to the Securities Purchase Agreement, the Company agreed that
Landmark could elect to loan the Company the Shortfall Amount under the
Grid Note.

     On October 24, 2002, in connection with one Shortfall Event which
occurred on June 30, 2002 (related to the amount of current assets over
current liabilities at such date), Landmark exercised its right to purchase
17,825,212 shares of Series B Preferred Stock and paid the Company $2,770
($0.1554 per share).

     On December 20, 2002, Landmark, at the Company's request, applied the
$8,770 of the principal and $705 of accrued interest then outstanding under
the Grid Note against the purchase of 60,967,777 shares of Series B
Preferred Stock ($0.1554 per share).

     The Series B Preferred Stock has certain conversion rights and has an
8% annual dividend, payable quarterly in additional shares of Series B
Preferred Stock.  As a result of the defaults under the Amended and
Restated Loan Agreement, Landmark may at its option require the Company to
redeem for cash all of the issued and outstanding Series B Preferred Stock
at any time.



<PAGE>


     As of December 31, 2002, Landmark holds 148,600,102 shares of
Series B Preferred Stock (and has rights with respect to accrued dividends
thereon) and holds a warrant to purchase 10,807,799 shares of the Company's
common stock.  Landmark's ownership will continue to grow through the
issuance of additional shares of Series B Preferred Stock and warrants as
"in-kind" payments for dividends and interest accruing on the Series B
Preferred Stock and interest accruing on the senior secured note (the
"Senior Secured Note"), respectively.


TERMS OF THE SERIES B PREFERRED STOCK

     The terms of the Series B Preferred Stock are set forth in their
entirety in the Company's Certificate of Incorporation.  The Series B
Preferred Stock ranks senior (with respect to, among other things,
dividends, redemption and liquidation payments) to the Series C Preferred
Stock (defined below), the common stock and any future preferred stock of
CoolSavings.  The following discussion summarizes the rights of the
Series B Preferred Stock.

     DIVIDENDS AND LIQUIDATION PREFERENCE

     Dividends accrue on the shares of Series B Preferred Stock at the
rate of 8% per annum, payable quarterly in additional shares of Series B
Preferred Stock. Dividends are cumulative and will continue to accrue
whether or not declared.  As of December 31, 2002, 1,822,567 shares of
Series B Preferred Stock are issuable with respect to accrued, but not
declared, dividends.

     On liquidation, holders of Series B Preferred Stock are entitled to
be paid the greater of the amount per share that would have been payable if
each share of Series B Preferred Stock had been converted to common stock
or the stated value ($0.1554 at the time of issuance, subject to anti-
dilution adjustments) for each share of Series B Preferred Stock plus the
amount of any accrued but unpaid dividends thereon, before holders of the
Series C Preferred Stock and common stock receive a distribution.  At the
election of the holders of the Series B Preferred Stock, a merger or
consolidation that effects a change of control of CoolSavings, or a sale of
all or substantially all of the assets of CoolSavings, may be deemed to be
a liquidation.

     CONVERSION RIGHTS

     Each share of Series B Preferred Stock, plus any shares issuable as
accrued but unpaid dividends thereon, is convertible at the holder's option
into the number of shares of common stock obtained by dividing the stated
value of a share of Series B Preferred Stock ($0.1554) by the conversion
price ($0.1554 at the time of issuance, subject to anti-dilution
adjustments).

     The conversion price and conversion ratio are subject to "full
ratchet" adjustment upon certain events. This means, for example (and
excluding exceptions), that if CoolSavings issues any shares of common
stock for less than the conversion price or issues convertible or
derivative securities with an exercise or conversion price less than the
conversion price of the Series B Preferred Stock, the conversion price and
conversion ratio are reduced to the price at which such new securities were
issued or the exercise or conversion price thereof, as applicable.

     REDEMPTION

     CoolSavings' Election.  Shares of Series B Preferred Stock are
redeemable in whole, at CoolSavings' election, after the seventh
anniversary of the issuance of the Series B Preferred Stock, at their
stated value of $0.1554 per share plus accrued but unpaid dividends through
the redemption date. CoolSavings' ability to redeem the shares of Series B
Preferred Stock is subject to the following:



<PAGE>


     .     the common stock must have traded at or above $3.00 per share
           for 20 consecutive trading days (and during at least 60 of the
           80 trading days immediately prior to the redemption date);

     .     CoolSavings must have on file, or agree to file and make
           effective within 30 days of redemption, a registration
           statement with the SEC registering for resale the shares of
           common stock underlying the Series B Preferred Stock;

     .     CoolSavings shall have paid any outstanding debt to Landmark
           in full; and

     .     there are no securities outstanding that are junior in ranking
           to the Series B Preferred Stock (except common stock).

     Holders' Election. Due to default events under the Amended and
Restated Loan Agreement, as of December 31, 2002 and 2001, the Series B
Preferred Stock was redeemable in whole or in part at the holder's election
at the stated value of $0.1554 per share plus accrued but unpaid dividends.

See Note 7 of these financial statements for a discussion of the default
events.


     VOTING RIGHTS AND BOARD OF DIRECTORS

     Each share of Series B Preferred Stock is entitled to the number of
votes equal to the number of shares of common stock into which such share
of Series B Preferred Stock and accrued dividends thereon is convertible,
from time to time. The holders of the Series B Preferred Stock are entitled
to vote together with holders of common stock at any meeting of the
stockholders on any and all matters presented to the stockholders for
consideration.  In addition to their right to vote in the general election
of members of the Company's Board on an as-converted basis, the holders of
Series B Preferred Stock are entitled to designate, and vote separately as
a single class for the election of a majority of the Company's Board (and
the number of seats elected exclusively by the Series B Preferred Stock
shall be automatically increased to such greater number as may be
proportionate to the Series B Preferred Stock's percentage ownership
interest in the Company, calculated on an as-converted basis).  The holders
of Series B Preferred Stock also have special voting rights where the
Company is prohibited from taking certain actions without the holder's
consent, including but not limited to, amending its charter documents,
entering into business transactions, authorizing or issuing securities
(except in limited circumstances), entering into related party
transactions, hiring or terminating key executive officers.


SALE OF SERIES C PREFERRED STOCK

     As a condition to the consummation of the Landmark Transaction on
November 12, 2001, the Company issued to three individuals, two of whom are
directors of the Company, 13,000,000 shares of the Company's Series C
Convertible Preferred Stock ("Series C Preferred Stock") in exchange for
$2,100 of the Company's 8% Senior Subordinated Convertible Notes ("Director
Notes"), due March 1, 2006, accrued interest, and warrants to purchase
1,050,000 shares of common stock which were previously issued to such
individuals with the Director Notes.


TERMS OF THE SERIES C PREFERRED STOCK

     The Series C Preferred Stock ranks junior (with respect to dividends
and liquidation payments) to the Series B Preferred Stock but senior to the
common stock.  The following discussion summarizes the rights of the
Series C Preferred Stock.



<PAGE>


     DIVIDENDS

     The Series C Preferred Stock will not accrue dividends. Dividends may
be declared and paid on the Series C Preferred Stock from funds lawfully
available as and when determined by the Board of Directors and subject to
any preferential dividend rights of any then outstanding preferred stock,
including the Series B Preferred Stock.

     CONVERSION RIGHTS

     Each share of Series C Preferred Stock is convertible, at the
holder's option, into the number of shares of common stock obtained by
dividing the stated value of a share of Series C Preferred Stock ($0.1665)
by the conversion price ($0.1665 at the time of issuance, subject to anti-
dilution adjustments).

     The conversion price and conversion ratio are subject to "weighted
average" adjustment upon certain events. This means, for example (and
excluding exceptions), that if CoolSavings issues common stock for less
than the conversion price or issues convertible or derivative securities
with an exercise or conversion price less than the conversion price of the
Series C Preferred Stock, the conversion price and conversion ratio are
reduced to the price derived from the weighted average of the price at
which all such securities were issued or deemed to be issued.

     REDEMPTION

     Shares of Series C Preferred Stock are redeemable in whole, at
CoolSavings' election, at any time after the shares of Series B Preferred
Stock have been redeemed or after the third anniversary of the date of
issuance, if the holders of a majority of the shares of Series B Preferred
Stock consent, at the stated value ($0.1665 at the time of issuance,
subject to anti-dilution adjustments) for each share of Series C Preferred
Stock plus a cash amount per share equal to eight percent (8%) per annum of
the Series C Preferred Stock stated value.

     VOTING RIGHTS

     Each share of Series C Preferred Stock is entitled to the number of
votes equal to the number of shares of common stock into which such share
of Series C Preferred Stock is convertible. The holders of Series C
Preferred Stock are entitled to vote together with holders of common stock
at any meeting of the Stockholders of CoolSavings on any and all matters
presented to the Stockholders for consideration.

     LIQUIDATION PREFERENCE

     On liquidation, after the payment of the preferred distribution to
the holders of the Series B Preferred Stock, holders of Series C Preferred
Stock are entitled to be paid the greater of: (1) the amount per share that
would have been payable if each share of Series C Preferred had been
converted to common stock, or (2) the stated value ($0.1665 at the time of
issuance, subject to anti- dilution adjustments) for each share of Series C
Preferred Stock plus a cash amount per share equal to eight percent (8%)
per annum of the Series C Preferred Stock stated value, before holders of
common stock receive a distribution. At the election of the holders of the
Series C Preferred Stock, a change of control of CoolSavings, or a sale of
all or substantially all of the assets of CoolSavings, may be deemed to be
a liquidation, provided the holders of the Series B Preferred Stock have
elected to have such event constitute a liquidation.




<PAGE>


3.   OTHER RELATED PARTY TRANSACTIONS:

     a.    LEGAL SERVICES:  One attorney with a law firm that provided
services to the Company was a member of the Company's Board of Directors
from September 2001 through July 2002.  Several attorneys with this law
firm also are holders of the Company's stock. Total fees for services were
$82, $1,142 and $571, during the years ended December 31, 2002, 2001 and
2000, respectively. These fees are included in general and administrative
expenses in 2002, 2001 and 2000, except a portion that had been capitalized
as Landmark Transaction costs and later amortized to interest expense as a
debt discount in 2001 and 2000, and a portion related to our initial public
offering which was capitalized to common stock in 2000.  Total fees payable
were $7 and $128 at December 31, 2002 and 2001, respectively.  An attorney
related to our former Chairman of the Board and Chief Executive Officer
provided services to the Company.  Total fees for such services were $0,
$162 and $430 during the years ended December 31, 2002, 2001 and 2000,
respectively.  These fees are included in general and administrative
expenses in the Company's statements of operations.  No fees were payable
at December 31, 2002 or 2001.

     b.    NOTES RECEIVABLE:  In March, April, and July 1999 and April,
2000, stockholders provided a total of $3,517 notes receivable upon
exercise of stock options and warrants by current and former officers and
directors of the Company ("Related Party Notes"). These Related Party Notes
accrued interest at rates ranging from 4.83% to 6.71% due annually. These
Related Party Notes were collateralized by the shares of common stock
issued upon exercise of the related options and warrants and the makers of
each note were personally liable for up to 20% of the face value of the
note, plus accrued interest. Accrued but unpaid interest on these notes was
$274 as of December 31, 2000.  During 2001, the Company forgave these
Related Party Notes which had an aggregate principal and accrued interest
of $3,747 and recorded the forgiveness as compensation expense and recorded
a charge of $139 as uncollectible bad debt expense.  Each related party was
permitted to keep the common stock (approximately 1.7 million shares)
purchased by delivery of the Related Party Notes.

     c.    DIRECTORS NOTES PAYABLE:  In March 2001, the Company sold
$2,100 of 8% Senior Subordinated Convertible Notes due March 1, 2006
("Director Notes") to three accredited investors.  Two of those investors
are members of the Company's Board of Directors, each of whom purchased
$1,000 of these Director Notes.  These Director Notes carried warrants to
purchase one share of the Company's common stock for every $2.00 of
principal indebtedness under each Director Note for a total of one million
shares subject to warrants issued to related parties.  The warrants had an
exercise price of $1.25 per share.  The proportional fair value of the
warrants was $387, of which $369 was to related parties.  Such value
represented a discount from the fair value of the Director Notes, and the
relative fair value of the warrants was recorded in the financial
statements as stipulated by APB 14, "Accounting for Convertible Debt and
Debt Issued with Stock Purchase Warrants," and was being amortized to
interest expense over the term of the Director Notes.  The Director Notes
were convertible at any time into common stock at a conversion rate equal
to one share for each outstanding dollar of principal and accrued interest,
at the election of the note holder.  Interest was payable quarterly, and
for periods prior to April 1, 2003, the Company had the option to pay
interest on the outstanding principal balance of the notes in cash or by
delivery of additional notes in an amount equal to the amount of the
interest.  In November 2001, in conjunction with, and as a condition to,
the closing of the investment in the Company by Landmark described in
Note 2 above, the Company issued 13,000,000 shares of its Series C
Preferred Stock (See Note 10b) in exchange for the Director Notes, the
accumulated accrued interest on the Director Notes and the accompanying
warrants.  This transaction resulted in an extraordinary gain of $327 due
to the early extinguishment of the Director Notes.



<PAGE>


     d.    NOTE PAYABLE:  In June 2001, Tomay Charitable Remainder
Unitrust u/t/a dated April 12, 1994, as amended, of which one of the
Company's Directors is the trustee, loaned the Company a total of $279.
These loans consisted of an interest free loan of $60 and a loan for $219
evidenced by a promissory note dated June 27, 2001, which accrued interest
at a rate equal to 8.5% per annum.  All principal and accrued interest
under these loans was repaid during 2001.

     e.    PARTNERSHIP:  In 2001, the Company formed a partnership with
DIMAC Marketing Partners.  Mr. Robert Kamerschen, a former director of the
Company, is an officer, director and owner of DIMAC Corporation.  DIMAC
Corporation and the Company entered into an agreement whereby the parties
market services and products to designated customers.  The Company has not
earned any revenue with respect to this contract.

     f.    SEVERANCE AGREEMENT:  On April 1, 2001, the Company entered
into an employment agreement with Steven M. Golden, who was serving as the
Company's Chairman and Chief Executive Officer.  The employment agreement
had a term of three years and provided for an annual base salary of $345
and the grant of an option to purchase 150,000 shares of the Company's
common stock.  At the time of the execution of the employment agreement,
all of Mr. Golden's stock options previously issued and not vested were
made immediately vested and exercisable.  On July 30, 2001, the Company
entered into a severance agreement with Mr. Golden which terminated Mr.
Golden's employment agreement.  The severance agreement provided for three
years of severance pay in the amount of $345 per year and the continuation
of certain benefits.  The severance agreement further provided that all
options held by Mr. Golden:  (a) became immediately vested and fully
exercisable; (b) were adjusted to have an exercise price of $0.50; and (c)
were exercisable through the tenth anniversary of the grant of each such
options.  These options are subject to variable accounting under FASB
Interpretation No. 44 "Accounting for Certain Transactions Involving Stock
Compensation."  No compensation expense was recorded in 2002 or 2001 as the
modified options had no intrinsic value.

     g.    EMPLOYMENT AGREEMENT:  On July 30, 2001, the Company entered
into an employment agreement with Matthew Moog, the Company's President and
Chief Executive Officer.  The employment agreement has a term of three
years, provides for an annual base salary of $345, and provides for the
grant of an option to purchase 750,000 shares of the Company's common
stock.  The employment agreement further provides that Mr. Moog would be
granted options to purchase at least an additional 200,000 shares on each
of the first and second anniversary of the agreement if he is still
employed by the Company.  Additionally, the agreement provides for the
immediate and full vesting on January 1, 2002 of the stock options for
250,000 shares of common stock that were originally issued on March 23,
2001.

     h.    CONSULTING CONTRACT:  As of November 1, 2002, the Company
entered into a consulting agreement with John Giuliani, a member of the
Company's Board of Directors.  Mr. Giuliani is paid a fixed monthly fee of
$5 per month to provide up to 5 days of marketing services consulting to
the Company.  This agreement expires December 31, 2003.  These fees are
included in general and administrative expenses in the Company's statement
of operations, and totaled $10 in 2002.  Total fees payable at December 31,
2002, were $10.

     i.    SERVICES PROVIDED:  Landmark provides financial and payroll
system support to the Company for a fixed monthly fee.  The Company
recorded general and administrative expenses for these services of $41, $0
and $0 in 2002, 2001 and 2000, respectively.  In addition, the Company
purchased online advertising services from weather.com, a division of The
Weather Channel, Inc., a wholly owned subsidiary of Landmark, and recorded
marketing expense of $280, $145 and $345 in 2002, 2001 and 2000,
respectively, for these services.



<PAGE>


     j.    CALL OPTION AGREEMENT:  In April 2002, Landmark acquired
10,889,636 shares of the Company's common stock from Lend Lease
International Pty. Limited of Australia. Contemporaneously with the
purchase, the Company entered into a call option agreement with Landmark,
whereby the Company has the right to call, subject to certain terms and
conditions, all 10,889,636 shares of common stock from Landmark.  The call
price is $0.08 per share plus seven percent interest thereon, compounded
annually.  The option can be exercised at any time after April 5, 2003 and
prior to March 31, 2008.  The Company does not have any right to call any
other shares of the Company's capital stock held by Landmark.  The Company
accounted for this call option as permanent equity and a contribution from
Landmark under EITF No. 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock."

The Company ascribed a value of $1,200 to the option at issuance.


4.   PROPERTY AND EQUIPMENT:  Property and equipment at December 31, 2002
and 2001, respectively, were comprised of the following:

                                              December 31,
                                         --------------------
                                            2002       2001
                                          --------   --------
    Computer hardware/software. . . . . . $  6,646   $  6,464
    Furniture and fixtures. . . . . . . .    1,637      2,902
    Leasehold improvements. . . . . . . .      768      1,227
                                          --------   --------
        Total . . . . . . . . . . . . . .    9,051     10,593
    Less depreciation . . . . . . . . . .   (6,455)    (4,797)
                                          --------   --------
        Net property and equipment. . . . $  2,596   $  5,796
                                          ========   ========

     Depreciation expense recorded on property and equipment was $2,303,
$2,820, and $1,789 in 2002, 2001 and 2000, respectively.


5.   INTANGIBLE ASSETS. Intangible assets are comprised of various license
agreements and patents that are recorded at cost. Intangible assets at
December 31, 2002 and 2001, were comprised of the following:

                                              December 31,
                                         --------------------
                                            2002       2001
                                          --------   --------
    License agreements. . . . . . . . . . $   --     $    176
    Patents . . . . . . . . . . . . . . .      500        500
                                          --------   --------
        Total . . . . . . . . . . . . . .      500        676
    Less amortization . . . . . . . . . .     (399)      (245)
                                          --------   --------
        Net intangible assets . . . . . . $    101   $    431
                                          ========   ========

     Amortization expense recorded on intangible assets was $251, $226,
and $148 in 2002, 2001, and 2000, respectively.  In 2002, the Company wrote
off $176 in license agreements for licenses it no longer uses.  The write
off resulted in a loss on intangible assets of $38.




<PAGE>


6.   IMPAIRMENT OF LONG-LIVED ASSETS AND COSTS ASSOCIATED WITH EXIT
ACTIVITIES

     During 2002, following a study of its future expected space
requirements, the Company determined that a significant portion of its
unoccupied leased office space and the assets associated with that office
space were unnecessary for its future operations.  In accordance wit SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
the Company determined that the estimated undiscounted cash flows expected
to be generated by the assets were less than their net book value.
Therefore, the Company has recorded an operating expense of $1,233 in 2002
to write down the assets to their estimated fair value. In addition, in
accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities", the Company has recorded an operating expense of
$2,110 in 2002, representing the estimated future lease obligations related
to the unoccupied office space, and estimated costs associated with
subleasing the space, net of estimated cash flows from future sublease
arrangements.

     For the year ended December 31, 2002, the lease exit cost and an
offsetting benefit from a previously recorded rent levelization adjustment
were as follows:

                                     Twelve Month Period Ended
                                            December 31,
                                     -------------------------
                                          2002         2001
                                        --------     --------
Lease obligation, net of estimated
  sub-lease income. . . . . . . . . .   $  1,306        --
Adjustment to accrued rent expense. .       (132)       --
Broker commissions and other
  miscellaneous costs . . . . . . . .        936        --
                                        --------     --------
Lease exit costs. . . . . . . . . . .   $  2,110        --
                                        ========     ========

     At December 31, 2002, the liability associated with lease exit costs
consisted of the following:

                      Balance at   Subsequent           Balance at
                      December 31, Accruals,            December 31,
                         2001        Net       Payments    2002
                      -----------  ---------- ----------------------

Lease obligations,
  net of estimated
  sub-lease income. . .  $  --      $  1,306    $   (216)   $  1,090
Broker commissions and
  other transaction
  costs . . . . . . . .     --           936        (701)        235
                         --------   --------    --------    --------
Total lease exit
  liability . . . . . .  $  --      $  2,242    $   (917)   $  1,325

Less: current portion
  of lease exit
  liability . . . . . .                                     $   (311)
                                                            --------
Long-term lease exit
  liability . . . . . .                                     $  1,014


     Significant assumptions were required concerning the estimated fair
value of the assets and estimates of sublease income.  As provided under
SFAS No. 144, the Company primarily used discounted cash flow analysis,
together with other available information, to estimate fair values.




<PAGE>


7.   LONG AND SHORT TERM DEBT:

     a.    BANK LINES OF CREDIT:

     During 2002, the Company had two separate credit facilities, both of
which expired as of December 31, 2002.  As of December 31, 2002, the
Company had no borrowings outstanding under these facilities.

     Under a credit facility with American National Bank (the "ANB
Facility") the Company had one term loan and one $3,000 revolving credit
line.  Both the term loan and the revolving credit line were payable in
installments.  At December 31, 2002, the Company had restricted
certificates of deposit of $231 which related to letters of credit which
were issued under the under the credit line, and which expired on
December 31, 2002. The restrictions on the certificates of deposit were
removed on January 1, 2003. Borrowings were collateralized by substantially
all the assets of the Company.

     On June 15, 2001, the Company entered into a Forbearance and
Reaffirmation Agreement with American National Bank, which was amended by a
letter agreement dated July 27, 2001 ("ANB Forbearance Agreement"), wherein
American National Bank agreed to forbear from accelerating borrowings under
the ANB Facility for certain stated defaults.  Among others, the Company
was in default primarily because of failure to satisfy a $10 million
tangible capital requirement (defined as total assets less intangible
assets plus subordinated debt), a debt to tangible capital ratio
requirement and a current asset to current liability ratio requirement with
which the Company was not in compliance.  The forbearance was based on the
continued compliance with the terms of the ANB Forbearance Agreement.  The
terms included an accelerated principal payment schedule with respect to
the ANB Facility.  This accelerated payment schedule provided an additional
principal payment of $150 per month and for the payment of the entire
indebtedness on or before December 31, 2002. The entire indebtedness was
paid before December 31, 2002.

     Under a credit facility with Midwest Guaranty Bank (the "Midwest
Facility"), the Company had a $1,000 equipment line of credit.  At
December 31, 2002, there were no borrowings outstanding under this line.
Borrowings were collateralized by the specific equipment purchased and were
payable in installments.

     On June 12, 2001, the Company entered into a Forbearance Letter
Agreement with Midwest Guaranty Bank, and on July 27, 2001, the Company
entered into a Loan Forbearance and Reaffirmation Agreement with Midwest
Guaranty Bank (collectively, the "Midwest Forbearance Agreement").  Midwest
Guaranty Bank agreed to forbear from accelerating the Midwest Facility for
certain stated defaults.  Among others, the Company was in default of the
Midwest Facility primarily because it was in default of the ANB Facility.
The forbearance was based on the continued compliance with the terms of the
Midwest Forbearance Agreement, which included an accelerated principal
payment schedule of $5 per month.  The entire indebtedness under the
Midwest facility was due and paid by October 31, 2002.

     b.    LANDMARK LOANS:

     In June 2001, Landmark loaned the Company a total of $650.  Such loan
was evidenced by a Loan and Security Agreement, as amended, dated June 14,
2001 (the "Landmark Bridge Loan").  The Landmark Bridge Loan provided for
repayment on demand and the accrual of interest at a rate of 12% per annum
and granted a second lien on substantially all of the Company's assets.
The Landmark Bridge Loan was ultimately funded up to $5,000 before it was
cancelled on July 30, 2001 and replaced with a $5,000 Amended and Restated
Senior Secured Loan and Security Agreement (the "Senior Secured Loan"),
also dated July 30, 2001.  The Senior Secured Loan currently carries a lien
on principally all of the Company's assets.  Offering costs of $643
assigned to the debt were recorded in the transaction.



<PAGE>


     The Senior Secured Loan is payable on June 30, 2006 and bore interest
at 12.0% per annum until November 12, 2001 at which time the interest rate
was reduced to 8.0% per annum.  The interest is paid quarterly in arrears
in the form of additional notes and warrants (described below).  The
Company has the right to prepay the Senior Secured Loan on or after the
third anniversary if certain conditions are met.  The Senior Secured Loan
also contains financial covenants and negative and affirmative covenants
that, among other things, restrict the Company's ability to incur
additional indebtedness and take other actions without the consent of
Landmark.

     At December 31, 2002, the Company was not in compliance with certain
financial covenants of the Senior Secured Loan.  The following is a list of
the material defaults under the Senior Secured Loan, and therefore under
the Grid Note and the Amended and Restated Loan and Security Agreement, as
these notes are cross-collateralized:

     .     The Company's failure to achieve a prescribed amount of
           billings during 2001 (a requirement of the Amended and
           Restated Loan Agreement); and

     .     The Company's failure to maintain a minimum level of working
           capital and a ratio of cash, cash equivalents and certain
           receivables over current liabilities (requirements of the
           Amended and Restated Loan Agreement); and

     .     The Company's failure to maintain a minimum ratio of total
           indebtedness over tangible net worth (a requirement of the
           Amended and Restated Loan Agreement).

     The Company's failures to comply with such covenants constitute
events of default.  Consequently, the Senior Secured Loan, including
accrued interest, is immediately due and payable at the option of Landmark.

Accordingly, the Company has reclassified the Senior Secured Loan,
including the in-kind interest which has been compounded on the principal
balance totaling $5,592 as currently payable as of December 31, 2002.

     In connection with the Senior Secured Loan, the Company issued the
Landmark Warrants.  The Landmark Warrants have a term of eight years
(expiring July 30, 2009) and may be exercised in whole or in part
immediately.  The Landmark Warrants contain a net exercise feature and were
exercisable for 10,000,000 million shares of the Company's common stock at
an exercise price of $0.50 per share on November 12, 2001 (automatically
increasing to $0.75 per share on July 30, 2005 if not previously
exercised).  The Company automatically issues to Landmark additional
warrants to purchase two shares of common stock for each dollar of interest
accrued on the Senior Secured Loan as paid-in-kind interest.  Under APB 14,
the Company assigned a $2,400 value to the Landmark Warrants and recorded
it as additional paid-in-capital and debt discount.

     The debt discount of $3,017 resulting from the offering costs and
warrant allocation from the Senior Secured Loan was amortized immediately
to interest expense in 2001.  This was due to covenant violations by the
Company causing the entire loan to be immediately due and payable at the
option of Landmark.

     During the second half of 2001, Landmark loaned to the Company under
a restated commercial demand grid note (the "Grid Note") an aggregate of
$17,249, of which $16,500 related to cash advances (in separate drawdowns,
several of which were related to Shortfall Events that occurred under the
Securities Purchase Agreement) and $749 related to transaction costs
reimbursable to Landmark.  The principal balance outstanding under the Grid
Note bore interest at 8.0% per annum.  The Grid Note including accrued
interest was immediately due and payable at the option of Landmark.  The
Grid Note was cross-collateralized with the Senior Secured Loan and
maintained the exact same covenants as the Senior Secured Loan. The entire
$749 of offering costs reimbursable to Landmark was expensed in 2001 and
was included as general and administrative expense.



<PAGE>


     On November 12, 2001, pursuant to the Securities Purchase Agreement,
Landmark exercised its right to apply $10,000 of principal and $108 of
accrued interest then outstanding under the Grid Note to the purchase of
Series B Preferred Stock (Note 10).

     On January 29, 2002, Landmark loaned to the Company, under the Grid
Note, an additional $21 related to transaction costs reimbursable to
Landmark.  On February 28, 2002, Landmark loaned the Company an additional
$1,500 under the Grid Note, in connection with another Shortfall Event,
bringing the outstanding principal balance to $8,770.  On December 20,
2002, Landmark, at the Company's request, applied the $8,770 of principal
and $705 of accrued interest then outstanding under the Grid Note to the
purchase of 60,967,777 shares of Series B Preferred Stock ($0.1554 per
share). Consequently, there is no balance due under the Grid Note at
December 31, 2002.  The Grid Note bears interest at eight percent (8%) per
annum and may evidence up to $20,000 in advances.


8.   COMMITMENTS AND CONTINGENCIES:

     a.    LETTERS OF CREDIT:  At December 31, 2001, the Company
maintained five letters of credit totaling $1,747, net of a $231 restricted
certificate of deposit to secure a line of credit. These letters of credit
collateralized the lease deposits for the Company's office facilities in
Chicago, New York and San Francisco. All letters of credit expired as of
December 31, 2002.

     On August 31, 2002, the Company entered into an Amended and Restated
Reimbursement and Security Agreement (the "Reimbursement Agreement") with
Landmark.  On behalf of the Company, Landmark applied for and received
letters of credit in the aggregate amount of $1,599 from Wachovia Bank to
collateralize lease deposits on the Company's office facilities (the
"Landmark Letters of Credit").  The Company has replaced the letters of
credit outstanding under the ANB Facility with the Landmark Letters of
Credit.  Under the Reimbursement Agreement, the Company has agreed, among
other things, to reimburse Landmark for all amounts that Landmark is
required to pay Wachovia under the bank agreement related to the Landmark
Letters of Credit, including all fees, penalties, interest and amounts in
connection with draws on the Landmark Letters of Credit.  The Landmark
Letters of Credit expire in March and April of 2003.  Landmark has applied
to Wachovia for a renewal of such Letters of Credit and may, in its sole
discretion, cancel such Letters of Credit on ninety (90) days written
notice to the Company.  If the Landmark Letters of Credit so expire or are
cancelled, the Company will need to enter into an alternate credit
arrangement.

     b.    LITIGATION:  During 2000, the Company settled several patent
infringement suits. As a result of these settlements, the Company expects
to receive certain royalty payments.  These payments are contingent upon
certain business transactions occurring and other transactions not
occurring over the next three years.  There can be no assurance that the
agreements will result in additional royalty revenue.  One of these
settlements contained certain change in control provisions which may result
in the acquired party paying to the other party $1,500 as additional
royalties.

     During 2001, the Company accepted a mediation award with a non-
operating business related lawsuit pursuant to which the Company paid the
plaintiff the sum of $219.

     The Company is currently a defendant in two patent infringement
lawsuits and one business related lawsuit. While the Company believes that
these actions are without merit and intends to defend them vigorously, the
Company's efforts may not be successful and may have an adverse impact on
the Company's business.  An unfavorable outcome for the Company is
considered neither probable nor remote by management at this time, and an
estimate of possible loss or range of possible losses cannot currently be
made.



<PAGE>


     In 2003, the Company entered into a settlement agreement with
Netcentives, Inc. and also settled other litigation where the Company was
the Plaintiff (see Note 14).

     c.    LEASES:  The Company leases equipment and its office premises
under operating lease agreements. Rental expense under these agreements was
$1,961, $2,405 and $1,846 during 2002, 2001 and 2000, respectively.

     At December 31, 2002, future minimum payments under noncancelable
operating leases were as follows:

     For the years ended December 31:

                 2003 . . . . . . . . . . .      $ 1,645
                 2004 . . . . . . . . . . .        1,654
                 2005 . . . . . . . . . . .        1,526
                 2006 . . . . . . . . . .          1,339
                 2007 . . . . . . . . . . .        1,363
                 and thereafter . . . . . .        3,273
                                                 -------
                 Total. . . . . . . . . . .      $10,800
                                                 =======


9.   INCOME TAXES:  Under SFAS No. 109, "Accounting for Income Taxes"
deferred tax assets and liabilities are recognized for the future tax
consequences of differences between the carrying amounts of assets and
liabilities and their respective tax bases and for tax carryforward items
using enacted tax rates in effect for the year in which the differences are
expected to reverse. Deferred tax assets consist of the following:

                                                   December 31,
                                                  2002       2001
                                                --------   --------
Deferred tax assets:
  Net operating loss carryforward . . . . . . . $  3,053   $  1,276
Amounts to adjust from accrual
 method to the cash method of
 accounting used for tax purposes . . . . . . .     (779)      (553)
Allowance for doubtful accounts . . . . . . . .      286        335
Deferred revenue. . . . . . . . . . . . . . . .      196        192
Deferred compensation . . . . . . . . . . . . .    --         1,505
Property and equipment. . . . . . . . . . . . .      255        205
Capitalized software. . . . . . . . . . . . . .     (267)      (576)
Debt discount . . . . . . . . . . . . . . . . .      803      1,032
Lease exit liability. . . . . . . . . . . . . .      504      --
Asset impairment. . . . . . . . . . . . . . . .      468      --
Landmark Transaction fees . . . . . . . . . . .      207      --
Other . . . . . . . . . . . . . . . . . . . . .       33        132
Valuation allowances. . . . . . . . . . . . . .   (4,759)    (3,548)
                                                --------   --------
                                                $  --      $   --
                                                ========   ========

     The difference between the amount of income tax benefit recorded and
the amount of income tax benefit calculated using the U.S. federal
statutory rate of 38% is due to net operating losses not being benefitted.
For financial reporting purposes, the entire amount of deferred tax assets
has been offset by a valuation allowance due to uncertainty regarding
realization of the asset. Accordingly, there is no provision for income
taxes for the years ended December 31, 2002, 2001 and 2000, respectively.

     The Company has net operating loss carryforwards of approximately
$8,035, $3,357 and $63,213 at December 31, 2002, 2001 and 2000,
respectively.  As a result of the issuance of Series B Preferred Stock to
Landmark, the Company triggered tax rules under Section 382 of the Internal
Revenue Code, which limits the ability of the Company to offset taxable
income earned subsequent to the initial issuance of the Series B Preferred
Stock on November 12, 2001 with the Company's net operating losses.


<PAGE>


10.  REDEEMABLE PREFERRED STOCK

     a.    SERIES B PREFERRED STOCK:  On November 12, 2001, under the
Securities Purchase Agreement, the Company issued to Landmark 65,057,936
shares of $0.001 par value Series B Preferred Stock for $10,108.  This
transaction was approved at the annual stockholders meeting on
September 20, 2001.  The Series B Preferred Stock has certain conversion
rights and has an 8% quarterly dividend payable in additional shares of
Series B Preferred Stock.  On October 24, 2002, in connection with one
Shortfall Event which occurred on June 30, 2002 (related to the amount of
current assets over current liabilities at such date), Landmark exercised
its right to purchase 17,825,212 shares of Series B Preferred Stock and
paid the Company $2,770 ($0.1554 per share).  On December 20, 2002,
Landmark, at the Company's request, applied the $8,770 of principal and
$705 of accrued interest then outstanding under the Grid Note toward the
purchase of 60,967,777 shares of Series B Preferred Stock.  As of December
31, 2002, Landmark holds 148,600,102 shares of Series B Preferred Stock
(and has rights with respect to accrued dividends thereon) and holds a
warrant to purchase 10,807,799 shares of the Company's common stock.  Under
Section 382 of the Internal Revenue Code, this transaction with Landmark
will result in a limitation on the amount of net operating loss
carryforwards that can be utilized in future years.  See Note 9 for a
further discussion of income taxes related to the Company.  The Series B
Preferred Stock is subject to certain redemption requirements outside the
control of the Company.  Landmark has the right to elect not less than a
majority of the Company's board of directors.  As of December 31, 2002, the
Company has reserved approximately 160 million shares of common stock for
the conversion of all the outstanding shares of Series B Preferred Stock
and the exercise of all outstanding Landmark Warrants.  See Note 2 for
further description of the terms of the Series B Preferred Stock.

     b.    SERIES C PREFERRED STOCK:  As a condition to the consummation
of the Landmark Transaction on November 12, 2001, the Company issued to
three individuals (two of whom are directors of the Company) 13,000,000
shares of $0.001 par value Series C Preferred Stock.  The Series C
Preferred Stock was given in exchange for the Director Notes (see Note 3c),
the related accrued interest and the accompanying warrants to purchase
1,050,000 shares of common stock previously issued to such individuals.  As
a result of the exchange, the Company recorded a gain of $327.  As of
December 31, 2002, the Company has reserved 13,000,000 shares of common
stock for the conversion of all the outstanding shares of Series C
Preferred Stock.  See Note 2 for further description of the terms of the
Series C Preferred Stock.


11.  STOCKHOLDERS' (DEFICIT) EQUITY:

     a.    MERGER:  The Company consummated a merger on September 25, 2001
that resulted in the change of the Company's name from coolsavings.com inc.
to CoolSavings, Inc. and a change in the Company's state of incorporation
from Michigan to Delaware.  As a result of the merger, the common and
preferred stock changed from no par to $0.001 par stock.  Also, the number
of authorized shares of common stock increased from 100,000,000 to
379,000,000, and the number of authorized shares of preferred stock
increased from 10,000,000 to 271,000,000.  The Company has designated
258,000,000 shares of preferred stock as Series B and 13,000,000 shares of
preferred stock as Series C.  Pursuant to the merger agreement, each share
of coolsavings.com inc. common stock issued and outstanding immediately
prior to the merger was converted into one share of common stock of
CoolSavings, Inc.

     b.    STOCK SPLIT:  On April 7, 2000 the Board of Directors approved
a 1,150 for 1 common stock split. All share and per share amounts have been
retroactively restated to reflect the split.

     c.    INITIAL PUBLIC OFFERING:  On May 19, 2000, the Company
completed its IPO in which the Company sold 3,300,000 shares of its common
stock, resulting in proceeds to the Company of $19,625, after deducting
underwriters discounts and commissions and other related offering expenses.


<PAGE>


     d.    COMMON STOCK OPTIONS:  On September 20, 2001, the Company's
stockholders, in conjunction with the annual meeting, ratified the adoption
of the 2001 Stock Option Plan (the "2001 Employee Plan") to replace the
1997 Employee Plan.  Additionally, in conjunction with the Landmark
Transaction, the 1999 Non-Employee Plan was terminated.

     Vesting under the 2001 Employee Plan is determined by the Board of
Directors on an individual grant basis and is typically incremental vesting
over a period of approximately four years.  Options that were granted under
the 1997 Employee Plan vest over a period of approximately four years.
Options that were granted under the 1999 Non-Employee Plan became fully
vested one year from the date of the grant. The term of the grants made
under each plan is established by the Board of Directors and may not exceed
ten years.  The Company is authorized under the 2001 Employee Plan to issue
stock options to purchase up to 7,953,954 shares of common stock plus an
additional 1,800,000 shares related to cancellations of certain stock
options as defined in the plan.

     The Company has reserved 4,732,172, and 63,250 shares of common stock
for option exercises under the 1997 Employee Plan and the 1999 Non-Employee
Plan, respectively.  Additionally, the Company has reserved 7,953,954
shares of common stock under the 2001 Employee Plan, plus up to 1,800,000
shares issued in connection with the cancellation of options under the 1997
Employee Plan for the exercise of stock options issued or to be potentially
issued.

     Outside of the above plans, the Company has granted options to a
certain employee in conjunction with the execution of a Board-approved
employment contract consistent with the 1997 Employee Plan. These options
are included in the disclosures that follow.

     The following information relates to stock options whose exercise
price equaled the fair value of the underlying stock on the date of grant:

                             Year Ended December 31,
            ---------------------------------------------------------
                      2002              2001              2000
               ------------------------------------------------------
                         Weighted          Weighted          Weighted
                         Average           Average           Average
                         Exercise          Exercise          Exercise
                 Share    Price    Shares   Price   Shares    Price
               --------- -------- -------------------------- --------
Outstanding at
 beginning of
 period        5,718,180   $1.68  4,429,817  $4.42 4,252,217   $3.51
Granted          101,000    0.11  3,450,445   0.45 1,175,770    7.32
Exercised          --                  --      --   (379,730)   2.17
Forfeited/
 expired        (889,740)   2.26 (2,162,082)  4.17  (618,440)   4.96
               ---------         ----------       ----------
Outstanding at
 end of period 4,929,440   $1.55  5,718,180  $1.68 4,429,817   $4.42
               =========         ==========       ==========
Exercisable at
 end of period 3,800,462   $1.37  3,149,311  $1.36 1,151,357   $1.78
               =========         ==========       ==========
Weighted average
 fair value of
 options granted
 during the period         $0.10             $0.44             $5.03




<PAGE>


     The following information relates to options whose exercise price
exceeded the fair value of the underlying stock on the date of grant:

                             Year Ended December 31,
            ---------------------------------------------------------
                      2002              2001              2000
               ------------------------------------------------------
                         Weighted          Weighted          Weighted
                         Average           Average           Average
                         Exercise          Exercise          Exercise
                 Share    Price    Shares   Price   Shares    Price
               --------- -------- -------------------------- --------
Outstanding at
 beginning of
 period          262,201   $3.28    299,215  $7.00     --      $ --
Granted        4,465,241    0.20    150,000   0.50   320,813    7.00
Exercised          --        --        --      --      --        --
Forfeited/
 expired        (390,689)   0.53   (187,014)  6.78   (21,598)   7.00
               ---------         ----------       ----------
Outstanding at
 end of period 4,336,753   $0.36    262,201  $3.28   299,215   $7.00
               =========         ==========       ==========
Exercisable at
 end of period   225,598   $1.92    188,276  $1.82     --      $ --
               =========         ==========       ==========
Weighted average
 fair value of
 options granted
 during the period         $0.09             $0.32             $2.89


     The following table summarizes information about fixed stock options
outstanding at December 31, 2002:

                                  December 31, 2002
               ------------------------------------------------------
                             Outstanding              Exercisable
                --------------------------------- -------------------
                              Remaining
                              Average    Weighted            Weighted
                             Contractual  Average             Average
Exercise Price                  Life     Exercise            Exercise
Range               Options  (in years)    Price   Options     Price
--------------     --------- ----------- --------  --------  --------

$0.07-$0.20        4,466,271       9.09   $ 0.19    105,000   $ 0.17
$0.21-$0.50        3,559,480       6.68     0.46  3,080,242     0.47
$0.51-$2.88          528,500       6.13     2.13    392,960     2.15
$3.13-$6.00          132,050       6.89     4.41     99,410     4.37
$6.06-$11.00         579,892       7.07     8.55    348,448     8.30
                   ---------      -----   ------  ---------   ------
Totals             9,266,193       7.84   $ 0.99  4,026,060   $ 1.40
                   =========      =====   ======  =========   ======

     The Company adopted the disclosure requirements of SFAS 148,
"Accounting for Stock Based Compensation - Transition and Disclosure - An
Amendment of FASB Statement No. 123."  As permitted by SFAS 123,
"Accounting for Stock Based Compensation," the Company continues to apply
the accounting provisions of APB Opinion Number 25, "Accounting for Stock
Issued to Employees" with regard to the measurement of compensation cost
for options granted.  The Company recognized $0, $0, and $3,960 of
compensation expense during 2002, 2001 and 2000, in conjunction with grants
made under its fixed stock option plans. Had expense been recognized using
the fair value method described in SFAS 123, the Company would have
reported the following results of operations using the Black-Scholes option
pricing model:


<PAGE>


                                      Years Ended December 31,
                                ----------------------------------
                                     2002       2001       2000
                                  ---------- ---------- ----------
Net loss applicable to common
  stockholders, as reported       $   (9,196)$  (30,658)$  (59,108)

Deduct:  Stock-based employee
  compensation expense determined
  under fair value based method
  for all awards, net of related
  tax effects                         (2,439)    (2,249)    (2,714)
                                  ---------- ---------- ----------
Pro forma net loss applicable to
  common stockholders             $  (11,635)$  (32,907)$  (61,822)
                                  ========== ========== ==========

Weighted average shares
  outstanding                     39,093,660 39,093,660 36,313,759

Earnings per share:
  Basic and diluted - as reported $    (0.24)$    (0.78)$    (1.63)

  Basic and diluted - pro forma   $    (0.30)$    (0.84)$    (1.70)


     These costs may not be representative of the total effects on pro
forma reported income for future years. Factors that may also impact
disclosures in future years include the attribution of the awards to the
service period, the vesting period of stock options, timing of additional
grants of stock option awards and number of shares granted for future
awards.

     The assumptions used for valuations of option grants calculated in
accordance with SFAS 123 are as follows:

                                     2002       2001       2000
                                  ---------- ---------- ----------

Annualized dividend yield               0.00%     0.00%      0.00%
Risk-free rate of return                4.21%     4.49%      6.28%
Expected option term (in years)          5.00     5.00       5.00
Expected volatility                   247.63%   231.37%     74.80%

     e.    COMMON STOCK COMPENSATION:  On December 30, 1999, the Company
entered into a termination and consulting agreement with its former
president.  In conjunction with the termination and consulting agreement,
the Company agreed, effective January 6, 2000, to extend the expiration
date of the former President's options to purchase an aggregate of 661,250
shares of the Company's common stock at a price of $2.17 per share until
the first anniversary of the termination of the consulting agreement. The
extension of the stock option agreements resulted in a remeasurement of the
compensation cost associated with the stock options.  Accordingly, a total
non-cash compensation charge of $3,960 was recognized on a straight-line
basis during 2000.

     The Company granted options to purchase 150,000 shares of common
stock pursuant to the employment agreement with Steven Golden, the then
current President and Chief Executive Officer of the Company, in April
2001.  Pursuant to the July 30, 2001 severance agreement between the
Company and Steven Golden, all of the options granted to Mr. Golden by the
Company as of the date thereof became immediately vested and fully
exercisable.  The options were also repriced at a strike price of $0.50 per
share.  These options are subject to variable accounting under FASB
Interpretation No. 44 "Accounting for Certain Transactions Involving Stock
Compensation."  The Company did not recognize any expense in 2002 or 2001
related to these options, as they had no intrinsic value.



<PAGE>


     Additionally, the Company granted options to purchase 750,000 shares
of common stock to Matthew Moog, the current President and Chief Executive
Officer, pursuant to his July 30, 2001 employment agreement.  The agreement
also provides for the immediate and full vesting on January 1, 2002 of the
stock options for 250,000 shares of common stock that were originally
issued on March 23, 2001.

     During 2001, the Company forgave Related Party Notes which had an
aggregate principal and accrued interest of $3,747 and recorded the
forgiveness as compensation expense.  Each related party was permitted to
keep the common stock purchased by delivery of the Related Party Notes
(Note 3b).

     f.    STOCK-BASED COMPENSATION:  On April 6, 2000, the Company
granted an option to purchase up to $500 of its common stock at the per
share public offering price established in the Company's initial public
offering.  This option was granted for consulting services related to
intellectual property licensed by the Company.  The options were valued at
$102 using the Black-Scholes option pricing model.  The options expired
unexercised during 2000.


12.  EARNINGS PER SHARE:  SFAS 128 requires companies to provide a
reconciliation of the numerator and denominator of the basic and diluted
EPS computations.  The calculation below provides net loss, weighted
average common shares outstanding and the resultant net loss per share for
both basic and diluted EPS for the years ended December 31, 2002, 2001 and
2000.

                                      Years Ended December 31,
                                ----------------------------------
                                     2002       2001       2000
                                  ---------- ---------- ----------
Numerator:
  Loss before extraordinary gain  $   (8,287)$  (29,554)$  (39,240)

Extraordinary gain                     --           327      --
                                  ---------- ---------- ----------
Net loss                              (8,287)   (29,227)   (39,240)

Deemed dividend representing the
  beneficial conversion feature of
  Series A Preferred Stock             --         --       (19,868)
Accretion of convertible redeemable
  Series B Preferred Stock to
  redemption value                     --        (1,318)     --
Cumulative dividends on Series B
  Preferred Stock                       (909)      (113)     --
                                  ---------- ---------- ----------
Loss applicable to common
  stockholders                    $   (9,196)$  (30,658)$  (59,108)
                                  ========== ========== ==========

Basic and diluted loss per
  share before extraordinary gain $    (0.24)$    (0.79)$    (1.63)
Extraordinary gain                     --          0.01      --
                                  ---------- ---------- ----------
Basic and diluted net loss
  per share                       $    (0.24)$    (0.78)$    (1.63)
                                  ========== ========== ==========
Denominator:
  Weighted average shares used
    in the calculation of basic
    and diluted net loss per share39,093,660 39,093,660 36,313,759
                                  ========== ========== ==========



<PAGE>


     The calculation of diluted net loss per share excludes shares of
common stock issuable upon the conversion of unsecured convertible
subordinated notes, exercise of employee stock options and warrants, and
conversion of convertible preferred stock, as the effect of such exercises
would be anti-dilutive.


13.  401(k) PLAN:  On February 11, 1997, the Company adopted a 401(k) plan
for employees.  All employees who meet certain age requirements are
eligible to participate.  Matching contributions are made at the discretion
of the Company.  The Company made no matching contributions during 2002,
2001, or 2000.


14.  SUBSEQUENT EVENTS

     On October 21, 1998, the Company instituted a lawsuit in the Northern
District of Illinois against Catalina Marketing International, Inc. and its
affiliate Supermarkets Online, Inc. (together with Catalina Marketing
International, Inc., "Catalina") for infringement of the Company's United
States Patent No. 5,761,648 (the " '648 Patent"), seeking unspecified
damages and a permanent injunction against further infringement.  Catalina
filed counterclaims alleging the invalidity of the Company's patent and
sought unspecified damages, attorneys' fees and injunctive relief. On
February 21, 2003, the Company settled this lawsuit and agreed to pay
Catalina $350.  The settlement dismissed all claims and counterclaims of
the parties, including claims for attorneys' fees and expenses, with
prejudice.  The payment of this settlement was shared with a third party,
resulting in a net expense to the Company of $150.  The Company recorded
this net expense as a charge to general and administrative expense in 2002.

     In February of 2003, the Company received notice of entry of an order
by the United States Bankruptcy Court of the Northern District of
California, Division 3 approving a Settlement Agreement and Mutual Release
with Netcentives, Inc. (the "Settlement").  Pursuant to the Settlement, the
Company recorded a gain of $256, which was recorded in the Company's
financial statements as a reduction of cost of revenues in 2002.  In
addition, the Settlement released the Company from any past or future
obligation of payments to Netcentives, Inc.  The Company recorded a charge
of $321 for unpaid service fees to Netcentives, Inc. in 2001.  This charge
was reversed against cost of revenues in 2002.

     Dividends in the amount of 1,822,567 shares of Series B Preferred
Stock accrued "in-kind" on the existing shares of Series B Preferred Stock
as of December 31, 2002, and the Company declared and paid the dividends on
January 1, 2003.





<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.



                               PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Directors and Executive Officers

     The names, ages and positions held by our executive officers and
directors as of March 24, 2003 are as follows:


                                                          Officer/
                                                          Director
Name                Age  Position                          Since
----                ---  --------                         --------

Matthew Moog         33  President and Chief
                         Executive Officer, Director        1996
John J. Adams        31  Chief Operating Officer            1999
David B. Arney       40  Chief Financial Officer            2001
David B. Desser      34  Vice President of
                         Business Affairs                1999-2000,
                         and General Counsel                2001
Charles M. Kingery   48  Senior Vice President, Sales       2002
Richard H. Rogel     54  Chairman of the Board              1996
R. Bruce Bradley     53  Director                           2001
Gary S. Briggs       40  Director                           2002
James S. Correll     37  Director                           2002
Guy R. Friddell, III 52  Director                           2001
John Giuliani        42  Director                           2002
Hugh R. Lamle        57  Director                           1998
Karl B. Quist        31  Director                           2001
Daniel Scherr        55  Director                           2002
Debora J. Wilson     45  Director                           2002

     Matthew Moog has served as our President and Chief Executive Officer
since July 2001.  From January 2001 to July 2001, he was our President and
Chief Operating Officer and, from August 1998 to January 2001, was our
Executive Vice President, Sales and Marketing. From October 1996 to July
1998, Mr. Moog served as our Vice President, Sales. Prior to joining us,
Mr. Moog worked for Microsoft Corporation in various capacities from June
1992 to September 1996, including Strategic Integrator Account Executive,
MSN Business Development Executive and Internet Business Development
Manager. Mr. Moog holds a B.A. in Political Science from the George
Washington University.

     John J. Adams has served as our Chief Operating Officer since July
2001 and was our Executive Vice President, Operations and Technology from
October 1999 until July 2001. From January 1999 to October 1999, Mr. Adams
served as our Executive Vice President, Engineering and Chief Technology
Officer. Prior to joining us, Mr. Adams worked in several capacities for
Arthur Andersen Business Consulting from July 1993 to January 1999,
including Manager--Architecture and Methodology, Manager of Client Server
and Internet Development and Senior Systems Consultant. Mr. Adams holds a
B.S. in Management of Information Systems from Florida State University. He
is currently an M.B.A. candidate at Kellogg Graduate School of Management
at Northwestern University.



<PAGE>


     David B. Arney has served as our Chief Financial Officer since
October 2001.  Mr. Arney joined us from eLoyalty Corporation, where he was
Director of Worldwide Finance from September 1999 to September 2001.  From
July 1990 through September 1999, Mr. Arney held positions of increasing
responsibility at TransUnion, LLC, where he was most recently Division
Controller of the Credit Reporting Division.  Earlier in his career, Mr.
Arney spent two years with Federated Foods, Inc. and its affiliates as an
Accounting and Financial Reporting Manager and four years at Deloitte and
Touche in its audit practice.  Mr. Arney received his B.B.A. in Accountancy
from Western Michigan University and an M.B.A. from Kellogg Graduate School
of Management at Northwestern University. Mr. Arney is a Certified Public
Accountant.

     David B. Desser has served as our Vice President of Business Affairs
and General Counsel since November 2001, and was appointed Secretary of the
Company in December 2001.  From July 1999 to September 2000, Mr. Desser
served as our Vice President and General Counsel.  Mr. Desser has been
engaged in the private practice of law during the periods in which he has
not been employed by the Company.  From December 1994 through July 1999,
Mr. Desser was an associate with the law firm of Katten Muchin Zavis
Rosenman focusing on mergers and acquisitions.  Mr. Desser holds a B.A. in
Politics from Brandeis University and a J.D. from the Georgetown University
Law Center.

     Charles M. Kingery has served as our Senior Vice President of Sales
since November 2002.  Mr. Kingery joined the Company from Information
Resources Inc., where he served as Executive Vice President and General
Manager of Client Sales and Customer Marketing.  Prior to his tenure at
Information Resources, Inc., Mr. Kingery spent 20 years with Kraft/General
Foods in various sales and marketing management roles.  He is a graduate of
Kenyon College.

     Richard H. Rogel has served as Chairman of the Board since July 2001
and as a director of CoolSavings since May 1996. In 1982, Mr. Rogel founded
Preferred Provider Organization of Michigan, Inc., a preferred provider
organization, and served as its Chairman from its inception until it was
sold in 1997.  Mr. Rogel is the President of the University of Michigan
Alumni Association and chairs the University of Michigan's Business School
Development Advisory Board, as well as serving on other boards of the
University.  Mr. Rogel holds a B.B.A. from the University of Michigan.

     R. Bruce Bradley has served as President of Landmark Publishing Group
since January 1999.  In 1995 he was named President and Publisher of The
Virginian-Pilot, Landmark's flagship newspaper in Norfolk, Virginia.  He
previously held numerous positions with The Virginian-Pilot, in addition to
positions at Landmark's two other metro papers, the News & Record in
Greensboro, North Carolina and The Roanoke Times in Roanoke, Virginia.  Mr.
Bradley served for three years as a ship navigator in the U.S. Navy.  He is
the past chairman of the Hampton Roads Chamber of Commerce and past
Chairman of the Hampton Roads YMCA.  Mr. Bradley holds a B.S. in Business
Administration from Villanova University, and a M.B.A. from Old Dominion
University.

     Gary S. Briggs is the Vice President of Consumer Marketing for eBay,
Inc., a position he has held since February 2002.  Prior to his current
position, Mr. Briggs was the Chief Marketing Officer and one of the
founders of OurHouse.com, an internet retailer focused on home related
products and services. Prior to founding OurHouse.com in 1999, he was
Director of Brand Strategy for IBM Corporation. Before joining IBM in 1997,
he worked for six years at Pepsi-Cola, most recently as Marketing Director
for Brand Pepsi. Prior to Pepsi, Mr. Briggs worked for four years at
McKinsey and Company as an associate and engagement manager. Mr. Briggs
holds an A.B. in Political Science and American Civilization from Brown
University and an M.B.A. from Kellogg Graduate School of Management at
Northwestern University.



<PAGE>


     James S. Correll is a Senior Vice President of Harte-Hanks (NYSE:
HHS), a worldwide, direct and interactive services company that provides
end-to-end customer relationship management (CRM) and related marketing
service solutions for a host of consumer and business-to-business
marketers. Mr. Correll has over 15 years of direct, database and
interactive marketing experience working with Global 1000 companies and has
been with Harte-Hanks since 1995. Prior to joining Harte-Hanks, Mr. Correll
held sales management positions with ACS, a leader in database management
and Equifax, a marketing information technology company. Mr. Correll holds
a B.A. in Finance and Marketing from the University of Nebraska.

     Guy R. Friddell, III is Executive Vice President and General Counsel
of Landmark Communications, Inc. Prior to 1999, he was a partner in the
Norfolk, Virginia law firm of Willcox & Savage, P.C. where he headed the
corporate department and practiced in the mergers and acquisitions area. He
is currently Vice Chairman of the Norfolk Convention and Visitors Bureau,
and has previously served as chairman of the Norfolk Board of Zoning
Appeals and in various other civic capacities. Mr. Friddell holds an A.B.
in Economics and Political Science from Princeton University and a J.D.
from the University of Virginia School of Law.

     John Giuliani is the founder of Rainmaker Consulting Group, Inc.,
which specializes in strategic sales and marketing consulting with
marketing services firms.  Mr. Giuliani serves on the Board of Directors of
the Gator Corporation and on the Advisory Board of Imagitas Inc.  Prior to
founding Rainmaker Consulting Group in July 2001, Mr. Giuliani served in
various capacities for Catalina Marketing from December 1996 through April
2002.  From January 2001 through April 2002, Mr. Giuliani was Executive
Vice President - Strategic Accounts.  From January through December 2000,
Mr. Giuliani was President of North America for Catalina Marketing
Services.  From June 1998 through December 1999, Mr. Giuliani was Executive
Vice President - Sales.  From December 1996 through May 1998, Mr. Giuliani
was Senior Vice President - Sales West.  Prior to joining Catalina, Mr.
Giuliani was with ACTMEDIA where he was part of the launch team of the
Instant Coupon Machine. Before entering the marketing services space, Mr.
Giuliani spent 8 years in consumer packaged goods sales and marketing with
Beecham Products and Frito-Lay, Inc.  Mr. Giuliani has an M.B.A. from
Kellogg Graduate School of Management at Northwestern University, as well
as a B.S. in Business Administration from the University of Illinois.

     Hugh R. Lamle has served as Executive Vice President and a principal
of M.D. Sass Investors Services Inc., a registered investment advisory firm
since April, 1974.  Since June 1995, Mr. Lamle has also served as President
and Chief Investment Officer of Chase & M.D. Sass Partners, a joint venture
between Chase Manhattan Bank and M.D. Sass Investors Services which manages
portfolios for corporate and institutional investors.  Mr. Lamle also
serves as President of Resurgence Asset Management and on the advisory
board of Real Estate Capital Partners, both affiliates of M.D. Sass, as
Executive Vice President and a director of Corporate Renaissance Group,
Inc., a closed-end business development company, and as a public director
of the Finex division of the New York Cotton Exchange.  Mr. Lamle holds a
B.A. in Political Science and Economics from Queens College and an M.B.A.
from Baruch College at the City University of New York.

     Karl B. Quist serves as a Director, New Ventures at Landmark
Communications, Inc.  Prior to joining Landmark in 2001, Mr. Quist spent
two years as a consultant with McKinsey & Company, Inc.  Before his tenure
at McKinsey & Company, Mr. Quist served as a Supply Officer with the United
States Navy from 1995 through 1999.  Mr. Quist holds a B.S. in Commerce
from the University of Virginia and an M.B.A. from the Darden Graduate
School of Business Administration.



<PAGE>


     Daniel Sherr is the Executive Vice President of Strategic Business
Development at Information Resources, Inc. (IRI).  He joined IRI in
November of 1999 to drive its internet initiative. Mr. Sherr previously was
employed by ADVO, a direct mail company, where he was Vice President of
Targeting and Database Marketing Services.  Prior to joining ADVO, Mr.
Sherr was Managing Director of Computerized Marketing Technologies in the
UK where behaviorgraphics, a system for segmenting the population based on
behavior, was developed. Mr. Sherr was a Founding Partner of Claritas, the
developers of geodemography and the PRIZM Segmentation system.  Mr. Sherr
began his career in product management at Kraft Foods and Quaker Oats.  Mr.
Sherr holds both a B.A. in Economics and a M.S. in Marketing from
Pennsylvania State University.

     Debora J. Wilson is President and Chief Executive Officer of
weather.com, a division of The Weather Channel, a wholly owned subsidiary
of Landmark Communications, Inc.  Prior to joining The Weather Channel in
1994, Ms. Wilson was a 15-year veteran of the telecommunications industry,
holding various positions with Bell Atlantic and the Chesapeake and Potomac
Telephone Company.  Ms. Wilson earned a Bachelor's Degree in Finance and
Business Management from George Mason University.

     Pursuant to the Landmark Transaction, Landmark has the right to
designate not less than the majority of the Board of Directors of the
Company.  R. Bruce Bradley, Guy R. Friddell, III and Karl B. Quist are
employees of Landmark.  Debora J. Wilson is the Chief Executive Officer of
weather.com a division of The Weather Channel, a wholly owned subsidiary of
Landmark.  Messrs. Bradley, Friddell, and Quist, and Ms. Wilson were named
to the Company's Board as Series B Director Designees.

     Each director is elected for a one-year term at our annual meeting of
stockholders and serves until the next annual meeting of stockholders or
until his or her successor is duly elected and qualified.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     We are required to identify each person who was an officer, director
or beneficial owner of more than 10% of its registered equity securities
during its most recent fiscal year and who failed to file on a timely basis
reports required by Section 16(a) of the Securities Exchange Act of 1934.
Based solely on our review of the copies of such reports received by us,
and written representations from certain reporting persons, we believe,
that during the year ended December 31, 2002, our directors, executive
officers and beneficial owners of more than 10% of our capital stock have
complied with all such filing requirements applicable to them, except that
(a) Peter Sugar, our former Secretary filed a late Form 3 reporting his
beneficial ownership; (b) Richard Rogel, a Director of the Company, filed
late one Form 4 reporting one transaction; (c) Debora J. Wilson, a Director
of the Company, filed late two Form 4s reporting two transactions; (d)
Landmark Ventures VII, LLC, a 10% owner of the Company's stock, filed a
Form 5 reporting one transaction; (e) Landmark Communications, Inc., a 10%
owner of the Company's stock, filed a Form 5 reporting late one
transaction; (f) Charles Kingery, our Senior Vice President of Sales, filed
a Form 5 reporting late one transaction, and (g) Matthew Moog, our
President, Chief Executive Officer and a Director of the Company, filed a
Form 5 reporting late one transaction.




<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION

     The following table sets forth all compensation paid to our Chief
Executive Officer and our three other executive officers at December 31,
2002 (the "Named Executive Officers").

                      SUMMARY COMPENSATION TABLE

                                                            Long-term
                                                             Compen-
                                   Annual Compensation       sation
                             ------------------------------ ----------
                                                   Other    Securities
                                                   Annual   Underlying
                               Salary             Compensa-   Options/
                        Year    ($)    Bonus ($)  tion ($)      SAR's
                       ------ -------- ---------  --------- ----------

Matthew Moog (1)         2002 $346,100  $  --      $   -       328,571
  President and          2001  277,269     --          -     1,000,000
  Chief Executive        2000  254,011   100,000       -          -
  Officer

John J. Adams            2002 $166,733  $  --      $   -       157,143
  Chief Operating        2001  165,000     --          -       175,000
  Officer                2000  149,999   100,000       -          -

David B. Arney (2)       2002 $163,773  $  --      $   -
  Chief Financial        2001   38,077     --          -       125,000
  Officer

David B. Desser (3)      2002 $149,790  $  --      $   -           -
  Vice President of      2001   20,192     --                  100,000
  Business Affairs and   2000   91,447     7,417       -           -
  General Counsel

(1)  On July 30, 2001, we entered into an employment agreement with
     Matthew Moog, who became our President and Chief Executive Officer.
     The employment agreement has a term of three years, provides for an
     annual base salary of $345,000, and provides for the grant of an
     option to purchase 750,000 shares of our common stock.  The
     employment agreement further provides that Mr. Moog would be granted
     200,000 additional options on the first and second anniversary of the
     agreement if he is still employed by us.

(2)  We hired Mr. Arney in October 2001.

(3)  Mr. Desser was not employed by us from October 2000 to November 2001.




<PAGE>


STOCK OPTIONS

     The following table sets forth summary information concerning
individual grants of stock options made during 2002 to each of the Named
Executive Officers:

                         OPTION GRANTS IN 2002

                            Percent of
                              Total
              Number of      Options                          Grant
              Securities    Granted to                        Date
              Underlying    Employees  Exercise              Present
               Options      in Fiscal   Price     Expiration  Value
Name           Granted      Year (2)   ($/Share)    Date       (3)
------        ----------    ---------- ---------  ---------- --------

Matthew Moog  328,571(1)         7.2%     $0.20    1/1/2012  $29,355

John J. Adams 157,143(1)         3.4%     $0.20    1/1/2012  $14,039

David B. Arney    --              --       --          --       --

David B. Desser   --              --       --          --       --

--------------------

(1)  Options granted with an exercise price above the market price of
     our shares on the date of grant; vesting in equal annual increments
     on the first four anniversaries of the date of grant; and having a
     term of ten years from the date of grant.

(2)  Based on a total of 4,566,241 option shares granted to our employees
     under our 1997 Stock Option Plan and our 2001 Stock Option Plan
     during 2002.

(3)  Like all public companies, we are required to indicate a grant date
     present value of the option using one of the methods prescribed by
     the United States Securities and Exchange Commission.  We have chosen
     to use the Black-Scholes present value option pricing model, which is
     a method of calculating a theoretical present value of the options
     based upon a mathematical formula using certain assumptions.

The following assumptions were used in calculating the Black-Scholes values
shown on the table: an assumed option life of five years; an interest rate
of 4.38%, which represents the yield of a bond equivalent with a maturity
date similar to the assumed exercise period; assumed annual volatility of
underlying shares of 248.05%, calculated based on historical, daily share
price movement since inception; zero dividend yield; and the vesting
schedule indicated for the respective option grant.

     The following table sets forth the number and value of securities
underlying unexercised options held by each Named Executive Officer as of
December 31, 2002:



<PAGE>


    AGGREGATED OPTION EXERCISES IN 2002 AND YEAR-END OPTION VALUES

                                         Number of
                                     Securities Underlying
                                     Unexercised Options at
                                       December 31, 2002
                                 -----------------------------
                                    Exer-             Unexer-
Name                                cisable           cisable
----                               ---------         ---------

Matthew Moog. . . . . . . . .      1,084,612           856,196

John J. Adams . . . . . . . .        385,450           247,993

David B. Arney. . . . . . . .         41,250            83,750

David B. Desser . . . . . . .         25,000            75,000

None of the options included in this table were in-the-money as of
December 31, 2002.


DIRECTOR COMPENSATION

     Directors who are also our employees receive no compensation for
serving on the Board of Directors. Directors who are not employees of
CoolSavings do not currently receive any cash compensation from us for
their service as members of the Board of Directors, although they are
reimbursed for all travel and other expenses incurred in connection with
attending Board and committee meetings. Under our 1999 Non-Employee
Director Stock Option Plan, non-employee directors are also eligible to
receive automatic stock option grants upon their initial appointment to the
Board of Directors and at each of our annual stockholder meetings.  In
2002, Mr. Briggs, Mr. Correll, Mr. Giuliani and Mr. Sherr each received
options to purchase 100,000 Shares of our common stock that vest in four
equal annual installments for serving as unrelated party board members.

     Mr. John Giuliani, one of our directors, is a paid consultant to our
company.  Mr. Giuliani provides marketing services consulting services to
us for a fixed fee of five thousand dollars per month.  Mr. Giuliani has
been compensated for his consulting services since November 2002.


EMPLOYMENT AGREEMENTS

     Employment Agreement with Matthew Moog

     We entered into an employment agreement with Matthew Moog for a term
of three years beginning July 30, 2001, which appoints Mr. Moog as Chief
Executive Officer and provides for a salary of $345,000 per year, subject
to periodic increases by our Board of Directors at its discretion. Mr. Moog
is eligible to receive a bonus each year as determined by our board. We
also granted Mr. Moog stock options to purchase 750,000 shares of common
stock, vesting over five years at an exercise price equal to the greater of
the market price on the day of execution of his employment agreement or the
20 day average closing price of our common stock following execution of his
employment agreement. On each of the first two anniversaries of the
employment agreement (subject to Mr. Moog's continued employment with us),
we will grant Mr. Moog additional stock options to purchase not less than
200,000 shares of our common stock, which options will vest over a four
year period. In addition, we also accelerated the vesting of other stock
options to purchase 250,000 shares of our common stock held by Mr. Moog. If
Mr. Moog's employment is terminated without cause, he is entitled to
receive a severance payment equal to the greater of the present value of
the compensation owed for the remainder of his employment agreement or the
present value of the base annual salary then in effect.



<PAGE>


     Each of our executive officers has signed our standard terms of
employment detailing, among other things, his non-competition and
confidentiality obligations and his employment status.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     None of the members of the Compensation Committee of the Board of
Directors is an officer or employee of us.  None of our executive officers
of the Company serves as a member of the Board of Directors or Compensation
Committee of any entity that has one or more executive officers serving on
our Board of Directors or Compensation Committee.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          AND RELATED STOCKHOLDER MATTERS

COMMON STOCK; SERIES B PREFERRED STOCK; SERIES C PREFERRED STOCK

     The following tables set forth information with respect to the
beneficial ownership of our common stock, Series B Preferred Stock, and
Series C Preferred Stock, our three classes of voting stock, as of March 1,
2003, by:

     .     each person known by us to beneficially own more than 5% of our
           common stock, Series B Preferred Stock, or Series C Preferred
           Stock;

     .     each Named Executive Officer;

     .     each of our Directors; and

     .     all executive officers and directors as a group.


     Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with respect to
securities. Shares of common stock, Series B Preferred Stock, and Series C
Preferred Stock subject to options or warrants that are currently
exercisable or exercisable within 60 days after March 1, 2003, are deemed
to be outstanding and to be beneficially owned by the person holding the
options or warrants for the purpose of computing the percentage ownership
of that person, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person. Unless otherwise
noted, each person or group identified possesses sole voting and investment
power with respect to the shares indicated, subject to applicable community
property laws. Beneficial ownership percentages are based on:

     .     39,093,660 shares of common stock outstanding,

     .     150,422,669 shares of Series B Preferred Stock, and

     .     13,000,000 shares of Series C Preferred Stock,

each as of March 1, 2003.



<PAGE>


     Unless indicated otherwise, the address of each of the beneficial
owners is: c/o CoolSavings, Inc., 360 N. Michigan Avenue, Suite 1900,
Chicago, Illinois 60601.

COMMON STOCK
                                                        Percentage
                                        Shares of       of Common
Shares                                 Common Stock       Stock
Name and Address                       Beneficially    Beneficially
of Beneficial Owner                       Owned           Owned
-------------------                    ------------    ------------

Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510             175,420,590 (1)          72.27%

Richard H. Rogel
56 Rose Crown
Avon, Colorado 81620                 13,573,089 (2)          26.05%

Hugh R. Lamle
c/o M.D. Sass
1185 Avenue of the Americas
New York, New York 10036              7,375,466 (3)          14.15%

Steven M. Golden
436 E. North Water St., Unit D
Chicago, Illinois 60611               6,101,815 (4)          15.14%

Matthew Moog                          2,759,439 (5)           6.85%

John J. Adams                           490,286 (6)           1.24%

R. Bruce Bradley
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0 (7)             *

Gary S. Briggs
c/o Ebay, Inc.
2145 Hamilton Ave.
San Jose, California  95125              25,000 (8)             *

Guy R. Friddell, III
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0 (7)             *

Karl B. Quist
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0 (7)             *

John Giuliani
350 Ravine Park Drive East
Lake Forest, Illinois 60045                   0                 *

James S. Correll
c/o Harte Hanks, Inc.
725 Stratford Drive
Encinitas, California 92024                   0                 *

Daniel Sherr
c/o Information Resources, Inc.
150 North Clinton Street
Chicago, Illinois 60661                       0                 *



<PAGE>


                                                        Percentage
                                        Shares of       of Common
Shares                                 Common Stock       Stock
Name and Address                       Beneficially    Beneficially
of Beneficial Owner                       Owned           Owned
-------------------                    ------------    ------------

Debora J. Wilson
c/o weather.com
300 Interstate North Parkway
Atlanta, Georgia 30339                        0 (7)             *

David B. Arney                           41,250 (9)             *

David B. Desser                          25,000(10)             *

All directors and executive
  officers as a group
  (14 persons) (11)                  24,289,530              45.07%

   *  Less than 1%.

     (1)   Includes 11,099,832 shares of common stock subject to purchase
           pursuant to an immediately exercisable warrant; 150,422,669
           shares of common stock issuable upon conversion of shares of
           Series B Preferred Stock outstanding on March 1, 2003 and owned
           by Landmark Ventures VII, LLC, a wholly owned subsidiary of
           Landmark Communications, Inc.; and 3,008,453 shares of common
           stock issuable upon conversion of shares of Series B Preferred
           Stock payable as an in-kind dividend on April 1, 2003 to
           Landmark Ventures VII, LLC.

     (2)   Includes 6,873,113 shares held by a trust of which Mr. Rogel is
           the trustee; 498,000 shares held by a limited partnership, of
           which Mr. Rogel is a partner; 11,500 shares of common
           stock subject to options exercisable within 60 days after
           March 1, 2003; and 6,190,476 shares of common stock issuable
           upon conversion of shares of Series C Preferred Stock
           outstanding on March 1, 2003.

     (3)   Includes 394,237 shares of common stock held by HLBL Family
           Partners, LP, which is controlled by Mr. Lamle; 1,500 shares
           held by a foundation controlled by Mr. Lamle; 11,500 shares
           of common stock subject to options exercisable within 60 days
           after March 1, 2003; and 6,190,476 shares of common stock
           issuable upon conversion of shares of Series C Preferred Stock
           outstanding on March 1, 2003.

     (4)   Includes 4,382,315 shares of common stock held by a revocable
           trust, of which Mr. Golden is the trustee; 172,500 shares of
           common stock held by Steven M. Golden LLC, which is controlled
           by Mr. Golden; and 1,213,000 shares of common stock subject to
           options exercisable within 60 days after March 1, 2003.

     (5)   Includes 359,968 shares of common stock held by Moog Investment
           Partners, LP, which is controlled by Mr. Moog; and 1,209,880
           shares of common stock subject to options exercisable within 60
           days after March 1, 2003.

     (6)   Includes 481,086 shares of common stock subject to options
           exercisable within 60 days after March 1, 2003.



<PAGE>


     (7)   Does not include the shares of common stock beneficially owned
           by Landmark Communications, Inc. (including shares of common
           stock beneficially owned by Landmark Ventures VII, LLC) which
           shares such individual may be deemed to beneficially own as a
           result of his or her relationship as a stockholder, director,
           officer or employee of such entity.  Such individual expressly
           disclaims beneficial ownership of all such shares of common
           stock.

     (8)   Includes 25,000 shares of common stock subject to options
           exercisable within 60 days after March 1, 2003.

     (9)   Includes 41,250 shares of common stock subject to options
           exercisable within 60 days after March 1, 2003.

     (10)  Includes 25,000 shares of common stock subject to options
           exercisable within 60 days after March 1, 2003.

     (11)  Includes 1,805,216 shares of common stock subject to options
           exercisable within 60 days after March 1, 2003. Does not
           include shares of common stock beneficially owned or deemed to
           be beneficially owned by Landmark Communications, Inc.
           (including shares of common stock beneficially owned by
           Landmark Ventures VII, LLC).


SERIES B PREFERRED STOCK

     Unless indicated otherwise, the address of each of the beneficial
owners is: c/o CoolSavings, Inc., 360 N. Michigan Avenue, Suite 1900,
Chicago, Illinois 60601.

                                                       Percentage
                                         Series B      of Series B
                                         Preferred     Preferred
Shares                                    Shares         Shares
Name and Address                       Beneficially    Beneficially
of Beneficial Owner                       Owned          Owned
-------------------                    ------------    ------------

Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510             153,431,122 (1)         100.00%

Richard H. Rogel
56 Rose Crown
Avon, Colorado 81620                          0                --

Hugh R. Lamle
c/o M.D. Sass
1185 Avenue of the Americas
New York, New York 10036                      0                --

Steven M. Golden
436 E. North Water St., Unit D
Chicago, Illinois 60611                       0                --

Matthew Moog                                  0                --

John J. Adams                                 0                --

R. Bruce Bradley
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0 (2)            --



<PAGE>


                                                       Percentage
                                         Series B      of Series B
                                         Preferred     Preferred
Shares                                    Shares         Shares
Name and Address                       Beneficially    Beneficially
of Beneficial Owner                       Owned          Owned
-------------------                    ------------    ------------
Gary S. Briggs
c/o Ebay, Inc.
2145 Hamilton Ave.
San Jose, California  95125                   0                --

Guy R. Friddell, III
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0 (2)            --

Karl B. Quist
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0 (2)            --

John Giuliani
350 Ravine Park Drive East
Lake Forest, Illinois 60045                   0                --

James S. Correll
c/o Harte Hanks, Inc.
725 Stratford Drive
Encinitas, California 92024                   0                --

Daniel Sherr
c/o Information Resources
150 North Clinton Street
Chicago, Illinois 60661                       0                --

Debora J. Wilson
c/o Weather.com
300 Interstate North Parkway
Atlanta, Georgia 30339                        0 (2)            --

David B. Arney                                0                --

David B. Desser                               0                --

All directors and executive
  officers as a group
  (14  persons) (3)                           0                --

     (1)   Includes 150,422,669 shares of Series B Preferred Stock owned
           by Landmark Ventures VII, LLC, a wholly-owned subsidiary of
           Landmark Communications, Inc.; and 3,008,453 shares of Series B
           Preferred Stock payable as an in-kind dividend to Landmark
           Ventures VII, LLC on April 1, 2003.

     (2)   Does not include the shares of Series B Preferred Stock
           beneficially owned by Landmark Communications, Inc. (including
           shares of Series B Preferred Stock beneficially owned by
           Landmark Ventures VII, LLC) which shares such individual may be
           deemed to beneficially owned as a result of his or her
           relationship as a stockholder, director, officer or employee of
           such entity.  Such individual expressly disclaims beneficial
           ownership of all such shares of Series B Preferred Stock.

     (3)   Does not include shares of Series B Preferred Stock
           beneficially owned or deemed to be beneficially owned by
           Landmark Communications, Inc. (including shares of Series B
           Preferred Stock beneficially owned by Landmark Ventures VII,
           LLC).


<PAGE>


SERIES C PREFERRED STOCK

     Unless indicated otherwise, the address of each of the beneficial
owners is: c/o CoolSavings, Inc., 360 N. Michigan Avenue, Suite 1900,
Chicago, Illinois 60601.

                                                       Percentage
                                         Series C      of Series C
                                         Preferred     Preferred
Shares                                    Shares         Shares
Name and Address                       Beneficially    Beneficially
of Beneficial Owner                       Owned          Owned
-------------------                    ------------    ------------

Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0                --

Richard H. Rogel
56 Rose Crown
Avon, Colorado 81620                      6,190,476          47.62%

Hugh R. Lamle
c/o M.D. Sass
1185 Avenue of the Americas
New York, New York 10036                  6,190,476          47.62%

Steven M. Golden
436 E. North Water St., Unit D
Chicago, Illinois 60611                       0                --

Matthew Moog                                  0                --

John J. Adams                                 0                --

R. Bruce Bradley
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0                --

Gary S. Briggs
c/o Ebay, Inc.
2145 Hamilton Ave.
San Jose, California  95125                   0                --

Guy R. Friddell, III
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0                --

Karl B. Quist
c/o Landmark Communications, Inc.
150 W. Brambleton Ave.
Norfolk, Virginia 23510                       0                --

John Giuliani
350 Ravine Park Drive East
Lake Forest, Illinois 60045                   0                --

James S. Correll
c/o Harte Hanks, Inc.
725 Stratford Drive
Encinitas, California 92024                   0                --

Daniel Sherr
c/o Information Resources
150 North Clinton Street
Chicago, Illinois 60661                       0                --



<PAGE>


                                                       Percentage
                                         Series C      of Series C
                                         Preferred     Preferred
Shares                                    Shares         Shares
Name and Address                       Beneficially    Beneficially
of Beneficial Owner                       Owned          Owned
-------------------                    ------------    ------------

Debora J. Wilson
c/o Weather.com
300 Interstate North Parkway
Atlanta, Georgia 30339                        0                --

David B. Arney                                0                --

David B. Desser                               0                --

All directors and executive
  officers as a group
  (14  persons)                          12,380,952          95.24%


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

     The following table sets forth certain information regarding our
equity compensation plans as of December 31, 2002:

                       (a)               (b)                (c)
                                                         Number of
                                                   securities remaining
                    Number of         Weighted     available for future
                securities to be  average exercise    issuance under
                  issued upon         price of      equity compensation
                  exercise of        outstanding     plans (excluding
              outstanding options,options, warrantssecurities reflected
Plan Category  warrants and rights   and rights       in column (a))
------------- ---------------------------------------------------------

Equity compen-
 sation plans
 approved by
 security
 holders           9,266,193             $ 0.99          5,283,183

Equity compen-
 sation plans
 not approved
 by security
 holders              --                   --               --
                  ----------             ------         ----------

Total              9,266,193             $ 0.99          5,283,183
                  ==========             ======         ==========




<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     LANDMARK

     As a result of a series of transactions with Landmark, Landmark has
the right to designate not less than a majority of our Board of Directors
at all times while our Series B Preferred Stock is outstanding.  R. Bruce
Bradley, Guy R. Friddell, III, Karl B. Quist, and Debora J. Wilson
currently are the directors designated by Landmark.  As a result of an
agreement between certain other stockholders and Landmark, those
stockholders agreed to vote their shares of our common stock in favor of
the election of directors nominated by the holders of a majority of the
then outstanding shares of Series B Preferred Stock. Landmark has also
agreed that until May 31, 2005, subject to certain conditions, it will vote
its shares of Series B Preferred Stock on an as converted basis to elect as
a director one person nominated by each of Messrs. Golden, Lamle and Rogel.

Pursuant to that same agreement, Landmark has agreed that it will not take
any action to cause us to become a privately-held company until the earlier
of two years after Landmark and any of its affiliates own 51% of our common
stock (on an as-converted basis) or July 30, 2005, unless such transaction
is approved by the holders of a majority of the shares of our common stock
(determined on a fully diluted basis) not owned by Landmark; provided, that
such restriction does not apply to purchases made from Messrs. Golden,
Lamle, Moog or Rogel (or their affiliates), purchases made from Lend Lease
International Pty. Limited or any of the transactions contemplated under
our stock purchase and loan agreements with Landmark (including "in-kind"
payments due Landmark from us).  We are not a party to this agreement and,
as such, it may be amended or terminated without our involvement or
consent.



ITEM 14.   CONTROLS AND PROCEDURES

     (a)   We maintain controls and procedures designed to ensure that
information required to be disclosed in the reports that we issue or submit
under the Securities Exchange Act of 1934 are recorded, processed,
summarized and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission.  Based upon their
evaluation of our disclosure controls and procedures performed within 90
days of the filing date of this report, our chief executive officer and
chief financial officer have concluded that our disclosure controls and
procedures are adequate.

     (b)   We have made no significant changes in internal controls or in
the other factors that could significantly affect those controls subsequent
to the date of the evaluation of those controls by our chief executive
officer and chief financial officer.






<PAGE>


                                PART IV


ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

   (a)     The following documents are filed herewith as part of this
           Form 10-K:

     (1)   Financial statements:  See "Item 8.  Financial Statements and
           Supplementary Data"

     (2)   Financial statement schedule:  The following financial
           statement schedule is filed as a part of this Form 10-K,
           --Schedule II--Valuation and Qualifying Accounts on page 106.

     (3)   Exhibits: See "Exhibit Index" beginning on page 47.


   (b)     Reports on Form 8-K

     No reports on Form 8-K were filed during the fourth quarter of 2002.




<PAGE>


                              SIGNATURES
                              ----------

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


Date: March 24, 2003              CoolSavings, Inc.

                                  By:  /s/ Matthew Moog
                                       -------------------------
                                       Matthew Moog
                                       Chief Executive Officer,
                                       President and Director


     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons in the
capacities and on the dates indicated.


Signature                   Title                        Date
---------                   -----                        ----



/s/ Matthew Moog            President and                March 24, 2003
-------------------------   Chief Executive Officer
Matthew Moog                (principal executive
                            officer), Director


/s/ David B. Arney          Chief Financial Officer      March 24, 2003
-------------------------   (principal accounting and
David Arney                 financial officer)



/s/ Richard H. Rogel        Chairman of the Board        March 24, 2003
-------------------------   of Directors
Richard H. Rogel



/s/ R. Bruce Bradley        Director                     March 24, 2003
-------------------------
R. Bruce Bradley



/s/ Gary S. Briggs          Director                     March 24, 2003
-------------------------
Gary S. Briggs


/s/ James S. Correll        Director                     March 24, 2003
-------------------------
James S. Correll



/s/ Guy R. Friddell, III    Director                     March 24, 2003
-------------------------
Guy R. Friddell, III




<PAGE>


Signature                   Title                        Date
---------                   -----                        ----


/s/ John Giuliani           Director                     March 24, 2003
-------------------------
John Giuliani


/s/ Hugh R. Lamle           Director                     March 24, 2003
-------------------------
Hugh R. Lamle


/s/ Karl B. Quist           Director                     March 24, 2003
-------------------------
Karl B. Quist


/s/ Daniel Sherr            Director                     March 24, 2003
-------------------------
Daniel Sherr


/s/ Debora J. Wilson        Director                     March 24, 2003
-------------------------
Debora J. Wilson

















<PAGE>


                            CERTIFICATIONS
                            --------------


I, Matthew Moog, certify that:

1.   I have reviewed this annual report on Form 10-K of CoolSavings,
     Inc.;

2.   Based on my knowledge, this annual report does not contain any
     untrue statement of a material fact or omit to state a material
     fact necessary to make the statements made, in light of the
     circumstances under which such statements were made, not
     misleading with respect to the period covered by this annual
     report;

3.   Based on my knowledge, the financial statements, and other
     financial information included in this annual report, fairly
     present in all material respects the financial condition,
     results of operations and cash flows of the registrant as of,
     and for, the periods presented in this annual report;

4.   The registrant's other certifying officer and I are responsible
     for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
     for the registrant and we have:

     a)    designed such disclosure controls and procedures to ensure
           that material information relating to the registrant is made
           known to us by others within that entity, particularly during
           the period in which this annual report is being prepared;

     b)    evaluated the effectiveness of the registrant's disclosure
           controls and procedures as of a date within 90 days prior to
           the filing date of this annual report (the "Evaluation
           Date"); and

     c)    presented in this annual report our conclusions about the
           effectiveness of the disclosure controls and procedures based
           on our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed,
     based on our most recent evaluation, to the registrant's
     auditors and the audit committee of registrant's board of
     directors:

     a)    all significant deficiencies in the design or operation of
           internal controls which could adversely affect the registrant's
           ability to record, process, summarize and report financial data
           and have identified for the registrant's auditors any material
           weaknesses in internal controls; and

     b)    any fraud, whether or not material, that involves management or
           other employees who have a significant role in the registrant's
           internal controls; and

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


Date: March 24, 2003              /s/ Matthew Moog
                                  -----------------------------------
                                  Matthew Moog
                                  President and Chief Executive Officer


<PAGE>


I, David B. Arney, certify that:

1.   I have reviewed this annual report on Form 10-K of CoolSavings,
     Inc.;

2.   Based on my knowledge, this annual report does not contain any
     untrue statement of a material fact or omit to state a material fact
     necessary to make the statements made, in light of the circumstances
     under which such statements were made, not misleading with respect to
     the period covered by this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all
     material respects the financial condition, results of operations and
     cash flows of the registrant as of, and for, the periods presented in
     this annual report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
     and we have:

     a)    designed such disclosure controls and procedures to ensure that
           material information relating to the registrant is made known
           to us by others within that entity, particularly during the
           period in which this annual report is being prepared;

     b)    evaluated the effectiveness of the registrant's disclosure
           controls and procedures as of a date within 90 days prior to
           the filing date of this annual report (the "Evaluation
           Date"); and

     c)    presented in this annual report our conclusions about the
           effectiveness of the disclosure controls and procedures based
           on our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based
     on our most recent evaluation, to the registrant's auditors and the
     audit committee of registrant's board of directors:

     a)    all significant deficiencies in the design or operation of
           internal controls which could adversely affect the registrant's
           ability to record, process, summarize and report financial data
           and have identified for the registrant's auditors any material
           weaknesses in internal controls; and

     b)    any fraud, whether or not material, that involves management or
           other employees who have a significant role in the registrant's
           internal controls; and

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



Date: March 24, 2003              /s/ David B. Arney
                                  -----------------------------------
                                  David B. Arney
                                  Chief Financial Officer




<PAGE>










                 Report of Independent Accountants on
                     Financial Statement Schedule



To the Board of Directors and Stockholders
of CoolSavings, Inc.:


Our audits of the financial statements referred to in our report dated
February 4, 2003 except for Note 14 which is as of February 21, 2003
appearing in this Form 10-K also included an audit of the financial
statement schedule listed in Item 15(a)(2) of this Form 10-K. In our
opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with
the related financial statements.





PricewaterhouseCoopers LLP


Chicago, Illinois
February 4, 2003


<PAGE>


                           CoolSavings, Inc.

           Schedule II -- Valuation and Qualifying Accounts




                                Additions (Reductions)
                         ----------------------------------
                             (1)
              Balance at  Charged to  Charged               Balance at
             Beginning of  Costs and  to Other     (2)        End of
               Period      Expenses   Accounts   Deduction    Period
             ------------ ---------- ----------  ---------- ----------

YEAR ENDED
DECEMBER 31,
2002
------------

Allowance for
 doubtful
 receivables     $   881    $   623   $   --      $   (751)    $  753


YEAR ENDED
DECEMBER 31,
2001
------------

Allowance for
 doubtful
 receivables     $ 1,318    $ 2,432   $   --      $ (2,869)    $  881


YEAR ENDED
DECEMBER 31,
2000
------------

Allowance for
 doubtful
 receivables     $   118    $ 1,638   $   --      $   (438)    $1,318



     (1)  Includes $385, $125 and $0 charged against revenues in the years
          ended December 31, 2002, 2001 and 2000, respectively.

     (2)  Uncollectible accounts written off.



<PAGE>


                             EXHIBIT INDEX

Exhibit
No.        Description
-------    -----------

2.1        Securities Purchase Agreement dated as of July 30, 2001 between
           coolsavings.com, inc., CoolSavings, Inc., Landmark
           Communications, Inc., and Landmark Ventures VII, LLC
           (incorporated by reference to Exhibit 2.1 to CoolSavings'
           Current Report on Form 8-K filed with the Securities and
           Exchange Commission on August 3, 2001 (the "August 8-K")

2.2        Amendment No. 1 to the Securities Purchase Agreement dated as
           of August 16, 2001 between coolsavings.com, inc., CoolSavings,
           Inc., Landmark Communications, Inc., and Landmark Ventures VII,
           LLC (incorporated by reference to Exhibit 2.3 to CoolSavings'
           Quarterly Report on Form 10-Q for the period ending
           September 30, 2001)

2.3        Agreement and Plan of Merger dated as of July 30, 2001 by and
           between coolsavings.com, inc. and CoolSavings, Inc.
           (incorporated by reference to Exhibit 2.2 to the August 8-K)

3.1        Certificate of Incorporation (incorporated by reference to
           Appendix D to CoolSavings' Definitive Proxy Statement filed
           with the Commission on August 22, 2001)

3.2        Bylaws (incorporated by reference to Appendix F to CoolSavings'
           Definitive Proxy Statement; file no. 000-30199)

4.1        Form of Common Stock Certificate (incorporate by reference to
           Exhibit 4.1 to CoolSavings' Registration Statement on Form S-1;
           file no. 333-94677)

4.2        Stockholders Agreement, dated as of June 1, 1998, among
           CoolSavings and certain of its Stockholders (incorporated by
           reference to Exhibit 4.2 to CoolSavings' Registration Statement
           on Form S-1; file no. 333-94677)

4.3        Registration Rights Agreement among CoolSavings and the holders
           of the 1999 Unsecured, Convertible Subordinated Promissory
           Notes (incorporated by reference to Exhibit 4.4 to CoolSavings'
           Registration Statement on Form S-1; file no. 333-94677)

4.4        Registration Rights Agreement among CoolSavings and the holders
           of the Series A Convertible Preferred Stock (incorporated by
           reference to Exhibit 4.5 to CoolSavings' Registration Statement
           on Form S-1; file no. 333-94677)

4.5        Warrant between coolsavings.com, inc. and Landmark
           Communications, Inc. dated July 30, 2001 (incorporated by
           reference to Exhibit 4.1 to the August 8-K)

4.6        Warrant between CoolSavings, Inc. and Landmark Communications,
           Inc. dated November 12, 2001 (incorporated by reference to
           Exhibit 4.6 to CoolSavings' Annual Report on Form 10-K filed
           with the Securities and Exchange Commission on April 1, 2002).

4.7        Registration Rights Agreement between coolsavings.com,inc.,
           Landmark Ventures VII, LLC and certain coolsavings.com, inc.
           Stockholders dated July 30, 2001 (incorporated by reference to
           Exhibit 4.2 to the August 8-K)



<PAGE>


Exhibit
No.        Description
-------    -----------

10.1**     Form of Indemnification Agreement (incorporated by reference
           to Exhibit 10.2 to CoolSavings' Registration Statement on
           Form S-1; file no. 333-94677)

10.2**     1997 Stock Option Plan (incorporated by reference to
           Exhibit 10.3 to CoolSavings' Registration Statement on
           Form S-1, file no. 333-94677)

10.3**     1999 Director Option Plan (incorporated by reference to
           Exhibit  10.4 to CoolSavings' Registration Statement on
           Form S-1, file no. 333-94677)

10.4       Loan and Security Agreement, dated January 18, 2000, between
           CoolSavings and American National Bank and Trust Company of
           Chicago (incorporated by reference to Exhibit 10.18 to
           CoolSavings' Registration Statement on Form S-1; file
           no. 333-94677)

10.5       Forbearance and Reaffirmation Agreement, dated June 15, 2001,
           between coolsavings.com, inc. and American National Bank and
           Trust Company of Chicago (incorporated by reference to
           Exhibit 10.5 to CoolSavings' Quarterly Report on Form 10-Q for
           the period ended June 30, 2001)

10.6       Letter Agreement dated July 27, 2001 between coolsavings.com,
           inc. and American National Bank and Trust Company of Chicago
           (incorporated by reference to Exhibit 10.6 to CoolSavings'
           Quarterly Report on Form 10-Q for the period ended June 30,
           2001)

10.7**     Form of Promissory Note from current and former directors of
           CoolSavings payable to CoolSavings in consideration for
           exercise of stock options and/or warrants (incorporated by
           reference to Exhibit 10.6 to CoolSavings' Registration
           Statement on Form S-1, file no. 333-94677)

10.8**     Termination Agreement, dated December 30, 1999 between
           CoolSavings and Hillel Levin (incorporated by reference to
           Exhibit 10.7 to CoolSavings' Registration Statement on
           Form S-1, file no. 333-94677)

10.9**     Consulting Agreement, dated as of January 1, 2000, between
           CoolSavings and Hillel Levin (incorporated by reference to
           Exhibit 10.8 to CoolSavings Registration Statement on Form S-1,
           file no. 333-94677)

10.10      Lease Agreement, dated February 24, 1997, between Prentiss
           Properties Acquisition Partners, L.P. and CoolSavings
           (incorporated by reference to Exhibit 10.9 to CoolSavings'
           Registration Statement on Form S-1, filed No. 333-94677)

10.11      Agreement of Sublease, dated June 30, 1998, between Insurance
           Company of North America and CoolSavings (incorporated by
           reference to Exhibit 10.10 to CoolSavings' Registration
           Statement on Form S-1, file no. 333-94677)

10.12      Lease Agreement, dated January 3, 2000, between 360 North
           Michigan Trust and CoolSavings (incorporated by reference to
           Exhibit 10.11 to CoolSavings' Registration Statement on
           Form S-1, file no. 333-94677)



<PAGE>


Exhibit
No.        Description
-------    -----------

10.13      Forbearance Letter Agreement dated June 14, 2001 between
           coolsavings.com, inc. and 360 North Michigan Trust
           (incorporated by reference to Exhibit 10.9 to CoolSavings'
           Quarterly Report on Form 10-Q for the period ending June 30,
           2001)

10.14      Form of 8% Senior Subordinated Convertible Notes due March 1,
           2006 ("8% Notes") (incorporated by reference to Exhibit 10.1 to
           CoolSavings' Quarterly Report on Form 10-Q for the period
           ending March 31, 2001)

10.15      Form of Warrant issued in connection with 8% Notes ("Warrants")
           (incorporated by reference to Exhibit 10.2 to CoolSavings'
           Quarterly Report on Form 10-Q for the period ending March 31,
           2001)

10.16      Form of Letter confirming terms of investment in 8% Notes and
           Warrants. (incorporated by reference to Exhibit 10.3 to
           CoolSavings' Quarterly Report on Form 10-Q for the period
           ending March 31, 2001)

10.17      Amended and Restated Senior Secured Loan and Security
           Agreement, dated July 30, 2001, between coolsavings.com, inc.
           and Landmark Communications, Inc. (incorporated by reference to
           Exhibit 10.1 to the August 8-K)

10.18      First Amendment to Amended and Restated Senior Secured Loan and
           Security Agreement, dated September 25, 2001, between
           coolsavings.com, inc. and Landmark Communications, Inc.
           (incorporated by reference to Exhibit 10.8 to CoolSavings'
           Quarterly Report on Form 10-Q for the period ending
           September 30, 2001)

10.19      Commercial Demand Grid Note, dated July 30, 2001, between
           coolsavings.com, inc. and Landmark Communications, Inc.
           (incorporated by reference to Exhibit 10.2 to the August 8-K)

10.20      Voting Agreement between Landmark Communications, Inc.,
           Landmark Ventures VII, LLC and certain coolsavings.com, inc.
           Stockholders dated July 30, 2001 (incorporated by reference to
           Exhibit 9.1 to the August 8-K)

10.21      Amended and Restated Commercial Demand Grid Note, dated
           September 28, 2001, between CoolSavings, Inc. and Landmark
           Communications, Inc. (incorporated by reference to
           Exhibit 10.9 to CoolSavings' Quarterly Report on Form 10-Q
           for the period ending September 30, 2001)

10.22**    2001 Stock Option Plan (incorporated by reference to
           Exhibit 10.3 to the August 8-K)

10.23      Form of Stockholders Agreement between CoolSavings, Inc.,
           Landmark Ventures VII, LLC and certain Stockholders of
           coolsavings.com, inc. (incorporated by reference to
           Exhibit 10.4 to the August 8-K)

10.24**    Severance Agreement dated July 29, 2001 between
           coolsavings.com, inc. and Steven M. Golden (incorporated by
           reference to Exhibit 10.12 to the CoolSavings' Quarterly Report
           on Form 10-Q for the period ended June 30, 2001)



<PAGE>


Exhibit
No.        Description
-------    -----------

10.25**    Employment Agreement dated July 29, 2001 between
           coolsavings.com, inc. and Matthew M. Moog (incorporated by
           reference to Exhibit 10.13 to the CoolSavings' Quarterly Report
           on Form 10-Q for the period ended June 30, 2001)

10.26      Senior Secured Note dated July 30, 2001 between
           coolsavings.com, inc. and Landmark Communications, Inc.
           (incorporated by reference to Exhibit 10.36 to the CoolSavings'
           Annual Report on Form 10-K for the period ended December 31,
           2001)

10.27*     Letter Agreement by and among Landmark Communications, Inc.,
           Landmark Ventures VII, LLC and CoolSavings, Inc. dated
           November 12, 2001.

99.1       Certification of Chief Executive Officer pursuant to
           Section 906 of the Sarbanes - Oxley Act of 2002.

99.2       Certification of Chief Financial Officer pursuant to
           Section 906 of the Sarbanes - Oxley Act of 2002.

-------------

    *      Filed herewith.

   **      Management contract or compensatory plan or arrangement
           required to be filed as an exhibit to the Annual Report on
           Form 10-K.