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

                                    FORM 10-Q

(Mark One)

|X|               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                       OR

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

     For the transition period from _________________ to ___________________

                        Commission File Number: 000-37258

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

                         iBEAM BROADCASTING CORPORATION
             (Exact name of registrant as specified in its charter)

              Delaware                                       94-3296895
   (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                        Identification No.)

               645 Almanor Avenue, Suite 100, Sunnyvale, CA 94085
               (Address of principal executive offices) (zip code)

       Registrant's telephone number, including area code: (408) 523-1600

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 |_|

The number of shares outstanding of the registrant's Common Stock as of May 1,
2001 was 127,414,432.


                                       1
<PAGE>

                         iBEAM BROADCASTING CORPORATION

                                      INDEX

                         PART I - FINANCIAL INFORMATION

                                                                         Page No
                                                                         -------

Item 1     Financial Statements:

           Condensed Consolidated Balance Sheets as of March 31, 2001
           and December 31, 2000 - (Unaudited)                              3

           Condensed Consolidated Statements of Operations for the Three
           Months Ended March 31, 2001 and 2000 - (Unaudited)               4

           Condensed Consolidated Statements of Cash Flows for the Three
           Months Ended March 31, 2001 and 2000 - (Unaudited)               5

           Notes to Condensed Consolidated Financial Statements -
           (Unaudited)                                                      6

Item 2     Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                        9

Item 3     Quantitative and Qualitative Disclosures about Market Risk      27

                           PART II - OTHER INFORMATION

Item 1.    Not applicable                                                  27

Item 2.    Changes in Securities and Use of Proceeds                       27

Item 3.-6. Not Applicable                                                  27

           Signature                                                       28


                                       2
<PAGE>

                         PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                         iBEAM BROADCASTING CORPORATION
                      Condensed Consolidated Balance Sheets
                            (unaudited, in thousands)

<TABLE>
<CAPTION>
                                                       March 31,      December 31,
                                                         2001            2000
                                                       ---------       ---------
<S>                                                    <C>             <C>
ASSETS
Current assets:
     Cash and cash equivalents ..................      $  30,113       $  62,342
     Short-term investments .....................          2,111           9,255
     Accounts receivable, net ...................          7,435           7,284
     Prepaid expenses and other current assets ..          4,636           8,717
                                                       ---------       ---------
          Total current assets ..................         44,295          87,598
Property and equipment, net .....................         68,054          63,777
Goodwill and intangible assets, net .............         47,235          51,210
Other assets ....................................          5,354           5,182
                                                       ---------       ---------
                                                       $ 164,938       $ 207,767
                                                       =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable ...........................      $  11,895       $   9,008
     Accrued liabilities ........................          6,749           9,180
     Restructuring reserve ......................          1,064             328
     Deferred revenue ...........................            424             489
     Current portion of capital lease obligations          8,256           8,727
                                                       ---------       ---------
          Total current liabilities .............         28,388          27,732
Capital lease obligations, net of current portion          9,662          11,164
                                                       ---------       ---------
          Total liabilities                               38,050          38,896
                                                       ---------       ---------

Minority interest ...............................          4,737           4,982
                                                       ---------       ---------

Stockholders' equity:
     Common stock, $0.0001 par value per share ..             13              13
     Additional paid-in capital .................        691,643         692,261
     Stockholders' notes receivable .............         (2,068)         (1,918)
     Unearned stock-based compensation ..........         (8,153)        (10,807)
     Accumulated other comprehensive income .....            727             605
     Accumulated deficit ........................       (560,011)       (516,265)
                                                       ---------       ---------
          Total stockholders' equity ............        122,151         163,889
                                                       ---------       ---------
                                                       $ 164,938       $ 207,767
                                                       =========       =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                         iBEAM BROADCASTING CORPORATION
                 Condensed Consolidated Statements of Operations
                    (in thousands, except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                        Three Months
                                                                       Ended March 31,
                                                                 -------------------------
                                                                    2001            2000
                                                                 ---------       ---------
<S>                                                              <C>             <C>
Revenue ...................................................      $   9,197       $     532
                                                                 ---------       ---------

Operating costs and expenses:
     Cost of revenue ......................................         19,575           7,130
     Engineering and development ..........................          4,631           3,904
     Selling, general and administrative ..................         21,091           7,076
     Amortization of goodwill and intangibles .............          3,975              --
     Amortization of stock-based compensation* ............          1,200           4,094
     Restructuring ........................................          1,995              --
                                                                 ---------       ---------
          Total operating costs and expenses ..............         52,467          22,204
                                                                 ---------       ---------
Loss from operations ......................................        (43,270)        (21,672)
Interest and other income (expense), net ..................           (148)            473
Interest expense ..........................................           (573)           (156)
Minority interest .........................................            245              --
                                                                 ---------       ---------
Net loss ..................................................        (43,746)        (21,355)
Deemed dividend related to preferred stock ................             --         (10,796)
                                                                 ---------       ---------
Net loss attributable to common stock .....................      $ (43,746)      $ (32,151)
                                                                 =========       =========

Net loss per share attributable to common stock - basic and
     diluted ..............................................      $   (0.36)      $   (3.04)
                                                                 =========       =========

Weighted average common shares outstanding ................        123,013          10,589
                                                                 =========       =========

* Allocation of amortization of stock-based compensation:
     Cost of revenue ......................................      $     211       $     989
     Engineering and development ..........................              9             680
     Selling, general and administrative ..................            980           2,425
                                                                 ---------       ---------
                                                                 $   1,200       $   4,094
                                                                 =========       =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>

                         iBEAM BROADCASTING CORPORATION
                 Condensed Consolidated Statements of Cash Flows
                            (unaudited, in thousands)

<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                             March 31,
                                                                                      -----------------------
                                                                                        2001           2000
                                                                                      --------       --------
<S>                                                                                   <C>            <C>
Cash flows from operating activities:
     Net loss ..................................................................      $(43,746)      $(21,355)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization .........................................         7,126          2,067
         Amortization of goodwill and intangibles ..............................         3,975             --
         Amortization of stock-based compensation ..............................         1,200          4,094
         Minority interest .....................................................          (245)            --
         Issuance of common stock for services .................................            --             50
         Changes in assets and liabilities:
            Accounts receivable ................................................          (151)          (147)
            Prepaid expenses and other assets ..................................         3,908         (6,825)
            Accounts payable ...................................................         2,889          4,957
            Restructuring reserve ..............................................           736             --
            Accrued liabilities ................................................        (2,431)         2,308
            Deferred revenue ...................................................           (65)          (117)
                                                                                      --------       --------
              Net cash used in operating activities ............................       (26,804)       (14,968)
                                                                                      --------       --------
Cash flows from investing activities:
     Purchase of property and equipment ........................................       (10,683)       (21,768)
     Purchase of investments ...................................................            --         (7,003)
     Sale of investments .......................................................         7,144             --
     Notes receivable due from webcast.com .....................................            --        (10,000)
                                                                                      --------       --------
              Net cash used in investing activities ............................        (3,539)       (38,771)
                                                                                      --------       --------
Cash flows from financing activities:
     Issuance of convertible preferred stock ...................................            --         34,922
     Issuance of common stock ..................................................           726          4,084
     Common stock repurchased ..................................................           (40)            --
     Payment of capital lease obligations ......................................        (2,694)          (281)
                                                                                      --------       --------
              Net cash (used in) provided by financing activities ..............        (2,008)        38,725
                                                                                      --------       --------
Net decrease in cash and cash equivalents ......................................       (32,351)       (15,014)
Effect of exchange rates on cash ...............................................           122             --
Cash and cash equivalents at beginning of period ...............................        62,342         24,863
                                                                                      --------       --------
Cash and cash equivalents at end of period .....................................      $ 30,113       $  9,849
                                                                                      ========       ========
Supplemental non-cash investing and financing activities:
     Property and equipment purchased under capital lease obligations ..........      $    720       $  4,273
     Issuance of warrants ......................................................            --          2,750
     Deemed dividend related to preferred stock ................................            --         10,796
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

                         iBEAM BROADCASTING CORPORATION

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for the
three months ended March 31, 2001 and 2000 have been prepared by iBEAM
Broadcasting Corporation (the "Company" or "iBEAM") in accordance with the rules
and regulations of the Securities and Exchange Commission. The amounts as of
December 31, 2000 have been derived from the annual audited financial
statements. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted
accounting principles in the United States have been condensed or omitted in
accordance with such rules and regulations. In the opinion of management, the
accompanying unaudited consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Company and its results of
operations and cash flows. These financial statements should be read in
conjunction with the annual audited financial statements and notes as of and for
the year ended December 31, 2000, included in the Company's annual report on
Form 10-K.

The consolidated financial statements include the accounts of iBEAM and its
majority-owned subsidiaries. To the extent that iBEAM does not own 100% of the
subsidiary, a minority interest is recorded. Entities for which iBEAM owns less
than 50% and accordingly does not have control, but exerts significant
influence, are incorporated using the equity accounting method. All intercompany
balances and transactions have been eliminated in consolidation. The functional
currencies of the Company's subsidiaries are the local currency. Assets and
liabilities of these subsidiaries were translated into U.S. dollars at exchange
rates as of the balance sheet date. Income and expense items are translated at
average exchange rates for the period. Accumulated translation adjustments are
recorded as a component of accumulated other comprehensive loss in stockholders'
equity.

The Company has incurred losses from operations since inception and has an
accumulated deficit of approximately $560.0 million as of March 31, 2001. The
Company has completed several rounds of private equity financing and completed
its initial public offering in May 2000 which raised $115.5 million, net of
expenses. However, the Company has incurred substantial losses and negative cash
flows from operations since inception. For the year ended December 31, 2000, the
Company incurred a loss from operations of approximately $474.9 million,
including a $310.0 million charge for impairment of goodwill, and negative cash
flows from operations of approximately $96.1 million. For the quarter ended
March 31, 2001, the Company incurred a loss from operations of approximately
$43.3 million, and negative cash flows from operations of approximately $26.8
million. Management expects operating losses and negative cash flows to continue
for the foreseeable future and anticipates that losses will continue because of
costs and expenses related to brand development, marketing and other promotional
activities, continued expansion of the Company's network infrastructure,
expansion of product offerings and development of relationships with other
businesses. The Company's operating plan requires it to raise additional capital
to fund its future operations. Certain of these costs are discretionary and
could be reduced if working capital decreased significantly. Failure to generate
sufficient revenues, raise additional capital or reduce certain discretionary
spending could have a material adverse effect on the Company's ability to
continue as a going concern and to achieve its intended business objectives.

The results of operations for the three months ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001 or any other future interim period, and the Company makes no
representations related thereto.

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


                                       6
<PAGE>

2. COMPREHENSIVE NET LOSS

Comprehensive loss, as defined, includes all changes in equity (net assets)
during a period from non-owner sources. Comprehensive loss differs from reported
net loss as shown below (in thousands):

                                                    Three Months Ended March 31,
                                                       2001           2000
                                                     --------       --------
Net loss attributable to common stock                $(43,746)      $(32,151)
Currency translation adjustment                          (122)            --
                                                     --------       --------
Comprehensive loss attributable to common stock      $(43,868)      $(32,151)
                                                     ========       ========

3. REVENUE RECOGNITION

The Company recognizes revenue based on its broadcasting services, consisting
primarily of On-Air(TM), On-Stage(TM), On-Demand(TM) and Activecast(TM).

On-Air is a service that provides the customer the ability to transfer live
content 24 hours a day, 7 days a week. On-Air services are provided under
contracts that typically last for a period of three to twelve months. These
services are billed based upon either the peak capacity purchased, which is
expressed as the maximum volume that can be delivered per second, or upon actual
usage, which is the total amount of megabytes transferred in the month. These
contracts may also provide for minimum monthly fees. Revenue for these services
is recognized as the service is provided.

On-Stage services are provided under contracts that typically relate to a single
event. These services are billed based upon the peak capacity purchased which is
the maximum megabits delivered per second per event, or upon actual usage, which
is the total amount of megabits transferred. These contracts may also provide
for minimum fees. Revenue for these services is recognized as the service is
provided.

On-Demand is a service that allows the customer to store content on the
Company's network, which can then be accessed by end users at any time. This
service is provided under contracts that typically last for a period of three to
twelve months. There are two streams of revenue associated with this service.
First, there is a fee for the amount of content stored, measured in gigabytes
per month. Second, there is a charge for the amount of content delivered to end
users which is billed based upon either the peak capacity purchased, which is
the maximum megabits delivered per second, or upon actual usage, which is the
total amount of megabytes transferred in the month. These contracts may also
provide for minimum monthly fees. Revenue for these services is recognized as
the service is provided.

Activecast services incorporate video, slides/graphics, audience polling, chat
and commerce into an interactive webcast delivered across the Company's network.
These services are billed based upon fixed price billings and may include an
additional charge for megabits transferred. Revenue for these services is
recognized as the service is provided.

Utilizing the On-Target application, the Company has the ability to enable
insertion of advertisements into the content delivered in connection with the
On-Air, On-Stage and On-Demand services. Revenue from advertising is recognized
over the period the advertisements are delivered.

Other broadcast services such as encoding, production services, event
management, acquisition services, hosting and custom web integration with chat
and e-commerce tools are generally provided on a consulting basis on either
hourly or fixed price billing over a period of 30 days or less. Revenue for
these services is recognized upon completion of the services.

The Company is required to share 10%-20% of the revenue generated from the
delivery of content from the On-Air, On-Stage and On-Demand services with
certain Internet service providers ("ISPs"). The revenue share we pay to such
ISPs is based on a percentage of the revenue we derive from content delivered
through such ISPs' networks. The Company records gross revenue from On-Air,
On-Stage and On-Demand services, because it acts as the principal in the
transactions and is wholly responsible for the delivery of the services. In
addition, the Company bears the risk of loss for collection from the customer.
The Company records the revenue sharing amount as cost of revenue.


                                       7
<PAGE>

Cash payments received in advance of services provided are recorded as deferred
revenue and are recorded as income in the period the services are provided.

Non-monetary transactions result from the exchange of streaming media services
by the Company in return for the right to insert advertisements into the
stream's broadcast. The Company records non-monetary transactions at fair value
only when the Company has an established historical practice of selling similar
services for cash. During the three months ended March 31, 2001, the Company
recognized $930,000 of revenue from non-monetary transactions.

4. ENGINEERING AND DEVELOPMENT EXPENSE

Engineering and development costs are expensed as incurred, except for certain
software development costs. In January 1999, the Company adopted Statement of
Position ("SOP") 98-1, which requires software development costs associated with
internal use software to be charged to operations until certain capitalization
criteria are met. For the three months ended March 31, 2001, software
development costs of approximately $1,784,000 were capitalized and included in
property and equipment.

5. NET LOSS PER SHARE

Basic and diluted net loss per share is computed by dividing the net loss
attributable to common stock for the period by the weighted average number of
shares of common stock outstanding during the period. The calculation of diluted
net loss per share excludes potential common shares as the effect is
antidilutive. Potential common shares are comprised of common stock subject to
repurchase rights and incremental shares of common and preferred stock issuable
upon the exercise of stock options or warrants and upon conversion of preferred
stock.

The following table sets forth the computation of basic and diluted net loss per
share for the periods indicated (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                                 March 31,
                                                                         -------------------------
                                                                            2001            2000
                                                                         ---------       ---------
<S>                                                                      <C>             <C>
Net loss attributable to common stock .............................      $ (43,746)      $ (32,151)
                                                                         =========       =========

Basic and diluted:
     Weighted average common shares outstanding ...................        127,044          18,132
     Weighted average unvested common shares subject to repurchase          (4,031)         (7,543)
                                                                         ---------       ---------
     Weighted average common shares used to compute basic and
     diluted net loss per share attributable to common stock ......        123,013          10,589
                                                                         =========       =========
Net loss per share attributable to common stock-basic and diluted .      $   (0.36)      $   (3.04)
                                                                         =========       =========
</TABLE>

The following table sets forth potential common shares that are not included in
the diluted net loss per share calculation above because to do so would be
anti-dilutive (in thousands):

<TABLE>
<CAPTION>
                                                                      March 31,   March 31,
                                                                        2001        2000
                                                                       ------      ------
<S>                                                                    <C>         <C>
      Convertible preferred stock upon conversion to common stock          --      66,489
      Unvested common shares subject to repurchase ..............       3,553       7,785
      Options and warrants to purchase common stock .............      18,785      13,767
                                                                       ------      ------
                                                                       22,338      88,041
                                                                       ======      ======
</TABLE>


                                       8
<PAGE>

6. RESTRUCTURING

In the first quarter of 2001, the Company recorded a $2.0 million charge for
restructuring. Components of the charge provided for the write-down of certain
fixed assets to realizable value - $0.8 million; provision for office closings -
$0.9 million; and for 34 terminated employees, principally in marketing and
administration - $0.3 million. The restructuring was undertaken to improve
operations by eliminating or consolidating costs. At March 31, 2001, the
restructuring accrual amounted to $1.1 million relating to office closures, the
majority of which will be spent in 2001. The Company expects that the actions
contemplated by the charge will be essentially completed during 2001. The
Company will record further restructuring charges of $1 million to $2 million in
the second quarter associated with the reduction in work force of approximately
140 employees announced in April 2001.

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

OVERVIEW

Our Internet broadcast network ("Broadcast Network") delivers streaming media
services and solutions to the Enterprise and Entertainment and Media ("E&M")
markets. To further expand our services to the Enterprise market, we have
acquired: (1) in April 2000, webcasts.com, a provider of production consulting
services and tools, whose services assist customers with integrating streaming
media and e-commerce functions such as chat, e-commerce database links, and
pay-per-view; (2) in July 2000, Server-Side Technologies, a provider of digital
rights management solutions; and (3) in October 2000, NextVenue, a provider of
streaming media services to the financial services and corporate enterprise
markets.

iBEAM commenced operations in March 1998 and began offering streaming media
delivery service in October 1999. Since our inception, we have incurred
significant losses and as of March 31, 2001, we had an accumulated deficit of
$560.0 million. We have not achieved profitability on a quarterly basis, and
anticipate that we will continue to incur substantial net losses. We expect to
incur significant engineering and development and sales, general and
administrative expenses and, as a result, we will need to generate significant
revenue to achieve profitability.

Our Revenue Model

We derive our revenue from charging customers for Internet streaming media
services. We commercially introduced our services in October 1999. We currently
have approximately 460 customers. We generate revenue from Enterprise customers
through fixed price contracts and hourly rate or per event billings. We generate
revenue from E&M customers based on one or more of the following, depending on
the nature of the service provided: the volume of content delivered over our
Broadcast Network, measured in megabytes transferred or bit rate per second; the
volume of content stored on our Broadcast Network; the volume of content we
encode for our customers; and cost-per-impression (for ad insertion).

Currently, our transport services (On-Air and On-Demand) are typically priced
based on actual usage, which is measured by the volume of megabytes transferred
during the month. Many of our contracts with our On-Air and On-Demand customers
contain a minimum monthly payment obligation and, for On-Demand customers, there
is a monthly fee for content stored on our Broadcast Network, which is measured
in gigabytes.

On-Stage is priced under a fixed-fee arrangement or on actual usage in terms of
megabytes transferred. Customers have typically elected to enter into fixed-fee
arrangements in order to set the price of a broadcasting event. We price our
fixed-fee arrangements using an estimate of the amount of content delivered,
which includes a forecast of the expected number of viewers, the access speeds
of the viewers, and the duration of the event. We bill for other event-related
services, such as production and event management, on an hourly rate or fixed
price.


                                       9
<PAGE>

Activecast includes production services, such as content capture, encoding,
event management, acquisition services, custom web integration with chat, and
e-commerce tools, and are generally provided at either an hourly rate or per
event billing. We recognize revenue for these services as the service is
provided.

On-Guard and On-Target are priced based on actual usage in terms of digital
downloads or ads inserted.

Cost of Revenue

The cost of broadcasting Internet content includes both direct costs that vary
with the volume of content delivered and relatively fixed indirect costs, such
as staffing for a 24-hour Network Operations Center ("NOC"). The cost of
production services is primarily related to manpower costs for delivery of those
services.

Direct broadcasting costs include depreciation of network servers, satellite
transmission charges, land-line network charges, access fees, and amortization
of developed software and license fees. In proportion, the largest direct cost
is the cost of using land-line networks, which we avoid by delivering content
directly to ISPs via satellite broadcast. Although certain of the ISPs to which
we deliver content have negotiated revenue shares, these amounts have
represented lower costs to iBEAM than paying for land-lines. The revenue share
we pay to such ISPs is based on a percentage of the revenue we derive from
content delivered through their network, ranging from 10% to 20% of such
revenue. In addition, we expect the number of ISPs that receive access fees will
increase.

Indirect broadcasting costs are primarily the cost of equipment, operations
management software, production services, and NOC personnel. These costs are
relatively fixed and independent of the volume of content we deliver.

Engineering and Development

Engineering and development expenses consist primarily of salaries and personnel
costs related to the design, development, and enhancement of our services, and
the development of new applications that may be added to our platform. We
believe that engineering and development is critical to our strategic business
development objectives, and we intend to enhance our technology to meet the
changing requirements of market demand. The amount that we will actually spend
on engineering and development is highly uncertain and will depend on various
factors that are difficult to predict.

Selling, General, and Administrative

Selling, general, and administrative expenses consist primarily of salaries and
related payroll costs, advertising and promotional expenses, consulting fees,
and legal and accounting services.

Amortization of Goodwill and Intangibles

Goodwill and intangibles are amortized over their respective estimated useful
lives ranging from three to five years and relates to our acquisition of
webcasts.com, Server-Side Technologies, and NextVenue in April, June, and
October 2000, respectively, and the purchase of technology from SES/Astra in
July 2000. During the fourth quarter of 2000, the Company recorded a $310
million impairment charge based on an impairment assessment of the identifiable
intangibles and enterprise level goodwill recorded.

Amortization of Stock-based Compensation

In connection with the grant of stock options to employees and consultants since
inception, we recorded unearned stock-based compensation of $29.2 million,
representing the difference between the deemed fair value of our common stock at
the date of grant and the exercise price of such options. Such an amount, net of
amortization, is presented as a reduction of stockholders' equity and amortized
over the vesting period of the applicable option. With regards to stock options
granted to consultants, we re-value the associated stock-based compensation
using the Black-Scholes option pricing model at each reporting date. As a
result, stock-based compensation expense will fluctuate as the fair market value
of our common stock fluctuates. We believe that the fair value of the stock
options granted to consultants is more reliably measurable than the


                                       10
<PAGE>

fair value of the services received, because we do not have records of time
spent by our consultants, and we do not have the ability to ascertain what the
fair market billing rates are for the consultants' work.

RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended March 31, 2001 and 2000

The results of operations related to webcasts.com, Server-Side Technologies and
NextVenue are included in the Company's financial statements since the
acquisition dates of April 2000, June 2000 and October 2000, respectively.

Revenue. Revenue increased by $8.7 million from $0.5 million in the first
quarter of 2000 to $9.2 million in the first quarter of 2001. Fees for
Enterprise and E & M customers accounted for 65% and 35%, respectively, of total
revenue for the first quarter of 2001. As we continue to expand our network and
as more companies distribute content over our network, we expect our revenue
will increase in future periods.

Cost of revenue. Cost of revenue increased by $12.4 million from $7.1 million in
the first quarter of 2000 to $19.6 million in the first quarter of 2001. This
increase was primarily due to increases in all cost of revenue components such
as: network bandwidth, satellite transmission, co-location, content acquisition
expenses, network server and software depreciation, and salaries, bonuses, and
related taxes as we expanded our Broadcast Network, added capacity, and
assimilated the operations of acquired companies in 2000. Headcount included in
cost of revenue increased from 56 at March 31, 2000 to 314 at March 31, 2001.

Engineering and development. Engineering and development expenses increased by
$0.7 million in the first quarter of 2000 to $4.6 million in the first quarter
of 2000 and 2001. Increases in salaries, bonuses, and related taxes as
additional engineers were hired during 2001 in addition to the effects of
salaries and related taxes of engineering and development functions in acquired
operations and use of outside consultants were more than offset by additional
amounts capitalized during the first quarter of 2001 as software development.
Headcount included in engineering and development decreased from 103 at March
31, 2000 to 63 at March 31, 2001.

Selling, general and administrative. Selling, general and administrative
expenses increased by $14.0 million from $7.1 million in the first quarter of
2000 to $21.1 million in the first quarter of 2001. This increase was primarily
due to increases in salaries, commissions, bonuses and related taxes, travel and
entertainment expenses, and advertising and promotional expenses in 2001. The
increase resulted as we expanded our sales and marketing organization, promoted
our Broadcast Network and began to provide infrastructure to support our growing
operations. Bad debt expense recognized during the first quarter of 2001 also
contributed to the increase. Headcount included in selling, general and
administrative increased from 118 at March 31, 2000 to 177 at March 31, 2001.

Amortization of goodwill and intangibles. Amortization of goodwill and
intangibles in 2001 was $4.0 million in the first quarter, resulting primarily
from the acquisition of webcasts.com, Server-Side Technologies, and NextVenue
and our purchase of technology from SES/Astra. We expect to amortize $11.9
million in the remainder of 2001, $15.1 million in 2002, $10.0 million in 2003,
$6.3 million in 2004 and $3.9 million in 2005.

Amortization of stock-based compensation. Amortization of employee stock-based
compensation was $1.2 million in the first quarter of 2001. The decrease was
primarily due to the grant of stock options to newly hired employees and
consultants, which were more than offset by credits due to employee terminations
during the first quarter of 2001. We expect to amortize $4.2 million in the
remainder of 2001, $2.9 million in 2002, $1.0 million in 2003 and $0.1 million
in 2004, before giving effect to the April 2001 reduction in force.

Restructuring. In the first quarter of 2001, we recorded a $2.0 million charge
for restructuring related to our operations. Components of the charge provided
for the write-down of certain fixed assets to realizable value - $0.8 million;
provision for office closings - $0.9 million; and for 34 terminated employees,
principally in marketing and administration - $0.3 million. The restructuring
was undertaken to improve operations by eliminating or consolidating costs. At
March 31, 2001 the restructuring accrual amounted to $1.1 million relating to
office closures, the majority of which will be spent in 2001. We expect that the
actions contemplated by the charge will be essentially completed during 2001. We
will record further


                                       11
<PAGE>

restructuring charges in the second quarter associated with additional
cost-saving initiatives, including the reduction in work force described below.

Interest and Other Income (Expense), net. Other income and expense, net,
decreased from income of $0.5 million in 2000 to expense of $0.1 million in the
first quarter of 2001. The decrease was primarily due to an increase in losses
from disposal of assets in 2001.

Interest Expense. Interest expense increased from $0.2 million in 2000 to $0.6
million in the first quarter of 2001, primarily as a result of additional
capitalized leases entered into or assumed through acquisitions completed
subsequent to the first quarter of 2000.

Minority Interest. Minority interest was a benefit of $245,000 in the first
quarter of 2001, representing the portion of losses from consolidated
subsidiaries attributable to minority owners.

Income Taxes. We have incurred operating losses since inception in March 1998
and have significant net operating loss carryforwards for federal and state tax
purposes. Accordingly, we did not record a provision for income taxes in 2000 or
2001.

Net Loss. Net loss increased by $22.4 million from $21.4 million in the first
quarter of 2000 to $43.7 million in the first quarter of 2001. The increase in
net loss is primarily attributable to goodwill amortization of $4.0 million, a
restructuring charge of $2.0 million, amortization of stock-based compensation
of $1.2 million, and a significant increase in operating expenses required to
support growth in our revenues and expansion of our Broadcast Network and
streaming media applications.

Costs and expenses in the first quarter of 2001 were higher than the Company
anticipated. Management took steps in April 2001 to realign expenses more
closely with revenue, in addition to the restructuring charge and associated
actions taken during the first quarter. The Company announced an additional
reduction in work force of approximately 140 employees, representing
approximately 25% of the total employee base. Most of the reductions, which
affected all functions and all levels, took place in April immediately following
the announcement. As of April 30, 2001, the Company had 479 employees. The
Company expects a second quarter charge associated with this action of
approximately $1 million to $2 million. In addition, additional cuts in
discretionary spending were also made in April 2001.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have funded our operations primarily through the sale of our
capital stock and capital lease obligations. We have raised an aggregate of $233
million from the sale of our common and preferred stock through March 31, 2001,
of which $115.5 million resulted from the initial public offering ("IPO") of our
common stock in May 2000.

Net cash used in operating activities was $15.0 million for the three months
ended March 31, 2000 and $26.8 million for the three months ended March 31,
2001. Cash used in operating activities for the three months ended March 31,
2001 was primarily due to our net loss of $43.7 million and a decrease in
accrued liabilities of $1.7 million, offset in part by the amortization of
stock-based compensation of $1.2 million, a decrease in prepaid expenses and
other assets of $3.1 million, the amortization of goodwill and intangibles of
$4.0 million, depreciation and amortization of $7.1 million, and an increase in
accounts payable of $2.9 million.

Net cash used in investing activities was $38.8 million for the three months
ended March 31, 2000, relating to the purchase of property and equipment. Net
cash used in investing activities was $3.5 million for the three months ended
March 31, 2001, relating primarily to the purchase of property and equipment of
$10.7 million, partially offset by the sale of investments of $7.1 million.

Net cash flow provided by financing activities was $38.7 million for the three
months ended March 31, 2000 compared to net cash used of $2.0 million for the
three months ended March 31, 2001. Net cash provided by financing activities was


                                       12
<PAGE>

the result of payments on our capital lease obligations of $2.7 million,
partially offset by net proceeds from the sales of common stock of $0.9 million.

As of March 31, 2001, we had cash, cash equivalents and investments of $32.2
million. From inception to March 31, 2001, we had raised $233 million from the
sale of common and preferred stock and $21.7 million from equipment lease lines
that are repayable over periods of up to three years. We expect to make less
than $15 million in capital investments in 2001, of which $10.7 million was
incurred during the three months ended March 31, 2001. In addition, the Company
will require significant capital to fund other operating expenses.

Based on our revised operating plan, we expect our existing cash resources will
fund operations into the third quarter this year. The board of directors has
authorized management to explore strategic alternatives to fund continued growth
and enhance shareholder value. The Company has retained Morgan Stanley Dean
Witter and Dresdner Kleinwort Wasserstein as lead and secondary advisers,
respectively. We may not be able to effect these strategic alternatives, or
obtain future equity or debt financing on favorable terms, if at all. Our
inability to obtain additional capital on satisfactory terms may result in the
Company not continuing as a going concern and could force us to cease operations
no later than the third quarter of 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. SFAS No. 133, as amended, is effective for all quarters of all
fiscal years commencing after June 15, 2000. The Company, to date, has not
engaged in derivative and hedging activities, and accordingly, the adoption of
SFAS No. 133, as amended, did not have a material impact on the financial
reporting and related disclosures of the Company.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. The Company
has complied with the guidance in SAB 101 for all periods presented.

FORWARD-LOOKING INFORMATION

      This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
include, without limitation, statements regarding our capital raising
activities, our future cash requirements, the deployment of our streaming media
services to the market, our ability to serve end users from the edge of the
Internet, future revenues and growth, successful international expansion, the
success of acquisitions and joint ventures, market position, customer growth and
adoption of our services and products including newly introduced services and
products. Predictions of future events are inherently uncertain. Actual events
could differ materially from those predicted in the forward-looking statements
as a result of the risks set forth in this report and, in particular, the risks
discussed below under the caption "Risk Factors that May Affect Operating
Results."

RISK FACTORS THAT MAY AFFECT OPERATING RESULTS

Our current cash will be exhausted in the third quarter of 2001. If we are
unable to raise additional capital, reduce spending or generate sufficient
revenues, we may be forced to cease operations no later than the third quarter
of 2001.

      Based on our projected rate of cash consumption, our currently available
cash will be exhausted in the third quarter of 2001. To conserve cash, we
announced a reduction in force on April 23, 2001 of approximately 140 employees,
or 25%


                                       13
<PAGE>

of our worldwide employee base, as well as additional cuts in discretionary
spending and have implemented a plan to reduce discretionary costs. We have
retained Morgan Stanley Dean Witter and Dresdner Kleinwort Wasserstein to assist
us in seeking additional funding and strategic alternatives. If we are unable to
raise additional cash, extend our currently available cash, or enter into a
strategic transaction in the near future, we may be forced to implement
additional and substantial reductions in force and may be unable to continue
operations past the third quarter of 2001.

      We have incurred losses from operations since inception and have an
accumulated deficit of approximately $560.0 million as of March 31, 2001. We
completed several rounds of private equity financing prior to our IPO and
completed our IPO in May 2000, which raised $115.5 million, net of expenses. For
the quarter ended March 31, 2001, we incurred a loss from operations of
approximately $43.3 million and negative cash flows from operations of
approximately $26.8 million. Management expects operating losses and negative
cash flows to continue for the foreseeable future and anticipates that losses
will continue because of costs and expenses related to brand development,
marketing and other promotional activities, expansion of product offerings, and
development of relationships with other businesses. Whether or not we expand,
reduce, or maintain the current configuration of our Broadcast Network is highly
dependent upon the results of our current efforts to raise capital. Even if we
are able to raise financing in the short term, our failure to generate
sufficient revenues, raise additional capital or reduce discretionary spending
over the long term could have a material adverse effect on our ability to
continue as a going concern and to achieve our intended business objectives.

      The expansion and development of our business will require significant
capital, which we may be unable to obtain, to fund our capital expenditures and
operating expenses, including working capital needs. In the first quarter of
2001, we incurred $10.7 million in capital expenditures, including investments
in servers, hosting centers, and our NOC, and we expect to incur significant and
increasing losses.

      We may fail to generate sufficient cash flow from the sales of our
services to meet our cash requirements. Our capital requirements may vary
materially from those currently planned if, for example, we have to incur
unforeseen capital expenditures, unforeseen operating expenses, and/or make
investments to maintain our competitive position. If this is the case, we may
have to delay or abandon some or all of our development and expansion plans or
otherwise forego market opportunities. If we are successful in raising
additional capital through the issuance of equity or equity-related securities,
the percentage ownership of existing stockholders will likely be substantially
diluted.

We are dependent on our Internet broadcasting services and applications, and our
future revenue depends on their commercial success.

      Our revenue growth depends materially on the commercial success of our
Internet broadcasting services and applications. Customer demand for streaming
media services and applications such those offered by iBEAM is difficult to
predict. We have seen some of our customers go out of business in 2000 and in
the first quarter of 2001. However, none of them represented more than 12% of
our annual revenue for 2000. Because we are in a period where the business
models of our actual and potential customers are often untried or unproven, it
is very difficult for us to predict our future revenues. Our revenue growth will
materially depend on the extent to which our customers' business models create
sustainable demand for our services and applications. In addition, failure of
our current and planned services and applications to operate as expected or the
occurrence of any service interruptions or technical problems with our Broadcast
Network could delay or prevent customer acceptance of our services. If our
target customers do not adopt and purchase our current and planned services, our
revenue will not grow significantly, and we may not become profitable as a
result.

We had operating losses of $474.9 million and $43.3 million for the year ended
December 31, 2000 and the quarter ended March 31, 2001, respectively, and our
accumulated deficit was $560.0 million as of March 31, 2001. We will need to
increase our revenues significantly to achieve profitability.

      We have never been profitable. We had operating losses of $474.9 million
and $43.3 million for the year ended December 31, 2000 and the quarter ended
March 31, 2001, respectively, and our accumulated deficit was $560.0 million as
of March 31, 2001. Considering that operating expenses are expected to increase
in future periods, we will need to increase our revenue significantly to achieve
profitability. In the first quarter of 2001, we incurred capital expenditures of
$10.7 million. We may continue to incur increasing operating losses in the
future.


                                       14
<PAGE>

      We cannot be certain that our revenue will grow or that we will achieve
sufficient revenue to achieve profitability. Our failure to significantly
increase our revenue would seriously harm our business and operating results. We
have large fixed expenses, and we expect to continue to incur significant and
increasing sales and marketing, product development, administrative, and other
expenses, including bandwidth fees related to our Broadcast Network. As a
result, we will need to generate significantly higher revenues to achieve and
maintain profitability. If our revenue grows more slowly than we anticipate or
if our operating expenses increase more than we expect or cannot be reduced in
the event of lower revenue, we may not become profitable.

Because we are an early stage company that has generated limited revenues and
only recently began offering our services in October 1999, our business and
prospects are unproven and difficult to evaluate.

      We were founded in March 1998 and began offering our Internet broadcasting
services for streaming video and audio in October 1999. The revenue and income
potential of our services and business and the size of our market are unproven.
We have limited meaningful historical financial data upon which to base planned
operating expenses and upon which investors may evaluate us and our prospects.
In addition, our operating expenses are largely based on anticipated revenue
trends and a high percentage of our expenses are, and will continue to be, fixed
for the foreseeable future. Accordingly, we are subject to all of the risks that
are associated with companies in an emerging industry and in an early stage of
development, particularly companies in the rapidly evolving Internet
infrastructure market, including:

      o     Undercapitalization;

      o     Cash shortages;

      o     The unproven nature of our business plan;

      o     The new and unproven nature of the market for our services;

      o     The need to make significant expenditures and incur significant
            expenses as we develop our business and Broadcast Network;

      o     The lack of sufficient clients and revenues to sustain our
            operations and growth without additional financing;

      o     Difficulties in managing growth including integration of businesses
            that may be acquired into our business; and

      o     Limited experience in providing some of the services that we offer
            or plan to offer.

            If we are unsuccessful in addressing these risks, our business may
be seriously harmed.

If our customers, ISP partners, and other strategic partners do not receive
additional funding to sustain their operations and grow their businesses, our
operating results will be negatively impacted.

      Many of our customers, ISP partners, and other strategic partners have not
reached profitability and will require additional funding to sustain their
operations and grow their businesses. Given the recent volatility in the capital
markets, many of these companies are having difficulty raising additional
financing, which in turn, will require them to curtail their operating
activities, or file for bankruptcy protection. To the extent that any of our
customers curtail or cease their operations, we may incur costs for streaming
content for which we will not receive any revenue and/or we may be required to
write-off existing accounts receivable.

      Our relationships with ISPs are critical to the success of our business
plan, because through these agreements we gain access to large numbers of end
users that we can reach via satellite rather than through land-lines. To the
extent that any of our ISP partners cease or curtail their operations, we may
not grow or maintain the number of end users that can be reached via satellite,
which would negatively impact our costs and operating results.


                                       15
<PAGE>

      Similarly, our operating results are also dependent on our strategic
relationships. To the extent that any of our strategic partners cease or curtail
their operations, we may lose the value associated with such strategic
relationships or we may be required to increase our financial commitment to the
relationship. In any event, our operating results would suffer.

Our ability to build our Broadcast Network to the edge of the Internet is
dependent on our relationship with ISPs.

      The long-term growth in demand for our E&M service offerings depends in
large part on our ability to build our Broadcast Network to the edge of the
Internet. An edge network provides our customers with competitively better
quality and lower-cost distribution of streaming video and audio content to end
users. The development of our edge network requires that we co-locate our
MaxCasters with ISPs, which control the Internet access points closest to the
end user.

      To accomplish our business strategy of developing an edge network, we will
need to co-locate our MaxCasters with ISPs. Although we provide ISPs with our
servers at no cost, some ISPs may nevertheless refuse to allow us to install our
equipment in their facilities. If we are unable to further develop our edge
network, our costs may increase and our services may not eliminate packet loss
and jitter, resulting in poor quality service. If the quality of our services
suffers, we may lose or fail to obtain customers, which would reduce our
revenue. Therefore, our failure to deploy our MaxCasters close to the end user
will cause our business and results of operations to suffer. The development of
our edge network will require that we not only enter into additional agreements
with ISPs to co-locate our MaxCasters in their facilities, but also that we
successfully move content from our hosting centers to our MaxCasters such that
we serve end users from the edge.

      Our agreements with larger ISPs are critical to the success of our
business plan, because through these agreements, we gain access to large numbers
of end users that we can reach via satellite rather than through land-lines. Our
agreements with high speed Internet access providers are important because
through these agreements we can reach end users with high-speed or "broadband"
connections from the edge of the Internet. These end users tend to access
greater volumes of streaming content. Unless we can reach large numbers of end
users through our edge network, our services will not be attractive to many
content providers. In order to secure agreements with large ISPs and high speed
Internet access providers, in some instances we have agreed to share between 10%
and 20% of the revenue we derive from content delivered through their networks.
We have also agreed to make non-refundable prepayments to ISPs in the amount of
$5.5 million, of which $4.25 million has been paid as of March 31, 2001.

      Pursuant to our agreement with AOL, we have deployed MaxCasters within
AOL's data centers. Considering the reach of AOL's network and market position
as the leading provider of Internet access in the United States, our agreement
with AOL is critical to our strategy of delivering more content to the edge of
the Internet. The agreement increases the availability of content delivered
through our Broadcast Network on the edge of the Internet. The agreement with
AOL has an initial two-year term that commenced in February 2000 but may be
terminated by either party for material breach by the other upon 30 days notice.
In addition, after the first year of the agreement AOL has the right to
terminate the agreement if we do not deliver a required level of Internet
content through their network. A termination of, or adverse change in, our
relationship with AOL would seriously impair our efforts to establish and
maintain our Broadcast Network's ability to reach the edge of the Internet.

      Pursuant to our agreement with Excite@Home, we have deployed MaxCasters
that have direct access to Excite@Home's network, and we have the right to place
our MaxCasters directly within Excite@Home's national data centers upon
Excite@Home's completion of such centers. Considering Excite@Home's position as
a provider of high-speed Internet access though cable access, our agreement is
important to the development of our Broadcast Network on the edge of the
Internet. The agreement has a three year term. Either party may terminate the
agreement with 30 days notice upon a material default by the other party.
Excite@Home may terminate the agreement upon 30 days notice upon a change of
control of iBEAM. In addition, Excite@Home may terminate the agreement without
cause after two years. A termination of, or an adverse change in, our
relationship with Excite@Home would seriously impair our efforts to establish
our Broadcast Network's ability to reach the edge of the Internet.

      Pursuant to our agreement with BellSouth, we have deployed our MaxCasters
within BellSouth's network and have the right to deploy our MaxCasters in
multiple locations within BellSouth's network in the future. We have agreed to
share revenue with BellSouth that is generated by services provided by iBEAM
over BellSouth's network. We have also issued a warrant to BellSouth for 500,000
shares of iBEAM common stock. The warrant vests in proportion to the number


                                       16
<PAGE>

of locations within BellSouth's network at which our Broadcast Network is
deployed over time and the number of BellSouth network subscribers in each such
market. The agreement has a two year term that commenced in May 2000. Either
party may terminate the agreement upon not less than sixty days prior written
notice to the other party. A termination of the agreement by BellSouth, or an
adverse change in our relationship with BellSouth, would seriously impair our
efforts to establish our Broadcast Network's ability to reach the edge of the
Internet.

Because our Broadcast Network is complex and is deployed in complex
environments, it may have errors or defects that could seriously harm our
business.

      Our Broadcast Network is highly complex and is deployed in complex
environments. As a result of testing conducted to date, we and our customers
have from time to time discovered errors and defects in our software. Since we
commenced offering our services in October 1999, we have experienced four
network outages, one of which was due to failure of our network software and
three of which were due to outages of third party land-line network services
providers. We have not experienced a network outage since July 1, 2000. We may
continue to experience problems with our software. Outages that have occurred to
date have resulted in between one and nine hours of network downtime which
prevented us from delivering our services to our customers. These downtimes
resulted in lost revenues for usage not billed during down periods. In April
2001, we completed our network redundancy project, which is intended to reduce
recurrences of general network failures and loss of revenues resulting from
outages.

      In the future, there may be additional errors and defects in our software
and servers that may adversely affect our services. If we are unable to
efficiently fix errors or other problems that may be identified, we could
experience:

      o     Loss of or delay in sales and loss of market share;

      o     Loss of customers;

      o     Failure to attract new customers or achieve market acceptance;

      o     Diversion of development resources;

      o     Loss of credibility;

      o     Increased service costs; or

      o     Legal action by our customers.

Any failure of our Broadcast Network or the satellite or land-line communication
services provided to us by third party providers could lead to significant costs
and disruptions which could harm our reputation and cause us to lose customers,
which would have a negative impact on our revenue.

            Our business and reputation are dependent on providing our customers
with high quality and low-cost Internet broadcasting services through our
Broadcast Network. To meet these customer requirements, we must protect our
Broadcast Network against damage from:

      o     Human error;

      o     Network software errors;

      o     Physical or electronic security breaches;

      o     Fire, earthquake, flood and other natural disasters;

      o     Power loss; and


                                       17
<PAGE>

      o     Sabotage and vandalism.

            If we are unable to provide our services to our customers, we could
face legal action by our customers, which would be costly and divert
management's attention from important business activities. Because our servers
are located in the facilities of others, such as ISPs and Internet hosting
companies, we must rely on others to protect our equipment.

            The architecture of our Broadcast Network uses satellite
transmission to bypass the congestion of the Internet backbone by broadcasting
directly to our MaxCasters. We have entered into a three-year agreement with a
satellite service provider for transmission capacity over a specified satellite.
While the agreement provides for a back-up satellite if difficulties arise with
our designated satellite, if we are required to change the designated satellite,
we would be required to readjust our equipment. This adjustment could take
several weeks and would result in a decrease in the quality of our services and
an increase in our cost relating to the more expensive transmission costs of
distributing content from our hosting centers over our land-line network. The
ongoing failure of this satellite service could prevent us from broadcasting
content directly to the edge of the Internet. This would significantly increase
our costs and reduce our ability to cost-effectively broadcast high quality
streaming video and audio content.

            On January 18, 2001, we experienced a "rolling blackout" of 1.5
hours at our Sunnyvale facility as a result of the shortage of electric supply
in California. We own a backup generator system in Sunnyvale which came on line
in accordance with specifications. Our Broadcast Network did not experience any
downtime as a result of this event. However, as the supply of electricity in
California remains uncertain, we may experience other rolling blackouts. Should
our backup generator not respond appropriately we may suffer a network outage,
in which case network operations are designed to be automatically rerouted to
our New York and Oklahoma facilities. A facility outage would not directly
affect our Broadcast Network, but would impair our ability to monitor and
maintain our Broadcast Network from our Sunnyvale location. If our backup
generator fails and our network operations are not automatically rerouted, we
would experience downtimes which would impact our revenues.

The market for Internet broadcasting services is new and our business will
suffer if it does not develop as we expect.

            The market for Internet broadcasting services is new and rapidly
evolving. Content providers, such as existing web-based companies and
traditional media and entertainment companies, may not increasingly seek to
broadcast streaming video and audio over the Internet. Therefore, we cannot be
certain that a viable market for our services will emerge or be sustainable. If
this market does not develop, or develops more slowly than we expect, our
revenues will suffer and we may not become profitable.

The markets in which we operate are highly competitive and we may be unable to
compete successfully against new entrants and established companies with greater
resources.

            We compete in a market that is new, intensely competitive, highly
fragmented, and rapidly changing. We have experienced and expect to continue to
experience increased competition. Some of our current competitors, as well as a
number of our potential competitors, have longer operating histories, greater
name recognition, and substantially greater financial, technical, and marketing
resources than we do. Some of our current and potential competitors have the
financial resources to withstand substantial price competition. Moreover, many
of our competitors have more extensive customer bases, broader customer
relationships, and broader industry alliances that they could use to their
advantage in competitive situations, including relationships with many of our
current and potential customers. We do not have exclusive contracts with ISPs
for the deployment of our MaxCasters within their networks, and we expect that
many ISPs will allow our competitors to install equipment at their sites. In
addition, our competitors may be able to respond more quickly than we can to new
or emerging technologies and changes in customer requirements.

            Some of our current or potential competitors may bundle their
services with other software or hardware to offer a full range of Internet
broadcasting products and services to meet all of the content distribution needs
of content providers. We currently do not offer a full range of products and
services. This may discourage content providers from purchasing services we
offer or ISPs from installing our MaxCasters in their facilities.


                                       18
<PAGE>

            As competition in the Internet broadcasting market continues to
intensify, new solutions will come to market. We are aware of other companies
that are focusing or may in the future focus significant resources on developing
and marketing products and services that will compete with ours. We believe our
competitors primarily come from two market segments:

      o     Internet webcasting companies that deliver streaming media through
            land-line networks, such as Akamai, Digital Island, and Real
            Networks; and

      o     Internet production and event services companies, such as
            Yahoo!Broadcast.com.

Increased competition could result in:

      o     Price and revenue reductions and lower profit margins;

      o     Increased cost of service from telecommunications providers and
            revenue sharing demands by ISPs;

      o     Loss of customers; and

      o     Loss of market share.

            Any one of these results would harm our financial results.

            We believe that the Internet broadcasting and content delivery
industry is likely to encounter consolidation, such as the acquisition of
InterVu by Akamai in 2000 and our acquisitions of webcasts.com, Inc. and
NextVenue, Inc. This consolidation could lead to the formation of more
formidable competitors and could result in increased pressure on us to lower our
prices. In addition, consolidation among Internet content providers could reduce
the number of potential customers for our services and may increase the
bargaining power of these organizations, which could force us to lower our
prices.

Our business will suffer if we do not respond rapidly to technological changes
or if new technological developments make our services non-competitive or
obsolete.

      The market for Internet broadcasting services is characterized by rapid
technological change, frequent new product and service introductions and changes
in customer requirements. We may be unable to respond quickly or effectively to
these developments. If competitors introduce products, services, or technologies
that are better than ours or that gain greater market acceptance, or if new
industry standards emerge, our services may become non-competitive or obsolete,
which would harm our revenues and cause our business and financial results to
suffer. In addition, technological developments could eventually make Internet
infrastructure much faster and more reliable such that performance enhancing
services like those we provide would be less relevant to content providers.

            In developing our services, we have made, and will continue to make,
assumptions about the standards that our customers and competitors may adopt. If
the standards adopted are different from those which we may now or in the future
promote or support, market acceptance of our services may be significantly
reduced or delayed, and our business will be seriously harmed. In addition, the
emergence of new industry standards could render our existing services
non-competitive or obsolete.

The uncertainty in the sales and installation cycles for our services resulting
from our limited operating history may cause revenue and operating results to
vary significantly and unexpectedly from quarter to quarter, which could
adversely affect our stock price.

      Because of our limited operating history and the nature of our business,
we cannot predict our sales and installation cycles. The uncertain sales and
installation cycles may cause our revenue and results of operations to vary
significantly and unexpectedly from quarter to quarter. If this occurs and our
quarterly operating results fall below the expectations of


                                       19
<PAGE>

our investors or securities analysts, if any are covering our common stock, then
the market price of our common stock could decline.

We expect the rates we can charge for our services to decline over time, which
could reduce our revenue and could cause our business and financial results to
suffer.

            We expect the prices we can charge for our Internet broadcasting
services will decline over time as a result of, among other things, the
increasing availability of bandwidth at reduced costs and existing and new
competition in the markets we address. If we fail to accurately predict the
decline in costs of bandwidth or, in any event, if we are unable to sell our
services at acceptable prices relative to our costs, or if we fail to offer
additional services from which we can derive additional revenue, our revenue
will decrease, and our business and financial results will suffer.

            We are currently pricing our services at levels that exceed our
direct variable costs but are insufficient to cover indirect costs such as our
NOC and billing system. There is no assurance that our revenues will increase to
cover our increasing indirect costs, or that we have accurately estimated
indirect costs. If we fail to increase revenues, we may not be able to achieve
profitability.

Our business will suffer if we do not anticipate and meet specific customer
requirements.

            Our current and prospective customers may require features and
capabilities that our current services do not have. To achieve market acceptance
for our services, we must effectively and timely anticipate and adapt to
customer requirements and offer services that meet these customer demands. The
development of new or enhanced services is a complex and uncertain process that
requires the accurate anticipation of technological and market trends. We may
experience design, manufacturing, marketing, and other difficulties that could
delay or prevent the development, introduction, or marketing of these new or
enhanced services. In addition, the introduction of new or enhanced services
also requires that we manage the transition from older services to minimize
disruption in customer service and ensure that we can deliver services to meet
anticipated customer demand. Our failure to offer services that satisfy customer
requirements would decrease demand for our products and seriously harm our
revenues and financial results.

Our business will suffer if we do not expand our direct and indirect sales
organizations and our customer service and support operations.

            We currently have limited sales and marketing experience and limited
trained sales personnel. Our limited experience may restrict our success in
commercializing our services. Our services require a sophisticated sales effort
targeted at a limited number of key people within our prospective customers'
organizations. This sales effort requires trained sales personnel. We need to
expand our marketing and sales organization in order to increase market
awareness of our services and generate increased revenue. We are in the process
of building our direct sales force and plan to hire additional qualified sales
personnel. Competition for these individuals is intense, and we might not be
able to hire the kind and number of sales personnel we may need. In addition, we
believe that our future success is dependent upon our ability to establish
successful relationships for indirect sales with a variety of distribution
partners. If we are unable to expand our direct and indirect sales operations,
we may not be able to increase market awareness or sales of our services, which
may prevent us from increasing our revenue and achieving and maintaining
profitability.

            Hiring customer service and support personnel is very competitive in
our industry because there is a limited number of people available with the
necessary technical skills and understanding of our market. Once we hire these
personnel, they require extensive training. If we are unable to expand our
customer service and support organization or train these personnel as rapidly as
necessary, we may not be able to maintain satisfied existing customers of our
services, which would harm our revenues and our ability to achieve or maintain
profitability.

            We will incur significant costs relating to the planned expansion of
our marketing, sales, and customer support organization. We are unable to
quantify the expenses associated with expanding our sales organization, customer
service, and support operations because these expenses depend on a number of
factors relating to our operations, including the rate of hiring personnel and
the timing and amount of marketing and advertising expenses. We expect that
these costs will


                                       20
<PAGE>

significantly exceed any revenues that we receive for our services for at least
the next year. If our revenues do not grow in the future, these costs may never
be recuperated and we may not become profitable.

We face a number of risks related to our acquisitions of NextVenue,
webcasts.com, Server-Side Technologies and the assets of TalkPoint
Communications, and we may face similar risks in the future if we acquire other
businesses or technologies.

            We acquired webcasts.com in April 2000, Server-Side Technologies in
June 2000, NextVenue in October 2000, and the assets of TalkPoint Communications
in April 2001. If we are unable to continue to effectively integrate these
companies' products, personnel, and systems, our business and operating results
are likely to suffer.

            As part of our business strategy, we frequently review acquisition
and strategic investment prospects that would complement our current services,
augment our market coverage, or enhance our technical capabilities, or that may
otherwise offer growth opportunities. If we make any future acquisitions, we
could:

      o     Issue equity securities, which would dilute current stockholders'
            percentage ownership;

      o     Incur substantial debt, the holders of which would have claims to
            our assets in preference to the holders of our common stock; or

      o     Assume contingent liabilities, which could materialize and involve
            significant cost.

            These actions could materially and adversely affect our operating
results and/or the price of our common stock. Acquisitions and investments may
require us to incur significant amortization and depreciation charges, and
acquisition related costs that adversely affect our financial results.
Acquisitions and investment activities also entail numerous risks, including:

      o     Difficulties in the assimilation of acquired operations,
            technologies, or services;

      o     Unanticipated costs associated with the acquisition or investment
            transaction;

      o     Adverse effects on existing business relationships with suppliers
            and customers;

      o     Risks associated with entering markets in which we have no or
            limited prior experience; and

      o     Potential loss of key employees of acquired organizations.

            We continue to look for acquisitions and investments.

            As a result of our recent acquisitions of companies and
technologies, we have recorded goodwill and acquired intangibles, the
amortization of which will increase our operating expenses.

            As a result of the webcasts.com, Server-Side Technologies, and
NextVenue acquisitions, and the purchase of technology from SES, we recorded
goodwill during 2000 of approximately $399.5 million which is being amortized
over its estimated useful life of three to five years. During the fourth quarter
of 2000, we recorded a $310 million impairment charge based on an impairment
assessment of the identifiable intangibles and enterprise level goodwill
recorded. Goodwill amortization recorded during 2000 and the first quarter of
2001 was $42.3 million. The remaining $47.2 million of goodwill is expected to
be amortized as follows: $12 million during the remainder of 2001, $15 million
in 2002, $10 million in 2003, $6 million in 2004, and $4 million in 2005.

            To the extent we do not generate sufficient cash flow to recover the
amount of the remaining goodwill and identifiable intangibles recorded, or if
our recorded value exceeds our market capitalization, the remaining amount could
be considered impaired and could be subject to earlier write-off. In such event,
our net loss in any given period could be greater than anticipated, and the
market price of our stock could decline.


                                       21
<PAGE>

Our business will suffer if we fail to manage the expansion of our operations
properly.

            From our inception through the fourth quarter of 2000, we grew
rapidly by hiring new employees and by expanding our services. As of March 31,
1999, we had 40 employees. As of December 31, 2000, we had 567 employees. As of
March 31, 2001, we had 554 employees. The acquisitions of webcasts.com and
Server-Side Technologies added 94 employees, the acquisition of NextVenue added
120 employees, and the acquisition of the assets of TalkPoint Communications in
April 2001 added 9 employees. However, due to restructuring activities that
occurred during the first quarter of 2001, we have now materially reduced our
workforce. As of April 30, 2001, the date for complete implementation of first
quarter restructuring plan, we had 479 employees. Our ability to offer our
services and implement our business plan in a rapidly evolving market with a
reduced workforce will require an effective planning and management process. If
we fail to do the following, our business may suffer:

      o     Provide competitive levels of service and deliver to the market new
            and improved products and services using a reduced workforce;

      o     Improve our financial and managerial controls, reporting systems,
            and procedures;

      o     Hire, train, manage, and retain additional qualified personnel,
            including additional senior management level personnel to fulfill
            our current of future needs; and

      o     Effectively manage and multiply relationships with our customers,
            suppliers, and other third parties.

The unpredictability of our quarterly results may adversely affect the trading
price of our common stock.

            Our revenue and operating results will vary significantly from
quarter to quarter due to a number of factors, many of which are outside of our
control and any of which may cause our stock price to fluctuate. The primary
factors that may affect our quarterly results include the following:

      o     Fluctuations in the demand for our Internet broadcasting services;

      o     The timing and size of sales of our services;

      o     The timing of revenue recognition and deferred revenue;

      o     New product and service introductions and enhancements by our
            competitors and ourselves;

      o     Changes in our pricing policies or the pricing policies of our
            competitors;

      o     Increases in the prices of, and availability of, the products,
            services, or components we purchase, including bandwidth;

      o     Our ability to attain and maintain quality levels for our services;

      o     Expenses related to testing our services;

      o     Costs related to acquisitions of technology or businesses; and

      o     General economic conditions as well as those specific to the
            Internet and related industries.

            The build-out of our Broadcast Network is substantially complete,
though we will incur significant expense in the future in order to strategically
expand the Broadcast Network and to periodically update the equipment and
software that comprises the Broadcast Network. We will also incur significant
expense in order to accelerate engineering and development, expand our sales and
marketing operations, broaden our customer support capabilities and continue to


                                       22
<PAGE>

develop new distribution channels. We also plan to expand our general and
administrative functions to address the increased reporting and other
administrative demands resulting from our IPO and the increasing size of our
business. Our operating expenses are largely based on anticipated revenue
trends, and a high percentage of our expenses are, and will continue to be,
fixed in the short term. As a result, a delay in generating or recognizing
revenue for the reasons set forth above, or for any other reason, could cause
significant variations in our operating results from quarter to quarter and
could result in substantially operating losses.

            Due to the above factors, we believe that quarter-to-quarter
comparisons of our operating results are not a good indication of our future
performance. It is likely that in some future quarters our operating results may
be below the expectations of investors and security analysts, if any follow our
stock. In this event, the price of our common stock will probably fall.

We rely on a limited number of customers, and any decrease in revenue from, or
loss of, these customers, without a corresponding increase in revenues from
other customers, would harm our operating results.

            Our customer base is limited and highly concentrated. In the three
months ended March 31, 2001, Bristol Myers Squibb and MTVi represented 6% and
8%, respectively, of our revenue. We expect that the majority of our revenue
will continue to depend on sales of our products to a small but growing number
of customers. If current customers do not continue to place significant orders,
we may not be able to replace these orders. In addition, any downturn in the
business of existing customers could result in significantly decreased sales to
these customers, which could seriously harm our revenues and results of
operations. Sales to any single customer may vary significantly from quarter to
quarter.

We expect to amortize stock-based compensation expense of $4.2 million in the
remainder of 2001, $2.9 million in 2002, $1.0 million in 2003 and $0.1 million
in 2004, before giving effect to the April reduction in force, which will
decrease our net earnings during these periods.

            In connection with the grant of stock options to employees and
consultants for the period from March 20, 1998 to March 31, 2001, we recorded
unearned stock-based compensation of $29.2 million, of which $12.7 million and
$1.2 million was amortized during the year ended December 31, 2000 and the three
months ended March 31, 2001, respectively. If our stock price increases, the
amount of stock-based compensation related to stock option grants to consultants
would increase as the fair value of these grants is re-measured at each
reporting date using a Black-Scholes option pricing model. These expenses will
increase our losses during each of these periods and delay our ability to
achieve profitability.

We depend on our executive officers to manage our business effectively in a
rapidly changing market and, if we are unable to retain our executive officers,
our ability to compete could be harmed.

            Our future success depends upon the continued services of our
executive officers who have critical industry experience and relationships that
we rely on in implementing our business plan. We do not have "key person" life
insurance covering any of our executive officers. The loss of services of any of
our executive officers could delay the development and introduction of and
negatively impact our ability to sell our services.

We face risks associated with international operations that could harm our
business.

            To be successful, we believe we must expand our international
operations. Therefore, we expect to commit significant resources to expand our
international sales and marketing activities. We are currently targeting the
United Kingdom, Germany, Hong Kong, and Japan for expansion. The expenses we
will incur in expanding our international operations will depend on the
arrangements into which we will enter to provide our services in such markets.
These factors have yet to be determined.

            In May 2000, we entered into an agreement with Pacific Century
CyberWorks ("PCCW") to establish a joint venture, named iBEAM Asia, to introduce
our services in Asia. In July 2000, we entered into an agreement with SES/Astra
to establish a joint venture, named iBEAM Europe, to introduce our services in
Europe. In order to bring our services to these regions, the joint ventures will
need to deploy a network of servers, which will involve large capital
expenditures and


                                       23
<PAGE>

operating expenses. We initially expect to incur approximately 90% of the
operating losses of iBEAM Asia and 66 2/3% of the operating losses of iBEAM
Europe. We expect our ownership interests, and therefore our share of the
operating losses or profits of the joint ventures, to decline in the future as
the joint ventures raise additional funding through sales of equity interests to
third parties, which would dilute our interests. iBEAM Asia began delivering
content to end users in 2000. However, iBEAM Asia has suspended business and
currently has no employees, cash, or equipment in operation. We are
renegotiating our relationship with PCCW. We expect iBEAM Europe to begin
delivering content in the second quarter of 2001. In connection with the
formation of the joint ventures, we contributed $1.1 million to iBEAM Asia and
$10 million to iBEAM Europe. We expect that the joint ventures will be funded
thereafter from independent third party sources. We may decide to provide
additional financing to the joint ventures in the future if the joint ventures
are unable to raise additional funding from third parties on favorable terms.

            We may be unable to maintain or increase market demand for our
services internationally, which may harm our business. As we expand
internationally, we will be increasingly subject to a number of risks associated
with international business activities that could increase our costs, lengthen
our sales cycle, and require significant management attention. These risks
include:

      o     Potential difficulty in enforcing intellectual property rights in
            foreign countries;

      o     Compliance with and unexpected changes in regulatory requirements
            resulting in unanticipated costs and delays;

      o     Lack of availability of trained personnel in international
            locations;

      o     Tariffs, export controls and other trade barriers;

      o     Longer accounts receivable payment cycles than in the United States;

      o     Potential difficulty in obtaining access to additional satellite and
            telecommunication transmission capacity;

      o     Potential difficulty of enforcing agreements and collecting
            receivables in some foreign legal systems;

      o     Potentially adverse tax consequences, including restrictions on the
            repatriation and earnings;

      o     General economic conditions in international markets; and

      o     Currency exchange rate fluctuations.

Any inability to adequately protect our intellectual property could harm our
competitive position.

            We rely on a combination of patent, copyright, trademark and trade
secret laws, and restrictions on disclosure to protect our intellectual property
rights. Our future growth, if any, will depend on our ability to continue to
seek patents and otherwise protect the intellectual property rights in our
Broadcast Network. However, these legal protections afford only limited
protection. Competitors may gain access to our Broadcast Network, including our
software and server technology, which may result in the loss of our customers.
Other companies, including our competitors, may obtain patents or other
proprietary rights that would prevent, limit, or interfere with our ability to
make, use, or sell our services. This would cause our revenues to decline and
seriously harm our results of operations.

            We may in the future initiate claims or litigation against third
parties for infringement of our proprietary rights or to determine the scope and
validity of our proprietary rights or the proprietary rights of competitors.
These claims could result in costly litigation and the diversion of our
technical and management personnel. As a result, our operating results could
suffer, and our financial condition could be harmed.


                                       24
<PAGE>

We could incur substantial costs defending our intellectual property from
infringement or a claim of infringement.

            Any litigation or claims, whether or not valid, could result in
substantial costs and diversion of resources. Companies in the Internet industry
are increasingly bringing suits alleging infringement of their proprietary
rights, particularly patent rights. Our patent applications to date cover our
platform, content management, distribution capabilities, and subscriber
management. If a company brings a claim against us, we may be found to infringe
their proprietary rights. In the event of a successful claim of infringement
against us and our failure or inability to license the infringed technology, our
business and operating results would be significantly harmed.

            Intellectual property litigation or claims could force us to do one
or more of the following:

      o     Cease selling, incorporating, or using products or services that
            incorporate the challenged intellectual property;

      o     Obtain a license from the holder of the infringed intellectual
            property right, which license may not be available on reasonable
            terms if at all; and

      o     Redesign products or services that incorporate the disputed
            technology.

            If we are forced to take any of the foregoing actions, we could face
substantial costs, and our business may be seriously harmed. Although we carry
general liability insurance, our insurance may not cover potential claims of
this type or be adequate to indemnify us for all liability that may be imposed.

Internet-related laws could cause us to change the manner in which we operate
our Broadcast Network, which could be disruptive, time consuming, and expensive.

            Our Broadcast Network is designed to deliver streaming media to
large audiences of simultaneous end users. Currently our Broadcast Network and
the media we broadcast are largely unregulated, even though traditional
television and radio are highly regulated by the Federal Communications
Commission. If laws and regulations that apply to communications over the
Internet are enacted that require us to change the manner in which we operate
our Broadcast Network, our business could be disrupted with time-consuming and
expensive modifications of our technology. In addition, our business could be
harmed to the extent that our customers are adversely affected. Laws and
regulations that apply to communications over the Internet are becoming more
prevalent. Several bills are currently being considered by the U.S. Congress.
Recently the U.S. Congress enacted Internet laws regarding children's privacy,
copyrights, taxation, and the transmission of sexually explicit material. The
European Union recently enacted its own privacy regulations, and is currently
considering copyright legislation that may extend the right of reproduction held
by copyright holders to include the right to make temporary copies for any
reason. The adoption or modification of laws or regulations relating to the
Internet, or interpretations of existing law, could harm our business directly
or indirectly due to effects on our customers.

Our volatile stock price could result in litigation against us and substantial
losses for our investors.

            The market for technology stocks has been extremely volatile. Our
stock price has significantly declined since our IPO in May 2000, which we
believe, in part, to be the result of general overall market weakness, our
current cash position, the length of time we have been engaged in capital
raising efforts, and more specifically the revaluation of companies with which
we compete and on whose relative value our offering price was based. The
following factors could cause the market price of our common stock in the public
market to fluctuate significantly:

      o     Our failure to raise additional capital;

      o     Announcements by us or our competitors of significant contracts, new
            products, services, or enhancements, acquisitions, distribution
            partnerships, joint ventures, or capital commitments;

      o     Variations in our quarter-to-quarter operating results including our
            failure to meet estimates of financial analysts, if any analysts
            elect to follow our stock;


                                       25
<PAGE>

      o     Changes in financial estimates by securities analysts, if any
            analysts elect to follow our stock;

      o     Changes in market valuations of networking, Internet, and
            telecommunications companies;

      o     The addition or departure of our personnel; and

      o     Fluctuations in stock market prices and volumes.

            In the past, class action litigation has often been brought against
companies following periods of volatility in the market price of those
companies' common stock. We may become involved in this type of litigation in
the future. Litigation is often expensive and diverts management's attention and
resources, which could materially and adversely affect our business and results
of operations.

Insiders beneficially own approximately 29% of our outstanding common stock as
of May 1, 2001, which could limit our investors' ability to influence the
outcome of key transactions, including changes of control.

            Our executive officers and directors, together with Accel Partners
and Crosspoint Venture Partners, each of which is an entity affiliated with one
of our directors, own in the aggregate approximately 29% of our outstanding
common stock as of May 1, 2001. These stockholders, if acting together, would be
able to influence significantly all matters requiring approval by our
stockholders, including the election of directors and the approval of mergers or
other business combination transactions.

Provisions of our charter documents and agreements with some of our large
stockholders may have anti-takeover effects that could prevent a change in
control even if the change in control would be beneficial to our stockholders.

            Our board of directors is divided into three classes, with each
class serving staggered three-year terms. This may discourage a third party from
making a tender offer or otherwise attempting to obtain control of us because it
generally makes it more difficult for stockholders to replace a majority of the
directors. We have in place procedures which prevent stockholders from acting
without holding a meeting and which limit the ease with which a stockholder
meeting can be called. We are subject to the "interested stockholder" provisions
of Delaware law which impose restrictions on mergers and other business
combinations between us and any holder of 15% or more of our outstanding common
stock. These provisions of our amended and restated certificate of
incorporation, by-laws, and Delaware law could make it more difficult for a
third party to acquire us, even if doing so would be beneficial to our
stockholders.

            In addition, Microsoft, which owns approximately 6.3% of our common
stock as of May 1, 2000, has agreed to vote its securities as directed by our
board of directors in any merger in which more than 50% of our voting power is
transferred or in a sale of substantially all of our assets. This obligation
lapses if and when Microsoft owns less than 5% of our voting power. Microsoft,
Sony, Pacific Century CyberWorks, America Online, Excite@Home and Covad have
each also agreed not to acquire more than 15% of our voting stock at any time
before the end of April 2005 without our permission. Our agreement with these
stockholders could make it more difficult for a third party or one of these
entities to acquire us, even if doing so would be beneficial to our
stockholders.

The sale of a substantial number of shares of common stock could cause the
market price of our stock to decline.

      Sales of a substantial number of shares of our common stock in the public
market or to one or more private investors, or the appearance that such shares
are available for sale, could adversely affect the market price for our common
stock. We have 127,414,352 shares outstanding as of May 1, 2001. Of these
shares, 125,030,356 are either freely tradable in the public market without
restriction or are tradeable in the public market subject only to volume, manner
of sale, and notice requirements of Rule 144 under the Securities Act. The
remaining 2,383,996 shares are also limited by resale restrictions.

      As of the date hereof, we also have approximately 15,836,931shares subject
to outstanding options under our stock option plans, and approximately 7,573,035
shares are available for future issuance under these plans. We have


                                       26
<PAGE>

registered the shares of common stock subject to outstanding options and
reserved for issuance under our stock option plans and the 1,155,465 shares of
common stock reserved for issuance under the iBEAM Employee Stock Purchase Plan.

            In addition, 1,529,989 shares of our common stock issueable upon
exercise of warrants will become eligible for sale on various dates.

            We are currently exploring various alternatives for the raising of
additional capital to fund our business model. This will likely result in the
issuance of additional shares of stock which may have a material impact on the
stock price.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We offer our services primarily in the United States and we provide limited
services in Asia. However, iBEAM Asia has suspended business and currently has
no employees, cash, or equipment in operation. We have not commenced operations
in Europe to date but plan to do so in the second quarter of 2001. As a result,
our financial results could be affected by factors including weak economic
conditions in foreign markets and foreign currency fluctuations. Our interest
income is sensitive to changes in the general level of U.S. interest rates. Due
to the short-term nature of our investments, we believe that there is no
material interest rate risk; therefore, no quantitative tabular disclosures are
required.

                          PART II -- OTHER INFORMATION

ITEM 1. Legal Proceedings

For a discussion of pending legal proceedings, please see our Annual Report on
Form 10-K for the year ended December 31, 2000.

ITEM 2. Changes in Securities and Use of Proceeds

We completed our IPO on May 23, 2000, pursuant to a Registration Statement on
Form S-1 (File No. 333-95833), which was declared effective by the Securities
and Exchange Commission on May 17, 2000. In the IPO, we sold an aggregate of
12,650,000 shares of common stock (including 1,650,000 shares sold in connection
with the exercise of the underwriters' over-allotment option) for $10.00 per
share. The sale of the shares of common stock generated aggregate gross proceeds
of approximately $126,500,000. The aggregate net proceeds were approximately
$115,532,000, after deducting underwriting discounts and commissions of
approximately $8,855,000 and directly paying expenses of the offering of
approximately $2,113,000. Morgan Stanley Dean Witter, Bear, Stearns & Co. Inc.,
Robertson Stephens Inc., and J.P. Morgan Securities Inc. were the lead
underwriters for the IPO.

In addition to funding operating losses since the completion of the IPO, to date
we have used the net proceeds of the IPO and preferred stock rounds for general
corporate purposes, including working capital and capital expenditures, and
funding of our joint ventures. We expect to use a portion of the remaining
proceeds to fund current and future operating losses. Net cash used in operating
activities for the year ended December 31, 2000 was $96.1 million. We also have
spent approximately $43 million during the year ended December 31, 2000, and an
additional $10.7 millions during the three months ended March 31, 2001 for
capital expenditures, excluding property and equipment acquired through capital
leases, primarily for the purpose of expanding our network operations. A portion
of the net proceeds may also be used to acquire or invest in complementary
businesses, technologies, or product offerings, although to date our
acquisitions have been funded through issuance of additional common stock. Our
management will retain broad discretion in the allocation of the remaining
proceeds from our IPO and preferred stock rounds.

ITEM 3. - 6. Not Applicable


                                       27
<PAGE>

                                   SIGNATURES

      PURSUANT TO THE REQUIREMENTS 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.

                                iBEAM BROADCASTING CORPORATION


                                By: /s/ Geoff Ribar
                                   ---------------------------
                                   Geoff Ribar
                                   Vice President and Chief Financial Officer

                                 Date: May 15, 2001


                                       28