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 JUNE 30, 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 |_|

      As of July 24, 2001, there were 128,114,715 shares of the Registrant's
common stock outstanding and 2,400,939 shares of the Registrant's preferred
stock outstanding, which are convertible into 240,093,900 shares of common
stock.


                                       1
<PAGE>

                         iBEAM BROADCASTING CORPORATION

                                     INDEX

                         PART I - FINANCIAL INFORMATION

                                                                         Page No
                                                                         -------
Item 1.     Financial Statements:

            Condensed Consolidated Balance Sheets as of June 30, 2001
            and December 31, 2000 - (Unaudited)                             3

            Condensed Consolidated Statements of Operations for the
            Three and Six Months Ended June 30, 2001 and 2000 -
            (Unaudited)                                                     4

            Condensed Consolidated Statements of Cash Flows for the
            Six Months Ended June 30, 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                                       11

Item 3.     Quantitative and Qualitative Disclosures about Market Risk      29

                          PART II - OTHER INFORMATION

Item 1.     Legal Proceedings                                               29

Item 2.     Changes in Securities and Use of Proceeds                       30

Item 3.-5.  Not Applicable                                                  30

Item 6.     Exhibits and Reports on Form 8-K                                31

            Signature                                                       32


                                       2
<PAGE>

                        PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

                                                      June 30,    December 31,
                                                        2001          2000
                                                      ---------   ------------
ASSETS

Current assets:
     Cash and cash equivalents......................  $   2,300     $  62,342
     Short-term investments.........................          -         9,255
     Accounts receivable, net.......................      5,343         7,284
     Prepaid expenses and other current assets......      3,949         8,717
                                                      ---------     ---------
        Total current assets........................     11,592        87,598

Property and equipment, net.........................     62,040        63,777
Goodwill and intangible assets, net.................     32,829        51,210
Other assets........................................     12,353         5,182
                                                      ---------     ---------
                                                      $ 118,814     $ 207,767
                                                      =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable...............................  $  18,985     $   9,008
     Accrued liabilities............................      8,883         9,180
     Restructuring reserve..........................      1,477           328
     Deferred revenue...............................        412           489
     Current portion of capital lease obligations...      7,013         8,727
                                                      ---------     ---------
        Total current liabilities...................     36,770        27,732
Capital lease obligations, net of current portion...      5,140        11,164
                                                      ---------     ---------
        Total liabilities                                41,910        38,896
                                                      ---------     ---------
Contingencies (See Note 8)
Minority interest...................................      3,765         4,982
                                                      ---------     ---------

Stockholders' equity:
     Common stock, $0.0001 par value per share......         13            13
     Additional paid-in capital.....................    688,572       692,261
     Stockholders' notes receivable.................       (418)       (1,918)
     Unearned stock-based compensation..............     (5,555)      (10,807)
     Accumulated other comprehensive income.........        113           605
     Accumulated deficit............................   (609,586)     (516,265)
                                                      ---------     ---------
        Total stockholders' equity..................     73,139       163,889
                                                      ---------     ---------
                                                      $ 118,814     $ 207,767
                                                      =========     =========

     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                 Six months ended
                                                                          June 30,                          June 30,
                                                              ------------------------------    -------------------------------
                                                                   2001             2000             2001              2000
                                                              --------------    ------------    --------------     ------------
<S>                                                                 <C>             <C>               <C>              <C>
Revenue.....................................................        $  6,857        $  3,380          $ 16,054         $  3,912
                                                              --------------    ------------    --------------     ------------

Operating costs and expenses:
     Cost of revenue........................................          17,442          10,748            37,016           17,878
     Engineering and development............................           3,177           4,755             7,808            8,659
     Selling, general and administrative....................          15,243          12,829            36,334           19,905
     Amortization of goodwill and intangibles...............           3,975           5,287             7,950            5,287
     Amortization of stock-based compensation*..............           1,080           3,646             2,280            7,740
        Restructuring.......................................          15,659              --            17,654               --
                                                              --------------    ------------    --------------     ------------
          Total operating costs and expenses................          56,576          37,265           109,042           59,469
                                                              --------------    ------------    --------------     ------------
Loss from operations........................................         (49,719)        (33,885)          (92,988)         (55,557)
Interest and other income (expense), net....................              17             983             (132)            1,457
Interest expense............................................            (845)           (178)           (1,418)            (335)
Minority interest...........................................             972              --             1,217               --
                                                              --------------    ------------    --------------     ------------
Net loss....................................................         (49,575)        (33,080)          (93,321)         (54,435)
Deemed dividend related to preferred stock..................              --              --                --          (10,796)
                                                              --------------    ------------    --------------     ------------
Net loss attributable to common stock.......................        $(49,575)       $(33,080)         $(93,321)        $(65,231)
                                                              ==============    ============    ==============     ============

Net loss per share attributable to common stock -
    basic and diluted.......................................        $  (0.40)       $  (0.61)         $  (0.77)        $  (2.01)
                                                              ==============    ============    ==============     ============
Weighted average common shares outstanding..................         122,532          54,625           121,679           32,414
                                                              ==============    ============    ==============     ============

* Allocation of amortization of stock-based compensation:
     Cost of revenue........................................        $    134        $  1,049         $    345          $  2,038
     Engineering and development............................              96             769              105             1,449
     Selling, general and administrative....................             850           1,828            1,830             4,253
                                                              --------------    ------------    -------------      ------------
                                                                    $  1,080        $  3,646         $  2,280          $  7,740
                                                              ==============    ============    =============      ============
</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>
                                                                                                    Six Months Ended
                                                                                                        June 30,
                                                                                                  2001           2000
                                                                                                ---------      ---------
<S>                                                                                             <C>            <C>
Cash flows from operating activities:
     Net loss............................................................................       $ (93,321)     $ (54,435)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization...................................................          14,453          5,660
         Amortization of goodwill and intangibles........................................           7,950          5,287
         Amortization of stock-based compensation........................................           2,280          7,740
         Restructuring charges...........................................................          16,488             --
         Minority interest...............................................................          (1,217)            --
         Issuance of common stock for services...........................................              --             50
         Changes in assets and liabilities:
            Accounts receivable..........................................................           1,941         (1,288)
            Prepaid expenses and other assets............................................           1,744         (6,329)
            Accounts payable and accrued liabilities.....................................           9,679          4,584
            Restructuring reserve........................................................            (232)            --
            Deferred revenue.............................................................             (77)          (286)
                                                                                                ---------      ---------
               Net cash used in operating activities.....................................         (40,312)       (39,017)
Cash flows from investing activities:
     Purchase of property and equipment..................................................         (13,998)       (33,366)
     Restricted cash.....................................................................          (6,820)            --
     Purchase of investments.............................................................              --        (22,868)
     Sale of investments.................................................................           9,255          3,997
     Cash received from acquisitions.....................................................              --          7,708
     Notes receivable due from webcasts.com..............................................              --        (10,000)
              Net cash used in investing activities......................................         (11,563)       (54,529)
                                                                                                ---------      ---------
Cash flows from financing activities:
     Issuance of convertible preferred stock.............................................              --         49,922
     Issuance of common stock............................................................             823        117,717
     Common stock repurchased............................................................             (40)            --
     Payment of capital lease obligations................................................          (8,458)        (1,302)
                                                                                                ---------      ---------
              Net cash (used in) provided by financing activities........................          (7,675)       166,337
                                                                                                ---------      ---------
Net increase/(decrease) in cash and cash equivalents.....................................         (59,550)        72,791
Effect of exchange rates on cash.........................................................            (492)            --
Cash and cash equivalents at beginning of period.........................................          62,342         24,863
                                                                                                ---------      ---------
Cash and cash equivalents at end of period...............................................       $   2,300      $  97,654
                                                                                                =========      =========
Supplemental non-cash investing and financing activities:
     Property and equipment purchased under capital lease obligations....................       $     720      $   6,457

     Issuance of warrants................................................................              --      $   3,000

     Deemed dividend related to preferred stock..........................................              --      $  10,796
     Purchase of webcasts.com and SST....................................................              --      $  88,375
</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 and six months ended June 30, 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 $609.6 million as of June 30, 2001. The
Company completed its initial public offering in May 2000 which raised $115.5
million, net of expenses. The Company has also completed several rounds of
private equity financing, including a recent transaction which closed on July
10, 2001, whereby four investors purchased an aggregate of 2,400,939 shares of
Series A convertible preferred stock of the Company for $30 million in cash and
$10 in future in-kind services. 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 six months ended June 30, 2001, the Company incurred a loss
from operations of approximately $93.0 million, and negative cash flows from
operations of approximately $40.3 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. The Company's
operating plan requires it to raise additional capital to fund its future
operations. Certain of the Company's 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 and six months ended June 30, 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


                                       6
<PAGE>

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.

2. COMPREHENSIVE LOSS

Comprehensive loss, as defined by generally accepted accounting principles,
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):

<TABLE>
<CAPTION>
                                       Three Months Ended June 30,   Six Months Ended June 30,
                                             2001       2000            2001          2000
                                       -------------------------------------------------------
<S>                                       <C>         <C>            <C>           <C>
Net loss attributable to common stock     $(49,575)   $(33,080)      $(93,321)     $(65,231)
Currency translation adjustment               (614)         --           (492)           --
                                       -------------------------------------------------------
Comprehensive loss attributable to
common stock                              $(50,189)   $(33,080)      $(93,813)     $(65,231)
                                       =======================================================
</TABLE>

3. REVENUE RECOGNITION

The Company recognizes revenue based on its broadcasting services, consisting
primarily of 24x7 Live Streaming Service(TM) (formerly On-Air(TM), Live Event
Streaming Service(TM) (formerly On-Stage(TM), Media On-demand ServiceTM
(formerly On-Demand(TM) and Activecast(TM).

24x7 Live Streaming is a service that provides the customer with the ability to
transfer live content 24 hours a day, 7 days a week. 24x7 Live Streaming
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.

Live Event Streaming 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.

Media On-demand is a service that allows the customer to store content on the
Company's network ("Broadcast 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
Broadcast 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 Advertising Agent ServiceTM, the Company has the ability to enable
insertion of advertisements into the content delivered in connection with Media
On-demand services. Advertisements can also be inserted prior to the start and
after the completion of any stream in connection with the 24x7 Live Streaming or
Live Event Streaming services. Revenue from advertising is recognized over the
period the advertisements are delivered.


                                       7
<PAGE>

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 24x7 Live Streaming, Live Event Streaming and Media
On-demand services with certain Internet service providers ("ISPs"). We have
also agreed to make non-refundable prepayments to ISPs in the amount of $5.5
million, of which $4.5 million has been paid as of June 30, 2001. 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 24x7 Live Streaming, Live Event Streaming and Media 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.

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
of the 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 and six months ended June 30, 2001, the
Company recognized $260,000 and $1.2 million, respectively, of revenue from
non-monetary transactions. There were no non-monetary transactions in the three
and six months ended June 30, 2000.

                          Three Months Ended June 30,  Six Months Ended June 30,
                                 2001          2000         2001           2000
                          ------------------------------------------------------
24 x 7 Live Streaming            $ 210          $238      $   626         $  382
Live event Streaming               180           225          726            357

Media On-Demand                  1,822         1,072        3,987          1,285

Other                               71            --          142             --
                          ------------------------------------------------------
Enterprise                       4,574         1,845       10,573          1,888

Entertainment and Media          2,283         1,535        5,482          2,024
                          ------------------------------------------------------
Total Revenues                  $6,857        $3,380      $16,054         $3,912
                          ======================================================

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 and six months ended June 30, 2001, software
development costs of approximately $1.2 million and $3.0 million, respectively,
were capitalized and included in property and equipment.


                                       8
<PAGE>

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       Six Months Ended
                                                                          June 30,                June 30,
                                                                   ---------------------    ---------------------
                                                                      2001        2000         2001        2000
                                                                   ---------    --------    ---------    --------

<S>                                                                <C>          <C>         <C>          <C>
Net loss attributable to common stock.........................     $ (49,575)   $(33,080)   $ (93,321)   $(65,231)
                                                                   =========    ========    =========    ========

Basic and diluted:
     Weighted average common shares outstanding...............       127,036      62,121      127,191      40,887
     Weighted average unvested common shares subject to
     repurchase...............................................        (4,504)     (7,496)      (5,512)     (8,473)
                                                                   ---------    --------    ---------    --------
     Weighted average common shares used to compute basic
     and diluted net loss per share attributable to common
     stock....................................................       122,532      54,625      121,679      32,414
                                                                   =========    ========    =========    ========
Net loss per share attributable to common stock-basic and
diluted.......................................................     $   (0.40)   $  (0.61)   $   (0.77)   $  (2.01)
                                                                   =========    ========    =========    ========
</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):

                                                        June 30,      June 30,
                                                         2001           2000
                                                     ------------  -------------

  Unvested common shares subject to repurchase.....         3,282          7,190
  Options and warrants to purchase common stock....        21,453         16,787
                                                     ------------  -------------
                                                           24,735         23,977
                                                     ============  =============

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.

In the second quarter of 2001, the Company recorded a $15.7 million charge for
restructuring. Components of the charge provided for the write-down of certain
fixed assets and purchased technology to realizable value - $13.5 million; for
the write-off of certain prepaid expenses upon termination of co-location
agreements of $0.8 million; and for 119 terminated employees - $1.4 million. The
restructuring was undertaken to improve operations by eliminating or
consolidating costs. At June 30, 2001, the restructuring accrual amounted to
$1.5 million relating to office closures and severance, the majority


                                       9
<PAGE>

of which will be spent in 2001. The Company expects that the actions
contemplated by the charge will be essentially completed during 2001.

7. STOCK-BASED COMPENSATION

During the quarter ended June 30, 2001, the Company issued options for 2.6
million shares at an exercise price of $0.105 per share, and options for 688,000
shares at an exercise price of $0.17 per share. Since the exercise price for
these options was below fair market value on the dates of grant, the Company
recorded deferred stock-based compensation of $1.1 million, which will be
amortized over the vesting period of the options.

8. CONTINGENCIES

In addition to the following, the Company is a party to other non-material legal
proceedings as well as other legal proceedings which have been previously
disclosed in which no material developments took place during the second quarter
of 2001.

On June 19, 2001, Activate.net Corporation ("Activate.net") filed a lawsuit in
the United States District Court, Western District of Washington at Seattle,
against us alleging false designation of origin and unfair competition entitled
Activate.net Corporation v. iBEAM Broadcasting Corporation, No. C01-914R.
Activate.net claims that our mark Activecast is confusingly similar to its
family of trademarks, and that our continued use of the mark Activecast is
causing serious and irreparable harm to Activate.net. Thus, Activate.net seeks
an injunction against our use of the mark Activecast as well as unspecified
damages. We intend to defend this action vigorously, however, litigation is
inherently uncertain, and we may not prevail against Activate.net. Should
Activate.net prevail with this lawsuit, we could be required to cease use of the
mark Activecast and/or pay unspecified damages. On July 25, 2001, we filed our
answer to the complaint, asserting various affirmative defenses.

On June 27, 2001, Societe Europeenne Des Satellites, SA ("SES") and SES Capital
Belgium SA made an application for and were granted an injunction against
several defendants, including iBEAM Europe Limited ("iBEAM Europe") and the
Company in the Chancery Division of the High Court of Justice in London,
England. The injunction prohibited any defendant from making any payment from
iBEAM Europe's bank accounts until July 4, 2001, based on an affidavit which
purported that the payment of approximately US$4,400,000 made on May 16, 2001,
to the Company was in breach of certain agreements between SES and the Company.
On June 29, 2001, SES issued Claim No. HC 01002800 in the same Court which
alleged that a certain bank mandate was invalid and requested that an accounting
be made of all payments authorized pursuant to such bank mandate. The Company
has cooperated with the audit procedures conducted by SES regarding payments
made by iBEAM Europe to the Company and to SES. As a result of the above
injunction, the Company has reclassified the $6.8 million held in iBEAM
Europe's bank accounts to restricted cash within long term other assets.

There can be no assurance that any complaints discussed above will be resolved
without costly litigation, or in a manner that is not materially adverse to the
Company's financial position, results of operations, or cash flows. No estimate
can be made of the possible loss or possible range of loss associated with the
resolution of these contingencies.

9. CONVERTIBLE PREFERRED STOCK

Pursuant to a Stock Purchase Agreement by and among Williams Communications,
LLC, Allen & Company Incorporated, Touch America Inc., and Lunn iBEAM, LLC
(collectively, the "Investors") and the Company dated June 24, 2001 (the "Stock
Purchase Agreement"), the Investors purchased an aggregate of 2,400,939 shares
of the Company's Series A convertible preferred stock which is initially
convertible into 240,093,900 shares of the Company's common stock for $30
million in cash and $10 million in in-kind services (the "Transaction").

Each share of preferred stock is voted as if it had been converted into common
stock. At this time, each share of preferred stock has 100 votes on each matter
calling for a vote of stockholders.


                                       10
<PAGE>

Subsequent to the Transaction, there were 7,599,061 remaining authorized shares
of preferred stock, par value $0.0001 per share. The rights and preferences of
the Series A convertible preferred stock are set forth in the Certificate of the
Designations, Powers, Preferences and Rights of Series A Convertible Preferred
Stock of iBEAM Broadcasting Corporation which is filed as Exhibit 4.1 to this
Form 10-Q.

The Series A convertible preferred stock is entitled to 10% cumulative
preferential dividends as well as any dividends declared on the common stock as
if the Series A convertible preferred stock had been converted into shares of
common stock. The Series A convertible preferred stock is convertible into
shares of common stock at a conversion price of $0.1666, subject to
anti-dilution provisions. Further, the Series A convertible preferred stock is
mandatorily redeemable on July 9, 2011, and may be redeemed at the Company's
option at any time after July 9, 2006.

On July 10, 2001, the closing date of the Transaction, the closing price for the
Company's common stock was $0.21 per share. The Series A convertible preferred
stock is initially convertible into 240,093,900 shares of the Company's common
stock at a conversion price of $0.1666 per share. The difference between the
closing price of the common stock on July 10, 2001, and the conversion price
resulted in a beneficial conversion feature of approximately $10.4 million,
which will be recognized as a "deemed" preferred dividend over the period to
redemption, using the effective interest rate method.

10. WARRANTS FOR COMMON STOCK

Outstanding warrants for the Company's common stock are summarized as follows:

<TABLE>
<CAPTION>
                                                                                    Exercise Price
                                                   Number of Shares         Per Share          Expiration Date
                                                   ----------------         ---------          ---------------

<S>                                                         <C>              <C>               <C>
                                                              901,053        $ 1.44                 May 18, 2004
                                                              537,634          9.30            February 25, 2004
                                                              500,000         10.00                 May 18, 2003
                                                            1,000,000         15.00                June 30, 2002
                                                               26,190         15.75                 June 2, 2003
                                                            ---------
Balance as of December 31, 2000 and June 30, 2001           2,964,877
                                                            =========
</TABLE>

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

OVERVIEW

Our Internet 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, Inc., 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; (3) in October 2000, NextVenue, a provider of streaming media
services to the financial services and corporate enterprise markets; and (4) in
April 2001, the assets of TalkPoint Communications (Delaware), Inc., including
web-based self-publishing presentation tools.

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 June 30, 2001, we had an accumulated deficit of
$609.6 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.


                                       11
<PAGE>

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 340 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 (24x7 Live Streaming and Media 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 24x7
Streaming Service and Media On-demand customers contain a minimum monthly
payment obligation and, for Media On-demand customers, there is a monthly fee
for content stored on our Broadcast Network, which is measured in gigabytes.

Live Event Streaming 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.

Activecast services include 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.

Advertising Agent Services 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"). Additionally,
certain of the content we deliver involves production services, the costs of
which are 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. The revenue share we pay to certain
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. We are currently
in the process of redesigning significant portions of our Broadcast Network to
reduce our expenses associated with the Broadcast Network. Consequently, we have
decommissioned some of the collocation portions of the Broadcast Network and
have commenced a migration of significant portions of our Broadcast Network to
facilities operated by Williams Communications and affiliates. Such redesigning
activities include a decreased emphasis on the satellite components of our
Broadcast Network. We expect such redesigning efforts to continue into the
fourth quarter of 2001. 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.


                                       12
<PAGE>

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 and TalkPoint in April 2001. 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. During the second quarter 2001, the technology purchased from
SES/Astra was abandoned and, accordingly, the remaining net book value of $10.4
million was written off.

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 $26.0 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 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 and Six Months Ended June 30, 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 $3.5 million from $3.4 million in the second
quarter of 2000 to $6.9 million in the second quarter of 2001. For the six
months ended June 30, 2001, revenue increased by $12.2 million from $3.9 million
in 2000 to $16.1 million in 2001. Fees for Enterprise and E&M customers
accounted for approximately 65% and 35%, respectively, of total revenue for the
second quarter and in the six months ended June 30, 2001. Revenues increased
year over year as a result of year over year increases in the number of
customers distributing content over our Broadcast Network and customers using
our services for events. As more companies distribute content over our network,
we expect our revenue will increase in future periods. Revenues for the second
quarter 2001 decreased by $2.3 million from $9.2 million in the first quarter of
2001. The quarter over quarter decline is primarily due to distractions and
concerns over the Company's ongoing viability. The decline in the number of
customers served, down 121 from 460 reported at the end of the first quarter
2001 to 339 at the end of the second quarter of 2001, was largely attributable
to Company actions to discontinue services to smaller customers that represented
unacceptable credit risks.

Cost of revenue. Cost of revenue increased by $6.7 million from $10.7 million in
the second quarter of 2000 to $17.4 million in the second quarter of 2001. For
the six months ended June 30, 2001, cost of revenue increased by $19.1 million
from $17.9 million in 2000 to $37.0 million in 2001. These increases were
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. Cost of revenue decreased by $2.2
million from $19.6 million in the first quarter of 2001 to $17.4 million in the
second quarter of 2001. The decrease was due to


                                       13
<PAGE>

employee terminations and lower revenues during the second quarter of 2001.
Headcount included in cost of revenue increased from 92 at June 30, 2000 to 244
at June 30, 2001.

Engineering and development. Engineering and development expenses decreased by
$1.6 million in the second quarter of 2001 from $4.8 million in the second
quarter 2000 to $3.2 million in the second quarter of 2001. For the six months
ended June 30, 2001, engineering and development expenses decreased by $0.9
million from $8.7 million in 2000 to $7.8 million in 2001. Increases in
salaries, bonuses, and related taxes 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 as software development during the first and second quarters of
2001. Engineering and development expenses decreased by $1.4 million in the
second quarter of 2001 from $4.6 million in the first quarter 2001 to $3.2
million in the second quarter of 2001. The decrease was primarily due to
employee terminations during the second quarter of 2001. Headcount included in
engineering and development decreased from 137 at June 30, 2000 to 45 at June
30, 2001.

Selling, general and administrative. Selling, general and administrative
expenses increased by $2.4 million from $12.8 million in the second quarter of
2000 to $15.2 million in the second quarter of 2001. For the six months ended
June 30, 2001, selling, general and administrative expenses increased by $16.4
million from $19.9 million in 2000 to $36.3 million in 2001. These increases
were primarily due to increases in salaries, commissions, bonuses and related
taxes, travel and entertainment expenses, and advertising and promotional
expenses in 2001. The increases resulted as we promoted our Broadcast Network
and began to provide infrastructure to support our growing operations. Bad debt
expense recognized during the first and second quarters of 2001 also contributed
to the increase. Selling, general and administrative expenses decreased by $5.9
million from $21.1 million in the first quarter of 2001 to $15.2 million in the
second quarter of 2001. The decrease was primarily due to employee terminations
and reductions in discretionary spending during the second quarter. Headcount
included in selling, general and administrative decreased from 188 at June 30,
2000 to 139 at June 30, 2001.

Amortization of goodwill and intangibles. Amortization of goodwill and
intangibles decreased by $1.3 million from $5.3 million in the second quarter of
2000 to $4.0 million in the second quarter of 2001, resulting primarily from the
$310.0 million impairment of goodwill recorded in the fourth quarter of 2000.
For the six months ended June 30, 2001, amortization of goodwill and intangibles
increased by $2.7 million from $5.3 million in 2000 to $7.9 million in 2001 due
to six months of amortization in 2001 related to the April 2000 acquisition of
webcasts.com and the October 2000 acquisition of NextVenue Inc. We expect to
amortize $5.3 million of goodwill and intangibles in the remainder of 2001.
Goodwill amortization will be discontinued at the end of 2001 in accordance with
SFAS No. 142 and subjected to impairment testing for expected recoverability,
which could result in additional charges.

Amortization of stock-based compensation. Amortization of employee stock-based
compensation decreased by $2.5 million from $3.6 million recorded in the second
quarter 2000 to $1.1 million in the second quarter of 2001. For the six months
ended June 30, 2001, amortization of employee stock-based compensation decreased
by $5.4 million from $7.7 million recorded in 2000 to $2.3 million in 2001. The
decreases were primarily due to credits related to employee terminations during
the second quarter of 2001. We expect to amortize $2.3 million in the remainder
of 2001, $2.5 million in 2002, and $0.8 million in 2003.

Restructuring. In the second quarter of 2001, we recorded a charge of $15.7
million for restructuring related to our operations. Components of the charge
for the quarter provided for the write-down of certain fixed and intangible
assets to realizable value - $13.5 million; the write-off of certain prepaid
expenses upon termination of co-location agreements of $0.8 million; and for 119
terminated employees, - $1.4 million. 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 charges were undertaken to improve operations by eliminating or
consolidating costs. At June 30, 2001, the restructuring accrual amounted to
$1.5 million relating to office closures and severance, the majority of which
will be spent in 2001. We expect that the actions contemplated by the charge
will be essentially completed during 2001.


                                       14
<PAGE>

Interest and other income (expense), net. Other income and expense, net,
decreased by $966,000 from $983,000 in the second quarter of 2000 to $17,000 in
the second quarter of 2001. For the six months ended June 30, 2001, other income
and expense, net, decreased by $1.6 million from $1.5 million net other income
in 2000 to $132,000 net other expense in 2001. The decreases were primarily due
to a decrease in average cash balances available for investment in 2001 compared
to 2000 and an increase in losses from disposal of assets in 2001.

Interest Expense. Interest expense increased by $667,000 from $178,000 in the
second quarter of 2000 to $845,000 million in the second quarter of 2001. For
the six months ended June 30, 2001, interest expense increased by $1.1 million
from $335,000 in 2000 to $1.4 million in 2001. The increases were primarily as a
result of additional capitalized leases entered into or assumed through
acquisitions completed subsequent to the second quarter of 2000.

Minority Interest. Minority interest was a benefit of $972,000 and $1.2 million
in the second quarter of 2001 and for the six months ended June 30, 2001,
respectively, 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 $16.5 million from $33.1 million in the second
quarter of 2000 to $49.6 million in the second quarter of 2001. For the six
months ended June 30, 2001, net loss increased by $38.9 million from $54.4
million in 2000 to $93.3 million in 2001. The increases in net loss are
primarily attributable to goodwill and intangibles amortization, a restructuring
charge, and a significant increase in operating expenses required to support
growth in our revenues and expansion of our Broadcast Network and streaming
media applications, all as described above.

LIQUIDITY AND CAPITAL RESOURCES

From inception to June 30, 2001, we have raised $233 million from the sale of
common and preferred stock, of which $115.5 million resulted from the initial
public offering ("IPO") of our common stock in May 2000 and $22 million from
equipment lease lines that are repayable over periods of up to three years. As
of June 30, 2001, we had cash, cash equivalents and investments of $9.1 million,
$6.8 million of which is related to iBEAM Europe, our joint venture with
SES/Astra and is not available for use by us because it is currently frozen
under a court order preventing disbursement pending final resolution of billing
discrepancies alleged by SES/Astra against us. We expect to make less than $15
million in capital investments in 2001, of which $14 million was incurred during
the six months ended June 30, 2001. In addition, we will require significant
capital to fund other operating expenses.

Net cash used in operating activities was $39.0 million for the six months ended
June 30, 2000, primarily due to our net loss of $54.4 million and an increase in
prepaid expenses and other assets of $6.3 million, offset in part by the
amortization of stock-based compensation of $7.7 million, amortization of
goodwill and intangibles of $5.3 million, depreciation and amortization of $5.7
million, and an increase in accounts payable and accrued liabilities of $4.6
million. Net cash used in operating activities was $40.3 million for the six
months ended June 30, 2001, primarily due to our net loss of $93.3 million,
offset in part by the amortization of stock-based compensation of $2.3 million,
a decrease in prepaid expenses and other assets of $1.7 million, the
amortization of goodwill and intangibles of $8.0 million, depreciation and
amortization of $14.5 million, the non-cash restructuring charge of $16.5
million and an increase in accounts payable and accrued liabilities of $9.7
million.

Net cash used in investing activities was $54.5 million for the six months ended
June 30, 2000, relating to the purchase of property and equipment. Net cash used
in investing activities was $11.6 million for the six months ended June 30,
2001, relating primarily to the purchase of property and equipment of $14.0
million and the transfer of iBEAM Europe cash balance of $6.8 million to
restricted cash, partially offset by the sale of investments of $9.3 million.

Net cash flow provided by financing activities was $166.3 million for the six
months ended June 30, 2000 compared to net cash used of $7.7 million for the six
months ended June 30, 2001. Net cash provided by financing activities in 2000
was


                                       15
<PAGE>

the result of net proceeds from the sales of our preferred and common stock of
$167.6 million, partially offset by payments on capital lease obligations. Net
cash used in financing activities in 2001 was due to payments on capital lease
obligations, partially offset by sales of our common stock.

On July 10, 2001, we completed a private placement of preferred stock, which
resulted in net proceeds of $30 million in cash and $10 million in future
in-kind services. Based on our revised operating plan, we expect our existing
cash resources will fund operations into the fourth quarter this year. We are
currently considering various funding sources in order to raise an additional
capital to fully fund our long-term business plan. We may not be able to obtain
future equity or debt financing on favorable terms, if at all. Our inability to
obtain additional capital on satisfactory terms could force us to cease
operations no later than the fourth 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 June 2001, the Financial Accounting Standards Board ("FASB") issued two new
pronouncements -- SFAS No. 141, Business Combinations, and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS No. 141 requires the use of the
purchase method of accounting and eliminates the pooling-of-interest method for
business combinations initiated after June 30, 2001. SFAS No. 142 provides for,
among other things, the discontinuance of goodwill amortization, the
reassessment of the useful lives for existing recognized intangibles, and the
potential reclassification of amounts between recognized intangibles and
goodwill. The standard is effective for fiscal years beginning after December
15, 2001, and applies to all goodwill and other intangible assets recognized in
an entity's statement of financial position at that date, regardless of when
those assets were initially recognized. The Company is currently evaluating the
provisions of SFAS No. 141 and SFAS No. 142 and has not adopted such provisions
in its June 30, 2001 financial statements.

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 at 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

We will need additional capital to fully fund our business model, which may not
be available at acceptable terms, if at all. Our current cash will be exhausted
in the fourth quarter of 2001. If we are unable to raise additional capital,
reduce spending or generate sufficient revenues, we may be forced to cease
operations by the end of 2001.

      We have suffered recurring losses from operations and have an accumulated
deficit of approximately $609.6 million as of June 30, 2001. At our current
level of operations and rate of negative cash flow, management anticipates that
our cash and cash equivalents will be adequate to satisfy the Company's
operating loss and capital expenditure requirements into the fourth quarter of
2001. On July 10, 2001, we completed a private placement of convertible
preferred stock, which resulted in net proceeds to the Company of $30 million in
cash and $10 million in future in-kind services.


                                       16
<PAGE>

However, if we are unable to raise additional cash or extend our currently
available cash 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 fourth quarter of 2001.

      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. Despite having raised 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. For the six months ended
June 30, 2001, we incurred $14.0 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 further
diluted.

Our principal stockholder, Williams Communications, LLC, owns 49% of our voting
stock, and has the right to appoint four members of the Company's nine-member
board of directors, which results in its having substantial influence on the
outcome of matters submitted to stockholders and/or board of directors for
approval.

      Williams Communications, LLC owns 49% of our outstanding shares of voting
stock. Consequently, it will be able practically to control the election of our
directors and the approval of significant corporate transactions that must be
submitted to a vote of stockholders.

      Williams Communications, LLC also has the right to appoint four of the
nine members of our Board of Directors and has significant influence in
directing the actions taken by the directors. The interest of Williams
Communications may conflict with the interests of other stockholders. This
concentration of ownership and influence over the management and affairs of our
Company may also have the effect of delaying or preventing a change in control
of our Company that other stockholders may consider desirable.

      Our executive officers and directors, together with Williams
Communications and Allen & Company Incorporated, which are entities affiliated
with four of our nine directors, own in the aggregate approximately 57.9% of our
outstanding stock as of July 11, 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.

The success and performance of our Broadcast Network is dependent on the success
and performance of Williams Communications' networks.

      We have entered into certain commercial agreements with Williams
Communications by which Williams will be our preferred provider of certain
network, data storage, and other telecommunications and Internet-related
services. Because we will have one primary network provider, in the event of a
global problem with the Williams network, for example, a denial of service
attack on the Williams infrastructure or a global routing problem within the
Williams network, it may adversely impact our ability to deliver content through
their network to our customers. Our inability to deliver content could harm our
reputation and cause us to lose customers, which could have a negative impact on
our revenue. Should Williams cease or curtail their operations, it would force
us to find alternative providers which may charge significantly more for the
same or similar services, which could have a negative impact on our revenue.


                                       17
<PAGE>

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

      Our future 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. For example, our revenue in the second quarter of 2001
decreased to $6.9 million from $9.2 million in the first quarter of 2001. We
have seen some of our customers go out of business in 2000 and in the first and
second quarters of 2001. However, none of them represented more than 12% of our
annual revenue for 2000. In the six months ended June 30, 2001, two customers
represented 7% and 10% of our revenues, respectively. 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, if any, 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 $93.0 million for the year ended
December 31, 2000 and the six months ended June 30, 2001, respectively, and our
accumulated deficit was $609.6 million as of June 30, 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 $93.0 million for the year ended December 31, 2000 and the six months ended
June 30, 2001, respectively, and our accumulated deficit was $609.6 million as
of June 30, 2001. We will need to increase our revenue significantly to achieve
profitability. For the six months ended June 30, 2001, we incurred capital
expenditures of $14.0 million. We may continue to incur increasing operating
losses in the future.

      Our revenue in the second quarter of 2001 decreased 25% from the first
quarter of this year, and we cannot be certain that our future 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 sales and marketing, product development, administrative, and
other expenses. As a result, we will need to generate significantly higher
revenues to achieve and maintain profitability. If we are unable to reverse
recent revenue declines, 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 engaged in early stage and developing markets, we have 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;


                                       18
<PAGE>

      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, while others have already gone out of
business. 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 important 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 our Broadcast Network. To the extent that some of
our ISP partners have ceased or curtailed their operations, it has affected our
ability to maintain or increase the number of end users that can be reached via
our Broadcast Network, which has negatively impacted our costs and operating
results. 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 $4.5 million has been paid as of June 30, 2001.

      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.

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. Pursuant to the migration of portions of our Broadcast Network to the
facilities of Williams Communications we will continue to have redundancy in our
Broadcast Network. However, even though we will have more than one data center
in the Broadcast Network, to the extent that such data centers are served by
Williams Communications it is possible that such data centers could be adversely
affected by service failures within the Williams Communications network.

      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:


                                       19
<PAGE>

      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 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

      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 physically protect our equipment.

      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. As a result, 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 it may 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


                                       20
<PAGE>

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. 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.

      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 Internet webcasting companies that deliver
streaming media, such as Akamai, Yahoo!Broadcast.com, and Real Networks.
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, the acquisition of Digital Island by Cable and Wireless in 2001, 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 changes, 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.


                                       21
<PAGE>

      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 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.

      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. 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.


                                       22
<PAGE>

      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 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 evaluate acquisition and investment opportunities.

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/Astra, we recorded
goodwill and acquired intangibles during 2000 of approximately $399.5 million


                                       23
<PAGE>

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. During the second quarter of 2001 we recorded a $10.4
million charge, which was included as part of the $15.7 million restructuring
charge, to write off the remaining value of the purchased technology from
SES/Astra which will no longer be utilized. Goodwill and intangibles
amortization recorded during 2000 and the first two quarters of 2001 was $46.2
million. We expect to amortize $5.3 million in the remainder of 2001. Goodwill
amortization will be discontinued at the end of 2001 in accordance with SFAS No.
142 and subjected to impairment testing for expected recoverability, which could
result in additional charges.

      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.

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. 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 and second quarters 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 and as of June 30, 2001, we had 428 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 has and may continue to adversely
affect the trading price of our common stock.

      Our revenue and operating results have varied and 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;


                                       24
<PAGE>

      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 redesign and
strategically modify 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, broaden
our customer support capabilities and continue to develop new distribution
channels. 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 six months
ended June 30, 2001, Bristol Myers Squibb and MTVi represented 7% and 10%,
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 $2.3 million in the
remainder of 2001, $2.5 million in 2002, and $0.8 million in 2003, 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 June 30, 2001, we recorded unearned
stock-based compensation of $26.0 million, of which $12.7 million and $2.3
million was amortized during the year ended December 31, 2000 and the six months
ended June 30, 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.


                                       25
<PAGE>

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

      To be successful, we believe we must expand our international operations.
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, Ltd., 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 Limited, to introduce our services
in Europe. 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 currently in the process of a cooperative
dissolution of iBEAM Asia with our joint venture partner, PCCW, and expect the
dissolution to be completed during the third quarter of 2001. The board of
directors of iBEAM Europe has resolved to pursue a liquidation of iBEAM Europe.
However, our joint venture partner, SES, has commenced litigation in London
pursuant to which the bank account of iBEAM Europe in the amount of $6.8 million
has been frozen. Such action was taken by SES based on allegations of
inappropriate billing of iBEAM Europe by iBEAM. iBEAM has cooperated with SES
and its auditors, Deloitte & Touche, to resolve such allegations. However, the
matter currently remains unresolved and it is possible that further litigation
or other disputes will arise among iBEAM, iBEAM Europe and SES. In connection
with the formation of the joint ventures, we contributed $1.1 million to iBEAM
Asia and $10 million to iBEAM Europe.

      We may be unable to maintain or increase market demand for our services
internationally, which may harm our business. 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
            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


                                       26
<PAGE>

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.

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 and trademark rights. For example, a lawsuit has
been brought against us by Activate.net Corporation alleging false designation
of origin and unfair competition, including claims that our mark Activecast is
confusingly similar to Activate's family of trademarks. Thus, Activate.net seeks
an injunction against our use of the mark Activecast as well as unspecified
damages. We intend to defend this action vigorously, however, litigation is
inherently uncertain, and should Activate.net prevail with this lawsuit, we
could be required to cease use of the mark Activecast and/or pay unspecified
damages.

      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.


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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;

      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.

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.

The sale of a substantial number of shares of our 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 128,114,715 shares of common stock outstanding as of July 24,
2001. Of these shares, 125,078,633 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 3,036,082 shares are also limited by resale restrictions.

      As of the date hereof, we also have approximately 16,043,783 shares
subject to outstanding options under our stock option plans, and approximately
10,259,996 shares are available for future issuance under these plans. We have
registered the shares of common stock subject to outstanding options and
reserved for issuance under our stock option plans and the 3,699,738 shares of
common stock reserved for issuance under the iBEAM Employee Stock Purchase Plan.


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<PAGE>

      In addition, 2,964,877 shares of our common stock issueable upon exercise
of warrants will become eligible for sale on various dates.

      Pursuant to a Stock Purchase Agreement dated June 24, 2001 certain
investors purchased an aggregate of 2,400,939 shares of the Company's Series A
convertible preferred stock which is initially convertible into 240,093,900
shares of the Company's common stock at a conversion price substantially below
the then-current market value of the Company's common stock.

      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 and are in the process of unwinding iBEAM Europe, our joint
venture with SES/Astra. We will continue to be engaged in Europe through our
subsidiary, NextVenue Europe, as opposed to our joint venture, iBEAM Europe. 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

      On June 19, 2001, Activate.net Corporation ("Activate.net") filed a
lawsuit in the United States District Court, Western District of Washington at
Seattle, against us alleging false designation of origin and unfair competition
entitled Activate.net Corporation v. iBEAM Broadcasting Corporation, No.
C01-914R. Activate.net claims that our mark Activecast is confusingly similar to
its family of trademarks, and that our continued use of the mark Activecast is
causing serious and irreparable harm to Activate.net. Thus, Activate.net seeks
an injunction against our use of the mark Activecast as well as unspecified
damages. We intend to defend this action vigorously, however, litigation is
inherently uncertain, and we may not prevail against Activate.net. Should
Activate.net prevail with this lawsuit, we could be required to cease use of the
mark Activecast and/or pay unspecified damages. On July 25, 2001, we filed our
answer to the complaint, asserting various affirmative defenses.

      On June 27, 2001, Societe Europeenne Des Satellites, SA ("SES") and SES
Capital Belgium SA made an application for and was granted an injunction against
several defendants including, iBEAM Europe Limited ("iBEAM Europe") and the
Company in the Chancery Division of the High Court of Justice in London,
England. The injunction prohibited any defendant from making any payment from
iBEAM Europe's bank accounts until July 4, 2001 based on an affidavit which
purported that the payment of approximately US$4,400,000 made on May 16, 2001 to
the Company was in breach of certain agreements between SES and the Company. On
June 29, 2001, SES issued Claim No. HC 01002800 in the same Court which alleged
that a certain bank mandate was invalid and requested that an account be made of
all payments authorized pursuant to such bank mandate. The Company has
cooperated with the audit procedures conducted by SES regarding payments made by
iBEAM Europe to the Company and to SES.


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<PAGE>

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 the proceeds of our recently
completed preferred stock round 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 $14 million during the six months
ended June 30, 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 recently completed preferred stock round.

ITEM 3. - 5. Not Applicable


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ITEM 6. Exhibits and Reports on Form 8-K.

      (a) Exhibits:

            4.1   Certificate of the Designations, Powers, Preferences and
                  Rights of Series A Convertible Preferred Stock of iBEAM
                  Broadcasting Corporation.
            4.2   Registration Rights Agreement by and among the Company,
                  Williams Communications, LLC, Allen & Company Incorporated,
                  Touch America, Inc. and Lunn iBEAM, LLC dated as of July 10,
                  2001.
            4.3   Stockholders Agreement by and among the Company, Williams
                  Communications, LLC and certain other stockholders dated July
                  10, 2001.
            10.1  Master Alliance Agreement between the Company and Williams
                  Communications, LLC dated July 10, 2001.
            10.2  Overflow Service Agreement between the Company and Williams
                  Communications, LLC dated July 10, 2001.
            10.3  mediaXtranet Services Agreement between the Company and Vyvx
                  Broadband Media, a business unit of Williams Communications,
                  LLC dated July 10, 2001.
            10.4  Data Services Agreement between the Company and Williams Vyvx
                  Services, a business unit of Williams Communications, Inc.
                  dated March 19, 2001, as amended on July 10, 2001.
            10.5  Teleport Services Agreement between the Company and Williams
                  Communications, LLC dated December 13, 1999.

      (b) Reports on Form 8-K:

      On June 26, 2001, the Company filed a Form 8-K announcing that it had
entered into a Stock Purchase Agreement by and among the Company, Williams
Communications, LLC, Allen & Company Incorporated, Touch America Inc., and Lunn
iBEAM, LLC dated June 24, 2001.

      On July 11, 2001, the Company filed a Form 8-K announcing that it had
closed the transactions contemplated by the Stock Purchase Agreement.


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<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/ Randall K. Gausman
                             -----------------------------

                              Randall K. Gausman
                              Chief Financial Officer


                          Date: August 13, 2001


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