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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
                            ------------------------
(MARK ONE)

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

                     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                         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: 000-28893

                                      L90, INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S>                                            <C>
                  DELAWARE                                      95-4761069
        (STATE OR OTHER JURISDICTION               (I.R.S. EMPLOYER IDENTIFICATION NO.)
      OF INCORPORATION OR ORGANIZATION)
</TABLE>

                              4499 GLENCOE AVENUE
                        MARINA DEL REY, CALIFORNIA 90292
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (310) 271-0200
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                    COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (TITLE OF CLASS)

     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.  [X]  Yes  [ ]  No

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

     The aggregate market value of the registrant's voting Common Stock held by
non-affiliates of the registrant was approximately $34,777,095 (computed using
the closing price of $3.00 per share of Common Stock on March 9, 2001, as
reported by NASDAQ, based on the assumption that directors and officers and more
than 10% shareholders are affiliates). There were 23,998,409 shares of the
registrant's Common Stock, par value $.001 per share, outstanding on March 9,
2001.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's Proxy Statement for the 2001 Annual Meeting of
Stockholders, which is to be filed subsequent to the date hereof, are
incorporated by reference into Part III.

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                                   L90, INC.

                               TABLE OF CONTENTS

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                                   PART I
Item 1.   Business....................................................    1
Item 2.   Properties..................................................   15
Item 3.   Legal Proceedings...........................................   16
Item 4.   Submission of Matters to a Vote of Security Holders.........   16

                                  PART II
Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.........................................   17
Item 6.   Selected Financial Data.....................................   19
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................   20
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   26
Item 8.   Financial Statements and Supplemental Data..................   27
Item 9.   Changes in and Disagreements With Accountants on Accounting
          and Financial Disclosure....................................   45

                                  PART III
Item 10.  Directors and Executive Officers of the Registrant..........   45
Item 11.  Executive Compensation......................................   45
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   45
Item 13.  Certain Relationships and Related Transactions..............   45

                                  PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
          8-K.........................................................   45

Signatures............................................................   48
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     This report contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about L90 and our industry.
These forward-looking statements involve risks and uncertainties. L90's actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, as more fully described in this
section and elsewhere in this report. L90 undertakes no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.

                                     PART I

ITEM 1. BUSINESS

OVERVIEW

     We are a leading provider of marketing services and we use our proprietary
adMonitor technology and media expertise to provide companies with turnkey
solutions to close the marketing circle by helping them build brand, acquire new
customers, increase traffic, drive sales and grow customer relationships. L90's
technology and sales representation agreements with over 450 Web publishing
partners allow us to reach over 40% of Internet users through e-mail, web based
messages and wireless communication.

     Since our inception over four years ago, L90 has been a leading provider of
innovative technology and marketing solutions that are designed to go beyond
simple banners to produce better customer conversion rates, resulting in higher
prices for our Web publishers' inventory and more value for marketers. L90 has
embedded our proprietary ProfiTools technology into the inventory of our Web
publishers to deliver turnkey solutions to marketers that include video, audio,
viral marketing, interstitials, co-registration, rich media, microsites and
other marketing methods. Our ProfiTools and adMonitor technology combined with
our four main marketing platforms create a compelling marketing solution: the
ability to deliver the right message at the right time to the right person.

     An Internet based world is emerging in which the accessibility and accuracy
of information is creating more intelligent customers and a significantly more
competitive business environment. In this new digital world, marketers and
customers increasingly are interacting over an "always connected" network that
extends across the Internet through Web sites and email, and soon to be, across
television and the wireless frontier (via cell phones, pagers, personal digital
assistants (PDA's) and other wireless devices). It is our belief that the
reliance upon traditional distribution channels will lessen as companies begin
to interact on a one-to-one basis with their customers, creating significant
demand for technologies and services that drive value, attract customers, build
lasting relationships with these customers and ultimately, convert these
relationships into revenue.

     Our marketing partnerships begin with brand building and initial customer
acquisitions and continue to evolve as we utilize our adMonitor's tracking and
optimization technologies to adjust campaigns in real time and to work with our
clients to determine the best possible inventory and methods to increase
traffic, stimulate transactions and develop one-to-one relationships. L90's
highly flexible technology, Internet reach, inventory segmentation and marketing
expertise provide Web publishers and marketers with effective, differentiated
and simple solutions to work together to grow their businesses and embrace the
new economy.

VALUE TO ADVERTISERS

  Build Brands, Acquire New Customers, Increase Traffic, Stimulate Transactions
and Grow Relationships.

     L90 is a full service marketing, technology and media company. From
strategic development and design, to superior technology, execution, tracking
and analysis, we are the complete source for value-generating marketing programs
on the Internet. L90's next-generation marketing solutions were developed to
help businesses build brands, acquire customers, drive traffic, increase sales
and garner customer retention. L90 offers marketers ProfiTools,
technology-driven marketing programs that L90 clients use to build targeted,
high-value relationships with Internet users. ProfiTools convert Internet
visitors into loyal

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customers by optimizing the value of each relationship on a customer by customer
level. adMonitor, L90's proprietary marketing technology, powers the ProfiTools
programs, including the serving and tracking of every next-generation campaign.

VALUE TO WEB PUBLISHERS

  A Fully Outsourced Marketing Sales Solution That Allows Web Publishers to
Focus on Their Core Competency.

     As a marketing, technology and media company, we offer Web publishers the
ability to add value to their customer relationships, thereby increasing the
value of their inventory to marketers. And through our superior sales
representation, we are able to generate greater revenue on the Internet for
these Web publishers. Through the use of our ProfiTools, L90 delivers Internet
users relevant offers and promotions through targeted campaigns, enhancing
users' experiences and providing them with incentives to come back to a Web
site. Outsourcing a Web publisher's sales efforts to L90 will streamline its
internal marketing costs while broadening its site's reach and impact to its
customers. Our fully outsourced marketing sales solutions are designed to
generate greater revenue for Web publishers by increasing the value of their
inventory to marketers and by selling this inventory through an experienced
sales force. As a result, Web publishers are more free to focus on the core
competency of their businesses.

THE L90 DIFFERENCE

     While a number of companies are competing in the marketing technology
space, L90 stands out due to our Internet reach and media, flexible technology
and marketing expertise.

     Reach and Media. We have entered into technology and sales representation
agreements with over 450 Web publishing partners. Through these relationships,
we are able to reach approximately 40% of the Web users in the United States.
This network enables marketers to target and connect with a number of diverse
audiences. In addition, we offer Web publishers superior site representation,
encompassing the sale of their advertising inventory and the provision of ad
delivery and related services.

     Flexible Technology. L90's adMonitor technology was developed to serve and
track ProfiTools, the sophisticated, relationship-building marketing programs
that are designed to convert Internet users into loyal, long-term customers for
businesses. This comprehensive technology is intuitive and flexible. adMonitor
tracks campaigns and provides real-time, customized reports, allowing marketers
to increase the effectiveness of their marketing efforts and Web publishers to
realize the value of their customer base. In essence, adMonitor provides
marketers and Web publishers a full suite of serving, tracking, management and
measurement tools.

     Marketing. Bringing extensive experience and a rich knowledge base, L90
professionals offer clients counsel and expertise in developing an integrated,
Internet strategy designed to meet branding, customer acquisition, and
revenue-generating goals. Our marketing services include the in-house
capabilities of our Creative Services Group to assist marketers in designing
contextually relevant marketing campaigns that attract and retain the Internet
user. Over the years, we have provided services to over 1,300 marketers.

     We believe that L90 stands alone in offering full service sales and
marketing solutions designed to allow marketers and Web publishers to interact
in an environment that maximizes e-mail, Web-based and wireless inventory, while
driving one-to-one, business-to-consumer communication that stimulates
transactions, optimizes campaigns in real time and fosters the development of
loyal relationships with customers.

PRODUCTS AND SERVICES

  ProfiTools

     ProfiTools is a technology-driven marketing platform designed to allow L90
clients to build targeted, high-value relationships with Internet users. Our
ProfiTools convert Internet visitors into loyal customers by optimizing the
value of each relationship on a customer by customer level. We have developed
many of

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these ProfiTools specifically with a direct marketing focus. adMonitor, our
proprietary marketing technology, powers the ProfiTools programs, including the
serving and tracking of every next-generation campaign. Our current portfolio of
ProfiTools includes:

     - Banners. The original brand awareness, traffic and lead generation tool
       that is most effective through targeted delivery.

     - E-newsletters. Product awareness and customer acquisition through
       targeted advertorial content within an e-mail newsletter.

     - Opt-in E-mails. Delivery of an offer to targeted, permission-based e-mail
       lists as a method of lead generation and brand building.

     - Co-Reg. Lead-generation and customer acquisition obtained on a
       permission-basis as consumers are registering on a Web site.

     - Link. Incentive-based viral marketing programs that enable word-of-mouth
       referrals.

     - Sweepstakes. Incentive-based promotions to acquire new customers, drive
       traffic and acquire opt-in information on users.

     - Games. Custom designed games that help acquire new users, obtain valuable
       user information and present sponsorship opportunities for marketers to
       generate brand awareness.

     - PowerAds. Customizable pop-up ads that build brand awareness, drive
       traffic and generate leads.

     - PowerOffers. Data-driven, promotional offers delivered through pop-up
       ads.

     - MicroSites. Brand awareness and customer acquisition through
       custom-designed mini-sites targeted at specific audiences.

     - PowerText. Sponsored text links that are integrated within Web site's
       text.

     - Sponsorships. Brand awareness and association through sponsorship of an
       area on a Web site.

     - Content Integration. Strategic placement of relevant content within a Web
       site to create brand association.

     - Broadband. Rich media advertising that combines the communication power
       of television, radio and print with the interactive and direct response
       components of the Internet.

     - Search. A functionality tool and new revenue stream for Web publishers
       that is created by adding a search feature to a site.

MARKETING PLATFORMS

     Marketers are able to employ our ProfiTools through four distinct marketing
platforms, each of which leverages different attributes of our broad network of
Web publishers to connect marketers with Web users. All four marketing
platforms, however, facilitate identical goals:

     - Build Brands

     - Acquire Customers

     - Increase Traffic

     - Drive Sales

     - Retain Customers

     Although these marketing platforms have the same goals, they reach these
goals in different ways.

     L90 Direct. The Direct platform enables permission marketing tactics for
marketers looking to target offers and incentives to the most desirable consumer
throughout L90's network.

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     L90 Premium. The Premium platform provides marketers with the opportunity
to reach targeted audiences on the high profile, well-trafficked Web sites of
L90's premium partners.

     L90 Targeted. The Targeted platform provides marketers with the opportunity
to reach specific audiences that are relevant to their product or service
through channels such as Entertainment, Sports, Business/Finance, Women, Kids &
Teens, Health&Fitness, Automotive and E-commerce.

     L90 R&E. The R&E platform provides marketers with the opportunity to reach
all users on the L90 network for the lowest and most efficient cost. Currently,
the L90 network reaches approximately 40% of the Internet audience, which is
approximately equal to the reach of major portals such as AOL, Lycos, Netscape
and Excite.

     ADMONITOR

     adMonitor, L90's proprietary marketing technology, is the force that powers
L90's ProfiTools. adMonitor was developed to serve and track the sophisticated,
relationship-building marketing programs that help businesses convert Internet
users into loyal, long-term customers.

     - Ad Serving. adMonitor delivers targeted, sophisticated marketing
       campaigns quickly, consistently and on schedule. In addition, because
       adMonitor is a centrally served technology platform administered from our
       facilities, our Web publishing clients are not required to purchase
       additional hardware, software or back-up systems to implement or utilize
       our adMonitor services. Our adMonitor system is easily modified, can
       handle significantly increased volume when needed, and is able to deliver
       targeted and specialized advertising campaigns virtually instantaneously.
       In addition, because adMonitor is capable of delivering rich media
       content, marketers have the freedom to develop complex marketing
       solutions incorporating our ProfiTools programs. adMonitor supports most
       leading Web tools and technologies, including JAVA, Java Script,
       RealAudio, Enliven and VRML, and adMonitor is compatible with most
       leading host servers.

     - Targeting. adMonitor enables our advertising clients to target their
       campaigns using a wide range of parameters, including domain, content
       area, keyword, geography and user-profile data. By utilizing adMonitor's
       advanced targeting capabilities, marketers are able to direct their
       campaigns at Web users who are most likely to respond.

     - Tracking. adMonitor provides marketers with comprehensive performance
       reports and the ability to adjust media plans, all in real-time.
       Marketers are able to track the progress of their campaigns from their
       Web browsers. These reports contain detailed information such as the Web
       sites included in an advertising campaign, the number of impressions
       served, the click-through rates and the incremental sales from the
       campaign, as well as other performance measures. In addition, they
       provide the information that marketers need to actively manage their
       campaigns to maximize effectiveness. adMonitor is fully Web-hosted and
       gives marketers the ability to optimize in real time the performance of
       their advertising campaigns.

     - Inventory Management. We provide our Web publishers and marketers with
       detailed, real-time information about current and future ad inventory.
       adMonitor automatically monitors each marketing campaign in progress,
       adjusts the delivery of ads for variations in site traffic and updates
       available ad inventory based upon current advertising campaigns. Our
       system ensures that advertising campaigns are optimally scheduled and
       delivered and that our Web publishers maximize the value of their ad
       inventory.

     adMonitor's architecture supports tracking and targeting of cutting-edge
marketing tools including Rich Media, e-mail, Enliven, Shockwave, Java, Blue
Streak, Pop-ups, Interstitials, Emblaze, CGI Banners, Zapa, Audio-Video,
Redirects, HTML and Flash. adMonitor is continuously updated based on research
obtained by L90's R&D engineering team to offer partners and clients the most
current and effective technologies that will meet their business goals.

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PRIVACY CONCERNS

     We believe that issues relating to the privacy of Internet users and the
use of personal information about these users are extremely important. In the
course of delivering ads to a Web user, we only collect non-personally
identifiable information about the Web user. We do not collect any personally
identifiable information about the Web user unless the Web user voluntarily and
knowingly provides personally identifiable information.

     In implementing any service or program designed to gather consumer data, we
are always mindful of our continuing commitment to uphold the privacy principles
of the Direct Marketing Association. In addition, we are a licensee under the
TRUSTe Privacy Program. TRUSTe is an independent, non-profit organization whose
mission is to build users' trust and confidence in the Internet by promoting the
use of fair information practices. We are also a member of the Network
Advertising Initiative. We actively monitor privacy laws and regulations and
seek to comply will all applicable privacy requirements.

SALES AND MARKETING

     Our sales and marketing staff is trained to work strategically with our Web
publishers and marketers to develop comprehensive marketing solutions. We
believe that marketers desire integrated programs that go beyond the banner to
include content integration, contextual sponsorships, promotions, sweepstakes,
e-mail sponsorships, interstitials, custom content and other highly effective
advertising tools. We have assembled a sales and marketing staff that possesses
the marketing, media, creative and advertising skills required to develop large,
sophisticated advertising campaigns. We have close relationships with, and
detailed knowledge of, our Web publishers. Consequently, we are able to work
with marketers in developing comprehensive, next generation marketing solutions.

     We sell our sales and marketing solutions through a sales and marketing
team consisting of a total of 145 employees as of December 31, 2000. Our sales
and marketing team is organized in a matrix fashion and includes account
executives, who sell all of our Web site ad inventory, and category sales
specialists, who focus on a specific field of content.

     Our experienced Web publisher and sales and marketing personnel use a
variety of marketing programs to generate demand for our products and services,
build market awareness, develop customer leads and establish business
relationships. Our marketing activities include public relations, print
advertisements, online advertisements and direct marketing, Web advertising
seminars, trade shows, special events and ongoing customer communications
programs.

SEASONALITY AND CYCLICALITY

     We believe that our business is subject to seasonal fluctuations. Marketers
generally place fewer advertisements during the first and third calendar
quarters of each year, and direct marketers generally mail substantially more
marketing materials in the third calendar quarter of each year. In addition,
expenditures by advertisers and direct marketers vary in cycles and tend to
reflect the overall economic conditions, as well as budgeting and buying
patterns. Furthermore, user traffic on the Internet tends to decrease during the
summer months which results in fewer advertisements to sell and deliver. A
decline in the general economy or in the economic prospects of advertisers and
direct marketers could adversely affect our revenue.

COMPETITION

     The market for interactive, Internet-based marketing solutions is extremely
competitive. We believe that our ability to compete depends upon many factors
both within and beyond our control, including the following:

     - the timing and market acceptance of new solutions and enhancements to
       existing solutions developed either by us or our competitors;

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     - the continued and increasing acceptance by marketers of the Internet as
       an effective and cost-efficient means of advertising;

     - the ability to adapt to the rapidly changing trends of the Internet;

     - our customer service and support efforts;

     - our sales and marketing efforts;

     - our ability to adapt and scale our technology as customer needs change
       and grow; and

     - the ease of use, performance, price and reliability of solutions
       developed either by us or our competitors.

     As we expand the scope of our Web services, we may face greater competition
from a number of Web sites and other media companies across a wide range of
different Web services, including in vertical markets where competitors may have
advantages in expertise, brand recognition and other factors. Several companies
offer competitive products or services through Web advertising networks,
including DoubleClick, 24/7 Media and Engage Technologies. Our business may also
encounter competition from providers of advertising inventory and database
management products and related services, including AdForce, DoubleClick and
Engage Technologies. In addition, we may face potential competition from a
number of large Web publishers and Web search engine companies, such as America
Online, Excite@Home, Infoseek and Yahoo! We also compete with television, radio,
cable and print for a share of the overall advertising budgets of marketers.

INTELLECTUAL PROPERTY RIGHTS

     Our success and ability to compete are substantially dependent on our
internally developed technologies, including adMonitor, and trademarks that we
protect through a combination of patent, copyright, trade secret, unfair
competition and trademark law, as well as contractual agreements. We have filed
a patent application in the United States for our adMonitor technology. We have
also applied to register trademarks internationally and in the United States.

     We cannot guarantee that any of our current or future patent applications
or trademark applications will be approved. Even if they are approved, these
patents or trademarks might be successfully challenged by others or invalidated.
Furthermore, if our patent applications or trademark applications are not
approved because third parties own these patents or trademarks, our use of these
patents or trademarks will be restricted unless we enter into arrangements with
these third parties. We cannot assure you that we can enter into arrangements
with these third parties on commercially reasonable terms.

     We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite these efforts, unauthorized parties may attempt to
disclose, obtain or use our advertising solutions or technologies. Our
precautions may not prevent misappropriation of our advertising solutions or
technologies, particularly in foreign countries where laws or law enforcement
practices may not protect our rights as fully as in the United States.

     Our technology collects and utilizes data derived from user activity on the
Internet. This information is used for targeting advertising and predicting
advertising performance. Although we believe that we generally have the right to
use this information and to compile it in our database, we cannot assure you
that any trade secret, copyright or other protection will be available for this
information. In addition, others may claim rights to this information.
Furthermore, we cannot guarantee that any of our other intellectual property
rights will be viable or valuable in the future since the validity,
enforceability and scope of protection of intellectual property rights in
Internet related industries is uncertain and still evolving. In addition, third
parties may assert infringement claims against us. Any claims could subject us
to significant liability for damages and could result in the invalidation of our
intellectual property rights. In addition, any claims could result in
litigation, which would be time-consuming and expensive to defend, and divert
our time and attention. Even if we prevail, this litigation could cause our
business, results of operations and

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financial condition to suffer. Any claims or litigation from third parties may
also result in limitations on our ability to use the intellectual property
subject to these claims or litigation unless we enter into arrangements with the
third parties responsible for these claims or litigation, which could be
unavailable on commercially reasonable terms. We believe that factors such as
the technological and creative skills of our personnel, new service offerings,
brand recognition and reliable customer service are more essential to
establishing and maintaining our position in the marketplace, rather than the
legal protection of our technology. We cannot assure you that others will not
develop technologies that are similar or superior to our technology.

EMPLOYEES

     As of December 31, 2000, we had 217 full-time employees, including 145 in
sales and marketing, 40 in engineering and product development and 32 in
accounting, human resources, business operations and administration. In
addition, we had three part-time employees. We are not subject to any collective
bargaining agreements and believe that our employee relations are excellent. Our
future success depends in part on our ability to attract, retain, integrate and
motivate highly-skilled employees. Competition for employees in the industry is
intense.

FACILITIES

     Our principal executive offices are located in Marina del Rey, California,
where we lease approximately 24,000 square feet under a lease that expires on
December 31, 2005. In addition, we lease space for our sales and marketing
efforts in Chicago; New York; Greenwich, Connecticut; San Francisco; Seattle and
London. Our adMonitor ad serving and tracking software and hardware is housed in
Santa Clara, California, El Segundo, California, and Austin, Texas. These
facilities provide us with a secure area to store and operate our computer
systems and capacity for communications links and Internet connectivity systems.
We are continually evaluating our facility requirements. We believe that our
existing leased space is more than adequate for our current operations and that
suitable replacement and additional space will be available in the future on
commercially reasonable terms.

CORPORATE HISTORY

     Our business began in January 1997 as a proprietorship of one of our
founders, John C. Bohan. We changed our form of operations in May 1997 to a
California limited liability company known as John Bohan & Associates, LLC. We
initially conducted business under the name AdNet Strategies, and in January
1998, we incorporated under the name AdNet Strategies, Inc. in California and
elected S-corporation status. In December 1998, we changed our name to Latitude
90, Inc. and became a C-corporation. We reincorporated in Delaware as L90, Inc.
in September 1999. Our principal executive offices are located at 4499 Glencoe
Avenue, Marina del Rey, California 90292. Our telephone number at that location
is (310) 751-0200. Our Web address is www.L90.com. Information contained on our
Web site does not constitute part of this prospectus.

ACQUISITIONS

     On July 24, 2000, we completed the acquisition of webMillion.com, Inc.
Pursuant to the Merger Agreement, we issued 1,901,381 shares of our common stock
to all the shareholders of webMillion. Holders of warrants of webMillion
received, in the aggregate, the right to purchase from us 98,619 shares of our
common stock at a price per share of $1.9792.

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                                  RISK FACTORS

     You should consider carefully the following risks before you decide to buy
our common stock. The risks and uncertainties described below are not the only
ones we may face. Additional risks and uncertainties may also impair our
business operations. If any of the following risks actually occurs, our
business, results of operations and financial condition would likely suffer. In
such case, the trading price of our common stock could decline, and you may lose
all or part of the money you paid to buy our common stock.

OUR REVENUES AND PROSPECTS ARE DIFFICULT TO FORECAST BECAUSE WE HAVE ONLY BEEN
OPERATING OUR BUSINESS SINCE JANUARY 1997

     We began our business in January 1997 and have a brief operating history.
Therefore, we lack sufficient historical financial and operating data on which
to adequately forecast future operating results. You should consider our
prospects in light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in an early stage of development,
particularly companies in new and rapidly evolving markets such as online
advertising.

     These risks include our ability to:

     - manage our growth effectively;

     - anticipate and adapt to the rapid changes in the Internet;

     - continue to develop and upgrade our technology;

     - respond to competitive developments in our market; and

     - continue to identify, attract, retain and motivate qualified personnel.

     If we are unsuccessful in addressing these risks, our revenues may not grow
in accordance with our business model and may fall short of expectations of
market analysts and investors, which could negatively affect the price of our
stock.

WE HAVE A HISTORY OF LOSSES AND EXPECT TO INCUR SUBSTANTIAL LOSSES IN THE FUTURE

     We incurred net losses attributable to common stockholders of approximately
$19.7 million for the year ended December 31, 2000 and $9.0 million for the year
ended December 31, 1999. Our accumulated deficit from inception, as of December
31, 2000, was approximately $28.5 million. We expect to continue to incur
substantial net losses for the foreseeable future due to a high level of planned
operating expenditures. We are making these expenditures in anticipation of
higher revenue, but we cannot assure you that we will realize higher revenue. If
we do not succeed in substantially increasing our revenue, our losses may
continue indefinitely and would likely increase. In addition, we cannot assure
you that we will return to profitability.

INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD PREVENT OR HINDER OUR ABILITY TO
DELIVER ADVERTISEMENTS OVER THE INTERNET

     We face the risk that other parties' intellectual property positions will
impair our ability to deliver advertisements over the Internet and as a result,
our operations may be severely harmed. Third parties may have, or may in the
future be granted, patents that cover our technology or other aspects of our
business. We may be limited in our ability to use our technology or conduct our
business without licenses from these third parties, which may not be available
on commercially reasonable terms, if at all. In that case, we would be required
to alter our technology in a way that would not infringe the subject patent, and
we cannot assure you that these alterations would be successful. In addition, we
may become subject to claims of alleged infringement based upon patents or other
intellectual property rights of third parties, including the DoubleClick patent
litigation described below. Such claims and any resulting litigation, should
they occur, could result in significant expenses to us and divert management
time and other resources, the

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extent of which cannot be quantified with any reasonable accuracy. Additionally,
some of our contracts with Web publishers require us to indemnify the Web
publishers for losses they incur arising from any infringement by our ad serving
technology of a third party's intellectual property rights.

     On November 12, 1999, DoubleClick filed a patent infringement lawsuit
against us in the United States District Court for the Eastern District of
Virginia. The suit alleged that we were infringing, and inducing and
contributing to the infringement by third parties of, a patent held by
DoubleClick related to methods and networks for delivering, targeting and
measuring advertising over the Internet. DoubleClick had sought treble damages
in an unspecified amount, a preliminary and permanent injunction from further
alleged infringement and attorneys' fees and costs. In November 2000,
DoubleClick and L90 settled the patent infringement litigation DoubleClick
initiated against L90, including L90's related counterclaims against
DoubleClick. Consequently, this lawsuit was dismissed with prejudice. As part of
the settlement, DoubleClick and L90 granted each other certain rights in certain
of their respective patents. No other terms of the settlement were disclosed.

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE, WHICH MAY MAKE IT DIFFICULT TO
FORECAST OUR FUTURE PERFORMANCE AND MAY RESULT IN VOLATILITY IN OUR STOCK PRICE

     Although we intend to increase our spending and investment to support our
planned growth, our revenue and some of our operating costs will be much less
predictable. This unpredictability will likely result in significant
fluctuations in our quarterly results. Therefore, you should not rely on
quarter-to-quarter comparisons of results of operations as an indication of our
future performance. Because of our limited operating history and the emerging
nature of our industry, we anticipate that securities analysts may have
difficulty in accurately forecasting our results. If our operating results are
below market expectations, the price of our common stock will likely decline.

     The following are among the factors that could cause significant
fluctuations in our operating results:

     - market acceptance of the Internet as an advertising medium;

     - delay or cancellation of advertising contracts;

     - expiration or termination of contracts with Web publishers;

     - introduction of new or enhanced services by us or our competitors;

     - system outages, delays in obtaining new equipment or problems with
       upgrades;

     - disruption or impairment of the Internet;

     - changes in our pricing policies or those of our competitors;

     - seasonality in the demand for advertising;

     - changes in government regulation of the Internet; and

     - general economic and market conditions, as well as economic and market
       conditions specific to the Internet.

GOVERNMENT REGULATION MAY AFFECT OUR ABILITY TO GATHER, GENERATE OR USE
INFORMATION FOR PROFILES AND MAY HINDER OUR ABILITY TO CONDUCT BUSINESS

     The legal and regulatory environment governing the Internet and the use of
information about Web users is uncertain and may change. A number of lawsuits
have recently been filed against certain Internet companies related to online
privacy. In addition, the Federal Trade Commission has begun investigations of,
and several attorneys general have instituted legal proceedings against, certain
Internet companies related to online privacy. Web sites typically place small
files of information, commonly known as cookies, on a Web user's hard drive,
generally without the user's knowledge or consent. Although it is possible to
modify a Web user's Internet browser software to prevent the placement of
cookies, few users currently choose to do so. Our adMonitor tracking technology
is able to use cookies to collect data about a Web

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<PAGE>   12

user's movement through the Internet. Some Internet commentators and privacy
advocates have suggested limiting or eliminating the use of cookies and
restricting the collection of data through the use of cookies. United States
legislators and various state governments in the past have introduced a number
of bills aimed at regulating the collection and use of data from Internet users
and additional similar bills are currently being considered. The European Union
has recently adopted a directive addressing data privacy that may result in
limitations on the collection and the use of specific personal information
regarding Internet users. In addition, Germany and other European Union member
countries have imposed their own laws protecting data that can become personally
identifiable through subsequent processing. Other countries have enacted, or are
considering, limitations on the use of personal data as well. The effectiveness
of our technology could be impaired by any limitation in the use of cookies or
the collection of data from Internet users, and consequently, our business and
results of operations could be harmed.

     A number of laws and regulations have been, and in the future may be,
adopted covering issues such as pricing, acceptable content, taxation and
quality of products and services on the Internet. This legislation could inhibit
the growth in the use of the Internet and decrease the acceptance of the
Internet as a communications and commercial medium. In addition, due to the
global accessibility of the Internet, it is possible that multiple federal,
state or foreign jurisdictions might inconsistently regulate our activities and
our customers. Any of these developments could limit our ability to do business
and to generate revenue.

OUR COMMON STOCK AND OUR STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME
FLUCTUATIONS

     The stock market has experienced extreme price and volume fluctuations. The
market prices of the securities of Internet-related companies have been
especially volatile. The market price of our common stock has fluctuated in the
past and is likely to be highly volatile. The market price of our common stock
could be subject to wide fluctuations in response to factors such as:

     - actual or anticipated variations in our revenue;

     - earnings and cash flow;

     - announcements of new service offerings;

     - technological innovations;

     - competitive developments with respect to patents, copyrights or
       proprietary rights;

     - changes in financial estimates by securities analysts;

     - conditions and trends in the Internet and electronic commerce industries;

     - adoption of new accounting standards affecting our industry; and

     - general market conditions.

     If we do not effectively manage our growth and expansion, our ability to
provide services could suffer.

     Our success depends in part on our ability to manage our growth and
expansion. This anticipated future expansion may place a significant strain on
our managerial, operational and financial resources. In addition, we will need
to continue to improve our financial and managerial controls, enhance our
reporting systems and procedures and expand, train and manage our work force.

IF WE ARE UNABLE TO ATTRACT AND RETAIN SALES AND CLIENT SERVICE PERSONNEL, OR IF
WE ARE UNABLE TO ADEQUATELY TRAIN OUR SALES PERSONNEL IN A TIMELY MANNER, OUR
BUSINESS AND FUTURE REVENUE GROWTH COULD SUFFER

     Our future success depends on our ability to identify, recruit, train,
integrate and retain qualified sales and marketing, managerial and technical
personnel. We anticipate the need to hire a significant number of personnel to
achieve our growth objectives. Competition for these personnel is intense. The
inability to attract, integrate and retain the necessary sales, marketing,
technical and administrative personnel could harm our ability to generate
revenue.

                                        10
<PAGE>   13

IF OUR AD DELIVERY AND TRACKING TECHNOLOGY IS NOT EFFECTIVE, OUR RELATIONSHIPS
WITH OUR ADVERTISING CLIENTS MAY BE HARMED

     Because our adMonitor technology is relatively new, we cannot assure you
that the use of our adMonitor services will remain effective in serving,
targeting and tracking advertisements or other marketing and promotional
activities. Our revenue would be adversely affected if marketers do not perceive
that the use of our adMonitor services will improve the effectiveness of their
marketing campaigns.

A SMALL NUMBER OF WEB PUBLISHERS ACCOUNTS FOR A SUBSTANTIAL PERCENTAGE OF OUR
ADVERTISING REVENUE AND OUR FAILURE TO DEVELOP AND SUSTAIN LONG-TERM
RELATIONSHIPS WITH WEB PUBLISHERS, OR THE REDUCTION IN TRAFFIC OF A CURRENT WEB
PUBLISHER IN OUR NETWORK, COULD LIMIT OUR ABILITY TO GENERATE REVENUE

     For the year ended December 31, 2000, our top five Web publishers accounted
for approximately 26.2% of our revenue, and our top three Web publishers
accounted for approximately 21.7% of our revenue. One website accounted for
14.2% of our revenue for the year ended December 31, 2000. Our contracts with
Web publishers, including these top Web publishers, are generally one year in
duration and can be terminated by either party with as little as 30 days notice.
We cannot assure you that any of our Web publishers will continue their
relationships with us. Additionally, we may lose Web publishers as a result of
acquisitions or as a result of the discontinuation of operations of any of our
Web publishers.

A LIMITED NUMBER OF MARKETERS ACCOUNTS FOR A SIGNIFICANT PERCENTAGE OF OUR
REVENUE AND A LOSS OF ONE OR MORE OF THESE MARKETERS COULD CAUSE OUR RESULTS OF
OPERATIONS TO SUFFER

     For the year ended December 31, 2000, revenue from our five largest
marketers accounted for 11.2% of our revenue. Marketers typically purchase
advertising under short-term purchase order agreements. We cannot assure you
that our top marketers or our other marketers will continue their relationships
with us. The loss of one or more of the marketers that represent a significant
portion of our revenue could cause our results of operations to suffer. In
addition, many of our contracts with Web publishers require us to bear the risk
of non-payment of advertising fees from marketers. Accordingly, the non-payment
or late payment of amounts due to us from a significant marketer could cause our
financial condition to suffer. For the year ended December 31, 2000, our bad
debt expense related to uncollected advertising fees was $5.4 million.

SINCE WE EXPECT TO DERIVE SUBSTANTIALLY ALL OF OUR REVENUE IN THE FORESEEABLE
FUTURE FROM ONLINE ADVERTISING, OUR ABILITY TO GENERATE REVENUE MAY SUFFER IF
THE INTERNET IS NOT INCREASINGLY ACCEPTED AS AN EFFECTIVE ADVERTISING MEDIUM

     If the online advertising market does not develop further, or develops more
slowly than expected, we may not generate enough advertising revenue to return
to profitability. Since we expect to derive substantially all of our revenue in
the foreseeable future from online advertising, our future success is highly
dependent on the increased use of the Internet as an advertising medium. Online
advertising is relatively new and rapidly evolving, and its effectiveness,
compared to traditional media, is uncertain. Widespread use of online
advertising depends upon businesses accepting a new way of marketing their
products and services. Businesses may view online advertising as undesirable or
less effective for promoting their products and services relative to traditional
advertising media. In addition, the widespread adoption of technologies that
permit Internet users to block advertisements on Web sites could inhibit the
growth of the Internet as an advertising medium.

SINCE OUR BUSINESS DEPENDS IN PART ON MARKET ACCEPTANCE OF ELECTRONIC COMMERCE,
IF ELECTRONIC COMMERCE DOES NOT GROW, OR GROWS SLOWER THAN WE EXPECT, OUR
ABILITY TO GENERATE REVENUE MAY SUFFER

     Our success depends in part on market acceptance of electronic commerce. A
number of factors outside of our control could prevent this acceptance,
including the following:

     - the necessary network infrastructure for substantial growth in usage of
       the Internet may not develop adequately;

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<PAGE>   14

     - insufficient availability of telecommunication services or changes in
       telecommunication services could result in slower response times; and

     - negative publicity and consumer concern surrounding the security of
       transactions could impede the growth of electronic commerce.

     If electronic commerce does not grow, or grows slower than we expect, due
to any of the above factors, or any other factor, our ability to generate
revenue could suffer.

FAILURE OF OUR TECHNOLOGY AND COMPUTING SYSTEMS COULD HARM OUR RELATIONSHIPS
WITH OUR CLIENTS AND CAUSE OUR RESULTS OF OPERATIONS TO SUFFER

     The continuing and uninterrupted performance of our servers and networking
hardware and software infrastructure is critical to our business. Periodically,
we have experienced minor systems interruptions, including Internet disruptions,
which we believe may occur periodically in the future. Any system failure that
causes interruptions in our ability to service our customers, including failures
that affect our ability to deliver advertisements without significant delay to
the viewer, could reduce customer satisfaction and, if sustained or repeated,
could cause our results of operations to suffer. Further, an increase in the
volume of advertising delivered through our servers could strain the capacity of
our hardware and software, which could lead to slower response times or system
failures. If we do not effectively address any capacity constraints, customer
satisfaction could be harmed and our business would likely suffer.

FAILURE OF THE WEB INFRASTRUCTURE TO SUPPORT THE GROWTH OF THE ELECTRONIC
MARKETPLACE COULD LIMIT THE GROWTH OF OUR BUSINESS

     The Internet may not in the future be a viable commercial marketplace
because of inadequate development of the necessary infrastructure, slow
development of complementary products, including high speed modems, delays in
the development or adoption of new standards and protocols required to handle
increased levels of Internet activity or increased government regulation. To the
extent that the Internet continues to experience significant growth in the
number of users and the level of use, we cannot assure you that the Internet
infrastructure will continue to be able to support the demands placed on it by
its users. If the necessary infrastructure or complementary products are not
developed, our business may not grow and would likely suffer.

OUR FAILURE TO ADEQUATELY RESPOND TO RAPID CHANGES IN TECHNOLOGY AND THE
INTERNET COULD HARM OUR ABILITY TO GENERATE REVENUE

     The market for online products and services is subject to rapid change and
characterized by evolving industry standards and frequent introductions of new
technological developments. These new standards and technological developments
could make our existing or future products or services obsolete. Keeping pace
with the introduction of new standards and technological developments could
result in significant additional costs or prove to be difficult or impossible
for us. Any failure to keep pace with the introduction of new standards and
technological developments on a cost-effective basis could result in increased
costs and harm our ability to generate revenue.

MANY COMPETITORS HAVE SUBSTANTIAL COMPETITIVE ADVANTAGES THAT MAY MAKE IT MORE
DIFFICULT FOR US TO RETAIN OUR EXISTING MARKETERS AND WEB PUBLISHERS AND TO
ATTRACT NEW MARKETERS AND WEB PUBLISHERS

     The markets for online advertising, direct marketing and ad delivery, or ad
serving, and tracking technology are intensely competitive. We compete with
television, radio, cable and print for a share of marketers' total advertising
budgets. We also compete with large Web publishers and Web search engine
companies, such as America Online, Excite@Home, Infoseek and Yahoo!, for the
online advertising budgets of marketers. In addition, we compete with various
Internet advertising networks, such as DoubleClick, 24/7 Media and Engage
Technologies. In marketing our adMonitor products and services to Web publishers
and marketers, we also compete with providers of ad delivery, or ad serving,
technology, database management and related services, including AdForce,
DoubleClick and Engage Technologies.

                                        12
<PAGE>   15

Many of our current and potential competitors enjoy competitive advantages over
us, including significantly greater financial, technical and marketing
resources. They may also enjoy significantly greater brand recognition and
substantially larger bases of Web site clients and marketers.

     As a result, our competitors may be able to respond more quickly than we
can to new or emerging technologies and changes in client requirements. Our
competitors may also have a significantly greater ability to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to potential employees, strategic partners, marketers and
Web publishers. Further, we cannot assure you that our competitors will not
develop online products and services that are equal to or superior to our
products and services or that achieve greater market acceptance than our
products and services. If we are unable to compete successfully against existing
or potential competitors, our revenue and margins may decline.

OUR FAILURE TO SUCCESSFULLY ACQUIRE AND INTEGRATE NEW TECHNOLOGIES AND
BUSINESSES COULD CAUSE OUR RESULTS OF OPERATIONS TO SUFFER

     We focus on creating sponsorship-oriented advertising campaigns that take
full advantage of the unique capabilities of the Internet. The Internet is a
quickly changing environment, requiring companies to constantly improve their
technology and develop or acquire new technology. We intend to acquire and make
investments in complementary businesses, products, services or technologies. On
July 24, 2000, we completed the acquisition of webMillion.com, Inc. We cannot
assure you that we will be able to identify other acquisition or investment
candidates. Even if we do identify other candidates, we cannot assure you that
we will be able to make any potential acquisition or investment on commercially
acceptable terms. Moreover, we may have difficulty integrating any acquired
businesses, products, services or technologies into our operations. These
difficulties could disrupt our business, distract our management and employees
and increase our expenses. In addition, we may incur debt or issue equity
securities to fund any future acquisitions. The issuance of equity securities
could be dilutive to existing stockholders.

IF WE ARE UNABLE TO SAFEGUARD THE SECURITY AND PRIVACY OF OUR INFORMATION, OUR
RESULTS OF OPERATIONS MAY SUFFER

     Our technical infrastructure is potentially vulnerable to physical or
electronic computer break-ins, viruses and similar disruptive problems.
Weaknesses or vulnerabilities in the Internet, a user's personal computer or in
our services could compromise the confidential nature of information transmitted
over the Internet. These factors could require us to devote significant
financial and human resources to protect against future breaches and alleviate
or mitigate problems caused by security breaches. Security breaches could result
in financial loss, litigation and other liabilities, any of which could cause
our results of operations to suffer.

ANY FAILURE BY US TO PROTECT OUR INTELLECTUAL PROPERTY COULD HARM OUR BUSINESS
AND COMPETITIVE POSITION

     We generally protect our intellectual property through a combination of
patent, trademark, trade secret and copyright laws, confidentiality agreements
with our employees and third parties, and license agreements with consultants,
vendors and clients. We have filed a patent application for our adMonitor
technology in the United States. We have also filed applications for several
trademarks internationally and in the United States. We cannot assure you that
any of our patent or trademark applications will be approved. Even if these
applications are approved, the patents or trademarks may be successfully
challenged by others or invalidated. In addition, despite our efforts to protect
our intellectual property, unauthorized parties may attempt to copy aspects of
our services or to obtain and use information that we regard as proprietary. We
may not have adequate remedies for any breach of confidentiality agreements, and
our trade secrets may otherwise become known or independently developed by
competitors.

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<PAGE>   16

WE MAY BE LIABLE FOR CONTENT AVAILABLE OR POSTED ON THE WEB SITES OF OUR
PUBLISHERS

     We may be liable to third parties for content in the advertising we serve
if the music, artwork, text or other content involved violates the copyright,
trademark or other intellectual property rights of such third parties or if the
content is defamatory. Any claims or counterclaims could be time-consuming,
result in costly litigation or divert management's attention.

THE LOSS OF KEY EMPLOYEES WOULD LIKELY IMPAIR THE GROWTH OF OUR BUSINESS

     Our performance and future success is substantially dependent on the
continued service of our executive officers and other key employees, all of whom
are employed on an at-will basis. In particular, our success depends on the
client relationships, management skills and industry knowledge of our CEO and
president, John C. Bohan. Given our early stage of development, we are dependent
on our ability to retain and motivate highly qualified personnel, especially our
management, technical and business development executives and other key
employees. The loss of the services of one or more of our executive officers or
other key employees would likely impair the growth of our business.

FUTURE SALES OF OUR COMMON STOCK MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK

     As of December 31, 2000, L90 had 23,998,409 shares of common stock
outstanding, excluding 4,844,123 shares subject to options outstanding as of
such date under its stock option plans that are exercisable at prices ranging
from $1.20 to $27.75 per share. Additionally, certain holders of L90's common
stock have registration rights with respect to their shares. L90 may be required
to file one or more registration statements in compliance with these
registration rights. L90 cannot predict the effect, if any, that future sales of
common stock or the availability of shares of common stock for future sale, will
have on the market price of its common stock prevailing from time to time. Sales
of substantial amounts of common stock, or the perception that such sales could
occur, may materially and adversely affect prevailing market prices for its
common stock.

OUR EXECUTIVE OFFICERS AND DIRECTORS EXERCISE SIGNIFICANT CONTROL OVER OUR
COMPANY, INCLUDING THE ABILITY TO CONTROL THE ELECTION OF OUR BOARD OF DIRECTORS
AND THE OUTCOME OF CORPORATE ACTIONS REQUIRING STOCKHOLDER APPROVAL

     Our executive officers and directors, in the aggregate, beneficially own or
control a substantial number of the outstanding shares of our common stock. Our
officers, directors and their affiliates will have the ability to control the
election of our board of directors and the outcome of corporate actions
requiring stockholder approval, including merger and other changes of corporate
control, going private transactions and other extraordinary transactions and
terms thereof.

OUR PLANNED INTERNATIONAL EXPANSION MAY BE AFFECTED BY FACTORS BEYOND OUR
CONTROL

     We are currently evaluating the initiation of operations in selected
international markets. This potential expansion could occur through internal
growth, acquisition, or both. In June 2000, we established a branch office in
London. Expansion into international markets will require substantial resources
and attention from management. We have no experience in international operations
and may not be able to compete effectively in international markets. We may face
numerous risks inherent in conducting business internationally, such as:

     - the impact of recessions in economies outside the United States;

     - changes in domestic regulatory requirements, as well as differences
       between domestic and foreign regulatory requirements;

     - export restrictions, including export controls relating to encryption
       technology;

     - reduced protection for intellectual property rights in some countries;

     - potentially adverse tax consequences;

                                        14
<PAGE>   17

     - difficulties and costs of staffing and managing foreign operations;

     - problems associated with any acquisitions we might pursue;

     - foreign political and economic instability;

     - tariffs and other trade barriers;

     - fluctuations in currency exchange rates; and

     - seasonal reductions in business activity.

     Our failure to address these risks adequately may cause our business,
results of operations and financial condition to suffer.

WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE TO OPERATE OUR BUSINESS AND WE MAY
EXPERIENCE DIFFICULTY IN OBTAINING THIS ADDITIONAL CAPITAL

     We believe that our existing cash and cash equivalents will be sufficient
to meet our anticipated cash needs for working capital and capital expenditures
for at least the next 12 months. We may need to raise additional funds in the
future to fund our operations, to enhance or expand the range of products and
services we offer or to respond to competitive pressures or perceived
opportunities. We cannot assure you that additional financing will be available
on terms favorable to us, or at all. If adequate funds are not available or not
available when required or on acceptable terms, the growth of our business and
results of operations may suffer.

WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS, WHICH MAY MAKE IT DIFFICULT FOR A
THIRD PARTY TO ACQUIRE US

     A number of recent acquisitions and consolidations have occurred in our
industry. For example, DoubleClick acquired NetGravity in October 1999, and
CMGI, Inc. sold Flycast Communications and Adsmart in April 2000 to its
majority-owned operating company, Engage Technologies, Inc. We are subject to
anti-takeover provisions that may make it difficult for a third party to acquire
us. We are subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law. In general, the statute prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of Section
203, a "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior, did own, 15% or more of the
corporation's voting stock.

ITEM 2. PROPERTIES

     Our principal executive offices are located in Marina del Rey, California,
where we lease approximately 24,000 square feet under a lease that expires on
December 31, 2005. In addition, we lease space for our sales and marketing
efforts in Chicago, IL; Greenwich, CT; London, England; Miami, FL; New York, NY;
San Francisco, CA and Seattle, WA. Our adMonitor ad serving and tracking
software and hardware is housed in El Segundo, CA, Santa Clara, CA and Austin,
TX. These three facilities provide us with a secure area to store and operate
our computer systems and capacity for communications links and Internet
connectivity systems. We are continually evaluating our facility requirements.
We believe that our existing leased space is more than adequate for our current
operations, and that suitable replacement and additional space will be available
in the future on commercially reasonable terms.

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<PAGE>   18

ITEM 3. LEGAL PROCEEDINGS

     On November 12, 1999, DoubleClick filed a patent infringement lawsuit
against us in the United States District Court for the Eastern District of
Virginia. The suit alleged that we were infringing, and inducing and
contributing to the infringement by third parties of, a patent held by
DoubleClick related to methods and networks for delivering, targeting and
measuring advertising over the Internet. DoubleClick had sought treble damages
in an unspecified amount, a preliminary and permanent injunction from further
alleged infringement and attorneys' fees and costs. On November 21, 2000,
DoubleClick and L90 settled the patent infringement litigation DoubleClick
initiated against L90, including L90's related counterclaims against
DoubleClick. Consequently, this lawsuit was dismissed with prejudice. As part of
the settlement, DoubleClick and L90 granted each other certain rights in certain
of their respective patents. No other terms of the settlement were disclosed.

     On September 7, 2000, JobsOnline filed a breach of contract lawsuit against
us in the Circuit Court of Cook County, Illinois. The suit alleged breach of
contract by L90 with respect to an Internet Advertising Agreement between the
two parties. JobsOnline had sought declaratory and injunctive relief and damages
in an amount to be proven at trial. On November 30, 2000, JobsOnline and L90
settled the breach of contract litigation JobsOnline initiated against L90,
including L90's related counterclaims against JobsOnline. Consequently, this
lawsuit was dismissed with prejudice.

     We periodically may become subject to other legal proceedings in the
ordinary course of our business. We are not currently involved in any
proceedings which we believe will materially and adversely affect us.

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

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

                                        16
<PAGE>   19

                                    PART II

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

MARKET FOR COMMON STOCK

     Our common stock has been quoted on the Nasdaq National Market under the
symbol LNTY since our initial public offering of January 28, 2000. Prior to
January 28, 2000, there was no public market for our common stock. The following
table sets forth, for the periods indicated, the high and low sales prices per
share of our common stock as reported by The Nasdaq National Market, Inc.

<TABLE>
<CAPTION>
                           PERIOD                              HIGH      LOW
                           ------                             ------    ------
<S>                                                           <C>       <C>
First Quarter...............................................  $30.50    $13.88
(January 28, 2000 through March 31, 2000)
Second Quarter..............................................   19.00      4.88
(April 1, 2000 through June 30, 2000)
Third Quarter...............................................   10.50      6.13
(July 1, 2000 through September 30, 2000)
Fourth Quarter..............................................    8.13      2.50
(October 1, 2000 through December 31, 2000)
</TABLE>

     On March 9, 2001, the last sale price of our common stock reported by the
Nasdaq National Market was $3.00 per share. As of December 31, 2000, we had
approximately 130 holders of record of our common stock.

DIVIDEND POLICY

     Other than a total of $50,000 that we distributed to our common
stockholders during the year ended December 31, 1998, and a total of $403,550
that we distributed to the holders of our Series A, B and C preferred stock upon
their conversion into common stock upon the closing of our initial public
offering of common stock, we have not declared or paid cash dividends on our
common stock since our incorporation. We otherwise currently intend to retain
any future earnings for use in our business and do not anticipate paying any
additional cash dividends in the foreseeable future.

SALE OF UNREGISTERED SECURITIES

     Upon the consummation of our initial public offering on February 2, 2000,
all outstanding shares of our preferred stock were automatically converted into
an aggregate of 5,276,156 shares of common stock. These shares were issued in
reliance upon the exemption provided for by Section 3(a)(9) of the Securities
Act.

     On February 2, 2000, DigaComm (L90), L.L.C. exercised a warrant on a
cashless basis and purchased 276,825 shares of our common stock. The shares
issued upon exercise of this warrant were issued in reliance upon the exemption
provided for by Section 3(a)(9) of the Securities Act. On January 31, 2000,
Development Ventures (Two) Inc. exercised a warrant and purchased an aggregate
of 674,029 shares of our common stock at an aggregate purchase price of
$3,093,793. The shares issued upon exercise of this warrant were issued in
reliance upon the exemption provided for by Section 4(2) of the Securities Act,
based upon the fact that we issued the shares in a sale not involving a public
offering. On February 2, 2000, Rare Medium Group, Inc. exercised a warrant on a
cashless basis and purchased 486,652 shares of our common stock. The shares
issued upon exercise of this warrant were issued in reliance upon the exemption
provided for by Section 3(a)(9) of the Securities Act. On January 28, 2000,
William Apfelbaum exercised a warrant on a cashless basis and purchased 274,422
shares of our common stock. The shares issued upon exercise of this warrant were
issued in reliance upon the exemption provided for by Section 3(a)(9) of the
Securities Act. In addition, Mr. Apfelbaum exercised a warrant on January 27,
2000, and purchased 438,593 shares of our common stock at an aggregate purchase
price of $750,000. The shares issued upon exercise of this warrant were issued
in reliance upon the exemption

                                        17
<PAGE>   20

provided for by Section 4(2) of the Securities Act, based upon the fact that we
issued the shares in a sale not involving a public offering.

     On February 27, 2000, we issued to Entertaindom, Inc. a warrant to purchase
an aggregate of 50,000 shares of our common stock at a purchase price per share
of $15.00. This warrant was issued and sold in reliance upon the exemption
provided for by Section 4(2) of the Securities Act, based on the fact that we
issued this warrant in a sale not involving a public offering.

     On July 24, 2000, we issued an aggregate of 1,901,381 shares of common
stock and warrants to purchase up to 98,619 additional shares of common stock to
the former stockholders and warrant holders of webMillion.com, Inc. These
securities were issued in exchange for all of the outstanding capital stock and
warrants of webMillion.com, Inc. These securities were issued and sold in
reliance upon the exemption provided for by Section 4(2) of the Securities Act
and Regulation D promulgated thereunder.

USE OF PROCEEDS FROM OUR INITIAL PUBLIC OFFERING

     The effective date of our initial public offering of shares of common stock
was January 28, 2000 (SEC Registration No. 333-87607). We completed our initial
public offering on February 2, 2000, through which we sold 7,475,000 shares of
our common stock, inclusive of the underwriters' over allotment, at an initial
public offering price of $15.00 per share. Our initial public offering was
managed by SG Cowen Securities Corporation, Banc of America Securities LLC, CIBC
Oppenheimer Corp. and Wit Capital Corporation. The initial public offering
resulted in gross proceeds of approximately $112.1 million, approximately $7.8
million of which was applied toward the underwriting discount and commission.
Expenses related to the offering totaled approximately $1.5 million. Our net
proceeds from the offering were approximately $102.6 million. From the time of
receipt through March 1, 2001, these net proceeds have been applied toward
general corporate purposes. Pending these uses, the net proceeds have been
invested in short-term, investment grade, interest-bearing securities.

                                        18
<PAGE>   21

ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth selected financial data for the period ended
December 31, 2000, 1999 and 1998, which has been derived from our audited
financial statements. The following information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes to those statements included
elsewhere in this Report.

<TABLE>
<CAPTION>
                                                                                              PERIOD FROM
                                                                                               INCEPTION
                                                         YEARS ENDED DECEMBER 31,          (JANUARY 5, 1997)
                                                   -------------------------------------        THROUGH
                                                      2000          1999         1998      DECEMBER 31, 1997
                                                   -----------   ----------   ----------   -----------------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                <C>           <C>          <C>          <C>
Revenue
  Service fee-based revenue......................  $    50,542   $    7,283   $       --        $   --
  Commission-based revenue.......................        1,411        1,918        2,189         1,160
                                                   -----------   ----------   ----------        ------
          Total revenue..........................       51,953        9,201        2,189         1,160
                                                   -----------   ----------   ----------        ------
Operating expenses:
  Cost of service fee and other revenue..........       31,147        4,751           --            --
  Sales and marketing............................       16,769        4,865        1,362           550
  Research and development.......................       11,907        2,581          138            --
  General and administrative.....................       16,997        4,521          995           303
                                                   -----------   ----------   ----------        ------
          Total operating expenses...............       76,820       16,718        2,496           853
                                                   -----------   ----------   ----------        ------
Operating loss...................................      (24,867)      (7,517)        (306)         (307)
Interest income, net.............................        5,158           30           17             3
                                                   -----------   ----------   ----------        ------
Loss before provision for income taxes...........      (19,709)      (7,487)        (289)         (310)
Provision for income taxes.......................            2            1            1            --
                                                   -----------   ----------   ----------        ------
Net loss.........................................  $   (19,711)  $   (7,488)  $     (290)       $ (310)
                                                   ===========   ==========   ==========        ======
Cumulative dividends on participating preferred
  stock..........................................           (2)      (1,470)         (23)           --
                                                   -----------   ----------   ----------        ------
Net loss attributable to common stockholders.....  $   (19,713)  $   (8,958)  $     (313)       $ (310)
                                                   ===========   ==========   ==========        ======
Net loss per share:
  Basic/Diluted..................................  $     (0.92)  $    (1.34)  $    (0.05)       $   --
                                                   ===========   ==========   ==========        ======
Weighted average number of common shares
  outstanding:
  Basic/Diluted..................................   21,535,290    6,675,361    6,666,667            --
                                                   ===========   ==========   ==========        ======
</TABLE>

<TABLE>
<CAPTION>
                                                                    YEARS ENDED DECEMBER 31,
                                                              -------------------------------------
                                                                2000       1999       1998     1997
                                                              --------    -------    ------    ----
                                                                         (IN THOUSANDS)
<S>                                                           <C>         <C>        <C>       <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $ 72,653    $ 6,896    $2,112    $235
Working capital.............................................    78,351      4,914     1,996     470
Total assets................................................   127,368     16,136     3,936     970
Notes payable and other obligations.........................     1,675      2,043       248      --
Convertible preferred stock.................................        --     16,006     2,000      --
Total stockholders' equity..................................   114,293      7,312     2,133     495
</TABLE>

<TABLE>
<CAPTION>
                                                                                        PERIOD FROM INCEPTION
                                                           YEARS ENDED DECEMBER 31,       (JANUARY 5, 1997)
                                                         ----------------------------    THROUGH DECEMBER 31,
                                                          2000       1999       1998             1997
                                                         -------    -------    ------   ----------------------
                                                                            (IN THOUSANDS)
<S>                                                      <C>        <C>        <C>      <C>
SUPPLEMENTAL DATA:
System revenue(1)......................................  $58,915    $15,366    $8,024           $4,210
                                                         =======    =======    ======           ======
</TABLE>

---------------
(1) System revenue represents the full value of gross billings for ads sold
    under either commission-based contracts or service fee-based contracts.
    Although system revenue is not recognized under generally accepted
    accounting principles, we believe that system revenue is a standard measure
    of advertising volume for the Internet advertising industry that enables a
    meaningful comparison of activity from period to period and from one company
    to another.
                                        19
<PAGE>   22

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

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You should read the following discussion of our financial condition and
results of operations together with the financial statements and the notes to
financial statements included elsewhere in this report. This discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those anticipated in these
forward-looking statements.

OVERVIEW

     References in this Report to "L90," "we," "our" and "us" refer to L90, Inc.
We are a leading provider of marketing services for marketers and Web
publishers. We design and implement marketing campaigns for our marketing
clients and strategically place their ads on our network of Web sites. We
provide our Web publishing clients with a fully-outsourced solution which
includes the sale of advertising space on their Web sites as well as the
technology required to deliver advertisements. We have developed adMonitor, our
ad serving and tracking technology that is used to deliver advertisements to our
network of Web site publishers. adMonitor enables our marketing and Web
publishing clients to implement sophisticated marketing campaigns quickly and to
selectively target ads to Web users based on specific interests or
characteristics. adMonitor also enables our clients to measure and manage the
effectiveness of their ad campaigns.

     Since inception, substantially all of our revenue has been derived from
online advertising sales. We offer advertisements primarily priced on a cost per
every thousand ads viewed, or CPM, basis. We also offer direct marketing
programs, which may be priced on a cost per action basis, such as cost for each
new user registration. In January 1999, we began to charge our customers for the
use of our adMonitor technology. For the year ended December 31, 2000, online
advertising sales accounted for 92.8% of our revenue, and fees generated by our
adMonitor technology accounted for 7.2% of our revenue.

     Revenue from ad sales is earned under commission-based and service
fee-based contracts. For commission-based contracts, we receive commissions from
Web publishers for the sale of their ad inventory. Revenue earned from
commission-based contracts reflects only the amount of the commission earned
without any associated cost of revenue. We recognize commissions ratably over
the term of an marketing campaign, which typically ranges from one to twelve
months. For service fee-based contracts, we purchase advertising space, or ad
inventory, from Web publishers and are obligated to pay a service fee to Web
publishers for ads placed on their Web sites. Additionally, under service
fee-based contracts, we bear the risk of loss from the non-collection of fees
payable by marketers for ads sold. Consequently, revenue earned from service
fee-based contracts reflects the full value of the ads sold. System revenue
represents the full value of gross billings for ads sold under either
commission-based contracts or service fee-based contracts. Because we have both
commission-based and service fee-based contracts, revenue will include a mix of
commissions received under our commission-based contracts and total billings to
our marketing clients under our service fee-based contracts.

     The financial statements included elsewhere in this report include
references to system revenue. We believe system revenue provides a consistent
basis for reporting revenue from period to period, regardless of the change in
contract type, as discussed above. System revenue represents the full value of
gross billings for ads sold under either commission-based contracts or service
fee-based contracts. We believe that period to period comparisons of operating
results are not always meaningful and that the results for any period should not
be relied upon as an indication of future performance. For the year ended
December 31, 2000, service fee-based contracts accounted for 97.3% of our
revenue, and commission based contracts accounted for 2.7% of our revenue. For
the year ended December 31, 1999, service fee-based contracts accounted for
79.2% of our revenue, and commission-based contracts accounted for 20.8% of our
revenue.

                                        20
<PAGE>   23

     Cost of revenue includes service fees paid to our Web publishers under our
service fee-based contracts and Internet connectivity and bandwidth costs
associated with ad serving. Additionally, cost of revenue includes contest fees
and insurance expense related to direct marketing promotions. We expect cost of
revenue to increase on an absolute dollar basis in future periods as our revenue
increases and as more of the contracts with Web publishers are structured as
service fee-based contracts.

     Our revenue has historically been, and we expect it to continue to be,
subject to seasonal fluctuations because advertisers generally place fewer
advertisements during the first calendar quarter of each year. Additionally,
expenditures by advertisers tend to be cyclical, reflecting overall economic
conditions, as well as budgeting and buying patterns.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000 AND 1999

     Revenue. Revenue increased 464.7% to $52.0 million for the year ended
December 31, 2000 from $9.2 million for the year ended December 31, 1999. This
increase was due to increases in the number of advertising customers that we
serviced, the number of Web publishers on our network and the number of ads
delivered. In addition, this increase was partly attributable to our adoption of
service fee-based contracts and the initiation of our charging service fees to
customers for the use of our adMonitor technology.

     System Revenue. System revenue represents the full value of gross billings
for ads sold under either commission-based contracts or service fee-based
contracts. Although system revenue is not recognized under accounting principles
generally accepted in the United States, we believe that system revenue is a
standard measure of advertising volume for the Internet advertising industry
that enables a meaningful comparison of activity from period to period and from
one company to another. System revenue increased 283.4% to $58.9 million for the
year ended December 31, 2000 from $15.4 million for the year ended December 31,
1999. This increase was due to increases in the number of advertising customers
that we serviced, the number of Web publishers on our network and the number of
ads delivered, as well as the initiation of our charging service fees to
customers for the use of our adMonitor technology.

     Cost of Revenue. Cost of revenue was $31.1 million for the year ended
December 31, 2000 and $4.8 million for the year ended December 31, 1999.

     Sales and Marketing. Sales and marketing expenses include salaries,
commissions, travel, advertising, trade show costs and marketing materials
expense. Sales and marketing expenses increased to $16.8 million, or 32.3% of
revenue, for the year ended December 31, 2000, compared to $4.9 million or 52.9%
of revenue, for the year ended December 31, 1999. This increase was primarily
due to an increase in the number of sales and marketing personnel and the
related commissions payable due to the 464.7% increase in revenue. Our sales and
marketing organization has grown to 145 employees as of December 31, 2000 from
75 employees as of December 31, 1999. We expect sales and marketing expenses to
increase on an absolute dollar basis in future periods as we hire additional
personnel, expand into new markets and continue to promote our advertising
solutions.

     Research and Development. Research and development expenses consist
primarily of compensation, consulting expenses and expenses for hardware,
software and materials associated with the development and improvement of our
adMonitor technology. To date, all research and development costs have been
expensed as incurred. Research and development expenses increased to $11.9
million, or 23.0% of revenue, for the year ended December 31, 2000, compared to
$2.6 million, or 28.1% of revenue, for the year ended December 31, 1999. This
increase was due primarily to the deployment and enhancement of our adMonitor
technology. We expect research and development expenses to increase on an
absolute dollar basis in future periods.

     General and Administrative. General and administrative expenses consist
primarily of compensation and professional service fees. General and
administrative expenses increased to $17.0 million, or 32.7% of revenue, for the
year ended December 31, 2000, compared to $4.5 million, or 49.1% of revenue, for
the

                                        21
<PAGE>   24

year ended December 31, 1999. This increase was primarily a result of increases
in personnel expenses, professional service fees and facility expenses necessary
to support our growth. We expect general and administrative expenses to increase
on an absolute dollar basis as we hire additional personnel and incur additional
costs related to the growth of our business and our operation as a public
company. For the year ended December 31, 2000 and 1999, our bad debt expense
related to uncollected advertising fees was $5.4 million and $645,000,
respectively.

     Interest Income, Net. Net interest income primarily consists of interest
earned on cash balances, offset by interest expense incurred with respect to our
capital leases and equipment financing obligations. Net interest income was $5.2
million for the year ended December 31, 2000. Net interest income was $30,000
for the year ended December 31, 1999. The increase in interest income resulted
primarily from interest income on the cash proceeds from our initial public
offering of common stock.

YEARS ENDED DECEMBER 31, 1999 AND 1998

     Revenue. Revenue increased 320.2% to $9.2 million for the year ended
December 31, 1999 from $2.2 million for the year ended December 31, 1998. This
increase was due to increases in the number of advertising customers that we
serviced, the number of Web publishers on our network and the number of ads
delivered. In addition, this increase was partly attributable to our adoption of
service fee-based contracts and the initiation of our charging service fees to
customers for the use of our adMonitor technology.

     System Revenue. System revenue represents the full value of gross billings
for ads sold under either commission-based contracts or service fee-based
contracts. Although system revenue is not recognized under generally accepted
accounting principles, we believe that system revenue is a standard measure of
advertising volume for the Internet advertising industry that enables a
meaningful comparison of activity from period to period and from one company to
another. System revenue increased 91.5% to $15.4 million for the year ended
December 31, 1999 from $8.0 million for the year ended December 31, 1998. This
increase was due to increases in the number of advertising customers that we
serviced, the number of Web publishers on our network and the number of ads
delivered, as well as the initiation of our charging service fees to customers
for the use of our adMonitor technology.

     Cost of Revenue. Cost of revenue was $4.8 million for the year ended
December 31, 1999. During the year ended December 31, 1998, all revenue was
derived solely from advertising sales commissions with no related service fees
charged to customers for the use of adMonitor, or associated cost of revenue.

     Sales and Marketing. Sales and marketing expenses include salaries,
commissions, travel, advertising, trade show costs and marketing materials
expense. Sales and marketing expenses were $4.9 million, or 52.9% of revenue,
for the year ended December 31, 1999, and $1.4 million, or 62.2% of revenue, for
the year ended December 31, 1998. This increase was primarily due to an increase
in the number of sales and marketing personnel. Our sales and marketing
organization has grown to 75 employees as of December 31, 1999 from six
employees as of January 1, 1998.

     Research and Development. Research and development expenses consist
primarily of compensation, consulting expenses and expenses for hardware,
software and materials associated with the development and improvement of our
adMonitor technology. To date, all research and development costs have been
expensed as incurred. Research and development expenses were $2.6 million, or
28.1% of revenue, for the year ended December 31, 1999, and $138,000, or 6.3% of
revenue, for the year ended December 31, 1998. This increase was due primarily
to the deployment and enhancement of our adMonitor technology.

     General and Administrative. General and administrative expenses consist
primarily of compensation and professional service fees. General and
administrative expenses were $4.5 million, or 49.1% of revenue, for the year
ended December 31, 1999, and $995,000, or 45.5% of revenue, for the year ended
December 31, 1998. This increase was primarily a result of a $1.0 million
increase in personnel expenses, a $677,000 increase in professional service fees
and a $1.3 million increase in facility expenses necessary to support our
growth.

                                        22
<PAGE>   25

     Interest Income, Net. Net interest income primarily consists of interest
earned on cash balances, offset by interest expense incurred with respect to our
capital leases and equipment financing obligations. Net interest income was
$30,000 for the year ended December 31, 1999. Net interest income was $17,000
for the year ended December 31, 1998.

QUARTERLY RESULTS OF OPERATIONS

     The following tables set forth unaudited quarterly statement of operations
data for the eight quarters ended December 31, 2000 in dollars and as a
percentage of revenue. In the opinion of management, this information has been
prepared on the same basis as the audited financial statements appearing
elsewhere in this report, and all necessary adjustments, consisting only of
normal recurring adjustments have been included in the amounts stated below to
present fairly the unaudited quarterly results of operations. The quarterly data
should be read in conjunction with our audited financial statements and the
notes to the financial statements appearing elsewhere in this report.
<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED
                            -----------------------------------------------------------------------------
                              MAR. 31,        JUN. 30,        SEP. 30,        DEC. 31,        MAR. 31,
                                1999            1999            1999            1999            2000
                            -------------   -------------   -------------   -------------   -------------
                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                         <C>             <C>             <C>             <C>             <C>
STATEMENT OF OPERATIONS
 DATA:
 Revenue..................     $  753          $ 1,168         $ 2,052         $ 5,227         $ 8,583
 Operating expenses:
   Cost of revenue........          2              307           1,027           3,415           5,455
   Sales and marketing....        803            1,003           1,182           1,878           2,908
   Research and
     development..........        139              252           1,013           1,176           2,181
   General and
     administrative.......        528              812           1,368           1,813           4,015
                               ------          -------         -------         -------         -------
 Total operating
   expenses...............      1,472            2,374           4,590           8,282          14,559
                               ------          -------         -------         -------         -------
 Operating loss...........       (719)          (1,206)         (2,538)         (3,055)         (5,976)
 Interest income
   (expense), net.........         11              (16)            (47)             82             978
                               ------          -------         -------         -------         -------
 Loss before provision for
   taxes..................       (708)          (1,222)         (2,585)         (2,973)         (4,998)
 Provision for income
   taxes..................         --               --              --               1              --
                               ------          -------         -------         -------         -------
 Net loss.................       (708)          (1,222)         (2,585)         (2,974)         (4,998)
 Cumulative dividends on
   participating Preferred
   stock..................        (20)             (20)         (1,204)           (225)             (2)
                               ------          -------         -------         -------         -------
 Net loss attributed to
   common Stockholders....     $ (728)         $(1,242)        $(3,789)        $(3,199)        $(5,000)
                               ======          =======         =======         =======         =======
 Net loss per share:
   Basic/diluted..........     $(0.11)         $ (0.19)        $ (0.57)        $ (0.48)        $ (0.30)
                               ======          =======         =======         =======         =======
 Weighted average number
   of common shares
   outstanding:
   Basic/diluted..........      6,667            6,667           6,667           6,693          16,584
                               ======          =======         =======         =======         =======
SUPPLEMENTAL DATA:
 System revenue (1).......     $2,529          $ 3,101         $ 3,602         $ 6,134         $10,387
                               ======          =======         =======         =======         =======

<CAPTION>
                                         THREE MONTHS ENDED
                            ---------------------------------------------
                              JUN. 30,        SEP. 30,        DEC. 31,
                                2000            2000            2000
                            -------------   -------------   -------------
                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                         <C>             <C>             <C>
STATEMENT OF OPERATIONS
 DATA:
 Revenue..................     $12,225         $14,683         $16,462
 Operating expenses:
   Cost of revenue........       8,024           8,974           8,694
   Sales and marketing....       3,494           4,593           5,774
   Research and
     development..........       3,214           3,387           3,125
   General and
     administrative.......       3,436           4,516           5,031
                               -------         -------         -------
 Total operating
   expenses...............      18,168          21,470          22,624
                               -------         -------         -------
 Operating loss...........      (5,943)         (6,787)         (6,162)
 Interest income
   (expense), net.........       1,439           1,433           1,308
                               -------         -------         -------
 Loss before provision for
   taxes..................      (4,504)         (5,354)         (4,854)
 Provision for income
   taxes..................          --              --              (2)
                               -------         -------         -------
 Net loss.................      (4,504)         (5,354)         (4,856)
 Cumulative dividends on
   participating Preferred
   stock..................          --              --              --
                               -------         -------         -------
 Net loss attributed to
   common Stockholders....     $(4,504)        $(5,354)        $(4,856)
                               =======         =======         =======
 Net loss per share:
   Basic/diluted..........     $ (0.20)        $ (0.23)        $ (0.20)
                               =======         =======         =======
 Weighted average number
   of common shares
   outstanding:
   Basic/diluted..........      21,985          23,472          24,030
                               =======         =======         =======
SUPPLEMENTAL DATA:
 System revenue (1).......     $14,023         $16,171         $18,333
                               =======         =======         =======
</TABLE>

---------------
(1) System revenue represents the full value of gross billings for ads sold
    under either commission-based contracts or service fee-based contracts.
    Although system revenue is not recognized under accounting principles
    generally accepted in the United States, we believe that system revenue is a
    standard measure of advertising volume for the Internet advertising industry
    that enables a meaningful comparison of activity from period to period and
    from one company to another.

                                        23
<PAGE>   26

     Our system revenue increased during each quarter of the last eight
quarters. Quarterly system revenue increased 22.6% from the first to the second
quarter, 16.1% from the second to the third quarter and 70.3% from the third to
fourth quarter of 1999. Quarterly system revenue increased 69.3% from the fourth
quarter of 1999 to the first quarter of 2000. Quarterly system revenue increased
35.0% from the first quarter to the second quarter, 15.3% from the second to the
third quarter, and 13.4% from the third to the fourth quarter of 2000. Quarterly
growth was due to increases in the number of advertising customers, the number
of Web publishers on our network, the number of ads delivered and adMonitor
service fees.

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                     --------------------------------------------------------------------------------------------
                                     MAR. 31,    JUN. 30,    SEP. 30,    DEC. 31,    MAR. 31,    JUN. 30,    SEP. 30,    DEC. 31,
                                       1999        1999        1999        1999        2000        2000        2000        2000
                                     --------    --------    --------    --------    --------    --------    --------    --------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                  <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
  Revenue..........................   100.0%       100.0%      100.0%     100.0%      100.0%      100.0%      100.0%      100.0%
  Operating expenses:
    Cost of revenue................     0.3         26.3        50.0       65.3        63.6        65.6        61.1        52.8
    Sales and marketing............   106.6         85.9        57.6       35.9        33.9        28.6        31.3        35.1
    Research and development.......    18.5         21.6        49.4       22.5        25.4        26.3        23.1        19.0
    General and administrative.....    70.1         69.5        66.7       34.7        46.8        28.1        30.7        30.6
                                      -----       ------      ------      -----       -----       -----       -----       -----
Total operating expenses...........   195.5        203.3       223.7      158.4       169.7       148.6       146.2       137.5
                                      -----       ------      ------      -----       -----       -----       -----       -----
Operating loss.....................   (95.5)      (103.3)     (123.7)     (58.4)      (69.7)      (48.6)      (46.2)      (37.5)
Interest income (expense), net.....     1.4         (1.3)       (2.2)       1.6        11.4        11.8         9.8         7.9
                                      -----       ------      ------      -----       -----       -----       -----       -----
Loss before provision for taxes....   (94.1)      (104.6)     (125.9)     (56.9)      (58.3)      (36.8)      (36.4)      (29.6)
Provision for income taxes.........      --           --          --         --          --          --          --          --
                                      -----       ------      ------      -----       -----       -----       -----       -----
Net loss...........................   (94.1)%     (104.6)%    (125.9)%    (56.9)%     (58.3)%     (36.8)%     (36.4)%     (29.6)%
</TABLE>

     Our revenue increased during each of the last eight quarters. In 1999,
quarterly revenue increased 55.1% from the first to second quarter, 75.7% from
the second to the third quarter and 154.7% from the third to the fourth quarter.
Quarterly revenue increased 64.2% from the fourth quarter of 1999 to the first
quarter of 2000. In 2000, quarterly revenue increased 42.4% from the first to
the second quarter, 20.1% from the second to the third quarter and 12.1% from
the third to the fourth quarter. Quarterly revenue growth was primarily due to
increases in the number of advertising clients, the number of Web sites on our
network, the number of ads delivered and adMonitor service fees.

     Increases in total operating expenses were due primarily to the addition of
sales, technical and administrative personnel needed to sustain our growth and
further develop our infrastructure.

     Our revenue has historically been, and we expect it to continue to be,
subject to seasonal fluctuations because advertisers generally place fewer
advertisements during the first calendar quarter of each year. Additionally,
expenditures by advertisers tend to be cyclical, reflecting overall economic
conditions as well as budgeting and buying patterns.

LIQUIDITY AND CAPITAL RESOURCES

     From our inception through September 1998, we financed our operations
primarily through internally generated cash flow. In September 1998, we
completed a private placement of equity securities to an individual investor and
received $1.9 million in net proceeds. In September 1999, we completed two
private placements of equity securities and received $12.9 million in net
proceeds. In February 2000, we completed our initial public offering of
7,475,000 shares of our common stock (including 975,000 shares subject to the
underwriter's over-allotment option) at $15.00 per share. The initial public
offering resulted in aggregate net proceeds of approximately $102.6 million, net
of underwriting discounts and expenses of the offering. The net proceeds from
these private placements and our initial public offering are being used to
expand our business operations, to hire additional personnel, to provide
additional services and for general corporate purposes related to the expansion
of our business.

     Net cash used by operating activities was $22.0 million for the year ended
December 31, 2000, $6.3 million for the year ended December 31, 1999 and $1,000
for the year ended December 31, 1998.

                                        24
<PAGE>   27

Cash used in operating activities for the year ended December 31, 2000 resulted
from a net loss of $19.7 million, as well as a $9.5 million increase in accounts
receivable, partially offset by a $2.9 million increase in accounts payable and
accrued expenses, a $1.2 decrease in prepaids and other current assets and a
$945,000 increase in deferred revenue. Cash used in operating activities for the
year ended December 31, 1999 resulted from a net loss of $7.5 million, as well
as a $2.8 million increase in accounts receivable and a $1.1 million increase in
prepaids and other current assets partially offset by a $3.5 million increase in
accounts payable and a $1.4 million increase in accrued expenses. Cash provided
by operating activities for the year ended December 31, 1998 resulted from a
$834,000 increase in accounts payable and a $200,000 increase in accrued
liabilities, partially offset by a $290,000 net loss and a $626,000 increase in
accounts receivable.

     Net cash used in investing activities was $16.0 million for the year ended
December 31, 2000, $1.1 million for the year ended December 31, 1999, $323,000
for the year ended December 31, 1998. Cash used in investing activities was
primarily related to purchases of approximately $13.9 million in property and
equipment related to research and development. In addition, net cash used in
investing activities for the year ended December 31, 2000 includes $196,000
related to costs associated with the acquisition of webMillion and $2.0 million
related to the investment in Zondigo, Inc.

     Net cash provided by financing activities was $103.8 million for the year
ended December 31, 2000, $12.2 million for the year ended December 31, 1999, and
$2.2 million for the year ended December 31, 1998. Cash provided by financing
activities for the year ended December 31, 2000 resulted primarily from
approximately $102.6 million in net proceeds from our initial public offering of
common stock. Cash provided by financing activities for the year ended December
31, 1999 resulted primarily from the proceeds from our private placement of
equity securities. Cash provided by financing activities for the year ended
December 31, 1998 resulted primarily from the sale of Series A preferred stock.

     Although we do not have any material commitments for capital expenditures,
we anticipate that we will experience a substantial increase in our capital
expenditures consistent with our anticipated growth in operations,
infrastructure and personnel. We currently anticipate that we will continue to
experience significant growth in operating expenses for the foreseeable future.
We believe that our existing cash and cash equivalents will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures for
at least the next 12 months.

ACQUISITION OF WEBMILLION.COM

     On July 24, 2000, L90, Inc. completed the merger with webMillion.com.
Pursuant to the Merger Agreement, we issued 1,901,381 shares of our common stock
to all the shareholders of webMillion. Holders of warrants of webMillion
received, in the aggregate, the right to purchase from us 98,619 shares of our
common stock at a price per share of $1.9792. A total of 361,063 of the merger
shares are being held in a three year escrow as security for the indemnification
obligations of webMillion's former shareholders pursuant to the Merger
Agreement. A majority of outstanding voting securities of webMillion were owned
by Messrs. Hauser and Adcock. The transaction was structured as a reverse
triangular merger and will be accounted for through the purchase method of
accounting. As a result of the tax free purchase, webMillion now is our
wholly-owned subsidiary. There is no material relationship between Messrs.
Hauser and Adcock, us, our affiliates, any of our directors or officers, or any
associate of any such director or officer.

YEAR 2000 COMPLIANCE

     We did not experience any significant malfunctions or errors in our
operating or business systems when the date changed from 1999 to 2000. Based on
operations since January 1, 2000, we do not expect any significant impact to our
on-going business as a result of the "Year 2000 issue." However, it is possible
that the full impact of the date change, which was of concern due to computer
programs that use two digits instead of four digits to define years, has not
been fully recognized. We cannot quantify the amount of our potential exposure
but we believe that any such problems are likely to be minor and

                                        25
<PAGE>   28

correctable. In addition, we could still be negatively impacted if our customers
or suppliers are adversely affected by the Year 2000 or similar issues. We
currently are not aware of any significant Year 2000 or similar problems that
have arisen for our customers and suppliers. In preparation for the year 2000,
we incurred internal staff costs as well as consulting and other expenses. Year
2000 expenses incurred to date totaled less than $100,000.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to a variety of risks, including foreign currency
fluctuations and changes in interest rates affecting the cost of its debt.

INTEREST RATE RISK

     The primary objective of our investment activities is to preserve the
principal while at the same time maximizing yields without significantly
increasing risk. To achieve this objective, we maintain our portfolio of cash
equivalents and short-term investments in money market funds. Although we are
subject to interest rate risks, we believe an effective increase or decrease of
10% in interest rate percentages would not have a material adverse effect on our
results from operations. The potential change noted above is based on
sensitivity analysis performed by us as of December 31, 2000.

     We did not hold derivative financial instruments as of December 31, 2000,
and have never held these instruments in the past.

FOREIGN CURRENCY

     Currently all of our sales and expenses are denominated in U.S. dollars and
as a result we have experienced no foreign exchange gains and losses to date.
While we do expect to effect some transactions in foreign currencies during
2001, we do not anticipate that foreign exchange gains or losses will be
significant. We have not engaged in foreign currency hedging activities to date.

     Our international business is subject to risks typical of an international
business, including, but not limited to differing economic conditions, changes
in political climate, differing tax structures, other regulations and
restrictions, and foreign exchange rate volatility. Accordingly, our future
results could be materially and adversely affected by changes in these or other
factors.

                                        26
<PAGE>   29

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                         INDEX TO FINANCIAL STATEMENTS

                                   L90, INC.

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Public Accountants....................   28
Consolidated Balance Sheets as of December 31, 2000 and
  1999......................................................   29
Consolidated Statements of Operations for the years ended
  December 31, 2000, 1999 and 1998..........................   30
Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 2000, 1999 and 1998..............   31
Consolidated Statements of Cash Flows for the years ended
  December 31, 2000, 1999 and 1998..........................   32
Notes to Consolidated Financial Statements..................   33
</TABLE>

                                        27
<PAGE>   30

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of L90, Inc.:

     We have audited the accompanying consolidated balance sheets of L90, Inc.
(a Delaware Corporation) and subsidiary as of December 31, 2000 and 1999, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the years ended December 31, 2000, 1999 and 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of L90, Inc. and subsidiary as
of December 31, 2000 and 1999 and the results of their operations and their cash
flows for the years ended December 31, 2000, 1999 and 1998, in conformity with
accounting principles generally accepted in the United States.

/s/ Arthur Andersen LLP

ARTHUR ANDERSEN LLP
Los Angeles, California
February 9, 2001

                                        28
<PAGE>   31

                            L90, INC. AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                              DECEMBER 31,    DECEMBER 31,
                                                                  2000            1999
                                                              ------------    ------------
<S>                                                           <C>             <C>
Current Assets:
  Cash and cash equivalents.................................  $ 72,653,394    $ 6,895,938
  Accounts receivable, net of allowance of $2,671,039 and
     $668,010 at December 31, 2000 and 1999, respectively...    13,964,680      4,128,069
  Notes receivable from officers............................     1,480,000             --
  Prepaid expenses and other assets.........................     2,551,166      1,341,950
                                                              ------------    -----------
          Total current assets..............................    90,649,240     12,365,957
                                                              ------------    -----------
  Restricted cash...........................................     2,618,632      1,268,632
  Goodwill, net of accumulated amortization of $416,380 at
     December 31, 2000......................................    19,569,848             --
  Investment in Zondigo.....................................     1,950,000             --
  Property and equipment:
     Equipment..............................................    16,566,587      2,695,847
     Furniture and fixtures.................................       245,760         70,006
     Leasehold improvements.................................        41,606         32,421
                                                              ------------    -----------
                                                                16,853,953      2,798,274
     Less -- Accumulated depreciation and amortization......    (4,273,527)      (296,808)
                                                              ------------    -----------
  Property and equipment, net...............................    12,580,426      2,501,466
                                                              ------------    -----------
          Total assets......................................  $127,368,146    $16,136,055
                                                              ============    ===========
                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable..........................................  $  7,642,170    $ 4,693,881
  Accrued expenses..........................................     2,813,350      1,686,274
  Current portion of note payable...........................       486,708        414,222
  Current portion of long-term capital lease obligations....       410,821        256,928
  Deferred revenues.........................................       944,852             --
  Accrued dividends.........................................            --        401,139
                                                              ------------    -----------
          Total current liabilities.........................    12,297,901      7,452,444
  Note payable, net of current portion......................       524,976        928,702
  Long-term capital lease obligations, net of current
     portion................................................       252,465        442,710
                                                              ------------    -----------
          Total liabilities.................................    13,075,342      8,823,856
                                                              ------------    -----------
Stockholders' Equity:
  Preferred stock, $0.001 par value, 6,998,000 shares
     authorized:
     Series A preferred stock, $0.001 par value, 0 and 2,000
      shares authorized, issued and outstanding, including
      paid-in-capital of 0 and 2,077,501 at December 31,
      2000 and 1999, respectively...........................            --      2,077,503
     Series B preferred stock, $0.001 par value, 5,000,000
      shares authorized, 0 and 4,107,044 shares issued and
      outstanding, including paid-in-capital of 0 and
      9,348,823 at December 31, 2000 and 1999,
      respectively..........................................            --      9,352,930
     Series C preferred stock, $0.001 par value, 3,000,000
      shares authorized, 0 and 1,307,190 shares issued and
      outstanding, including paid-in-capital of 0 and
      4,574,279 at December 31, 2000 and 1999,
      respectively..........................................            --      4,575,586
     Common stock, $0.001 par value, 53,333,333 shares
      authorized, 23,998,409 and 6,693,333 shares issued and
      outstanding at December 31, 2000 and 1999,
      respectively..........................................        24,096          6,693
  Additional paid-in capital................................   142,845,553        181,901
  Notes receivable for common stock.........................       (24,749)       (43,750)
  Retained deficit..........................................   (28,552,096)    (8,838,664)
                                                              ------------    -----------
          Total stockholders' equity........................   114,292,804      7,312,199
                                                              ------------    -----------
          Total liabilities and stockholders' equity........  $127,368,146    $16,136,055
                                                              ============    ===========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        29
<PAGE>   32

                            L90, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                      -----------------------------------------
                                                          2000           1999           1998
                                                      ------------    -----------    ----------
<S>                                                   <C>             <C>            <C>
Revenue:
  Service fee-based revenue.........................  $ 50,541,687    $ 7,282,892    $       --
  Commission-based revenue..........................     1,411,114      1,917,907     2,189,433
                                                      ------------    -----------    ----------
          Total revenue.............................    51,952,801      9,200,799     2,189,433
                                                      ------------    -----------    ----------
Operating expenses:
  Cost of service fee and other revenue.............    31,147,238      4,751,034            --
  Sales and marketing...............................    16,768,724      4,865,678     1,361,856
  Research and development..........................    11,907,197      2,581,070       138,402
  General and administrative........................    16,997,216      4,520,895       995,435
                                                      ------------    -----------    ----------
          Total operating expenses..................    76,820,375     16,718,677     2,495,693
                                                      ------------    -----------    ----------
Operating loss......................................   (24,867,574)    (7,517,878)     (306,260)
Interest income, net................................     5,158,153         30,397        17,491
                                                      ------------    -----------    ----------
Loss before provision for income taxes..............   (19,709,421)    (7,487,481)     (288,769)
Provision for income taxes..........................         1,600            800           800
                                                      ------------    -----------    ----------
Net loss............................................  $(19,711,021)   $(7,488,281)   $ (289,569)
                                                      ============    ===========    ==========
Cumulative dividends on participating preferred
  stock.............................................        (2,411)    (1,469,823)      (23,233)
                                                      ------------    -----------    ----------
Net loss attributable to common stockholders........  $(19,713,432)   $(8,958,104)   $ (312,802)
                                                      ============    ===========    ==========
Net loss per share:
  Basic/Diluted.....................................  $      (0.92)   $     (1.34)   $    (0.05)
                                                      ============    ===========    ==========
Weighted average number of common shares
  outstanding:
  Basic/Diluted.....................................    21,535,290      6,675,361     6,666,667
                                                      ============    ===========    ==========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        30
<PAGE>   33

                            L90, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                           NOTES
                                                                                         RECEIVABLE
                                                                           ADDITIONAL       FOR         RETAINED
                                        PREFERRED     CAPITAL   COMMON      PAID-IN        COMMON       EARNINGS
                                          STOCK       ACCOUNT    STOCK      CAPITAL        STOCK       (DEFICIT)        TOTAL
                                       ------------   -------   -------   ------------   ----------   ------------   ------------
<S>                                    <C>            <C>       <C>       <C>            <C>          <C>            <C>
BALANCE at December 31, 1997.........  $         --   $ 8,068   $    --   $         --   $      --    $    487,242   $    495,310
Net loss.............................            --        --        --             --          --        (289,569)      (289,569)
Issuance of Series A preferred
 stock...............................     2,000,000        --        --             --          --              --      2,000,000
Issuance of common stock.............            --        --        --         43,750     (43,750)             --             --
Distributions to shareholders........            --        --        --             --          --         (50,000)       (50,000)
Conversion to C-corporation..........            --    (8,068)    6,667          6,401          --          (5,000)            --
Accrual of cumulative dividends on
 participating preferred stock.......            --        --        --             --          --         (23,233)       (23,233)
                                       ------------   -------   -------   ------------   ---------    ------------   ------------
BALANCE at December 31, 1998.........     2,000,000        --     6,667         50,151     (43,750)        119,440      2,132,508
Net loss.............................            --        --        --             --          --      (7,488,281)    (7,488,281)
Issuance of Series B preferred stock,
 net of costs of $706,471............     8,957,694        --        --             --          --              --      8,957,694
Issuance of Series C preferred stock,
 net of costs of $45,505.............     3,956,408        --        --             --          --              --      3,956,408
Issuance of common stock for
 options.............................            --        --        26         93,974          --              --         94,000
Issuance of debt related warrants....            --        --        --         37,776          --              --         37,776
Issuance of preferred stock
 warrants............................     1,091,917        --        --             --          --      (1,091,917)            --
Accrual of cumulative dividends on
 participating preferred stock.......            --        --        --             --          --        (377,906)      (377,906)
                                       ------------   -------   -------   ------------   ---------    ------------   ------------
BALANCE at December 31, 1999.........    16,006,019        --     6,693        181,901     (43,750)     (8,838,664)     7,312,199
Net loss.............................            --        --        --             --          --     (19,711,021)   (19,711,021)
Conversion of preferred stock into
 common stock........................   (16,006,019)       --     5,276     16,000,743          --              --             --
Issuance of common upon IPO, net of
 costs of $9,537,405.................            --        --     7,475    102,580,120          --              --    102,587,595
Notes receivable for exercise of
 options.............................            --        --       267        101,066    (101,333)             --             --
Repayment of notes receivable for
 common stock........................            --        --        --             --     120,334              --        120,334
Issuance of common stock for
 options.............................            --        --       234        433,580          --              --        433,814
Issuance of common stock for purchase
 of webMillion.......................            --        --     2,000     19,498,001          --              --     19,500,001
Exercise of warrants.................            --        --     1,113      3,842,680          --              --      3,843,793
Issuance of warrant..................            --        --        --        208,500          --              --        208,500
Cashless exercise of warrants........            --        --     1,038         (1,038)         --              --             --
Accrual of cumulative dividends on
 participating preferred stock.......            --        --        --             --          --          (2,411)        (2,411)
                                       ------------   -------   -------   ------------   ---------    ------------   ------------
BALANCE at December 31, 2000.........  $         --   $    --   $24,096   $142,845,553   $ (24,749)   $(28,552,096)  $114,292,804
                                       ============   =======   =======   ============   =========    ============   ============
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        31
<PAGE>   34

                            L90, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                      YEARS ENDED DECEMBER 31,
                                                              -----------------------------------------
                                                                  2000           1999           1998
                                                              ------------    -----------    ----------
<S>                                                           <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  $(19,711,021)   $(7,488,281)   $ (289,569)
  Adjustments to reconcile net loss to cash used in
    operating activities --
    Depreciation and amortization...........................     4,393,098        297,245        30,885
    Non-cash charge for warrants issued.....................       208,500             --            --
    Changes in assets and liabilities:
      Increase in accounts receivable.......................    (9,529,816)    (2,817,612)     (626,420)
      Increase in prepaid expenses and other assets.........    (1,185,193)    (1,145,388)     (171,237)
      Increase in accounts payable..........................     2,194,982      3,515,931       833,950
      Increase in accrued expenses..........................       725,940      1,385,604       200,430
      Increase (decrease) in deferred revenues..............       944,852        (53,417)       22,999
                                                              ------------    -----------    ----------
        Net cash used in operating activities...............   (21,958,658)    (6,305,918)        1,038
                                                              ------------    -----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment........................   (13,923,619)    (1,100,717)     (322,762)
  Investment in Zondigo.....................................    (1,950,000)            --            --
  Acquisition costs for webMillion, net of cash acquired....      (195,797)            --            --
                                                              ------------    -----------    ----------
        Net cash used in investing activities...............   (16,069,416)    (1,100,717)     (322,762)
                                                              ------------    -----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (payments) borrowings under capital lease
    obligations.............................................      (367,593)       451,251       248,387
  Notes receivable from officers............................    (1,480,000)            --            --
  Restricted cash...........................................    (1,350,000)    (1,268,632)           --
  Proceeds from initial public offering, net of issuance
    costs...................................................   102,587,595             --            --
  Repayment of notes receivable for common stock............       120,334             --            --
  Exercise of warrants......................................     3,843,793             --            --
  Distribution of dividends.................................        (2,413)            --       (50,000)
  Series A preferred stock, net.............................            --             --     2,000,000
  Series B preferred stock, net.............................            --      8,957,694            --
  Series C preferred stock, net.............................            --      3,956,408            --
  Exercise of common stock options..........................       433,814         94,000            --
                                                              ------------    -----------    ----------
        Net cash provided by financing activities...........   103,785,530     12,190,721     2,198,387
                                                              ------------    -----------    ----------
Net increase in cash........................................    65,757,456      4,784,086     1,876,663
Cash and cash equivalents, beginning of year................     6,895,938      2,111,852       235,189
                                                              ------------    -----------    ----------
        Cash and cash equivalents, end of year..............  $ 72,653,394    $ 6,895,938    $2,111,852
                                                              ============    ===========    ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest..................................................  $    209,386    $   124,577    $   15,555
                                                              ============    ===========    ==========
  Income taxes..............................................  $      1,600    $       800    $       --
                                                              ============    ===========    ==========
Acquisition of webMillion:
  Fair value of assets acquired.............................  $   (462,877)   $        --    $       --
  Liabilities assumed.......................................       753,307             --            --
  Goodwill..................................................   (19,769,752)            --            --
  Less common stock issued for acquisition..................    19,500,001             --            --
                                                              ------------    -----------    ----------
  Net cash acquired for webMillion..........................        20,679             --            --
  Acquisition costs for webMillion..........................      (216,476)            --            --
                                                              ------------    -----------    ----------
  Acquisition costs for webMillion, net of cash acquired....  $   (195,797)   $        --    $       --
                                                              ============    ===========    ==========
SUMMARY OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
  Notes receivable for common stock.........................  $    (24,749)   $        --    $  (43,750)
                                                              ============    ===========    ==========
  Accrued dividends.........................................  $      2,411    $   377,906    $   23,233
                                                              ============    ===========    ==========
  Acquisition of software license in exchange for note......  $         --    $ 1,342,924    $       --
                                                              ============    ===========    ==========
  Cashless exercise of warrants.............................  $      1,038    $        --    $       --
                                                              ============    ===========    ==========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        32
<PAGE>   35

                            L90, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2000

 1. DESCRIPTION OF THE BUSINESS

     L90, Inc. and Subsidiary (the "Company") is an Internet-based provider of
marketing solutions for advertisers and Web publishers. The Company provides
fully-outsourced ad sales, as well as ad serving, tracking technology, direct
marketing and sweepstakes promotions. The Company develops targeted marketing
campaigns that leverage the capabilities of the Internet. The Company's
adMonitor technology platform provides Web publishers, marketers and agencies
with the ability to target, deliver, measure and analyze their marketing
campaigns.

     The Company commenced operations in January 1997 as a sole proprietorship.
In May 1997, the Company became a California limited liability company and
changed its name to John Bohan and Associates, LLC. At that time, the Company
did business as AdNet Strategies. In January 1998, the Company incorporated in
California, elected S-corporation status and changed its name to AdNet
Strategies, Inc. In December 1998, the Company became a California C-corporation
under the name Latitude 90, Inc. In September 1999, the Company reincorporated
in Delaware as L90, Inc.

 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  a. Revenue Recognition

     Revenue from ad sales is earned under commission-based and service
fee-based contracts. For commission-based contracts, the Company generally
invoices the full amount of revenue due to Web publishers for the sale of their
ad inventory and is entitled to receive a commission. Revenue earned from
commission-based contracts reflects only the amount of the commission earned
without any associated cost of revenue. The Company recognizes commissions
ratably over the term of the advertising campaigns, which usually range from one
to twelve months. For service fee-based contracts, the Company is obligated to
pay a service fee to the Web publishers for ads placed on their Web sites that
is included in cost of revenue. Additionally, under service fee-based contracts,
the Company must collect and bear the risk of loss from the advertiser for ads
sold. Consequently, revenue earned from service fee-based contracts reflects the
full value of the ads sold, or the Company's credit risk exposure on service
fee-based sales.

     System revenue represents the full value of gross billings for ads sold
under either commission-based or service fee-based contracts and is not affected
by the mix of such contracts. Although system revenue is not recognized under
accounting principles generally accepted in the United States, the Company
believes that system revenue is a standard measure of advertising volume for the
Internet advertising industry that enables a meaningful comparison of activity
from period to period and from one company to another. Revenue of the Company
was derived from system revenue of $58,914,872, $15,365,966 and $8,023,501, for
the years ended December 31, 2000, 1999 and 1998, respectively.

  b. Current Vulnerability Due to Certain Concentrations

     The Company sells advertising space to its customers. For the years ended
December 31, 2000, 1999 and 1998, there were no advertising customers that
comprised greater than 10 percent of revenue.

     The Company purchases advertising space from its Web site partners. For the
year ended December 31, 1998, the two largest Web site partners accounted for
36.3 percent and 12.0 percent of revenue respectively. For the year ended
December 31, 1999, no Web site partner comprised greater than 10 percent of
revenue. For the year ended December 31, 2000, the largest Web site partner
accounted for 14.2 percent of revenue. No other Web site partner accounted for
10 percent or more of the advertising space sold to generate revenue. The loss
of the largest Web site partner could have an adverse effect on the Company's
operations.

                                        33
<PAGE>   36
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

  c. Cash and Cash Equivalents

     For purposes of the balance sheets and statements of cash flows, cash and
cash equivalents includes all cash instruments due on demand or with an original
maturity of 90 days or less.

     The Company maintained its cash balances in six financial institutions
during 2000 and two financial institutions during 1999. The cash balances in
each financial institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. At December 31, 2000 and 1999, the Company's
uninsured cash balances totaled $74,972,025 and $7,964,570, respectively.

  d. Restricted Cash

     Restricted cash consists of cash pledged under outstanding letters of
credit.

  e. Accounts Receivable

     The Company has receivables due from advertisers and from Web publishers
resulting from the sales of ads. These receivables relate to both
commission-based and service fee-based contracts. The Company's credit exposure
on commission-based contracts is limited to the net amount of cash to be
received by the Company from ad sales. The Company's credit exposure on service
fee-based contracts is the full amount of the ad sales as the Company is
obligated to pay the Web publishers for ads sold on their Web sites irrespective
of receiving payment from advertisers.

     The Company extends credit to its customers, who are primarily located in
the United States. The ability of these customers to meet their obligations to
the Company is dependent on their economic health, as well as their industry and
other factors. The Company maintains an allowance for doubtful accounts which
represents management's estimate of expected losses on specific accounts and
inherent losses on other as yet unidentified accounts included in accounts
receivable. In estimating the potential losses on specific accounts, management
performs ongoing credit evaluations of its customers based on management
analysis and reviews of available public documents. The amounts the Company will
ultimately realize could differ materially in the near term from the amounts
assumed in arriving at the allowance for doubtful accounts reported in the
financial statement.

  f. Property and Equipment

     Property and equipment are recorded at cost and depreciated over the
estimated useful life of the asset, using the straight-line method of
depreciation. Leasehold improvements are amortized over the shorter of the
estimated useful life of the asset or the term of the lease. Property, equipment
and leasehold improvements have estimated useful lives ranging from three to
five years.

  g. Equipment Under Capital Leases

     Equipment under capital leases is recorded at the lower of the present
value of the minimum lease payments or the fair value of the leased property at
the inception of the lease. Amortization of leased property is computed using
the straight-line method over the term of the lease.

  h. Deferred Revenue

     Deferred revenue primarily represents advertising campaign revenue to be
recognized over the period of the campaign subsequent to the respective
year-end. This revenue will be recognized ratably over the term of the
advertising campaign, which usually ranges from one to twelve months.

                                        34
<PAGE>   37
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

  i. Income Taxes

     The Company provides for income taxes in accordance with the asset and
liability method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using the enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

  j. Net Loss Per Share

     Basic earnings per share ("EPS") is computed by dividing income or loss
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or result in the issuance of common
stock that would then share in the earnings of the Company. Potentially dilutive
securities are excluded from the Company's calculation of diluted EPS when their
inclusion would be antidilutive.

  k. Stock-Based Compensation

     Accounting principles generally accepted in the United States ("GAAP")
permit companies to use either of two alternative accounting methods to
recognize employee stock-based compensation. Under the first accounting method,
if options are granted at an exercise price equal to the market value of the
stock at the time of the grant, no compensation expense is recognized. The
Company follows this accounting method, which it believes better reflects the
motivation for its issuance of stock options, namely, that they are incentives
for future performance rather than compensation for past performance. Under the
second accounting method, issuers record compensation expense over the period
they are expected to be outstanding prior to exercise, expiration, or
cancellation. The amount of compensation expense recognized over this term is
the "fair value" of the options at the time of the grant as determined by an
option pricing model. The option pricing model attributes fair value to the
options based upon the length of their term, the volatility of the stock price
in past periods, and other factors. Under this method, the issuer recognizes
compensation expense regardless of whether the officer or director exercised the
options. Pro forma disclosures of net income under this method are presented in
Note 7.

  l. Use of Estimates

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

  m. Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133 "Accounting for Derivative Instruments and Hedging Activities", which is
effective for fiscal years beginning after June 15, 2000 as amended by SFAS No.
137 and SFAS No. 138. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments. The statement requires that every
derivative instrument be recorded in the balance sheet as either an asset or
liability measured at its fair value, and that changes in the derivative's fair
value be recognized currently in the earnings unless specific hedge accounting
criteria are met. The Company did not have any derivative instruments as of
                                        35
<PAGE>   38
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

December 31, 2000 and 1999 and believes that the adoption of SFAS No. 133 will
not have a material impact on its financial statements.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on the recognition, disclosure and
presentation of revenue in financial statements. SAB 101, as amended by SAB 101A
and SAB101B, is required to be implemented no later than the fourth fiscal
quarter of fiscal years beginning after December 15, 1999. We believe that our
revenue recognition policy is in compliance with the provisions of SAB 101 and
that the adoption of SAB 101 will have no material impact on our financial
position or the results of operations.

     In March 2000, the FASB issued interpretation No. 44, Accounting For
Certain Transactions Involving Stock Compensation -- an Interpretation of
Accounting Principles Board ("APB") Opinion NO. 25." The Interpretation
clarifies the application of APB Opinion No. 25 in certain situations, as
defined. The Interpretation is effective July 1, 2000, but covers certain events
occurring during the period after December 15, 1998, but before the effective
date. To the extent that events covered by the effective date, the effects of
applying this Interpretation would be recognized on a prospective basis from the
effective date. Accordingly, upon initial application of the final
Interpretation, (a) no adjustments would be made to the financial statement for
periods before the effective date and (b) no expense would be recognized for any
additional compensation cost measured that is attributable to periods before the
effective date. The adoption of this new Interpretation had no impact on the
Company's consolidated financial statements based on the current structure and
operations.

  n. Principles of Consolidation

     The Company's consolidated financials as of December 31, 2000 and 1999
include the accounts of the Company and its subsidiary from its respective date
of acquisition (see note 3). All significant intercompany transactions and
balances have been eliminated in consolidation.

 3. ACQUISITIONS

     On July 24, 2000, the Company acquired webMillion.com, Inc., a leading
direct marketing promotions company. Pursuant to the Merger Agreement, the
Company issued 1,901,381 shares of its Common Stock, $0.001 par value, to all
the shareholders of webMillion. Holders of warrants of webMillion received, in
the aggregate, the right to purchase from the Company 98,619 shares of Common
Stock at a price per share of $1.9792. A total of 361,063 of the Merger Shares
are being held in a three year escrow as security for the indemnification
obligations of webMillion's former shareholders pursuant to the Merger
Agreement.

     The fair value purchase price in excess of the value of identified assets
and liabilities assumed has been allocated to goodwill in the amount of $19.8
million. Goodwill is being amortized over its expected benefit, which is 20
years. The transaction was structured as a reverse triangular merger and has
been accounted for through the purchase method of accounting. As a result of the
tax-free purchase, webMillion now is a wholly-owned subsidiary of the Company.

 4. EQUITY

  a. Initial Public Offering

     In February 2000, the Company completed an initial public offering (the
"IPO") of 7,475,000 shares of common stock, including 975,000 shares subject to
the underwriter's over-allotment option, at $15.00 per share of common stock.
The IPO resulted in aggregate net proceeds to the Company of approximately
$102,600,000, net of underwriting discounts and expenses of the offering.

                                        36
<PAGE>   39
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

  b. Stock Split

     On April 29, 1999, the Board of Directors of the Company authorized a stock
split converting each share of common stock into ten shares of common stock.
This stock split increased the total number of common stock shares authorized
from 1,800,000 to 18,000,000. In October 1999, the Company announced that it
will effect a reverse stock split converting three shares of common stock into
two shares of common stock. On January 25, 2000, the Company effected the
2-for-3 reverse stock split. The effect of this stock split is retroactively
reflected in the financial statements and the accompanying notes to the
financial statements.

     On September 22, 1999, the Company restated and amended its certificate of
incorporation authorizing 80,000,000 shares of common stock, later adjusted to
53,333,333 as a result of the reverse stock split, and 15,000,000 authorized
shares of preferred stock.

  c. Series A Preferred Stock Financing

     On September 16, 1998, in a private placement transaction, the Company
issued 2,000 shares of Series A preferred stock to William Apfelbaum at $1,000
per share, convertible into common stock at the conversion price per share of
$1.20. The number of shares of common stock into which the Series A preferred
stock will convert is an aggregate of 1,666,666 shares. Mr. Apfelbaum, the
Company's chairman, was issued a warrant to purchase up to 438,593 shares of the
Company's common stock at a price per share of $1.71. The holder of the Series A
preferred stock is entitled to registration rights regarding the shares of
common stock issued or issuable upon conversion and upon exercise of the
warrant. The holder of the outstanding shares of Series A preferred stock is
entitled to receive, upon conversion of shares of Series A preferred stock into
common stock, a dividend in cash accruing from September 16, 1998, at an annual
rate of $40 per share of Series A preferred stock so converted. The holder of
Series A preferred stock has the right to elect one member of the board of
directors. To date, the holder of the Series A preferred stock has designated
William Apfelbaum to the board of directors. All shares of Series A preferred
stock were automatically converted into shares of common stock upon the closing
of the initial public offering of the Company's common stock on February 2,
2000.

  d. Series B Preferred Stock Financing

     Commencing on August 6, 1999, in a private placement transaction, the
Company issued a total of 4,107,044 shares of Series B preferred stock at $2.35
per share convertible into common stock at a three-to-two ratio. The principal
purchasers of the Series B preferred stock included DigaComm (L90), L.L.C. and
Keystone Venture V, L.P. DigaComm (L90), L.L.C. also purchased a warrant to
acquire up to 353,964 shares of common stock of the Company at a price per share
of $5.30. Unless previously exercised this warrant will be automatically
exercised on a cashless basis into shares of common stock, with a fair value
equivalent to the intrinsic value of the warrant, upon the closing of an initial
public offering of the Company's common stock. The holders of the Series B
preferred stock are entitled to registration rights regarding the shares of
common stock issued or issuable upon conversion and upon exercise of the
warrant. The holders of the outstanding shares of Series B preferred stock are
entitled to receive, upon conversion of shares of Series B convertible preferred
stock into common stock, a dividend in cash accruing from August 6, 1999, at an
annual rate of $0.141 per share of Series B preferred stock so converted. The
holders of Series B preferred stock collectively have the right to elect three
members of the board of directors. All shares of Series B preferred stock were
automatically converted into shares of common stock upon the closing the initial
public offering of the Company's common stock on February 2, 2000. In connection
with the closing of the private placement transaction for Series B preferred
stock, the Company incurred fees and expenses totaling $629,864.

                                        37
<PAGE>   40
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

  e. Series C Preferred Stock Financing

     On September 22, 1999, in a private placement transaction, the Company
issued 1,307,190 shares of Series C preferred stock to Development Ventures
(Two) Inc. and Rare Medium Group, Inc. at $3.06 per share, convertible into
common stock at a three-to-two ratio. The holders of the outstanding shares of
Series C preferred stock are entitled to receive, upon conversion of the Series
C preferred stock into common stock, a dividend in cash accruing from September
22, 1999, at an annual rate of $0.18 per share of Series C preferred stock so
converted. Development Ventures (Two) Inc. also purchased a warrant to acquire
up to 674,029 shares of common stock of the Company at a price per share of
$4.59. Rare Medium Group, Inc. also purchased a warrant to acquire up to 600,000
shares of common stock of the Company at a price per share of $4.59. Unless
previously exercised, both warrants will automatically be exercised on a
cashless basis into shares of common stock upon the closing of an initial public
offering. The holders of Series C preferred stock are entitled to have their
shares of common stock issuable upon conversion of the Series C preferred stock,
as well as the common stock issuable upon exercise of their warrants, registered
on the same registration statement. All shares of Series C preferred stock were
automatically converted into shares of common stock upon the closing of the
initial public offering of the Company's common stock on February 2, 2000.

  f. Warrants

     On June 7, 1999, the Company issued to The Roman Arch Fund L.P. and The
Roman Arch Fund II, L.P. four warrants to purchase up to an aggregate of 333,333
shares of common stock, later adjusted to an aggregate of 150,000 shares of
common stock, at an initial purchase price of $2.40 per share, subject to
adjustment. These warrants may be exercised on a cashless basis. These warrants
expire on the earlier of (i) June 7, 2005 or (ii) the fifth anniversary of an
initial public offering with gross proceeds of at least $20,000,000.
Eighty-three thousand three hundred thirty-three of these warrants, to the
extent not previously exercised, may be exchanged at the election of the holder
within 180 days of the closing of an initial public offering of the Company's
common stock with gross proceeds of at least $20,000,000 for warrants to
purchase up to 166,667 shares of common stock.

     On August 13, 1999, the Company issued to William Apfelbaum a warrant to
purchase up to 353,964 shares of common stock, at an exercise price of $5.30 per
share. Unless previously exercised, this warrant will automatically convert into
the right to receive 353,964 shares of common stock immediately prior to the
closing of an initial public offering of the Company's common stock. Mr.
Apfelbaum exercised this warrant on a cashless basis on January 28, 2000 and
purchased 274,422 shares of common stock.

     Upon the IPO of the Company's common stock, the Company converted all
outstanding shares of Series A, B and C preferred stock into 5,276,156 shares of
common stock. Additionally, the Series A, B and C preferred stockholders
exercised their warrants to purchase shares of the Company's common stock.

 5. DEBT

     On November 29, 1999, the Company acquired a software license in exchange
for a promissory note for $1,453,715. The note bears interest at 7.86% per
annum. This note is collateralized by a standby letter of credit for a total of
$1,208,632. At December 31, 2000 and 1999, the Company had pledged $1,208,632 of
cash as collateral for this outstanding letter of credit. Remaining principal
payments due under the note are $486,708 and $524,976 for the years ending
December 31, 2001 and 2002, respectively.

     On November 29, 1999, the Company obtained a standby letter of credit for a
total of $60,000. At December 31, 2000 and 1999, the Company had pledged $60,000
of cash as collateral for this outstanding letter of credit.

                                        38
<PAGE>   41
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

     On March 28, 2000 the Company obtained a standby letter of credit for a
total of $600,000. At December 31, 2000, the Company had pledged $600,000 of
cash as collateral for this outstanding letter of credit.

     On October 27, 2000, the Company obtained a standby letter of credit in the
amount of $750,000. At December 31, 2000, the Company had pledged $750,000 of
cash as collateral for this outstanding letter of credit.

 6. INCOME TAXES

     During 1998, the Company was an S-corporation and the federal and state
taxes were the responsibility of stockholders rather than the Company. Effective
November 30, 1998, the Company became a C-corporation for income tax purposes.
Pursuant to this election, such taxes will be the responsibility of the Company
rather than the stockholders.

     Deferred income taxes arise as a result of temporary differences in the
methods used to determine income for financial reporting purposes versus income
for tax reporting purposes. These differences result primarily from accruals,
reserves and net operating losses carrying forward.

     The provision for income taxes for December 31, 2000 and 1999 consists of
the following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                             -------------------------
                                                                2000           1999
                                                             -----------    ----------
<S>                                                          <C>            <C>
Current:
  Federal..................................................  $        --    $       --
  State....................................................        1,600           800
                                                             -----------    ----------
                                                                   1,600           800
Deferred...................................................   10,077,192     2,981,483
                                                             -----------    ----------
                                                              10,078,792     2,982,283
Less: Valuation Allowance..................................   10,077,192     2,981,483
                                                             -----------    ----------
                                                             $     1,600    $      800
                                                             ===========    ==========
</TABLE>

     Significant components of the Company's deferred tax assets at December 31,
2000 and 1999 are comprised primarily of net operating loss carry forwards and
are summarized as follows:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                           ---------------------------
                                                               2000           1999
                                                           ------------    -----------
<S>                                                        <C>             <C>
Net operating loss carry forward.........................  $  8,770,338    $ 2,526,389
Accrued other............................................     1,306,854        455,094
                                                           ------------    -----------
Gross deferred tax asset.................................    10,077,192      2,981,483
Less: Valuation Allowance................................   (10,077,192)    (2,981,483)
                                                           ------------    -----------
                                                           $         --    $        --
                                                           ============    ===========
</TABLE>

     At December 31, 2000 and 1999, the Company provided a valuation allowance
for net deferred tax assets which management determined were "more likely than
not" to be unrealizable. As a result, no deferred tax assets have been recorded
by the Company.

     The Tax Reform Act of 1986 limits the use of net operating loss and tax
credit carryforward in certain situations where changes occur in the stock
ownership of a company. If the Company should have an ownership change, as
defined for tax purposes, utilization of the carryforwards could be restricted.

                                        39
<PAGE>   42
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

 7. STOCK OPTIONS AND WARRANTS

  a. Stock Options

     During February 1999, the Company granted 46,666 stock options to employees
with a strike price of $1.50 vesting ratably through March 1, 2003. These
options are dependent upon continued employment with the Company.

     During April 1999, the Company adopted an employee stock option plan
authorized by the Board of Directors to grant up to an aggregate of 1,666,666
options to purchase common stock shares. These shares may be comprised of
authorized but unissued shares or shares previously issued but reacquired by the
Company. The price of these options will be not less than the fair market value
of the shares, or greater than 110 percent of the fair market value of the
shares, at the date of grant. This plan will terminate ten years from the
adoption date and may be amended by the Board of Directors with stockholder
approval.

     Employee transactions during the years ended December 31, 2000, 1999 and
1998 are summarized as follows:

<TABLE>
<CAPTION>
                                               2000                          1999                         1998
                                    ---------------------------   ---------------------------   -------------------------
                                                    WEIGHTED                      WEIGHTED                    WEIGHTED
                                                    AVERAGE                       AVERAGE                     AVERAGE
      EMPLOYEE STOCK OPTIONS          SHARES     EXERCISE PRICE     SHARES     EXERCISE PRICE    SHARES    EXERCISE PRICE
      ----------------------        ----------   --------------   ----------   --------------   --------   --------------
<S>                                 <C>          <C>              <C>          <C>              <C>        <C>
Outstanding at beginning of
  period..........................   2,151,734       $2.82           582,000       $0.86              --       $  --
Granted...........................   3,477,903        7.87         1,644,400        3.51         648,667        0.89
Exercised.........................    (502,041)       1.06           (26,666)       3.53              --          --
Forfeited.........................    (283,473)       8.56           (48,000)       2.23         (66,667)       1.20
                                    ----------       -----        ----------       -----        --------       -----
Outstanding at end of period......   4,844,123       $7.35         2,151,734       $2.82         582,000       $0.86
                                    ==========       =====        ==========       =====        ========       =====
Options exercisable at end of
  period..........................     833,287                       816,666                          --
Weighted average fair value of
  options granted during period...  $     7.84                    $     2.31                    $   0.60
</TABLE>

     The following table summarizes information about employee stock options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                WEIGHTED AVERAGE
   RANGE OF         NUMBER         REMAINING
EXERCISE PRICES   OUTSTANDING   CONTRACTUAL LIFE
---------------   -----------   ----------------
<S>               <C>           <C>
$ 1.20 - $ 1.50      137,941       7.90 years
$ 3.53 - $ 4.94    3,208,912       9.30 years
$ 5.50 - $ 8.25      307,097       9.60 years
$ 8.38 - $10.25      677,147       9.50 years
$14.44 - $21.06      434,227       9.10 years
$22.38 - $27.75       78,799       9.20 years
                   ---------       ----------
                   4,844,123       9.30 years
                   =========       ==========
</TABLE>

     The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
its plan. No compensation cost has been recognized for its employee stock option
grants, which are fixed in nature, as the options have been granted with an
exercise price equal to the then current fair market value of the Company's
stock as determined by the Company's Board of Directors. Had compensation cost
for the Company's stock-based compensation plan been determined based on the
fair value at the grant dates for awards under this plan consistent with the
method of FASB Statement No. 123, "Accounting for Stock-Based Compensation,"

                                        40
<PAGE>   43
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

the Company's net loss for the years ended December 31, 2000, 1999 and 1998
would have been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                 -------------------------------------
                                                    2000           1999         1998
                                                 -----------    ----------    --------
<S>                                              <C>            <C>           <C>
Net loss as reported...........................  $19,711,021    $7,488,281    $289,569
Pro forma adjustment...........................   27,548,868     1,092,595     137,769
                                                 -----------    ----------    --------
Pro forma loss.................................  $47,259,889    $8,580,876    $427,338
                                                 ===========    ==========    ========
</TABLE>

     The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants during the years ended December 31, 2000, 1999 and
1998: dividend yield of 0 percent; risk-free interest rates of 5.9 percent;
expected life of five years; and an expected volatility of 135.3 percent for
December 31, 2000 and 20 percent for the years ended December 31, 1999 and 1998.

  b. Common Stock Warrants

     In connection with an advertising agreement, the Company issued a warrant
to purchase 50,000 shares of common stock at an exercise price of $15.00 per
share. This warrant is only exercisable from January 29, 2001 through February
5, 2001. The fair value of the warrant was estimated at $209,000 on the date of
issuance using the Black-Scholes option pricing model with the following
assumptions: dividend yield of 0 percent; expected volatility of 65 percent;
risk-free interest rate of 6.12 percent; and an expected life of one year. This
warrant was not exercised and expired on February 5, 2001.

 8. COMMITMENTS AND CONTINGENCIES

  a. Litigation

     The Company may become subject to legal proceeding from time to time in the
normal course of business. The Company is not currently involved in any
litigation that management believes will have a material adverse effect on the
Company's financial position or results of operations.

  b. Office Lease

     The Company leases office space in the following location: New York, NY. In
addition, the Company has entered into the following lease agreements during the
12 months ended December 31, 2000:

     On January 17, 2000, the Company entered into an agreement to lease
additional office space in Chicago, IL through January 16, 2005.

     On February 28, 2000, the Company entered into an agreement to lease
additional office space in New York, NY through July 30, 2003. In connection
with this agreement, the Company was required to obtain a standby letter of
credit in the amount of $600,000. This letter of credit expires on July 31, 2001
and is automatically extended for an additional period of one year through July
31, 2002. The Company has pledged $600,000 under this letter of credit.

     On May 1, 2000, the Company entered into an agreement to lease additional
office space in San Francisco, CA through July 31, 2003.

     On June 26, 2000, the Company entered into an agreement to lease additional
office space in Greenwich, CT through July 31, 2005.

                                        41
<PAGE>   44
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

     On July 24, 2000, in conjunction with its acquisition of webMillion.com,
Inc., the Company assumed the lease liability for office space in Boise, ID
through March 31, 2001.

     On September 26, 2000, the Company entered into an agreement to lease
additional office space in Seattle, WA through September 30, 2003.

     On October 27, 2000, the Company entered into an agreement to lease
additional office space for its corporate headquarters in Marina Del Rey, CA
through December 31, 2005. In connection with this agreement, the Company was
required to obtain a standby letter of credit in the amount of $750,000. This
letter of credit expires on January 31, 2002 and is automatically extended for
an additional period of one year through January 31, 2006. The Company has
pledged $750,000 under this letter of credit.

     The minimum rental commitments required under operating leases are as
follows:

<TABLE>
<CAPTION>
                         YEAR                           OPERATING LEASES
                         ----                           ----------------
<S>                                                     <C>
2001..................................................     $1,767,500
2002..................................................      1,782,500
2003..................................................      1,644,500
2004..................................................      1,258,000
2005..................................................      1,164,000
Thereafter............................................        112,000
                                                           ----------
                                                           $7,728,500
                                                           ==========
</TABLE>

  c. Capital Lease Commitments and Service Agreement

     The Company is committed under non-cancelable capital lease obligations for
certain equipment. The equipment related to capital leases has an original cost
of approximately $2,600,000, $873,000 and $274,000 at December 31, 2000, 1999
and 1998, respectively, with accumulated depreciation of approximately $839,000,
$127,000 and $11,000, respectively.

     Future minimum annual payments under non-cancelable capital leases and
service agreements are as follows as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                        SERVICE
                       YEAR                          CAPITAL LEASES    AGREEMENT
                       ----                          --------------    ----------
<S>                                                  <C>               <C>
2001...............................................     $466,000       $  547,000
2002...............................................      236,000          547,000
2003...............................................       21,000               --
2004...............................................       11,000               --
Thereafter.........................................           --               --
                                                        --------       ----------
                                                         734,000        1,094,000
Less -- Amounts representing interest..............       70,000           82,000
Less -- Current Portion............................      411,000          547,000
                                                        --------       ----------
                                                        $253,000       $  465,000
                                                        ========       ==========
</TABLE>

     During 1999, the Company entered into a three-year servicing agreement with
a third party to provide Internet data service centers. If this agreement is
terminated without cause, the Company will be assessed a fee equal to fifteen
percent of the total contract value due to the service provider.

                                        42
<PAGE>   45
                            L90, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2000

 9. INVESTMENTS

     On November 22, 2000, the Company purchased a 19% interest in Zondigo,
Inc., a wireless technology company. The cash purchase price for the shares was
equal to $1.95 million. Concurrent with the investment, the Company and Zondigo
entered into a strategic alliance and cross-licensing agreement, pursuant to
which both parties have agreed to grant each other licenses to certain of their
respective technologies. This investment is being accounted for under the cost
method of accounting.

     Frank Addante, the Company's former Chief Technology Officer, serves as the
Chairman of Zondigo. Peter Sealey, one of the Company's board members, also
serves on the board of Zondigo. In addition, John Bohan, the Company's
President, CEO and board member, serves on the board of Zondigo.

10. RELATED PARTY TRANSACTIONS

     In November 2000, the Company received $1,480,000 in notes receivable for
loans to officers. These notes bear interest at 5.0% per annum and mature at the
occurrence of the fifth anniversary of the date of the note or upon demand by
the Holder. The notes are secured by a security interest in the officers' stock,
as well as, all other personal property of the officers.

     During the year ended December 31, 2000, the Company provided technology,
marketing and design consulting services to Zondigo. Zondigo paid the Company an
aggregate of $800,000 for these services. Additionally, Zondigo paid the Company
$150,000 as a licensing fee for its technology (see note 9).

     During September of 1999, a member of the Board of Directors exercised
options to purchase 26,667 shares of common stock at $3.53 per share. This
transaction has been reflected in the financial statements and accompanying
notes to the financial statements.

     During 1998, the Company received $43,750 in notes receivable for common
stock from employees for the issuance of 116,667 shares of common stock with a
par value of $0.001 per share. These notes bear interest at a rate equal to 5.28
percent per annum and mature at the earliest of cessation of maker's employment
by the Company for any reason or May 18, 2004. In addition, during 1998, the
Company issued an aggregate of 6,550,000 shares of common stock with a par value
of $0.001 per share to certain other employees and a former employee in exchange
for their contribution of the operating business of John Bohan & Associates,
LLC, which was valued at $2,456,250.

     During 1998, the Company entered into an agreement with a stockholder to
purchase 2,000 shares of preferred stock for $2,000,000 and a warrant to
purchase 438,593 shares of common stock at a strike price of $1.71 per share.

                                        43
<PAGE>   46

                                  SCHEDULE II

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
                                                  BALANCE AT    CHARGED TO                 BALANCE AT
                                                   BEGINNING    COSTS AND                    END OF
                  DESCRIPTION                      OF PERIOD     EXPENSES    DEDUCTIONS      PERIOD
                  -----------                     -----------   ----------   -----------   ----------
<S>                                               <C>           <C>          <C>           <C>
For the year ended December 31, 2000
  Allowance for doubtful accounts receivable....   $668,010     $5,365,660   $(3,362,631)  $2,671,039
For the year ended December 31, 1999
  Allowance for doubtful accounts receivable....   $142,952     $  644,602   $  (119,544)  $  668,010
For the year ended December 31, 1998
  Allowance for doubtful accounts receivable....   $ 69,860     $  142,952   $   (69,860)  $  142,952
</TABLE>

                                        44
<PAGE>   47

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

     Not Applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Incorporated by reference from the information in our proxy statement for
the 2001 Annual Meeting of Stockholders, which we will file with the Securities
and Exchange Commission on or before April 30, 2001.

ITEM 11. EXECUTIVE COMPENSATION

     Incorporated by reference from the information in our proxy statement for
the 2001 Annual Meeting of Stockholders which we will file with the Securities
and Exchange Commission on or before April 30, 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated by reference from the information in our proxy statement for
the 2001 Annual Meeting of Stockholders which we will file with the Securities
and Exchange Commission on or before April 30, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated by reference from the information in our proxy statement for
the 2001 Annual Meeting of Stockholders which we will file with the Securities
and Exchange Commission on or before April 30, 2001.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) Documents Filed As Part of This Report:

          (1) Index to Financial Statements

          The financial statements required by this item are included in Part
     II, Item 8 of this Report.

          (2) Financial Statement Schedules

          The financial statement schedule included in Part II, Item 8 of this
     document is filed as part of this Report.

     All other schedules are omitted as the required information is inapplicable
or the information is presented in the consolidated financial statements or
related notes.

     (b) Reports on Form 8-K.

          (1) We filed a Current Report on Form 8-K, Items 5 and 7, with the SEC
     on October 5, 2000, which amended our Current Report on Form 8-K, filed
     with the SEC on July 28, 2000.

          (2) We filed a Current Report on Form 8-K, Item 5, with the SEC on
     November 7, 2000.

                                        45
<PAGE>   48

     (c) Exhibits

<TABLE>
<CAPTION>
 NUMBER                            DESCRIPTION
 ------                            -----------
<S>        <C>
 2.1*      Agreement of Merger dated September 15, 1999.
 3.1**     Amended and Restated Certificate of Incorporation.
 3.2*      Amended and Restated Bylaws.
 4.1*      See Exhibits 3.1 and 3.2 for provisions of the Amended and
           Restated Certificate of Incorporation and Bylaws of the
           Registrant defining the rights of holders of Common Stock of
           the Registrant.
 4.2*      Stock Purchase and Stockholders Agreement dated September
           14, 1998.
 4.3*      Registration Agreement dated August 6, 1999 (as amended).
 4.4*      Series C Registration Agreement dated September 22, 1999.
10.1*      1999 Stock Incentive Plan.
10.2**     Form of Incentive Stock Option Agreement.
10.3**     Form of Non-Statutory Stock Option Agreement.
10.4*      Warrant No. PP-99-1 dated June 7, 1999 issued to The Roman
           Arch Fund L.P.
10.5*      Warrant No. PP-99-2 dated June 7, 1999 issued to The Roman
           Arch Fund II L.P.
10.6*      Warrant No. IPO-99-1 dated June 7, 1999 issued to The Roman
           Arch Fund L.P.
10.7*      Warrant No. IPO-99-2 dated June 7, 1999 issued to The Roman
           Arch Fund II L.P.
10.8*      Form of Indemnification Agreement entered into between the
           Registrant and each of directors and executive officers.
10.9*      Employment Agreement entered into between the Registrant and
           John C. Bohan.
10.10*     Employment Agreement entered into between the Registrant and
           Christopher J. Cardinali.
10.11*     Employment Agreement entered into between the Registrant and
           Mark D. Roah (as amended).
10.12*     Employment Agreement entered into between the Registrant and
           Frank A. Addante (as amended).
10.13*     Employment Agreement entered into between the Registrant and
           Thomas A. Sebastian.
10.14*     Severance Agreement entered into between the Registrant and
           Thomas A. Sebastian.
10.15**    Payment Schedule Contract dated November 30, 1999 between
           L90 and Oracle Corporation.
10.16**    Master Lease Agreement dated January 5, 1999 between L90 and
           Sun Microsystems Finance.
10.17***   Agreement and Plan of Merger dated July 7, 2000 among L90,
           WM Acquisition Corp., webMillion.com, Inc., Anthony Hauser
           and Kenneth Adcock.
10.18      Office Lease dated October 25, 2000 between Registrant and
           Spieker Properties, L.P.
10.19      Agreement of Lease dated April 13, 1999 between Registrant
           and New Green 50W23 Realty LLC.
10.20      Sub-Sublease Agreement dated February 28, 2000 between
           Registrant and Cravens & Company, Inc.
21.1****   Subsidiaries.
23.1       Consent of Arthur Andersen LLP.
24.1       Powers of Attorney (See Signature Page).
27.1       Financial Data Schedule.
</TABLE>

                                        46
<PAGE>   49

---------------
*    Previously filed as an exhibit to the Registrant's S-1 Registration
     Statement filed with the Commission on September 23, 1999, which is
     incorporated herein by reference.

**   Previously filed as an exhibit to the Registrant's Annual Report on Form
     10-K filed with the Commission on March 24, 2000, which is incorporated
     herein by reference.

***  Previously filed as an exhibit to the Registrant's Current Report on Form
     8-K filed with the Commission on July 28, 2000, which is incorporated
     herein by reference.

**** Previously filed as an exhibit to the Registrant's Post-Effective Amendment
     No. 1 to S-1 Registration Statement filed July 28, 2000 with the
     Commission, which is incorporated herein by reference.

     (d) Financial Statement Schedules.

          Schedule II Valuation and Qualifying Accounts (see page 44).

                                        47
<PAGE>   50

                                   SIGNATURES

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

                                          L90, INC.,
                                          a Delaware corporation

Date: March 29, 2001                      By:       /s/ JOHN C. BOHAN
                                            ------------------------------------
                                                       John C. Bohan
                                               President and Chief Executive
                                                           Officer

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

<TABLE>
<CAPTION>
                        NAME                                     CAPACITY                    DATE
                        ----                                     --------                    ----
<C>                                                    <C>                              <S>
                  /s/ JOHN C. BOHAN                    Director, President and Chief    March 29, 2001
-----------------------------------------------------  Executive Officer (Principal
                    John C. Bohan                           Executive Officer)

               /s/ THOMAS A. SEBASTIAN                 Senior Vice President, Chief     March 29, 2001
-----------------------------------------------------      Financial Officer and
                 Thomas A. Sebastian                        Assistant Secretary
                                                       (Principal Financial Officer
                                                         and Principal Accounting
                                                                 Officer)

              /s/ WILLIAM M. APFELBAUM                   Chairman of the Board of       March 29, 2001
-----------------------------------------------------            Directors
                William M. Apfelbaum

                  /s/ MARK D. ROAH                               Director               March 29, 2001
-----------------------------------------------------
                    Mark D. Roah

            /s/ CHRISTOPHER J. CARDINALI                         Director               March 29, 2001
-----------------------------------------------------
              Christopher J. Cardinali

                                                                 Director               March   , 2001
-----------------------------------------------------
                 Peter G. Diamandis

                                                                 Director               March   , 2001
-----------------------------------------------------
                   Glenn S. Meyers

                                                                 Director               March   , 2001
-----------------------------------------------------
                  G. Bruce Redditt

                  /s/ PETER SEALEY                               Director               March 29, 2001
-----------------------------------------------------
                    Peter Sealey
</TABLE>

                                        48
<PAGE>   51

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
-------                           -----------
<S>       <C>
2.1*      Agreement of Merger dated September 15, 1999.
3.1**     Amended and Restated Certificate of Incorporation.
3.2*      Amended and Restated Bylaws.
4.1*      See Exhibits 3.1 and 3.2 for provisions of the Amended and
          Restated Certificate of Incorporation and Bylaws of the
          Registrant defining the rights of holders of Common Stock of
          the Registrant.
4.2*      Stock Purchase and Stockholders Agreement dated September
          14, 1998.
4.3*      Registration Agreement dated August 6, 1999 (as amended).
4.4*      Series C Registration Agreement dated September 22, 1999.
10.1*     1999 Stock Incentive Plan.
10.2**    Form of Incentive Stock Option Agreement.
10.3**    Form of Non-Statutory Stock Option Agreement.
10.4*     Warrant No. PP-99-1 dated June 7, 1999 issued to The Roman
          Arch Fund L.P.
10.5*     Warrant No. PP-99-2 dated June 7, 1999 issued to The Roman
          Arch Fund II L.P.
10.6*     Warrant No. IPO-99-1 dated June 7, 1999 issued to The Roman
          Arch Fund L.P.
10.7*     Warrant No. IPO-99-2 dated June 7, 1999 issued to The Roman
          Arch Fund II L.P.
10.8*     Form of Indemnification Agreement entered into between the
          Registrant and each of directors and executive officers.
10.9*     Employment Agreement entered into between the Registrant and
          John C. Bohan.
10.10*    Employment Agreement entered into between the Registrant and
          Christopher J. Cardinali.
10.11*    Employment Agreement entered into between the Registrant and
          Mark D. Roah (as amended).
10.12*    Employment Agreement entered into between the Registrant and
          Frank A. Addante (as amended).
10.13**   Employment Agreement entered into between the Registrant and
          Thomas A. Sebastian.
10.14**   Severance Agreement entered into between the Registrant and
          Thomas A. Sebastian.
10.15***  Payment Schedule Contract dated November 30, 1999 between
          L90 and Oracle Corporation.
10.16*    Master Lease Agreement dated January 5, 1999 between L90 and
          Sun Microsystems Finance.
10.17*    Agreement and Plan of Merger dated July 7, 2000 among L90,
          WM Acquisition Corp., webMillion.com, Inc., Anthony Hauser
          and Kenneth Adcock.
10.18     Office Lease dated October 25, 2000 between Registrant and
          Spieker Properties, L.P.
10.19     Agreement of Lease dated April 13, 1999 between Registrant
          and New Green 50W23 Realty LLC.
10.20     Sub-Sublease Agreement dated February 28, 2000 between
          Registrant and Cravens & Company, Inc.
21.1****  Subsidiaries.
23.1      Consent of Arthur Andersen LLP.
24.1      Powers of Attorney (See Signature Page).
</TABLE>

                                        49
<PAGE>   52

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
-------                           -----------
<S>       <C>
27.1      Financial Data Schedule.
</TABLE>

---------------
*    Previously filed as an exhibit to the Registrant's S-1 Registration
     Statement filed with the Commission on September 23, 1999, which is
     incorporated herein by reference.

**   Previously filed as an exhibit to the Registrant's Annual Report on Form
     10-K filed with the Commission on March 24, 2000, which is incorporated
     herein by reference.

***  Previously filed as an exhibit to the Registrant's Current Report on Form
     8-K filed with the Commission on July 28, 2000, which is incorporated
     herein by reference.

**** Previously filed as an exhibit to the Registrant's Post-Effective Amendment
     No. 1 to S-1 Registration Statement filed July 28, 2000 with the
     Commission, which is incorporated herein by reference.

                                        50
<PAGE>   53

                                   SIGNATURES

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

                                          L90, INC., a Delaware corporation

Date: March 29, 2001                      By:       /s/ JOHN C. BOHAN
                                            ------------------------------------
                                                       John C. Bohan
                                                       President and
                                                  Chief Executive Officer

                               POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that such person whose signature appears
below constitutes and appoints John C. Bohan and Thomas A. Sebastian, and each
of them his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Form 10-K and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the U.S. Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
                        NAME                                     CAPACITY                    DATE
                        ----                                     --------                    ----
<C>                                                    <C>                              <S>
                  /s/ JOHN C. BOHAN                    Director, President and Chief    March 29, 2001
-----------------------------------------------------  Executive Officer (Principal
                    John C. Bohan                           Executive Officer)

               /s/ THOMAS A. SEBASTIAN                 Senior Vice President, Chief     March 29, 2001
-----------------------------------------------------      Financial Officer and
                 Thomas A. Sebastian                        Assistant Secretary
                                                       (Principal Financial Officer
                                                         and Principal Accounting
                                                                 Officer)

              /s/ WILLIAM M. APFELBAUM                   Chairman of the Board of       March 29, 2001
-----------------------------------------------------            Directors
                William M. Apfelbaum

                  /s/ MARK D. ROAH                               Director               March 29, 2001
-----------------------------------------------------
                    Mark D. Roah

            /s/ CHRISTOPHER J. CARDINALI                         Director               March 29, 2001
-----------------------------------------------------
              Christopher J. Cardinali

                                                                 Director               March   , 2001
-----------------------------------------------------
                 Peter G. Diamandis

                                                                 Director               March   , 2001
-----------------------------------------------------
                   Glenn S. Meyers

                                                                 Director               March   , 2001
-----------------------------------------------------
                  G. Bruce Redditt

                  /s/ PETER SEALEY                               Director               March 29, 2001
-----------------------------------------------------
                    Peter Sealey
</TABLE>

                                        51