<PAGE>   1
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                ----------------

                                    FORM 10-Q
                                ----------------

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                        COMMISSION FILE NUMBER 000-26365
                                ----------------

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

                DELAWARE                               95-4652060
     (STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)              IDENTIFICATION NUMBER)

                       74 NORTH PASADENA AVENUE 3RD FLOOR
                           PASADENA, CALIFORNIA 91103
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                            TELEPHONE: (626) 685-5600
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [X] No [ ]

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

   49,054,352 shares of Common Stock, $0.0001 par value, as of March 31, 2000

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                                 GOTO.COM, INC.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                  PAGE NO.
                                                                                                                  --------
<S>                                                                                                               <C>
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements:
          Condensed Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999........................   3
          Condensed Consolidated Statements of Operations for the three months ended March 31, 2000 and 1999......   4
          Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2000 and 1999......   5
          Notes to Condensed Consolidated Financial Statements....................................................   6
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations...................  10
Item 3.   Quantitative and Qualitative Disclosures About Market Risks                                               23

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.......................................................................................  23
Item 2.   Changes in Securities and Use of Proceeds...............................................................  24
Item 6.   Exhibits and Reports on Form 8-K........................................................................  24

Signatures........................................................................................................  25
</TABLE>


                                       2
<PAGE>   3
                          PART I FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                                 GOTO.COM, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          MARCH 31,     DECEMBER 31,
                                                                            2000            1999
                                                                          ---------     ------------
                                                                         (UNAUDITED)
<S>                                                                      <C>            <C>
                                            ASSETS

CURRENT ASSETS:
  Cash and cash equivalents ........................................      $  22,550       $  11,914
  Short-term investments ...........................................         69,275          93,409
  Accounts receivable, net .........................................          3,349           2,927
  Prepaid expenses and other .......................................            927             851
  Prepaid marketing expenses .......................................          2,963           2,034
                                                                          ---------       ---------
Total current assets ...............................................         99,064         111,135

Property and equipment, net ........................................         18,889          12,703

Intangible assets, net .............................................        237,186              --
Long-term investments ..............................................          3,733           4,932
Other assets .......................................................            553             742
                                                                          ---------       ---------
Total assets .......................................................      $ 359,425       $ 129,512
                                                                          =========       =========

                              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable .................................................      $  10,003       $  10,465
  Accrued expenses .................................................          7,448           2,562
  Deferred revenue .................................................          2,463           2,058
  Current portion of debt ..........................................            100             131
  Current portion of capital lease obligations .....................            780             754
                                                                          ---------       ---------
Total current liabilities ..........................................         20,794          15,970

Other long-term liabilities ........................................          1,279              --
Long-term capital lease obligations ................................            578             768

STOCKHOLDERS' EQUITY:
    Common Stock, $0.0001 par value,
      200,000 shares authorized:
      Shares issued and outstanding-- 49,054 and 45,519
      for March 31, 2000 and December 31, 1999, respectively .......              5               5
    Additional paid-in capital on Common Stock .....................        412,893         158,799
    Deferred compensation, net .....................................         (2,159)         (2,584)
    Accumulated deficit ............................................        (73,914)        (43,405)
    Unrealized losses on short-term and long-term investments ......            (51)            (41)
                                                                          ---------       ---------
Total stockholders' equity .........................................        336,774         112,774
                                                                          ---------       ---------
Total liabilities and stockholders' equity .........................      $ 359,425       $ 129,512
                                                                          =========       =========
</TABLE>

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


                                       3
<PAGE>   4
                                 GOTO.COM, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS; UNAUDITED)

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED
                                                                                  MARCH 31,
                                                                           -----------------------
                                                                             2000           1999
                                                                           --------       --------
<S>                                                                        <C>            <C>
Revenue .............................................................      $ 17,215       $  1,451

Cost of revenue .....................................................         2,605            957
                                                                           --------       --------
Gross profit ........................................................        14,610            494

Operating expenses:
  Marketing, sales and service ......................................        16,314          4,614
  General and administrative ........................................         6,267          1,555
  Product development ...............................................         2,201            520
  Amortization of deferred compensation .............................           425          1,297
  Write-off of acquired in-process research and development .........         7,550             --
  Amortization of intangible assets .................................        13,954             --
                                                                           --------       --------
                                                                             46,711          7,986
                                                                           --------       --------
Loss from operations ................................................       (32,101)        (7,492)

Other income:
  Interest income, net ..............................................         1,547            132
  Other income ......................................................            45             --
                                                                           --------       --------
Net loss ............................................................      $(30,509)      $ (7,360)
                                                                           ========       ========

Pro forma basic and diluted net loss per share ......................      $  (0.67)      $  (0.24)
                                                                           ========       ========

Historical basic and diluted net loss per share .....................      $  (0.67)      $  (0.68)
                                                                           ========       ========

Weighted average shares used to compute pro forma basic
  and diluted net loss per share ....................................        45,323         30,387
                                                                           ========       ========
Weighted average shares used to compute historical basic
  and diluted net loss per share ....................................        45,323         10,894
                                                                           ========       ========
</TABLE>

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


                                       4
<PAGE>   5
                                 GOTO.COM, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS; UNAUDITED)

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED
                                                                                     MARCH 31
                                                                              -----------------------
                                                                                2000           1999
                                                                              --------       --------
<S>                                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss .............................................................      $(30,509)      $ (7,360)
  Adjustments to reconcile net loss to net cash used in
     operating activities:
     Amortization of deferred stock option compensation ................           425          1,297
     Accretion of discounts from the purchase of
       short-term and long-term investments ............................          (413)            --
     Other common stock and warrants expense ...........................            --            180
     Write-off of acquired in-process research and development .........         7,550             --
     Depreciation and amortization .....................................         1,295            179
     Intangible amortization ...........................................        13,954             --
  Changes in operating assets and liabilities:
     Accounts receivable ...............................................          (402)          (343)
     Prepaid expenses and other ........................................           (27)          (304)
     Prepaid marketing expenses ........................................          (928)           (79)
     Accounts payable and accrued expenses .............................         1,022          1,024
     Deferred revenues .................................................           405            293
                                                                              --------       --------
  Net cash used in operating activities ................................        (7,628)        (5,113)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds of short-term and long-term investments, net ................        25,737             --
  Capital expenditures for property and equipment ......................        (7,027)        (1,088)
  Net cash used in acquisition .........................................        (1,407)            --
  Other assets .........................................................          (438)            --
                                                                              --------       --------
  Net cash provided by (used in) investing activities ..................        16,865         (1,088)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from the issuance of Common Stock ...........................         1,594            561
  Proceeds from lease line .............................................            --            587
  Repayments under lease line ..........................................          (164)           (82)
  Repayment of debt ....................................................           (31)           (27)
                                                                              --------       --------
  Net cash provided by financing activities ............................         1,399          1,039

  Net increase (decrease) in cash and cash equivalents .................        10,636         (5,162)
  Cash and cash equivalents at beginning of period .....................        11,914         16,357
                                                                              --------       --------
  Cash and cash equivalents at end of period ...........................      $ 22,550       $ 11,195
                                                                              ========       ========
</TABLE>

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


                                       5
<PAGE>   6
                                 GOTO.COM, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY, BASIS OF PRESENTATION

GoTo.com, Inc. (the Company or GoTo.com) operates an online marketplace that
introduces consumers and businesses who search the Internet to advertisers, who
provide products, services and information. Advertisers participating in our
marketplace include retail merchants, wholesale and service businesses and
manufacturers. We facilitate these introductions through our search service,
which enables advertisers to bid in an ongoing auction for priority placement in
our search results. Priority placement means that the search results appear on
the page ranked in descending order of bid price, with the highest bidder's
listing appearing first. Each advertiser pays GoTo.com the amount of its bid
whenever a consumer clicks on the advertiser's listing in our search results.
Advertisers pay GoTo.com for each click-through, so advertisers bid only on
keywords relevant to the products, services or information that they offer.
Because each advertiser chooses the bid amount and advertisement placement that
is optimal for its business, we believe the GoTo.com marketplace provides
advertisers with a cost-effective way to target consumers. Consumers access the
GoTo.com search service both at our Web site and through our affiliates, a
network of Web sites that have integrated the GoTo.com search service into their
sites or that direct consumer traffic to our site. On January 31, 2000, GoTo.com
acquired Cadabra Inc. (Cadabra), an online comparison shopping service that we
now call "GoTo(TM) Shopping" (see Note 6). We believe GoTo Shopping further
facilitates introductions between consumers and advertisers. GoTo Shopping
simplifies the consumers' process of finding desired products by automating
product comparison across multiple attributes. By enabling consumers to search
at the product level, GoTo Shopping creates more targeted, and therefore highly
valuable, advertising opportunities for our advertisers. In addition, on May 3,
2000 GoTo.com acquired AuctionRover, Inc. (AuctionRover), an online resource for
auctions, that we now call "GoTo(TM) Auctions" (see Note 7). As with Web search,
we will offer GoTo Shopping and GoTo Auctions at our Web site as well as through
our affiliate network, providing consumers with multiple points of access to,
and advertisers with multiple points of distribution for, the advertisers'
products. The Company operates in one reportable business segment.

    GoTo.com was incorporated on September 15, 1997 in the state of Delaware and
officially launched its service on June 1, 1998.

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

    Certain prior year balances have been reclassified to conform to current
year presentation.

    The accompanying unaudited condensed consolidated financial statements have
been prepared on the same basis as the annual financial statements and, in the
opinion of management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's financial
position, results of operations and cash flows for the periods shown, except for
the write-off of approximately $7.6 million of in-process research and
development associated with GoTo.com's acquisition of Cadabra (see Note 6). The
results of operations for such periods are not necessarily indicative of the
results expected for a full year or for any future period.

    These financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
fiscal year 1999 Form 10-K.

2. COMPREHENSIVE INCOME (LOSS)

    The Company accounts for comprehensive income (loss) using Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting comprehensive income and its
components in financial statements. Comprehensive income, as defined therein,
refers to revenues, expenses, gains and losses that are not included in net
income (loss) but rather are recorded directly in stockholders' equity. Total
comprehensive loss for the quarter ended March 31, 2000 approximated net loss.


                                       6
<PAGE>   7
3. EARNINGS (LOSS) PER SHARE COMPUTATION

    Historical basic and diluted net loss per share is computed using the
weighted average number of shares of common stock outstanding, excluding the
unvested portion of stock that is subject to repurchase issued in connection
with the exercise of such options. The effect of outstanding stock options,
convertible preferred stock and unvested stock are excluded from the calculation
of historical diluted net loss per share for the periods presented, as their
inclusion would be antidilutive.

    Pro forma basic and diluted net loss per share is computed using the
historical weighted average number of shares of common stock outstanding plus
the weighted average number of shares resulting from the assumed conversion of
all outstanding convertible preferred stock as though such conversion occurred
at the beginning of the period or original date of issuance, if later. The
effect of outstanding stock options and unvested stock are excluded from the
calculation of pro forma diluted net loss per share for the periods presented,
as their inclusion would be antidilutive.

    Options to purchase approximately 3.3 million and 2.8 million shares of
common stock were outstanding as of March 31, 2000 and 1999, respectively. In
addition, as of March 31, 2000, there were approximately 2.2 million shares of
unvested common stock outstanding that were issued in connection with the
exercise of options and which are subject to repurchase. The following table
sets forth the computation of historical basic and diluted net loss per share
and pro forma basic and diluted net loss per share for the periods indicated (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                                MARCH 31,
                                                                        -------------------------
                                                                           2000           1999
                                                                        ----------       --------
<S>                                                                     <C>              <C>
Numerator:
  Net loss .......................................................      $  (30,509)      $ (7,360)
                                                                        ==========       ========
Denominator:
  Denominator for historical basic and diluted
    calculation -- Weighted average shares .......................          45,323         10,894
                                                                        ==========       ========
Weighted average effect of pro forma securities:
  Series A Preferred Stock .......................................              --            471
  Series B Preferred Stock .......................................              --          8,312
  Series C Preferred Stock .......................................              --         10,710
                                                                        ----------       --------
  Denominator for pro forma basic and diluted calculation ........          45,323         30,387
                                                                        ==========       ========
Pro forma basic and diluted net loss per share ...................      $    (0.67)      $  (0.24)
                                                                        ==========       ========
Historical basic and diluted net loss per share ..................      $    (0.67)      $  (0.68)
                                                                        ==========       ========
</TABLE>

4. LITIGATION

    We are engaged in litigation that will be expensive to pursue and will be
distracting to our management and other employees. Any adverse developments
resulting from this litigation could seriously harm our business. We believe
that The Walt Disney Company and certain of its affiliates, including Infoseek
Corporation, are infringing our GoTo.com logo. On February 18, 1999, we sued
these companies and two affiliated companies in the United States District Court
for the Central District of California alleging violation of federal trademark
law and unfair competition. Our lawsuit is based on the use by these companies
of a "GO" design mark to provide Internet services, including a search engine in
connection with their "Go Network." We are seeking to prevent these companies
from using this "GO" design mark as well as other remedies. We cannot assure you
that the outcome of this litigation will be favorable to us. For example, we may
not prevail and be able to stop these companies from causing confusion among
consumers and advertisers through continued use of the "GO" design mark. The
defendants have asserted counterclaims against GoTo.com. GoTo.com believes that
the proposed counterclaims are without merit and will defend against them
vigorously. An unfavorable result could affect the value of the GoTo.com logo or
even prevent us from using the GoTo.com logo.

    On November 12, 1999, the federal district court in Los Angeles
preliminarily enjoined The Walt Disney Company, Infoseek and related companies
from using their Go Network logo. On November 18, 1999, the Ninth Circuit Court
of Appeals granted the defendants' motion for a stay of the preliminary
injunction pending appeal, and the defendants were permitted to use the Go
Network logo while the Ninth Circuit reviewed the district court's preliminary
injunction order. GoTo.com and the defendants briefed the appeal during
December, and the Ninth Circuit heard oral arguments on the matter on January
19, 2000. On January 27, 2000, the Ninth Circuit vacated the stay and reinstated
the preliminary injunction. No trial date has been set and, despite the issuance
of the preliminary injunction, we cannot assure you that we will ultimately
prevail in this litigation.


                                       7
<PAGE>   8
5. RELATED PARTY TRANSACTIONS

    During the quarter ended March 31, 1999, Bill Gross' idealab!, which, with
its affiliate, idealab! Holdings, L.L.C., is a significant stockholder of
GoTo.com provided management services, such as payroll and benefits
administration, facilities management and Internet connection and email
services. During February 1999 and July 1999, GoTo.com entered into two lease
agreements with Bill Gross' idealab!, which were effective through January 2000.
GoTo.com entered into an arrangement with Bill Gross' idealab! for approximately
58,000 square feet of office space with total lease payments of approximately
$7.1 million commencing on January 15, 2000, terminating on October 31, 2004.
Total fees for leasing and management services were approximately $469,000 and
$75,000 for the quarters ended March 31, 2000 and 1999, respectively. Management
believes these amounts are materially representative of the fair value of
services recorded.

    During the quarter ended March 31, 2000, GoTo.com recorded approximately
$39,000 of search listing advertising revenue from Bill Gross' idealab!. During
the quarter ended March 31, 2000, GoTo.com also recorded approximately $143,000
of search listing and banner revenue from Cadabra prior to the closing of
GoTo.com's acquisition of Cadabra on January 31, 2000. Cadabra began advertising
its Web site on GoTo.com's marketplace on December 17, 1999 and ceased
advertising on GoTo.com on January 13, 2000. Management believes these amounts
are materially representative of the fair value of advertising services
provided.

    On March 3, 2000, GoTo.com entered into a Stockholder Agreement with Bill
Gross' idealab!, which provides, among other things, that Bill Gross' idealab!
will not and will cause its affiliates not to, directly or indirectly, except
with the prior written consent of our Board of Directors and, without
limitation, a majority of our directors who are not, and have not been for the
previous twelve months, affiliates of Bill Gross' idealab! or any of its
affiliates or associates:

    -   become a beneficial owner of 35% or more of the outstanding common stock
        of GoTo.com;

    -   transfer beneficial ownership of any common stock of GoTo.com except (A)
        pursuant to the terms of a merger, consolidation or liquidation of, or
        tender offer or other business combination transaction with respect to
        GoTo.com, in each case approved by our Board of Directors and, without
        limitation, by a majority of our directors who are not, and have not
        been for the previous twelve months, affiliates of Bill Gross' idealab!
        or any of its affiliates or associates; (B) pro rata distributions by
        certain of the affiliated venture funds of Bill Gross' idealab! of
        shares of common stock of GoTo.com to their limited partners consistent
        with past practice, or (C) other transfers to third parties, provided
        that any such third party (together with any of its affiliates and
        associates) would not, to the knowledge of Bill Gross' idealab! after
        inquiry, following the completion of such transfer, beneficially own 15%
        or more of the outstanding common stock of GoTo.com; or

    -   knowingly assist or advise, or knowingly provide or arrange financing to
        facilitate, another person or entity, or group of persons or entities
        acting in concert, to become the beneficial owner of 15% or more of the
        outstanding common stock of GoTo.com

    Further, the Stockholder Agreement also provides that, until March 3, 2002,
so long as Bill Gross' idealab! is the beneficial owner of at least 20% of the
outstanding common stock of GoTo.com, we will not, without the prior written
consent of Bill Gross' idealab!, adopt a "shareholder rights plan" (commonly
referred to as a "poison pill"); provided, however, that if, in the good faith
judgment of our Board, after consideration of its fiduciary duties, adoption of
such a shareholder rights plan would be in the best interests of our
stockholders, we may adopt such a shareholder rights plan without the consent of
Bill Gross' idealab! so long as the percentage thresholds set forth in such plan
are no more restrictive to Bill Gross' idealab! than the terms of the
Stockholder Agreement. If we adopt a shareholder rights plan, the Stockholder
Agreement will terminate and be of no further force or effect.

6. Acquisition of Cadabra

    On January 31, 2000, GoTo.com acquired Cadabra, an online comparison
shopping service. Pursuant to the Agreement and Plan of Reorganization, GoTo.com
acquired all of the outstanding shares of capital stock and assumed all
outstanding options to acquire shares of capital stock of Cadabra, for $8.0
million in cash and 3,283,672 shares of GoTo.com common stock, including 214,833
shares to be issued upon the exercise of options assumed by GoTo.com. The
acquisition was accounted for as a purchase. Under the purchase method of
accounting, the purchase price is allocated to the assets acquired and
liabilities assumed based on their estimated fair values as determined by
GoTo.com at the date of the acquisition. The operations of Cadabra have been
included in our results of operations since the date of the acquisition. The
total purchase price of the acquisition was approximately $263.1 million and
consisted of cash of $8.0 million; GoTo.com common stock of $252.5 million
valued at the closing price of GoTo.com's common


                                       8
<PAGE>   9
stock on the date the acquisition exchange ratio was set, net of expected
proceeds from the exercise of Cadabra stock options assumed by GoTo.com; and
acquisition costs of $2.6 million, primarily for investment banking, legal and
accounting costs. Of the purchase price, $7.6 million was assigned to in-process
research and development to be expensed immediately following the consummation
of the acquisition, $6.0 million was assigned to the value of purchased
technology and other intangibles and will be amortized on a straight-line basis
over three years and $4.4 million was allocated to the net tangible assets. The
excess purchase price over the estimated fair value of the assets acquired and
liabilities assumed has been allocated to goodwill in the amount of $245.1
million and will be amortized on a straight-line basis over three years. The
projects identified as in-process research and development are those that are
currently underway, that will require additional effort to establish
technological feasibility and have no alternative future use. The projects are
expected to add features that will enhance the Web site scraping ability and
operating capabilities of the service. At the acquisition date, these projects
were approximately 80% complete and will require additional expected costs of
approximately $2.0 million to complete, consisting principally of personnel
related costs. These projects are expected to be completed during fiscal year
2000. To determine the value of in-process research and development, the
expected future cash flows, including costs to reach technological feasibility,
were discounted at an after-tax rate of 25%, taking into account risks related
to the characteristics and applications of the technology, existing and future
markets, and assessments of the life cycle stage of the technology. GoTo.com
obtained an independent appraisal to derive the purchase price allocation.

    The following unaudited pro forma financial information presents the
combined results of operations of the Company and Cadabra as if the acquisition
had occurred as of the beginning of each period presented, after giving effect
to certain adjustments, including amortization of goodwill and intangible
assets, but excludes the non-recurring charge for the write-off of in-process
research and development. The pro forma financial information does not
necessarily reflect the results of operations that would have occurred had the
Company and Cadabra constituted a single entity during such periods.

<TABLE>
<CAPTION>
                                               Three Months Ended    Three Months Ended
                                                 March 31, 2000        March 31, 1999
                                               ------------------    ------------------
<S>                                            <C>                   <C>
Revenue .....................................        $ 17,081             $  1,548
Net loss ....................................         (51,992)             (28,577)
Pro forma net loss per share ................           (1.09)               (0.88)
                                                     --------             --------
Historical net loss per share ...............        $  (1.09)            $  (2.18)
</TABLE>

7. Subsequent Event

    On May 3, 2000, GoTo.com acquired AuctionRover, an online resource for
auctions. Pursuant to the Agreement and Plan of Reorganization, GoTo.com
acquired all of the outstanding shares of capital stock and assumed all
outstanding options to acquire shares of capital stock of AuctionRover for
3,470,588 shares of GoTo.com common stock, including 521,408 shares to be issued
upon the exercise of options assumed by GoTo.com. Based on the price of GoTo.com
stock on March 8, 2000 the purchase price was valued at approximately $174.2
million, which consisted of GoTo.com Common Stock of $173.7 million valued at
the closing price of GoTo.com Common Stock on the date of exchange ratio was
set, net of expected proceeds from the exercise of stock options assumed by
GoTo.com and including acquisition costs of approximately $500,000 for legal and
accounting services. The purchase price was determined by arms-length
negotiations between the parties. Timothy Draper, a director of GoTo.com, is
affiliated with certain entities, which are principal stockholders of
AuctionRover. GoTo.com intends to continue to operate AuctionRover's business.


                                       9
<PAGE>   10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. WE USE WORDS SUCH AS "ANTICIPATES," "BELIEVES," "PLANS,"
"EXPECTS," "FUTURE" AND "INTENDS" AND SIMILAR EXPRESSIONS TO IDENTIFY
FORWARD-LOOKING STATEMENTS. YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH APPLY ONLY AS OF THE DATE OF THIS DOCUMENT.
OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE IN OUR FORWARD-LOOKING
STATEMENTS FOR MANY REASONS, INCLUDING WITHOUT LIMITATION THE RISKS DESCRIBED IN
"RISKS THAT COULD AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS,"
BELOW.

OVERVIEW

    GoTo.com operates an online marketplace that introduces consumers and
businesses who search the Internet to advertisers, who provide products,
services and information. Advertisers participating in our marketplace include
retail merchants, wholesale and service businesses and manufacturers. We
facilitate these introductions through our search service, which enables
advertisers to bid in an ongoing auction for priority placement in our search
results. Priority placement means that the search results appear on the page
ranked in descending order of bid price, with the highest bidder's listing
appearing first. Each advertiser pays GoTo.com the amount of its bid whenever a
consumer clicks on the advertiser's listing in our search results. Advertisers
pay GoTo.com for each click-through, so advertisers bid only on keywords
relevant to the products, services or information that they offer. Because each
advertiser chooses the bid amount and advertisement placement that is optimal
for its business, we believe the GoTo.com marketplace provides advertisers with
a cost-effective way to target consumers. Consumers access the GoTo.com search
service both at our Web site and through our affiliates, a network of Web sites
that have integrated the GoTo.com search service into their sites or that direct
consumer traffic to our site. On January 31, 2000, GoTo.com acquired Cadabra, an
online comparison shopping service that we now call "GoTo Shopping." We believe
GoTo Shopping further facilitates introductions between consumers and
advertisers. GoTo Shopping simplifies the consumers' process of finding desired
products by automating product comparison across multiple attributes. By
enabling consumers to search at the product level, GoTo Shopping creates more
targeted, and therefore highly valuable, advertising opportunities for our
advertisers. In addition, on May 3, 2000 GoTo.com acquired AuctionRover, Inc.
(AuctionRover), an online resource for auctions, that we now call "GoTo
Auctions" (see Note 7). As with Web search, we will offer GoTo Shopping and GoTo
Auctions at our Web site as well as through our affiliate network, providing
consumers with multiple points of access to, and advertisers with multiple
points of distribution for, the advertisers' products.

    A large and growing number of consumers using the GoTo.com search service at
our Web site and at our affiliates' Web sites across the Internet increases the
incentive for advertisers to bid in the GoTo.com marketplace. In turn, a breadth
of relevant advertiser links increases the value to consumers of using the
GoTo.com search service. Consequently, we believe a large and active base of
advertisers, consumers and affiliates in our marketplace can stimulate growth in
bidding, searches and paid introductions.

    Our revenue consists of search listing advertisements and banner
advertisements. The Company has no barter transactions. For the quarter ended
March 31, 2000, banner advertisement revenue constituted less than 10 percent of
our revenue. Search listing advertisement revenue is determined by multiplying
the number of click-throughs on paid search results by the amounts bid for
applicable keywords. Search listing revenue is recognized when earned based on
click-through activity to the extent that the advertiser has deposited
sufficient funds with us or collection is probable. Banner advertisement revenue
is recognized when earned under the terms of the contractual arrangement with
the advertiser or advertising agency, provided that collection is probable.

    Our revenue is determined primarily by the number of paid introductions,
that is the result of the number of times consumers click on advertisers'
listings, multiplied by the bid price for those listings. The number of paid
introductions for each of the last seven fiscal quarters is as follows:

<TABLE>
<CAPTION>
      NUMBER OF PAID INTRODUCTIONS                      FOR THE QUARTER ENDED
      ----------------------------                      ---------------------
<S>                                                     <C>
      88 million.....................................   March 31, 2000
      73 million.....................................   December 31, 1999
      54 million.....................................   September 30, 1999
      31 million.....................................   June 30, 1999
      15 million.....................................   March 31, 1999
       7 million.....................................   December 31, 1998
       2 million.....................................   September 30, 1998
</TABLE>


                                       10
<PAGE>   11
    The average price per paid introduction results from advertisers' online
bidding for priority placement in the search results. The average price per paid
introduction for each of the last seven fiscal quarters is as follows:

<TABLE>
<CAPTION>
     AVERAGE PRICE PER PAID INTRODUCTION                  FOR THE QUARTER ENDED
     -----------------------------------                  ---------------------
<S>                                                       <C>
     $0.19............................................    March 31, 2000
      0.17............................................    December 31, 1999
      0.14............................................    September 30, 1999
      0.11............................................    June 30, 1999
      0.08............................................    March 31, 1999
      0.05............................................    December 31, 1998
     $0.03............................................    September 30, 1998
</TABLE>

    We believe the quarterly number of paid introductions and average price per
paid introduction listed above are not necessarily indicative of future results
and that the periods prior to the three-month period ended September 30, 1998
are not relevant because our service was only in its initial stage. It is
difficult to forecast the future growth of the average price per paid
introduction, as advertisers, rather than GoTo.com, determine the price paid. We
do not anticipate our historical growth rate to continue. Our growth rate and
results depend on our ability to continue to increase the number of advertisers
who use our service, the amount our advertisers spend on our service and the
number of consumers who use our service. We anticipate these variables to
fluctuate, affecting our growth rate and results.

    GoTo.com was incorporated in September 1997 and has a limited operating
history. We launched a proof-of-concept version of our search service in the
fiscal year ended December 31, 1997. Our pay-for-performance service was
announced in February 1998, and following further proof-of-concept testing, was
officially launched in June 1998. We launched GoTo Shopping during the month of
February 2000 and incorporated AuctionRover's services in GoTo's services during
the month of May 2000. GoTo.com has devoted significant resources to launching
its search service, including developing an infrastructure and building a
management team. GoTo.com's losses for the quarter ended March 31, 2000 and the
years ended December 31, 1999 and 1998 were approximately $30.5 million, $29.3
million and $14.0 million, respectively.

    We believe that our search, shopping and auction services will be more
attractive to advertisers as more consumers use it for their search needs and
more attractive to consumers as more advertisers bid for placement in our
search, shopping and auction results. A significant component of our expenses
consists of costs incurred to attract consumers to our service. We primarily
attract consumers through our affiliate network, as well as through online and
offline marketing, including radio, print, television and outdoor advertising.
We expect to continue to rely upon these sources for a significant proportion of
consumer searches conducted on our service. Our future success is dependent upon
increasing the revenue we derive from this traffic.

    As a result of our acquisitions of Cadabra and AuctionRover, we believe our
cost of revenue; marketing, sales and service expenses; general and
administrative expenses and product development expenses will increase as we
integrate and maintain our shopping and auction services. In addition, we will
incur charges to operations with respect to the amortization of goodwill and
other intangible assets, and the expense related to in-process research and
development.

Acquisition of Cadabra

    On January 31, 2000, GoTo.com acquired Cadabra, an online comparison
shopping service. Pursuant to the Agreement and Plan of Reorganization, GoTo.com
acquired all of the outstanding shares of capital stock and assumed all
outstanding options to acquire shares of capital stock of Cadabra, for $8.0
million in cash and 3,283,672 shares of GoTo.com common stock, including 214,833
shares to be issued upon the exercise of options assumed by GoTo.com. The
acquisition was accounted for as a purchase. Under the purchase method of
accounting, the purchase price is allocated to the assets acquired and
liabilities assumed based on their estimated fair values as determined by
GoTo.com at the date of the acquisition. The operations of Cadabra have been
included in our results of operations since the date of the acquisition. The
total purchase price of the acquisition was approximately $263.1 million and
consisted of cash of $8.0 million; GoTo.com common stock of $252.5 million
valued at the closing price of GoTo.com's common stock on the date the
acquisition exchange ratio was set, net of expected proceeds from the exercise
of Cadabra stock options assumed by GoTo.com; and acquisition costs of $2.6
million, primarily for investment banking, legal and accounting costs. Of the
purchase price, $7.6 million was assigned to in-process research and development
to be expensed immediately following the consummation of the acquisition, $6.0
million was assigned to the value of purchased technology and other intangibles
and will be amortized on a straight-line basis over three years and $4.4 million
was allocated to the net tangible assets. The excess purchase price over the
estimated fair value of the assets acquired and liabilities assumed has been
allocated to goodwill in the amount of $245.1 million and will be amortized on a
straight-line basis over three years. The projects identified as in-process
research and development are those that are currently underway, that will
require additional effort to establish technological feasibility and have no
alternative future use.


                                       11
<PAGE>   12
    The projects are expected to add features that will enhance the Web site
scraping ability and operating capabilities of the service. At the acquisition
date, these projects were approximately 80% complete and will require additional
expected costs of approximately $2.0 million to complete, consisting principally
of personnel-related costs. These projects are expected to be completed during
fiscal year 2000. To determine the value of in-process research and development,
the expected future cash flows, including costs to reach technological
feasibility, were discounted at an after-tax rate of 25%, taking into account
risks related to the characteristics and applications of the technology,
existing and future markets, and assessments of the life cycle stage of the
technology. GoTo.com obtained an independent appraisal to derive the purchase
price allocation.

Acquisition of AuctionRover.com, Inc.

    On May 3, 2000, GoTo.com acquired AuctionRover, an online resource for
auctions. Pursuant to the Agreement and Plan of Reorganization, GoTo.com
acquired all of the outstanding shares of capital stock and assumed all
outstanding options to acquire shares of capital stock of AuctionRover for
3,470,588 shares of GoTo.com common stock, including 521,408 shares to be issued
upon the exercise of options assumed by GoTo.com. Based on the price of GoTo.com
stock on March 8, 2000 the purchase price was valued at approximately $174.2
million, which consisted of GoTo.com Common Stock of $173.7 million valued at
the closing price of GoTo.com Common Stock on the date of exchange ratio was
set, net of expected proceeds from the exercise of stock options assumed by
GoTo.com and including acquisition costs of approximately $500,000 for legal and
accounting services. The purchase price was determined by arms-length
negotiations between the parties. Timothy Draper, a director of GoTo.com, is
affiliated with certain entities, which are principal stockholders of
AuctionRover. GoTo.com intends to continue to operate AuctionRover's business.

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 2000 COMPARED TO QUARTER ENDED MARCH 31, 1999

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED
                                                                           MARCH 31,
                                                                    -----------------------
                                                                      2000           1999
                                                                    --------       --------
<S>                                                                 <C>            <C>
Revenue ..........................................................  $ 17,215       $  1,451

Cost of revenue ..................................................     2,605            957
                                                                    --------       --------
Gross profit .....................................................    14,610            494

Operating expenses:
  Marketing, sales and service ...................................    16,314          4,614
  General and administrative(a) ..................................     6,267          1,555
  Product development ............................................     2,201            520
  Amortization of deferred compensation ..........................       425          1,297
  Write-off of acquired in-process research and development ......     7,550             --
  Amortization of intangible assets ..............................    13,954             --
                                                                    --------       --------
                                                                      46,711          7,986
                                                                    --------       --------
Loss from operations .............................................   (32,101)        (7,492)

Other income:
  Interest income, net ...........................................     1,547            132
  Other income ...................................................        45             --
                                                                    --------       --------
Net loss .........................................................  $(30,509)      $ (7,360)
                                                                    ========       ========
</TABLE>

----------

(a) Included in general and administrative expenses are non-cash charges related
    to warrants issued as compensation to non-employees totaling $180,000 for
    the quarter ended March 31, 1999.

    Revenue. Revenue consists of search listing advertisements and banner
advertisements. GoTo.com has no barter transactions. For the quarter ended March
31, 2000, banner advertisement revenue constituted less than 10 percent of our
revenue. Revenue was approximately $17.2 million for the quarter ended March 31,
2000 compared to approximately $1.5 million for the quarter ended March 31,
1999. The increase was the result of continued growth of our marketplace and the
corresponding participants, our advertisers and the number of consumers using
our product. We have experienced rapid growth from the quarter ended March 31,
1999 through the quarter ended March 31, 2000; however, we do not anticipate our
historical revenue growth rate to continue as a percentage of growth as
expressed on a year-to-year or quarter-to-quarter basis. Our growth is dependent
on obtaining additional


                                       12
<PAGE>   13
traffic. For the quarter ended March 31, 2000, 25% of our overall traffic came
from the browsers, Microsoft's Internet Explorer and Netscape. Although we
entered into a one-year agreement with Microsoft on January 21, 2000 for
continued traffic from their Internet Explorer 4 and Internet Explorer 5
browsers, we expect Microsoft to deliver a diminishing level of traffic to us in
2000 compared to 1999, and anticipate that we eventually will receive no traffic
from Internet Explorer 4 and Internet Explorer 5. In addition, our agreement
with Netscape will expire on June 30, 2000, and there can be no assurance that
we will be successful in renewing this agreement or in entering into a new
distribution agreement on commercially acceptable terms. Even though we
currently anticipate growth in traffic from existing and new affiliates, we must
renew our affiliate agreements or replace this traffic with other sources and
grow our advertising base, otherwise our revenue may be materially, adversely
affected.

    Cost of Revenue. Cost of revenue consists primarily of fees paid to outside
service providers that provide and manage our unpaid listings and costs
associated with maintaining our Web site. Costs associated with maintaining our
Web site include salaries of related personnel, depreciation of Web site
equipment, co-location charges for our Web site equipment and software license
fees. Cost of revenue was approximately $2.6 million for the quarter ended March
31, 2000 compared to approximately $1.0 million for the quarter ended March 31,
1999. The increase was primarily due to the increased fees paid to outside
service providers, increased database and hardware capacity requirements and an
increase in the number of personnel required to support our Web site. We
anticipate cost of revenue to continue to increase as our traffic and number of
advertisers increase.

    Marketing, Sales and Service. Marketing, sales and service expenses consist
primarily of our advertising and promotional expenditures, such as online links
from other Web sites associated with our affiliate network, banner
advertisements on other sites and offline media advertising, as well as payroll
and related expenses for personnel engaged in marketing, customer service and
sales functions. Marketing, sales and service expenses were approximately $16.3
million for the quarter ended March 31, 2000 compared to approximately $4.6
million for the quarter ended March 31, 1999. The increase was primarily due to
increased distribution of our search service, the hiring of additional personnel
for marketing, sales and service functions and our print and television media
advertising campaign in the fourth quarter of 1999, which extended into the
first quarter of 2000. We believe that continued investment in marketing, sales
and service and in the increased distribution of our search service is critical
to attaining our strategic objectives and, as a result, expect these costs to
continue to increase in the future.

    General and Administrative. General and administrative expenses consist
primarily of payroll and related expenses for executive and administrative
personnel; facilities; professional services, including legal, insurance and
other general corporate expenses. General and administrative expenses were
approximately $6.3 million for the quarter ended March 31, 2000 compared to
approximately $1.6 million for the quarter ended March 31, 1999. The increase
was the result of increased headcount and related expenses associated with the
hiring of additional personnel and increased professional services. We expect
general and administrative expenses to continue to increase as we expand our
staff and incur additional costs related to the growth of our business. In
addition, these expenses will vary based on the outcome of our litigation with
The Walt Disney Company and certain of its affiliates.

    Product Development. Product development expenses consist primarily of
payroll and related expenses for personnel responsible for development of
features and functionality for our service, as well as costs incurred in the
preliminary project and post-implementation stage of computer software developed
for internal use. Product development expenses were approximately $2.2 million
for the quarter ended March 31, 2000 compared to approximately $520,000 for the
quarter ended March 31, 1999. The increase was a result of increased staffing
and associated costs relating to enhancing features and functionality to our Web
site and search service. The increase was offset by capitalization of certain
costs under Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," of approximately $600,000
during the quarter ended March 31, 2000. We believe our continued investment in
product development is critical to attaining our strategic objectives and, as a
result, expect product development expenses to continue to increase in the
future.

    Amortization of Deferred Compensation. Certain stock options granted from
the inception of GoTo.com through our initial public offering have been
considered to be compensatory for financial accounting purposes. Total
compensation resulting from these stock options amounted to approximately $7.4
million. This amount represents the difference between the exercise price of the
stock options and the deemed fair value of our common stock at the time of the
grants or issuances, adjusted for the return of unvested options or the
repurchase of restricted stock resulting from employee terminations.
Compensation associated with these stock options is amortized and expensed over
the applicable vesting periods using a graded methodology. Approximately
$400,000 and $1.3 million were amortized and charged to operations for the
quarters ended March 31, 2000 and 1999, respectively.

    Acquisition-Related Costs. On January 31, 2000, GoTo.com acquired Cadabra.
The total purchase price of the acquisition was approximately $263.1 million, of
which $7.6 million was assigned to in-process research and development which was
expensed immediately following the consummation of the acquisition, $6.0 million
was assigned to the value of purchased technology and other


                                       13
<PAGE>   14
intangibles and will be amortized on a straight-line basis over three years and
$4.4 million was allocated to the net tangible assets. The excess purchase price
over the estimated fair value of the assets acquired and liabilities assumed has
been allocated to goodwill in the amount of $245.1 million and will be amortized
on a straight-line basis over three years. In the quarter ended March 31, 2000,
GoTo.com incurred charges totaling approximately $21.5 million, which included
approximately $7.6 million for the write-off of in-process research and
development and approximately $14.0 million for the amortization of goodwill and
other intangible assets. We expected acquisition-related costs to increase
significantly in future quarters because of the goodwill and other intangible
assets related to the acquisition of Auction Rover in May 2000 which will begin
amortizing in the second quarter of 2000 and because the amortization of the
goodwill and other intangible assets related to the Cadabra acquisition in the
quarter ended March 31, 2000 was only for two months.

    Interest Income. Interest income consists primarily of earnings on our cash,
cash equivalents and short-term and long-term investments, net of interest
expense attributable to leased equipment and debt. Interest income, net was
approximately $1.5 million for the quarter ended March 31, 2000 compared to
approximately $132,000 for the quarter ended March 31, 1999. The increase was
primarily due to increased earnings on cash, cash equivalents, and short-term
and long-term investments in available-for-sale securities, which increased as a
result of our initial public offering.

LIQUIDITY AND CAPITAL RESOURCES

    Net cash used in operating activities totaled approximately $7.6 million and
$5.1 million for the quarters ended March 31, 2000 and 1999, respectively. The
increase was due primarily to net losses for the quarter ended March 31, 2000
partially offset by acquisition-related costs. Net cash provided by investing
activities totaled approximately $16.9 million for the quarter ended March 31,
2000, and net cash used in investing activities totaled approximately $1.1
million for the quarter ended March 31, 1999. The increase resulted from
proceeds from maturities or sales of short-term and long-term investments, which
was partially offset by capital expenditures for properties and equipment. Net
cash provided by financing activities totaled approximately $1.4 million and
$1.0 million for the quarters ended March 31, 2000 and 1999, respectively.

    Our principal sources of liquidity consisted of cash, cash equivalents and
short-term investments of approximately $91.8 million as of March 31, 2000 and
approximately $105.3 million as of December 31, 1999. We also carry long-term
investments of approximately $3.7 million as of March 31, 2000, which we believe
is liquid. We believe that our cash reserves are sufficient to sustain
operations through the next 12 months, however, unknown factors may require us
to seek additional capital. Such unknown factors may include, among other
things, competitive pressure, higher cost of intellectual capital, higher costs
to accommodate increases in capacity and acquisitions.

    We may seek additional capital through the issuance of debt or equity
depending upon our results of operations, market conditions or unforeseen
opportunities. Our future liquidity and capital requirements will depend upon
numerous factors. The pace of expansion of our operations will affect our
capital requirements. Our forecast of the period of time through which our
financial resources will be adequate to support our operations is a
forward-looking statement that involves risks and uncertainties, and actual
results could vary materially as a result of the factors described above. If we
require additional capital resources, we may seek to sell additional equity or
debt securities or obtain a bank line of credit. The sale of additional equity
or convertible debt securities could result in additional dilution to our
stockholders. There can be no assurance that any financing arrangements will be
available in amounts or on terms acceptable to us, if at all.

IMPACT OF YEAR 2000

    As a result of our planning and implementation efforts, we have experienced
no significant disruptions in mission critical information technology and
non-information technology systems to date and believe those systems
successfully responded to the Year 2000 date change. GoTo.com expensed an
insignificant amount during 1999 and the first quarter of 2000 in connection
with our remediation of our systems. We are not aware of any material problems
resulting from Year 2000 issues, either with our products, our internal systems,
or the products and services of third parties. We will continue to monitor our
mission critical computer applications and those of our suppliers and vendors
throughout the year 2000 to ensure that any latent Year 2000 matters that may
arise are addressed promptly.


                                       14
<PAGE>   15
    RISKS THAT COULD AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS

WE HAVE A LIMITED OPERATING HISTORY.

    GoTo.com was founded in September 1997, officially launched its service in
June 1998, and has a limited operating history. An investor in our common stock
must consider the risks and difficulties frequently encountered by early stage
companies in new and rapidly evolving markets. These risks include our:

    -   complete dependence on online advertising and consumer search services
        with only limited market acceptance;

    -   need to develop and upgrade our infrastructure, including internal
        controls, transaction processing systems, data storage and retrieval
        systems and Web site;

    -   need to manage changing operations;

    -   dependence upon and need to hire and retain key personnel; and

    -   ability to integrate acquisitions, including, but not limited to, the
        recent acquisitions of Cadabra in January 2000 and AuctionRover in May
        2000.

    We cannot assure you that the GoTo.com service will retain its existing, or
attract new, advertisers, consumers and Web sites that include the GoTo.com
search service on their sites or that direct consumer traffic to the GoTo.com
Web site, which we call "affiliates." We also cannot assure you that GoTo.com
will achieve significant additional revenues or improve operating margins in
future periods. There can be no assurance that GoTo.com's service will continue
to achieve commercial success and, if it does not, the price of our common stock
will decline.

WE HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES.

    We have not achieved profitability. We expect to incur net losses for the
foreseeable future and may never become profitable. We incurred a net loss of
approximately $30.5 million and $7.4 million for the quarters ended March 31,
2000 and 1999, respectively, and as of March 31, 2000, we had an accumulated
deficit of approximately $73.9 million.

    Our limited operating history makes it difficult to forecast our future
operating results. Although our revenue has grown in recent quarters, we cannot
be certain that this growth will continue. We expect to continue to increase our
marketing, sales and service, product development and general and administrative
expenses. In addition, the amortization of goodwill and other intangible assets
related to our acquisitions of Cadabra and AuctionRover will be significant, and
any similar expense for future acquisitions could negatively affect our
earnings. As a result, we will need to generate significant additional revenue
to achieve profitability and in the absence of significant additional revenue,
we may need to raise additional funds. If we do achieve profitability, we cannot
be certain that we will sustain or increase it.

OUR QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS BECAUSE
OF MANY FACTORS, AND ANY OF THESE COULD ADVERSELY AFFECT OUR STOCK PRICE.

    We believe that quarter-to-quarter comparisons of our operating results are
not a good indication of our future performance. It is likely that in some
future quarter our operating results may be below the expectations of public
market analysts and investors and, as a result of these or other factors, the
price of our common stock may fall. Our operating results have varied widely in
the past, and we expect that they will continue to vary significantly from
quarter to quarter due to a number of factors, including:

    -   demand for our search services by advertisers and consumers, including
        the number of searches performed by consumers and the rate at which they
        click-through to paid search listing advertisements;

    -   prices paid by advertisers using the GoTo.com service, which are not
        determined by GoTo.com;


                                       15
<PAGE>   16
    -   our costs of attracting consumers to the GoTo.com Web site, including
        costs of receiving exposure on third-party Web sites and advertising
        costs;

    -   costs related to agreements with suppliers of consumer traffic to our
        service and professional services;

    -   loss of these agreements;

    -   the mix of paying vs. non-paying search results on the GoTo.com service;

    -   our ability to significantly increase our distribution channels;

    -   the amount and timing of operating costs and capital expenditures
        relating to expansion of our operations;

    -   costs and delays in introducing new GoTo.com services and improvements
        to existing services;

    -   costs related to the integration of acquisitions, including the
        integration of Cadabra and AuctionRover;

    -   consumers may access advertisers through our search, shopping and
        auction services and, during the initial integration of Cadabra and
        AuctionRover, the prices advertisers pay for shopping and auction
        listings may be lower than those paid for Web search, which may result
        in lower revenue per each paid introduction;

    -   changes in the growth rate of Internet usage and acceptance by consumers
        of electronic commerce;

    -   technical difficulties, system failures or Internet downtime;

    -   government regulations related to the Internet;

    -   our ability to upgrade and develop our information technology systems
        and infrastructure;

    -   costs related to acquisitions of technologies or businesses; and

    -   general economic conditions, as well as those specific to the Internet
        and related industries.

    As a result of our limited operating history, it is difficult to accurately
forecast our revenue, and we have limited meaningful historical financial data
upon which to base planned operating expenses. We plan to significantly increase
our operating expenses to expand our marketing and sales operations, broaden our
customer support capabilities and fund greater levels of product development. We
base our current and future expense levels on our operating plans and estimates
of future revenue, and our expenses are relatively fixed. Revenue and operating
results are difficult to forecast because they generally depend upon the volume
of the searches conducted on our service, the amounts bid by advertisers for
keyword search listings on the service and the number of advertisers that bid on
the service, none of which are under our control. As a result, we may be unable
to adjust our spending in a timely manner to compensate for any unexpected
revenue shortfall. We also may be unable to increase our spending and expand our
operations in a timely manner to adequately meet user demand to the extent it
exceeds our expectations.

WE DEPEND ON A LIMITED NUMBER OF SOURCES TO DIRECT CONSUMERS TO OUR SERVICE TO
CONDUCT SEARCHES.

    The consumers who conduct searches on our service come from a limited number
of sources. Our sources for consumers conducting searches are members of our
affiliate network, including providers of Internet browsers such as Netscape
Communicator and Microsoft Internet Explorer, aggregators of search offerings of
various providers, Internet Service Providers, our Web site, and banner
advertising. We entered into a one-year agreement with Microsoft Corporation for
continued traffic from their Internet Explorer 4 and Internet Explorer 5
browser, which commenced on January 21, 2000. This source is expected to deliver
a diminishing level of traffic to us in 2000 compared to 1999, and we expect
that we will eventually receive no traffic from this source. In addition, our
agreement with Netscape will expire on June 30, 2000, and there can be no
assurance that we will be successful in renewing this agreement or in entering
into a new distribution agreement on commercially acceptable terms. Even though
we currently anticipate growth from other existing and new traffic sources, if
we are unable to renew our agreements or replace this traffic with other
sources,


                                       16
<PAGE>   17
it may materially, adversely impact our revenue. Although sources of consumer
traffic to our service fluctuate, in any given month we typically depend upon
one or a few of these sources for a significant majority of traffic and searches
conducted on our service. For the quarter ended March 31, 2000, approximately
90% of all of GoTo.com's traffic came from our affiliates. Of GoTo.com's total
traffic, approximately 25% of the total traffic came from the browsers,
Microsoft's Internet Explorer and Netscape, approximately 65% of the total
traffic came from other affiliates and the remaining 10% of the total traffic
came directly to the GoTo.com Web site. We generally obtain traffic from these
sources through short-term agreements. There can be no assurance that we will be
successful in renewing any of these agreements or entering into new distribution
agreements on commercially acceptable terms.

OUR SUCCESS DEPENDS UPON ACHIEVING A LARGE AND ACTIVE BASE OF ADVERTISERS AND
CONSUMERS.

    Our ability to increase the volume of transactions on our service and the
amounts bid by our advertisers is dependent upon achieving market acceptance
from more advertisers and consumers using our service. Most potential
advertisers have only limited experience advertising on the Internet and have
not devoted a significant portion of their advertising expenditures to Internet
advertising. Advertising through priority placement on our search service in
particular has been introduced only recently, and we cannot predict the level of
its acceptance as an advertising medium. Our service may not achieve significant
acceptance by consumers. Among other things, because our service prioritizes
search results based on advertising bids associated with keywords rather than on
algorithmic or other traditional search and retrieval technologies, consumers
may perceive our results to be less objective than those provided by traditional
search methods. Failure to achieve and maintain a large and active base of
advertisers and consumers would seriously harm our business.

OUR FUTURE SUCCESS IS DEPENDENT UPON FURTHER DEVELOPING AND ENHANCING THE
AFFILIATE NETWORK.

    We believe that our future success in penetrating our target markets depends
in part on our ability to further develop and maintain relationships with
affiliates, who provide their users with GoTo.com search capabilities on their
sites or direct their traffic to our Web site. We believe these relationships
are important in order to facilitate broad market acceptance of our service and
enhance our sales. Our future ability to attract consumers to our service is
dependent upon the growth of our affiliate network, which is new and unproven.
Our agreements with affiliates are generally terminable at will by either party
at any time. The loss of our agreements with our existing affiliates could
damage our business. If we are unable to successfully develop and maintain
relationships with affiliates, our business will be damaged.

WE MAY HAVE DIFFICULTY IMPLEMENTING GOTO SHOPPING AND GOTO AUCTIONS, AND
CONSUMERS AND ADVERTISERS MAY NOT ADOPT EITHER GOTO SHOPPING OR GOTO AUCTIONS.

    We intend to extend our pay-for-placement model for Web search to GoTo
Shopping and GoTo Auctions, which services were acquired in our recent
acquisitions of Cadabra and AuctionRover. GoTo Shopping will permit advertisers
to bid for placement in search results generated from a consumer's search for
products. GoTo Auctions will allow GoTo.com to carry listings of major auction
sites. We may not be able to successfully implement this model for GoTo Shopping
or GoTo Auctions. Moreover, advertisers may not accept this model as a means to
sell their products. Failure to successfully implement GoTo Shopping or GoTo
Auctions, or to achieve market acceptance of GoTo Shopping or GoTo Auctions on a
cost-effective basis could have a significant adverse affect on our results of
operations and the price of our stock.

WE CANNOT ASSURE YOU THAT OUR STOCK PRICE WILL NOT DECLINE OR WILL NOT BE
EXTREMELY VOLATILE.

    The price of our common stock may decline or may be extremely volatile.
Since our initial public offering in June 1999, the per share closing price of
our common stock has ranged from a low of $20.00 as of June 21, 1999 to a high
of $114.50 as of November 15, 1999. In addition, an active public market for
GoTo.com's common stock may not continue.

WE ARE DEPENDENT UPON OTHER COMPANIES WHO SUPPLY SERVICES TO US.

    We also depend on non-distribution related relationships. For example,
following the paid advertising search results offered to consumers on our
service, we offer search results provided by Inktomi Corporation. We currently
rely on Inktomi as the sole source of these additional search results, which
constitute a very high percentage of the search results displayed by GoTo.com.
For example, Inktomi results were shown on approximately 72% of March 2000
searches. Our agreement with Inktomi expires in May 2000. The loss of this or
any other key relationship could damage our business. If we are unable to
develop future key relationships or maintain and enhance our existing
relationships, our business will be damaged.


                                       17
<PAGE>   18
OUR INDUSTRY IS HIGHLY COMPETITIVE, AND WE CANNOT ASSURE YOU THAT WE WILL BE
ABLE TO COMPETE EFFECTIVELY.

    The market for Internet products, services and advertising is new, rapidly
evolving and intensely competitive. GoTo.com currently or potentially competes
with many other providers of Web directories, search, shopping, auction and
information services, as well as traditional media, for consumer attention and
advertising expenditures. We expect competition to intensify in the future.
Barriers to entry may not be significant, and current and new competitors may be
able to launch new Web sites at a relatively low cost. Accordingly, we believe
that our success will depend heavily upon achieving significant market
acceptance before our competitors and potential competitors introduce competing
services.

    GoTo.com competes with online services, other Web sites and advertising
networks such as DoubleClick Inc. and 24/7 Media, Inc., as well as traditional
offline media such as television, radio and print for a share of advertisers'
total advertising budgets. We believe that the number of companies selling
Web-based advertising and the available inventory of advertising space has
recently substantially increased. Accordingly, GoTo.com may face increased
pricing pressure for the sale of advertisements and direct marketing
opportunities, which could adversely affect our business and operating results.

    GoTo.com also competes with providers of Web directories, search, shopping,
auction and information services, all of whom offer services competitive with
GoTo.com, including, among others, AltaVista, Amazon.com, Inc., America Online,
Inc. (AOL.com, Netfind and Netscape Netcenter), Ask Jeeves, Inc., CNET, Inc.
(NBCi and mySimon Inc.), DealTime.com, Excite@Home, Inc. (including WebCrawler
and Magellan), Google, Inc., Inktomi Corporation, LookSmart, Ltd., Lycos, Inc.
(including HotBot), Microsoft Corporation (LinkExchange, Inc. and msn.com),
OpenDirectory, Inc., ShopNow.com Inc. (bottomdollar.com), The Walt Disney
Company (Go.com) and Yahoo! Inc. In addition, we expect that other companies
will offer directly competing services in the future.

    Many of these competitors, as well as potential entrants into our market,
have longer operating histories, larger customer or user bases, greater brand
recognition and significantly greater financial, marketing and other resources
than we do. Many of these current and potential competitors can devote
substantially greater resources to promotion and Web site and systems
development than we can. In addition, as the use of the Internet and other
online services increases, larger, well-established and well-financed entities
may continue to acquire, invest in or form joint ventures with providers of Web
directories, search, shopping, auction and information services or advertising
solutions, and existing providers of Web directories, search, shopping, auction
and information services or advertising solutions may continue to consolidate.
In addition, providers of Internet browsers and other Internet products and
services who are affiliated with providers of Web directories and information
services in competition with the GoTo.com service may more tightly integrate
these affiliated offerings into their browsers or other products or services.
Any of these trends would increase the competition we face and could adversely
affect our business and operating results.

WE ARE DEPENDENT UPON MAINTAINING AND EXPANDING OUR COMPUTER AND COMMUNICATIONS
SYSTEMS.

    Our failure to achieve or maintain high capacity data transmission without
system downtime and achieve improvements to our transaction processing systems
and network infrastructure would adversely affect our business and results of
operations. We believe that our current transaction-processing systems and
network infrastructure are insufficient to support our future growth. Although
we are enhancing and expanding our transaction-processing systems and network
infrastructure, we have experienced occasional systems interruptions and
infrastructure failures, which we believe will continue to occur.

WE MUST MAINTAIN AND CONTINUE TO UPGRADE OUR NEW FINANCIAL AND ACCOUNTING
SYSTEMS.

    If we are not able to maintain or continue to automate our sales, financial
and accounting systems and processes, and upgrade those systems in accordance
with our growth, including the integration of any acquired companies' systems
and data, we may not have adequate, accurate or timely financial information.
Failure to have adequate, accurate or timely financial information would harm
our business and could lead to volatility in our stock price. If we grow
rapidly, we will face additional challenges in upgrading and maintaining these
systems.

A SIGNIFICANT PORTION OF OUR REVENUE IS CONCENTRATED AMONG A LIMITED NUMBER OF
ADVERTISERS.

    If our major advertisers were to substantially cut back advertising or stop
using our services, our business would be seriously harmed. A significant
majority of our total revenue is derived from a small proportion of our
advertisers. We believe that a substantial


                                       18
<PAGE>   19
amount of revenue from advertising sales in any given future period may come
from a relatively small number of advertisers. We do not have formal contractual
relationships with many of our advertisers and when we do have contracts, most
are terminable at any time by the advertiser. As a result, we cannot assure you
that any of our advertisers will purchase advertising from us in the future.

CONTINUED ADOPTION OF THE INTERNET AS A METHOD OF CONDUCTING BUSINESS IS
NECESSARY FOR OUR FUTURE GROWTH.

    The failure of the Internet to continue to develop as a commercial and
business medium would adversely affect our business. The widespread acceptance
and adoption of the Internet by traditional businesses for conducting business
and exchanging information is likely only if the Internet provides these
businesses with greater efficiencies and improvements.

FAILURE TO EXPAND INTERNET INFRASTRUCTURE COULD LIMIT OUR FUTURE GROWTH.

    The recent growth in Internet traffic has caused frequent periods of
decreased performance, and if Internet usage continues to grow rapidly, the
Internet's infrastructure may not be able to support these demands and its
performance and reliability may decline. Consequently, the emergence and growth
of the market for our services depends upon improvements being made to the
entire Internet as well as to our individual advertisers' and consumers'
networking infrastructures to alleviate overloading and congestion.

INCREASED SECURITY RISKS OF ONLINE COMMERCE MAY DETER FUTURE USE OF OUR
SERVICES.

    Concerns over the security of transactions conducted on the Internet and the
privacy of consumers may also inhibit the growth of the Internet and other
online services generally, and online commerce in particular. Our failure to
prevent security breaches could significantly harm our business and results of
operations. Anyone who is able to circumvent our security measures could
misappropriate proprietary information, cause interruptions in our operations or
damage our brand and reputation. We do not believe that our data repositories,
financial systems and other technology resources are secure from security
breaches or sabotage and we occasionally experience attempts at "hacking" or
security breaches. We may be required to incur significant costs to protect
against security breaches or to alleviate problems caused by breaches. Any
well-publicized compromise of security could deter people from using the
Internet to conduct transactions that involve transmitting confidential
information or downloading sensitive materials, which would adversely affect the
business of our advertisers and, accordingly, our business.

WE FACE THE RISKS OF SYSTEM FAILURES.

    We currently do not have a disaster recovery plan in effect and do not have
fully redundant systems for our services at an alternate site. A disaster such
as fire, flood, earthquake, power loss, telecommunications failure, break-in,
sabotage or a similar event could severely damage our business and results of
operations because our services could be interrupted for an indeterminate length
of time. Our operations depend upon our ability to maintain and protect our
computer systems, all of which are located in our principal headquarters in
Pasadena, California and at two offsite locations, both managed by third
parties. One is managed by GlobalCenter, in Sunnyvale, California and the other
by Qwest Communications International, Inc., in Burbank, California. Pasadena,
Sunnyvale and Burbank exist on or near known earthquake fault zones. The
occurrence of a natural disaster or unanticipated problems at our principal
headquarters or at the third-party facility could cause interruptions or delays
in our business, loss of data or render us unable to provide our services. In
addition, failure by the third-party facility to provide the data communications
capacity required by us, as a result of human error, natural disaster or other
operational disruptions, could cause interruptions in our service. The
occurrence of any or all of these events could adversely affect our reputation,
brand and business, which could cause the price of our common stock to decline.

WE HAVE EXPERIENCED SIGNIFICANT GROWTH IN OUR BUSINESS IN RECENT PERIODS, AND
ANY FAILURE TO MANAGE THIS GROWTH COULD DAMAGE OUR BUSINESS.

    Our ability to successfully offer products and services and implement our
business plan in a rapidly evolving market requires an effective planning and
management process. We have increased, and plan to continue to increase, the
scope of our operations. These expansion efforts could be expensive and put a
strain on management, and, if we do not manage growth properly, it could
adversely affect our business. We will need to expand our infrastructure, which
will include hiring certain key employees and continuing to increase our
headcount. Hiring key employees, in particular, has historically been difficult,
and we cannot assure you that we will be able to successfully attract and retain
a sufficient number of qualified personnel.


                                       19
<PAGE>   20
OUR EXECUTIVE OFFICERS AND CERTAIN KEY PERSONNEL ARE CRITICAL TO OUR BUSINESS
AND THESE OFFICERS AND KEY PERSONNEL MAY NOT REMAIN WITH US IN THE FUTURE.

    Our future success depends upon the continued service of our executive
officers and other key technology, marketing, sales and support personnel. None
of our officers or key employees is bound by an employment agreement for any
specific term. If we lost the services of one or more of our key employees, or
if one or more of our executive officers or employees decided to join a
competitor or otherwise compete directly or indirectly with us, this could have
a significant adverse effect on our business and could cause the price of our
stock to decline.

WE ARE EXPOSED TO RISKS ASSOCIATED WITH CREDIT CARD FRAUD.

    We have suffered losses and may continue to suffer losses as a result of
orders placed with fraudulent credit card data, even though the associated
financial institution approved payment of the orders. Under current credit card
practices, a merchant is liable for fraudulent credit card transactions when, as
is the case with the transactions we process, that merchant does not obtain a
cardholder's signature. A failure to adequately control fraudulent credit card
transactions would adversely affect our business and could cause a decline in
our stock price.

WE FACE RISKS OF CLAIMS FROM THIRD PARTIES FOR INTELLECTUAL PROPERTY
INFRINGEMENT AND OTHER MATTERS THAT COULD ADVERSELY AFFECT OUR BUSINESS.

    Our services operate in part by making Internet services and content
available to our users. This creates the potential for claims to be made against
us, either directly or through contractual indemnification provisions with third
parties. These claims might, for example, be made for defamation, negligence,
copyright, trademark or patent infringement, personal injury, invasion of
privacy or other legal theories. Allegations are made against us from time to
time concerning these types of claims. Any claims could result in costly
litigation and be time consuming to defend, divert management's attention and
resources, cause delays in releasing new or upgrading existing services or
require us to enter into royalty or licensing agreements. Royalty or licensing
agreements, if required, may not be available on acceptable terms, if at all.
There can be no assurance that our services do not infringe the intellectual
property rights of third parties. A successful claim of infringement against us
and our failure or inability to license the infringed or similar technology
could adversely affect our business.

WE ARE ENGAGED IN LITIGATION WITH THE WALT DISNEY COMPANY AND CERTAIN OF ITS
AFFILIATES THAT COULD SERIOUSLY HARM OUR BUSINESS

    We are engaged in litigation that will be expensive to pursue and will be
distracting to our management and other employees. Any adverse developments
resulting from this litigation could seriously harm our business. We believe
that The Walt Disney Company and certain of its affiliates, including Infoseek
Corporation, are infringing our GoTo.com logo. On February 18, 1999, we sued
these companies and two affiliated companies in the United States District Court
for the Central District of California alleging violation of federal trademark
law and unfair competition. Our lawsuit is based on the use by these companies
of a "GO" design mark to provide Internet services, including a search engine in
connection with their "Go Network." We are seeking to prevent these companies
from using this "GO" design mark as well as other remedies. We cannot assure you
that the outcome of this litigation will be favorable to us. For example, we may
not prevail and be able to stop these companies from causing confusion among
consumers and advertisers through continued use of the "GO" design mark. The
defendants have asserted counterclaims against GoTo.com. GoTo.com believes that
the counterclaims are without merit and will defend against them vigorously. An
unfavorable result could affect the value of the GoTo.com logo or even prevent
us from using the GoTo.com logo.

    On November 12, 1999, the federal district court in Los Angeles
preliminarily enjoined The Walt Disney Company, Infoseek and related companies
from using their Go Network logo. On November 18, 1999, the Ninth Circuit Court
of Appeals granted the defendants' motion for a stay of the preliminary
injunction pending appeal and the defendants were permitted to use the Go
Network logo while the Ninth Circuit reviewed the district court's preliminary
injunction order. GoTo.com and the defendants briefed the appeal during
December, and the Ninth Circuit heard oral arguments on the matter on January
19, 2000. On January 27, 2000, the Ninth Circuit vacated the stay and reinstated
the preliminary injunction. No trial date has been set, and despite the issuance
of the preliminary injunction, we cannot assure you that we will ultimately
prevail in this litigation.


                                       20
<PAGE>   21
WE MAY NOT BE ABLE TO PROTECT OUR INTERNET DOMAIN NAME OR INTELLECTUAL PROPERTY
RIGHTS UPON WHICH OUR BUSINESS RELIES.

    The Internet domain name we use, "GoTo.com," is an extremely important part
of our business and we may not be able to protect it. We may be unable to
acquire or maintain relevant domain names in all countries in which we conduct
business. We may be unable to prevent third parties from acquiring domain names
that are similar to, infringe upon or otherwise decrease the value of our
trademarks and other proprietary rights. Third parties have acquired domain
names that include "goto" or varieties thereof both in the United States and
elsewhere.

    Our success and ability to compete also are substantially dependent upon our
internally developed technology and data resources, which we protect through a
combination of copyright, trade secret and trademark law. We have no patents
issued to date on our technology. There can be no assurance that we will
adequately be able to protect our technology and data resources.

    We are aware that certain other companies are using or may have plans to use
the terms "GoTo," "Go," "Go2" and variations of these terms as part of a company
name, domain name, trademark or service mark. In addition, we have received
notice from companies claiming superior rights to marks such as these. We cannot
assure you that additional companies will not claim such superior rights or that
we will not be subject to infringement claims. A successful infringement claim
by the owner of a mark including "GoTo" or a variation could require us to
change our name or our logo, which would be expensive and disruptive to our
business. Further, despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use our
services, technology and other intellectual property, and we cannot be certain
that the steps we have taken will prevent any misappropriation or confusion
among consumers and advertisers.

WE MAY NEED ADDITIONAL CAPITAL WHICH COULD DILUTE THE OWNERSHIP INTEREST OF
INVESTORS.

    We require substantial working capital to fund our business. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the rights of our common stock, and our stockholders may
experience additional dilution. We cannot be certain that additional financing
will be available to us on favorable terms when required, or at all. Since our
inception, we have experienced negative cash flow from operations and expect to
experience significant negative cash flow from operations in the future. We
currently anticipate that our available funds will be sufficient to meet our
anticipated needs for working capital and capital expenditure through at least
the next 12 months. However, we may choose to raise additional funds prior to
the expiration of this period or at a later date.

THE ACQUISITIONS OF CADABRA AND AUCTIONROVER COULD BE DIFFICULT TO INTEGRATE,
DISRUPT OUR BUSINESS, DILUTE STOCKHOLDER VALUE AND ADVERSELY AFFECT OUR
OPERATING RESULTS.

    We recently completed the acquisitions of Cadabra and AuctionRover. We are
in the process of integrating Cadabra's and AuctionRover's products, technology
and personnel, and the process may be delayed, disrupt our ongoing business,
cost more than expected and distract management. None of Cadabra's or
AuctionRover's personnel is subject to an employment agreement for any specific
term. If we lost the services of any of the key personnel of either Cadabra or
AuctionRover, it could have a significant adverse effect on our business and on
the integration of Cadabra and AuctionRover.

OTHER POTENTIAL ACQUISITIONS COULD BE DIFFICULT TO INTEGRATE, DISRUPT OUR
BUSINESS, DILUTE STOCKHOLDER VALUE AND ADVERSELY AFFECT OUR OPERATING RESULTS.

    We may make investments in or acquire complementary products, technologies
and businesses. These acquisitions and investments could disrupt our ongoing
business, distract our management and employees and increase our expenses. If we
acquire a company, we could face difficulties in assimilating that company's
personnel and operations. In addition, the key personnel of the acquired company
may decide not to work for us. Acquisitions of additional services or
technologies also involve risks of incompatibility and the need for integration
into our existing services and marketing, sales and support efforts. If we
finance the acquisitions by issuing equity securities, this could dilute our
existing stockholders. Any amortization of goodwill or other assets, or other
charges resulting from the costs of these acquisitions could adversely affect
our operating results.

IMPACT OF YEAR 2000

    As a result of our planning and implementation efforts, we have experienced
no significant disruptions in mission critical information technology and
non-information technology systems to date and believe those systems
successfully responded to the Year


                                       21
<PAGE>   22
2000 date change. GoTo.com expensed an insignificant amount during 1999 and the
first quarter of 2000 in connection with our remediation of our systems. We are
not aware of any material problems resulting from Year 2000 issues, either with
our products, our internal systems, or the products and services of third
parties. We will continue to monitor our mission critical computer applications
and those of its suppliers and vendors throughout the year 2000 to ensure that
any latent Year 2000 matters that may arise are addressed promptly.

OUR MARKET MAY UNDERGO RAPID TECHNOLOGICAL CHANGE AND OUR FUTURE SUCCESS WILL
DEPEND ON OUR ABILITY TO MEET THE CHANGING NEEDS OF OUR INDUSTRY.

    If new industry standards and practices emerge in the Internet and online
advertising industry, our existing services, technology and systems may become
obsolete. Our future success will depend on our ability to:

    -   license and internally develop leading technologies useful in our
        business;

    -   enhance our existing services;

    -   develop new services and technologies that address the increasingly
        sophisticated and varied needs of prospective consumers; and

    -   respond to technological advances and emerging industry standards and
        practices on a cost-effective and timely basis.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES MAY DAMAGE OUR BUSINESS.

    The laws and regulations applicable to the Internet and our services are
evolving and unclear and could damage our business. There are currently few laws
or regulations directly applicable to access to, or commerce on, the Internet.
Due to the increasing popularity and use of the Internet, it is possible that
laws and regulations may be adopted, covering issues such as user privacy,
defamation, database protection, pricing, taxation, content regulation, quality
of products and services, and intellectual property ownership and infringement.
Such legislation could expose GoTo.com to substantial liability as well as
dampen the growth in use of the Internet, decrease the acceptance of the
Internet as a communications and commercial medium, or require GoTo.com to incur
significant expenses in complying with any new regulations.

WE MAY INCUR LIABILITIES FOR THE ACTIVITIES OF USERS OF OUR SERVICE.

    The law relating to the liability of providers of online services for
activities of their users is currently unsettled and could damage our business.
We do not carry insurance that will indemnify us for liability for activities of
our users. We cannot assure you that GoTo.com will successfully avoid civil or
criminal liability for unlawful activities carried out by users of our service.
The imposition upon GoTo.com of potential liability for unlawful activities of
users of our service could require us to implement measures to reduce our
exposure to such liability, which may require us, among other things, to spend
substantial resources or to discontinue certain service offerings. Any costs
incurred as a result of such liability or asserted liability could damage our
business.

WE HAVE BROAD DISCRETION TO USE OUR CAPITAL AND HOW WE INVEST THESE PROCEEDS MAY
NOT YIELD A FAVORABLE RETURN.

    Our management can spend our capital in ways with which the stockholders may
not agree.

FUTURE SALES OF OUR COMMON STOCK BY OUR STOCKHOLDERS MAY DEPRESS OUR STOCK
PRICE.

    If our stockholders sell substantial amounts of common stock in the public
market, including shares issued upon the exercise of outstanding options, the
market price of our common stock could fall. All of the approximately 49.1
million shares of common stock outstanding at March 31, 2000 are available for
sale in the public market, except for 2.2 million shares that are subject to
repurchase by GoTo.com and transfer restrictions as a result of vesting
agreements and 3.7 million shares, which became available on April 14, 2000.


                                       22
<PAGE>   23
OUR CHARTER DOCUMENTS AND CHANGE OF CONTROL SEVERANCE AGREEMENTS WITH OUR
MANAGEMENT WILL MAKE IT MORE DIFFICULT TO ACQUIRE US.

    Provisions of our Amended and Restated Certificate of Incorporation and
Bylaws could make it more difficult for a third party to acquire us, even if
doing so would be beneficial to our stockholders. For example, our board of
directors is divided into three classes, with one class being elected each year
by our stockholders, which generally makes it more difficult for stockholders to
replace a majority of directors and obtain control of our board. In addition,
stockholder meetings may be called only by our board of directors, the chairman
of the board and the president, advanced notice is required prior to stockholder
proposals, and stockholders may not act by written consent. Further, we have
authorized preferred stock that is undesignated, making it possible for the
board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change control of
GoTo.com.

    Delaware law also could make it more difficult for a third party to acquire
us. Specifically, Section 203 of the Delaware General Corporation Law may have
an anti-takeover effect with respect to transactions not approved in advance by
the board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by our
stockholders.

    We have entered into change of control severance agreements with members of
our senior management providing for certain benefits, including acceleration of
option vesting, to these members if they are terminated other than for cause
following an acquisition of GoTo.com. These agreements could make us less
attractive to a third party who may want to acquire us because they will make
any replacement of management more expensive.

    Furthermore, in March 2000, we entered into a Stockholder Agreement with
Bill Gross' idealab!, which limits Bill Gross' idealab!'s and its affiliates'
ability to beneficially own 35% or more of our outstanding common stock, to
transfer shares of our common stock or to knowingly assist or advise, or
knowingly provide or arrange financing to facilitate any other person or entity
to beneficially own 15% or more of our outstanding common stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    GoTo.com's exposure to market risk for interest rate changes relates
primarily to its investment portfolio. GoTo.com has no derivative financial
instruments as of March 31, 2000 or December 31, 1999. GoTo.com places its
investment portfolio in high quality credit instruments, which are spread to
many issuers. GoTo.com's investments are principally confined to cash
equivalents and available-for-sale debt securities.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    On February 18, 1999, GoTo.com sued The Walt Disney Company and certain of
its affiliates, including Infoseek Corporation, in the United States District
Court for the Central District of California, alleging violation of federal
trademark law and unfair competition. The lawsuit is based upon these companies'
use of a "GO" design mark to provide Internet services, including a search
engine in connection with their "Go Network." GoTo.com is seeking to prevent
these companies from using the "GO" design mark as well as other remedies.

    The defendants have asserted counterclaims against GoTo.com. GoTo.com
believes that the proposed counterclaims are without merit and will defend
against them vigorously.

    On November 12, 1999, the federal district court in Los Angeles
preliminarily enjoined The Walt Disney Company, Infoseek and related companies
from using their Go Network logo. On November 18, 1999, the Ninth Circuit Court
of Appeals granted the defendants' motion for a stay of the preliminary
injunction pending appeal and the defendants were permitted to use the Go
Network logo while the Ninth Circuit reviewed the district court's preliminary
injunction order. GoTo.com and the defendants briefed the appeal during
December, and the Ninth Circuit heard oral arguments on the matter on January
19, 2000. On January 27, 2000, the Ninth Circuit vacated the stay and reinstated
the preliminary injunction. No trial date has been set, and despite the issuance
of the preliminary injunction, we cannot assure you that we will ultimately
prevail in this litigation.


                                       23
<PAGE>   24
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

    The Company invested all of the approximately $94,800,000 of the proceeds
from its initial public offering toward purchases in investment grade short-term
and long-term investments.

SALES OF UNREGISTERED SECURITIES

    On May 3, 2000, GoTo.com acquired AuctionRover, an online resource for
auctions. Pursuant to the Agreement and Plan of Reorganization, GoTo.com
acquired all of the outstanding shares of capital stock and assumed all
outstanding options to acquire shares of capital stock of AuctionRover for
3,470,588 shares of GoTo.com common stock, including 521,408 shares to be issued
upon the exercise of options assumed by GoTo.com. Based on the price of GoTo.com
stock on March 8, 2000 the purchase price was valued at approximately $174.2
million, which consisted of GoTo.com Common Stock of $173.7 million valued at
the closing price of GoTo.com Common Stock on the date of exchange ratio was
set, net of expected proceeds from the exercise of stock options assumed by
GoTo.com and including acquisition costs of approximately $500,000 for legal and
accounting services. The issuance of these shares was exempt from registration
under Section 3(a)(10) of the Securities Act of 1933, based upon the issuance of
a permit following a fairness hearing before the North Carolina Securities
Administrator.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

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

(b) Reports on Form 8-K.

    The Company filed a Current Report on Form 8-K dated February 3, 2000 to
report under Item 2 thereof the acquisition of Cadabra. We filed an amendment
dated March 16, 2000 to this Current Report on Form 8-K to include the required
Pro Forma Information and Financial Statements required under the report. We
filed a Current Report on Form 8-K dated May 3, 2000 to report under Item 2
thereof the acquisition of AuctionRover.


                                       24
<PAGE>   25
                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: May 10, 2000                        GOTO.COM, INC.

                                          By:        /s/  TODD TAPPIN
                                              ----------------------------------
                                                          Todd Tappin
                                                    Chief Financial Officer
                                                 (Duly Authorized Officer and
                                                 Principal Financial Officer)


                                       25