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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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Amendment No. 1
FORM 10-Q/A

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
|--- | -------------------------------------------------------------------------------------------------------------------------------------

OR

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM       TO
|--- | --------------------------------------------------------------------------------------------------------------------------------

Commission File Number 0-26707

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NETWORK COMMERCE INC.

(Exact name of registrant as specified in its charter)

Washington(State or other jurisdiction of incorporation or organization)

91-1628103(IRS Employer Identification No.)411 1st Avenue South
Suite 200 North
Seattle, WA 98104(Address of principal executive offices)


(206) 223-1996(Registrant's telephone number, including area code)

ShopNow.com Inc.(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

As
of September 29, 2000, there were 61,848,422 shares outstanding of the Registrant's common stock.

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Network Commerce Inc.       Form 10-Q/A       Index

|                                                                                               |  | Page
|---------------------------------------------------------------------------------------------- |  | ----
|PART I  FINANCIAL INFORMATION                                                                  |  |     
|ITEM 2:  Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 3   
|SIGNATURES                                                                                     |  | 21  

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EXPLANATORY NOTE

The purpose of this Form 10-Q/A is to amend the registrant's Form 10-Q for the quarterly period ended March 31,
2000 to change the measuring time period of average revenue per premier merchant from per month to per quarter in the table appearing under "Financial Data" in Item 2 of Part I. No part of the
Form 10-Q for the quarterly period ended March 31, 2000 previously filed with the SEC other than Item 2 of Part I is affected by this amendment.

In
accordance with Rule 12b-15 of the Exchange Act of 1934, this Amendment No. 1 sets forth the complete text to Item 2 of Part I of our
form 10-Q for the quarter ended March 31, 2000, as amended.

PART I.  FINANCIAL INFORMATION

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

The matters discussed in this report contain forward-looking statements that involve known and unknown risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions. Words such as "may," "could," "would," "expect," "anticipate," "intend," "plan," "believe," "estimate," and variations of such words and similar
expressions are intended to identify such forward-looking statements. You should not place undue reliance on these forward-looking statements, which are based on our current expectations and
projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below) and apply only as of the date of this
report. Our actual results could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to,
those discussed below in "Additional Factors That May Affect Future Results" as well as those discussed in this section and elsewhere in this report, and the risks discussed in the "Risk Factors"
section included in our December 31, 1999 10-K filed on February 10, 2000 with the Securities and Exchange Commission.



We provide an end-to-end solution that enables businesses to engage in e-commerce with other businesses, merchants and
shoppers. Our end-to-end solution consists of access to our online marketplaces and networks combined with a suite of e-commerce enabling products and services.
These services include custom application and online store development and design, hosting and maintenance, sales and marketing services and transaction processing. We maintain an on-line
marketplace, referred to as the ShopNow Network, which aggregates merchants and shoppers over a distributed network of web sites. In January 2000, we launched a
business-to-business portal and marketplace, known as the Business Commerce Network, which is designed to enable businesses to engage in online transactions with other
businesses.

We
were incorporated in January 1994 and initially operated as a computer services company. In 1996, we began to change the focus of our business to conducting commerce over
the Internet. In May 1997, we launched BuySoftware.com, an online computer products store. During 1998, we completed three acquisitions, including the acquisition of Media Assets, Inc.,
a direct marketing company, launched ShopNow.com and began offering merchants e-commerce enabling products and services. In April 1999, we changed our name from TechWave Inc.
to ShopNow.com Inc. In June 1999, we ceased operation of BuySoftware.com because we determined it was inconsistent with our evolving strategy. We consummated two acquisitions in the
second quarter of 1999, three in the fourth quarter of 1999 and two in the first quarter of 2000.

We
derive substantially all of our revenues from the ShopNow Network and the Business Commerce Network, which includes providing services to businesses.

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Revenues from the ShopNow Network, which is a network of proprietary and affiliated web sites, includingwww.shopnow.com, the
BottomDollar Network (includingwww.bottomdollar.comand other affiliated BottomDollar sites), www.chaseshop.comandwww.speedyclick.comare generated primarily from advertising and merchandising
paid by merchants as well as from leads and orders delivered to merchants. Advertising consists of the sale of impressions on one or more of the our network of web sites; merchandising consists of the
sale of specific positions or category sponsorships on the sites. These agreements typically have a term of one to four months. Advertising and merchandising revenues are recognized ratably over the
term of the applicable agreement. In certain circumstances, we offer products directly to shoppers via thewww.chaseshop.comportal. In these instances
where we act as merchant-of-record, we record as revenue the full sales price of the product sold and records the full
cost of the product to us as cost of revenues, upon shipment of the product. Revenues generated from our ceased BuySoftware.com business are included in our March 31, 1999 operations, as
management did not cease operations of BuySoftware.com until June 1999.

Revenues
from the Business Commerce Network are derived primarily from providing services, transaction processing, and technology licensing to businesses and from the our proprietary
business-to-business portal located atwww.b2bnow.com. Revenues from services are generated principally through development
fees, hosting fees and sales and marketing services. These services can be purchased as a complete end-to-end suite of services or separately. We recognize revenues from
development of custom applications and online stores and marketing projects on a percentage of completion basis over the period of development or the period of the marketing project. These projects
generally range from two to five months. Hosting contracts typically have a term of one year, with fees charged and earned on a monthly basis. We bear full credit risk with respect to these sales.
Contract costs include all direct labor, material, subcontract and other direct project costs and certain indirect costs related to contract performance.

Revenues
are also generated from fees paid to us by businesses and merchants that license our transaction processing and fraud prevention technologies and on-line payment
gateways, as well as other e-commerce enabling technologies. Revenues include licensing fees, per-transaction fees and in certain cases monthly hosting and maintenance fees,
which are recognized in the period earned. Revenues generated from technology licensing are recognized in accordance with Statement of Position 97-2, "Software Revenue Recognition."
Businesses and merchants that utilize our payment processing technologies act as the merchant-of-record and bear the full credit risk on those sales of goods and services.
Revenues from b2bNow.com are generated primarily from the sales of advertising and merchandising products similar to those sold on the ShopNow Network.

Cost
of revenues generated from the ShopNow Network include the portion of our Internet telecommunications connections that are directly attributable to traffic on the ShopNow Network
and the direct labor costs incurred in maintaining and enhancing our network infrastructure. In order to fulfill our obligations under our lead and order delivery advertising programs, we occasionally
purchase shopping traffic from third parties by placing on their web sites advertisements that, when clicked on by a visitor, send the visitor to the ShopNow Network. Any shopping traffic that we
purchase from a third party that is used to fulfill these obligations is included as cost of revenues. Cost of revenues on the products that we sell as merchant-of-record
includes the cost of the product, credit card fees and shipping costs. Cost of revenues generated from providing services includes all direct labor costs incurred in connection with the provision of
services, as well as fees charged by third-party vendors that have directly contributed to the design, development and implementation of our services. Cost of revenues generated from licensing
e-commerce-enabling technologies and from our proprietary business-to-business portal consists primarily of telecommunications costs and direct labor costs incurred
in maintaining and enhancing our network infrastructure.

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The following table presents selected operating data for the ShopNow Network. This information should be read in conjunction with the other information
presented in Management's Discussion and Analysis of Financial Condition and Results of Operations. The operating data presented below for any quarter are not necessarily indicative of data for any
future period.

|                                                                |  | March 31, 2000 |         | December 31, 1999 |   | September 30, 1999
|--------------------------------------------------------------- |  | -------------- | ------- | ----------------- | - | ------------------
|Number of merchants listed on the ShopNow Network(1)            |  |                | 61,000  |                   |   | 48,000            
|Number of premier merchants listed on the ShopNow Network(2)    |  |                | 97      |                   |   | 68                
|Average revenue per premier merchant per quarter                |  | $              | 47,504  |                   | $ | 34,991            
|Number of businesses listed in the Business Commerce Network(3) |  |                | 610,000 |                   |   |                  
|Number of development contracts(4)                              |  |                | 8       |                   |   | 5                 

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|(1) |  | Represents the number of merchants listed on the ShopNow Network as of the last day of the applicable quarter.                                                                             
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Premier merchants include those merchants that contribute greater than $10,000 of revenue per month to the ShopNow Network.                                                                
|(3) |  | Represents the number of businesses listed in the Business Commerce Network directory as of the last day of the applicable quarter. The Business Commerce Network launched in January 2000.
|(4) |  | Represents development contracts for our business customers where our total development fees from these contracts exceed $100,000.                                                         



Revenues.Total revenues for the three-month period ended March 31, 2000 were $18.7 million, compared to
$7.6 million for the same period ended March 31, 1999, an increase of $11.1 million. The increase was due primarily to the expansion of our networks and increased demand for our
services. We continued to experience growth in our merchant listings, shopper traffic and affiliate and syndication shopping sites, which resulted in increased merchandising and advertising revenues,
transaction processing fees and sales of products to shoppers, exclusive of BuySoftware.com. The BuySoftware.com portion of revenues for the three-month period ended March 31, 1999 was
$5.5 million.

Cost of Revenues.The cost of revenues for the three-month period ended March 31, 2000 was $10.4 million,
compared to $7.1 million for the same period ended March 31, 1999, an increase of $3.3 million. The increase in our cost of revenues was directly attributable to the increase in
revenues during the same period from the ShopNow Network and the Business Commerce Network. The BuySoftware.com portion of cost of revenues for the three-month period ended March 31, 1999 was
$5.9 million.

Gross Profit.Gross profit for the three-month period ended March 31, 2000 was $8.3 million, compared to
$428,000 for the same period ended March 31, 1999, an increase of $7.9 million. As a percent of revenues, our gross profits were 44.3% compared to 5.7% for the same periods. This
increase in gross profit percentage was due primarily to the increase in higher-margin revenues during the first quarter of 2000, while decreasing our concentration of revenues from product sales to
shoppers, which historically has contributed only flat or negative gross profits. While we expect to

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continue to increase our gross profits both in absolute dollars and as a percentage of revenues, we do not expect that the rate of growth achieved historically will continue.

Sales and Marketing.Sales and marketing expenses consist primarily of costs associated with marketing programs such as
advertising and public relations, as well as salaries and commissions. Sales and marketing expenses for the three-month period ended March 31, 2000 were $22.1 million, compared to
$5.3 million for the same period ended March 31, 1999, an increase of $16.8 million. The increase was due primarily to increased spending as a result of our expansion of the
ShopNow Network and our launch and expansion of the Business Commerce Network, both of which resulted in additional personnel and nationwide television, print and radio advertisements. We anticipate
continued growth in our sales and marketing expenses during the remainder of 2000.

General and Administrative.General and administrative expenses consist primarily of salaries and other
personnel-related costs for executive, financial, human resources, information services and other administrative personnel, as well as legal, accounting and insurance costs. General and administrative
expenses for the three-month period ended March 31, 2000 were $3.2 million, compared to $1.3 million for the same period ended March 31, 1999, an increase of
$1.9 million. The increase was due primarily to an increase in personnel from internal growth and acquisitions. We anticipate continued growth in our general and administrative expenses during
the remainder of 2000.

Research and Development.Research and development expenses consist primarily of salaries and related costs associated
with the development of new products and services, the enhancement of existing products and services, and the performance of quality assurance and documentation activities. Research and development
expenses for the three-month period ended March 31, 2000 were $4.2 million, compared to $1.5 million for the same period ended March 31, 1999, an increase of
$2.7 million. The increase was due primarily to the development and enhancement of our technology platform, as well as to an increase in technology personnel. These employees focus on
developing our technology platform as well as building the overall infrastructure that supports the ShopNow Network and the Business Commerce Network. We anticipate continued growth in our research
and development expenses during the remainder of 2000.

Amortization of Intangible Assets.Amortization of intangible assets resulting from acquisitions is primarily related
to the amortization of customer lists, domain names, acquired technology, proprietary concepts, assembled workforce and goodwill. Amortization of intangible assets expense for the three-month period
ended March 31, 2000 was $13.5 million, compared to $558,000 for the same period ended March 31, 1999, an increase of $12.9 million. This increase was due primarily to the
increase in intangible assets and related amortization expenses from business acquisitions completed during the last three quarters of 1999 and the first quarter of 2000, including the acquisitions of
GO Software, Inc., SpeedyClick, Corp., Cortix, Inc., WebCentric, Inc., Pronet Enterprises Ltd. and AXC Corporation. Intangible assets acquired in business combinations are
amortized over a three-year period. We expect continued growth in our amortization of intangible assets expense resulting from future business acquisitions.

Stock-Based Compensation.Stock-based compensation expense is related to the amortization of deferred compensation
resulting from stock option grants to employees with an option exercise price below the estimated fair market value of our common stock as of the date of grant. Stock-based compensation expense for
the three-month period ended March 31, 2000 was $1.9 million, compared to $137,000 for the same period ended March 31, 1999, an increase of $1.7 million. The amount of
deferred compensation resulting from these grants generally is amortized over a three-year vesting period.

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Gain On Sale Of Marketable Equity Securities.Gain on sale of marketable equity securities for the three-month period
ended March 31, 2000 was $1.1 million. We did not liquidate any of our marketable equity securities during the three-month period ended March 31, 1999.

Interest Income, Net.Interest income, net consists primarily of the combination of interest income earned on our cash
and cash equivalents and short-term investments as well as interest expense incurred on our outstanding debt obligations. Interest income, net for the three-month period ended
March 31, 2000 was $834,000, compared to $15,000 for the same period ended March 31, 1999, an increase of $819,000. Interest income, net increased due to the increase in our cash and
cash equivalents and short-term investments realized from completion of our initial and supplemental public offerings of common stock.

Income Tax Benefit.Income tax benefit for the three-month period ended March 31, 2000 was $11.9 million.
We did not realize any income tax benefits during the three-month period ended March 31, 1999. The income tax benefit recognized resulted principally from reductions of deferred tax liabilities
created as a result of business combinations. If we continue to consummate additional business combinations that result in the recognition of deferred taxes, we may incur additional tax deferred tax
benefits. We have not paid nor have we received refunds for federal income taxes and we do not expect to pay income taxes or receive income tax refunds in the foreseeable future.

Net Loss.Net loss for the three-month period ended March 31, 2000 was $22.8 million, compared to
$8.3 million for the same period ended March 31, 1999, an increase of $14.5 million. This increase was due primarily to an increase in our operating expenses, most significantly
sales and marketing expenses and amortization of intangible assets, partially offset by our increase in gross profit and income tax benefit during the same period. We expect to incur additional net
losses in 2000.



As of March 31, 2000, we had net operating loss carryforwards of approximately $103.3 million. If not used, the net operating loss carryforwards
will expire at various dates beginning in 2012. The Tax Reform Act of 1986 imposes restrictions on the use of net operating losses and tax credits in the event that there has been an ownership change,
as defined, of a corporation since the periods in which the net operating losses were incurred. Our ability to use net operating losses incurred prior to July 1999 is limited to approximately
$14.3 million per year due to sales of Series D and Series E convertible preferred stock to third parties in April 1998 and the sale of Series I convertible
preferred stock to Chase Manhattan Bank in July 1999, which resulted in ownership changes. Our deferred tax assets are recognizable only to the extent that they are offset by deferred tax
liabilities. To the extend that our deferred tax assets exceed our deferred tax liabilities in the future, valuation allowances may be recorded against our deferred tax assets. In concluding that
valuation allowances may be required, management considers such factors as our history of operating losses, potential future losses and the nature of our deferred tax assets.



Since inception, we have experienced net losses and negative cash flows from operations. As of March 31, 2000, we had an accumulated deficit of
$128.1 million. We have financed our activities largely through issuances of common stock and preferred stock, from the issuance of short- and long-term obligations and from capital
leasing transactions for certain of our fixed asset purchases. Through March 31, 2000, our aggregate net proceeds have been $270.8 million from issuing equity securities and
$21.8 million from issuing debt securities. As of March 31, 2000, we had $124.7 million in cash, cash equivalents and short-term investments.

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Net cash used in operating activities was $21.7 million for the three-month period ended March 31, 2000, compared to $8.2 million for the same period in 1999. The
increase was due primarily to the increase in our net loss for the three-month period ended March 31, 2000 of $22.8 million compared to $8.3 million for the same period ended
1999.

Net
cash used in investing activities was $77.9 million for the three-month period ended March 31, 2000, compared to $1.8 million for the same period in 1999. The
increase was due primarily to the net
increase in purchases of short-term investments of $55.1 million for the period-ended March 31, 2000, compared to $30,000 for the same period in 1999, the increase in
purchases of property and equipment of $6.5 million for the period-ended March 31, 2000, compared to $1.6 million for the same period in 1999, the increase in investments in
equity securities and other assets of $10.5 million for the period-ended March 31, 2000, compared to $199,000 for the same period in 1999, and the acquisition of businesses of
$5.8 million for the period-ended March 31, 2000, compared to $0 for the same period in 1999.

Net
cash provided by financing activities was $106.3 million for the three-month period ended March 31, 2000, compared to $6.4 million for the same period in
1999. The increase was due primarily to the closing of our public offering of 7,913,607 shares of common stock at $14.50 per share, which resulted in proceeds to us net of underwriters' fees and
commissions of $108.7 million. Additional offering costs incurred by the Company relating to the SPO were approximately $700,000. This public offering was closed on February 18, 2000.

In
March 1999 we entered into a loan and security agreement with Transamerica Business Credit Corporation for a term loan and line of credit. In May 1999, the agreement
was amended and restated allowing us to borrow up to $8.5 million at any one time, consisting of a $3.5 million term loan, a $4.0 million bridge loan and a line of credit of up to
$2.5 million, initially capped at $1.0 million until the bridge loan is repaid. The line of credit bears interest at the Transamerica Business Credit Corporation's base rate plus 2%, is
secured by substantially all of our assets and was amended in January 2000 to expire on March 31, 2001. The term loan bears interest at 12%, is secured by substantially all of our assets
and matures in March 2002. The bridge loan bore interest at 12% and was repaid in October 1999 after the closing of our initial public offering.

Our
capital requirements depend on numerous factors, including the rate of expansion of the ShopNow Network and the Business Commerce Network, the investments we make in our
technology platforms and in future technologies, the number of acquisitions that are completed and the composition of the consideration paid between cash, debt and stock, and the resources we devote
to expansion of our sales, marketing and branding efforts. We have also entered into agreements with Chase Manhattan Bank and 24/7 Media that require us to make aggregate advertising and marketing
expenditures of approximately $6.0 million in 2000, decreasing annually to $1.0 million in 2004. We believe that existing cash balances and cash generated from operations, together with
the net proceeds from our public offerings and the future sale of marketable equity securities will be sufficient to meet our anticipated cash needs for working capital and capital expenditures
through the next 18 months. After that time, we may be required to raise additional financing. We cannot be sure that the assumed levels of revenues and expenses underlying our anticipated cash
needs will prove to be accurate. The sale of additional equity or convertible debt securities could result in additional dilution to our shareholders. We cannot be sure that financing will be
available in amounts or on terms acceptable to us, or even available at all.

We
are currently contemplating entering into a new secured credit facility with terms and interest rates customary for transactions of this type. We expect the maximum borrowings
available under such new facility to be $15.0 million.

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In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin (SAB) No. 101,"Revenue
Recognition in Financial Statements,"to provide guidance on the recognition, presentation and disclosure of revenues in financial statements. We believe our revenue
recognition practices are in conformity with the guidelines prescribed in SAB No. 101.

In
March 2000, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 44 (FIN 44), "Accounting for Certain Transactions Involving Stock
Compensation." FIN 44 clarifies certain issues relating to the application of Accounting Principles Board Opinion No. 25 and related interpretations, which are the authoritative pronouncements
we use to account for our stock-based compensation transactions. FIN 44 is effective July 1, 2000, however certain conclusions reached in FIN 44 are applicable for transactions consummated
after either December 15, 1998 or January 12, 2000. We do not believe that the adoption of FIN 44 will have a material effect on our financial position or results of operations.



We believe that our advertising and merchandising revenues on the ShopNow Network and the Business Commerce Network are subject to seasonality changes as
retail transactions and advertising sales in traditional media, such as television and radio, generally are lower in the first and third calendar quarters of each year. In addition, Internet usage
typically declines during the summer and certain holiday periods. If our market makes the transition from an emerging to a more developed market, seasonal and cyclical patterns may develop in our
industry and in the usage of, and transactions on, our web sites and those of our merchants. Seasonal and cyclical patterns in online transactions and advertising would affect our revenues. Those
patterns may also develop on our web sites. Given the early stage of the development of the Internet and our company, however, we cannot predict to what extent, if at all, our operations will prove to
be seasonal.

Impact of the Year 2000 Computer Problem

Prior to January 1, 2000, we devoted substantial resources in an effort to ensure that our proprietary software, the third-party software on which we
rely, and the underlying systems and protocols did not contain errors associated with Year 2000 date functions. Since January 1, 2000, we have not experienced any disruption as a result of Year
2000 problems.

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Additional Factors That May Affect Future Results

You should carefully consider the risks described below and the other information in this quarterly report. While we have attempted to
identify all risks that are material to our business, additional risks that we have not yet identified or that we currently think are immaterial may also impair our business operations. The trading
price of our common stock could decline due to any of these risks. In assessing these risks, you should also refer to the other information in this quarterly report, including the consolidated
financial statements and related notes and the risks discussed in the "Risk Factors" section included in our December 31, 1999 10-K filed on February 10, 2000 with the
Securities and Exchange Commission.



We were incorporated in January 1994 and operated initially as a computer services company. In 1996, we began to change the focus of our business to
conducting commerce over the Internet. In August 1998, we launched our first online marketplace, ShopNow.com. In recent months, particularly with the launch of the Business Commerce Network, we
have increasingly focused on developing and providing products and services to enable businesses to conduct online commerce. The recent shifts in our business focus may make it difficult for you to
evaluate our business and prospects. You should also consider the risks, expenses and difficulties that we may encounter as a young company in a rapidly evolving market.



We incurred net losses of $22.8 million for the three-months ended March 31, 2000 and $8.3 million for the three-months ended
March 31, 1999. At March 31, 2000, we had an accumulated deficit of $128.1 million. We have historically invested heavily in sales and marketing, technology infrastructure and
research and development and expect to continue to do so in the future. As a result, we must
generate significant revenues to achieve and maintain profitability. We expect that our sales and marketing expenses, research and development expenses and general and administrative expenses will
continue to increase in absolute dollars and may increase as a percentage of revenues. In addition, we may incur substantial expenses in connection with future acquisitions.



Our business model has only been applied to the Internet since the mid-1990's and continues to evolve. Therefore we have limited experience in
planning the financial needs and operating expenses of our business. It is difficult for us to accurately forecast our revenues in any given period. We may not be able to sustain our recent revenue
growth rates or obtain sufficient revenues to achieve profitability. If our revenues in a particular period fall short of our expectations, we will likely be unable to quickly adjust our spending in
order to compensate for that revenue shortfall.

Our
operating results are likely to fluctuate substantially from period to period as a result of a number of factors, such as:

| |  | declines in the number of businesses and merchants to which we provide our products and services;     
|- |  | ------------------------------------------------------------------------------------------------------
| |  | the amount and timing of operating costs and expenditures relating to expansion of our operations; and
| |  | the mix of products and services that we sell.                                                        

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In addition, factors beyond our control may also cause our operating results to fluctuate, such as:

| |  | the announcement or introduction of new or enhanced products or services by our competitors; and
|- |  | ------------------------------------------------------------------------------------------------
| |  | the pricing policies of our competitors.                                                        

Period-to-period
comparisons of our operating results are not a good indicator of our future performance. It is likely that our operating results in some
quarters may not meet the expectations of stock market analysts and investors and this could cause our stock price to decline.



Our business model consists of providing businesses and merchants with e-commerce enabling solutions. We have limited experience as a company and,
additionally, the Internet, on which our business model relies, is still unproven as a business medium. Accordingly, our business model may not be successful, and we may need to change it. Our ability
to generate sufficient revenues to achieve profitability will depend, in large part, on our ability to successfully market our e-commerce products and services to businesses and merchants
that may not be convinced of the need for an online presence or may be reluctant to rely upon third parties to develop and manage their e-commerce offerings and marketing efforts.



Our success depends on our ability to continually enhance and expand our e-commerce enabling products and services and our online marketplaces in
response to changing technologies, customer demands and competitive pressures. Consequently, we have acquired complementary technologies or businesses in the past, and intend to do so in the future.
We have entered into a definitive agreement to acquire Ubarter.com, subject to the approval of Ubarter.com's shareholders. The acquisition of Ubarter.com is intended to expand our capability to enable
businesses to exchange business products and services. If we are unable to identify suitable acquisition targets, or if we are unable to successfully complete acquisitions and successfully integrate
the acquired businesses, technologies and personnel, our ability to increase product and service offerings will be reduced. This could cause us to lose business to our competitors, and our operating
results could suffer.



We actively seek to identify and acquire companies with attributes complementary to our e-commerce products and services. Since December 31,
1999, we have acquired two companies. In addition, as described previously, we recently agreed to acquire Ubarter.com.

Acquisitions
that we make may involve numerous risks, including:

| |  | diverting management's attention from other business concerns;                                                                 
|- |  | -------------------------------------------------------------------------------------------------------------------------------
| |  | being unable to maintain uniform standards, controls, procedures and policies;                                                 
| |  | entering markets in which we have no direct prior experience;                                                                  
| |  | improperly evaluating new services and technologies or otherwise being unable to fully exploit the anticipated opportunity; and
| |  | being unable to successfully integrate the acquired businesses, technologies and other assets.                                 

If
we are unable to accurately assess any newly acquired businesses or technologies, our business could suffer. For example, in June 1998 we acquired e-Warehouse
and CyberTrust. These companies had developed payment processing technologies that we planned to utilize as part of our e-commerce

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products and services. However, we are not currently utilizing the acquired technologies, and we have determined that the technologies have no other use or value to us. Because we are not using the
acquired technologies, we wrote off substantially all of the $5.4 million aggregate purchase price for e-Warehouse and CyberTrust in 1998. Future acquisitions may involve the
assumption of obligations or large one-time write-offs and amortization expenses related to goodwill and other intangible assets. Any of the factors listed above would
adversely affect our results of operations.

In
addition, in order to finance any future acquisition, we may need to raise additional funds through public or private financings. In this event, we could be forced to obtain equity
or debt financing on terms that are not favorable to us and that may result in dilution to our shareholders.



Our success depends upon achieving significant market penetration and acceptance of our e-commerce enabling products and services. We have only
recently begun to expand our business-to-business
initiatives designed to enable businesses to maximize their e-commerce opportunities, and our online marketplaces have achieved only limited market acceptance to date. We may not currently
have adequate market share to successfully execute our business plan. If we are unable to reach and retain substantial numbers of businesses, merchants and shoppers, our business model may not be
sustainable.

To
successfully market and sell our e-commerce enabling products and services we must:

| |  | become recognized as a leading provider of end-to-end enabling solutions;                                              
|- |  | -----------------------------------------------------------------------------------------------------------------------
| |  | enhance existing products and services;                                                                                
| |  | add new products and services;                                                                                         
| |  | complete projects on time;                                                                                             
| |  | increase the number of businesses and merchants using our e-commerce products and services and online marketplaces; and
| |  | continue to increase the attractiveness of the ShopNow marketplace to shoppers.                                        



Due in part to the emerging nature of the markets for e-commerce enabling products and services and online marketplaces, together with the
substantial resources available to many of our competitors, our opportunity to achieve and maintain a significant market share may be limited. Developing and maintaining awareness of the ShopNow.com
and b2bNow.com brand names is critical in achieving widespread acceptance of our e-commerce enabling products and services and our online marketplaces. We launched the ShopNow marketplace
in August 1998 and we have only recently begun to expand our business-to-business initiatives designed to enable businesses to maximize their e-commerce
opportunities. The importance of brand recognition will increase as competition in our markets increases. Successfully promoting and positioning our brands will depend largely on the effectiveness of
our marketing and sales efforts and our ability to develop reliable and useful products and services at competitive prices. If our planned marketing and sales efforts are ineffective, we may need to
increase our financial commitment to creating and maintaining brand awareness among businesses, merchants and shoppers, which could divert financial and management resources from other aspects of our
business, or cause our operating expenses to increase disproportionately to our revenues. This could cause our business and operating results to suffer.

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The market for e-commerce enabling products and services and online marketplaces is highly competitive, and we expect competition to intensify in
the future. Barriers to entry are not significant. Our failure to compete effectively could result in the following:

| |  | fewer businesses and merchants relying upon our enabling solutions;     
|- |  | ------------------------------------------------------------------------
| |  | the obsolescence of the technology underlying our products and services;
| |  | fewer businesses and merchants listed in our directories;               
| |  | a decrease in shopper traffic on our web sites; and                     
| |  | a reduction in the prices of or profits on our products and services.   

The
number of companies providing e-commerce enabling products and services is large and increasing at a rapid rate. We expect that additional companies which to date have
not had a substantial commercial presence on the Internet or in our markets will offer competing products and services. Although we believe no one company currently offers a range of
e-commerce enabling solutions as comprehensive as our suite of products and services, companies such as InfoSpace, Go2Net, Yahoo! and Cybersource offer alternatives to one or more of our
products and services.

Many
of our competitors and potential competitors have substantial competitive advantages as compared to us, including:

| |  | larger customer or user bases;                                                 
|- |  | -------------------------------------------------------------------------------
| |  | the ability to offer a wider array of e-commerce products and solutions;       
| |  | greater name recognition and larger marketing budgets and resources;           
| |  | substantially greater financial, technical and other resources;                
| |  | the ability to offer additional content and other personalization features; and
| |  | larger production and technical staffs.                                        

These
advantages may enable our competitors to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and
services, initiate or withstand substantial price competition, take advantage of acquisition or other opportunities more readily or develop and expand their product and service offerings more quickly.

In
addition, as the use of the Internet and online products and services increases, larger well-established and well-financed entities may continue to acquire,
invest in or form joint ventures with providers of e-commerce enabling solutions, and existing providers may continue to consolidate. Providers of Internet browsers and other Internet
products and services who are affiliated with providers of web directories and information services that compete with our products and services 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.



An important element of our strategy involves entering into business relationships with other companies. Our success is dependent on maintaining our current
contractual relationships and developing new strategic relationships. These contractual relationships typically involve joint marketing, licensing or promotional arrangements. For example, we have
entered into a licensing and co-marketing agreement with Chase Manhattan Bank, a marketing agreement with About.com, a cross promotion

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agreement with 24/7 Media and a software license agreement with HNC Software. Although these relationships are an important factor in our strategy because they enable us to enhance our product and
service offerings, the parties with which we contract may not view their relationships with us as significant to their own businesses. To date, we have not derived material revenue from these
relationships, and some of these relationships impose substantial obligations on us. It is not certain that the benefits to us will outweigh our obligations. For example, our relationship with 24/7
Media requires us to refer to them any business that would benefit from the advertising services offered by 24/7 Media
and makes 24/7 Media the only third party authorized to sell advertising on our web site. Several of our significant business arrangements do not establish minimum performance requirements but instead
rely on contractual best efforts obligations of the parties with which we contract. In addition, either party with little notice may terminate most of these relationships. Accordingly, in order to
maintain our strategic business relationships we will need to meet our partners' specific business objectives, including incremental revenue, brand awareness and implementation of specific
e-commerce applications. If our strategic business relationships are discontinued for any reason, or if we are unsuccessful in entering into new relationships in the future, our business
and results of operations may be harmed.



Our ability to successfully offer e-commerce enabling products and services and implement our business plan in a rapidly evolving market requires
an effective planning and management process. We are increasing the scope of our operations domestically and internationally, and we have recently increased our headcount substantially. From
December 31, 1997 to March 31, 2000, our total number of employees increased from less than 50 to 615. This growth has placed and will continue to place a significant strain on our
management systems, infrastructure and resources. We will need to continue to improve our financial and managerial controls and reporting systems and procedures, and will need to continue to expand,
train and manage our workforce worldwide. Furthermore, we expect that we will be required to manage an increasing number of relationships with various customers and other third parties. Any failure to
expand any of the foregoing areas efficiently and effectively could cause our business to suffer.



Our success depends on the skills, experience and performance of our senior management and other key personnel. Our key personnel include Dwayne Walker, our
Chairman and Chief Executive Officer, Joe Arciniega, our President and Chief Operating Officer, Alan Koslow, our Chief Financial Officer, and Dr. Ganapathy Krishnan, our Chief Technology
Officer. Only Mr. Walker has an employment agreement with ShopNow.com. Many of our executive officers have joined us within the past three years. If we do not quickly and efficiently integrate
these new personnel into our management and culture, our business could suffer. Our business could also suffer if we do not retain our key personnel.



Our future success depends on our ability to identify, hire, train, retain and motivate highly skilled executive, technical, managerial, sales and marketing,
business development and administrative personnel. We intend to hire a significant number of personnel during the next year, and as of March 31, 2000 we had openings for 67 job positions.
Competition for qualified personnel is intense, particularly in the technology and Internet markets. If we fail to successfully attract and retain a sufficient number of qualified executive,
technical, managerial, sales and marketing, business development and administrative personnel, our ability to manage and expand our business could suffer.

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We have limited experience delivering our e-commerce products and services and operating online marketplaces. In order to remain competitive, we
must regularly upgrade our e-commerce products and services to incorporate current technology, which requires us to integrate complex computer hardware and software components. If we do
not successfully integrate these components, the quality and performance of our online offerings may be reduced. In addition, the ability of our online marketplaces to accommodate an increasing number
of businesses, merchants and shoppers would suffer. While these technologies are generally commercially available, we may be required to expend considerable time and money in order to successfully
integrate them into our products and services and this may cause our business to suffer. We must also maintain an adequate testing and technical support infrastructure to ensure the successful
introduction of products and services.



Our success depends on the performance, reliability and availability of the technology supporting our e-commerce products and services and our
online marketplaces. Our revenues depend, in large part, on the number of businesses and merchants that use our products and services and the number of shoppers that access the ShopNow Network. This
depends, in part, upon our actual and perceived reliability and performance. Any inability to provide our products and services or any slowdown or stoppage of our online marketplaces could cause us to
lose clients and therefore lose revenue. Substantially all of our computer and communications hardware is located at leased and third-party facilities in Seattle, Washington and Sterling, Virginia.
Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, break-in, earthquake
and similar events. Because we presently do not have fully redundant systems or a formal disaster recovery plan, a systems failure could adversely affect our business. Our computer systems are
vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which may lead to interruptions, delays, loss of data or inability to process online transactions
for our clients. We may be required to expend considerable time and money to correct any system failure. If we are unable to fix a problem that arises, we may lose clients or be unable to conduct our
business at all.



We have developed custom software for our network servers and have licensed additional software from third parties. This software may contain undetected errors
or defects. Although we have not suffered significant harm from any errors or defects to date, we may discover significant errors or defects in the future that we may be unable to fix in a timely or
cost-effective manner.



We must expand and upgrade our technology, transaction processing systems and network infrastructure if the number of businesses and merchants using our
e-commerce products and services and online marketplaces, or the volume of traffic on our web sites or our clients' web sites, increases substantially. We could experience periodic
capacity constraints, which may cause unanticipated system disruptions, slower response times and lower levels of customer service. We may be unable to accurately project the rate or timing of
increases, if any, in the use of our products or services or our web sites or when we must expand and upgrade our systems and infrastructure to accommodate these increases in a timely manner. Any
inability to do so could harm our business.

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We are subject to risks specific to Internet-based companies in foreign markets. These risks include:

| |  | delays in the development of the Internet as a commerce medium in international markets;       
|- |  | -----------------------------------------------------------------------------------------------
| |  | restrictions on the export of encryption technology; and                                       
| |  | increased risk of piracy and limits on our ability to enforce our intellectual property rights.



Although we believe that our cash reserves and cash flows from operations will be adequate to fund our operations for at least the next twelve months, these
resources may be inadequate. Consequently, we may require additional funds during or after this period. Additional financing may not be available on favorable terms or at all. If we raise additional
funds by selling stock, the percentage ownership of our then current shareholders will be reduced. If we cannot raise adequate funds to satisfy our capital requirements, we may have to limit our
operations significantly. Our future capital requirements depend upon many factors, including, but not limited to:

| |  | the rate at which we expand our sales and marketing operations and our product and service offerings;
|- |  | -----------------------------------------------------------------------------------------------------
| |  | the extent to which we develop and upgrade our technology and data network infrastructure; and       
| |  | the occurrence, timing, size and success of acquisitions.                                            



We regard our intellectual property rights as critical to our success, and we rely on trademark and copyright law, trade secret protection and confidentiality
and license agreements with our employees, customers and others to protect our proprietary rights. Despite our precautions, unauthorized third parties might copy portions of our software or reverse
engineer and use information that we regard as proprietary. We currently have five patents pending in the United States Patent and Trademark Office covering different aspects of our product
architecture and technology. However, we do not currently own any issued patents and there is no assurance that any pending patent application will result in an issued patent, or that any future
patent will not be challenged, invalidated or circumvented, or that the rights granted under any patent will provide us with a competitive advantage. The laws of some countries do not protect
proprietary rights to the same extent as do the laws of the United States, and our means of protecting our proprietary rights abroad may not be adequate. Any misappropriation of
our proprietary information by third parties could adversely affect our business by enabling third parties to compete more effectively with us.



Although we have not received notice of any alleged infringement by us, we cannot be certain that our technology does not infringe issued patents or other
intellectual property rights of others. In addition, because patent applications in the United States are not publicly disclosed until the patent is issued, applications may have been filed which
relate to our software. We may be subject to legal proceedings and claims from time to time in the ordinary course of our business, including claims of alleged infringement of the trademarks and other
intellectual property rights of third parties. Intellectual property litigation is expensive and time-consuming, and could divert our management's attention away from running our business.

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A fundamental requirement for e-commerce is the secure transmission of confidential information of businesses, merchants and shoppers over the
Internet. Among the e-commerce services we offer to merchants are security features such as:

| |  | secure online payment services;          
|- |  | -----------------------------------------
| |  | secure order processing services; and    
| |  | fraud prevention and management services.

Third
parties may attempt to breach the security provided by our e-commerce products and services or the security of our clients' internal systems. If they are successful,
they could obtain confidential information about businesses and shoppers using our online marketplaces, including their passwords, financial account information, credit card numbers or other personal
information. We may be liable to our clients or to shoppers for any breach in security. Even if we are not held liable, a security breach could harm our reputation, and the mere perception of security
risks, whether or not valid, could inhibit market acceptance of our products and services. We may be required to expend significant capital and other resources to license additional encryption or
other technologies to protect against security breaches or to alleviate problems caused by these breaches. In addition, our clients might decide to stop using our e-commerce products and
services if their customers experience security breaches.



Prior to January 1, 2000, we devoted substantial resources in an effort to ensure that our proprietary software, the third-party software on which we
rely, and the underlying systems and protocols did not contain errors or defects associated with Year 2000 date functions. Since January 1, 2000, we have not experienced any disruption to our
business as the result of any Year 2000 problems or otherwise. If problems do arise, they could adversely affect our business.



We depend on the growing use and acceptance of the Internet by businesses, merchants and shoppers as a medium of commerce. Rapid growth in the use of and
interest in the Internet and online products and services is a recent development. No one can be certain that acceptance and use of the Internet and online products and services will continue to
develop or that a sufficiently broad base of businesses, merchants and shoppers will adopt and continue to use the Internet and online products and services as a medium of commerce.

The
Internet may fail as a commercial marketplace for a number of reasons, including potentially inadequate development of the necessary network infrastructure or delayed development
of enabling technologies, including security technology and performance improvements. For example, if technologies such as software that stops advertising from appearing on a web user's computer
screen gain wide acceptance, the attractiveness of the Internet to advertisers would be diminished, which could harm our business.



Rapidly changing technology, evolving industry standards, evolving customer demands and frequent new product and service introductions characterize the market
for e-commerce products and services and online marketplaces. Our future success will depend in significant part on our ability to improve

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the performance, content and reliability of our products and services in response to both the evolving demands of the market and competitive product and service offerings. Our efforts in these areas
may not be successful. If a large number of our clients adopt new Internet technologies or standards, we may need to incur substantial expenditures modifying or adapting our e-commerce
products and services to remain compatible with their systems.



Our success depends in large part on other companies maintaining the Internet infrastructure. In particular, we rely on other companies to maintain a reliable
network backbone that provides adequate speed, data capacity and security and to develop products that enable reliable Internet access and service. If the Internet continues to experience significant
growth in the number of users, frequency of use and amount of data transmitted, the Internet infrastructure of thousands of computers communicating via telephone lines, coaxial cable and other
telecommunications systems may be unable to support the demands placed on it, and the Internet's performance or reliability may suffer as a result of this continued growth. If the performance or
reliability of the Internet suffers, Internet users could have difficulty obtaining access to the Internet. In addition, data transmitted over the Internet, including information and graphics
contained on web pages, could reach Internet users much more slowly. This could result in frustration of Internet users, which could decrease online traffic and cause advertisers to reduce their
Internet expenditures.



We are not currently subject to direct regulation by any government agency, other than regulations applicable to businesses generally, and there are currently
few laws or regulations directly applicable to access to or commerce on the Internet. However, due to the increasing popularity and use of the Internet, a number of legislative and regulatory
proposals are under consideration by federal, state, local and foreign governmental organizations, and it is possible that a number of laws or regulations may be adopted with respect to the Internet
relating to issues such as user privacy, taxation, infringement, pricing, quality of products and services and intellectual property ownership. The adoption of any laws or regulations that have the
effect of imposing additional costs, liabilities or restrictions relating to the use of the Internet by businesses or consumers could decrease the growth in the use of the Internet, which could in
turn decrease the demand for our products and services, decrease traffic on our online marketplaces, increase our cost of doing business, or otherwise have a material adverse effect on our business.
Moreover, the applicability to the Internet of existing laws governing issues such as property ownership, copyright, trademark, trade secret, obscenity, libel and personal privacy is uncertain and
developing. Any new legislation or regulation, or application or interpretation of existing laws, could have a material adverse effect on our business.

The
Federal Communications Commission is currently reviewing its regulatory positions on the privacy protection given to data transmissions over telecommunications networks and could
seek to impose some form of telecommunications carrier regulation on telecommunications functions of information services. State public utility commissions generally have declined to regulate
information services,
although the public service commissions of some states continue to review potential regulation of such services. Future regulation or regulatory changes regarding data privacy could have an adverse
effect on our business by requiring us to incur substantial additional expenses in order to comply with this type of regulation.

A
number of proposals have been made at the federal, state and local level that would impose additional taxes on the sale of goods and services over the Internet and certain states
have taken measures to tax Internet-related activities. Foreign countries also may tax Internet transactions. The taxation of Internet-related activities could have the effect of imposing additional
costs on companies,

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such as ShopNow.com, that conduct business over the Internet. This, in turn, could lead to increased prices for products and services, which could result in decreased demand for our solutions.



Because material may be downloaded from web sites hosted by us and subsequently distributed to others, there is a potential that claims will be made against us
for negligence, copyright or trademark infringement or other theories based on the nature and content of this material. Negligence and product liability claims also potentially may be made against us
due to our role in facilitating the purchase of some products, for example firearms. Although we carry general liability insurance, our insurance may not cover claims of these types, or may not be
adequate to indemnify us against this type of liability. Any imposition of liability, and in particular liability that is not covered by our insurance or is in excess of our insurance coverage, could
have a material adverse effect on our reputation and our operating results, or could result in the imposition of criminal penalties on us.



We do not currently collect sales or other similar taxes on products sold by us and delivered into states other than Washington, California, Georgia, Arizona,
Kansas, New York, Tennessee and Kentucky. However, one or more states or foreign countries may seek to impose sales tax collection obligations on out-of-state or foreign
companies engaging in e-commerce. In addition, any new operation in states outside the states for which we currently collect sales tax could subject shipments into these states to state or
foreign sales taxes. A successful assertion by one or more states or any foreign country that we
should collect sales or other similar taxes on the sale of merchandise or services could result in liability for penalties as well as substantially higher expenses incurred by our business.



Specific provisions of our articles of incorporation and bylaws and Washington law could make it more difficult for a third party to acquire us, even if doing
so would be beneficial to our shareholders.

Our
articles of incorporation and bylaws establish a classified board of directors, eliminate the ability of shareholders to call special meetings, eliminate cumulative voting for
directors and establish procedures for advance notification of shareholder proposals. The presence of a classified board and the elimination of cumulative voting may make it more difficult for an
acquirer to replace our board of directors. Further, the elimination of cumulative voting substantially reduces the ability of minority shareholders to obtain representation on the board of directors.

Our
board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including
voting rights, of those shares without any further vote or action by our shareholders. The issuance of preferred stock could have the effect of delaying, deferring or preventing a change of control of
ShopNow.com and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock.

Washington
law imposes restrictions on some transactions between a corporation and significant shareholders. Chapter 23B.19 of the Washington Business Corporation Act prohibits a
target corporation, with some exceptions, from engaging in particular significant business transactions with an acquiring person, which is defined as a person or group of persons that beneficially
owns 10% or more of the voting securities of the target corporation, for a period of five years after the acquisition, unless

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the transaction or acquisition of shares is approved by a majority of the members of the target corporation's board of directors prior to the acquisition. Prohibited transactions include, among other
things:

| |  | a merger or consolidation with, disposition of assets to, or issuance or redemption of stock to or from the acquiring person;
|- |  | -----------------------------------------------------------------------------------------------------------------------------
| |  | termination of 5% or more of the employees of the target corporation; or                                                     
| |  | allowing the acquiring person to receive any disproportionate benefit as a shareholder.                                      

A
corporation may not opt out of this statute. This provision may have the effect of delaying, deterring or preventing a change in control of ShopNow.com.

The
foregoing provisions of our charter documents and Washington law could have the effect of making it more difficult or more expensive for a third party to acquire, or could
discourage a third party from attempting to acquire, control of ShopNow.com. These provisions may therefore have the effect of limiting the price that investors might be willing to pay in the future
for our common stock.



The stock market in general, and the stock prices of Internet-related companies in particular, have recently experienced extreme volatility, which has often
been unrelated to the operating performance of any particular company or companies. Our stock price could be subject to wide fluctuations in response to factors such as the following:

| |  | actual or anticipated variations in quarterly results of operations;                                          
|- |  | --------------------------------------------------------------------------------------------------------------
| |  | the addition or loss of merchants and shopper traffic;                                                        
| |  | announcements of technological innovations, new products or services by us or our competitors;                
| |  | changes in financial estimates or recommendations by securities analysts;                                     
| |  | conditions or trends in the Internet, e-commerce and marketing industries;                                    
| |  | changes in the market valuations of other Internet or online service or software companies;                   
| |  | our announcements of significant acquisitions, strategic relationships, joint ventures or capital commitments;
| |  | additions or departures of key personnel;                                                                     
| |  | sales of our common stock;                                                                                    
| |  | general market conditions; and                                                                                
| |  | other events or factors, many of which are beyond our control.                                                

These
broad market and industry factors may materially and adversely affect our stock price, regardless of our operating performance. The trading prices of the stocks of many
technology companies are at or near historical highs and reflect price to earnings ratios substantially above historical levels. These trading prices and price-to-earnings
ratios may not be sustained.

In
the past, securities class action litigation has often been brought against companies following periods of volatility in their stock prices. We may in the future be the target of
similar litigation. Securities litigation could result in substantial costs and divert our management's time and resources, which could cause our business to suffer.

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## 

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.

|                       |  | NETWORK COMMERCE INC.
|---------------------- |  | ---------------------
|Date: October 17, 2000 |  | By:                  
|                       |  | By:                  

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