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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2001

or

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

Commission File Number:000-27899

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NBC INTERNET, INC.(Exact name of registrant as specified in its charter)

DELAWARE(State of Incorporation)

94-3333463(I.R.S. Employer Identification No.)


225 BUSH STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 375-5000(Address and telephone number of principal executive offices)

Securities
registered pursuant to Section 12(b) of the Act:None

Securities
registered pursuant to Section 12(g) of the Act: Class A Common Stock, $0.0001 Par Value

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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. /x/ Yes  / / No

The
number of shares outstanding of Registrant's Common Stock at April 30, 2001 was 39,038,751 of Class A, par value $0.0001, and 24,550,708 of Class B, par value
$0.0001.

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NBC INTERNET, INC.    TABLE OF CONTENTS

|Part I  |         | FINANCIAL INFORMATION                                |                                                                                       | Page
|------- | ------- | ---------------------------------------------------- | ------------------------------------------------------------------------------------- | ----
|        |         |                                                      |                                                                                       |     
|        | Item 1. |                                                      | Condensed Consolidated Financial Statements (Unaudited)                               |     
|        |         | Condensed Consolidated Balance Sheets                |                                                                                       |     
|        |         | March 31, 2001 and December 31, 2000                 |                                                                                       | 3   
|        |         | Condensed Consolidated Statements of Operations      |                                                                                       |     
|        |         | Three months ended March 31, 2001 and 2000           |                                                                                       | 4   
|        |         | Condensed Consolidated Statements of Cash Flows      |                                                                                       |     
|        |         | Three months ended March 31, 2001 and 2000           |                                                                                       | 5   
|        |         | Notes to Condensed Consolidated Financial Statements |                                                                                       | 7   
|        | Item 2. |                                                      | Management's Discussion and Analysis of Financial Condition and Results of Operations |     
|        | Item 3. |                                                      | Quantitative and Qualitative Disclosures about Market Risk                            |     
|Part II |         | OTHER INFORMATION                                    |                                                                                       |     
|        | Item 1. |                                                      | Legal Proceedings                                                                     |     
|        | Item 6. |                                                      | Exhibits and Reports on Form 8-K                                                      |     
|        |         | Signature                                            |                                                                                       | 24  

2

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NBC INTERNET, INC.    CONDENSED CONSOLIDATED BALANCE SHEETS    (In thousands)    (Unaudited)

|                                                                                                                      |                                                                              | March 31,
2001 |         | December 31,
2000 |  
|--------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | -------------- | ------- | ----------------- | -
|ASSETS                                                                                                                |                                                                              |                |         |                   |  
|Current assets:                                                                                                       |                                                                              |                |         |                   |  
|                                                                                                                      | Cash and cash equivalents                                                    |                | $       | 45,769            |  
|                                                                                                                      | Short-term investments                                                       |                |         | 133,754           |  
|                                                                                                                      | Accounts receivable, net                                                     |                |         | 3,789             |  
|                                                                                                                      | Note receivable from NBC, current portion                                    |                |         | 83,717            |  
|                                                                                                                      | Other current assets                                                         |                |         | 4,952             |  
|                                                                                                                      |                                                                              |                |         |                   |  
|Total current assets                                                                                                  |                                                                              |                | 271,981 |                   |  
|Fixed assets, net                                                                                                     |                                                                              |                | 4,711   |                   |  
|Goodwill and other intangible assets, net                                                                             |                                                                              |                |        |                   |  
|Long-term note receivable from NBC, less current portion                                                              |                                                                              |                | 157,758 |                   |  
|Investment in affiliated companies                                                                                    |                                                                              |                | 12,240  |                   |  
|Long-term investments                                                                                                 |                                                                              |                | 66,421  |                   |  
|Other assets, including restricted cash of $3,134 and $3,494 as of March 31, 2001 and December 31, 2000, respectively |                                                                              |                | 7,384   |                   |  
|                                                                                                                      |                                                                              |                |         |                   |  
|Total assets                                                                                                          |                                                                              | $              | 520,495 |                   | $
|                                                                                                                      |                                                                              |                |         |                   |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                  |                                                                              |                |         |                   |  
|Current liabilities:                                                                                                  |                                                                              |                |         |                   |  
|                                                                                                                      | Accounts payable                                                             |                | $       | 11,729            |  
|                                                                                                                      | Accrued compensation and related expenses                                    |                |         | 8,773             |  
|                                                                                                                      | Other accrued liabilities                                                    |                |         | 16,289            |  
|                                                                                                                      | Deferred revenue                                                             |                |         | 11,275            |  
|                                                                                                                      | Amounts due to related parties, current portion                              |                |         | 14,422            |  
|                                                                                                                      |                                                                              |                |         |                   |  
|Total current liabilities                                                                                             |                                                                              |                | 62,488  |                   |  
|Long-term liabilities:                                                                                                |                                                                              |                |         |                   |  
|                                                                                                                      | Convertible notes payable and related interest due to NBC and its affiliates |                |         | 389,931           |  
|                                                                                                                      | Other long-term liabilities                                                  |                |         | 10,763            |  
|                                                                                                                      |                                                                              |                |         |                   |  
|Total long-term liabilities                                                                                           |                                                                              |                | 400,694 |                   |  
|Stockholders' equity:                                                                                                 |                                                                              |                |         |                   |  
|                                                                                                                      | Class A common stock                                                         |                |         | 1,582,995         |  
|                                                                                                                      | Class B common stock                                                         |                |         | 1,158,336         |  
|                                                                                                                      | Deferred compensation                                                        |                |         | (7,105            | )
|                                                                                                                      | Accumulated deficit                                                          |                |         | (2,678,144        | )
|                                                                                                                      | Accumulated other comprehensive income (loss)                                |                |         | 1,231             |  
|                                                                                                                      |                                                                              |                |         |                   |  
|Total stockholders' equity                                                                                            |                                                                              |                | 57,313  |                   |  
|                                                                                                                      |                                                                              |                |         |                   |  
|Total liabilities and stockholders' equity                                                                            |                                                                              | $              | 520,495 |                   | $
|                                                                                                                      |                                                                              |                |         |                   |  

See
accompanying notes.

3

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NBC INTERNET, INC.    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    (In thousands, except per share amounts)    (Unaudited)

|                                                                                   |                                                       | Three months ended
March 31, |           
|---------------------------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------- | ----------
|
|Net revenue:                                                                       |                                                       |                              |           
|                                                                                   | Advertising                                           |                              | $         
|                                                                                   | E-commerce                                            |                              |           
|                                                                                   |                                                       |                              |           
|Total net revenue                                                                  |                                                       |                              | 15,458    
|Cost of net revenue:                                                               |                                                       |                              |           
|                                                                                   | Cost of advertising                                   |                              |           
|                                                                                   | Cost of e-commerce                                    |                              |           
|                                                                                   |                                                       |                              |           
|Total cost of net revenue                                                          |                                                       |                              | 10,377    
|Gross profit                                                                       |                                                       |                              | 5,081     
|Operating expenses:                                                                |                                                       |                              |           
|                                                                                   | Operations and development                            |                              |           
|                                                                                   | Sales and marketing                                   |                              |           
|                                                                                   | General and administrative                            |                              |           
|                                                                                   | Promotion and advertising provided by NBC             |                              |           
|                                                                                   | Amortization of deferred and other stock compensation |                              |           
|                                                                                   | Amortization of goodwill and other intangible assets  |                              |           
|                                                                                   | Loss on impairment of long-lived assets               |                              |           
|                                                                                   |                                                       |                              |           
|Total operating expenses                                                           |                                                       |                              | 1,715,748 
|                                                                                   |                                                       |                              |           
|Loss from operations                                                               |                                                       |                              | (1,710,667
|Other income (expense):                                                            |                                                       |                              |           
|                                                                                   | Interest income                                       |                              |           
|                                                                                   | Interest expense                                      |                              |           
|                                                                                   | Loss on investments                                   |                              |           
|                                                                                   | Equity in earnings (loss) of affiliated companies     |                              |           
|                                                                                   |                                                       |                              |           
|Net loss before cumulative effect of accounting change                             |                                                       |                              | (1,910,467
|Cumulative effect of accounting change                                             |                                                       |                              | (4,670    
|                                                                                   |                                                       |                              |           
|Net loss                                                                           |                                                       | $                            | (1,915,137
|                                                                                   |                                                       |                              |           
|Net loss per sharebasic and diluted before cumulative effect of accounting change |                                                       | $                            | (30.06    
|Cumulative effect of accounting change                                             |                                                       |                              | (0.07     
|                                                                                   |                                                       |                              |           
|Net loss per sharebasic and diluted                                               |                                                       | $                            | (30.13    
|                                                                                   |                                                       |                              |           
|Number of shares used in per share calculationbasic and diluted                   |                                                       |                              | 63,559    
|                                                                                   |                                                       |                              |           

See
accompanying notes.

4

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NBC INTERNET, INC.    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    (In thousands)    (Unaudited)

|                                                                    |                                                                             | Three months ended
March 31,                                               |                                          
|------------------------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -----------------------------------------
|
|Operating activities:                                               |                                                                             |                                                                            |                                          
|                                                                    | Net loss                                                                    |                                                                            | $                                        
|                                                                    | Adjustments to reconcile net loss to net cash used in operating activities: |                                                                            |                                          
|                                                                    |                                                                             | Receipt of stock in exchange for services provided                         |                                          
|                                                                    |                                                                             | Loss on impairment of long-lived assets                                    |                                          
|                                                                    |                                                                             | Loss on investments                                                        |                                          
|                                                                    |                                                                             | Depreciation and amortization                                              |                                          
|                                                                    |                                                                             | Equity in net loss of affiliated companies                                 |                                          
|                                                                    |                                                                             | Cumulative effect of accounting change                                     |                                          
|                                                                    |                                                                             | Non-cash interest expense related to note payable to NBC                   |                                          
|                                                                    |                                                                             | Changes in operating assets and liabilities, net of business combinations: |                                          
|                                                                    |                                                                             |                                                                            | Accounts receivable                      
|                                                                    |                                                                             |                                                                            | Other current assets                     
|                                                                    |                                                                             |                                                                            | Other assets                             
|                                                                    |                                                                             |                                                                            | Accounts payable                         
|                                                                    |                                                                             |                                                                            | Accrued compensation and related expenses
|                                                                    |                                                                             |                                                                            | Other accrued liabilities                
|                                                                    |                                                                             |                                                                            | Deferred revenue                         
|                                                                    |                                                                             |                                                                            | Other long-term liabilities              
|                                                                    |                                                                             |                                                                            |                                          
|                                                                    | Net cash used in operating activities                                       |                                                                            |                                          
|Investing activities:                                               |                                                                             |                                                                            |                                          
|                                                                    | Purchases of fixed assets                                                   |                                                                            |                                          
|                                                                    | Purchases of short-term and long-term investments                           |                                                                            |                                          
|                                                                    | Maturities of short-term and long-term investments                          |                                                                            |                                          
|                                                                    | Business combinations, net of cash                                          |                                                                            |                                          
|                                                                    |                                                                             |                                                                            |                                          
|                                                                    | Net cash used in investing activities                                       |                                                                            |                                          
|Financing activities:                                               |                                                                             |                                                                            |                                          
|                                                                    | Proceeds from issuance of common stock, net                                 |                                                                            |                                          
|                                                                    | Proceeds from note receivable from NBC                                      |                                                                            |                                          
|                                                                    | Payments of notes payable and capital lease obligations, net                |                                                                            |                                          
|                                                                    |                                                                             |                                                                            |                                          
|                                                                    | Net cash provided by financing activities                                   |                                                                            |                                          
|Effect of foreign currency translation on cash and cash equivalents |                                                                             |                                                                            | 10                                       
|                                                                    |                                                                             |                                                                            |                                          
|Net increase (decrease) in cash and cash equivalents                |                                                                             |                                                                            | (45,676                                  
|Cash and cash equivalents at beginning of period                    |                                                                             |                                                                            | 91,445                                   
|                                                                    |                                                                             |                                                                            |                                          
|Cash and cash equivalents at end of period                          |                                                                             | $                                                                          | 45,769                                   
|                                                                    |                                                                             |                                                                            |                                          

See
accompanying notes.

5

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NBC INTERNET, INC.    SUPPLEMENTAL CASH FLOW INFORMATION    (In thousands)    (Unaudited)

|                          |                        | Three months ended
March 31                                                     
|------------------------- | ---------------------- | --------------------------------------------------------------------------------
|
|Supplemental disclosures: |                        |                                                                                 
|                          | Non-cash transactions: |                                                                                 
|                          |                        | Investments in corporate securities received in connection with media contracts 
|                          |                        |                                                                                 
|                          |                        | Value of shares received upon cashless exercise of warrant                      
|                          |                        |                                                                                 
|                          |                        | Deferred compensation resulting from grant of stock options to Company employees
|                          |                        |                                                                                 
|                          |                        | Issuance of common stock in conjuction with business and technology acquisitions
|                          |                        |                                                                                 
|                          | Cash flow information: |                                                                                 
|                          |                        | Cash paid for interest                                                          
|                          |                        |                                                                                 

See
accompanying notes.

6

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NBC INTERNET, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (In thousands)        (Unaudited)

1.  The Company and summary of significant accounting policies

The Company

NBC Internet, Inc. ("NBCi" or the "Company") is an integrated Internet media company that combines portal, community, online and on-air
advertising, and e-commerce services designed to deliver a comprehensive, next-generation online experience to a domestic audience under a nationally recognized brand name. The
Company operates in a single operating segment and generates revenue primarily from online, television and radio advertising, and e-commerce services.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not contain all of
the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of the Company's consolidated financial position as of
March 31, 2001 and December 31, 2000, and the consolidated results of its operations and its cash flows for the three months ended March 31, 2001 and 2000. All significant
inter-company transactions and balances have been eliminated in consolidation.

These
consolidated financial statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2000, including the notes
thereto, and the other information set forth therein included in the Company's 2000 Annual Report filed on Form 10-K, as amended. Consolidated operating results for the three months
ended March 31, 2001 are not necessarily
indicative of the operating results that may be expected for the year ending December 31, 2001 or other future periods.

Reclassifications

The Company has reclassified certain amounts in prior periods to conform to the current presentation. These reclassifications had no material effect on the
Company's previously reported financial position, results of operations, or cash flows.

Use of estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported consolidated
results of operations during periods presented. Actual results could differ from those estimates.

7

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Goodwill and other intangible assets

Goodwill and other intangible assets result from acquisitions accounted for under the purchase method. Amortization of goodwill and other intangible assets is
provided on the straight-line basis over the respective estimated useful lives of the assets. As of December 31, 2000, goodwill and other intangible assets were being amortized over
periods ranging from 2 to 7 years. In accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("FAS 121"), the Company periodically evaluates whether indicators of impairment are present or changes have occurred that would require
revision of the remaining estimated useful life of the assigned intangible assets or render the intangible assets not recoverable. If such circumstances arise, the Company uses an estimate of the
undiscounted value of expected future operating cash flows to determine whether the intangible assets are impaired. During the three months ended March 31, 2001, and in connection with the
announcement that the Company entered into a merger agreement and plan of liquidation with National Broadcasting Company ("NBC") in April 2001 (as described in Note 7), the Company
recorded impairment losses of approximately $1.5 billion. No such losses were recorded during the three months ended March 31, 2000.

Revenue recognition

Advertising revenue.Revenue from the exchange of media and advertising services for equity securities in strategic
partners and customers was $3.9 million and $6.9 million for the three months ended March 31, 2001 and 2000, respectively. In addition, the Company recognized approximately
$762,000 and $722,000 for the three months ended March 31, 2001 and 2000, respectively, in cash revenue from companies in which it has an equity investment.

Barter transactions.Revenue from the exchange of media and advertising services for advertising in other media was
$1.1 million for the three months ended March 31, 2001, of which $381,000 was earned from CNBC.com, and $473,000 for the three months ended March 31, 2000.

Net loss per share

The Company computes net loss per share based on Financial Accounting Standards Board Statement No. 128, "Earnings Per Share" ("FAS 128"). In
accordance with FAS 128, basic net loss per share is calculated as net loss divided by the weighted average number of Class A and Class B common shares outstanding. Since each
share of Class B common stock is convertible into one share of Class A common stock, the total of the weighted average number of common shares for both classes of common stock is
considered in the computation of net loss per share. Diluted net loss per share is computed using the weighted average number of common shares outstanding and dilutive common stock equivalents
outstanding during the period. To date, common equivalent shares from stock options, warrants, and convertible securities (using the treasury stock method) have been excluded from the Company's net
loss per share calculations as their effect would be antidilutive.

Recent accounting pronouncement

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," ("FAS 133").

8

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FAS 133 requires the Company to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value at each reporting date. On the date of
adoption, January 1, 2001, the Company recorded a one-time charge of $4.7 million to account for the cumulative effect of an accounting change for certain of our common stock
warrants which qualify as derivatives under FAS 133. The one-time cumulative effect resulted in an increase in the reported basic and diluted net loss per share of $0.07 per share
for the three-month period ended March 31, 2001. As FAS 133 requires that the fair value of the Company's derivatives be remeasured at each reporting date, any fluctuations in the fair
value of the Company's derivative instruments are included in the determination of net income or loss. For the three months ended March 31, 2001, these fluctuations resulted in a loss of
$33,000. As of March 31, 2001, the fair value of these instruments was approximately $1.6 million.

2.  Financial instruments

Short-term and long-term investments included the following securities as of March 31, 2001 and December 31, 2000 (in
thousands):

|            |                                                      | March 31, 2001                                 |  
|----------- | ---------------------------------------------------- | ---------------------------------------------- | -
|
|Short-term: |                                                      |                                                |  
|            | Demand and money market instrument accounts          |                                                | $
|            | Corporate bonds and notes                            |                                                |  
|            | United States government agency bonds                |                                                |  
|            | Foreign debt securities                              |                                                |  
|            | Publicly traded equity securities                    |                                                |  
|            |                                                      |                                                |  
|            |                                                      | Total available-for-sale securities            |  
|            | Less amounts classified as cash and cash equivalents |                                                |  
|            |                                                      |                                                |  
|            |                                                      | Total short-term available-for-sale securities |  
|            |                                                      |                                                |  
|Long-term:  |                                                      |                                                |  
|            | Corporate bonds and notes                            |                                                | $
|            | United States government agency bonds                |                                                |  
|            |                                                      |                                                |  
|            |                                                      | Total long-term available-for-sale securities  |  
|            |                                                      |                                                |  

9

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|            |                                                      | December 31, 2000                              |  
|----------- | ---------------------------------------------------- | ---------------------------------------------- | -
|
|Short-term: |                                                      |                                                |  
|            | Demand and money market instrument accounts          |                                                | $
|            | Corporate bonds and notes                            |                                                |  
|            | United States government agency bonds                |                                                |  
|            | Foreign debt securities                              |                                                |  
|            | Publicly traded equity securities                    |                                                |  
|            |                                                      |                                                |  
|            |                                                      | Total available-for-sale securities            |  
|            | Less amounts classified as cash and cash equivalents |                                                |  
|            |                                                      |                                                |  
|            |                                                      | Total short-term available-for-sale securities |  
|            |                                                      |                                                |  
|Long-term:  |                                                      |                                                |  
|            | Corporate bonds and notes                            |                                                | $
|            | United States government agency bonds                |                                                |  
|            |                                                      |                                                |  
|            |                                                      | Total long-term available-for-sale securities  |  
|            |                                                      |                                                |  

During
the three months ended March 31, 2001, the Company wrote off a portion of its investments due to circumstances indicating that these assets were impaired and that the
decline in value was other than temporary. Subsequently, on April 9, 2001, the Company announced that its Board of Directors had approved an Agreement of Merger and Plan of Liquidation and
Dissolution with NBC. As a result of this announcement, the Company determined that it no longer had the intent to hold the remaining investments and, therefore, wrote down the cost basis of a
majority of the investments remaining based on the Company's best estimate of fair market value. Write-downs of these investments totaled $191.9 million for the three months ended
March 31, 2001. Included in the loss on investments is the write-down of the Company's investments in affiliated companies and CNBC.com of $88.2 million and
$65.4 million, respectively. No such losses were recorded during the three months ended March 31, 2000.

3.  Impairment of long-lived assets

Long-lived assets are comprised principally of fixed assets and goodwill and other intangible assets related to the Company's formation in
November 1999 as well as acquisitions of other companies since that date. The Company determined that certain factors were present that were considered to be indicators of potential impairment
including negative trends in revenue and operating results, continued weakening of the Internet advertising market, recent failures of Internet companies, conservative valuations by prospective merger
candidates and significant devaluation of Internet companies. Furthermore, as discussed in Note 7, the Company decided to enter into a merger agreement and plan of liquidation with NBC and to
scale back operations should the merger and the liquidation not be completed. As a result of all those factors, management concluded the carrying value of the Company's long-lived assets
was impaired. The Company's projections indicated that estimated future cash flows

10

---

would be negative and, accordingly, recorded a charge to write off substantially all of its long-lived assets during the three months ended March 31, 2001, as follows (in
thousands):

Goodwill and other intangible assets

$
1,532,562Fixed assets


52,681$
1,585,243


The
Company recorded depreciation and amortization expense of $89.4 million and $73.1 million during the three months ended March 31, 2001 and 2000, respectively.
As a result of the impairment charge, no amortization related to goodwill and other intangible assets will be recorded in future periods.

4.  Comprehensive income (loss)

The components of comprehensive income (loss) are as follows:

Three months ended
March 31,2001

2000Net loss

$
(1,915,137
)
$
(107,106
)Net unrealized gain on investments


1,525


14,971Other, net


170


(41
)Comprehensive loss

$
(1,913,442
)
$
(92,176
)


5.  Related party transactions

Notes payable to NBC

For the three months ended March 31, 2001 and 2000, interest expense recognized related to notes payable to NBC was $3.8 million and
$3.7 million, respectively. As of March 31, 2001, the estimated aggregate fair value of these notes was $231.7 million.

Note receivable from NBC

As of March 31, 2001 and 2000, the principal balance of the note receivable from NBC was $241.5 million and $320.8 million, respectively,
and interest receivable was $1.1 million and $1.4 million, respectively. Interest receivable is included in other current assets in the accompanying balance sheets. For the three months
ended March 31, 2001 and 2000, interest income earned from this note totaled $3.4 million and $4.5 million, respectively. As of March 31, 2001, the estimated fair value of
this note was $239.4 million.

Advertising agreement with NBC

For the three months ended March 31, 2001 and 2000, the Company incurred $18.8 million and $20.1 million, respectively, of promotional
expense related to an agreement with NBC.

11

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6.  Legal proceedings

In April 2001, 13 complaints had been filed in the State of Delaware and two complaints had been filed in the State of California on behalf of a
purported class of NBCi stockholders. These complaints name the Company, one or more current or former members of the Company's board of directors, NBC and/or General Electric Company (as the ultimate
parent of NBC) as defendants and allege violations of the fiduciary duties of the Company's board of directors to its public stockholders in connection with the merger and the liquidation including
the value of the merger consideration. The complaints seek, among other things, an injunction seeking to enjoin the merger and the liquidation and unspecified damages. The plaintiffs have made no
attempt so far to pursue an immediate injunction through a temporary restraining order. The Company believes these lawsuits are without merit and intends to contest vigorously the allegations made in
the complaints.

In
November 2000, NeoPlanet, Inc. filed a complaint against flyswat, Inc., a wholly-owned subsidiary of the Company, in an Arizona state court, alleging breach of
a distribution agreement as well as various other related claims. NeoPlanet claimed damages of approximately $5.0 million. The Company filed a complaint in a California state court against
NeoPlanet for breach of the distribution agreement and interference with prospective economic advantage. The Company is presently negotiating a confidential settlement with NeoPlanet that includes a
payment from us to NeoPlanet. The Company intends to defend and pursue these matters vigorously. Based on information available to date, the Company does not believe the ultimate outcome of this
matter will have a material effect on its financial position or results of operations.

In
July 2000, WebNext S.p.A. sent the Company a demand letter claiming that it had exercised a "put right" with respect to an internet site in Italy in which the Company owns a
majority interest. The demand letter alleged that the value of the put was between $10.0 and $15.0 million. In addition, WebNext threatened to proceed to arbitration if this amount is not paid.
In the Company's response to the demand letter, it denied the allegations for a number of reasons and expressed its view that the put right and the potential value associated with such right are
indeterminable. The Company intends to defend this matter vigorously. The Company recently entered into a settlement and license agreement with WebNext under confidential terms.

In
June 2000, Sentius Corporation filed a suit against flyswat, a wholly-owned subsidiary of the Company, in the Northern District of California federal court, for patent
infringement. Sentius claimed that flyswat infringed upon its patent for "system and method for linking streams of multimedia for reference material for display." flyswat received a written legal
analysis and opinion from outside patent counsel that its products and services do not infringe Sentius' patent. flyswat filed an answer to this complaint in August 2000. The Company believes
that this lawsuit is without merit and intends to defend this suit vigorously. Based on information available to date, the Company does not believe the
ultimate outcome of this matter will have a material effect on its financial position or results of operations.

Two
of the founders of LiquidMarket, Inc., a company acquired by Xoom.com, the Company's predecessor, each left Xoom.com at the time of the Xoom.com/LiquidMarket closing. Some
unvested shares held by these individuals were not repurchased by the Company pursuant to the repurchase option in the applicable employee stock restriction agreement within the appropriate time
period. As a

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result, each of the two founders is claiming damages of approximately $1.0 million. The Company intends to defend this matter vigorously. Based on information available to date, the Company
does not believe that the ultimate outcome of this matter will have a material effect on its financial position or results of operations.

In
January 1998, Xoom.com became aware that Imageline, Inc. claimed to own the copyright related to specific images that a third party, Sprint Software Pty Ltd,
had licensed to Xoom.com. Some clip art images that Imageline alleged infringed Imageline's copyright were included by Xoom.com in versions of its Web Clip Empire product and licensed by Xoom.com to
third parties, including other software clip publishers. Xoom.com's contracts with such publishers require it to indemnify the publisher if copyrighted material licensed from Xoom.com infringes a
copyright. In August 1998, the Company filed a lawsuit in the United States District Court for the Eastern District of Virginia against Imageline, certain parties affiliated with Imageline, and
Sprint regarding its licensees' alleged infringement of Imageline's copyright in certain clip art that it licensed from Sprint. The lawsuit seeks, among other relief, disclosure of information from
Imageline concerning the alleged copyright infringement, a declaratory judgment concerning the validity and enforceability of Imageline's copyrights and copyright registrations, a declaratory judgment
regarding damages, if any, owed by the Company to Imageline, and indemnification from Sprint for damages, if any, owed by the Company to Imageline. There is no contractual limitation on Sprint's
indemnification. While the Company is seeking indemnification from Sprint for damages, if any, there can be no assurance that Sprint will be able to fulfill the indemnity obligations under its license
agreements with the Company. In September 1998, Imageline filed a counterclaim, which Imageline amended in January 1999, seeking up to $60.0 million in damages. In
March 1999, the parties completed the discovery process and filed separate motions for summary judgment. In April 1999, the Court granted one of the Company's motions for partial summary
judgment and stayed the case to allow Imageline to file all necessary copyright registration applications to cover the clip art images. Currently, trial on Imageline's remaining count of false
advertising is scheduled for April 2001. The Company believes its liability related to this matter ranges from $0 to $10.0 million; however, the Company believes it is unlikely that the
liability will exceed $1.0 million. Accordingly, the Company reserved $1.0 million for this potential liability, the expense of which was included in non-recurring charges
for the year ended December 31, 1997. In April 2001, the Court granted summary judgment in the Company's favor on Imageline's final claim that remained before the Court.

In
February 2000, International Microcomputer Software, Inc., or IMSI, notified the Company that it intended to make a claim for indemnification pursuant to a contract
with Xoom.com in connection with
a $2.6 million judgment entered in favor of Imageline against IMSI. The judgment resulted from an arbitration award pertaining to a contract between Imageline and IMSI. The Company has notified
IMSI that it denies any duty to indemnify IMSI in connection with its contractual dispute with Imageline. In March 2001, IMSI, along with another licensee of Xoom.com's clip art,
ArtToday.com, Inc., filed suit against the Company for indemnification of the $2.6 million judgment and related costs in California Superior Court. In May 2001, the Company filed
a demurrer in response to this claim. Additional third parties may ask the Company to indemnify them in connection with disputes with Imageline. The Company intends to defend this matter vigorously.
Based on information available to date, management does not believe that the ultimate outcome of these matters will have a material effect on our financial position, results of operations, or cash
flows.

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From time to time, the Company receives notices of alleged claims and threats in the ordinary course of business. It is management's belief that these alleged claims and threats will
not have a material effect on its financial position or results of operations. Not withstanding the aforementioned, it is possible that the resolution of a claim or threat may have a material adverse
affect on the Company's financial position, results of operations, or cash flows.

7.  Subsequent events

On April 8, 2001, the Company entered into a Merger Agreement and Plan of Liquidation and Dissolution with NBC pursuant to which all of the holders of
the Company's Class A common stock would receive $2.19 in cash for each share of their Class A common stock. All remaining assets and liabilities of the Company would be distributed to
NBC in a liquidating distribution. Completion of the transactions contemplated by the merger agreement and plan of liquidation is subject to various approvals by the Company's stockholders, including
the approval of holders of a majority of all shares of the Company's Class A common stock, excluding shares with respect to which NBC has the right to vote or direct the vote.

Also
on April 8, 2001, the Class A members of the Board of Directors acknowledged that in the absence of a business combination with NBC or another third party, a
significant scale down of the Company's operations would be advisable. Management is currently developing plans to execute on this contingency and expects to ultimately record charges to operations,
which are not estimable at this time, if such a scale-down becomes necessary.

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

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as forward-looking statements regarding expectations of future net revenue, cash balances, the sufficiency
of our cash and marketable securities balances to meet our cash needs over the next twelve months, cash flows from operations, gross margins and improvement in operating loss and revenue, all of which
are inherently difficult to predict. All statements other than statements of historical fact made are forward-looking. We generally use words such as "anticipates," "believes," "expects," "future,"
and "intends" and similar expressions to identify forward-looking statements. Forward-looking statements reflect management's current expectations and are inherently uncertain. Our actual results may
differ significantly from management's expectations for a variety of reasons, including the growth of our company, continued acceptance of the Internet as an advertising medium, ability to attract and
retain advertising customers, maintenance of our website traffic, continuation of the Internet as a viable commercial marketplace, promotion and development of our online brand, NBCi.com, possible
impairment of our long-lived assets, decrease in revenue, continued integration of our web properties, continuation of our strategic relationships with suppliers, customers and NBC, and
meaningful protection of our intellectual property rights. Other risks and uncertainties include our limited operating history, anticipated losses, potential fluctuations in quarterly operating
results, seasonality, consumer trends, competition, adverse consequences arising from system interruptions, risks associated with management of potential growth, and risks of new business areas,
business combinations, strategic alliances and the economy in general. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ
significantly from management's expectations, are described in greater detail in the Business section of our 2000 Annual Report filed on Form 10-K entitled "Certain Risk Factors That May Impact
Future Operating Results," which, along with the following discussion, describes some, but not all, of the factors that could cause actual results to differ significantly from management's
expectations.

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Overview

We are an integrated Internet media company that combines portal, community, online and on-air advertising, and e-commerce services
designed to deliver a comprehensive, next-generation online experience to a domestic audience under a nationally recognized brand name. We believe that we deliver to our customers enhanced
branded services and content and that we emphasize offering services that take advantage of Internet ubiquity and broadband access. During 2000, we combined our various website assets, including the
former Snap.com and Xoom.com, NBCi.com, NBC.com, VideoSeeker.com, and content from AccessHollywood.com, under the NBCi brand. We combine the
NBC media brand and related content with our complementary portal and navigation services and community and direct e-commerce services site to deliver to a broad audience what we believe
to be a comprehensive, entertaining, and compelling Internet experience. In addition, our advertising customers can purchase integrated online and on-air advertising packages.

We
have not achieved profitability on a quarterly or annual basis to date, and anticipate that we will continue to incur net losses. The extent of these losses will depend, in part,
on the amount of net revenue derived from advertising and e-commerce and our ability to achieve lower operating expense levels.

Recent events

On April 8, 2001, we entered into a Merger Agreement and Plan of Liquidation and Dissolution with NBC pursuant to which all of the holders of our
Class A common stock would receive $2.19 in cash for each share of their Class A common stock. All of our remaining assets and liabilities would be distributed to NBC in a liquidating
distribution. Completion of the transactions contemplated by the

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merger agreement and plan of liquidation is subject to various approvals by our stockholders, including the approval of holders of a majority of all shares of our Class A common stock,
excluding shares with respect to which NBC has the right to vote or may direct the vote.

Also
on April 8, 2001, the Class A members of our Board of Directors acknowledged that in the absence of a business combination with NBC or another third party, a
significant scale down of our operations would be advisable. Management is currently developing plans to execute on this contingency and expects to ultimately record charges to operations, which are
not estimable at this time, if such a scale-down becomes necessary.

The
factors that led to our decision to enter into the merger agreement and plan of liquidation with NBC, or to likely scale down operations in the absence of a business combination
with NBC or another third party, include negative trends in revenue and operating results, continued weakening of the Internet advertising market, recent failures of Internet companies, lower
valuations by prospective merger candidates and significant devaluation of the current trading prices for publicly-traded Internet companies, all of which management considered to be indicators that
the carrying value of our long-lived assets may not be recoverable. Accordingly, we prepared projections that considered certain assumptions, including the following:



Based
on the above assumptions, we concluded that we would not achieve positive cash flows and, therefore, that the carrying value of our long-lived assets was considered impaired. As
a result, we recorded a significant charge to write off substantially all of our long-lived assets during the three months ended March 31, 2001. Long-lived assets are comprised
principally of fixed assets, investments, and goodwill and other intangible assets related to our formation in November 1999 as well as acquisitions of other companies since that date.

Results of operations

Advertising revenue.Advertising revenue, which includes revenue derived from the sale of promotional space on our
online Internet properties and on-air mediums, including television and radio, totaled $13.2 million for the three months ended March 31, 2001, compared to
$24.5 million for the three months ended March 31, 2000. This decrease in advertising revenue was primarily the result of the softening of the advertising market as a whole, which
adversely affected the number of new customers we were able to acquire. Additionally, several of our long-term advertising contracts expired and we were unable to sign new customers to
contracts with prices and terms similar to the contracts that expired.

The
percentage of total net revenue attributable to advertising revenue increased to 85.1% for the three months ended March 31, 2001 from 81.2% for the same period in 2000 due
primarily to our discontinuance of product sales in February 2001.

An
aggregate of $3.9 million of revenue for the three months ended March 31, 2001 and $6.9 million for the three months ended March 31, 2000 was from
non-cash transactions with strategic partners, in which we provide media and advertising services for equity. We also had revenue from the

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exchange of media and advertising services for advertising in other media of $1.1 million for the three months ended March 31, 2001, of which $381,000 was earned from CNBC.com, and
$473,000 for the same period in 2000. In addition, we recognized approximately $762,000 for the three months ended March 31, 2001 and $722,000 for the three months ended March 31, 2000
in cash revenue from companies in which we have an equity investment.

E-commerce revenue.E-commerce revenue is generated by services provided by NBCi Direct,
including online product sales and e-mail marketing campaigns. E-commerce revenue decreased to $2.3 million for the three months ended March 31, 2001 from
$5.7 million for the three months ended March 31, 2000. The percentage of total net revenue derived from e-commerce sales decreased to 14.9% for the three months ended
March 31, 2001 from 18.8% for the same period in 2000. These decreases in e-commerce revenue in absolute dollars and e-commerce revenue as a percent of total net revenue
were a direct result of our decision to discontinue online product sales during February 2000.

Cost of advertising revenue.Cost of advertising revenue consists primarily of bandwidth and hosting charges related to
the operation of our website, the cost of procuring content for our online properties, costs incurred in the procurement of on-air spots in television and radio that we resell,
employee-related expenses, and depreciation. Cost of advertising revenue increased to $9.8 million for the three months ended March 31, 2001 from $7.1 million for the same period
in 2000. This increase can be attributed primarily to an increase in bandwidth and hosting charges, quantity and total cost of content, and the number of employees needed to support our website.

As
a percentage of advertising revenue, cost of advertising revenue increased to 74.4% for the three months ended March 31, 2001 from 29.1% for the three months ended
March 31, 2000. This increase was due primarily to the decrease in net revenue and an increase in the volume and breadth of content needed to support and populate our online properties and a
large on-air contract that we entered into in June 2000 that had unfavorable terms.

Cost of e-commerce revenue.Cost of e-commerce revenue consists primarily of cost of
merchandise sold to customers, product fulfillment fees, and outbound shipping and handling costs. Cost of e-commerce revenue decreased to $596,000 for the three months ended
March 31, 2001 from $2.8 million for the three months ended March 31, 2000. This decrease was attributable to the fact that the cost of product fulfillment makes up the majority
of our cost and online product sales experienced a decrease in revenue from the prior year.

As
a percentage of e-commerce revenue, cost of e-commerce revenue decreased to 25.8% of e-commerce revenue for the three months ended
March 31, 2001 from 49.3% for the same period in 2000. This decrease was due to online product sales, which have a lower gross margin, representing a lower percentage of our total
e-commerce revenue in 2001 versus 2000. Revenue generated through our e-list and direct marketing services made up a larger portion of our e-commerce revenue in
2001 and have more favorable margins than online product sales.

Operations and development expenses.Operations and development expenses consist primarily of costs related to the
enhancement and modification of our online properties, including payroll and other employee-related expenses for development and network operations personnel. Also included in operations and
development expenses are depreciation, the costs of contract labor, and costs associated with new development operations to improve our online properties. Operations and development expenses decreased
to $9.0 million for the three months ended March 31, 2001 from $11.1 for the three months ended March 31, 2000. This decrease was due primarily to the cost-cutting
efforts that were undertaken during the first quarter of 2001, which lead to a decrease in employee-related and outside contracting expenses.

Operations
and development expenses increased as a percentage of net revenue to 58.3% for the three months ended March 31, 2001 from 36.7% for the same period ended
March 31, 2000. This

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increase was the result of greater operations and development expenses required to run a full-service portal than our prior offering. In addition, we experienced a decrease in our revenue
at a faster rate than our cost-cutting measures could offset.

Sales and marketing expenses.Sales and marketing expenses consist of payroll and related expenses for personnel
engaged in sales and marketing activities, costs associated with directing traffic to our online properties from other websites, and advertising and promotional distribution expenditures. Sales and
marketing expenses decreased to $12.2 million for the three months ended March 31, 2001 from $19.1 million for the three months ended March 31, 2000. This decrease was due
primarily to cost-cutting efforts that were undertaken during the first quarter of 2001, which lead to a decrease in employee-related as well as in non-NBC advertising and
promotional expenses.

Sales
and marketing expenses increased as a percentage of net revenue to 79.2% for the three months ended March 31, 2001 from 63.5% for the same period in 2000. This increase
was due to primarily to our total net revenue decreasing at a faster rate than our sales and marketing expenses.

General and administrative expenses.General and administrative expenses consist primarily of payroll and related
expenses for general corporate functions as well as outside legal and accounting services and facilities-related expenses. General and administrative expenses remained relatively consistent at
$11.7 million for the three months ended March 31, 2001 and $11.9 million for the three months ended March 31, 2000. Payroll and other employee-related expenses decreased
as a result of cost-cutting measures undertaken during the first quarter of 2001, however, these decreases were offset by an increase in facilities-related expenses as we moved into our
new corporate headquarters during the third quarter of 2000.

General
and administrative expenses increased as a percentage of net revenue to 75.6% for the three months ended March 31, 2001 from 39.5% for the same in 2000. This increase
was due primarily to our expenses remaining consistent while our net revenue decreased.

Promotion and advertising provided by NBC.Promotion and advertising provided by NBC consists of charges incurred in
connection with an advertising agreement entered into with NBC upon consummation of the NBCi formation transactions in November 1999, pursuant to which we agreed to purchase advertising spots
with an aggregate value of $405.0 million over a four-year period. We recorded $17.0 million in promotion and advertising expense related to NBC promotions for the three
months ended March 31, 2001 and $19.7 million for the same period in 2000. This decrease was due to our total obligation to purchase advertising from NBC being lower during 2001 than
during 2000. Included in cost of advertising revenue was $1.8 million for the three months ended March 31, 2001 and $395,000 for the three months ended March 31, 2000 representing
additional amounts paid to NBC for the cost of on-air advertising that we sold to others.

Amortization of deferred and other stock compensation.We record deferred compensation charges to recognize the
difference between the exercise price and the deemed fair value of stock options and restricted stock that we grant to certain key employees and employees of certain acquired companies. We amortize
these amounts by charges to operations over the vesting periods of the individual equity instruments, which range from three months to four years. Amortization of deferred compensation totaled
$1.7 million for the three months ended March 31, 2001 and $1.1 million for the same period in 2000. This increase was the result of the additional non-cash stock
compensation charges related to the hiring of certain key executives on or about March 31, 2000. We began to amortize this deferred compensation during the three months ended June 30,
2000.

Amortization of goodwill and other intangible assets.Amortization of goodwill and other intangible assets totaled
$79.0 million for the three months ended March 31, 2001 and $69.7 million for the same period in 2000. This increase was primarily the result of acquisitions completed during the

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three months ended June 30, 2000, including GlobalBrain.net and flyswat, which are being amortized over periods ranging from 24 to 60 months.

Loss on impairment of long-lived assets.In accordance with our accounting policy for
long-lived assets, we considered whether any indicators of impairment were present for our long-lived assets. In connection with the announcement made in April 2001
regarding the potential transaction with NBC as well as other negative indicators present, we determined that the carrying value of our long-lived assets may not be recoverable. As a
result, we wrote off a total of $1.6 billion of long-lived assets, including $1.5 billion of goodwill and other intangible assets and $52.7 million of fixed assets.

Interest income.Interest income represents interest we earned on our cash balances and marketable securities, as well
as the interest earned on our $340.0 million note receivable from NBC. We earned $7.5 million of interest income for the three months ended March 31, 2001 and $9.1 million
for the same period in the prior year. This decrease was due primarily to a decrease in our average cash balance from the first quarter of 2000 to the first quarter of 2001.

Interest expense.Interest expense represents interest charges related to notes payable and capital lease obligations,
as well as the interest charges related to our two convertible notes payable to NBC, which have a total principal value of $370.0 million. We incurred $4.1 million of interest expense
for the three months ended March 31, 2001 and $3.9 million for the same period in 2000. Interest expense remained constant from quarter to quarter as our notes payable and capital lease
balances remained fairly consistent, as did our interest expense related to our notes payable to NBC, which totaled $3.8 million for the three months ended March 31, 2001 and
$3.7 million for the same period in 2000.

Loss on investments.We recorded non-cash losses totaling $191.9 million during the three months
ended March 31, 2001 related to write-downs of certain publicly and privately-held investments in equity securities as a result of decreases in fair value below our cost that we
determined were other than temporary. Included in the loss on investments are write-downs, to the estimated fair value, related to our investments in affiliated companies and CNBC.com totaling
$153.6 million. We did not record losses related to investments during the three months ended March 31, 2000.

Equity in net loss of affiliated companies.Equity in net loss of affiliated companies resulted from our minority
ownership in certain investments that are accounted for under the equity method of accounting, which requires that our proportionate share of each affiliate's operating earnings (loss) be recorded in
our statements of operations. During the three months ended March 31, 2001, we recorded $11.3 million of such losses. These losses resulted primarily from our investment in BigVine,
which we made concurrently with the disposition of AllBusiness.com in November 2000. We did not have any investments under the equity method of accounting during the three months ended
March 31, 2000.

Cumulative effect of accounting change.On January 1, 2001 upon the adoption of Financial Accounting Standards
Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," or FAS 133, we recorded a loss of $4.7 million related to a cumulative effect of
accounting change for certain of our common stock warrants that qualify as derivatives under FAS 133. FAS 133 requires that all derivative instruments be recorded on the consolidated
balance sheets at their fair value and any increase or decrease in the fair value over the course of a reporting period be recorded in the statement of operations. During the three months ended
March 31, 2001, the fair value of our derivative
instruments decreased by $33,000. As FAS 133 was not required to be adopted until January 1, 2001, we did not record a similar amount during the three months ended March 31, 2000.

Income taxes.From inception through March 31, 2001, we incurred net losses for federal and state income tax
purposes and have not recognized any income tax provision or benefit. Given our limited operating history, losses incurred to date and the difficulty in accurately forecasting our future results,
management does not believe that the related deferred income tax asset meets the recognition criteria required by generally accepted accounting principles. Accordingly, a full valuation allowance has
been recorded.

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Liquidity and capital resources

To date, we have financed our operations primarily from proceeds received from the Xoom.com initial public offering in December 1998, Xoom.com's
secondary offering in April 1999, and our secondary offering in February 2000, as well as proceeds from the issuance of 960,028 shares of common stock to NBC in July 1999.

Operating activities.Net cash used in operating activities was $45.9 million during the three months ended
March 31, 2001 and $39.4 million for the three months ended March 31, 2000. Cash used in operating activities in the first quarter of 2001 was primarily the result of a net loss
of $1.9 billion, decreases in accounts payable and accrued compensation and related expenses of $11.8 million, offset by non-cash charges including loss on impairment of
long-lived assets of $1.6 billion, loss on equity investments of $191.9 million, depreciation and amortization of $89.4 million, and equity in the net loss of
affiliated companies of $11.3 million. Cash used in operating activities in the first quarter of 2000 was primarily the result of the net loss of $107.1 million, an increase in accounts
receivable of $8.7 million, decreases in accounts payable and accrued compensation and related expenses of $12.6 million, partially offset by depreciation and amortization of
$73.1 million, and an increase in deferred revenue of $15.3 million due to the receipt of equity instruments in exchange for services to be performed.

Investing activities.Net cash used in investing activities was $19.7 million during the three months ended
March 31, 2001 and $112.3 million during the three months ended March 31, 2000. Cash used in investing activities in the first quarter of 2001 was primarily a result of the
purchase of short-term and long-term investments of $65.5 million, offset by the maturity of short-term and long-term investments of
$48.3 million. Cash used in investing activities during the three months ended March 31, 2000 was primarily the result of the purchase of investments of $143.4 million and fixed
asset additions of $12.1 million, partially offset by the maturity of investments of $40.5 million.

Financing activities.Net cash provided by financing activities was $19.9 million during the three months ended
March 31, 2001 and $282.8 million during the three months ended March 31, 2000. Cash provided by financing activities in the first quarter of 2001 was primarily attributable to
proceeds from our note receivable from NBC of $20.2 million. Cash provided by financing activities in the three months ended March 31, 2000 was primarily attributable to proceeds from
our secondary stock offering of $280.1 million, proceeds from the exercise of stock options of $19.2 million, and proceeds from our note receivable from NBC of $19.2 million,
partially offset by the repayment of notes payable of $35.7 million.

As
set forth in the consolidated statements of operations, we experienced net losses for the periods ended March 31, 2001 and 2000. We believe that we have the financial
resources needed to meet our
presently anticipated business requirements, including capital expenditure and strategic operating programs, for at least the next 12 months. Thereafter, if cash generated by operations is
insufficient to satisfy our liquidity requirements, we may need to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity or convertible debt
securities may result in additional dilution to our stockholders. We may not be able to raise any such capital on terms acceptable to us or at all.

Item 3. Quantitative and qualitative disclosures about market risk

Our exposure to interest rate risk relates primarily to our portfolio of short- and long-term cash investments, our note receivable from NBC, our
convertible note payable to NBC, and equity security prices.

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Interest rate sensitivity

We invest primarily in instruments issued by high quality financial institutions and companies including demand and money market instruments and debt issued by
corporations. All of these investments have maturities of less than four years. Investments in fixed and floating rate interest earning instruments carry interest rate risk in that the fair value of
fixed rate securities may be adversely impacted if interest rates rise while floating rate securities may produce less interest income if interest rates fall. A hypothetical 100 basis point increase
in interest rates would result in an approximate $2.5 million decrease in the fair value of the Company's debt securities classified as available-for-sale.

Because
the interest rates on the note receivable from NBC and convertible note payable to NBC are fixed, an increase in interest rates causes the fair value of the note receivable to
decline and the fair value of the convertible note payable to rise and a decrease in interest rates has the opposite effect. A hypothetical 100 basis point increase in interest rates would result in a
$3.4 million decrease in the fair value of the note receivable from NBC and a $11.2 million decrease in the fair value of the note payable to NBC.

Equity security price risk

We also invest in equity securities of publicly and privately-held companies, including preferred stock and warrants, for the promotion of business
and strategic objectives. These investments are generally in companies in the Internet industry. These investments are accounted for using the cost method and are
included in short-term or long-term investments, depending on whether there is a public market for the security and on Rule 144 restrictions regarding salability. For
these investments, we periodically review operating performance, financing status, liquidity prospects, and cash flows in assessing carrying values. Impairment losses are recorded when events and
circumstances indicate that such assets might be impaired and the decline in value is other than temporary. Such losses are included in loss on equity investments in the statement of operations.
During the three months ended March 31, 2001, we realized losses totaling $191.9 million related to impairment of equity investments. A hypothetical 20% adverse change in the market
prices of our salable public equity securities would result in an approximate $3.6 million decrease in the fair value of our portfolio as of March 31, 2001.

PART II. OTHER INFORMATION

Item 1. Legal proceedings

In April 2001, as a result of our announcement of our Agreement of Merger and Plan of Liquidation and Dissolution with NBC, 13 complaints had been filed
against us in the Court of Chancery for the State of Delaware, New Castle County on behalf of a purported class of our stockholders. In addition, two complaints had been filed in the Superior Court
for the State of California, County of San Francisco, on behalf of a purported class of our stockholders. These complaints name NBCi, one or more current or former members of our board of directors,
NBC and/or General Electric Company (as the ultimate parent of NBC) as defendants and allege violations of the fiduciary duties of our board of directors to our public stockholders in connection with
the merger and the liquidation including the value of the merger consideration. The complaints seek, among other things, an injunction seeking to enjoin the merger and the liquidation and unspecified
damages. The plaintiffs have made no attempt so far to pursue an immediate injunction through a temporary restraining order. We intend to contest vigorously the allegations made in the complaints.

In
November 2000, NeoPlanet, Inc. filed a complaint against flyswat, Inc., our wholly-owned subsidiary, in an Arizona state court, alleging breach of a
distribution agreement as well as various other related claims. NeoPlanet claimed damages of approximately $5.0 million. We filed a complaint in a California state court against NeoPlanet for
breach of the distribution agreement and interference

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with prospective economic advantage. We are presently negotiating a confidential settlement with NeoPlanet that includes a payment from us to NeoPlanet. We intend to defend and pursue these matters
vigorously. Based on information available to date, we do not believe the ultimate outcome of this matter will have a material effect on its financial position or results of operations.

In
July 2000, WebNext S.p.A. sent us a demand letter claiming that it had exercised a "put right" with respect to an internet site in Italy in which we own a majority interest.
The demand letter alleged that the value of the put was between $10.0 and $15.0 million. In addition, WebNext threatened to proceed to arbitration if this amount is not paid. In our response to
the demand letter, we denied the allegations for a number of reasons and expressed our view that the put right and the potential value associated with such right are indeterminable. We intend to
defend this matter vigorously. We recently entered into a settlement and license agreement with WebNext under confidential terms.

In
June 2000, Sentius Corporation filed a suit against flyswat, our wholly-owned subsidiary, in the Northern District of California federal court, for patent infringement.
Sentius claimed that flyswat infringed upon its patent for "system and method for linking streams of multimedia for reference material for display." flyswat received a written legal analysis and
opinion from outside patent counsel that its products and services do not infringe Sentius' patent. flyswat filed an answer to this complaint in August 2000. We believe that this lawsuit is
without merit and intend to defend this suit vigorously. Based on information available to date, we do not believe the ultimate outcome of this matter will have a material effect on our financial
position or results of operations.

Two
of the founders of LiquidMarket, Inc., a company acquired by Xoom.com, our predecessor, each left Xoom.com at the time of the Xoom.com/LiquidMarket closing. Some unvested
shares held by these individuals were not repurchased by us pursuant to the repurchase option in the applicable employee stock restriction agreement within the appropriate time period. As a result,
each of the two founders is claiming damages of approximately $1.0 million. We intend to defend this matter vigorously. Based on information available to date, management does not believe that
the ultimate outcome of this matter will have a material effect on our financial position or results of operations.

In
January 1998, Xoom.com became aware that Imageline, Inc. claimed to own the copyright related to specific images that a third party, Sprint Software Pty Ltd,
had licensed to Xoom.com. Some clip art images that Imageline alleged infringed Imageline's copyright were included by Xoom.com in versions of its Web Clip Empire product and licensed by Xoom.com to
third parties, including other software clip publishers. Xoom.com's contracts with such publishers require it to indemnify the publisher if copyrighted material licensed from Xoom.com infringes a
copyright. On August 27, 1998, we filed a lawsuit in the United States District Court for the Eastern District of Virginia against Imageline, certain parties affiliated with Imageline, and
Sprint regarding our licensees' alleged infringement of Imageline's copyright in certain clip art that we licensed from Sprint. The lawsuit seeks, among other relief, disclosure of information from
Imageline concerning the alleged copyright infringement, a declaratory judgment concerning the validity and enforceability of Imageline's copyrights and copyright registrations, a declaratory judgment
regarding damages, if any, owed by us to Imageline, and indemnification from Sprint for damages, if any, owed by us to Imageline. There is no contractual limitation on Sprint's indemnification. While
we are seeking indemnification from Sprint for damages, if any, there can be no assurance that Sprint will be able to fulfill the indemnity obligations under its license agreements with us. On
September 17, 1998, Imageline filed a counterclaim, which Imageline amended in January 1999, seeking up to $60.0 million in damages. In March 1999, the parties completed
the discovery process and filed separate motions for summary judgment. On April 5, 1999, the Court granted one of our motions for partial summary judgment and stayed the case to allow Imageline
to file all necessary copyright registration applications to cover the clip art images. Currently, trial on Imageline's remaining count of false advertising is scheduled for April 24, 2001. We
believe our liability
related to this matter ranges from $0 to $10.0 million; however, we believe it is unlikely that the liability will exceed $1.0 million. Accordingly, we reserved $1.0 million for
this potential liability, the

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expense of which was included in non-recurring charges for the year ended December 31, 1997. In April 2001, the Court granted summary judgment in our favor on Imageline's
final claim that remained before the Court.

In
February 2000, International Microcomputer Software, Inc., or IMSI, notified us that it intended to make a claim for indemnification pursuant to a contract with
Xoom.com in connection with a $2.6 million judgment entered in favor of Imageline against IMSI. The judgment resulted from an arbitration award pertaining to a contract between Imageline and
IMSI. We have notified IMSI that we deny any duty to indemnify IMSI in connection with its contractual dispute with Imageline. In March 2001, IMSI, along with another licensee of Xoom.com's
clip art, ArtToday.com, Inc., filed suit against us for indemnification of the $2.6 million judgment and related costs in California Superior Court. In May 2001, we filed a
demurrer in response to this claim. Additional third parties may ask us to indemnify them in connection with disputes with Imageline. We intend to defend this matter vigorously. Based on information
available to date, management does not believe that the ultimate outcome of these matters will have a material effect on our financial position, results of operations, or cash flows.

From
time to time, we receive notices of alleged claims and threats in the ordinary course of business. It is our belief that these alleged claims and threats will not have a material
effect on our financial position or results of operations. Not withstanding the aforementioned, it is possible that the resolution of a claim or threat may have a material adverse affect on our
financial position, results of operations, or cash flows.

Item 6. Exhibits and reports on Form 8-K





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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused the Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                   |  | NBC INTERNET, INC.
|------------------ |  | ------------------
|Date: May 15, 2001 |  | By:               
|                   |  |                   

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EXHIBIT INDEX

|Exhibit
Number |  | Document                                                                                                                                                                                                                                                                       
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Agreement and Plan of Contribution and Merger dated as of May 9, 1999 by and among the Registrant, Xoom.com, Inc., CNET, Inc., Snap! LLC and Xenon 3, Inc.(1)                                                                                                                  
|2.2            |  | First Amendment to Agreement and Plan of Contribution and Merger dated as of October 20, 1999 by and among the Registrant, Xoom.com, Inc. CNET, Inc., Snap! LLC and Xenon 3, Inc.(1)                                                                                           
|2.3            |  | Second Amended and Restated Agreement and Plan of Contribution, Investment and Merger dated July 8, 1999 by and among the Registrant, National Broadcasting Company, Inc., GE Investments Subsidiary, Inc., Neon Media Corporation and Xoom.com,
Inc.(1)                       
|2.4            |  | First Amendment to Second Amended and Restated Agreement and Plan of Contribution, Investment and Merger dated October 20, 1999 by and among the Registrant, National Broadcasting Company, Inc., GE Investments Subsidiary, Inc., Neon Media Corporation
and Xoom.com, Inc.(1)
|3.1            |  | Restated Certificate of Incorporation of the Registrant(2)                                                                                                                                                                                                                     
|3.2            |  | Amended and Restated Bylaws of the Registrant(2)                                                                                                                                                                                                                               
|4.1            |  | Reference is made to Exhibits 3.1 and 3.2                                                                                                                                                                                                                                      
|4.2            |  | Specimen Stock Certificate of the Registrant(1)                                                                                                                                                                                                                                
|10.1           |  | Form of Indemnification Agreement between the Registrant and each of its executive officers and directors(1)                                                                                                                                                                   
|10.2           |  | Agreement of Sublease between Xoom.com, Inc. and Cornerstone Internet Solutions Company d/b/a USWeb Cornerstone dated August 1, 1998(1)                                                                                                                                        
|10.3           |  | Assignment of Lease by Xaos Tools, Inc. and Acceptance of Assignment and Assumption of Lease by Xoom.com, dated July 31, 1998(1)                                                                                                                                               
|10.4           |  | Office Lease for One Beach Street, San Francisco, California between No. 1 Beach Street, LLC and CNET, Inc. dated September 24, 1997(1)                                                                                                                                        
|10.5           |  | Governance and Investor Rights Agreement between the Registrant and National Broadcasting Company, Inc.(3)                                                                                                                                                                     
|10.6           |  | Standstill Agreement between the Registrant and CNET, Inc.(3)                                                                                                                                                                                                                  
|10.7           |  | Brand Integration and License Agreement between NBC Multimedia, Inc. and National Broadcasting Company, Inc., dated May 8, 1999(1)                                                                                                                                             
|10.8           |  | Stock Option Agreement between Xoom.com, Inc. and National Broadcasting Company, Inc., dated May 9, 1999(1)                                                                                                                                                                    
|10.9           |  | Voting Agreement among Xoom.com, Inc., National Broadcasting Company, Inc., CNET, Inc., Chris Kitze and Flying Disc Investments Limited Partnership, dated May 9, 1999(1)                                                                                                      
|10.10          |  | Voting and Right of First Offer Agreement between National Broadcasting Company, Inc. and CNET, Inc.(3)                                                                                                                                                                        

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|10.11 |  | Loan Agreement between Xoom.com, Inc. and Sand Hill Capital, LLC, dated as of November 3, 1998(1)                                                                                                          
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12 |  | Amended and Restated Letter Agreement between Bank of America National Trust and Savings Association and Snap! LLC, dated September 14, 1999(1)                                                            
|10.13 |  | Agreement of Lease between Eleven Penn Plaza LLC and Xoom.com, Inc., dated March 16, 1999(1)                                                                                                               
|10.14 |  | Preferred Carriage Agreement by and between CNET, Inc., National Broadcasting Company, Inc., NBC Multimedia, Inc. and Snap! LLC., dated September 30, 1998(1)                                              
|10.15 |  | Addendum to Preferred Carriage Agreement between CNET, Inc. and Snap! LLC, dated September 30, 1998(1)                                                                                                     
|10.16 |  | Addendum to the Snap Agreements by and among CNET, Inc., National Broadcasting Company, Inc., NBC Multimedia, Inc. and Snap! LLC., dated May 9, 1999(1)                                                    
|10.17 |  | Form of Severance Agreement by and between Xoom.com, Inc. and Laurent Massa(1)                                                                                                                             
|10.18 |  | 1999 Stock Incentive Plan(1)                                                                                                                                                                               
|10.19 |  | Stock Purchase Agreement by and between Xoom.com, Inc. and National Broadcasting Company, Inc., dated September 11, 1999(1)                                                                                
|10.24 |  | Employment Agreement by and between Xoom.com, Inc. and John Harbottle, dated August 4, 1998(1)                                                                                                             
|10.25 |  | Advertising Agreement between the Registrant and National Broadcasting Company, Inc.(3)                                                                                                                    
|10.26 |  | Registration Rights Agreement by and among the Registrant, CNET, Inc., National Broadcasting Company, Inc., GE Investments Subsidiary, Inc., Flying Disc Investments Limited Partnership and Chris Kitze(3)
|10.27 |  | $39,477,953 Subordinated Zero Coupon Convertible Debenture due 2006(3)                                                                                                                                     
|10.28 |  | $447,416,805 Subordinated Zero Coupon Convertible Debenture due 2006(3)                                                                                                                                    
|10.29 |  | $340,000,000 Term Note(3)                                                                                                                                                                                  
|10.30 |  | Office Lease for 225 Bush Street, San Francisco, California between OAIC Bush Street, LLC and Xoom.com, Inc. dated August 13, 1999(1)                                                                      
|10.31 |  | Letter Agreement by and between Xoom.com, Inc. and Edmond Sanctis, dated October 19, 1999(3)                                                                                                               
|10.32 |  | Letter Agreement by and between Xoom.com, Inc. and Alan Braverman, dated November 12, 1999(3)                                                                                                              
|10.33 |  | Letter Agreement by and between Xoom.com, Inc. and John McMenamin, dated November 17, 1999(3)                                                                                                              
|10.34 |  | 1999 Employee Stock Purchase Plan(3)                                                                                                                                                                       
|10.35 |  | Employment Agreement by and between NBC Internet, Inc. and William Lansing, dated March 23, 2000(4)                                                                                                        
|10.36 |  | 2000 Non-Qualified Stock Option Plan and form stock option agreement(4)                                                                                                                                    

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|10.37 |  | Amendment to Employment Agreement by and between NBC Internet, Inc. and William Lansing, dated February 1, 2001(5)
|----- |  | ------------------------------------------------------------------------------------------------------------------
|10.38 |  | Form of Severance Agreement(5)                                                                                    
|21.1  |  | Subsidiaries of the Registrant(3)                                                                                 

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