<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                        --------------------------------



                                    FORM 10-Q




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

                  For the quarterly period ended March 31, 2000
                        Commission File No. 33-19139-NY
                        -------------------------------


                             RATEXCHANGE CORPORATION
                             -----------------------
             (Exact Name of Registrant as Specified in Its Charter)


                  Delaware                                      11-2936371
      -------------------------------                    -----------------------
     (State or Other Jurisdiction of                    (IRS Employer ID Number)
      Incorporation or Organization)

185 Berry Street, Suite 3515, San Francisco, CA                   94107
-----------------------------------------------          -----------------------
  (Address of Principal Executive Offices)                     (Zip Code)


       Registrant's telephone number, including area code: (415) 371-9800


         Formerly NetAmerica.com Corporation at Two Embarcadero Center,
                       Suite 200, San Francisco, CA 94111
-------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)


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

     YES  [X]   NO [ ]


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


                17,136,174 shares common stock as of May 12, 2000
                                (Title of Class)
<PAGE>   2
                            RATEXCHANGE CORPORATION
                                   FORM 10-Q
                      FOR THE QUARTER ENDED MARCH 31, 2000


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                PAGE
<S>                                                                           <C>
     Item 1 -

         Financial Statements

              Consolidated Balance Sheet as of March 31, 2000 (unaudited)
                  and December 31, 1999                                         3

              Consolidated Statement of Income (unaudited) for the
                  three months ended March 31, 2000 and 1999                    4

              Consolidated Statement of Cash Flows (unaudited) for
                  the three months ended March 31, 2000 and 1999                5

              Notes to Consolidated Financial Statements                        6

     Item 2 -

         Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                             9

PART II - OTHER INFORMATION

     Item 1 - Legal Proceedings                                                 21

     Item 2 - Changes in Securities                                             21

     Item 3 - Defaults Upon Senior Securities                                   21

     Item 4 - Submission of Matters to a Vote of Security Holders               21

     Item 5 - Other Information                                                 22

     Item 6 - Exhibits and Reports on Form 8-K                                  22

SIGNATURES                                                                      24
</TABLE>



                                     Page 2
<PAGE>   3
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RATEXCHANGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                             March 31,           December 31,
ASSETS                                                                         2000                  1999
                                                                           ------------          ------------
                                                                           (unaudited)
<S>                                                                        <C>                   <C>
CURRENT ASSETS
         Cash and Cash Equivalents                                         $ 31,007,201          $    451,615
         Interest Receivable                                                         --               150,608
         Prepaid Expenses                                                        13,572                 5,814
         Note Receivable                                                             --             1,787,531
                                                                           ------------          ------------
                  TOTAL CURRENT ASSETS                                       31,020,773             2,395,568

PROPERTY & EQUIPMENT (NET) (Net of accumulated depreciation
of $34,863 and $10,766 in 2000 and 1999)                                        656,665               175,349


OTHER ASSETS
         Investment in Affiliate                                                 75,000                75,000
         Deposits                                                               236,386               103,305
                                                                           ------------          ------------
TOTAL ASSETS                                                               $ 31,988,823          $  2,749,222
                                                                           ============          ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
         Accounts Payable and Accrued Expenses                             $  3,076,419          $  1,639,301
         Accrued Taxes                                                           85,000                85,000
         Short Term Debt                                                      2,000,000               800,000
                                                                           ------------          ------------
                  TOTAL CURRENT LIABILITIES                                   5,161,419             2,524,301

STOCKHOLDERS' EQUITY
         Common Stock, $.0001 par value; 300,000,000 shares
         authorized; issued and outstanding; 17,019,651 shares and
         14,087,425 shares                                                        1,702                 1,409
         Capital in Excess of Par Value                                      46,591,823             8,891,088
         Retained (Deficit) Accumulated Since Inception                     (19,766,121)           (8,667,576)
                                                                           ------------          ------------
         Total stockholders' equity                                          26,827,404               224,921
                                                                           ------------          ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $ 31,988,823          $  2,749,222
                                                                           ============          ============
</TABLE>


                       See Notes to Financial Statements


                                     Page 3
<PAGE>   4
RATEXCHANGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF INCOME


<TABLE>
<CAPTION>
                                                                                                      Beginning of
                                                                                                    Development Stage
                                                              Three Months ended March 31           September 30, 1998
                                                           ----------------------------------       through March 31
                                                              2000                  1999                  2000
                                                           ------------          ------------       -------------------
<S>                                                        <C>                   <C>                <C>
REVENUE                                                    $     --              $     --              $      --

EXPENSES
Selling, General & Administrative                             3,392,862               960,696             8,353,817
Compensation Expense - below market option  grants            7,566,083                  --               7,827,918
Bad Debt                                                           --                    --               1,748,750
Depreciation and Amortization                                    24,097                 4,363                53,553
Loss from write down of Goodwill                                   --                    --               1,582,155
                                                           ------------          ------------          ------------

         TOTAL EXPENSES                                      10,983,042               965,059            19,566,193

OTHER INCOME (Expenses)

Interest Income                                                  57,367                 5,589               210,857
Interest Expense                                               (150,896)                 --                (174,688)
Other Income                                                      1,500                  --                   1,720
Loss Allocated to Minority Interest                                --                    --                   7,000
                                                           ------------          ------------          ------------
Income (Loss) Before Taxes                                  (11,075,071)             (959,470)          (19,521,304)

Taxes                                                              --                    --                    --
                                                           ------------          ------------          ------------
INCOME (LOSS)                                              $(11,075,071)         $   (959,470)         $(19,521,304)
                                                           ============          ============          ============

Loss Per Common Share
         Basic                                            $      (0.75)         $      (0.10)
                                                          ============          ============
         Fully Diluted                                    $      (0.75)         $      (0.10)
                                                          ============          ============
Weighted Average Number of Shares                           14,820,000             9,244,000
                                                          ============          ============
</TABLE>



                       See Notes to Financial Statements



                                     Page 4
<PAGE>   5
RATEXCHANGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                         From the Beginning of
                                                                                                          Development Stage on
                                                                        For the Three Months Ended        September 30, 1998 to
                                                                                March 31,                        March 31,
                                                                       2000                  1999                  2000
                                                                   ------------          ------------    ----------------------
<S>                                                                <C>                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net (Loss)                                                    $(11,075,071)         $   (959,470)         $(19,521,304)
     Adjustments to Reconcile Net Income to Net Cash
     Provided by Operating Activities:
         Depreciation and Amortization                                   24,097                 4,363                53,553
         Bad Debt                                                          --                    --               1,748,750
         Stock Option Grants Below Fair Market Value                  7,566,083                  --               7,827,918

         Write Off of Goodwill                                             --                    --               1,582,155
         Stock for Services/Expenses                                       --                    --                 702,244
         Stock for Interest                                                --                    --                  10,773
         Stock for Accounts Payable conversion                             --                    --                 (30,000)
         (Increase) Decrease in Accounts Receivable
            and Other Advances                                          142,850              (750,996)             (933,472)

         Increase (Decrease) in Accounts Payable and
            Accrued Expenses                                          1,672,960                41,478             3,062,438

                                                                   ------------          ------------          ------------
                  TOTAL                                              (1,669,081)           (1,664,625)           (5,496,945)

CASH FLOWS FROM INVESTING ACTIVITIES
         Purchase of RateXchange                                           --                    --                (450,000)
         Payment for Purchase of Equipment                             (505,413)                 --                (673,735)
         Payment for Deposits                                          (133,080)                 --                (236,385)
         Cash Purchased by Stock Acquisition of Subsidiary                 --                    --                 (78,550)
         Advances to Affiliates                                            --                    --                (721,871)
                                                                   ------------          ------------          ------------
                  TOTAL                                                (638,493)                 --              (2,160,541)

CASH FLOWS FROM FINANCING ACTIVITIES
         Loans and Other Debt (Net)                                   1,200,000               (30,000)            2,463,000
         Net Proceeds from Stock Sales                               30,135,000             1,425,450            34,673,527
         Proceeds from Payment of Note Receivable                     1,528,160                                   1,528,160
                                                                   ------------          ------------          ------------
                  TOTAL                                              32,863,160             1,395,450            38,664,687

INCREASE (DECREASE) IN CASH                                          30,555,586              (269,175)           31,007,200

CASH BEGINNING OF PERIOD                                                451,615               528,516
                                                                   ------------          ------------          ------------
CASH END OF PERIOD                                                 $ 31,007,200          $    259,341          $ 31,007,200
                                                                   ============          ============          ============
</TABLE>



                       See Notes to Financial Statements


                                     Page 5
<PAGE>   6
                    RATEXCHANGE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1     INTERIM FINANCIAL STATEMENTS AND BACKGROUND AND HISTORY

           The interim financial statements presented herein are unaudited and
           have been prepared in accordance with the instructions to Form 10-Q.
           These statements should be read in conjunction with financial
           statements and notes thereto included in our annual report on Form
           10-K for the year ended December 31, 1999. The accompanying financial
           statements have not been examined by independent accountants in
           accordance with generally accepted auditing standards, but in the
           opinion of management such financial statements include all
           adjustments (consisting only of normal recurring adjustments)
           necessary to summarize fairly our financial position, results of
           operations, and cash flows. The results of operations and cash flows
           for the three months ended March 31, 2000 may not be indicative of
           the results that may be expected for the year ended December 31,
           2000.

            RateXchange Corporation (the Company) is a consolidated group of
            companies including the parent corporation, RateXchange Corporation
            (RateXchange Corp.), and its subsidiaries, RateXchange I, Inc. and
            PolarCap, Inc. (PolarCap).

           RateXchange Corp. (formerly NetAmerica.com Corporation) is a Delaware
           corporation organized on May 6, 1987 for the purpose of seeking out
           and developing any general business opportunity. On February 7, 2000,
           the Company announced its intention to change its name to RateXchange
           Corporation and to focus its efforts on the business of RateXchange
           I, Inc. The name change was approved by the shareholders on April 20,
           2000.

           RateXchange I, Inc., a Delaware corporation organized in June 1999,
           is in the business of business-to-business e-commerce seeking to
           develop new exchange services for the telecommunications market.

           The Company is in its planning stages for its eventual day to day
           business and has not generated any revenues from its planned
           operations. The Company is defined as a development stage company per
           SFAS No. 7. All operations since the start of the development stage,
           September 30, 1998, when the Company acquired PolarCap, have been
           reported.

NOTE 2     PRIVATE PLACEMENT

           In March 2000, the Company completed a private placement offering in
           which it sold 2,733,329 shares of restricted common stock plus
           warrants to purchase 1,366,673 shares of its common stock at an
           exercise price of $14.40 per share. The warrants are immediately
           exercisable and expire in three years. After deducting $2,665,000 for
           costs associated with the offering the Company received $30,135,000.

NOTE 3     EARNINGS PER SHARE AND AVERAGE SHARES OUTSTANDING

           Earnings (loss) per share are computed based on the weighted average
           method. Options and warrants on shares of common stock were not
           included in computing diluted earnings per share because their
           effects were antidilutive (7,105,000 options and 2,596,293 warrants).

NOTE 4     COMMITMENTS AND CONTINGENCIES

            In 1999, RateXchange I, Inc. entered into a term sheet agreement
            with a vendor to provide specialized consulting and computer
            programming to assist in RateXchange I, Inc.'s business plans and
            operations in the business-to-business e-commerce niche it was
            developing. The term sheet was never finalized into a formal
            agreement, but some services were provided, and payments were made
            for the services that were rendered. The term sheet provided for the
            vendor to receive a stock position in RateXchange I, Inc. of up to
            10% for certain services. The Company is in discussion with the
            vendor concerning the 10% stock position in RateXchange I, Inc.
            because the formal agreement was never completed and the
            contemplated services were not fully provided. The ultimate outcome
            of this discussion is uncertain at this time. No adjustment has been
            made in the financial statements for this uncertainty.



                                     Page 6
<PAGE>   7
                    RATEXCHANGE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



            The Company is involved in several issues as follows:

            Gregory K. Martin v. NetAmerica., Inc. et al. In the spring of 1999,
            Gregory K. Martin, a former officer of both NetAmerica, Inc.
            (Seattle)(NAI) and the Company, brought suit against the Company and
            others in the Superior Court of Washington (Civil Action No.
            99-2-09171-OSEA). The suit related to, among other things, Mr.
            Martin's claims for compensation, reimbursement for business
            expenses, certain insurance benefits, payment of certain other
            obligations guaranteed by Mr. Martin (or reimbursement of payments
            made by him as guarantor), payment of certain tax and other
            obligations of a company referred to as SRG/Quantum that were
            purportedly assumed by NAI and the Company, issuance of options to
            purchase stock of the Company and other remedies relating to the
            terminated acquisition and other transactions. The suit was
            conditionally settled by an agreement dated May 22, 1999 among NAI,
            the Company and Mr. Martin (with William Fritts undertaking certain
            limited obligations). Pursuant to that agreement, Mr. Martin filed a
            voluntary non-suit, i.e. dismissed his suit without prejudice. Mr.
            Martin may have the ability to attempt to void the settlement
            pursuant to noncompliance on the part of NAI to their part of the
            settlement. As of March 31, 2000, the Company has fulfilled all of
            its current obligations under the settlement agreement.

            NAI Office Lease. The Company understands that NAI leased certain
            office space in Seattle pursuant to a lease agreement. The lease's
            identification of the party intended to be obligated as tenant may
            not be entirely clear. In early 1999, the Landlord asserted that the
            Company may be liable for NAI's obligations under that lease,
            although the Landlord did not clearly present its basis for that
            assertion. The Landlord brought suit against NAI for breach of this
            lease and also named the Company as a party. The Company believes
            that there is a remote chance that any further losses will result
            from this action.

            Dispute with Waave Telecommunications, Inc. On February 3, 2000, the
            Company filed a lawsuit against Waave Telecommunications, Inc. in
            the San Francisco County Superior Court (Case No. 309608). Other
            defendants named in the lawsuit include Robert W. Ingraham, Gran
            Columbia Resources, Inc. (aka Waave Telecommunications, Inc.) and
            Does One through Fifty. The case has recently been transferred to
            Sacramento County Superior Court. The lawsuit involves claims for
            breach of contract, promissory estoppel, fraud and deceit,
            intentional interference with a contract and prospective economic
            advantage, and unfair and unlawful business practices. The Company
            is seeking in excess of $1 million in compensatory damages,
            exemplary damages, interest and attorneys fees. The Company has not
            made an evaluation as to the likelihood of settlement or favorable
            or unfavorable results from this action.

            On February 24, 2000, Concentric Network Corporation filed a lawsuit
            against NetAmerica, Inc., aka A1 Internet, Inc., and the Company in
            the Superior Court of California for the County of Santa Clara (CV
            784335). The lawsuit involves claims for breach of contract and
            common counts based on A1 Internet's nonperformance in a service
            agreement between A1 Internet and Concentric. Concentric is asking
            for compensatory damages of at least $167,794, restitution, costs
            and attorney fees. The matter is currently pending in Superior Court
            and will soon proceed to arbitration.

NOTE 5     OPTIONS FOR PURCHASE OF COMMON STOCK

           Shareholders authorized the 1999 Stock Option Plan during 1999.
           Shareholders authorized the 2000 Stock Option Plan on April 20, 2000.
           Options to purchase a total of 8,000,000 shares are authorized for
           issuance under these plans.

           On February 24, 2000, the Board authorized additional options to
           purchase 4,290,000 shares outside of either plan at a strike price of
           $7.00. The closing stock price on February 24, 2000 was $12.00. Of
           these options, 837,500 vested immediately. A further 400,000 vested
           in the first quarter upon meeting a vesting provision that the
           Company's stock price trade over $20 for ten consecutive days. The
           remaining options vest over periods of between one and four years.
           Total options issued during the quarter for less than fair market
           value were 4,215,000 for which the Company recognized compensation
           expense of $7,566,083, of this amount $6,806,250 related to those
           options that vested during the first quarter. None of the options
           that vested in the first quarter have been exercised.

NOTE 6     SHORT TERM DEBT

           In January 2000, RateXchange I, Inc. closed a $2,000,000 convertible
           note offering (the "Notes"). The Notes were convertible into
           RateXchange I, Inc. common stock at a price per share to be
           determined in an anticipated subsequent financing of RateXchange I,
           Inc. In addition, warrants to purchase RateXchange I, Inc. common
           stock were issued.



                                     Page 7
<PAGE>   8
                    RATEXCHANGE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



           As a result of the Company's new business strategy, the Company
           offered to such note holders the right to convert their Notes into
           RateXchange Corp. common stock at an exchange rate of $5.00 per
           share. In addition, the Company agreed to issue such holders an
           aggregate of 500,000 warrants to purchase common stock at $5.00 per
           share. Any note holders who decline this offer will be entitled to
           rescind their original investment and receive their principal back in
           full, including accrued interest. As of March 31, 2000, no
           conversions have occurred.

NOTE 7     GOING CONCERN

            The accompanying financial statements have been prepared assuming
            that the Company will continue as a going concern. The Company has
            had recurring operating losses and is dependent upon financing to
            continue operations. The financial statements do not include any
            adjustments that might result from the outcome of this uncertainty.
            Management intends to fund RateXchange Corp. activities, according
            to its business plan, and emerge profitable sometime in the future.



                                     Page 8
<PAGE>   9


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

         The following discussion should be read in conjunction with our
Consolidated Financial Statements and the notes thereto presented in "Item 1 -
Financial Statements." The information set forth in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
includes forward-looking statements that involve risks and uncertainties. Many
factors could cause actual results to differ materially from those contained in
the forward-looking statements below. See "Outlook."

OVERVIEW

         We are a pioneer in the development of business-to-business ("B2B")
e-commerce for the telecommunications industry. We are a development stage B2B,
e-commerce company seeking to develop new transaction services for the estimated
$1 trillion international market for telecommunications services. We focus on
developing, operating and maintaining liquid, efficient and automated online
market services to trade bandwidth and other telecommunications products. In
February 2000, we announced the launch of the RateXchange Real-Time Bandwidth
eXchange ("RTBX"). We believe RTBX is the first online exchange specializing in
telecommunication bandwidth as a tradeable commodity. We also announced the
opening of our first two delivery hubs in New York and Los Angeles where
carriers will interconnect to the exchange. During 2000, we expect to commence
other revenue-generating services such as RateXchange CustomAuctions for buying
and selling of other telecommunications products and services and to open
additional interconnection delivery hubs.

GENERAL DEVELOPMENT OF BUSINESS

         The Company was originally incorporated as Venture World, Ltd. on May
6, 1987 under the laws of the State of Delaware for the purpose of developing or
acquiring general business opportunities. We did not have any material
operations from 1992 to 1998.

         On September 30, 1998, we acquired PolarCap, Inc. As a result of this
acquisition, PolarCap became our wholly owned subsidiary. PolarCap is a
California corporation that was organized in April 1997 for the purpose of
investing in and developing rights to a variety of software technologies related
to multimedia, development tools, and applications technologies.

         In September 1998, in connection with our strategy to acquire and
consolidate Internet Service Providers ("ISPs"), we also entered into an
agreement with NetAmerica, Inc., a Washington corporation, pursuant to which we
agreed to purchase the outstanding stock of Net America, Inc. Net America, Inc.
subsequently agreed to be renamed A1 Internet, Inc. and agreed to assign and
transfer to us all of its right, title and interest in the name "Net America."
We determined in March 1999 that it was not in our best interest to complete the
purchase of A1 Internet's stock after A1 Internet acknowledged that certain
representations made to us were inaccurate. Consequently, on March 16, 1999, we
entered into an agreement with A1 Internet to abandon the stock purchase and
settle our differences.

         In 1999, we changed the name of the Company to NetAmerica.com
Corporation. Shortly thereafter, we incorporated Telenisus Corporation, a
Delaware corporation, as one of our wholly owned subsidiaries. Telenisus is a
development stage company that is seeking to become a single source provider of
secure and reliable Internet-based business-to-business services to corporate
customers, carriers, ISPs and marketers of telecommunications services. Through
acquisitions and internal business development, Telenisus seeks to develop a
full suite of Internet and data network management tools that will enable
customers to increase productivity, to reduce costs and to access a wide range
of Internet, e-commerce, security and communication applications from a one-stop
network service delivery provider.

        On or about November 3, 1999, Telenisus announced the closing of its
first independent private placement financing. The common stock issued in this
financing, together with stock issued in a Telenisus-subsidiary acquisition,
reduced our percentage ownership interest in Telenisus to less than 10%.
Telenisus used the proceeds of the financing to expand its management team and
to accelerate development of its four service families: virtual



                                     Page 9
<PAGE>   10

private networks, managed firewall/security services, Web site and application
hosting, and e-commerce. Telenisus is focused on delivering its business
Internet solutions to large and mid-sized corporate customers.

         On July 6, 1999, we acquired 100% of the outstanding stock of Rate
Exchange, Inc., a Colorado corporation, through a merger into RateXchange I,
Inc., our wholly owned Delaware subsidiary. The Delaware subsidiary was the
surviving entity. We paid 574,998 shares of common stock and $450,000 in a note
that was due one year from the date of closing. This note is now fully paid. On
July 23, 1999, RateXchange I entered into an agreement with a consultant for
market development expertise as applied to the telecommunications market. In
exchange for these services, RateXchange I agreed to issue up to 10% of its
common stock based on successful completion and delivery of certain software. As
of the date of this report, no shares of RateXchange I, Inc. have been issued
under the consultant agreement and the parties are in discussions regarding
termination of this agreement.

         On September 15, 1999, RateXchange I and Donald H. Sledge entered into
an employment agreement under which RateXchange I agreed to grant Mr. Sledge an
equity position of up to 10% of RateXchange I's outstanding stock through a
stock purchase right. RateXchange I has repurchased Mr. Sledge's equity as part
of our restructuring.

         RateXchange I is a development stage B2B, e-commerce company seeking to
develop new transaction services for the estimated $1 trillion international
market for telecommunications services. RateXchange I has operated an
Internet-based lead generation service for trading in long-distance minutes,
telephony minutes and bandwidth since January 1998.

         On February 7, 2000, we announced our intention to change our name to
RateXchange Corporation (subject to shareholder approval) and to focus our
efforts on the business of RateXchange I, Inc. As part of our restructuring,
Donald H. Sledge agreed to serve as our Chairman and CEO. On April 20, 2000, our
shareholders approved our name change.

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO MARCH
31, 1999

         The following table summarizes our results of operations for the three
months ended March 31, 2000 and 1999.


<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                            March 31
                                                               ----------------------------------
                                                                  2000                   1999
                                                               ------------          -------------
<S>                                                            <C>                   <C>
Revenue                                                                --                    --
Expenses (including Selling, General & Administrative)         $(10,983,042)         $   (965,059)
Net Income (Loss)                                              $(11,075,071)         $   (959,470)
</TABLE>

Revenue

         We have not generated any revenues since inception. The only income we
generated during the first quarter of 2000 was interest income on the net
proceeds from the $32.8 million private placement. Interest income for the first
quarter of 2000 was $57,367 compared to $5,589 for the same period in 1999. The
increase in interest income is attributable to interest earned on the proceeds
from the private placement.

Expenses

         Our total expenses increased to $10,983,042 from $965,059 for the three
months ended March 31, 2000 and 1999. The increase was due primarily to:

         -        compensation expense recorded for below market stock option
                  grants,

         -        increased marketing and development activity,




                                    Page 10
<PAGE>   11

         -    the expansion of our executive management team and the addition of
              certain advisors, and

         -    costs associated with our restructuring.

Net Income (Loss):

         During the three months ended March 31, 2000, we incurred losses of
$(11,075,071) compared to losses of $(959,470) during the same period in 1999.
Included in the loss for the period were:

         -    $7,566,083 in expenses associated with below market stock option
              grants, of which $6,806,250 relates to options that vested in the
              first quarter,

         -    $1,122,698 in payroll costs,

         -    $373,000 in legal and professional fees,

         -    $607,000 in outside services,

         -    $100,000 in financing costs,

         -    $280,000 in marketing costs,

         -    $290,000 in delivery equipment maintenance costs, and

         -    $201,000 in recruiting expenses.

         Because we are in the early growth stage, we anticipate that we will
continue to incur operating losses and cash flow deficiencies for the
foreseeable future.

LIQUIDITY AND CAPITAL RESOURCES

         We have financed our operations to date primarily through the sale of
equity securities. We have been unprofitable since inception and we have
incurred net losses in each year.

         We had working capital of $25,859,000 at March 31, 2000 compared to
negative working capital of $(128,733) on December 31, 1999. In March 2000 we
closed a $32.8 million private placement, netting $30.1 million after expenses.
These funds should be sufficient to cover our operations and working capital
requirements for the next twelve (12) months. Nevertheless, we may be forced to
seek additional financing sooner than expected.

         Our operating activities used $1,669,000 during the three months ended
March 31, 2000 due primarily to our:

         -    increased marketing and development,

         -    expansion of our executive management team, and

         -    increased professional services and consulting costs.

         Our capital investing activities used $638,000 during the three months
ended March 31, 2000, due primarily to purchases of equipment.

         Financing activities generated $32,863,000 during the three months
ended March 31, 2000. Financing activities during the three months ended March
31, 2000 consisted primarily of proceeds from sales of common stock. Between
February and March 2000, we sold to accredited investors a total of 2,733,329
shares of our restricted common shares plus warrants to purchase 1,366,673
shares of our common stock at an exercise price of $14.40 per share. The shares
were sold at a subscription price of $12.00 per share. After deducting the
expenses related to the offering, we received $30,135,000. The proceeds of the
sales of common stock were and will be used



                                    Page 11
<PAGE>   12
to accelerate deployment of our delivery hubs, expand our online marketplace for
telecommunications products and enhance our geographic reach and product line.

         In March 2000, we executed a Master Lease Line Commitment Agreement,
which has a minimum term of either 36 or 48 months (depending upon the type of
equipment we lease). Pursuant to this agreement, we are entitled to lease
equipment that has a cost or sale price which, in the aggregate, does not exceed
$10,000,000. Our periodic lease payments are determined by multiplying the cost
or sale price of the equipment leased by a lease rate factor of either .03277 or
 .02633, depending upon the type of equipment. We are also responsible for all
taxes, shipping, transportation, installation, services and other expenses
related to the equipment we lease pursuant to the agreement.

         We are executing an overall business plan that requires significant
additional capital for among other uses:

         -    additional equipment and facilities,

         -    expansion into new domestic and international markets,

         -    additional management and personnel,

         -    development of additional products and services, and

         -    acquisitions.

        Furthermore, our funding of working capital and current and future
operating losses will require additional capital investment. We do not currently
possess a bank source of financing and we have not had any revenues. We
anticipate that the funds we obtained from our private placement and our lease
line commitment should be sufficient to cover our capital needs.

        Our business and operations have not been materially affected by
inflation during the periods for which financial information is presented.

OUTLOOK

         Historically, we have not had any long-term successful business
operations and we are concentrating our efforts in developing a new business
model for business-to-business e-commerce products and services for the
telecommunications sector. We are in an early stage of development and we are
subject to all the risks inherent in the establishment of a new business
enterprise. To address these risks, we must:

         -    establish market acceptance for our online exchange and other
              products and services,

         -    continue to retain, attract and motivate qualified personnel,

         -    effectively manage our capital to support the expenses of
              developing and marketing new products and services,

         -    implement and successfully execute our business and marketing
              strategy,

         -    respond to competitive developments, and

         -    continue to develop and upgrade our exchange and delivery hub
              technology.



                                    Page 12
<PAGE>   13
Forward-Looking Statements

        This Outlook section, and other sections of this document, include
certain "forward-looking statements" within the meaning of that term in Section
27A of the Securities Act of 1933, and Section 21E of the Securities Act of
1934, including, among others, those statements preceded by, following or
including the words "believe," "expect," "intend," "anticipate" or similar
expressions. These forward-looking statements are based largely on our current
expectations and are subject to a number of risks and uncertainties. Our actual
results could differ materially from these forward-looking statements. Important
factors to consider in evaluating such forward-looking statements include:

         -    changes in our business strategy or an inability to execute our
              strategy due to unanticipated changes in the market,

         -    our ability to raise sufficient capital to meet operating
              requirements,

         -    various competitive factors that may prevent us from competing
              successfully in the marketplace,

         -    changes in external competitive market factors or in our internal
              budgeting process which might impact trends in our results of
              operations, and

         -    other risks described below in "Factors That May Affect Future
              Results."

In light of these risks and uncertainties, there can be no assurance that the
events contemplated by the forward-looking statements contained in this Form
10-Q will in fact occur.

FACTORS THAT MAY AFFECT FUTURE RESULTS

AS A DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING HISTORY IN A NEW AND
RAPIDLY CHANGING INDUSTRY, IT IS DIFFICULT TO EVALUATE OUR BUSINESS AND
PROSPECTS.

         We are a development stage company with a limited operating history.
Our activities to date, including the activities of our predecessor, have
concentrated on:

         -    offering a free online lead-generation service in order to build
              clientele and educate potential exchange participants about the
              benefits of online trading; and

         -    planning and developing our online exchange for trading bandwidth,
              and other telecommunications products.

         Accordingly, we have a limited operating history on which to base an
evaluation of our business and prospects. Our prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development, particularly companies in new and
rapidly evolving markets such as online commerce. There can be no assurance that
we will be successful in addressing such risks, and the failure to do so could
have a material adverse effect on our business and results of operations.

OUR SUCCESS DEPENDS ON OUR ABILITY TO SUCCESSFULLY DEVELOP OUR ONLINE EXCHANGE,
SECURE PARTICIPATION IN THE EXCHANGE AND CONNECT PARTICIPANTS TO OUR NETWORK.

         Our online exchange is still in the early stages of continued
development and implementation and, as such, is subject to the inherent risks
involved in the development and implementation of an integrated hardware and
software application.

         The success of our online exchange is dependent upon the creation of a
network of physically interconnected users. Prior to trading on the exchange,
users must connect to our network at one of our delivery hubs. We currently do
not own any delivery hub equipment or other infrastructure necessary to
interconnect users. Instead, we plan to lease switching capacity from one or
more providers. There is a risk that we will not be able to



                                    Page 13
<PAGE>   14

identify suitable switching facilities, or even if we do identify such
facilities, we may not be able to enter into contractual arrangements on
favorable terms, if at all.

         Although we have established a timetable for the full launch of our
online exchange, we may need additional time and substantially more resources
than anticipated to develop the website and configure the necessary
infrastructure in multiple cities. Setbacks in the development, or delays in
developing, the online exchange would have a material adverse effect on our
business and results of operations.

         The success of our business depends on our ability to attract users to
our online exchange. While we have identified target users, there can be no
assurance that we will be able to secure their participation in the exchange.
Users must agree to physically connect their systems to our network. In
addition, we do not presently have commitments from any of the members of our
free online lead-generation service to participate in the fee-based online
exchange, and therefore, there can be no assurance that any such members will
use the online exchange.

WE HAVE A HISTORY OF LOSSES AND EXPECT TO INCUR LOSSES IN THE FUTURE, AND WE MAY
NEVER ACHIEVE PROFITABILITY.

         At March 31, 2000, our accumulated deficit since inception was
$(19,266,121). For the three months ended March 31, 2000, we incurred net losses
of $(10,575,071). We have incurred a net loss in each year of our existence, and
have financed our operations primarily through sales of equity securities. Our
expense levels are high and our revenues nonexistent. We expect to incur net
losses for the foreseeable future. We may never achieve or sustain significant
revenues or profitability on a quarterly or annual basis in the future.

IF OUR ONLINE EXCHANGE DOES NOT ACHIEVE COMMERCIAL ACCEPTANCE, OUR RESULTS WILL
SUFFER.

         We will rely primarily on a single source (fees and commissions from
transactions facilitated on the online exchange) for our revenues for the
foreseeable future. Online trading of telecommunications bandwidth and minutes
currently has only a limited market acceptance. As a result, our future ability
to gain commercial acceptance of our online exchange is critical to our success.
Any failure to successfully gain commercial acceptance of our online exchange
would not only have a material adverse effect on our business and results of
operation but also on our ability to seek additional revenue opportunities.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND FUTURE
COMPETITORS.

         The market for online bandwidth and minutes trading services is new,
rapidly evolving and very competitive, as are the online commerce and
business-to-business e-commerce markets generally. We expect competition in this
market to intensify in the future. Several of our existing competitors, such as
Band-X, Enron, Arbinet and InterXion, currently operate online exchanges and
have established customer bases. Our ability to compete with them will depend
largely upon our ability to capture market share by obtaining sufficient
participants for our online exchange.

         In addition, we compete with all companies who trade, broker, or
otherwise assist in the buying and selling of telecommunications bandwidth and
minutes. Therefore, we currently or potentially compete with a variety of other
companies, including established clearinghouses, lead-generation services and
traditional offline brokers. We are aware of established clearinghouses, such as
GRIC, ITXC and AT&T Global Clearinghouse, that aggregate supply and demand and
contract directly with buyers or sellers, rather than facilitate trades. Many
established companies, such as Band-X, Min-X, Asia Capacity Exchange and Cape
Saffron offer lead-generation services which provide opportunities for buyers
and sellers to identify trading opportunities through online listings. Barriers
to entry in the lead-generation category are minimal, as current and new
competitors can launch sites at a relatively low cost. Traditional offline
brokers act as agents for buyers and sellers of bandwidth for a commission and
have the advantage of established industry practices and industry contacts. The
increased use and acceptance of any other method of facilitating the buying and
selling of excess telecommunications bandwidth and minutes may adversely impact
the commercial viability of our online exchange.

         Large telecommunications companies such as AT&T and MCI Worldcom have
the ability and resources to compete in the online bandwidth and minutes trading
services market if they choose to do so, including launching



                                    Page 14
<PAGE>   15

their own online exchanges or offering clearinghouse and other trading services.
Many of our competitors have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we
have. In addition, a number of these competitors may combine or form strategic
partnerships. As a result, our competitors may be able to offer, or bring to
market earlier, products and services that are superior to our own in terms of
features, quality, pricing or other factors. Our failure to compete successfully
with any of these companies could have a material adverse impact on our business
and results of operations.

         Increased pressure created by any present or future competitors, or by
our competitors collectively, could have a material adverse effect on our
business and results of operations. Increased competition may result in reduced
commissions and loss of market share. Further, as a strategic response to
changes in the competitive environment, we may from time to time make certain
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on our business and results of operations. There can be
no assurance that we will be able to compete successfully against current and
future competitors. In addition, new technologies and the expansion of existing
technologies may increase the competitive pressures on us.

WE MAY BECOME SUBJECT TO REGULATION BY THE COMMODITY FUTURES TRADING COMMISSION
DEPENDING ON THE TYPES OF PRODUCTS AND SERVICES WE EVENTUALLY INTRODUCE.

         We propose to develop an online exchange for trading spot and forward
contracts for the purchase or sale of bandwidth and other telecommunications
products. Spot contracts for the near term delivery of a commodity are not
subject to regulation by the Commodity Futures Trading Commission ("CFTC").
Forward contracts, which impose binding obligations for the deferred delivery of
a commodity between commercial parties, also are excluded from the CFTC's
jurisdiction. We currently intend to operate our online exchange in a manner
consistent with existing regulatory guidance concerning transactions and
services that are not subject to regulation by the CFTC.

         The Commodity Exchange Act provides that futures contracts may only be
entered into on an exchange that has been designated by the CFTC as a contract
market. If we elected in the future to provide trading and/or clearing services
for futures contracts and options on futures contracts, we would have to apply
to the CFTC for designation as a contract market. The contract market
designation process is complicated, time consuming, and expensive. We cannot
assure that we could satisfy all of the regulatory requirements applicable to
obtaining designation as a contract market or predict how long the process would
take.

         Contract markets must comply on an ongoing basis with numerous
regulatory requirements. Those requirements currently include submitting all
proposed rules and contracts, and proposed changes to existing rules and
contracts, to the CFTC for prior review and approval, implementing and enforcing
disciplinary rules, and submitting reports to the CFTC on, among other things,
trading volume, open contracts, and prices.

         The CFTC has never determined whether some or all swap agreements are
futures contracts. Nevertheless, depending on the type of trading and/or
clearing services that we elected in the future to provide for swap agreements,
we may need to request an exemption from the CFTC from the requirement that
futures contracts and options on futures contracts only be traded on a
CFTC-designated contract market. The CFTC is under no obligation to reach a
decision within a certain period or to grant an exemption.

         Future regulatory changes also could affect our operations. Pending
regulatory proposals, if they become law, may remove some of the obstacles to
our providing trading and/or clearing services for swap agreements involving
telecommunications products. Some of those proposals still would subject
possible future services to CFTC regulation. We are unable to predict at this
time, however, whether pending regulatory proposals, if enacted, would have an
affect on our ability to offer trading and/or clearing services for swap
agreements, futures contracts and options on futures contracts involving
telecommunications products.



                                    Page 15
<PAGE>   16
WE ARE DEPENDENT ON THE CONTINUED GROWTH OF ONLINE COMMERCE AND THE ACCEPTANCE
BY USERS OF THE INTERNET AS A MEANS FOR TRADING EXCESS BANDWIDTH AND MINUTES.

         Our future revenues and profits are substantially dependent upon the
widespread acceptance and use of the Internet and online services as an
effective medium of commerce by businesses. Rapid growth in the use of and
interest in the Internet and online services is a recent phenomenon, and there
can be no assurance that acceptance and use will continue to develop or that a
sufficiently broad base of businesses or customers will adopt, and continue to
use, the Internet and online services as a medium of commerce.

         Demand and market acceptance for recently introduced services and
products over the Internet are subject to a high level of uncertainty. We will
rely on customers who have historically used traditional offline means of
commerce to buy and sell excess telecommunications bandwidth and minutes. For us
to be successful, these customers must accept and utilize novel ways of
conducting business and exchanging information over the Internet.

         Critical issues concerning the commercial use of the Internet, such as
ease of access, security, reliability, cost and quality of service, remain
unresolved and may affect the growth of Internet use or the attractiveness of
conducting commerce online. In addition, the Internet and online services may
not be accepted as a viable commercial marketplace for a number of reasons,
including potentially inadequate development of the necessary network
infrastructure or delayed development of enabling technologies and performance
improvements. To the extent that the Internet and online services continue to
experience significant growth, there can be no assurance that the infrastructure
of the Internet and online services will prove adequate to support increased
user demands. In addition, the Internet or online services could lose their
viability due to delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet or online service
activity. Changes in or insufficient availability of telecommunications services
to support the Internet or online services also could result in slower response
times and adversely affect usage of the Internet and online services generally
and us in particular. If use of the Internet and online services does not
continue to grow or grows more slowly than expected, if the infrastructure for
the Internet and online services does not effectively support growth that may
occur, or if the Internet and online services do not become a viable commercial
marketplace, we would be materially adversely affected.

WE FACE ONLINE COMMERCE SECURITY RISKS.

         We rely on encryption and authentication technology licensed from third
parties to provide the security and authentication necessary to effect secure
transmission of confidential information, such as bank account or credit
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the algorithms used by us to
protect transaction data. Any compromise of our security could have a material
adverse effect on us and our reputation. A party who is able to circumvent our
security measures could misappropriate proprietary information or cause
interruptions in our operations. We may be required to expend significant
capital and other resources to protect against such security breaches or to
alleviate problems caused by such breaches. To the extent that our activities or
those of third party contractors involve the storage and transmission of
proprietary information, such as bank account or credit information, security
breaches could damage our reputation and expose us to a risk of loss or
litigation and possible liability which could have a material adverse effect on
our business and results of operations.

OUR OPERATING RESULTS COULD BE IMPAIRED IF WE ARE OR BECOME SUBJECT TO
BURDENSOME GOVERNMENTAL REGULATION OF ONLINE COMMERCE.

         We are not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, including e-commerce companies. However, due to the increasing
popularity and use of the Internet and other online services, it is possible
that a number of laws and regulations may be adopted with respect to the
Internet or other online services covering issues such as:

         -    user privacy,

         -    pricing,


                                    Page 16
<PAGE>   17

         -    content,

         -    copyrights,

         -    distribution, and

         -    characteristics and quality of products and services.

         The adoption of any additional laws or regulations may decrease the
growth of the Internet or other online services, which could, in turn, decrease
the demand for our products and services and increase our cost of doing
business, or otherwise have an adverse effect on our business and results of
operations. Moreover, the applicability to the Internet and other online
services of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes and personal privacy is uncertain and
may take years to resolve.

         We plan to facilitate transactions between numerous customers residing
in various states and foreign countries, and such jurisdictions may claim that
we are required to qualify to do business as a foreign corporation in each such
state and foreign country. Our failure to qualify as a foreign corporation in a
jurisdiction where it is required to do so could subject us to taxes and
penalties. Any new legislation or regulation, the application of laws and
regulations from jurisdictions whose laws do not currently apply to our
business, or the application of existing laws and regulations to the Internet
and other online services could have a material adverse effect on our business
and results of operations.

WE MAY FACE LIABILITY FOR INFORMATION RETRIEVED FROM OUR WEBSITE.

         Due to the fact that material may be downloaded from our website and
subsequently distributed to others, there is a potential that claims may be made
against us for negligence, copyright or trademark infringement or other theories
based on the nature and content of such material. Although we carry general
liability insurance, our insurance may not cover potential claims of this type
or may not be adequate to cover all costs incurred in defense of potential
claims or to indemnify us for all liability that may be imposed. Any costs or
imposition of liability that is not covered by insurance or in excess of
insurance coverage could have a material adverse effect on our business and
results of operations.

WE ARE AT RISK OF CAPACITY CONSTRAINTS AND FACE SYSTEM DEVELOPMENT RISKS.

         The satisfactory performance, reliability and availability of our
online exchange and the related network infrastructure are critical to our
reputation and our ability to attract and retain users and maintain adequate
customer service levels. Our revenues depend on the number of users of our
online exchange and the volume of trading that the exchange facilitates. Any
system interruptions that result in the unavailability of our website or reduced
performance of the online exchange could reduce the volume of bandwidth traded
and the attractiveness of our website as a means for such trading.

         As a start-up venture, we expect to experience system interruptions,
which may continue to occur from time to time. There may be a significant need
to upgrade the capacity of our website in order to handle thousands of
simultaneous users and transactions. Our inability to add additional software
and hardware or to develop and upgrade further our existing technology,
transaction-processing systems or network infrastructure to accommodate
increased traffic on our online bandwidth exchange or increased trading volume
through our online trading or transaction-processing systems may cause
unanticipated system disruptions, slower response times, degradation in levels
of customer service and impaired quality and speed of trade processing, any of
which could have a material adverse effect on our business and results of
operations.

OUR BUSINESS AND OPERATIONS WOULD SUFFER IN THE EVENT OF SYSTEM FAILURES.

         Our ability to successfully facilitate bandwidth trades and provide
high-quality customer service, largely depends on the efficient and
uninterrupted operation of our computer and communications hardware systems. Our
systems and operations are vulnerable to damage or interruption from fire,
flood, power loss, telecommunications



                                    Page 17
<PAGE>   18

failure, break-ins, earthquake and similar events. We do not have a formal
disaster recovery plan and carry only limited business interruption insurance to
compensate us for losses that may occur. Despite the implementation of network
security measures, our servers are vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions, which could lead to interruptions,
delays, loss of data or the inability to accept and fulfill customer orders. In
addition, we rely on online trading software developed by third parties.
Disruptions or failures in the online trading software systems, or the
occurrence of any of the other foregoing system disruptions, could have a
material adverse effect on our business and results of operations.

IF WE DO NOT RESPOND EFFECTIVELY TO TECHNOLOGICAL CHANGE, OUR SERVICE COULD
BECOME OBSOLETE AND OUR BUSINESS WILL SUFFER.

         To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our online exchange. The Internet
and the online commerce industry are characterized by rapid technological
change, changes in user and customer requirements and preferences, frequent new
product and service introductions embodying new technologies and the emergence
of new industry standards and practices that could render our existing online
exchange and proprietary technology and systems obsolete. Our success will
depend, in part, on our ability to license leading technologies useful in our
business, enhance our existing services, develop new services and technology
that address the increasingly sophisticated and varied needs of our prospective
customers, and respond to technological advances and emerging industry standards
and practices on a cost-effective and timely basis.

         The development of the online exchange and other proprietary technology
entails significant technical and business risks. There can be no assurance that
we will successfully use new technologies effectively or adapt our online
exchange and proprietary technology to user requirements or emerging industry
standards. Our failure to adapt in a timely manner for technical, legal,
financial or other reasons, to changing market conditions or customer
requirements, could have a material adverse effect on our business and results
of operations.

IF WE DO NOT EFFECTIVELY MANAGE GROWTH, OUR ABILITY TO PROVIDE TRADING SERVICES
WILL SUFFER.

         To manage the expected growth of our operations and personnel, we will
be required to improve existing and implement new transaction-processing,
operational and financial systems, procedures and controls, and to expand, train
and manage a growing employee base. Further, we will be required to maintain and
expand our relationships with various hardware and software vendors, Internet
and other online service providers and other third parties necessary to our
business. If we are unable to manage growth effectively, we will be materially
adversely affected.

WE NEED TO RETAIN AND HIRE QUALIFIED PERSONNEL TO SUSTAIN OUR BUSINESS.

         We are currently managed by a small number of key management and
operating personnel. We do not maintain "key man" insurance on any employee. Our
future success depends, in part, on the continued service of our key executive,
management, and technical personnel, many of whom have only recently been hired,
and our ability to attract highly skilled employees. If any key officer or
employee were unable or unwilling to continue in their present positions, our
business could be harmed. From time to time we have experienced, and we expect
to continue to experience, difficulty in hiring and retaining highly skilled
employees. Competition for employees in our industry is intense, particularly in
the San Francisco Bay Area where we are located. If we are unable to retain our
key employees or attract, assimilate or retain other highly qualified employees
in the future, that may have a material adverse effect on our business and
results of operations.

OUR SUCCESS IS DEPENDENT ON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY.

         Our performance and ability to compete is dependent on our proprietary
technology, including, but not limited to the design of our online exchanges and
delivery hubs. We regard our copyrighted material, trade secrets and similar
intellectual property as critical to our success, and we rely on trademark and
copyright law, trade secret protection and confidentiality and/or license
agreements with our employees, customers, partners and others to protect our
proprietary rights. There can be no assurance that we will be able to secure
significant protection for



                                    Page 18
<PAGE>   19

any of our intellectual property. It is possible that our competitors or others
will adopt product or service names similar to our marks, thereby inhibiting our
ability to build brand identity and possibly leading to customer confusion.

         We generally have entered into agreements containing confidentiality
and non-disclosure provisions with our employees and consultants and limited
access to and distribution of our software, documentation and other proprietary
information. There can be no assurance that the steps taken by us will prevent
misappropriation of our technology or that agreements entered into for that
purpose will be enforceable. Notwithstanding the precautions we have taken, it
might be possible for a third party to copy or otherwise obtain and use our
software independently. Policing unauthorized use of our technology is
difficult, particularly because the global nature of the Internet makes it
difficult to control the ultimate destination or security of software or other
data transmitted. The laws of other countries may afford us little or no
effective protection of our intellectual property.

         Effective trademark, service mark, copyright and trade secret
protection may not be available in every country where our services are made
available online. In the future, we may also need to file lawsuits to enforce
our intellectual property rights, protect our trade secrets, and determine the
validity and scope of the proprietary rights of others. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversion of
resources, which could have a material adverse effect on our business and
results of operations.

WE MAY NOT BE ABLE TO SECURE LICENSES FOR TECHNOLOGY FROM THIRD PARTIES ON
COMMERCIALLY REASONABLE TERMS.

         We rely on a variety of software and hardware technologies that we
license from third parties, including our database and Internet server software,
components of our online trading software, and transaction-processing software
which is used in our online exchange to perform key functions. There can be no
assurance that these third party technology licenses will continue to be
available to us on commercially reasonable terms. The loss of our ability to
maintain or obtain upgrades to any of these technology licenses could result in
delays in completing our proprietary software enhancements and new developments
until equivalent technology could be identified, licensed or developed and
integrated. Any such delays could have a material adverse impact on our business
and results of operations.

WE EXPECT TO NEED ADDITIONAL CAPITAL IN THE FUTURE AND IT MAY NOT BE AVAILABLE
ON ACCEPTABLE TERMS.

         We anticipate incurring substantial costs in developing, operating and
maintaining the online exchange and in implementing the objectives of our
business plan. We may need significant amounts of working capital for
infrastructure, software development, marketing, personnel, general and
administrative costs, and to fund losses prior to achieving profitability.

         We may need to raise additional funds through additional equity and/or
debt financings to meet our capital requirements. We may need to raise
additional funds if we have underestimated our capital needs or if we incur
unexpected expenses. There can be no assurance that such financings will be
available in amounts or on terms acceptable to us, if at all. Further, our lack
of tangible assets to pledge could prevent us from establishing a source of
financing. The inability to raise all needed funding would adversely affect our
ability to successfully implement the objectives of our business plan.

THE VOLATILITY OF OUR SECURITIES PRICES MAY INCREASE.

         The market price of our common stock has in the past been, and may in
the future continue to be, volatile. A variety of events may cause the market
price of our common stock to fluctuate significantly, including:

         -    adverse news announcements,

         -    the introduction of new products and services,

         -    market conditions in the telecommunications industry in general,
              Internet-based services and B2B e-commerce,



                                    Page 19
<PAGE>   20

         -    quarter to quarter variations in operating results, and

         -    general market conditions.

         In addition, the stock market in recent years has experienced
significant price and volume fluctuations that have particularly affected the
market prices of equity securities of many companies in our business and that
often have been unrelated to the operating performance of such companies. These
market fluctuations may adversely impact the price of our common stock.

WE MAY BE REQUIRED TO ISSUE STOCK IN THE FUTURE THAT WILL DILUTE THE VALUE OF
OUR EXISTING STOCK.

         We have a significant number of outstanding options and warrants. The
exercise of all of the outstanding options and warrants would dilute the
then-existing shareholders' percentage ownership of our common stock. Any sales
resulting from exercise of options and warrants in the public market could
adversely affect prevailing market prices for our common stock. Moreover, our
ability to obtain additional equity capital could be adversely affected since
the holders of outstanding options and warrants will likely exercise the options
and warrants when we would also wish to enter the market to obtain capital on
terms more favorable than those provided by these securities. We lack control
over the timing of any exercise or the number of shares issued or sold if
exercises occur.



                                    Page 20
<PAGE>   21
                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

         On February 3, 2000, we filed a lawsuit against Waave
         Telecommunications, Inc. in the San Francisco County Superior Court
         (Case No. 309608). Other defendants named in the lawsuit include Robert
         W. Ingraham, Gran Columbia Resources, Inc. (aka Waave
         Telecommunications, Inc.) and Does One through Fifty. The case has
         recently been transferred to Sacramento County Superior Court. The
         lawsuit involves claims for breach of contract, promissory estoppel,
         fraud and deceit, intentional interference with a contract and
         prospective economic advantage, and unfair and unlawful business
         practices. We are seeking in excess of $1 million in compensatory
         damages, exemplary damages, interest and attorneys fees.

         On February 24, 2000, Concentric Network Corporation filed a lawsuit
         against NetAmerica, Inc., aka A1 Internet, Inc., and the Company in the
         Superior Court of California for the County of Santa Clara (CV 784335).
         The lawsuit involves claims for breach of contract and common counts
         based on A1 Internet's nonperformance in a services agreement between
         A1 Internet and Concentric. Concentric is asking for compensatory
         damages of at least $167,794, restitution, costs and attorney fees. The
         matter is currently pending in Superior Court and will soon proceed to
         arbitration.

         Other than those matters disclosed herein, there were no material
         additions to, or changes in status of, any ongoing, threatened or
         pending legal proceedings during the three months ended March 31, 2000.
         From time to time, we are a party to various legal proceedings
         incidental to our business. None of these proceedings is material to
         the conduct of our business, operations or financial condition.

ITEM 2.  CHANGES IN SECURITIES.

         In February 2000, we issued 198,898 shares of our restricted common
         stock to certain warrant holders upon such warrant holders' cashless
         exercise of certain of our warrants. We issued the shares to accredited
         investors only in reliance upon Section 4(2) of the 1933 Act.

         Between February and March 2000, we sold to certain private placement
         investors 2,733,329 shares of our restricted common stock plus warrants
         to purchase 1,366,673 shares of our common stock at an exercise price
         of $14.40 per share. The warrants are immediately exercisable and
         expire in three years. After deducting $2,665,000 for expenses related
         to the offering, we received $30,135,000. We issued the shares to
         accredited investors only in reliance upon Rule 506 of Regulation D of
         the 1933 Act.

         Between February and March 2000, we issued to various services
         providers additional warrants to purchase 804,620 shares of our common
         stock in exchange for services. The exercise prices of the warrants
         range from $5.00 to $14.40 per share and the warrants expire between
         2003 and 2005. We issued the warrants to accredited investors only in
         reliance upon Section 4(2) of the 1933 Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - NONE.

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

         On March 30, 2000, we mailed our shareholders proxy statements for our
         annual meeting of shareholders that was held on April 20, 2000. During
         the meeting, holders of 9,384,721 shares, out of 17,019,651 shares
         outstanding on the record date, attended either in person or by proxy.
         With respect to the election of the Board of Directors, shareholders
         cast all of the 9,384,721 shares present and entitled to vote, with the
         following results: 9,384,626 votes in favor of the appointment of
         Douglas D. Cole, Donald H. Sledge, Christopher Vizas, D. Jonathan
         Merriman and Ronald E. Spears as directors of the Company, 0 votes
         against, 95 votes withheld/abstentions, and 291,000 broker non-votes.

         With respect to the approval of our amendment to our Certificate of
         Incorporation to change our name to RateXchange Corporation,
         shareholders cast all of the 9,384,721 shares present and entitled to
         vote, with



                                    Page 21
<PAGE>   22

         the following results: 9,384,626 votes in favor of the name change, 0
         votes against, 95 votes withheld/abstentions and 291,000 broker
         non-votes.

         With respect to the approval of our 2000 Stock Option and Incentive
         Plan, shareholders cast all of the 9,384,721 shares present and
         entitled to vote, with the following results: 9,380,501 votes in favor
         of approval of the 2000 Plan, 4,125 votes against, 95 votes
         withheld/abstentions and 291,000 broker non-votes.

         With respect to the authorization of 60,000,000 shares of preferred
         stock, shareholders cast all of the 9,384,721 shares present and
         entitled to vote, with the following results: 9,225,321 votes in favor
         of authorizing the preferred stock, 59,925 votes against, 99,475 votes
         withheld/abstentions and 291,000 broker non-votes.

ITEM 5.  OTHER INFORMATION

         During February and March 2000, in conjunction with our restructuring,
         (1) Edward Mooney resigned as an officer and director, (2) Douglas Cole
         resigned as an officer but remains a director, (3) John Dixon resigned
         as a director, and (4) Douglas Glen resigned as a director. We
         concurrently appointed (1) Donald Sledge as Chairman and Chief
         Executive Officer, (2) Philip Rice as Chief Financial Officer, (3) Paul
         Wescott as Chief Operating Officer, (4) Ross Mayfield as President, (5)
         Christopher Vizas as director, (6) Jonathan Merriman as director, and
         (7) Ronald Spears as director.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

                  (a)  Exhibits

<TABLE>
<CAPTION>
       Exhibit No.                                   Description
       -----------                                   -----------
<S>                  <C>
         3.1         Certificate of Incorporation for RateXchange Corporation,
                     as amended, filed with the Form S-1 dated May 12, 2000 and
                     incorporated herein by reference.

         3.2         Amended and Restated Bylaws of RateXchange Corporation,
                     filed with the September 30, 1999 Form 10-Q and
                     incorporated herein by reference.

         4.1         Form of Warrant, filed with the Form 10-K dated December
                     31, 1999 and incorporated herein by reference.

         4.2         Form of Convertible Promissory Note between RateXchange,
                     Inc. and Investors, filed with the Form 10-K dated December
                     31, 1999 and incorporated herein by reference.

         10.1        Agreement and Plan of Merger between NetAmerica.com
                     Corporation and Rate Exchange, Inc., dated June 1, 1999,
                     filed with the Form 10-Q dated September 30, 1999,
                     incorporated herein by reference.

         10.2        Acquisition Agreement between NetAmerica.com Corporation
                     and PolarCap, Inc., filed with the Form 8-K dated September
                     22, 1998, incorporated herein by reference.

         10.3        Form of Severance Agreement between NetAmerica.com
                     Corporation and each of Douglas Cole and Edward Mooney,
                     filed with the Form 10-K dated December 31, 1999 and
                     incorporated herein by reference.

         10.4        Employment Agreement between RateXchange, Inc. and Donald
                     H. Sledge, filed with the Form 10-Q dated September 30,
                     1999, incorporated herein by reference.

         10.5        Form of Employment Agreement between RateXchange, Inc. and
                     each of Philip Rice, Ross Mayfield and Paul Wescott, filed
                     with the Form 10-K dated December 31, 1999 and incorporated
                     herein by reference.

         10.6        NetAmerica.com Corporation 1999 Stock Option Plan, filed
                     with the Proxy Statement for the Annual Meeting of
                     Shareholders on December 16, 1999, and incorporated herein
                     by reference.
</TABLE>



                                    Page 22
<PAGE>   23
<TABLE>
<S>                  <C>
         10.7        2000 Stock Option Plan, filed with the Proxy Statement for
                     the Annual Meeting of Shareholders on April 20, 2000, and
                     incorporated herein by reference.

         27          Financial Data Schedule, filed herein.
</TABLE>

                  (b)      Reports on Form 8-K.

                           None.



                                    Page 23
<PAGE>   24
                                   SIGNATURES

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

Dated this 12th day of May, 2000.


                                       RATEXCHANGE CORPORATION




                                       By: /s/
                                           -------------------------------------
                                           Philip Rice,
                                           Chief Financial Officer



                                    Page 24
<PAGE>   25
                                  Exhibit Index

<TABLE>
<CAPTION>
Exhibit No.                       Description
-----------                       -----------
<S>            <C>
3.1            Certificate of Incorporation for RateXchange Corporation, as
               amended, filed with the Form S-1 dated May 12, 2000 and
               incorporated herein by reference.

3.2            Amended and Restated Bylaws of RateXchange Corporation, filed
               with the September 30, 1999 Form 10-Q and incorporated herein by
               reference.

4.1            Form of Warrant, filed with the Form 10-K dated December 31, 1999
               and incorporated herein by reference.

4.2            Form of Convertible Promissory Note between RateXchange, Inc. and
               Investors, filed with the Form 10-K dated December 31, 1999 and
               incorporated herein by reference.

10.1           Agreement and Plan of Merger between NetAmerica.com Corporation
               and Rate Exchange, Inc., dated June 1, 1999, filed with the Form
               10-Q dated September 30, 1999, incorporated herein by reference.

10.2           Acquisition Agreement between NetAmerica.com Corporation and
               PolarCap, Inc., filed with the Form 8-K dated September 22, 1998,
               incorporated herein by reference.

10.3           Form of Severance Agreement between NetAmerica.com Corporation
               and each of Douglas Cole and Edward Mooney, filed with the Form
               10-K dated December 31, 1999 and incorporated herein by
               reference.

10.4           Employment Agreement between RateXchange, Inc. and Donald H.
               Sledge, filed with the Form 10-Q dated September 30, 1999,
               incorporated herein by reference.

10.5           Form of Employment Agreement between RateXchange, Inc. and each
               of Philip Rice, Ross Mayfield and Paul Wescott, filed with the
               Form 10-K dated December 31, 1999 and incorporated herein by
               reference.

10.6           NetAmerica.com Corporation 1999 Stock Option Plan, filed with the
               Proxy Statement for the Annual Meeting of Shareholders on
               December 16, 1999.

10.7           2000 Stock Option Plan, filed with the Proxy Statement for the
               Annual Meeting of Shareholders on April 20, 2000.

27             Financial Data Schedule, filed herein.
</TABLE>