GO2NET INC, 10-K, 1999-12-29

GO2NET INC
10-K, 1999-12-29
COMPUTER PROCESSING & DATA PREPARATION

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

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

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999

COMMISSION FILE NUMBER 0-22047

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GO2NET, INC.

(Exact name of Registrant as specified in its charter)

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DELAWARE 91-1710182
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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999 THIRD AVENUE, SUITE 4700, SEATTLE, WASHINGTON 98104
(Address of principal executive offices, including zip code)

(206) 447-1595
(Registrant's telephone number, including area code)

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

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

Common Stock $.01 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. Yes _X_ No ____

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 28, 1999 was $2,669,194,352 (based on the last
reported sale price on the Nasdaq National Market on that date).

The number of shares outstanding of the registrant's Common Stock as of
December 28, 1999 was 30,331,754.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents (or parts thereof) are incorporated by reference
into the following parts of this Form 10-K:

(i) Proxy Statement for the 2000 Annual Meeting of Shareholders--Items 10,
11, 12 and 13.

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GO2NET, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

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PART I
Item 1. Business.................................................... 3
Item 2. Properties.................................................. 13
Item 3. Legal Proceedings........................................... 14
Item 4. Submission of Matters to a Vote of Security Holders......... 14
Item 4A. Executive Officers of the Registrant........................ 14

PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 16
Item 6. Selected Financial Data..................................... 18
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation.................................. 19
Item 7a. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 38
Item 8. Financial Statements........................................ 39
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 68

PART III
Item 10. Executive Officers of the Registrant........................ 68
Item 11. Executive Compensation...................................... 68
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 68
Item 13. Certain Relationships and Related Transactions.............. 68

PART IV
Item 14. Exhibits and Reports on Form 8-K............................ 68
Signatures.................................................. 72
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This Report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties, including without limitation those discussed in
"Factors Affecting Go2Net's Business, Operating Results and Financial Condition"
section herein. Such forward-looking statements speak only as of the date on
which they are made, and Go2Net cautions readers not to place undue reliance on
such statements.

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PART I

ITEM 1. BUSINESS

OVERVIEW

COMPANY OVERVIEW

Go2Net, Inc. (including its subsidiaries, "Go2Net" or the "Company") offers
through the World Wide Web a network of branded properties and aggregated
content in the categories of search and directory, small business and electronic
commerce services, personal finance and multi-player games. The Company also
offers electronic commerce solutions to online merchants by providing payment
authorization and other services to small and medium-sized businesses. The
Company is using its proprietary, scaleable technology platforms to develop
private label portal and ecommerce content solutions for strategic partners to
extend the distribution of its products and services. Go2Net's branded Web
properties offered through the Go2Net Network include:

- Go2Net Personal (www.go2net.com), which provides users with a
comprehensive Internet start page offering customizable news, discussion
and portfolio information as well as direct access to Go2Net's own
finance, search and directory, free Web hosting, shopping, auction and
multiplayer games sites;

- MetaCrawler (www.metacrawler.com) and Dogpile (www.dogpile.com), the Web's
leading providers of metasearch services, which simultaneously query a
variety of search engines and directory services and combine the search
results;

- Silicon Investor (www.siliconinvestor.com), the Web's premier financial
discussion community which also offers proprietary articles, portfolio
tracking tools, company research, charting and analytics and business and
finance news;

- The HyperMart Network, consisting of HyperMart (www.hypermart.net),
Virtual Avenue (WWW.VIRTUALAVE.NET) and FreeYellow.com
(www.freeyellow.com), the Web's leading provider of free hosting services
for small businesses;

- Authorize.Net (www.authorize.net), a leading payment authorization service
for online businesses;

- Haggle Online (www.haggle.com), a provider of Web based person to person
auction services;

- WebMarket (www.webmarket.com), a one-stop comparison shopping service;

- 100Hot (www.100hot.com), a leading directory of the Web's most popular
sites; and

- PlaySite (www.playsite.com), a Java-based multiplayer games site.

Since the commercial launch of Go2Net's first Web site in November 1996,
traffic on the Go2Net Network has increased significantly. During the month of
September 1999, the Go2Net Network had approximately 25.8 million average page
views per day. Also, during the month of September 1999, the Go2Net Network had
over 9.8 million unique users, according to Web-ranking firm Media Metrix.

Go2Net believes that the traffic and user demographics on its Web sites
provide an attractive platform for measurable, targeted, cost-effective and
interactive advertising on the Internet. As of September 30 1999, Go2Net had
relationships with over 450 advertisers, including Amazon.com, Ameritech,
At-Hand, Barnesandnoble.com, Computer4Sure, Fleet Bank, Music Depot, Office Max
and US West. Since inception, a significant portion of of Go2Net's revenue has
been derived from advertising sales. In addition, Go2Net has established
strategic licensing and distribution relationships with several companies,
including Allegiance Telecom, Inc., Broadband Partners, Inc., CommTouch
Software, Ltd., Click2Learn.com, Inc. and Net2Phone, Inc.

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Go2Net was incorporated in February 1996 under the laws of the State of
Delaware. Our principal executive offices are located at 999 Third Avenue, Suite
4700, Seattle, Washington 98104, and our telephone number is (206) 447-1595.

STRATEGY

Go2Net's strategy is to draw a large number of users to the Go2Net Network
by providing branded Web sites in the most popular areas of Web usage: search
and directory, small business and ecommerce services, personal finance and
multi-player games. In addition, the Company seeks to distribute its content,
services and technologies through strategic relationships that will enable the
Company to leverage the sales and marketing resources of strategic partners to
extend the usage and market reach of Go2Net's products and services. The
inability of Go2Net to achieve its strategic goals may have a material adverse
effect on its business, financial condition and operating results. There can be
no assurances that Go2Net will be able to achieve these goals and, if not so
achieved, that it will be able to develop and implement alternative strategic
goals.

Key elements in Go2Net's strategy include:

GENERATE AND SUSTAIN A HIGH VOLUME OF USAGE. Go2Net seeks to draw a large
number of users to its sites by generally providing its products and services to
users free or with minimal charges and making them as widely accessible as
possible. Go2Net is also focused on building its brands and believes its brand
building will be a significant contributor to usage growth in the future.

PURSUE LICENSING OF PORTAL SERVICES TO THIRD PARTIES. Go2Net is using its
proprietary, scaleable technology platform to develop private label portal
services and ecommerce solutions for strategic partners to extend the
distribution of the Company's products and services both in the narrowband and
broadband environments. Go2Net's strategy is to license its content, services
and technology to a wide-range of companies seeking to enhance the value of
their Internet products and services. These relationships will enable the
Company to leverage the sales and marketing resources of its strategic partners
to extend the usage of its products and services. Go2Net's licensing and
distribution arrangements also enable Go2Net to create multiple points of entry
and alternative distribution channels for Go2Net's products and services, build
brand awareness and expand its audience reach without the associated
infrastructure costs. Go2Net has licensed its content, services and technology
to companies such as Allegiance Telecom, Inc., Broadband Partners, Inc.,
DirectWeb, Inc. and Lycos, Inc.

PURSUE VALUE-ADDED ELECTRONIC COMMERCE SOLUTIONS. Go2Net believes that
Web-based electronic commerce will continue to grow as an increasing number of
businesses and consumers embrace the Internet as a viable method of purchasing
goods and services. Ecommerce is a natural extension of Go2Net's Web-hosting and
payment authorization services. Go2Net's strategy is to integrate its ecommerce
enabling services into the Hypermart Network so that an online business can
create an end-to-end commerce solution consisting of Web hosting, shopping cart
technology, payment authorization services and merchant bank services. By
offering its commerce solution to members of the HyperMart network, Go2Net will
receive monthly licensing fees and transaction fees from the merchants using the
commerce solution.

CREATE INNOVATIVE ADVERTISING SOLUTIONS. Go2Net believes that the traffic
generated on its Web sites provides an attractive platform for measurable,
targeted, cost-effective and interactive advertising on the Internet. Go2Net
seeks to provide differentiated solutions to advertisers, helping them exploit
the capabilities of the Internet as an advertising medium. Go2Net is actively
seeking to develop innovative ways for advertisers to reach their target
audiences through the Internet.

ENHANCE AND EXPAND GO2NET'S PRODUCT OFFERINGS. Go2Net intends to enhance
its product offerings with additional content, features and functionality to
maintain and enhance its market position. Go2Net also plans to incorporate into
its product offerings new technologies developed internally or licensed from

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other companies that it believes will further differentiate its product
offerings and provide users with a unique, value-added experience. In order to
expand its product offerings, Go2Net has completed acquisitions of businesses,
technologies, content and services that are complementary or related to Go2Net's
operations and may pursue other acquisitions in the future. Go2Net plans to
pursue integration of additional subscription and other commerce areas in its
existing and new Web sites.

PROVIDE ORIGINAL, COMPELLING AND TARGETED SITES. Go2Net's Web sites focus
on community and interactivity and offer what Go2Net believes are areas that are
currently among the most popular areas of interest on the Internet: search and
directory; small business and ecommerce services; personal finance and
multi-player games. These specific areas offer Go2Net opportunities to deliver
premium advertising opportunities to a user base with attractive demographics
and to diversify its revenue stream through generating revenues from
transactions-based commerce and licensing fees.

ESTABLISH MARKET AWARENESS AND BRAND RECOGNITION. Go2Net believes that
maintaining and building the GO2NET brand is a critical element of its strategy.
In this regard, Go2Net has placed significant emphasis on establishing brand
identity for its Internet sites and product offerings. Go2Net's brand and
corporate identity seeks to reflect an Internet network that provides technology
and user-driven Web sites. Go2Net's strategy is to build brand awareness through
an integrated plan utilizing online and traditional media, public relations and
promotions. Go2Net's media campaign has included traditional media such as print
advertising in major newspapers, bus advertising and billboards. In addition,
Go2Net utilizes non-traditional marketing channels, such as professional sports
sponsorships, to increase its brand awareness. Go2Net plans to continue to
promote its brand in on a nationwide marketing and branding campaign focused on
major college and professional sports stadiums and arenas.

STRATEGIC RELATIONSHIPS

In order to leverage its marketing resources and to facilitate the
distribution of certain of Go2Net's products, Go2Net has established strategic
licensing and distribution relationships with several companies, including
Allegiance Telecom, Inc., Broadband Partners, Inc., Click2Learn.com, Inc.,
CommTouch Software, Ltd ("CommTouch") and Net2Phone, Inc.

ALLEGIANCE TELECOM. Go2Net and Allegiance Telecom, a facilities-based
competitive local exchange carrier that offers business telecommunications
services, have formed a five year strategic alliance in which Go2Net will
develop a customized private-label Internet portal which will provide, among
other things, a comprehensive Internet start page and an online business center
for Allegiance's business customers. The Allegiance private-label portal will
provide a comprehensive Internet start page for Allegiance customers,
incorporating customizable news, communication services (including e-mail,
calendaring and instant messaging), discussion and stock information. It will
also provide direct access to Go2Net's branded finance, search and small
business offerings. The portal will feature the search capabilities of
MetaCrawler, the personal finance information and discussion features of Silicon
Investor and the Allegiance private-label Small Business Center, which will
provide a variety of business resources and transaction services.

BROADBAND PARTNERS. On October 1, 1999, Go2Net, Vulcan Ventures, an entity
controlled by Paul G. Allen, and Charter Communications Holding Company entered
into an agreement in principle to form Broadband Partners, a joint venture.
Broadband Partners intends to provide broadband portal services initially to
customers of Charter Communications, RCN Corporation and High Speed Access
Corporation, and potentially to other cable operators. Under the joint venture,
Go2Net will distribute customized versions of its content, services and
technologies through Broadband Partners for further distribution to Charter
Communications, RCN and High Speed Access Corporation. In exchange for licensing
its products and services to Broadband Partners, Go2Net will receive fixed
annual licensing fees and a portion of the advertising and commerce revenues
generated by Broadband Partners from the use of Go2Net's content, services and
technologies on the broadband platform.

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Charter Communications has agreed to use Broadband Partners' portal services
exclusively for an initial six-year period that will begin when the portal
services are launched, subject to certain exceptions. The joint venture has an
initial 25-year term, subject to successive five-year renewals by mutual
consent. Vulcan Ventures will own 55.2%, Charter Communications will own 24.9%
and Go2Net will own 19.9% of Broadband's capital stock. Vulcan Ventures will
have voting control over the Broadband entity. Broadband's board of directors
will consist of three directors designated by Vulcan Ventures and one by each of
Charter Communications and Go2Net.

Go2Net believes that its participation in the Broadband Partners joint
venture will facilitate the distribution of the Company's content, services and
technologies through the broadband platform to the customers of Charter
Communications, RCN and High Speed Access over the television digital set-top
box and through the personal computer.

CLICK2LEARN. Go2Net and Click2Learn.com will offer co-branded training
offerings throughout the Go2Net Network. Go2Net will provide co-branded learning
environments throughout its MetaCrawler, HyperMart, Virtual Avenue and Silicon
Investor Web sites, offering users access to hundreds of online learning courses
on various relevant topics. Go2Net Network community members will also have
access to free ``2MinuteTutors(tm)" which are tutorials on a wide range of
general-interest topics and free trials of courses from independent content
providers. Go2Net and Click2Learn have agreed to build a series of 2MinuteTutors
that will enhance the learning experience of Go2Net community members. These new
2MinuteTutors will be integrated throughout the Go2Net Network. In connection
with the strategic alliance, Go2Net purchased 428,571 shares of Click2Learn's
common stock and received warrants to purchase an additional 428,571 shares of
common stock. Click2Learn also agreed to pay Go2Net a three year marketing fee
for the distribution of its tutorials through the Go2Net Network.

COMMTOUCH. As part of a comprehensive strategic marketing and distribution
agreement between Go2Net and Commtouch, Go2Net launched CommTouch's Custom Mail
free email services on Go2Net's MetaCrawler and Silicon Investor in
October 1999. Go2Net plans to implement additional customized email and
communications services across the Go2Net Network. The Custom Mail solution
allows all registered Silicon Investor and MetaCrawler users to sign up for
free, personalized Silicon Investor or MetaCrawler email accounts. In addition
to free email, the Custom Mail service offered through the Go2Net sites provides
online calendaring, contact lists and day-to-day 'to do' lists, among other
features. In fiscal 2000, Go2Net plans on offering specialized, co-branded email
and communication solutions through the HyperMart Network for small and medium
sized businesses. This email service will enable the individual HyperMart
Network's member businesses to automatically create customized, free email
services for their sites' visitors. In connection with the strategic alliance,
Go2Net purchased 896,057 shares of CommTouch's common stock and received
warrants to purchase an additional 1,136,000 shares of common stock. Go2Net and
CommTouch will share in the advertising revenues derived from the co-branded
email offerings.

NET2PHONE. Go2Net and Net2Phone will create a new unified messaging and
communications center on the Go2Net Network, where users and online businesses
will have the ability to send and receive voice mail, faxes, email and telephone
calls from a single, integrated Web-based environment. Through the
communications center, Go2Net's users will be able to download Net2Phone's
PC-to-phone software and place calls to any telephone in the world. Net2Phone's
IP telephony services will also be integrated into the HyperMart Network to
provide its member businesses with access to the one-stop communications center.
Net2Phone has agreed to pay Go2Net a three year marketing fee of $15 million for
the distribution of its services through the Go2Net Network. In addition,
Net2Phone and Go2Net will share in the revenues derived by Net2Phone from the IP
telephony services, offered through the Go2Net Network, after Net2Phone has
generated certain minimum revenues.

OTHER RELATIONSHIPS. Go2Net also intends to leverage its current
development resources and infrastructure by entering into strategic and
licensing relationships with third party developers of content and

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technologies. Go2Net has agreements with information providers including S&P
Comstock, Dow Jones & Company, Inc., New York Stock Exchange, Inc., The Nasdaq
Stock Market, Inc., FreeEdgar, Reuters and Market Guide Inc. Go2Net has also
established a relationship with InterNAP Network Services, Corporation, a
Seattle-based public NAP, or network access point. The InterNAP headquarters,
where Go2Net's servers are located, maintains multiple DS-3 circuits with some
of the largest Internet service providers. This relationship helps to maximize
the speed and accessibility of Go2Net's Web sites for users.

RECENT ACQUISITIONS

The Company made the following acquisitions during and subsequent to the
fiscal year ended September 30, 1999:

- On December 31, 1998, the Company acquired Web21 the operator of 100Hot
(www.100hot.com), a leading directory of the Web's most popular Web sites.

- On April 16, 1999, the Company acquired Haggle Online (www.haggle.com), a
provider of Web based person to person auction services.

- On April 28, 1999, the Company acquired Virtual Avenue
(www.virtualave.net), a leading provider of free Web hosting services for
small and medium-sized businesses. As part of the transaction, Go2Net also
acquired USA Online (www.usaol.com), a directory of business Web sites.

- On May 13, 1999, the Company acquired IQC Corporation (www.iqc.com), a
provider of financial charting and analytical tools.

- On July 1, 1999, the Company acquired Authorize.Net (www.authorize.net), a
leading payment authorization service for online businesses.

- On August 4, 1999, the Company acquired Dogpile, LLC (www.dogpile.com),
the operator of the Dogpile metasearch service.

- On October 22, 1999, the Company acquired FreeYellow.com
(www.freeyellow.com), a provider of free Web site building tools and
hosting services.

The above acquisitions, except the Web21 acquisition, were all accounted for
under the purchase method of accounting, and accordingly, the purchase price was
allocated to each acquired company's assets obtained and liabilities assumed
based on their respective fair values and the results of operations of each
acquired company are included in the Company's consolidated financial statements
since the date of acquisition. The acquisition of Web21 was accounted for under
the pooling method of accounting, and accordingly, historical balances have been
restated to reflect the combined results of Web21 and Go2Net.

PRODUCTS AND SERVICES

Go2Net offers various Internet sites, products and services. Internet users
access these sites, products and services directly through the Go2Net Network
home page or through the individual homepages of Go2Net's Internet sites.

GO2NET PERSONAL. Go2Net Personal (www.go2net.com) provides users with a
comprehensive Internet start page featuring the MetaCrawler metasearch service.
In addition to general metasearch, Go2Net Personal offers customizable news,
discussion and stock information, as well as direct access to Go2Net's own
finance, free Web hosting, shopping and Java-based multiplayer game sites.

SILICON INVESTOR. Silicon Investor (www.siliconinvestor.com) is the Web's
premier financial discussion community. On Silicon Investor's message boards,
users can discuss stocks with some of the top financial minds. It also offers
comprehensive charting services and stock research resources. Silicon Investor
is one of the most trafficked Web sites in the personal finance category.

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METACRAWLER. MetaCrawler (www.metacrawler.com), a metasearch service, is
consistently rated the #1 metasearch service on the Web. In response to every
user query, MetaCrawler incorporates responses from the top search engines and
directories on the Web. It collates results, eliminates duplication, scores the
results and provides the user with a comprehensive list of relevant sites.
MetaCrawler offers a low-bandwidth version, power-search options and other
customizable features. Additional value-added features include the MetaCrawler
Marketplace, an online shopping center; directory services; MiniCrawler, a small
desktop version of MetaCrawler; and the unique MetaSpy feature, which allows
users to view other users' queries-in-progress.

DOGPILE.COM Dogpile (www.dogpile.com) is a metasearch service that
integrates several Web search and directory services into a single service. It
also provides the user with the ability to search several other databases such
as stock quotes, usenet articles, weather forecasts and yellow pages.

HYPERMART NETWORK. The HyperMart Network, consisting of HyperMart
(www.hypermart.net), Virtual Avenue (www.virtualave.net) and FreeYellow
(www.freeyellow.com), provides free Web hosting services to businesses. The
HyperMart Network represents one of the Web's largest communities of businesses.
HyperMart and Virtual Avenue services include the HyperMart Small Business
Center which offers businesses a comprehensive, one-stop portal featuring
business products, services and reference materials. This complements
Hypermart's customer support program which offers technical support twenty-four
hours a day, seven days a week.

AUTHORIZE.NET. Authorize.Net (www.authorize.net) is a leading payment
authorization service for online businesses. Authorize.Net provides server-based
transaction processing systems that enable businesses to authorize, process and
manage credit card and electronic check transactions in a real-time, online
environment from any computer with an Internet connection and a Web browser.

PLAYSITE. PlaySite (www.playsite.com) offers 100% Java, multiplayer board
and card games that incorporate chat, messaging, tournaments and player ratings.
Playsite has won several editorial awards and its technical advances have been
recognized by the multiplayer gaming industry and various media outlets.

100HOT. 100Hot (www.100hot.com) is a directory of the most popular Web
sites. The directory is created by using Internet activity data gathered from
multiple sources to rank the world's most popular Web sites and compiles its
listings based on the analysis of log files from cache servers located at
strategic points throughout the Internet. The 100hot.com rankings enable Web
users to find the most popular sites on the Internet as a whole, or within each
of the 100hot.com categories.

HAGGLE. Haggle Online (www.haggle.com) is an online auction site that adds
auction services to the Go2Net Network. Haggle Online also provides Go2Net with
a platform to extend auctions to the member businesses of the HyperMart Network.

USA ONLINE. USA Online (www.usaol.com), is a directory of business Web
sites featuring more than 200,000 listings organized geographically and by
business category.

WEBMARKET. WebMarket (www.webmarket.com), offers a comparison shopping
service to Go2Net's users. WebMarket has introduced "metashopping" to the Web by
offering online shoppers the ability to comparison shop from over 80 online
merchants. It also provides reports and ratings on the Web's top merchant sites.
Each user query is run through a comprehensive database of merchant Web sites.
The search technology then returns to the user a list of prices on the item
searched. Users can also sort results by merchant, brand, availability, shipping
parameters and more. Each result has a link to the corresponding merchant site
so that the user can immediately purchase the desired product from the vendor of
choice.

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REVENUE SOURCES

ADVERTISING--Go2Net derives a significant portion of its revenues from
advertising. As of September 30, 1999 Go2Net had relationships with over 450
advertisers, including Amazon.com, Ameritech, At-Hand, Barnesandnoble.com,
Computer4Sure, Fleet Bank, Music Depot, Office Max and US West. The typical
advertiser that Go2Net targets for advertising on the Go2Net Network is a large
corporation or organization that currently advertises nationally in print,
radio, television or electronic media, in addition to other types of
corporations or organizations that currently advertise in electronic media.
Go2Net's advertising sales efforts are managed by its internal advertising sales
department, and supplemented from time to time with independent advertising
sales agencies. The pricing strategy is generally based on the number of
impressions delivered or sponsorship of certain areas, with the goal of
incentivizing advertisers to sign long-term agreements.

SUBSCRIPTIONS, MEMBERSHIPS, LICENSING, ECOMMERCE AND OTHER
TRANSACTIONS: Go2Net also generates revenues from subscriptions, licensing fees
and transactions-based commerce fees. Go2Net offers subscription services on
HyperMart, IQC.com and Silicon Investor. Additionally, Go2Net provides
server-based transaction processing services that enable businesses to
authorize, process and manage credit card and electronic check transactions in a
real-time, online environment from any computer with an Internet connection and
a Web browser. Go2Net also offers for sale products and services from certain of
its advertisers and sponsors, for which it, in certain cases, receives a
percentage of any revenues generated. Go2Net also seeks to license its content,
services and technologies to third parties and has signed licensing agreements
with several companies, including Allegiance Telecom, Lycos and DirectWeb. See
"Financial Statements and Supplementary Data."

ADVERTISING SALES

As of September 30, 1999, Go2Net's advertising sales, marketing and
advertising sales support staff consisted of 56 full-time employees, 34 of whom
were located at Go2Net's executive offices in Seattle. Go2Net also maintains
advertising sales offices in Atlanta, Austin, Boston, Chicago, Dallas, Detroit,
Los Angeles, New York and San Francisco. Go2Net expects that its Internet-based
advertising revenues will continue to be derived from the sale of advertising
and sponsorships by Go2Net's direct sales department, supplemented by
independent advertising sales agencies.

Go2Net believes that the sponsorship of Internet-based products and services
will play an increasingly important role in generating advertising revenues.
Go2Net believes that tasteful, authentic sponsorships will lead the user to
believe that the sponsor is not being forced upon them, but rather is presenting
a value-added product and/or service. Indeed, sponsored content on the Web is
becoming more and more prevalent.

Go2Net offers each of its advertisers the opportunity to access the number
of times their advertisements are viewed, and clicked on, on a daily basis
through a private, dedicated URL located on Go2Net's Web servers. This process
makes it easier for the advertiser to monitor the success of a particular
advertisement on a daily basis, and gives the advertiser more confidence in the
accuracy of the number of advertisement impressions delivered on Go2Net's Web
site. In order to further serve the advertiser, Go2Net has from time to time
established a page on its Web sites where users are asked to respond to a short
survey in return for the opportunity to win prizes. Go2Net believes that the
demographic information derived from such surveys has resulted in generating
more interest in specific sites and attracting advertiser interest.

MARKETING

Go2Net's marketing strategy is to enhance, promote and support a perception
that Go2Net's Internet sites and product offerings are both original and
compelling. Go2Net believes that it is necessary to provide Internet users with
products and services that allow them a unique, value-added experience. To

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that end, Go2Net has focused on developing and offering Internet sites and
technologies in areas where it believes it is positioned to offer unique,
value-added products and services. This enhances the ability of Go2Net to
provide Internet sites that it believes to be original and compelling, as well
as unique to the Internet medium.

Go2Net currently is focusing on a marketing strategy to maintain and build
the Go2Net brand that includes periodic press releases promoting Go2Net's
Internet sites and new products, services and technologies; important hires and
other strategic relationships; and advertising on Web sites and in trade
magazines. In addition, Go2Net's public relations strategy includes the
development of relationships with various media to encourage editorial and press
coverage.

In 1999, Go2Net has embarked on a nationwide marketing and branding campaign
focused on major college and professional sports stadiums and arenas. The
program was launched during the 1999 college football season, with Go2Net's logo
and Internet address appearing prominently on video boards and other locations
throughout 13 major college football stadiums.

Go2Net's branding efforts have also been extended to include home games of
the Seattle Seahawks National Football League team and the Portland Trail
Blazers National Basketball Association team. Some of the major college football
stadiums included in Go2Net's branding campaign included home fields of the
University of Tennessee, Purdue University, the University of Texas, Texas A&M,
Vanderbilt and Oregon State University.

RESEARCH AND DEVELOPMENT

A focus of Go2Net's research and development efforts is the enhancement of
its technology applications and content through the use of Java-based software
applications. Go2Net's programming staff devotes a portion of its time and
efforts to the development of Java and other software applications, which are
primarily used in connection with existing Company Internet sites and offerings.
Product development expenses for the years ended September 30, 1999, 1998, and
1997 were $2,703,874, $1,376,238, and $798,146, respectively.

COMPETITION

The market for Internet products and services is highly competitive.
Furthermore, Go2Net expects the market for Internet advertising to become
intensely competitive, as there are no substantial barriers to entry. Go2Net
believes the principal competitive factors in this market are name recognition,
performance, ease of use, variety of value-added products and services, features
and quality of support.

Go2Net competes with various companies and Internet sites, such as America
OnLine, Inc., c/net, Inc. Excite@Home, Inc., The Go Network, Lycos, Inc.,
Microsoft Corporation, NBC Internet and Yahoo! Inc. for the time and attention
of consumers and for advertising, subscription and ecommerce revenues.
Competition among Internet sites is intense and is expected to increase
significantly in the future. To compete successfully, Go2Net must develop and
deliver popular, useful, efficient, unique, entertaining, informative and
compelling product offerings to attract Internet users and to support
advertising, subscription fees, licensing and ecommerce. Additionally, Go2Net
competes for advertising revenue with numerous newspapers, magazines, television
programs and radio broadcasts.

In addition, a number of companies offering Internet products and services,
including direct competitors of Go2Net, recently have begun to integrate
multiple features within the products and services they offer to consumers.
Integration of Internet products and services is occurring through development
of competing products and through acquisitions of, or entering into joint
ventures and/or licensing arrangements involving, competitors of Go2Net. Also,
many other large media companies have announced that they are contemplating
developing or acquiring Internet navigation services and are attempting to
become "gateway" sites for Web users. Many, if not all, of these competitors
offer a wider range of products and

10
<PAGE>
services than Go2Net, which products and services may be sufficiently attractive
to Internet users to attract users to their services and, consequently, dissuade
them from accessing Go2Net's Internet sites.

The market for Internet-based products and services is relatively new,
intensely competitive and rapidly evolving. There are minimal barriers to entry,
and current and new competitors can launch new Internet sites at relatively low
cost within relatively short time periods. In addition, Go2Net competes for the
time and attention of Internet users with thousands of non-profit Internet sites
operated by, among other persons, individuals, government and educational
institutions. Existing and potential competitors also include magazine and
newspaper publishers, cable television companies and start-up ventures attracted
to the Internet market. Accordingly, Go2Net expects competition to persist and
intensify and the number of competitors to increase significantly in the future.
Should Go2Net seek in the future to attempt to expand the scope of its product
offerings, it will compete with a greater number of Internet sites and other
companies. Because the operations and strategic plans of existing and future
competitors are undergoing rapid change, it is extremely difficult for Go2Net to
anticipate which companies are likely to offer competitive products and services
in the future.

Go2Net believes that the competitive factors attracting Internet users
include the quality of presentation and the relevance, timeliness, depth and
breadth of information and services offered by Go2Net. With respect to
attracting advertisers and advertising agencies, Go2Net believes that the
competitive factors include, among others, the number of users accessing
Go2Net's Internet sites, the demographics of such user base, Go2Net's ability to
deliver targeted advertising and rich-media advertising through its Internet
sites, and the overall cost-effectiveness and value of advertising offered by
Go2Net. In addition, the success of Go2Net's business strategy depends on the
sale of future Internet advertising at premium prices, based in part on the
demographic characteristics of Go2Net's Internet users. With respect to
attracting subscription-based users, Go2Net believes that the competitive
factors include, among others, the quality, uniqueness and usefulness of the
products or services provided, the price charged for such product or service and
the cost and accessibility of similar products and services through the Internet
or competing media.

Many, if not all, of Go2Net's current and potential competitors have
significantly greater financial, editorial, technical and marketing resources,
longer operating histories, greater name recognition and greater experience than
Go2Net; and also have established relationships with more advertisers and
advertising agencies. Many, if not all, of such competitors may be able to
undertake more extensive marketing campaigns, adopt more aggressive advertising
and subscription price policies and devote substantially more resources to
developing Internet-based products and services than Go2Net.

EMPLOYEES

As of September 30, 1999, Go2Net had a total of 225 employees, 162 of whom
were based at Go2Net's executive offices in Seattle, Washington, 33 of whom were
based in Provo, Utah, and a total of 30 located in San Francisco, Los Angeles
and Davis, California, New York, Boston, Dallas, Atlanta, Austin, Chicago and
Detroit. Of the total of 225 employees, 67 were in sales and marketing, 79 were
in providing and editing content for the Internet sites, 44 were in programming,
design, quality assurance, technical support, documentation and product
development, and 35 were in administrative and finance functions. In addition,
as of September 30, 1999, Go2Net had agreements with 3 independent contractors
to provide various services. None of Go2Net's employees are represented by a
labor union, and Go2Net considers its employee relations to be good.

11
<PAGE>
INTELLECTUAL PROPERTY

Go2Net regards its copyrights, trademarks, trade dress, trade secrets and
similar intellectual property as critical to its success. The Company relies
upon trademark and copyright law, trade secret protection and confidentiality or
license agreements with its employees, customers, partners and others to protect
its proprietary rights. The success of Go2Net is dependent upon its ability to
protect and leverage the value, if any, of its original Internet technologies,
software and content as well as its trademarks, trade names, service marks,
domain names and other proprietary rights it either currently has or may have in
the future. Go2Net has obtained service marks for its logo and name, as well as
for the names of each of its Internet sites. Given the uncertain application of
existing copyright and trademark laws to the Internet, there can be no assurance
that existing laws will provide adequate protection for Go2Net's technologies,
Internet sites or domain names. Effective trademark, copyright and trade secret
protection may not be available in every country in which the Company chooses to
distribute or make available through the Internet its products and media
properties. Policing unauthorized use of Go2Net's technologies, content and
other intellectual property rights entails significant expenses and could be
difficult or impossible to do given, among other things, the global nature of
the Internet.

Go2Net has licensed in the past, and may license in the future, elements of
its distinctive trademarks, trade dress and similar proprietary rights to third
parties. While the Company attempts to ensure that the quality of its brand is
maintained by its licensees, its licensees may take actions that could
materially and adversely affect the value of its proprietary rights or the
reputation of its products and media properties. The distinctive elements of
Go2Net's intellectual property may not be protectible under copyright law.
Go2Net cannot guarantee that the steps that it has taken to protect its
proprietary rights will be adequate.

Many parties are actively developing search, indexing, ecommerce and other
Web-related technologies. Go2Net believes that such parties will continue to
take steps to protect these technologies, including seeking patent protection.
As a result, the Company believes that disputes regarding the ownership of such
technologies are likely to arise in the future. For example, Go2Net is aware
that a number of patents have been issued in the areas of electronic commerce,
online auctions, Web-based information and retrieval, online direct marketing,
fantasy sports and common Web graphics formats and mapping technologies. The
Company anticipates that additional third-party patents will be issued in the
future. Parties could assert patent infringement claims against the Company. In
these situations, to the extent that Go2Net were to determine that licensing
such patents would be appropriate, it cannot guarantee that it would be able to
license such patents on reasonable terms. Go2Net may incur substantial expenses
in defending against third-party patent claims regardless of the merit of such
claims. In the event that there is a determination that Go2net has infringed
such third-party rights, the Company could incur substantial monetary liability
and be prevented from using the rights in the future.

METACRAWLER LICENSE AGREEMENT

On January 31, 1997, Go2Net and Netbot entered into the MetaCrawler License
Agreement pursuant to which Netbot granted Go2Net an exclusive (subject to
certain limited exceptions), worldwide license to provide the MetaCrawler
Service. Netbot was acquired by Excite, Inc. in November 1997 and Excite was
acquired by @Home Corporation in May 1999. As part of the MetaCrawler License
Agreement, Go2Net has the exclusive right to operate, modify and reproduce the
MetaCrawler Service (including, without limitation, the exclusive right to use,
modify and reproduce the name "MetaCrawler" and the MetaCrawler URL in
connection with the operation of the MetaCrawler Service). Netbot licensed the
MetaCrawler Service and the other intellectual property rights associated
therewith from the University of Washington ("UW") on an exclusive basis. The
license has been granted to Go2Net by Netbot on an exclusive basis, but Netbot
has reserved the right to use, modify, reproduce and license the MetaCrawler
search engine for any purpose other than the provision of the MetaCrawler
Service, and the license is subject to the rights of UW to use, modify and
reproduce the MetaCrawler search engine and derivatives of the MetaCrawler site
to operate Internet sites for internal purposes within the UW domain and to use,
modify and reproduce

12
<PAGE>
any of the licensed technologies for research, instructional and academic
purposes. The search technology underlying the MetaCrawler Service and the
MetaCrawler trademark is licensed to or owned by Netbot and sublicensed to
Go2Net pursuant to the MetaCrawler License Agreement. A substantial portion of
the traffic to Go2Net's Internet sites is currently derived from users of the
MetaCrawler Service. Although the MetaCrawler License Agreement may be
terminated by Netbot only upon a material default by Go2Net thereunder, the
termination of the MetaCrawler License Agreement could have a material adverse
effect on Go2Net's business, financial condition and operating results.
Moreover, the termination of the License Agreement between UW and Netbot
relating to Netbot's license of the MetaCrawler Service would result in the
inability of Go2Net to continue to provide the MetaCrawler Service under the
MetaCrawler License Agreement, which could have a material adverse effect on
Go2Net's business, financial condition and operating results. In addition, any
failure by Go2Net to continue the MetaCrawler Service for any reason could have
a material adverse effect on Go2Net's business, financial condition and
operating results.

Pursuant to the MetaCrawler License Agreement Go2Net paid Netbot an initial
license fee of $100,000. Additionally, Go2Net pays to Netbot an annual fee of
$25,000. Go2Net has agreed to pay Netbot annual royalties of 7.5% based on
Go2Net's gross revenues received from the MetaCrawler Service, which royalties
will be reduced by the $25,000 minimum annual payment.

GOVERNMENT REGULATIONS

As a publisher and a distributor of content over the Internet, Go2Net faces
potential liability for defamation, negligence, copyright, patent or trademark
infringement and other claims based on the nature and content of the materials
that it publishes or distributes. Such claims have been brought, and sometimes
successfully prosecuted, against Internet services. In addition, Go2Net could be
exposed to liability with respect to the content or unauthorized duplication of
material indexed in its search services. Although Go2Net carries general
liability insurance, Go2Net's insurance may not cover potential claims of this
type or may not be adequate to indemnify Go2Net for all liability that may be
imposed.

As a provider of Internet content, Go2Net is subject to the provisions of
existing and future United States federal legislation that can be applied to
Go2Net's undertakings. Although there are currently few laws and regulations
directly applicable to the Internet, it is possible that new laws and
regulations will be adopted covering issues such as, among other things,
privacy, copyrights, obscene or indecent communications and the pricing,
characteristics and quality of Internet-based products and services. The
adoption of restrictive laws and regulations could decrease the growth of the
use of the Internet or expose Go2Net to significant liabilities associated with
content available on or through Go2Net's Internet sites or otherwise cause a
material adverse effect on Go2Net's business, financial condition and operating
results. Application to the Internet of existing laws and regulations governing
issues such as, among other things, property ownership, libel and personal
privacy is also subject to substantial uncertainty.

The adoption of such laws and regulations and the potential adoption of new
and more restrictive laws and regulations may decrease the growth of the
Internet, which in turn could decrease the attractiveness of Go2Net's Internet
sites and reduce the demand for advertising thereon. In addition, the need to
monitor and comply with existing and future laws and regulations will increase
Go2Net's cost of doing business. Moreover, the applicability to the Internet of
existing laws governing issues such as property ownership, libel and personal
privacy is uncertain.

ITEM 2. PROPERTIES

Go2Net's executive offices are located in downtown Seattle, Washington at
999 Third Street in an office building in which Go2Net leases 13,481 square feet
under a sublease that expires in September 2003. Go2Net has also leased an
additional 24,671 square feet of office space under various subleases in the
same office building. Go2Net has entered into a lease agreement with Triad Pier
70, L.L.C., owner of Seattle's Pier 70, to move its company headquarters to an
80,000-square-foot space in the historic

13
<PAGE>
waterfront property. The lease is for a term of 7 years. Go2Net is currently
scheduled to move to Pier 70 in the second quarter of fiscal 2000. In addition,
Go2Net also maintains offices in New York, Los Angeles, Boston, Austin, Dallas,
Atlanta, Chicago, Detroit, Provo, San Francisco and Davis. Go2Net believes its
office space will be adequate for its needs for the present and the immediate
future.

Go2Net's operations are dependent in part upon its ability to protect
against physical damage from fire, floods, earthquakes, power loss,
telecommunications failures, break-ins and similar events. Go2Net does not have
a disaster recovery plan or sufficient business interruption insurance to
compensate it for losses that may occur as a result of any of these events. The
occurrence of any of these events could result in interruptions, delays or
cessation in service to users of Go2Net's Internet sites, which could have a
material adverse effect on Go2Net's business, financial condition and operating
results.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company is subject to legal proceedings and claims in
the ordinary course of business. The Company is not currently involved in any
legal proceedings that it believes could have, either individually or in the
aggregate, a material adverse effect on its business or financial condition.

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

No matters were submitted to a vote of security holders during the last
quarter of the fiscal year ended September 30, 1999.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by Item 10 of Form 10-K with respect to executive
officers of Go2Net is set forth below. Executive officers of Go2Net are elected
by the Board of Directors on an annual basis and serve until their successors
have been duly elected and qualified. There are no family relationships among
any of the executive officers or directors of Go2Net.

The executive officers of Go2Net are:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ------------------------------------------
<S> <C> <C>
Russell C. Horowitz....................... 33 Chief Executive Officer, Chief Financial
Officer and Chairman of the Board
John Keister.............................. 33 President
Michael J. Riccio, Jr..................... 38 Chief Operating Officer
Oren Etzioni.............................. 35 Chief Technology Officer
</TABLE>

RUSSELL C. HOROWITZ is a founder of Go2Net and has served as its Chief
Executive Officer, Chief Financial Officer and a director since its inception in
February 1996. From February 1996 until January 1999, he served as Go2Net's
President. In March 1996, Mr. Horowitz founded Xanthus Capital, L.P., a Seattle,
Washington-based merchant bank that focuses primarily on developing companies in
emerging growth industries or special situations. Mr. Horowitz serves as the
Chief Executive Officer and a director of Xanthus Management, L.L.C., the
general partner of Xanthus Capital, L.P., and of DMR Investments, L.L.C., the
investment advisor to Xanthus Capital, L.P. In July 1992, Mr. Horowitz was a
founder of Active Apparel Group, Inc., a New York-based apparel supplier. From
1992 until April 1994, Mr. Horowitz served as its Chief Financial Officer; and
from May 1994 until May 1997, Mr. Horowitz served as its Director of Corporate
Development and Investor Relations. Prior to July 1992, Mr. Horowitz served as a
financial advisor to start-up and developing companies. Mr. Horowitz received a
B.A. in Economics from Columbia College of Columbia University in 1988.

JOHN KEISTER is a founder of Go2Net and has served as Go2Net's President
since January 1999. From Go2Net's inception in February 1996 through
December 1998 he served as the Chief Operating Officer,

14
<PAGE>
and from September 1997 through June 1999, he served as a director. From 1994 to
February 1996, Mr. Keister served as the President, Chief Operating Officer and
a director of ViewCom Technology International, Inc., a Seattle,
Washington-based computer software developer. From 1992 to 1994, Mr. Keister
managed European marketing operations for Dorian International, Inc., a White
Plains, New York-based export management company. Mr. Keister received a B.A. in
International Affairs and Philosophy from Occidental College in 1989.

MICHAEL J. RICCIO, JR. has served as the Company's Chief Operating Officer
since January 1999, and a director of the Company from September 1997 through
June 1999. From 1989 through December 1998, Mr. Riccio was an attorney with
Hutchins, Wheeler & Dittmar, a Boston-based law firm, most recently serving as a
shareholder of the Firm. Prior to joining Hutchins, Wheeler & Dittmar,
Mr. Riccio was an associate of Willkie Farr & Gallagher, a New York-based law
firm. Mr. Riccio received a B.S. in Business Administration from Bucknell
University in 1983 and a J.D. from Albany Law School of Union University in
1986.

DR. OREN ETZIONI has served as the Company's Chief Technology Officer since
March 1999. From October 1998 until June 1999, he served on Go2Net's Board of
Directors. Dr. Etzioni was an associate professor at the University of
Washington's Department of Computer Science from 1996. Prior to 1996,
Dr. Etzioni was an assistant professor at the University of Washington's
Department of Computer Science. Dr. Etzion also co-founded Netbot, Inc., which
was acquired by Excite, Inc. in 1997.

15
<PAGE>
PART II

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

(a) The common stock of the Company traded on the NASDAQ SmallCap Market
under the symbol "GNET" from the Company's initial public offering on April 23,
1997 until October 1, 1998. On October 1, 1998, the Company's common stock was
approved for trading on the NASDAQ National Market and has traded on the NASDAQ
National Market since that time. Prior to that time, there was no public market
for the Company's common stock. The following table sets forth the high and low
last reported sales prices for the Company's common stock for the period
indicated as reported by the NASDAQ SmallCap Market or the NASDAQ National
Market as applicable adjusted for two two-for-one stock splits on February 23,
1999 and June 24, 1999.

<TABLE>
<CAPTION>
YEAR FISCAL QUARTER ENDED HIGH LOW
- ---- ----------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
1997 June 30, 1997 (commencing April 23, 1997)............ 2 3/4 1 5/16
September 30, 1997................................... 2 29/64 1 13/32

1998 December 31, 1997.................................... 2 9/16 1 5/8
March 31, 1998....................................... 4 11/16 1 23/32
June 30, 1998........................................ 9 3/4 4 3/32
September 30, 1998................................... 8 3/4 3 13/64

1999 December 31, 1998.................................... 12 15/16 3 1/2
March 31, 1999....................................... 78 8 27/32
June 30, 1999........................................ 99 1/2 45
September 30, 1999................................... 96 1/2 46 1/16
October 1, 1999 (through December 28, 1999).......... 53 1/2 100 1/16
</TABLE>

As of December 28, 1999 Go2Net had 30,331,754 shares of common stock
outstanding held by approximately 66 shareholders of record. This does not
reflect persons or entities who hold their stock in nominee or "street" name
through various brokerage firms.

Go2Net has not paid cash dividends on its common stock. Go2Net anticipates
it will continue to reinvest earnings to finance future growth, and therefore
does not intend to pay cash dividends in the foreseeable future.

(b) In two issuances on March 15 and June 17, 1999, the Company sold a total
of 300,000 shares of Series A convertible preferred stock, par value $.01 per
share, to Vulcan Ventures Incorporated for total consideration of $300 million.
The Series A shares were initially convertible into 9,075,782 shares of common
stock subject to adjustments for stock splits, stock dividends and other Company
transactions. The Series A shares were issued pursuant to an exemption from the
registration requirements of the Securities Act, afforded by Section 4(2) of the
Securities Act of 1933.

16
<PAGE>
(c) Go2Net made the following unregistered sales of the Company's common
stock during the fiscal year ended September 30, 1999.

<TABLE>
<CAPTION>
NAME OF
AMOUNT OF UNDERWRITER PERSONS OR CLASS OF
SECURITIES OR PLACEMENT CONSIDERATION PERSONS TO WHOM THE EXEMPTION FROM
TRANSACTION DATE SOLD AGENT RECEIVED SECURITIES WERE SOLD REGISTRATION CLAIMED
- ---------------- ----------- ------------ ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1998 1,343,780(1) None (1) Shareholders and option Section 4(2) of the
holders of Web21, Inc. Securities Act of 1933

April 16, 1999 84,064(2) None (2) Shareholders and option Section 4(2) of the
holders of Haggle Online Securities Act of 1933

April 28, 1999 300,000(3) None (3) Shareholders of Virtual Section 4(2) of the
Avenue and USAOnline Securities Act of 1933

May 13, 1999 297,204(4) None (4) Shareholders and option Section 4(2) of the
holders of IQC Securities Act of 1933

July 1, 1999 1,005,713(5) None (5) Shareholders and option Section 4(2) of the
holders of Authorize.Net Securities Act of 1933

August 4, 1999 682,156(6) None (6) Members of Dogpile Section 4(2) of the
Securities Act of 1933
</TABLE>

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

(1) Pursuant to an Agreement and Plan of Merger dated December 31, 1998, by and
among the Company, WTO Acquisition Corp., Web21, Inc. and Bert Fornaciari,
the principal shareholder of Web21, the Company acquired all of the
outstanding capital stock of Web21 and options to purchase Web21 capital
stock in exchange for 1,343,780 shares and options to purchase shares of
common stock of the Company. The resale of the shares was registered on a
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on February 12, 1999.

(2) Pursuant to an Agreement and Plan of Merger dated April 16, 1999, by and
among the Company, HO Acquisition Corp., Haggle Online, Inc, and the
principal shareholder of Haggle, the Company acquired all of the outstanding
capital stock and options to purchase capital stock of Haggle in exchange
for 84,064 shares and options to purchase common stock of the Company. The
resale of the shares was registered on a Registration Statement on Form S-3
filed with the Securities and Exchange Commission on July 13, 1999.

(3) Pursuant to an Agreement and Plan of Merger dated April 28, 1999, by and
among the Company, USAO Acquisition Corp., Virtual Avenue, Inc.,
USAOnline, Inc. and those parties named therein, the Company acquired all of
the outstanding capital stock of Virtual Avenue and USAOnline in exchange
for 300,000 shares of common stock of the Company. The resale of the shares
was registered on a Registration Statement on Form S-3 filed with the
Securities and Exchange Commission on July 13, 1999.

(4) Pursuant to an Agreement and Plan of Merger dated May 13, 1999 by and among
the Company, VA Acquisition Corp., IQC Corporation and the security holders
of IQC, the Company acquired all of the capital stock and options to
purchase capital stock of IQC in exchange for 297,204 shares and options to
purchase shares of Company common stock. The resale of the shares was
registered on a Registration Statement on Form S-3 filed with the Securities
and Exchange Commission on July 13, 1999.

(5) Pursuant to an Agreement and Plan of Merger dated July 1, 1999 by and among
the Company, 3I Acquisition Corp., Authorize.Net Corporation and the
principal shareholders of Authorize, the Company acquired all of the
outstanding shares of capital stock and options to purchase capital stock of
Authorize.Net in exchange for 1,005,713 shares and options to purchase
shares of Company common stock and $13,500,000 in cash. The resale of the
shares was registered on a Registration Statement on Form S-3 filed with the
Securities and Exchange Commission on July 13, 1999.

(6) Pursuant to an Interest Purchase Agreement dated August 4, 1999, by and
among the Company, Dogpile, LLC, Pile, Inc., Thunderstone Software LLC, the
stockholders of Pile and the member of Thunderstone, the Company purchased
all of the outstanding membership interests of Dogpile in exchange for
682,156 shares of common stock of the Company and $15,000,000 in cash. The
resale of the shares was registered on a Registration Statement on Form S-3
filed with the Securities and Exchange Commission on September 3, 1999.

17
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA

The following table sets forth financial data and other operating
information of Go2Net. The selected financial data presented in the table is
derived from the financial statements of Go2Net. The data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and Notes thereto
included elsewhere in this Report.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
------------- ------------- ------------- ------------- -------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................. $ 22,435,035 $ 7,109,432 $ 1,627,964 $ 301,247 $ 46,863
Cost of revenues..................... 4,604,193 2,295,194 371,810 18,847 14,555
Operating expenses:
Sales and marketing................ 6,347,873 2,044,086 531,758 15,541 295
General and administrative......... 6,068,647 2,454,620 1,711,380 163,408 3,818
Product development................ 2,703,874 1,376,238 798,146 544,966 30,687
Merger and acquisition related
costs............................ 873,094 1,035,494 -- -- --
Stock compensation expense......... 773,584 212,841 71,156 -- --
Amortization of intangibles........ 19,432,304 -- -- -- --
Impairment loss.................... -- 398,126 -- -- --
------------ ----------- ------------ ---------- --------
Total operating expenses........... 36,199,376 7,521,405 3,112,440 723,915 34,800
------------ ----------- ------------ ---------- --------
Loss from operations................. (18,368,534) (2,707,167) (1,856,286) (441,515) (2,492)
Interest income...................... 6,810,866 510,529 249,488 12,752 --
------------ ----------- ------------ ---------- --------
Loss before taxes.................... (11,557,668) (2,196,638) (1,606,798) (428,763) (2,492)
Income tax expense (benefit)......... (714,862) 69,220 67,347 800 800
------------ ----------- ------------ ---------- --------
Net loss............................. $(10,842,806) $(2,265,858) $ (1,674,145) $ (429,563) $ (3,292)
============ =========== ============ ========== ========
Net loss applicable to common
stockholders per share............. $ (6.44) $ (0.09) $ (0.08) $ (0.07) $ (0.00)
Shares used in computing net loss per
share(1)........................... 26,524,025 24,817,559 20,107,816 6,577,996 1,305,280
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and marketable
securities......................... $217,786,513 $ 8,885,602 $11,071,214 $ 891,468 $ 44,567
Working capital...................... 220,322,365 9,310,587 11,088,806 900,265 44,675
Total assets......................... 508,259,068 12,535,209 13,218,870 1,287,589 107,346
Stockholders' equity................. 480,931,375 10,971,576 12,820,747 1,224,359 107,346
</TABLE>

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

(1) Net loss applicable to common stockholders per share is calculated using the
weighted average number of shares of Common Stock outstanding during such
period. Net loss applicable to common stockholders per share for the year
ended September 30, 1999 includes a preferred stock dividend charge of
$159,930,733. See Note 1 to Consolidated Financial Statements.

18
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

THE MATTERS DISCUSSED IN THIS REPORT CONTAIN FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. GO2NET'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "FACTORS
AFFECTING GO2NET'S BUSINESS OPERATING RESULTS AND FINANCIAL CONDITION" AS WELL
AS THOSE DISCUSSED IN THIS SECTION AND ELSEWHERE IN THIS REPORT.

OVERVIEW

Go2Net, Inc. (including its subsidiaries, "Go2Net" or the "Company") offers
through the World Wide Web a network of branded properties and aggregated
content in the categories of search and directory, small business and electronic
commerce services, personal finance and multi-player games. The Company also
offers electronic commerce solutions to online merchants by providing payment
authorization and other services to small and medium-sized businesses. The
Company is using its proprietary, scaleable technology platform to develop
private label portal and ecommerce content solutions for strategic partners to
extend the distribution of its products and services. Go2Net's branded Web
properties offered through the Go2Net Network include:

- MetaCrawler (www.metacrawler.com) and Dogpile (www.dogpile.com), the Web's
leading providers of metasearch services, which simultaneously query a
variety of search engines and directory services;

- The HyperMart Network, consisting of HyperMart (www.hypermart.net),
Virtual Avenue (www.virtualave.net) and FreeYellow.com
(www.freeyellow.com), the Web's leading provider of free hosting services
for small businesses;

- Authorize.Net (www.authorize.net), a leading payment authorization service
for online businesses;

- Haggle Online (www.haggle.com), a provider of Web based person to person
auction services;

- WebMarket (www.webmarket.com), a one-step comparison shopping service;

- 100Hot (www.100hot.com), a leading directory of the Web's most popular
sites; and

- PlaySite (www.playsite.com), a Java-based multiplayer games site.

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Go2Net has established strategic licensing and distribution relationships with
several companies, including Allegiance Telecom, Inc., Broadband Partners, LLC,
CommTouch Software, Ltd., Click2Learn.com. and Net2Phone, Inc.

RESULTS OF OPERATIONS

REVENUES

Total revenues increased from $1,627,964 in 1997 to $7,109,432 in 1998.
Revenue increased to $22,435,035 in 1999. These increases were primarily the
result of increases both in the number of advertisers on Go2Net's Web sites and
in the size of advertising contracts. Go2Net expects to continue to derive a
significant portion of its revenue from selling advertisements on the Go2Net
Network. Given the competitive nature of Web based advertising, advertising
rates are subject to intensive price pressure. A reduction in Go2Net's
advertising rates, the number of advertisers or the value of advertising
contracts as a result of competition or otherwise, could adversely affect
revenues in the future.

Advertising revenues increased $10,651,548, or 183%, to $16,456,463 for the
year ended September 30, 1999, representing 73% of total revenues. For the
previous year ended September 30, 1998, advertising revenues were $5,804,915
representing 82% of total revenues. For the year ended September 30, 1997
advertising revenues were $1,353,758 representing 83% of total revenues. The
increase in advertising revenue year over year was attributable primarily to an
increase in the number of advertisers as well as growth in the average contract
size and value.

Go2Net derives a substantial portion of its revenues from the sale of
advertisements on its Web sites, primarily through banner advertisements and
sponsorships. Advertising contracts are primarily sold as: (1) a "run of site"
contract under which a customer is often guaranteed a number of impressions;
(2) a "key word" contract in which a customer purchases the right to advertise
in connection with specified word searches; or (3) a "targeted" contract where
the customer purchases a specified number of impressions in one of the sites or
on a specified page or network.

Electronic commerce, subscription, license and other revenues increased
$4,674,055 or 358%, to $5,978,572 for the year ended September 30, 1999,
representing 27% of total revenues. For the previous year ended September 30,
1998, electronic commerce, subscription, license and other revenues were
$1,304,517, representing 18% of total revenues. For the year ended
September 30, 1997, electronic commerce, subscription, license and other
revenues were $274,206, representing 17% of total revenues. The increase in
electronic commerce, subscription, license and other revenues for 1999 relative
to 1998 is primarily attributable to ecommerce fees from Authorize.Net. The
increase was also the result of increases in subscription fees from Silicon
Investor, IQC and HyperMart. The remaining increase is due to the addition of
several new strategic relationships during the year, including, among others,
Fleet, FreeShop and LookSmart. The increase in electronic commerce,
subscription, license and other revenues for the 1998 relative to 1997 is due to
increases in subscription fees for Silicon Investor and HyperMart.

Electronic commerce revenues are derived principally from setup and gateway
licensing fees paid for Authorize.Net's suite of ecommerce products as well as
from royalties from the sale of goods and services from the Company's Web sites.
The Company's license revenues are derived principally from product licensing
fees and fees from maintenance and support of its products. Electronic commerce,
license and product revenues are generally recognized upon delivery provided
that no significant Company obligations remain and collection of the receivable
is probable. In cases where there are significant remaining obligations, the
Company defers such revenue until those obligations are satisfied. Fees from
maintenance and support of the Company's products, including revenues bundled
with the initial licensing fees, are deferred and recognized ratably over the
service period.

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COST OF REVENUES

Cost of revenues includes hosting costs, royalties and other cost of
revenues and amortization of certain purchased technology. Hosting costs relate
to the maintenance and technical support of Go2Net's Web sites and consist of
personnel costs, third party hosting costs, equipment depreciation and overhead
allocations. Royalties and other cost of revenues include expenses related to
royalties, license agreements and revenue sharing agreements for content and
other services. Cost of revenues increased by $2,308,999 from $2,295,194, or 32%
of revenues for 1998, to $4,604,193, or 21% of revenues, for 1999. Cost of
revenues increased by $1,923,384 from $371,810, or 23% of revenues for 1997, to
$2,295,194, or 32% of revenues, for 1998. The increases year over year are
primarily due to increased hosting costs to support Go2Net's sites, along with
an increase in royalties and content associated with the corresponding increase
in revenues.

OPERATING EXPENSES

SALES AND MARKETING. Sales and marketing expenses consist primarily of salaries
and sales commissions, public relations, travel and costs of marketing
literature. Sales and marketing expenses increased from $2,044,086, or 29% of
revenues in 1998, to $6,347,873, or 28% of revenue in 1999. Sales and marketing
expenses increased from $531,758, or 33% of revenue in 1997 to $2,044,086 in
1998. The increase year over year in sales and marketing expenses is primarily
due to hiring of sales and marketing personnel, the launching or redevelopment
of new Web sites and the marketing of such Web sites. In order to continue
promoting its brands Go2Net intends to significantly increase its sales and
marketing expenses in future periods.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of compensation not otherwise attributable to other cost or expense
categories, rent expense, fees for professional services and other general
expenses. General and administrative expenses increased from $2,454,620, or 35%
of revenue in 1998 to $6,068,647, or 27% of revenue in 1999. General and
administrative expenses increased from $1,711,380, or 105% of revenue in 1997 to
$2,454,620 in 1998. The increase in general and administrative expenses is due
to the increase in personnel, professional services and the expansion of
Go2Net's corporate infrastructure. Go2Net expects general and administrative
expenses to continue to increase in future periods as a result of adding
infrastructure and assimilating acquisitions of acquired technologies and
businesses.

Stock compensation principally related to general and administrative expenses
totaled $71,156 in 1997, $212,841 in 1998 and $773,584 in 1999. The 1997 and
1998 amounts related to options granted with an exercise price less than the
fair value of the underlying common stock. The 1999 amounts related primarily to
a granting of stock options to consultants and employees and stock option
modifications for terminated employees.

PRODUCT DEVELOPMENT. Product development expenses consist of expenses incurred
by Go2Net in the development and creation of its Internet sites and product
offerings. Product development expenses include compensation and related
expenses, costs of computer hardware and software, and the cost of acquiring,
designing, and developing Internet technologies, products and services. All of
the costs incurred to date in connection with the development of Go2Net's Web
sites have been expensed. Product development expenses increased from
$1,376,238, or 19% of revenue for 1998 to $2,703,874, or 12% of revenue for
1999. Product development expenses increased from $798,146, or 49% of revenue in
1997, to $1,376,238 in 1998. The increase year over year in product development
expenses is the result of the increased staff required to develop and enhance
Go2Net's Web sites. Go2Net believes that significant investments in enhancing
its Web sites and product offerings will be necessary to be competitive. As a
result, Go2Net may continue to incur, or increase the level of, product
development expenses.

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IMPAIRMENT LOSS. Go2Net recognized a charge of $398,126 in 1998 to reflect
permanent impairment in Go2Net's original investment in certain technology
licenses where Go2Net no longer uses the technology.

MERGER AND ACQUISITION RELATED COSTS. Merger and acquisition related costs
totaled $873,094, and $1,035,494 in 1999 and 1998, respectively, with no costs
incurred for 1997. Merger and acquisition related costs of $873,094 in 1999,
primarily related to the Web21 pooling of interests combination. Of the 1998
costs, $319,512 and $715,982 related to the HyperMart and Silicon Investor
pooling of interests combinations, respectively.

AMORTIZATION OF INTANGIBLES. Amortization of intangibles totaled $19,432,304 in
1999 and related to the amortization of goodwill and identifiable intangibles
obtained through the 1999 purchase business combinations. There was no such
amortization in 1998 and 1997.

INTEREST INCOME. Interest income was $249,488, $510,529 and $6,810,866 in 1997,
1998 and 1999, respectively. The increase from 1997 to 1998 reflected interest
earned on investments from cash received from the Company's initial public
offering in April of 1997. The increase from 1998 to 1999 reflected interest
earned on a $300 million equity investment in Go2Net by Vulcan Ventures Inc.

INCOME TAXES. Go2Net has recorded an income tax benefit of $714,862 in 1999.
The actual income tax benefit differed from the expected federal tax benefit
because of non-deductible goodwill and increases in the deferred tax asset
valuation allowance. The income tax expense of $69,220 and $67,347 in 1998 and
1997, respectively, related primarily to the business of Web21 prior to the 1999
merger with the Company. As of September 30, 1999, Go2Net had federal net
operating loss carry forwards of approximately $58,000,000, which begin to
expire in 2019. The Company has provided a valuation allowance related to the
net operating loss carryforward; however, if realized, the benefit would result
in a credit to stockholders' equity. See Note 3 of Notes to Consolidated
Financial Statements.

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SELECTED QUARTERLY DATA: The following table sets forth the selected
quarterly data for the years ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
FISCAL 1999 QUARTER ENDED
---------------------------------------------------------
SEPT. 30 JUN. 30 MAR. 31 DEC. 31
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue................. $ 9,783,748 $ 5,726,004 $ 4,325,243 $ 2,600,040

Cost of revenue......... 1,772,125 1,205,310 938,666 688,092

Gross Profit............ 8,011,623 4,520,694 3,386,577 1,911,948

Operating expenses:
Sales and marketing... 2,729,322 1,481,248 1,216,420 920,883
General and
administrative...... 2,370,730 1,751,192 1,213,164 733,561
Product development... 1,251,470 634,711 422,767 394,926
Merger and acquisition
related costs....... 33,048 189,789 -- 650,257
Stock compensation.... 2,665 693,652 6,320 70,947
Amortization of
intangibles......... 16,691,541 2,740,763 -- --
Impairment loss....... -- -- -- --
------------ ------------- ------------ -----------
Total operating
expenses.......... 23,078,776 7,491,355 2,858,671 2,770,574
------------ ------------- ------------ -----------

Income (loss) from
operations............ (15,067,153) (2,970,661) 527,906 (858,626)

Interest income......... 3,659,440 2,422,248 613,406 115,772
------------ ------------- ------------ -----------

Income (loss) before
income taxes.......... (11,407,713) (548,413) 1,141,312 (742,854)

Income taxes............ (733,395) 18,533 -- --
------------ ------------- ------------ -----------

Net Income (Loss)....... (10,674,318) (566,946) 1,141,312 (742,854)
============ ============= ============ ===========

Preferred stock
dividend.............. -- 107,000,447 52,930,286 --
Net loss applicable to
common stockholders... $(10,674,318) $(107,567,393) $(51,788,974) $ (742,854)
Basic and diluted net
loss per share........ $ (0.37) $ (4.07) $ (2.04) $ (0.03)
Shares used in computing
basic and diluted net
loss per share........ 29,062,706 26,401,610 25,429,050 25,250,308

<CAPTION>
FISCAL 1998 QUARTER ENDED
-----------------------------------------------------
SEPT. 30 JUN. 30 MAR. 31 DEC. 31
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue................. $ 2,486,842 $ 1,969,306 $ 1,543,395 $ 1,109,889
Cost of revenue......... 697,254 681,279 568,057 348,604
Gross Profit............ 1,789,588 1,288,027 975,338 761,285
Operating expenses:
Sales and marketing... 616,717 511,924 470,450 444,995
General and
administrative...... 924,690 712,602 472,548 344,780
Product development... 373,339 339,574 329,660 333,665
Merger and acquisition
related costs....... 319,512 715,982 -- --
Stock compensation.... 53,210 88,683 35,474 35,474
Amortization of
intangibles......... -- -- -- --
Impairment loss....... -- 398,126 -- --
----------- ----------- ----------- -----------
Total operating
expenses.......... 2,287,468 2,766,891 1,308,132 1,158,914
----------- ----------- ----------- -----------
Income (loss) from
operations............ (497,880) (1,478,864) (332,794) (397,629)
Interest income......... 127,312 135,047 123,265 124,905
----------- ----------- ----------- -----------
Income (loss) before
income taxes.......... (370,568) (1,343,817) (209,529) (272,724)
Income taxes............ 29,609 19,806 19,805 --
----------- ----------- ----------- -----------
Net Income (Loss)....... (400,177) (1,363,623) (229,334) (272,724)
=========== =========== =========== ===========
Preferred stock
dividend.............. -- -- -- --
Net loss applicable to
common stockholders... $ (400,177) $(1,363,623) $ (229,334) $ (272,724)
Basic and diluted net
loss per share........ $ (0.02) $ (0.06) $ (0.01) $ (0.01)
Shares used in computing
basic and diluted net
loss per share........ 24,822,636 24,353,190 24,310,950 24,282,808
</TABLE>

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LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1999, Go2Net's principal source of liquidity was
$217,786,513 in cash, cash equivalents and short term investments derived
primarily from the sale of Go2Net's preferred and common equity securities. As
of September 30, 1999, Go2Net also had a $15,000,000 revolving line of credit
that expires on August 30, 2000. All borrowings under such line of credit accrue
interest at either the bank's prime lending rate (8.25% per annum as of
September 30, 1999) or LIBOR plus 1.75%. As of September 30, 1999, no borrowings
were outstanding under this line of credit. Go2Net has primarily financed its
operations through the sale of equity securities.

Operating activities used cash of $2,697,349, and $1,253,501 in 1997 and
1998, respectively. The increased use of cash was primarily due to operating
losses and increases in accounts receivable and deposits. Operating activities
generated cash of $8,561,047 in 1999. The source of cash was primarily due to
non-cash amortization expenses, along with increases in deferred revenues and
accrued expenses. Go2Net has in the past, and may in the future, acquire
businesses which may result in an increase in the use of cash to support
operations.

Investing activities used cash of $333,816, $9,111,367 and $244,239,189 in
1997, 1998 and 1999, respectively. The use of cash in 1997 was the result of
capital expenditures of $333,816. In 1998, the increased use of cash was the
result of capital expenditures along with the net purchase of marketable
securities. The increased use of cash in 1999 was due to the net purchase of
marketable securities and the use of $27,386,208 for business acquisitions.
Go2Net has no material commitments for capital expenditures other than
approximately $100,000 relating to the purchase of computer hardware and
software. Go2Net anticipates a substantial increase in its capital expenditures
in 2000 consistent with its anticipated growth.

Go2Net maintains an investment portfolio consisting of interest bearing
securities with an average maturity of less than two years. These securities are
subject to interest rate risk and will fall in value if market interest rates
increase. Because Go2Net has the ability to hold its fixed income investments
until maturity, it does not expect its operating results or cash flows to be
affected to any significant degree by a sudden change in market interest rates
on its securities portfolio.

Financing activities generated cash of $13,212,036, $235,007 and
$301,523,302 in 1997, 1998 and 1999. Financing activities in 1997 consisted of
the sale of Go2Net's common stock in its initial public offering. In 1998,
financing activities consisted of proceeds from the sale of common stock, stock
option exercises, and short-term financing offset by repayments on short-term
debt. In 1999, financing activities consisted of proceeds from the sale of
preferred stock and stock option exercises.

Go2Net currently believes that available funds, cash flows expected to be
generated from operations, if any, and the existing line of credit will be
sufficient to fund its working capital and capital expenditures requirements for
at least the next twelve months. Thereafter, Go2Net may need to raise additional
funds. Go2Net's ability to grow will depend in part on Go2Net's ability to
expand and improve its Internet operations, expand its advertising and marketing
efforts, expand and improve its Internet user support capabilities and develop
new Internet-based products and services. In connection therewith, Go2Net may
need to raise additional capital in the foreseeable future from public or
private equity or debt sources in order to finance such possible growth. In
addition, Go2Net may need to raise additional funds in order to avail itself to
unanticipated opportunities (such as more rapid expansion, acquisitions of
complementary businesses or the development of new products or services), to
react to unforeseen difficulties (such as the loss of key personnel or the
rejection by Internet users or potential advertisers of Go2Net's Internet
products and services) or to otherwise respond to unanticipated competitive
pressures. If additional funds are raised through the issuance of equity
securities, then the percentage ownership of Go2Net's then existing stockholders
will be reduced, stockholders may experience additional and significant dilution
and such equity securities may have rights, preferences or privileges senior to
those of Go2Net's common stock. There can be no assurance that additional
financing will be available on terms acceptable to Go2Net or at all. If adequate
funds are not available or are not available on terms acceptable to Go2Net,
Go2Net may

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be unable to implement its business, sales or marketing plan, respond to
competitive forces or take advantage of perceived business opportunities, which
could have a material adverse effect on Go2Net's business, financial condition
and operating results.

FACTORS AFFECTING GO2NET'S BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION

THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED IN CONJUNCTION WITH THE
OTHER INFORMATION INCLUDED IN THIS REPORT. THIS REPORT MAY INCLUDE
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. IN ADDITION TO
THOSE RISK FACTORS DISCUSSED ELSEWHERE IN THIS REPORT, GO2NET IDENTIFIES THE
FOLLOWING RISK FACTORS WHICH COULD AFFECT GO2NET'S ACTUAL RESULTS AND CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS.

WE HAVE A LIMITED OPERATING HISTORY ON WHICH TO EVALUATE US

We have a limited operating history upon which an evaluation of our
prospects can be based. We anticipate that advertising revenues from Internet
sites will constitute a majority of our revenues during the foreseeable future.
We believe that our success will depend upon our ability to generate revenues
from advertising, subscription and ecommerce fees from our Internet sites, which
cannot be assured. Our ability to generate revenues is subject to substantial
uncertainty. Our prospects must be considered in light of the risks, expenses,
difficulties and uncertainties frequently encountered by emerging growth
companies in new and rapidly evolving markets for Internet based products and
services. Our success will depend on our ability to:

- effectively establish, develop and maintain relationships with advertising
customers, advertising agencies and other third parties;

- enter into distribution relationships and strategic alliances to drive
traffic to our Web sites;

- provide original and compelling products and services to Internet users;

- develop and upgrade our technology;

- effectively respond to competitive developments;

- continue to develop and extend the Go2Net brand;

- effectively generate revenues through sponsored services and placements;

- attract new qualified personnel; and

- retain existing qualified personnel.

We may not succeed in addressing these risks.

WE ANTICIPATE INCREASED OPERATING EXPENSES AND MAY EXPERIENCE LOSSES

Our lack of an extensive operating history makes prediction of future
operating results difficult. We believe that a comparison of our quarterly
results is not meaningful. As a result, you should not rely on the results for
any period as an indication of our future performance. Accordingly, there can be
no assurance that we will generate significant revenues or that we will sustain
a level of profitability in the future. We currently intend to increase
substantially our operating expenses in order to expand and improve our Internet
operations, fund increased advertising and marketing efforts, expand and improve
our Internet user support capabilities and develop new Internet technologies,
products and services. As a result, we may experience significant losses on a
quarterly and annual basis.

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OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE BECAUSE OF A NUMBER OF FACTORS,
MANY OF WHICH ARE OUTSIDE OF OUR CONTROL

Our quarterly operating results may fluctuate significantly as a result of a
variety of factors, many of which are outside of our control. These factors
include but are not limited to:

- the demand for Internet advertising;

- the level of usage of the Internet;

- the level of user traffic on our Web sites;

- seasonal trends and budgeting cycles in advertising sales;

- incurrence of costs relating to the development, operation and expansion
of our Internet operations;

- introduction of new products and services by us and our competitors;

- costs incurred with respect to acquisitions;

- price competition or pricing changes in the industry;

- technical difficulties or system failures; and

- general economic conditions and economic conditions specific to the
Internet and Internet media.

We may from time to time make pricing, service or marketing decisions that
may adversely affect our profitability in a given quarterly or annual period.

Our advertising revenue is also subject to seasonal fluctuations.
Historically, advertisers spend less in the first and third calendar quarters
and user traffic on our online media properties has historically been lower
during the summer and during year-end vacation and holiday periods.

OUR SUCCESS DEPENDS ON OUR ABILITY TO MAINTAIN ADVERTISING REVENUES

We derive a significant portion of our revenues from the sale of advertising
on our Internet sites. We will not be able to maintain or increase our
advertising revenues in the future if our advertising customers move their
advertising to competing Internet sites or to traditional forms of media.
Additionally, in selling Internet-based advertising, we depend in part on
advertising agencies, which exercise substantial control over the placement of
advertising for their clients. Our success will depend on our ability to retain,
broaden and diversify our future base of advertising customers. In order to
generate significant advertising revenues, we will depend on the development of
a larger base of users of our Internet sites having demographic characteristics
attractive to advertisers. If we are unable to retain paying advertising
customers or we are forced to offer lower than anticipated advertising rates in
order to retain advertising customers or to attract new advertising customers,
our business, financial condition and operating results will be adversely
affected, and we may cease to be a commercially viable enterprise.

OUR ARRANGEMENTS WITH ADVERTISERS AND SPONSORS MAY EXPOSE US TO SIGNIFICANT
FINANCIAL RISKS

We enter into advertising arrangements with third parties to provide
services on our Web sites which involve a unique rate structure. Specifically,
we receive sponsorship fees and, under certain circumstances, a portion of
transaction revenues received by third party sponsors from users originated
through our Web sites, in return for minimum levels of user impressions or user
requests for additional information made by clicking on the promotional
hyperlink or advertisement. To the extent implemented, these arrangements expose
us to potentially significant financial risks, including the risk that we fail
to deliver required minimum levels of user impressions (in which case, these
agreements typically provide for adjustments to the fees payable thereunder or
"make good" periods) and that third party sponsors do not renew the

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agreements at the end of their terms. Some of these arrangements also require us
to integrate advertisers' or sponsors' content with our services, which requires
the dedication of resources and significant programming and design efforts to
accomplish. We cannot assure you that we will be able to attract additional
advertisers or sponsors or that we will be able to renew existing advertising
arrangements when they expire. In addition, we have granted exclusivity
provisions to some of our sponsors and may in the future grant additional
exclusivity provisions. These exclusivity provisions may have the effect of
preventing us, for the duration of the exclusivity arrangements, from accepting
advertising or sponsorship arrangements within a particular subject matter in
our Web sites or across our entire service. Our inability to enter into further
sponsorships or advertising arrangements as a result of our exclusivity
arrangements could have a material adverse impact our business, financial
condition and operating results.

IF WE DO NOT DEVELOP NEW AND ENHANCED FEATURES, PRODUCTS AND SERVICES FOR OUR
BROADBAND SERVICES, WE MAY NOT BE ABLE TO ATTRACT AND RETAIN A SUFFICIENT NUMBER
OF USERS

Because of the competitiveness of the broadband market, we believe it is
important to introduce additional or enhanced features, products and services in
the future in order to differentiate our services and attract users. If we
introduce a feature, product or service that is not favorably received, people
will not use our service and they may choose a competing service.

We will need to continually enhance our products and services to incorporate
rapidly changing technologies. We could incur substantial development costs if
we need to modify our products, services or infrastructure to adapt. Our
business could be harmed if we incur significant costs to adapt to these
changes. If we cannot adapt to these changes, users may discontinue using our
services.

We may also experience difficulties that could delay or prevent us from
introducing our broadband features, products or services. Furthermore, these
features, products or services may contain errors that are discovered after the
feature, product or services are introduced. We may need to modify the design of
them significantly to correct these errors. In addition, we must consult with
and involve our principal cable partners in the development and design of new
features, products or services for our broadband services. Therefore, the
process of introducing new broadband features, products and services is time
consuming and if our principal cable partners object to a new feature, product
or service, we could be prohibited from offering it in particular areas. Our
business could be adversely affected if we experience difficulties in
introducing new products and services or if users do not accept these new
products or services.

WE DEPEND ON THE CONTINUED GROWTH OF THE INTERNET AS AN ADVERTISING MEDIUM

Use of the Internet by consumers is at an early stage of development and
market acceptance of the Internet as a medium for information, entertainment,
commerce and advertising is subject to a level of uncertainty. We believe that
our success depends upon our ability to obtain significant revenues from our
Internet operations, which will require the continued acceptance of the Internet
as an advertising medium. We believe that most advertisers and advertising
agencies have limited experience with the Internet as an advertising medium and
most advertisers and advertising agencies have not devoted a significant portion
of their advertising budgets to Internet-related advertising to date. In order
for us to continue to generate advertising revenues, advertisers and advertising
agencies must direct more of their budgets to the Internet as a whole, and
specifically to our Internet sites. We cannot assure you that advertisers or
advertising agencies will continue to allocate larger portions of their budgets
to Internet-based advertising or that they will find Internet-based advertising
to be more effective than advertising in traditional media such as television,
print or radio. Advertisers may determine that banner advertising, which
comprises the majority of our revenues, is not an effective advertising medium.
We may not be able to effectively transition to any other forms of Web-based
advertising, should these other forms prove more popular. Advertising filter
software programs have become available that limit or remove banner advertising
from Web pages viewed by an Internet user. This software, if generally adopted
by users, may have a materially adverse effect upon the viability of advertising
on the Internet. Our advertising customers may not accept the internal and

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third-party measurements of impressions received by advertisements on Go2Net
online media properties and these measurements may contain errors. We rely
primarily on our internal advertising sales force for domestic advertising
sales, which involves additional risks and uncertainties, including risks
associated with the recruitment, retention, management, training and motivation
of sales personnel. As a result of these factors, we may not be able to sustain
or increase current advertising sales levels. Failure to do so will have a
material adverse effect on our business, operating results, and financial
position.

WE DEPEND ON CONTINUED GROWTH IN ECOMMERCE AND INTERNET INFRASTRUCTURE
DEVELOPMENT

Use of the Internet by businesses and consumers as a medium for electronic
commerce is at an early stage of development and is subject to a level of
uncertainty. We depend on the growing use and acceptance of the Internet as an
effective medium of commerce by merchants and customers. The use of and interest
in the Internet is a relatively recent development. We cannot be certain that
acceptance and use of the Internet will continue to develop as a medium for
commerce or that a sufficiently broad base of merchants and consumers will
adopt, and continue to use, the Internet as a medium of commerce.

The emergence of the Internet as a commercial marketplace may occur more
slowly than anticipated for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. If the number
of Internet users or their use of Internet resources continues to grow, it may
overwhelm the existing Internet infrastructure. Delays in the development or
adoption of new standards and protocols required to handle increased levels of
Internet activity could also have a detrimental effect. These factors could
result in slower response times or adversely affect usage of the Internet,
resulting in lower numbers ecommerce transactions and lower demand for our
services.

Our success also depends on our ability to grow, or scale, our ecommerce
transaction systems to accommodate increases in the volume of traffic on our
systems, especially during peak periods of demand. We may not be able to
anticipate increases in the use of our systems and successfully expand the
capacity of our network infrastructure. Our inability to expand our systems to
handle increased traffic could result in system disruptions, slower response
times and other difficulties in providing services to our merchant customers,
which could materially harm our business.

WE ARE EXPOSED TO ECOMMERCE SECURITY RISKS

A requirement of the continued growth of ecommerce is the secure
transmission of confidential information over public networks. We rely on public
key cryptography and digital certificate technology to provide the security and
authentication necessary for secure transmission of confidential information.
Various regulatory and export restrictions may prohibit us from using the
strongest and most secure cryptographic protection available and thereby expose
us to a risk of data interception. A party who is able to circumvent our
security measures could misappropriate proprietary information or interrupt our
operations. Any such compromise or elimination of our security could reduce
demand for our services.

We may be required to expend significant capital and other resources to
protect against these security breaches or to address problems caused by these
breaches. Concerns over the security of the Internet and other online
transactions and the privacy of users may also inhibit the growth of the
Internet and other online services generally, and the Web in particular,
especially as a means of conducting commercial transactions. Because some of our
activities involve the storage and transmission of proprietary information, such
as credit card numbers, security breaches could damage our reputation and expose
us to a risk of loss or litigation and possible liability. Our security measures
may not prevent security breaches, and failure to prevent these security
breaches may disrupt our operations.

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THE MARKET FOR OUR PRODUCTS AND SERVICES IS UNCERTAIN

The market for our products and services is new and evolving, and therefore,
it is difficult to predict whether the Internet will develop the necessary
infrastructure. Market demand and acceptance of newly released products and
services is highly uncertain. Our future success depends upon our ability to
develop and provide on the Internet original and compelling products and
services that will continue to attract and retain users with demographic
characteristics valuable to the various advertisers and advertising agencies we
target and to charge users a subscription fee for access to specific portions of
our products and services. We cannot assure you that our products and services
will be attractive enough to a sufficient number of Internet users to generate
advertising revenues or to allow the charging of a subscription fee for our
products and services. There also can be no assurance that we will be able to
anticipate, monitor and successfully respond to rapidly changing consumer tastes
and preferences so as to attract a growing number of users to our Internet sites
with characteristics desirable to advertisers and advertising agencies or those
users who are otherwise willing to pay to access specific portions of our
products and services. Internet users can freely navigate and instantly switch
among a large number of Internet sites, many of which offer competitive products
and services, making it difficult for us to distinguish our product offerings
and attract users. In addition, many other Internet sites offer very specific,
highly targeted products and services that may have greater appeal than the
products and services offered on our Internet sites. If we are unable to develop
original and compelling Internet-based products and services, we will be unable
to generate sufficient advertising or subscription revenues, and our business,
financial condition and operating results will be adversely affected.

THE MARKET FOR OUR PRODUCTS AND SERVICES HAS A LOW BARRIER OF ENTRY

The market for Internet-based products and services is relatively new,
intensely competitive and rapidly evolving. There are minimal barriers to entry,
and current and new competitors can launch new Internet sites at a relatively
low cost within relatively short time periods. In addition, we compete for the
time and attention of Internet users with thousands of non-profit Internet sites
operated by individuals, government and educational institutions. Existing and
potential competitors also include magazine and newspaper publishers, cable
television companies and start-up ventures attracted to the Internet market. As
a result, we expect competition to persist and intensify and the number of
competitors to increase significantly in the future. As we attempt to expand the
scope of our Internet sites and product offerings, we will compete with a
greater number of Internet sites and other companies. Because the operations and
strategic plans of existing and future competitors are undergoing rapid change,
it is extremely difficult for us to anticipate which companies are likely to
offer competitive products and services in the future. There can be no assurance
that our Internet sites will compete successfully.

MARKET CONSOLIDATION IS CREATING MORE FORMIDABLE COMPETITORS

In the recent past, there have been a number of significant acquisitions and
strategic plans announced among and between many of our competitors, including:

- The Walt Disney Company acquiring InfoSeek and reorganizing all of its
Internet assets to create a tracking stock;

- AOL acquiring Netscape;

- Yahoo! acquiring GeoCities Corporation and Broadcast.com;

- @HomeNetworks, a provider of high speed Internet access serving the cable
television infrastructure and the largest stockholder of which is AT&T,
acquiring Excite;

- NBC merging its Internet assets with XOOM.com, Inc. and Snap.com, a
subsidiary of CNET; and

- CMGI, Inc. acquiring AltaVista from Compaq.

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The effect of these acquisitions and strategic plans on Go2Net cannot be
predicted with certainty, but all of these competitors are aligned with
companies that are significantly larger or more well established than Go2Net. In
particular, many of them are television broadcasters having substantial
marketing resources and capabilities to assist our competitors. As a result,
each of them will have access to significantly greater financial, marketing and,
in some cases, technical resources than Go2Net.

ALLIANCES MAY MAKE IT MORE DIFFICULT TO ACCESS OUR PRODUCTS AND MEDIA PROPERTIES

The acquisitions and alliances discussed above will result in greater
competition as more users of the Internet consolidate on fewer services that
incorporate search and retrieval features. In addition, providers of software
and other Internet products and services are incorporating search and retrieval
features into their offerings. For example, Web browsers offered by Netscape and
Microsoft increasingly incorporate prominent search buttons that direct search
traffic to competing services. These features could make it more difficult for
Internet users to find and use our products and services. In the future,
Netscape, Microsoft and other browser suppliers may also more tightly integrate
products and services similar to ours into their browsers or their browsers'
pre-set home pages. Any of these companies could take actions that would make it
more difficult for consumers to find and use Go2Net services. Microsoft signed a
long term partnership with LookSmart to provide directory services in the
Microsoft Network and other Microsoft online properties. These search services
may be tightly integrated into future versions of the Microsoft operating
system, the Internet Explorer browser, and other software applications, and
Microsoft may promote these services within the Microsoft Network or through
other Microsoft affiliated end-user services such as MSNBC or WebTV Networks.
Each of these situations creates a potential competitive advantage over ours
because their Internet navigational offerings may be more conveniently accessed
by users.

OUR COMPETITORS HAVE GREATER RESOURCES THAN WE DO

Many, if not all, of our competitors have significantly greater resources
than we do. In particular, our competitors have greater financial, editorial,
technical and marketing resources, longer operating histories, greater name
recognition, and greater experience than we do. Additionally, our competitors
have established relationships with more advertisers and advertising agencies.
And they are able to undertake more extensive marketing campaigns, adopt more
aggressive advertising and subscription price policies and devote substantially
more resources to developing Internet-based products and services than we are.
There can be no assurance that we will be able to compete successfully against
current or future competitors or that competitive pressures faced by us will not
materially adversely affect our business, financial condition and operating
results.

INCREASED COMPETITION MAY EXERT DOWNWARD PRICING PRESSURE ON ADVERTISING
CONTRACTS

We compete with online services, other Web site operators and advertising
networks, as well as traditional offline media such as television, radio and
print for a share of advertisers' total advertising budgets. We believe that the
number of companies selling Web-based advertising and the available inventory of
advertising space has recently increased substantially. Accordingly, we may face
increased pricing pressure for the sale of advertisements, which could reduce
our advertising revenues. In addition, our sales may be adversely affected to
the extent that our competitors offer superior advertising services that better
target users or provide better reporting of advertising results.

WE MUST DEVELOP AND MAINTAIN A "BRAND IDENTITY" FOR OUR PRODUCTS

We believe that maintaining and building the Go2Net brand is a critical
aspect of our efforts to attract an Internet audience. In addition, we believe
that the importance of brand recognition will increase due to the anticipated
increase in the number of Internet sites and the relatively low barriers to
entry to providing Internet-based products and services. Promoting the Go2Net
brand name will depend on our continued

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ability to develop and deliver original and compelling Internet-based products
and services. If Internet users do not continue to perceive our Internet sites
to be of sufficient interest and usefulness, we will be unsuccessful in
promoting and maintaining our brand. If we expand the focus of our operations
beyond providing our current Internet sites, we risk diluting our brand,
confusing users and advertisers, and decreasing the attractiveness of our
audience to advertisers. In order to respond to competitive pressures, we may
find it necessary to increase our budget for developing our products and
services or otherwise to increase substantially our financial commitment to
creating and maintaining a distinct brand loyalty among users. If we are unable
to provide Internet-based products and services or otherwise fail to promote and
maintain the Go2Net brand, or we incur significant expenses in an attempt to
improve our products and services or promote and maintain our brand, our
business, financial condition and operating results will be adversely affected.

THE INTERNET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGES, AND WE MUST ADAPT
QUICKLY TO THESE CHANGES TO COMPETE EFFECTIVELY

The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. For example, to the
extent that higher bandwidth Internet access becomes more widely available, we
may be required to make significant changes to the design and content of our
products and media properties. Failure to effectively adapt to these or any
other technological developments could adversely affect our business, operating
results and financial condition.

WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH AND INTEGRATING RECENTLY ACQUIRED
COMPANIES

Our recent growth has placed a significant strain on our managerial,
operational, and financial resources. To manage our growth, we must continue to
implement and improve our operational and financial systems and to expand,
train, and manage our employee base. Any inability to manage growth effectively
could have a material adverse effect on our business, operating results, and
financial condition.

The process of managing advertising within large, high traffic Web sites
like ours is an increasingly important and complex task. We rely on both
internal and licensed third-party advertising inventory management and analysis
systems. To the extent that any extended failure of our advertising management
system results in incorrect advertising insertions, we may be exposed to "make
good" obligations, which, by displacing advertising inventory, could defer
advertising revenues. Failure of our advertising management systems to
effectively scale to higher levels of use or to effectively track and provide
accurate and timely reports on advertising results also could negatively affect
our relationships with advertisers.

As part of our business strategy, we have completed several acquisitions and
expect to enter into additional business combinations and acquisitions.
Acquisition transactions are accompanied by a number of risks, including:

- the difficulty of assimilating the operations and personnel of the
acquired companies;

- the potential disruption of our ongoing business and distraction of
management;

- the difficulty of incorporating acquired technology or content and rights
into our products and media properties;

- the correct assessment of the relative percentages of in-process research
and development expense which can be immediately written off as compared
to the amount which must be amortized over the appropriate life of the
asset;

- the failure to successfully develop an acquired in-process technology
resulting in the impairment of amounts currently capitalized as intangible
assets;

- unanticipated expenses related to technology integration;

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- the maintenance of uniform standards, controls, procedures and policies;

- the impairment of relationships with employees and customers as a result
of any integration of new management personnel; and

- the potential unknown liabilities associated with acquired businesses.

We may not be successful in addressing these risks or any other problems
encountered in connection with these acquisitions.

WE MAY BE SUBJECT TO RISKS ASSOCIATED WITH FUTURE ACQUISITIONS

In the future, we may pursue acquisitions of companies, technologies or
assets that complement our business. We cannot assure you that we will be able
to identify suitable acquisition candidates available for sale at reasonable
prices, consummate any acquisition or successfully integrate any acquired
business into our operations. Acquisitions may result in the potentially
dilutive issuance of equity securities, the incurrence of additional debt, the
write-off of in-process research and development or software acquisition and
development costs, and the amortization of expenses related to goodwill and
other intangible assets, any of which could have a material adverse effect on
our business, financial condition and results of operations. As described above,
acquisitions would involve numerous additional risks, including difficulties in
the assimilation of the operations, services, products and personnel of the
acquired company, the diversion of management's attention from other business
concerns along with the risks involved in entering markets in which we have
little or no experience. We have made, and may in the future make, investments
in companies involved in the development of technologies or services that are
complementary or related to our operations. Problems with an acquired business
could have a material adverse effect on our performance as a whole.

RISKS ASSOCIATED WITH THE ACQUISITION BY VULCAN VENTURES OF GO2NET CAPITAL STOCK

INFLUENCE OVER GO2NET ACTIONS. Vulcan Ventures Incorporated recently acquired
approximately 30.68% of Go2Net's outstanding common stock (including common
stock issuable upon conversion of Series A Preferred Stock). Vulcan's ownership
could be sufficient to enable Vulcan to significantly influence the vote on most
matters submitted to a vote of the public shareholders, including the election
of the Board of Directors. Vulcan has acquired the right to designate two
directors to serve on Go2Net's Board of Directors.

CONFLICTS OF INTEREST. Conflicts of interest may arise as a consequence of the
relationship between Vulcan and Go2Net, including:

- conflicts between Vulcan, as a shareholder with a significant ownership
interest in Go2Net and representation on the Board of Directors, and the
other shareholders of Go2Net, whose interests may differ with respect to,
among and other things, the strategic direction of Go2Net or significant
corporate transactions,

- conflicts arising in respect of corporate opportunities that could be
pursued by Go2Net, on the one hand, or by Vulcan and any of its other
affiliated entities, on the other hand, or

- conflicts arising in respect of new contractual relationships between
Go2Net, on the one hand, and Vulcan and any of its other affiliated
entities, on the other hand.

To the extent that conflicts arise as a result of Vulcan's relationship with
Go2Net, the Board of Directors (including any directors nominated by Vulcan)
would be guided by its fiduciary obligations as directors under Delaware law,
including the directors' duty of loyalty. In addition, Vulcan's beneficial
ownership of approximately 30.68% of Go2Net's outstanding common stock will make
it more difficult for a third party to effect a change in management or to
acquire control of Go2Net without the approval of

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Vulcan and, therefore, may delay, prevent or deter a proxy contest for control
of Go2Net or other changes in management, or discount bids for a merger,
acquisition or tender offer, in which Go2Net's shareholders could receive a
premium for their shares.

BLOCKING RIGHTS. Vulcan is not required to sell its block of shares, even if an
offer is made that might be attractive to the other shareholders. In addition,
the consent of the holders of Series A Preferred Stock, voting as a class, is
required to effect particular corporate actions, including without limitation,
to amend Go2Net's Restated Certificate of Incorporation or By-laws in any manner
that would adversely affect the powers, preferences or special rights of the
Series A Preferred Stock.

WE DEPEND UPON THIRD PARTIES FOR CRITICAL ELEMENTS OF OUR BUSINESS

We depend upon third parties in order to advertise our Internet sites on
other Internet sites. In addition, the willingness of the owners and operators
of these sites to direct users to our Internet sites through hypertext links are
critical to the success of our Internet operations. There can be no assurance
that we will establish or maintain such arrangements in the future.

WE DEPEND ON THIRD PARTIES FOR CONTENT DEVELOPMENT OF OUR INTERNET SITES

Our ability to develop original and compelling Internet-based products and
services is also dependent on maintaining relationships with and using products
provided by third-party vendors. Developing and maintaining satisfactory
relationships with third parties could become more difficult and more expensive
as competition increases among Internet sites. If we are unable to develop and
maintain satisfactory, relationships with third parties on terms acceptable to
us, or if our competitors are better able to leverage these relationships, our
business, financial condition and operating results will be materially adversely
affected. We have relied, and will continue to rely substantially, on the
product and service development efforts of third parties. For example, we rely
on S&P Comstock, Dow Jones & Company. Inc., New York Stock Exchange, Inc., The
Nasdaq Stock Market, Inc., Reuters and Market Guide, Inc. to provide a
significant portion of the information included on our Internet sites. There can
be no assurance we will maintain these relationships in the future. Any failure
of these third parties to provide this information to us could have a material
adverse effect on our business, financial condition and operating results.

OUR PERFORMANCE DEPENDS ON THE SUCCESS OF THE METACRAWLER LICENSE

We entered into a License Agreement with Netbot, Inc. (the "MetaCrawler
License Agreement"), in which Netbot, Inc. granted us an exclusive (subject to
some limited exceptions), worldwide license to provide the MetaCrawler Service.
As part of the MetaCrawler License Agreement, we have the exclusive right to
operate, modify and reproduce the MetaCrawler Service (including, without
limitation, the exclusive right to use, modify and reproduce the name
"MetaCrawler" and the MetaCrawler URL in connection with the operation of the
MetaCrawler Service). A material portion of the traffic to our Internet sites is
currently derived from users of the MetaCrawler Service. A termination of the
MetaCrawler License Agreement or the inability of Go2Net to continue to provide
access to the search engines included in the MetaCrawler Service, could have a
material adverse effect on our business, financial condition and operating
results. Netbot has licensed the MetaCrawler Service and the other intellectual
property rights associated therewith from the University of Washington on an
exclusive basis. The license has been granted to us by Netbot on an exclusive
basis, but Netbot has reserved the right to use, modify, reproduce and license
the MetaCrawler search engine for any purpose other than the provision of the
MetaCrawler Service. The license is subject to the rights of the University of
Washington to use, modify and reproduce the MetaCrawler search engine and
derivatives of the MetaCrawler site to operate Internet sites for internal
purposes within the University of Washington domain and to use, modify and
reproduce any of the licensed technologies for research, instructional and
academic purposes. The

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search technology underlying the MetaCrawler Service and the MetaCrawler
trademark is licensed to or owned by Netbot and sublicensed to us pursuant to
the MetaCrawler License Agreement.

WE MUST CONTINUE TO DIVERSIFY OUR REVENUE STREAMS

The long-term success of our business strategy will depend to a significant
extent on our ability to successfully diversify our revenue streams. We
currently derive revenue from advertising, licensing, subscriptions and
electronic commerce. However, we are largely dependent on advertising revenues,
and continue to seek out ways to develop these other sources of revenue. This
includes the investigation of new business areas. Expansion into new business
areas and new Internet sites may bring us into direct competition with new
competitors. Any expansion of product offerings or operations, or new Internet
sites developed and launched by us that are not favorably received by Internet
users could damage our reputation or the Go2Net brand. Expansion into new
business areas or the development and launching of new Internet sites will also
require significant additional expenses and programming and other resources. It
will also strain our management, financial and operational resources.

From time to time, Go2Net may entertain new business opportunities and
ventures in a broad range of areas. Typically, these opportunities require
extended negotiations, the outcome of which cannot be predicted. If Go2Net were
to enter into such a venture, Go2Net could be required to invest a substantial
amount of capital, which could have a material adverse effect on our financial
condition and our ability to implement our existing business strategy. Such an
investment could also result in large and prolonged operating losses for Go2Net.
Further, these negotiations or ventures could place additional, substantial
burdens on Go2Net's management personnel and its financial and operational
systems. There can be no assurance that such a venture would ever achieve
profitability, and a failure by Go2Net to recover the substantial investment
required to launch and operate such a venture would have a material adverse
effect on Go2Net's business, financial condition and operating results.

WE ARE SUBJECT TO SYSTEM DISRUPTIONS AND CAPACITY CONSTRAINTS

The satisfactory performance, reliability and availability of our Internet
sites and our computer network infrastructure are critical to attracting
Internet users and maintaining relationships with advertising customers. Our
Internet-based advertising revenues will be directly related to the number of
advertisement impressions delivered by us. System interruptions that result in
the unavailability of our Internet sites or slower response times for users
would reduce the number of advertisements delivered and reduce the
attractiveness of our Internet sites to users and advertisers. We may experience
periodic system interruptions from time to time in the future. Additionally, any
substantial increase in traffic on our Internet sites may require us to expand
and adapt our computer network infrastructure. Our inability to add additional
computer software, hardware and bandwidth to accommodate increased use of our
Internet sites may cause unanticipated system disruptions and result in slower
response times. We cannot assure you that we will be able to expand our computer
network infrastructure on a timely basis to meet increased use. Any system
interruptions or slower response times resulting from these factors could have a
material adverse effect on our business, financial condition and operating
results. We are dependent on third parties for uninterrupted Internet access. In
addition, we are dependent on various third parties for substantially all of our
news and information. Loss of these services from any one or more of third
parties may have a material adverse effect on our business, financial condition
and operating results. No assurance can be given as to whether, or on what
terms, we would be able to obtain these services from other third parties in the
event of the loss of any of these services.

Our Internet operations are vulnerable to interruption by fire, earthquake,
power loss, telecommunications failure and other events beyond our control.
There can be no assurance that interruptions in service will not materially
adversely affect our operations in the future. While we carry business
interruption insurance to compensate us for losses that may occur, we cannot
assure you that insurance will be sufficient to provide for all losses or
damages that we incur.

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WE ARE SUBJECT TO U.S. AND FOREIGN GOVERNMENT REGULATION OF THE INTERNET, THE
IMPACT OF WHICH IS DIFFICULT TO PREDICT

There are currently few laws or regulations directly applicable to the
Internet. The application of existing laws and regulations to Go2Net relating to
issues such as user privacy, defamation, pricing, advertising, taxation,
gambling, sweepstakes, promotions, content regulation, quality of products and
services, and intellectual property ownership and infringement can be unclear.
In addition, we will also be subject to new laws and regulations directly
applicable to our activities. Any existing or new legislation applicable to us
could expose us to substantial liability, including significant expenses
necessary to comply with these laws and regulations, and dampen the growth in
use of the Web.

Other nations, including Germany, have taken actions to restrict the free
flow of material deemed to be objectionable on the Web. The European Union has
recently adopted privacy and copyright directives that may impose additional
burdens and costs on our international operations. In addition, several
telecommunications carriers, including America's Carriers' Telecommunications
Association, are seeking to have telecommunications over the Web regulated by
the FCC in the same manner as other telecommunications services. Many areas with
high Web use have begun to experience interruptions in phone service, and local
telephone carriers, such as Pacific Bell, have petitioned the FCC to regulate
ISPs and OSPs and to impose access fees. A number of proposals have been made at
the federal, state and local level that would impose additional taxes on the
sale of goods and services through the Internet. If any such proposals are
adopted, it could substantially impair the growth of the Internet and adversely
affect us.

Several recently passed federal laws could have an impact on our business.
The Digital Millennium Copyright Act is intended to reduce the liability of
online service providers for listing or linking to third-party Web sites that
include materials that infringe copyrights or other rights of others. The
Children's Online Protection Act and the Children's Online Privacy Protection
Act are intended to restrict the distribution of materials deemed harmful to
children and impose additional restrictions on the ability of online services to
collect user information from minors. In addition, the Protection of Children
From Sexual Predators Act of 1998 requires online service providers to report
evidence of violations of federal child pornography laws under some
circumstances. Such legislation may impose significant additional costs on our
business or subject us to additional liabilities.

Due to the global nature of the Web, it is possible that the governments of
other states and foreign countries might attempt to regulate its transmissions
or prosecute us for violations of their laws. We might unintentionally violate
these laws. These laws may be modified, or new laws enacted, in the future. Any
such developments could have a material adverse effect on our business, results
of operations, and financial condition.

WE MAY BE SUBJECT TO A VARIETY OF LEGAL UNCERTAINTIES THAT IMPAIR OUR BUSINESS

As a publisher and a distributor of content over the Internet, we face
potential liability for defamation, negligence, copyright, patent or trademark
infringement and other claims based on the nature and content of the materials
that we publish or distribute. In addition, we could be exposed to liability
with respect to the content or unauthorized duplication of material indexed in
our search services. Although we carry liability insurance, our insurance may
not cover potential claims of this type or may not be adequate to indemnify us
for all liability that may be imposed.

We host a wide variety of services that enable individuals to exchange
information, generate content, conduct business and engage in various online
activities, including services relating to online auctions and the homesteading
and other services. The law relating to the liability of providers of these
online services for activities of their users is currently unsettled. Claims
could be made against us for defamation, negligence, copyright or trademark
infringement, unlawful activity, tort, including personal injury, fraud or other
theories based on the nature and content of information that we provide links to
or that may be posted online or generated by our users or with respect to
auctioned materials. These types of claims have

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been brought, and sometimes successfully prosecuted, against online service
providers in the past. In addition, we are aware that governmental agencies are
currently investigating the conduct of online auctions.

We also periodically enter into arrangements to offer third-party products,
services, or content under the Go2Net brand or via distribution on Go2Net
properties, including stock quotes and trading information. We may be subject to
claims concerning these products, services or content by virtue of our
involvement in marketing, branding, broadcasting or providing access to them,
even if we do not ourself host, operate, provide, or provide access to these
products, services or content. While our agreements with these parties often
provide that we will be indemnified against such liabilities, such
indemnification may not be adequate.

It is also possible that, if any information provided directly by us
contains errors or is otherwise negligently provided to users, third parties
could make claims against us. For example, we offer Web-based email services,
which expose us to potential risks, such as liabilities or claims resulting from
unsolicited email, lost or misdirected messages, illegal or fraudulent use of
email, or interruptions or delays in email service.

OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY

Our success is dependent upon our ability to protect and leverage the value
of our original Internet technologies, software, content and our trademarks,
trade names, service marks, domain names and other proprietary rights we either
currently have or may have in the future. We have filed service marks for our
logo and name, as well as for the names of each of our sites. In addition, given
the uncertain application of existing copyright and trademark laws to the
Internet, there can be no assurance that existing laws will provide adequate
protection for our technologies, sites or domain names. Policing unauthorized
use of our technologies, content and other intellectual property rights entails
significant expenses and could otherwise be difficult or impossible to do given
the global nature of the Internet.

OUR SUCCESS DEPENDS ON OUR ABILITY TO OBTAIN ADDITIONAL CAPITAL

We intend to enhance and expand our Internet sites in order to improve our
competitive position and meet the increasing demands for quality Internet-based
products and services and competitive advertising and subscription pricing. Our
ability to grow will depend in part on our ability to expand and improve our
Internet operations, expand our advertising and marketing efforts, expand and
improve our Internet user support capabilities and develop new Internet
technologies, products and services. As a result, we may need to raise
additional capital in the foreseeable future from public or private equity or
debt sources in order to finance such possible growth. In addition, we may need
to raise additional funds in order to avail ourselves of unanticipated
opportunities (such as more rapid expansion, acquisitions of complementary
businesses or the development of new products or services), to react to
unforeseen difficulties (such as the loss of key personnel or the rejection by
Internet users or potential advertisers of our Internet- based products and
services) or to otherwise respond to unanticipated competitive pressures. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of our then existing shareholders would be reduced,
shareholders may experience additional and significant dilution and the equity
securities may have rights, preferences or privileges senior to those of the
holders of common stock. There can be no assurance that additional financing
will be available on terms acceptable to us or at all. If adequate funds are not
available or are not available on terms acceptable to us, we may be unable to
implement our business, sales or marketing plan, respond to competitive forces
or take advantage of perceived business opportunities, which could have a
material adverse effect in Go2Net's business, financial condition and operating
results.

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WE MAY BE ADVERSELY IMPACTED BY YEAR 2000 ISSUES

Many currently installed computer systems and software products are
dependent upon internal calendars coded to accept only two digit entries in the
date code field. These date code fields will need to accept four digit entries
to distinguish 21st century dates from 20th century dates. Computer systems and
software used by many companies may need to be upgraded to comply with these
"Year 2000" requirements. We have completed our review of the potential impact
of Year 2000 issues and do not anticipate any significant costs, problems or
uncertainties associated with becoming Year 2000 compliant. Nonetheless, our
failure or our software providers' failure to adequately address the Year 2000
issue could result in misstatement of reported financial information or
otherwise adversely affect Go2Net's business operations.

STATE OF READINESS. We have completed our assessment of all current
versions of our information technology systems and we believe we are year 2000
compliant. The supplier of our current financial and accounting software has
informed us that this software is year 2000 compliant. We have been informed by
our financial institutions that their information systems are year 2000
compliant.

COSTS. To date, we have not incurred any material expenditure in connection
with identifying or evaluating year 2000 compliance issues. Most of our expenses
have related to the retention of an outside consultant to evaluate our financial
and accounting software, and the opportunity cost of time spent by our employees
evaluating this software and year 2000 compliance matters generally. Although we
are not aware of any material operational issues or costs associated with
preparing our internal systems for the year 2000, there can be no assurances
that we will not experience serious unanticipated negative consequences and/or
material costs caused by undetected errors or defects in the technology used in
our internal systems, which are comprised predominantly of acquired technology
and our own software developments. We believe that internally generated funds or
available cash would be sufficient to cover the costs of year 2000 compliance.
At this time, based upon the information provided to us, we do not believe there
exists a material impact of year 2000 compliance issues relating to our non-IT
systems, our vendors, our customers and other parties. We continue to update our
assessment of year 2000 issues as it relates to our non-IT systems, our vendors,
our customers and other parties.

CONTINGENCY PLAN. As we are not aware of any material year 2000 compliance
issues, we have not developed a year 2000-specific contingency plan. We continue
to assess the impacts of year 2000 issues, and if year 2000 compliance issues
are discovered, we will evaluate the need for one or more contingency plans
relating to these issues.

OUR STOCK PRICE HAS HISTORICALLY BEEN VOLATILE, WHICH MAY MAKE IT MORE DIFFICULT
FOR YOU TO RESELL SHARES WHEN YOU CHOOSE TO AT PRICES YOU FIND ATTRACTIVE

The trading price of our common stock has been and may continue to be
subject to wide fluctuations. During fiscal 1999, the closing sale prices of our
common stock on The Nasdaq Stock Market ranged from $3.50 (adjusted to reflect
two stock splits) to $99.50. The stock price may fluctuate in response to a
number of events and factors, such as quarterly variations in operating results,
announcements of technological innovations or new products and media properties
by us or our competitors, changes in financial estimates and recommendations by
securities analysts, the operating and stock price performance of other
companies that investors may deem comparable, and news reports relating to
trends in our markets. In addition, the stock market in general, and the market
prices for Internet-related companies in particular, have experienced extreme
volatility that often has been unrelated to the operating performance of such
companies. These broad market and industry fluctuations may adversely affect the
price of our stock, regardless of our operating performance.

37
<PAGE>
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to the impact of interest rate changes and change in
the market values of its investments.

INTEREST RATE RISK. The Company's exposure to market rate risk for changes in
interest rates relates primarily to the Company's investment portfolio. The
Company has not used derivative financial instruments in its investment
portfolio. The Company invests its excess cash in high quality corporate and
municipal debt instruments and, by policy, limits the amount of credit exposure
to any one issuer. The Company protects and preserves its invested funds by
limiting default, market and reinvestment risk. Investments in both fixed rate
and floating rate interest earning instruments carries a degree of interest rate
risk. Fixed rate securities may have their fair market value adversely impacted
due to a rise in interest rates, while floating rate securities may produce less
income than expected if interest rates fall. Due in part to these factors, the
Company's future investment income may fall short of expectations due to changes
in interest rates or the Company may suffer losses in principal if forced to
sell securities which have declined in market value due to changes in interest
rates.

INVESTMENT RISK. The Company has an investment in equity instruments of a
privately-held, information technology company for business and strategic
purposes. This investment is included in other long-term assets and is accounted
for under the cost method since ownership is less than 20%. For this non-quoted
investment, the Company's policy is to regularly review the assumptions
underlying the operating performance and cash flow forecasts in assessing the
carrying value. The Company identifies and records impairment losses on
long-lived assets when events and circumstances indicate that such assets might
be impaired. To date, no such impairment has been recorded. The Company invests
in short-term and long-term equity instruments of primarily publicly-held,
information technology companies for business and strategic purposes. Such
investments, are subject to significant fluctuations in fair market value due to
the volatility of the stock market.

38
<PAGE>
ITEM 8: FINANCIAL STATEMENTS

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders

Go2Net, Inc.:

We have audited the accompanying consolidated balance sheets of
Go2Net, Inc. and subsidiaries as of September 30, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity and comprehensive
loss and cash flows for each of the years in the three-year period ended
September 30, 1999. These consolidated financial statements are the
responsibility of Go2Net's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Go2Net, Inc. and subsidiaries at September 30, 1999 and 1998, and the results of
their operations and their cash flows for each of the years in the three-year
period ended September 30, 1999, in conformity with generally accepted
accounting principles.

KPMG LLP

Seattle, Washington
December 17, 1999

39
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
1999 1998
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 66,786,513 $ 941,353
Short-term investments.................................... 151,000,000 7,944,249
Trade accounts receivable, net............................ 5,712,977 1,402,340
Other accounts receivable................................. 3,818,410 48,042
Deferred tax asset, net................................... 2,144,637 265,413
Prepaid expenses and other current assets................. 750,848 272,823
------------ -----------
Total current assets.................................... 230,213,385 10,874,220
Property and equipment, net................................. 3,254,594 1,315,167
Other assets................................................ 1,164,553 45,822
Long-term investments....................................... 53,771,208 --
Investment in affiliates.................................... 21,676,129 --
Deposits.................................................... 250,000 300,000
Intangibles, net............................................ 197,929,199 --
------------ -----------
Total assets............................................ $508,259,068 $12,535,209
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 1,253,843 $ 178,877
Accrued expenses.......................................... 3,139,409 666,567
Accrued compensation and benefits......................... 2,425,013 123,775
Short term debt........................................... -- 90,616
Deferred revenue.......................................... 3,072,755 503,798
------------ -----------
Total current liabilities............................... 9,891,020 1,563,633
Deferred revenue............................................ 530,796 --
Deferred tax liability...................................... 16,905,877 --
Commitments, contingencies and subsequent events............
Stockholders' equity:
Series A convertible preferred stock including additional
paid in capital, $0.01 par value (aggregate involuntary
liquidation preference of $300,000,000); authorized,
issued and outstanding 300,000 shares in 1999 and no
shares in 1998.......................................... 450,927,510 --
Common stock including additional paid-in capital, $0.01
par value; authorized 499,000,000 shares, issued and
outstanding 29,654,033 shares in 1999; authorized
50,000,000 shares, issued and outstanding
25,100,708 shares in 1998............................... 42,721,806 15,347,048
Accumulated other comprehensive income.................... 2,500,337 --
Accumulated deficit....................................... (15,218,278) (4,375,472)
------------ -----------
Total stockholders' equity.............................. 480,931,375 10,971,576
------------ -----------
Total liabilities and stockholders' equity.............. $508,259,068 $12,535,209
============ ===========
</TABLE>

See accompanying notes to the consolidated financial statements.

40
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1999 1998 1997
------------- ----------- -----------
<S> <C> <C> <C>
Revenue.............................................. $ 22,435,035 $ 7,109,432 $ 1,627,964
Cost of revenue...................................... 4,604,193 2,295,194 371,810
------------- ----------- -----------
Gross profit..................................... 17,830,842 4,814,238 1,256,154
Operating expenses:
Sales and marketing................................ 6,347,873 2,044,086 531,758
General and administrative......................... 6,068,647 2,454,620 1,711,380
Product development................................ 2,703,874 1,376,238 798,146
Merger and acquisition related costs............... 873,094 1,035,494 --
Stock compensation................................. 773,584 212,841 71,156
Amortization of intangibles........................ 19,432,304 -- --
Impairment loss.................................... -- 398,126 --
------------- ----------- -----------
Total operating expenses............................. 36,199,376 7,521,405 3,112,440
------------- ----------- -----------
Loss from operations................................. (18,368,534) (2,707,167) (1,856,286)
Interest income...................................... 6,810,866 510,529 249,488
------------- ----------- -----------
Loss before income taxes............................. (11,557,668) (2,196,638) (1,606,798)
Income tax expense (benefit)......................... (714,862) 69,220 67,347
------------- ----------- -----------
Net loss............................................. $ (10,842,806) $(2,265,858) $(1,674,145)
------------- ----------- -----------
Preferred stock dividend............................. 159,930,733 -- --
Net loss applicable to common stockholders........... $(170,773,539) $(2,265,858) $(1,674,145)
============= =========== ===========
Basic and diluted net loss per common share.......... $ (6.44) $ (0.09) $ (0.08)
Shares used in computing basic and diluted net loss
per common share................................... 26,524,025 24,817,559 20,107,816
</TABLE>

See accompanying notes to the consolidated financial statements.

41
<PAGE>
GO2NET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE
9% CUMULATIVE PREFERRED STOCK COMMON STOCK
CONVERTIBLE PREFERRED INCLUDING ADDITIONAL INCLUDING ADDITIONAL
STOCK PAID IN CAPITAL PAID IN CAPITAL SUBSCRIPTION
------------------------- ----------------------- ------------------------- NOTES
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT RECEIVABLE
---------- ------------ -------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1996...... 927,500 $ 1,505,000 -- $ -- 12,711,988 $ 234,828 $(80,000)
Collection of subscription note
receivable.................... -- -- -- -- -- -- 80,000
Conversion of preferred stock... (927,500) (1,505,000) -- -- 3,710,000 1,505,000 --
Sale of common stock............ -- -- -- -- 313,048 200,000 --
Exercise of stock options....... -- -- -- -- 23,540 1,219 --
Stock compensation.............. -- -- -- -- -- 71,156 --
Repurchase of common stock...... -- -- -- -- (60,072) (23,056) --
Issuance of common stock for
services rendered............. -- -- -- -- 166,348 67,000 --
Sale of common stock in initial
public offering, net of
issuance costs................ -- -- -- -- 7,360,000 12,789,212 --
Common stock issued in
connection with acquisition of
license....................... -- -- -- -- 66,668 85,002 --
Comprehensive loss:
Net loss...................... -- -- -- -- -- -- --
Total comprehensive loss.... -- -- -- -- -- -- --
---------- ------------ ------- ------------ ---------- ------------ --------
Balance at September 30, 1997... -- -- -- $ -- 24,291,520 $ 14,930,361 $ --
Repurchase of common stock...... -- -- -- -- (24,000) (60) --
Issuance of common stock for
services rendered............. -- -- -- -- 12,700 24,875 --
Exercise of stock options and
warrants and stock
compensation.................. -- -- -- -- 190,492 336,730 --
Issuance of common stock to
HyperMart founders............ -- -- -- -- 629,996 55,142 --
Comprehensive loss:
Net loss...................... -- -- -- -- -- -- --
Total comprehensive loss.... -- -- -- -- -- -- --
---------- ------------ ------- ------------ ---------- ------------ --------
Balance at September 30, 1998... -- -- -- $ -- 25,100,708 $ 15,347,048 $ --
Exercise of stock options and
warrants...................... -- -- -- -- 2,358,591 10,596,298 --
Sale of preferred stock, net of
issuance costs................ -- -- 300,000 290,996,777 -- -- --
Preferred stock dividend........ -- -- -- 159,930,733 -- (159,930,733) --
Stock compensation expense...... -- -- -- -- -- 773,584 --
Shares issued to acquired
companies..................... -- -- -- -- 2,194,734 173,075,893 --
Tax benefit from stock
options....................... -- -- -- -- -- 2,838,873 --
Capital contribution............ -- -- -- -- -- 20,843 --
Comprehensive loss:
Net loss...................... -- -- -- -- -- -- --
Net unrealized gain on
available-for-sale
securities, net of income
tax of $1,573,083......... -- -- -- -- -- -- --
Total comprehensive loss.... -- -- -- -- -- -- --
---------- ------------ ------- ------------ ---------- ------------ --------
Balance at September 30, 1999... -- -- 300,000 $450,927,510 29,654,033 $ 42,721,806 $ --
========== ============ ======= ============ ========== ============ ========

ACCUMULATED
OTHER TOTAL
COMPREHENSIVE ACCUMULATED STOCKHOLDERS'
INCOME DEFICIT EQUITY
-------------- ------------- -------------
<S> <C> <C> <C>
Balance at October 1, 1996...... $ -- $ (435,469) $ 1,224,359
Collection of subscription note
receivable.................... -- -- 80,000
Conversion of preferred stock... -- -- --
Sale of common stock............ -- -- 200,000
Exercise of stock options....... -- -- 1,219
Stock compensation.............. -- -- 71,156
Repurchase of common stock...... -- -- (23,056)
Issuance of common stock for
services rendered............. -- -- 67,000
Sale of common stock in initial
public offering, net of
issuance costs................ -- -- 12,789,212
Common stock issued in
connection with acquisition of
license....................... -- -- 85,002
Comprehensive loss:
Net loss...................... -- (1,674,145) (1,674,145)
------------
Total comprehensive loss.... -- -- (1,674,145)
---------- ------------- ------------
Balance at September 30, 1997... $ -- $ (2,109,614) $ 12,820,747
Repurchase of common stock...... -- -- (60)
Issuance of common stock for
services rendered............. -- -- 24,875
Exercise of stock options and
warrants and stock
compensation.................. -- -- 336,730
Issuance of common stock to
HyperMart founders............ -- -- 55,142
Comprehensive loss:
Net loss...................... -- (2,265,858) (2,265,858)
------------
Total comprehensive loss.... -- -- (2,265,858)
---------- ------------- ------------
Balance at September 30, 1998... $ -- $ (4,375,472) $ 10,971,576
Exercise of stock options and
warrants...................... -- -- 10,596,298
Sale of preferred stock, net of
issuance costs................ -- -- 290,996,777
Preferred stock dividend........ -- -- --
Stock compensation expense...... -- -- 773,584
Shares issued to acquired
companies..................... -- -- 173,075,893
Tax benefit from stock
options....................... -- -- 2,838,873
Capital contribution............ -- -- 20,843
Comprehensive loss:
Net loss...................... -- (10,842,806) (10,842,806)
Net unrealized gain on
available-for-sale
securities, net of income
tax of $1,573,083......... 2,500,337 -- 2,500,337
------------
Total comprehensive loss.... -- -- (8,342,469)
---------- ------------- ------------
Balance at September 30, 1999... $2,500,337 $ (15,218,278) $480,931,375
========== ============= ============
</TABLE>

See accompanying notes to the consolidated financial statements.

42
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------
1999 1998 1997
------------- ------------ -----------
<S> <C> <C> <C>
Operating activities:
Net loss.................................................. $ (10,842,806) $ (2,265,858) $(1,674,145)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization of other assets............. 944,278 1,253,576 95,769
Amortization of intangibles............................... 19,432,304 -- --
Shares issued for services rendered....................... -- 24,875 67,000
Stock compensation........................................ 773,584 212,841 71,156
Tax benefit from stock options............................ 2,838,873 -- --
Deferred taxes............................................ (3,514,592) (255,610) --
Changes in assets and liabilities, net of effect of
acquisitions:
Receivables............................................. (7,141,260) (1,139,913) (246,659)
Prepaid expenses and other current assets, deposits and
other assets.......................................... (1,613,882) (200,219) (1,181,827)
Accounts payable and accrued expenses, and accrued
compensation and benefits............................. 4,627,104 633,646 150,720
Deferred revenue........................................ 3,057,444 483,161 20,637
------------- ------------ -----------
Net cash provided by (used in) operating activities......... 8,561,047 (1,253,501) (2,697,349)
Investing activities:
Purchase of marketable securities....................... (308,355,051) (11,765,093) --
Sales and maturities of marketable securities........... 93,975,383 3,828,209 --
Purchase of property and equipment...................... (2,473,313) (1,174,483) (333,816)
Net cash used in business acquisitions.................. (27,386,208) -- --
------------- ------------ -----------
Net cash used in investing activities....................... (244,239,189) (9,111,367) (333,816)
Financing activities:
Borrowings on line of credit.............................. -- 200,000 500,000
Payments on line of credit................................ -- (200,000) (500,000)
Short term borrowings..................................... -- 190,789 206,435
Payments on short term borrowings......................... (90,616) (134,753) (41,774)
Sale of preferred stock, net.............................. 290,996,777 -- --
Sale of common stock, net................................. -- 55,142 12,989,212
Repurchase of common stock................................ -- (60) (23,056)
Capital contribution...................................... 20,843 -- --
Exercise of stock options................................. 10,596,298 123,889 1,219
Collection of subscription notes receivable............... -- -- 80,000
------------- ------------ -----------
Net cash provided by financing activities................... 301,523,302 235,007 13,212,036
------------- ------------ -----------
Increase (decrease) in cash and cash equivalents............ 65,845,160 (10,129,861) 10,180,871
Cash and cash equivalents at beginning of period............ 941,353 11,071,214 890,343
------------- ------------ -----------
Cash and cash equivalents at end of period.................. $ 66,786,513 $ 941,353 $11,071,214
============= ============ ===========
Supplemental cash flow disclosure:
Cash paid for interest.................................... -- 5,579 $ 11,692
Cash paid for income taxes................................ -- 184,394 159,257
Non-cash financing and investing activities:
Dividend to preferred stockholder......................... 159,930,733 -- --
Conversion of 9% cumulative preferred stock to common
stock................................................... -- -- 1,505,000
Common stock issued in connection with acquisition of
license................................................. -- -- 85,002
Common stock issued in business acquisitions.............. 173,075,893 -- --
Assets and liabilities recognized upon business acquistions:
Receivables............................................... 939,745 -- --
Prepaid expenses and other assets and deposits............ 16,800 -- --
Property and equipment.................................... 376,466 -- --
Intangibles............................................... 217,361,503 -- --
Accounts payable, accrued expenses and accrued
compensation and benefits............................... 1,221,942 -- --
Deferred revenue.......................................... 42,309 -- --
Deferred tax liability, net............................... 16,968,162 -- --
</TABLE>

See accompanying notes to the consolidated financial statements.

43
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Go2Net, Inc. (the "Company") offers through the World Wide Web (the "Web") a
network of branded, technology and community-driven Web sites. Our properties
available through the Go2Net Network include: Go2Net Personal (www.go2net.com),
which provides users with a comprehensive Internet start page offering
customizable news, discussion and portfolio information as well as direct access
to Go2Net's own finance, search and directory, free Web hosting, shopping,
auction and multiplayer games sites; MetaCrawler (www.metacrawler.com) and
Dogpile (www.dogpile.com), metasearch services that combine various existing
search and directory services into one service; Silicon Investor
(www.siliconinvestor.com), the Web's premier financial discussion community
which also offers proprietary articles, portfolio tracking tools, company
research, charting and analytics and business and finance news; HyperMart
(www.hypermart.net), Virtual Avenue (www.virtualave.net), and FreeYellow.com
(www.freeyellow.com) the Web's leading providers of free business hosting
services; Authorize.Net (www.authorize.net), a leading payment authorization
system for online businesses; Haggle Online (www.haggle.com), a provider of Web
based person to person auction services; WebMarket (www.webmarket.com), a
one-stop comparison shopping service; 100Hot (www.100hot.com), a leading
directory of the Web's most popular sites; and PlaySite (www.playsite.com), a
Java-based multiplayer games site.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the financial statements of
Go2Net, Inc. and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of three
months or less at purchase to be cash equivalents. The Company has not
experienced losses on its cash equivalent investments.

INVESTMENTS

Investment securities at September 30, 1999 and 1998 consist of municipal
and corporate debt and equity securities. The Company's securities are
classified as available-for-sale and are recorded at fair value. Unrealized
holding gains and losses, net of the related tax effect, on available-for-sale
securities are excluded from earnings and are reported as a separate component
of other comprehensive income until realized. Realized gains and losses from the
sale of available-for-sale securities are determined on a specific
identification basis.

A decline in the market value of any available-for-sale security below cost
that is deemed to be other than temporary results in a reduction in carrying
amount to fair value. The impairment is charged to earnings and a new cost basis
for the security is established. Premiums and discounts are amortized or
accreted over the life of the related security as an adjustment to yield using
the effective interest method. Dividend and interest income are recognized when
earned.

44
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of three to seven
years. Leasehold improvements are stated at cost and are amortized over their
useful lives or the lease term, whichever is shorter.

INTANGIBLE ASSETS

Intangible assets consist of goodwill, which represents costs in excess of
the fair value of the net assets acquired and identifiable intangibles.
Intangible assets are amortized on a straight-line basis over their estimated
useful lives of three years. The Company assesses the recoverability of
intangible assets by determining whether the amortization of the intangible
balance over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operations. The amount of intangible asset
impairment, if any, is measured based on projected discounted future operating
cash flows using a discount rate reflecting the Company's average cost of funds.
The assessment of the recoverability of intangible asset will be impacted if
estimated future operating cash flows are not achieved.

OTHER ASSETS

Other assets consist of the costs associated with licensed technology,
domain names and trademarks and security deposits and are recorded at cost.
Amortization of other assets is recorded using the straight-line method over the
shorter of useful lives, generally one to three years, or the term of the
agreement.

PREMIUM ON WARRANTS

Premiums associated with warrants for common stock are amortized over the
term of the warrant.

CONCENTRATION OF CREDIT RISK

The Company performs ongoing credit evaluations of its customers' financial
conditions and generally does not require collateral on accounts receivable. The
Company maintains allowances for credit losses and such losses have been within
management's expectations.

No single customer accounted for greater than 10% of total revenues during
the years ended September 30, 1999, 1998 and 1997.

The Company is also subject to risks related to the significant balances of
cash, cash equivalents, short-term and long-term investments. At September 30,
1999, the Company held shares and warrants of CommTouch common stock
representing approximately 13.9% of Commtouch's outstanding common stock and
shares and warrants of Click2Learn's common stock representing approximately
5.8% of Click2Learn's outstanding common stock. If there is a permanent decline
in the value of these securities below cost, the decline will be reported in the
Company's statement of operations. The Company's remaining portfolio, however,
is diversified and consists primarily of highly rated money market funds and
short and long-term investment-grade securities.

45
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

USE OF ESTIMATES

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

FINANCIAL INSTRUMENTS

The recorded amounts of financial instruments including cash equivalents,
investments, receivables, accounts payable and short-term debt approximate their
fair values at September 30, 1999 and 1998.

REVENUE RECOGNITION

The Company derives its revenue from the sale of advertisements on
short-term contracts, ecommerce fees and license fees.

Advertising revenues are recognized over the period in which the
advertisements are displayed. Deferred revenues result from billings in excess
of recognized revenue relating to contracts.

The Company's ecommerce and license revenues are derived principally from
product licensing, set-up, gateway and transaction fees from the use of its
products. The Company also derives revenues from subscriptions and memberships.

All revenues are generally recognized as the related services are performed,
upon product delivery, or over the term of the subscription or membership,
provided that no significant Company obligations remain and collection of the
receivable is probable. In cases where there are significant remaining
obligations, the Company defers such revenue until those obligations are
satisfied. Fees from maintenance and support of the Company's products,
including revenues bundled with the initial licensing fees, are deferred and
recognized over the service period.

Barter transactions are recorded at the lower of the estimated fair value of
the goods or services/ advertisements received or the estimated fair value of
the goods or services/advertisements given. Barter revenue was immaterial for
the years ended September 30, 1999 and 1998. Barter revenue represented $163,390
of revenue for the year ended September 30, 1997.

PRODUCT DEVELOPMENT

Costs incurred in the design and development of new products and
enhancements to existing products and Internet technology applications are
charged to expense as incurred.

Statement of Financial Accounting Standards (SFAS) No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed,"
requires capitalization of certain software development costs subsequent to the
establishment of technological feasibility. Based upon the Company's product
development process, technological feasibility is established upon completion of
a working model. Costs incurred by the Company between completion of the working
model and the point at which the product is ready for general release have been
insignificant.

46
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

ADVERTISING AND MARKETING EXPENSE

The Company expenses costs associated with advertising and marketing as they
are incurred. Advertising expense was $346,611, $123,369, and $9,717 for 1999,
1998 and 1997, respectively.

INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

STOCK-BASED COMPENSATION

The Company accounts for its stock option plans for employees in accordance
with the provisions of Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations. As
such, compensation expense related to fixed employee stock options is recorded
only if, on the date of grant, the fair value of the underlying stock exceeded
the exercise price. The Company has adopted the disclosure-only requirements of
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation", which allows entities to continue to apply the
provisions of APB Opinion No. 25 for transactions with employees and provide pro
forma net income and pro forma earnings per share disclosures as if the
fair-value based method of accounting in SFAS No. 123 had been applied to
employee stock option grants.

NET LOSS PER SHARE

In accordance with SFAS No. 128, "Earnings Per Share", the Company has
reported both basic and diluted net income per common share for each period
presented. Basic income per share is computed on the basis of the
weighted-average number of common shares outstanding for the year. Diluted
income per share is computed on the basis of the weighted-average number of
common shares plus dilutive potential common shares outstanding. Dilutive
potential common shares are calculated under the treasury stock method.
Securities that could potentially dilute basic income per share consist of
outstanding stock options and convertible preferred stock. As the Company had a
net loss attributable to common shareholders in each of the periods presented,
basic and diluted net loss per share are the same. Dilutive potential securities
outstanding at year-end that were not included in the computation of diluted
earnings per share included preferred stock convertible into approximately 9.1
million common shares and options to purchase approximately 10.6 million common
shares for the year ended September 30, 1999, and options to purchase
approximately 7.7 million common shares and 2.5 million common shares for the
years ended September 30, 1998 and 1997, respectively.

47
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

COMPREHENSIVE INCOME

On October 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". SFAS 130 establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income consists of net loss and net
unrealized gains or losses from available-for-sale securities and is presented
in the statements of stockholders' equity and comprehensive loss. The Statement
requires only additional disclosures in the financial statements; it does not
affect the Company's financial position or results of operations.

RECLASSIFICATIONS

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133) in
June 1998. This statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as a hedge. The accounting for changes
in the fair value of a derivative depends on the intended use of the derivative
and the resulting designation. SFAS No. 133, as amended by SFAS 137, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The adoption of this statement is not expected to have a material impact on the
Company's consolidated financial statements.

In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued AICPA Statement of
Position 98-1 ("SOP 98-1") "Accounting for the Costs of Software Developed or
Obtained for Internal Use" which is required to be adopted for fiscal years
beginning after December 15, 1998. SOP 98-1 provides guidance in capitalizing
software that is developed in-house or purchased. The Company does not believe
SOP 98-1 will have a material impact on the Company's financial statements.

In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101 ("SAB 101") "Revenue Recognition in Financial
Statements" which the Company expects to adopt no later than October 1, 2000.
SAB 101 provides guidance on revenue recognition issues. The Company has not yet
determined the impact, if any, SAB 101 is expected to have on the Company's
financial statements.

48
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BALANCE SHEET COMPONENTS

CASH AND CASH EQUIVALENTS

The following schedule summarizes the fair value of cash and cash
equivalents:

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1999 1998
----------- --------
<S> <C> <C>
Cash and cash equivalents:
Cash............................................... $ 9,414,115 $919,364
Money market funds................................. 52,362,938 21,989
Commercial paper................................... 5,009,460 --
----------- --------
$66,786,513 $941,353
=========== ========
</TABLE>

INVESTMENTS

Investments are summarized as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------
1999 1998
------------ ----------
<S> <C> <C>
Short-term investments:
Variable rate demand obligations................. $ 10,000,000 $ --
Auction preferreds............................... 5,000,000 --
Corporate bonds.................................. 5,000,000 1,244,249
Taxable municipal bonds.......................... 131,000,000 6,700,000
------------ ----------
$151,000,000 $7,944,249
============ ==========
Long-term investments:
Corporate bonds.................................. $ 53,521,225 $ --
Common stock..................................... 249,983 --
------------ ----------
$ 53,771,208 $ --
============ ==========
Investment in affiliates:
CommTouch common stock and warrants.............. $ 16,295,555 $ --
Click2Learn common stock and warrants............ 5,380,574 --
------------ ----------
$ 21,676,129 $ --
============ ==========
</TABLE>

49
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BALANCE SHEET COMPONENTS (CONTINUED)

The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and fair value of available-for-sale securities and other long-term
investments by major security type and class of security at September 30, 1999
and 1998 is summarized as follows:

<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED ---------------------
SEPTEMBER 30, 1999 COST GAIN LOSS FAIR VALUE
- ------------------ ------------ ---------- -------- ------------
<S> <C> <C> <C> <C>
Long-term marketable securities............. $ 53,942,325 $ -- $421,100 $ 53,521,225
Short-term marketable securities............ 151,000,000 -- -- 151,000,000
Equities.................................... -- --
Conducent................................. 249,983 -- -- 249,983
CommTouch................................. 13,943,041 2,352,514 -- 16,295,555
Click2Learn............................... 3,238,568 2,142,006 -- 5,380,574

SEPTEMBER 30, 1998
- --------------------------------------------
Short-term marketable securities............ 7,944,249 -- -- 7,944,249
</TABLE>

Maturities of securities classified as available-for-sale were as follows at
September 30, 1999:

<TABLE>
<CAPTION>
AMORTIZED COST FAIR VALUE
-------------- ------------
<S> <C> <C>
Due within one year.............................. $151,000,000 $151,000,000
Due within two years............................. 41,814,963 41,618,015
Due within three years........................... 12,127,362 11,903,210
Equity securities without maturity............... 17,431,592 21,926,112
</TABLE>

There were no realized gains or losses from sales of securities in the
periods presented.

TRADE RECEIVABLES

A summary of trade receivables follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Accounts receivable.................................. $6,241,389 $1,730,625
Less allowance for doubtful accounts................. (528,412) (328,285)
---------- ----------
Net accounts receivable.............................. $5,712,977 $1,402,340
========== ==========
</TABLE>

50
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BALANCE SHEET COMPONENTS (CONTINUED)

Bad debt expense was $577,643, $386,097 and $68,000 for the years ended
September 30, 1999, 1998 and 1997, respectively. $129,992 of the provision for
1999 was obtained in purchase business combinations.

PROPERTY AND EQUIPMENT

A summary of property and equipment follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Computer equipment................................... $3,722,436 $1,589,215
Furniture and Equipment.............................. 204,727 62,359
Leasehold improvements............................... 85,206 40,129
Software............................................. 842,562 313,450
---------- ----------
4,854,931 2,005,153
Less accumulated depreciation........................ (1,600,337) (689,986)
---------- ----------
$3,254,594 $1,315,167
========== ==========
</TABLE>

Depreciation expense was $910,351, $541,537 and $131,575 for the years ended
September 30, 1999, 1998 and 1997, respectively.

OTHER ASSETS

A summary of other assets is as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1999 1998
---------- --------
<S> <C> <C>
Technology licenses.................................... $ 882,500 $ --
Domain names........................................... 22,500 14,660
Security deposits...................................... 192,678 25,020
Other.................................................. 80,000 22,926
---------- --------
1,177,678 62,606
Less accumulated amortization.......................... (13,125) (16,784)
---------- --------
$1,164,553 $ 45,822
========== ========
</TABLE>

Amortization expense was $33,927, $3,227 and $1,404 for the years ended
September 30, 1999, 1998 and 1997, respectively. Other assets include $905,000
and $14,660 of intangibles as of September 30, 1999 and 1998, respectively.

On July 15, 1997, the Company acquired PlaySite, a Java-based multi-user
games site, and certain gaming infrastructure technology from Internet Games
Corporation for $500,000 in cash and 66,668 shares of the Company's common
stock, with a value of $85,002. The Company was amortizing the acquired
technology cost over it's estimated useful life of three years; however, in the
third fiscal quarter of 1998, the Company stopped using the acquired technology
and an impairment loss of the remaining unamortized balance of $398,126 was
recorded.

51
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BALANCE SHEET COMPONENTS (CONTINUED)

INTANGIBLES

A summary of intangibles is as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
Workforce in place............................... $ 710,903 $ --
Developed technology............................. 26,702,679 --
Trade names...................................... 15,029,907 --
Customer value................................... 23,807,802 --
Goodwill......................................... 151,110,212 --
------------ ------------
217,361,503 --
Less accumulated amortization.................... (19,432,304) --
------------ ------------
$197,929,199 $ --
============ ============
</TABLE>

Amortization of intangibles was $19,432,304, $0 and $0 for the years ended
September 30, 1999, 1998 and 1997, respectively.

3. INCOME TAXES

The components of income tax expense (benefit) are as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30,
----------------------------------
1999 1998 1997
----------- --------- --------
<S> <C> <C> <C>
Current..................................... $ (39,143) $ 324,830 $77,150
Charge-in-lieu of taxes..................... 2,838,873 -- --
Deferred.................................... (3,514,592) (255,610) (9,803)
----------- --------- -------
$ (714,862) $ 69,220 $67,347
=========== ========= =======
</TABLE>

Income tax expense (benefit) differed from the amounts computed by applying
the U.S. federal income tax rate of 34 percent to loss before income taxes as a
result of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30,
-----------------------------------
1999 1998 1997
----------- --------- ---------
<S> <C> <C> <C>
Computed expected tax benefit............. $(3,929,607) $(746,856) $(546,311)
Increase (reduction) in income taxes
resulting from:
Change in the beginning-of-the-year
balance of the valuation allowance.... (1,129,245) 408,123 592,887
Non-deductible expenses, including
goodwill amortization................. 4,181,057 362,898 7,297
State and local income taxes, net of
federal tax benefit................... 18,000 15,274 13,474
Other................................... 144,933 29,781 --
----------- --------- ---------
$ (714,862) $ 69,220 $ 67,347
=========== ========= =========
</TABLE>

52
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. INCOME TAXES (CONTINUED)

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
September 30, 1999 and 1998 are presented below.

<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------
1999 1998
------------ -----------
<S> <C> <C>
Deferred tax assets:
Current:
Accounts receivable principally due to
allowance for doubtful accounts............. $ 155,730 $ 131,137
Compensated absences, principally due to
accrual for financial reporting purposes.... 64,193 11,130
Stock based compensation...................... 1,924,714 91,181
Deferred expense.............................. -- 78,397
Net operating loss carryforward............... 19,713,905 1,002,060
------------ -----------
21,858,542 1,313,905
Non-current:
Deferred revenue.............................. 296,177 --
Amortization and depreciation expense......... 780,338 80,753
------------ -----------
Gross deferred tax assets......................... 22,935,057 1,394,658
Less valuation allowance.......................... (19,713,905) (1,129,245)
------------ -----------
Net deferred tax assets........................... 3,221,152 265,413
Deferred tax liabilities--non-current:
Depreciation.................................... (59,321) --
Intangibles..................................... (17,585,956) --
Financial statement basis in excess of tax basis
of available for sale securities.............. (337,115) --
------------ -----------
Net deferred tax asset (liability)................ $(14,761,240) $ 265,413
============ ===========
</TABLE>

The net change in the total valuation allowance for the years ended
September 30, 1999 and 1998 was an increase of $18,584,660 and $408,123,
respectively.

At September 30, 1999, the Company had net operating loss carryforwards for
Federal income tax purposes of approximately $57,982,074, which begin to expire
in 2019. This net operating loss carryforward results primarily from deductions
associated with the exercise of nonqualified employee stock options; therefore,
the realization of these carryforwards will result in a credit to stockholders'
equity. The company realized a $2,838,837 benefit through stockholders' equity
in 1999 related to the exercise of stock options.

4. STOCKHOLDERS' EQUITY

SERIES A CONVERTIBLE PREFERRED STOCK

On March 15, 1999, the Company entered into a Stock Purchase Agreement under
which the Company agreed to issue and sell to Vulcan Ventures Incorporated
("Vulcan") 300,000 shares of the Company's Series A Convertible Preferred Stock,
par value $.01 per share for a purchase price of $1,000 per share, in two
separate issuances of 167,507 (the "First Issuance") and 132,493 shares (the
"Second

53
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. STOCKHOLDERS' EQUITY (CONTINUED)

Issuance"). The Series A Convertible Preferred Stock is initially convertible at
a conversion price of $33.06 per share into 9,075,782 shares of Common Stock and
has a liquidation preference of $1,000 per share. The First Issuance was
consummated concurrently with the execution of the Stock Purchase Agreement on
March 15, 1999. Simultaneously with the closing of the first issuance of
preferred stock, the Company and Vulcan entered into a Registration Rights
Agreement, and Vulcan entered into a Management Agreement with each director of
the Company pursuant to which Vulcan agreed to purchase 2,806,624 shares of
Common Stock from the directors of the Company, three of whom are executive
officers of the Company, at a price of $45.00 per share. The Second Issuance and
the sale of directors shares was consummated June 17, 1999. On March 19, 1999,
pursuant to the Stock Purchase Agreement, Vulcan commenced a tender offer to
purchase 7,193,376 shares of Common Stock for a purchase price of $45.00 per
share. The tender offer expired on April 15, 1999 with no shares being tendered.

On the date of the First Issuance (March 15, 1999) and Second Issuance
(June 17, 1999), the price of the Series A Convertible Preferred Stock was at a
discount to the price of the common stock into which the preferred stock was
then convertible. The discount of $159,930,733 was recognized as a dividend to
Vulcan.

9% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK

In November 1996, the holders of all outstanding shares of 9% Cumulative
Convertible Redeemable Preferred Stock converted their preferred stock to
3,710,000 shares of the Company's common stock.

COMMON STOCK

The Company's common stock was split 2-for-1 on February 23, 1999 and
June 24, 1999. The common stock shares and dollars per share included throughout
the financial statements have been restated to reflect the splits.

In April 1997, the Company completed its initial public offering and issued
6,400,000 shares of its common stock to the public at a price of $2.00 per
share. In May 1997, pursuant to the exercise of an over-allotment option granted
to the underwriters of the Company's initial public offering, the Company issued
an additional 960,000 shares of its common stock at a price of $2.00 per share.
The Company received approximately $12.8 million of cash, net of underwriting
discounts, commissions and other offering costs.

54
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. STOCK OPTION PLANS

In 1996, the Board of Directors adopted a Stock Option Plan under which an
aggregate of 3,000,000 shares of common stock were reserved for grants to
employees and members of the Board of Directors and independent contractors.
Options granted under this plan may be designated as incentive or nonqualified
at the discretion of the Plan Administrator. The Company authorized an
additional 6,000,000 shares of common stock in 1999 and 7,000,000 shares of
common stock in 1998 under the Plan increasing total shares under the plan to
16,000,000. There remains 3,343,272 shares available for grant at September 30,
1999.

The Compensation Committee of the Board of Directors determines the option
price for stock options granted under the Stock Option Plan. Incentive stock
options may be granted at not less than 100% of the fair market value per share
at the date of grant as determined by the Board of Directors or committee
thereof, except for incentive options granted to a person owning greater than
10% of the total combined voting power of all classes of the Company's stock,
for which the exercise price of the options must be not less than 110% of the
fair market value. Options generally have a term of 6 years and generally vest
annually over a three to four year period. Stock options exercised, granted and
canceled during the years ended September 30, 1999, 1998 and 1997, are as
follows:

<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
NUMBER OF OPTIONS EXERCISE PRICE
----------------- ----------------
<S> <C> <C>
Outstanding at September 30, 1996............ 318,000 $ 2.00
Granted
Price less than market value............. 52,000 $ 2.10
Price equal market value................. 2,222,000 $ 1.99
Exercised.................................. --
Cancellations.............................. (213,336) $ 1.97
---------- ------
Outstanding at September 30, 1997............ 2,378,664 $ 1.99
Granted
Price less than market value............. 1,200,000 $ 6.47
Price equal market value................. 4,138,400 $ 4.16
Exercised.................................. (82,732) $ 2.47
Cancellations.............................. (171,332) $ 2.06
---------- ------
Outstanding at September 30, 1998............ 7,463,000 $ 3.91
Granted
Price less than market value............. 1,200,000 $ 4.03
Price equal market value................. 4,878,646 $40.30
Exercised.................................. (2,128,413) $ 4.73
Cancellations.............................. (967,650) $ 9.08
---------- ------
Outstanding at September 30, 1999............ 10,445,583 $20.25
========== ======
</TABLE>

Options exercisable as of September 30, 1999, 1998 and 1997 were 3,618,438
1,798,580 and 1,690,636, respectively, with at weighted average exercise prices
of $20.25, $2.07, and $1.59 per share, respectively. The weighted average
remaining contractual life of the outstanding options at September 30, 1999 was
4.65 years.

55
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. STOCK OPTION PLANS (CONTINUED)

AUTHORIZE.NET STOCK OPTION PLAN

In connection with the acquisition of Authorize.Net, the Company assumed the
Authorize.Net Stock Option Plan under which incentive stock options and
nonqualified stock options to purchase common stock may be granted to officers,
key employees and advisors. Under the Plan, options to purchase 101,825 shares
of the Company's common stock were reserved for grants. Options under the
Authorize.Net Stock Option Plan vest immediately. Options under the
Authorize.Net Stock Option Plan expire six years from the date of grant. The
total weighted-average contractual life of options outstanding September 30,
1999 was approximately 5.75 years. No options remain available for grant at
September 30, 1999.

A summary of the Company's option activity under the AuthorizeNet Stock
Option Plan is as follows:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at acquisition......................... 101,825 $0.80
Exercised.......................................... (23,870) $0.80
------- -----
Outstanding at September 30, 1999.................. 77,955 $0.80
======= =====
</TABLE>

All options outstanding at September 30, 1999 are exercisable.

HAGGLE ONLINE STOCK OPTION PLAN

In connection with the acquisition of Haggle Online, the Company assumed the
Haggle Online Stock Option Plan under which incentive stock options and
nonqualified stock options to purchase common stock may be granted to officers,
key employees and advisors. Under the Plan, options to purchase 64 shares of the
Company's common stock were reserved for grants. Options under the Haggle Online
Stock Option Plan vest immediately. Options under the Haggle Online Stock Option
Plan expire five years from the date of grant. The total weighted- average
contractual life of options outstanding September 30, 1999 was approximately
0.5 years.

There were 64 options outstanding at acquisition with an exercise price of
$61.00. There has been no option activity since the date of the acquisition. The
options outstanding are exercisable at September 30, 1999.

IQC STOCK OPTION PLAN

In connection with the acquisition of IQC, the Company assumed the IQC Stock
Option Plan under which incentive stock options and nonqualified stock options
to purchase common stock may be granted to officers, key employees and advisors.
Under the Plan, options to purchase 70,578 shares of the Company's common stock
were reserved for grants, of which no options remain available for grant at
September 30, 1999. Options under the IQC Stock Option Plan vest over a four
year period from date of grant. Options under the IQC Stock Option Plan expire
ten years from the date of grant. The total weighted- average contractual life
of options outstanding September 30, 1999 was approximately 5.5 years.

56
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. STOCK OPTION PLANS (CONTINUED)

A summary of option activity under the IQC Stock Option Plan is as follows:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at acquisition......................... 70,578 $3.13
Exercised.......................................... (42,984) $3.16
------- -----
Outstanding at September 30, 1999.................. 27,594 $3.09
======= =====
</TABLE>

All options outstanding at September 30, 1999.

SILICON INVESTOR STOCK OPTION PLAN

In connection with the acquisition of Silicon Investor, the Company assumed
the Silicon Investor Stock Option Plan under which incentive stock options and
nonqualified stock options to purchase common stock may be granted to officers,
key employees and advisors. Under the Plan, options to purchase the
47,828 shares of the Company's common stock assumed at the acquisition date were
reserved for grants, of which no options remain available for grant at
September 30, 1999. Options under the Silicon Investor Stock Option Plan vest
over a four year period from date of grant. Options under the Silicon Investor
Stock Option Plan expire ten years from the date of grant. The total
weighted-average contractual life of options outstanding at September 30, 1999
was approximately 5.0 years.

A summary of option activity under the Silicon Investor Stock Option Plan is
as follows:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at September 30, 1996.................. -- --
Granted.......................................... 128,584 $0.11
Exercised........................................ (4,784) $0.11
Cancellations.................................... (59,372) $0.11
Outstanding at September 30, 1997.................. 64,428 $0.11
Exercised........................................ (16,600) $0.11
------- -----
Outstanding at September 30, 1998.................. 47,828 $0.11
Exercised........................................ (41,550) $0.11
------- -----
Outstanding at September 30, 1999.................. 6,278 $0.11
======= =====
</TABLE>

None of the outstanding options at September 30, 1999 are exercisable.

WEB21 STOCK OPTION PLAN

In connection with the acquisition of Web21, the Company assumed the Web21
Stock Option Plan under which incentive stock options and nonqualified stock
options to purchase common stock may be granted to officers, key employees and
advisors. Under the Plan, options to purchase the 98,030 shares of the Company's
common stock assumed at the acquisition date were reserved for grants. At
September 30, 1999, 64,064 shares remained available for grant under the Web21
Stock Option Plan. Options under the Web21 Stock Option Plan vest over a four
year period from date of grant. Options under the Web21 Stock Option Plan expire
ten years from the date of grant. The total weighted-average contractual life of
options outstanding at September 30, 1999 was approximately 3.06 years.

57
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. STOCK OPTION PLANS (CONTINUED)

A summary of option activity under the Web 21 Stock Option Plan is as
follows:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at September 30, 1996.................. 33,424 $0.04
Granted.......................................... 45,988 $3.84
-------- -----
Outstanding at September 30, 1997.................. 79,412 $2.24
Granted.......................................... 70,548 $9.19
-------- -----
Outstanding at September 30, 1998.................. 149,960 $5.51
Granted.......................................... 46,100 $4.21
Exercised........................................ (110,628) $3.41
Cancellations.................................... (64,064) $8.20
-------- -----
Outstanding at September 30, 1999.................. 21,368 $5.52
======== =====
</TABLE>

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED AVERAGE WEIGHTED ----------------------------------------
RANGE OF EXERCISE NUMBER OUTSTANDING AS REMAINING AVERAGE NUMBER EXERCISABLE AS WEIGHTED AVERAGE
PRICES OF SEPTEMBER 30, 1999 CONTRACTUAL LIFE EXERCISE PRICE OF SEPTEMBER 30, 1999 EXERCISE PRICE
- --------------------- --------------------- ---------------- -------------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.04 5,434 1.44 $ 0.04 -- --
$ 3.84 7,260 3.41 $ 3.84 5,870 $ 3.84
$10.36 8,674 3.79 $10.36 1,059 $10.36
</TABLE>

The following table summarizes information about the above fixed stock
options outstanding at September 30, 1999:

The outstanding options have a weighted average exercise price of $20.02 per
share and a weighted average remaining contractual life of 4.66 years. 3,793,980
options are exercisable at September 30, 1999.

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------------------------
NUMBER OPTIONS EXERCISABLE
OUTSTANDING WEIGHTED AVERAGE WEIGHTED ----------------------------------------
RANGE OF EXERCISE AS OF SEPTEMBER 30, REMAINING AVERAGE NUMBER EXERCISABLE AS WEIGHTED AVERAGE
PRICES 1999 CONTRACTUAL LIFE EXERCISE PRICE OF SEPTEMBER 30, 1999 EXERCISE PRICE
- --------------------- ------------------- ---------------- -------------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.04-$2.19 2,519,249 3.14 $ 2.01 1,737,349 $ 1.97
$ 2.69-$4.69 2,862,400 4.83 $ 4.25 1,197,332 $ 4.26
$ 4.94-$11.28 2,205,479 4.84 $ 6.81 561,622 $ 6.70
$13.78-$79.38 2,302,214 5.66 $54.88 247,344 $37.34
$73.75-$89.75 689,500 5.56 $77.16 50,333 $73.75
---------- ---- ------ --------- ------
$ .04-$89.75 10,578,842 4.66 $20.02 3,793,980 $ 6.65
========== ==== ====== ========= ======
</TABLE>

1999 EMPLOYEE STOCK PURCHASE PLAN

On January 28, 1999, the 1999 Employee Stock Purchase Plan was adopted by
the Company's Board of Directors. The 1999 Employee Stock Purchase Plan
authorizes the issuance of a maximum of 250,000 shares of common stock and is
administered by the Company's Board of Directors or Compensation Committee. All
employees who work more than 20 hours per week or five months per year and have
been

58
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. STOCK OPTION PLANS (CONTINUED)

employed longer than three months are eligible to participate with the exception
of those owning 5% or more of the combined voting power of the Company's stock.
Employees elect to have deducted from 1% to 10% of their base compensation up to
$25,000 per year. The exercise price for the option is the lesser of 85% of the
fair value of the common stock on the first or last day of the purchase period
(six months). An employee's rights under the plan terminate upon voluntary
withdrawal or upon termination. All 250,000 shares were available for issuance
under the plan at September 30, 1999.

6. STOCK-BASED COMPENSATION

Pro forma information regarding net loss and loss per share required by SFAS
No. 123 has been determined as if the Company had accounted for its employee
stock options and stock purchase plan under the fair value method. Under this
method, the weighted-average per share grant date fair value of options granted
in fiscal 1999, 1998 and 1997 was, $11.92, $4.41, and $1.49, respectively, for
the options granted with an exercise price less than fair value at the date of
grant, and $27.33, $2.86, and $1.35, respectively, for the options granted with
an exercise price equal to fair market value at the date of grant. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>
YEARS ENDED
------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Average risk-free interest rate.................. 6.00% 5.59% 6.39%
Average expected life (in years)................. 4.00 4.00 2.37
Dividend yield................................... 0.00% 0.00% 0.00%
Expected volatility.............................. 1.00 0.9169 0.548
</TABLE>

Under SFAS No. 123, if the Company had elected to recognize the compensation
cost based upon the fair value of the options granted at the grant date, net
loss and net loss per share would have been increased as follows (the estimated
fair value of the options is amortized to expense over the options' vesting
period)

<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------------------
1999 1998 1997
------------- ----------- -----------
<S> <C> <C> <C>
Net loss:
As reported.......................................... $ (10,842,806) $(2,265,858) $(1,674,145)
Pro forma............................................ $ (35,342,725) $(5,319,787) $(2,616,878)
Net loss applicable to common stockholders:
As reported.......................................... (170,773,539) (2,265,858) (1,674,145)
Pro-forma............................................ (195,273,458) (5,319,787) (2,616,878)
Net loss per share applicable to common stockholders:
As reported.......................................... $ (6.44) $ (.09) $ (.08)
Pro forma............................................ $ (7.36) $ (.21) $ (.13)
</TABLE>

The Company recognized compensation expense of $783,584, $212,841 and
$71,156 associated with accelerated options or options granted at less than fair
market value for the years ended September 30, 1999, 1998 and 1997,
respectively. The amounts are reflected in the Consolidated Statement of
Operations and relate primarily to general and administrative expenses.

59
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. COMMITMENTS

The Company has several noncancelable leases for its administrative
facilities and sales offices. Rental expense from these leases amounted to
approximately $643,377 and $375,350 and $153,546 for the years ended
September 30, 1999, 1998 and 1997, respectively.

Future minimum payments under noncancelable operating leases with an initial
term of one year or more were as follows at September 30, 1999:

<TABLE>
<S> <C>
2000........................................................ $ 1,822,376
2001........................................................ 1,584,781
2002........................................................ 1,598,886
2003........................................................ 1,583,098
2004........................................................ 1,306,924
Thereafter.................................................. 2,741,360
-----------
Total minimum lease payments................................ $10,637,425
===========
</TABLE>

8. REVOLVING CREDIT AGREEMENT

On August 31, 1999, the Company entered into a revolving credit agreement
with a bank that provides for the Company to borrow up to $15,000,000 at either
the bank's prime lending rate (8.25% per annum as of September 30, 1999) or
LIBOR plus 1.75%. The revolving credit agreement is secured by the Company's
accounts with the bank. All amounts outstanding under the agreement are due by
August 30, 2000. No amounts were outstanding under the line of credit at
September 30, 1999.

On December 12, 1997, the Company entered into a revolving credit agreement
with a bank that provides for the Company to borrow up to $1,000,000 at the
bank's prime lending rate (8.0% per annum as of September 30, 1998). No amounts
were outstanding under the line of credit at September 30, 1998. The agreement
expired February 13, 1999.

60
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. MERGERS AND ACQUISITIONS

On August 4, 1999, the Company acquired Dogpile, LLC
(http://www.dogpile.com) in exchange for 682,156 shares of the Company's Common
Stock and $15 million in cash, the total consideration was valued at
approximately $52.0 million. The purchase agreement also provides for additional
payments of up to $15 million over the next eighteen months contingent on future
revenues and usage of Dogpile. The additional payments, if any, will be
accounted for as additional goodwill.

On July 1, 1999, the Company acquired Authorize.Net
(http://www.authorize.net/) in exchange for 903,888 shares of the Company's
Common Stock and $13.5 million in cash, the total consideration was valued at
approximately $98.6 million. The purchase price also included the value of
Authorize.Net's outstanding stock options that were converted to options to
purchase 101,825 shares of the Company's common stock. The purchase agreement
also provides for additional payments to Authorize.Net of up to $55 million over
the next two years contingent on future revenues and operating income of
Authorzize.Net. The additional payments, if any, will be accounted for as
additional goodwill.

On May 13, 1999, the Company acquired IQC Corporation (http://www.iqc.com/)
in exchange for 226,626 shares of the Company's Common Stock valued at
approximately $19.4 million. The purchase price also included the value of IQC's
outstanding stock options that were converted to options to purchase 70,578
shares of the Company's common stock.

On April 28, 1999, the Company acquired Virtual Avenue
(http://www.virtualave.net/) and USAOnline (http://www.usaol.com/) in exchange
for 300,000 shares of the Company's Common Stock valued at approximately
$24.7 million.

On April 16, 1999, the Company acquired Haggle Online
(http://www.haggle.com/) in exchange for 82,064 shares of the Company's Common
Stock valued at approximately $6.8 million. The purchase price also included the
value of Haggle Online's outstanding stock options that were converted to
options to purchase 64 shares of the Company's common stock.

The above acquisitions were all accounted for under the purchase method of
accounting, and accordingly, the purchase price was allocated to each acquired
company's assets acquired and liabilities assumed based on their respective fair
values. The results of operations of each acquired company are included in the
Company's consolidated financial statements since the date of acquisition.

A summary of the combined consideration paid and liabilities assumed for the
above acquisitions is as follows:

<TABLE>
<S> <C>
Stock and stock options..................................... $173,075,893
Cash........................................................ 28,500,000
Direct acquisition costs.................................... 882,573
Deferred tax liability...................................... 19,441,657
Accrued liabilities assumed................................. 1,264,251
------------
Total................................................... $223,164,374
============
</TABLE>

61
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. MERGERS AND ACQUISITIONS (CONTINUED)

The combined consideration paid and liabilities assumed were allocated as
follows:

<TABLE>
<S> <C>
Cash acquired............................................... $ 1,996,365
Other assets acquired....................................... 3,430,202
Equipment................................................... 376,466
Identifiable intangibles.................................... 66,251,129
Goodwill.................................................... 151,110,212
------------
Total................................................... $223,164,374
============
</TABLE>

Identifiable intangibles and goodwill are being amortized using the
straight-line method over their estimated useful lives of 3 years.

The following unaudited pro forma financial information presents the
combined results of operations of the Company, Haggle Online, Virtual Avenue,
USAOnline, IQC Corporation, Authorize.Net and Dogpile, LLC as if the
acquisitions had occurred as of the beginning of the Company's 1998 and 1999
fiscal years, after giving effect to certain adjustments, including amortization
of goodwill. The pro forma financial information does not necessarily reflect
the results of operations that would have occurred had the Company, Haggle
Online, Virtual Avenue, USAOnline IQC Corporation, Authorize.Net and Dogpile,
LLC constituted a single entity during such periods.

<TABLE>
<CAPTION>
RESULTS OF OPERATIONS AS IF
ACQUISITION OCCURED AT
BEGINNING OF YEARS ENDED
SEPTEMBER 30,
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenue............................................ $28,953,575 $ 8,593,011
Net loss........................................... $75,964,237 $93,410,896
Net loss per share applicable to common
stockholders..................................... $ 8.89 $ 3.76
</TABLE>

On December 31, 1998, the Company merged with Web21 and exchanged all of the
issued and outstanding capital stock of Web21 for 1,343,780 shares of the
Company's Common Stock. In addition, the Company assumed options to purchase
capital stock of Web21, of which 6,929 are exercisable at September 30, 1999.
This acquisition was accounted for as a pooling of interests, and accordingly,
the financial statements for periods prior to the combination have been restated
to include the accounts and results of operations of Web21.

In connection with the merger, the Company incurred approximately $650,257
in merger-related expenses primarily for investment banking, legal and other
professional fees in the first quarter of 1999.

62
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. MERGERS AND ACQUISITIONS (CONTINUED)

Separate results for the combined entities are as follows.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, YEAR ENDED SEPTEMBER 30,
----------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Go2Net..................................... $1,955,154 $ 609,276 $ 4,830,882 $ 528,595
Web21...................................... 644,886 500,613 2,278,550 1,099,369
---------- ---------- ----------- -----------
$2,600,040 $1,109,889 $ 7,109,432 $ 1,627,964
========== ========== =========== ===========
Net Income/(Loss):
Go2Net..................................... $ (241,944) $ (368,402) $(2,371,125) $(1,756,249)
Web21...................................... (500,910) 95,679 105,267 82,104
---------- ---------- ----------- -----------
$ (742,854) $ (272,723) $(2,265,868) $(1,674,145)
========== ========== =========== ===========
</TABLE>

There were no significant intercompany transactions between the two
companies and no significant conforming accounting adjustments.

On August 3, 1998, the Company exchanged 629,996 shares of common stock for
all the outstanding capital stock of Hypermart, Inc., an acquisition accounted
for as a pooling of interests. The financial statements for the fiscal year
prior to the combination have not been restated as the impact was not material.
In connection with the merger, the Company incurred approximately $319,000 in
merger-related expenses primarily for legal and other professional fees.

Separate results for the combined entities for the period ended August 3,
1998 are as follows.

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
OCTOBER 1, 1997 TO
AUGUST 3, 1998
-------------------
<S> <C>
Revenues:
Go2Net................................................... $ 4,723,030
HyperMart................................................ 107,852
-----------
$ 4,830,882
===========
Net Income/(Loss):
Go2Net................................................... $(2,350,886)
HyperMart................................................ (20,239)
-----------
$(2,371,125)
===========
</TABLE>

HyperMart did not have any activity prior to October 1, 1997. There were no
significant intercompany transactions between the two companies and no
significant conforming accounting adjustments.

On June 23, 1998, the company acquired all of the issued and outstanding
capital stock of Silicon Investor, Inc., which began operations in April 1995,
in exchange for 4,952,172 shares of the Company's common stock. In addition, the
Company assumed options to purchase capital stock of Silicon Investor, which
were converted to 47,828 options to purchase common stock of the Company. This
acquisition was accounted for as a pooling of interests, and accordingly, the
financial statements for periods prior to the combination have been restated to
include the accounts and results of operations of Silicon Investor.

63
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. MERGERS AND ACQUISITIONS (CONTINUED)

In connection with the merger, the Company incurred approximately $716,000
in merger-related expenses primarily for legal and other professional fees in
the third quarter of 1998.

Separate results for the combined entities for the period ended June 23,
1998 and the year ended September 30, 1997 are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD FROM YEAR ENDED
OCTOBER 1, 1997 TO SEPTEMBER 30,
JUNE 23, 1998 1997
------------------- --------------
<S> <C> <C>
Revenues:
Go2Net (adjusted for Web21).................. $ 1,812,238 $ 1,353,758
Silicon Investor............................. 1,063,402 274,206
----------- -----------
$ 2,875,640 $ 1,627,964
=========== ===========
Net Income/(Loss):
Go2Net (adjusted for Web21).................. $(2,472,524) $(1,636,376)
Silicon Investor............................. 290,366 (37,769)
----------- -----------
$(2,182,158) $(1,674,145)
=========== ===========
</TABLE>

There were no significant intercompany transactions between the two
companies and no significant conforming accounting adjustments.

10. RELATED PARTY

During fiscal 1999, the Company recognized revenues of approximately
$610,000 under advertising and licensing agreements with DirectWeb, Inc., the
CEO of which was a member of the Board of Directors. The Company also recognized
revenues of approximately $53,000 under an advertising agreement with
Mercata, Inc. in fiscal 1999. Vulcan Ventures is a minority shareholder in the
Company and the majority shareholder in Mercata, Inc.

On October 20, 1999, the Company announced a nationwide marketing and
branding campaign focused on major college and professional sports stadiums and
arenas, including home games of the Seattle Seahawks National Football League
team and the Portland Trail Blazers National Basketball Association team, both
of which are owned by Paul G. Allen. The marketing campaign will be handled by
Action Sports Media, a sports venue-marketing firm founded by Vulcan.

On October 1, 1999, the Company announced an agreement in principle to form
a new company, Broadband Partners, which is a joint venture among the Company,
Vulcan and Charter Communications Holding Company. Under the joint venture, the
Company will distribute customized versions of its content, technologies and
services via Broadband Partners to subscribers of Charter Communications, RCN
Corporation, High Speed Access Corporation and other companies from the
investment portfolio of Vulcan. The Company will own a 19.9% equity interest in
the joint venture, subject to certain dilution adjustments. Each investor will
be obligated to provide their pro rata share of funding for Broadband's
operations and capital expenditures, except that Vulcan will fund Charter
Communications' portions of Broadband's expenses for the first four years and
will fund the Company's portion of Broadband's expenses to the extent such
expenses exceed budget for the first four years. Vulcan is a minority
shareholder of RCN Corporation and High Speed Access Corporation and a majority
shareholder in Charter Communications.

64
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. RELATED PARTY (CONTINUED)

On July 7, 1999, the Company acquired 896,057 shares of Common Stock of
CommTouch Software, LTD. ("CommTouch") and received warrants to acquire an
additional 1,136,000 shares of Common Stock. The stock and warrants were valued
at $13,970,628. The investment, carried at fair market value, represents an
approximate 13.9% stake in Commtouch on a fully diluted basis. In conjunction
with the equity investment, the Company received one seat on CommTouch's Board
of Directors and entered into a distribution and marketing agreement with
CommTouch. Vulcan is a minority shareholder of CommTouch.

On July 21, 1999, the Company acquired 428,571 shares of Common Stock of
Click2Learn, Inc. (Click2Learn) and received warrants to acquire an additional
428,571 shares of Common Stock. The stock and warrants were valued at
$3,245,700. The investment, carried at fair market value, represents an
approximate 5.8% stake in Click2Learn on a fully diluted basis. In conjunction
with the equity investment the Company entered into a three-year marketing,
distribution, licensing and co-branding partnership with Click2Learn. Vulcan is
a majority shareholder of Click2Learn.

On November 3, 1998, the Company purchased 13,158 shares of Series D
Preferred Stock of Conducent Technologies, Inc. ("Conducent") valued at
approximately $250,000. The investment, carried at cost, represents an
approximate 1.3% stake in Conducent on a fully diluted basis. Conducent is the
owner of the AdGateway service, a leading provider of software advertising
solutions. Go2Net has partnered with Conducent on ad sales and software
distribution by Go2Net's salesforce. The CEO of Conducent is a former member of
the Company's board of directors.

11. SUBSEQUENT EVENTS

On October 29, 1999, the Company announced a three year agreement with
Net2Phone to exclusively integrate Net2Phone's PC-to-phone technology and their
communications services throughout the Go2Net Network in exchange for
$15 million in cash from Net2Phone.

On October 22, 1999, the Company entered into a merger agreement pursuant to
which it acquired FreeYellow.com, Inc. (www.freeyellow.com) in exchange for
334,161 shares of the Company's Common Stock and $1 million in cash. The total
consideration was valued at approximately $19.5 million. The transaction will be
accounted for under the purchase method of accounting, and accordingly, the
purchase price will be allocated to assets acquired and liabilities assumed
based on their respective fair values.

12. SEGMENT INFORMATION

We have identified our reportable segments based on how our operations are
managed and how results are viewed by management. The accounting policies of the
operating segments are the same as those described in the summary of significant
accounting policies. The Company does not track expenses, operating income or
assets by operating segments. Consequently, we do not disclose expenses,
operating income or assets by operating segments. The have been no transactions
between segments. The following

65
<PAGE>
GO2NET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SEGMENT INFORMATION (CONTINUED)

results are broken out by our operating segments for the fiscal years ended
September 30, 1997, 1998, and 1999:

<TABLE>
<CAPTION>
SUBSCRIPTIONS,
ELECTRONIC
COMMERCE, LICENSE
YEAR ENDED SEPTEMBER 30, ADVERTISING AND OTHER CONSOLIDATED
- ------------------------ ----------- ----------------- ------------
<S> <C> <C> <C>
1997
Revenue........................... 1,353,758 274,206 1,627,964

1998
Revenue........................... 5,804,915 1,304,517 7,109,432

1999
Revenue........................... 16,456,463 5,978,572 22,435,035
</TABLE>

66
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On July 14, 1999, the audit committee of the Company dismissed Ernst & Young
LLP as the Company's independent accountants. On July 19, 1999, the Company
engaged KPMG LLP as the Company's independent accountants.

PART III

In accordance with General Instruction G(3) to Form 10-K, except as
indicated in the following sentence, the information called for by Items 10, 11,
12 and 13 is incorporated by reference from the registrant's definitive proxy
statement pursuant to Regulation 14A for the 2000 Annual Meeting of
Shareholders. As permitted by General Instruction G(3) to Form 10-K and
Instruction 3 to Item 401(b) of Regulation S-K, the information on executive
officers called for by Item 10 is included in Part I of this Annual Report on
Form 10-K.

PART IV

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

(a) Financial Statements and Schedules

(1) FINANCIAL INFORMATION

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
ITEM 1......................................................
Report of KPMG LLP, Independent Auditors.................... 39
Financial Statements:
Consolidated Balance Sheets............................... 40
Consolidated Statements of Operations..................... 41
Consolidated Statements of Stockholders' Equity and
Comprehensive Loss...................................... 42
Consolidated Statements of Cash Flows..................... 43
Notes to Consolidated Financial Statements................ 44
</TABLE>

(2) FINANCIAL STATEMENTS SCHEDULE

All schedules have been omitted since they are either not applicable, not
required or the information is included elsewhere herein.

(3) EXHIBITS

See (c) below

(b) Reports on Form 8-K

Form 8-K/A was filed by the Company on July 2, 1999, with respect to the
acquisition of Haggle Online, Inc. and Virtual Avenue, Inc. and
USAOnline, Inc.

Form 8-K was filed by the Company on July 13, 1999, with respect to the
acquisition of Authorize.Net Corporation.

Form 8-K was filed by the Company on July 19, 1999, with respect to the
change in the Company's certifying accountants.

Form 8-K/A was filed by the Company on July 27, 1999, with respect to the
acquisition of IQC Corporation.

67
<PAGE>
Form 8-K was filed by the Company on August 18, 1999, with respect to the
acquisition of Dogpile, LLC.

Form 8-K/A was filed by the Company on September 13, 1999, with respect
to the acquisition of Authorize.Net Corporation.

Form 8-K/A was filed by the Company on October 18, 1999, with respect to
the acquisition of Dogpile, LLC.

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
- --------------------- -----
<C> <S>
2.1 Agreement and Plan of Merger, dated December 31, 1998 by and
among the Company, WTO Acquisition Corp., Web21 and Bert
Fornaciari. (Incorporated by reference from the Company's
report on Form 8-K filed January 12, 1999)

2.1 Agreement and Plan of Merger, dated April 16, 1999 by and
among the Company, HO Acquisition Corp., Haggle Online and
the principal shareholder of Haggle. (Incorporated by
reference from the Company's report on Form 8-K filed
May 3, 1999)

2.3 Agreement and Plan of Merger dated April 28, 1999 by and
among the Company, USAO Acquisition Corp., Virtual
Avenue, Inc., USAOnline, Inc. and those parties named
therein. (Incorporated by reference from the Company's
report on Form 8-K filed May 3, 1999)

2.2 Agreement and Plan of Merger, dated May 13, 1999 by and
among the Company, VA Acquisition Corporation, IQC
Corporation and the shareholders and option holders of IQC
Corporation. (Incorporated by reference from the Company's
report on Form 8-K filed May 28, 1999)

2.3 Agreement and Plan of Merger, dated July 1, 1999 by and
among the Company, 3I Acquisition Corporation,
Authorize.Net Corporation and the principal shareholders
of Authorize.Net Corporation. (Incorporated by reference
from the Company's Form 8-K filed July 13, 1999)

2.4 Interest Purchase Agreement, dated August 4, 1999 by and
among the Company, Dogpile, LLC, Pile, Incorporated,
Thunderstone Software LLC, the stockholders of Pile,
Incorporated, and the member of Thunderstone Software,
LLC. (Incorporated by reference from the Company's report
on Form 8-K filed August 18, 1999)

3.1 Restated Certificate of Incorporation of the Company.
(Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 333-19051))

3.2 Amended and Restated Bylaws of the Company. (Incorporated by
reference from the Company's Registration Statement on
Form S-1 (Registration No. 333-19051))

3.3 Certificate of Designation of Series A Convertible Preferred
Stock, dated March 15, 1999 by and between the Company and
Vulcan Ventures Incorporated. (Incorporated by reference
from the Company's report on Form 8-K filed April 12,
1999)

4.1 Specimen stock certificate representing the shares of Common
Stock. (Incorporated by reference from the Company's
Registration Statement on Form S-1 (Registration
No. 333-19051))

4.2 Registration Rights Agreement, dated March 15, 1999, by and
between the Company and Vulcan Ventures Incorporated.
(Incorporated by reference from the Company's report on
Form 8-K filed April 12, 1999)

4.3 Form of Stock Purchase and Voting Agreement for
Non-Executive Directors. (Incorporated by reference from
the Company's report on Form 8-K filed April 12, 1999)
</TABLE>

68
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
- --------------------- -----
<C> <S>
4.4 Form of Stock Purchase and Voting Agreement for Executive
Directors. (Incorporated by reference from the Company's
report on Form 8-K filed April 12, 1999)

10.1 Form of Preferred Stock Subscription Agreement.
(Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 333-19051))

10.2* Employment Agreement, dated March 1, 1996, between the
Company and Russell C. Horowitz. (Incorporated by
reference from the Company's Registration Statement on
Form S-1 (Registration No. 333-19051))

10.3* Employment Agreement, dated March 1, 1996, between the
Company and John Keister. (Incorporated by reference from
the Company's Registration Statement on Form S-1
(Registration No. 333-19051))

10.4* Employment Agreement, dated October 13, 1998, between the
Company and Michael J. Riccio, Jr. (Incorporated by
reference from the Company's Quarterly Report on Form 10-Q
for the quarterly period ended May 4, 1999 (File
No. 0-22047))

10.5 Amended and Restated Credit Agreement, dated August 31,
1999, between the Company and Imperial Bank.

10.6 Sublease Agreement, dated March 18, 1997, between the
Company and Wells Fargo Bank, N.A. (Incorporated by
reference from the Company's Annual Report on Form 10-K
for the year ended September 30, 1999)

10.7* Go2Net, Inc. 1996 Stock Option Plan. (Incorporated by
reference from the Company's Registration Statement on
Form S-1 (Registration No. 333-19051))

10.8* Web21 Stock Option Plan (Incorporated by reference to the
Company's registration statement on Form S-8 (Registration
No. 333-76071))

10.9* Authorize.Net Corporation Stock Incentive Plan.
(Incorporated by reference to the Company's registration
statement on Form S-8 (Registration No. 333-82765))

10.10* Haggle Online, Inc. Stock Option Agreement. (Incorporated by
reference to the Company's registration statement on
Form S-8 (Registration No. 333-82765))

10.11* Form of IQC Corporation Stock Option Agreement.
(Incorporated by reference to the Company's registration
statement on Form S-8 (Registration No. 333-82765))

10.12 License Agreement dated as of January 31, 1997 between
Netbot, Inc. and the Company. (Incorporated by reference
from the Company's Registration Statement on Form S-1
(Registration No. 333-19051))

10.13 Subscription Agreement dated as of August 7, 1996 between
Sports Ticker Enterprises, L.P. and the Company.
(Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 333-19051))

10.14 S&P Comstock Information Distribution License Agreement
dated as of August 16, 1996 between S&P Comstock, Inc. and
the Company. (Incorporated by reference from the Company's
Registration Statement on Form S-1 (Registration
No. 333-19051))

10.15 Distributor Agreement dated as of September 6, 1996 between
Comtex Scientific Corporation and the Company.
(Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 333-19051))

10.16 Stock Purchase Agreement, dated as of March 15, 1999, by and
between the Company and Vulcan Ventures Incorporated.
(Incorporated by reference from the Company's report on
Form 8-K filed April 12, 1999)
</TABLE>

69
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
- --------------------- -----
<C> <S>
10.17 Pier 70 Lease Agreement dated July 20, 1999, between Triad
Pier 10, LLC and the Company. (Incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarterly period ended August 13, 1999(File No. 0-22047)

10.18* Employment Agreement, dated March 1, 1996, between the
Company and Oren Etzioni.

21.1 Subsidiaries of Go2Net, Inc.

23.1 Consent of KPMG LLP, Independent Auditors

27.1 Financial Data Schedule
</TABLE>

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

* Indicates Management Compensatory plan, contract or arrangement.

70
<PAGE>
SIGNATURES

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

<TABLE>
<S> <C> <C>
GO2NET, INC.

By: /s/ RUSSELL C. HOROWITZ
-----------------------------------------
Name: Russell C. Horowitz
Title: Chief Executive Officer
Date: December 29, 1999
</TABLE>

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chief Executive Officer,
/s/ RUSSELL C. HOROWITZ Chief Financial Officer
------------------------------------------- and Director (principal December 29, 1999
Russell C. Horowitz executive, financial and
accounting officer)

/s/ DENNIS CLINE
------------------------------------------- Director December 29, 1999
Dennis Cline

/s/ BILL SAVOY
------------------------------------------- Director December 29, 1999
Bill Savoy

/s/ DIANE DAGGAT
------------------------------------------- Director December 29, 1999
Diane Daggat

/s/ BILL FLECKENSTEIN
------------------------------------------- Director December 29, 1999
Bill Fleckenstein
</TABLE>

<PAGE>

[LOGO] LIBOR ADDENDUM
IMPERIAL BANK TO NOTE
Member FDIC

This Libor Addendum ("Addendum") is dated as of AUGUST 31, 1999, and is
by and between GO2NET, INC., A DELAWARE CORPORATION ("Borrower") and Imperial
Bank ("Bank"). This Addendum amends and supplements the PROMISSORY NOTE to
which it is attached (the "Note") and forms a part of and is incorporated
into the Note.

In the event of any inconsistency between the terms herein and the terms
of the Note, the terms herein shall in all cases govern and control. All
capitalized terms herein, unless otherwise defined herein, shall have the
meanings set forth in the Note.

1. ADVANCES.

1.1 PRIME LOANS. Advances permitted pursuant to the terms of the Note
or this Addendum which bear interest in relation to Bank's Prime Rate shall be
referred to herein as "Prime Loans" and each such advance shall be a "Prime
Loan." Each Prime Loan shall bear interest at an annual rate equal to the sum
of 00.000% plus the Bank's Prime Rate. "Prime Rate" shall mean the rate of
interest publicly announced by Bank from time to time in Inglewood,
California, as its prime rate for lending. The Prime Rate is not intended to
be the lowest rate of interest charged by Bank in connection with extensions
of credit to borrowers.

1.2 LIBOR LOANS. Advances permitted pursuant to the terms of the Note
or this Addendum which bear interest in relation to the Libor Rate shall be
referred to herein as "Libor Loans" and each such advance shall be a "Libor
Loan." Each Libor Loan shall bear interest at the Libor Rate, as defined
below. A Libor Loan shall be in the minimum amount of ONE MILLION DOLLARS
($1,000,000) or such greater amount which is an integral multiple of FIFTY
THOUSAND DOLLARS ($50,000). No Libor Loan shall be made after the last
Business Day that is at least THREE (3) MONTHS prior to the Maturity Date
described in the Note.

2. INTEREST ON LIBOR LOANS.

2.1 RATE OF INTEREST. Each Libor Loan shall bear interest on the unpaid
principal amount thereof from the Loan Date through the date paid (whether by
acceleration or otherwise) at a rate equal to the sum of 1.760% per annum
plus the Libor Rate for the Interest Period.

(a) "Loan Date" shall mean the date on which (i) a Libor Loan is
made, a Libor Loan is continued, or a Prime Loan is converted to a Libor Loan.

(b) "Interest Period" shall mean a period of ONE (1), THREE (3)
OR SIX (6) MONTHS, commencing on the applicable Loan Date, as selected by
Borrower pursuant to Section 2.2 PROVIDED, HOWEVER, that Borrower may not
select an Interest Period that would otherwise extend beyond the Maturity Date
of the Loan. Borrower may also select a twelve (12) month Interest Period if
and when Bank notifies Borrower that such Interest Period is available, as
determined by Bank in its sole discretion.

(c) "Libor Rate" shall mean, for the applicable Interest Period for
a Libor Loan, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) equal to (i) the Libor Base Rate for such Interest Period
divided by (ii) 1.00 minus the Reserve Requirement Rate (expressed as a
decimal fraction) for such Interest Period.

(d) "Libor Base Rate" shall mean with respect to any Interest
Period, the rate equal to the arithmetic mean (rounded upwards, if necessary,
to the nearest 1/16 of 1%) of:

(i) the offered rates per annum for deposits in U.S. Dollars
for a period equal to such Interest Period which appears at 11:00 a.m.,
London time, on the Reuters Screen LIBOR Page on the Business Day that
is two (2) Business Days before the first day of such Interest Period,
in each case if at least four (4) such offered rates appear on such
page, or

(ii) if clause (i) is inapplicable, (x) the offered rate per
annum for deposits in U.S. Dollars for a period equal to such Interest
Period which appears as of 11:00 a.m., London time on the Telerate
Monitor on Telerate Screen 3750 on the Business Day which is two (2)
Business Days before the first day of such Interest Period; or (y) if
clause (x) above is inapplicable, the arithmetic mean (rounded upwards,
if necessary, to the nearest 1/16 of 1%) of the interest rates per
annum offered by at least three (3) prime banks selected by Bank at
approximately 11:00 a.m. London time, on the Business Day which is two
(2) Business Days before such date for deposits in U.S. Dollars to prime
banks in the London interbank market, in each case for a period equal to
such Interest Period in an amount equal to the amount to which the Libor
Rate applies.

Page 1 of 4
<PAGE>

(e) "Business Day" means any day on which Bank is open for
business in the state of California.

(f) "Reuters Screen LIBOR Page" means the display designated as
page LIBOR on the Reuters Monitor Money Rates Service or such other page as
may replace the LIBOR page on that service for the purpose of displaying
London interbank offered rates of major banks.

(g) "Reserve Requirement Rate" means, for any Interest Period, the
aggregate of the rates, effective as of the Business Day which is two (2)
Business Days before the first day of the Interest Period, at which:

(i) reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest
Period under Regulation D against "Eurocurrency liabilities" (as such
term is used in Regulation D) by member banks of the Federal Reserve
System; and

(ii) any additional reserves are required to be maintained by
Bank by reason of any Regulatory Change against (x) any category of
liabilities which includes deposits by reference to which the Libor Rate
is to be determined as provided in the definition of "Libor Base Rate,"
or (y) any category of extensions of credit or other assets which
include Libor Loans.

(h) "Regulatory Change" means, with respect to Bank, any change on
or after the date of the Note and this Addendum in any Governmental
Regulation, including the introduction of any new Governmental Regulation or
the rescission of any existing Governmental Regulation.

(i) "Governmental Regulation" means any (i) United States Federal,
state or foreign law or regulation (including without limitation Regulation
D); and (ii) the adoption or making of any interpretation, application,
directive or request applying to a class of lenders, including Bank, of or
under any United States Federal, state, or any foreign law or regulation
(whether or not having the force of law) by any court or by any governmental,
central banking, monetary or taxing authority charged with the interpretation
or administration of such law or regulation.

2.2 DETERMINATION OF INTEREST RATES. Subject to the terms and
conditions of the Note and this Addendum, Borrower, at its option, may
request an advance in the form of a Libor Loan, a continuation of a Libor
Loan, or a conversion of a Prime Loan into a Libor Loan, only upon delivery
to Bank of an irrevocable written notice received by Bank at least three (3)
Business Days prior to the requested Loan Date, specifying (i) the principal
amount of such Libor Loan, (ii) the requested Loan Date, and (iii) the
selected Interest Period. Upon receiving such notice, Bank shall determine
(which determination shall be in accordance with Section 2.1 and shall,
absent manifest error, be final, conclusive and binding upon all parties
hereto) the Libor Rate applicable to such Libor Loan two (2) Business Days
prior to the Loan Date, and shall promptly give notice thereof (in writing
or by telephone confirmed in writing) to Borrower. If Borrower shall fail to
notify Bank of its selected Interest Period for a Libor Loan (including the
continuation of an existing Libor Loan or the conversion of a Prime Loan into
a Libor Loan), the Borrower shall be deemed to have selected an Interest
Period of three (3) months.

2.3 COMPUTATION OF INTEREST AND FEES. All computations of interest and
fees payable pursuant to the Note shall be calculated on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed (less the
date of repayment).

2.4 RECORDATION BY BANK. Bank is hereby authorized to record the Loan
Date, the applicable Interest Period, the principal amount, and the interest
rate of each Libor Loan made (or continued or converted) by Bank, and the date
and amount of each payment or prepayment or principal thereof, in Bank's
records. Any such recordation shall constitute PRIMA FACIE evidence of the
accuracy of the information recorded; PROVIDED that the failure to make any such
recordation shall not in any way affect the Borrower's obligations
hereunder.

3. CONVERSION TO PRIME LOANS.

3.1 ELECTION BY BORROWER. Subject to all the terms and conditions of this
Addendum, Borrower may elect from time to time to convert a Libor Loan to a
Prime Loan by giving Bank at least three (3) Business Days' prior irrevocable
notice of such election, and any such conversion of a Libor Loan shall be made
on the last day of the Interest Period with respect thereto.

3.2 FAILURE OF NOTICE BY BORROWER. If Borrower otherwise fails to give
notice specifying its requests with respect to any Libor Loans that are
scheduled to become due, such failure shall be deemed, in the absence of any
notice from Borrower to the contrary, to be notice of a requested advance in the
form of a Prime Loan in a principal amount equal to the amount of said Libor
Loan.

4. PREPAYMENTS.

4.1 VOLUNTARY PREPAYMENT BY BORROWER. Subject to the terms and conditions
of the Note and this Addendum, Borrower may, upon at least three (3) Business
Days' irrevocable notice to Bank as provided herein, at any time and from time
to time on any Business Day prepay any Prime Loan or Libor Loan in whole or in
part, without penalty or premium, other than customary actual "Breakage Fees"
and "Prepayment Costs" as defined below, resulting from prepayment of any Libor
Loan prior to the expiration of the Interest Period relating thereto. The
notice of prepayment shall specify the date and amount of the prepayment, and
the Loan to which the

Page 2 of 4
<PAGE>

prepayment applies. Each partial prepayment of a Libor Loan shall be in an
amount not less than ONE HUNDRED THOUSAND DOLLARS ($100,000) or such greater
amount which is an integral multiple of FIFTY THOUSAND DOLLARS ($50,000);
PROVIDED, that unless a Libor Loan is prepaid in full, no prepayment shall be
made if, after giving effect to such prepayment, the aggregate principal
amount of Libor Loans having the same Interest Period shall be less than ONE
MILLION DOLLARS ($1,000,000). Notice of prepayment having been delivered as
aforesaid, the principal amount of the prepayment specified in such notice
shall become due and payable on the prepayment date set forth in such notice.
All payments of principal under this Section 4 shall be accompanied by
accrued but unpaid interest on the amount being prepaid through the date of
such prepayment.

4.2 BREAKAGE FEES. If for any reason (including voluntary or mandatory
prepayment, voluntary or mandatory conversion of a Libor Loan into a Prime Loan,
or acceleration), Bank receives all or part of the principal amount of a Libor
Loan prior to the last day of the Interest Period for such Loan, Borrower shall
immediately notify Borrower's account officer at Bank and, on demand by Bank,
pay Bank the Breakage Fees, defined as the amount (if any) by which (i) the
additional interest which would have been payable on the amount so received had
it not been received until the last day such Interest Period exceeds (ii) the
interest which would have been recoverable by Bank (without regard to whether
Bank actually so invests said funds) by placing the amount so received on
deposit in the certificate of deposit markets or the offshore currency interbank
markets or United States Treasury investment products, as the case may be, for a
period starting on the date on which it was so received and ending on the last
day of such Interest Period at the interest rate determined by Bank in its
reasonable discretion. Bank's determination as to such amount shall be
conclusive and final, absent manifest error.

4.3 PREPAYMENT COSTS. Borrower shall pay to Bank, upon the demand of Bank,
such other amount or amounts as shall be sufficient (in the sole good faith
opinion of Bank) to compensate it for any loss, costs or expense incurred by it
as a result of any prepayment by Borrower (including voluntary or mandatory
prepayment, voluntary or mandatory conversion of a Libor Loan into a Prime Loan,
or prepayment due to acceleration) of all or part of the principal amount of a
Libor Loan prior to the last day of the Interest Period for such Loan (including
without limitation any failure by Borrower to borrow a Libor Loan on the Loan
Date for such borrowing specified in the relevant notice of borrowing
hereunder). Such costs shall include, without limitation, any interest or fees
payable by Bank to lenders of funds obtained by it in order to make or maintain
its loans based on the London interbank eurodollar market. Bank's determination
as to such costs shall be conclusive and final, absent manifest error.

5. REMEDIES UPON EVENTS OF DEFAULT.

5.1 CONVERSION TO PRIME LOANS. If any Event of Default has occurred and
is continuing under the Note or this Addendum, then in addition to all other
remedies available to Bank under the Note, at the option of Bank and without
demand or notice, all Libor Loans then outstanding shall be automatically
converted to Prime Loans on the last day of each respective Interest Period
for each Libor Loan.

5.2 INDEMNITY. Borrower agrees to pay and indemnify Bank for, and to hold
Bank harmless from, any and all cost, loss or expense (including without
limitation any such cost, loss or expense arising from interest or fees payable
by Bank to lenders of funds obtained by it in order to maintain its Libor Loans
hereunder, or in its reemployment of funds obtained in connection with the
making or maintaining of Libor Loans) which Bank may sustain or incur as a
consequence of any default by Borrower in connection with or related to: (a)
payment of the principal amount of or interest on Libor Loans, (b) making a
borrowing or conversion of a Libor Loan after Borrower has given a notice
thereof in accordance with this Addendum, or (c) making a prepayment of a Libor
Loan after Borrower has given a notice thereof in accordance with this Addendum,
or any prepayment (whether optional or mandatory) of any Libor Loan prior to the
end of the applicable Interest Period for such Loan.

6. ADDITIONAL PROVISIONS REGARDING LIBOR LOANS.

6.1 LIBOR RATE TAXES. All payments of principal, interest, fees, costs,
expenses and all other amounts payable to Borrower pursuant to the Note and this
Addendum shall be made free and clear of and without reduction by reason of all
present and future income, stamp and other taxes or other charges whatsoever
imposed, assessed, levied or collected by any national government or any
political subdivision or taxing authority thereof or any organization of which
it is a member (excluding (i) any taxes imposed on or measured by the overall
net income or gross receipts of Bank by any such entity, and (ii) any taxes
which would have been imposed even if no provisions for Libor Loans had appeared
in this Addendum)(collectively, "Libor Taxes").

If any Libor Taxes are required to be withheld from any amounts
payable to Bank, Borrower shall pay such additional amounts as may be necessary
so as to yield to Bank a net amount equal to the total amount of the payments
provided for in this Addendum or under the Note which Bank would have received
if such amounts had not been subject to Libor Taxes.

If any Libor Taxes are payable directly by Borrower, they shall be
paid by Borrower prior to the date on which penalties attach for failure to
timely pay such Libor Taxes. Within forty five (45) days after the date on which
payment of any such Libor Taxes is due pursuant to applicable law, Borrower
will furnish Bank the original receipt for the full payment of such Libor Taxes
or, if such is not available, evidence of such payment satisfactory in form and
substance to Bank. Borrower shall indemnify and hold Bank harmless against, and
will reimburse to Bank, upon demand, any incremental taxes, interest or
penalties that may become payable by Bank as a result of any failure by Borrower
to pay any Libor Taxes when due.

Page 3 of 4
<PAGE>

6.2 INABILITY TO DETERMINE FAIR INTEREST RATE. If at any time Bank, in its
sole and absolute discretion, determines that (i) the amount of the Libor Loans
for periods equal to the corresponding Interest Periods are not available to
Bank in the offshore currency interbank markets, (ii) the Libor Rate does not
accurately reflect the cost to Bank of lending the Libor Loan, or (iii) by
reason of any changes arising after the date of the Note affecting the London
interbank eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in Sections
2.1 or 2.2 above, then Bank shall promptly give notice thereof to Borrower. Upon
the giving of such notice, Bank's obligation to make Libor Loans shall
terminate, unless Bank and the Borrower agree in writing to a different interest
rate applicable to Libor Loans, or until such time as Bank notifies Borrower
that the circumstances giving rise to Bank's notice no longer exist. While such
circumstances continue to exist, (x) any requested Libor Loan shall be treated
as a request for a Prime Loan, (y) any Prime Loan that was to have been
converted to a Libor Loan shall be continued as a Prime Loan, and (z) any
outstanding Libor Loan shall be converted retroactively, on the first day of the
then current Interest Period with respect thereto, to a Prime Loan.

6.3 ILLEGALITY OR IMPRACTICABILITY. If (i) due to any Governmental
Regulation it shall become unlawful for Bank to continue to fund or maintain any
Libor Loans, or to perform its obligations hereunder, or (ii) due to any
contingency occurring after the date of the Note which has a material adverse
effect on the London interbank eurodollar market, it has become impracticable
for Bank to continue to fund or maintain any Libor Loans, or to perform its
obligations hereunder, then Bank shall promptly give notice thereof to Borrower.
Upon the giving of such notice, Bank's obligation to make Libor Loans shall
terminate, and in such event, (x) any requested Libor Loan shall be treated as a
request for a Prime Loan, (y) any Prime Loan that was to have been converted to
a Libor Loan shall be continued as a Prime Loan, and (z) any outstanding Libor
Loan shall be converted retroactively, on the first day of the then current
Interest Period with respect thereto, to a Prime Loan.

6.4 GOVERNMENTAL REGULATIONS; INCREASED COSTS. Borrower shall pay Bank,
within 15 days after demand by Bank, from time to time such amounts as Bank may
determine to be necessary to compensate it for any increased costs incurred by
Bank that Bank determines are attributable to its making or maintaining of any
Libor Loans to Borrower (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), in each case resulting from
any Regulatory Change which:

(a) imposes a new tax or changes the basis of taxation of any amounts
payable to Bank under the Note or this Addendum in respect of any Libor Loans
(other than changes which affect taxes measured by or imposed on the overall net
income of Bank by the jurisdiction in which such Bank has its principal office);
or

(b) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits or other liabilities with or for the account of Bank (including any
Libor Loans or any deposits referred to in the definition of Libor Base Rate);
or

(d) imposes or modifies a Governmental Regulation regarding capital
adequacy which has or would have the effect of reducing the rate of return on
capital of Bank or any person or entity controlling Bank ("Parent") as a
consequence of its obligations hereunder to a level below that which Bank (or
its Parent) could have achieved but for such adoption, change or compliance
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by Bank to be material.

Bank will notify Borrower of any event occurring after the date of the Note
which will entitle Bank to Additional Costs pursuant to this Section 6.4 as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Bank will furnish Borrower with a statement setting
forth the basis and amount of each request by Bank for Additional Costs under
this Section 6.4. Determinations and allocations by Bank for purposes of this
Section 6.4 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Libor Loans or of making or maintaining Libor Loans or
on amounts receivable by it in respect of Libor Loans, and of the additional
amounts required to compensate Bank in respect of any Additional Costs, shall be
conclusive and final, absent manifest error.

PLEASE SEE ADDENDUM TO LIBOR ADDENDUM OF NOTE ATTACHED HERETO AND MADE A
PART HEREOF.

This Addendum is executed as of the date first written above.

BORROWER BANK

GO2NET, INC. IMPERIAL BANK,
- ------------------------------------ a California banking corporation

a DELAWARE CORPORATION
----------------------------------

By /s/Jeff Bergstrom JEFF BERGSTROM By /s/ J.P. Michael
---------------------------------- ---------------------------------
J.P. Michael

Its VP DIRECTOR OF FINANCE Its VICE PRESIDENT
--------------------------------- -------------------------------

By
----------------------------------

Its
----------------------------------

Page 4 of 4

<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$15,000,000.00 08-31-1999 08-01-2000 73600083 382 [Illegible]
- ------------------------------------------------------------------------------------------------
</TABLE>

- ------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- ------------------------------------------------------------------------------

<TABLE>
<S> <C>
BORROWER: GO2NET, INC., A DELAWARE CORPORATION LENDER: Imperial Bank
999 THIRD AVENUE, SUITE 4700 Emerging Growth Industries Group -
SEATTLE, WA 98104 Pacific Northwest Regional Office
226 Airport Parkway
San Jose, CA 95110-1024
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C> <C>
PRINCIPAL AMOUNT: $15,000,000.00 INITIAL RATE: 8.250% DATE OF NOTE: AUGUST 31, 1999
</TABLE>

PROMISE TO PAY. GO2NET, INC., A DELAWARE CORPORATION ("Borrower") promises to
pay to Imperial Bank ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Fifteen Million & 00/100 Dollars
($15,000,000.00) or so much as may be outstanding, together with interest on
the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on August 31, 2000. In addition, Borrower will
pay regular monthly payments of accrued unpaid interest beginning September 10,
1999, and all subsequent interest payments are due on the last day of each month
after that. The annual interest rate for the Note is computed on a 365/360
basis: that is, by applying the ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Borrower will pay
Lender at Lender's address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to any unpaid collection costs and any late
charges, then to any unpaid interest, and any remaining amount to principal.

VARIABLE INTEREST RATE. Subject to designation of a different interest rate
index by Borrower as provided below, the interest rate on this Note is subject
to change from time to time based on changes in an index which is the Imperial
Bank Prime Rate (the "Index"). The Prime Rate is the rate announced by Lender
as its Prime Rate of Interest from time to time. Lender will tell Borrower
the current Index rate upon Borrower's request. Borrower understands that
Lender may make loans based on other rates as well. The interest rate change
will not occur more often than each day. The Index currently is 8.250%. The
Interest rate to be applied to the unpaid principal balance of this Note will
be at a rate equal to the Index, resulting in an initial rate of 8.250%.
NOTICE: Under no circumstances will the interest rate on this Note be more
than the maximum rate allowed by applicable law.

INTEREST RATE OPTIONS. The following interest rate options are available
under this Note:

(a) Default Option. The interest rate margin and index described in
the "VARIABLE INTEREST RATE" paragraph above (the "Default Option").

(b) LIBOR. A margin of 1,750 percentage points over LIBOR. For
purposes of this Note, LIBOR shall mean London Inter-Bank Offered
Rate as provided in the LIBOR ADDENDUM TO NOTE attached hereto and
made a part hereof.

When the Interest rate is based on a fixed rate, the rate shall be in effect for
a period of the number of days or months as indicated in the rate option
description ("the Interest Period"). In any case extended to the next
succeeding business day when necessary, beginning on a borrowing date,
conversion date or expiration date of the then current Interest Period.
Adjustments in the interest rate due to changes in the maximum nonusurious
interest rate allowed (the "Highest Lawful Rate") shall be made on the
effective day of any change in the Highest Lawful Rate.

Provided Borrower is not in default under this Note, Borrower may designate in
dvance which of the above interest rate indexes shall be applicable to any loan
advance under this Note and shall designate any optional Interest Period
applicable to any fixed rate loan or advance. In the absence of any such
designation the interest rate option shall be the Default Option. Thereafter
unpaid principal balances under this Note may be converted (at the end of an
Interest Period if the index used to determine the Interest rate therefore is a
fixed rate) to another of the above interest rate options, or continued for an
additional interest period, when applicable, as designated by Borrower in
advance; and in the absence of sufficient advance designation as to conversion
to or continuation of a fixed rate index, the index shall be converted to the
Default Option. Notwithstanding the foregoing, a fixed rate index may not be
elected for a loan or advance under the Note, nor any conversion to or
continuation of a fixed rate index be elected, if the Interest Period thereof
would extend beyond the maturity of this Note.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even
upon full prepayment of this Note, Borrower understands that Lender is entitled
to a minimum Interest charge of $250.00. Other than Borrower's obligation to
pay any minimum Interest charge, Borrower may pay without penalty all or a
portion of the amount owed earlier than it is due. Early payments will not,
unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to continue to make payments of accrued unpaid interest. Rather,
they will reduce the principal balance due.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the Unpaid portion of the regularly scheduled payment.

DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payments when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other loan, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or furnished
to Lender by Borrower or on Borrower's behalf is false or misleading in any
material respect either now or at the time made or furnished. (d) Borrower
becomes insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (e) Any creditor tries to take any of Borrower's property on
or in which Lender has a lien or security interest. This includes garnishment
of any of Borrower's accounts with Lender. (f) Any guarantor dies or any of the
other events described in this default section occurs with respect to any
guarantor of this Note. (g) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the indebtedness is impaired. (h) Lender in good faith deems itself
insecure.

If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within ten (10) days; or
(b) If the cure requires more than ten (10) days, immediately initiates steps
which Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, without notice, and then Borrower will pay that amount. Upon Borrower's
failure to pay all amounts declared due pursuant to this section, including
failure to pay upon final maturity, Lender, at its option, may also, if
permitted under applicable law, do one or both of the following: (a) increase
the variable interest rate on this Note to 5.000 percentage points over the
Index, and (b) add any unpaid accrued interest to principal and such sum will
bear Interest therefrom until paid at the rate provided in this Note
(including any increased rate). Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses whether or not there is
a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services,
Borrower also will pay any court costs, in addition to all other sums
provided by law. THIS NOTE HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF LOS
ANGELES COUNTY, THE STATE OF CALIFORNIA. LENDER AND BORROWER HEREBY WAIVE
THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. (INITIAL HERE
[ILLEGIBLE]) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
- ------------
THE LAWS OF THE STATE OF CALIFORNIA.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender
all Borrower's right, title and Interest in and to, Borrower's accounts with
Lender (whether checking, savings, or some other account), including without
limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh

-------------------------
<PAGE>

08-31-1999 PROMISSORY NOTE Page 2
(Continued)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on this Note
against any and all such accounts.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested orally by Borrower or by an authorized person.
All oral requests shall be confirmed in writing on the day of the request.
All communications, instructions, or directions by telephone or otherwise to
Lender are to be directed to Lender's office shown above. The following party
or parties are authorized to request advances under the line of credit until
Lender receives from Borrower at Lender's address shown above written notice of
revocation of their authority: JAMES ALLARD, VP OPERATIONS; RUSSELL HOROWITZ,
CEO; JOHN KEISTER, PRESIDENT; AND MICHAEL RICCIO, COO. Borrower agrees to be
liable for all sums either: (a) advanced in accordance with the instructions of
an authorized person or (b) credited to any of Borrower's accounts with Lender.
The unpaid principal balance owing on this Note at any time may be evidenced
by endorsements on this Note or by Lender's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under
this note if; (a) Borrower or any guarantor is in default under the terms of
this Note or any agreement that Borrower or any guarantor has with Lender,
including any agreement made in connection with the signing of this Note; (b)
Borrower or any guarantor ceases doing business or is insolvent; (c) any
guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
guarantor's guarantee of this Note or any other loan with Lender; (d) Borrower
has applied funds provided pursuant to this Note for purposes other than those
authorized by Lender; or (e) Lender in good faith deems itself insecure under
this Note or any other agreement between Lender and Borrower.

AMENDED AND RESTATED CREDIT AGREEMENT. This Note is subject to the provisions
of the Amended and Restated Credit Agreement dated August 31, 1999 and all
amendments thereto and replacements therefor.

PROVISION RELATING TO LIBOR INTEREST PAYMENT. During a Libor Interest Period,
interest shall be payable on the last day of the Interest Period, provided that
for any Interest Period longer than 3 months, interest shall be payable
quarterly and on the last day of the Interest Period.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive any applicable statute of limitations, presentment, demand for payment,
protest and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(reportedly and for any length of time) this loan, or release any party or
guarantor of collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY
OF THE NOTE.
Please see addendum to Promissory Note attached hereto and made a
part hereof.

BORROWER:

GO2NET,INC., A DELAWARE CORPORATION

By: /s/ Jeff Bergstrom
---------------------------------------------
JEFF BERGSTROM, VP DIRECTOR OF FINANCE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

<PAGE>

EMPLOYMENT AGREEMENT

This Agreement is made as of the ___ day of April, 1999 between Go2Net,
Inc., a Delaware corporation (the "Company"), and Oren Etzioni, an individual
residing at [______________________] (the "Executive").

RECITALS

WHEREAS, the Company desires to employ the Executive as the Chief
Technology Officer of the Company, and the Executive desires to serve as the
Chief Technology Officer of the Company, on the terms and conditions hereinafter
set forth.

NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:

1. EMPLOYMENT. The Company hereby employs the Executive as the Chief
Technology Officer of the Company, and the Executive accepts such employment for
the term of employment specified in Section 3 below (the "Employment Term").
During the Employment Term, as the Chief Technology Officer of the Company, the
Executive shall, subject to the direction of the Chief Executive Officer of the
Company, perform such duties consistent with those duties ordinarily and
customarily performed by a person holding such position in similar
organizations, as may from time to time be reasonably assigned to him by the
Chief Executive Officer or the Board of Directors of the Company. The Company
acknowledges and acquiesces to the professional and personal obligations listed
Exhibit A over the course of the next eight months.

2. PERFORMANCE; LOCATION OF EMPLOYMENT; OTHER ACTIVITIES.

(a) The Executive agrees to devote his reasonable best efforts and
substantially all of his business time to the performance of his duties
hereunder during the Employment Term. The Executive will perform his duties
hereunder at the Company's executive offices, currently located in Seattle,
Washington.

(b) During the Employment Term, the Executive agrees that, unless he
has the express prior written approval of the Chief Executive Officer of the
Company, he shall not accept a membership on a Board of Directors of, or act as
an officer, employee or consultant to, any entity which is in a similar or
competing business of the Company that would in any way conflict with the
business of the Company or the time needed by the Executive to perform his
duties hereunder.

<PAGE>

3. EMPLOYMENT TERM. The term of employment under this Agreement shall
begin on the date of this Agreement and continue until April 30, 2002 (the
"Initial Employment Term"). Employment shall thereafter continue on the basis
hereby established for successive one year terms unless, more than ninety days
prior to the expiration of the Initial Employment Term or any successive one
year term, either the Executive or the Company provides the other with written
notice that this Agreement will not be renewed (the "Subsequent Employment Term"
and with the Initial Employment Term, the "Employment Term"). Employment during
the Employment Term shall be subject to earlier termination in accordance with
the terms of this Agreement.

4. COMPENSATION.

(a) SALARY. During the Employment Term, the Company shall pay the
Executive a base salary, payable in equal installments in accordance with the
Company's then current compensation practices for all of its executives, subject
to withholding and other applicable taxes, at an annual rate of Ninety-Five
Thousand Dollars ($95,000). The base salary may be reviewed annually by the
Board of Directors, provided that the base salary shall not be decreased during
the Employment Term. The Company agrees to pay the Executive up to two weeks
vacation time during the pre-planned trip to Europe during the summer of 1999
(as is further described in Exhibit A). Such payment shall be recorded as an
advance against future earned vacation time.

(b) STOCK OPTIONS. Upon the execution and delivery of this
Agreement, the Executive shall be granted non-qualified stock options (the
"Options") to purchase 140,000 shares of Common Stock of the Company (the
"Common Stock") at an exercise price equal to the closing market price of the
Common Stock as reported on the Nasdaq National Market on the date of this
Agreement. Of the Options, (i) Options to purchase 30,000 shares of Common
Stock shall be immediately vested and exercisable on the date hereof, and
(ii) Options to purchase the remaining 110,000 shares of Common Stock shall
vest in eight equal semi-annual installments of 13,750 shares commencing on
October __, 1999. In the event the Executive's employment is terminated by
the Company without Cause (as defined herein) or by the Executive for Good
Reason (as defined herein), all Options shall immediately become vested and
exercisable. In the event that the Company accelerates the vesting of any
options held by any other employee of the Company in connection with a change
of control of the Company, then all Options held by the Executive shall be
accelerated and become vested and exercisable in the same manner as such
other options are accelerated. None of the options granted to the Executive
pursuant to this Employment Agreement shall be included in the acceleration
of options which are contingent upon the Company's outstanding transaction
with Vulcan Ventures, Inc.

<PAGE>

(c) INSURANCE; OTHER BENEFITS. The Executive and his dependants
shall be entitled to receive full family medical, dental and disability
insurance, at the Company's expense. The Executive shall also be entitled to
participate in all executive benefit plans now existing or hereinafter
established by the Company, including, but not limited to, family medical and
dental plans, group life and disability insurance plans, life insurance plan;
pension, 401(k), profit sharing or bonus plans, and any other benefit plan or
arrangement made available to executive officers of the Company. In
addition, the Executive shall be entitled to the use of a parking space near
the Company's building, which shall be paid for by the Company.

(d) VACATION. The Executive shall be entitled to the same paid
vacation benefits as the other executive officers of the Company, to be
taken at such time or times as shall be mutually convenient and consistent
with his duties and obligations to the Company.

5. EXPENSES. The Executive shall be reimbursed by the Company for all
reasonable expenses incurred by him in connection with the performance of his
duties hereunder in accordance with policies established by the Board of
Directors from time to time and upon receipt of appropriate documentation.

6. TERMINATION.

(a) TERMINATION AT END OF TERM. The employment of the Executive
hereunder shall terminate at the end of the Initial Employment Term or any
Subsequent Employment Term if either party provides notice of termination at
least 90 days prior to expiration of the Initial Employment Term or
Subsequent Employment Term, or if earlier terminated by the Board of
Directors of the Company pursuant to this Section 6.

(b) TERMINATION BY THE COMPANY WITH CAUSE. The Company shall have
the right at any time to terminate the Executive's employment hereunder upon
the occurrence of any of the following (any such termination being referred
to as a termination for "Cause"): (i) the Executive has misappropriated or
done material, intentional damage to the Company or its business or financial
situation, (ii) the Executive shall have (A) failed or refused to perform the
reasonable or lawful duties reasonably assigned to him by the Chief Executive
Officer of Go2Net or another executive officer hereunder or (B) breached in
any material respect any one or more of the material provisions of this
Agreement or (C) failed to comply in any material respect with Go2Net''
employee policies, which failure, refusal or breach in (A), (B) or (C)
continues for a period of ten (10) days after written notice from the Company
describing such failure, refusal or breach,or (iii) the Executive has been
convicted of a felony involving moral turpitude.

(c) TERMINATION UPON DEATH OR DISABILITY. The Executive's
employment hereunder shall automatically terminate upon the Executive's death
or upon his inability to

<PAGE>

perform his duties hereunder by reason of any mental, physical or other
disability for a period of at least six consecutive months, or six months
within any 18 month period, as determined by a qualified physician selected
by the Company and reasonably acceptable to the Executive or his guardian, in
the case where the Executive is incapacitated.

(d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company shall
have the right to terminate the Executive's employment at any time prior to
the expiration of the Initial Employment Term or any Subsequent Employment
Term for any reason without Cause with at least ninety days written notice.

(e) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
shall have the right to terminate his employment at any time for Good Reason
upon written notice to the Company. For purposes of this Agreement, "Good
Reason" shall mean (a) the failure to elect or appoint the Executive as Chief
Technology Officer or another comparable position of the Company, (b) the
Executive's authority or duties are materially changed without the prior
consent of the Executive, which change is not remedied within ten (10)
business days after written notice thereof is delivered to the Company by the
Executive, (c) any material breach of this Agreement by the Company, which
breach is not remedied within ten (10) business days after written notice
thereof is delivered to the Company by the Executive, or (d) the relocation
of Executive's place of work more than 30 miles from the Seattle, Washington
area. For purposes of this Agreement, the Executive's authority or duties
shall be deemed to be "materially changed" if, without the Executive's
consent, there is any diminution or adverse modification in the Executive's
title, compensation, responsibilities or reporting relationship.

(f) VOLUNTARY RESIGNATION. In addition to the right to terminate
his employment for Good Reason under Section 6(e) above, the Executive may
voluntarily terminate his employment at any time upon thirty days notice.
The provisions of Section 8 relating to non-disclosure shall immediately
become effective upon the Executive's resignation without Good Reason.

7. EFFECT OF TERMINATION OF EMPLOYMENT.

(a) WITH CAUSE; RESIGNATION; DEATH OR DISABILITY. If the
Executive's employment is terminated with Cause pursuant to Section 6(b), if
the Executive's employment is terminated by the death or disability of the
Executive pursuant to Section 6(c) or if the Executive elects to terminate
his employment voluntarily under Section 6(f) (other than for Good Reason),
the Executive's salary and other benefits specified in Section 4 shall cease
at the time of such termination; provided, however, that (i) the Executive
shall be entitled to continue to participate in the Company's medical benefit
plans to the extent required by law and shall be entitled to the
reimbursement for expenses incurred by him through the date of termination
pursuant to Section

<PAGE>

5, and (ii) in the case of termination due to death or disability, the
Executive or his estate shall continue to receive his then current annual
base salary payable under Section 4(a) for a period of three months from the
date of termination.

(b) WITHOUT CAUSE BY THE COMPANY. If the Executive's employment
is terminated either by the Company without Cause pursuant to Section 6(d) or
by the Executive for Good Reason pursuant to Section 6(e), in each case,
prior to the expiration of the Initial Employment Term or any Subsequent
Employment Term, the Executive's salary and other benefits specified in
Section 4 shall cease at the time of such termination, and the Executive
shall be entitled to receive his then current annual base salary payable
under Section 4(a) for a period of six months from the date of termination.
In addition, in any of such events or if the Company does not renew this
Agreement beyond the Initial Employment Term or Subsequent Employment Term
(i) the Executive shall also be entitled to receive any guaranteed bonus and
any bonus accrued or earned by the Executive through the date of termination
pursuant to Section 4(b) and the amount of any expenses incurred by the
Executive through the date of termination pursuant to Section 5, (ii) all
stock options then held by the Executive shall immediately vest and become
exercisable, and (iii) the Executive shall continue to receive the insurance
benefits specified in Section 4, at the Company's expense, until the
expiration of the Employment Term.

8. NON-DISCLOSURE OF BUSINESS INFORMATION. The Executive
acknowledges and agrees that by virtue of his employment with the Company,
the Executive will obtain such knowledge, know-how, training and experience
that is not generally known by those engaged in the Internet or World Wide
Web industry ("Trade Secrets"), and there is a possibility that such
knowledge, know-how, training and experience could be used by a competitor of
the Company to the Company's detriment. Therefore, the Executive covenants
and agrees, as follows: (a) the Executive agrees that he will not, at any
time during or after the Employment Term, disclose, reproduce, assign or
transfer to any person, firm, corporation or other business entity, except as
required by law, any Trade Secrets concerning the business, finances,
patents, affairs, business plans, strategies, methods, software, hardware,
results from ongoing investigations from others, and present and future plans
of the Company, any subsidiary or affiliate thereof or any company formed or
founded by the Company at any time for any reason or purpose whatsoever,
without the Company's express written consent; nor shall the Executive make
use of any such Trade Secrets for his own purpose or for the benefit of any
person, firm, corporation or other business entity, except the Company or any
subsidiary or affiliate thereof and upon the termination of the Executive's
employment for any reason, the Executive will immediately return all books,
files, papers, records and documents of any kind (including those contained
in computer disks) relating to the business of the Company; (b) during the
period which the Executive is employed by the Company and for a period of one
year thereafter, the Executive shall not, without the prior written consent
of the Company, engage in, for any purpose whatsoever, any activity that
competes directly with the Company, except that the Executive shall have no
obligations under

<PAGE>

this clause (b) in the event he is terminated by the Company without Cause or
he elects to terminate his employment for Good Reason, and (c) the Executive
shall not, without the prior written consent of the Company, within the one
year period following the termination of his employment solicit any employee
of the Company to join the Executive as a partner, employee or consultant in
any Internet or World Wide Web related enterprise that competes directly with
the Company.

9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE EXECUTIVE. The
Executive represents that he has the capacity and desire to enter into this
Agreement, and the voluntary execution, delivery and performance of the
Agreement and compliance with its provisions will not conflict with or result
in any breach of any of the terms, conditions, obligations, covenants or
provisions of, or constitute a default under, any note, mortgage, agreement,
contract or instrument to which the Executive is a party or by which he may
be bound or affected, including specifically any pre-existing or existing
consulting, employment, or independent contractor arrangements,
understandings, or agreements whether written or oral.

10. INSURANCE. The Company may purchase insurance on the life of the
Executive, and if it does so, the Executive shall cooperate fully by
performing all the requirements of the life insurer which are necessary
conditions precedent to the issuance of the life insurance policy issued by
it.

11. NOTICE. Any notices required or permitted hereunder shall be in
writing and shall be deemed to have been given when personally delivered or
when mailed, certified or registered mail, postage prepaid, to the following
addresses or such other address as to which notice is given in the manner
provided herein:

If to the Executive:

If to the Company:

Go2Net, Inc.
999 Third Avenue
Suite 4700
Seattle, WA 98104
Attn.: Russell C. Horowitz
12. GENERAL.

(a) GOVERNING LAW; SUBMISSION TO JURISDICTION. The terms of this
Agreement

<PAGE>

shall be governed by and construed under the laws of the State of Washington
without regard to its principles of conflicts of laws. Accordingly, to the
extent a restriction contained in this Agreement is more restrictive than
permitted by the laws of any jurisdiction where this Agreement may be subject
to review and interpretation, the terms of such restriction, for the purpose
only of the operation of such restriction in such jurisdiction, shall be the
maximum restriction allowed by the laws of such jurisdiction and such
restriction shall be deemed to have been revised accordingly herein. The
parties hereto irrevocably agree that all claims relating to this Agreement
shall be submitted exclusively to federal and state courts located in the
County of King and the State of Washington and irrevocably consent to the
jurisdiction and venue of such courts and service of process by certified or
registered mail, return receipt requested, directed to the parties at the
addresses set forth herein or as otherwise provided by law.

(b) REMEDY FOR BREACH OF SECTION 8. It is acknowledged by the
Executive that he will be devoting his work efforts towards establishing
relationships for the Company; that the Executive will be knowledgeable in
all aspects of the business, including the type of transactions the Company
is involved with, thus, the Executive would be able to enter the same
business as the Company and unfairly compete against the Company to its
detriment. Thus, the restrictions contained in Section 8 and the provisions
contained in this Section regarding injunctive relief are reasonable and
justified. The Executive agrees that irreparable injury to the Company will
inevitably occur in the event of any breach of the terms and conditions of
this Agreement and, specifically, if Section 8 is breached by the Executive.
The Executive agrees in such event that the Company shall be entitled, in
addition to any other remedies available to it, without proof of monetary or
immediate damage, to seek an action for any injunction to retrain any
violation of this Agreement by the Executive and all persons acting for or
with the Executive.

(c) ASSIGNABILITY. The Executive may not assign his interest in
or delegate his duties under this Agreement. The Company may not assign the
Agreement or the rights and obligations hereunder without written consent of
Executive.

(d) BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company, its permitted successors and assigns,
and the Executive, his representatives and heirs.

(e) ENTIRE AGREEMENT; MODIFICATION. This Agreement and the Option
Grant Agreement constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and they and may not be modified or
amended in any way except in writing by the parties hereto.

(f) DURATION. Notwithstanding the term of employment hereunder, this

<PAGE>

Agreement shall continue for so long as any obligations remain under this
Agreement.

* * *

<PAGE>

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto executed this Agreement the day and year first written above.

GO2NET, INC.

By:
-----------------------------------
Name: Russell C. Horowitz
Title: President and Chief Executive
Officer

EXECUTIVE

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

<PAGE>

Exhibit A

Oren Etzioni has the following outstanding obligations that will be completed
by Sep. 31, 1999:

- - chair the Review of Progress Committee for the computer science
department at UW (2 days of work in May).
- - chair the Agents '99 Conference (May 1 - 5).
- - Host Dr. David Lewis (May 7).
- - chair and guide the Ph.D. dissertations of Oren Zamir, Erik Selberg, and
Mike Perkowitz. All three are scheduled to defend their dissertations this
summer. (at most 1 day per week).
- - Already booked trip to Europe to deliver invited talks, attend
professional meetings, and visit family from July 26 to August 21. Note: I
will be in e-mail contact and be able to work remotely during this trip.

<PAGE>
EXHIBIT 21.1

SUBSIDIARIES OF GO2NET, INC.(1)

<TABLE>
<CAPTION>
STATE OR COUNTRY
SUBSIDIARY OF ORGANIZATION
- ---------- ----------------
<S> <C>
Silicon Investor, Inc....................................... Delaware
HyperMart, Inc.............................................. Delaware
Web21, Inc.................................................. California
Haggle Online, Inc.......................................... Delaware
USAOnline, Inc.............................................. New Jersey
IQC, Inc.................................................... California
AuthorizeNet, Inc........................................... Utah
DogPile, LLC................................................ California
FreeYellow, Inc............................................. Florida
</TABLE>

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

(1) Go2Net, Inc. or one of its subsidiaries owned one hundred percent (100%) of
the outstanding shares of capital stock or the general partnership and
limited partnership interests of the subsidiaries, as applicable, listed
above as of September 30, 1999

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS'

The Board of Directors
Go2Net, Inc.:

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-63729) pertaining to the Go2Net, Inc. 1996 Stock Option Plan
and Silicon Investor, Inc. 1996 Stock Plan, the Registration Statement
(Form S-3 No. 333-63725) pertaining to the registration of 1,295,536 shares of
Common Stock of Go2Net, Inc., the Registration Statement (Form S-3 No.
333-76069) pertaining to the registration of 717,390 shares of Common Stock of
Go2Net, Inc., the Registration Statement (Form S-8 No. 333-76071) pertaining to
the Go2Net, Inc. 1996 Stock Option Plan and Web21 Stock Option Plan, the
Registration Statement (Form S-8 No. 333-82765) pertaining to the Authorize.Net
Corporation 1999 Stock Incentive Plan, the Haggle Online, Inc. Stock Option
Agreement, and the IQC Corporation Stock Option Agreement, the Registration
Statement (Form S-3 No. 333-82773) pertaining to the registration of 1,512,514
shares of Common Stock of Go2Net, Inc. and the Registration Statement (Form S-3
No. 333-86529) pertaining to registration of 686,900 shares of Common Stock of
Go2Net, Inc. of our report dated December 17, 1999 with respect to the
consolidated balance sheets of Go2Net, Inc. and Subsidiaries as of
September 30, 1999 and 1998 and the related consolidated statements of
operations, stockholders' equity and comprehensive loss and cash flows for each
of the years in the three-year period ended September 30, 1999, which report
appears in the September 30, 1999 annual report on Form 10-K of Go2Net, Inc. and
subsidiaries.

KPMG LLP

Seattle, Washington
December 29, 1999

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 66,786,513
<SECURITIES> 151,000,000
<RECEIVABLES> 6,241,389
<ALLOWANCES> (528,412)
<INVENTORY> 0
<CURRENT-ASSETS> 228,529,105
<PP&E> 4,854,931
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0
450,927,510
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</TABLE>