GO2NET INC
10-Q, 2000-05-03
COMPUTER PROCESSING & DATA PREPARATION
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<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)

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

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

COMMISSION FILE NUMBER  0-22047

                                  GO2NET, INC.
                                 --------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                                       91-1710182
- -------------------------------                      ----------------
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification Number)

                          999 Third Avenue, Suite 4700
                                Seattle, WA 98104
                                -----------------
                    (Address of principal executive offices)

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

Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.

                   (1)     Yes   X             No
                              -----               -----

As of April 28, 2000, there were 31,282,760 shares of the Registrant's common
stock outstanding.

<PAGE>

<TABLE>
<CAPTION>

                                                                                                           PAGE
PART I                     FINANCIAL INFORMATION                                                           NUMBER
<S>                                                                                                        <C>
ITEM 1:           Financial Statements (Unaudited)

                  Consolidated Balance Sheets as of March 31, 2000
                           and September 30, 1999.......................................................     3
                  Consolidated Statements of Operations for the three and six
                           months ended March 31, 2000 and 1999.........................................     4
                  Consolidated Statements of Cash Flows for the six
                           months ended March 31, 2000 and 1999.........................................     5
                  Notes to Financial Statements.........................................................     6

ITEM 2:           Management's Discussion and Analysis of Financial
                           Condition and Results of Operations..........................................    11

ITEM 3:           Quantitative and Qualitative Disclosures about Market Risk............................    17

PART II                    OTHER INFORMATION

ITEM 1:           Legal Proceedings.....................................................................    18

ITEM 2:           Changes in Securities and Use of Proceeds.............................................    18

ITEM 3:           Defaults Upon Senior Securities.......................................................    18

ITEM 4:           Submission of Matters to a Vote of Security Shareholders..............................    18

ITEM 5:           Other Information.....................................................................    19

ITEM 6:           Exhibits and Reports on Form 8-K......................................................    19

                  SIGNATURES............................................................................    20

Exhibit 27        Financial Data Schedule...............................................................    21
</TABLE>


                                       2

<PAGE>

                          Go2Net, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                     March 31,      September 30,
                                                                                       2000              1999
                                                                                       ----              ----
                                                                                    (Unaudited)
<S>                                                                                 <C>               <C>
ASSETS
Current assets:
  Cash and cash equivalents...............................................          $  66,298,692     $  66,786,513
  Short-term investments..................................................            177,354,939       151,000,000
  Trade accounts receivable, net..........................................              9,583,842         5,712,977
  Other accounts receivable...............................................              2,154,851         3,818,410
  Deferred tax asset, net.................................................              5,680,995         2,144,637
  Prepaid expenses and other current assets...............................              1,098,109           750,848
                                                                                        ---------           -------
     Total current assets.................................................            262,171,428       230,213,385

Property and equipment, net...............................................              5,506,303         3,254,594
Other assets..............................................................              1,087,613         1,164,553
Long-term investments.....................................................             43,518,029        53,771,208
Investments in affiliates.................................................            120,332,950        21,676,129
Deposits..................................................................                250,000           250,000
Intangibles, net..........................................................            184,121,253       197,929,199
                                                                                      -----------       -----------

     Total assets.........................................................          $ 616,987,576     $ 508,259,068
                                                                                    =============     =============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable........................................................          $   2,535,821     $   1,253,843
  Accrued expenses........................................................              4,051,817         3,139,409
  Accrued compensation and benefits.......................................              1,447,420         2,425,013
  Deferred revenue........................................................             17,612,617         3,072,755
                                                                                       ----------         ---------
     Total current liabilities............................................             25,647,675         9,891,020

Deferred revenue                                                                          461,851           530,796
Deferred tax liability                                                                 39,917,781        16,905,877

COMMITMENTS AND CONTINGENCIES                                                                   -                 -

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 at March
     31, 2000 and September 30, 1999......................................            450,850,177       450,927,510
  Common stock including additional paid in capital, $0.01 par value;
     authorized 499,000,000 shares, outstanding 31,191,078 shares at March 31,
     2000 and 29,653,033 shares at September 30, 1999.....................             85,787,111        42,721,806
  Accumulated other comprehensive income..................................             52,720,081         2,500,337
  Accumulated deficit.....................................................            (38,397,100)      (15,218,278)
                                                                                      -----------       -----------
     Total stockholders' equity...........................................            550,960,269       480,931,375
                                                                                      -----------       -----------

     Total liabilities and stockholders' equity...........................          $ 616,987,576     $ 508,259,068
                                                                                    =============     =============
</TABLE>

                 See notes to consolidated financial statements.


                                       3

<PAGE>

                          Go2Net, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                      Three Months        Three Months          Six Months          Six Months
                                                         Ended               Ended                 Ended               Ended
                                                     March 31, 2000      March 31, 1999       March 31, 2000      March 31, 1999
                                                     --------------      --------------       --------------      --------------
<S>                                                  <C>                 <C>                  <C>                 <C>
Revenue..........................................    $  18,744,303        $   4,325,243        $  32,746,533      $   6,925,283
Costs of revenue.................................        3,016,037              938,666            5,372,728          1,626,758
                                                     -------------        -------------        -------------      -------------
    Gross profit.................................       15,728,266            3,386,577           27,373,805          5,298,525

Operating expenses:
    Sales and marketing..........................        5,576,306            1,392,019            9,164,223          2,445,780
    General and administrative...................        2,911,292              827,391            6,228,965          1,358,064
    Product development..........................        2,173,497              639,261            3,539,412          1,175,144
    Merger and acquisition related costs.........                -                    -                    -            650,257
    Amortization of intangibles..................       20,180,767                    -           39,606,246                  -
                                                     -------------        -------------        -------------      -------------

Total operating expenses.........................       30,841,862            2,858,671           58,538,846          5,629,245
                                                     -------------        -------------        -------------      -------------

Income (loss) from operations....................      (15,113,596)             527,906          (31,165,041)          (330,720)
Interest income, net.............................        4,089,096              613,406            7,986,220            729,178
                                                     -------------        -------------        -------------      -------------
Net income (loss) before taxes...................      (11,024,500)           1,141,312          (23,178,821)           398,458

Income tax expense...............................          847,907                    -                    -                  -
                                                     -------------        -------------        -------------      -------------
Net income (loss)................................      (11,872,407)           1,141,312          (23,178,821)           398,458

Preferred stock dividend.........................                -           52,930,286                    -         52,930,286
                                                     -------------        -------------        -------------      -------------
Net loss applicable to common shareholders.......     $(11,872,407)        $(51,788,974)        $(23,178,821)      $(52,531,828)
                                                     =============        =============        =============      =============
Basic and diluted net loss per share.............          $ (0.39)             $ (2.04)            $  (0.77)          $  (2.08)
                                                     =============        =============        =============      =============
Number of shares used in computing basic and
diluted net loss per share.......................       30,686,174           25,429,050           29,948,022         25,307,268

</TABLE>


                 See notes to consolidated financial statements.


                                       4

<PAGE>

                          Go2Net, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                Six Months          Six Months
                                                                                   Ended              Ended
                                                                              March 31, 2000      March 31, 1999
                                                                              --------------      --------------
<S>                                                                           <C>                 <C>
     Operating activities:
       Net income (loss)..............................................             $(23,178,821)           $398,458
       Adjustments to reconcile net income (loss) to
          net cash provided by operating activities:
          Depreciation and amortization of other assets...............                  967,179             388,864
          Amortization of intangibles.................................               39,606,246                   -
          Stock compensation..........................................                    4,033              77,267
          Tax benefit from stock options..............................                4,982,073                   -
          Deferred income taxes.......................................               (6,272,644)                  -
          Changes in assets and liabilities, net of effect of
            acquisitions:
            Receivables...............................................               (2,172,461)         (1,575,175)
            Prepaid expenses and other current assets, deposits
              and other assets........................................                 (274,405)            (80,182)
            Accounts payable, accrued expenses and accrued
              compensation and benefits...............................                1,201,824           1,003,149
            Deferred revenue..........................................               10,142,272             926,116
                                                                                     ----------             -------
     Net cash provided by operating activities........................               25,005,296           1,138,497
     Investing activities:
       Purchases of marketable securities.............................             (111,253,637)        (42,797,900)
       Sales and maturities of marketable securities..................               76,469,573           1,700,000
       Purchase of property and equipment.............................               (3,152,265)           (336,353)
       Net cash used in business acquisitions.........................               (1,622,936)                  -
       Minority equity investments....................................                        -            (249,983)
                                                                                ---------------        ------------
     Net cash used in investing activities............................              (39,559,265)        (41,684,236)
     Financing activities:
       Sale of preferred stock, net...................................                  (77,333)        166,782,338
       Exercise of stock options......................................               14,143,481           2,782,431
       Payments on short term borrowings..............................                        -             (77,387)
                                                                                ---------------           ---------
     Net cash provided by financing activities........................               14,066,148         169,487,382
                                                                                     ----------         -----------
     Net increase (decrease) in cash and cash
       equivalents....................................................                 (487,821)        128,941,643
     Cash and cash equivalents at beginning
       of period......................................................               66,786,513             941,351
                                                                                     ----------             -------
     Cash and cash equivalents at end of period.......................              $66,298,692        $129,882,994
                                                                                    ===========        ============

     Non-cash financing and investing activities:
       Dividend to preferred stockholder                                                      -          52,930,286
       Stock warrants acquired for services                                           4,312,396                   -
       Common stock issued in business acquisition                                   23,935,718                   -
       Assets and liabilities recognized upon business
          acquisition, excluding cash:
           Receivables                                                                   34,845                   -
           Prepaid expenses and other assets and deposits                                17,166                   -
           Intangibles                                                               24,154,893                   -
           Accounts payable and accrued expenses                                         14,969                   -
           Deferred revenue                                                              16,249                   -
           Deferred tax liability, net                                                  260,440                   -
</TABLE>

                See notes to consolidated financial statements.

                                       5

<PAGE>

                          GO2NET, INC. AND SUBSIDIARIES

                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.       THE COMPANY AND BASIS OF PRESENTATION

    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.

    The financial statements as of March 31, 2000 and 1999 have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). These statements are unaudited and, in the
opinion of management, include all adjustments (consisting of normal
recurring adjustments and accruals) necessary to present fairly the results
of the periods presented. The balance sheet at September 30, 1999 has been
derived from the audited financials statements at that date. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such SEC rules and regulations.

    These financial statements should be read in conjunction with the
Company's audited financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1999.
The results of operations for the period ended March 31, 2000 are not
necessarily indicative of the results to be expected for any subsequent
quarter or for the entire fiscal year ending September 30, 2000.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 March 31, 2000 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. The Company had unrealized holding gains
of $52,720,081 (net of the related tax effect of $27,060,833) reported as other
comprehensive income as of March 31, 2000. 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.


                                       6

<PAGE>

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 assets 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, 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.

PREMIUMS 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 quarters and six months ended March 31, 2000 and 1999.

    The Company is also subject to risks related to the significant balances of
cash, cash equivalents, short-term and long-term investments. The Company has
invested approximately $18 million in National Discount Brokers and AskMe.com
during the quarter ended March 31, 2000. At March 31, 2000, the Company held
shares and warrants of CommTouch Software LTD common stock representing
approximately 13.9% of CommTouch's outstanding common stock, held shares and
warrants of Click2Learn, Inc. common stock representing approximately 5.8% of
Click2Learn's outstanding common stock, held shares of National Discount
Brokers' common stock representing approximately 1.5% of National Discount
Brokers' common stock, held warrants of FindWhat.com common stock
representing approximately 5.3% of FindWhat.com's common stock and held
shares and warrants of AskMe.com preferred and common stock representing
approximately 11.6% of AskMe.com's 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.

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.


                                       7

<PAGE>

FINANCIAL INSTRUMENTS

    The recorded amounts of financial instruments including cash equivalents,
investments, receivables, and accounts payable approximate their fair values at
March 31, 2000.

REVENUE RECOGNITION

    The Company derives its revenue from the sale of advertisements primarily on
short-term contracts and ecommerce, subscription 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, distribution, 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 provided. The Company has recorded deferred
revenue of $5,018,610 and $825,129 as of March 31, 2000 and September 30, 1999,
respectively, in connection with the receipt of stock purchase warrants as part
of several of its strategic arrangements. For the three and six months ended
March 31, 2000, the Company has recorded non-cash revenue related to these
arrangements of $74,663 and $148,815, respectively. The Company did not record
any non-cash revenue for the comparable periods in 1999. All other barter
revenue for the periods presented was immaterial.

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.

ADVERTISING AND MARKETING EXPENSE

    The Company expenses costs associated with advertising and marketing as they
are incurred.

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.


                                       8

<PAGE>

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 common share is computed on the basis of the
weighted-average number of common shares outstanding for the year. Diluted
income per common 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 common
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.
There were 16,530,312 and 9,312,594 securities at March 31, 2000 and 1999,
respectively, that could potentially dilute basic earnings per share (EPS) in
the future that were not included in the computation of diluted EPS because
to do so would have been anti-dilutive for the periods presented.

COMPREHENSIVE INCOME

    For the quarter ended March 31, 2000, total comprehensive loss was
$8,091,052 which consisted of net loss of $11,872,407 and unrealized holding
gains, net of tax, of $3,781,355. For the quarter ended March 31, 1999, total
comprehensive income was $1,141,312 which equaled the net income for the
quarter.

RECLASSIFICATIONS

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    The Financial Accounting Standards Board (FASB) 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 was adopted by the Company on October 1,
1999. SOP 98-1 provides guidance in capitalizing software that is developed
in-house or purchased. The adoption of SOP 98-1 did not 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.

                                       9
<PAGE>

     In March 2000, the FASB issued Interpretation No. 44 (FIN No. 44),
"Accounting for Certain Transactions Involving Stock Compensation, an
interpretation of APB Opinion No. 25." FIN No. 44 will be effective July 1,
2000. This interpretation provides guidance for applying APB Opinion No. 25
"Accounting for Stock Issued to Employees." Management has not determined the
impact that adoption of FIN No. 44 will have on the Company's financial
position or results of operations.

    In March 2000, the Emerging Issues Task Force (EITF) of the FASB reached
a consensus on Issue No. 00-2, "Accounting for Web Site Development Costs"
which provides guidance on when to capitalize versus expense costs incurred
to develop a web site. The consensus is effective for web site development
costs in quarters beginning after June 30, 2000. The Company has not yet
determined the impact, if any, this Issue will have on the Company's
financial statements.

3.      RELATED PARTY TRANSACTIONS

     For the quarter ended March 31, 2000, the Company recognized revenues of
$180,000 under licensing agreements with DirectWeb, Inc., the CEO of which
was a member of the Company's Board of Directors. As of March 31, 2000 the
Company had $240,000 in accounts receivable from DirectWeb, Inc. The Company
recognized revenues in the quarter ended March 31, 2000 of $434,117 from
Mercata and Click2Learn, Inc. under advertising, marketing, distribution and
licensing agreements. Vulcan Ventures Incorporated is a minority shareholder
in the Company and a shareholder in Mercata and Click2Learn, Inc. The Company
recognized revenues in the quarter ended March 31, 2000 of $197,567 from
AskMe.com under an advertising, marketing and distribution agreement. The
Company is a minority shareholder in AskMe.com. The Company also recognized
revenues in the quarter ended March 31, 2000 of $906,489 from National
Discount Brokers under an advertising, marketing, distribution and license
agreement. The Company and Vulcan Ventures Incorporated are minority
shareholders in National Discount Brokers. As of March 31, 2000 the Company
had $67,601 in accounts receivable from Digeo Broadband, Inc. The Company is
a minority shareholder and Vulcan Ventures Incorporated is the majority
shareholder in Digeo Broadband, Inc.

4.       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. There
have been no transactions between segments. The following results are broken
out by our operating segments for the three and six months ended March 31,
2000 and 1999:

<TABLE>
<CAPTION>

                                                      Three Months Ended                       Six Months Ended
                                              March 31, 2000     March 31, 1999       March 31, 2000      March 31, 1999
                                              --------------     --------------       --------------      --------------
<S>                                            <C>                 <C>                 <C>                  <C>
Advertising Revenue                            $ 10,713,300        $ 3,443,938         $ 19,503,513         $ 5,630,091

Subscriptions, electronic
commerce, licenses and other revenue              8,031,003            881,305           13,243,020           1,295,192
                                               ------------        -----------         ------------         -----------

Consolidated Revenue                           $ 18,744,303        $ 4,325,243         $ 32,746,533         $ 6,925,283
                                               ============        ===========         ============         ===========
</TABLE>

5.       LEGAL PROCEEDINGS

     The Company is subject to various legal proceedings and claims that arise
in the ordinary course of business. Management currently believes that resolving
these matters will not have a material adverse impact on the Company's financial
position or results of operations.




                                       10

<PAGE>

                     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. The Company'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 this
section and elsewhere in this Report, and the risks discussed in the "Additional
Factors that may Affect Future Results" section included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1999.

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, shopping cart technology 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:

    - 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;

    - 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 providers 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.

     The Company has a limited operating history upon which an evaluation of its
prospects can be based. The Company anticipates that advertising revenues from
Internet sites and transaction based processing fees will constitute a
significant portion of the revenues during the foreseeable future. The Company
believes that its success will depend upon its ability to generate revenues from
advertising, subscription fees and transaction fees from its

                                       11

<PAGE>

internet sites, which cannot be assured. The Company's ability to generate
revenues is subject to substantial uncertainty. The Company's prospects must
be considered in light of the risks, expenses and difficulties frequently
encountered by emerging growth companies in general, and specifically with
respect to the new and rapidly evolving market for Internet-based products
and services. To address these risks, the Company must, among other things,
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 its
Websites, provide original and compelling products and services to Internet
users, develop and upgrade its technology, respond to competitive
developments, attract new qualified personnel and retain existing qualified
personnel. There can be no assurance that the Company will succeed in
addressing such risks and the failure to do so would have a material adverse
effect on the Company's business, financial condition and operating results.
Additionally, the Company's lack of an extensive operating history makes
prediction of future operating results difficult. Accordingly, there can be
no assurance that the Company will be able to generate significant revenues
or that the Company will achieve, or maintain profitability in the future.
Since inception, the Company has incurred significant losses on an annual
basis and, as of March 31, 2000, had an accumulated deficit of $38,397,100.
The Company currently intends to substantially increase its operating
expenses in order to, among other things, expand and improve its Internet
operations, fund increased advertising and marketing efforts, expand and
improve its Internet user support capabilities and develop new Internet
technologies, applications and other products and services.

     The Company's quarterly operating results may fluctuate significantly as
a result of a variety of factors, many of which are outside of the Company's
control. Factors that may adversely affect the Company's quarterly operating
results include the level of use of the Internet, demand for advertising and
ecommerce, seasonal trends in both Internet use and advertising placements,
the addition or loss of advertisers and licensing partners, advertising
budgeting cycles of individual advertisers, the Company's ability to execute
on its licensing strategy, the level of use of the Company's Internet sites,
the amount and timing of capital expenditures and other costs relating to the
development, costs and expenses relating to acquisitions, operation and
expansion of the Company's Internet operations, the introduction of new sites
and services by the Company or its competitors, price competition or pricing
changes in the industry, technical difficulties or system failures, general
economic conditions and economic conditions specific to the Internet and
Internet media. In seeking to effectively implement its operating strategy,
the Company may elect from time to time to make certain advertising and
marketing or acquisition decisions that could have a material adverse effect
on the Company's business, financial condition and operating results. The
Company believes that period to period comparisons of its operating results
are not meaningful and should not be relied upon for an indication of future
performance. Due to all of the foregoing factors, it is likely that in some
future quarters, the Company's operating results may be below the
expectations of public market analysts and stockholders. In such event, the
price of the Company's common stock would likely be materially adversely
affected.

RESULTS OF OPERATIONS

REVENUE

     Total revenues for the three and six months ended March 31, 2000 were
$18,744,303 and $32,746,533, respectively. Revenues for the comparable
periods in 1999 were $4,325,243 and $6,925,283, respectively. The increase in
revenue is the result of the development and increase in usage of the
Company's Web sites over the last year resulting in an increase in the number
of advertisers purchasing advertising banners on the Company's Web sites, an
increase in sponsorship advertising revenue, and an increase in sales of
targeted advertisements with higher rates. This increase is also the result
of an increase in subscription revenues, partnership license fees and
ecommerce transaction fees year-over-year.

COSTS OF REVENUE

     Costs of revenue consist primarily of expenses associated with the
production, enhancement, maintenance and support of the Company's Web sites.
These costs consist primarily of fees paid to third parties for content
included in the online properties, internet connection charges, personnel
costs, equipment depreciation, and overhead allocations. Costs of revenue
also include, for all periods presented, expenses associated with license
agreements and royalties for revenue sharing agreements and other services.

                                       12
<PAGE>

     For the three and six months ended March 31, 2000, costs of revenue were
$3,016,037 and $5,372,728, respectively. Costs of revenue for the comparable
periods in 1999 were $938,666 and $1,626,758, respectively. The increase is
due primarily to increases in support and maintenance costs as a result of
the increase in traffic, along with increased royalties associated with the
increase in revenue.

    Costs of revenue in future periods are expected to increase in absolute
dollars and may increase as a percentage of revenues as the Company increases
costs to support expanded services and content.

GROSS PROFIT

     Gross profit as a percentage of revenue was 83.9% for the three months
ended March 31, 2000 compared to 78.3% for the comparable period in 1999.
Gross profit as a percentage of revenue was 83.6% for the six months ended
March 31, 2000 compared to 76.5% for the comparable period in 1999. The
increase in the gross profit in absolute dollars and as a percentage of
revenue was due primarily to the fact that revenues have increased at a
faster rate than costs to support those revenues.

     In the future, the types of advertisements sold and revenue sharing
provisions of content agreements may affect gross margins. Advertisements
that target a specific audience typically have higher gross margins than
advertisements which target a broader demographic. Furthermore, in certain
circumstances, the Company shares advertising revenue with third party
content providers based upon the number of consumers directed to specific
areas within its sites. A decrease in targeted advertising sold, advertising
rates or an increase in revenue sharing obligations could adversely affect
gross margins.

     Increases in service and content offerings will also adversely affect
gross margins. Furthermore, pursuant to the provisions of certain agreements
with content providers, the Company shares advertising revenues upon select
co-branded pages within its network. An increase in targeted advertising
rates or an increase in the Company's advertising revenue within these
co-branded areas could adversely affect gross margins in the future

OPERATING EXPENSES

     The Company's operating expenses have increased since inception through
March 31, 2000. This reflects the Company's investment in infrastructure and
personnel costs to develop, market and sell its services. The Company
believes that continued expansion of operations is essential to achieving and
maintaining market share. As a result, the Company intends to continue to
increase expenditures in all operating areas for the foreseeable future.

     SALES AND MARKETING. Sales and marketing expenses consist primarily of
sales and marketing personnel costs, agency and consulting fees, travel, and
promotional and advertising expenses. Sales and marketing expenses incurred
by the Company for the three and six months ended March 31, 2000 were
$5,576,306 and $9,164,223, respectively. Sales and marketing expenses for the
comparable periods in 1999 were $1,392,019 and $2,445,780, respectively. The
increase is primarily attributable to the hiring of additional sales staff,
increased commissions associated with higher sales, and expenses associated
with the Company's expanded marketing and public relations campaign. The
Company 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 product development
and sales and marketing expenses, stock compensation charges, rent expense,
fees for professional services and other general corporate purposes. General
and administrative expenses for the three and six months ended March 31, 2000
were $2,911,292 and $6,228,965, respectively. General and administrative
expenses for the comparable periods in 1999 were $827,391 and $1,358,064,
respectively. The increase was primarily attributable to an increase in
personnel and facilities costs to support the Company's growth. In addition,
general overhead costs increased along with the Company's growth. The Company
anticipates that its general and administrative expenses may continue to
increase in absolute dollars as the Company expands its administrative and
executive staff, adds infrastructure and integrates acquired technologies and
businesses.

     PRODUCT DEVELOPMENT. Product development expenses consist of costs
incurred by the Company in its development and creation of its Internet sites
as well as enhancements to the sites. Product development expenses

                                       13
<PAGE>

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 the Company's Internet sites have been
expensed. Product development expenses incurred by the Company for the three
and six months ended March 31, 2000 were $2,173,497 and $3,539,412,
respectively. Product development expenses for the comparable periods in 1999
were $639,261 and $1,175,144, respectively. The overall increase in product
development expenses was primarily due to increased engineering staffing to
continue to develop and enhance the Company's expanded product offerings. The
Company believes that significant investments in enhancing its Internet sites
will be necessary to be competitive. As a result, the Company may continue to
incur, or increase the level of, product development expenses.

     MERGER AND ACQUISITION RELATED EXPENSES. During the six months ended
March 31, 1999, the Company incurred $650,257 related to the merger with
Web21, Inc. The expenses were primarily for investment banking, legal,
accounting and other professional fees. The Company may in the future,
acquire businesses, technologies, and other Web sites.

     AMORTIZATION OF INTANGIBLES. Goodwill and other purchased intangibles
represent the excess of the purchase price over the fair value of tangible
assets acquired. The Company is amortizing goodwill and identifiable
intangibles relating to acquisitions over a life of three years. Amortization
expense incurred by the Company for the three months and six months ended
March 31, 2000 was $20,180,767, and $39,606,246, respectively. There was no
amortization expense incurred by the Company for the comparable periods in
1999.

     INTEREST INCOME. Interest income for the three and six months ended
March 31, 2000 was $4,089,096 and $7,986,220, respectively. Interest income
for the comparable periods in 1999 was $613,406 and $729,178, respectively.
Interest income was higher in 2000 as compared to 1999 as a result of
interest earned on cash received from the sale of Preferred Stock.

     INCOME TAXES. For the three and six months ended March 31, 2000, the
Company recorded an income tax expense of $847,907 and $0, respectively. For
the three and six months ended March 31, 1999 the Company has not recorded an
income tax expense because it has utilized net operating losses carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2000, the Company's principal source of liquidity was
$243,653,631 in cash, cash equivalents and short term investments derived
primarily from the sale of the Company's preferred and common equity
securities. As of March 31, 2000, the Company 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 (9.00% per annum as of March 31, 2000) or LIBOR plus 1.75%. As of March
31, 2000, no borrowings were outstanding under this line of credit. The
Company has primarily financed its operations through the sale of equity
securities.

     Capital expenditures were $3,152,265 and $336,353 for the six months
ended March 31, 2000 and March 31, 1999, respectively. The Company has
entered into formal commitments for capital expenditures of approximately
$7,300,000 relating to the purchase of computer hardware, software, furniture
and the relocation of its main corporate offices. The Company anticipates a
substantial increase in its capital expenditures through the remainder of
fiscal 2000 consistent with its anticipated growth. Additionally, the Company
will continue to evaluate possible acquisitions of, or investments in
businesses, products, and technologies that are complementary to those of the
Company, which may require the use of cash.

    The Company 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 the Company 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.

    The Company 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

                                       14

<PAGE>

requirements for at least the next twelve months. Thereafter, the Company may
need to raise additional funds. The Company's ability to grow will depend in
part on the Company'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, the Company 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, the Company
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 the Company'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 the Company'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 the Company's common stock. There can be no
assurance that additional financing will be available on terms acceptable to
the Company or at all. If adequate funds are not available or are not
available on terms acceptable to the Company, the Company may 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 the Company's business, financial condition
and operating results.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

     The Company has a limited operating history upon which an evaluation of
the Company and its prospects can be based. The Company and its prospects
must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets. To address these
risks, the Company must, among other things, respond to competitive
developments, continue to attract, retain and motivate qualified persons and
continue to upgrade its technologies and commercialize products and services
incorporating such technologies. There can be no assurance that the Company
will be successful in addressing such risks. The limited operating history of
the Company makes the prediction of future results of operations difficult or
impossible, and therefore there can be no assurance that the Company will
achieve revenue growth or profitability.

     As a result of the Company's limited operating history, the Company does
not have historical financial data for any significant period of time on
which to base planned operating expenses. The Company's expense levels are
based in part on its expectations as to future revenues and to a large extent
are fixed. Quarterly sales and operating results generally depend on
advertising revenues, which are difficult to forecast. The Company may be
unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. Accordingly, any significant shortfall in relation to the
Company's expectations would have an immediate adverse impact on the
Company's business, results of operations and financial condition. In
addition, the Company plans to significantly increase its operating expenses
to fund greater levels of research and development, increase its sales and
marketing operations, broaden its customer support capabilities and establish
brand identity and strategic alliances. To the extent that such expenses
precede or are not subsequently followed by increased revenues, the Company's
business, results of operations and financial condition will be materially
adversely affected.

     The Company's operating results may fluctuate significantly in the
future as a result of a variety of factors, some of which are outside of the
Company's control. These factors include general economic conditions,
specific economic conditions in the Internet industry, usage of the Internet,
demand for Internet advertising and ecommerce, seasonal trends in advertising
sales, the advertising budgeting cycles of individual advertisers, capital
expenditures and other costs relating to the expansion of operations, costs
and expenses relating to acquisitions, the introduction of new products or
services by the Company or its competitors, the mix of services sold, the
channels through which those services are sold and pricing changes. As a
strategic response to a changing competitive environment, the Company may
elect from time to time to make certain pricing, service or marketing
decisions or acquisitions that could have a material adverse effect on the
Company's business, results of operations and financial condition. The
Company believes that period to period comparisons of its operating results
are not meaningful and should not be relied upon for an indication of future
performance. The Company also expects that, in the future, it may experience
seasonality in its business, with advertising revenues being somewhat lower
during the summer and year-end vacation and holiday periods, when usage of
the Company's Internet sites and services may be expected to decline. Due to
all of the foregoing factors, it is likely that in some future quarter, the
Company's operating results may be

                                       15

<PAGE>

below the expectations of public market analysts and investors. In such
event, the price of the Company's common stock would likely be materially
adversely affected.

     The Company derives a significant portion of its revenues from the sale
of advertising on the Company's various Web sites. Many of the Company's
customers purchasing advertisements purchase these advertisements on a
short-term basis, and many of these customers may terminate their commitments
at any time without penalty. Consequently, there can be no assurance that
these customers will continue or increase their level of advertising on the
Company's Web sites or that these customers will not move their advertising
to competing Web sites or to other forms of media. Therefore, there can be no
assurance that the Company will be successful in maintaining or increasing
the amount of advertising on the Company's Web sites, and the failure to do
so would have a material adverse effect on the Company's business, results of
operations and financial condition.

     In addition, there is intense competition in the sale of advertising on
the Web, resulting in a wide range of rates and a variety of pricing models
offered by different vendors for a variety of advertising services, which
makes it difficult to project future levels of advertising revenues and
rates. It is also difficult to predict which pricing models the industry or
advertisers will adopt. For example, advertising rates based on the number of
"click throughs", or user requests for additional information made by
clicking on the advertisement from the Company's network to the advertiser's
Web pages, instead of rates based solely on the number of impressions
displayed on users' computer screens, could materially adversely affect the
Company's revenues. As a result of these risks, there can be no assurance
that the Company will be successful in generating significant future
advertising revenues from Web-based advertising, and the failure to do so
would have a material adverse effect on the Company's business, results of
operations and financial condition.

     The Company operates in a rapidly changing environment that involves a
number of risks and uncertainties, some of which are beyond the Company's
control. In addition to the factors discussed in this report, factors that
could cause or contribute to such differences include, but are not limited
to, those discussed in the "Additional Factors that may Affect Future
Results" section included in the Company's Annual Report on Form 10-K for the
year ended September 30, 1999.

                                       16

<PAGE>

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The primary objective of the Company's investment activities is to
preserve the principal while at the same time maximizing yields without
significantly increasing risk. To achieve this objective, the Company
maintains its portfolio of cash equivalents and short-term investments in a
variety of securities, including both municipal and corporate obligations and
money market funds. As of March 31, 2000, approximately 85% of the Company's
total portfolio matures in one year or less, with the remainder maturing in
less than three years. The average interest rate on the entire portfolio was
approximately 5.98% as of March 31, 2000. The interest bearing securities are
subject to interest rate risk and, accordingly, sharp changes in interest
rates can affect the fair value of these securities. After a review of the
Company's marketable investment securities, the Company believes that in the
event of a hypothetical ten percent (60 basis point) increase in interest
rates, the resulting decrease in fair market value of the securities would be
insignificant to the financial statements.

     INVESTMENT RISK. The Company has investments in equity instruments of
privately-held, information technology and internet service companies for
business and strategic purposes. These investments are included in other
long-term assets and are accounted for under the cost method since ownership
is less than 20% and the Company does not exert significant influence over
the operations. For these non-quoted investments, the Company's policy is to
regularly review the assumptions underlying the operating performance and
cash flow forecasts in assessing the carrying values. 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 general
volatility of the stock market and stock prices of information technology
companies in particular.

                                       17

<PAGE>

PART II           OTHER INFORMATION

ITEM 1:  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 aggregate, a
                  material adverse effect on its business or financial
                  condition.

ITEM 2:  Changes in Securities and Use of Proceeds

                  Go2Net made the following unregistered sales of the Company's
                  common stock during the fiscal quarter ended March 31, 2000.

<TABLE>
<CAPTION>

                                               Name of
                                 Amount of   Underwriter                  Persons or Class of
                   Transaction  Securities  or Placement   Consideration  Persons to whom the       Exemption from
                      Date         Sold         Agent        Received     Securities were sold   Registration Claimed
                      ----         ----         -----        --------     --------------------   --------------------
                    <S>          <C>             <C>            <C>       <C>                     <C>
                    March 29,    54,302(1)       None           (1)       Members of Dogpile,     Section 4(2) of the
                      2000                                                        LLC              Securities Act of
                                                                                                    1933, as amended
</TABLE>

                  (1) Pursuant to an earn out provision of the 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 issued additional consideration of 54,302 shares of
                  Company common stock upon the attainment of specified
                  milestones. The resale of the shares was registered on a
                  Registration Statement on Form S-3 filed with the Securities
                  and Exchange Commission on April 27, 2000.


ITEM 3:  Defaults Upon Senior Securities

                  None.

ITEM 4:  Submission of Matters to a Vote of Security Shareholders

                  At the Annual Meeting of the Stockholders held on March 17,
                  2000, the Company's nominees for directors to serve until the
                  2000 Annual Meeting of Stockholders were elected, and the
                  following proposals were approved; (i) the Go2Net, Inc. 2000
                  Stock Option Plan and (ii) the selection of KPMG LLP as the
                  independent auditors of the Company for the fiscal year 2000.

                  With respect to the election of directors, the voting was as
                  follows:

<TABLE>
<CAPTION>

                  Nominee                            For             Withheld
                  -------                            ---             --------
<S>                                               <C>                 <C>
                  Russell C. Horowitz             36,273,600          122,541
                  Dennis Cline                    36,260,917          135,224
                  William D. Savoy                36,229,453          166,688
                  Diane Daggatt                   36,273,270          122,871
                  William A. Fleckenstein         36,085,968          310,173
</TABLE>

                    With respect to the approval of the Go2Net, Inc. 2000 Stock
                    Option Plan, the voting was as follows:

<TABLE>
<CAPTION>

                          For              Against        Abstain           Non-Votes
                          ---              -------        -------           ---------
                       <S>                 <C>              <C>             <C>
                       20,115,864          5,838,472        45,257          10,396,548
</TABLE>


                                       18

<PAGE>

                  With respect to the approval of the selection of KPMG LLP as
                  the independent certified public accountants of the Company
                  for the fiscal year 2000 the voting was as follows:

<TABLE>
<CAPTION>

                          For            Against       Abstain         Non-Votes
                          ---            -------       -------         ---------
                      <S>                 <C>           <C>                <C>
                      36,303,432          80,697        12,012             0
</TABLE>

ITEM 5:  Other Information.

                  None

ITEM 6:  Exhibits and Reports on Form 8-K

                  Form 8-K/A was filed with the SEC on January 4, 2000 and
                  January 10, 2000 with respect to the financial statements
                  of FreeYellow.com, Inc.

                  Exhibit 27 - Financial Data Schedule


                                       19

<PAGE>

                                   SIGNATURES

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

                                            GO2NET, INC.

Date:  May 2, 2000

                                  By:   /s/ Jeff D. Bergstrom

                                     Jeff D. Bergstrom
                                     Senior Vice President of Finance
                                     (Principal Accounting Officer)

                                       20


<TABLE> <S> <C>

<PAGE>
<ARTICLE> 5

<S>                             <C>
<PERIOD-TYPE>                              6-MOS
<FISCAL-YEAR-END>                          SEP-30-2000
<PERIOD-START>                             OCT-01-1999
<PERIOD-END>                               MAR-31-2000
<CASH>                                      66,298,692
<SECURITIES>                               177,354,939
<RECEIVABLES>                               10,432,473
<ALLOWANCES>                                   848,631
<INVENTORY>                                          0
<CURRENT-ASSETS>                           262,171,428
<PP&E>                                       8,095,082
<DEPRECIATION>                               2,588,779
<TOTAL-ASSETS>                             616,987,576
<CURRENT-LIABILITIES>                       25,647,675
<BONDS>                                              0
                                0
                                450,850,177
<COMMON>                                    85,787,111
<OTHER-SE>                                           0
<TOTAL-LIABILITY-AND-EQUITY>               616,987,576
<SALES>                                     32,746,533
<TOTAL-REVENUES>                            32,746,533
<CGS>                                        5,372,728
<TOTAL-COSTS>                               58,538,846
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                           (23,178,821)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                       (23,178,821)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
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<EPS-BASIC>                                     (0.77)
<EPS-DILUTED>                                   (0.77)


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