L90 INC, 10-Q, 2000-08-14

L90 INC
10-Q, 2000-08-14
BUSINESS SERVICES, NEC

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<PAGE>

================================================================================

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
______________

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO
________

Commission File Number: 000-28893

L90, Inc.
(Exact name of registrant as specified in its charter)
______________

Delaware 95-4761069
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2020 Santa Monica Boulevard
Suite 400
Santa Monica, California 90404
(Address of principal executive offices) (Zip Code)

(310) 315-1199
(Registrant's telephone number, including area code)

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

As of August 10, 2000, L90, Inc. had 22,364,498 shares of its common stock,
$.001 par value per share, outstanding.

================================================================================
<PAGE>

L90, INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I
Item 1. Financial Statements
Balance Sheets............................................. 3
Statements of Operations................................... 4
Statements of Cash Flows................................... 5
Statements of Stockholders' Equity......................... 6
Notes to Financial Statements.............................. 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 26

Part II
Item 1. Legal Proceedings.......................................... 26
Item 2. Changes in Securities and Use of Proceeds.................. 26
Item 6. Exhibits and Reports on Form 8-K........................... 28

Signatures.................................................................... 29

Exhibit Index................................................................. 30
</TABLE>
<PAGE>

PART I

ITEM 1. FINANCIAL STATEMENTS

L90, INC.

BALANCE SHEETS
<TABLE>
<CAPTION>

June 30, December 31,
2000 1999
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents................................................................. $ 93,745,618 $ 6,895,938
Accounts receivable, net of allowances of $668,010 and $1,357,432 at December 31,
1999 and June 30, 2000, respectively.................................................... 10,112,883 4,128,069
Prepaid expenses and other assets......................................................... 1,492,122 1,341,950
------------ -----------
Total current assets..................................................... 105,350,623 12,365,957
------------ -----------
Restricted cash........................................................................... 1,868,632 1,268,632
Property and equipment:
Equipment............................................................................... 14,410,475 2,695,847
Furniture and fixtures.................................................................. 108,883 70,006
Leasehold improvements.................................................................. 41,606 32,421
------------ -----------
14,560,964 2,798,274
Less--Accumulated depreciation and amortization......................................... (2,007,269) (296,808)
------------ -----------
Property and equipment, net............................................................... 12,553,695 2,501,466
------------ -----------
Total assets............................................................... $119,772,950 $16,136,055
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
Accounts payable.......................................................................... $ 8,487,540 $ 4,693,881
Accrued expenses.......................................................................... 3,810,895 1,686,274
Current portion of note payable........................................................... 236,247 414,222
Current portion of long-term capital lease obligations.................................... 153,678 256,928
Deferred revenues......................................................................... 718,536 --
Accrued dividends......................................................................... -- 401,139
------------ -----------
Total current liabilities........................................................... 13,406,896 7,452,444
Note payable, net of current portion...................................................... 1,005,320 928,702
Long-term capital lease obligations, net of current portion............................... 605,887 442,710
------------ -----------
Total liabilities................................................................... 15,018,103 8,823,856
------------ -----------
Stockholders' Equity:
Preferred stock, $0.001 par value, 15,000,000 shares authorized:
Series A preferred stock, $0.001 par value, 2,000 shares authorized, issued and
outstanding, including paid-in-capital of 2,077,501 at December 31, 1999............... -- 2,077,503

Series B preferred stock, $0.001 par value, 5,000,000 shares authorized,
4,107,044 shares issued and outstanding, including paid-in-capital of
9,348,823 at December 31, 1999......................................................... -- 9,352,930
Series C preferred stock, $0.001 par value, 3,000,000 shares authorized,
1,307,190 shares issued and outstanding, including paid-in-capital of
4,574,279 at December 31, 1999......................................................... -- 4,575,586
Common stock, $0.001 par value, 53,333,333 shares authorized, 21,997,190 and
6,693,333 shares issued and outstanding at June 30, 2000 and December 31, 1999, 21,997 6,693
respectively..........................................................................
Additional paid-in capital................................................................ 123,100,550 181,901
Notes receivable for common stock......................................................... (24,749) (43,750)
Retained earnings......................................................................... (18,342,951) (8,838,664)
------------ -----------
Total stockholders' equity.......................................................... 104,754,847 7,312,199
------------ -----------
Total liabilities and stockholders' equity.......................................... $119,772,950 $16,136,055
============ ===========
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

3
<PAGE>

L90, INC.

STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
2000 1999 2000 1999
----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Revenue
Service fee-based revenue................................. $12,072,034 $ 519,457 $ 20,125,910 $ 555,316
Commission-based revenue.................................. 152,614 648,618 682,208 1,393,687
----------- ----------- ------------ -----------
Total revenue.......................................... 12,224,648 1,168,075 20,808,118 1,949,003
----------- ----------- ------------ -----------

Operating expenses:
Cost of service fee and other revenue..................... 8,024,013 306,610 13,479,588 308,951

Sales and marketing....................................... 3,493,646 1,003,312 6,401,900 1,805,973
Research and development.................................. 3,214,026 252,495 5,395,220 391,658
General and administrative................................ 3,435,712 811,719 7,450,137 1,339,555
----------- ----------- ------------ -----------
Total operating expenses............................... 18,167,397 2,374,136 32,726,845 3,846,137
----------- ----------- ------------ -----------
Operating loss.............................................. (5,942,749) (1,206,061) (11,918,727) (1,897,134)
Interest income, net........................................ 1,439,055 (15,538) 2,416,851 (4,809)
----------- ----------- ------------ -----------
Loss before provision for income taxes...................... (4,503,694) (1,221,599) (9,501,876) (1,901,943)
Provision for income taxes.................................. -- -- -- --
----------- ----------- ------------ -----------
Net loss.................................................... $(4,503,694) $(1,221,599) $ (9,501,876) $(1,901,943)
=========== =========== ============ ===========
Cumulative dividends on participating preferred stock....... -- -- (2,411) (39,671)
----------- ----------- ------------ -----------
Net loss attributable to common stockholders................ $(4,503,694) $(1,221,599) $ (9,504,287) $(1,941,614)
=========== =========== ============ ===========

Net loss per share:
Basic/Diluted............................................. $(0.20) $(0.18) $(0.44) $(0.19)
=========== =========== ============ ===========
Weighted average number of common shares outstanding:
Basic/Diluted............................................. 21,985,072 6,666,667 21,503,705 10,000,000
=========== =========== ============ ===========
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

4
<PAGE>

L90, INC.

STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
Six months ended June 30,
------------------------------------
2000 1999
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................... $ (9,501,876) $(1,901,943)
Adjustments to reconcile net loss to cash used in operating activities--
Depreciation and amortization............................................. 1,727,109 71,373
Non-Cash charge for warrants issued....................................... 208,500 --
Changes in assets and liabilities:
Increase in accounts receivable........................................ (5,984,814) (620,200)
Increase in prepaid expenses and other assets.......................... (150,172) (344,685)
Increase in accounts payable........................................... 3,793,661 714,953
Increase in accrued expenses........................................... 1,842,336 61,397
Increase in deferred revenues.......................................... 717,184 22,569
------------ -----------
Net cash used in operating activities............................... (7,348,072) (1,996,536)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment.......................................... (11,779,338) (243,780)
------------ -----------
Net cash used in investing activities............................... (11,779,338) (243,780)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under capital lease obligations.............................. 239,795 100,177
Net borrowings under loan payable obligations............................... -- 1,000,000
Restricted cash............................................................. (600,000) --
Proceeds from initial public offering, net of issuance costs................ 102,587,595 --
Repayment of notes receivable for common stock.............................. 120,334 --
Exercise of warrants........................................................ 3,843,793 --
Distribution of dividends................................................... (401,140) --
Exercise of common stock options............................................ 186,713 --
------------ -----------
Net cash provided by financing activities........................... 105,977,090 1,100,177
------------ -----------
Net increase (decrease) in cash............................................. 86,849,680 (1,140,139)
Cash and cash equivalents, beginning of period.............................. 6,895,938 2,111,852
------------ -----------
Cash and cash equivalents, end of period............................ $ 93,745,618 $ 971,713
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.................................................................. $ 16,726 $ --
============ ===========
Income taxes.............................................................. $ -- $ 800
============ ===========
SUMMARY OF NON-CASH FINANCING ACTIVITIES:
Notes receivable for common stock......................................... $ (24,749) $ (43,750)
============ ===========
Accrued dividends......................................................... $ 2,411 $ 39,671
============ ===========
Cashless exercise of warrants............................................. $ 1,038 $ --
============ ===========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.

<PAGE>

L90, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

<TABLE>
<CAPTION>
Notes
Receivable
Additional for
Preferred Capital Common Paid-in Common
Stock Account Stock Capital Stock
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE at January 5, 1997.................. $ -- $13,068 $ -- $ -- $ --
Withdrawal of capital....................... -- (5,000) -- -- --
Net income.................................. -- -- -- -- --
------------ -------- ------- ------------ ----------
BALANCE at December 31, 1997................ -- 8,068 -- -- --
Net loss.................................... -- -- -- -- --
Issuance of Series A preferred stock........ 2,000,000 -- -- -- --
Issuance of common stock.................... -- -- -- 43,750 (43,750)
Distributions to shareholders............... -- -- -- -- --
Conversion to C-corporation................. -- (8,068) 6,667 6,401 --
Accrual of cumulative dividends on
participating preferred stock.............. -- -- -- -- --
------------ -------- ------- ------------ ----------
BALANCE at December 31, 1998................ 2,000,000 -- 6,667 50,151 (43,750)
Net loss.................................... -- -- -- -- --
Issuance of Series B preferred stock, net
of costs of $706,471....................... 8,957,694 -- -- -- --
Issuance of Series C preferred stock, net
of costs of $45,505........................ 3,956,408 -- -- -- --
Issuance of common stock for options........ -- -- 26 93,974 --
Issuance of debt related warrants........... -- -- -- 37,776 --
Issuance of preferred stock warrants........ 1,091,917 -- -- -- --
Accrual of cumulative dividends on
participating preferred stock.............. -- -- -- -- --
------------ -------- ------- ------------ ----------
BALANCE at December 31, 1999................ $ 16,006,019 $ -- $ 6,693 $ 181,901 $ (43,750)
Net loss (unaudited)........................ -- -- -- -- --
Conversion of preferred stock into
common stock............................... (16,006,019) -- 5,276 16,000,743 --
Issuance of common upon IPO, net of
costs of $9,537,405........................ -- -- 7,475 102,580,120 --
Notes receivable for exercise of options.... -- -- 267 101,066 (101,333)
Repayment of notes receivable for
common stock............................... -- -- -- -- 120,334
Issuance of common stock for options........ -- -- 135 186,578 --
Exercise of warrants........................ -- -- 1,113 3,842,680 --
Issuance of warrant......................... -- -- -- 208,500 --
Cashless exercise of warrants............... -- -- 1,038 (1,038) --
Accrual of cumulative dividends on
participating preferred stock.............. -- -- -- -- --
------------ -------- ------- ------------ ----------
BALANCE at June 30, 2000
(unaudited)................................ $ -- $ -- $21,997 $123,100,550 $ (24,749)
============ ======== ======= ============ ==========

Retained
Earnings Total
------------------------------
<S> <C> <C>
BALANCE at January 5, 1997.................. $ 177,458 $ 190,526
Withdrawal of capital....................... -- (5,000)
Net income.................................. 309,784 309,784
------------ ------------
BALANCE at December 31, 1997................ 487,242 495,310
Net loss.................................... (289,569) (289,569)
Issuance of Series A preferred stock........ -- 2,000,000
Issuance of common stock.................... -- --
Distributions to shareholders............... (50,000) (50,000)
Conversion to C-corporation................. (5,000) --
Accrual of cumulative dividends on
participating preferred stock.............. (23,233) (23,233)
------------ ------------
BALANCE at December 31, 1998................ 119,440 2,132,508
Net loss.................................... (7,488,281) (7,488,281)
Issuance of Series B preferred stock, net
of costs of $706,471....................... -- 8,957,694
Issuance of Series C preferred stock, net
of costs of $45,505........................ -- 3,956,408
Issuance of common stock for options........ -- 94,000
Issuance of debt related warrants........... -- 37,776
Issuance of preferred stock warrants........ (1,091,917) --
Accrual of cumulative dividends on
participating preferred stock.............. (377,906) (377,906)
------------ ------------
BALANCE at December 31, 1999................ $ (8,838,664) $ 7,312,199
Net loss (unaudited)........................ (9,501,876) (9,501,876)
Conversion of preferred stock into
common stock............................... -- --
Issuance of common upon IPO, net of
costs of $9,537,405........................ -- 102,587,595
Notes receivable for exercise of options.... -- --
Repayment of notes receivable for
common stock............................... -- 120,334
Issuance of common stock for options........ -- 186,713
Exercise of warrants........................ -- 3,843,793
Issuance of warrant......................... -- 208,500
Cashless exercise of warrants............... -- --
Accrual of cumulative dividends on
participating preferred stock.............. (2,411) (2,411)
------------ ------------
BALANCE at June 30, 2000
(unaudited)................................ $(18,342,951) $104,754,847
============ ============
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

6
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

1. Description of the Business

L90, Inc. (the "Company") is an Internet-based provider of online
advertising and direct marketing solutions for advertisers and Web publishers.
The Company provides fully-outsourced ad sales, as well as ad serving and
tracking technology. The Company develops targeted advertising campaigns that
leverage the capabilities of the Internet. The Company's adMonitor technology
platform provides Web publishers, advertisers and ad agencies with the ability
to target, deliver, measure and analyze their marketing campaigns.

The Company commenced operations in January 1997 as a sole proprietorship.
In May 1997, the Company became a California limited liability company and
changed its name to John Bohan and Associates, LLC. At that time, the Company
did business as AdNet Strategies. In January 1998, the Company incorporated in
California, elected S-corporation status and changed its name to AdNet
Strategies, Inc. In December 1998, the Company became a California C-corporation
under the name Latitude 90, Inc. In September 1999, the Company reincorporated
in Delaware as L90, Inc.

2. Summary of Significant Accounting Policies

a. Interim Results

The unaudited condensed financial statements for the six month periods ended
June 30, 2000 and 1999 have been prepared by us and are unaudited. In our
opinion, the unaudited consolidated condensed financial statements have been
prepared on the same basis as the annual financial statements and reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly the financial position as of June 30, 2000 and the results of our
operations and our cash flows for the six month periods ended June 30, 2000 and
1999. The financial data and other information disclosed in these notes to the
condensed financial statements related to these periods are unaudited. The
results for the six month period ended June 30, 2000 are not necessarily
indicative of the results to be expected for any subsequent quarter or the
entire fiscal year ending December 31, 2000.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission's rules and regulations. It is suggested that these unaudited
financial statements be read in conjunction with our audited financial
statements and notes thereto for the year ended December 31, 1999 as included in
our annual report on Form 10-K.

b. Revenue Recognition

Revenue from ad sales is earned under commission-based and service fee-based
contracts. For commission-based contracts, the Company generally invoices the
full amount of revenue due to Web publishers for the sale of their ad inventory
and is entitled to receive a commission. Revenue earned from commission-based
contracts reflects only the amount of the commission earned without any
associated cost of revenue. The Company recognizes commissions ratably over the
term of the advertising campaigns, which usually range from one to twelve
months. For service fee-based contracts, the Company is obligated to pay a
service fee to the Web publishers for ads placed on their Web sites that is
included in cost of revenue. Additionally, under service fee-based contracts,
the Company must collect and bear the risk of loss from the advertiser for ads
sold. Consequently, revenue earned from service fee-based contracts reflects the
full value of the ads sold, or the Company's credit risk exposure on service
fee-based sales.

7
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

System revenue represents the full value of gross billings for ads sold
under either commission-based or service fee-based contracts and is not affected
by the mix of such contracts. Revenue of the Company was derived from system
revenue of $3,101,213 and $14,023,452, for the quarters ended June 30, 1999 and
2000, respectively.

c. Current Vulnerability Due to Certain Concentrations

The Company sells advertising space to its customers. For the quarter ended
June 30, 1999 and the quarter ended June 30, 2000, there were no advertising
customers that comprised greater than 10 percent of revenue.

The Company purchases advertising space from its Web site partners. For the
quarter ended June 30, 1999, the largest Web site partner accounted for 14.6
percent of revenue. For the quarter ended June 30, 2000, the largest Web site
partner accounted for 30.4 percent of revenue. No other Web site partner
accounted for 10 percent or more of the advertising space sold to generate
revenue. The loss of the largest Web site partner could have an adverse effect
on the Company's operations.

d. Cash and Cash Equivalents

For purposes of the balance sheets and statements of cash flows, cash and
cash equivalents includes all cash instruments due on demand or with an original
maturity of 90 days or less.

The Company maintained its cash balances in two financial institutions
during 1999 and 2000. The cash balances in each financial institution is insured
by the Federal Deposit Insurance Corporation up to $100,000. At December 31,
1999 and June 30, 2000, the Company's uninsured cash balances totaled $6,695,938
and $93,545,618, respectively.

e. Restricted Cash

Restricted cash consists of cash pledged under outstanding letters of
credit.

f. Accounts Receivable

The Company has receivables due from advertisers and from Web publishers
resulting from the sales of ads. These receivables relate to both commission-
based and service fee-based contracts. The Company's credit exposure on
commission-based contracts is limited to the net amount of cash to be received
by the Company from ad sales. The Company's credit exposure on service fee-based
contracts is the full amount of the ad sales as the Company is obligated to pay
the Web publishers for ads sold on their Web sites irrespective of receiving
payment from advertisers.

The Company extends credit to its customers, who are primarily located in
the United States. The ability of these customers to meet their obligations to
the Company is dependent on their economic health, as well as their industry and
other factors. The Company maintains an allowance for doubtful accounts which
represents management's estimate of expected losses on specific accounts and
inherent losses on other as yet unidentified accounts included in accounts
receivable. In estimating the potential losses on specific accounts, management
performs ongoing credit evaluations of its customers based on management
analysis and reviews of available public documents. The amounts the Company will
ultimately realize could differ materially in the near term from the amounts
assumed in arriving at the allowance for doubtful accounts reported in the
financial statement.

g. Property and Equipment

Property and equipment are recorded at cost and depreciated over the
estimated useful life of the asset, using the straight-line method of
depreciation. Leasehold improvements are amortized over the shorter of the
estimated useful life of the asset or the term of the lease. Property, equipment
and leasehold improvements have estimated useful lives ranging from three to
five years.

8
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

h. Equipment Under Capital Leases

Equipment under capital leases is recorded at the lower of the present value
of the minimum lease payments or the fair value of the leased property at the
inception of the lease. Amortization of leased property is computed using the
straight-line method over the term of the lease.

i. Deferred Revenue

Deferred revenue primarily represents advertising campaign revenue to be
recognized over the period of the campaign subsequent to the respective year-end
and quarter-end. This revenue will be recognized ratably over the term of the
advertising campaign, which usually ranges from one to twelve months.

j. Income Taxes

The Company provides for income taxes in accordance with the asset and
liability method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using the enacted tax rates in effect for the year 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.

k. Net Loss Per Share

Basic earnings per share ("EPS") is computed by dividing income or loss
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or result in the issuance of common
stock that would then share in the earnings of the Company. Potentially dilutive
securities are excluded from the Company's calculation of diluted EPS when their
inclusion would be antidilutive.

l. Stock-Based Compensation

Accounting principles generally accepted in the United States ("GAAP")
permit companies to use either of two alternative accounting methods to
recognize employee stock-based compensation. Under the first accounting method,
if options are granted at an exercise price equal to the market value of the
stock at the time of the grant, no compensation expense is recognized. The
Company follows this accounting method, which it believes better reflects the
motivation for its issuance of stock options, namely, that they are incentives
for future performance rather than compensation for past performance. Under the
second accounting method, issuers record compensation expense over the period
they are expected to be outstanding prior to exercise, expiration, or
cancellation. The amount of compensation expense recognized over this term is
the "fair value" of the options at the time of the grant as determined by an
option pricing model. The option pricing model attributes fair value to the
options based upon the length of their term, the volatility of the stock price
in past periods, and other factors. Under this method, the issuer recognizes
compensation expense regardless of whether the officer or director exercised the
options.

m. Use of Estimates

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

9
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

n. New Accounting Pronouncements

In March 1998, the Accounting Standards Executive Committee issued Statement
of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 requires all costs related to
the development of internal use software other than those incurred during the
application development stage to be expensed as incurred. Costs incurred during
the application development stage are required to be capitalized and amortized
over the estimated useful life of the software. SOP 98-1 was adopted by the
Company on January 1, 1999 and did not have a material effect on the Company's
financial position or results of operations.

3. Equity

a. Initial Public Offering

In February 2000, the Company completed an initial public offering (the
"IPO") of 7,475,000 shares of common stock, including 975,000 shares subject
to the underwriter's over-allotment option, at $15.00 per share of common stock.
The IPO resulted in aggregate net proceeds to the Company of approximately
$102,600,000, net of underwriting discounts and expenses of the offering.

b. Conversion of Preferred Stock and Warrants

Upon the IPO of the Company's common stock, the Company converted all
outstanding shares of Series A, B and C preferred stock into 5,276,156 shares of
common stock. Additionally, the Series A, B and C preferred stockholders
exercised their warrants to purchase shares of the Company's common stock.

4. Debt

On November 29, 1999, the Company acquired a software license in exchange
for a promissory note for $1,453,715. The note bears interest at 7.86% per
annum. This note is collateralized by a standby letter of credit for a total of
$1,208,632. At December 31, 1999, the Company had pledged $1,208,632 of cash as
collateral for this outstanding letter of credit. Remaining principal payments
due under the note are $442,032, $486,708 and $524,976 for the years ending
December 31, 2000, 2001 and 2002, respectively.

On November 29, 1999, the Company obtained a standby letter of credit for a
total of $60,000. At December 31, 1999, the Company had pledged $60,000 of cash
as collateral for this outstanding letter of credit.

On March 28, 2000 the Company obtained a standby letter of credit for a
total of $600,000. At March 31, 1999 the Company had pledged $600,000 of cash as
collateral for this outstanding letter of credit.

10
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

5. Stock Options and Warrants

a. Stock Options
Employee transactions during the quarter ended June 30, 2000 are summarized as
follows:

<TABLE>
<S> <C> <C>
2000
-----------------------------------
Weighted
-------------------------------------------------------------------- average
Shares exercise
Employee stock options Shares price
-------------------------------------------------------------------- ----------------- ------------
Outstanding at beginning of period............................. 2,308,411 $ 6.61
Granted........................................................ 782,246 9.29
Exercised...................................................... (36,399) 1.56
Forfeited...................................................... (57,832) 13.92
---------- ------
Outstanding at end of period................................... 2,996,426 $ 7.23
========== ======
Options exercisable at end of period........................... 1,063,270
Weighted average fair value of options granted during period... $9.29
</TABLE>

The following table summarizes information about employee stock options
outstanding at June 30, 2000:

<TABLE>
<CAPTION>
Weighted average
Number remaining
Range of Exercise Prices Outstanding contractual life
------------------------------ ------------------ --------------------
<S> <C> <C>
$ 1.20 151,668 8.05 years
$ 1.50 51,835 8.48 years
$ 3.53 1,420,149 9.13 years
$ 4.59 66,667 9.23 years
$ 6.00-$10.00 744,665 9.90 years
$10.01-$15.00 424,860 9.61 years
$15.01-$20.00 38,200 9.75 years
$20.01-$25.00 90,299 9.69 years
$25.01-$28.00 8,083 9.62 years
--------- -------------------
2,996,426 9.48 years
========= ===================
</TABLE>

b. Common Stock Warrants

In connection with an advertising agreement, the Company issued a warrant to
purchase 50,000 shares of common stock at an exercise price of $15.00 per share.
This warrant is only exercisable from January 30, 2001 through February 5, 2001.
The warrant expires on February 5, 2001. The fair value of the warrant was
estimated at $209,000 on the date of issuance using the Black-Scholes option
pricing model with the following assumptions: dividend yield of 0 percent;
expected volatility of 65 percent; risk-free interest rate of 6.12 percent; and
an expected life of one year.

11
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

6. Commitments and Contingencies

a. Litigation

The Company may become subject to legal proceeding from time to time in the
normal course of business. The Company is not currently involved in any
litigation that management believes will have a material adverse effect on the
Company's financial position or results of operations.

We face the risk that other parties' intellectual property positions will
impair our ability to deliver advertisements over the Internet. On November 12,
1999, DoubleClick filed a patent infringement lawsuit against us in the United
States District Court for the Eastern District of Virginia. The lawsuit was
moved to the United States District Court for the Southern District of New York
in March 2000. The suit alleges that we are infringing, and inducing and
contributing to the infringement by third parties of, a patent held by
DoubleClick related to methods and networks for delivering, targeting and
measuring advertising over the Internet. DoubleClick is seeking treble damages
in an unspecified amount, a preliminary and permanent injunction from further
alleged infringement and attorneys' fees and costs.

On May 24, 2000, DoubleClick filed a reissue application with the U.S.
Patent & Trademark Office with respect to the patent at issue. On May 26, 2000,
DoubleClick filed with the court a motion to stay the entire litigation pending
the U.S. Patent and Trademark Office's review of DoubleClick's reissue
application. On June 12, 2000, we filed with the court an opposition to
DoubleClick's motion to stay the litigation. Our opposition asked the court to
stay the litigation with respect to the issues related to infringement and the
validity of the patent, but asked the court to proceed with respect to the issue
related to our claim of DoubleClick's inequitable conduct. On July 21, 2000, the
court stayed the litigation with respect to the issues related to infringement
and the validity of the patent. The court has allowed us to proceed with respect
to the issue related to our claim of DoubleClick's inequitable conduct. A trial
date has been set for November 6, 2000.

This litigation could result in significant expenses to us and the
diversion of management time and other resources, the extent of which cannot be
quantified with any reasonable accuracy. In addition, some of our contracts
with Web publishers require us to indemnify the Web publishers for losses they
incur arising from any infringement by our ad serving technology of a third
party's intellectual property rights. If DoubleClick is successful in its
claims against us, we may be hindered from competing in the Internet advertising
market and our operations could be severely harmed. The DoubleClick suit could
result in limitations on how we implement our products and services, delays and
costs associated with redesigning our products and services and payments of
license fees and other monies. An injunction obtained by DoubleClick could
eliminate our ability to deliver advertisements over the Internet. If
DoubleClick is successful in its claims against us, we cannot assure you that we
would be able to enter into a licensing agreement with DoubleClick on
commercially reasonable terms, if at all. In that case, we would be required to
alter our technology in a way that would not infringe the DoubleClick patent,
and we cannot assure you that these alterations would be successful.
Furthermore, other third parties, such as 24/7 Media, may have, or may in the
future be granted, patents that cover our technology or other aspects of our
business. We may be limited in our ability to use our technology or conduct our
business without licenses from these third parties, which may not be available
on commercially reasonable terms, if at all.

b. Office Lease

On February 28, 2000, the Company entered into an agreement to lease
additional office space through July 30, 2003. In connection with this
agreement, the Company was required to obtain a standby letter of credit in the
amount of $600,000. This letter of credit expires on July 31, 2001 and is
automatically extended for an additional period of one year through July 31,
2002. The Company has pledged $600,000 under this letter of credit.

12
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

On June 26, 2000, the Company entered into an agreement to lease additional
office space through July 31, 2005. The minimum rental commitments required
under these two operating leases are as follows:

<TABLE>
<CAPTION>
Year Office Lease
----------------------- ------------
<S> <C>
2000................... $ 339,000
2001................... 463,000
2002................... 463,000
2003................... 317,000
2004................... 112,000
Thereafter............. 65,000
----------
$1,759,000
==========
</TABLE>

7. Related Party Transactions

On January 1, 2000, the Company received $101,333 in notes receivable for
common stock from employees for the exercise of 266,666 options. These notes
bear interest at a rate equal to 5.00% per annum and mature at the earliest of
the cessation of the maker's employment by the Company for any reason or January
1, 2005. The Company paid an aggregate of $925,588 in withholding obligations
for these employees upon exercise of these options. In April 2000, these
employees repaid the notes in full and reimbursed the Company in full for the
amounts advanced for their withholding obligations.

On January 26, 2000, the Company received payment of $19,000 for a note
receivable from a consultant for 50,000 shares of common stock.

8. Subsequent Events

On July 24, 2000, the Company completed the acquisition of webMillion.com,
Inc., a leading direct marketing promotions company, for an aggregate of
2,000,000 shares of our common stock.

13
<PAGE>

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

THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF L90 CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE EVENTS AND THE
FUTURE PERFORMANCE OF L90 WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED. STOCKHOLDERS ARE CAUTIONED THAT SUCH STATEMENTS INVOLVE RISKS AND
UNCERTAINTIES. L90'S ACTUAL RESULTS AND TIMING OF CERTAIN EVENTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER
"RISK FACTORS RELATING TO OUR BUSINESS AND OPERATIONS" AND ELSEWHERE IN THIS
REPORT AND IN L90'S OTHER PUBLIC FILINGS MADE FROM TIME TO TIME WITH THE
SECURITIES AND EXCHANGE COMMISSION.

Overview

References in this Report to "L90," "we," "our" and "us" refer to L90,
Inc. We are a leading provider of Internet-based advertising and direct
marketing solutions for advertisers and Web publishers. We design and implement
advertising campaigns for our advertising clients and strategically place their
ads on our network of Web sites. We provide our Web publishing clients with a
fully-outsourced solution which includes the sale of advertising space on their
Web sites as well as the technology required to deliver advertisements. We have
developed adMonitor, our ad serving and tracking technology that is used to
deliver advertisements to our network of Web site publishers. adMonitor enables
our advertising and Web publishing clients to implement sophisticated
advertising campaigns quickly and to selectively target ads to Web users based
on specific interests or characteristics. adMonitor also enables our clients to
measure and manage the effectiveness of their ad campaigns.

Since inception, substantially all of our revenue has been derived from online
advertising sales. We offer advertisements primarily priced on a cost per every
thousand ads viewed, or CPM, basis. We also offer direct marketing programs,
which may be priced on a cost per action basis, such as cost for each new user
registration. In January 1999, we began to charge our customers for the use of
our adMonitor technology. For the six months ended June 30, 2000, online
advertising sales accounted for 92.3% of our revenue, and fees generated by our
adMonitor technology accounted for 7.7% of our revenue.

Revenue from ad sales is earned under commission-based and service fee-based
contracts. For commission-based contracts, we receive commissions from Web
publishers for the sale of their ad inventory. Revenue earned from commission-
based contracts reflects only the amount of the commission earned without any
associated cost of revenue. We recognize commissions ratably over the term of an
advertising campaign, which typically ranges from one to twelve months. For
service fee-based contracts, we purchase advertising space, or ad inventory,
from Web publishers and are obligated to pay a service fee to Web publishers for
ads placed on their Web sites. Additionally, under service fee-based contracts,
we bear the risk of loss from the non-collection of fees payable by advertisers
for ads sold. Consequently, revenue earned from service fee-based contracts
reflects the full value of the ads sold. System revenue represents the full
value of gross billings for ads sold under either commission-based contracts or
service fee-based contracts.

In the second quarter of 1999, we began the process of amending many of our
commission-based contracts with Web publishers to provide that we will sell
their ad inventory on a best efforts basis to our advertising clients and remit
to Web publishers, as a service fee, a percentage of the resulting advertising
revenue. We are attempting to amend almost all of our existing commission-based
contracts with Web publishers to convert these contracts into service fee-based
contracts. So long as we have both commission-based and service fee-based
contracts, revenue will include a mix of commissions received under our
commission-based contracts and total billings to our advertising clients under
our service fee-based contracts. For the foreseeable future, we do not expect to
completely convert all of our contracts into service fee-based contracts. As our
amended contracts are phased in, we expect that revenue will increase
disproportionately from prior periods as a result of the recognition of total
billings to our advertising clients as revenue.

14
<PAGE>

The financial statements included elsewhere in this report include references
to system revenue. We believe system revenue provides a consistent basis for
reporting revenue from period to period, regardless of the change in contract
type, as discussed above. System revenue represents the full value of gross
billings for ads sold under either commission-based contracts or service fee-
based contracts. We believe that period to period comparisons of operating
results are not always meaningful and that the results for any period should not
be relied upon as an indication of future performance. For the six months ended
June 30, 2000, service fee-based contracts accounted for 96.7% of our revenue,
and commission based contracts accounted for 3.3% of our revenue. For the six
months ended June 30, 1999, service fee-based contracts accounted for 44.5% of
our revenue, and commission-based contracts accounted for 55.5% of our revenue.

Cost of revenue includes service fees paid to our Web publishers under our
service fee-based contracts and Internet connectivity and bandwidth costs
associated with ad serving. We expect cost of revenue to increase on an absolute
dollar basis in future periods as our revenue increases and as more of the
contracts with Web publishers are structured as service fee-based contracts.

Results of Operations

Revenue. Revenue increased 947% to $12.2 million for the three months ended
June 30, 2000 from $1.2 million for the three months ended June 30, 1999. This
increase was due to increases in the number of advertising customers that we
serviced, the number of Web publishers on our network and the number of ads
delivered. In addition, this increase was partly attributable to our adoption of
service fee-based contracts and the initiation of our charging service fees to
customers for the use of our adMonitor technology. On a year to date basis,
revenue for the six months ended June 30, 2000 totaled $20.8 million, an
increase of $18.9 million or 968% over the six months ended June 30, 1999.

System Revenue. System revenue represents the full value of gross billings
for ads sold under either commission-based contracts or service fee-based
contracts. Although system revenue is not recognized under generally accepted
accounting principles, we believe that system revenue is a standard measure of
advertising volume for the Internet advertising industry that enables a
meaningful comparison of activity from period to period and from one company to
another. System revenue increased 352% to $14.0 million for the three months
ended June 30, 2000 from $3.1 million for the three months ended June 30, 1999.
This increase was due to increases in the number of advertising customers that
we serviced, the number of Web publishers on our network and the number of ads
delivered, as well as the initiation of our charging service fees to customers
for the use of our adMonitor technology. On a year to date basis, system
revenue for the six months ended June 30, 2000 totaled $24.4 million, an
increase of $18.8 million or 334% over the six months ended June 30, 1999.

Cost of Revenue. Cost of revenue was $8.0 million for the three months ended
June 30, 2000 and $307,000 for the three months ended June 30, 1999. On a year
to date basis, cost of revenue was $13.5 million for the six months ended June
30, 2000 and $309,000 for the six months ended June 30, 1999. During the six
months ended June 30, 1999, essentially all revenue was derived from advertising
sales commissions with limited costs of revenue.

Sales and Marketing. Sales and marketing expenses include salaries,
commissions, travel, advertising, trade show costs and marketing materials
expense. Sales and marketing expenses increased to $3.5 million, or 28.6% of
revenue, for the three months ended June 30, 2000, compared to $1.0 million or
85.9% of revenue, for the three months ended June 30, 1999. Sales and marketing
expenses increased to $6.4 million, or 30.8% of revenue, for the six months
ended June 30, 2000, compared to $1.8 million or 92.7% of revenue, for the six
months ended June 30, 1999. This increase was primarily due to an increase in
the number of sales and marketing personnel. Our sales and marketing
organization has grown to 111 employees as of June 30, 2000 from 46 employees as
of June 30, 1999. We expect sales and marketing expenses to increase on an
absolute dollar basis in future periods as we hire additional personnel, expand
into new markets and continue to promote our advertising solutions.

Research and Development. Research and development expenses consist
primarily of compensation, consulting expenses and expenses for hardware,
software and materials associated with the development and improvement of our
adMonitor technology. To date, all research and development costs have been
expensed as incurred. Research and development expenses increased to $3.2
million, or 26.3% of revenue, for the three months

15
<PAGE>

ended June 30, 2000, compared to $252,000, or 21.6% of revenue, for the three
months ended June 30, 1999. Research and development expenses increased to $5.4
million, or 25.9% of revenue, for the six months ended June 30, 2000, compared
to $392,000, or 20.1% of revenue, for the six months ended June 30, 1999. This
increase was due primarily to the deployment and enhancement of our adMonitor
technology. We expect research and development expenses to increase
significantly on an absolute dollar basis in future periods.

General and Administrative. General and administrative expenses consist
primarily of compensation and professional service fees. General and
administrative expenses increased to $3.4 million, or 28.1% of revenue, for the
three months ended June 30, 2000, compared to $812,000, or 69.5% of revenue, for
the three months ended June 30, 1999. General and administrative expenses
increased to $7.5 million, or 35.8% of revenue, for the six months ended June
30, 2000, compared to $1.3 million, or 68.7% of revenue, for the six months
ended June 30, 1999. This increase was primarily a result of increases in
personnel expenses, professional service fees and facility expenses necessary to
support our growth. We expect general and administrative expenses to increase on
an absolute dollar basis as we hire additional personnel and incur additional
costs related to the growth of our business and our operation as a public
company.

Interest Income, Net. Net interest income primarily consists of interest
earned on cash balances, offset by interest expense incurred with respect to our
capital leases and equipment financing obligations. Net interest income was $1.4
million for the three months ended June 30, 2000. Net interest expense was
$16,000 for the three months ended June 30, 1999. On a year to date basis, net
interest income for the six months ended June 30, 2000 was $2.4 million,
compared to net interest expense of $5,000 for the six months ended June 30,
1999.

Liquidity and Capital Resources

From our inception through September 1998, we financed our operations
primarily through internally generated cash flow. In September 1998, we
completed a private placement of equity securities to an individual investor and
received $1.9 million in net proceeds. In September 1999, we completed two
private placements of equity securities and received $12.9 million in net
proceeds. In February 2000, we completed our initial public offering of
7,475,000 shares of our common stock (including 975,000 shares subject to the
underwriter's over-allotment option) at $15.00 per share. The initial public
offering resulted in aggregate net proceeds of approximately $102.6 million, net
of underwriting discounts and expenses of the offering. The net proceeds from
these private placements and our initial public offering are being used to
expand our business operations, to hire additional personnel, to provide
additional services and for general corporate purposes related to the expansion
of our business.

Net cash used by operating activities was $7.3 million for the six months
ended June 30, 2000, and $2.0 for the six months ended June 30, 1999. Cash used
in operating activities for the six months ended June 30, 2000 resulted from a
net loss of $9.5 million, as well as a $6.0 million increase in accounts
receivable, partially offset by a $5.6 million increase in accounts payable and
accrued expenses, a $150,000 decrease in prepaids and other current assets and a
$717,000 increase in deferred revenue. Cash used in operating activities for the
six months ended June 30, 1999 resulted from a net loss of $1.9 million and a
$965,000 increase in accounts receivable and prepaids and other current assets,
partially offset by a $776,000 increase in accounts payable and accrued
expenses.

Net cash used in investing activities was $11.8 million for the six months
ended June 30, 2000, and $244,000 for the six months ended June 30, 1999. Cash
used in investing activities was primarily related to purchases of property and
equipment related to research and development.

Net cash provided by financing activities was $106.0 million for the six
months ended June 30, 2000 and $1.1 million for the six months ended June 30,
1999. Cash provided by financing activities for the six months ended June 30,
2000 resulted primarily from the proceeds from our IPO. Cash provided by
financing activities for the six months ended June 30, 1999 resulted primarily
from net borrowings under capital lease obligations and two senior promissory
note agreements in the aggregate principal amount of $1,000,000.

Although we do not have any material commitments for capital expenditures, we
anticipate that we will experience a substantial increase in our capital
expenditures consistent with our anticipated growth in operations,
infrastructure and personnel. We currently anticipate that we will continue to
experience significant growth in operating expenses for the foreseeable future.
We believe that our existing cash and cash equivalents will be

16
<PAGE>

sufficient to meet our anticipated cash needs for working capital and capital
expenditures for at least the next 12 months.

Recent Developments

On July 24, 2000, the Company completed the acquisition of webMillion.com,
Inc., a leading direct marketing promotions company, for an aggregate of
2,000,000 shares of our common stock.

Year 2000 Compliance

We did not experience any significant malfunctions or errors in our operating
or business systems when the date changed from 1999 to 2000. Based on operations
since January 1, 2000, we do not expect any significant impact to our on-going
business as a result of the "Year 2000 issue." However, it is possible that
the full impact of the date change, which was of concern due to computer
programs that use two digits instead of four digits to define years, has not
been fully recognized. We cannot quantify the amount of our potential exposure
but we believe that any such problems are likely to be minor and correctable. In
addition, we could still be negatively impacted if our customers or suppliers
are adversely affected by the Year 2000 or similar issues. We currently are not
aware of any significant Year 2000 or similar problems that have arisen for our
customers and suppliers. In preparation for the year 2000, we incurred internal
staff costs as well as consulting and other expenses. Year 2000 expenses
incurred to date totaled less than $100,000.

Risk Factors Relating to Our Business and Operations

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT
EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT L90 AND OUR INDUSTRY.
THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. L90'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, AS MORE FULLY DESCRIBED IN THIS
SECTION AND ELSEWHERE IN THIS REPORT. L90 UNDERTAKES NO OBLIGATION TO UPDATE
PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON, EVEN IF NEW INFORMATION
BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.

Our revenues and prospects are difficult to forecast because we have only been
operating our business since January 1997

We began our business in January 1997 and have a brief operating history.
Therefore, we lack sufficient historical financial and operating data on which
to adequately forecast future operating results. You should consider our
prospects in light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in an early stage of development,
particularly companies in new and rapidly evolving markets such as online
advertising.

These risks include our ability to:

. manage our growth effectively;

. anticipate and adapt to the rapid changes in the Internet;

. continue to develop and upgrade our technology;

. respond to competitive developments in our market; and

. continue to identify, attract, retain and motivate qualified personnel.

If we are unsuccessful in addressing these risks, our revenues may not grow
in accordance with our business model and may fall short of expectations of
market analysts and investors, which could negatively affect the price of our
stock.

17
<PAGE>

We have a history of losses and expect to incur substantial losses in the future

We incurred net losses of approximately $9.5 million for the six months
ended June 30, 2000 and $1.9 million for the six months ended June 30, 1999.
Our accumulated deficit from inception, as of June 30, 2000, was approximately
$18.3 million. We expect to continue to incur substantial net losses for the
foreseeable future due to a high level of planned operating expenditures. We
are making these expenditures in anticipation of higher revenue, but we cannot
assure you that we will realize higher revenue. If we do not succeed in
substantially increasing our revenue, our losses may continue indefinitely and
would likely increase. In addition, we cannot assure you that we will return to
profitability.

Intellectual property infringement claims, including a November 1999 lawsuit
against us by DoubleClick, could prevent or hinder our ability to deliver
advertisements over the Internet

Our quarterly operating results may fluctuate, which may make it difficult to
forecast our future performance and may result in volatility in our stock price

Although we intend to increase our spending and investment to support our
planned growth, our revenue, and some of our costs, will be much less
predictable. This unpredictability will likely result in significant
fluctuations in our quarterly results. Therefore, you should not rely on
quarter-to-quarter comparisons of results of operations as an indication of our
future performance. Because of our limited operating history and the emerging
nature of our industry, we anticipate that securities analysts may have
difficulty in accurately forecasting our results. If our

18
<PAGE>

operating results are below market expectations, the price of our common stock
will likely decline.

The following are among the factors that could cause significant
fluctuations in our operating results:

. market acceptance of the Internet as an advertising medium;

. delay or cancellation of advertising contracts;

. expiration or termination of contracts with Web publishers;

. introduction of new or enhanced services by us or our competitors;

. system outages, delays in obtaining new equipment or problems with
upgrades;

. disruption or impairment of the Internet;

. changes in our pricing policies or those of our competitors;

. seasonality in the demand for advertising;

. changes in government regulation of the Internet; and

. general economic and market conditions, as well as economic and market
conditions specific to the Internet.

Government regulation may affect our ability to gather, generate or use
information for profiles and may hinder our ability to conduct business

The legal and regulatory environment governing the Internet and the use of
information about Web users is uncertain and may change. A number of lawsuits
have recently been filed against certain Internet companies related to online
privacy. In addition, the Federal Trade Commission has begun investigations of,
and several attorneys general have instituted legal proceedings against, certain
Internet companies related to online privacy. Web sites typically place small
files of information, commonly known as cookies, on a Web user's hard drive,
generally without the user's knowledge or consent. Although it is possible to
modify a Web user's Internet browser software to prevent the placement of
cookies, few users currently choose to do so. Our adMonitor tracking technology
is able to use cookies to collect data about a Web user's movement through the
Internet. Some Internet commentators and privacy advocates have suggested
limiting or eliminating the use of cookies and restricting the collection of
data through the use of cookies. United States legislators in the past have
introduced a number of bills aimed at regulating the collection and use of data
from Internet users and additional similar bills are being considered during the
current congressional session. The European Union has recently adopted a
directive addressing data privacy that may result in limitations on the
collection and the use of specific personal information regarding Internet
users. In addition, Germany and other European Union member countries have
imposed their own laws protecting data that can become personally identifiable
through subsequent processing. Other countries have enacted, or are considering,
limitations on the use of personal data as well. The effectiveness of our
technology could be impaired by any limitation in the use of cookies or the
collection of data from Internet users, and consequently, our business and
results of operations could be harmed.

A number of laws and regulations have been, and in the future may be,
adopted covering issues such as pricing, acceptable content, taxation and
quality of products and services on the Internet. This legislation could
inhibit the growth in the use of the Internet and decrease the acceptance of the
Internet as a communications and commercial medium. In addition, due to the
global accessibility of the Internet, it is possible that multiple federal,
state or foreign jurisdictions might inconsistently regulate our activities and
our customers. Any of these developments could limit our ability to do business
and to generate revenue.

Our common stock and our stock price may experience extreme price and volume
fluctuations

19
<PAGE>

The stock market has experienced extreme price and volume fluctuations.
The market prices of the securities of Internet-related companies have been
especially volatile. The market price of our common stock has fluctuated in the
past and is likely to be highly volatile. The market price of our common stock
could be subject to wide fluctuations in response to factors such as:

. actual or anticipated variations in our revenue;

. earnings and cash flow;

. announcements of new service offerings;

. technological innovations;

. competitive developments with respect to patents, copyrights or
proprietary rights;

. changes in financial estimates by securities analysts;

. conditions and trends in the Internet and electronic commerce industries;

. adoption of new accounting standards affecting our industry; and

. general market conditions.

If we do not effectively manage our growth and expansion, our ability to
provide services could suffer.

Our success depends in part on our ability to manage our growth and
expansion. We have grown to 169 full-time and three part-time employees as of
June 30, 2000 from 66 full-time and three part-time employees as of June 30,
1999. We plan to continue to expand our sales, marketing, technology and
administrative organizations. This anticipated future expansion may place a
significant strain on our managerial, operational and financial resources. In
addition, we will need to continue to improve our financial and managerial
controls, enhance our reporting systems and procedures and expand, train and
manage our work force.

If we are unable to attract and retain sales and client service personnel, or if
we are unable to adequately train our sales personnel in a timely manner, our
business and future revenue growth could suffer

Our future success depends on our ability to identify, recruit, train,
integrate and retain qualified sales and marketing, managerial and technical
personnel. We anticipate the need to hire a significant number of personnel to
achieve our growth objectives. Competition for these personnel is intense. The
inability to attract, integrate and retain the necessary sales, marketing,
technical and administrative personnel could harm our ability to generate
revenue.

20
<PAGE>

If our ad delivery and tracking technology is not effective, our relationships
with our advertising clients may be harmed

Because our adMonitor technology is relatively new, we cannot assure you
that the use of our adMonitor services will remain effective in serving,
targeting and tracking advertisements or other marketing and promotional
activities. Our revenue would be adversely affected if advertisers do not
perceive that the use of our adMonitor services will improve the effectiveness
of their marketing campaigns.

A small number of Web publishers accounts for a substantial percentage of our
advertising revenue and our failure to develop and sustain long-term
relationships with Web publishers, or the reduction in traffic of a current Web
publisher in our network, could limit our ability to generate revenue

For the quarter ended June 30, 2000, our top five Web publishers accounted
for approximately 46.6% of our revenue, and our top three Web publishers
accounted for approximately 39.2% of our revenue. One website accounted for
30.4% of our revenue for the quarter ended June 30, 2000. Our contracts with
Web publishers, including these top Web publishers, are generally one year in
duration and can be terminated by either party with as little as 30 days notice.
We cannot assure you that any of our Web publishers will continue their
relationships with us. Additionally, we may lose Web publishers as a result of
acquisitions or as a result of the discontinuation of operations of any of our
Web publishers. For example, Four11, Inc. terminated its contract with us
following its acquisition by Yahoo! Furthermore, we cannot assure you that we
would be able to replace a departed or acquired Web publisher with another Web
publisher with comparable traffic patterns and demographics, if at all.
Therefore, our failure to develop and sustain long-term relationships with Web
publishers or the reduction in traffic of a current Web publisher in our network
could limit our ability to generate advertising revenue.

A limited number of advertisers accounts for a significant percentage of our
revenue and a loss of one or more of these advertisers could cause our results
of operations to suffer

For the quarter ended June 30, 2000, revenue from our five largest
advertisers accounted for 23.2% of our revenue. No single advertiser accounted
for more than 10% of our revenue for the quarter ended June 30, 2000.
Advertisers typically purchase advertising under short-term purchase order
agreements. We cannot assure you that our top advertisers or our other
advertisers will continue their relationships with us. The loss of one or more
of the advertisers that represent a significant portion of our revenue could
cause our results of operations to suffer. In addition, many of our contracts
with Web publishers require us to bear the risk of non-payment of advertising
fees from advertisers. Accordingly, the non-payment or late payment of amounts
due to us from a significant advertiser could cause our financial condition to
suffer. For the quarter ended June 30, 2000, our bad debt expense related to
uncollected advertising fees was $989,908.

Since we expect to derive substantially all of our revenue in the foreseeable
future from online advertising, our ability to generate revenue may suffer if
the Internet is not increasingly accepted as an effective advertising medium

If the online advertising market does not develop further, or develops more
slowly than expected, we may not generate enough advertising revenue to return
to profitability. Since we expect to derive substantially all of our revenue in
the foreseeable future from online advertising, our future success is highly
dependent on the increased use of the Internet as an advertising medium. Online
advertising is relatively new and rapidly evolving, and its effectiveness,
compared to traditional media, is uncertain. Widespread use of online
advertising depends upon businesses accepting a new way of marketing their
products and services. Businesses may view online advertising as undesirable or
less effective for promoting their products and services relative to traditional
advertising media. In addition, the widespread adoption of technologies that
permit Internet users to block advertisements on Web sites could inhibit the
growth of the Internet as an advertising medium.

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Since our business depends in part on market acceptance of electronic commerce,
if electronic commerce does not grow, or grows slower than we expect, our
ability to generate revenue may suffer

Our success depends in part on market acceptance of electronic commerce. A
number of factors outside of our control could prevent this acceptance,
including the following:

. the necessary network infrastructure for substantial growth in usage of
the Internet may not develop adequately;

. insufficient availability of telecommunication services or changes in
telecommunication services could result in slower response times; and

. negative publicity and consumer concern surrounding the security of
transactions could impede the growth of electronic commerce.

If electronic commerce does not grow, or grows slower than we expect, due
to any of the above factors, or any other factor, our ability to generate
revenue could suffer.

Failure of our technology and computing systems could harm our relationships
with our clients and cause our results of operations to suffer

The continuing and uninterrupted performance of our servers and networking
hardware and software infrastructure is critical to our business. Periodically,
we have experienced minor systems interruptions, including Internet disruptions,
which we believe may occur periodically in the future. Any system failure that
causes interruptions in our ability to service our customers, including failures
that affect our ability to deliver advertisements without significant delay to
the viewer, could reduce customer satisfaction and, if sustained or repeated,
could cause our results of operations to suffer. Further, an increase in the
volume of advertising delivered through our servers could strain the capacity of
our hardware and software, which could lead to slower response times or system
failures. If we do not effectively address any capacity constraints, customer
satisfaction could be harmed and our business would likely suffer.

Failure of the Web infrastructure to support the growth of the electronic
marketplace could limit the growth of our business

The Internet may not in the future be a viable commercial marketplace
because of inadequate development of the necessary infrastructure, slow
development of complementary products, including high speed modems, delays in
the development or adoption of new standards and protocols required to handle
increased levels of Internet activity or increased government regulation. To the
extent that the Internet continues to experience significant growth in the
number of users and the level of use, we cannot assure you that the Internet
infrastructure will continue to be able to support the demands placed on it by
its users. If the necessary infrastructure or complementary products are not
developed, our business may not grow and would likely suffer.

Our failure to adequately respond to rapid changes in technology and the
Internet could harm our ability to generate revenue

The market for online products and services is subject to rapid change and
characterized by evolving industry standards and frequent introductions of new
technological developments. These new standards and technological developments
could make our existing or future products or services obsolete. Keeping pace
with the introduction of new standards and technological developments could
result in significant additional costs or prove to be difficult or impossible
for us. Any failure to keep pace with the introduction of new standards and
technological developments on a cost-effective basis could result in increased
costs and harm our ability to generate revenue.

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Many competitors have substantial competitive advantages that may make it more
difficult for us to retain our existing advertisers and Web publishers and to
attract new advertisers and Web publishers

The markets for online advertising, direct marketing and ad delivery, or ad
serving, and tracking technology are intensely competitive. We compete with
television, radio, cable and print for a share of advertisers' total advertising
budgets. We also compete with large Web publishers and Web search engine
companies, such as America Online, Excite@Home, Infoseek and Yahoo!, for the
online advertising budgets of advertisers. In addition, we compete with various
Internet advertising networks, such as DoubleClick, 24/7 Media and Engage
Technologies. In marketing our adMonitor products and services to Web
publishers and advertisers, we also compete with providers of ad delivery, or ad
serving, technology, database management and related services, including
AdForce, DoubleClick and Engage Technologies. Many of our current and potential
competitors enjoy competitive advantages over us, including significantly
greater financial, technical and marketing resources. They may also enjoy
significantly greater brand recognition and substantially larger bases of Web
site clients and advertisers.

As a result, our competitors may be able to respond more quickly than we can to
new or emerging technologies and changes in client requirements. Our competitors
may also have a significantly greater ability to undertake more extensive
marketing campaigns, adopt more aggressive pricing policies and make more
attractive offers to potential employees, strategic partners, advertisers and
Web publishers. Further, we cannot assure you that our competitors will not
develop online products and services that are equal to or superior to our
products and services or that achieve greater market acceptance than our
products and services. If we are unable to compete successfully against existing
or potential competitors, our revenue and margins may decline.

Our failure to successfully acquire and integrate new technologies and
businesses could cause our results of operations to suffer

We focus on creating sponsorship-oriented advertising campaigns that take
full advantage of the unique capabilities of the Internet. The Internet is a
quickly changing environment, requiring companies to constantly improve their
technology and develop or acquire new technology. We intend to acquire and make
investments in complementary businesses, products, services or technologies. On
July 24, 2000, we completed the acquisition of webMillion.com, Inc. We cannot
assure you that we will be able to identify other acquisition or investment
candidates. Even if we do identify other candidates, we cannot assure you that
we will be able to make any potential acquisition or investment on commercially
acceptable terms. Moreover, we may have difficulty integrating any acquired
businesses, products, services or technologies into our operations. These
difficulties could disrupt our business, distract our management and employees
and increase our expenses. In addition, we may incur debt or issue equity
securities to fund any future acquisitions. The issuance of equity securities
could be dilutive to existing stockholders. In the webMillion.com acquisition,
we issued an aggregate of 2,000,000 shares of common stock.

If we are unable to safeguard the security and privacy of our information, our
results of operations may suffer

Our technical infrastructure is potentially vulnerable to physical or
electronic computer break-ins, viruses and similar disruptive problems.
Weaknesses or vulnerabilities in the Internet, a user's personal computer or in
our services could compromise the confidential nature of information transmitted
over the Internet. These factors could require us to devote significant
financial and human resources to protect against future breaches and alleviate
or mitigate problems caused by security breaches. Security breaches could
result in financial loss, litigation and other liabilities, any of which could
cause our results of operations to suffer.

Any failure by us to protect our intellectual property could harm our business
and competitive position

We generally protect our intellectual property through a combination of
patent, trademark, trade secret and copyright laws, confidentiality agreements
with our employees and third parties, and license agreements with consultants,
vendors and clients. We have filed a patent application for our adMonitor
technology in the United States. We have also filed applications for several
trademarks internationally and in the United States. We cannot assure you that
any of our patent or trademark applications will be approved. Even if these
applications are approved, the patents or trademarks may be successfully
challenged by others or invalidated. In addition, despite our

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efforts to protect our intellectual property, unauthorized parties may attempt
to copy aspects of our services or to obtain and use information that we regard
as proprietary. We may not have adequate remedies for any breach of
confidentiality agreements, and our trade secrets may otherwise become known or
independently developed by competitors.

We may be liable for content available or posted on the Web sites of our
publishers

We may be liable to third parties for content in the advertising we serve
if the music, artwork, text or other content involved violates the copyright,
trademark or other intellectual property rights of such third parties or if the
content is defamatory. Any claims or counterclaims could be time-consuming,
result in costly litigation or divert management's attention.

The loss of key employees would likely impair the growth of our business

Our performance and future success is substantially dependent on the
continued service of our executive officers and other key employees, all of whom
are employed on an at-will basis. In particular, our success depends on the
client relationships, management skills and industry and technical knowledge of
our CEO and president, John C. Bohan, and our chief technology officer, Frank A.
Addante. Given our early stage of development, we are dependent on our ability
to retain and motivate highly qualified personnel, especially our management,
technical and business development executives and other key employees. The loss
of the services of one or more of our executive officers or other key employees
would likely impair the growth of our business.

A substantial number of shares that will be eligible for sale in the near future
may cause the market price of our common stock to decline

A substantial number of shares of our common stock are subject to 180 day
lock-up agreements that expired on July 26, 2000. Sales of substantial amounts
of our common stock, or the perception that such sales could occur, could
adversely affect the market price of our common stock.

Our executive officers and directors exercise significant control over our
company, including the ability to control the election of our board of directors
and the outcome of corporate actions requiring stockholder approval

Our executive officers and directors, in the aggregate, beneficially own or
control a substantial number of the outstanding shares of our common stock as of
June 30, 2000. Our officers, directors and their affiliates will have the
ability to control the election of our board of directors and the outcome of
corporate actions requiring stockholder approval, including merger and other
changes of corporate control, going private transactions and other extraordinary
transactions and terms thereof.

Our planned international expansion may be affected by factors beyond our
control

We are currently evaluating the initiation of operations in selected
international markets. This potential expansion could occur through internal
growth, acquisition, or both. In June 2000, we established a branch office in
London. Expansion into international markets will require substantial resources
and attention from management. We have no experience in international
operations and may not be able to compete effectively in international markets.
We may face numerous risks inherent in conducting business internationally, such
as:

. the impact of recessions in economies outside the United States;

. changes in domestic regulatory requirements, as well as differences
between domestic and foreign regulatory requirements;

. export restrictions, including export controls relating to encryption
technology;

. reduced protection for intellectual property rights in some countries;

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. potentially adverse tax consequences;

. difficulties and costs of staffing and managing foreign operations;

. problems associated with any acquisitions we might pursue;

. foreign political and economic instability;

. tariffs and other trade barriers;

. fluctuations in currency exchange rates; and

. seasonal reductions in business activity.

Our failure to address these risks adequately may cause our business,
results of operations and financial condition to suffer.

We may need additional capital in the future to operate our business and we may
experience difficulty in obtaining this additional capital

We believe that our existing cash and cash equivalents will be sufficient
to meet our anticipated cash needs for working capital and capital expenditures
for at least the next 12 months. We may need to raise additional funds in the
future to fund our operations, to enhance or expand the range of products and
services we offer or to respond to competitive pressures or perceived
opportunities. We cannot assure you that additional financing will be available
on terms favorable to us, or at all. If adequate funds are not available or not
available when required or on acceptable terms, the growth of our business and
results of operations may suffer.

We are subject to anti-takeover provisions, which may make it difficult for a
third party to acquire us

A number of recent acquisitions and consolidations have occurred in our
industry. For example, DoubleClick acquired NetGravity in October 1999, and
CMGI, Inc., which recently acquired Flycast Communications and Adforce, has
agreed to sell Flycast Communications and Adsmart to its majority-owned
operating company, Engage Technologies, Inc. We are subject to anti-takeover
provisions that may make it difficult for a third party to acquire us. We are
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of Section 203, a
"business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior, did own, 15% or more of the
corporation's voting stock.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a variety of risks, including foreign currency fluctuations
and changes in interest rates affecting the yield on our investments.

Interest Rate Risk

The primary objective of our investment activities is to preserve the
principal while at the same time achieving an attractive return. To achieve
this objective, we maintain a portfolio of investment grade cash equivalents and
short-term investments. Although we are subject to interest rate risks, we
believe an effective increase or decrease of 10% in interest rate percentages
would not have a material adverse effect on our results from operations. The
potential change noted above is based on sensitivity analysis we performed as of
June 30, 2000.

We did not hold derivative financial instruments as of June 30, 2000, and
have never held these instruments in the past.

Foreign Currency

Essentially all of our sales and expenses are denominated in U.S. dollars and
as a result we have experienced virtually no foreign exchange gains and losses
to date. While we do expect to effect some transactions in foreign currencies
during 2000, we do not anticipate that foreign exchange gains or losses will be
significant. We have not engaged in foreign currency hedging activities to
date.

PART II

ITEM 1. LEGAL PROCEEDINGS

On November 12, 1999, DoubleClick filed a lawsuit against us in the United
States District Court for the Eastern District of Virginia. The lawsuit was
moved to the United States District Court for the Southern District of New York
in March 2000. On May 24, 2000, DoubleClick filed a reissue application with
the U.S. Patent & Trademark Office with respect to the patent at issue. On May
26, 2000, DoubleClick filed with the court a motion to stay the entire
litigation pending the U.S. Patent and Trademark Office's review of
DoubleClick's reissue application. On June 12, 2000, we filed with the court an
opposition to DoubleClick's motion to stay the litigation. Our opposition asked
the court to stay the litigation with respect to the issues related to
infringement and the validity of the patent, but asked the court to proceed with
respect to the issue related to our claim of DoubleClick's inequitable conduct.
On July 21, 2000, the court stayed the litigation with respect to the issues
related to infringement and the validity of the patent. The court has allowed
us to proceed with respect to the issue related to our claim of DoubleClick's
inequitable conduct. A trial date has been set for November 6, 2000. For a
description of the lawsuit, please see PART I, ITEM 3 (LEGAL PROCEEDINGS), in
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1999, previously filed with the Securities and Exchange Commission.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Sale of Unregistered Securities

Upon the consummation of our initial public offering on February 2, 2000, all
outstanding shares of our preferred stock were automatically converted into an
aggregate of 5,276,156 shares of common stock. These shares were issued in
reliance upon the exemption provided for by Section 3(a)(9) of the Securities
Act.

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On February 2, 2000, DigaComm (L90), L.L.C. exercised a warrant on a cashless
basis and purchased 276,825 shares of our common stock. The shares issued upon
exercise of this warrant were issued in reliance upon the exemption provided for
by Section 3(a)(9) of the Securities Act. On January 31, 2000, Development
Ventures (Two) Inc. exercised a warrant and purchased an aggregate of 674,029
shares of our common stock at an aggregate purchase price of $3,093,793. The
shares issued upon exercise of this warrant were issued in reliance upon the
exemption provided for by Section 4(2) of the Securities Act, based upon the
fact that we issued the shares in a sale not involving a public offering. On
February 2, 2000, Rare Medium Group, Inc. exercised a warrant on a cashless
basis and purchased 486,652 shares of our common stock. The shares issued upon
exercise of this warrant were issued in reliance upon the exemption provided for
by Section 3(a)(9) of the Securities Act. On January 28, 2000, William Apfelbaum
exercised a warrant on a cashless basis and purchased 274,422 shares of our
common stock. The shares issued upon exercise of this warrant were issued in
reliance upon the exemption provided for by Section 3(a)(9) of the Securities
Act. In addition, Mr. Apfelbaum exercised a warrant on January 27, 2000, and
purchased 438,593 shares of our common stock at an aggregate purchase price of
$750,000. The shares issued upon exercise of this warrant were issued in
reliance upon the exemption provided for by Section 4(2) of the Securities Act,
based upon the fact that we issued the shares in a sale not involving a public
offering.

On February 27, 2000, we issued to Entertaindom, Inc. a warrant to purchase an
aggregate of 50,000 shares of our common stock at a purchase price per share of
$15.00. This warrant was issued and sold in reliance upon the exemption provided
for by Section 4(2) of the Securities Act, based on the fact that we issued this
warrant in a sale not involving a public offering.

On July 24, 2000, the Registrant issued an aggregate of 2,000,000 shares of
common stock to the former stockholders and warrant holders of webMillion.com,
Inc. These shares were issued in exchange for all of the outstanding capital
stock and warrants of webMillion.com, Inc. The shares of common stock were
issued and sold in reliance upon the exemption provided for by Section 4(2) of
the Securities Act and Regulation D promulgated thereunder.

During the period covered by this Q2, we issued and sold 365,967 shares of our
common stock to employees, consultants, officers and directors upon the exercise
of options for an aggregate consideration of $231,338. All shares of our common
stock issued upon exercise of these options were issued and sold in reliance
upon the exemption provided for under Rule 701 promulgated under the Securities
Act of 1933, as amended.

Use of Proceeds

The effective date of the registration statement related to our initial public
offering of shares of common stock was January 28, 2000 (SEC Registration No.
333-87607). Through our initial public offering in February 2000, we sold
7,475,000 shares of our common stock, inclusive of the underwriters' over
allotment, at an initial public offering price of $15.00 per share. Our initial
public offering was managed by SG Cowen Securities Corporation, Banc of America
Securities LLC, CIBC Oppenheimer Corp. and Wit Capital Corporation. The initial
public offering resulted in gross proceeds of approximately $112.1 million,
approximately $7.8 million of which was applied toward the underwriting discount
and commission. Expenses related to the offering totaled approximately $1.7
million. Our net proceeds from the offering were approximately $102.6 million.
From the time of receipt through March 31, 2000, these net proceeds have been
applied toward general corporate purposes. Pending these uses, the net proceeds
have been invested in short-term, investment grade, interest-bearing securities.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits. The following exhibits are filed as part of this Report.

10.1 Agreement and Plan of Merger dated July 7, 2000 by and among L90,
Inc., WM Acquisition Corp., Inc., webMillion.com, Inc., Anthony
Hauser and Kenneth Adcock, previously filed on July 28, 2000 with
the Commission as an Exhibit to L90's Current Report on Form 8-K,
which is incorporated herein by reference.

27.1 Financial Data Schedule.

b. Reports on Form 8-K

We filed a current report on Form 8-K, dated July 24, 2000, Item 2, on
July 28, 2000, announcing the completion of our acquisition of webMillion.com,
Inc. Copies of the Agreement and Plan of Merger and the press release relating
to the acquisition are appended as exhibits to the Report.

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SIGNATURES

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

L90, INC.

Dated: August 12, 2000 By: /s/ John C. Bohan
----------------------------------
Name: John C. Bohan
Title: President & Chief Executive Officer

Dated: August 12, 2000 By:/s/ Thomas A. Sebastian
-----------------------------------
Name: Thomas A. Sebastian
Title: Chief Financial Officer, Senior Vice
President and Assistant Secretary

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EXHIBITS INDEX

Exhibit No. Exhibit
-------------- -------
<S> <C>

10.1 Agreement and Plan of Merger dated July 7, 2000 by and among
L90, Inc., WM Acquisition Corp., Inc., webMillion.com, Inc.,
Anthony Hauser and Kenneth Adcock, previously filed on July 28,
2000 with the Commission as an Exhibit to L90's Current Report
on Form 8-K, which is incorporated herein by reference.

27.1 Financial Data Schedule.

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