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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

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

For The Fiscal Year Ended December 31, 2000

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

Commission File Number 0-25107

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EarthWeb Inc.
(Exact Name Of Registrant As Specified In Its Charter)

Delaware 13-3899472

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

3 Park Avenue, New York, New York 10016
(Address of principal executive offices, including zip code)

Registrant's Telephone Number, Including Area Code: (212) 725-6550

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Securities Registered Pursuant To Section 12(B) Of The Act: None
Securities Registered Pursuant To Section 12(G) Of The Act:

Common Stock, par value $.01 per share
(Title of class)

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INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [_]

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

The aggregate market value of voting stock held by nonaffiliates of the
registrant, based on the closing price of the common stock on March 14, 2001 of
$3.625, as reported on the NASDAQ National Market, was approximately
$25,384,824. For purposes of the foregoing calculation, shares of common stock
held by each executive officer and director have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for any other purpose.

As of March 14, 2001, the registrant had outstanding 10,492,414 shares of
common stock, $.01 par value.

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DOCUMENTS INCORPORATED BY REFERENCE:

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

Proxy Statement for the 2001 Annual Meeting of Stockholders--Items 10, 11,
12 and 13.

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PART I

ITEM 1. BUSINESS

Except for the historical information contained herein, the matters
discussed in this Annual Report on Form 10-K, specifically in this Item or
otherwise incorporated by reference into this Annual Report on Form 10-K, are
"forward-looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995). These statements generally can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may", "will", "should," or "anticipates" or the negative thereof
or other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. The safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section
27A of the Securities Act of 1933, as amended, apply to forward-looking
statements made by EarthWeb. These forward-looking statements involve risks
and uncertainties, including those identified within "Risk Factors" and
elsewhere in, or incorporated by reference into, this Annual Report on Form
10-K. The actual results that EarthWeb achieves may differ materially from
forward-looking statements due to such risks and uncertainties. These forward-
looking statements are based on current expectations, and EarthWeb assumes no
obligation to update these statements. Readers are urged to carefully review
and consider the various disclosures made by EarthWeb in this Annual Report on
Form 10-K and in EarthWeb's other reports filed with the Securities and
Exchange Commission that attempt to advise interested parties of the risks and
factors that may affect EarthWeb's business.

EarthWeb is a leading online provider of career development resources to
Information Technology ("IT") professionals. EarthWeb serves IT professionals
and the companies that depend on them with targeted services offered in
recruiting and career development through dice.com, a leading online IT job
board, and through MeasureUp, a leading online provider of IT certification
test preparation products.

EarthWeb supports organizations across industries by helping them hire and
retain the IT talent needed to compete in today's technology-intensive
economy. Employers and recruiters of IT professionals pay for access to our
online recruiting services to help them find the right IT employee or
contractor.

IT job seekers look to manage their careers through us by posting their
resumes on dice.com, by searching dice.com's database of permanent, contract
and consulting IT job postings, and by using our IT career resources,
including MeasureUp's IT certification test preparation products. The job
postings available in our database include a wide variety of IT positions from
programmers, software engineers and systems administrators to Chief
Information or Technology Officers ("CIO" or "CTO") and other IT
professionals.

COMPANY HISTORY

EarthWeb was incorporated in New York in April 1996, commenced operations
in October 1996 and was reincorporated in Delaware in June 1997. EarthWeb LLC
transferred substantially all of its assets and liabilities to EarthWeb in
October 1996 in exchange for 2,925,000 shares of common stock, which
represented all of the issued and outstanding common stock of EarthWeb at such
time. In November 1998, the Company completed an initial public offering of
stock and was listed on the NASDAQ National Market System under the ticker
symbol "EWBX". In May 1999, the Company completed an additional public
offering of common stock. In January 2000, the Company completed a private
offering pursuant to Rule 144A of convertible subordinated notes.

From inception in 1994 until mid-1997, we primarily developed and
maintained websites and online commerce infrastructures for our customers. In
1997, we began aggregating content for use by IT professionals.

Through December 26, 2000, EarthWeb served as a business portal for the IT
industry. We provided a comprehensive set of business-to-business and
business-to-professional services through a central portal serving each of the
major vertical markets in the IT industry, including enterprise management,
networking and telecommunications, software and internet development, and
hardware and systems. Our network served various

constituents of the IT industry across these vertical segments, including IT
managers, programmers and engineers, network managers, recruiters/human
resources managers, corporate IT purchasers, software publishers, hardware
manufacturers, value-added resellers and IT services firms.

In addition to creating some of these services internally and licensing
others from third parties, the Company acquired a number of these IT content-
oriented services and websites. During 1998, EarthWeb acquired the websites
htmlgoodies.com, javagoodies.com, javascripts.com and datamation.com. In 1999,
EarthWeb acquired the websites sysopt.com and codeguru.com. In February 2000,
EarthWeb acquired Cambridge Information Network ("CIN"), a Website for IT
executives.

On December 26, 2000, EarthWeb completed the sale of certain of EarthWeb's
content business assets, including earthweb.com, the website assets listed in
the prior paragraph and other content-oriented website assets, to internet.com
Corporation ("internet.com").

Also, on December 26, 2000, EarthWeb announced that it was exiting the
remaining content businesses that were not sold to internet.com. The Company
discontinued the operations of the EarthWeb Knowledge Products, Inc. business
as of December 26, 2000 and on February 28, 2001, we ceased offering our
subscription based online IT reference library, ITKnowledge.com, to customers.

Since December 26, 2000, we have focused almost exclusively on the IT
career solutions businesses. The IT career solutions business has been
aggregated as a result of the acquisition of certain assets and businesses,
which have been integrated and enhanced. In February 1999, EarthWeb completed
the acquisition of D&L Online, now known as EarthWeb Career Solutions, Inc.
which operates dice.com, a leading online job posting service for IT
professionals ("dice.com"). In February 2000, EarthWeb acquired MeasureUp,
Inc., a company that provides online certification preparation and assessment
solutions for IT professionals ("MeasureUp"). In January and February, 2000,
EarthWeb acquired the websites CCPrep and NetCerts, respectively, both of
which offer online certification preparation products and services designed
for IT professionals seeking certification for Cisco products. Today we
provide products and services that enable companies to hire and retain IT
professionals, and that enable IT professionals to advance their careers.

As part of the sale to internet.com, the Company sold its rights to the
EarthWeb trademark to internet.com but has retained the right to use the
EarthWeb name and logo for the Company's corporate name purposes through
December 25, 2001. The Company plans to implement a change of its name during
the second quarter of 2001.

References to "EarthWeb", "the Company", "we", "our" and "us" in this Form
10-K that refer to the period prior to October 25, 1996 are to EarthWeb's
predecessors, and for the later period refer to EarthWeb.

Our principal executive office is located at 3 Park Avenue, New York, New
York 10016, and our telephone number at such location is (212) 725-6550. Our
corporate website address is http://www.ewbx.com. Information contained on our
website is not part of this Annual Report on Form 10-K.

MARKET OPPORTUNITY

The IT Workforce

The application of new technology has been and will continue to be the
driving force in productivity growth in our economy. Companies in virtually
all industries have invested in information technology to improve the
productivity of their business systems. IT professionals form the cornerstone
of these companies' ability to employ technology to increase productivity and
revenues.

According to the U.S. Bureau of Labor Statistics, the five fastest growing
occupations in the U.S. are in the IT field, and the growth of IT jobs is
expected to far outpace general labor force growth over the next few years.

The Information Technology Association of America's ("ITAA") Bridging the Gap
study (April 2000) found a U.S. IT workforce of over 10 million in the private
sector, and forecast an acute shortage of skilled IT professionals.

The IT workforce that we serve has several unique characteristics. First,
IT is a highly specialized discipline, and IT jobs have technical requirements
that can be specified to a far greater degree than more generalized fields. A
company seeking to hire IT professionals can be very specific about listing
the qualifications for an IT professional. Second, turnover in the IT
community has historically been higher than in the general workforce, with IT
professionals constantly looking for a company or project that will involve
them in leading-edge work. The combination of the shortage of skilled IT
professionals, the "free agent" nature of the IT workforce, and the project-
oriented nature of IT work have led to high turnover in this marketplace.

Online Recruiting

The Internet is transforming what was once a highly fragmented and
inefficient recruiting market to a national market. Online recruiting extends
the reach of the recruiter across geographic lines and provides the
opportunity for round-the-clock contact between recruiters and candidates.
Jobs and resumes can be reviewed and screened online at any place and at any
time. We believe that the cycle time for hiring is also being reduced
dramatically through online recruiting and that the cost of online recruitment
advertising is considerably less than traditional costs like print classified
advertising.

Each of these factors is contributing to the shift of an increasing share
of recruitment advertising from traditional media to online. Online recruiting
advertising represents 29% of current spending on recruiting and advertising
services and is forecast to increase to 44% by 2004 according to Forrester
Research. Forrester has also estimated that the overall online recruiting
industry was approximately $1 billion in 2000, and that it will grow by more
than 40% compounded annually through 2005.

THE IT CAREER SOLUTIONS BUSINESS

Dice.com

Dice.com, founded in 1991 and acquired by EarthWeb in 1999, has focused
exclusively on IT jobs for ten years and has developed strong brand
recognition among both IT job providers and IT job seekers. According to Media
Metrix and IDC, a leading IT industry research company, dice.com is the No. 1
online IT job board based on candidate traffic to the site and on revenues.
Our customers and our audience of IT jobs seekers provide the content of our
business--job postings and resumes, respectively. Dice.com serves employers
and recruiters of IT professionals, which include direct employers, staffing
companies and recruiting firms that recruit IT professionals for direct
employers. Dice.com also serves IT professionals who are regularly seeking
both full-time and contract jobs.

Our search technology and the vertical industry focus of our online job
board enable us to provide users with the ability to perform highly targeted
job searches based on IT-specific criteria. Such focused searches are
generally unavailable through other nationally recognized job boards, which
typically do not segment job opportunities based on IT industry criteria.

Dice.com's customer base is diversified across technology and non-
technology companies. Employers who purchase our online recruiting services
look to us to help them find the right IT employee or independent contractor.
Through mid-1999, recruiters and independent staffing/consulting firms formed
dice.com's customer base. In mid-1999, shortly after EarthWeb acquired
dice.com, the service was made available to direct employers, which greatly
expanded our customer base. At the end of 2000, we had approximately 8,600
customers paying us to post their job listings, including companies such as
Allegis, Microsoft, Martha Stewart, Johnson & Johnson, Lockheed Martin,
Manpower, EDS, Merck, Sun, Cisco, Lucent, Hall Kinion, Cap Gemini Ernst &
Young, Avon, and EMC. In 2000 no one customer accounted for more than 1% of
dice.com's total revenue.

We generate revenues from three types of arrangements with our customers:
Members, non-Members, and Enterprise customers, all of whom post jobs on the
site directly and thus provide the content to our site.

Member customers are our largest group of clients. We have direct
relationships with these customers, train them on the use of the site, and
provide ongoing support to help them maximize their use of the site. We
attract and retain this group of customers with a telesales force and customer
service team. The price for this service is based on the number of jobs a
customer posts, the number of the customer locations to which we provide
access, and the number of users within each location.

Our second group of customers, non-Members, represent small, irregular
users of our job posting services. The service is paid by credit card, and is
provided as a self-service product that requires no interaction with our
staff. This category allows us to serve small customers on a cost-effective
basis.

Our third group of customers comprises large organizations interested in
significant enterprise-wide contracts. The pricing is structured for
enterprise needs over a longer time period than our traditional "Member"
relationships.

Dice.com also offers a number of other IT career resources to IT job
seekers. Approximately 600,000 job seekers have registered to use one or more
of our Job Tools. These Job Tools include Announce Availability (which allows
job seekers to post their qualifications and availability into a database
searchable by our employer customers), JobSeeker (which notifies job seekers
by email when jobs are posted that match their customized profiles), and
ResumeOnline (which provides job seekers a place to maintain online resumes).
Dice.com also maintains a detailed IT rate and salary survey that allows job
seekers to assess what certain types of IT jobs pay and the relative value of
obtaining certain types of IT skills. These job tools enable us to serve both
active and passive job seekers.

We have developed relationships with approximately 30 tech-specific sites
for which we are the exclusive provider of job postings. This network includes
leading IT-centric sites such as CNET.com, ZDNet.com and internet.com. In
March 2001, EarthWeb signed a three-year agreement with CNET that makes
dice.com the exclusive IT job listing provider for CNET Networks' CNET.com and
ZDNet.com sites. According to Media Metrix, CNET.com and ZDNet.com attract the
largest IT-centric audience on the Web. Dice.com will create two co-branded
sites that will enable CNET.com and ZDNet.com's combined audience of
technology interested users to search for jobs, create IT skills profiles,
submit resumes online and access other career tools. The sites, which are
expected to launch in April 2001, will contain all the features found on
dice.com, including a salary tracker, Announce Availability, Job Tools
accounts, JobSeeker and Resume Online. In January 2001, the Company entered
into an agreement with internet.com Corporation for the launch of a new joint
vertical content channel, the Career Channel, hosted at internet.com's
website. These exclusive agreements help to provide a broad flow of candidates
for the jobs our customers pay us to post.

MeasureUp

We provide online IT certification test preparation and related products
through MeasureUp. Certification is becoming an increasingly important
component in an IT worker's skill set, as it provides an objective measurement
to demonstrate that an IT worker has the skills that can lead him or her to
higher paying jobs. In the highly specialized IT world, there are over 250
different certification exams. IT professionals preparing for certification
exams use these products at training centers or individually online. Employers
also have an interest in certification--both to help them screen candidates
and to retain employees through in-house training programs. MeasureUp provides
online practice exams to help prepare IT professionals for the actual
certification exams from leading vendors and other entities such as Microsoft,
Cisco, Novell, and CIW.

We provide self-paced assessment tests and certification program guides
which enable IT professionals to assess their skills and determine which
certification programs will help them enhance their knowledge and advance
their careers. Our content is included in IT certification programs offered by
leading training centers.

THE IT CONTENT BUSINESS

In addition to the IT career solutions outlined above, through December 26,
2000, EarthWeb's business portal addressed the needs of the IT industry for
content and community. On December 26, 2000, EarthWeb completed the sale of
certain of EarthWeb's content business assets, including earthweb.com and
other content-oriented website assets, to internet.com Corporation. Also, on
December 26, 2000, EarthWeb announced that it was exiting the remaining
content businesses that were not sold to internet.com, including its
subscription based online IT reference library, ITKnowledge.com. On February
28, 2001, we ceased offering our ITKnowledge.com service to customers.

Content

We drew from our content knowledge base of over two million pages to
provide comprehensive and valuable information resources across IT industry
vertical markets and constituencies. We provided technical resources including
full-text reference books, training materials and tutorials, technical
articles and source code libraries to IT professionals to enable them to solve
challenging technical problems. We also provided product surveys to enable IT
professionals to make informed purchasing decisions. IT professionals
navigated our large knowledge base through a central search engine as well as
through an extensive menu of categories.

We featured hundreds of original, proprietary, in-depth technical tutorials
for IT industry constituents. The tutorials included workshops on specific
technical issues, online textbooks, source code, tests and quizzes. We
exclusively owned most of these tutorials, and the balance came from a variety
of third-party publishers. We added new training materials on a regular basis.

Community

We provided a forum in which users could contribute material and
communicate with each other. Users were encouraged to submit source code,
object code, development tools and other materials that were then archived in
our directories. Our online services also included a number of bulletin boards
for technical discussions that allowed users to solve problems together. These
bulletin boards were managed by experienced IT professionals to maintain the
quality of the content. These discussions were then archived, creating an
online knowledge repository for future reference. We also provided the IT
industry with a centralized calendar of upcoming conferences and events, which
enabled its members to identify events relevant to them.

GROWTH STRATEGY

During 2000, we made a strategic decision to focus on our core business
with the highest potential for profitable growth, our IT career solutions
business. We expect to continue to extend the scope of this business by
serving the needs of IT professionals and the companies who employ them.

Our objective is to continue to grow in revenue, profitability and
penetration of the IT career solutions market. We intend to achieve this
objective by implementing the following strategies, which we may pursue
through internal growth, selective acquisitions of companies or assets, joint
ventures, licensing arrangements or other strategic initiatives.

Maintain and strengthen our position as a leading online IT job board

We believe that our ability to achieve our growth objectives will be
enhanced by the ability to maintain and strengthen our position as a leading
online IT job board. To achieve this objective, we intend to continue to
enhance the services that we provide to both IT professionals seeking jobs and
to our customers seeking IT professionals. We also intend to maintain a strong
presence on IT-centric websites which fosters the flow of job seekers to our
site.

Expand our customer base

Our growth objectives will also be enhanced by increasing both our customer
base and the amount of services our customers purchase. Key elements of this
strategy include increasing the awareness of our services

among direct employers of IT professionals, continuing to expand our sales
operations, and further developing the use of enterprise agreements with large
potential customers. We may also expand our offerings internationally, as our
existing strength in IT career solutions will enable us to take advantage of
the increasing need for these services outside the U.S.

Strengthen our brand recognition

We intend to expand our visibility and contact with a greater audience of
potential purchasers of our services, as well as with our existing customers.
In addition, we will continue to promote the Company and its products through a
variety of offline and online media and promotional activities.

Expand our sales force

We intend to continue to build our sales organization to reach greater
numbers of potential customers. Within our sales organization, we intend to
expand both our internal telemarketing sales force and our new external
corporate sales force, which is being developed to broaden the use of
enterprise agreements with large potential customers.

SALES AND MARKETING

Sales

In 2000, we expanded our sales organization at dice.com to further penetrate
the market for IT online job postings and recruiting services. Our sales
organization in the career solutions business at dice.com and MeasureUp has
grown to 55 sales people and 42 customer support personnel as of December 31,
2000, from 13 sales people and 20 customer support personnel as of December 31,
1999.

Dice.com also developed a new sales team structure in late 2000 by grouping
sales, customer support and telemarketing specialists into teams covering
specific accounts by territory. Additionally, a corporate sales group was
created in late 2000 to develop enterprise agreements targeting Fortune 1000
companies and other large businesses.

Marketing

Market success in the intensely competitive online world requires integrated
and intensive marketing. At the end of 2000, we strengthened our focus on the
IT career solutions business. We promoted our brand strength, industry
leadership and competitive advantage to reach greater numbers of potential
customers and further strengthen our customer relationships.

We intensified our focus on the specific markets to introduce EarthWeb
products, and foster relationships at the earliest stages of IT professionals'
careers. We launched a combination of online and traditional media marketing
campaigns to promote the use of our online services by users, advertisers and
customers. We utilized a variety of media and tactics--direct mail, print,
radio, television, outbound emails and newsletters--to market our online
services. We also have an ongoing public relations program and participate in
tradeshows, conferences and speaking engagements.

We have pursued and completed strategic relationships to enhance brand
awareness for the dice.com brand and to generate leads through major
distribution portals and search engines. We have also completed a number of
marketing agreements to become the exclusive provider of job listings and
resume registrations for a number of high-traffic technology websites. With
these agreements, dice.com has added a significant IT-centric audience. We are
expanding our marketing programs to increase brand awareness of dice.com among
human resources professionals within the direct employer segment of our market.

COMPETITION

Since the advent of commercial services on the Internet, the number of
online job-related services competing for users' attention and spending has
proliferated, particularly in the IT industry, and we expect that competition
will continue to intensify. The intensification of this competition has been
characterized by pressure to reduce prices, incorporate new capabilities and
technologies and aggregate job seekers to utilize services. Dice.com competes
with horizontally focused online job boards such as Monster.com (TMP
Worldwide), Hotjobs.com and Headhunter.net as well as online job boards
focused on the IT job market like Brass Ring, Techies.com and
ComputerJobs.com. Dice.com also competes with traditional media companies that
carry classified advertising. Our ability to maintain our existing customers
and generate new customers depends to a significant degree on the quality of
our services, pricing and our reputation among our customers and potential
customers.

INTELLECTUAL PROPERTY

We seek to protect our intellectual property through a combination of
license agreements, service mark, copyright, trade secret laws and other
methods of restricting disclosure and transferring title. We obtain the
majority of our content under license agreements with publishers, through work
for hire arrangements with third parties and from internal staff development.
We have no patents or patents pending for our current online services and do
not anticipate that patents will become a significant part of our intellectual
property in the foreseeable future. We generally enter into confidentiality
agreements with our employees, consultants, vendors and customers, license
agreements with third parties and generally seek to control access to and
distribution of our technology, documentation and other proprietary
information. We pursue the registration of our service marks in the United
States and internationally. We are the trademark owner of MEASUREUP, we have
been assigned the DICE trademark and have applied for the registration of
additional service marks.

U.S. AND FOREIGN GOVERNMENT REGULATION

Congress has recently passed legislation that regulates certain aspects of
the Internet, including online content, copyright infringement, user privacy,
taxation, access charges, liability for third-party activities and
jurisdiction. In addition, federal, state, local and foreign governmental
organizations have enacted and also are considering, and may consider in the
future, other legislative and regulatory proposals that would regulate the
Internet. Areas of potential regulation include, but are not limited to,
libel, electronic contracting, pricing, quality of products and services and
intellectual property ownership.

The European Union also has enacted several directives relating to the
Internet. In order to safeguard against the spread of certain illegal and
socially harmful materials on the Internet, the European Commission has
drafted the "Action Plan on Promoting the Safe Use of the Internet." Other
European Commission directives address the regulation of privacy, e-commerce,
security, commercial piracy, consumer protection and taxation of transactions
completed over the Internet.

It is not known how courts and administrative agencies will interpret and
apply both existing and new laws. Therefore, we are uncertain as to how new
laws or the application of existing and new laws will affect our business. In
addition, our business may be indirectly affected by our vendors and customers
who may be subject to such legislation. Increased regulation of the Internet
may decrease the growth in the use of the Internet, which could decrease the
demand for our services, increase our cost of doing business or otherwise have
a material adverse effect on our business, results of operations and financial
condition.

EMPLOYEES

As of February 28, 2001 we had approximately 248 full-time employees,
including 140 in sales, marketing and customer support, 16 in content, and 92
in corporate, finance, systems and administrative positions. Our employees are
not represented by any union, and we consider our relations with our employees
to be good.

RISK FACTORS

RISKS PARTICULAR TO EARTHWEB

YOU CANNOT PREDICT OUR FUTURE SUCCESS BASED ON OUR OPERATING HISTORY

Although we commenced operations in October 1994, we have had a number of
different operating models since that time. We began our business of providing
online services to IT professionals in October 1995. We then broadened our
online services to address the needs of other constituents of the IT industry
and began generating advertising revenues in June 1996. In 2000, we announced
that we were exiting the content business and focusing solely on the IT career
solutions aspect of our business. The limited amount of information about us
in our current operating mode and the fact that our historical results are not
reflective of our current business make it difficult for you to predict
whether we will be successful.

We compete in the relatively new markets for Internet services and
products. Thus, you should also evaluate our chances of financial and
operational success in light of the risks, uncertainties, expenses, delays and
difficulties associated with operating a business in a relatively new and
unproven market, many of which may be beyond our control. Some of the risks
that we face are described in the following paragraphs. Our failure to address
these risks could have a material adverse effect on our business, results of
operations and financial condition.

WE HAVE A HISTORY OF LOSSES AND MAY NEED ADDITIONAL FUNDS

We have experienced operating losses as well as net losses for all of the
fiscal years during which we have operated. Although our revenues have
increased in recent quarters, we cannot assure you that such growth will be
maintained or increased in the future. You should not rely on our recent
revenue growth as indicative of our future results of operations. We cannot
predict with accuracy our future results of operations and believe that any
period-to-period comparisons of our results of operations may not be
meaningful.

We expect to increase our operating expenses significantly, expand our
sales and marketing operations and continue to develop and extend our online
IT career services. In the future, we may not generate sufficient revenues to
pay for all of these operating or other expenses. If we fail to generate
sufficient cash to pay these expenses, we will need to identify other sources
of financing. We may not be able to borrow money or issue more shares of
common stock or other securities to meet our cash needs, and even if we can
complete such transactions, the terms may be deemed unfavorable to us.

WE HAVE SIGNIFICANT INDEBTEDNESS

We have indebtedness of $80 million under convertible subordinated notes
that are due in 2005. Our indebtedness could limit our ability to: obtain
necessary additional financing for working capital, capital expenditures, debt
service requirements or other purposes in the future; plan for, or react to,
changes in our business and competition; and react in the event of an economic
downturn. If we are unable to generate sufficient cash flow or obtain funds
for required payments under the notes, or if we fail to comply with other
covenants relating to the notes, we will be in default.

OUR BUSINESS MODEL RELIES ON CONTRACT RENEWALS

Our current business depends on recurring revenues from fees charged to
employers using our Website to hire technology professionals. We have entered
into most of our customer agreements during the past year and we cannot be
sure that these companies will renew their agreements when they expire. For
our business to be successful, we must provide technology professionals with
compelling career development services and sufficient job opportunities while
providing companies with an ongoing pool of qualified applicants. If
technology professionals and employers decide to discontinue using our Website
and we are unable to attract new clients,

our business, financial condition and results of operations could be
materially adversely affected. Accordingly, we cannot be certain that our
business will be successful or that we can increase our revenues. It is
possible that we will be required to adapt our business model in response to
changes in the online recruiting market. We may not be successful in adapting
our business model if required to do so.

OUR FUTURE REVENUES ARE DEPENDENT ON THE ADOPTION AND EFFECTIVENESS OF THE
INTERNET AS A JOB SEARCH AND RECRUITMENT TOOL

Providing career development and recruitment services on the Internet is a
new business, and we will not be successful if companies and technology
professionals resist using the Internet for these services. In addition, the
Internet is not a proven recruiting medium. Our business depends upon the
acceptance by technology professionals and employers of the Internet as an
effective job search and recruitment tool. The online recruiting market is new
and rapidly evolving, and we do not yet know how effective online recruiting
will be compared to traditional recruiting methods or whether it will attain a
significant level of market acceptance. The adoption of online recruiting and
job seeking, particularly among those who have historically relied upon
traditional recruiting methods, requires the acceptance of a new way of
conducting business, exchanging information and applying for jobs. Many of our
potential clients have little or no experience using the Internet as a
recruiting tool. If we are unable to compete with traditional recruiting and
job seeking methods, our business, financial condition and results of
operations could be materially adversely affected.

WE MAY BE ADVERSELY AFFECTED BY A RECESSION

Our business could be adversely affected by a recession, which may
materially harm our financial results. Online recruitment of technology
professionals is a relatively new industry and we do not know how sensitive
our industry is to general economic conditions. Demand for online recruitment
of technology professionals may be significantly and adversely affected by the
level of economic activity and employment in the United States and abroad. A
recession could cause employers to reduce or postpone their recruiting efforts
generally, and their online recruiting efforts of technology professionals in
particular. Therefore, if an economic downturn or recession occurs in the
United States or abroad, our business, financial condition and results of
operations could be materially adversely affected.

WE COMPETE IN A HIGHLY COMPETITIVE DEVELOPING MARKET WITHOUT CERTAINTY OF
FUTURE GROWTH

The market for our online IT career services has only recently begun to
develop, is rapidly evolving and is characterized by an increasing number of
market entrants. As is typical of a new and rapidly evolving industry, demand
and market acceptance for recently introduced services is uncertain and we
cannot accurately predict the future growth, if any, and size of this market.
The market for our online IT career services may not continue to develop or
become sustainable. If use of our online IT career services fails to grow, our
ability to establish other online IT career services would be materially
adversely affected.

We compete with other companies that direct all or portions of their
Websites towards certain segments or sub-segments of the IT industry. Some of
our competitors include Monster.com, Hotjobs.com, Headhunter.net, Brass Ring,
Techies.com and ComputerJobs.com. We also compete with traditional media
companies that carry classified advertising.

Many of our competitors may have longer operating histories, larger client
bases, longer relationships with clients, greater brand or name recognition or
significantly greater financial, technical, marketing and public relations
resources than we do. As a result, they may be in a position to respond more
quickly to new or emerging technologies and changes in customer requirements
and to develop and promote their products and services more effectively. We
may not be able to compete successfully against present or future competitors.

There are relatively low barriers to entry in the online IT career services
market. We do not own any patented technology that precludes or inhibits
competitors from entering the online IT career services market. Existing or
future competitors may develop or offer services that are comparable or
superior to ours at a lower price, which could have a material adverse effect
on our business, results of operations and financial condition.

WE MUST CONTINUE TO MAINTAIN AND DEVELOP OUR REPUTATION AND BRAND RECOGNITION

We believe that establishing and maintaining the identity of our brands is
critical in attracting and expanding our audience, and that the importance of
brand recognition will increase due to the growing number of Internet online
services. Promotion and enhancement of our brands will depend largely on our
success in continuing to provide high quality online IT career services. If
users do not perceive our existing online IT career services to be of high
quality, or if we introduce new online services or enter into new business
ventures that are not favorably received by users, the uniqueness of our
brands could be diminished and the attractiveness of our audiences to
advertisers could be reduced. We will have to change the Company's corporate
name during 2001, which may adversely affect our branding efforts to date. We
may also find it necessary to increase substantially our financial commitment
to creating and maintaining a distinct brand loyalty among users or in
transitioning to a new corporate name. If we (1) cannot provide high quality
online IT career services, (2) fail to promote and maintain our brands, or (3)
incur excessive expenses in an attempt to improve our online IT career
services or promote and maintain our brands, our business, results of
operations and financial condition could be materially adversely affected.

WE MUST RETAIN KEY EXECUTIVES AND PERSONNEL

Our performance is substantially dependent on the performance of our senior
management and key technical personnel. We have employment agreements, which
include non-compete provisions, with all members of senior management.
However, these senior managers and others may leave us or compete with us,
which could have a material adverse effect on our business, results of
operations and financial condition. In addition, we have not purchased key
person life insurance on any members of our senior management.

Our future success also depends upon our continuing ability to identify,
attract, hire and retain highly qualified personnel. There has recently been a
shortage of qualified personnel in the online services market, and this
shortage may continue. We compete intensely for qualified personnel with other
companies. If we cannot attract, motivate and retain qualified professionals,
our business and results of operations could be materially adversely affected.

OUR CONTINUED FUTURE GROWTH MAY STRAIN OUR RESOURCES

A key part of our strategy is to grow, which may strain our managerial,
operational and financial resources. To manage acquisitions and future growth,
our management must continue to improve our operational and financial systems
and expand, train, retain and manage our employee base. Our management may not
be successful in managing our growth effectively. If our systems, procedures
and controls are inadequate to support our operations, our expansion would be
halted and we could lose our opportunity to gain significant market share. Any
inability to manage growth effectively could have a material adverse effect on
our business, results of operations and financial condition.

WE MAY BE UNABLE TO CONSUMMATE POTENTIAL ACQUISITIONS OR INTEGRATE THE
OPERATIONS OF COMPANIES WE ACQUIRE

Our strategy has included the acquisition of assets of online service
providers that enhance our current services. As part of this strategy, during
2000 we acquired a number of businesses and websites including MeasureUp. Our
continued growth may depend in part on our ability to continue to identify
suitable acquisition candidates and to acquire them on appropriate terms. In
addition, the anticipated results of any acquisitions may not be realized.
Some of the risks that we may encounter in acquiring other companies include
the following:

. expenses, delays and difficulties of integrating the acquired company
into our existing organization;

. potential disruption of our ongoing business;

. diversion of management's attention;

. the amortization of the acquired company's intangible assets;

. impact on our financial condition due to the timing of the acquisition;

. failure to retain key personnel;

. difficulties of integrating the personnel and cultures of the acquired
company into our organization; and

. potential legal liabilities.

If any of these risks materialize, they could have a material adverse
effect on our business, results of operations and financial condition.

WE RELY ON A NUMBER OF STRATEGIC ALLIANCES

We rely on strategic alliances, like our agreement with internet.com to
operate the Career Channel and the agreement we entered into with CNET and
ZDNet, to attract job seekers to our online services. These relationships may
not continue or we may not be able to develop any additional third party
alliances on acceptable commercial terms. Our inability to maintain current
strategic relationships generally or develop new strategic relationships could
have a material adverse effect on our business, results of operations and
financial condition.

OUR QUARTERLY RESULTS MAY FLUCTUATE SIGNIFICANTLY

Because of our limited operating history, we plan our expenses based in
part upon our expectations concerning future revenues. Our expenses, to a
large extent, are fixed. Our quarterly revenues and operating results depend
substantially upon the revenues we receive within that quarter, which are
difficult to forecast accurately. The cancellation or deferral of a small
number of contracts could have a material adverse effect on our business,
results of operations and financial condition. We may be unable to adjust
spending in a timely manner to compensate for any unexpected revenue
shortfall, and any significant shortfall could have a material adverse effect
on our business, results of operations and financial condition.

WE MAY HAVE DIFFICULTY IN EXPANDING AND MANAGING OUR INTERNATIONAL OPERATIONS

A part of our strategy is to develop our online services in international
markets. To date, we have had limited experience in developing localized
versions of our online services and in marketing and operating our online
services internationally. If the international revenues are not adequate to
offset our investments in international activities, our business, results of
operations and financial condition could be materially and adversely affected.

We may experience difficulty in managing international operations because
of distance, as well as language and cultural differences. We and any of our
future foreign business associates may not be able to successfully market and
operate our online services in foreign markets. Furthermore, in light of
substantial anticipated competition, we believe that it will be necessary to
implement our business strategy quickly in international markets to obtain a
significant share of the market. We cannot give you any assurance that we will
be able to do so. Other risks that could affect our potential international
operations include: fluctuations in currency exchange rates; difficulties
arising from staffing and managing foreign operations; unexpected changes in
the legal and regulatory requirements of different countries; potential
political and economic instability; and overlapping or differing tax laws.

If any of these risks materialize, our domestic and international
businesses, results of operations and financial condition could be materially
adversely affected.

OUR STOCK PRICE IS VOLATILE

Our common stock began trading on the Nasdaq National Market on November
11, 1998 and its market price has been highly volatile. The price range for
our common stock has ranged from a low of $2.59 to a high of $89 since it
began trading on the Nasdaq National Market. In addition, the overall market
for the equity securities issued by Internet-related companies has been
volatile. This volatility will likely continue. Factors that may materially
adversely affect the market price of our common stock include:

. variations in our financial results and earnings;

. failure to meet or exceed estimates by securities analysts;

. fluctuations in the stock prices of our competitors;

. any loss of key management;

. adverse regulatory actions or decisions;

. announcements of extraordinary events, including material litigation or
acquisitions or changes in pricing policies by us or our competitors;

. changes in the market for our online services; and

. general economic, political and market conditions.

FOUR OF OUR DIRECTORS OR THEIR AFFILIATES OWN A SIGNIFICANT PERCENTAGE OF
OUR SHARES

As of March 14, 2001, Warburg, Pincus Ventures, L.P., Jack D. Hidary and
Murray Hidary (or their affiliates) owned 33.0% in the aggregate of the
outstanding shares of common stock and individually owned the percentage set
forth opposite their respective names below. Two of our directors are
affiliated with Warburg, Pincus Ventures, L.P. and both Jack Hidary and Murray
Hidary are directors of EarthWeb.

Warburg, Pincus Ventures, L.P.......................................... 17.3%
Jack D. Hidary ........................................................ 7.9%
Murray Hidary ......................................................... 7.8%

If the stockholders listed above choose to act or vote in concert, they
will have the power to influence the election of our directors, the
appointment of new management and the approval of any other action requiring
the approval of our stockholders, including any amendments to our certificate
of incorporation (including those necessary to implement a corporate name
change) and mergers or sales of all of its assets. In addition, without the
consent of these stockholders, we could be prevented from entering into
potentially beneficial transactions. Conversely, third parties could be
discouraged from making a tender offer or bid to acquire us at a price per
share that is above the price at which the common stock trades on the Nasdaq
National Market.

SUBSTANTIAL SALES OF OUR COMMON STOCK COULD ADVERSELY AFFECT OUR STOCK PRICE

In connection with our acquisitions of businesses, we issued a significant
number of shares of common stock. Some shares may be offered and sold from
time to time under an effective registration statement by the holders of those
shares. Those stockholders have agreed to restrict their sales of such shares
of common stock to a limited number of shares per quarter. In the event that
all of those shares available for sale in any quarter are all sold on one day,
such sales may have an adverse effect in the market price of our common stock.

OUR CHARTER DOCUMENTS COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO
ACQUIRE US

Various provisions of our certificate of incorporation and by-laws are
designed to discourage or prevent a third party from acquiring control of us.
Our by-laws include restrictions on who may call a special meeting of
stockholders, and either a majority of the board of directors or the holders
of two-thirds of our outstanding capital stock, which are entitled to vote in
the elections of the board of directors, must approve all amendments to our
by-laws.

Our certificate of incorporation authorizes the board of directors to issue
up to 2,000,000 shares of "blank check" preferred stock. The board of
directors will have the authority without action by our stockholders to fix
the rights, privileges and preferences of, and to issue shares of this
preferred stock. In addition, our certificate of incorporation provides that
the board of directors will be divided into three classes with the directors
serving staggered three-year terms. Only the holders of two-thirds of our
outstanding capital stock that are entitled to vote in the elections of the
board of directors can amend this provision.

RISKS TYPICAL OF THE INTERNET INDUSTRY

OUR SUCCESS IS TIED TO THE CONTINUED GROWTH IN THE USE OF THE INTERNET AND THE
ADEQUACY OF THE INTERNET INFRASTRUCTURE

Our future success is substantially dependent upon continued growth in the
use of the Internet. The number of users on the Internet may not increase and
commerce over the Internet may not become more accepted and widespread for a
number of reasons, including:

. actual or perceived lack of security of information, including credit
card numbers, customer information and job seeker information;

. lack of access and ease of use;

. congestion of traffic on the Internet;

. inconsistent quality of service and lack of availability of cost-
effective, high-speed service;

. possible disruptions due to computer viruses or other damage to the
Internet servers or to users' computers;

. excessive governmental regulation;

. uncertainty regarding intellectual property ownership; and

. lack of high-speed modems and other communications equipment.

Published reports have also indicated that growth in the use of the
Internet has resulted in users experiencing delays, transmission errors and
other difficulties. As currently configured, the Internet may not support an
increase in the number or requirements of our users. In addition, there have
been outages and delays on the Internet as a result of damage to the current
infrastructure. The amount of traffic on our online services could be
materially affected if there are outages or delays in the future. The use of
the Internet may also decline if there are delays in the development or
adoption of modifications by third parties that are required to support
increased levels of activity on the Internet. If none of the foregoing changes
occur, or if the Internet does not become a viable commercial medium, our
business, results of operations and financial condition could be materially
adversely affected. In addition, even if those changes occur, we may be
required to spend significant amounts to adapt our online services to any new
or emerging technologies relating to the Internet.

CAPACITY CONSTRAINTS OR SYSTEMS FAILURES COULD MATERIALLY AND ADVERSELY AFFECT
OUR BUSINESS

The performance of our online services is critical to:

. our reputation;

. our ability to attract users to our services; and

. achieving market acceptance of our online services.

Any system failure, including network, software or hardware failure that
causes interruption or an increase in response time of our online services
could result in decreased usage of our services. If these failures are
sustained or repeated, they could reduce the attractiveness of our online
services to our users, vendors and advertisers. An increase in the volume of
queries conducted through our online services could strain the capacity of the
software or hardware we employ, which could lead to slower response time or
system failures that could adversely affect our revenues.

Our operations are dependent in part upon our ability to protect our
operating systems against:

. physical damage from acts of God;

. power loss;

. telecommunications failures;

. physical and electronic break-ins;

. hacker attacks;

. computer viruses; and

. similar events.

The occurrence of any of these events could result in interruptions, delays
or cessations in service to users of our online services, which could have a
material adverse effect on our business, results of operations and financial
condition. Overall Internet usage could decline if any well-publicized
compromise of security occurs. Hacking involves efforts to gain unauthorized
access to information of systems or to cause intentional malfunctions or loss
or corruption of data software, hardware or other computer equipment. Hackers,
if successful, could misappropriate proprietary information or cause
disruptions in our services. Several popular Internet portals in the United
States have been disrupted by hackers. We cannot assure you that we will be
able to avoid hackers or some other similar form of system disruption or
denial of service attack. Security breaches could have a material adverse
effect on our business. In addition, transmission of computer viruses to our
Internet sites, whether intentional or inadvertent, could expose us to a
material risk of loss or litigation and possible liability.

WE MAY FACE LIABILITY FOR THE SERVICES THAT WE PROVIDE

Because content made available by third parties may be downloaded by the
online services operated or facilitated by us and may be subsequently
distributed to others, there is a potential that claims will be asserted
against us for defamation, negligence or personal injury, or based on other
theories due to the nature of the content. These claims have been brought, and
sometimes successfully asserted, against other online service providers. In
addition, we could be exposed to liability with respect to the selection of
listings that may be accessible through our online services or through content
and materials that may be posted by users in our classifieds. By providing
hypertext links to Internet sites operated by other providers, third parties
may attempt to assert claims or liability for wrongful actions by these other
providers through these Internet sites. It is also possible that users could
claim that we were responsible for losses incurred in reliance on information
provided on our online services. Although we carry general liability
insurance, our insurance may not cover potential claims of this type or may
not be adequate to provide full indemnification. Any imposition of liability
or legal defense expenses that are not covered by insurance or are in excess
of insurance coverage could have a material adverse effect on our business,
results of operations and financial condition. Liability claims could require
us to spend significant time and money in litigation or to pay significant
damages. As a result, any such claims, whether or not successful, could
seriously damage our reputation and our business.

MISAPPROPRIATION OF OUR INTELLECTUAL PROPERTY COULD HARM OUR REPUTATION,
AFFECT OUR COMPETITIVE POSITION AND COST US MONEY

We believe that our service marks and other proprietary rights are
important to our success and competitive position. We have registered some of
our service marks in the United States and abroad. We also limit access to and
distribution of our proprietary information, as well as proprietary
information licensed from third parties. Our management cannot ensure that
these strategies will be adequate to deter misappropriation of our proprietary
information and material.

Despite our efforts to protect our intellectual property, we face the
following risks:

. non-recognition or inadequate protection of our proprietary rights in
various foreign countries;

. undetected misappropriation of our proprietary information or materials;

. development of similar technologies by competitors;

. unenforceability of the non-competition agreements entered into by our
employees; and

. infringement claims, even if not meritorious.

If any of these risks materialize, we could be required to pay significant
amounts to defend our rights and our managerial resources could be diverted.

Legal standards relating to the validity, enforceability and scope of
protection of various intellectual property rights in Internet-related
industries are uncertain and still evolving, and no assurance can be given as
to the future viability or value of any intellectual property rights of ours
or other companies within the IT industry. We generally enter into
confidentiality agreements with our employees, consultants, vendors and
customers, license agreements with third parties and generally seek to control
access to and distribution of our technology, documentation and other
proprietary information. We pursue the registration of our service marks in
the United States and internationally. We are the trademark owner of
MEASUREUP, we have been assigned the DICE trademark and have applied for the
registration of additional service marks. Although we generally pursue the
registration of our service marks and other intellectual property, we have
copyrights, trademarks and/or service marks that have not been registered in
the United States and/or other jurisdictions. Moreover, effective trademark,
copyright and trade secret protection may not be available in every country in
which our online services are distributed or made available through the
Internet. The steps we have taken to protect our proprietary rights may not be
adequate, and third parties could infringe or misappropriate our copyrights,
service marks, trade dress and similar proprietary rights.

We have licensed in the past, and expect to license in the future, various
elements of our distinctive trademarks, service marks, trade dress, trade
secrets and similar proprietary rights to third parties. While we attempt to
ensure that the quality of our brands is maintained by these licensees, no
assurance can be given that these licensees will not take actions that could
materially and adversely affect the value of proprietary rights or the
reputation of our online services, either of which could have a material
adverse effect on business, results of operations and financial condition.

WE MAY BE LIABLE IF THIRD PARTIES MISAPPROPRIATE OUR USERS'
PERSONAL INFORMATION

If third parties were able to penetrate our network security or otherwise
misappropriate our users' personal information or credit card information, we
could be subject to liability. This liability could include claims for
unauthorized purchases with credit card information, impersonation or other
similar fraud claims. It could also include claims for other misuses of
personal information, including unauthorized marketing purposes. These claims
could result in litigation.

WE MAY BE LIABLE WITH RESPECT TO THE COLLECTION AND USE OF USERS' PERSONAL
INFORMATION AND OUR CURRENT PRACTICES MAY NOT BE IN COMPLIANCE WITH PROPOSED
NEW LAWS AND REGULATIONS

Recently, class action lawsuits have been filed and the Federal Trade
Commission and state agencies have commenced investigations with respect to
the collection, use and sale by various Internet companies of users' personal
information. While we do not sell personally identifiable user information to
third parties and believe we are otherwise in compliance with current law, we
cannot ensure that we will not be subject to any such lawsuits or
investigations. Moreover, our current practices regarding the collection and
use of user information may not be in compliance with currently pending
legislative and regulatory proposals by the United States federal government
and various state governments intended to limit the collection and use of user
information. As a result, we may be forced to change our current practices
relating to the collection and use of user information. In addition, the
European Union adopted a directive in October 1998 that may limit our
collection and use of information regarding our users in Europe. We may incur
additional expenses if we are sued, our privacy practices are investigated or
need to change our practices to comply with

OUR BUSINESS IS SUBJECT TO U.S. AND FOREIGN GOVERNMENT REGULATION OF THE
INTERNET AND TAXATION

Congress and various state and local governments, as well as the European
Union, have recently passed legislation that regulates various aspects of the
Internet, including online content, copyright infringement, user privacy,
taxation, access charges, liability for third-party activities and
jurisdiction. In addition, federal, state,

local and foreign governmental organizations are also considering legislative
and regulatory proposals that would regulate the Internet. Areas of potential
regulation include libel, pricing, quality of products and services and
intellectual property ownership. A number of proposals have been made at the
state and local level that would impose taxes on the sale of goods and
services through the Internet. Such proposals, if adopted, could substantially
impair the growth of e-commerce and could adversely affect our future results
of operations and financial condition.

A law imposing a three-year moratorium on new taxes on Internet-based
transactions was enacted by Congress in October 1998. This moratorium relates
to new taxes on Internet access fees and state taxes on commerce that
discriminate against out-of-state Websites. Sales or use taxes imposed upon
the sale of products or services over the Internet will not be affected by
this moratorium. We have not yet been able to determine how we will be
affected by this moratorium. To the extent that the moratorium provides a
material benefit, its expiration after three years could have a material
adverse effect on our financial condition and results of operations.

Because these laws are relatively new and still in the process of being
implemented, it is not known how courts will interpret both existing and new
laws. Therefore, we are uncertain as to how new laws or the application of
existing laws will affect our business. Increased regulation of the Internet
may reduce the use of the Internet, which could decrease the demand for our
services, increase our cost of doing business or otherwise have a material
adverse effect on our business, results of operations and financial condition.

ITEM 2. PROPERTIES

Our headquarters are currently located in a leased facility in New York
City consisting of a total of approximately 19,800 square feet of office
space, the majority of which is under a ten-year lease. EarthWeb Career
Solutions, Inc. has offices located in Des Moines, Iowa, consisting of
approximately 40,790 square feet under leases expiring beginning on October
31, 2001. The Company is in negotiations to lease approximately 90,000 square
feet of office space in Des Moines for a term of ten years that would replace
the offices utilized under existing leases in Des Moines. MeasureUp, located
in Alpharetta, GA, has an office consisting of approximately 9,100 square feet
under lease. The Company also leases office space in Boston and San Francisco,
which we intend to sublease to third parties.

ITEM 3. LEGAL PROCEEDINGS

We are party to claims and litigation that arise in the normal course of
business. We believe that the ultimate outcome of those claims and litigation
will not have a material impact on our financial position or results of
operations.

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

No matters were submitted to a vote of our security holders during the
fourth quarter of our fiscal year ended December 31, 2000.

PART II

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

EarthWeb's common stock is quoted on The Nasdaq National Market System
("NASDAQ") (Symbol: EWBX).

The following table sets forth, for the calendar periods indicated, the
high and low sales prices per share for EarthWeb's common stock on NASDAQ:

High Low
------ ------

Year Ended December 31, 2000
First Quarter.................................................... $53.00 $21.88
Second Quarter................................................... 24.25 8.13
Third Quarter.................................................... 17.13 7.75
Fourth Quarter................................................... 18.13 4.75
Year Ended December 31, 1999
First Quarter.................................................... $57.88 $34.25
Second Quarter................................................... 89.00 25.38
Third Quarter.................................................... 50.00 30.81
Fourth Quarter................................................... 55.31 30.00

The bid prices reported for these periods reflect inter-dealer prices,
rounded to the nearest cent, and do not include retail markups, markdowns or
commissions, and may not represent actual transactions.

There were approximately 143 stockholders of record as of March 14, 2001
and the closing price of EarthWeb's common stock on that day was $3.625.

EarthWeb has paid no cash dividends on its common stock to date and does
not anticipate paying cash dividends in the immediate future.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
the financial statements and notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this Annual Report. The statement of operations data for the years ended
December 31, 2000, 1999, and 1998 and the balance sheet data as of December
31, 2000 and 1999 are derived from the audited financial statements of
EarthWeb and are included elsewhere in this Annual Report. The statement of
operations data for the years ended December 31, 1997 and 1996 and the balance
sheet data as of December 31, 1998, 1997 and 1996 are derived from the audited
financial statements of EarthWeb not included herein. The historical results
presented here include the results of operations of content businesses sold to
internet.com Corporation and the remaining content businesses that were exited
as of December 26, 2000.

Year Ended December 31,
---------------------------------------------
2000 1999 1998 1997 1996
-------- -------- ------- ------- -------
(In thousands, except per share data)

STATEMENT OF OPERATIONS DATA:
Revenues......................... $ 73,823 $ 31,050 $ 3,349 $ 1,135 $ 472
Cost of revenues................. 18,368 10,968 2,131 1,358 314
-------- -------- ------- ------- -------
Gross profit (deficit)........... 55,455 20,082 1,218 (223) 158
-------- -------- ------- ------- -------
Operating expenses:
Product development............ 8,999 4,114 1,476 1,003 68
Sales and marketing............ 43,248 27,715 4,547 1,018 252
General and administrative..... 13,045 9,875 3,356 2,567 1,802
Restructuring and impairment
charges....................... 38,675 -- -- -- --
Depreciation................... 5,292 1,677 699 387 101
Amortization................... 24,010 12,218 417 506 --
-------- -------- ------- ------- -------
Total operating expenses..... 133,269 55,599 10,495 5,481 2,223
-------- -------- ------- ------- -------
Loss from operations............. (77,814) (35,517) (9,277) (5,704) (2,065)
Interest expense................. (6,076) (494) (20) -- --
Interest and other income........ 3,454 1,298 327 267 61
-------- -------- ------- ------- -------
Loss from continuing operations.. (80,436) (34,713) (8,970) (5,437) (2,004)
Loss from discontinued
operations...................... -- -- -- (2,384) (42)
-------- -------- ------- ------- -------
Net loss......................... $(80,436) $(34,713) $(8,970) $(7,821) $(2,046)
======== ======== ======= ======= =======
Basic and diluted net loss per
share from
continuing operations........... $ (7.86) $ (3.78) $ (2.37) $ (1.86) $ (0.69)
Basic and diluted net loss per
share from
discontinued operations......... -- -- -- (0.81) (0.01)
-------- -------- ------- ------- -------
Basic and diluted net loss per
share........................... $ (7.86) $ (3.78) $ (2.37) $ (2.67) $ (0.70)
======== ======== ======= ======= =======
Weighted average shares of common
stock outstanding used in
computing basic and diluted net
loss per share.................. 10,230 9,180 3,783 2,925 2,925
======== ======== ======= ======= =======
BALANCE SHEET DATA (end of
period):
Cash and cash equivalents........ $ 40,157 $ 13,054 $25,293 $ 4,775 $ 3,779
Marketable securities............ 6,322 6,242 -- -- --
Working capital.................. 22,898 5,525 23,418 4,317 3,315
Total assets..................... 109,604 89,189 30,477 8,514 5,652
Long-term obligations............ 82,027 9,250 66 85 94
Stockholders' (deficit) equity... (6,915) 58,910 26,852 6,445 4,259

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

EarthWeb is an IT career solutions company and is a leading online provider
of career development resources to IT professionals. EarthWeb provides
services to hire and retain IT professionals through dice.com, an online IT
job board, and through MeasureUp, a provider of preparation products for IT
professional certifications.

Through December 26, 2000, EarthWeb owned and operated an online
advertising and subscription supported content business (the "Content
Business"). The Content Business of EarthWeb provided a comprehensive set of
information to IT professionals serving each of the major vertical markets in
the IT industry, including enterprise management, networking and
telecommunications, software and internet development, and hardware and
systems.

On December 26, 2000, EarthWeb completed the sale of certain assets of the
Content Business to internet.com Corporation ("internet.com"). These assets
primarily consisted of web sites, which included Earthweb.com
(www.Earthweb.com), Developer.com (www.developer.com), Datamation
(www.datamation.com), CrossNodes (www.crossnodes.com), SysOpt.com
(www.sysopt.com), ERP Hub (www.erphub.com), Open Source IT
(www.opensourceit.com), Javascripts.com (www.javascripts.com), JARS.com
(www.jars.com), HTML Goodies (www.htmlgoodies.com), Gamelan (www.gamelan.com),
CodeGuru.com (www.codeguru.com), Intranet Journal (www.intranetjournal.com),
CIN (www.cin.Earthweb.com) and EarthWeb Direct (www.Earthwebdirect.com), and
certain computer equipment, furniture and fixtures and leasehold improvements
related to the operations of those sites.

The consideration received by EarthWeb for these assets was $0.5 million in
cash and a three-year commitment by internet.com to deliver advertising
impressions on internet.com's network of web sites in order to promote
EarthWeb's remaining web sites; EarthWeb has valued this commitment at
approximately $2.2 million.

Also on December 26, 2000, EarthWeb announced that it was exiting the
remaining content businesses that were not sold to internet.com, which
primarily included its subscription based online reference library,
ITKnowledge.com.

TRANSACTIONS AFFECTING THE COMPARABILITY OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

The sale of certain assets of the Content Business and the exit from the
remaining content businesses should be considered when comparing our results
of operations and financial position. To enhance comparability, we have
included a discussion of the results of operations of the continuing
businesses and separate financial information that gives effect to these
transactions as if these transactions had occurred on January 1, 1999. Also
because of these transactions historical results may not be indicative of
future results.

RESULTS OF OPERATIONS

Year ended December 31, 2000 compared to year ended December 31, 1999

Revenues

Revenues for the year ended December 31, 2000 increased $42.8 million to
$73.8 million from $31.0 million for the year ended December 31, 1999. The
increase in revenues was primarily due to increases in customers and the
average amount spent per customer in our paid job listing and advertising
businesses, increased sales of our subscription and educational courseware
products, and the operations of acquired businesses. Specifically, the
increase in revenues attributable to (1) a full year of operations in 2000
versus a partial period of operations in the 1999 period for dice.com
(formerly known as D&L Online, Inc.) (acquired

February 1999) and MicroHouse International, Inc. (acquired March 1999) and
(2) a partial period of operations in 2000 versus no operations in 1999 for
Measure Up, Inc. (acquired February 2000) was approximately $3.4 million. In
mid year 2000 the Company changed its pricing structure of the paid job
listing business which resulted in an increase in revenue per customer.
Revenues from paid job listings accounted for 63%, banner and sponsorship
advertising for 23%, and premium products for 14% of total revenues for the
year ended December 31, 2000, compared to 51%, 34% and 15%, respectively, of
total revenues for the same period in 1999. For the years ended December 31,
2000 and 1999 no customer accounted for more than 2% and 5% of our revenues,
respectively. Barter advertising revenues accounted for less than 10% and
approximately 10% of revenues for the years ended December 31, 2000 and 1999,
respectively. For both periods barter advertising revenues primarily related
to the exchange of advertisements, tradeshow booths, and other promotional
activities with other companies.

Cost of Revenues

EarthWeb's cost of revenues consists primarily of employee salaries and
related expenses, computer systems related expenses required to support and
deliver EarthWeb's online services, consulting fees, cost of materials for
subscription and educational courseware products, royalties, Internet access
fees and hosting fees. Cost of revenues increased $7.4 million to $18.4
million for the year ended December 31, 2000 from $11.0 million for the year
ended December 31, 1999. The increase in cost of revenues was primarily
attributable to increases in employee related expenses, cost of materials of
premium products, computer system related expenses, consulting fees, freelance
writing costs and royalties paid needed to support the expansion of EarthWeb's
online service offerings. Also, an increase of approximately $1.2 million from
the year ended December 31, 1999 to the year ended December 31, 2000 is
attributed to the effect of acquisitions. Cost of revenues grew at a slower
rate than revenues primarily as a result of the ability to leverage the cost
structure of the paid job listing business.

Product Development

Product development expenses consist primarily of employee salaries and
related expenses, content conversion costs, consulting fees and computer
systems related expenses required to develop new or enhance existing service
offerings. Product development expenses increased $4.9 million to $9.0 million
for the year ended December 31, 2000 from $4.1 million for the year ended
December 31, 1999. The increase in product development expenses was primarily
attributable to an increase in employee related expenses, the redesign of the
Company's Content Business Web sites and the expansion of EarthWeb's online
services and product offerings.

Sales and Marketing

Sales and marketing expenses consist primarily of advertising, employee
salaries, sales commissions and related costs of EarthWeb's sales force and
marketing personnel, and promotional materials. Sales and marketing expenses
increased $15.5 million to $43.2 million for the year ended December 31, 2000
from $27.7 million for the year ended December 31, 1999. The increase was
partially attributable to an increase in advertising expenses of approximately
$5.6 million due to increased spending in marketing programs designed to
enhance brand recognition for our products. Additionally, an increase of
approximately $4.7 million was attributable to salaries, commissions and
related costs, mainly due to expansion of the sales force. Also, an increase
of $1.3 million is attributed to the effect of the acquisitions made in 1999
and 2000. Barter transactions as a percentage of sales and marketing expenses
accounted for approximately 12% for the years ended December 31, 2000 and
December 31, 1999.

General and Administrative

General and administrative expenses consist primarily of employee salaries
and related expenses for executive, administrative, and accounting personnel,
facility costs, recruiting fees and professional fees. General and
administrative expenses increased $3.1 million to $13.0 million for the year
ended December 31, 2000 from $9.9 million for the year ended December 31,
1999. The increase in general and administrative expenses was attributable to
increases in salaries and other employee related expenses, the Company's
provision for uncollectible accounts as a result of the overall increase in
revenues, and to facilities related expenses in order to support and grow the
Company's businesses.

Restructuring and Impairment Charges

The restructuring and impairment charges of $38.7 million in 2000 resulted
from the sale of the Content Business to internet.com Corporation and the
decision to exit the Company's remaining content businesses. The components of
these charges primarily included a $21.5 million write-off of intangible
assets, an $8.4 million write-down of fixed assets and $8.8 million in accrued
restructuring costs.

Components of the accrued restructuring costs as of December 31, 2000 were
as follows (in thousands):

Employee separation costs............................................... $3,360
Professional fees....................................................... 2,400
Other contractual commitments and exit costs............................ 2,210
Lease obligations....................................................... 823
------
Total................................................................. $8,793
======

Employee separation costs of $3.4 million relate to the employees of the
Content Business and primarily consist of severance and related payments, and
medical and other benefits. During December 2000, approximately 96 employees
companywide were notified that their positions were being eliminated over the
next few months but none were terminated as of December 31, 2000. Professional
fees of $2.4 million relate to services provided by attorneys, bankers,
accountants and other professionals as a result of the sale of the Content
Business. Other contractual commitments and exit costs of $2.2 million are
primarily comprised of guaranteed royalty payments, fixed advertising
commitments and obligations related to prior acquisitions and they do not
provide the Company any future benefit. Accrued costs for lease obligations of
$0.8 million relate to lease commitments for offices that will be vacated and
the termination of various office equipment leases.

The Company expects to make all payments related to its restructuring plan
by December 2001 with the exception of certain office equipment and facilities
lease agreements that expire in the second quarter of 2003. As of December 31,
2000 the Company had not made any payments related to these accrued
restructuring costs.

Depreciation

Depreciation expense increased $3.6 million to $5.3 million for the year
ended December 31, 2000 from $1.7 million for the year ended December 31,
1999. The increase was primarily a result of additional purchases of property,
equipment and capitalized software and was mainly related to the Content
Business.

Amortization

Amortization results primarily from amortization of intangible assets
related to acquisitions. Amortization increased $11.8 million to $24.0 million
for the year ended December 31, 2000 from $12.2 million for the year ended
December 31, 1999. This increase was a result of acquisitions consummated in
2000, to a full period of amortization of the intangible assets from the
acquisitions consummated in 1999 and to payments on earnout obligations.
Amortization will decrease in 2001 due to the sale of the Content Business and
the write-off of related intangible assets. However, we expect this decrease
to be partially offset by additional amortization due to future payments on
earnout obligations for the dice.com and MeasureUp acquisitions.

Interest Expense

Interest expense increased $5.6 million to $6.1 million for the year ended
December 31, 2000 from $0.5 million for the year ended December 31, 1999. The
increase primarily resulted from the issuance of the Convertible Notes in the
first quarter of 2000, which accounted for $5.8 million of the total increase,
partially offset by a decrease of $0.2 million in interest expense due to the
conversion of the MicroHouse convertible notes into EarthWeb common stock.

Interest and Other Income

Interest and other income increased $2.2 million to $3.5 million for the
year ended December 31, 2000 from $1.3 million for the year ended December 31,
1999. This increase resulted primarily from interest earned on the cash raised
from the issuance of the Convertible Notes in the first quarter of 2000.

Income Taxes

No provision for federal and state income taxes has been recorded as
EarthWeb has incurred net operating losses through December 31, 2000. As of
December 31, 2000, EarthWeb had approximately $77.3 million of net operating
loss carryforwards for federal income tax purposes, which will begin to expire
in 2011, available to offset future taxable income. Given EarthWeb's limited
operating history and losses incurred to date, we do not believe that the
realization of the related deferred income tax assets meets the criteria
required by generally accepted accounting principles and, accordingly, a full
valuation allowance has been recorded.

Statements of Operations of the Continuing Business for the Year Ended
December 31, 2000 compared to the Continuing Business for the Year Ended
December 31, 1999

The following unaudited statements of operations for the continuing
business is comprised of the results of operations for dice.com and MeasureUp,
and also includes allocated corporate overhead. These statements present the
operating results of the continuing business as if the sale of certain assets
of the Content Business and the exit of the remaining content businesses had
occurred on January 1, 1999. These statements exclude the restructuring and
impairment charges resulting from the sale and exit of the Content Business.

In addition, these statements of operations of the continuing business
include allocations of certain of EarthWeb's general corporate overhead costs.
These overhead costs primarily included those associated with the executive,
legal, accounting, tax, insurance, investor and public relations, and
corporate marketing areas of EarthWeb. These allocations were either based on
the ratio of the costs of the continuing business to EarthWeb's costs or based
on the ratio of the employees of the continuing business to EarthWeb's
employees.

The unaudited statements of operations for the continuing business are
presented below for illustrative purposes only and are not necessarily
indicative of the results of operations that would have actually been reported
had the sale of the certain assets of the Content Business and the exit of the
remaining content businesses occurred as of January 1, 1999 nor are they
necessarily indicative of future results of operations.

Statements of Operations of Continuing Business
(unaudited)

Year ended
December 31,
---------------
2000 1999
------- -------
(In thousands)

Revenues................................................... $49,931 $15,873
Cost of revenues........................................... 3,733 1,550
------- -------
Gross profit............................................... 46,198 14,323
------- -------
Operating expenses:
Product development...................................... 3,784 752
Sales and marketing...................................... 19,347 7,407
General and administrative............................... 7,614 5,579
Depreciation............................................. 1,089 300
Amortization............................................. 13,541 7,658
------- -------
Total operating expenses................................... 45,375 21,696
------- -------
Income (loss) from operations.............................. $ 823 $(7,373)
======= =======

The following discussion provides an analysis of revenues, costs of
revenues and other operating expenses of the continuing businesses.

Revenues

Total revenues increased $34.0 million from $15.9 million in 1999 to $49.9
million in 2000. The increase in revenues between periods primarily resulted
from an overall increase in paid listing customers and a change in the pricing
structure, implemented by dice.com during the third quarter of fiscal 2000,
which resulted in an increase in the revenue generated per customer. In
addition, $2.2 million of the increase is attributed to the effect of the
acquisitions of dice.com and MeasureUp.

Cost of Revenues

Cost of revenues primarily includes employee salaries and related expenses,
and system support costs related to the dice.com and MeasureUp websites. Total
cost of revenues increased $2.2 million from $1.5 million in 1999 to $3.7
million in 2000. The increase was primarily attributable to an increase in
customer support personnel to support the increase in the customer base of the
dice.com website. An additional $0.7 million of the increase is attributed to
the effect of the acquisitions. As a percentage of revenues, costs of revenues
declined from 10% in 1999 to 7% in 2000. The decrease as a percentage of
revenues stemmed principally from efficiencies gained from supporting a larger
customer base on the dice.com website.

Product Development

Product development consists primarily of employee salaries and related
expenses required to develop new or enhance existing service offerings.
Product development increased $3.0 million from $0.8 million in 1999 to $3.8
million in 2000. Product development expense increased partially as a result
of an increase in personnel utilized to support the existing and future
product offerings of dice.com.

Sales and Marketing

Sales and marketing expense consists primarily of advertising costs,
employee salaries, sales commissions and related costs associated with the
sales force and marketing personnel, and promotional materials. Sales and
marketing expense increased $11.9 million from $7.4 million in 1999 to $19.3
million in 2000. The increase in sales and marketing expense primarily
resulted from an increase in advertising expenses and also an increase in
salaries, commissions and related costs due to the expansion of the sales
force at dice.com.

General and Administrative

General and administrative expense consists primarily of personnel related
costs for executive administration, finance, human resources and facilities
management. General and administrative expenses increased $2.0 million from
$5.6 million in 1999 to $7.6 million in 2000. The increase in general and
administrative expenses was partially attributable to increases in the
Company's provision for uncollectible accounts resulting from the overall
increase in revenues. There were also increases in salaries and other employee
related expenses and in facilities related expenses in order to support and
grow the remaining businesses of the Company. Additionally, an increase of
approximately $0.7 million is attributed to the effect of the acquisitions.

Depreciation

Depreciation expense increased $0.8 million from $0.3 million in 1999 to
$1.1 million in 2000. The increase was primarily the result of additional
property and equipment to support the growth of operations of dice.com.

Amortization

Intangible assets, resulting from the acquisition of dice.com and MeasureUp
by EarthWeb, are being amortized using the straight-line method over three to
five years. If additional consideration is accrued due to earnout targets
being achieved, the additional intangible assets are amortized over the period
remaining from the date of acquisition. Amortization expense increased $5.9
million from $7.6 million in 1999 to $13.5 million in 2000. Of the increase
$4.1 million was due to the acquisition of MeasureUp and the intangible assets
acquired. The remaining increase resulted from additional consideration earned
as a result of performance targets achieved by dice.com.

Year ended December 31, 1999 compared to year ended December 31, 1998

Revenues

Revenues for the year ended December 31, 1999 increased to $31.0 million
from $3.3 million for the year ended December 31, 1998. Advertising revenues
including paid listings, banners and sponsorships represented 85% and 95% of
revenues for the year ended December 31, 1999 and 1998, respectively. The
increase in

revenues was primarily due to growth in advertising and paid listing revenues,
attributable to the acquisition of dice.com and increases in the volume of
advertising sold resulting from increases in the number of advertising
customers. The net impact on advertising revenues from the acquisition of
dice.com was an increase of approximately $15.9 million. For the year ended
December 31, 1999 no advertiser accounted for more than 10% of revenues; two
customers accounted for 21% of revenues for the year ended December 31, 1998.
Barter transactions accounted for approximately 10% and 25% of revenues for
the years ended December 31, 1999 and 1998, respectively. The decrease as a
percentage of revenue was primarily due to the increased revenues from
acquired companies that do not engage in significant barter transactions. For
both periods barter advertising revenues primarily related to the exchange of
advertisements, tradeshow booths, and other promotional activities with other
companies.

Cost of Revenues

Cost of revenues for the year ended December 31, 1999 increased to $11.0
million or 35.3% of net revenues from $2.1 million or 63.6% of net revenues
for the year ended December 31, 1998. The increase in cost of revenues was
primarily attributable to increased employee salaries and related expenses,
consulting fees, royalties, and computer systems related expenses due to the
expansion of EarthWeb's online service offerings of which $4.2 million related
to the expenses of dice.com and EarthWeb Knowledge Products.

Product Development

Product development expenses for the year ended December 31, 1999 increased
to $4.1 million from $1.5 million for the year ended December 31, 1998. The
increase in product development expenses was primarily attributable to the
expansion of EarthWeb's online service and product offerings.

Sales and Marketing

Sales and marketing expenses for the year ended December 31, 1999 increased
to $27.7 million from $4.5 million for the year ended December 31, 1998. The
increase was primarily attributable to an increase in advertising expenses of
$11.9 million of which $4.1 million related to the expenses of dice.com and
EarthWeb Knowledge Products. Additionally, salaries, commissions and related
costs increased approximately $7.0 million due to the expansion of the sales
force, of which $3.2 million related to the expenses of both dice.com and
EarthWeb Knowledge Products. Barter transactions accounted for approximately
12% and 19% of sales and marketing expenses for 1999 and 1998, respectively.

General and Administrative

General and administrative expenses for the year ended December 31, 1999
increased to $9.9 million from $3.4 million for the year ended December 31,
1998. The absolute dollar increase in general and administrative expenses was
primarily attributable to increased employee salaries and related expenses,
facilities costs, professional fees and recruiting fees, of which $3.1 million
related to the expenses of dice.com and EarthWeb Knowledge Products.

Depreciation

Depreciation for the year ended December 31, 1999 increased to $1.7 million
from $0.7 million for the year ended December 31, 1998, of which $0.4 million
related to the expenses of dice.com and EarthWeb Knowledge Products. The
increase was primarily a result of additional depreciation on property
and equipment.

Amortization

Amortization for the year ended December 31, 1999 increased to $12.2
million from $0.4 million for the year ended December 31, 1998. The increase
in amortization expense was primarily a result of additional amortization on
intangible assets of which $10.1 million related to the expenses of dice.com
and EarthWeb Knowledge Products.

Interest and Other Income, net

Interest and other income, net for the year ended December 31, 1999
increased to $0.8 million from $0.3 million for the year ended December 31,
1998. The increase was primarily the result of higher average cash balances
during 1999, primarily from the proceeds of EarthWeb's initial and secondary
public common stock offerings.

Income Taxes

No provision for federal and state income taxes has been recorded as
EarthWeb has incurred net operating losses through December 31, 1999. As of
December 31, 1999, EarthWeb had approximately $40.2 million of net operating
loss carryforwards for federal income tax purposes, which will begin to expire
in 2011, available to offset future taxable income.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

EarthWeb historically has satisfied its cash requirements primarily through
offerings of common stock and convertible notes and lease financings.
Subsequent to the disposition of the Content Business, we believe that the
Company's current cash position and future cash flows from operations will be
sufficient to fund the Company's operations for the next twelve months.
However, there can be no assurances that the Company will achieve its planned
results. If anticipated results are not achieved, management has the ability
to delay or reduce its expenditures so as to not require additional financing,
if such financing is not available on terms acceptable to the Company.

EarthWeb will continue to evaluate possible acquisitions of, or investments
in, business products and technologies that are complementary to those of the
Company, which may require the use of cash. However, EarthWeb may sell
additional equity or debt securities or obtain credit facilities. The sale of
additional securities could result in dilution to EarthWeb's stockholders.

Net cash used in operating activities was $10.0 million for the year ended
December 31, 2000 and resulted primarily from a net loss of $80.4 million and
an increase in accounts receivable of $6.2 million offset by an increase in
deferred revenue of $4.9 million, restructuring and impairment charges of
$38.7 million and depreciation and amortization of $29.3 million.

Net cash used in investing activities was $27.8 million for the year ended
December 31, 2000 and was primarily attributable to acquisitions of $16.0
million and purchases of fixed assets of $12.3 million.

Net cash from financing activities was $64.8 million for the year ended
December 31, 2000 and $24.7 million for the year ended December 31, 1999. In
January 2000, EarthWeb completed a private offering pursuant to Rule 144A of
the Securities Act of 1933 of $80.0 million of convertible subordinated notes.
Proceeds to EarthWeb, net of issuance costs, were approximately $77.2 million.
Partially offsetting these cash inflows were payments on amounts due under
acquisition agreements of approximately $10.9 million and $1.7 million for
payments on notes payable and capital leases. On May 7, 1999, EarthWeb
completed a secondary public offering of 1,300,000 shares of common stock at
an offering price of $37.00 per share, of which 750,000 shares were sold by
EarthWeb and 550,000 shares were sold by selling stockholders. Proceeds to
EarthWeb, net of issuance costs, were approximately $25.4 million.

Under the terms of the acquisition agreement for dice.com, the Company has
earnout obligations to the sellers of dice.com based on the attainment of
certain financial targets. A total of $4.0 million is due in April 2001 and if
certain financial targets are met during 2001, a total of $4.0 million will be
due in April 2002. Of the amount due in April 2001, $2.0 million is payable in
cash and $2.0 million is payable in cash, common stock or any combination, at
the Company's option. It is the Company's intention to pay the April 2001
earnout obligation in cash.

Under terms of the purchase agreement for MeasureUp, the Company has
earnout obligations to the sellers of MeasureUp based on the achievement of
certain financial targets during the years 2000, 2001 and 2002 aggregating up
to $10 million, payable in cash and/or common stock, at the Company's option.
The first payment is due in April 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133
established new accounting and reporting standards for derivative financial
instruments and for hedging activities. SFAS 133 requires the Company to
measure all derivatives at fair value and to recognize them in the balance
sheet as an asset or liability, depending on the Company's rights or
obligations under the applicable derivative contract. The effective date of
this standard was deferred to all fiscal quarters of years beginning after
June 15, 2000 by SFAS No. 137 (SFAS 137) "Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB
Statement No.133". The Company does not believe that SFAS 133 will have a
material impact on the Company's results of operations, financial position or
cash flows.

In December 1999, the SEC issued SAB No. 101, "Revenue Recognition in
Financial Statements". SAB No. 101 expresses the views of the SEC staff in
applying generally accepted accounting principles to certain revenue
recognition issues. SAB 101B deferred the required implementation of SAB 101
until the fiscal quarter ending December 31, 2000. SAB 101 did not have a
material impact on the Company's financial position or results of operations.

In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation". FIN 44, an
interpretation of APB Opinion No. 25, does not change FASB Statement No. 123
"Accounting for Stock Issued to Employees". FIN 44 expresses the views of the
FASB regarding the recognition of compensation expense in several situations
where no expense is recognized under current practice, including option
repricings, business combinations under the purchase method of accounting and
plans that permit tax withholdings. FIN 44 did not have a material impact on
the Company's results of operations, financial position or cash flows.

In 2000, the Emerging Issues Task Force ("EITF") of the FASB issued EITF
Issue No. 00-2, "Website Development Costs," which established guidelines for
accounting for website development costs and became effective for quarters
beginning after June 30, 2000. The adoption of EITF Issue No. 00-2 did not
have a significant effect on the Company's financial statements.

ITEM 7(a). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's short-term investment portfolio and
outstanding debt. The Company does not use derivative financial instruments in
its investment portfolio. The Company mainly invests its excess cash in debt
instruments of government agencies and high quality corporate money market
instruments. If market rates increase, the Company runs the risk that the
related income from those holdings will be less than those that could be
obtained from newer issues of similar securities. Additionally, the fair
market value of these securities will decline in value.

At December 31, 2000 the Company's outstanding debt approximated $80.7
million, all of which constitute fixed rate obligations. If market rates
decline, the Company runs the risk that the related required payments on the
fixed rate debt will exceed those that would be paid based on the current
market rate.

Equity Price Risk

The Company has minimal investments in various equity securities. These
investments, as of December 31, 2000, were considered available-for-sale, with
the unrealized gains deferred as a component of stockholders' equity. The
Company seeks preservation of capital and selectively considers investments in
equity securities as part of its investment strategy.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Independent Accountants' Report.......................................... 29
Consolidated Balance Sheets as of December 31, 2000 and 1999............. 30
Consolidated Statements of Operations for the fiscal years ended December
31, 2000, 1999 and 1998................................................. 31
Consolidated Statements of Stockholders' (Deficit) Equity for the fiscal
years ended December 31, 2000, 1999 and 1998............................ 32
Consolidated Statements of Cash Flows for the fiscal years ended December
31, 2000, 1999 and 1998................................................. 33
Notes to Consolidated Financial Statements............................... 34

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of EarthWeb Inc.:

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the consolidated
financial position of EarthWeb Inc. and its subsidiaries (the "Company") at
December 31, 2000 and 1999, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2000 in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statement
schedules listed in the accompanying index present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

/s/ PricewaterhouseCoopers LLP
New York, New York
February 7, 2001

EARTHWEB INC.

CONSOLIDATED BALANCE SHEETS

December 31,
-------------------
2000 1999
--------- --------
(In thousands
except per share
data)

ASSETS
Current assets
Cash and cash equivalents............................... $ 40,157 $ 13,054
Marketable securities................................... 6,322 6,242
Accounts receivable, net of allowance for doubtful
accounts of $2,352 in 2000 and $665 in 1999............ 8,293 4,776
Prepaid expenses and other current assets............... 2,618 2,482
--------- --------
Total current assets.................................. 57,390 26,554
Fixed assets, net....................................... 6,842 7,272
Intangible assets, net.................................. 40,370 53,790
Other assets, net....................................... 5,002 1,573
--------- --------
Total assets.......................................... $ 109,604 $ 89,189
========= ========

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities
Accounts payable........................................ $ 2,999 $ 4,347
Accrued expenses........................................ 8,424 7,633
Accrued interest........................................ 2,434 32
Accrued restructuring charge............................ 8,793 --
Deferred revenue........................................ 5,963 2,006
Leases payable-current portion.......................... 1,259 403
Amounts due under acquisition agreements................ 4,096 6,122
Notes payable-current portion........................... 524 486
--------- --------
Total current liabilities............................. 34,492 21,029
Long term debt............................................ 80,156 6,524
Leases payable............................................ 688 642
Other liabilities......................................... 1,183 2,084

Commitments and contingencies (Note 9)

Stockholders' (deficit) equity
Common stock, par value $.01; 75,000 shares authorized;
10,402 and 9,818 shares issued in 2000 and 1999,
respectively........................................... 104 98
Additional paid in capital.............................. 125,558 111,284
Unearned compensation................................... -- (386)
Accumulated comprehensive other income.................. 55 110
Treasury stock at cost, 5 shares........................ (200) (200)
Accumulated deficit..................................... (132,432) (51,996)
--------- --------
Total stockholders' (deficit) equity.................. (6,915) 58,910
--------- --------
Total liabilities and stockholders' (deficit) equity.. $ 109,604 $ 89,189
========= ========

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

EARTHWEB INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended December 31,
---------------------------
2000 1999 1998
-------- -------- -------
(In thousands except per
share data)

Revenues......................................... $ 73,823 $ 31,050 $ 3,349
Cost of revenues................................. 18,368 10,968 2,131
-------- -------- -------
Gross profit..................................... 55,455 20,082 1,218
-------- -------- -------
Operating expenses:
Product development............................ 8,999 4,114 1,476
Sales and marketing............................ 43,248 27,715 4,547
General and administrative..................... 13,045 9,875 3,356
Restructuring and impairment charges........... 38,675 -- --
Depreciation................................... 5,292 1,677 699
Amortization................................... 24,010 12,218 417
-------- -------- -------
Total operating expenses..................... 133,269 55,599 10,495
-------- -------- -------
Loss from operations............................. (77,814) (35,517) (9,277)
Interest expense................................. (6,076) (494) (20)
Interest and other income........................ 3,454 1,298 327
-------- -------- -------
Net loss......................................... $(80,436) $(34,713) $(8,970)
======== ======== =======
Basic and diluted net loss per share............. $ (7.86) $ (3.78) $ (2.37)
======== ======== =======
Weighted average shares of common stock
outstanding used in computing basic and diluted
net loss per share.............................. 10,230 9,180 3,783
======== ======== =======

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

EarthWeb Inc.

Consolidated Statements of Stockholders' (Deficit) Equity

Convertible
Preferred
Stock Series Treasury
A and B Common Stock Additional Other Stock
-------------- ------------- Paid Comprehensive Unearned Accumulated -------------
Shares Amount Shares Amount In Capital Income (Loss) Compensation Deficit Shares Amount Total
------ ------ ------ ------ ---------- ------------- ------------ ----------- ------ ------ --------
(In thousands)

Balance at
December 31,
1997............. 1,251 $ 13 2,925 $ 29 $ 14,716 $-- $ -- $ (8,313) -- $ -- $ 6,445
Issuance of
common stock..... 2,536 25 29,466 29,491
Exercise of stock
options.......... 3 -- 4 4
Issuance of non-
qualified stock
options.......... 41 41
Issuance of stock
options below
deemed fair value
for accounting
purposes......... 368 (368) --
Amortization of
deferred
compensation..... 41 41
Conversion of
preferred stock.. (1,251) (13) 2,440 25 (12) -- --
Purchase of
treasury stock... (5) (200) (200)
Comprehensive
loss:
Net loss........ (8,970) (8,970)
Comprehensive
loss............
------ ---- ------ ---- -------- ---- ------- --------- --- ----- --------
Balance at
December 31,
1998............. -- -- 7,904 79 44,583 -- (327) (17,283) (5) (200) 26,852
Issuance of
common stock..... 750 8 24,967 24,975
Exercise of stock
options.......... 208 2 966 968
Stock issued in
Employee Stock
Purchase Plan.... 34 -- 464 464
Stock issued in
acquisitions..... 922 9 38,263 38,272
Issuance of non-
qualified stock
options.......... 1,793 (1,060) 733
Forfeitures of
below market
stock options.... (234) 234 --
Amortization of
unearned
compensation..... 767 767
Beneficial
conversion
feature on note
payable.......... 482 482
Comprehensive
loss:
Unrealized
gains/(losses)
on "available-
for-sale"
marketable
securities...... 110 110
Net loss........ (34,713) (34,713)
Comprehensive
loss............
------ ---- ------ ---- -------- ---- ------- --------- --- ----- --------
Balance at
December 31,
1999............. -- -- 9,818 98 111,284 110 (386) (51,996) (5) (200) 58,910
Exercise of stock
options.......... 78 1 309 310
Stock issued in
Employee Stock
Purchase Plan.... 52 1 658 659
Stock issued in
acquisitions..... 454 4 12,549 12,553
Forfeitures of
below market
stock options.... (283) 283 --
Amortization of
unearned
compensation..... 103 103
Amortization of
restricted stock
grant............ 141 141
Acceleration of
option vesting... 900 900
Comprehensive
loss:
Unrealized
gains/(losses)
on "available-
for-sale"
marketable
securities..... (55) (55)
Net loss........ (80,436) (80,436)
Comprehensive
loss............
------ ---- ------ ---- -------- ---- ------- --------- --- ----- --------
Balance at
December 31,
2000............. -- $-- 10,402 $104 $125,558 $ 55 $ -- $(132,432) (5) $(200) $ (6,915)
====== ==== ====== ==== ======== ==== ======= ========= === ===== ========

Comprehensive
Loss
-------------

Balance at
December 31,
1997.............
Issuance of
common stock.....
Exercise of stock
options..........
Issuance of non-
qualified stock
options..........
Issuance of stock
options below
deemed fair value
for accounting
purposes.........
Amortization of
deferred
compensation.....
Conversion of
preferred stock..
Purchase of
treasury stock...
Comprehensive
loss:
Net loss........ (8,970)
-------------
Comprehensive
loss............ (8,970)
=============
Balance at
December 31,
1998.............
Issuance of
common stock.....
Exercise of stock
options..........
Stock issued in
Employee Stock
Purchase Plan....
Stock issued in
acquisitions.....
Issuance of non-
qualified stock
options..........
Forfeitures of
below market
stock options....
Amortization of
unearned
compensation.....
Beneficial
conversion
feature on note
payable..........
Comprehensive
loss:
Unrealized
gains/(losses)
on "available-
for-sale"
marketable
securities...... 110
Net loss........ (34,713)
-------------
Comprehensive
loss............ (34,603)
=============
Balance at
December 31,
1999.............
Exercise of stock
options..........
Stock issued in
Employee Stock
Purchase Plan....
Stock issued in
acquisitions.....
Forfeitures of
below market
stock options....
Amortization of
unearned
compensation.....
Amortization of
restricted stock
grant............
Acceleration of
option vesting...
Comprehensive
loss:
Unrealized
gains/(losses)
on "available-
for-sale"
marketable
securities..... (55)
Net loss........ (80,436)
-------------
Comprehensive
loss............ (80,491)
=============
Balance at
December 31,
2000.............
===

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

EARTHWEB INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended December 31,
---------------------------
2000 1999 1998
-------- -------- -------
(In thousands)

Cash flows from operating activities:
Net loss....................................... $(80,436) $(34,713) $(8,970)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation................................... 5,292 1,677 699
Amortization of intangible assets.............. 24,010 12,218 417
Amortization of deferred financing costs....... 589 -- --
Restructuring and impairment charge............ 38,675 -- --
Non-cash interest expense...................... 2,540 376 --
Provision for doubtful accounts................ 1,792 426 43
Charge related to issuance of stock options and
restricted stock.............................. 244 767 83
Changes in operating assets and liabilities:
Accounts receivable............................ (6,150) (2,640) (810)
Prepaid expenses and other assets.............. (585) (1,613) (306)
Accounts payable and accrued expenses.......... (810) 4,566 2,294
Deferred revenue............................... 4,864 905 (19)
Other.......................................... 8 616 25
-------- -------- -------
Net cash used in operating activities............ (9,967) (17,415) (6,544)
-------- -------- -------
Cash flows from investing activities:
Purchases of fixed assets...................... (12,319) (3,863) (1,148)
Acquisitions, net of cash acquired............. (15,988) (8,330) (1,310)
Proceeds from sale of Content Business......... 500 -- --
Restricted cash................................ -- (500) 225
Purchase of investment securities.............. (6,159) (6,841) --
Sale of investment securities.................. 6,200 -- --
-------- -------- -------
Net cash used in investing activities............ (27,766) (19,534) (2,233)
-------- -------- -------
Cash flows from financing activities:
Proceeds from issuance of common stock, net.... 310 26,406 29,495
Proceeds from issuance of convertible notes,
net........................................... 77,151 -- --
Payments of obligations under acquisition
agreements.................................... (10,901) -- --
Purchase of treasury stock..................... -- -- (200)
Payments of principal on capital leases and
notes payable................................. (1,724) (1,696) --
-------- -------- -------
Net cash provided by financing activities........ 64,836 24,710 29,295
-------- -------- -------
Net change in cash and cash equivalents for the
period.......................................... 27,103 (12,239) 20,518
Cash and cash equivalents, beginning of period... 13,054 25,293 4,775
-------- -------- -------
Cash and cash equivalents, end of period......... $ 40,157 $ 13,054 $25,293
======== ======== =======
Supplemental cash flow information:
Interest paid.................................. $ 2,993 $ 116 $ 3
Summary of non-cash transactions:
Conversion of promissory notes to shares of
common stock.................................. $ 5,848 -- --
Common stock issued for acquisitions........... $ 6,705 $ 38,272 --
Acquisition of computer equipment and software
through capital leases........................ $ 2,051 $ 1,144 --

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

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--THE COMPANY

EarthWeb Inc. ("EarthWeb" or the "Company") is an IT career solutions
company and is a leading online provider of career development resources to
information technology ("IT") professionals. EarthWeb provides services to
hire and retain IT professionals through dice.com, an online IT job board, and
through MeasureUp, a provider of preparation products for IT professional
certifications.

Through December 26, 2000 EarthWeb also owned and operated an online
advertising and subscription supported content business (the "Content
Business"). The Content Business of EarthWeb provides information to IT
professionals serving each of the major vertical markets in the IT industry,
including enterprise management, networking and telecommunications, software
and internet development, and hardware and systems.

On December 26, 2000, EarthWeb completed the sale of certain assets of the
Content Business to internet.com Corporation ("internet.com"). These assets
primarily consisted of web sites which included Earthweb.com
(www.Earthweb.com), Developer.com (www.developer.com), Datamation
(www.datamation.com), CrossNodes (www.crossnodes.com), SysOpt.com
(www.sysopt.com), ERP Hub (www.erphub.com), Open Source IT
(www.opensourceit.com), Javascripts.com (www.javascripts.com), JARS.com
(www.jars.com), HTML Goodies (www.htmlgoodies.com), Gamelan (www.gamelan.com),
CodeGuru.com (www.codeguru.com), Intranet Journal (www.intranetjournal.com),
CIN (www.cin.Earthweb.com) and EarthWeb Direct (www.Earthwebdirect.com), and
certain computer equipment, furniture and fixtures and leasehold improvements
related to the operations of those sites. In addition, on December 26, 2000,
EarthWeb announced that it was exiting the remaining content businesses that
were not sold to internet.com, which primarily included its subscription based
online reference library, ITKnowledge.com.

EarthWeb was incorporated in the State of New York on April 25, 1996 and
subsequently reincorporated in the State of Delaware on June 17, 1997.

EarthWeb has sustained net losses and negative cash flows from operations
since its inception. EarthWeb's ability to meet its obligations in the
ordinary course of business is dependent upon its ability to establish
profitable operations or raise additional financing through public or private
equity financings, collaborative or other arrangements with corporate sources,
or other sources of financings to fund operations. Management believes that
the Company's current cash position and future cash flows from operations will
be sufficient to fund the Company's operations for the next twelve months.
However, there can be no assurances that the Company will achieve its planned
results. If anticipated results are not achieved, management has the ability
to delay or reduce its expenditures so as to not require additional financing,
if such financing is not available on terms acceptable to the Company.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES

Principles of Consolidation

The consolidated financial statements include the accounts of EarthWeb and
its principal subsidiaries, EarthWeb Career Solutions, Inc., EarthWeb
Knowledge Products, Inc. and Measure Up, Inc. All significant intercompany
balances and transactions have been eliminated in consolidation.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Revenue Recognition

EarthWeb generates revenue from the following sources:

Career Solutions

Paid job listings. Paid job listing revenues are derived from the sale of
IT job listings by employers on the dice.com website. Paid job listing
revenues are recognized ratably over the period in which the customer
contracts to display job listings.

Advertising. Advertising revenues are derived from the sale of advertising
space on the dice.com and MeasureUp.com websites. Advertising revenues are
recognized over the period in which the advertisements are displayed, provided
that no significant Company obligations remain and collection of the
receivable is reasonably assured. Company obligations typically include
guarantees of a minimum number of "impressions" (times that an advertisement
is viewed by users of EarthWeb's online services over a specified period of
time). To the extent that minimum guaranteed impressions are not met, EarthWeb
defers recognition of the corresponding revenues until the guaranteed
impressions are achieved.

Test preparation and on-line certification. Revenue from MeasureUp's online
certification preparation exams and other training courses is recognized
ratably as courses are provided. Revenue from the sale of CD-ROM test
preparation exams is recognized when the product is shipped.

Content Business

Through December 26, 2000, EarthWeb generated the following types of
revenues from content businesses that were either sold or discontinued:

Advertising. Advertising revenues were derived from the sale of advertising
space on the websites of the Content Business. Advertising revenues were
recognized over the period in which the advertisements were displayed,
provided that no significant Company obligations remain and collection of the
receivable is reasonably assured. Company obligations typically included
guarantees of a minimum number of impressions. To the extent that minimum
guaranteed impressions were not met, EarthWeb deferred recognition of the
corresponding revenues until the guaranteed impressions were achieved.

Revenues and expenses from barter transactions were recorded based upon
estimated fair value of the advertisements delivered. Fair value of
advertisements delivered was based upon the Company's recent historical
practice of receiving cash for similar advertisements. Revenue from barter
transactions (representing advertisements given) was recognized as income when
advertisements were delivered on the Company's websites. Barter expense
(representing advertisements received) was recognized when the Company's
advertisements were run on other companies' websites, which was typically in
the same period when the related barter revenue was recognized. Accordingly,
the revenue approximates the direct costs attributed to barter in each period
presented. For the years ended December 31, 2000, 1999 and 1998, barter
transactions were $5.1 million, $3.1 million and $0.8 million, respectively.

IT Educational Courseware. EarthWeb sold manuals for IT training classes.
Educational courseware revenue was recognized as technical support information
was shipped. When a product sale included the right to receive updates,
revenue was recognized over the term of the total deliveries based on the
relative value of each delivered product.

Subscription Revenue. EarthWeb offered monthly and yearly subscriptions for
ITknowledge.com, TPJ.com and SupportSource.com. Subscription revenue was
recognized ratably over the term of the subscription. Accordingly, amounts
received for services which have not yet been provided were reflected as
deferred revenue in the accompanying balance sheets.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Cash and Cash Equivalents

All highly liquid investments with maturities of three months or less when
purchased are considered cash equivalents. Restricted cash of $1.1 million has
been included in other assets on the balance sheet.

Concentration of Credit Risk

Substantially all of EarthWeb's excess cash has been invested in highly
liquid investments. EarthWeb performs ongoing credit evaluations of its
customers' financial condition and generally does not require collateral on
accounts receivable. EarthWeb's services are provided to customers in several
industries worldwide.

Accounts receivable allowances are provided for estimated uncollectible
accounts, sales discounts and returns. Accounts receivable are stated net of
allowances for doubtful accounts of approximately $2.4 million and $0.7
million as of December 31, 2000 and 1999, respectively. One customer accounted
for approximately 8% and one customer accounted for approximately 12% of the
accounts receivable balance at December 31, 2000 and 1999, respectively. For
the years ended December 31, 2000 and 1999 no customer accounted for more than
2% and 5% of revenues, respectively.

Marketable Securities

EarthWeb's marketable securities are comprised of U.S. government
securities and corporate equity securities with readily determinable market
values. Marketable securities are classified and accounted for as "available-
for-sale" and are reported at fair market value with the resulting net
unrealized gains or losses reported as a separate component of stockholders'
equity, net of income taxes. If management determines that an unrealized loss
is other than temporary, it will be charged to the statement of operations.

Fixed Assets

Depreciation of equipment, furniture and fixtures and computer software is
provided under the straight-line method over estimated useful lives ranging
from three to five years. Amortization of leasehold improvements is provided
over the lesser of the term of the related lease or the estimated useful life
of the improvement. The cost of additions and betterments is capitalized, and
repairs and maintenance costs are charged to operations in the periods
incurred.

Intangible Assets

Intangible assets, resulting from acquisitions of websites and other
assets, are being amortized using the straight-line method over three to five
years which approximates the expected period of benefit.

Long-Lived Assets

The carrying amount of assets is reviewed on a regular basis for the
existence of facts or circumstances, both internal and external, that suggest
impairment. EarthWeb determines if the carrying amount of a long-lived asset
is impaired based on anticipated undiscounted cash flows before interest and
income taxes. In the event of impairment, a loss is recognized based on the
amount by which the carrying amount exceeds fair value of the asset. Fair
value is determined primarily using the anticipated cash flows before interest
and income taxes, discounted at a rate commensurate with the risk involved.
See Note 4--Restructuring and Impairment Charges.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Income Taxes

EarthWeb recognizes deferred taxes by the asset and liability method. Under
this method, deferred income taxes are recognized for differences between the
financial-statement and tax bases of assets and liabilities at enacted
statutory tax rates in effect for the years in which the differences are
expected to reverse. The effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date. In
addition, valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be realized. The primary
sources of temporary differences are depreciation and amortization of
intangible assets and operating loss carryforwards.

Risks and Uncertainties

EarthWeb has a limited operating history and its prospects are subject to
the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving markets for Internet products and services. These
risks include the failure to develop and extend EarthWeb's online service
brands, the rejection of EarthWeb's services by Web consumers, vendors and/or
advertisers, the inability of EarthWeb to maintain and increase the levels of
traffic on its online services, as well as other risks and uncertainties. In
the event that EarthWeb does not successfully implement its business plan,
certain assets may not be recoverable.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amount
of assets and liabilities, disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates. EarthWeb's significant estimates include the useful lives of fixed
assets and intangibles, the accounts receivable allowance for doubtful
accounts, accrued expenses and the income tax valuation allowance.

Net Loss Per Share

Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed using the weighted average number of common and common stock
equivalent shares outstanding during the period. There were 2,849,329,
1,806,377 and 498,962 options outstanding as of December 31, 2000, 1999 and
1998 that could potentially dilute earnings per share in the future. Shares
that would result from conversion of the $80.0 million convertible
subordinated notes (see Note 7) and other common equivalent shares were not
included in the computation of diluted loss per share because to do so would
have been antidilutive for all periods presented.

Stock Split

EarthWeb declared a 0.65-for-one reverse stock split in connection with the
initial public offering of EarthWeb's common stock on November 10, 1998. All
references to the number of shares of common stock have been retroactively
restated in the financial statements to reflect the effect of this
transaction.

Comprehensive Income

EarthWeb adopted the provisions of SFAS No. 130, "Reporting Comprehensive
Income" in 1998. SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Comprehensive income, as defined, includes all changes in equity (net assets)
during a period from non-owner sources.

Segments

EarthWeb adopted the provisions of SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information" in 1998. This statement establishes
standards for the way companies report information about operating segments in
annual financial statements. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
EarthWeb has determined that it does not have any separately reportable
business segments as of December 31, 2000.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133
established new accounting and reporting standards for derivative financial
instruments and for hedging activities. SFAS 133 requires the Company to
measure all derivatives at fair value and to recognize them in the balance
sheet as an asset or liability, depending on the Company's rights or
obligations under the applicable derivative contract. The effective date of
this standard was deferred to all fiscal quarters of years beginning after June
15, 2000 by SFAS No. 137 (SFAS 137) "Accounting for Derivative Instruments and
Hedging Activities Deferral of the Effective Date of FASB Statement No.133".
The Company does not believe that SFAS 133 will have a material impact on its
results of operations, financial position or cash flows.

In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"), "Accounting
for Certain Transactions Involving Stock Compensation". FIN 44, an
interpretation of APB Opinion No. 25, does not change FASB Statement No. 123
"Accounting for Stock Issued to Employees". FIN 44 expresses the views of the
FASB regarding the recognition of compensation expense in several situations
where no expense is recognized under current practice, including option
repricings, business combinations under the purchase method of accounting and
plans that permit tax withholdings. FIN 44 did not have a material impact on
the Company's results of operations, financial position or cash flows.

In 2000, the Emerging Issues Task Force ("EITF") of the FASB issued EITF
Issue No. 00-2, "Website Development Costs," which established guidelines for
accounting for website development costs and became effective for quarters
beginning after June 30, 2000. The adoption of EITF Issue No. 00-2 did not have
a significant effect on the Company's financial statements.

NOTE 3--ACQUISITIONS

dice.com

In February 1999, EarthWeb completed the acquisition of D&L Online Inc., now
known as EW Career Solutions, Inc., which operates dice.com, a leading online
job posting service for IT professionals, for approximately $35 million. The
consideration paid consisted of $7.0 million in cash, $1.5 million of which was

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

paid in January 2000 and 577,778 shares of EarthWeb common stock. The
consideration also consisted of additional future payments, based on the
financial performance of dice.com, payable over a period of three years in the
form of cash and/or EarthWeb common stock with an aggregate value of up to
$12.0 million. Due to the achievement of these targets, $4.0 million was paid
in April 2000 in the form of $2.0 million in cash and $2.0 million in EarthWeb
common stock and in April 2001 an additional $4.0 million will be paid in
cash. Based on the achievement of certain financial targets related to 2001,
$4.0 million would be also payable in April 2002. All outstanding options to
purchase dice.com common stock were converted into non-qualified options to
purchase an aggregate of 36,667 shares of EarthWeb Inc. common stock.

Measure Up and CCPrep

In February 2000, EarthWeb acquired Measure Up, Inc. ("Measure Up"), a
company that provides online certification preparation and assessment
solutions for IT professionals. Total consideration for the acquisition was
$15.0 million, plus contingent earnout obligations under the acquisition
agreement based on operating performance with an aggregate value of up to an
additional $10.0 million. The purchase price consisted of (a) $10.0 million in
cash paid at closing, (b) $2.5 million, which consisted of $0.2 million in
cash and 150,947 shares of EarthWeb common stock and was paid in May 2000 and
(c) $2.5 million paid in cash in August 2000. The additional earnout
obligations would be payable in the form of cash and/or common stock, at the
Company's option, over a period of three years beginning in April 2001. Under
the terms of the acquisition agreement and a related escrow agreement, the
150,947 shares of EarthWeb common stock paid in May 2000 were released from
escrow and 41,387 shares remain in escrow to secure potential future payments.

In January and February 2000, EarthWeb acquired the Web sites CCPrep and
NetCerts, respectively, both of which offer online certification preparation
products and services designed for IT professionals seeking certification for
Cisco Systems, Inc. products. The aggregate purchase price of both
acquisitions was $3.2 million of which $2.0 million was paid at closing,
consisting of $0.7 million in cash and 41,247 shares of EarthWeb common stock.
The remaining $1.2 million was paid in cash in July 2000.

Content Business

During 1998, EarthWeb acquired the Web sites htmlgoodies.com,
javagoodies.com, intranetjournal.com, javascripts.com, and datamation.com. In
conjunction with the acquisition of datamation.com, EarthWeb also licensed, on
a non-exclusive, fully paid basis from the seller, the right to use certain
customer lists for the purposes of marketing EarthWeb's products and services.
The aggregate cost of these Web site acquisitions totaled approximately $1.0
million. In 1999, EarthWeb acquired the Web sites SysOpt.com and codeguru.com.
The aggregate base purchase price of both acquisitions was approximately $12.0
million, payable in the form of common stock, cash and convertible notes. The
historical revenue and expenses of these acquired Web sites for the years
ended December 31, 2000, 1999 and 1998 were immaterial compared to EarthWeb's
consolidated results of operations. In February 2000, EarthWeb acquired
Cambridge Information Network ("CIN"), a leading Web site for IT executives.
The consideration totaled approximately $8.0 million, $7.0 million of which
was paid in cash and $1.0 million of which was paid with 39,678 shares of
EarthWeb common stock.

All of the above listed Content Business websites were sold to internet.com
Corporation on December 26, 2000.

In March 1999, EarthWeb acquired MicroHouse International, Inc.
("MicroHouse"), now known as EarthWeb Knowledge Products, Inc., for
approximately $9.0 million in shares of stock, convertible notes and cash,
plus the assumption of $1.7 million of debt. The consideration paid by
EarthWeb consisted of (a) $1.6 million in cash, (b) 50,856 shares of EarthWeb
common stock, and (c) convertible promissory notes in an aggregate amount of
$5.0 million which were converted into approximately 126,475 shares of common
stock in March 2000. The beneficial conversion feature related to the notes
payable of approximately $0.5 million was

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

amortized over a one-year period thru March 2000. The Company announced that
it was discontinuing the operations of EarthWeb Knowledge Products on December
26, 2000 as part of the restructuring of the Company (see Note 1).

In March 1999, EarthWeb acquired substantially all of the assets of The
Perl Journal, a leading technical publication for developers using the Perl
programming language, and the related Web site TPJ.com. The aggregate purchase
price was $1.0 million of which $0.2 million was paid at closing in cash and
$0.8 million was paid in March 2000 in cash.

All of EarthWeb's acquisitions were accounted for using the purchase method
of accounting. The results of operations for each were included with those of
EarthWeb for periods subsequent to the date of each acquisition.

Amortization expense of intangible assets resulting from these acquisitions
totaled $24.0 million, $12.2 million and $0.4 million in the years ended
December 31, 2000, 1999 and 1998, respectively.

The following unaudited pro forma summary presents consolidated results of
operations for EarthWeb as if the acquisitions of D&L Online, Inc., MeasureUp,
CCPrep, codeguru.com, SysOpt.com, MicroHouse, and CIN had been consummated as
of the beginning of each year presented. The unaudited pro forma information
is intended for informational purposes only and is not necessarily indicative
of the future financial results of operations of EarthWeb or of the financial
results of operations of EarthWeb had the acquisitions occurred in the
beginning of each year presented.

Year ended December 31,
------------------------
2000 1999
----------- -----------
(In thousands,
except per share data)

Revenues............................................. $ 74,130 $ 34,533
Net loss............................................. $ (82,289) $ (55,564)
Basic and diluted loss per share..................... $ (7.96) $ (5.78)
Weighted average of common stock outstanding......... 10,334 9,610

Pro forma adjustments include: (i) amortization of goodwill and other
intangible assets recorded as a result of the acquisitions, (ii) adjustment
related to D&L Online, Inc.'s S corporation distribution which was recorded as
compensation expense that will not be incurred in the future, as well as to
record the associated tax charge which does not assume the utilization of
EarthWeb's net operating loss carryforwards, (iii) adjustment to record
compensation expense related to options issued to EarthWeb Knowledge Products
employees to purchase common stock at an exercise price below the fair market
value of the EarthWeb common stock at the date of grant, (iv) adjustment to
reflect the accretion of the discount on the convertible note issued in the
connection with the acquisition of EarthWeb Knowledge Products and (v)
adjustment of the weighted average shares of common stock outstanding use in
the calculation of earnings per share to reflect shares issued in connection
with all of the acquisitions.

NOTE 4--RESTRUCTURING AND IMPAIRMENT CHARGES

In December 2000 EarthWeb adopted a restructuring plan to reorganize its
existing operations which included, the sale of a portion of the Content
Business to internet.com Corporation and the decision to exit the remaining
Content businesses. These transactions resulted in a restructuring and
impairment charge related to the Content Business of approximately $38.7
million. The components of this charge primarily include a $21.5 million
write-off of intangible assets, an $8.4 million write-down of fixed assets and
$8.8 million in accrued restructuring costs.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Components of the accrued restructuring costs as of December 31, 2000 were
as follows (in thousands):

NOTE 5--MARKETABLE SECURITIES

EarthWeb's marketable securities are stated at fair value. The following
table shows the cost, unrealized gains and fair value of EarthWeb's marketable
securities as of December 31, 2000 (in thousands):

Unrealized Fair
Maturity Cost Gains Value
------------- ------ ---------- ------

Corporate equity securities............. N/A $ 108 $14 $ 122
U.S. Government and agencies............ Within 1 Year 6,159 41 6,200
------ --- ------
Total................................. $6,267 $55 $6,322
====== === ======

NOTE 6--BALANCE SHEET COMPONENTS

Fixed assets consist of the following:

December 31,
----------------
2000 1999
------- -------
(In thousands)

Computer equipment and software............................... $ 7,030 $ 7,471
Furniture and fixtures........................................ 1,518 1,126
Assets recorded under capital leases.......................... 419 1,212
Leasehold improvements........................................ 344 865
------- -------
9,311 10,674
Less: accumulated depreciation and amortization............... (2,469) (3,402)
------- -------
Fixed assets, net............................................. $ 6,842 $ 7,272
======= =======

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Depreciation and amortization for the years ended December 31, 2000, 1999
and 1998, which includes amortization of assets recorded under capital leases,
totaled approximately $5.3 million, $1.7 million and $0.7 million,
respectively.

Intangible assets consist of the following:

December 31,
------------------
2000 1999
-------- --------
(In thousands)

Goodwill.................................................... $ 45,769 $ 34,272
Other intangible assets..................................... 15,800 32,628
-------- --------
61,569 66,900
Less: accumulated amortization.............................. (21,199) (13,110)
-------- --------
Intangible assets, net...................................... $ 40,370 $ 53,790
======== ========

NOTE 7--LONG TERM DEBT

Long term debt consists of the following:

December 31,
---------------
2000 1999
------- ------
(In thousands)

Convertible notes payable...................................... $80,000 $5,743
Promissory note................................................ 680 1,267
------- ------
Total.......................................................... 80,680 7,010
Less: current portion.......................................... (524) (486)
------- ------
Long term debt................................................. $80,156 $6,524
======= ======

As part of the consideration paid in the acquisition of MicroHouse,
EarthWeb issued convertible promissory notes in the original principal amount
of approximately $5.0 million, which were converted into 126,475 shares of
common stock in March 2000. Additionally, EarthWeb assumed a $1.5 million
promissory note payable as part of this acquisition. The note accrues interest
at an annual rate of 10% and requires quarterly payments of principal and
interest with the final payment due on January 1, 2002.

In July 1999, as part of the consideration for the acquisition of
SysOpt.com, EarthWeb issued a promissory note in the original principal amount
of $0.9 million. This promissory note was converted into approximately 19,290
shares of common stock in July 2000.

In January 2000, EarthWeb completed a private offering pursuant to Rule
144A of $80.0 million face value, 7% convertible subordinated notes due
January 25, 2005 (the "Convertible Notes"). Proceeds to EarthWeb, net of
issuance costs, were $77.2 million. Pursuant to a prospectus dated May 9,
2000, as supplemented from time to time, the holders of the Convertible Notes
may offer for sale the Convertible Notes and the shares into which the
Convertible Notes are convertible. The Convertible Notes are convertible, at
the option of the holder, at any time on or prior to maturity into shares of
EarthWeb common stock. The conversion price, subject to adjustment, is $39.10
per share, which is equal to a conversion rate of 25.5754 shares per $1,000
principal amount of Convertible Notes and would result in the issuance of
2,046,032 shares of EarthWeb common stock, if converted. Interest on the
Convertible Notes is payable semiannually on January 25 and July 25 of each
year. EarthWeb

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

may redeem some or all of the Convertible Notes at any time before January 25,
2003 at a redemption price equal to $1,000 per $1,000 principal amount of the
Convertible Notes to be redeemed plus accrued and unpaid interest, if any, to
the provisional redemption date if the closing price to EarthWeb common stock
exceeds 150% of the conversion price for at least 20 trading days within a
period of 30 consecutive trading days ending on the trading day before the
date of mailing of the provisional redemption notice. Upon any provisional
redemption the Company is required to make an additional payment in cash with
respect to the Convertible Notes called for redemption to holders in an amount
equal to $130.43 per $1,000 principal amount of Convertible Notes, less the
amount of any interest actually paid on the Convertible Notes prior to the
notice date of the provisional redemption. The Company is obligated to make
this supplementary payment on all Convertible Notes called for provisional
redemption, including any Convertible Notes converted after the notice date
and before the provisional redemption date. On or after January 25, 2003, the
Company will be entitled to redeem the notes for cash as a whole at any time,
or from time to time in part, at the following redemption prices (plus accrued
cash interest to the redemption date): from January 25, 2003 through January
24, 2004 at a price of 102.8% per $1,000 principal amount; thereafter at a
price of 101.4% per $1,000.

NOTE 8--FAIR VALUE OF FINANCIAL INSTRUMENTS

Convertible Notes

The fair value of the Company's Convertible Notes is $27.1 million based on
the market price of the Convertible Notes as of December 31, 2000.

NOTE 9--COMMITMENTS AND CONTINGENCIES

Leases

EarthWeb leases equipment and office space under non-cancelable operating
leases expiring at various dates through March 2009. Future minimum lease
payments under non-cancelable leases as of December 31, 2000 are as follows
(in thousands):

Rental Payments
------------------
Capital Operating
Leases Leases
------- ---------

2001......................................................... $ 1,319 $ 2,088
2002......................................................... 701 1,931
2003......................................................... 63 1,811
2004......................................................... -- 1,824
2005 and thereafter.......................................... -- 4,807
------- -------
Total minimum payments....................................... 2,083 $12,461
=======
Amount representing interest................................. (136)
-------
Obligations under capital leases............................. 1,947
Obligations due within one year.............................. (1,259)
-------
Long-term obligations under capital leases................... $ 688
=======

Rent expense was approximately $2.2 million, $1.3 million and $0.3 million
for the years ended December 31, 2000, 1999 and 1998, respectively.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Letters of Credit

As of December 31, 2000, EarthWeb has $1.1 million in standby letters of
credit to collateralize facility lease agreements. Restricted cash
collateralizes such standby letters of credit.

Litigation

EarthWeb is subject to legal proceedings and claims which arise in the
ordinary course of its business. EarthWeb does not believe that an adverse
outcome of any proceeding would have a material effect on EarthWeb's financial
position or results of operations.

NOTE 10--STOCKHOLDERS' (DEFICIT) EQUITY

Common Stock

In June 1998, EarthWeb issued 433,965 shares of Common Stock to EarthWeb
LLC through a private placement, in consideration of net proceeds of $3.7
million. In November 1998, EarthWeb completed its initial public offering
("IPO") of 2.1 million shares of common stock at a price of $14.00 per share.
The total net proceeds to EarthWeb from the IPO were approximately $25.8
million. In May 1999, EarthWeb completed a secondary public offering of 1.3
million shares of common stock at an offering price of $37.00 per share, of
which 750,000 shares were sold by EarthWeb and 550,000 shares were sold by
selling stockholders. Proceeds to EarthWeb, net of issuance costs, were
approximately $25.4 million.

In May 2000, the Board of Directors approved an increase in the number of
authorized shares of common stock to 75,000,000 from 21,750,000 and the
elimination of certain classes of preferred stock. The shareholders approved
the increase at the Company's Annual Meeting of Shareholders in May 2000 and
the Company's Certificate of Incorporation was amended to reflect these
changes.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Option Plan

In October 1996, EarthWeb adopted the 1996 Amended and Restated Stock
Option Plan (the "1996 Plan") under which incentive stock options or non-
qualified stock options to purchase common stock may be granted to eligible
employees.

In November 1998, the Board of Directors adopted EarthWeb's 1998 Plan (the
"1998 Plan" and, together with the 1996 Plan, the "Plans"). EarthWeb initially
reserved 375,000 shares of common stock for issuance under the 1998 Plan. At
the annual meeting in May 1999, EarthWeb's shareholders approved an increase
of 1.7 million shares of common stock authorized for issuance under the 1998
Plan. Also pursuant to the 1998 Plan, which allows for an annual increase to
be added on the first day of EarthWeb's fiscal year beginning in 2000 equal to
two percent (2%) of the number of shares outstanding as of such date or a
lesser number of shares determined by the Compensation Committee, 196,354
shares were authorized for issuance in January 2000. At the annual meeting in
May 2000, EarthWeb's shareholders approved an increase in the number of shares
of common stock authorized for issuance under the 1998 Plan by an additional
1.5 million shares and to provide for an increase in the number of shares
available under the Plan's annual renewal mechanism. The Company's Certificate
of Incorporation was amended to reflect these changes. In January 2001, an
additional 416,000 shares were added under the Plan's annual renewal
mechanism. A summary of the status of EarthWeb's Plans, as amended, as of
December 31, 1998, 1999 and 2000, and changes during the three years ended
December 31, 2000 are presented below:

Weighted Average
Option Shares Exercise Price
------------- ----------------

Options outstanding--January 1, 1998............. 200,090 $ 2.48
Granted.......................................... 363,925 $ 5.14
Exercised........................................ (2,732) $ 1.54
Cancelled........................................ (57,820) $ 2.51
Expired.......................................... (4,501) $ 1.64
---------
Options outstanding--December 31, 1998........... 498,962 $ 4.43
Granted.......................................... 1,837,776 $28.73
Exercised........................................ (208,067) $ 4.72
Cancelled........................................ (321,159) $25.05
Expired.......................................... (1,135) $ 7.30
---------
Options outstanding--December 31, 1999........... 1,806,377 $25.44
Granted.......................................... 1,900,800 $11.68
Exercised........................................ (77,797) $ 4.03
Cancelled........................................ (746,825) $19.83
Expired.......................................... (33,226) $27.94
---------
Options outstanding--December 31, 2000........... 2,849,329 $18.29
=========

Options exercisable at December 31, 2000............................... 586,379
Options exercisable at December 31, 1999............................... 104,627
Options exercisable at December 31, 1998............................... 108,813

Weighted average fair value of options granted during 2000............. $ 8.27
Weighted average fair value of options granted during 1999............. $ 19.80
Weighted average fair value of options granted during 1998............. $ 0.97

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table summarizes information about stock options outstanding
at December 31, 2000:

Options Outstanding Options Exercisable
------------------------------------- -----------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Shares Contractual Exercise Shares Exercise
Prices Outstanding Life Price Exercisable Price
- -------- ----------- ----------- -------- ----------- --------

$1.54 3,599 2.8 $ 1.54 2,632 $ 1.54
$2.77-$3.08 99,563 3.9 $ 3.06 50,458 $ 3.04
$8.57-$12.44 709,725 9.3 $10.12 22,522 $ 9.85
$13.00-$13.70 855,741 9.5 $13.07 34,814 $13.16
$26.19-$36.13 1,150,701 8.3 $27.63 464,704 $27.71
$54.81 30,000 8.3 $54.81 11,249 $54.81
- ---------------------------------------------------------------------------
$1.54-$54.81 2,849,329 8.8 $18.29 586,379 $24.44

Options generally vest over a period of four years, however, 15% of all
unvested options automatically vested at the date of the initial public
offering. At December 31, 2000, EarthWeb had reserved 3,907,674 shares of
common stock for the exercise of options.

The 1998 Plan also provides for the issuance of stock appreciation rights
and restricted stock awards under which shares of common stock may be issued
to eligible employees. EarthWeb granted 40,000 shares of restricted stock
during 2000 that vest over various periods through 2006.

1998 Employee Stock Purchase Plan

EarthWeb's 1998 Employee Stock Purchase Plan (the "Stock Purchase Plan")
was approved by the Board of Directors in November 1998. The Stock Purchase
Plan is intended to qualify as an "employee stock purchase plan" under Section
423 of the Code in order to provide employees of EarthWeb with an opportunity
to purchase Common Stock through payroll deductions. An aggregate of 159,000
shares of EarthWeb's common stock has been reserved for issuance under the
Stock Purchase Plan and is available for purchase thereunder, plus an annual
increase to be added on the first day of the Company's fiscal year beginning
in 2000 equal to the lesser of (i) 400,000 shares, (ii) two percent (2%) of
the outstanding shares on such date or (iii) a lesser number of shares
determined by the Compensation Committee. As of December 31, 2000 there were
159,000 shares reserved for issuance of which 87,061 have been purchased by
the employees of EarthWeb. During the year ended December 31, 2000, employees
purchased 52,844 shares of common stock at a weighted average price of $12.62
per share under the Stock Purchase Plan.

Stock-Based Compensation

EarthWeb applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock-Issued to Employees" and related interpretations in accounting for
its stock option issuances. EarthWeb has adopted the disclosure-only
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation ("SFAS
No. 123")." Had compensation cost for EarthWeb's stock option issuances in
2000, 1999, and 1998 been recognized based on the fair value method under the
provisions of SFAS No. 123, EarthWeb's net loss would have been adjusted to
the pro forma amounts indicated below (in thousands except per share amounts):

December 31,
---------------------------
2000 1999 1998
-------- -------- -------

Net loss--as reported............................. $(80,436) $(34,713) $(8,970)
Net loss--pro forma............................... $(87,770) $(40,079) $(9,023)
Basic net loss per share--as reported............. $ (7.86) $ (3.78) $ (2.37)
Basic net loss per share--pro forma............... $ (8.58) $ (4.37) $ (2.39)

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The fair value of each option grant is estimated on the date of the grant
using the "Black-Scholes option-pricing model" with the following weighted
average assumptions used for grants for the years ended December 31, 2000,
1999 and 1998; zero dividend yield for all years; 92% expected volatility for
options granted in 2000, 88% expected volatility for options granted in 1999
and 0% volatility for options granted in 1998 (all options granted in 1998
were issued prior to the effectiveness of the IPO); a weighted average risk-
free interest rate of 6.08%, 5.53% and 5.34%, respectively; and expected lives
of 4 years for options granted in 2000, 1999 and 1998.

In 1998, EarthWeb issued stock options with strike prices below the then
fair market value of EarthWeb's common stock price and, as a result, recorded
deferred compensation of approximately $0.4 million. In connection with the
acquisition of MicroHouse in March 1999, EarthWeb issued stock options with
strike prices below the then fair market value and, as a result, recorded
deferred compensation of approximately $1.1 million. Deferred compensation is
amortized over the four-year vesting period of the options. For the years
ended December 31, 2000 and 1999, EarthWeb recognized compensation cost, net
of reversals due to forfeitures, of approximately $0.1 million and $0.8
million, respectively. As a result of the sale of the Content Business (see
Note 1) and other terminations of employees, EarthWeb reversed approximately
$0.3 million of deferred compensation in 2000 against additional paid-in-
capital.

NOTE 11--INCOME TAXES

The components of the net deferred tax asset as of December 31, 2000 and
1999 consists of the following (in thousands):

2000 1999
-------- --------

Net operating loss carryforward............................. $ 31,698 $ 16,299
Amortization and write-off of intangibles................... 9,011 (342)
Depreciation and write-off of fixed assets.................. 2,661 --
Provision of uncollectible accounts......................... 1,551 --
Provision for accrued expenses and other, net............... 2,182 --
-------- --------
Net deferred tax asset...................................... 47,103 15,957
Less: valuation allowance................................... (47,103) (15,957)
-------- --------
Deferred tax asset.......................................... $ -- $ --
======== ========

The difference between EarthWeb's U.S. federal statutory rate of 35%, as
well as its state and local rate, net of a federal benefit of 7%, when
compared to its effective rate of 0% is principally comprised of its valuation
allowance.

As of December 31, 2000, EarthWeb has a net operating loss carryforward for
Federal income tax purposes of approximately $77.3 million. The carryforwards
will begin to expire in 2011 if not used. The net deferred tax asset has been
fully reserved due to the uncertainty of EarthWeb's ability to realize this
asset in the future.

NOTE 12--EMPLOYEE SAVINGS PLAN

EarthWeb has four savings plans (the "Savings Plans") that qualify as
deferred salary arrangements under Section 401(k) of the Internal Revenue
Code. Under the Savings Plans, participating employees may defer a portion of
their pretax earnings, up to the Internal Revenue Service annual contribution
limit. For the years ended December 31, 2000, 1999 and 1998, EarthWeb
contributed approximately $144,000, $47,000 and $0, respectively, to the
Savings Plan.

EARTHWEB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 13--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31,
Quarter Ended 1999 1999 1999 1999 2000 2000 2000 2000
- ------------- --------- -------- ------------- ------------ --------- -------- ------------- ------------
(In thousands, except per share data)

Net Revenues............ $ 3,732 $ 7,199 $ 8,653 $11,466 $ 13,658 $ 16,502 $21,027 $ 22,636
Gross Profit............ 2,253 4,612 5,575 7,642 9,214 11,920 16,161 18,160
Loss from operations.... (7,046) (9,335) (9,209) (9,927) (11,234) (11,725) (8,829) (46,026)
Net loss................ (6,812) (9,176) (8,951) (9,774) (11,631) (12,355) (9,593) (46,857)
Basic diluted net loss
per share.............. $ (0.82) $ (1.02) $ (0.93) $ (1.00) $ (1.18) $ (1.20) $ (0.92) $ (4.51)

NOTE 14--SUBSEQUENT EVENTS (UNAUDITED)

On January 29, 2001, the Board of Directors named Peter A. Derow as
President and CEO of EarthWeb Inc., succeeding Jack D. Hidary, a Co-founder
and President and CEO, who resigned these positions and became Chairman of the
Board of Directors. Mr. Derow has served as a Director of EarthWeb Inc. since
May 1999. Murray Hidary, Co-founder and Executive Vice President, also
resigned his position and will continue to serve as a Director of the Company.
In connection with these resignations, the Company recorded a charge of
approximately $1.0 million in the first quarter of 2001.

In March 2001, in response to EarthWeb's submission of a sublease with a
third party for approximately 23,000 square feet of office rental space in New
York City, EarthWeb's landlord terminated the portion of the lease related to
that space, with the effect that the Company's operating lease commitment was
reduced by approximately $4.6 million.

EARTHWEB INC.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this Item is incorporated by reference to the
section entitled "Management" of the Company's Proxy Statement for its 2001
Annual Meeting of Stockholders, which will be filed with the Securities and
Exchange Commission within 120 days after December 31, 2000.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference to the
section entitled "Compensation of Executive Officers" of the Company's Proxy
Statement for its 2001 Annual Meeting of Stockholders, which will be filed
with the Securities and Exchange Commission within 120 days after December 31,
2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this Item is incorporated by reference to the
section entitled "Principal Security Holders" of the Company's Proxy Statement
for its 2001 Annual Meeting of Stockholders, which will be filed with the
Securities and Exchange Commission within 120 days after December 31, 2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item is incorporated by reference to the
section entitled "Certain Relationships and Related Transactions" of the
Company's Proxy Statement for its 2001 Annual Meeting of Stockholders, which
will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2000.

PART IV

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

(a) Documents filed as part of this Report:

1. Consolidated Financial Statements:

See Index to Consolidated Financial Statements (Item 8).

2. Consolidated Financial Statement Schedules:

Schedule II--Valuation and Qualifying Accounts for the fiscal
years ended December 31, 1998, 1999 and 2000.

All other financial statements and schedules not listed have been
omitted since the required information is included in the
Consolidated Financial Statements or the notes thereto, or is not
applicable or required.

(b) Reports on Form 8-K.

Form 8-K filed on December 11, 2000 with respect to a news release
relating to developments in EarthWeb's education courseware business
and MeasureUp's Test Preparation Products.

Form 8-K filed on December 26, 2000 with respect to a news release
relating to developments in EarthWeb's Content and Career Solutions
businesses, including EarthWeb's sale of content-related assets to
internet.com Corporation.

Exhibit
No. Description
------- -----------

*2.1 Agreement and Plan of Merger among EarthWeb Inc., EW Acquisition
Corporation, D&L Online, Inc., Lloyd Linn, and Diane Rickert;
incorporated by reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated February 2, 1999.

*2.2 Securities Purchase Agreement, dated as of January 13, 2000 among
EarthWeb Inc., Kevin R. Brice and Robert M.M. Holtackers; incorporated
by reference to Exhibit 2.1 to the Registrant's Current Report on
Form 8-K dated February 11, 2000.

*2.3 Asset Purchase Agreement dated as of December 22, 2000 between
internet.com Corporation and Registrant; incorporated by reference to
Registrant's Current Report on Form 8-K dated January 11, 2001.

3.1 Form of Amended and Restated Certificate of Incorporation;
incorporated by reference to Exhibit 3.1 to Registrant's Registration
Statement on Form S-1 (SEC File No. 333-60837).

3.2 Certificate of Amendment to Restated Certificate of Incorporation.

3.3 Form of Amended and Restated By-laws; incorporated by reference to
Exhibit 3.2 to Registrant's Registration Statement on Form S-1 (SEC
File No. 333-60837).

4.1 Amended and Restated Shareholders Agreement dated as of June 24, 1997
among the Registrant, EarthWeb LLC, Global Network Partners (GNP),
Warburg, Pincus Ventures, L.P., Jack D. Hidary, Murray Hidary and Nova
Spivack; incorporated by reference to Exhibit 4.1 to Registrant's
Registration Statement on Form S-1 (SEC File No. 333-60837).

Exhibit
No. Description
------- -----------

4.2 Specimen Common Stock Certificate of Registrant; incorporated by
reference to Exhibit 4.2 to Registrant's Registration Statement on
Form S-1 (SEC File No. 333-60837).

4.3 Registration Rights Agreement dated as of October 25, 1996 by and
between the Registrant, Warburg, EarthWeb LLC and GNP; incorporated by
reference to Exhibit 4.3 to Registrant's Registration Statement on
Form S-1 (SEC File No. 333-60837).

4.4 Registration Rights Agreement between EarthWeb Inc., Lloyd Linn and
Diane Rickert; incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated February 2, 1999.

4.5 Registration Rights Agreement, dated as of January 13, 2000 between
EarthWeb Inc., Kevin R. Brice and Robert M.M. Holtackers; incorporated
by reference to Exhibit 4.1 to the Registrant's Current Report on Form
8-K dated February 11, 2000.

4.6 Indenture, dated as of January 25, 2000, between the Registrant and
State Street Bank and Trust Company of California, N.A. as Trustee
with respect to 7% Convertible Subordinated Notes due 2000 (the "7%
Notes"); incorporated by reference to Exhibit 4.1 of the Registrant's
Registration Statement on Form S-3 (SEC File No. 333-95921).

4.7 Registration Rights Agreement, dated as of January 19, 2000, between
the Registrant and the initial purchasers identified therein, with
respect to the 7% Notes; incorporated by reference to Exhibit 4.2 to
the Registrant's Registration Statement on Form S-3 (SEC File No. 333-
95921).

9 Form of Voting Trust Agreement, as amended; incorporated by reference
to Exhibit 9 to Registrant's Registration Statement on Form S-1 (SEC
File No. 333-60837).

10.1 1996 Amended and Restated Stock Plan, as amended; incorporated by
reference to Exhibit 10.1 to Registrant's Registration Statement on
Form S-1 (SEC File No. 333-60837).

10.2 Employment Agreement dated January 1, 1995 between GNP (formerly
EarthWeb Ltd.) and Jack D. Hidary; incorporated by reference to
Exhibit 10.2 to Registrant's Registration Statement on Form S-1 (SEC
File No. 333-60837).

10.3 Employment Agreement dated January 1, 1995 between GNP (formerly
EarthWeb Ltd.) and Murray Hidary; incorporated by reference to Exhibit
10.3 to Registrant's Registration Statement on Form S-1 (SEC File No.
333-60837).

10.4 Employment Agreement dated November 4, 1996 between the Registrant and
Irene Math; incorporated by reference to Exhibit 10.4 to Registrant's
Registration Statement on Form S-1 (SEC File No. 333-60837).

10.5 Intercompany Services Agreement dated October 25, 1996 among the
Registrant, EarthWeb LLC, GNP (formerly EarthWeb Ltd.), Jack D.
Hidary, Murray Hidary and Nova Spivack, as amended; incorporated by
reference to Exhibit 10.7 to the Registrant's Registration Statement
on Form S-1 (SEC File No. 333-60837).

10.6 Lease Agreement dated April 28, 1995 between 3 Park Avenue Co. and MJN
Enterprises, Inc., as amended; incorporated by reference to Exhibit
10.8 to the Registrant's Registration Statement on Form S-1 (SEC File
No. 333-60837).

10.7 Form of 1998 Employee Stock Purchase Plan; incorporated by reference
to Exhibit 10.10 to Registrant's Registration Statement on Form S-1
(SEC File No. 333-60837).

10.9 Separation Agreement dated as of June 26, 2000 between the Registrant
and William Gollan; incorporated by reference to Registrant's Form 10Q
dated August 4, 2000;

10.10 Employment Agreement dated December 3, 1999 between the Registrant and
Norman Lorentz; incorporated by reference to Registrant's Form 10Q
dated May 15, 2000;

Exhibit
No. Description
------- -----------

10.11 Employment Agreement dated as of January 31, 2000 between the
Registrant and Brian Campbell; incorporated by reference to
Registrant's Form 10Q dated May 15,2000;

10.12 Employment Agreement dated as of April 20, 2000 between the Registrant
and Michael Durney; incorporated by reference to Registrant's Form 10Q
dated August 4, 2000;

*10.13 Option Holder Purchase Agreements with each of Kenneth B. Williams,
Jeffrey W. Adkisson, Jack R. Freeman, Melissa S. Stover, Scott E.
Hall, Chad A. Dorn and Deanne Brown dated as of January 13, 2000;
incorporated by reference to Exhibit 10.1 to Registrant's Current
Report on Form 8-K dated February 11, 2000.

10.14 Employment Agreement dated as of January 26, 2000 between Registrant
and Harold Miltsch, incorporated by reference to Exhibit 10.6 to
Registrant's Form 10-Q dated November 8, 2000.

10.15 Amended and Restated 1998 Stock Incentive Program of Registrant.

12. Ratio of Earnings to Fixed Charges

21.1 Subsidiaries of Registrant

23.1 Consent of Independent Auditors

- --------
* Confidential treatment has been received with respect to certain portions
of this Exhibit. Omitted portions have been filed separately with the
Commission.

SCHEDULE II

EARTHWEB INC.
VALUATION AND QUALIFYING ACCOUNTS

Balance at Charges to Charges to Balance
Beginning Costs and Other Deductions-- at End
of Period Expenses Accounts(1) Describe(2) of Period
---------- ---------- ----------- ------------ ---------
(In thousands)

Allowance for Doubtful
Accounts
Year ended December 31,
2000................... $665 $3,135 $120 $(1,568) $2,352
==== ====== ==== ======= ======
Year ended December 31,
1999................... $ 53 $ 849 $379 $ (616) $ 665
==== ====== ==== ======= ======
Year ended December 31,
1998................... $ 11 $ 42 $ 0 $ 0 $ 53
==== ====== ==== ======= ======

- --------
(1) Amounts relate to acquisitions of D&L Online and MicroHouse
International, Inc. in 1999 and Measure Up, Inc. in 2000.

(2) Write off fully reserved accounts receivable.

EARTHWEB INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
New York, State of New York, on April 2, 2001.

EARTHWEB INC.

/s/ Peter A. Derow
By: _________________________________
Peter A. Derow
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities on April 2, 2001.

Name and Signature Title
------------------ -----

_________ /s/ Peter A. Derow_________ President, Chief Executive Officer and
Peter A. Derow Director

_________ /s/ Jack D. Hidary_________ Chairman of the Board and Director
Jack D. Hidary

_________ /s/ Murray Hidary__________ Director
Murray Hidary

_________ /s/ Henry Kressel__________ Director
Henry Kressel

___________ /s/ Cary Davis___________ Director
Cary Davis

_______ /s/ Michael P. Durney________ Senior Vice President, Chief Financial
Michael P. Durney Officer and
Principal Financial Officer

_______ /s/ David L. Jonassen________ Corporate Controller and Chief
David L. Jonassen Accounting Officer