Network Solutions Inc/DE – ‘S-3’ on 12/22/99

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Registration Statement for Securities Offered Pursuant to a Transaction   —   Form S-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-3         Registration Statement for Securities Offered         85    452K 
                          Pursuant to a Transaction                              
 2: EX-23.1     Consent of Pricewaterhousecoopers                      1      6K 

S-3   —   Registration Statement for Securities Offered Pursuant to a Transaction
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 1999 

                                               REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
------------------------

NETWORK SOLUTIONS, INC. 
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                                        [Enlarge/Download Table]
                                                                                                                  
                        DELAWARE                                                 52-1146119                       
            (STATE OR OTHER JURISDICTION OF                                   (I.R.S. EMPLOYER                    
             INCORPORATION OR ORGANIZATION)                                IDENTIFICATION NUMBER)                 
                 505 HUNTMAR PARK DRIVE                                        JAMES P. RUTT                      
                HERNDON, VIRGINIA 20170                                   CHIEF EXECUTIVE OFFICER                 
                     (703) 742-0400                                       NETWORK SOLUTIONS, INC.                 
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,                      505 HUNTMAR PARK DRIVE                 
                       INCLUDING                                          HERNDON, VIRGINIA 20170                 
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)                        (703) 742-0400                     
                                                         (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                                                                 INCLUDING AREA CODE, OF AGENT FOR SERVICE)       

------------------------
Copies to:

                                                        [Enlarge/Download Table]
                                                                                     
    JORGE DEL CALVO, ESQ.       JONATHAN W. EMERY, ESQ.      DOUGLAS E. SCOTT, ESQ.  
   KEITH J. MENDELSON, ESQ.       JAMES M. ULAM, ESQ.         ALOMA H. AVERY, ESQ.   
    DAVINA K. KAILE, ESQ.       NETWORK SOLUTIONS, INC.       SCIENCE APPLICATIONS   
PILLSBURY MADISON & SUTRO LLP    505 HUNTMAR PARK DRIVE    INTERNATIONAL CORPORATION 
     2550 HANOVER STREET        HERNDON, VIRGINIA 20170     10260 CAMPUS POINT DRIVE 
 PALO ALTO, CALIFORNIA 94306         (703) 742-0400       SAN DIEGO, CALIFORNIA 92121
        (650) 233-4500                                           (619) 546-6000      

                               GERALD S. TANENBAUM, ESQ.                             
                                CAHILL GORDON & REINDEL                              
                                   EIGHTY PINE STREET                                
                                NEW YORK, NEW YORK 10005                             
                                     (212) 701-3000                                  

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the Registration Statement becomes effective.

If the only securities being registered on this Form are being offered pursuant 
to dividend or interest reinvestment plans, please check the following box. [ ] 

If any of the securities being registered on this Form are to be offered on a   
delayed or continuous basis pursuant to Rule 415 under the Securities Act of    
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]                                

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective       
registration statement for the same offering. [ ]                               
------------------                                                              

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under  
the Securities Act, check the following box and list the Securities Act         
registration statement number of the earlier effective registration statement   
for the same offering. [ ]                                                      
------------------                                                              

If delivery of the prospectus is expected to be made pursuant to Rule 434,      
please check the following box. [ ]                                             

CALCULATION OF REGISTRATION FEE 

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
                                                                                 PROPOSED            PROPOSED MAXIMUM   
             TITLE OF EACH CLASS OF                    AMOUNT TO BE          MAXIMUM OFFERING       AGGREGATE OFFERING  
          SECURITIES TO BE REGISTERED                   REGISTERED          PRICE PER SHARE(1)           PRICE(1)       
------------------------------------------------------------------------------------------------------------------------
                                                                                                                        
Common Stock, $.001 par value...................     8,889,500 shares           $211.1875             $1,877,351,281    
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------


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

             TITLE OF EACH CLASS OF                    AMOUNT OF                                                        
          SECURITIES TO BE REGISTERED              REGISTRATION FEE                                                     
------------------------------------------------  -------------------                                                   
                                                                                                                        
Common Stock, $.001 par value...................       $495,621                                                         
---------------------------------------------------------------------------------------------------                     
----------------------------------------------------------------------------------------------------------------------- 

(1) Estimated solely for the purpose of calculating the registration fee        
    pursuant to Rule 457(c) based upon the average of the high and low prices of
the Company's Common Stock on the Nasdaq National Market on December 15,
1999.                                                                   
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES  
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE 
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT  
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE        
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME         
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), 
MAY DETERMINE.                                                                  

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      THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
       WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS  
 PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
      SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.                                       

PROSPECTUS                                                                      

SUBJECT TO COMPLETION 
DATED DECEMBER 22, 1999 
7,730,000 Shares                                                                

[NETWORK SOLUTIONS LOGO]                                                        
Common Stock                                                                    

We are offering 1,000,000 shares of our common stock, Science Applications      
International Corporation is selling 6,700,000 shares of our common stock and   
the other selling stockholders identified in this prospectus are offering 30,000
shares of our common stock.                                                     

Our common stock is traded on the Nasdaq National Market under the symbol NSOL. 
On December 20, 1999, the reported last sale price of our common stock was      
$258.688 per share.                                                             

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON   
PAGE 6.                                                                         

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES         
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A     
CRIMINAL OFFENSE.                                                               

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------------------------
                                                                       PROCEEDS TO           PROCEEDS TO         
                              PRICE TO           UNDERWRITING          NETWORK               THE SELLING         
                              PUBLIC             DISCOUNT              SOLUTIONS             STOCKHOLDERS        
-----------------------------------------------------------------------------------------------------------------
                                                                                                                 
Per Share                     $                  $                     $                     $                   
-----------------------------------------------------------------------------------------------------------------
Total                         $                  $                     $                     $                   
-----------------------------------------------------------------------------------------------------------------

We have granted the underwriters the right to purchase up to an additional      
1,159,500 shares of common stock to cover over-allotments.                      

J.P. MORGAN & CO.                                     MORGAN STANLEY DEAN WITTER

HAMBRECHT & QUIST                                                               
PAINEWEBBER INCORPORATED                        
  ROBERTSON STEPHENS
                                     PRUDENTIAL VOLPE TECHNOLOGY
                                             A UNIT OF PRUDENTIAL SECURITIES

, 2000                                                      

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[INSIDE FRONT COVER]

.com Drives Net Registration Growth 

[Bar graph depicting number of .com, .net, .org and .edu net registrations on a 
quarterly basis from December 1995 through September 1999]                      

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You should rely only on the information contained or incorporated by reference  
in this prospectus. We have not authorized anyone to provide you with           
information different from that contained or incorporated by reference in this  
prospectus. This prospectus is an offer to sell, or a solicitation of offers to 
buy, shares of common stock only in jurisdictions where offers and sales are    
permitted. The information contained in this prospectus is accurate only as of  
the date of this prospectus, regardless of the time of delivery of this         
prospectus or of any sale of our common stock.                                  

TABLE OF CONTENTS 

                                                                [Download Table]

                                         Page
                                             
Prospectus Summary.....................    1 
Risk Factors...........................    6 
Price Range of Common Stock and              
     Dividend Policy...................   14 
Use of Proceeds........................   14 
Capitalization.........................   15 
Selected Financial Information.........   16 
Management's Discussion and Analysis of      
     Financial Condition and Results of      
     Operations........................   18 

                                                                [Download Table]

                                         Page
                                             
Business...............................   30 
Management.............................   43 
Selling Stockholders...................   46 
Description of Capital Stock...........   47 
Underwriting...........................   50 
Legal Matters..........................   51 
Experts................................   51 
Where You Can Find More Information....   52 
Index to Financial Statements..........  F-1 

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

Our primary web sites are www.networksolutions.com and www.nsiregistry.net. The 
information on our web sites is not incorporated by reference into this         
prospectus.                                                                     

We own or have rights to various copyrights, trademarks and trade names used in 
our business. These include Network Solutions, Inc.(R), dot com mail(TM), dot   
com toolkit(TM), dot com biz card(TM), dot com directory(TM), dot com           
promotions(TM), dot com people(TM), dot com essentials(TM), ImageCafe(TM) and   
idNames(TM). This prospectus also includes trademarks, service marks and trade  
names of other companies.                                                       

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

ON DECEMBER 21, 1999, OUR BOARD OF DIRECTORS APPROVED A 2-FOR-1 STOCK SPLIT OF  
THE SHARES OF COMMON STOCK, TO BE EFFECTED IN THE FORM OF A STOCK DIVIDEND ON   
SHARES OF COMMON STOCK. THE RECORD AND DISTRIBUTION DATES FOR THE STOCK DIVIDEND
HAVE NOT YET BEEN DETERMINED BUT WILL OCCUR AFTER COMPLETION OF THIS OFFERING.  
EXCEPT AS OTHERWISE NOTED, NO SHARE OR PER SHARE INFORMATION IN THIS PROSPECTUS 
HAS BEEN ADJUSTED TO REFLECT THE 2-FOR-1 STOCK SPLIT. ALSO, EXCEPT AS OTHERWISE 
NOTED, INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS'  
OVER-ALLOTMENT OPTION.                                                          

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PROSPECTUS SUMMARY

This summary highlights certain of the information contained elsewhere in this  
prospectus. To understand this offering fully, you should read the entire       
prospectus carefully, including the risk factors, the financial statements and  
the information incorporated by reference in this prospectus.                   

NETWORK SOLUTIONS, INC. 

We are a leading provider of web identity services worldwide. Our web identity  
offerings include Internet domain name registration services, for which we are  
the global leader, and related value-added products and services.               

Internet domain names are unique identities which enable businesses, other      
organizations and individuals to communicate and conduct commerce on the        
Internet. An Internet domain name is made up of a top level domain and a second 
level domain. For example, in the domain name "companyX.com," ".com" is the top 
level domain and "companyX" is the second level domain. We are the exclusive    
registry and the leading registrar for second level domain names within the     
.com, .net and .org top level domains. As a registry, we maintain the master  
directory of all second level domain names in the .com, .net and .org top level 
domains. We own and maintain the shared registration system that allows all     
registrars, including us, to enter new second level domain names into the master
directory and to submit modifications, transfers, re-registrations and deletions
for existing second level domain names. As a registrar, we market second level  
domain name registration services that enable our customers to establish their  
identities on the web. In addition, we market a portfolio of value-added        
products and services to help our customers maximize the value of those         
identities throughout their life cycles.                                        

Net registrations through our registrar services increased by 135% from         
2,777,000 second level domain names registered as of September 30, 1998 to      
6,528,000 second level domain names registered as of September 30, 1999. An     
additional 223,000 second level domain names have been registered through our   
registry services in the .com, .net and .org top level domains by competing     
registrars as of September 30, 1999. Consequently, our registrar services       
accounted for approximately 97% of the total 6,751,000 net registrations in the 
.com, .net and .org, as well as .edu, top level domains as of that date. Net new
registrations through our registrar services increased by 160% from 507,000     
second level domain names for the three months ended September 30, 1998 to      
1,318,000 second level domain names for the three months ended September 30,    
1999. An additional 193,000 second level domain names were registered during the
three months ended September 30, 1999 through our registry services by other    
registrars competing in the .com, .net, and .org top level domains.             

On November 10, 1999, we, the Department of Commerce and the Internet           
Corporation for Assigned Names and Numbers, commonly known as ICANN, entered    
into a series of wide-ranging agreements relating to the domain name system.    
These agreements, which furthered the transition of the domain name system to a 
shared, or competitive, registration system in the .com, .net and .org top level
domains, removed a substantial amount of uncertainty regarding administration of
the domain name system and our role in that system going forward. Among other   
things, the agreements provide that multiple registrars may register second     
level domain names with us as exclusive registry. Under these agreements:       

  - We agreed to operate the registry in accordance with the provisions of
     the registry agreement and the consensus policies established by ICANN.
   The term of the registry agreement extends until November 2003 or, if
    ownership of our registry and registrar operations is separated by May
      2001 in accordance with the agreement, until November 2007. We intend to
    engage financial advisors to review alternatives for our registrar and
registry services.                                                

   - We, as the registry, will charge all registrars $6 per registration per
       year starting January 16, 2000, unless increased to cover higher registry
costs under the circumstances described in the registry agreement.

- We became an ICANN-accredited registrar. The term of our registrar  
       accreditation agreement extends until November 2004 with a right to renew
indefinitely in accordance with the agreement.                    

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- We, and all other registrars, are permitted to offer variable       
   registration terms, up to 10 years, and have discretion on pricing of
registration services. As a registrar, we currently charge $35 per
   registration per year for our basic domain name registration service.

We believe that our experience and our position as a leading provider of web    
identity services worldwide give us several competitive strengths including:    

As a company:                                                                   

    - We are a trusted, reliable, and secure provider of web identity services
   with strong brand recognition as Network Solutions and as the dot com
people.                                                           

  - We have the financial strength to continue to implement and expand our
sales, marketing, product development and acquisition efforts.    

  - We have proprietary software and systems, long standing experience and
technical expertise in the web identity services business.        

As a registry:                                                                  

- We are the exclusive registry for the .com, .net and .org top level 
domains until at least November 2003.                             

     - We own the infrastructure, technology and protocols underlying the shared
 registration system and we have the right to deploy and control the
       infrastructure and technology underlying the top level domain name server
system for the .com, .net and .org top level domains.             

As a registrar:                                                                 

     - We are the leading registrar, with over 6,500,000 net second level domain
    name registrations. We meet our customers at a very early point in the
     establishment of their web identities, at a time when they are disposed
to buy.                                                           

   - We offer an expanding set of value-added products and services that can
     extend our relationship with our customers as we help them maximize the
       value of their web identities over time. We sold value-added products and
services along with approximately 15% of our 1,318,000 net new    
registrations in the third quarter of 1999.                       

     - We have strategic wholesale and retail marketing agreements with over 260
      companies around the world, including leading portals such as Yahoo! and
Microsoft/LinkExchange.                                           

We believe that the potential for continued growth of domain name registrations 
and other web identity services is substantial. We are expanding our position as
a leading provider of web identity services worldwide by:                       

- expanding our wholesale and retail marketing and other strategic    
relationships,                                                    

- continuing to enhance our one-stop shop of registration services and
value-added products and services,                                

     - continuing to invest in improving the purchase and support experience for
   our customers as evidenced by our recent introduction of a storefront
design on our web site,                                           

- promoting the use of .com, .net and .org top level domains as the   
preferred Internet identities,                                    

- maintaining technology leadership, and                              

- seeking to expand our registry services by operating additional     
     registries, providing new domain name system functionality and offering
additional trusted third party services for e-commerce.           

We also provide Internet technology services that focus on network engineering, 
network and systems security and network management.                            

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THE OFFERING

The following information is based on 33,883,707 shares of common stock         
outstanding on December 15, 1999. This number excludes 3,807,480 shares of      
common stock issuable upon the exercise of stock options outstanding on December
15, 1999 at a weighted average exercise price of $52.370 per share. It also     
excludes an additional 2,699,921 shares of common stock reserved for future     
issuance under our employee benefit plans.                                      

COMMON STOCK OFFERED BY                                                         
NETWORK SOLUTIONS.............   1,000,000 shares                               

COMMON STOCK OFFERED BY                                                         
SELLING STOCKHOLDERS:                                                           
Science Applications                                                        
International                                                         
Corporation..............   6,700,000 shares                          
Members of our management...   30,000 shares                                

TOTAL OFFERING................   7,730,000 shares                               

COMMON STOCK OUTSTANDING AFTER                                                  
THE OFFERING..................   34,913,707 shares; 36,073,207 shares if the    
                           entire over-allotment option is exercised

OVER-ALLOTMENT OPTION.........   1,159,500 shares from Network Solutions        

USE OF PROCEEDS...............   For general corporate purposes and possibly for
                           acquisitions and investments. We will not
                                 receive any proceeds from the sale of shares of
                              common stock in this offering by the selling
stockholders. 

NASDAQ NATIONAL MARKET                                                          
SYMBOL........................   NSOL                                           

Network Solutions is incorporated in Delaware. Our executive offices are located
at 505 Huntmar Park Drive, Herndon, Virginia 20170 and our telephone number is  
(703) 742-0400.                                                                 

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SUMMARY FINANCIAL DATA

                                                        [Enlarge/Download Table]

                                          ------------------------------------------------------------
                                                                                      NINE MONTHS     
                                               YEAR ENDED DECEMBER 31,            ENDED SEPTEMBER 30, 
                                          ---------------------------------      ---------------------
                                           1996         1997         1998         1998          1999  
                                          -------      -------      -------      -------      --------
                                                                                                      
In thousands, except per share data                                                                   
STATEMENTS OF OPERATIONS DATA:                                                                        
Net revenue.............................. $18,862      $45,326      $93,652      $62,395      $144,885
Net income (loss)........................  (1,625)       4,231       11,235        7,517        17,871
Basic net income (loss) per share........   (0.07)        0.16         0.35         0.24          0.54
Diluted net income (loss) per share......   (0.07)        0.16         0.34         0.23          0.51
OTHER OPERATING DATA:                                                                                 
Net new registrations....................     489          960        1,911        1,290         3,420
Registrations not re-registered..........      39           46           90           54           254
Net registrations at period end..........     627        1,541        3,362        2,777         6,528

                                                                [Download Table]

                                                             ----------------------
                                                               SEPTEMBER 30, 1999  
                                                             ----------------------
In thousands                                                  ACTUAL    AS ADJUSTED
BALANCE SHEET DATA:                                          --------   -----------
                                                                                   
Cash and cash equivalents................................... $ 98,863    $         
Total marketable securities.................................  121,205              
Working capital, including $200,160 of current deferred                            
  revenue...................................................   81,280              
Total assets................................................  459,988              
Deferred revenue, net.......................................  282,939              
Capital lease obligations...................................      436              
Total stockholders' equity..................................  119,418              

---------------                                                                 
Net new registrations shown above under "Other Operating Data" for each period  
include gross new registrations less an estimate of registrations that are      
uncollectible for our registrar services. Net registrations at period end       
include net new registrations less management's estimate of registrations not   
re-registered.                                                                  

The as adjusted consolidated balance sheet data presented above gives effect to 
the issuance of 1,000,000 shares of common stock by Network Solutions at an     
assumed offering price of $      per share, the receipt of $      in proceeds   
from the exercise of options by members of our management who are selling       
stockholders, and the application of the estimated net proceeds upon            
consummation of this offering.                                                  

SUMMARY QUARTERLY FINANCIAL DATA

                                                        [Enlarge/Download Table]

                                   ---------------------------------------------------------------------------------------
                                                                        QUARTER ENDED                                     
                                   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,
                                     1997       1998       1998       1998        1998       1999       1999       1999   
                                   --------   --------   --------   ---------   --------   --------   --------   ---------
                                                                                                                          
In thousands, except per share                                                                                            
data                                                                                                                      
STATEMENTS OF OPERATIONS DATA:                                                                                            
Net revenue....................... $14,430    $16,492    $20,476     $25,427    $31,257    $38,132    $47,499     $59,254 
Net income........................   1,743      2,049      2,463       3,005      3,718      4,798      5,795       7,278 
Basic net income per share........    0.06       0.07       0.08        0.09       0.11       0.14       0.17        0.22 
Diluted net income per share......    0.05       0.06       0.07        0.09       0.11       0.14       0.17        0.21 

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RELATIONSHIP WITH SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Prior to our initial public offering in October 1997, we were a wholly-owned    
subsidiary of Science Applications International Corporation, commonly known as 
SAIC. SAIC provides diversified professional and technical services and designs,
develops and manufactures high-technology products.                             

SAIC holds in the aggregate 14,850,000 shares or approximately 44% of our common
stock. After this offering, SAIC will own 8,150,000 shares or approximately 23% 
of our common stock.                                                            

Several officers and employees of SAIC currently serve as directors of Network  
Solutions. As anticipated, effective December 21, 1999, John E. Glancy, an      
officer of SAIC, and Donald N. Telage, a former officer of SAIC, resigned as    
directors of Network Solutions. We anticipate that the composition of our board 
of directors may further change in connection with the decrease in SAIC's       
percentage ownership. SAIC will, however, continue to be our largest stockholder
immediately after this offering and may be able to exercise significant         
influence over us.                                                              

SAIC is not under any obligation to retain its remaining interest, except that  
SAIC has agreed not to sell or otherwise dispose of any shares of common stock  
for 90 days after the date of this prospectus without the prior written consent 
of J.P. Morgan Securities Inc.                                                  

SAIC continues to provide us certain services, and we and SAIC have entered into
agreements, and may enter into additional agreements in the future, relating to 
these services and other matters. Our certificate of incorporation includes     
provisions relating to competition by SAIC with us, allocations of corporate    
opportunities, transactions with interested parties and intercompany agreements 
and provisions limiting the liability of certain people. These provisions will  
remain in effect after this offering. See "Description of Capital Stock."       

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RISK FACTORS

You should carefully consider the risks and uncertainties described below and   
the other information in this prospectus or incorporated by reference before    
deciding to invest in shares of our common stock. These are not the only risks  
and uncertainties that we face. If any of these risks or uncertainties actually 
occur, our business, financial condition, operating results and cash flows could
be materially harmed. In that case, the trading price of our common stock could 
decline and you could lose all or part of your investment.                      

INDUSTRY RISKS                                                                  

INCREASED COMPETITION COULD HARM OUR DOMAIN NAME REGISTRATION BUSINESS          

The introduction of additional competition into the domain name registration    
business could harm our business. This includes, in particular, competition     
among registrars within a single top level domain, such as .com, and competition
among registrars and registries of existing and potential new top level domains.
We currently face competition in the domain name registration business from     
other registrars in the top level domains for which we act as registry, third   
level domain name providers such as Internet access providers and registrars and
registries of top level domains other than those top level domains for which we 
act as registry. As of December 10, 1999, 22 accredited registrars (in addition 
to us) in the .com, .net and .org top level domains used our shared registration
system to register domain names. ICANN has accredited 44 additional registrars, 
as of that date. We expect these and additional accredited registrars to offer  
competing registration services in these top level domains in the near future.  

The accredited registrars include, among others, AT&T, America Online, CORE or  
Internet Council of Registrars, France Telecom Oleane, iDirections, interQ,     
Melbourne IT, NameSecure.com, NetBenefit, PSINet, Register.com and Verio. For   
the quarter ended September 30, 1999, we registered 1,318,000 net new second    
level domain names and competing accredited registrars registered 193,000 second
level domain names.                                                             

Future competition in the domain name registration business as a registry or    
registrar could come from many different companies, including:                  

- domain name registration resellers,                                 

- country code registries,                                            

- Internet access providers and                                       

- major telecommunications firms.                                     

Many of these entities have core capabilities to deliver registry and/or        
registrar services, such as help desks, billing services and network management,
along with strong name recognition and Internet industry experience. The recent 
agreements among ICANN, the Department of Commerce, us and other registrars     
permit flexibility in pricing for and term of registrations. Our revenue,       
therefore, could be reduced due to pricing pressures, bundled service offerings 
and variable terms resulting from increased competition. Some registrars and    
resellers in the .com, .net and .org top level domains are already charging     
lower prices for domain name registration services in those domains. In         
addition, other entities are bundling, and may in the future bundle, domain name
registrations with other products or services at reduced rates or for free.     

ISSUES ARISING FROM IMPLEMENTATION OF OUR AGREEMENTS WITH ICANN AND THE         
DEPARTMENT OF COMMERCE COULD HARM OUR REGISTRATION BUSINESS                     

The Department of Commerce has adopted a plan for a phased transition of the    
Department of Commerce's responsibilities for the domain name system to ICANN by
September 30, 2000. We face risks from this transition, including:              

  - ICANN could adopt or promote policies, procedures or programs that are
     unfavorable to our role in the registration of domain names or that are
inconsistent with our current or future plans,                    

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    - The Department of Commerce or ICANN could terminate our agreements to be
  the registry and/or a registrar in the .com, .net and .org top level
  domains if they find that we are in violation of our agreements with
them,                                                             

     - If we do not separate ownership of our registry and registrar by May 2001
 in accordance with the registry agreement, the term of the registry
 agreement will expire in four years and we may not be chosen as the
successor registry,                                               

- The terms of the registrar accreditation contract could change, as a
    result of an ICANN-adopted policy, in a manner which is unfavorable to
us,                                                               

   - The Department of Commerce's or ICANN's interpretation of provisions of
our agreements with either of them above could differ from ours,  

  - The Department of Commerce could revoke its recognition of ICANN, as a
      result of which the Department of Commerce would take the place of ICANN
    for purposes of the various agreements described above, and could take
actions which are harmful to us,                                  

     - ICANN may approve new top level domains and we may not be selected to act
     as a registrar or registry with respect to those top level domains, and

     - The U.S. Government could refuse to transfer certain responsibilities for
      domain name system administration to ICANN due to security, stability or
      other reasons, resulting in fragmentation or other instability in domain
name system administration.                                       

CHALLENGES TO ONGOING PRIVATIZATION OF INTERNET ADMINISTRATION COULD HARM OUR   
REGISTRATION BUSINESS                                                           

Risks we face from challenges by third parties, including other domestic and    
foreign governmental authorities, to our role in the ongoing privatization of   
the Internet include:                                                           

- Legal, regulatory or other challenges, including challenges to the  
   agreements governing our relationship with, or to the legal authority
    underlying the roles and actions of, the Department of Commerce, ICANN
and/or us, could be brought,                                      

   - Congress has held two hearings in which various issues about the domain
  name system have been raised and Congress could take action which is
unfavorable to us,                                                

- ICANN could fail to maintain legitimacy resulting in instability in 
domain name system administration, and                            

  - Some foreign governments and governmental authorities have in the past
disagreed with, and may in the future disagree with, the actions, 
      policies or programs of ICANN, the U.S. Government and Network Solutions
relating to the domain name system. These foreign governments or  
     governmental authorities may take actions or adopt policies or programs
which are harmful to our business.                                

WE DEPEND ON FUTURE GROWTH OF THE INTERNET AND INTERNET INFRASTRUCTURE          

Our future success substantially depends on the continued growth in the use of  
the Internet. If the use of and interest in the Internet does not continue to   
grow, our business would be harmed. Continued growth of the Internet could be   
slowed by:                                                                      

- inadequate infrastructure,                                          

   - lack of availability of cost-effective, high speed systems and service,

  - delays in developing or adopting new standards and protocols to handle
increased levels of Internet activity or                          

- government regulation.                                              

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WE RELY ON THIRD PARTIES WHO MAINTAIN AND CONTROL ROOT ZONE AND TOP LEVEL DOMAIN
ZONE SERVERS                                                                    

We currently administer and operate only two of the 13 root zone servers and    
four top level domain zone servers. The others are administered and operated by 
independent operators on a volunteer basis. Because of the importance to the    
functioning of the Internet of these root zone servers and top level domain zone
servers, our registration business could be harmed if these volunteer operators 
fail to properly maintain such servers or abandon such servers.                 

Further, our registration business could be harmed if any of these volunteer    
operators fail to include or provide accessibility to the data that we maintain 
in the root zone servers and the top level domain zone servers that we control. 

In the event and to the extent that ICANN is authorized to set policy with      
regard to an authoritative root server system, as provided in the registry      
agreement, it is required to ensure that the authoritative root will point to   
the top level domain zone servers designated by us. If ICANN does not do this,  
our business could be harmed.                                                   

WE RELY ON INTERNET SERVICE PROVIDERS                                           

Our registration business could be harmed if a significant number of Internet   
service providers decided not to route Internet communications to or from domain
names registered by us or if a significant number of Internet service providers 
decided to provide routing to a set of domain name servers which did not point  
to our top level domain zone servers.                                           

WE MAY LOSE REVENUE OR INCUR SIGNIFICANT COSTS IF YEAR 2000 COMPLIANCE ISSUES   
ARE NOT PROPERLY ADDRESSED                                                      

Our failure, or the failure of third parties on which we rely, to adequately    
address Year 2000 compliance issues may cause us to lose revenue or to incur    
significant costs. The primary risks that we face with regard to Year 2000      
failures are those which impact our domain name registration business. These    
risks include:                                                                  

     - significant and protracted interruption of electrical power to systems in
our engineering and customer service facilities,                  

  - significant and protracted interruption of telecommunications and data
  network services in any of our headquarters, engineering or customer
service facilities,                                               

- the failure of components of our current back office and domain name
registration related systems,                                     

- the occurrence of a Year 2000 problem with respect to third-party   
  suppliers', vendors' and outsourcing service providers' products and
services, and                                                     

  - the occurrence of a Year 2000 problem with respect to one of the other
registrars' use of the shared registration system.                

If we fail to solve a Year 2000 compliance problem with our mission critical    
business systems and processes, including the domain name servers under our     
control, telecommunications systems, facilities, data-networking infrastructure,
commercial-off-the-shelf hardware or software and components used by our        
employees, the result could be a failure of or interruption to normal business  
operations. Furthermore, our business depends on the continued operation of, and
widespread access to, the Internet. This, in turn, depends to a large extent on 
the software and systems of third parties on which our systems rely or to which 
they are connected. These third parties include, among others, Internet-related 
companies, including Internet web hosting companies, Internet access providers  
and Internet domain name server operators.                                      

We have no responsibility for, nor control over, other Internet domain name     
server operators that are critical to the efficient operation of the Internet.  
We do not know whether such domain name server operators have hardware, software
or firmware that is Year 2000 compliant.                                        

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COMPANY RISKS                                                                   

OUR NEAR TERM SUCCESS DEPENDS ON THE GROWTH OF OUR DOMAIN NAME REGISTRATION     
BUSINESS                                                                        

We may not be able to sustain the revenue growth we have experienced in recent  
periods. In addition, past revenue growth may not be indicative of future       
operating results. If we do not successfully maintain our current position as a 
leading provider of domain name registration services or develop or market      
additional value-added products and services, our business could be harmed.     

Our domain name registration services business generates over 90% of our revenue
and is expected to continue to account for a very significant portion of our    
revenue in at least the near term. Our future success will depend largely on:   

- the continued increase in domain name registrations,                

- re-registration rates of our customers,                             

  - our ability to maintain our current position as a leading registrar of
domain names,                                                     

 - the successful development, introduction and market acceptance of new
services that address the demands of Internet users,              

- our ability to provide robust domain name registration systems, and 

  - our ability to provide a superior customer service infrastructure as a
registry and registrar.                                           

The contractual requirement that we provide bulk access to customer data could  
hurt our ability to market and sell other value-added services in addition to   
domain name registration services.                                              

SYSTEM FAILURE OR INTERRUPTION, SECURITY BREACHES OR OUR FAILURE TO MEET        
INCREASING DEMANDS ON OUR SYSTEMS COULD HARM OUR BUSINESS                       

Any significant problem, including any security breach, with our systems or     
operations could result in lost revenue, customer dissatisfaction or lawsuits   
against us. A failure in the operation of our registration system or other      
events could result in deletion of one or more domain names from the Internet   
for a period of time. A failure in the operation of our shared registration     
system could result in the inability of one or more other registrars to register
and maintain domain names for a period of time. A failure in the operation or   
update of the master database that we maintain could result in deletion of one  
or more top level domains from the Internet and the discontinuation of second   
level domain names in those top level domains for a period of time. The         
inability of our registrar systems, including our back office billing and       
collections infrastructure, and telecommunications systems to meet the demands  
of the increasing number of domain name registration requests and corresponding 
customer e-mails and telephone calls, including speculative, otherwise abusive  
and repetitive e-mail domain name registration and modification requests, could 
result in substantial degradation in our customer support service and our       
ability to process, bill and collect registration requests in a timely manner.  

We recently completed a physical separation of our registrar and registry       
computer systems and have run the operations of our new systems separately for  
only a limited time. Any data integrity, non-compatability or other issues that 
may arise from this separation could materially harm our business.              

Our operations depend on our ability to maintain our computer and               
telecommunications equipment in effective working order and to reasonably       
protect our systems against interruption and potentially on such maintenance and
protection by other registrars in the shared registration system. The root zone 
servers and top level domain zone servers that we operate are critical hardware 
to our operations. Interruptions could result from:                             

     - fire, natural disaster, sabotage, power loss, telecommunications failure,
human error or similar events,                                    

- computer viruses, hackers or similar disruptive problems caused by  
employees, customers or other Internet users, and                 

- systems strain caused by the growth of our customer base and our    
inability to sufficiently maintain or upgrade our systems.        
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WE MUST ATTRACT, INTEGRATE, TRAIN AND RETAIN KEY PERSONNEL KNOWLEDGEABLE ABOUT  
OUR BUSINESS                                                                    

We face intense competition for the limited supply of people qualified to work  
for us. Our future success depends on the continued service of key engineering, 
sales, marketing, executive and administrative personnel, and our ability to    
identify, attract, hire, integrate, train and retain such personnel. Competition
for engineering, sales, marketing and executive personnel is intense,           
particularly in the technology and Internet sectors and in the regions where our
facilities are located. We may be unable to retain existing personnel or        
attract, hire or retain additional qualified personnel. The loss of the services
of any of our senior management team or other key employees or our failure to   
attract, integrate, train and retain additional key employees could harm our    
business.                                                                       

WE MUST EFFECTIVELY MANAGE OUR MARKETING ORGANIZATION AND ESTABLISH AND MAINTAIN
DISTRIBUTION CHANNELS                                                           

We will need to effectively manage our growing sales and marketing organization 
if we want to achieve future revenue growth. We do not know if we will be able  
to identify, attract and retain experienced sales and marketing personnel with  
relevant experience. Further, our sales and marketing organization may not be   
able to successfully compete against the significantly more extensive and       
well-funded sales and marketing operations of our current or potential          
competitors for registration or Internet technology services.                   

Our ability to achieve future revenue growth will also depend on our ability to 
continue to establish direct sales channels and to develop multiple distribution
channels. To do this we must maintain relationships with Internet access        
providers and other third parties.                                              

WE HAVE A HIGH LEVEL OF UNCOLLECTIBLE RECEIVABLES                               

Because of our high level of uncollectible receivables, we continually review   
our billing practices. Any modifications that we may implement as a result of   
these reviews, including prepayment or pre-approved credit limits for new       
registration orders could have unanticipated harmful consequences to our        
business. We have begun to phase in the implementation of prepayment or         
pre-approved credit terms which are required by our agreements with ICANN to be 
in place by March 9, 2000. We believe we have experienced a high level of       
uncollectible receivables due to, among other factors, the large number of      
individuals and corporations that have registered multiple domain names with the
apparent intention of transferring such names at a profit. Our experience has   
been that such speculative resellers have a greater tendency than other         
customers to default on their services fees. We have established a provision for
uncollectible accounts which we believe to be adequate to cover anticipated     
uncollectible receivables; however, actual results could differ from our        
estimates.                                                                      

WE ARE PARTY TO LEGAL PROCEEDINGS WHICH COULD HAVE A NEGATIVE FINANCIAL IMPACT  
ON US                                                                           

We are involved in a number of legal proceedings. We cannot reasonably estimate 
the potential impact of any of these proceedings. An adverse determination in   
any of these proceedings, however, could harm our business. Legal proceedings in
which we are involved are expensive and divert the attention of our personnel.  
See "Business -- Legal Proceedings."                                            

WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND PROPRIETARY  
INFORMATION OR WE MAY BE SUBJECT TO CLAIMS OF INFRINGEMENT OF THIRD PARTY       
INTELLECTUAL PROPERTY RIGHTS                                                    

We rely on a combination of nondisclosure and other contractual arrangements    
with the U.S. Government, our employees, and third parties, as well as          
copyright, privacy and trade secret laws, to protect and limit the distribution 
of our proprietary data, computer software, documentation, and processes used in
conducting our domain name registration and other businesses. If we fail to     
adequately protect our intellectual property rights and proprietary information,
or if we are subject to adverse results in litigation relating to our           
intellectual property rights and proprietary information, our business could be 
harmed. Any actions we take may not be adequate to protect our intellectual     
property rights and proprietary information. Other companies may develop        
competing technology that is similar or superior to our technology. Although we 
have no reason to believe that                                                  
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our domain name registration business activities infringe on the intellectual   
property rights of others, and we believe that we have all rights needed to     
conduct our business, it is possible that we could become subject to claims     
alleging infringement of third party intellectual property rights. Any of these 
claims could subject us to costly litigation, and any adverse final rulings on  
any of these claims could require us to pay damages, seek to develop alternative
technology, and/or seek to acquire licenses to the intellectual property that is
the subject of any alleged infringement, and any rulings not in our favor could 
harm our business.                                                              

UNSUCCESSFUL FUTURE ACQUISITIONS AND INVESTMENTS COULD DECREASE OPERATING       
INCOME, CAUSE OPERATIONAL PROBLEMS OR OTHERWISE DISRUPT OUR BUSINESS            

We evaluate potential acquisitions and investments on an ongoing basis for      
various reasons including, among others, diversification of our domain name     
registration services and Internet technology services businesses. Our          
acquisition and investment strategy poses many risks, including:                

- we may not be able to compete successfully for available acquisition
    candidates, complete future acquisitions and investments or accurately
       estimate the financial effect on our company of any businesses we acquire
or investments we make,                                           

   - future acquisitions and investments may require us to spend significant
cash amounts or may decrease our operating income,                

- we may have trouble integrating the acquired business and retaining 
personnel,                                                        

 - acquisitions or investments may disrupt our business and distract our
management from other responsibilities,                           

   - to the extent that any of the companies which we acquire or in which we
invest fail, our business could be harmed, and                    

- we may not identify appropriate acquisition targets.                

WE FACE INCREASING RISKS ASSOCIATED WITH OUR INTERNATIONAL BUSINESS             

While substantially all of our operations, facilities, and personnel are located
within the United States, our revenues from sources outside the United States   
have increased significantly and may continue to increase in the future. As a   
result, we are subject to the risks of conducting business internationally,     
including unexpected changes in regulatory requirements, competition from       
foreign companies, fluctuations in the U.S. dollar, tariffs and other barriers  
and restrictions and the burdens of complying with a variety of foreign laws. We
do not know what the impact of such regulatory, geopolitical and other factors  
will be on our business in the future or if we will have to modify our business 
practices. In addition, the laws of certain foreign countries may not protect   
our proprietary rights to the same extent as do the laws of the United States.  

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE; OUR FUTURE REVENUE AND           
PROFITABILITY ARE UNCERTAIN                                                     

Our quarterly operating results may fluctuate significantly in the future due to
a variety of factors, some of which are beyond our control. Factors that may    
affect our revenue include:                                                     

 - variations in the number of requests for domain name registrations or
demand for our services,                                          

- successful competition by others,                                   

- termination or completion of contracts in our Internet technology   
 services business or failure to obtain additional contracts in that
business, and                                                     

- market acceptance of new service offerings.                         

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In addition, we expect a significant increase in our operating expenses as we:  

- increase our sales and marketing operations and activities, and     

- continue to update our systems and infrastructure.                  

If the increase in our expenses is not followed by a corresponding increase in  
our revenue, our operating results will suffer. The fact that in the past our   
revenue has increased and we have been profitable on a quarterly and annual     
basis is not indicative of whether our revenue will increase or whether we will 
be profitable on a quarterly or annual basis in the future.                     

OFFERING RISKS                                                                  

OUR STOCK PRICE, LIKE THAT OF MANY INTERNET COMPANIES, IS HIGHLY VOLATILE       

The market price of our common stock has been and is likely to continue to be   
highly volatile and significantly affected by factors such as:                  

  - general market and economic conditions and market conditions affecting
technology and Internet stocks generally,                         

- actual or anticipated fluctuations in our quarterly or annual       
registrations or operating results,                               

    - announcements of technological innovations, acquisitions or investments,
    developments in Internet governance or corporate actions such as stock
splits, and                                                       

- industry conditions and trends.                                     

The stock market has experienced significant price and volume fluctuations that 
have particularly affected the market prices of the stocks of technology        
companies, especially Internet-related companies. These broad market or         
technology or Internet sector fluctuations may adversely affect the market price
of our common stock. Recently, the market price of our common stock, like that  
of many Internet-related companies, has experienced significant fluctuations.   
For instance, from January 1, 1999 through December 20, 1999, the reported last 
sales price for our common stock ranged from $51.750 per share to $258.688 per  
share. On December 20, 1999, the reported last sale price of our common stock   
was $258.688 per share.                                                         

The market price of our common stock also has been and is likely to continue to 
be significantly affected by expectations of analysts and investors. Reports and
statements of analysts do not necessarily reflect our views. The fact that we   
have in the past met or exceeded analyst or investor expectations does not      
necessarily mean that we will do so in the future.                              

In the past, securities class action lawsuits have often followed periods of    
volatility in the market price of a particular company's securities. This type  
of litigation could result in substantial costs and a diversion of our          
management's attention and resources.                                           

FUTURE ISSUANCES OR SALES OF COMMON STOCK COULD CAUSE OUR STOCK PRICE TO        
DECREASE                                                                        

We may in the future issue shares of common stock in connection with            
acquisitions or other strategic investments. Also, after this offering, SAIC    
will own 8,150,000 shares of our common stock. A decision by us to issue shares 
of common stock or by SAIC or other stockholders to sell our common stock could 
depress the market price of the common stock.                                   

BECAUSE USE OF PROCEEDS IS UNSPECIFIED, IF PROCEEDS ARE NOT INVESTED TO YIELD A 
FAVORABLE RETURN, THE PRICE OF OUR COMMON STOCK COULD DECREASE                  

We plan to use the proceeds which we receive from this offering for general     
corporate purposes and possibly for acquisitions and investments. Therefore, we 
will have discretion in spending the proceeds of this offering and our          
stockholders may not agree with our decisions as to these uses. We cannot       
predict that the proceeds will be invested to yield a favorable return. If the  
proceeds are not invested to yield a favorable return, there could be an adverse
effect on the price of our common stock.                                        
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SAIC MAY MAINTAIN SIGNIFICANT INFLUENCE OVER US                                 

After this offering, SAIC will own approximately 23% of our common stock and    
will remain our largest stockholder. Matters requiring approval by our          
stockholders, including the election of members of our board of directors,      
changes in the size and composition of the board of directors and a change in   
control, may need SAIC's approval to be effected. We do not have an agreement   
with SAIC which restricts its rights to distribute or sell its shares of our    
common stock.                                                                   

SOME OF OUR DIRECTORS MAY HAVE CONFLICTS OF INTEREST                            

Some of our directors currently serve as directors, officers and employees of   
SAIC. Therefore, there may be various conflicts of interest or conflicting      
duties for these individuals. Since our directors and officers may also own     
stock of SAIC, there may be conflicts of interest when directors and officers   
are faced with decisions that could have different implications for us and SAIC.

WE RELY ON SAIC FOR CORPORATE SERVICES AND EMPLOYEE BENEFITS                    

We currently receive corporate services under an agreement with SAIC. If SAIC   
were to terminate these services, we might not be able to secure alternative    
sources for such services or such services might only be available to us at     
prices higher than those charged by SAIC.                                       

Our employees are currently eligible to participate in some of SAIC's employee  
benefit plans through the end of calendar year 2000. However, due to SAIC's sale
of some of its shares, SAIC now owns less than 50% of our common stock and as a 
result we will have to establish certain employee benefit plans of our own which
could result in incremental costs to us.                                        

OUR CERTIFICATE OF INCORPORATION CONTAINS PROVISIONS RELATING TO SAIC THAT MAY  
ADVERSELY AFFECT US OR OUR STOCKHOLDERS                                         

Our certificate of incorporation includes provisions relating to competition by 
SAIC with us, allocations of corporate opportunities, transactions with         
interested parties and intercompany agreements and provisions limiting the      
liability of certain people. It is unclear whether such provisions are          
enforceable under Delaware corporate law. Our certificate of incorporation      
provides that any person purchasing or acquiring an interest in shares of our   
capital stock shall be deemed to have consented to the provisions in the        
certificate of incorporation relating to competition with SAIC, conflicts of    
interest, corporate opportunities and intercompany agreements, and such consent 
may restrict such person's ability to challenge transactions carried out in     
compliance with such provisions. The corporate charter of SAIC does not include 
similar provisions. Therefore, persons who are directors and/or officers of ours
and who are also directors and/or officers of SAIC may choose to take action in 
reliance on such provisions rather than act in a manner that might be favorable 
to us but adverse to SAIC.                                                      

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

This prospectus contains forward-looking statements that involve risks and      
uncertainties. These statements relate to our future plans, objectives,         
expectations and intentions. These statements may be identified by the use of   
words such as "expects," "anticipates," "intends" and "plans" and similar       
expressions. Our actual results could differ materially from those discussed in 
these statements. Factors that could contribute to such differences include, but
are not limited to, those discussed above and elsewhere in this prospectus.     

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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY 

The following table sets forth the high and low reported last sales prices for  
the common stock on the Nasdaq National Market for the periods indicated.       

                                                                [Download Table]

                                                             ---------------------
                                                               HIGH          LOW  
                                                             --------      -------
                                                                                  
Year Ended December 31, 1997:                                                     
  Fourth Quarter from September 26, 1997.................... $ 12.063      $ 6.094
Year Ended December 31, 1998:                                                     
  First Quarter............................................. $ 18.563      $ 6.469
  Second Quarter............................................   27.500       16.250
  Third Quarter.............................................   23.156       12.875
  Fourth Quarter............................................   82.359       14.188
Year Ending December 31, 1999:                                                    
  First Quarter............................................. $144.000      $70.000
  Second Quarter............................................  115.500       51.750
  Third Quarter.............................................   95.063       54.125
  Fourth Quarter through December 20, 1999..................  258.688       85.125

We do not presently intend to pay cash dividends on our common stock. We        
currently plan to retain any earnings for use in the operation of our business. 

USE OF PROCEEDS 

We estimate that the net proceeds from the sale of the 1,000,000 shares of our  
common stock offered by us will be approximately $          , after deducting   
underwriting discounts and estimated offering expenses. We will not receive any 
of the proceeds from the sale of the shares of common stock in this offering by 
the selling stockholders. If the underwriters' option to purchase an additional 
1,159,500 shares of common stock is exercised in full, we estimate that         
additional net proceeds to us will be approximately $          after deducting  
underwriting discounts. We will also receive proceeds of approximately          
$     million upon the exercise of options by members of our management who are 
selling stockholders.                                                           

We intend to use the net proceeds we receive from this offering primarily for   
general corporate purposes. We may also use a portion of the proceeds to acquire
or invest in businesses, technologies, product lines or service offerings that  
are complementary to our business. We have no present commitments with respect  
to such transactions. As a result, we will have significant discretion as to the
use of the proceeds. Pending such uses, we intend to invest the proceeds in     
interest-bearing, investment-grade securities. See "Risk Factors -- Unsuccessful
future acquisitions and investments could decrease operating income, cause      
operational problems or otherwise disrupt our business" and "Risk               
Factors -- Because use of proceeds is unspecified, if proceeds are not invested 
to yield a favorable return, there could be an adverse effect on the price of   
our common stock."                                                              

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1999:     

- on an actual basis; and                                             

     - as adjusted to reflect our receipt of the estimated net proceeds from our
     sale of 1,000,000 shares of common stock in this offering at an assumed
public offering price of $          per share (after deducting the
      underwriting discounts and estimated offering expenses) and the proceeds
       from the exercise of options by members of our management who are selling
stockholders:                                                     

                                                        [Enlarge/Download Table]

                                                          ---------------------------
                                                           AS OF SEPTEMBER 30, 1999  
                                                          ---------------------------
                                                             ACTUAL      AS ADJUSTED 
                                                          ------------   ------------
                                                                                     
Preferred stock, $.001 par value, authorized 10,000,000                              
shares; none issued and outstanding...................... $         --   $           
Common stock, $.001 par value, authorized 210,000,000                                
  shares; 33,381,167 shares issued and outstanding                                   
  actual; 34,411,167 shares issued and outstanding as                                
  adjusted...............................................       33,000               
Additional paid-in capital...............................   86,783,000               
Retained earnings........................................   20,278,000               
Accumulated other comprehensive income...................   12,324,000               
                                                          ------------   ------------
          Total stockholders' equity.....................  119,418,000               
                                                          ------------   ------------
          Total capitalization........................... $119,418,000   $           
                                                          ============   ============

The outstanding share information is based on our shares outstanding as of      
September 30, 1999. The information excludes:                                   

- 3,921,549 shares of common stock issuable upon exercise of options  
       outstanding on September 30, 1999, except those options exercised as part
of this offering by selling stockholders, with a weighted average 
exercise price of $40.21 per share, and                           

     - 1,081,392 shares of common stock reserved for issuance under our employee
benefit plans.                                                    

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SELECTED FINANCIAL INFORMATION

The following table sets forth selected financial and operating data of Network 
Solutions for the periods indicated and should be read in conjunction with      
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations," the Financial Statements and the Notes related thereto included    
elsewhere and incorporated by reference in this prospectus. The Statements of   
Operations Data and Balance Sheet Data as of and for the years ended December   
31, 1996, 1997 and 1998 were derived from Network Solutions' audited financial  
statements. The selected financial data for the year ended December 31, 1995    
were derived by combining Network Solutions' results of operations for the      
period January 1, 1995 through March 10, 1995 and the period March 11, 1995     
through December 31, 1995, both as derived from Network Solutions' audited      
financial statements. Comparability of pre-acquisition periods to               
post-acquisition periods is limited because the financial statements have been  
prepared on differing bases of accounting as a result of the acquisition by SAIC
on March 10, 1995. The Statements of Operations Data and Balance Sheet Data as  
of and for the year ended December 31, 1994 and for the nine months ended       
September 30, 1998 and 1999 is derived from Network Solutions' unaudited        
financial statements which, in the opinion of management, reflect all           
adjustments (consisting only of normal recurring items) necessary to present    
fairly the financial position and results of operations for the periods then    
ended. See "Management's Discussion and Analysis of Financial Condition and     
Results of Operations -- Overview -- Registration Services."                    

                                                        [Enlarge/Download Table]

                                                           --------------------------------------------------------------------- 
                                                                                                              NINE MONTHS ENDED  
                                                                       YEAR ENDED DECEMBER 31,                  SEPTEMBER 30,    
                                                           ------------------------------------------------   ------------------ 
                                                            1994      1995      1996      1997       1998      1998       1999   
                                                           -------   -------   -------   -------   --------   -------   -------- 
                                                                                                                                 
In thousands, except per share data                                                                                              
STATEMENTS OF OPERATIONS DATA:                                                                                                   
Net revenue............................................... $ 5,029   $ 6,486   $18,862   $45,326   $ 93,652   $62,395   $144,885 
Cost of revenue...........................................   3,073     5,704    14,666    25,798     38,530    26,451     54,040 
                                                           -------   -------   -------   -------   --------   -------   -------- 
Gross profit..............................................   1,956       782     4,196    19,528     55,122    35,944     90,845 
Research and development expenses.........................      --        --       680     1,653      4,821     2,893      7,365 
Selling, general and administrative expenses..............   1,544     2,394     6,280    12,268     37,144    24,438     59,581 
Interest income...........................................      --        --      (496)   (2,211)    (6,303)   (4,423)    (6,312)
Other expenses............................................     109        61        --       116        116        93         45 
                                                           -------   -------   -------   -------   --------   -------   -------- 
Income (loss) from continuing operations before income                                                                           
  taxes and cumulative effect of a change in accounting                                                                          
  principle...............................................     303    (1,673)   (2,268)    7,702     19,344    12,943     30,166 
Provision (benefit) for income taxes......................     114      (239)     (643)    3,471      8,109     5,426     12,295 
                                                           -------   -------   -------   -------   --------   -------   -------- 
Income (loss) from continuing operations..................     189    (1,434)   (1,625)    4,231     11,235     7,517     17,871 
Loss from discontinued operations, net of income taxes....  (1,169)   (1,403)       --        --         --        --         -- 
                                                           -------   -------   -------   -------   --------   -------   -------- 
Net income (loss)......................................... $  (980)  $(2,837)  $(1,625)  $ 4,231   $ 11,235   $ 7,517   $ 17,871 
                                                           =======   =======   =======   =======   ========   =======   ======== 

Basic earnings per share:                                                                                                        
    Income (loss) from continuing operations.............. $  0.09   $ (0.07)  $ (0.07)  $  0.16   $   0.35   $  0.24   $   0.54 
    Loss from discontinued operations.....................   (0.56)    (0.07)       --        --         --        --         -- 
                                                           -------   -------   -------   -------   --------   -------   -------- 
    Net income (loss)..................................... $ (0.47)  $ (0.14)  $ (0.07)  $  0.16   $   0.35   $  0.24   $   0.54 
                                                           =======   =======   =======   =======   ========   =======   ======== 
Weighted average shares...................................   2,084    20,670    25,000    26,610     31,957    31,776     33,251 

Diluted earnings per share:                                                                                                      
    Income (loss) from continuing operations.............. $  0.09   $ (0.07)  $ (0.07)  $  0.16   $   0.34   $  0.23   $   0.51 
    Loss from discontinued operations.....................   (0.56)    (0.07)       --        --         --        --         -- 
                                                           -------   -------   -------   -------   --------   -------   -------- 
    Net income (loss)..................................... $ (0.47)  $ (0.14)  $ (0.07)  $  0.16   $   0.34   $  0.23   $   0.51 
                                                           =======   =======   =======   =======   ========   =======   ======== 
Weighted average shares...................................   2,094    20,670    25,000    26,966     33,397    33,088     34,727 

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                                                        [Enlarge/Download Table]

                                                         -----------------------------------------------------------------------
                                                                                                              NINE MONTHS ENDED 
                                                                           DECEMBER 31,                         SEPTEMBER 30,   
                                                         -------------------------------------------------   -------------------
                                                          1994      1995      1996       1997       1998       1998       1999  
                                                         -------   -------   -------   --------   --------   --------   --------
                                                                                                                                
In thousands                                                                                                                    
OTHER OPERATING DATA:                                                                                                           
Net new registrations...................................      24       141       489        960      1,911      1,290      3,420
Registrations not re-registered.........................      --         1        39         46         90         54        254
Net registrations as of period end......................      37       177       627      1,541      3,362      2,777      6,528

                                                        [Enlarge/Download Table]

                                                         -----------------------------------------------------------------------
                                                                           DECEMBER 31,                         SEPTEMBER 30,   
                                                         -------------------------------------------------   -------------------
                                                          1994      1995      1996       1997       1998       1998       1999  
                                                         -------   -------   -------   --------   --------   --------   --------
                                                                                                                                
In thousands                                                                                                                    
BALANCE SHEET DATA:                                                                                                             
Cash and cash equivalents............................... $   136   $     5   $15,540   $ 41,146   $ 12,862   $  9,124   $ 98,863
Total marketable securities.............................      --        --        --     40,200    128,098    114,148    121,205
Working capital.........................................  (1,340)     (559)    1,362     50,947     65,791     63,506     81,280
Total assets............................................   2,448    11,748    66,118    149,620    243,867    191,915    459,988
Restricted assets included in total assets..............      --     1,408    17,453     25,873         --        627         --
Deferred revenue, net...................................     137     3,346    29.352     61,451    129,194    106,730    282,939
Long-term obligations, excluding current portion........      81     1,353     9,440     18,743     35,721     29,400     82,779
Total stockholders' equity..............................     252     3,062     1,437     47,655     75,130     62,019    119,418

Net new registrations shown above under "Other Operating Data" for each period  
include gross new registrations less an estimate of registrations that are      
uncollectible for our registrar services. Net registrations at period end       
include net new registrations less management's estimate of registrations not   
re-registered. Prior to September 14, 1995, net registrations equaled gross     
registrations because Network Solutions was reimbursed by the National Science  
Foundation for all registrations under a cost plus fixed-fee contract.          

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with        
"Selected Financial Information" and Network Solutions' Financial Statements and
Notes thereto included elsewhere and incorporated by reference in this          
prospectus. Except for the historical information contained and incorporated by 
reference in this prospectus, the discussion in this prospectus contains certain
forward-looking statements that involve risks and uncertainties, such as        
statements of Network Solutions' plans, objectives, expectations and intentions.
The cautionary statements made in this prospectus should be read as being       
applicable to all related forward-looking statements wherever they appear in    
this prospectus. Network Solutions' actual results may differ materially from   
the results discussed in the forward-looking statements as a result of certain  
factors, including, but not limited to, those discussed in "Risk Factors" and   
elsewhere in this prospectus and from time to time in Network Solutions'        
periodic reports. Unless otherwise indicated, the accompanying financial        
statements and "Management's Discussion and Analysis of Financial Condition and 
Results of Operations" for all periods presented for continuing operations      
reflect the financial position and results of operations of Network Solutions'  
commercial business, which includes registration services and consulting        
services.                                                                       

OVERVIEW                                                                        

Network Solutions, Inc.                                                         

Network Solutions is the exclusive registry and the leading registrar for second
level domain names within the .com, .net and .org top level domains pursuant to 
agreements with ICANN and the Department of Commerce. Internet domain names are 
unique identities which enable businesses, other organizations and individuals  
to communicate and conduct commerce on the Internet. As a registry, we maintain 
the master directory of all second level domain names in the .com, .net and .org
top level domains. We own and maintain the shared registration system that      
allows all registrars, including us, to enter new second level domain names into
the master directory and to submit modifications, transfers, re-registrations   
and deletions for existing second level domain names. As a registrar, we market 
second level domain name registration services that enable our customers to     
establish their identities on the web. In addition, we market a portfolio of    
value-added products and services to help our customers maximize the value of   
those identities throughout their life cycles. Network Solutions also provides  
Internet technology services that focus on network engineering, network and     
systems security and network management solutions.                              

Registration Services                                                           

In December 1992, Network Solutions entered into the cooperative agreement with 
the National Science Foundation under which Network Solutions was to provide    
Internet domain name registration services for five top level domains: .com,    
.net, .org, .edu and .gov. These registration services include the initial two
year domain name registration and annual re-registration, and throughout the    
registration term, maintenance of and unlimited modifications to individual     
domain name records and updates to the master file of domain names. The         
cooperative agreement became effective January 1, 1993. It included a           
three-month phase-in period, a five-year operational period, commencing April 1,
1993 and ending March 31, 1998, and a six-month flexibility period through      
September 30, 1998. Effective September 9, 1998, the Department of Commerce took
over the administration of the cooperative agreement from the National Science  
Foundation. In October 1998, the cooperative agreement was amended to extend the
flexibility period until September 30, 2000 and to transition to a shared       
registration system. In November 1999, we entered into a series of agreements   
with ICANN and the Department of Commerce relating to our Internet domain name  
registration services.                                                          

The original terms of the cooperative agreement provided for a cost             
reimbursement plus fixed-fee contract (with an initial fee of 8%). Effective    
September 14, 1995, the National Science Foundation and Network Solutions       
amended the cooperative agreement to require Network Solutions to begin charging
end users a services fee of $50 per year for each domain name in the .com, .net 
and .org top level domains. Prior to April 1, 1998, registrants paid a services 
fee of $100 for two years of domain name registration services upon each initial
registration and an annual re-registration fee of $50 per year thereafter. The  
National Science Foundation paid                                                

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the registration fees for domain names within the .edu and .gov top level       
domains through March 31, 1997. Commencing April 1, 1997, Network Solutions     
agreed with the National Science Foundation to provide domain name registration 
services within the .edu and .gov top level domains free of charge. As of       
October 1, 1997, Network Solutions ceased to register or administer domain names
in the .gov top level domain.                                                   

Under the terms of the September 14, 1995 amendment to the cooperative          
agreement, 30% of the registration fees collected by Network Solutions was      
required to be set aside for the enhancement of the intellectual infrastructure 
of the Internet and, as such, was not recognized as revenue by Network          
Solutions. The set aside funds, plus any interest earned, were disbursed at the 
direction of the National Science Foundation. As of December 31, 1998, Network  
Solutions had cumulatively disbursed to the National Science Foundation at its  
direction all set aside funds collected and associated interest earned for a    
total of $62.3 million.                                                         

On March 12, 1998, the National Science Foundation and Network Solutions amended
the cooperative agreement to eliminate the 30% set aside requirement effective  
April 1, 1998 and to reduce the registration fees by a corresponding amount.    
Initial registrations on and after April 1, 1998 are charged $70 for two years  
of registration services and an annual re-registration fee of $35 per year      
thereafter. This amendment had no effect on the revenue recognized on each      
registration ($70 for initial registrations and $35 for re-registrations) since 
Network Solutions previously did not recognize revenue on the 30% set aside     
funds. Accordingly, while the revenue to Network Solutions on a per registration
basis did not change, the amount charged to customers declined.                 

In order to provide prompt access to new domain names on the Internet, Network  
Solutions has historically invoiced customers and permitted them to pay their   
registration fees after their domain names are registered. Network Solutions'   
experience has been that, for the period from September 1995 through September  
1999, approximately 35% of registrations have ultimately been deactivated for   
non-payment. Network Solutions believes that this level of uncollectible        
receivables is due to, among other factors, the large number of individuals and 
corporations that have registered multiple domain names with the apparent       
intention of transferring registration for such names at a profit. Network      
Solutions believes such speculative resellers have a greater tendency than other
customers to default on their registration fees. As a consequence, Network      
Solutions has recorded a comparable provision for uncollectible accounts in     
determining net registration revenue.                                           

Registration fees charged to customers for registration services are recognized 
as revenue evenly over the registration term. Accordingly, Network Solutions    
recognizes $70 on a straight-line basis over the two-year service period for    
each $70 initial domain name registration, equivalent to $35 per year. Annual   
re-registrations of domain names are recorded as revenue based upon $35         
recognized on a straight-line basis over the one-year service period. This      
subscription-based model defers revenue recognition until Network Solutions     
provides the registration services, including maintenance of and unlimited      
modifications to individual domain name records, over the respective            
registration terms. At September 30, 1999, Network Solutions had net deferred   
revenue of $283 million.                                                        

On November 10, 1999 we, the Department of Commerce and ICANN entered into a    
series of wide-ranging agreements relating to the domain name system. Under     
these agreements, Network Solutions is entitled to establish our own prices for 
registrar services and after March 9, 2000, Network Solutions is required not to
accept the registration of a domain name unless it is satisfied that it has     
received reasonable assurance of payment of the registration fee. As part of our
registry services, Network Solutions will continue to charge registrars $9 per  
registration per year until January 15, 2000. Thereafter, the fee will be $6 per
registration per year unless increased to cover increases in registry costs     
under the circumstances described in the registry agreement. Network Solutions  
has also agreed to modify the shared registration system to enable registrars to
accept registrations and re-registrations in one year increments up to a ten    
year term.                                                                      

Internet Technology Services                                                    

Substantially all of Network Solutions' Internet technology services revenue is 
derived from professional services which are generally provided to clients on a 
time and expense basis and is recognized as services are performed.             

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The majority of Network Solutions' Internet technology services are provided to 
customers in the financial services industry. Bank of America, formerly         
NationsBanc, is currently Network Solutions' largest Internet technology        
services client, accounting for 39.3% of Network Solutions' Internet technology 
services business net revenue and 2.4% of Network Solutions' total net revenue  
during the nine months ended September 30, 1999. NationsBanc originally         
contracted with Network Solutions in 1993 and Network Solutions currently       
provides network design and engineering services as well as a variety of project
specific services under the contract.                                           

RESULTS OF OPERATIONS                                                           

The following table sets forth, for the periods indicated, the percentage       
relationship to net revenue of certain items in Network Solutions' Statements of
Operations.                                                                     

                                                        [Enlarge/Download Table]

                                                  ----------------------------------------- 
                                                                              NINE MONTHS   
                                                        YEAR ENDED               ENDED      
                                                       DECEMBER 31,          SEPTEMBER 30,  
                                                  -----------------------    -------------- 
                                                  1996     1997     1998     1998     1999  
                                                  -----    -----    -----    -----    ----- 
                                                                                            
Percentage of net revenue                                                                   
Net revenue...................................... 100.0%   100.0%   100.0%   100.0%   100.0%
Cost of revenue..................................  77.8     56.9     41.1     42.4     37.3 
                                                  -----    -----    -----    -----    ----- 
Gross profit.....................................  22.2     43.1     58.9     57.6     62.7 
Research and development expenses................   3.6      3.6      5.1      4.6      5.1 
Selling, general and administrative expenses.....  33.3     27.1     39.7     39.2     41.1 
Interest and other expense (income)..............  (2.7)    (4.6)    (6.6)    (6.9)    (4.3)
                                                  -----    -----    -----    -----    ----- 
Income (loss) before income taxes................ (12.0)    17.0     20.7     20.7     20.8 
Provision (benefit) for income taxes.............  (3.4)     7.7      8.7      8.7      8.5 
                                                  -----    -----    -----    -----    ----- 
Net income (loss)................................  (8.6)%    9.3%    12.0%    12.0%    12.3%
                                                  =====    =====    =====    =====    ===== 

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999                     

Net Revenue                                                                     

Net revenue increased 132% from $62.4 million for the nine months ended         
September 30, 1998 to $144.9 million for the nine months ended September 30,    
1999. This increase in net revenue was primarily attributable to the increase in
the number of domain name registrations, principally in the .com top level      
domain. Net revenue from registration services increased 136% from $57.7 million
for the nine months ended September 30, 1998 to $136.1 million for the nine     
months ended September 30, 1999.                                                

Net new registrations for Network Solutions' registrar services, or NSI         
registrar, during the nine month period ended September 30, 1999 were 3,420,000 
as compared to 1,290,000 during the nine month period ended September 30, 1998, 
an increase of 162%. Due in part to the addition of nearly 40 international     
partners, 1,004,000, or 30%, of net new registrations were international        
registrations for the nine months ended September 30, 1999. This is an increase 
in international registrations of 176% over the 364,000 net new registrations   
for the nine months ended September 30, 1998. Non-NSI registrars registered an  
additional 223,000 names through our registry services, bringing the total net  
new registrations for the nine months ended September 30, 1999 in .com, .net and
.org top level domains to 3,643,000.                                          

Growth in net registrations continues to be driven by the widespread use and    
adoption by businesses of the Internet and intranets on a global basis. In      
addition, value-added services were sold along with approximately 15% of NSI    
registrar's 1,318,000 net new registrations in the third quarter. These         
value-added services present potential growth areas for Network Solutions.      
Cumulative net registrations for the NSI registrar as of September 30, 1998 were
2,777,000 as compared to 6,528,000 as of September 30, 1999, for a 135%         
increase. In addition, this growth in cumulative net registrations represents a 
23% increase in NSI registrar's entire customer base since June 30, 1999.       

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Net revenue from Internet technology services increased 89% from $4.7 million   
for the nine months ended September 30, 1998 to $8.9 million for the nine months
ended September 30, 1999. This was primarily attributable to an increase in     
business from Bank of America and other financial services customers. Bank of   
America accounted for $3.5 million or 2.4% of Network Solutions' total net      
revenue for the nine months ended September 30, 1999, and $2.3 million or 3.7%  
for nine months ended September 30, 1998.                                       

Cost of Revenue                                                                 

Cost of revenue consists primarily of salaries and employee benefits, fees paid 
to subcontractors for work performed in connection with revenue producing       
projects, depreciation and equipment costs, lease costs of the operations       
infrastructure and the associated operating overhead. Cost of revenue increased 
104% from $26.5 million for the nine months ended September 30, 1998 to $54.0   
million for the nine months ended September 30, 1999. This increase was driven  
by a $10.1 million increase in outsourcing costs and $6.0 million in additional 
depreciation charges and equipment expenditures and additional direct labor     
charges of $7.6 million related to systems engineering and operations primarily 
associated with supporting the growth of Network Solutions' registration        
services business.                                                              

As a percentage of net revenue, cost of revenue decreased from 42.4% for the    
nine months ended September 30, 1998 to 37.3% for the nine months ended         
September 30, 1999 reflecting economies of scale achieved in Network Solutions' 
registration business. In the near term, the continued need for back office     
investments is expected to partially offset future margin improvements arising  
from economies of scale.                                                        

Research and Development Expenses                                               

Research and development expenses consist primarily of compensation expenses to 
support the creation, development and enhancement of Network Solutions' products
and technologies. Research and development expenses increased 155% from $2.9    
million for the nine months ended September 30, 1998 to $7.4 million for the    
nine months ended September 30, 1999. As a percentage of net revenue, research  
and development expenses increased from 4.6% for the nine months ended September
30, 1998 to 5.1% for the nine months ended September 30, 1999. Network Solutions
expects that the level of research and development expenses will continue to    
increase in the near future in absolute dollars as Network Solutions invests in 
developing new product and service offerings.                                   

Selling, General and Administrative Expenses                                    

Selling, general and administrative expenses consist primarily of salaries of   
business development, general management, administrative and financial          
personnel, marketing expenses, corporate services from SAIC, legal and other    
professional costs. Selling, general and administrative expenses increased 144% 
from $24.4 million for the nine months ended September 30, 1998 to $59.6 million
for the nine months ended September 30, 1999. This increase was primarily       
attributable to a $22.4 million increase in marketing and business development  
expenses including Internet banner advertising and targeted direct mail         
campaigns, increased staffing expenses of $4.3 million and an increase of other 
professional costs of $5.0 million.                                             

As a percentage of net revenue, selling, general and administrative expenses    
increased from 39.2% for the nine months ended September 30, 1998 to 41.1% for  
the nine months ended September 30, 1999.                                       

Network Solutions expects that the level of selling, general and administrative 
expenses will continue to increase significantly in the near future in terms of 
absolute dollars as operations continue to expand. In particular, sales,        
marketing and business development expenses will increase as NSI registrar      
continues to promote the value of a .com web address and new value-added        
services including web site design and enhanced service offerings. NSI registrar
also plans to continue to develop and enhance its extensive partner and         
distribution channels, both domestically and internationally in light of the new
competitive environment.                                                        

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Interest Income                                                                 

Network Solutions had net interest income of $4.4 million for the nine months   
ended September 30, 1998 as compared to $6.3 million for the nine months ended  
September 30, 1999. The increase is attributable to the investment of cash      
generated from operating activities.                                            

Income Taxes                                                                    

The provision for income taxes was 42% of pre-tax earnings or $5.4 million for  
the nine months ended September 30, 1998, and 41% or $12.3 million for the nine 
months ended September 30, 1999. The difference between the effective rates and 
the statutory rate is principally attributable to the relative impact that non- 
deductible goodwill had on pretax operating income. Goodwill is being amortized 
by Network Solutions over five years and is associated with the acquisition of  
Network Solutions by SAIC in 1995.                                              

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1998                            

Net Revenue                                                                     

Net revenue increased 107% from $45.3 million for the year ended December 31,   
1997 to $93.7 million for the year ended December 31, 1998. This increase in net
revenue was primarily attributable to the increase in the number of domain name 
registrations, principally in the .com top level domain. Net revenue from       
registration services increased 121% from $38.8 million for the year ended      
December 31, 1997 to $85.7 million for the year ended December 31, 1998. Net new
registrations increased 99% from 960,000 for the year ended December 31, 1997 to
1,911,000 for the year ended December 31, 1998. Growth in net registrations     
continues to be driven by the widespread use and adoption by businesses of the  
Internet and intranets on a global basis. Cumulative net registrations as of    
December 31, 1997 were 1,541,000 as compared to 3,362,000 as of December 31,    
1998 for a 118% increase.                                                       

Net revenue from Internet technology services increased 22% from $6.5 million   
for the year ended December 31, 1997 to $8.0 million for the year ended December
31, 1998. Further, the fourth quarter reflected an increase of 117% over the    
same quarter last year and a 47% increase over the third quarter of 1998.       
NationsBanc accounted for $1.9 million or 4% of Network Solutions' total net    
revenue for the year ended December 31, 1997 and $3.2 million or 3% for the year
ended December 31, 1998.                                                        

During the year ended December 31, 1998, the Internet technology services       
division added new leadership in sales and operations and hired additional      
technical consultants. In addition, the division continued to emphasize its     
efforts targeted at lead generation and regional sales and marketing programs by
opening offices in New York City and Atlanta, Georgia.                          

Cost of Revenue                                                                 

Cost of revenue increased from $25.8 million for the year ended December 31,    
1997 to $38.5 million for the year ended December 31, 1998. This 49% increase   
was driven by a $3.0 million increase in labor, a $6.4 million increase in      
outsourcing costs and $2.7 million increase in additional depreciation charges  
and equipment expenditures primarily associated with supporting the growth of   
Network Solutions' registration services business.                              

As a percentage of net revenue, cost of revenue decreased from 56.9% for the    
year ended December 31, 1997 to 41.1% for the year ended December 31, 1998      
principally reflecting economies of scale and other operational efficiencies    
achieved in Network Solutions' registration business.                           

Research and Development Expenses                                               

Research and development expenses increased 192% from $1.7 million for the year 
ended December 31, 1997 to $4.8 million for the year ended December 31, 1998. As
a percentage of net revenue, research and development expenses increased from   
3.6% for the year ended December 31, 1997 to 5.1% for the year ended December   
31, 1998.                                                                       

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Selling, General and Administrative Expenses                                    

Selling, general and administrative expenses increased 203% from $12.3 million  
for the year ended December 31, 1997 to $37.1 million for the year ended        
December 31, 1998. The increase was attributable to a $16.9 million increase in 
marketing and business development expenses including television, Internet      
banner advertising and targeted direct mail campaigns, increased staffing       
expenses of $1.8 million and an increase in legal and other professional costs  
of $2.6 million. As a percentage of net revenue, selling, general and           
administrative expenses increased from 27.1% for the year ended December 31,    
1997 to 39.7% for the year ended December 31, 1998.                             

Interest Income                                                                 

Network Solutions had net interest income of $2.2 million for the year ended    
December 31, 1997 as compared to $6.3 million for the year ended December 31,   
1998. The increase is attributable to the investment of the positive cash flow  
resulting primarily from increasing domain name registrations and the net       
proceeds of Network Solutions' initial public offering.                         

Income Taxes                                                                    

The provision for income taxes was 45% of pretax earnings, or $3.5 million for  
the year ended December 31, 1997, and 42%, or $8.1 million for the year ended   
December 31, 1998. The difference between the effective rates for both periods  
presented is principally attributable to the relative impact that non-deductible
goodwill had on pretax operating income. Goodwill is being amortized by Network 
Solutions over five years and is associated with the acquisition of Network     
Solutions by SAIC in 1995.                                                      

COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND 1997                            

Net Revenue                                                                     

Net revenue increased 140% from $18.9 million for the year ended December 31,   
1996 to $45.3 million for the year ended December 31, 1997. This increase in net
revenue was primarily attributable to the increase in the number of domain name 
registrations, principally in the .com top level domain. Net revenue from       
registration services increased 246% from $11.2 million for the year ended      
December 31, 1996 to $38.8 million for the year ended December 31, 1997. Net new
registrations increased 96% from 489,000 for the year ended December 31, 1996 to
960,000 for the year ended December 31, 1997. Growth in net registrations was   
driven by the widespread use and adoption by businesses of the Internet and     
intranets on a global basis. Cumulative net registrations as of December 31,    
1996 were 627,000 as compared to 1,541,000 as of December 31, 1997, for a 146%  
increase.                                                                       

Net revenue from Internet technology services decreased 16% from $7.7 million   
for the year ended December 31, 1996 to $6.5 million for the year ended December
31, 1997. This decrease was primarily attributable to a decrease in business    
from NationsBanc. NationsBanc, Network Solutions' largest Internet technology   
services client, accounted for $3.7 million or 20% of Network Solutions' total  
net revenue in 1996 and $1.9 million or 4% of Network Solutions' total net      
revenue in 1997.                                                                

Cost of Revenue                                                                 

Cost of revenue increased 76% from $14.7 million for the year ended December 31,
1996 to $25.8 million for the year ended December 31, 1997. The increase was    
primarily driven by the growth of Network Solutions' registration business which
experienced additional labor costs of $4.2 million and additional outsourcing   
costs of $1.6 million in support of Network Solutions' invoicing, collection and
processing activities. In June 1997, Network Solutions opened a 31,200 square   
foot facility to support its Internet business operations and in January 1998,  
Network Solutions signed an agreement to lease an additional 9,100 square feet  
at the same location. This leased facility was designed to meet current         
registration services customer support needs as well as to provide expansion    
capability for future business.                                                 

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As a percentage of net revenue, cost of revenue decreased from 77.8% for the    
year ended December 31, 1996 to 56.9% for the year ended December 31, 1997. This
decrease primarily reflects economies of scale that Network Solutions achieved  
due to the growth of its subscription-based domain name registration business.  

Research and Development Expenses                                               

Research and development expenses increased 150% from $680,000 for the year     
ended December 31, 1996 to $1.7 million for the year ended December 31, 1997. As
a percentage of net revenue, research and development expenses were 3.6% for    
both the year ended December 31, 1996 and the year ended December 31, 1997.     

Selling, General and Administrative Expenses                                    

Selling, general and administrative expenses increased 95% from $6.3 million for
the year ended December 31, 1996 to $12.3 million for the year ended December   
31, 1997. The increase is primarily attributable to increased management and    
administrative labor expenses of $1.8 million, business development expenses of 
$1.3 million and an increase in legal costs of $1.0 million.                    

As a percentage of net revenue, selling, general and administrative expenses    
decreased from 33.3% for the year ended December 31, 1996 to 27.1% for the year 
ended December 31, 1997. The decrease in percentage of net revenue reflects     
economies of scale Network Solutions achieved due primarily to the growth of its
domain name registration business.                                              

Interest Income                                                                 

Network Solutions had net interest income of $496,000 for the year ended        
December 31, 1996 as compared to $2.1 million for the year ended December 31,   
1997. The increase is attributable to the investment of the net proceeds of     
Network Solutions' stock offering as well as improved cash flow resulting from  
the increase in domain name registrations.                                      

Income Taxes (Benefit)                                                          

The income tax benefit was $643,000 for the year ended December 31, 1996 as     
compared to an income tax expense of $3.5 million for the year ended December   
31, 1997. The effective tax rate changed from 28% for the year ended December   
31, 1996 to 45% for the year ended December 31, 1997. The difference between the
effective rates is principally attributable to the relative impact that         
non-deductible goodwill had on pretax operating income or loss for the year.    
Goodwill is being amortized by Network Solutions over five years and is         
associated with the acquisition of Network Solutions by SAIC in 1995.           

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SELECTED QUARTERLY RESULTS OF OPERATIONS                                        

The following tables set forth certain unaudited quarterly financial information
for each of the eight quarters in the period ended September 30, 1999. In the   
opinion of management, this information has been presented on the same basis as 
the audited financial statements appearing elsewhere and incorporated by        
reference in this prospectus, and all necessary adjustments (consisting only of 
normal recurring adjustments) have been included in the amounts stated below to 
present fairly the unaudited quarterly results when read in conjunction with the
audited financial statements of Network Solutions and notes thereto. Interest   
income shown in the table below is net of other expenses, which were not        
significant. The operating results for any quarter are not necessarily          
indicative of results for any future period.                                    

                                                        [Enlarge/Download Table]

                           ---------------------------------------------------------------------------------------
                                                                QUARTER ENDED                                     
                           DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,
                             1997       1998       1998       1998        1998       1999       1999       1999   
                           --------   --------   --------   ---------   --------   --------   --------   ---------
                                                                                                                  
In thousands                                                                                                      
Net revenue............... $14,430    $16,492    $20,476     $25,427    $31,257    $38,132    $47,499     $59,254 
Cost of revenue...........   7,330      7,348      8,791      10,312     12,079     14,541     17,711      21,788 
                           -------    -------    -------     -------    -------    -------    -------     ------- 
Gross profit..............   7,100      9,144     11,685      15,115     19,178     23,591     29,788      37,466 
Research and development                                                                                          
  expenses................     558        725        815       1,353      1,928      2,035      2,460       2,870 
Selling, general and                                                                                              
  administrative                                                                                                  
  expenses................   4,375      6,182      8,008      10,248     12,706     15,265     19,395      24,921 
Interest income...........  (1,041)    (1,292)    (1,384)     (1,654)    (1,857)    (1,911)    (1,912)     (2,444)
                           -------    -------    -------     -------    -------    -------    -------     ------- 
Income before income                                                                                              
  taxes...................   3,208      3,529      4,246       5,168      6,401      8,202      9,845      12,119 
Provision for income                                                                                              
  taxes...................   1,465      1,480      1,783       2,163      2,683      3,404      4,050       4,841 
                           -------    -------    -------     -------    -------    -------    -------     ------- 
Net income................ $ 1,743    $ 2,049    $ 2,463     $ 3,005    $ 3,718    $ 4,798    $ 5,795     $ 7,278 
                           =======    =======    =======     =======    =======    =======    =======     ======= 

                                                        [Enlarge/Download Table]

                           ---------------------------------------------------------------------------------------
                                                                QUARTER ENDED                                     
                           DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,
                             1997       1998       1998       1998        1998       1999       1999       1999   
                           --------   --------   --------   ---------   --------   --------   --------   ---------
                                                                                                                  
Percentage of net revenue                                                                                         
Net revenue...............   100.0%     100.0%     100.0%      100.0%     100.0%     100.0%     100.0%      100.0%
Cost of revenue...........    50.8       44.6       42.9        40.6       38.6       38.1       37.3        36.8 
                           -------    -------    -------     -------    -------    -------    -------     ------- 
Gross profit..............    49.2       55.4       57.1        59.4       61.4       61.9       62.7        63.2 
Research and development                                                                                          
  expenses................     3.9        4.4        4.0         5.3        6.1        5.3        5.2         4.8 
Selling, general and                                                                                              
  administrative                                                                                                  
  expenses................    30.3       37.4       39.1        40.3       40.7       40.0       40.8        42.1 
Interest income...........    (7.2)      (7.8)      (6.7)       (6.5)      (5.9)      (4.9)      (4.0)       (4.2)
                           -------    -------    -------     -------    -------    -------    -------     ------- 
Income before income                                                                                              
  taxes...................    22.2       21.4       20.7        20.3       20.5       21.5       20.7        20.5 
Provision for income                                                                                              
  taxes...................    10.1        9.0        8.7         8.5        8.6        8.9        8.5         8.2 
                           -------    -------    -------     -------    -------    -------    -------     ------- 
Net income................    12.1%      12.4%      12.0%       11.8%      11.9%      12.6%      12.2%       12.3%
                           =======    =======    =======     =======    =======    =======    =======     ======= 

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LIQUIDITY AND CAPITAL RESOURCES                                                 

At September 30, 1999, Network Solutions' principal source of liquidity was its 
cash and cash equivalents of $98.9 million and its short-term investments of    
$99.1 million, which when combined represent an increase of $66.3 million from  
its December 31, 1998 balances in those accounts. Network Solutions also has    
$22.1 million of marketable securities held as long term investments as of      
September 30, 1999.                                                             

At September 30, 1999, Network Solutions' cumulative net obligation to SAIC for 
intercompany activity was $6.6 million. Intercompany activity is primarily      
comprised of salaries and benefits paid by SAIC on behalf of Network Solutions. 
Network Solutions currently reimburses SAIC for intercompany activity on a      
monthly basis. Pursuant to the Tax Sharing Agreement dated September 26, 1997,  
Network Solutions remits income tax payments directly to tax authorities as it  
no longer is part of SAIC's consolidated group for income tax purposes.         

Cash provided by operations was $108.3 million for the nine months ended        
September 30, 1999. This amount is principally attributed to net income plus the
increase in deferred revenue reflecting cash collected in advance of            
registration services revenue recognition which occurs ratably over the two-and 
one-year registration terms. Partially offsetting this amount is an increase in 
deferred tax assets resulting from accelerated revenue recognition for tax      
purposes and the associated tax liabilities, generally paid on a quarterly      
basis.                                                                          

Cash used in investing activities totaled $27.2 million for the nine months     
ended September 30, 1999. Capital expenditures of $44.7 million and net         
long-term investment purchases of $3.7 million were partially offset by the     
redemption of $21.2 million of short-term investments. Investments during the   
period include a $2.0 million investment in Critical Path, a strategic business 
partner, which subsequently consummated its initial public offering during the  
period. Also during the period, a $9.7 million investment was made in RealNames 
Corporation, a strategic business partner. Critical Path provides outsourced    
e-mail services in support of Network Solutions' value-added e-mail product     
offerings. RealNames provides an Internet keyword service that Network Solutions
promotes in its value-added product offerings.                                  

Capital expenditures for the nine months ended September 30, 1999 were $44.7    
million, primarily for computer equipment and software to support Network       
Solutions' registry and registrar efforts, as well as costs related to the      
opening of Network Solutions' new call center. Network Solutions will continue  
to invest in the back office infrastructure in advance of continued growth in   
domain name registrations including investments in the shared registration      
system in accordance with the agreements between us, the Department of Commerce 
and ICANN.                                                                      

Network Solutions believes that its existing cash balance, investments and cash 
flows expected from future operations will be sufficient to meet Network        
Solutions' capital requirements for at least the next 12 months.                

YEAR 2000 COMPLIANCE                                                            

Network Solutions is continually assessing the potential effects of the "Year   
2000" millennium change on Network Solutions' business systems and processes.   
Network Solutions' Year 2000 project is proceeding on schedule. The project goal
is to ensure that Network Solutions' business is not impacted by the date       
transitions associated with the Year 2000.                                      

Network Solutions' Year 2000 project plan is coordinated by a team that reports 
directly to senior management. The project team is evaluating the Year 2000     
compliance of Network Solutions' business systems and processes, including the  
Internet domain name servers under Network Solutions' control,                  
telecommunications systems, facilities, data-networking infrastructure,         
commercial-off-the-shelf hardware, software and components used by its employees
and its outsourcing vendors who provide services relating to Network Solutions' 
domain name registration business. Network Solutions' Year 2000 project is      
comprised of the following parallel phases:                                     

- Phase 1 -- Inventory all of Network Solutions' business systems and 
     processes in order to assign priorities to potentially impacted systems
and services. This phase has been completed;                      

  - Phase 2 -- Assess the Year 2000 compliance of all inventoried business
    systems and processes and determine whether to renovate or replace any
     non-Year 2000 compliant systems and services. The assessment of mission
     critical systems has been completed; however, assessment continues as a
life cycle development activity;                                  

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   - Phase 3 -- Complete remediation of any non-Year 2000 compliant business
       systems and processes. Conduct procurements to replace any other non-Year
2000 compliant business systems and processes that will not be    
remediated. All remediation efforts have been completed;          

  - Phase 4 -- Test and validate remediated systems to ensure inter-system
       compliance and mission critical system functionality. The testing for the
most critical dates has been completed. As remediated code is     
  successfully tested, it is released into production incrementally, a
      process which was completed by October 16, 1999. However, should vendors
    release additional patches related to the Year 2000 millennium change,
Network Solutions will continue to deploy changes during regularly
scheduled maintenance windows;                                    

    - Phase 5 -- Deploy and implement remediated and replacement systems after
     the completion of successful testing and validation. The deployment and
      implementation of the remediated or replacement systems was completed by
October 16, 1999; and                                             

- Phase 6 -- Design contingency and business continuation plans in the
    event of the failure of business systems and processes due to the Year
     2000 millennium change. The contingency and business continuation plans
 have been completed and they will be updated throughout the year as
appropriate.                                                      

Based on its inventory and assessment, Network Solutions found that less than   
one-half of one percent of the software code of its mission critical systems    
needed to be remediated to be made Year 2000 compliant. However, Network        
Solutions, in its normal course of business, is replacing or upgrading, prior to
the millennium change, portions of these systems with new systems which will    
also be Year 2000 compliant. Currently, Network Solutions is enhancing its      
"back-office" and registration-related systems and the software relating to its 
core domain name registration services business. This enhancement effort is a   
function of Network Solutions' business growth and not a Year 2000 remediation  
effort.                                                                         

Based on its inventory and assessment, Network Solutions has found no material  
Year 2000 problems with its facilities and telecommunications systems. Network  
Solutions has conducted detailed assessments and tested the components of its   
telecommunications infrastructure. In addition, Network Solutions is seeking    
assurances from its facilities' landlords and telecommunications equipment      
vendors and data circuit providers regarding the Year 2000 compliance of their  
facilities and equipment. In the event of electrical power interruption outside 
of Network Solutions' control, Network Solutions has deployed back-up power     
systems capable of operating its core business indefinitely.                    

Network Solutions has completed the testing phase of its project cycle although 
Network Solutions will continue to use its test environment to evaluate less    
critical processes into and through the transition to the Year 2000. Network    
Solutions believes that its incremental remediation costs to make its current   
business systems and processes Year 2000 compliant are not material. Network    
Solutions is incurring some incremental costs directly relating to staff        
augmentation for the Year 2000 program management and technical assessment.     
Through September 30, 1999, the costs expended by Network Solutions were        
approximately $2.0 million. Network Solutions' expected total costs, including  
remediation and replacement costs, are estimated to be between $2.5 million and 
$2.75 million over the life of the Year 2000 project. Since portions of the     
mission critical "back office" and domain name registration-related systems have
been replaced as a function of business growth, the labor and capital costs     
associated with such replacement systems are not directly attributed to         
achieving Year 2000 compliance. Network Solutions has incurred costs for        
extending its software testing architecture which, in addition to testing       
remediated systems, is used as a normal component of Network Solutions' quality 
assurance infrastructure. As such, these costs are not directly categorized as  
Year 2000 project costs but as normal business development and engineering      
costs.                                                                          

Network Solutions is maintaining contact with its hardware and software vendors,
significant suppliers, outsourcing service providers and contracting parties to 
monitor the extent to which Network Solutions is vulnerable to any such third   
party's failure to achieve Year 2000 compliance for its own systems. At the     
present time, Network Solutions does not expect Year 2000 issues of any such    
third parties to materially affect Network Solutions' business. Furthermore,    
Network Solutions' business depends on the continued operation of, and          
widespread access to, the Internet. This, in turn, depends to a large extent on 
the software and systems of third parties on which Network Solutions' systems   
rely or to which they are connected. These third parties include,               

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among others, Internet-related companies, including Internet web hosting        
companies, Internet access providers and Internet domain name server operators. 
Network Solutions can give no assurances that the software or systems of such   
third parties will be Year 2000 compliant or that the failure of such third     
parties to achieve Year 2000 compliance will not have a material adverse effect 
on Network Solutions. To the extent that the normal operation of the Internet is
disrupted by the Year 2000 millennium change, Network Solutions' business,      
financial condition or results of operations could be materially and adversely  
affected.                                                                       

Should Network Solutions fail to solve a Year 2000 compliance problem related to
its mission critical business systems and processes the result could be a       
failure of or interruption to normal business operations. Network Solutions     
believes that, with the upgrades to the "back office" and domain name           
registration related systems in 1999, the potential for significant             
interruptions to normal operations should be minimized. Network Solutions'      
primary risks with regard to Year 2000 failures are those which impact its      
domain name registration business. The reasonably likely worst case risks       
inherent in Network Solutions' business are as follows:                         

   - Significant and protracted interruption of electrical power to data and
       systems in Network Solutions' engineering and customer support facilities
  could materially and negatively impact Network Solutions' ability to
     provide data and call-center operations. To mitigate this risk, Network
Solutions has deployed back-up power systems capable of operating 
indefinitely. However, electrical power interruptions that impact 
      Internet connectivity providers could adversely impact Network Solutions
     because of Network Solutions' reliance upon Internet-based, value-added
operations for its day to day business.                           

  - Significant and protracted interruption of telecommunications and data
     network services in any of Network Solutions' headquarters, engineering
   or customer support facilities could materially and negatively impact
    Network Solutions' ability to provide data and call-center operations.
       Network Solutions has conducted detailed assessments of the components of
     its telecommunications infrastructure and tested those systems. As part
      of its technical assessment, Network Solutions identified the compliance
       status of its data networking infrastructure and implemented remediation.

     - The failure of components of Network Solutions' current "back office" and
      domain name registration related systems could materially and negatively
    impact Network Solutions' business. As a contingency planning measure,
   Network Solutions has conducted a technical assessment of the current
    systems and their software applications, taken corrective action where
necessary, tested those changes, and deployed into production the 
remediated software.                                              

- Despite the assurances of Network Solutions' third-party suppliers, 
hardware and software vendors, and outsourcing service providers  
    regarding the Year 2000 compliance of their products and services, the
    potential exists that a Year 2000 problem relating to such third-party
suppliers, vendors and outsourcing service providers' products and
   services could have a material impact on Network Solutions' business.

Although Network Solutions found that it only has had to remediate a small      
portion of its software code in its internal mission critical systems and       
despite Network Solutions' finding that its enhancement effort has resulted in  
Year 2000 compliant "back-office" and registration-related systems and software 
relating to its core domain name registration services business, Network        
Solutions has developed a business continuity plan and has performed a test on  
the existing core registration-related systems that were upgraded. The test was 
performed by conducting end-to-end testing of the existing core                 
registration-related systems in a test environment mirroring the production     
system environment. The final business continuity plan has been completed.      

Although Network Solutions is taking appropriate steps so that Network          
Solutions' business is not impacted by the date transitions associated with the 
Year 2000, Network Solutions has no responsibility for, nor control over other  
Internet domain name server operators or tens of thousands of lower level domain
name system server operators that are critical to the efficient operation of the
Internet. Network Solutions has not determined whether such domain name server  
operators or other server operators have hardware, software or firmware that is 
Year 2000 compliant. Network Solutions has notified the Department of Commerce  
of this issue. Network Solutions is aware that many companies that have their   
own DNS servers are running older copies of BIND software which are not         
certified Year 2000 compliant, although the current version of BIND, version    
8.x, is so certified. BIND is the most commonly used program for DNS resolution 
at the server level and is created and distributed by the Internet Software     
Consortium. Network Solutions has not determined whether the older              

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versions of BIND could present a significant Year 2000 problem. Network         
Solutions has made available test support materials to aid DNS operators in     
their evaluation of their local compliance.                                     

Forward-Looking Statements                                                      

The foregoing Year 2000 discussion and the information contained herein is      
provided as a "Year 2000 Readiness Disclosure" as defined in the Year 2000      
Information and Readiness Disclosure Act of 1998 (Public Law 105-271, 112 Stat. 
2386) enacted on October 19, 1998 and contains "forward-looking statements"     
within the meaning of the Private Securities Litigation Reform Act of 1995.     
These statements, including without limitation, anticipated costs and the dates 
by which Network Solutions expects to complete certain actions, are based on    
management's best current estimates, which were derived utilizing numerous      
assumptions about future events, including the continued availability of certain
resources, representations received from third parties and other factors.       
However, there can be no guarantee that these estimates will be achieved, and   
actual results could differ materially from those anticipated. Specific factors 
that might cause such material differences include, but are not limited to, the 
ability to identify and remediate all relevant systems, results of Year 2000    
testing, adequate resolution of Year 2000 issues by governmental agencies,      
businesses and other third parties who are outsourcing service providers,       
suppliers, and vendors of Network Solutions, unanticipated system costs, the    
adequacy of and ability to implement contingency plans and similar              
uncertainties. The "forward-looking statements" made in the foregoing Year 2000 
discussion speak only as of the date on which such statements are made, and     
Network Solutions undertakes no obligation to update any forward-looking        
statement to reflect events or circumstances after the date on which such       
statement is made or to reflect the occurrence of unanticipated events.         

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BUSINESS

The following discussion contains forward-looking statements that involve risks 
and uncertainties. Our actual results may differ significantly from the results 
discussed in the forward-looking statements as a result of certain factors      
including, but not limited to, those discussed in "Risk Factors" and elsewhere  
in the prospectus.                                                              

We are a leading provider of web identity services worldwide. Our web identity  
offerings include domain name registration services, for which we are the global
leader, and related value-added products and services. We are the exclusive     
registry and the leading registrar for second level domain names within the     
.com, .net and .org top level domains. We also facilitate global registration of
domain names in other existing top level domains, including country code top    
level domains. By registering Internet domain names, we enable businesses, other
organizations and individuals to establish unique web identities from which to  
communicate and conduct e-commerce. We also provide Internet technology services
that focus on network engineering, network and systems security and network     
management.                                                                     

Net registrations through our registrar services increased by 135% from         
2,777,000 second level domain names registered as of September 30, 1998 to      
6,528,000 second level domain names registered as of September 30, 1999. An     
additional 223,000 second level domain names have been registered through our   
registry services in the .com, .net and .org top level domains through competing
registrars as of September 30, 1999. Consequently, our registrar services       
accounted for approximately 97% of the total 6,751,000 net registrations in the 
.com, .net and .org, as well as .edu, top level domains, as of that date. In  
addition to domain name registration, we sold value-added services along with   
approximately 15% of our 1,318,000 net new registrations in the third quarter   
ended September 30, 1999. We believe that commercial enterprises and individual 
Internet users domestically and worldwide recognize the .com top level domain as
the desirable address for commercial presence on the Internet. Net registrations
in the .com top level domain represent 78% of our total net registrations as of 
September 30, 1999. Net revenue from Internet domain name registrations         
accounted for 94% of our net revenue for the nine months ended September 30,    
1999. We believe that the potential for continued growth of domain name         
registrations and other web identity services is substantial.                   

INDUSTRY BACKGROUND                                                             

The Internet is a global network of millions of interconnected computers and    
computer networks that allow businesses, other organizations and individuals to 
communicate. A broad range of commercial organizations and individuals are using
the Internet to communicate electronically, to distribute and retrieve          
information and to conduct e-commerce. Advances in technology, low-cost Internet
access and an increasing corporate reliance on distributed information          
environments have fueled the rapid growth of the Internet.                      

We believe that in order to support the demands placed on this evolving and     
rapidly growing medium of commerce and information exchange, a wide range of    
products and services will need to be developed and continually enhanced and    
expanded, including:                                                            

- registration services,                                              

- value-added products and services, and                              

- Internet technology services.                                       

Registration Services                                                           

With the increased commercialization of the Internet, large corporations and    
other users, including small businesses, organizations and individuals, on both 
a domestic and international basis, are increasingly establishing their web     
identities by registering domain names. The most popular top level domain       
continues to be .com. Users are registering domain names to establish web       
identities and for other purposes such as trademarks, brands, products and      
events. We are the exclusive registry and the leading registrar in the .com,    
.net and .org top level domains. There are also approximately 240 two letter  
country code top level domains that are each administered by other exclusive    
registries. Examples are .uk for the United Kingdom and .de for                 

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Germany. A growing number of large corporations with multiple web identities is 
also seeking solutions through which a single provider can register and manage  
their domain names in the various top level domains.                            

Value-Added Products and Services                                               

The increase in the number of Internet users provides companies, other          
organizations and individuals with new ways to conduct business. In order to    
establish and promote a strong web identity and to conduct e-commerce, Internet 
users seek value-added products and services, such as directory, communications,
security, privacy, data and research and identity promotion services. We believe
there will be opportunities for entities which can facilitate, develop and      
distribute such products and services and make them more accessible and easy to 
use.                                                                            

Internet Technology Services                                                    

As more businesses establish or expand their Internet presence and begin to     
deploy more sophisticated e-commerce based network infrastructures, we believe  
there will be an increasing demand for Internet technology services. We believe 
that networks are becoming increasingly sophisticated and are requiring business
to possess increased capabilities and improved access to information. As a      
result, their businesses are increasingly seeking experienced network consulting
firms to provide sophisticated network services.                                

OUR SOLUTION                                                                    

We are the exclusive registry and the leading registrar for second level domain 
names within the .com, .net and .org top level domains. We are a trusted,       
reliable and secure provider of web identity services including domain name     
registration services in the .com, .net and .org top level domains, as well as  
country code top level domains. We own the infrastructure, technology and       
protocols underlying the shared registration system and we have the right to    
deploy and control the infrastructure and technology underlying the top level   
domain name server system for the .com, .net and .org top level domains. We     
offer value-added products and services through our web site which serves as a  
one-stop shop for our customers at a very early point in the establishment of   
their web identity. We also provide Internet technology services that focus on  
network engineering, network and systems security and network management.       

OUR BUSINESSES                                                                  

We are the leading registrar and the exclusive registry for second level domain 
names within the .com, .net and .org top level domains and we provide Internet  
technology services. As a leading provider of web identity services worldwide,  
we believe that we have several competitive advantages:                         

   - We are a trusted, reliable and secure provider of web identity services
       with strong brand recognition as Network Solutions as well as the dot com
people.                                                           

  - We have the financial strength to continue to implement and expand our
  sales, marketing, product development and acquisition efforts. As an
       example, in November 1999, we acquired ImageCafe, Inc. in a substantially
     all-cash transaction. Our balance sheet at September 30, 1999 consisted
  of no long-term debt and a cash and marketable securities balance of
approximately $221 million.                                       

     - We are investing significant technical and financial resources to improve
and expand our registration business. A substantial portion of our
registration software is custom-developed and proprietary.        

Registration Services                                                           

REGISTRAR SERVICES.  Domain name registration services are our core business.   
Through our registrar services we register second level domain names in the     
.com, .net and .org top level domains, enabling registrants to establish a    
unique identity on the Internet. Our customers apply to register second level   
domain names either directly through our web sites and e-mail-based registration
templates or indirectly through Internet access providers and others. Currently,
we charge a two-year services fee of $70 for initial registrations and $35 per  
year for re-registrations for our basic registration service.                   

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Our customers can submit applications for the registration of second level      
domain names via e-mail through the Internet. We process the application and    
either register the requested domain name in the requested top level domain or  
reject the application. Upon registration or rejection, we notify the customer  
via e-mail. For domain names which are registered, we either require customers  
to pay through our online payment process or we invoice the customers and permit
them to pay the registration services fee after the domain name is registered.  
As of March 9, 2000, we will require pre-payment or some other reasonable       
assurance of payment at the time of registration. We perform internally our core
proprietary automated registration process and associated security functions.   

We also offer a web-based domain name registration process through our new      
storefront web site. As part of our web-based registration process, we offer the
option of registering a domain name and activating it later by providing domain 
name record hosting and a suite of other services including dot com biz card and
dot com mail. Customers that select this option currently pay a two-year        
services fee of $119 for registration of a domain name and a one page dot com   
biz card web site. We believe that ease of use is becoming more important to the
increasing number of less technically sophisticated Internet users. This        
web-based process also simplifies the user payment process by validating and    
accepting credit card payments and providing a customer confirmation number via 
our secure web-based online payment system.                                     

Through our idNames services, we have continued to expand our registration      
services to the country code top level domains. We provide search and           
registration services for domain names in country code top level domains around 
the world. With the idNames services, we make it easier for companies to protect
their brands both globally and in local markets. In November 1999, we expanded  
our idNames services to meet the growing needs of large and Internet focused    
businesses worldwide. These services include a confidential domain name         
reservation service, a domain name modification assistance service and a        
multi-year domain name maintenance program in the .com, .net and .org top level 
domains and in many of the available country code top level domains. We intend  
to continue to introduce new idNames services to meet the needs of this market. 

We have made significant investments in registrar services. We believe that we  
currently have the following competitive advantages in registrar services:      

     - Large, Established Customer Base.  We are the leading registrar with over
6,500,000 net second level domain name registrations. We meet our 
customers at a very early point in the establishment of their web 
  identities, at a time when they are disposed to buy. As a result, we
    believe we have the infrastructure needed to achieve significant scale
    efficiencies in the registration process. As customers invest in their
web sites for advertising, branding and other business-critical   
    activities, we believe that they will be inclined to re-register their
domain names with us.                                             

- Global Recognition of Network Solutions as the dot com people.  We  
    believe that the .com top level domain, for which we are currently the
    leading registrar, has perceived value on a global basis to commercial
       and other users on the Internet. We are building strong brand recognition
 as the dot com people. We believe that this will be a key factor in
maintaining and broadening our customer base.                     

    - Quality Customer Support.  We believe that high quality customer support
      is vital to customer satisfaction. We have continually improved customer
      service and account handling and expanded our capacity to service larger
      volumes of registrants. Customer access to our customer support services
       includes a 24 hour 7 day a week telephone help desk, an e-mail processing
facility for account information updates and other services.      

- One-Stop Shop for Value-Added Products and Services.  We provide    
      value-added products and services through our web site which serves as a
one-stop shop for our customers at a very early point in the      
 establishment of their web identities. We offer an expanding set of
     value-added products and services that can extend our relationship with
      our customers as we help them maximize the value of their web identities
over time. We sold value-added products and services along with   
approximately 15% of our                                          

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1,318,000 net new registrations in the third quarter of 1999. These value-added 
products and services include:                                                  

 -- dot com directory, an Internet "find engine" which allows users to
   quickly locate, research and do business with companies that have
         registered domain names through us in the .com, .net and .org top level
domains,                                                      

 -- ImageCafe, an automated tool which allows users to build web sites
efficiently at an attractive price point,                     

   -- dot com biz card, a one page web site that can be used as a "virtual
business card" to promote businesses on the Internet,         

     -- dot com forwarding, a service that enables our customers to "point" or
forward users from multiple domain names to one web site,     

  -- RealNames, an Internet keyword service that offers companies, brand
         managers, and trademark owners a way to enhance their identities on the
Internet,                                                     

-- dot com mail, a portable, personalized e-mail service designed   
primarily for small businesses,                               

     -- dot com toolkit, a small business resource center that provides access
         to tools and services for setting up a web site and conducting business
on the Internet, and                                          

   -- dot com promotions, a service through which a domain name registrant
can link to and subscribe to various services provided by     
Microsoft/LinkExchange.                                       

   - Strategic Agreements.  To strengthen our distribution channels, we have
  entered into strategic agreements with over 260 companies around the
world including leading portals such as Yahoo! and                
Microsoft/LinkExchange. We have entered into strategic wholesale  
   agreements with companies who register a significant number of second
       level domain names with us on behalf of their customers. Additionally, we
have structured retail marketing agreements with channel partners 
       designed to take advantage of their complementary marketing capabilities.

In addition, we are continuing to expand our registrar services and improve the 
registration process by:                                                        

  - Expanding Marketing and Distribution Agreements.  Through our Alliance
 Program and other programs, we are expanding our relationships with
       certain Internet access providers who participate in our Premier Program.
     These wholesale agreements are designed to provide enhanced services to
     partners who register a significant number of second level domain names
with us on behalf of our customers. Through our retail marketing  
     agreements, we are developing and expanding our relationships with some
       of the smaller Internet access providers and other companies by providing
      such companies additional revenues through the payment of referral fees.
Through these relationships, we believe we will be able to deliver
     enhanced registration services and identify additional opportunities to
  expand our registrar services. Additionally, we are establishing and
       expanding relationships with companies worldwide to promote our services,
 penetrate new customer bases and integrate third party products and
services.                                                         

   - Continuing to Enhance Our Offerings.  We have introduced a portfolio of
value-added products and services and intend to develop additional
value-added products and services that allow us to build upon our 
  position as the leading registrar and make use of our customer data.

    - Pursue Strategic Acquisitions and Investments.  We intend to continue to
      identify and, where appropriate, pursue additional strategic acquisition
 and investment opportunities which would provide our customers with
complementary products, services and technologies including, among
      others, those which enhance web identity, communications and e-commerce.

- Continuing to Improve the Customer Experience.  We are continuing to
       invest in improving the purchase and support experience for our customers
as evidenced by our recent introduction of a storefront design    

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      on our web site. Our newly redesigned and enhanced web site, launched in
      December 1999, offers increased functionality, ease of use, and customer
account management.                                               

   - Promoting the Use of .com, .net and .org Worldwide.  We believe that we
can continue to grow our registrar services by promoting global   
recognition of the .com, .net and .org top level domains. We are  
       promoting the use of such top level domains to establish them as the most
      recognized domains for individuals and organizations conducting business
on the Internet.                                                  

 - Maintaining Technology Leadership.  We have continued to build on our
     experience to develop enabling technologies which support the continued
    enhancement of infrastructure flexibility and scalability and customer
ease of use. A substantial portion of our registrar software is   
custom-developed and proprietary.                                 

Marketing and Distribution Relationships.  We have relationships with many      
companies worldwide to promote our registrar services, penetrate new customer   
bases and integrate third party products and services.                          

  - Strategic Programs with Internet Access Providers and Others.  We have
       entered into wholesale agreements to provide enhanced services to certain
       Internet access providers, including Internet service providers, or ISPs,
both in the United States and in other countries, who register a  
  significant number of second level domain names with us on behalf of
their customers.                                                  

    -- Premier Program.  Our Premier Domain Registration Service Program
        provides participating Internet access providers with personalized
           account management, customized billing and financial reports, private
          e-mail boxes and other customized features. As of December 10, 1999,
      we had entered into agreements with over 240 companies under the
     Premier Program which include agreements with approximately 100
         companies located in the United States and 140 companies located in
         Canada, Australia, New Zealand and the European, South American and
       Asia-Pacific regions. These companies include: EarthLink Network,
          Deutsche Telekom, Hong Kong Telecom, Interland, Interliant (formerly
Sage Networks) and Singapore Telecommunications.          

     -- Alliance Program.  The Alliance Program is available to members of
    the Premier Program who have participated in the program for a
         minimum of one year and who have registered a significant number of
         second level domain names with us. The Alliance Program is designed
        to enable us and our participating companies to provide reciprocal
        links and referrals to the other party's distribution channels for
           each other's complementary services. Through these relationships with
        EarthLink, Interliant, Interland, and ValueWeb, we seek to deliver
our enhanced registration services and identify additional
opportunities to expand our registrar services.           

- Distribution Channel Marketing Agreements.  We are developing       
 co-marketing programs with retail channel partners designed to take
advantage of their complementary marketing capabilities.          

     -- Affiliate Program.  Our Affiliate Program provides an easy way for
         small Internet access providers and other companies and individuals
           to establish a link to our enhanced domain name registration process,
          enabling them to earn additional revenue and add value for their web
           site visitors. The Affiliate Program is designed for participation by
        the thousands of Internet access providers, web hosting companies,
 and web site design companies that currently register their
        customers' domain names through us, as well as other companies and
        individuals who could benefit from providing this service to their
     customers. As of December 10, 1999, we had approximately 35,000
members in our Affiliate Program.                         

      -- Domestic Agreements.  In 1999, we entered into strategic agreements
    with Go2Net, IBM and Microsoft and expanded our agreement with
     RealNames (formerly Centraal Corporation) for the marketing and
          development of products and services to meet the future needs of the
business marketplace.                                     

        - Our agreement with Go2Net provides members of Go2Net's HyperMart
         and Virtual Avenue business hosting services with access to our
            domain name registration and dot com directory services. Go2Net is
         a network of branded, technology and community-driven web sites

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         focused on personal finance, search and directory, commerce and
business services, and games.                         

          - Under our agreement with IBM, IBM provides a hypertext link to our
          domain name registration and dot com directory services from its
         HomePage Creator e-business web site and we provide a hypertext
        link to the IBM HomePage Creator for e-business small business
resource center from our dot com toolkit.             

        - Under the Microsoft/LinkExchange agreement, we are promoting the
             Microsoft/LinkExchange suite of marketing services designed to help
          small businesses increase their online traffic and sales through
           our dot com toolkit resource center and Microsoft is offering our
      domain name registration services through a service offering
             co-branded as SiteRegistration. This new offering is being promoted
      throughout the LinkExchange web site and on the LinkExchange
BannerNetwork.                                        

         - Other Channel Agreements.  Under our agreement with RealNames, we
           have executed agreements with 14 channel distributors that act as
           our sales representatives in marketing RealNames Internet Keyword
         subscriptions. The Internet Keyword service is a web navigation
            service that offers companies, brand managers and trademark owners
  a way to enhance their identities on the Internet and is
 complementary to our domain name registration services.

 -- International Agreements.  We have also established additional
     international distribution channels through Orientation.com and
Yupi.com.                                                 

          - The agreement with Orientation.com provides a distribution channel
         for our domain name registration and dot com directory services
            through Orientation.com's extensive network of multilingual portal
       sites with content that target specific regions and countries
including Asia, Africa, Central/Eastern Europe, Latin 
America/Caribbean, the Middle East and Oceania.       

         - Our agreement with Yupi.com promotes our domain name registration
      services to Spanish speaking Internet users throughout Latin
America.                                              

We intend to continue to establish additional distribution alliances for our    
domain name registration services in other regions and countries and in         
different languages.                                                            

Advertising.  In 1999, we have expanded our advertising and marketing through   
various targeted print and on-line advertising campaigns. We also launched      
several major multi-piece direct mail, print and web site banner advertising    
campaigns announcing our new products and services.                             

In November 1999, we extended our global marketing agreement with Yahoo! under  
which we purchased advertising to broadly promote our domain name registration  
services and other services on certain Yahoo! web sites during 2000. Under this 
agreement we will expand our promotions for domain name registration services in
the .com, .net and .org top level domains globally and expect to extend the     
reach of the Network Solutions' brand to the global Internet community.         

Starting in 1999 we have also begun selling advertising and sponsorships for    
complementary services on our web sites and we are working with DoubleClick, a  
leading web advertising broker.                                                 

Direct Sales.  Our services are marketed and distributed directly through our   
web sites. We are continuing to target additional channel and distribution      
partners to offer our registration services electronically through existing web 
sites and through other direct channels, such as direct mail and telemarketing. 
Through our direct sales efforts we are seeking to expand the number of         
registrations in targeted customer segments both domestically and               
internationally. We are targeting customer segments such as small business      
users, individuals, holders of trademarks, service marks and product marks and  
event sponsors.                                                                 

REGISTRY SERVICES.  We are the exclusive registry for .com, .net and .org top   
level domains until at least November 2003. If the ownership of our registry and
registrar is separated by May 2001, in accordance with the registry agreement,  
the exclusivity for the registry will extend to November 2007. We intend to     
engage financial advisors to review alternatives for possible separation.       
Competing registrars, including our registrar, submit .com,                     
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.net and .org second level domain name registrations through our proprietary  
shared registration system which hosts the master database. Commencing on       
January 16, 2000, the annual registry fee for a domain name will be $6, unless  
increased to cover higher registry costs under circumstances described in the   
registry agreement. We own the infrastructure, technology and protocols         
underlying the shared registration system for the .com, .net and .org top level 
domains. We maintain the master database of domain names for the .com, .net and 
.org top level domains.                                                       

As of December 10, 1999, there were 22 ICANN-accredited registrars submitting   
domain name registrations to us through the shared registration system. An      
additional 26 accredited registrars, as of such date, were testing in our       
pre-production environment and 18 other entities have received accreditation    
status. Once a registrar achieves its accreditation we enter into an agreement  
with such registrar and license our software development toolkit, protocol and  
application programmers interface to our system to each registrar to enable it  
to develop its front-end domain name registration systems. We receive a one-time
$10,000 license fee from each registrar.                                        

We have made significant investments in our registry developing the shared      
registration system and building our system infrastructure. We believe that we  
have the following competitive advantages in the registry business versus       
competing registries for the existing and any new top level domains:            

- Recognition of the .com, .net and .org Top Level Domains            
      Worldwide.  Commercial enterprises and individual users domestically and
 worldwide recognize the .com top level domain as the most desirable
     address for commercial presence on the Internet. We believe that we can
  continue to grow our registry by promoting global recognition of the
     .com, .net and .org top level domains. We are promoting the use of such
    top level domains to establish them as the most recognized domains for
individuals and organizations conducting business on the Internet.

 - Customer Support/Technical Assistance Services.  We believe that high
       quality customer support/technical assistance is vital to our customers',
      the registrars', satisfaction. We have developed an operational test and
  evaluation environment for registrars to test their systems prior to
going into a production environment. We have assigned one point of
      contact to each registrar to help resolve issues. We have a trained team
      of engineers on standby to address any operational issues that adversely
 impact the registrars. Finally, we are in the process of developing
  service level agreements with the registrars to provide high quality
service that the registrars can count on.                         

     - Technical Infrastructure Support.  We have invested and are continuing to
  invest significant technical and financial resources in our registry
    infrastructure. Our shared registration system is custom-developed and
      proprietary. We intend to deploy new top level domain name servers in 15
    locations worldwide under agreements with service level obligations to
 increase the robustness of the .com, .net and .org top level domain
       system. This will be a significant improvement to the current domain name
      server infrastructure, in which nine of the 13 existing top level domain
      name servers are operated by volunteer organizations with no contractual
   or legal obligations. Our deployment should also enhance reliability,
      speed and scalability. We believe that significant engineering talent is
   required to create a registry capability and that knowledge of domain
 name system structures, Internet security, data routing and routing
       protocols is critical to creating and enhancing registry capabilities. We
     believe that engineers skilled in protocol development are difficult to
    identify, hire and retain and thus our staff of engineers represents a
valuable resource.                                                

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We are working to expand our registry business through the operation of         
additional registries, by providing new domain name system functionality and by 
offering additional trusted third party services for e-commerce.                

COMPETITION IN REGISTRATION SERVICES.  We currently face competition among      
registrars within a single top level domain like .com, and could in the future  
face competition among registrars within potential new top level domains. As of 
December 10, 1999, there were 66 ICANN-accredited registrars, including AT&T,   
America Online, CORE or "Internet Council of Registrars," France Telecom Oleane,
iDirections, interQ Incorporated, Melbourne IT, NameSecure.com, NetBenefit,     
PSINet, Register.com and Verio. As of December 10, 1999, our shared registration
system was being used by 22 accredited registrars, in addition to ourselves, in 
the .com, .net and .org top level domains to register second level domain names.
We also face competition from third level domain name providers such as Internet
access providers and registrars of top level domains other than those top level 
domains for which we act as exclusive registry. Although we currently act as the
exclusive registry for second level domain names within the .com, .net and .org 
top level domains, we face competition from registries of country code top level
domains as well as potential new top level domains.                             

Future competition in domain name registration services could come from many    
different companies. Many of these companies have core capabilities to deliver  
registration services such as help desks, billing services and network          
management, along with strong name recognition and Internet industry experience.
Examples of these types of companies include:                                   

- domain name registration resellers,                                 

- country code registries,                                            

- Internet access providers, and                                      

- major telecommunications firms.                                     

INTERNET TECHNOLOGY SERVICES                                                    

We deliver Internet technology services to some of the world's leading          
businesses that are utilizing Internet technologies for their internal          
enterprise networks, or intranets. Our engineers have extensive knowledge and   
experience in network engineering, network security and network management. By  
leveraging this knowledge and experience, we are able to provide solutions to   
clients' complex network needs.                                                 

 - Network Engineering.  We offer a line of services to help develop and
       integrate enterprise network solutions in a manner tailored to individual
    clients' needs. All of these services are focused on building a strong
network foundation for the enterprise.                            

   - Network and System Security.  We provide a range of security consulting
     services to allow clients to protect their data and systems. We develop
     access and protection controls that permit internal and remote users to
       access computer systems, databases and applications on the network, while
protecting against unauthorized access to information or misuse of
systems.                                                          

     - Network Management.  We provide a range of services that allow clients to
     monitor, control and improve their network performance. We also provide
    planning and analysis to implement disaster recovery and contingencies
for network system failures.                                      

During 1999, we provided Internet technology consulting services to more than 20
large companies. Our Internet technology services are generally provided to     
clients on a time and expense basis. We also perform some engagements on a      
fixed-price basis.                                                              

Most of our Internet technology services customers are in the financial services
industry. Bank of America, formerly NationsBanc, is currently our largest       
consulting services client, accounting for 39.3% of our Internet technology     
services net revenue and 2.4% of our total net revenue in the nine months ended 
September 30, 1999. NationsBanc originally contracted with us in 1993 and we    
currently provide network design and engineering services as well as a variety  
of project specific services under the contract.                                

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Companies with Internet expertise are current or potential competitors to our   
Internet technology services. These companies include systems integrators and   
consulting firms, such as Andersen Consulting, IBM Global Services and Lucent   
NetCare. We also compete with certain companies that have developed products    
that automate the management of Internet protocol addresses and name maps       
throughout enterprise-wide intranets, and with companies with                   
internally-developed systems integration efforts. A number of these competitors 
and potential competitors have longer operating histories and greater name      
recognition and significantly greater financial, technical, marketing,          
distribution and other resources than we do.                                    

OPERATIONS                                                                      

We have operating facilities to support our current registration operations and 
customer support needs as well as to provide expansion capability for future    
business. One facility houses our call center, a training center equipped for   
both computer and telephone training and a new computer room with expanded      
systems and telecommunications services. Another facility houses our registry   
systems and our primary computer room and telecommunications systems. In        
addition, we contract for a back-up facility to a third party's secure facility 
in California to provide redundancy and enhanced reliability for our Internet   
root zone administration. It is our intention to develop a live redundant site  
for the registry during the first half of 2000.                                 

Our systems have periodically been subject to large numbers of speculative and  
repetitive e-mail domain name registration and modification requests from domain
name speculators and other abusers. Such abuses of our systems have resulted in 
processing delays. We have taken, and are continuing to take, actions to combat 
these delays and abusive e-mails to minimize the impact of such system abuses.  

In the latter part of 1999, the operations infrastructure was significantly     
augmented to reflect the creation of the shared registration system to implement
the terms of our agreements with ICANN and the Department of Commerce.          
Throughout 1999 new hardware configurations were added for the registration and 
billing databases to both the registrar and registry systems. Bandwith          
connections to multiple Internet service providers were increased threefold.    
State of the art storage technology was added to both systems. The overall      
systems management and monitoring was improved with the addition of a 24 hour, 7
day a week network operations center function. All of the infrastructure        
enhancements were integrated into an improved state-of-the-art network          
management system. Many legacy systems were upgraded to resolve potential year  
2000 issues. All production systems were successfully remediated.               

In December 1999, our registrar system web servers were upgraded to provide a   
storefront ability and our on-line payment system was replaced. Additionally,   
our customer service technical support infrastructure was improved with the     
installation of a new Nortel 81C telephone switch.                              

The internal telecommunications infrastructure between our multiple locations   
was upgraded to support increasing business requirements in both the registry   
and registrar.                                                                  

ONGOING PRIVATIZATION OF INTERNET ADMINISTRATION                                

With the onset of increased commercial growth of the Internet, the U.S.         
Government initiated an activity directed at increased privatization of the     
policy making and central administration of the Internet. Within the U.S.       
Government, leadership for the continued privatization of Internet              
administration is currently provided by the Department of Commerce. On June 10, 
1998, the Department of Commerce published in the Federal Register a plan       
referred to as the Statement of Policy or White Paper, calling for increased    
competition and the formation of a corporation to assume certain                
responsibilities relating to the domain name system.                            

The process initiated by the Statement of Policy resulted in the entry by the   
U.S. Government into a Memorandum of Understanding, or MOU, with ICANN, a U.S.  
based private not-for-profit corporation with an international board of         
directors. The U.S. Government has recognized ICANN as the corporation described
in the cooperative agreement, in the performance of ICANN's obligations under   
the MOU, and until such time as the MOU is terminated.                          

Currently, the technical structure of the Internet only permits one registry for
each top level domain. A registrar acts as the interface between the registry   
and the end-user domain name registrants. Registrars submit to the              
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registry certain limited information for each of their customers that has a     
second level domain name in that top level domain. A registrar can provide      
value-added products and services in addition to its basic registration service.
Numerous registrars will be able to operate within each top level domain. We    
currently are the exclusive registry in the .com, .net and .org top level       
domains and the leading registrar in those domains.                             

On November 10, 1999, a series of wide-ranging agreements were entered into     
which removed a substantial amount of uncertainty regarding the administration  
of the domain name system and our role in that system going forward. These      
agreements consist of the following:                                            

     - A registry agreement between us and ICANN under which we will continue to
 act as the exclusive registry for the .com, .net and .org top level
domains for at least four more years,                             

- A revised registrar accreditation agreement between ICANN and all   
registrars registering names in the .com, .net and .org domains,  

    - A revised registrar license and agreement between us as registry and all
       registrars registering names in the .com, .net and .org domains using our
proprietary shared registration system,                           

- An amendment to the cooperative agreement, and                      

- An amendment to the MOU.                                            

Under these agreements we have recognized ICANN as the not-for-profit           
corporation described in amendment 11 to the cooperative agreement, have become 
an ICANN-accredited registrar and have agreed to operate the registry in        
accordance with the provisions of the registry agreement and the consensus      
policies established by ICANN in accordance with the terms of that agreement. We
will be an accredited registrar through November 9, 2004 with a right to renew  
indefinitely in accordance with the agreement.                                  

On or before March 9, 2000, we are required to implement a system under which we
will not accept the registration of a domain name as a registrar unless we have 
received a reasonable assurance of payment of the registration fee. We are      
entitled to establish our own prices for registrar services, except that if we  
charge less than $35 per registration per year prior to March 9, 2000, we must  
do so only for registrations for which we have a reasonable assurance of payment
of the registration fee.                                                        

We have agreed to use our best commercial efforts to implement by January 15,   
2000 modifications to the shared registration system that will enable a         
registrar to (a) accept registrations and renewals in one-year increments and   
(b) add one year to a registrant's registration period upon transfer of a       
registration from one registrar to another. The unexpired term of any           
registration may not exceed ten years. We are contractually obligated to provide
equivalent access to the shared registration system to all ICANN-accredited     
registrars and to ensure that the revenues and assets of the registry are not   
utilized to advantage our registrar to the detriment of other registrars. We    
have agreed to and implemented an organizational conflict of interest compliance
plan that includes organizational, physical and procedural safeguards in        
connection with these obligations.                                              

The term of the registry agreement extends until November 9, 2003, except that  
in the event that we complete the legal separation of the ownership of our      
registry business from our registrar business by divesting all the assets and   
operations of one of those businesses by May 9, 2001 to an unaffiliated third   
party that enters an agreement enforceable by ICANN and the Department of       
Commerce (1) not to be both a registry and a registrar in the .com, .net and    
.org top level domains and (2) not to control, own or have as an affiliate any
individual(s) or entity(ies) that, collectively, act as both a registry and a   
registrar in the .com, .net and .org top level domains, the term will be        
extended for an additional four years, resulting in a total term of eight years.
For the purposes of this provision, "unaffiliated third party" means any entity 
in which we (including our successors and assigns, subsidiaries and divisions,  
and their respective directors, officers, employees, agents and representatives)
do not have majority equity ownership or the ability to exercise managerial or  
operational control, either directly or indirectly through one or more          
intermediaries. "Control," as used in this provision, means any of the          
following: (1) ownership, directly or indirectly, or other interest entitling us
to exercise in the aggregate 25% or more of the voting power of an entity; (2)  
the power, directly or indirectly, to elect 25% or more of the board of         
directors (or equivalent governing body) of an entity; or (3) the ability,      
directly or indirectly, to direct or cause the direction of the management,     
operations, or policies of an entity. Department of Commerce approval would be  
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required for the transfer of our registry operations and for the designation of 
a successor registry by ICANN. We intend to engage financial advisors to review 
alternatives for possible separation. Upon expiration of the agreement, ICANN   
will conduct a process for selecting a successor registry, in which case we may 
compete on an equal basis. If, during the term of the agreement, we fail to     
remedy any breach by us of the agreement, we may be terminated as the registry  
for the .com, .net and .org top level domains.                                  

ICANN is contractually obligated to the registry and to all accredited          
registrars to comply with specified procedural requirements governing the       
exercise of its authority. The agreements also explicitly define the subjects   
within the scope of ICANN's authority with respect to both the registry and     
registrars. ICANN's authority to set policy for the registry may be terminated  
if (a) ICANN breaches the registry agreement and fails to remedy that breach;   
(b) the Department of Commerce withdraws its recognition of ICANN; or (c) the   
Department of Commerce concludes that ICANN has not made sufficient progress    
towards entering into agreements with other registries and we are competitively 
disadvantaged. In the event ICANN's authority is terminated, the Department of  
Commerce will assume the policy-setting function for registry services for the  
.com, .net and .org top level domains.                                        

We have agreed to pay annual fees to ICANN as set by ICANN at levels currently  
not to exceed $2 million for our registrar and $250,000 for our registry. We    
have agreed to provide to the Department of Commerce control over the content   
and use of the internic.net website, subject to transition arrangements set     
forth in the agreements.                                                        

All accredited registrars are obligated to provide query-based access to        
registration data and are barred from placing conditions upon any legal use of  
that data, except to prohibit use of the data to enable the transmission of mass
unsolicited commercial solicitations via e-mail (spam) or to enable high volume,
automated electronic processes that apply to the registrar (or its systems). In 
addition, all accredited registrars are required to provide third-party bulk    
access to registration data (subject to the restrictions described above) for an
annual fee not to exceed $10,000. This obligation would remain in effect until  
replaced by a different policy adopted by ICANN or a finding by the Department  
of Commerce that no individual or entity is able to exercise market power with  
respect to data used for development of third-party value added products and    
services.                                                                       

On October 24, 1999, ICANN adopted the Uniform Domain Name Dispute Resolution   
Policy, commonly known as the dispute policy, and accompanying rules of         
procedure required to be used by all accredited registrars in the .com, .net and
 .org top level domains. We will implement this policy on January 1, 2000. Under
the dispute policy, registrars do not participate in the administration or      
conduct of any proceeding brought under the dispute policy. Each registrant     
agrees in its contract with a registrar to be bound by the terms and conditions 
found in the dispute policy. If a complaint is brought by a trademark owner     
under the dispute policy and the trademark owner prevails, the registrar is     
required under the dispute policy to implement the decision ten days after being
notified of a decision. The registrant can suspend implementation of the        
decision by filing suit against the trademark owner within that ten-day period. 

On November 29, 1999, the Anticybersquatting Consumer Protection Act was signed 
into law by the President, making it illegal under certain circumstances for    
persons to register domain names which conflict with personal names or          
trademarks. The remedies under this Act are forfeiture, cancellation, and       
transfer of the domain name registration to the trademark owner or the          
individual. Except in cases of bad faith, reckless disregard or willful failure 
to comply with a court order, the registry and registrar are not liable for     
injunctive or monetary relief as long as the registry and registrar complies    
with the procedural requirements of the statute.                                

EMPLOYEES                                                                       

As of December 8, 1999, we had approximately 735 full-time employees. None of   
our employees are covered by collective bargaining agreements. We believe that  
our relations with our employees are good.                                      

LEGAL PROCEEDINGS                                                               

As of December 8, 1999, we were a defendant in nine active lawsuits involving   
domain name disputes between trademark owners and domain name holders. We are   
drawn into such disputes, in part, as a result of claims by                     

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trademark owners that we are legally required, upon request by a trademark      
owner, to terminate the right we granted to a domain name holder to register a  
domain name which is alleged to be similar to the trademark in question. On     
October 25, 1999, however, the Ninth Circuit Court of Appeals ruled in our favor
and against Lockheed Corporation, holding that our services do not make us      
liable for contributory infringement to trademark owners. Thus, we believe, this
type of suit should decline. The holders of the domain name registrations in    
dispute have, in turn, questioned our right, absent a court order, to take any  
action which suspends their use of the domain names in question. Beginning      
January 1, 2000, however, we will no longer include a contractual provision in  
our service contracts with domain name holders under which we would suspend     
their use of their domain name under dispute by a trademark owner. Thus, we     
believe, this type of suit also should decline. Although 63 out of approximately
9,000 of these situations have resulted in suits actually naming us as a        
defendant, as of December 8, 1999, no adverse judgment has been rendered and no 
award of damages has ever been made against us. We believe that we have         
meritorious defenses and vigorously defend ourselves against these claims.      

On March 20, 1997, PG Media, Inc., a New York-based corporation, filed a lawsuit
against us in the United States District Court, Southern District of New York   
alleging that we had restricted access to the Internet by not adding PG Media's 
requested 490 top level domains to the Internet root zone in violation of the   
Sherman Act. In its complaint, PG Media, in addition to requesting damages,     
asked that we be ordered to include reference to PG Media's top level domains   
and name servers in the root zone file administered by us under the cooperative 
agreement. In June 1997, we received written direction from the National Science
Foundation not to take any action which would create additional top level       
domains or to add any new top level domains to the Internet root zone until the 
National Science Foundation provides further guidance. On September 17, 1997, PG
Media filed a Second Amended Complaint adding the National Science Foundation as
a defendant. On May 14, 1998, PG Media served us with a motion for a preliminary
injunction against both defendants to compel both defendants to add PG Media's  
top level domains to the Internet root zone within 30 days. In response, both   
defendants filed cross-motions for summary judgment against PG Media. On July   
20, 1998, a hearing on all parties' motions occurred. The basic issue before the
court was the National Science Foundation's authority to control the Internet's 
root zone system. On March 16, 1999, the court granted both our and the National
Science Foundation's motions for summary judgment, holding that the National    
Science Foundation does have authority over the root zone system and that the   
federal instrumentality immunity doctrine immunizes us against liability under  
both sections 1 and 2 of the Sherman Act for our root zone administration. PG   
Media appealed to the Second Circuit Court of Appeals and the oral argument on  
the appeal occurred on November 4, 1999. No decision has yet been issued. While 
we cannot reasonably estimate the potential impact of the claims advanced in    
this lawsuit, a successful claim could harm our business.                       

On October 17, 1997, a group of six plaintiffs filed the Thomas suit against us 
and the National Science Foundation in the United States District Court,        
District of Columbia, challenging the legality of fees defendants charge for the
registration of domain names on the Internet and seeking restitution of fees    
collected from domain name registrants in an amount in excess of $100 million,  
damages, and injunctive and other relief. Plaintiffs alleged violations of the  
Sherman Act, the U.S. Constitution, the Administrative Procedures Act and the   
Independent Offices Appropriations Act. On February 10, 1998, the plaintiffs    
filed a motion for preliminary injunction against us seeking several items of   
relief. On April 6, 1998, the Court issued its opinion granting summary judgment
in favor of the plaintiffs on the Intellectual Infrastructure Fund, ruling it an
"unlawful tax." The court also granted our motion to dismiss all other counts   
(II through X) and simultaneously denied the plaintiffs' preliminary injunction 
motion against us. On April 30, 1998, Congress passed H.R. 3579 which was signed
into law by the President on May 1, 1998. Section 8003 of H.R. 3579 legalized,  
ratified and confirmed the entire Intellectual Infrastructure Fund and          
authorized and directed the National Science Foundation to deposit the entire   
fund into the U.S. Treasury. On August 28, 1998, the District Court dismissed   
the entire case, issuing a final judgment in the matter. In October 1998, the   
plaintiffs appealed the court's dismissal of their claims, and oral argument    
occurred on February 25, 1999. On May 14, 1999, the Court of Appeals ruled in   
our favor by unanimously affirming the District Court's decision. The Court of  
Appeals denied the plaintiffs' motion for reconsideration and entered final     
judgment on July 20, 1999. On October 12, 1999, the plaintiffs filed a Petition 
for a Writ of Certiorari with the U.S. Supreme Court. Our opposition to that    
Petition was filed on December 8, 1999.                                         
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On June 27, 1997, SAIC received a Civil Investigative Demand, or "CID," from the
U.S. Department of Justice issued in connection with an investigation to        
determine whether there is, has been, or may be any antitrust violation under   
the Sherman Act relating to its Internet registration services. The CID sought  
documents and information from SAIC and us relating to our Internet registration
business. On April 29, 1999, we received a second CID seeking additional        
information and documents relating to our ownership rights in, policies relating
to access to, and our use of, data that we compile in the course of operating   
our Internet registration business. We provided information responsive to the   
CID. On June 23, 1999, the Department of Justice formally notified us that SAIC 
had been removed as a subject of the investigation. We cannot reasonably        
estimate the potential impact of the investigation nor can we predict whether   
any civil action might ultimately be filed by the Department of Justice or the  
form of relief that might be sought. Any such relief from such a suit could have
a harmful effect on our business.                                               

On August 17, 1998, we received notice from the Commission of the European      
Communities, or "EC," of an investigation concerning the Company's Premier      
Program agreements in Europe. The EC requested production of these agreements   
and related materials for review and we complied. On June 17, 1999, we received 
a second inquiry from the EC concerning our registrar licensing agreements with 
the five newly-accredited testbed registrars and we responded to this inquiry on
July 9, 1999. We cannot reasonably estimate the potential impact of the         
investigation nor can we predict whether any action will ultimately be taken by 
the EC or the form of relief that might be sought. Any such relief could harm   
our business.                                                                   

We are involved in various other investigations, claims and lawsuits arising in 
the normal conduct of our business, none of which, in our opinion will harm our 
business.                                                                       

Legal proceedings in which we are involved have resulted and likely will result 
in, and any future legal proceedings can be expected to result in, substantial  
legal and other expenses and a diversion of the efforts of our personnel.       

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MANAGEMENT

The name, age and position held with Network Solutions by each of the executive 
officers and directors of Network Solutions as of December 22, 1999 are set     
forth below:                                                                    

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------
              NAME                AGE                              POSITION                           
------------------------------------------------------------------------------------------------------
                                                                                                      
James P. Rutt (1)...............  46    Chief Executive Officer and Director                          
Michael A. Daniels (1)(2).......  53    Chairman of the Board                                         
Robert J. Korzeniewski..........  42    Chief Financial Officer                                       
Bruce L. Chovnick...............  39    Senior Vice President and General Manager, Registry Business  
Jonathan W. Emery...............  47    Senior Vice President, General Counsel and Secretary          
David H. Holtzman...............  43    Senior Vice President, Chief Technology Officer               
Timothy R. Ranney...............  44    Senior Vice President and General Manager, Internet Technology
                                        Services Business                                             
Douglas L. Wolford..............  38    Senior Vice President and General Manager, Registrar and      
                                        Value-Added Services Business                                 
Michael G. Voslow...............  40    Vice President, Finance and Treasurer                         
Richard A. Walsh................  52    Vice President, Operations and acting Chief Information       
                                        Officer                                                       
Alan E. Baratz (2)(3)...........  45    Director                                                      
J. Robert Beyster (1)(2)........  75    Director                                                      
Craig I. Fields (1)(3)..........  53    Director                                                      
J. Dennis Heipt (2).............  57    Director                                                      
William A. Roper, Jr. (3).......  53    Director                                                      
Stratton D. Sclavos (2).........  38    Director                                                      

---------------                                                                 
(1) Member of Executive Committee.                                              
(2) Member of Compensation Committee.                                           
(3) Member of Audit Committee.                                                  

JAMES P. RUTT has served as Chief Executive Officer of Network Solutions since  
May 1999 and as a Director of Network Solutions since July 1999. From 1993 until
May 1999, Mr. Rutt served in various senior management positions with The       
Thomson Corporation, one of the world's leading information publishing          
companies, and, most recently, he served as Chief Technology Officer. Prior to  
that, Mr. Rutt was the co-founder of First Call, an investment information      
service that was one of the earliest ventures to provide on-line delivery of    
complex information products. Mr. Rutt received a B.S. from the Massachusetts   
Institute of Technology -- Sloan School of Management.                          

MICHAEL A. DANIELS has served as Chairman of the Board of Network Solutions     
since 1995. From November 1998 to May 1999, Mr. Daniels served as acting Chief  
Executive Officer of Network Solutions. Since 1986, Mr. Daniels has served in   
various positions with SAIC and has served as a Sector Vice President and Sector
Manager for the Technology Applications Sector of SAIC since 1993. Prior        
thereto, Mr. Daniels served as a Group Senior Vice President of SAIC from 1991  
to 1993. Mr. Daniels received a B.S. and an M.A. from Northwestern University   
and received a J.D. from the University of Missouri School of Law.              

ROBERT J. KORZENIEWSKI has served as Chief Financial Officer of Network         
Solutions since March 1996. From November 1998 to May 1999, Mr. Korzeniewski    
served as acting Chief Operating Officer of Network Solutions. From 1987 until  
October 1997, Mr. Korzeniewski held a variety of senior financial positions with
SAIC and served as a Corporate Vice President for Administration of SAIC from   
1989 until 1997. Mr. Korzeniewski is a Certified Public Accountant and received 
a B.S. in Business Administration from Salem State College.                     

BRUCE L. CHOVNICK has served as Senior Vice President and General Manager,      
Registry Business of Network Solutions since August 1999 and Senior Vice        
President and General Manager, Internet Technology Services Business of Network 
Solutions from September 1997 to August 1999. From October 1993 until September 
1997, Mr. Chovnick served in various executive leadership roles with General    
Electric Information Services, Inc., an electronic commerce company, and, most  
recently, he served as Vice President of its Global Internet Solutions          

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business. Prior to that he was a Senior Manager of IBM Corporation, a computer  
systems, software, networking systems and storage devices manufacturer, from    
January 1984 to September 1993. Mr. Chovnick received a B.S. in Computer Science
from the University of Florida.                                                 

JONATHAN W. EMERY has served as Senior Vice President, General Counsel and      
Secretary of Network Solutions since December 1997. From 1986 until 1997, Mr.   
Emery held a variety of positions with Tambrands Inc., a consumer products      
company, most recently as Vice President, Senior Counsel and Assistant          
Secretary. Prior thereto, from 1977 until 1986, Mr. Emery was an associate with 
the law firm of Brown & Wood. Mr. Emery received a B.A. from Trinity College,   
Hartford, Connecticut, and a J.D. from Boston University School of Law.         

DAVID H. HOLTZMAN has served as Senior Vice President, Chief Technology Officer 
of Network Solutions since August 1999 and Senior Vice President, Engineering   
from February 1997 to August 1999. From September 1995 until January 1997, he   
served as Business Development Manager, Development Manager and Chief Scientist,
Internet Information Technology (InfoMarket) group of IBM Corporation, a        
computer systems, software, networking systems and storage devices manufacturer.
From May 1992 to August 1995, he served as a Senior Associate at Booz-Allen &   
Hamilton, a management consulting firm. Mr. Holtzman received a B.A. in         
Philosophy from the University of Pittsburgh and a B.S. in Computer Science from
the University of Maryland.                                                     

TIMOTHY R. RANNEY has served as Senior Vice President and General Manager of the
Internet Technology Services division of Network Solutions since September 1999.
From February 1998 to September 1999, Mr. Ranney served as Director, then Vice  
President of the Southeast Region, Internet Technology Services of Network      
Solutions. Prior to joining Network Solutions, Mr. Ranney was Vice President,   
Sales for Distributed Systems Management, a consulting and software development 
firm, from September 1997 to January 1998 and President of Unix Integration     
Services, a consulting and software development firm, from March 1990 to August 
1997. Mr. Ranney received a B.S. in Business Administration from Bemidji State  
University in Minnesota.                                                        

DOUGLAS L. WOLFORD has served as Senior Vice President and General Manager,     
Registrar and Value-Added Services Business since August 1999 and Senior Vice   
President, Marketing and Sales of Network Solutions since from December 1997    
until August 1999. From December 1994 to November 1997, Mr. Wolford was employed
by General Electric Information Services, Inc., an electronic commerce company, 
during which tenure he progressed to the position of General                    
Manager -- Marketing (Americas). From March 1989 to December 1994 he was        
employed by the National Academy of Engineering, most recently as Director,     
Development and Public Affairs. Mr. Wolford received a B.S. in Mechanical       
Engineering from North Carolina State University, a Certificat de Langue        
Francaise from Sorbonne University and an M.B.A. in Marketing from the          
University of Maryland.                                                         

MICHAEL G. VOSLOW has served as Vice President, Finance and Treasurer since     
March 1998 and as Treasurer of Network Solutions since January 1997. From       
January 1995 to January 1997, Mr. Voslow was Vice President and Corporate       
Controller for MAXM Systems Corporation, a worldwide provider of computer       
software and professional services. Prior to joining MAXM, Mr. Voslow was a     
Senior Manager at Price Waterhouse where he served from August 1983 to January  
1995. Mr. Voslow is a Certified Public Accountant and received a B.S. in        
Business Administration from Miami University (Ohio) and an M.B.A. in Finance   
from Duke University.                                                           

RICHARD A. WALSH has served as acting Chief Information Officer since August    
1999, Vice President, Operations of Network Solutions since March 1999 and      
Director, Operations Support from July 1997 to March 1999. From September 1995  
to July 1997, Mr. Walsh was self employed and provided operation support        
consulting services to various large scale information technology operations.   
Prior to that Mr. Walsh held several executive management positions at Sprint   
International, a provider of global telecommunications services, from August    
1991 to September 1995. Mr. Walsh received a B.A. from the University of        
Maryland and an M.B.A. from the University of Southern California.              

ALAN E. BARATZ has served as a director of Network Solutions since September    
1999. Since September 1999, Dr. Baratz has served as a Managing Director of E.M.
Warburg, Pincus & Co., LLC, a private equity investment firm. Prior to joining  
Warburg, Pincus & Co., from 1996 to August 1999 Dr. Baratz served in various    
senior management positions with Sun Microsystems, a provider of products,      
services and support solutions for building                                     

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and maintaining network computing environments, most recently as President of   
Sun Microsystems' Software Products and Platforms division. Prior to joining Sun
Microsystems, Dr. Baratz served as President and Chief Executive Officer of     
Delphi Internet, the online business unit of Rupert Murdoch's News Corp from    
June 1994 to 1996.                                                              

J. ROBERT BEYSTER has served as a director of Network Solutions since 1996.     
Since 1998, Dr. Beyster has been the Chief Executive Officer, President and     
Chairman of the Board of SAIC, a company he founded in 1969. From 1988 to 1998, 
Dr. Beyster was Chief Executive Officer and Chairman of the Board of SAIC. Dr.  
Beyster is a Fellow of the American Nuclear Society and a Fellow of the American
Physical Society. Dr. Beyster is also the founder, President and a member of the
Board of Trustees of the Foundation for Enterprise Development, a nonprofit     
organization that promotes employee ownership.                                  

CRAIG I. FIELDS has served as a director of Network Solutions since 1997. Dr.   
Fields has served as Chairman of the Defense Science Board since 1994. Dr.      
Fields has served as a consultant to several companies, including as a          
consultant to SAIC since 1994. Prior thereto, Dr. Fields served as Vice Chairman
of Alliance Gaming Corporation, a diversified entertainment company, from 1994  
to 1997. From 1990 until 1994, Dr. Fields served as Chairman and Chief Executive
Officer of the Microelectronics and Computer-Technology Corporation, a privately
held research and development consortium. Dr. Fields serves as a director of    
ENSCO International Incorporated and Firearms Training Systems, Inc.            

J. DENNIS HEIPT has served as a director of Network Solutions since February    
1998. Mr. Heipt has served as Executive Vice President of SAIC since October    
1999 and as Corporate Secretary since 1984. Mr. Heipt has held various positions
with SAIC since 1979, including Senior Vice President for Administration from   
1984 to October 1999.                                                           

WILLIAM A. ROPER, JR. has served as a director of Network Solutions since 1996. 
Mr. Roper has served as Executive Vice President of SAIC since October 1999 and 
as Chief Financial Officer since 1990. Mr. Roper served as Senior Vice President
of SAIC from 1990 to October 1999. Mr. Roper also serves as a director of ODS   
Networks, Inc. and Daleen Technologies, Inc.                                    

STRATTON D. SCLAVOS has served as a director of Network Solutions since 1997.   
Mr. Sclavos has served as President, Chief Executive Officer and director of    
VeriSign, Inc., a provider of digital certificate services, since 1995. From    
1993 until 1995, Mr. Sclavos served as Vice President of Worldwide Marketing and
Sales for Taligent, Inc., a joint venture of Apple Computer, Inc., IBM          
Corporation and The Hewlett-Packard Company, Inc. From 1992 until 1993, Mr.     
Sclavos served as Vice President of Worldwide Sales and Business Development for
GO Corporation, a mobile computing company. From 1988 until 1993, Mr. Sclavos   
served in various executive positions with MIPS Computers Systems.              

Several officers and employees of SAIC currently serve as directors of Network  
Solutions. We anticipate that the composition of our board of directors will    
change in connection with the decrease in SAIC's percentage ownership of Network
Solutions.                                                                      

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SELLING STOCKHOLDERS

The following table sets forth certain information as of December 15, 1999      
regarding the beneficial ownership of common stock by each of the selling       
stockholders and the shares of common stock offered hereby. Prior to this       
offering, SAIC held approximately 44% of the outstanding common stock. After    
this offering, SAIC will have approximately 23% of the outstanding common stock.

The following table is based on information supplied by the selling             
stockholders. Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with respect to       
securities. Except as indicated by footnotes and subject to community property  
laws, where applicable, the persons named below have sole voting and investment 
power with respect to all shares of common stock shown as beneficially owned by 
them. Shares of common stock that are issuable upon exercise of options that are
exercisable within 60 days of December 15, 1999 are deemed to be beneficially   
owned by the person holding such options or such shares of common stock for the 
purpose of computing the percentage ownership of such person, but are not       
treated as outstanding for purposes of computing the percentage ownership of any
other person.                                                                   

Applicable percentages of shares beneficially owned prior to and after this     
offering and the number of shares being offered are based on 33,883,707 shares  
of common stock outstanding as of December 15, 1999. The applicable percentages 
of shares of common stock beneficially owned after this offering gives effect to
the 1,000,000 shares of common stock to be issued and sold by Network Solutions,
6,700,000 shares of common stock to be sold by SAIC and 30,000 shares of common 
stock to be issued to and sold by the other selling stockholders after they     
exercise their stock options simultaneously with the closing of this offering.  
The percentages shown assume that the underwriters' option to purchase up to an 
additional 1,159,500 shares of common stock is not exercised.                   

                                                        [Enlarge/Download Table]

                                  ---------------------------------------------------------------------------------
                                                                    COMMON STOCK                                   
                                  SHARES BENEFICIALLY                          SHARES BENEFICIALLY   SHARES SUBJECT
                                     OWNED PRIOR TO       NUMBER OF SHARES         OWNED AFTER        TO UNVESTED  
                                        OFFERING            BEING OFFERED           OFFERING            OPTIONS    
                                  --------------------   -------------------   -------------------   --------------
        BENEFICIAL OWNER            NUMBER     PERCENT    NUMBER     PERCENT    NUMBER     PERCENT       NUMBER    
        ----------------          ----------   -------   ---------   -------   ---------   -------       ------    
                                                                                                                   
Science Applications                                                                                               
International Corporation........ 14,850,000     43.8%   6,700,000   19.8%     8,150,000    23.3%        --        
Craig I. Fields(1)...............     27,300         *      12,300       *        15,000        *        12,300    
Robert J. Korzeniewski(2)........     52,125         *      10,000       *        42,125        *        96,320    
Jonathan W. Emery(3).............     19,623         *       7,700       *        11,923        *        43,200    

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

* Less than 1%.                                                               
(1) Includes 21,300 shares of common stock issuable pursuant to options         
exercisable within 60 days of December 15, 1999.                        
(2) Includes 26,120 shares of common stock issuable pursuant to options         
exercisable within 60 days of December 15, 1999.                        
(3) Includes 18,000 shares of common stock issuable pursuant to options         
exercisable within 60 days of December 15, 1999.                        

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DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK                                                        

Our authorized capital stock consists of 210,000,000 shares of common stock and 
10,000,000 shares of preferred stock. No shares of preferred stock are          
outstanding as of the date hereof. Of the 210,000,000 shares of common stock    
authorized, as of December 15, 1999, 33,883,707 shares were outstanding,        
3,807,480 shares were issuable upon exercise of outstanding stock options (of   
which options to purchase 371,799 shares were currently exercisable) and        
2,699,921 shares were reserved for issuance pursuant to certain employee        
benefits plans (exclusive of the 3,807,480 shares reserved for issuance upon    
exercise of outstanding stock options).                                         

On December 21, 1999, our board of directors approved a 2-for-1 stock split of  
the shares of common stock, to be effected in the form of a stock dividend on   
shares of common stock. The record and distribution dates for the stock dividend
have not yet been determined but will occur after completion of this offering.  

COMMON STOCK                                                                    

The holders of common stock are entitled to one vote per share and do not have  
cumulative voting rights. Generally, all matters to be voted on by stockholders 
must be approved by a majority (or, in the case of election of directors, by a  
plurality) of the votes entitled to be cast by all shares of common stock       
subject to any voting rights granted to holders of any preferred stock. In the  
event we voluntarily or involuntarily liquidate, dissolve or wind up, the       
holders of shares of common stock would share ratably in all assets remaining   
after payment of liabilities subject to prior distribution rights and payment of
any distributions owing to holders of shares of preferred stock then            
outstanding, if any. Holders of the shares of common stock have no preemptive   
rights, and the shares of common stock are not subject to further calls or      
assessment. There are no redemption or sinking fund provisions applicable to the
shares of common stock.                                                         

Holders of common stock will share in an equal amount per share in any dividend 
declared by our board of directors, subject to any preferential rights of any   
outstanding preferred stock.                                                    

PREFERRED STOCK                                                                 

There are currently no shares of preferred stock outstanding. Under our         
certificate of incorporation, our board of directors has the authority, without 
further action by the stockholders, to issue from time to time up to 10,000,000 
shares of the preferred stock in one or more series and to fix the number of    
shares, designations, preferences, powers, and relative, participating, optional
or other special rights and the qualifications or restrictions of the preferred 
stock. The preferences, powers, rights, qualifications and restrictions of      
different series of preferred stock may differ with respect to dividend rates,  
amounts payable on liquidation, voting rights, conversion rights, redemption    
provisions, sinking fund provisions, and purchase funds and other matters. The  
issuance of preferred stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could decrease the     
amount of earnings and assets available for distribution to holders of common   
stock or affect adversely the rights and powers, including voting rights, of the
holders of common stock, and may have the effect of delaying, deferring or      
preventing a change in control. We have no present plan to issue any shares of  
preferred stock.                                                                

REGISTRATION RIGHTS                                                             

Pursuant to the registration rights agreement between us and SAIC, if we propose
to register any of our securities either for our own account or for the account 
of our other security holders, SAIC is entitled to notice of the registration   
and is entitled to include, at our expense, their shares in the registration,   
subject to cutback by the underwriters. In addition, SAIC may require us on not 
more than two occasions, to register its shares. The first registration required
by SAIC was effected in February 1999. The second registration required by SAIC 
is the registration being effected with this offering. We have agreed to        
indemnify SAIC in connection with any such registration.                        

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DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS                       

Certificate of Incorporation                                                    

Our certificate of incorporation provides that our bylaws may be repealed or    
amended only by a two-thirds vote of our board of directors or a two-thirds vote
of our stockholders. In addition, those provisions of our certificate of        
incorporation may only be amended or repealed by the holders of at least        
two-thirds of the voting power of all the then-outstanding shares of stock      
entitled to vote generally for the election of directors voting together as a   
single class. The provisions described above, together with the ability of our  
board of directors to issue preferred stock as described under "Description of  
Capital Stock -- Preferred Stock," may have the effect of deterring a hostile   
takeover or delaying a change in control or change in management.               

Delaware Takeover Statute                                                       

We have elected not to be governed by Section 203 of the Delaware General       
Corporation Law. This section requires the vote of at least 66 2/3% of the      
outstanding voting stock of a company not owned by an interested stockholder to 
approve certain business combinations. Section 203 defines interested           
stockholder as any entity or person owning 15% or more of the outstanding voting
stock of the company and any entity or person affiliated with, controlling or   
controlled by such entity or person. As a result, if we decide to enter into any
such proposed business combination, we will only need the approval of a majority
of our outstanding voting stock.                                                

CERTAIN CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS                       

Our certificate of incorporation provides that any person purchasing or         
acquiring an interest in shares of our capital stock is deemed to have consented
to the following provisions relating to intercompany agreements and to          
transactions with interested parties and corporate opportunities. The corporate 
charter of SAIC does not include comparable provisions relating to intercompany 
agreements, transactions with interested parties or corporate opportunities.    

Transactions with Interested Parties                                            

Our certificate of incorporation provides that no contract, agreement,          
arrangement or transaction between us and SAIC or any related entity will be    
void or voidable solely because SAIC, a related entity or any officers or       
directors of SAIC, a related entity or Network Solutions are parties or because 
these directors or officers are present at or vote with respect to the          
authorization of the contract, agreement, arrangement or transaction. Our       
certificate of incorporation also provides that SAIC, a related entity and the  
officers or directors of SAIC and the related entity will not be presumed liable
to us or our stockholders for:                                                  

- breach of any fiduciary duty or duty of loyalty,                    

- failure to act in our best interests, or                            

- receipt of any improper personal benefit,                           

simply because SAIC or any director or officer of SAIC or a related entity, in  
good faith, takes any action or gives or withholds any consent with respect to  
any agreement or contract between SAIC or a related entity and us.              

For purposes of the foregoing, "Network Solutions" or "us" and "SAIC" include   
all corporations and other entities in which either we or SAIC owns fifty       
percent or more of the outstanding voting stock, and "related entity" means one 
or more corporations or other entities in which one or more of our directors    
have a direct or indirect financial interest.                                   

Competition by SAIC with Us; Corporate Opportunities                            

Our certificate of incorporation provides that SAIC has no duty to refrain from 
engaging in the same or similar activities or lines of business as us and that  
neither SAIC nor any of its directors, officers or employees will be liable to  
us or our stockholders for breach of any fiduciary duty due to any of these     
activities. If SAIC learns of                                                   

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a potential matter which may be a corporate opportunity for both SAIC and us,   
SAIC has no duty to communicate or offer this opportunity to us. In addition,   
SAIC will not be liable to us or our stockholders for breach of any fiduciary   
duty if SAIC pursues or acquires the corporate opportunity or does not          
communicate it to us.                                                           

If one of our directors, officers or employees who is also a director, officer  
or employee of SAIC knows of a potential transaction or matter that may be a    
corporate opportunity both for us and SAIC, the director, officer or employee is
entitled to offer the corporate opportunity to us or SAIC as the director,      
officer or employee deems appropriate under the circumstances in his or her sole
discretion, and no such director, officer or employee will be presumed liable to
us or our stockholders for breach of any fiduciary duty or duty of loyalty or   
failure to act in our best interests or the derivation of any improper personal 
benefit by reason of the fact that:                                             

  - the director, officer or employee offered the corporate opportunity to
       SAIC (rather than to us) or did not communicate information regarding the
corporate opportunity to us, or                                   

     - SAIC pursues or acquires such corporate opportunity for itself or directs
     the corporate opportunity to another person or does not communicate the
corporate opportunity to us.                                      

The enforceability of the provisions discussed above under Delaware corporate   
law has not been established and, due to the absence of relevant judicial       
authority, our counsel is not able to deliver an opinion as to the              
enforceability of these provisions. These provisions of our certificate of      
incorporation eliminate certain rights that might have been available to        
stockholders under Delaware law, although the enforceability of these provisions
has not been established.                                                       

These provisions of our certificate of incorporation expire on the date that    
SAIC ceases to own at least 20% of our outstanding shares of common stock and no
person who is a director or officer of Network Solutions is also a director or  
officer of SAIC or its subsidiaries.                                            

Actions Under Intercompany Agreements                                           

Our certificate of incorporation limits the liability of SAIC and its           
subsidiaries for some breaches of their fiduciary duties in connection with     
action that may be taken or not taken in good faith under the intercompany      
agreements.                                                                     

Advance Notice Provision                                                        

Our bylaws provide for an advance notice procedure for the nomination, other    
than by or at the direction of our board of directors, of candidates for        
election as directors as well as for other stockholder proposals to be          
considered at annual meetings of stockholders. In general, notice of intent to  
nominate a director or raise matters at such meetings will have to be received  
by us not less than 120 days prior to any meeting of the stockholders called for
the election of directors, and must contain information concerning the person to
be nominated or the matters to be brought before the meeting and concerning the 
stockholder submitting the proposal.                                            

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UNDERWRITING

J.P. Morgan Securities Inc. is acting as book running lead manager for this     
offering. J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated are 
acting as joint lead managers.                                                  

The underwriters named below, for whom J.P. Morgan Securities Inc., Morgan      
Stanley & Co. Incorporated, Hambrecht & Quist LLC, PaineWebber Incorporated,    
FleetBoston Robertson Stephens Inc. and Prudential Securities Incorporated are  
acting as representatives, have severally agreed, subject to the terms and      
conditions set forth in the underwriting agreement among us, the selling        
stockholders and the underwriters, to purchase from us and the selling          
stockholders, and we and the selling stockholders have agreed to sell to the    
underwriters, the respective number of shares of common stock set forth opposite
their names below:                                                              

                                                                [Download Table]

                                                              ---------
                                                               NUMBER  
                                                              OF SHARES
                        UNDERWRITERS                          ---------
                                                                       
J.P. Morgan Securities Inc. ................................           
Morgan Stanley & Co. Incorporated...........................           
Hambrecht & Quist LLC.......................................           
PaineWebber Incorporated....................................           
FleetBoston Robertson Stephens Inc. ........................           
Prudential Securities Incorporated..........................           
                                                              ---------
          Total.............................................  7,730,000
                                                              =========

The nature of the underwriters' obligations under the underwriting agreement is 
such that all of the common stock being offered, excluding shares covered by the
over-allotment option granted to the underwriters, must be purchased if any are 
purchased.                                                                      

The representatives of the underwriters have advised us and the selling         
stockholders that the several underwriters propose to offer the common stock to 
the public initially at the public offering price set forth on the cover page of
this prospectus and may offer the common stock to selected dealers at this price
less a concession not to exceed $     per share. The underwriters may allow, and
these dealers may reallow, a concession to other dealers not to exceed $     per
share. After the initial public offering of the common stock, the public        
offering price and other selling terms may be changed by the representatives.   

We have granted the underwriters an option, exercisable for 30 days from the    
date of this prospectus, to purchase up to 1,159,500 additional shares of common
stock at the same price per share to be paid by the underwriters for the other  
shares offered hereby. If the underwriters purchase any such additional shares  
pursuant to the option, each of the underwriters will be committed to purchase  
such additional shares in approximately the same proportion as shown in the     
above table. The underwriters may exercise the option only to cover             
over-allotments, if any, made in connection with the distribution of the common 
stock offered in this prospectus.                                               

The following table shows the per share and total underwriting discounts to be  
paid to the underwriters by us and by the selling stockholders. These amounts   
are shown assuming both no exercise and full exercise of the underwriters'      
over-allotment option.                                                          

                                                        [Enlarge/Download Table]

                                                            ---------------------------
                                                            NO EXERCISE   FULL EXERCISE
                                                            -----------   -------------
                                                                                       
By Network Solutions                                                                   
  Per share................................................ $              $           
  Total.................................................... $              $           
By the Selling Stockholders                                                            
  Per share................................................ $                       -- 
  Total.................................................... $                       -- 

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We and the selling stockholders have agreed to indemnify the underwriters       
against certain liabilities, including liabilities under the Securities Act, or 
to contribute to payments the underwriters may be required to make in respect   
thereof.                                                                        

We estimate that the total expenses of this offering, excluding underwriting    
discounts, will be $          . We will be responsible for all of these         
expenses.                                                                       

In connection with this offering, the underwriters may engage in transactions   
that stabilize, maintain or otherwise affect the price of the common stock.     
Specifically, the underwriters may overallot this offering, creating a syndicate
short position. In addition, the underwriters may bid for, and purchase, shares 
of common stock in the open market to cover syndicate shorts or to stabilize the
price of the common stock. Finally, the underwriting syndicate may reclaim      
selling concessions allowed for distributing shares of common stock in this     
offering, if the syndicate repurchases previously distributed common stock in   
syndicate covering transactions, in stabilization transactions or otherwise. Any
of these activities may stabilize or maintain the market price of the shares of 
common stock above independent market levels. The underwriters are not required 
to engage in these activities, and may end any of these activities at any time. 

We, the selling stockholders and our executive officers and directors have      
agreed, with limited exceptions, that, during the period beginning from the date
of this prospectus and continuing and including the date 90 days after the date 
of this prospectus, they will not, directly or indirectly offer, sell, offer to 
sell, contract to sell or otherwise dispose of any shares of common stock or any
of our securities which are substantially similar to the common stock, including
but not limited to any securities that are convertible into or exchangeable for,
or that represent the right to receive, common stock or any such substantially  
similar securities or enter into any swap, option, future, forward or other     
agreement that transfers, in whole or in part, the economic consequence of      
ownership of common stock or any securities substantially similar to the common 
stock, other than pursuant to employee benefit plans existing on the date of    
this prospectus, without the prior written consent of J.P. Morgan Securities    
Inc.                                                                            

It is expected that delivery of the shares will be made to investors on or about
, 2000.                                           

The common stock is traded on the Nasdaq National Market under the symbol NSOL. 

From time to time in the ordinary course of their respective businesses, members
of the underwriters and their affiliates have engaged in and may in the future  
engage in commercial and/or investment banking transactions with SAIC, us and   
their and our affiliates. Each of the representatives, or its predecessor, acted
as an underwriter in connection with a public offering of securities which we   
consummated on February 12, 1999.                                               

LEGAL MATTERS 

Selected legal matters with respect to the validity of the common stock offered 
in this prospectus are being passed upon for us and the selling stockholders by 
Pillsbury Madison & Sutro LLP, Palo Alto, California and Washington, D.C. Cahill
Gordon & Reindel, a partnership including a professional corporation, New York, 
New York, is acting as counsel to the underwriters in connection with legal     
matters relating to the shares of common stock offered in this prospectus.      

EXPERTS 

The financial statements as of December 31, 1997 and 1998, and for each of the  
three years in the period ended December 31, 1998, included in this prospectus  
have been so included in reliance on the report of PricewaterhouseCoopers LLP,  
independent accountants, given on the authority of said firm as experts in      
auditing and accounting.                                                        

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WHERE YOU CAN FIND MORE INFORMATION 

We file annual, quarterly and current reports, proxy statements and other       
information with the SEC. We have also filed with the SEC a registration        
statement on Form S-3 to register the shares of common stock being offered in   
this prospectus. This prospectus, which forms part of the registration          
statement, does not contain all of the information included in the registration 
statement. For further information about us and the shares of common stock      
offered in this prospectus, you should refer to the registration statement and  
its exhibits and our other SEC filings. Statements made in this prospectus      
regarding the contents of any contract or other document including, but not     
limited to, our agreements with ICANN dated November 10, 1999 and amendment 19  
to our cooperative agreement with the Department of Commerce dated November 10, 
1999, which are filed as exhibits to our current report on Form 8-K filed with  
the SEC on November 30, 1999, are not necessarily complete. You should refer to 
the registration statement and its exhibits and our other SEC filings for a more
complete description and each such statement is deemed qualified in its entirety
by such reference.                                                              

You may read and copy any document we file with the SEC at the SEC's Public     
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call   
the SEC at 1-800-SEC-0330 for further information on the operation of the Public
Reference Room. We file our SEC materials electronically with the SEC, so you   
can also review our filings by accessing the web site maintained by the SEC at  
http://www.sec.gov. This web site contains reports, proxy and information       
statements and other information regarding issuers that file electronically with
the SEC.                                                                        

The SEC allows us to "incorporate by reference" the information we file with    
them, which means we can disclose important information to you by referring you 
to those documents. The information included in the following documents is      
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and     
supersedes more dated information. We have previously filed the following       
documents with the SEC and incorporate them by reference into this prospectus:  

 1. Our annual report on Form 10-K for the year ended December 31, 1998;

2. Our quarterly reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;                     

   3. Our current reports on Form 8-K filed on January 15, 1999, February 9,
   1999, February 11, 1999, October 6, 1999 and November 30, 1999; and

    4. The description of the common stock contained in registration statement
      on Form 8-A, filed by us with the SEC on August 8, 1997, as amended on
June 17, 1999.                                                  

We also incorporate by reference all documents subsequently filed by us pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as 
amended, prior to the termination of this offering.                             

We will provide without charge to each person to whom a prospectus is delivered,
including any beneficial owner, a copy of any or all of the information that has
been incorporated by reference in this prospectus. If you would like to obtain  
this information from us, please direct your request, either in writing or by   
telephone, to Jonathan W. Emery, Esq., Network Solutions, Inc., 505 Huntmar Park
Drive, Herndon, Virginia 20170, telephone (703) 742-0400.                       

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INDEX TO FINANCIAL STATEMENTS 

                                                                [Download Table]

                                                                  PAGE   
                                                                REFERENCE
                                                                ---------
                                                                         
Report of Independent Accountants...........................       F-2   
Statements of Financial Position as of December 31, 1997 and             
  1998 and September 30, 1999 (Unaudited).....................     F-3   
Statements of Operations for the Years Ended December 31,                
  1996, 1997 and 1998 and for the Nine Months Ended                      
  September 30, 1998 and 1999 (Unaudited)...................       F-4   
Statements of Changes in Stockholders' Equity for the Years              
  Ended December 31, 1996, 1997 and 1998 and for the Nine                
  Months Ended September 30, 1999 (Unaudited)...............       F-5   
Statements of Cash Flows for the Years Ended December 31,                
  1996, 1997 and 1998 and for the Nine Months Ended                      
  September 30, 1998 and 1999 (Unaudited)...................       F-6   
Notes to Financial Statements...............................       F-7   

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REPORT OF INDEPENDENT ACCOUNTANTS 

To the Board of Directors and Stockholders of Network Solutions, Inc.           

In our opinion, the financial statements listed in the index appearing on page  
F-1 present fairly, in all material respects, the financial position of Network 
Solutions, Inc. (a majority-owned subsidiary of Science Applications            
International Corporation) at December 31, 1998 and 1997 and the results of its 
operations and its cash flows for each of the three years in the period ended   
December 31, 1998 in conformity with generally accepted accounting principles.  
These financial statements are the responsibility of the Company's management;  
our responsibility is to express an opinion on these financial statements based 
on our audits. We conducted our audits of these statements in accordance with   
generally accepted auditing standards 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 the opinion expressed    
above.                                                                          

/s/ PRICEWATERHOUSECOOPERS LLP                                                  

PRICEWATERHOUSECOOPERS LLP                                                      

McLean, VA                                                                      
February 5, 1999                                                                

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NETWORK SOLUTIONS, INC. 

STATEMENTS OF FINANCIAL POSITION

                                                        [Enlarge/Download Table]

                                               ---------------------------------------------
                                                       DECEMBER 31,            SEPTEMBER 30,
                                               ----------------------------    -------------
                                                   1997            1998            1999     
                                               ------------    ------------    -------------
                                                                                (UNAUDITED) 
                                                                                            
ASSETS                                                                                      
Current assets:                                                                             
Cash and cash equivalents....................  $ 41,146,000    $ 12,862,000    $ 98,863,000 
Short-term investments.......................    40,200,000     118,808,000      99,090,000 
Accounts receivable, net.....................     5,792,000      22,628,000      45,783,000 
Prepaids and other assets....................     1,005,000       4,001,000      13,415,000 
Deferred tax asset...........................    20,153,000      40,508,000      81,920,000 
Restricted assets............................    25,873,000              --              -- 
                                               ------------    ------------    ------------ 
          Total current assets...............   134,169,000     198,807,000     339,071,000 
Furniture and equipment, net.................     6,146,000      16,005,000      54,688,000 
Long-term investments........................            --      13,590,000      36,013,000 
Deferred tax asset...........................     8,128,000      14,831,000      29,990,000 
Goodwill, net................................     1,177,000         634,000         226,000 
                                               ------------    ------------    ------------ 
          Total Assets.......................  $149,620,000    $243,867,000    $459,988,000 
                                               ============    ============    ============ 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                        
Current liabilities:                                                                        
Accounts payable and accrued liabilities.....  $  6,426,000    $ 28,287,000    $ 41,850,000 
Due to parent................................     1,250,000       4,766,000       6,578,000 
Income taxes payable.........................     5,042,000       5,409,000       8,767,000 
Current portion of capital lease                                                            
  obligations................................       842,000         834,000         436,000 
Deferred revenue, net........................    43,789,000      93,720,000     200,160,000 
Internet fund liability......................    25,873,000              --              -- 
                                               ------------    ------------    ------------ 
          Total current liabilities..........    83,222,000     133,016,000     257,791,000 
Capital lease obligations....................     1,081,000         247,000              -- 
Long-term deferred revenue, net..............    17,662,000      35,474,000      82,779,000 
                                               ------------    ------------    ------------ 
          Total liabilities..................   101,965,000     168,737,000     340,570,000 
Commitments and contingencies                                                               
Stockholders' equity:                                                                       
Preferred stock, $.001 par value, authorized                                                
  10,000,000 shares; none issued and                                                        
  outstanding in 1997 and 1998...............            --              --              -- 
Common stock, $001 par value; authorized                                                    
  210,000,000 shares; 33,381,167 issued and                                                 
  outstanding in 1999........................            --              --          33,000 
Class A common stock, $.001 par value;                                                      
  authorized 100,000,000 shares; 7,590,000                                                  
  and 9,140,372 issued and outstanding in                                                   
  1997 and 1998..............................         4,000           9,000              -- 
Class B common stock, $.001 par value;                                                      
  authorized 30,000,000 shares; 23,850,000                                                  
  issued and outstanding in 1997 and 1998....        12,000          24,000              -- 
Additional paid-in capital...................    56,451,000      72,331,000      86,783,000 
Retained earnings (accumulated deficit)......    (8,812,000)      2,407,000      20,278,000 
Accumulated other comprehensive income.......            --         359,000      12,324,000 
                                               ------------    ------------    ------------ 
          Total stockholders' equity.........    47,655,000      75,130,000     119,418,000 
                                               ------------    ------------    ------------ 
          Total Liabilities and Stockholders'                                               
            Equity...........................  $149,620,000    $243,867,000    $459,988,000 
                                               ============    ============    ============ 

The accompanying notes are an integral part of these financial statements 
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NETWORK SOLUTIONS, INC. 

STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                 -------------------------------------------------------------------- 
                                                                               NINE MONTHS ENDED      
                                         YEAR ENDED DECEMBER 31,                 SEPTEMBER 30,        
                                 ---------------------------------------   -------------------------- 
                                    1996          1997          1998          1998           1999     
                                 -----------   -----------   -----------   -----------   ------------ 
                                                                                  (UNAUDITED)         
                                                                                                      
Net revenue..................... $18,862,000   $45,326,000   $93,652,000   $62,395,000   $144,885,000 
Cost of revenue.................  14,666,000    25,798,000    38,530,000    26,451,000     54,040,000 
                                 -----------   -----------   -----------   -----------   ------------ 
Gross profit....................   4,196,000    19,528,000    55,122,000    35,944,000     90,845,000 
Research and development                                                                              
  expenses......................     680,000     1,653,000     4,821,000     2,893,000      7,365,000 
Selling, general and                                                                                  
  administrative expenses.......   6,280,000    12,268,000    37,144,000    24,438,000     59,581,000 
Interest income.................    (496,000)   (2,211,000)   (6,303,000)   (4,423,000)    (6,312,000)
Other expenses..................          --       116,000       116,000        93,000         45,000 
                                 -----------   -----------   -----------   -----------   ------------ 
Income (loss) before income                                                                           
  taxes.........................  (2,268,000)    7,702,000    19,344,000    12,943,000     30,166,000 
Provision (benefit) for income                                                                        
  taxes.........................    (643,000)    3,471,000     8,109,000     5,426,000     12,295,000 
                                 -----------   -----------   -----------   -----------   ------------ 
Net income (loss)............... $(1,625,000)  $ 4,231,000   $11,235,000   $ 7,517,000   $ 17,871,000 
                                 ===========   ===========   ===========   ===========   ============ 
Earnings (loss) per common                                                                            
  share:                                                                                              
  Basic......................... $     (0.07)  $      0.16   $      0.35   $      0.24   $       0.54 
                                 ===========   ===========   ===========   ===========   ============ 
  Diluted....................... $     (0.07)  $      0.16   $      0.34   $      0.23   $       0.51 
                                 ===========   ===========   ===========   ===========   ============ 

The accompanying notes are an integral part of these financial statements 
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NETWORK SOLUTIONS, INC. 

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY 

                                                        [Enlarge/Download Table]

                                 -------------------------------------------------------------------------------------------------
                                                                                                                       ACCUMULATED
                                                               CLASS A                 CLASS B                            OTHER   
                                     COMMON STOCK           COMMON STOCK             COMMON STOCK        ADDITIONAL      COMPRE-  
                                 --------------------   ---------------------   ----------------------     PAID-IN       HENSIVE  
                                   SHARES     AMOUNT      SHARES      AMOUNT      SHARES       AMOUNT      CAPITAL       INCOME   
                                 ----------   -------   -----------   -------   -----------   --------   -----------   -----------
                                                                                                                                  
Balance, December 31, 1995.....          --   $    --            --   $    --    12,500,000   $ 12,000   $ 4,468,000   $       -- 
Net loss for the year ended                                                                                                       
December 31, 1996..............          --        --            --        --            --         --            --              
                                 ----------   -------   -----------   -------   -----------   --------   -----------   -----------
Balance, December 31, 1996.....          --        --            --        --    12,500,000     12,000     4,468,000           -- 
Declaration of Class B                                                                                                            
 dividend......................          --        --            --        --            --         --            --           -- 
Conversion of Class B Common                                                                                                      
 Stock.........................          --        --       575,000        --      (575,000)        --            --           -- 
Issuance of Class A Common                                                                                                        
 Stock.........................          --        --     3,220,000     4,000            --         --    51,983,000           -- 
Net income for the year ended                                                                                                     
 December 31, 1997.............          --        --            --        --            --         --            --           -- 
                                 ----------   -------   -----------   -------   -----------   --------   -----------   -----------
Balance, December 31, 1997.....          --        --     3,795,000     4,000    11,925,000     12,000    56,451,000           -- 
Issuance of common stock                                                                                                          
 pursuant to stock plans.......          --        --       775,000     1,000            --         --    10,273,000           -- 
Tax benefit associated with                                                                                                       
 stock plans...................          --        --            --        --            --         --     5,607,000           -- 
Two-for-one common stock split                                                                                                    
 effected in the form of a 100%                                                                                                   
 stock dividend................          --        --     4,570,000     4,000    11,925,000     12,000            --           -- 
Comprehensive Income:                                                                                                             
 Net income for the year ended                                                                                                    
   December 31, 1998...........          --        --            --        --            --         --            --           -- 
 Other comprehensive income,                                                                                                      
   net of tax:                                                                                                                    
   Unrealized gains on                                                                                                            
     securities................          --        --            --        --            --         --            --      359,000 
 Comprehensive income..........          --        --            --        --            --         --            --           -- 
                                 ----------   -------   -----------   -------   -----------   --------   -----------   -----------
Balance, December 31, 1998.....          --        --     9,140,000     9,000    23,850,000     24,000    72,331,000      359,000 
Issuance of common stock                                                                                                          
 pursuant to stock plans.......      68,000        --       323,000        --            --         --     3,726,000           -- 
Tax benefit associated with                                                                                                       
 stock plans...................          --        --            --        --            --         --    10,726,000           -- 
Conversion of Class B common                                                                                                      
 stock.........................          --        --    23,850,000    24,000   (23,850,000)   (24,000)           --           -- 
Reclassification of Class A                                                                                                       
 common stock..................  33,313,000    33,000   (33,313,000)  (33,000)           --         --            --           -- 
Comprehensive income:                                                                                                             
 Net income for the period                                                                                                        
   ended September 30, 1999....          --        --            --        --            --         --            --           -- 
 Other comprehensive income,                                                                                                      
   net of tax:                                                                                                                    
   Unrealized gains on                                                                                                            
     securities................          --        --            --        --            --         --            --   11,965,000 
 Comprehensive income..........          --        --            --        --            --         --            --           -- 
                                 ----------   -------   -----------   -------   -----------   --------   -----------   -----------
Balance, September 30, 1999                                                                                                       
 (unaudited)...................  33,381,000   $33,000            --   $    --            --   $     --   $86,783,000   $12,324,000
                                 ==========   =======   ===========   =======   ===========   ========   ===========   ===========


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

                                   RETAINED       COMPRE-         TOTAL                                                           
                                   EARNINGS       HENSIVE     STOCKHOLDERS'                                                       
                                  (DEFICIT)       INCOME         EQUITY                                                           
                                 ------------   -----------   -------------                                                       
                                                                                                                                  
Balance, December 31, 1995.....  $ (1,418,000)                $  3,062,000                                                        
Net loss for the year ended                                                                                                       
December 31, 1996..............    (1,625,000)                  (1,625,000)                                                       
                                 ------------                 ------------                                                        
Balance, December 31, 1996.....    (3,043,000)                   1,437,000                                                        
Declaration of Class B                                                                                                            
 dividend......................   (10,000,000)                 (10,000,000)                                                       
Conversion of Class B Common                                                                                                      
 Stock.........................            --                           --                                                        
Issuance of Class A Common                                                                                                        
 Stock.........................            --                   51,987,000                                                        
Net income for the year ended                                                                                                     
 December 31, 1997.............     4,231,000                    4,231,000                                                        
                                 ------------                 ------------                                                        
Balance, December 31, 1997.....    (8,812,000)                  47,655,000                                                        
Issuance of common stock                                                                                                          
 pursuant to stock plans.......            --                   10,274,000                                                        
Tax benefit associated with                                                                                                       
 stock plans...................            --                    5,607,000                                                        
Two-for-one common stock split                                                                                                    
 effected in the form of a 100%                                                                                                   
 stock dividend................       (16,000)                          --                                                        
Comprehensive Income:                                                                                                             
 Net income for the year ended                                                                                                    
   December 31, 1998...........  $ 11,235,000   $11,235,000     11,235,000                                                        
 Other comprehensive income,                                                                                                      
   net of tax:                                                                                                                    
   Unrealized gains on                                                                                                            
     securities................            --       359,000        359,000                                                        
                                                -----------                                                                       
 Comprehensive income..........            --   $11,594,000             --                                                        
                                 ------------   ===========   ------------                                                        
Balance, December 31, 1998.....     2,407,000                   75,130,000                                                        
Issuance of common stock                                                                                                          
 pursuant to stock plans.......            --                    3,726,000                                                        
Tax benefit associated with                                                                                                       
 stock plans...................            --                   10,726,000                                                        
Conversion of Class B common                                                                                                      
 stock.........................            --                           --                                                        
Reclassification of Class A                                                                                                       
 common stock..................            --                           --                                                        
Comprehensive income:                                                                                                             
 Net income for the period                                                                                                        
   ended September 30, 1999....    17,871,000   $17,871,000     17,871,000                                                        
 Other comprehensive income,                                                                                                      
   net of tax:                                                                                                                    
   Unrealized gains on                                                                                                            
     securities................            --    11,965,000     11,965,000                                                        
                                                -----------                                                                       
 Comprehensive income..........            --   $29,836,000             --                                                        
                                 ------------   ===========   ------------                                                        
Balance, September 30, 1999                                                                                                       
 (unaudited)...................  $ 20,278,000                 $119,418,000                                                        
                                 ============                 ============                                                        

The accompanying notes are an integral part of these financial statements 
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NETWORK SOLUTIONS, INC. 

STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                              ------------------------------------------------------------------------- 
                                                                                                 NINE MONTHS ENDED      
                                                        YEAR ENDED DECEMBER 31,                    SEPTEMBER 30,        
                                              -------------------------------------------   --------------------------- 
                                                  1996           1997           1998            1998           1999     
                                              ------------   ------------   -------------   ------------   ------------ 
                                                                                                    (UNAUDITED)         
                                                                                                                        
Cash flows from operating activities:                                                                                   
Net income (loss)...........................  $ (1,625,000)  $  4,231,000   $  11,235,000   $  7,517,000   $ 17,871,000 
Adjustments to reconcile net income (loss)                                                                              
  to net cash provided by operating                                                                                     
  activities:                                                                                                           
Depreciation and amortization...............     1,417,000      2,432,000       3,754,000      2,613,000      6,440,000 
Provision for uncollectible accounts                                                                                    
  receivable................................     3,597,000      8,082,000       2,247,000      2,168,000             -- 
Deferred income taxes.......................   (12,834,000)   (13,226,000)    (27,317,000)   (14,061,000)   (64,876,000)
Tax benefit associated with stock plans.....            --             --       5,607,000      2,240,000     10,726,000 
Changes in operating assets and liabilities:                                                                            
    Increase in accounts receivable.........   (12,144,000)    (1,287,000)    (19,083,000)   (10,298,000)   (23,155,000)
    Increase in prepaids and other assets...      (925,000)       (69,000)     (2,996,000)      (507,000)    (9,414,000)
    Increase in accounts payable and accrued                                                                            
      liabilities...........................     1,226,000      3,845,000      21,861,000      9,139,000     13,563,000 
    Increase in income taxes payable........            --      5,042,000         367,000     (1,952,000)     3,358,000 
    Increase in deferred revenue............    26,006,000     32,099,000      67,743,000     45,279,000    153,745,000 
                                              ------------   ------------   -------------   ------------   ------------ 
      Net cash provided by operating                                                                                    
        activities..........................     4,718,000     41,149,000      63,418,000     42,138,000    108,258,000 
                                              ------------   ------------   -------------   ------------   ------------ 
Cash flows from investing activities:                                                                                   
Purchase of furniture and equipment.........    (1,901,000)    (3,240,000)    (13,070,000)    (5,639,000)   (44,717,000)
Purchase of short-term investments, net.....            --    (40,200,000)    (77,990,000)   (67,676,000)    21,223,000 
Purchase of long-term investments...........            --             --     (13,590,000)    (6,012,000)   (11,656,000)
Proceeds from maturity of long-term                                                                                     
  investments, net..........................            --             --              --             --      8,000,000 
Net investment in net assets of discontinued                                                                            
  operations................................      (208,000)            --              --             --             -- 
                                              ------------   ------------   -------------   ------------   ------------ 
      Net cash used in investing                                                                                        
        activities..........................    (2,109,000)   (43,440,000)   (104,650,000)   (79,327,000)   (27,150,000)
                                              ------------   ------------   -------------   ------------   ------------ 
Cash flows from financing activities:                                                                                   
Net transactions with SAIC..................    12,926,000    (14,045,000)      3,516,000      1,337,000      1,812,000 
Proceeds from issuance of common stock......            --     52,405,000              --             --             -- 
Dividend paid...............................            --    (10,000,000)             --             --             -- 
Issuance of common stock pursuant to stock                                                                              
  plans.....................................            --             --      10,274,000      4,456,000      3,726,000 
Repayment of capital lease obligations......            --       (463,000)       (842,000)      (626,000)      (645,000)
                                              ------------   ------------   -------------   ------------   ------------ 
      Net cash provided by financing                                                                                    
        activities..........................    12,926,000     27,897,000      12,948,000      5,167,000      4,893,000 
                                              ------------   ------------   -------------   ------------   ------------ 
Net increase (decrease) in cash and cash                                                                                
  equivalents...............................    15,535,000     25,606,000     (28,284,000)   (32,022,000)    86,001,000 
Cash and cash equivalents, beginning of                                                                                 
  period....................................         5,000     15,540,000      41,146,000     41,146,000     12,862,000 
                                              ------------   ------------   -------------   ------------   ------------ 
Cash and cash equivalents, end of period....  $ 15,540,000   $ 41,146,000   $  12,862,000   $  9,124,000   $ 98,863,000 
                                              ============   ============   =============   ============   ============ 

The accompanying notes are an integral part of these financial statements 
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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS 

NOTE 1 -- COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                

Network Solutions is the exclusive registry and the leading registrar for second
level domain names within the .com, .net, .org and .edu top level domains       
pursuant to a series of agreements with ICANN and the Department of Commerce. As
a registry, we maintain the master directory of all second level domain names in
the .com, .net and .org top level domains. We own and maintain the shared       
registration system that allows all registrars, including us, to enter new      
second level domain names into the master directory and to submit modifications,
transfers, re-registrations and deletions for existing second level domain      
names. As a registrar, we market second level domain name registration services 
that enable registrants to establish their identities on the web. In addition,  
we market a portfolio of value-added products and services to help our customers
maximize the value of that identity throughout its life cycle. Network Solutions
also provides Internet Technology Services, focusing on network engineering,    
network and systems security and network management solutions.                  

Cooperative Agreement                                                           

In December 1992, Network Solutions entered into the cooperative agreement with 
the National Science Foundation under which Network Solutions was to provide    
Internet domain name registration services for five top level domains: .com,    
.net, .org, .edu and .gov. These registration services include the initial two
year domain name registration and annual re-registration, and throughout the    
registration term, maintenance of and unlimited modifications to individual     
domain name records and updates to the master file of domain names. The         
cooperative agreement became effective January 1, 1993. It included a           
three-month phase-in period, a five-year operational period, commencing April 1,
1993 and ending March 31, 1998, and a six-month flexibility period through      
September 30, 1998. Effective September 9, 1998, the Department of Commerce took
over the administration of the cooperative agreement from the National Science  
Foundation. In October 1998, the cooperative agreement was amended to extend the
flexibility period until September 30, 2000.                                    

The original terms of the cooperative agreement provided for a cost             
reimbursement plus fixed-fee contract (with an initial fee of 8%). Effective    
September 14, 1995, the National Science Foundation and Network Solutions       
amended the cooperative agreement to require Network Solutions to begin charging
end users a services fee of $50 per year for each domain name in the .com, .net 
and .org top level domains. Until April 1, 1998, registrants paid a services fee
of $100 for two years of domain name services upon each initial registration and
an annual re-registration fee of $50 per year thereafter. The National Science  
Foundation paid the registration fees for domain names within the .edu and .gov 
top level domains through March 31, 1997. Commencing April 1, 1997, Network     
Solutions agreed with the National Science Foundation to provide domain name    
registration services within the .edu and .gov top level domains free of charge.
As of October 1, 1997, Network Solutions no longer registers or administers     
domain names in the .gov top level domain.                                      

Under the terms of the September 14, 1995 amendment to the cooperative          
agreement, 30% of the registration fees collected by Network Solutions was      
required to be set aside for the enhancement of the intellectual infrastructure 
of the Internet (set aside funds) and, as such, was not recognized as revenue by
Network Solutions. Network Solutions has reflected these set aside funds, along 
with the appropriate percentage of net accounts receivable (Note 3), as         
restricted assets and has recorded an equivalent, related current liability.    
Network Solutions maintained the cash received relating to the set aside funds  
in a separate interest bearing account. The set aside funds, plus any interest  
earned, were disbursed at the direction of the National Science Foundation. As  
of December 31, 1998, Network Solutions had cumulatively disbursed all set aside
funds collected and associated interest earned for a total of $62.3 million to  
the National Science Foundation at their direction. The restricted cash at      
December 31, 1997 and 1998 was approximately $23,512,000 and $0, respectively.  

On March 12, 1998, the National Science Foundation and Network Solutions amended
the cooperative agreement to eliminate the 30% set aside requirement effective  
April 1, 1998 and to reduce the registration fees                               

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

by a corresponding amount. Initial registrations on and after April 1, 1998 are 
charged $70 for two years of registration services and an annual re-registration
fee of $35 per year thereafter. This amendment had no effect on the revenue     
currently recognized on each registration, $70 for initial registrations and $35
for re-registrations, since Network Solutions previously did not recognize      
revenue on the 30% set aside funds. Accordingly, while the revenue to Network   
Solutions on a per registration basis does not change, the amount charged to    
customers declined.                                                             

For purposes of Network Solutions' statements of cash flows, amounts relating to
these restricted assets and the Internet fund liability have been excluded in   
their entirety.                                                                 

Revenue Recognition                                                             

Registration fees charged to end users for registration services provided by    
Network Solutions are recognized on a straight-line basis over the life of the  
registration term, two years for initial registrations and one year for re-     
registrations. Network Solutions records revenue net of an estimated provision  
for uncollectible accounts receivable (Note 3).                                 

Substantially all of Network Solutions' Internet Technology Services revenue is 
derived from professional services which are generally provided to clients on a 
time and expense basis and is recognized as services are performed.             

One Internet Technology Services' customer contributed approximately 20% of net 
revenue for the year ended December 31, 1996. During the years ended December   
31, 1997 and 1998, there were no customers which individually represented more  
than 4% of net revenues.                                                        

Deferred Revenue                                                                

Deferred revenue primarily represents the unearned portion of revenue related to
the unexpired term of registration fees, net of an estimate for uncollectible   
accounts receivable (Note 3).                                                   

Cash and Cash Equivalents                                                       

Network Solutions considers all highly liquid investments with an original      
maturity of three months or less to be cash equivalents.                        

Short and Long-Term Investments                                                 

Short and long-term investments in marketable securities are classified as      
available-for-sale. All long-term investments in marketable securities mature   
within two years. At December 31, 1997 and 1998, the fair value of short and    
long-term investments approximated cost. Fair value is determined based upon the
quoted market prices of the securities as of the balance sheet date.            

At December 31, 1998, Network Solutions also held equity interests in a         
privately-held, information technology company totaling $4,200,000. This        
investment is included in other long-term assets and is accounted for under the 
cost method which approximates fair value.                                      

Financial Instruments                                                           

The recorded value of Network Solutions' financial instruments, which include   
short and long-term investments, accounts receivable and accounts payable,      
approximates market value. Concentration of credit risks with respect to        
registration receivables is limited due to the wide variety and number of       
customers, as well as their dispersion across geographic areas. Network         
Solutions has no derivative financial instruments.                              

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Furniture and Equipment                                                         

Furniture and equipment are stated at cost. Depreciation on furniture, office   
and computer equipment is calculated principally using a declining-balance      
method over the useful lives of three to seven years. Equipment under capital   
leases is amortized using a declining-balance method over the shorter of the    
assets' useful lives or lease term, ranging from two to three years. Leasehold  
improvements are amortized using the straight-line method over the shorter of   
the lease term or the estimated useful lives of the assets, generally six years.

Goodwill                                                                        

Goodwill represents the excess of the purchase cost over the fair value of net  
assets acquired in Network Solutions' acquisition by Science Applications       
International Corporation, or SAIC, in 1995 and is amortized over five years    
using the straight-line method. Amortization expense of $715,000, $686,000 and  
$543,000 for years ended December 31, 1996, 1997 and 1998, respectively, was    
included in selling, general and administrative expenses. In connection with    
Network Solutions' initial public offering during 1997, SAIC sold a portion of  
its interest in Network Solutions resulting in a corresponding reduction of     
goodwill in the amount of $418,000 which was charged to additional paid-in      
capital.                                                                        

Stock Split                                                                     

On December 31, 1998, Network Solutions' board of directors approved a          
two-for-one stock split of the shares of Class A common stock and Class B common
stock, to be effected in the form of a 100% stock dividend on shares of Class A 
common stock and Class B common stock outstanding on February 26, 1999. The     
stock dividend will be distributed on March 23, 1999. Share and per share       
information for all periods presented in the accompanying financial statements  
have been adjusted to reflect the two-for-one stock split.                      

Software Development Costs                                                      

Research and development costs are expensed as incurred. In accordance with     
Statement of Financial Accounting Standards (SFAS) No. 86, "Accounting for the  
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed", Network  
Solutions has not capitalized any significant software development costs as of  
December 31, 1998.                                                              

Income Taxes                                                                    

Deferred taxes are accounted for under SFAS No. 109, "Accounting for Income     
Taxes," whereby deferred tax assets and liabilities are recognized for the      
expected future tax consequences of temporary differences between financial     
statement reporting and income tax purposes. A valuation allowance is recorded  
if it is "more likely than not" that some portion of or all of a deferred tax   
asset will not be realized.                                                     

Until Network Solutions' initial public offering, Network Solutions filed tax   
returns as part of SAIC's consolidated tax group. Tax expense during this period
has been determined as if Network Solutions was a separate taxpayer and was     
charged to Network Solutions by SAIC. Effective October 1, 1997, Network        
Solutions is no longer part of SAIC's consolidated tax group for federal income 
tax purposes and prepares its income tax returns as a separate entity.          

Stock Based Compensation                                                        

Network Solutions accounts for its stock option and employee stock purchase     
plans in accordance with the provisions of Accounting Principles Board Opinion  
(APB) No. 25, "Accounting for Stock Issued to Employees". No compensation cost  
has been recognized by Network Solutions for its employee stock plans. The SFAS 
No. 123, "Accounting for Stock-Based Compensation", provides an alternative     
accounting method to APB                                                        

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

No. 25 and requires additional pro forma disclosures (Note 11). Network         
Solutions expects to continue to account for its employee stock plans in        
accordance with the provisions of APB No. 25.                                   

Segment Data                                                                    

During 1998, Network Solutions adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 supersedes SFAS No. 14, 
"Financial Reporting for Segments of a Business Enterprise", replacing the      
"industry segment" approach with the "management" approach. The management      
approach designates internal reporting that is used by management for making    
operating decisions and assessing performance as the source of an entity's      
reportable segments. SFAS No. 131 also requires disclosures about products and  
services, geographic areas and major customers. The adoption of SFAS No. 131 did
not affect results of operations, financial position or segment information     
disclosures of Network Solutions due to the nature and relative magnitude of its
business activities.                                                            

Use of Estimates                                                                

The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make reasonable estimates and      
assumptions, based upon all known facts and circumstances that affect the       
reported amounts of assets and liabilities and disclosure of contingent assets  
and liabilities at the date of the financial statements. Actual results could   
differ from those estimates.                                                    

Newly Issued Accounting Standards                                               

In March 1998, the American Institute of Certified Public Accountants issued    
Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer    
Software Developed or Obtained for Internal Use." This standard requires        
companies to capitalize qualifying computer software costs which are incurred   
during the application development stage and amortize them over the software's  
estimated useful life. SOP 98-1 is effective for fiscal years beginning after   
December 15, 1998.                                                              

Network Solutions is currently evaluating the impact of SOP 98-1 on its         
financial statements and related disclosures.                                   

NOTE 2 -- RECAPITALIZATION AND INITIAL PUBLIC OFFERING                          

On June 26, 1997, the Board of Directors amended the Certificate of             
Incorporation to provide for two classes of common stock, designated as Class A 
and Class B. The holders of Class A and Class B common stock generally have     
identical rights except that holders of Class A common stock are entitled to one
vote per share while holders of Class B common stock are entitled to ten votes  
per share. Each share of Class B common stock is convertible at the holder's    
option into one share of Class A common stock.                                  

On October 1, 1997, Network Solutions completed an initial public offering of   
7,590,000 shares of its $.001 par value Class A common stock, including 990,000 
shares resulting from the exercise of certain overallotment provisions. Network 
Solutions' net proceeds from the initial public offering, including             
overallotment, were $52.5 million based on Network Solutions' direct sale of    
6,440,000 shares of Class A common stock.                                       

Prior to the offering, Network Solutions was a wholly-owned subsidiary of SAIC. 
In conjunction with the initial public offering, SAIC converted 1,150,000 shares
(including 150,000 overallotment shares) of Class B common stock into 1,150,000 
shares of Class A common stock and directly sold the shares as a selling        
stockholder. Upon completion of the offering, SAIC owned 100% of the outstanding
Class B common stock representing 75.9% of Network Solutions' equity and 96.9%  
of the combined voting power of Network Solutions' outstanding Class B and Class
A common stock.                                                                 

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

On August 21, 1997, Network Solutions' Board of Directors declared a $10,000,000
dividend to be paid to SAIC upon consummation of the initial public offering.   
This dividend was paid to SAIC on October 1, 1997.                              

NOTE 3 -- ACCOUNTS RECEIVABLE                                                   

Accounts receivable consist of the following amounts as of December 31:         

                                                        [Enlarge/Download Table]

                                                              1997           1998     
                                                          ------------   ------------ 
                                                                                      
Billed................................................... $ 24,483,000   $ 42,679,000 
Unbilled.................................................    1,526,000      5,695,000 
                                                          ------------   ------------ 
          Total accounts receivable before allowances....   26,009,000     48,374,000 
Less -- Allowance for uncollectible accounts.............  (17,856,000)   (25,746,000)
     -- Accounts receivable allocable to 30% NSF set                                  
  aside (Note 1).........................................   (2,361,000)            -- 
                                                          ------------   ------------ 
Accounts receivable, net................................. $  5,792,000   $ 22,628,000 
                                                          ============   ============ 

Unbilled receivables consist of registration fees and time and material contract
costs which have been incurred but which have not yet been billed.              

In accounting for registration fees, Network Solutions initially records the    
gross amount of the registration fee to accounts receivable and deferred        
revenue. The allowance for estimated uncollectible accounts is recorded against 
both accounts receivable and deferred revenue balances (see Note 1 for treatment
of the 30% National Science Foundation set aside). From the deferred revenue and
allowance balances, Network Solutions records revenue and its provision for     
uncollectible accounts on a straight-line basis over the registration term.     
Effective April 1, 1998, Network Solutions consolidates and then amortizes only 
the net deferred revenue balance as net revenue over the registration term.     

The provision for uncollectible accounts receivable, which was separately       
recorded and deducted from gross registration fees in determining net           
registration revenue, was $3,597,000, $7,782,000 and $2,168,000, respectively,  
for the years ended December 31, 1996, 1997 and 1998. An additional $300,000 and
$79,000 of bad debt expense was recorded in 1997 and 1998, respectively, for the
write-off of Internet Technology Services receivables. Network Solutions'       
allowance for uncollectible accounts receivable is associated solely with its   
registration services business. The provision for uncollectible accounts        
receivable is primarily due to the large number of individuals and corporations 
that have registered multiple domain names with the apparent intention of       
transferring registration for such names at a profit. Network Solutions'        
experience has been that, in contrast to other registrants, such speculative    
resellers have a higher tendency to default on their registration fees,         
returning the names into the available pool for subsequent registration.        

NOTE 4 -- FURNITURE AND EQUIPMENT                                               

Furniture and equipment consist of the following amounts as of December 31:     

                                                        [Enlarge/Download Table]

                                                              1997          1998     
                                                           -----------   ----------- 
                                                                                     
Furniture and office equipment............................ $   476,000   $   833,000 
Computer equipment........................................   8,619,000    19,400,000 
Leasehold improvements....................................     288,000     2,018,000 
                                                           -----------   ----------- 
  Furniture and equipment, at cost........................   9,383,000    22,251,000 
Less: Accumulated depreciation and amortization...........  (3,237,000)   (6,246,000)
                                                           -----------   ----------- 
Furniture and equipment, net.............................. $ 6,146,000   $16,005,000 
                                                           ===========   =========== 

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Furniture and equipment includes $2,386,000 of computer equipment acquired      
during 1997 under capital lease agreements. Amortization expense related to     
capital leases totaled $915,000 and $1,028,000 in 1997 and 1998, respectively.  
Total depreciation and amortization expense for the years ended December 31,    
1996, 1997 and 1998 was $702,000, $1,746,000 and $3,211,000, respectively.      

NOTE 5 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                 

Accounts payable and accrued expenses consist of the following amounts as of    
December 31:                                                                    

                                                        [Enlarge/Download Table]

                                                            -------------------------
                                                               1997          1998    
                                                            ----------    -----------
                                                                                     
Accounts payable........................................... $1,896,000    $ 7,647,000
Accrued expenses...........................................  2,384,000     16,717,000
Accrued payroll............................................  2,146,000      3,923,000
                                                            ----------    -----------
          Total accounts payable and accrued expenses...... $6,426,000    $28,287,000
                                                            ==========    ===========

NOTE 6 -- LEASES                                                                

Future minimum lease payments, including fixed escalation increases for office  
space and equipment under capital and operating leases with initial or remaining
noncancelable lease terms in excess of one year as of December 31, 1998 are:    

                                                        [Enlarge/Download Table]

                                                            -------------------------
                                                             CAPITAL       OPERATING 
YEAR ENDING DECEMBER 31:                                      LEASES        LEASES   
------------------------                                    ----------    -----------
                                                                                     
1999 ...................................................... $  885,000    $ 3,778,000
2000 ......................................................    252,000      3,099,000
2001 ......................................................         --      1,935,000
2002 ......................................................         --      1,452,000
                                                            ----------    -----------
          Total minimum lease payments.....................  1,137,000    $10,264,000
                                                                          ===========
Less: Amounts representing interest........................    (56,000)              
                                                            ----------               
Present value of minimum lease payments....................  1,081,000               
Less: Current portion......................................   (834,000)              
                                                            ----------               
Long-term portion of capital lease obligations............. $  247,000               
                                                            ==========               

In December 1992, Network Solutions entered into a lease agreement for Network  
Solutions' headquarters in Herndon, Virginia. Subsequent to the acquisition,    
SAIC subleased the facilities to Network Solutions under a lease expiring       
November 2002. During 1997, Network Solutions leased a second facility in       
Herndon whose lease term expires in July 2002.                                  

Operating lease expense for the years ended December 31, 1996, 1997 and 1998 was
$924,000, $2,188,000 and $3,533,000, respectively. Network Solutions generated  
rental income from subleases of $187,000, $291,000 and $215,000 for the years   
ended December 31, 1996, 1997 and 1998, respectively.                           

NOTE 7 -- INTEREST EXPENSE AND INCOME                                           

For the year ended December 31, 1996, interest income of $496,000 was allocated 
by SAIC based upon the cost of capital calculation. From its acquisition by SAIC
in March 1995 until December 1996, Network Solutions participated in SAIC's     
centralized cash management system whereby cash received from operations was    
transferred to SAIC's centralized cash accounts and cash disbursements were     
funded from such centralized                                                    

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

cash accounts. Accordingly, the SAIC cost of capital formula provided for       
charges and credits to Network Solutions based upon management of certain       
assets, including accounts receivable and fixed assets. Such amounts are not    
necessarily indicative of the cost that would have been incurred if Network     
Solutions had been operated as a separate entity.                               

Effective January 1, 1997, Network Solutions was no longer subject to SAIC's    
cost of capital calculation in connection with Network Solutions fulfilling its 
own treasury function. Interest paid for the years ended December 31, 1996, 1997
and 1998 was $0, $116,000 and $116,000, respectively.                           

NOTE 8 -- TRANSACTIONS WITH SAIC                                                

Network Solutions was acquired by SAIC on March 10, 1995 in a stock-for-stock   
transaction accounted for as a purchase. The financial statements for the years 
ended December 31, 1996, 1997 and 1998 include significant transactions with    
other SAIC business units involving functions and services (such as cash        
management, tax administration, accounting, legal, data processing and employee 
benefit plans) that were provided to Network Solutions by centralized SAIC      
organizations. The costs of these functions and services have been directly     
charged and/or allocated to Network Solutions using methods that SAIC management
believes are reasonable; primarily a percentage of budgeted administrative and  
overhead costs. Such charges and allocations are not necessarily indicative of  
the costs that would have been incurred if Network Solutions had been a separate
entity. Through August 9, 1996, the amounts allocated by SAIC to Network        
Solutions included both administrative and overhead costs which are included in 
selling, general and administrative expenses and cost of revenue, respectively. 
Effective August 10, 1996, SAIC stopped allocating costs based generally upon   
pro rata labor and began assessing Network Solutions for corporate services     
provided by SAIC at a fee equal to 2.5% of annual net revenue. The corporate    
services fee is negotiated annually and was 2.5% and 1.5% during 1997 and 1998, 
respectively. The agreement may be terminated by either party upon 180 days'    
prior written notice.                                                           

Amounts charged and allocated to Network Solutions for these functions and      
services for the years ended December 31, 1996, 1997 and 1998 were $1,196,000,  
$1,126,000 and $1,447,000, respectively, and are principally included in        
selling, general and administrative expenses. Additionally, certain interest    
credits were allocated by SAIC to Network Solutions (Note 7).                   

Sales as a subcontractor to SAIC for the years ended December 31, 1996, 1997 and
1998 were $1,505,000, $2,445,000 and $525,000, respectively. In addition,       
because Network Solutions was included in SAIC's consolidated tax returns for   
periods from acquisition until the initial public offering, Network Solutions   
was obligated to make payment for its tax liability to SAIC in accordance with  
the tax sharing arrangement (Note 9). The due to parent balance represents the  
cumulative net activity of all transactions between Network Solutions and SAIC. 
Network Solutions reflects this activity in the statements of cash flows on a   
net basis because of the quick turnover, the large amounts and the short        
maturities of these related party cash transactions.                            

NOTE 9 -- PROVISION FOR INCOME TAXES                                            

The results of Network Solutions since its acquisition by SAIC until its initial
public offering were included in SAIC's consolidated tax returns. Subsequent to 
the initial public offering, Network Solutions is no longer part of SAIC's      
consolidated tax group for federal income tax purposes and prepares its income  
tax returns as a separate entity.                                               

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The provision for (benefit) from income taxes consists of the following:        

                                                        [Enlarge/Download Table]

                                               ------------------------------------------ 
                                                        YEAR ENDED DECEMBER 31,           
                                               ------------------------------------------ 
                                                   1996           1997           1998     
                                               ------------   ------------   ------------ 
                                                                                          
Current:                                                                                  
Federal....................................... $ 10,171,000   $ 13,931,000   $ 29,559,000 
  State.......................................    2,020,000      2,766,000      5,867,000 
                                               ------------   ------------   ------------ 
          Total current provision.............   12,191,000     16,697,000     35,426,000 
                                               ------------   ------------   ------------ 
Deferred:                                                                                 
  Federal.....................................  (10,716,000)   (11,035,000)   (22,792,000)
  State.......................................   (2,118,000)    (2,191,000)    (4,525,000)
                                               ------------   ------------   ------------ 
          Total deferred (benefit)............  (12,834,000)   (13,226,000)   (27,317,000)
                                               ------------   ------------   ------------ 
Provision for (benefit) from income taxes..... $   (643,000)  $  3,471,000   $  8,109,000 
                                               ============   ============   ============ 

Deferred tax assets are comprised of the following temporary differences as of  
December 31:                                                                    

                                                        [Enlarge/Download Table]

                                                             ------------------------- 
                                                                1997          1998     
                                                             -----------   ----------- 
                                                                                       
Deferred revenue............................................ $26,295,000   $46,943,000 
Provision for uncollectible accounts receivable.............   1,841,000     8,409,000 
Other.......................................................     145,000       (13,000)
                                                             -----------   ----------- 
          Total deferred tax asset.......................... $28,281,000   $55,339,000 
                                                             ===========   =========== 

Although Network Solutions has a past history of net losses, it has not         
established a current valuation allowance for its deferred tax assets since, in 
the opinion of management, it is more likely than not that all of the deferred  
tax assets will be realized. The deferred tax assets relate primarily to        
registration fees which are taxable upon initial registration but are recognized
in the financial statements over the next 12 to 24 months, the registration     
term.                                                                           

A reconciliation of the provision for income taxes to the amount computed by    
applying the statutory federal income tax rate of 35% to income before income   
taxes is provided below:                                                        

                                                        [Enlarge/Download Table]

                                                     -----------------------------------
                                                           YEAR ENDED DECEMBER 31,      
                                                     -----------------------------------
                                                       1996         1997         1998   
                                                     ---------   ----------   ----------
                                                                                        
Federal tax at statutory rate....................... $(794,000)  $2,696,000   $6,771,000
State income taxes, net of federal tax benefit......   (96,000)     374,000    1,015,000
Nondeductible goodwill amortization.................   281,000      240,000      213,000
Other...............................................   (34,000)     161,000      110,000
                                                     ---------   ----------   ----------
Provision for (benefit) from income taxes........... $(643,000)  $3,471,000   $8,109,000
                                                     =========   ==========   ==========

Network Solutions paid income taxes of $31,235,000 during the year ended        
December 31, 1998.                                                              

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10 -- COMPUTATION OF EARNINGS (LOSS) PER SHARE                             

The following is a reconciliation of the numerator and denominator used in the  
basic and diluted earnings per share computations:                              

                                                        [Enlarge/Download Table]

                                                   -----------------------------------------
                                                   INCOME (LOSS)      SHARES       PER SHARE
                                                    (NUMERATOR)    (DENOMINATOR)    AMOUNT  
                                                   -------------   -------------   ---------
                                                                                            
1996 Loss Per Share:                                                                        
Basic.............................................  $(1,625,000)    25,000,000      $(0.07) 
                                                                                    ======  
Dilutive securities:                                                                        
  Outstanding options.............................           --             --              
                                                    -----------     ----------              
  Diluted.........................................  $(1,625,000)    25,000,000      $(0.07) 
                                                    ===========     ==========      ======  
1997 Earnings Per Share:                                                                    
  Basic...........................................  $ 4,231,000     26,610,000      $ 0.16  
                                                                                    ======  
  Dilutive securities:                                                                      
  Outstanding options.............................           --        356,000              
                                                    -----------     ----------              
  Diluted.........................................  $ 4,231,000     26,966,000      $ 0.16  
                                                    ===========     ==========      ======  
1998 Earnings Per Share:                                                                    
  Basic...........................................  $11,235,000     31,957,000      $ 0.35  
                                                                                    ======  
Dilutive securities:                                                                        
  Outstanding options.............................           --      1,440,000              
                                                    -----------     ----------              
  Diluted.........................................  $11,235,000     33,397,000      $ 0.34  
                                                    ===========     ==========      ======  
Nine Months Ended September 30, 1999 (Unaudited)                                            
Basic.............................................  $17,871,000     33,251,000      $ 0.54  
                                                                                    ======  
Dilutive securities:                                                                        
  Outstanding options.............................           --      1,476,000              
                                                    -----------     ----------              
Diluted...........................................  $17,871,000     34,727,000      $ 0.51  
                                                    ===========     ==========      ======  
Nine Months Ended September 30, 1998 (Unaudited)                                            
Basic.............................................  $ 7,517,000     31,776.000      $ 0.24  
                                                                                    ======  
Dilutive securities:                                                                        
  Outstanding Options.............................           --      1,312,000              
                                                    -----------     ----------              
Diluted...........................................  $ 7,517,000     33,088,000      $ 0.23  
                                                    ===========     ==========      ======  

Common shares issued are weighted for the period the shares were outstanding and
incremental shares assumed issued under the treasury stock method for dilutive  
earnings per share are weighted for the period the underlying options were      
outstanding. Options outstanding in 1996 are not reflected in the computation of
diluted earnings per share because the effects are anti-dilutive and would      
increase diluted earnings per share.                                            

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11 -- EMPLOYEE BENEFIT PLANS                                               

1996 Stock Incentive Plan                                                       

The 1996 Stock Incentive Plan, or Incentive Plan, of Network Solutions was      
adopted by the Board of Directors on September 18, 1996. The Incentive Plan     
provides for awards in the form of restricted shares, stock units, stock        
appreciation rights, and stock options (including incentive stock options and   
nonstatutory stock options). A total of 4,612,500 shares of Class A Common Stock
have been initially reserved for issuance under the Incentive Plan. The number  
of shares are increased by 2% of the total number of common shares of Network   
Solutions outstanding at the end of the most recent calendar year, subject to a 
cumulative limit of 2,000,000 shares. Through December 31, 1998, an additional  
1,789,000 shares were eligible for issuance and have subsequently been reserved 
for a combined total of 6,401,000 eligible shares under the Incentive Plan.     

Following is a summary of activity pursuant to Network Solutions' Incentive     
Plan:                                                                           

                                                        [Enlarge/Download Table]

                                                                      WEIGHTED AVERAGE 
                                                           SHARES      EXERCISE PRICE  
                                                         ----------   -----------------
                                                                                       
Balance at January 1, 1996..............................         --            --      
Granted.................................................  2,451,000        $ 6.49      
Exercised...............................................         --            --      
Cancelled...............................................         --            --      
                                                         ----------                    
Balance at December 31, 1996............................  2,451,000        $ 6.49      
Granted.................................................  1,201,000        $ 7.11      
Exercised...............................................         --            --      
Cancelled...............................................    (73,000)       $ 7.00      
                                                         ----------                    
Balance at December 31, 1997............................  3,579,000        $ 6.68      
Granted.................................................  1,359,000        $21.95      
Exercised............................................... (1,520,000)       $ 6.51      
Cancelled...............................................   (707,000)       $ 9.26      
                                                         ----------                    
Balance at December 31, 1998............................  2,711,000        $13.74      
                                                         ==========        ======      

Granted stock options generally become exercisable one year after the date of   
the grant, vest 30%, 30%, 20% and 20%, respectively, on each anniversary date of
the grant and have a term of five years. All options granted to date have been  
nonstatutory stock options except for 202,000 incentive stock options granted in
1996. No restricted shares, stock units or stock appreciation rights have been  
granted to date.                                                                

The following table summarizes the status of Network Solutions' stock options   
outstanding and exercisable at December 31, 1998:                               

                                                        [Enlarge/Download Table]

                                      STOCK OPTIONS OUTSTANDING                                            
                               ---------------------------------------       STOCK OPTIONS EXERCISABLE     
                                WEIGHTED AVERAGE                        -----------------------------------
                                    REMAINING        WEIGHTED AVERAGE   WEIGHTED AVERAGE                   
RANGE OF                       CONTRACTUAL SHARES      EXERCISE LIFE     EXERCISE PRICE     SHARES    PRICE
EXERCISE PRICES                -------------------   -----------------  -----------------   -------   -----
                                                                                                           
$ 7.00-$ 9.25.................      1,712,000              3.31              $ 7.29         252,000   $7.16
$15.88-$34.25.................        918,000              4.58              $21.20              --      --
$65.44-$69.50.................         81,000              5.00              $65.59              --      --
                                    ---------                                               -------        
 $7.00-$69.50.................      2,711,000              3.79              $13.74         252,000   $7.16
                                    =========                                               =======        

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Employee Stock Purchase Plan                                                    

Effective January 7, 1998, Network Solutions adopted an Employee Stock Purchase 
Plan to provide substantially all full time employees an opportunity to purchase
shares of its Class A common stock through payroll deductions of up to 10% of   
eligible compensation. Semiannually, on June 30 and December 31, participant    
account balances are used to purchase stock at the lesser of 85 percent of the  
fair market value on the trading day before the participation period starts or  
the trading day preceding the day on which the participation period ends. A     
total of 500,000 shares were initially reserved for purchase under the plan.    
During the year ended December 31, 1998, a total of 30,000 shares were purchased
under this plan.                                                                

SAIC Benefit Plans                                                              

Employees of Network Solutions participate in various SAIC benefit plans,       
including stock, bonus and retirement plans, subject to the applicable          
eligibility requirements. SAIC charges Network Solutions directly for the costs 
of such employee benefit plans. Charges related to the administration of the    
SAIC benefit plans in which employees of Network Solutions participate are      
included within SAIC general corporate allocations (Note 8).                    

SAIC has one principal Cash or Deferred Arrangement plan which allows eligible  
participants to defer a portion of their income through payroll contributions.  
Such deferrals are fully vested, are not taxable to the participant until       
distributed from the Cash or Deferred Arrangement plan upon termination,        
retirement, permanent disability or death and may be matched by SAIC. SAIC also 
has an SAIC Employee Stock Purchase Plan which allows eligible employees to     
purchase shares of SAIC's Class A common stock, with SAIC currently contributing
10% of the existing fair market value.                                          

SAIC has a Bonus Compensation Plan which provides for bonuses to reward         
outstanding performance. Bonuses are paid in the form of cash, fully vested     
shares of SAIC Class A common stock or vesting shares of SAIC Class A common    
stock. Network Solutions participated in this plan during the period from       
acquisition until December 31, 1996.                                            

During the years ended December 31, 1996 and 1997, a total of 53,000 and 11,000 
SAIC options were granted to Network Solutions' employees, respectively, with   
exercise prices ranging from $19.33 to $22.83 and $25.96 to $34.78 per share,   
respectively, with a weighted average price of $20.51 and $28.13, respectively. 
These options were granted under the SAIC 1995 Stock Option Plan to purchase    
SAIC Class A common stock and vest 20%, 20%, 20% and 40%, respectively, on each 
anniversary of the date of grant and have a term of five years. There were no   
SAIC options granted to Network Solutions' employees during 1998.               

Pro Forma Disclosures                                                           

The weighted average fair value of the options granted during the years ended   
December 31, 1996 and 1997 under the SAIC Bonus Compensation Plan were estimated
at $4.30 and $7.56, respectively, and $1.38, $2.34 and $14.91, during 1996, 1997
and 1998, respectively, under Network Solutions' Incentive Plan using the       
Black-Scholes model. The following weighted average assumptions were used in    
calculating the option fair values.                                             

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

                                                        [Enlarge/Download Table]

                                              ------------------------------------------------- 
                                                                           NETWORK SOLUTIONS    
                                                SAIC STOCK OPTIONS           STOCK OPTIONS      
                                              -----------------------    ---------------------- 
                                              YEAR ENDED DECEMBER 31,                           
                                              -----------------------                           
                                              1996     1997     1998     1996    1997     1998  
                                              -----    -----    -----    ----    -----    ----- 
                                                                                                
Expected life (years)........................  4.0      5.0      --      4.0       4.0      4.0 
Risk-free interest rate...................... 5.91%    6.30%     --      5.98%    6.25%     5.1%
Volatility................................... 0.00%    0.00%     --      0.00%   20.79%   90.73%
Dividend yield............................... 0.00%    0.00%     --      0.00%    0.00%    0.00%

Under the above models, the total value of SAIC stock options granted during    
1996 and 1997 was approximately $228,000 and $87,000, respectively, and         
$3,379,000, $2,809,000 and $20,322,000, respectively, for the Network Solutions'
employee stock purchase program and stock options granted in 1996, 1997 and     
1998, all of which would be amortized ratably on a pro forma basis over their   
respective option terms. Had Network Solutions recorded compensation costs for  
these plans in accordance with SFAS No. 123, Network Solutions' pro forma income
(loss) would have been ($1,763,000), $3,510,000 and $9,236,000, respectively,   
for the years ended December 31, 1996, 1997 and 1998. Pro forma earnings (loss) 
per share on a diluted basis would have been ($0.07), $0.13 and $0.28,          
respectively, for the years ended December 31, 1996, 1997 and 1998.             

NOTE 12 -- COMPREHENSIVE INCOME                                                 

The changes in the components of accumulated other comprehensive income are     
reported net of income taxes for the year ended December 31, 1998 as follows:   

                                                        [Enlarge/Download Table]

                                                          ----------------------------------------
                                                          UNREALIZED GAINS    COMPREHENSIVE INCOME
                                                           ON SECURITIES       ACCUMULATED OTHER  
                                                          ----------------    --------------------
                                                                                                  
Pre-tax amount...........................................     $618,000              $618,000      
Income tax...............................................      259,000               259,000      
                                                              --------              --------      
Net of tax amount........................................     $359,000              $359,000      
                                                              ========              ========      

NOTE 13 -- COMMITMENTS AND CONTINGENCIES                                        

As of December 31, 1998, Network Solutions was a defendant in two active        
lawsuits involving domain name disputes between trademark owners and domain name
holders. Network Solutions is drawn into such disputes, in part, as a result of 
claims by trademark owners that Network Solutions is legally required, upon     
request by a trademark owner, to terminate the right Network Solutions granted  
to a domain name holder to register a domain name which is alleged to be similar
to the trademark in question. The holders of the domain name registrations in   
dispute have, in turn, questioned Network Solutions' right, absent a court      
order, to take any action which suspends their use of the domain names in       
question. Although 46 out of approximately 4,500 of these situations have       
resulted in suits actually naming us as a defendant, as of December 31, 1998, no
adverse judgment has been rendered and no award of damages has been made against
Network Solutions. Network Solutions believes that it has meritorious defenses  
and vigorously defends itself against these claims.                             

On March 20, 1997, PG Media, Inc., a New York-based corporation (PG Media),     
filed a lawsuit against Network Solutions in the United States District Court,  
Southern District of New York alleging that Network Solutions had restricted    
access to the Internet by not adding PG Media's requested top level domains to  
the Internet root zone system in violation of the Sherman Act. In its complaint,
PG Media, in addition to requesting damages, asked that Network Solutions be    
ordered to include reference to PG Media's top level domains and name servers in
the root zone file administered by Network Solutions under the cooperative      
agreement. In June 1997, Network Solutions received written direction from the  
National Science Foundation not to take any action which would create additional
top level domains or to add any new top level domains to the Internet root zone 
until the                                                                       
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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

National Science Foundation provided further guidance. On September 17, 1997, PG
Media filed a Second Amended Complaint adding the National Science Foundation as
a defendant. On May 14, 1998, PG Media served Network Solutions with a motion   
for a preliminary injunction against both defendants to compel both defendants  
to add PG Media's top level domains to the Internet root zone within 30 days. In
response, both defendants filed cross-motions for summary judgment against PG   
Media. On July 20, 1998, a hearing on all parties' motions occurred. The basic  
issue before the court is the National Science Foundation's authority to control
the Internet's root zone system. The court has taken the issue under advisement 
and no date has been indicated for the issuance of a decision. With the         
transition of the cooperative agreement from the National Science Foundation to 
the Department of Commerce, Network Solutions is still required to request      
written direction from the U.S. Government before making or rejecting any       
modifications, additions or deletions to the root zone file, in accordance with 
the October 1998 amendment to the cooperative agreement.                        

On October 17, 1997, a group of six plaintiffs filed a lawsuit (the "Thomas     
suit") against Network Solutions and the National Science Foundation in the     
United States District Court, District of Columbia, challenging the legality of 
fees defendants charge for the registration and renewal of domain names on the  
Internet and seeking restitution of fees collected from domain name registrants 
in an amount in excess of $100 million, damages, and injunctive and other       
relief. Plaintiffs alleged violations of the Sherman Act, the U.S. Constitution,
the Administrative Procedures Act and the Independent Offices Appropriations    
Act. On February 10, 1998, the plaintiffs filed a motion for preliminary        
injunction against Network Solutions seeking several items of relief. On April  
6, 1998, the Court issued its opinion granting summary judgment in favor of the 
plaintiffs on the Intellectual Infrastructure Fund, ruling it an "unlawful tax."
The court also granted Network Solutions' motion to dismiss all other counts (II
through X) and simultaneously denied the plaintiffs' preliminary injunction     
motion against Network Solutions. On April 30, 1998, Congress passed H.R. 3579  
which was signed into law by the President on May 1, 1998. Section 8003 of H.R. 
3579 legalized, ratified and confirmed the entire Intellectual Infrastructure   
Fund and authorized and directed the National Science Foundation to deposit the 
entire fund into the U.S. Treasury. On August 28, 1998, the District Court      
dismissed the entire case, issuing a final judgment in the matter. In October   
1998, the plaintiffs appealed the court's dismissal of their claims, with oral  
argument scheduled for February 25, 1999.                                       

On October 20, 1998, Network Solutions was included as a defendant in a suit    
brought by the Pennsylvania Attorney General's office against a domain name     
holder who has alleged to have used his domain name in connection with a web    
site promoting white supremacy and threatening certain state employees. The     
Pennsylvania Attorney General named all of the communications companies in any  
way connected with the domain name or web site. The Pennsylvania Attorney       
General seeks to permanently enjoin these entities, including Network Solutions,
from providing services to this domain name holder in the event that the domain 
name holder fails to comply with the order of the court. Network Solutions has  
answered the complaint denying any knowledge or participation in the actions of 
the primary defendant. No motions are pending and Network Solutions expects to  
be dismissed from the matter.                                                   

Network Solutions believes that it has meritorious defenses and vigorously      
defends itself against the claims advanced in the PG Media, Thomas or           
Pennsylvania Attorney General suits. While management cannot reasonably estimate
the potential impact of such claims, a successful claim against Network         
Solutions in any of these proceedings could have a material adverse effect on   
Network Solutions' business, financial condition and results of operations.     

On June 27, 1997, SAIC received a Civil Investigative Demand, or "CID" from the 
U.S. Department of Justice issued in connection with an investigation to        
determine whether there is, has been, or may be an antitrust violation under the
Sherman Act relating to Internet registration products and services. The CID    
seeks documents and information from SAIC and Network Solutions relating to     
their Internet registration business. Network Solutions cannot reasonably       
estimate the potential impact of the investigation nor can it predict           

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

whether a civil action will ultimately be filed by the Department of Justice or 
the form of relief that might be sought. Any such relief could have a material  
adverse effect on Network Solutions' business, financial condition and results  
of operations.                                                                  

On August 17, 1998, Network Solutions received notice from the Commission of the
European Communities, or "EC," of an investigation concerning Network Solutions'
Premier Program agreements in Europe. The EC requested production of these      
agreements and related materials for review. Network Solutions cannot reasonably
estimate the potential impact of the investigation nor can Network Solutions    
predict whether an action will ultimately be brought by the EC or the form of   
relief that might be sought. Any such relief could harm Network Solutions'      
business.                                                                       

Network Solutions is involved in various other investigations, claims and       
lawsuits arising in the normal conduct of business, none of which, in           
management's opinion will harm Network Solutions' business.                     

Legal proceedings in which Network Solutions is involved have resulted and      
likely will result in, and any future legal proceedings can be expected to      
result in, substantial legal and other expenses and a diversion of the efforts  
of Network Solutions' personnel.                                                

NOTE 14 -- SUBSEQUENT EVENTS (UNAUDITED)                                        

Secondary Stock Offering                                                        

On February 12, 1999, Network Solutions completed a secondary stock offering in 
which a total of 9,160,000 shares of Class A common stock were sold. Concurrent 
with the offering, SAIC converted 9,000,000 shares of Class B common stock into 
9,000,000 shares of Class A common stock sold in the offering. The remaining    
160,000 shares of Class A common stock were sold by other selling stockholders  
after they exercised the applicable stock options simultaneously with the       
closing of the offering. Network Solutions was not a selling stockholder, and,  
therefore, did not receive any proceeds from the stock offering other than      
proceeds from options exercised as part of the offering. After the offering,    
SAIC owned approximately 89% of the combined voting power and approximately 45% 
of the economic interest of the outstanding common stock.                       

On June 3, 1999, SAIC, the sole Class B common stock stockholder, converted the 
remaining Class B common stock into an identical number of shares of Class A    
common stock. As a result, SAIC's voting power changed from 89% to 45%,         
consistent with the number of Class A shares owned after the conversion. On June
17, 1999, Network Solutions filed a Certificate of Amendment of Second Amended  
and Restated Certificate of Incorporation whereby its Class A common stock, par 
value $0.001 per share, and Class B common stock, par value $0.001 per share,   
were reclassified as a single class of common stock, par value $0.001 per share.
At the time of the reclassification of the Class A common stock and Class B     
common stock to common stock, there were 33,312,594 shares of Class A common    
stock and no shares of Class B common stock outstanding.                        

The Certificate of Amendment also increased the total number of authorized      
shares of Network Solutions, Inc. to 220,000,000 of which 210,000,000 shares are
authorized shares of common stock and 10,000,000 shares are authorized shares of
preferred stock, par value $0.001 per share. There are no shares of preferred   
stock outstanding.                                                              

Litigation                                                                      

On March 16, 1999, the United States District Court ruled in favor of Network   
Solutions' and the National Science Foundation's motions for summary judgment in
the PG Media antitrust lawsuit. In the decision, Network Solutions was found to 
be immune to antitrust violations of the Sherman Act for its actions taken      
pursuant to the cooperative agreement. PG Media appealed to the Second Circuit  
Court of Appeals and the oral argument on the appeal occurred in November 4,    
1999. No decision has been issued.                                              

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

On May 14, 1999, the U.S. Court of Appeals for the District of Columbia Circuit 
unanimously affirmed Federal District Court Judge Thomas F. Hogan's decision in 
Thomas v. Network Solutions and the National Science Foundation, thus affirming 
the validation of Network Solutions' role in providing domain name registration 
services and charging fees for such services. The lawsuit, which had been filed 
in October 1997, named the National Science Foundation and Network Solutions as 
defendants, and alleged that the National Science Foundation lacked authority to
permit Network Solutions to charge for Internet registration services, and to   
set aside 30 percent of all fees for the preservation and enhancement of the    
Internet's infrastructure. The suit further had charged that the National       
Science Foundation had created an illegal monopoly in Internet registration     
services and that Network Solutions had illegally precluded competition. The    
Court of Appeals denied the plaintiff's motion for reconsideration and entered  
final judgment on July 20, 1999. On October 12, 1999, the plaintiffs filed a    
Petition for Writ of Certiorari with the U.S. Supreme Court. Our opposition to  
that petition was filed on December 9, 1999.                                    

On April 26, 1999, the Pennsylvania Attorney General dismissed Network Solutions
from a suit brought by the Pennsylvania Attorney General's Office against a     
domain holder who was alleged to have used his domain name in connection with a 
web site promoting white supremacy and threatening certain state employees.     
Named in the suit were all of the communications companies in any way connected 
with the domain name or web site.                                               

On August 17, 1998, Network Solutions received notice from the Commission of the
European Communities, or "EC," of an investigation concerning Network Solutions'
Premier Program agreements in Europe. The EC requested production of these      
agreements and related materials for review and Network Solutions complied. On  
June 17, 1999, Network Solutions received a second inquiry from the EC          
concerning its registrar licensing agreements with the five newly-accredited    
testbed registrars and Network Solutions responded to this inquiry on July 9,   
1999. Network Solutions cannot reasonably estimate the potential impact of the  
investigation nor can Network Solutions predict whether an action will          
ultimately be brought by the EC or the form of relief that might be sought. Any 
such relief could harm Network Solutions' business.                             

Status of Privatization of Internet Administration                              

On November 10, 1999, a series of wide-ranging agreements were entered into     
relating to the domain name system. These agreements consist of the following:  

- A registry agreement between Network Solutions and the Internet     
    Corporation for Assigned Names and Numbers, commonly known as "ICANN",
 under which Network Solutions will continue to act as the exclusive
      registry for the .com, .net and .org top level domains for at least four
more years.                                                       

- A revised registrar accreditation agreement between ICANN and all   
registrars registering names in the .com, .net and .org domains.  

  - A revised registrar license and agreement between Network Solutions as
      registry and all registrars registering names in the .com, .net and .org
      domains using Network Solutions' proprietary shared registration system.

- Amendment 19 to the cooperative agreement.                          

- An amendment to the Memorandum of Understanding between the U.S.    
Government and ICANN.                                             

Under these agreements Network Solutions has recognized ICANN as the            
not-for-profit corporation described in Amendment 11 to the cooperative         
agreement, has become an ICANN-accredited registrar and has agreed to operate   
the registry in accordance with the provisions of the registry agreement and the
consensus policies established by ICANN in accordance with the terms of that    
agreement. Network Solutions will be an accredited registrar through November 9,
2004 with a right to renew indefinitely in accordance with the terms of that    
agreement. As the registry, Network Solutions will continue to charge registrars
$9 per registration-per year until                                              

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NETWORK SOLUTIONS, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

January 15, 2000. Thereafter, the fee will be $6 per registration-per year      
unless increased to cover increases in registry costs under the circumstances   
described in the registry agreement.                                            

The term of the registry agreement extends until November 9, 2003, except that  
if the ownership of Network Solutions' registry and registrar operations is     
separated within 18 months as described in the agreement, the registry agreement
term would be extended for four additional years.                               

Network Solutions has agreed to pay annual fees set by ICANN at levels currently
not to exceed $2 million for Network Solutions registrar and $250,000 for the   
Network Solutions registry.                                                     

Stock Split                                                                     

On December 21, 1999, the board of directors of the Company approved a 2-for-1  
stock split of the shares of common stock, to be effected in the form of a stock
dividend. The record and distribution dates have not yet been determined but    
will occur in 2000. After giving effect to this stock split, pro forma earnings 
(loss) per share for all periods presented would be as follows:                 

                                                        [Enlarge/Download Table]

                                                                                   NINE MONTHS     
                                                                                      ENDED        
                                                                                  SEPTEMBER 30,    
                         YEAR ENDED         YEAR ENDED         YEAR ENDED      --------------------
                      DECEMBER 31, 1996  DECEMBER 31, 1997  DECEMBER 31, 1998    1998        1999  
                      -----------------  -----------------  -----------------  --------    --------
                                                                                                   
Basic................      $(0.03)            $ 0.08             $ 0.18         $0.12       $0.27  
Diluted..............      $(0.03)            $ 0.08             $ 0.17         $0.11       $0.26  

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[INSIDE BACK COVER] 

[Schematic of Our Internet Domain Name Registration Services]                   

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[OUTSIDE BACK COVER]

[NETWORK SOLUTIONS LOGO]

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PART II 

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION                           

The following table sets forth the various expenses payable by the Registrant in
connection with the sale and distribution of the securities being registered    
hereby. Normal commission expenses and brokerage fees are payable individually  
by the selling stockholders. All amounts are estimated except the SEC           
registration fee, the NASD filing fee and the Nasdaq listing fee.               

                                                                [Download Table]

                                                               AMOUNT 
                                                              --------
                                                                      
SEC registration fee........................................  $495,621
NASD filing fee.............................................  $ 30,500
Nasdaq listing fee..........................................  $ 17,500
Accounting fees and expenses................................     *    
Printing and engraving......................................     *    
Legal fees and expenses.....................................     *    
Miscellaneous fees and expenses.............................     *    
                                                              --------
          Total.............................................  $  *    
                                                              ========

--------------------                                                  
* To be filed by amendment.                                           

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS                             

Section 145 of the Delaware General Corporation Law provides for the            
indemnification of officers, directors, and other corporate agents in terms     
sufficiently broad to indemnify such persons under certain circumstances for    
liabilities (including reimbursement for expenses incurred) arising under the   
Securities Act. Article IX of the Registrant's Second Amended and Restated      
Certificate of Incorporation (Exhibit 3(i) to the Registrant's Annual Report on 
Form 10-K for the year ended December 31, 1998) limits the liability of the     
Registrant's directors to the extent and under the circumstances permitted by   
the Delaware General Corporation Law. Certain provisions of the Company's Bylaws
provide for indemnification of the Registrant's directors and officers. In      
addition, the Company has entered into indemnification agreements with its      
directors and officers that will require the Registrant, among other things, to 
indemnify them against certain liabilities that may arise by reason of their    
status or service as directors or officers to the fullest extent permitted by   
law.                                                                            

The Underwriting Agreement (Exhibit 1 to this Registration Statement) provides  
for indemnification by the Underwriters of the Registrant, its directors and    
officers, and by the Registrant of the Underwriters, for certain liabilities,   
including liabilities arising under the Securities Act, and affords certain     
rights of contribution with respect thereto.                                    

ITEM 16.  EXHIBITS                                                              

                                                                [Download Table]

EXHIBIT                                                              
NUMBER                      DESCRIPTION OF DOCUMENT                  
-------                     -----------------------                  
                                                                     
    1*    Form of Underwriting Agreement.                            
    4     Form of Common Stock Certificate, filed as Exhibit 4.1 to  
          Company's Registration Statement on Form S-1, File No.     
          333-30705, and incorporated herein by this reference.      
    5*    Opinion of Pillsbury Madison & Sutro LLP.                  
 23.1     Consent of PricewaterhouseCoopers LLP.                     
 23.2*    Consent of Pillsbury Madison & Sutro LLP (included in its  
          opinion filed as Exhibit 5 to this Registration Statement).
   24     Power of Attorney (see page II-3).                         

---------------                                                                 
* To be filed by amendment.                                                     

ITEM 17.  UNDERTAKINGS                                                          

Insofar as indemnification for liabilities arising under the Securities Act of  
1933, as amended (the "Act"), may be permitted to directors, officers and       
controlling persons of the Registrant pursuant to the foregoing provisions, or  
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as        
expressed in the Act and is, therefore, unenforceable. In the                   

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event that a claim for indemnification against such liabilities (other than the 
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,   
suit or proceeding) is asserted by such director, officer or controlling person 
in connection with the securities being registered, the Registrant will, unless 
in the opinion of its counsel the matter has been settled by controlling        
precedent, submit to a court of appropriate jurisdiction the question whether   
such indemnification by it is against public policy as expressed in the Act and 
will be governed by the final adjudication of such issue.                       

The undersigned Registrant hereby undertakes:                                   

    (1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this 
     Registration Statement in reliance upon Rule 430A and contained in the form
     of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) and
     497(h) under the Act shall be deemed part of this Registration Statement as
of the time it was declared effective.                                

        (2) For the purpose of determining any liability under the Act, each
     post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered 
   therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.                         

      (3) That, for purposes of determining any liability under the Act,
    each filing of the Registrant's annual report pursuant to Section 13(a) or
     Section 15(d) of the Exchange Act that is incorporated by reference in this
   Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such   
securities at that time shall be deemed to be the initial bona fide   
offering thereof.                                                     

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant      
certifies that it has reasonable grounds to believe that it meets all of the    
requirements for filing on Form S-3, and has duly caused this Registration      
Statement to be signed on its behalf by the undersigned, thereunto duly         
authorized, in the City of Washington, District of Columbia, on December 21,    
1999.                                                                           

                           NETWORK SOLUTIONS, INC.

                             By:     /s/ JAMES P. RUTT
                                              ----------------------------------
                        Name:  James P. Rutt
                                    Title:   Chief Executive Officer

POWER OF ATTORNEY 

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below  
constitutes and appoints James P. Rutt, Robert J. Korzeniewski and Jonathan W.  
Emery, and each of them, his true and lawful attorneys-in-fact and agents, each 
with full power of substitution and resubstitution, for him and in his name,    
place and stead, in any and all capacities, to sign any and all amendments,     
including post-effective amendments, to this Registration Statement, and to file
the same, with exhibits thereto and other documents in connection therewith,    
with the Securities and Exchange Commission, granting unto said                 
attorneys-in-fact and agents, and each of them, full power and authority to do  
and perform each and every act and thing requisite and necessary to be done, as 
fully to all intents and purposes as he might or could do in person, hereby     
ratifying and confirming all that each of said attorneys-in-fact and agents or  
their substitute or substitutes may lawfully do or cause to be done by virtue   
hereof.                                                                         

Pursuant to the requirements of the Securities Act of 1933, this Registration   
Statement has been signed below by the following persons in the capacities and  
on the dates indicated.                                                         

                                                        [Enlarge/Download Table]

                NAME                                 TITLE                        DATE       
                ----                                 -----                        ----       
                                                                                             
         /s/ JAMES P. RUTT            Chief Executive Officer and Director  December 21, 1999
------------------------------------  (Principal Executive Officer)                          
           James P. Rutt                                                                     

       /s/ MICHAEL A. DANIELS         Chairman of the Board                 December 21, 1999
------------------------------------                                                         
         Michael A. Daniels                                                                  

     /s/ ROBERT J. KORZENIEWSKI       Chief Financial Officer (Principal    December 21, 1999
------------------------------------  Financial Officer)                                     
       Robert J. Korzeniewski                                                                

       /s/ MICHAEL G. VOSLOW          Vice President, Finance and           December 21, 1999
------------------------------------  Treasurer (Principal Accounting                        
         Michael G. Voslow            Officer)                                               

                                      Director                              December 21, 1999
------------------------------------                                                         
           Alan E. Baratz                                                                    

       /s/ J. ROBERT BEYSTER          Director                              December 21, 1999
------------------------------------                                                         
         J. Robert Beyster                                                                   

        /s/ CRAIG I. FIELDS           Director                              December 21, 1999
------------------------------------                                                         
          Craig I. Fields                                                                    

        /s/ J. DENNIS HEIPT           Director                              December 21, 1999
------------------------------------                                                         
          J. Dennis Heipt                                                                    

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                                                                [Download Table]

                NAME                            TITLE        DATE       
                ----                            -----        ----       
                                                                        
     /s/ WILLIAM A. ROPER, JR.        Director         December 21, 1999
------------------------------------                                    
       William A. Roper, Jr.                                            

      /s/ STRATTON D. SCLAVOS         Director         December 21, 1999
------------------------------------                                    
        Stratton D. Sclavos                                             

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EXHIBIT INDEX 

                                                                [Download Table]

EXHIBIT                                                                    
NUMBER                      DESCRIPTION OF DOCUMENT                        
-------                     -----------------------                        
                                                                           
    1*    Form of Underwriting Agreement..............................     
    4     Form of Common Stock Certificate, filed as Exhibit 4.1 to        
          Company's Registration Statement on Form S-1, File No.           
          333-30705, and incorporated herein by this reference........     
    5*    Opinion of Pillsbury Madison & Sutro LLP....................     
 23.1     Consent of PricewaterhouseCoopers LLP.......................     
 23.2*    Consent of Pillsbury Madison & Sutro LLP (included in its        
          opinion filed as Exhibit 5 to this Registration                  
          Statement)..................................................     
   24     Power of Attorney (see page II-3)...........................     

---------------                                                                 
* To be filed by amendment.                                                     

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-3’ Filing		Date		First		Last			Other Filings
		11/9/04		43		77
		11/9/03		43		78
		5/9/01		43
		9/30/00		10		63
		3/9/00		14		43
		1/16/00		5		40
		1/15/00		23		78
		1/1/00		44		45
		12/31/99		18					10-K405
Filed on:		12/22/99		1		47
		12/21/99		4		84
		12/20/99		2		18
		12/15/99		1		51
		12/10/99		10		41
		12/9/99		77
		12/8/99		44		45
		11/30/99		56					8-K
		11/29/99		44
		11/10/99		5		77			8-K
		11/4/99		45		76
		10/25/99		45
		10/24/99		44
		10/16/99		31
		10/12/99		45		77
		10/6/99		56					8-K
		9/30/99		5		71			10-Q
		7/20/99		45		77
		7/9/99		46		77
		6/30/99		24		56			10-Q
		6/23/99		46
		6/17/99		46		77			8-A12G/A
		6/3/99		76
		5/14/99		45		77
		4/29/99		46
		4/26/99		77
		3/31/99		56					10-Q
		3/23/99		65
		3/16/99		45		76
		2/26/99		65
		2/25/99		45		75
		2/12/99		55		76			SC 13G/A
		2/11/99		56					8-K
		2/9/99		56					424B1,  8-K,  SC 13G/A
		2/5/99		58
		1/15/99		56					8-K
		1/1/99		16
		12/31/98		18		81			10-K,  8-K
		12/15/98		66
		10/20/98		75
		10/19/98		33
		9/30/98		5		71			10-Q
		9/9/98		22		63
		8/28/98		45		75
		8/17/98		46		77
		7/20/98		45		75
		6/10/98		42
		5/14/98		45		75
		5/1/98		45		75
		4/30/98		45		75
		4/6/98		45		75
		4/1/98		22		67
		3/31/98		22		63			10-K,  10-Q
		3/12/98		23		63			SC 13G/A
		2/10/98		45		75
		1/7/98		73					S-8
		12/31/97		18		78			10-K
		10/17/97		45		75
		10/1/97		23		67
		9/26/97		18		30			424B1
		9/17/97		45		75
		8/21/97		67
		8/8/97		56					8-A12G
		6/27/97		46		75
		6/26/97		66
		4/1/97		23		63
		3/31/97		23		63
		3/20/97		45		74
		1/1/97		69
		12/31/96		20		78
		9/18/96		72
		8/10/96		69
		8/9/96		69
		1/1/96		72
		12/31/95		20		61
		9/14/95		21		63
		3/11/95		20
		3/10/95		20		69
		1/1/95		20
		12/31/94		20
		4/1/93		22		63
		1/1/93		22		63
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