Be Free Announces Restructuring and Reduction in Workforce to Support Plan for Profitability in Second Quarter of 2002.

Business/Technology Editors

MARLBOROUGH, Mass.--(BUSINESS WIRE)--August 21, 2001

Company Reiterates Previously Announced Revenue and Loss

Guidance for the Remainder of 2001

Thomas Gerace, Co-founder and Chief Marketing Officer, Departs

Be Free, Inc. (Nasdaq: BFRE), a leading provider of a marketing platform that allows online businesses to attract, convert and retain customers easily and cost effectively, today announced continued restructuring and a 25 percent workforce reduction as part of its plan to reach profitability, before non-cash charges, by the second quarter of 2002. The company will reduce its workforce to approximately 175 employees from 230.

"We believe that our market is continuing to evolve in the direction that we discussed in our second-quarter investor conference call," said Gordon B. Hoffstein, chairman and chief executive officer. "We are bringing on larger "brick to click" customers and anticipate continued losses of dot-com customers. With a smaller number of larger customers, our business model has become more efficient. The management and organizational structure that we have put in place with this restructuring will allow us to continue our high levels of service for our new and existing customers with lower staffing levels. These changes keep us on our path to profitability without compromising our market position and ability to provide excellent customer service," said Hoffstein.

Financial Impact of Restructuring

The company also stated that it expects its third- and fourth-quarter 2001 revenue and loss figures will be consistent with the guidance that management provided in its second-quarter investor conference call on July 25, 2001.

The company reiterated that it expects revenue to grow by seven to 12 percent sequentially in the third quarter of 2001, and 20 to 30 percent sequentially in the fourth quarter. Combined with previous cost-reduction measures, the company expects to reduce quarterly operating expenses by a total of $3.5 million by the fourth quarter of 2001, compared to expense levels in the first quarter of the year. The company expects to take a restructuring charge of up to $1.5 million in the third quarter.

"We believe that our more efficient business model and strong balance sheet will allow Be Free to achieve its second quarter 2002 goals of profitability before non-cash charges, and a cash reserve of more than $100 million," said Hoffstein.

Co-founder and Chief Marketing Officer Departs

As part of the restructuring, Thomas Gerace, co-founder and chief marketing officer, will no longer serve in the capacity of chief marketing officer. He will, however, continue to work with the company in an advisory capacity on strategic initiatives.

"Since the founding of Be Free, Tom has been an integral part of its success," said Hoffstein. Just as Tom helped to shape the original vision for Be Free four years ago, he has continued to be essential in forming the company's future direction. I would like to personally thank Tom for his tireless commitment to Be Free and selfless evaluation of the best structure for the company going forward."

About Be Free, Inc.

The Be Free marketing platform allows online businesses to attract, convert and retain customers easily and cost effectively. The company provides a uniform system for tracking, managing, measuring and analyzing all of a business's online marketing programs. These services are hosted, allowing a business to deploy its marketing programs rapidly, without placing time intensive and expensive demands on its own technical resources.

With Be Free's industry-leading BFAST(SM) partner marketing services, businesses manage and track strategic partners and affiliates - compensating these selling partners based on their performance. Be Free's BSELECT(SM) Onsite service allows a business to convert visitors to buying customers by recommending relevant products in real time. For more information about Be Free and its products and services, visit http://www.befree.com.

Safe Harbor Statement

This press release contains forward-looking statements including, but not limited to, statements about our future financial performance such as our expected revenue growth, future losses and profits, cash expenditures and cash balances, the level of customer transactions, as well as statements about the growth of performance marketing and the future market conditions for our services. These statements are based on Be Free's current expectations, hopes, beliefs and estimates and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated or projected. The risk factors include, but are not limited to:

-- If the Internet fails to grow as an advertising, marketing, and sales medium, our future revenue and business prospects would be materially and adversely affected;

-- System disruptions and failures may result in customers' dissatisfaction, customer loss or both, which could materially and adversely affect our reputation and business;

-- To be competitive we must continue to develop new and enhanced services and our failure to do so may adversely affect our prospects;

-- The Internet generates privacy concerns which could result in market perceptions or legislation which could harm our business, result in reduced sales of our services, or both;

-- If we infringe upon the intellectual property rights of others, we could be exposed to significant liability;

-- If we fail to manage effectively our operations, our business and prospects will be materially and adversely affected; and

-- If we fail to attract and retain key personnel, our business will be materially and adversely affected.

Further information about risk factors that could affect the Company's performance are contained in the Company's filings with the Securities and Exchange Commission, including but not limited to those set forth in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors That May Affect Future Results" in its annual report on Form 10-Q for the quarter ended June 30, 2001. Be Free disclaims any obligation to update these expectations, hopes and beliefs.