INDIVIDUAL INC, S-1/A, 1996-09-06

INDIVIDUAL INC
S-1/A, 1996-09-06
COMPUTER PROCESSING & DATA PREPARATION

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1996

REGISTRATION NO. 333-8511
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- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------

AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
INDIVIDUAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7375 04-3036959
(PRIMARY STANDARD (I.R.S.
(STATE OR OTHER INDUSTRIAL EMPLOYERIDENTIFICATION
JURISDICTION OF CLASSIFICATION CODE NUMBER)
INCORPORATION OR NUMBER)
ORGANIZATION)

8 NEW ENGLAND EXECUTIVE PARK WEST,
BURLINGTON, MA 01803
(617) 273-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
MICHAEL E. KOLOWICH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INDIVIDUAL, INC.
8 NEW ENGLAND EXECUTIVE PARK WEST
BURLINGTON, MASSACHUSETTS 01803
(617) 273-6000

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
WILLIAM B. ASHER, JR., ESQ.
TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER
125 HIGH STREET
BOSTON, MASSACHUSETTS 02110
(617) 248-7000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.

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, check the following box. [X]

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. [_]

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

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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- -------------------------------------------------------------------------------
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1996

1,514,309 SHARES

INDIVIDUAL, INC.

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

This Prospectus relates to the resale of 1,514,309 shares of Common Stock,
$.01 par value per share (the "Common Stock"), of Individual, Inc.
("Individual" or the "Company") which may be offered hereby from time to time
by any or all of the Selling Stockholders named herein. See "Selling
Stockholders and Plan of Distribution." The Company will not receive any of the
proceeds from the resale of the shares being sold by the Selling Stockholders.
The Common Stock is traded on the Nasdaq National Market under the symbol INDV.
On August 30, 1996, the last reported sale price of the Common Stock as
reported on the Nasdaq National Market was $6.00 per share. See "Price Range of
Common Stock."

On June 28, 1996, the Company acquired (the "FreeLoader Acquisition")
FreeLoader, Inc. ("FreeLoader") pursuant to a subsidiary merger in which all of
the outstanding shares of Common Stock of FreeLoader, $.001 par value per share
(the "FreeLoader Common Stock") were exchanged for an aggregate of 1,514,309
shares of the Company's Common Stock. In addition, in connection with the
FreeLoader Acquisition, the Company assumed all of the outstanding stock
options under FreeLoader's 1996 Stock Plan, as amended.

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

-----------

The date of this Prospectus is , 1996
<PAGE>

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING
STOCKHOLDER OR ANY OTHER PERSON OR ENTITY. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................................................... 4
Risk Factors........................................................... 6
Price Range of Common Stock............................................ 17
Dividend Policy........................................................ 17
Capitalization......................................................... 18
Selected Consolidated Financial Data................................... 19
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 21
Business............................................................... 29
Management............................................................. 50
Certain Transactions................................................... 59
Principal Stockholders................................................. 61
Selling Stockholders and Plan of Distribution.......................... 64
Description of Capital Stock........................................... 66
Legal Matters.......................................................... 69
Experts................................................................ 69
Additional Information................................................. 69
Index to Financial Statements.......................................... F-1
</TABLE>

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The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by its independent auditors, and with quarterly reports for the
first three quarters of each fiscal year containing unaudited summary
financial information.

The Company was incorporated in Delaware on January 24, 1989. Unless the
context requires otherwise, as used in this Prospectus, "Company" and
"Individual" refer to Individual, Inc. and its subsidiaries. The Company's
principal executive offices are located at 8 New England Executive Park West,
Burlington, Massachusetts 01803, and its telephone number is (617) 273-6000.

The following are trademarks of the Company: Individual(TM), the Company's
logo, First!(TM), HeadsUp(TM), Physician's NewScan(TM), Topic Selector(TM) and
FreeLoader(TM). This Prospectus also includes trademarks and trade names of
companies other than Individual. All other company or product names are
trademarks or registered trademarks of their respective owners.

3
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and Financial Statements and Notes
thereto, appearing elsewhere in this Prospectus.

THE COMPANY

Individual develops and markets a suite of customized information services
that provide knowledge workers with daily personalized current awareness
reports, while offering information providers and advertisers new ways to reach
targeted audiences. Leveraging its knowledge processing systems, editorial
knowledge bases, and an exclusive license to Cornell University's SMART
technology, the Company's intelligent software agents search each day through
approximately 10,000 to 20,000 stories drawn from more than 730 broad (e.g.,
Reuters) and specialized (e.g., PC Week) information sources. The Company's
proprietary systems filter incoming information, prepare for each user a highly
relevant daily news briefing, and deliver its services across a range of
delivery platforms, including facsimile, electronic mail, groupware, intranets,
and the Internet. The Company's services enable its more than 138,000 users to
track industry developments in a cost-effective, timely and user-friendly
manner. The Company believes that its customized information services address
the current awareness needs of knowledge workers--individuals whose job
productivity and effectiveness depend on the ability to access and analyze
current information to make effective decisions.

The Company's First! service is targeted to enterprises seeking to gain
competitive advantage through current awareness and knowledge sharing. First!
is typically delivered electronically to groupware (including Lotus Notes,
Folio VIEWS, and Collabra Share) or intranet platforms, is made available for
organization-wide redistribution, and enables end-user personalization. The
Company's single-user service, HeadsUp, offers knowledge workers a concise
abstract of customized daily news items, with full text available through the
Company's interactive fulfillment capabilities. HeadsUp has served as a model
for other single-user services that the Company now markets. These services are
sold to customers on a subscription basis.

In April, 1995, the Company launched its award-winning NewsPage site on the
Internet's World Wide Web ("Web"). NewsPage users have access to brief
abstracts of news items and can link to full-text versions of stories of
interest. The Company sells advertising for NewsPage topic areas, enabling
corporations to reach micro-targeted audiences. When users review a topic of
interest, they are presented with an advertising banner from a related
sponsoring company, and can immediately link to the advertiser's Web site to
get detailed product information or potentially to conduct a business
transaction online. The Company believes that the widespread deployment of the
Internet creates opportunities for generating both subscription and advertising
revenue from its Web-based information services.

In June 1996 the Company acquired FreeLoader, the developer of an offline Web
content delivery service. Working in conjunction with Web browsers such as
Netscape Navigator, FreeLoader enables the user to specify multimedia Web
content to be retrieved and downloaded to the user's hard drive at pre-
determined intervals. Once downloaded, the information is accessible to the
user at any time.

The Company's services address the information needs of multiple market
segments ranging from individual knowledge workers to enterprises. To reach
these segments, the Company has developed sales expertise in multiple channels.
The Company utilizes business relationships with leading corporations, to
market its capabilities to a broader user base. Two such corporations,
Microsoft and Knight-Ridder, have invested in the Company and also have joint
product development and marketing activities with the Company. Existing
customers include leading corporations in diverse industry sectors, such as
Amoco, Andersen Consulting, AT&T, Chase Manhattan Bank, Cisco Systems, Hewlett-
Packard, IBM, Intel, Johnson & Johnson, MCI, Mercedes-Benz, and Xerox.

The Company's objective is to build the industry's leading "open information
exchange" linking a growing base of knowledge workers to relevant information
providers and advertisers. The Company believes that the value of this exchange
will increase as the Company enhances its knowledge processing systems and
expands its base of participants. An expanding set of information providers
will make the services more compelling for knowledge workers. A larger user
base will generate additional readership and revenue for information providers.
Increased participation of advertisers, who benefit from a larger user base and
a growing number of information topics, will help to reduce subscription costs,
leading to further expansion of the Company's user base. The Company believes
the mutually reinforcing dynamics of its business model are key to sustaining
its growth and meeting its strategic objectives.

4
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PLAN OF DISTRIBUTION

This Prospectus relates to the resale of 1,514,309 shares of Common Stock of
the Company received by the Selling Stockholders upon the closing of the
FreeLoader Acquisition. Such shares may be offered hereby from time to time by
any or all of the Selling Stockholders. The Company will not receive any of the
proceeds from the resale of the shares of Common Stock by the Selling
Stockholders. See "Selling Stockholders and Plan of Distribution."

SUMMARY CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED(4)
(UNAUDITED)
-----------
SIX MONTHS
ENDED
JUNE 30, SIX MONTHS
YEAR ENDED DECEMBER 31, (UNAUDITED) ENDED
------------------------------------------- ----------------- JUNE 30,
1991 1992 1993 1994 1995 1995 1996(1) 1996(1)(3)
------- ------- ------- ------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenue................. $ 845 $ 1,901 $ 4,105 $ 9,127 $16,733 $ 7,601 $ 10,677 $ 10,677
Gross margin............ 300 818 1,936 5,050 8,950 4,218 5,782 5,782
Loss from operations.... (1,683) (1,729) (3,184) (4,162) (6,232) (3,036) (40,546) (44,210)
Net loss................ (1,610) (1,740) (3,020) (4,256) (6,443) (3,040) (40,848) (44,485)
Supplemental net loss
per common share(2).... $ (0.67) $ (0.32) $ (3.67) $ (3.52)
Supplemental weighted
average common shares
outstanding(2)......... 9,619 9,639 11,134 12,632
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
(UNAUDITED)
-----------
<S> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents......................................... $34,118
Working capital................................................... 26,009
Total assets...................................................... 49,103
Other long-term obligations....................................... 1,128
Stockholders' equity.............................................. 29,398
</TABLE>
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(1) Excludes 2,735,424 shares of Common Stock issuable pursuant to stock
options outstanding at June 30, 1996 (of which options to purchase 772,535
shares were exercisable) with a weighted average exercise price of $6.93
per share See "Management -- Stock Plans."

(2) See Notes to the Interim Condensed Consolidated Financial Statements.

(3) Gives effect to the acquisition of FreeLoader, using the purchase method of
accounting, as if the acquisition had occurred as of the beginning of the
six-month period ending on June 30, 1996 for consolidated statement of
operations data, and the issuance by the Company of approximately 1,514,309
shares of Common Stock to the securityholders of FreeLoader (excluding
approximately 360,180 shares of Common Stock reserved for issuance upon
exercise of outstanding FreeLoader stock options assumed by the Company in
the acquisition). The nonrecurring charge of approximately $35,564,000 at
June 30, 1996 related to purchased technology determined to be in-process
has been reflected in the pro forma combined consolidated statement of
operations data. See the Unaudited Pro Forma Combined Condensed
Consolidated Financial Statements, appearing elsewhere in this Prospectus.

(4) As discussed in the Unaudited Pro Forma Combined Condensed Consolidated
Financial Statements, appearing elsewhere in this Prospectus, the operating
results of FreeLoader for the year ended December 31, 1995 were not
material to the results of operations of Individual and therefore, the pro
forma combined consolidated statement of operations data for the year ended
December 31, 1995 has not been presented. In addition, the acquisition of
FreeLoader was completed on June 28, 1996, and accordingly has been
reflected in the Company's June 30, 1996 balance sheet. Therefore, pro
forma combined consolidated balance sheet data as of June 30, 1996 has not
been presented.

Except as otherwise noted, all information in this Prospectus (i) reflects
the conversion of all outstanding shares of the Company's Preferred Stock into
Common Stock which occurred in March 1996 in connection with the Company's
initial public offering and (ii) reflects the 3-for-2 stock split of the
Company's Common Stock in the form of a stock dividend effected in March 1996
in connection with the initial public offering. See "Capitalization" and
"Description of Capital Stock."

This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

5
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RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Common Stock offered hereby. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

HISTORY OF OPERATING LOSSES; ANTICIPATION OF CONTINUING LOSSES

The Company was incorporated in January 1989 and introduced its initial
service First! in March 1990. Accordingly, the Company has only a limited
operating history upon which an evaluation of the Company and its prospects
can be based. The Company's prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new, unproven and
rapidly evolving markets. To address these risks, the Company must, among
other factors, respond to competitive developments, continue to attract,
retain and motivate qualified employees, continue to upgrade its technologies,
and commercialize its products and services incorporating such technologies.
There can be no assurance that the Company will be successful in addressing
such risks. Since its inception, the Company has incurred substantial costs to
develop and enhance its technology, to create, introduce, and enhance its
service offerings, to establish marketing and distribution relationships, to
recruit and train a sales and marketing group, and to build an administrative
organization. The Company intends to continue these efforts and, in addition,
to increase its spending for the marketing and sale of its products and
services, in particular its NewsPage and FreeLoader Internet services. As a
consequence, the Company has incurred operating losses in each of its fiscal
quarters and years since inception and expects to continue to incur operating
losses on both a quarterly and annual basis for the foreseeable future. From
inception through June 30, 1996, the Company had accumulated a deficit of
approximately $59 million. The limited operating history of the Company makes
the prediction of future results of operations difficult or impossible, and
therefore, there can be no assurance that the Company will sustain revenue
growth or achieve profitability. See "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Industry Background."

FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS

The Company's quarterly revenue and results of operations have fluctuated
significantly in the past and will likely fluctuate in the future. Causes of
such significant fluctuations have included and may include, among other
factors, demand for the Company's services, the size and timing of both new
and renewal subscriptions from corporate customers, the number, timing and
significance of new service announcements by the Company and its competitors,
the ability of the Company to develop, market and introduce new and enhanced
versions of its services on a timely basis, the level of product and price
competition, changes in operating expenses, changes in service mix, changes in
the Company's sales incentive strategy, and general economic factors. In
addition, revenue attributable to the Company's NewsPage and FreeLoader
Internet services will depend upon the success of the Internet, and, to a
significant extent upon the sale of advertising space on that service. There
can be no assurance that the Company will be successful in attracting
advertisers to this service or in selling advertising space at favorable
rates. Any one or more of these factors could have a material adverse effect
on the Company's business, results of operations and financial condition, and
makes the prediction of results of operations on a quarterly basis unreliable.
As a result, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as any indication of future performance.

6
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A substantial portion of the Company's cost of revenue, which consists
principally of fees payable to information providers, telecommunications
costs, personnel expenses attributable to the daily publication of its
services, and related editorial and client services expenses, is relatively
fixed in nature. In addition, a substantial portion of the Company's operating
expenses is related to personnel and marketing programs, which cannot be
adjusted quickly and are therefore fixed in the short term. The Company's
operating expense levels are based, in significant part, on the Company's
expectations of future revenue on a quarterly basis. If actual revenue levels
on a quarterly basis are below management's expectations, both gross margins
and results of operations are likely to be adversely affected because a
relatively small amount of the Company's costs and expenses varies with its
revenue in the short term.

Due to all of the foregoing factors, it is possible that in some future
quarter the Company's results of operations will be below the expectations of
public market analysts and investors. In such event, the price of the
Company's Common Stock would likely be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Selected Quarterly Results of Operations."

RECENT CHANGE IN MANAGEMENT; DEPENDENCE ON KEY PERSONNEL

The Company hired Michael E. Kolowich as the Company's new President and
Chief Executive Officer in September 1996. Mr. Kolowich replaced Joseph A.
Amram, a founder and former President and Chief Executive Officer of the
Company whose employment was terminated in August 1996. In addition, a number
of other senior management personnel have joined the Company since January 1,
1996, including Janesse T. Bruce, the Company's Senior Vice President and
General Manager, Internet and Single-User Services, Robert L. Lentz, the
Company's Chief Financial Officer, Jeffrey Miller, the Company's Vice
President, NewsPage Advertising Sales and Robin B. Streit, the Company's Vice
President, Consumer Marketing. There can be no assurance that Mr. Kolowich and
the other new management personnel will be able to effectively manage the
Company, and that these management changes will not have a material adverse
affect on the Company's business, results of operations and financial
condition, as well as on perceptions of the Company by current and prospective
investors.

The Company's future success depends, in significant part, upon the
continued service of its key technical, editorial, sales, product development
and senior management personnel, most of whom are not bound by employment
agreements, and only certain of whom are bound by noncompetition agreements.
The loss of the services of one or more of these key employees could have a
material adverse affect on the Company. There can be no assurance that the
Company will be able to retain its key personnel. Departures and additions of
key personnel, such as may occur in connection with the management changes
described above, to the extent disruptive, could have a material adverse
affect on the Company. See "Business -- Employees."

The Board of Directors has been engaged in discussions with Mr. Amram
concerning the terms of possible severance benefits relating to his
termination of employment with the Company, although no agreement has been
reached, and there can be no assurance that any agreement will be reached,
with respect to such matters. In the event that no agreement is reached, there
is a risk that Mr. Amram may commence litigation against the Company based
upon claims arising out of his termination. Any such litigation, if commenced,
could be costly to defend, would divert management's attention and might
result in a significant monetary judgment against the Company, any of which
could have a material adverse affect upon the Company's business, results of
operations and financial condition.

MANAGEMENT OF CHANGE; NEED TO ENHANCE MANAGEMENT SYSTEMS; ADDITIONAL PERSONNEL

The Company has recently experienced a period of rapid and significant
growth, including a significant increase in the number of employees. Such
growth has placed, and may continue to place, strain on the Company's
management, operations, and systems. The Company's ability to compete

7
<PAGE>

effectively will depend, in part, upon its ability to revise, improve, and
effectively utilize its operational, management, marketing, and financial
systems necessitated by changes in the Company's business. Any failure of the
Company's management to effectively manage expected changes would have a
material adverse effect on the Company's business, results of operations, and
financial condition. There can be no assurance that the Company will be able
to effectively manage such change.

The Company intends to hire a significant number of additional engineering
and sales personnel in 1996 and later years. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to
attract, assimilate or retain additional highly qualified employees in the
future. If the Company is unable to hire and retain personnel in key
positions, the Company's business, results of operations, and financial
condition would be materially adversely affected. See "Business -- Employees."

EMERGING MARKET FOR CUSTOMIZED INFORMATION SERVICES

The market for the Company's customized information services has only
recently begun to develop, is rapidly evolving and is characterized by an
increasing number of market entrants who have introduced or developed business
information services for delivery by facsimile and over public and private
networks, online services, the Internet and intranets. As is typical of a new
and rapidly evolving industry, demand and market acceptance for recently
introduced products and services are subject to a high level of uncertainty.

The Company's future operating results will depend in substantial part on
its ability to increase the subscriber base of its First! service, which is
targeted to knowledge workers within large enterprises ($50 million or more in
annual revenue) and its single-user services, as well as to attract and
increase paid advertising sponsorship of its NewsPage and FreeLoader services.
Growth in the subscriber base of First! will depend, among other factors, on
the ability of the Company to expand its direct and indirect sales and
marketing channels, to attract and retain information providers that publish
news and information which is relevant to the needs of the Company's
enterprise customers, and to deliver its services across the multiple delivery
platforms that are relied upon by its enterprise customers to support their
changing communications infrastructures. Increases in the paid advertising
sponsorship of NewsPage and FreeLoader and the Company's other single-user
services will depend, among other matters, on the acceptance of the Internet
as a viable advertising medium, as well as on the Company's ability to build a
direct sales force to sell advertising, to attract and retain information
providers, and to develop and increase a base of users of a sufficient size
and with appropriate demographics to attract advertisers. In addition, if
customers of First! migrate in significant numbers to NewsPage, which is
offered by the Company either without charge or for a low monthly per-user
charge, before the Company is able to increase advertising sponsorship of
NewsPage, the Company would suffer a significant shortfall in revenue. If the
Company is unable to increase the subscriber base of First! or to attract and
increase paid advertising sponsorship of NewsPage and FreeLoader, the
Company's business, results of operations, and financial condition will be
materially and adversely affected. See "Business -- Strategy" and "-- Products
and Services."

Because the market for the Company's products and services is new and
evolving, it is difficult to predict with any assurance the growth rate, if
any, and size of this market. There can be no assurance that the market for
the Company's products and services will develop or that the Company's
products and services will achieve market acceptance. If the market fails to
develop, develops more slowly than expected, or becomes saturated with
competitors; if the Company's products and services do not achieve market
acceptance; or if pricing becomes subject to significant competitive
pressures, the Company's business, results of operations, and financial
condition will be materially adversely affected. See "Business -- Industry
Background."

8
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COMPETITION

The market for information services is intensely competitive and rapidly
changing. The Company competes, or may in the future compete, directly or
indirectly for users, information providers and/or advertisers with the
following categories of companies: (i) large, well-established news and
information providers such as Dow Jones & Company, Inc., Knight-Ridder, Inc.
("Knight-Ridder"), Pearson PLC, Reed Elsevier PLC ("Lexis/Nexis"), Reuters
America, Inc., and Thompson Financial Networks, Inc.; (ii) traditional print
media companies that are increasingly searching for opportunities for online
provision of news, including through the establishment of Web sites on the
Internet; (iii) providers of network-based software systems such as Lotus
Development Corporation and Microsoft Corporation, which could, in the future,
ally with competing news and information providers; (iv) third party providers
of software that allows customers to aggregate and filter a variety of news
feeds, such as Desktop Data, Inc.; (v) consumer online services such as
CompuServe, Incorporated, America Online, Inc., and Prodigy Services Company;
(vi) Internet-based news and information distributors such as ClariNet
Communications Corp., and search engine providers such as Digital Equipment
Corporation, Infoseek Corporation, Lycos, Inc., Verity, Inc., and Yahoo
Corporation, and (vii) companies that offer space for advertising on the Web,
including content sites such as c|net, ESPNet, GNN, HotWired, Pathfinder, and
USA Today. FreeLoader competes with other Web offline delivery software
vendors such as Pointcast, Web Whacker and OM Express. The Company presently
has strategic relationships with certain of its competitors or potential
competitors (including Knight-Ridder, Microsoft and Yahoo!) and licenses
content from others.

Some of the Company's current and potential competitors own all or a
substantial part of the information in their databases. The Company pays fees
to the information providers from whom it licenses content. Competitors who
own their own information have no such fee obligation on their own
information, or may limit or preclude access by the Company to their
information which may give such competitors a pricing or competitive advantage
over the Company.

The Company believes that the overall cost to the user of retrieving useful
information through an online service is an important competitive factor. This
cost will include such elements as subscription fees, usage fees, online
charges, and other items. The Company could be required to reduce its
subscription fees or otherwise alter its pricing structure in response to
competitive pressures. Any such action or increased competition, on the basis
of price, depth and breadth of data sources or other factors could have a
material adverse effect on the Company's business, results of operations and
financial condition.

Many of the Company's current and potential competitors have longer
operating histories, significantly greater financial, technical and marketing
resources, greater name recognition, and a larger installed customer base than
the Company. In addition, any of these competitors may be able to respond more
quickly to new or emerging technologies and changes in customer requirements,
and to devote greater resources to the development, promotion, and sale of
their services than the Company. There can be no assurance that the Company's
current or potential competitors will not develop products and services
comparable or superior to those developed by the Company or adapt more quickly
than the Company to new technologies, evolving industry trends or changing
customer requirements. Increased competition could result in price reductions,
reduced margins, or loss of market share, any of which would materially and
adversely affect the Company's business, results of operations, or financial
condition. There can be no assurance that the Company will be able to compete
successfully against current and future competitors, or that competitive
pressures faced by the Company will not have a material adverse effect on its
business, results of operations, and financial condition. If the Company is
unable to compete successfully against current and future competitors, the
Company's business, results of operations, and financial condition will be
materially adversely affected. See "Business -- Competition."

9
<PAGE>

DEPENDENCE ON THE INTERNET

Although the Company distributes its products and services across multiple
delivery platforms, including facsimile, electronic mail, and private networks
based on Lotus Notes and other groupware products, sales of certain of the
Company's products and services will depend upon the adoption of the Internet
as a widely used medium for commerce and communication. The Internet may not
prove to be a viable commercial marketplace because of inadequate development
of the necessary infrastructure, such as reliable network backbones or timely
development of complementary services, such as high-speed modems. The Internet
has experienced, and is expected to continue to experience, significant growth
in the number of users and amount of traffic. There can be no assurance that
the Internet infrastructure will continue to be able to support the demands
placed on it by this continued growth. In addition, the Internet could lose
its viability due to delays in the development or adoption of new standards
and protocols (for example, the next-generation Internet Protocol) to handle
increased levels of Internet activity, or due to increased governmental
regulation. Because global commerce and online exchange of information on the
Internet and other similar open wide area networks are new and evolving, it is
difficult to predict with any assurance whether the Internet will prove to be
a viable commercial marketplace. There can be no assurance that the
infrastructure or complementary services necessary to make the Internet a
viable commercial marketplace will be developed, or, if developed, that the
Internet will become a viable commercial marketplace for products and services
such as those offered by the Company. In particular, the Internet is an
unproven medium for paid advertising sponsorship of services such as the
Company's NewsPage and FreeLoader services. If the necessary infrastructure or
complementary services are not developed, or if the Internet does not become a
viable commercial marketplace, the Company's business, results of operations,
and financial condition will be materially adversely affected. See
"Business -- Industry Background."

DEPENDENCE ON LOTUS NOTES

A significant portion of the Company's revenue to date has been derived from
services delivered to enterprise customers who have established private
communications networks based on Lotus Notes. Any factor adversely affecting
the demand for, or use of, Lotus Notes could have an adverse impact on the
demand for the Company's services and would cause a material adverse effect on
the Company's business, results of operations and financial condition.
Additionally, any changes to the underlying components of Lotus Notes that
would require changes to the Company's products and services would materially
adversely affect the Company if it were not able to successfully develop or
implement such changes in a timely and cost-effective fashion. Lotus/IBM has
recently introduced Notes 4.0. The Company is in the process of enhancing its
First! service to run on Notes 4.0, but there can be no assurance that it will
be successful in such efforts on a timely basis, if at all. There can be no
assurance that the acquisition of Lotus by IBM will not result in changes to
the technology, sales and marketing strategy, support, or competitive position
of Lotus Notes. Although the Company also delivers its products and services
to its enterprise customers on multiple platforms other than Lotus Notes,
including facsimile, electronic mail, intranets, and the Internet, there can
be no assurance that any such versions of its products and services will gain
market acceptance. See "Business -- Industry Background," "-- The Individual
Solution" and "-- Products and Services."

DEPENDENCE ON PRINCIPAL PRODUCTS AND SERVICES

Since their respective introductions in March 1990 and June 1993, First! and
HeadsUp have accounted for a substantial portion of the Company's revenue. For
1994 and 1995, subscriptions for these services accounted for 96.5% and 92.6%
of revenue, respectively. These services are expected to continue to account
for a substantial portion of the Company's total revenue for the foreseeable
future. As a result, any factor, such as price reductions or declines in
demand for First! or HeadsUp, or increases in customer acquisition costs which
adversely affect sales of First! or HeadsUp, would have a material adverse
effect on the Company's business, results of operations, or financial
condition.

10
<PAGE>

In April 1995, the Company introduced a service for the Internet called
NewsPage. Because NewsPage is sponsored by paid advertising and is offered to
users either without cost or for a low monthly per-user charge, customers of
First! and HeadsUp may migrate to NewsPage, with a resulting loss of
subscription revenue, before the Company is able to generate significant
advertising revenue from NewsPage. There can be no assurance that the Company
will continue to be successful in marketing these services or any new or
enhanced services which supplement or replace these services. In addition,
competitive pressures or other factors may result in significant price erosion
that would have a material adverse effect on the Company's business, results
of operations, and financial condition. See "Business -- Products and
Services" and "-- Competition."

DEPENDENCE ON INFORMATION PROVIDERS

The Company currently offers its users access to more than 730 news and
information sources through its services, pursuant to agreements between the
Company and more than 60 information providers. The Company's agreements with
information providers are generally for a term of two or three years, with
automatic renewal unless notice of termination is provided before the end of
the term by either party. These agreements may also be terminated by the
information provider if the Company fails to fulfill its obligations under the
applicable agreement. Many of these information providers compete with one
another and, to some extent, with the Company for subscribers and paid
advertising. Termination of one or more significant information provider
agreements would decrease the news and information which the Company can offer
its customers and could have a material adverse effect on the Company's
business, results of operations, and financial condition. The Company may in
the future be subject to certain third party claims, such as defamation, as a
result of the content supplied by its information providers, and any such
claim may have a material adverse effect on the Company. In addition, fees
payable to the Company's information providers constitute a significant
portion of the Company's cost of revenue. If the Company is required to
increase the fees payable to its information providers, or to pay arrearages
attributable to prior periods, such increased fee payments would have an
adverse effect on the Company's gross margins and results of operations. See
"Business -- Information Sources."

RISKS ASSOCIATED WITH ACQUISITIONS

Acquisitions, including Individual's acquisition of FreeLoader in June 1996,
involve a number of potential risks, including difficulties in the
assimilation of the acquired company's operations, technology, products and
personnel, completion and integration of acquired in-process technology,
diversion of management's resources, uncertainties associated with operating
in new markets and working with new employees and customers, and the potential
loss of the acquired company's key employees. In order for Individual to
achieve anticipated benefits from its acquisition of FreeLoader, Individual
will need to integrate FreeLoader's business and key employees with
Individual's existing operations and employees and to make significant
expenditures for sales and marketing and product development to further
develop FreeLoader's business. No assurance can be given that Individual will
be successful in this regard. Moreover, even if successfully integrated, the
acquired Freeloader operations may not achieve levels of revenues or
productivity comparable to those achieved by Individual's existing operations,
or otherwise perform as expected. The combination of the two companies will
also require substantial attention from management. In addition, the process
of combining the two organizations could cause the interruption of, or a loss
of momentum in, the activities of either or both of the companies' businesses.
The diversion of the attention of management and the interruption or loss of
momentum with respect to either or both companies' business activities could
have an adverse effect on the business, results of operations and financial
condition of the combined company.

Management may from time to time consider other acquisitions of assets or
businesses that it believes may enable Individual to acquire complementary
skills and capabilities, offer new products,

11
<PAGE>

expand its customer base or obtain other competitive advantages. There can be
no assurance that Individual will be able to successfully identify suitable
acquisition candidates or complete future acquisitions. In order to finance
such acquisitions or fund the operations of any acquired businesses, it may be
necessary for Individual to raise additional funds either through public or
private financings, including bank borrowings. Any financing, if available at
all, may be on terms which are not favorable to Individual. In addition,
issuances of Individual's equity securities for future acquisitions could
result in dilution to Individual's existing stockholders.

There can also be no assurance that the FreeLoader acquisition and any
future acquisitions will not have a material adverse effect upon Individual's
business and results of operations. See "Business."

RAPID TECHNOLOGICAL CHANGE; NEW PRODUCT DELAYS; RISK OF SERVICE FAILURES

The information services, software and communications industries are
characterized by rapid technological change, changes in customer requirements,
frequent new product and service introductions and enhancements and emerging
industry standards. The introduction of products and services embodying new
technologies and the emergence of new industry standards and practices can
render existing products and services obsolete and unmarketable. The Company's
future success will depend on its ability to enhance its existing services, to
develop new products and services that address the increasingly sophisticated
and varied needs of its customers, and to respond to technological advances
and emerging industry standards and practices. In April 1995, the Company
introduced a new service for the Internet, NewsPage. In addition, in the
future the Company expects to introduce enhanced versions of NewsPage and of
its other products and services. The development of new products and services
or enhanced versions of existing products and services, including new versions
of existing services that are delivered via the Web, entail significant
technical risks. There can be no assurance that the Company will be successful
in developing, introducing and marketing service enhancements, new services,
or versions of existing services, or will not experience difficulties that
could delay or prevent the successful development, introduction or marketing
of these services, or that its new services and product enhancements will
adequately meet the requirements of the marketplace and achieve market
acceptance. If the Company is unable, for technical or other reasons, to
develop and introduce new products and services or enhancements of existing
products and services in a timely manner in response to changing market
conditions or customer requirements, or if NewsPage or new versions of
existing services do not achieve market acceptance, the Company's business,
results of operations, and financial condition will be materially adversely
affected. Services as complex as those offered by the Company often encounter
development delays and may result in service failures when first introduced or
as new versions are released. Although the Company has not experienced
material adverse effects resulting from any such delays or failures in the
last three years, there can be no assurance that the Company will not
experience delays in development, or that failures will not occur, in new
services after commercial introduction, resulting in loss of or delay in
market acceptance, which could have a material adverse effect upon the
Company's business, results of operations, or financial condition. See
"Business -- Editorial Operations and Product Development."

RISK OF SYSTEM FAILURE OR INADEQUACY

The Company's operations are dependent on its ability to maintain its
computer and telecommunications equipment in effective working order and to
protect its systems against damage from fire, natural disaster, power loss,
telecommunications failure or similar events. All of the Company's computer
and telecommunications equipment, including its processing operations, is
located at its headquarters facility in Burlington, Massachusetts. Although
the Company is considering establishing a limited back-up capability for its
systems at another site, this measure, if implemented, will not eliminate the
significant risk to the Company's operations from a natural disaster or system
failure at its principal site. From time to time the Company has suffered
failure of its system which has

12
<PAGE>

resulted in delays in the delivery of its services to some customers or, on
two occasions (most recently in October 1994), in a one-day interruption in
production of its services. In addition, the Company's operations are
dependent upon receipt of timely feeds and computer downloads from its
information providers, and any failure or delay in the transmission or receipt
of such feeds and downloads, whether on account of system failure of the
information providers, the public network or otherwise, could disrupt the
Company's operations. In addition, growth of the Company's customer base may
strain the capacity of its computer and telecommunications systems and lead to
degradations in performance or system failure. Any damage, failure or delay
that causes interruptions in the Company's operations could have a material
adverse effect on the Company's business, results of operations, and financial
condition. The Company's property and business interruption insurance may not
be adequate to compensate the Company for all losses that may occur. See
"Business -- Editorial, Operations, and Product Development."

DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISK OF THIRD PARTY CLAIMS FOR
INFRINGEMENT; POSSIBLE TRADEMARK INFRINGEMENT CLAIMS

The Company's success is dependent to a significant degree on its
proprietary technology. The Company relies on a combination of trade secret,
copyright and trademark laws, non-disclosure agreements with its employees and
with third parties, and contractual provisions to establish and protect its
proprietary rights. The Company has filed two patent applications, and has not
to date registered any of its copyrights or trademarks. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's services or to obtain and use information that
the Company regards as proprietary. There can be no assurance that the steps
taken by the Company to protect its proprietary rights will be adequate or
that the Company's competitors will not independently develop technologies
that are substantially equivalent or superior to the Company's technologies or
services.

The Company has licensed the proprietary SMART filtering software, which is
used as the filtering engine for all of its products and services, from
Cornell Research Foundation, Inc. ("Cornell University"). Under the terms of
the license agreement with Cornell University, the Company has exclusive
worldwide rights until February 1999 to design, develop, market, and sell
systems and services based on the SMART software for the retrieval and
dissemination of data from recent and continually changing data sources.
Provided that the Company is not then in default of the license agreement, at
the end of the initial term of the agreement the Company will retain a
continuing worldwide, non-exclusive, perpetual royalty-free right to use the
SMART software; and in addition, the Company owns, and will continue to own,
all enhancements to the SMART software that it has developed. There can be no
assurance, however, that Cornell University will not license the SMART
software to a third party, including a competitor of the Company, once the
Company's exclusive rights have lapsed. In addition, Cornell University may
terminate the license agreement if the Company has materially breached the
agreement and such breach remains uncured 60 days after written notice of such
breach has been given. If the license agreement were to terminate, the Company
would be required to develop or acquire a replacement filtering technology,
and there can be no assurance that such technology could be developed or
acquired, on a timely basis or at all, and on favorable terms to the Company.
Consequently, any termination of the Company's license agreement with Cornell
University would have a material adverse effect on the Company's business,
results of operations, and financial condition.

13
<PAGE>

the other owner will not commence legal action against the Company for
infringement of its registered trademark. Although the Company believes that
"NewsPage" does not infringe upon the rights of the other party, an
infringement action, if commenced, could result in an injunction against the
Company's further use of the "NewsPage" name, as well as monetary damages,
which could have a material adverse effect upon the Company. The Company has
also received correspondence from legal counsel for the owner of a registered
trademark entitled "Enhancing the Power of Knowledge" alleging that the
Company's use of the phrase "Spreading the Power of Knowledge" in connection
with advertising or marketing of healthcare or medical-related information
services was likely to confuse the public and result in irreparable damage to
the other owner's mark. The other owner insists that the Company refrain from
such use of "Spreading the Power of Knowledge." There can be no assurance that
the other owner will not commence legal action against the Company for
infringement of its registered trademark. Although the Company has been using
the mark since 1989 and believes that "Spreading the Power of Knowledge" does
not infringe upon the rights of the other party, an infringement action, if
commenced, could result in an injunction against the Company's further use of
"Spreading the Power of Knowledge," as well as monetary damages, which could
have a material adverse effect upon the Company.

There has been substantial litigation in the information services industry
involving intellectual property rights. Although the Company does not believe
that it is infringing the intellectual property rights of others, there can be
no assurance that such claims, if asserted, would not have a material adverse
effect on the Company's business, results of operations, and financial
condition. In addition, inasmuch as the Company licenses the informational
content that is included in its services from third parties, its exposure to
copyright infringement actions may increase because the Company must rely upon
such third parties for information as to the origin and ownership of such
licensed content. Although the Company generally obtains representations as to
the origins and ownership of such licensed informational content and generally
obtains indemnification to cover any breach of any such representations, there
can be no assurance that such representations will be accurate or that such
indemnification will provide adequate compensation for any breach of such
representations. In the future, litigation may be necessary to enforce and
protect trade secrets, copyrights and other intellectual property rights of
the Company. The Company may also be subject to litigation to defend against
claimed infringement of the rights of others or to determine the scope and
validity of the intellectual property rights of others. Any such litigation
would be costly and divert management's attention, either of which would have
a material adverse effect on the Company's business, results of operations,
and financial condition. Adverse determinations in such litigation could
result in the loss of the Company's proprietary rights, subject the Company to
significant liabilities, require the Company to seek licenses from third
parties, and prevent the Company from selling its services, any one of which
could have a material adverse effect on the Company's business, results of
operations, and financial condition. See "Business -- Licenses and
Intellectual Property."

DEPENDENCE ON STRATEGIC RELATIONSHIPS

The Company has entered into certain agreements and informal relationships
with software vendors and operators of online networks, such as Microsoft,
Lotus, and Prodigy. The business relationships with these companies consist of
cooperative marketing programs and sponsorships on online networks and Web
pages. At the present time, the companies with which the Company jointly
markets products and services do not market services that compete with those
of the Company. If the Company's marketing arrangements and activities with
such companies were lessened, curtailed, or otherwise modified, the Company
may not be able to replace or supplement such marketing efforts alone or with
other companies. If these companies were to reduce their joint marketing
activities with the Company, develop and market their own business information
services, market business information services developed by competitors of the
Company, or cease to jointly market the Company's services, the Company's
business, results of operations, and financial condition would be

14
<PAGE>

materially and adversely affected. See "Business -- Sales and Marketing," "--
Microsoft Relationship," and "-- Knight-Ridder and Other Strategic
Relationships."

RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION

A key component of the Company's strategy is its planned expansion into
international markets. To date, the Company has only limited experience in
marketing, selling, and delivering its products and services internationally.
There can be no assurance that the Company will be able to successfully
market, sell, and deliver its products and services in international markets.
In addition to the uncertainty as to the Company's ability to expand its
international presence, there are certain risks inherent in doing business on
an international level, such as unexpected changes in regulatory requirements,
export restrictions, tariffs and other trade barriers, difficulties in
staffing and managing foreign operations, difficulties in protecting
intellectual property rights, longer payment cycles, problems in collecting
accounts receivable, political instability, fluctuations in currency exchange
rates, and potentially adverse tax consequences, which could adversely impact
the success of the Company's international operations. There can be no
assurance that one or more of such factors will not have a material adverse
effect on the Company's future international operations and, consequently, on
the Company's business, results of operation, and financial condition. See
"Business -- Sales and Marketing."

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

The Company is not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses generally, and there
are currently few laws or regulations directly applicable to access to or
commerce on the Internet. However, due to the increasing popularity and use of
the Internet, it is possible that a number of laws and regulations may be
adopted with respect to the Internet, covering issues such as user privacy,
pricing, and characteristics and quality of products and services. Recent
legislative proposals aimed at limiting the use of the Internet to transmit
certain content and materials could, if enacted, result in significant
potential liability to providers of Internet information services including
the Company. The adoption of any such laws or regulations may decrease the
growth of the Internet, which could in turn decrease the demand for the
Company's services and increase the Company's cost of doing business or
otherwise have an adverse effect on the Company's business, results of
operations, and financial condition. Moreover, the applicability to the
Internet of existing laws governing issues such as property ownership, libel,
and personal privacy is uncertain.

POSSIBLE VOLATILITY OF STOCK PRICE

The trading price of the Company's Common Stock could be subject to
fluctuations in response to quarterly variations in results of operations,
announcements of technological innovations or new products and services by the
Company or its competitors, changes in financial estimates by securities
analysts, changes in management, and other events or factors. In addition, the
stock market has experienced volatility that has particularly affected the
market prices of equity securities of many high technology companies and often
that has been unrelated to the operating performance of such companies. These
broad market fluctuations may adversely affect the market price of the
Company's Common Stock. Evidencing the potential volatility of the trading
price of the Company's Common Stock, between March 15, 1996, when the
Company's Common Stock began trading on the Nasdaq National Market, and August
30, 1996, the closing sale price for the Company's Common Stock has ranged
from a high of $24.50 to a low of $5.75. See "Price Range of Common Stock."

CONTROL BY EXISTING STOCKHOLDERS

As of June 30, 1996, directors and officers and their affiliated entities
together beneficially owned approximately 45% of the outstanding shares of
Common Stock. As a result, such stockholders may

15
<PAGE>

be able to control or otherwise significantly influence all matters requiring
stockholder approval, including the election of directors and approval of
significant transactions. Such control or influence may have the effect of
delaying or preventing a change in control of the Company. In addition,
pursuant to agreements with the Company, each of Knight-Ridder (until August
31, 1996), and Microsoft (from September 1, 1996 until September 1, 1999) has
a right of first negotiation with respect to any proposed sale of control of
the Company, which gives them the right to negotiate for the purchase of the
Company for 60 days before a letter of intent or binding agreement for such
sale is entered into with any other party. This right of first negotiation may
have the effect of delaying or preventing a change in control of the Company.
See "Description of Capital Stock -- Delaware Law and Certain Charter and By-
Law Provisions," "Certain Transactions" and "Principal Stockholders."

EFFECT OF CERTAIN CHARTER PROVISIONS; ANTI-TAKEOVER EFFECTS OF CERTIFICATE OF
INCORPORATION,BY-LAWS AND DELAWARE LAW

The Board of Directors has the authority to issue up to 1,000,000 shares of
Preferred Stock and to determine the price, rights, preferences, privileges,
and restrictions, including voting rights, of those shares without any further
vote or action by the stockholders. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future. The issuance
of Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no present plans to
issue shares of Preferred Stock. Further, certain provisions of the Company's
Certificate of Incorporation and By-laws and of Delaware law could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. In addition, the right of first negotiation held by Knight-Ridder
until August 31, 1996 and by Microsoft from September 1, 1996 until September
1, 1999, may have the effect of delaying or preventing a change in control of
the Company. See "Certain Transactions," "Description of Capital Stock --
Preferred Stock" and "-- Delaware Law and Certain Charter and By-Law
Provisions."

SHARES ELIGIBLE FOR FUTURE SALE

The Company issued approximately 1,514,309 shares of Common Stock in the
FreeLoader Acquisition. In addition, approximately 360,180 shares of Common
Stock are reserved for issuance pursuant to exercise of outstanding FreeLoader
stock options assumed by Individual in the FreeLoader Acquisition. Sales of a
substantial number of shares of Common Stock in the public market or the
perception that such sales could occur, could adversely affect the market
price for the Common Stock.

16
<PAGE>

USE OF PROCEEDS

The Company will not receive any proceeds from the resale of shares of
Common Stock by the Selling Stockholders hereunder. See "Selling Stockholders
and Plan of Distributions."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "INDV." Public trading of the Common Stock commenced on March 15, 1996.
Prior to that time, there was no public market for the Company's Common Stock.
The following table sets forth the high and low sale prices for the Common
Stock as reported by the Nasdaq National Market for the periods indicted:

<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
1996:
First quarter (from March 15, 1996).......................... $16.625 $14.00
Second quarter............................................... $24.50 $14.00
Third quarter (through August 30, 1996)...................... $17.75 $ 5.75
</TABLE>

On August 30, 1996, the last reported sale price of the Common Stock on the
Nasdaq National Market was $6.00 per share. As of June 30, 1996, there were
approximately 120 holders of record of the Common Stock.

DIVIDEND POLICY

The Company has never paid any cash dividends on its Common Stock and does
not anticipate paying any cash dividends in the foreseeable future. The
Company currently intends to retain future earnings to fund the development
and growth of its business. In addition, the Company's bank line of credit
contains covenants that prohibit the Company from paying dividends without
prior bank consent.

17
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company at June 30,
1996 on an actual basis. This table should be read in conjunction with the
Consolidated Financial Statements and Notes and the Interim Condensed
Consolidated Financial Statements and Notes thereto appearing elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
(UNAUDITED)
------------------
ACTUAL
------------------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C>
Long-term capital lease obligations......................... $ 37
Long-term bank loans........................................ 924
Long-term deferred compensation............................. 167
Stockholders' equity(1):
Common Stock, $0.01 par value; 25,000,000 shares
authorized; 14,106,476 shares issued..................... 141
Additional paid-in capital................................ 88,681
Accumulated deficit....................................... (59,393)
--------
29,429
Less 80,405 shares of Common Stock in treasury (at cost).. (31)
--------
Total stockholders' equity.............................. 29,398
--------
Total capitalization.................................. $ 30,526
========
</TABLE>
- --------

18
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below at December 31,
1994 and 1995 and for each of the three years in the period ended December 31,
1995 have been derived from, and are qualified by reference to, the Company's
Consolidated Financial Statements that have been audited by Coopers & Lybrand
L.L.P., independent accountants whose report thereon is included elsewhere in
this Prospectus. The selected consolidated financial data presented below at
December 31, 1991, 1992, and 1993 and for each of the two years ended in the
period December 31, 1992 have been derived from, and are qualified by
reference to, the Company's financial statements that have been audited by
Coopers & Lybrand L.L.P., independent accountants, which are not included in
this Prospectus. The interim consolidated financial data set forth below at
June 30, 1996 and for the six-month periods ended June 30, 1995 and 1996 have
been derived from unaudited condensed interim consolidated financial
statements included elsewhere in this Prospectus. The unaudited condensed
interim consolidated financial statements include all adjustments, consisting
only of normal recurring adjustments, that the Company considers necessary for
a fair presentation of the financial position and results of operations for
those periods. Operating results for the six-month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the
entire fiscal year ending December 31, 1996. The unaudited pro forma combined
consolidated financial data set forth below for the six-month period ended
June 30, 1996 have been presented as if the acquisition of FreeLoader had
occurred at the beginning of the six-month period ended June 30, 1996 for the
consolidated statement of operations data. The pro forma results of operations
are not necessarily indicative of future operations or the actual results that
would have occurred had the acquisition of FreeLoader been consummated at the
beginning of the six-month period ended June 30, 1996. The operating results
of FreeLoader for the year ended December 31, 1995 were not material to the
results of operations of Individual and therefore, the pro forma combined
consolidated statement of operations data for the year ended December 31, 1995
has not been presented. In addition, the acquisition of FreeLoader was
completed on June 28, 1996, and accordingly has been reflected in the
Company's June 30, 1996 balance sheet. Therefore, pro forma combined
consolidated balance sheet data as of June 30, 1996 has not been presented.
Selected Consolidated Financial Data presented below should be read in
conjunction with, and are qualified by reference to, "Management's Discussion
and Analysis of Financial Condition and Results of Operations," the
Consolidated Financial Statements and Notes thereto and other financial
information appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
(UNAUDITED)
-----------
SIX MONTHS
ENDED
JUNE 30, SIX MONTHS
YEAR ENDED DECEMBER 31, (UNAUDITED) ENDED
------------------------------------------- ----------------- JUNE 30,
1991 1992 1993 1994 1995 1995 1996 1996
------- ------- ------- ------- ------- ------- -------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF OPERATIONS DATA:
Revenue................. $ 845 $ 1,901 $ 4,105 $ 9,127 $16,733 $ 7,601 $ 10,677 $ 10,677
Cost of revenue......... 545 1,083 2,169 4,077 7,783 3,383 4,895 4,895
------- ------- ------- ------- ------- ------- -------- --------
Gross margin........... 300 818 1,936 5,050 8,950 4,218 5,782 5,782
Operating expenses:
Sales and marketing.... 266 367 867 1,183 2,785 986 2,407 2,725
New subscriber
acquisition........... 787 1,063 2,666 5,953 7,387 4,004 4,179 4,179
Product development.... 347 359 772 1,153 2,587 1,049 1,892 2,806
General and
administrative........ 583 758 815 923 2,423 1,214 2,286 4,718
Purchased incomplete
technology............ -- -- -- -- -- -- 35,564 35,564
------- ------- ------- ------- ------- ------- -------- --------
Total operating
expenses............ 1,983 2,547 5,120 9,212 15,182 7,253 46,328 49,992
------- ------- ------- ------- ------- ------- -------- --------
Loss from operations.... (1,683) (1,729) (3,184) (4,162) (6,232) (3,035) (40,546) (44,210)
Interest and other
income (expense), net.. 73 (11) 164 (94) (211) (5) (302) (275)
------- ------- ------- ------- ------- ------- -------- --------
Net loss................ $(1,610) $(1,740) $(3,020) $(4,256) $(6,443) $(3,040) $(40,848) $(44,485)
======= ======= ======= ======= ======= ======= ======== ========
Unaudited supplemental
net loss per common
share.................. $ (0.67) $ (3.67) $ (3.52)
======= ======== ========
Unaudited supplemental
weighted average common
shares outstanding..... 9,619 11,134 12,632
======= ======== ========
</TABLE>

19
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30,
1996
1991 1992 1993 1994 1995 (UNAUDITED)
------- ------- ------- -------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Cash and cash
equivalents............ $ 1,090 $ 3,695 $ 4,461 $ 1,640 $ 17,518 $34,118
Working capital
(deficit).............. 539 2,733 2,347 (2,751) 9,869 26,009
Total assets............ 1,670 4,813 7,115 7,289 26,803 49,103
Other long-term
obligations............ 137 176 377 565 986 1,128
Senior subordinated
notes.................. -- -- -- -- 10,000 --
Redeemable preferred
stock.................. 4,408 9,272 10,759 12,246 23,999 --
Stockholders' equity
(deficit).............. (3,726) (6,369) (7,876) (13,618) (21,688) 29,398
</TABLE>

20
<PAGE>

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

OVERVIEW

Individual offers a suite of customized information services that provide
knowledge workers with relevant current awareness reports each day while
offering information providers and advertisers new ways to reach targeted
audiences. The Company commenced delivery of its initial service in the
quarter ended March 31, 1990, and has subsequently introduced additional
services targeted at multiple market segments.

The Company's revenue is derived from two classes of services: enterprise
services and single-user services. Revenue for the Company's enterprise
service, First! (introduced in the first quarter of 1990), consists of
subscription fees from organizations. Single-user services include HeadsUp
(introduced in the second quarter of 1993), Physician's NewScan (introduced in
the fourth quarter of 1994), NewsPage (introduced in the second quarter of
1995), and BookWire (acquired by the Company in the third quarter of 1995).
Revenue for single-user services consists of both subscription fees and fees
for the fulfillment of certain user requests for additional information, as
well as advertising fees from companies placing advertisements through these
services.

On June 28, 1996, the Company acquired FreeLoader, a developer of agent-
based software for the offline delivery of World Wide Web multi-media content.
The FreeLoader Acquisition was effected through the merger of FL Merger Corp.,
a wholly-owned subsidiary of the Company, with and into FreeLoader, with
FreeLoader continuing as the surviving corporation and a wholly-owned
subsidiary of the Company. The Company issued approximately 1,874,489 shares
of its Common Stock in the FreeLoader Acquisition in exchange for the
outstanding securities of FreeLoader, which includes approximately 360,180
shares of Individual Common Stock which are reserved for issuance upon
exercise of outstanding FreeLoader stock options assumed by Individual in the
FreeLoader Acquisition. The aggregate estimated purchase price of
approximately $34,931,000 is based on the fair market value of Individual,
Inc. Common Stock and options as of May 30, 1996 and includes estimated
accrued transaction costs of approximately $950,000. The FreeLoader
Acquisition was accounted for as a purchase. Approximately $633,000 of the
purchase price has been allocated to the fair value of the net identifiable
liabilities assumed and approximately $35,564,000 has been allocated to the
fair value of purchased technology determined to be in-process and
accordingly, expensed at consummation.

The Company recognizes subscription revenue ratably over the subscription
period. The Company's subscription contracts are typically billed in advance,
and amounts attributable to services not yet delivered are recorded in
deferred revenue. Customers of the Company's services may terminate their
subscriptions at any time and receive a credit in the form of a cash refund
for the unused portion. Historically, the level of subscription cancellations
prior to the termination of the subscription period has not been material and
has had no impact on revenue previously recognized. Fulfillment fees are
recognized as revenue at the time stories are provided. Advertising revenue is
recognized ratably over the advertisement period.

21
<PAGE>

Since the Company introduced its initial service, revenue has increased each
quarter. These increases resulted from the introduction of new services by the
Company, increased market acceptance of the Company's services, and growth in
the overall market for customized news and information. The Company's
enterprise services have generated increases in revenue primarily due to the
addition of new accounts and broader deployment by existing customers. Factors
contributing to the increases include expansion of sales efforts, expansion of
information sources and topics offered, and an expansion in the number of
delivery platforms that are supported. In the quarter ended June 30, 1993, the
Company released HeadsUp, its first service targeted at individual
subscribers. Revenue from HeadsUp and other single-user services has grown
significantly since that time due to increases in the number of subscribers
obtained primarily through direct mail and telesales campaigns. The Company
has recently introduced services directed towards generating revenue from
advertising sponsors in addition to subscription and fulfillment fees. In view
of the Company's significant revenue growth in recent years, management
believes that period-to-period comparisons of its financial results should not
be relied upon as an indication of future performance. The limited operating
history of the Company makes the prediction of future operating results
difficult or impossible and therefore there can be no assurance that the
Company will sustain revenue growth or achieve profitability.

The Company employed 204 full-time employees at June 30, 1996, up from 157
at December 31, 1995, and up from 96 and 66 at December 31, 1994 and 1993,
respectively. The largest portion of the Company's expenses consists of
salaries and related costs. The Company incurs significant expenses to acquire
new customers, reported as new subscriber acquisition expenses. The Company
may also incur expenses in the process of soliciting a subscription renewal,
which are included in sales and marketing expenses. The cost of soliciting
subscription renewals is substantially less than the cost of acquiring new
subscriptions.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain financial
data as a percentage of total revenue:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
--------------------------- --------------
1993 1994 1995 1995 1996
------- ------- ------- ----- ------
<S> <C> <C> <C> <C> <C>
Revenue..................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue............. 52.8 44.7 46.5 44.5 45.9
------- ------- ------- ----- ------
Gross margin................ 47.2 55.3 53.5 55.5 54.1
Operating expenses:
Sales and marketing....... 21.1 13.0 16.6 12.9 22.5
New subscriber
acquisition.............. 64.9 65.2 44.1 52.7 39.2
Product development....... 18.8 12.6 15.5 13.8 17.7
General and
administrative........... 19.9 10.1 14.5 16.0 21.4
Purchased incomplete
technology............... -- -- -- -- 333.1
------- ------- ------- ----- ------
Total operating
expenses............... 124.7 100.9 90.7 95.4 433.9
------- ------- ------- ----- ------
Loss from operations........ (77.5) (45.6) (37.2) (39.9) (379.8)
Interest and other income
(expense), net............. 4.0 (1.0) (1.3) (0.1) (2.8)
------- ------- ------- ----- ------
Net loss.................... (73.5)% (46.6)% (38.5)% (40.0)% (382.6)%
======= ======= ======= ===== ======
</TABLE>

Three months and six months ended June 30, 1996 and 1995.

Revenue. Revenue increased 36%, from $4,145,000 for the three months ended
June 30, 1995 to $5,648,000 for the three months ended June 30, 1996. Revenues
increased 40%, from $7,601,000 to $10,677,000 in the six months ended June 30,
1995 and 1996 respectively. The number of registered users increased to more
than 280,000 at June 30, 1996 (including 32,000 users of the FreeLoader
service), over five times the number of users at June 30, 1995. In the second
quarter of fiscal 1996, revenue from enterprise services was $3,712,000, up
from $2,649,000 for the same period

22
<PAGE>

in 1995. This increase of 40% resulted primarily from new and upgrade sales of
First! for intranet and groupware platforms. The percentage increase for the
six months ended June 30, 1996 was approximately 41% as revenue from
enterprise services grew to $7,177,000, up from $5,101,000 for the same period
in 1995.

In the second quarter of fiscal 1996, revenue from single user services grew
by 29% to $1,935,000, up from $1,496,000 for the same period in 1995. For the
six months ended June 30,1996, single user services revenue grew by 40% to
$3,500,000, up from $2,500,000 for the same period in 1995. The growth was
attributable to the Company's NewsPage service on the World Wide Web, which
was introduced in the second quarter of 1995. The increase in revenue from Web
single-user services was partially offset by the declining revenues from
Physician's NewScan, a sponsored news service, which has not been heavily
promoted in 1996. The acquisition of FreeLoader did not contribute any revenue
in the second quarter, nor is it expected to have a material impact on
revenues in the second half of 1996.

Cost of revenue. Cost of revenue was $2,637,000 for the three months ended
June 30, 1996 as compared to $1,791,000 for the same period in 1995, or an
increase of 47%. Cost of revenue was $4,895,000 for the six months ended June
30, 1996, as compared to $3,383,000 for the same period in 1995, or an
increase of 45%. The slight decrease in gross margin as a percentage of
revenue from 55% to 54% for the six months ended June 30, 1996 and 1995
respectively was mainly the result of higher information provider costs. The
number of information providers increased to over 700 at June 30, 1996, up
from 500 at June 30, 1995. In addition, the royalties paid to information
providers on NewsPage revenue as a percentage of sales is higher than the
enterprise percentage, as this is a new service and revenue is still ramping
up.

FreeLoader expenses. The acquisition of FreeLoader was completed on June 28,
1996 and as a result, no material expenses of FreeLoader were reflected in the
operating expenses of the quarter ended June 30, 1996. In future periods
however, FreeLoader's sales and marketing, new subscriber acquisition
expenses, product development, and general and administrative expenses are
expected to have a material impact on the Company's results. The one-time non-
cash charge of $35,564,000 incurred in June 1996 was based on the fair value
assessment of purchased FreeLoader incomplete technology.

Sales and Marketing. Sales and marketing expenses increased 163% to
$1,346,000 for the three months ended June 30, 1996, up from $512,000 for the
same period of 1995. Sales and marketing expenses increased by 144% to
$2,407,000 for the six months ended June 30, 1996, up from $986,000 for the
same period of 1995. These increases were primarily due to hiring additional
personnel in marketing and selling of advertising for NewsPage, which was
launched in the second quarter of 1995. Additionally, there was an increased
in expenses related to renewal subscription sales, due to the larger customer
base.

New subscriber acquisition. New subscriber acquisition expenses declined 11%
from $2,178,000 to $1,949,000 for the three months ended June 30, 1995 and
June 30, 1996 respectively. New subscriber acquisition expenses increased 4%
from $4,004,000 to $4,180,000 for the six months ended June 30, 1995 and June
30, 1996 respectively. The decrease in the new subscriber acquisition expenses
in the second quarter of 1996 was the result of a reduction on non-Web single
user services promotion expenses which were partially offset by the continued
expansion of the enterprise sales staff and NewsPage advertising expenses. The
decrease is believed to be temporary, as the Company intends to continue
efforts to expand the subscription base for Web and enterprise services.

Product development. Product development increased 62% to $1,053,000 for the
three months ended June 30, 1996, up from $649,000 for the same period in
1995. Product development increased 80% to $1,892,000 for the six months ended
June 30, 1996, up from $1,049,000 for the same period in 1995. This increase
was primarily the result of the continued development of new enhancements and
new delivery platforms for both the NewsPage and First! services.

23
<PAGE>

General and administrative. General and administrative expenses increased
268% to $1,630,000 for the three months ended June 30, 1996, up from $443,000
for the same period of 1995. General and administrative expenses increased 88%
to $2,286,000 for the six months ended June 30, 1996, up from $1,214,000 for
the same period of 1995. The reasons for this increase included hiring of
additional management and administrative personnel and deferred compensation
charges related to the FreeLoader acquisition.

Interest and other income (expense), net. Interest and other income
(expense), net, increased to $194,000 for the three months ended June 30,
1996, up from $(4,000) for the same period of 1995. Interest and other income
(expense), net, for the six months ended June 30, 1996 was $(302,000), as
compared to $(5,000) for the same period in 1995. The second quarter 1996
increase was primarily attributable to interest revenue on proceeds from the
IPO in March 1996, as partially offset by losses incurred by the Japanese
joint venture with Toshiba Corp. and Mitsui & Co., Ltd. The Company expects
that results from the joint venture will continue to negatively impact other
income in the foreseeable future. The year to date changes over last year's
levels are a function of the factors noted above and interest charges on
senior subordinated notes incurred in the first quarter of 1996.

Years ended December 31, 1995, 1994, and 1993

Revenue. Revenue was $16.7 million in 1995, $9.1 million in 1994, and $4.1
million in 1993, representing an increase of 83.5% in 1995 and 122.0% in 1994.
The Company's enterprise services and single-user services both contributed to
these increases.

Revenue from enterprise services was $11.1 million in 1995, $7.0 million in
1994, and $3.9 million in 1993, representing an increase of 58.6% in 1995 and
79.5% in 1994. Revenue from enterprise customers consists of subscription fees
for First!. These revenue increases were primarily due to the addition of new
accounts in established vertical markets addressed by the Company's services,
penetration of new vertical markets, expansion in the number of delivery
platforms supported by the Company, and increases in subscription fees due to
broader deployment by existing customers.

Revenue from single-user services was $5.6 million in 1995, $2.1 million in
1994, and $160,000 in 1993. Revenue increased by 166.7% in 1995 from 1994. The
increases in revenue in 1995 and 1994 were primarily attributable to increases
in the number of HeadsUp subscribers. Revenue in 1995 was also favorably
impacted by revenue from a contract signed in the quarter ended December 31,
1994 with a pharmaceutical company for advertising sponsorship of the
Company's Physician's NewScan service, as well as by subscription and
advertising fees from the introduction of its Internet-based NewsPage service
in the quarter ended June 30, 1995. The increase in revenue from single-user
services in 1994 was due to the introduction of HeadsUp, the Company's first
single-user service, in the second quarter of 1993.

Cost of revenue. Cost of revenue was $7.8 million, $4.1 million, and $2.2
million, and gross margins were 53.5%, 55.3%, and 47.2%, in 1995, 1994, and
1993, respectively. The increase in the cost of revenue for each period
primarily reflects costs incurred to provide service to an increased number of
users, including costs relating to expanding the number of information sources
available to users. Cost of revenue in 1995 also increased as a result of
certain non-recurring expenditures related to improving the scalability and
reliability of the Company's production systems. The decrease in gross margin
in 1995 was attributable to the higher proportion of revenue derived from its
HeadsUp single-user service which is delivered at a lower gross margin than
the Company's enterprise services. The increase in gross margin in 1994 was a
result of operating leverage from growth of the Company's enterprise services
revenue. The Company believes that gross margins will be favorably impacted by
any future increases in advertising fees for its single-user products. The
Company currently has available inventory of advertising space on its NewsPage
service. As those advertising spaces are sold, the fixed costs

24
<PAGE>

attributable to establishing and maintaining the NewsPage service will be
spread over a broader advertising revenue base, which the Company believes
will result in increased gross margins. There can be no assurance, however,
that advertising revenues will increase in future periods. See "Risk
Factors -- Fluctuations in Quarterly Results of Operations," "-- Emerging
Market for Customized Information Services" and "-- Dependence on the
Internet."

Sales and marketing. Sales and marketing expenses were $2.8 million, $1.2
million, and $867,000, and as a percentage of revenue were 16.6%, 13.0%, and
21.1%, in 1995, 1994, and 1993, respectively. The principal reasons for the
dollar increases in sales and marketing expenses in all periods were increases
in the number of sales and marketing personnel, the increased level of
activity necessary to renew subscriptions from a larger customer base, and
increases in general promotional activity. In addition, sales and marketing
expenses increased substantially in 1995 due to the creation and expansion of
a direct sales force to sell advertising, and these increased expenses
contributed to the overall increase of sales and marketing expenses as a
percentage of revenue.

New subscriber acquisition. New subscriber acquisition expenses were $7.4
million, $6.0 million, and $2.7 million, and as a percentage of revenue were
44.1%, 65.2%, and 64.9%, in 1995, 1994, and 1993, respectively. Management
considers these expenses to be investments by the Company to increase its user
base and to acquire a recurring subscription revenue stream. The Company
expenses these costs as incurred. The dollar increases in new subscriber
acquisition expenses in 1995 and 1994 were primarily attributable to increases
in the number of sales personnel for the Company's enterprise services, and
increases in direct mail, telesales, advertising, and other costs incurred to
expand the number of customers for its single-user services. In addition, 1995
costs increased as a result of advertising and other efforts to acquire
subscribers for NewsPage. New subscriber acquisition expenses decreased as a
percentage of revenue in 1995 because a larger portion of revenue in 1995 was
attributable to subscribers acquired in prior years.

Product development. Product development expenses were $2.6 million, $1.2
million, and $773,000, and as a percentage of revenue were 15.5%, 12.6%, and
18.8% in 1995, 1994, and 1993, respectively. The dollar increases in 1995 and
1994 were primarily related to expanding the number of delivery platforms
supported by the Company, as well as the development of new single-user
services. In addition, in 1995 expenses associated with the development of
NewsPage, as well as certain non-recurring projects to enhance the scalability
and reliability of the Company's production system (consisting of costs of
approximately $700,000 attributable principally to employee salaries),
contributed to the increase in product development expenses, both in dollar
amount and as a percentage of revenue.

General and administrative. General and administrative expenses were $2.4
million, $923,000, and $815,000, and as a percentage of revenue were 14.5%,
10.1%, and 19.9% in 1995, 1994, and 1993, respectively. The dollar increases
in 1995 and 1994 primarily relate to costs incurred to support the general
growth of the Company's business. The increase as a percentage of revenue in
1995 was primarily due to increased administrative costs associated with the
growth of the Company's single-user services, which generate higher
transaction volumes than the Company's enterprise services. The Company
anticipates that it will incur additional general and administrative expenses
as a result of becoming a publicly-held company.

25
<PAGE>

SELECTED QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited quarterly consolidated
statement of operations data for each of the nine quarters in the period ended
June 30, 1996 and the percentage of the Company's total revenue represented by
each item in the respective quarter. In the opinion of management, this
information has been presented on the same basis as the Consolidated Financial
Statements appearing elsewhere 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 Consolidated Financial Statements of
the Company and related Notes thereto. The operating results for any quarter
are not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1994 1994 1994 1995 1995 1995 1995 1996 1996
-------- --------- -------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $ 1,994 $ 2,444 $ 3,039 $ 3,456 $ 4,145 $ 4,424 $ 4,707 $ 5,029 $ 5,648
Cost of revenue......... 932 1,149 1,232 1,592 1,791 2,087 2,312 2,257 2,637
------- ------- ------- ------- ------- ------- ------- ------- --------
Gross margin............ 1,062 1,295 1,807 1,864 2,354 2,337 2,395 2,772 3,011
Operating expense:
Sales and marketing.... 264 265 374 475 512 762 1,036 1,060 1,346
New subscriber
acquisition........... 1,386 1,475 1,943 1,826 2,178 1,853 1,531 2,231 1,949
Product development.... 246 337 366 399 649 716 822 839 1,054
General and
administrative........ 175 245 313 772 443 639 569 655 1,630
Purchased incomplete
technology............ -- -- -- -- -- -- -- -- 35,564
------- ------- ------- ------- ------- ------- ------- ------- --------
Total operating
expenses.............. 2,071 2,322 2,996 3,472 3,782 3,970 3,958 4,785 41,543
------- ------- ------- ------- ------- ------- ------- ------- --------
Loss from operations.... (1,009) (1,027) (1,189) (1,608) (1,428) (1,633) (1,563) (2,013) (38,532)
Interest and other
income (expense), net.. (47) 27 (21) (1) (3) (49) (157) (497) 194
------- ------- ------- ------- ------- ------- ------- ------- --------
Net loss................ $(1,056) $(1,000) $(1,210) $(1,609) $(1,431) $(1,682) $(1,720) $(2,510) $(38,338)
======= ======= ======= ======= ======= ======= ======= ======= ========
<CAPTION>
AS A PERCENTAGE OF REVENUE
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue......... 46.7 47.0 40.5 46.1 43.2 47.2 49.1 44.9 46.7
------- ------- ------- ------- ------- ------- ------- ------- --------
Gross margin............ 53.3 53.0 59.5 53.9 56.8 52.8 50.9 55.1 53.3
Operating expenses:
Sales and marketing.... 13.2 10.8 12.3 13.7 12.3 17.2 22.0 21.1 23.8
New subscriber
acquisition........... 69.5 60.4 63.9 52.8 52.5 41.9 32.5 44.4 34.5
Product development.... 12.3 13.8 12.1 11.6 15.7 16.2 17.5 16.6 18.6
General and
administrative........ 8.8 10.0 10.3 22.3 10.7 14.4 12.1 13.0 28.9
Purchased incomplete
technology............ -- -- -- -- -- -- -- -- 629.7
------- ------- ------- ------- ------- ------- ------- ------- --------
Total operating
expenses.............. 103.8 95.0 98.6 100.4 91.2 89.7 84.1 95.1 735.5
------- ------- ------- ------- ------- ------- ------- ------- --------
Loss from operations.... (50.6) (42.0) (39.1) (46.5) (34.4) (36.9) (33.2) (40.0) (682.2)
Interest and other
income (expense), net.. (2.4) 1.1 (0.7) 0.0 (0.1) (1.1) (3.3) (9.9) 3.4
------- ------- ------- ------- ------- ------- ------- ------- --------
Net loss................ (53.0)% (40.9)% (39.8)% (46.5)% (34.5)% (38.0)% (36.5)% (49.9)% (678.8)%
======= ======= ======= ======= ======= ======= ======= ======= ========
</TABLE>

26
<PAGE>

Internet, and, to a significant extent upon the sale of advertising space on
those services. There can be no assurance that the Company will be successful
in attracting advertisers to those services or in selling advertising space at
favorable rates. Any one or more of these factors could have a material
adverse effect on the Company's business, results of operations and financial
condition, and makes the prediction of results of operations on a quarterly
basis unreliable. As a result, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as any indication of future performance.

The Company's revenue has increased in each of the quarters presented above.
These increases have resulted primarily from the introduction of new services,
increased market acceptance of the Company's services, and growth in the
overall market for customized news. Most of the Company's revenue is from
subscription fees for its services, with a substantial portion derived from
annual contracts. The Company recognizes subscription fees as revenue ratably
over the subscription period and has also experienced a high subscription
renewal rate, although there can be no assurance that it will maintain these
high renewal rates in the future.

Generally, the various expenses of the Company have increased in each
quarter compared to the previous quarter, reflecting increases in the cost of
developing, delivering, supporting, and selling the Company's services as its
business has grown. In 1995, costs incurred in connection with the development
and introduction of NewsPage contributed to increases in product development
expenses throughout the year and to increases in sales and marketing expenses
in the second half of the year. New subscriber acquisition expense declined as
a percentage of revenue in the last two quarters of 1995 because a larger
portion of revenue in those quarters was attributable to subscriptions
acquired in previous quarters. General and administrative expenses in the
first quarter of 1995 included non-recurring provisions for certain state
sales tax obligations and for the retirement of certain assets in connection
with the relocation of the Company's offices. Interest and other income
(expense), net, in the first quarter of 1996 included interest expense of
$697,000 on $10.0 million of senior subordinated notes issued in November 1995
and repaid in March 1996 with the proceeds of the Company's initial public
offering.

LIQUIDITY AND CAPITAL RESOURCES

From inception through the end of 1995, the Company financed its operations
primarily through private sales of Common Stock and Preferred Stock which
through December 31, 1995 totaled approximately $20.9 million. Approximately
$13.1 million of this amount was raised by the Company in the three years
ended December 31, 1995. Also, in the quarter ended December 31, 1995, the
Company issued $10.0 million of senior subordinated notes in a private
transaction. On March 20, 1996, the Company completed an initial public
offering of Common Stock, raising approximately $29.1 million after
underwriting discounts and offering expenses. The Company has also used
equipment leases and debt instruments to finance the majority of its purchases
of capital equipment. At June 30, 1996 the Company had approximately
$1,886,000 outstanding in connection with these obligations and had an
additional $81,000 available under established credit arrangements. In
addition, the Company has a revolving line of credit with a commercial bank
providing for a maximum credit of $3,500,000, subject to certain covenants. At
June 30, 1996, no amounts were outstanding under this line.

A portion of the Company's subscription contracts are billed annually in
advance. Amounts billed for services not yet delivered are recorded in
deferred revenue as a current liability and, as the subscription services are
performed by the Company, the corresponding revenue is recognized and

27
<PAGE>

the resulting net income or loss is credited to stockholder's equity. The
Company's deferred revenue was $6.5 million at December 31, 1994, $8.9 million
at December 31, 1995 and $9.0 million at June 30, 1996. As a result of the
accounting for subscription revenues, the Company's working capital is reduced
by the amount of deferred revenue. At December 31, 1994, deferred revenue of
$6.5 million contributed to negative working capital of $2.8 million.

The Company's operations used $2.8 million, $1.8 million, and $1.8 million
in cash in 1995, 1994, and 1993, respectively. The use of cash in operations
resulted primarily from the Company's increasing investment in new subscriber
acquisition. Before incurring these costs, cash from operations was positive
in each of the last three years. Capital expenditures, primarily for the
Company's production facilities, were $1.7 million, $1.4 million, and $309,000
in 1995, 1994, and 1993, respectively. The Company expects any future growth
in capital additions and working capital requirements to be commensurate with
the growth of its business, if any.

The Company's cash and cash equivalents balance at June 30, 1996 was
$34,118,000, as compared to $34,222,000 at March 31, 1996 and $17,518,000 at
December 31, 1995. Net cash provided by operations was $144,000 for the six
months ended June 30, 1996, as compared with net cash used in operations of
$368,000 for the same period in 1995. The change was mainly attributable to
fluctuations in working capital as accounts receivable decreased and accounts
payable and accrued expenses increased. Net cash used in investing activities
was $7,741,000 in the six months ended June 30, 1996 as compared with $243,000
provided by investing activities for the same period of 1995. In the first two
quarters of 1996, $5,992,000 was used to purchase marketable securities,
primarily from U.S. Government Agencies, whereas the cash flow from investing
activities in 1995 was positive due to redemption of marketable securities. In
the second quarter of 1996, $1,010,000 of cash was acquired in the FreeLoader
acquisition. Net cash provided by financing activities was $24,200,000 in the
six months ended June 30, 1996, as compared to $203,000 in the same period of
1995. This increase resulted from the completion of the Company's IPO in March
of 1996 and the exercise of the over-allotment option in the second quarter of
1996, which together generated net proceed of approximately $33,839,000. In
addition, the Company used $10,000,000 of the offering proceeds for repayment
of the principal on the senior subordinated notes.

28
<PAGE>

BUSINESS

Individual develops and markets a suite of customized information services
that provide knowledge workers with daily personalized current awareness
reports, while offering information providers and advertisers new ways to
reach targeted audiences. Leveraging its knowledge processing systems,
editorial knowledge bases, and an exclusive license to Cornell University's
SMART technology, the Company's intelligent software agents search each day
through approximately 10,000 to 20,000 stories drawn from more than 730 broad
(e.g., Reuters) and specialized (e.g., PC Week) information sources. The
Company's proprietary systems filter incoming information, prepare for each
user a highly relevant daily news briefing, and deliver its services across a
range of delivery platforms, including facsimile, electronic mail, groupware,
intranets, and the Internet. The Company's services enable its more than
280,000 users to track industry developments in a cost-effective, timely and
user-friendly manner.

On June 28, 1996, Individual acquired FreeLoader, a developer of
intelligent- agent software for the offline delivery of World Wide Web multi-
media content. The FreeLoader software is designed to conduct autonomous Web
searches based on user-defined search criteria and retrieves targeted multi-
media content for automatic, offline delivery directly to the user's desktop,
without the need for online intervention by the user. Web content is then
stored on the hard-drive for access by the user at any time. FreeLoader was
incorporated in October 1995. As of March 31, 1996, FreeLoader was a
development-stage enterprise with no revenue since inception. The Company
intends to integrate and modify the in-process technology acquired in the
FreeLoader Acquisition into future products which have not yet achieved
technological feasibility. With its acquisition of FreeLoader, Individual
believes that it has the opportunity to be a leading provider of customized
news and information services delivered proactively in graphically-rich,
multi-media format via the Internet and World Wide Web.

INDUSTRY BACKGROUND

An increasingly competitive global market environment is forcing
organizations to accelerate the rate at which they identify and respond to
changing business conditions. Many organizations have addressed this challenge
by decentralizing decision-making, creating a growing number of knowledge
workers -- individuals whose job productivity and effectiveness depend on the
ability to access and analyze current information to make effective decisions.
At the same time, the amount of information available on competitors,
customers, and new technologies across multiple continents and industries has
been growing rapidly. To assimilate this information effectively, knowledge
workers seek cost-effective, timely, and user-friendly methods to increase
their awareness of current developments and to identify changes and
opportunities in their competitive markets.

The overall market for information produced for the business and the
professional audience exceeded $25 billion in 1994, according to a leading
industry source. In recent years, the proliferation of personal computers,
desktop publishing software, and LANs has resulted in a rapid growth in
sources of news and other information distributed electronically. As a result,
electronically available information accounts for a significant and growing
share of the total market.

Methods of accessing information have also increased dramatically over the
past decade, as technological advances and the mass adoption of computers have
created a flexible and far-reaching set of delivery platforms. Knowledge
workers now access information through a combination of hardcopy documents,
facsimile transmissions, electronic mail, groupware, and online technologies.

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<PAGE>

Many large enterprises rely on a mix of these platforms to disseminate
information across the organization.

More recently, the increasing popularity of the Internet has introduced a
structural change in the way information is produced, distributed, and
consumed, thereby dramatically lowering the cost of publishing information and
significantly increasing its reach. Much of the recent growth in Internet use
has been driven by the emergence of the Web -- a network of servers and
information available on the Internet. Web servers have also been implemented
on intranets -- private networks based on Internet technology that disseminate
internal information throughout an organization. An industry source estimates
that there were approximately 90,000 Web sites as of January 1996, compared to
approximately 2,700 Web sites as of June 1994. With this rapid infrastructure
deployment, the number of individuals with access to the Internet is projected
by an industry source to reach 199 million users in 1999, of which 125 million
users are estimated to be accessing the Web. By facilitating the publishing
and consumption of information, the Internet and intranets are dramatically
increasing the amount of information, both relevant and irrelevant, readily
available to knowledge workers.

Faced with this proliferation of information, knowledge workers must
maintain current awareness of relevant information in a manner that
contributes to, rather than detracts from, effective decision-making. These
professionals must contend with information overload -- more information
crossing their desks than can possibly be assimilated. But they are also
concerned about information underload -- the daily possibility of missing a
news item of significant consequence to their organization. In this
environment, knowledge workers seek effective ways to track a comprehensive
set of information sources and identify items of highest relevance.

Traditional methods of maintaining current awareness are proving
increasingly inadequate. Subscribing to and reviewing a full set of
potentially relevant information sources, such as newspapers and trade
publications, may provide comprehensive coverage, but are no longer practical
from both a cost and time perspective. Proprietary online electronic
databases, such as Dialog, Dow Jones News Retrieval, Lexis-Nexis, and Reuters,
contain extensive information, but generally require specialized search
languages to query the database. Such search languages typically require
specialized training to be utilized effectively, and, as a result, are not
readily accessible to a broad range of knowledge workers. Although direct
access to the Internet or consumer online services, such as America Online,
CompuServe, and Prodigy, offer inexpensive access to information in a user-
friendly environment, they generally do not employ sophisticated filtering
systems, sources are limited and lack depth, and few professionals have the
inclination or time to maintain current awareness by exploring the myriad of
available sites each day in order to locate relevant news and information.
Other, more specialized information services have been designed to meet
specific business needs in a real-time environment; however, these services
are often expensive and inflexible because they require dedicated hardware and
software systems and direct contracting with information providers.
Consequently, traditional information service alternatives do not adequately
address the information needs of today's knowledge workers.

The rapid growth of information sources and delivery platforms also creates
both challenges and opportunities for information providers. As it becomes
increasingly difficult to gain and retain customers, information providers
struggle to find effective means of adding customers and incremental revenues.
New electronic information delivery platforms offer information providers the
potential to establish additional distribution channels to reach a broader
audience, thereby realizing incremental revenues without incurring significant
additional costs.

The continual introduction of new information sources, both printed and
electronic, also impacts advertisers, who face a bewildering array of
alternatives for reaching an audience that often lacks the time or attention
to derive useful information from advertisements. The emergence of highly
customized news sources provides advertisers with a means of cost-effectively
reaching a micro-

30
<PAGE>

targeted audience. In addition, the deployment of online technologies provides
advertisers with the ability to establish interactive relationships with
potential customers.

Advertisers, information providers, and knowledge workers share a common
need for the timely delivery of targeted, relevant information. Advertisers
need to reach micro-targeted audiences and exploit interactive technologies to
offer customers additional information or the option to effect electronic
transactions. Information providers need new channels to leverage their fixed
editorial investments with additional customers and revenues. Knowledge
workers need a cost-effective, timely, and user-friendly information service
that filters the abundance of information sources and delivers concise
intelligence over appropriate delivery platforms.

THE INDIVIDUAL SOLUTION

The Individual solution offers a suite of customized information services
that provide knowledge workers with relevant current awareness reports while
offering information providers and advertisers new ways to reach targeted
audiences. The Company's intelligent software agents filter information from
more than 730 sources, prepare a customized report of highly-relevant
information, and proactively deliver a user's personal report by 8:00 a.m.
Eastern Time each business day. These reports are delivered via platforms
convenient to the user, including facsimile, electronic mail, groupware,
intranets, and the Internet.

The Company's extensive suite of services is tailored to address the news
and information needs of multiple market segments ranging from individuals to
enterprises. The Company's principal services include First!, targeted to
corporate workgroups and enterprises, and a series of single-user services,
including HeadsUp, targeted for the individual business executive or knowledge
worker, Physician's NewScan, a sponsored briefing service targeted to medical
professionals, and NewsPage, a Web-based news site that offers information and
targeted advertising to knowledge workers with Internet access. With its
acquisition of FreeLoader, the Company plans to offer agent-based retrieval of
multi-media Web content for offline delivery directly to the user's hard
drive, including the use of advertising-based screen savers. The Company
believes that these services offer prospective customers a range of
information solutions according to their desired breadth and depth of content,
delivery platform, and level of customization.

The Company believes that its solution provides the following benefits to
knowledge workers, information providers and advertisers:

Key Benefits to Knowledge Workers

High Relevance. The Company's services are customized to the unique
interests of each customer. Profiles of customer preferences are calibrated
initially and refined continually according to usage patterns and direct
customer feedback. Once a customer's profile is established, the Company,
through its proprietary filtering software, editorial expertise, and industry-
segment knowledge bases, provides those news items of highest relevance to the
specific interests of the customer, while eliminating redundant and irrelevant
items. The Company believes that its knowledge processing capabilities used to
generate its services result in higher information relevancy for users than
alternative information filtering approaches.

Ease of Use. The Company's services are designed to provide customers with
exceptional ease of use. To initiate use of one of the Company's services, a
customer is only required to spend a short amount of time to configure the
initial profile of interests. Once the profile of interests has been
established, the Company proactively delivers to the user a customized report
each business day which can be read at the user's convenience. In addition,
there is no need for specialized hardware,

31
<PAGE>

software, or search languages. As a result, users maintain current awareness
without the need to take special steps each day to search for items of
interest.

Single Point of Access to Broad Set of Sources. The Company's customized and
pre-packaged solutions offer a convenient, single point of access to a global
array of information. The Company offers users more than 730 information
sources, including both broad horizontal sources (e.g., Knight-Ridder, Kyodo
News International, and Reuters) and specialized vertical industry sources
(e.g., Communications Week, ComputerWorld, and PC Week in the computer
industry).

Predictable Pricing. The Company's subscription fee and fulfillment pricing
model allow customers to access content from a range of information providers
at a predictable cost, which is significantly lower than through direct
sourcing. The Company's pricing model provides its users with a constantly
growing set of information sources at no incremental cost. Unlike conventional
online information services with connect-time-based pricing, the Company's
subscription fee structure allows companies to more accurately budget for
their information needs. Certain of the Company's services (NewsPage,
FreeLoader and Physician's NewScan) derive revenue from advertising fees,
which enable the Company to offer these services to customers for no charge or
at a reduced subscription rate.

Multiple Delivery Platforms. The Company delivers its services across an
extensive set of platforms, including, in the case of the Company's enterprise
services, facsimile, electronic mail, groupware, and intranets, and, in the
case of the Company's single-user services, facsimile (HeadsUp and Physician's
NewScan), electronic mail (HeadsUp and NewsPage), and the Internet (NewsPage
and FreeLoader). These capabilities allow the Company to address a broad
audience and to meet the requirements of large enterprises with heterogeneous
delivery needs. This platform flexibility allows the Company to meet the
evolving infrastructure requirements of its customers.

Enhanced Offline Web Delivery

The Company's FreeLoader software facilitates the offline delivery of Web
content in a graphically-rich, multimedia format. Working in conjunction with
Internet browsers such as Netscape Navigator, FreeLoader automatically
searches for and retrieves news and information from user-specified Web sites
and automatically downloads relevant content directly to the user's hard drive
at regular intervals specified by the user. Once the user has established the
desired Web site retrieval and downloading criteria, no further user
intervention is required, enabling timely information retrieval without the
need for inefficient and time consuming Web "surfing."

Key Benefits to Information Providers

Incremental Revenues. Information providers receive fees for certain of the
Company's products for content delivered to the Company's customers. These
fees provide information providers with additional revenues, leveraging the
fixed editorial investment in their published information.

Alternative Distribution Channels. The Company's services offer information
providers access to alternative distribution channels, such as electronic
mail, groupware, intranets and the Internet, that might otherwise be difficult
for them to establish. These channels give information providers the
opportunity to explore and benefit from alternative media in a rapidly
changing publishing environment.

Brand Name Awareness. When users of the Company's services read an abstract
or full text of a story, they see a clear citation specifying the source of
the item. This source citation promotes awareness of the information
provider's brand name, in many cases to users previously unfamiliar with the
source.

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<PAGE>

Source of New Subscribers. Information providers who license the use of
their content to the Company reach an interested audience of non-subscribers,
and promote their brand name to this audience. Users who repeatedly receive
stories from a particular source are potential new subscribers for the
information provider.

Key Benefits to Advertisers

Targeted Audience. The Company's NewsPage Web site is organized in a topic-
based menu system, featuring current awareness information on more than 25
different industries. This structure allows advertisers to promote their
services in a defined and relevant segment of NewsPage, reaching highly
qualified customers with a micro-targeted message. The Company's Physician's
NewScan service also provides its sponsors with a highly qualified subscriber
base.

New Interactive Media. The Company's Web-based NewsPage and FreeLoader
services provide interactive advertising platforms that offer advertisers
greater flexibility and functionality than traditional broadcast and print
media. An interested reader can link directly to the appropriate page on the
advertiser's Web site, allowing the advertiser to provide an unlimited amount
of information in a rich multimedia format; also, advertisers can modify their
advertising in real time and collect data on audience responses. The Company's
FreeLoader service is intended to provide interactive advertising in an
innovative screen saver format which displays the advertisement (linked to the
advertiser's Web site) on the user's desktop screen saver, enabling the
advertiser to reach the knowledge worker even while the computer is idle.

Potential for Online Commerce. Web-based advertising with links to the
advertiser's Web site can provide readers with the opportunity to learn more
about products, request further information, and complete transactions online.
The Company's Web-based information exchange capability not only introduces
efficiencies into the product awareness process, but also has the potential to
significantly compress the advertiser's sales cycle. Notwithstanding these
benefits, the potential for completing commercial transactions online depends
to a significant extent on the successful resolution of issues relating to the
security of Internet transactions. See "Risk Factors -- Dependence on the
Internet."

The Company believes its business model creates a mutually reinforcing
relationship among knowledge workers, information providers and advertisers.
The Company believes that the value of the Company's information franchise to
all participants will increase as it enhances its core knowledge processing
technology and as it increases its base of knowledge workers, information
providers and advertisers. Expanding the number of information sources
increases the depth and breadth of information content available to knowledge
workers and attracts new users. Growing the user base enhances the ability of
information providers to leverage their editorial investments for incremental
readership and revenue. A larger user base also attracts additional
advertisers, whose increased participation leads to lower subscription costs,
thereby further expanding the Company's user base.

STRATEGY

The Company's objective is to be the industry's leading "open information
exchange" through a strategy that links a growing user base of knowledge
workers to relevant information providers and advertisers. By executing this
strategy, the Company believes that it is establishing a brand name identified
with high relevance, breadth and depth of information content, and ease of
use. The Company's strategy to aggressively build its information exchange
includes the following key elements:

Maintain Knowledge Processing and Relevance Leadership. The Company believes
that it has the most advanced systems for proactively delivering highly
relevant information matched to a user's customized profile. The Company has
invested considerable resources to develop and refine the SMART filtering
technology and its proprietary knowledge bases of more than 2,400 distinct
editorial topics in a range of vertical markets and more than 13,000 company
tracking profiles. The Company believes that its knowledge processing
capabilities enable it to achieve much higher relevancy than

33
<PAGE>

generic filtering or search-and-retrieval technologies. The Company intends to
continue to refine and enhance its technology and knowledge processing
capabilities, including expanding the scope of its proprietary knowledge
bases, editorial topics, and thesauri.

Expand the Breadth and Depth of Information Content. The Company believes
that its users value the breadth and depth of information coverage offered by
the Company's services. As of June 30, 1996, the Company had established
contractual license agreements that enable it to offer its users access to
information from more than 730 sources, up from 630 sources at December 31,
1995. These information sources include both broad horizontal sources (e.g.,
Associated Press, The Economist, Financial Times) and specialized vertical
industry sources (e.g., BioWorld Today, Health News Daily, and Medline in the
healthcare industry). The Company intends to continue to add information
sources in current categories, as well as to expand coverage to new vertical
markets.

Expand Sales Channels. The Company has developed sales expertise in
multiple, complementary channels, including direct and indirect sales and
strategic relationships. The Company intends to continue to build its direct
sales capability for its enterprise services and advertising sponsorships.
Through its telesales force, the Company focuses on expanding the user base
for its single-user services, which in turn can generate leads for enterprise
sales. The Company places priority on developing and leveraging strategic
relationships that enable it to reach a wider base of users. At March 31,
1996, the Company had sales and marketing relationships established with
Gartner Group, Lotus/IBM, Knight-Ridder, Microsoft, Netscape, Prodigy, Toshiba
and Yahoo!, among others. The Company intends to continue to build its direct
and indirect sales channels to reach broader domestic and international
markets.

Continue to Capitalize on the Internet Opportunity. The Company's NewsPage
Internet site has generated significant traffic since its introduction in
April 1995, and currently receives approximately two million Web page requests
("hits") per week. The Company believes that it is well positioned to continue
to capitalize on the opportunities presented by the widespread use of the
Internet. These opportunities include reduced costs of acquiring new users,
reduced costs of delivering information, access to additional information
sources, affordable access to international markets, increased interactivity
with the Company's user base, the potential to generate advertising revenue by
targeting a well-defined user base, and more direct linkages among knowledge
workers, information providers, and advertisers. The Company intends to
continue to invest significant resources to capitalize on these Internet
opportunities.

Grow Advertising Revenue. The Company believes that the growing user base
for its Internet-based and vertical market services presents the Company with
significant opportunities to attract advertisers. The Company offers
"relevance-based" advertising positions, enabling advertisers to reach a
micro-targeted audience of potential customers. For example, NewsPage offers
advertising banners that are positioned on the same screen as related news
topics. In addition to expanding the Company's revenue sources, advertising
enables the Company to lower the cost of information access to users, thus
making the Company's services affordable to a broader market. The Company
intends to continue to invest resources to grow advertising revenue.

Support and Define Open Industry Standards. The Company is committed to
providing an open independent information exchange. The Company delivers its
services over a range of platforms, including facsimile, electronic mail,
groupware, intranets and the Internet. The Company has also invested resources
in defining open industry standards and to facilitate the seamless exchange of
information. For example, the Company is a founding member of the Open Content
Publishers Standard ("OCPS") committee, which is comprised of information
publishers, distributors, and information technology companies such as Gartner
Group, Netscape, and Ziff-Davis Interactive. The OCPS committee is in the
process of defining standards for integrating text, multimedia graphics and
sound, video, hypermedia links, multimedia advertising, and universal resource
locating. The Company intends to continue to take advantage of emerging
standards to offer richer content in its services and to meet the evolving
infrastructure needs of its customers.

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<PAGE>

PRODUCTS AND SERVICES

The Company offers a suite of customized information services targeted to
distinct market segments. The Company addresses two broad classes of users:
enterprises and single users. The Company's enterprise service, First!, is
offered in a variety of configurations. Its single-user services include
HeadsUp, Physician's NewScan, NewsPage and FreeLoader. To deliver these
services, the Company utilizes the proprietary SMART text retrieval and
filtering technology, scaleable internal processing systems, editorial
knowledge bases and specialists, and quality assurance tools and analysts. The
Company provides each customer with a concise daily information report which
consists of relevant and timely articles drawn from an extensive set of
worldwide information sources. Information provided to the Company's users is
drawn from general news sources, including regional, national, and
international newswires, newspapers and periodicals, as well as from targeted
vertical sources specific to high technology, healthcare, energy, finance, and
other industry segments. The Company delivers its services over a broad range
of delivery platforms, including facsimile, electronic mail, enterprise
groupware platforms such as Lotus Notes and intranets, and the Internet.

<TABLE>
<CAPTION>
DELIVERY PLATFORMS
SERVICES DESCRIPTION TARGET USERS (INTRODUCTION DATE) PRICING
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ENTERPRISE
- ----------------------------------------------------------------------------------------------------
First! Daily, Management teams, Fax (Q1 1990) Subscription-based
comprehensive full- corporate E-mail (Q1 1990) pricing ranging
text news service workgroups, sales Lotus Notes (Q3 from $5,000 to more
teams, and/or 1992) than $200,000
enterprise-wide SGML/HTML (Q4 1994) annually, depending
distribution within Intranet (Q3 1995) on customer
large organizations requirements
- ----------------------------------------------------------------------------------------------------

SINGLE-USER
- ----------------------------------------------------------------------------------------------------
HeadsUp Daily news reports Individual Fax (Q2 1993) Subscription-based
including story executives and E-mail (Q4 1993) pricing of $360 and
briefs and full- managers within up annually, based
text fulfillment large and small upon fulfillment
options organizations options*
Physician's NewScan A version of Physicians and Fax (Q4 1994) Sponsored by
HeadsUp targeted to other medical pharmaceutical
the healthcare professionals companies;
market delivered free to
qualifying medical
professionals
NewsPage Internet news site Knowledge workers Internet (Q2 1995) Advertiser
updated daily, with access to the E-mail (Q1 1996) supported; with
including story Internet variable
briefs, full-text subscription fees
fulfillment, and and fulfillment
targeted costs*
advertising with
links to
advertisers' Web
sites
FreeLoader Offline Web content All Web users Internet/Web (v1.0 Free for users;
delivery service Q2 1996) intended to be
with editorial advertiser
programming supported
- ----------------------------------------------------------------------------------------------------

OTHER INTERNET
- ----------------------------------------------------------------------------------------------------
BookWire Internet site Book readers and Internet Advertiser
featuring book the publishing (acquired Q3 1995) supported; free of
reviews, discussion industry charge to users
forums and the
ability to purchase
books online
</TABLE>

* These services provide headlines and abstracts of news items; depending on
subscription plan, user requests for the full text of an article may be
subject to additional fulfillment charges.

35
<PAGE>

Enterprise Services

First! provides comprehensive, full-text news and information delivered each
day to enterprises and workgroups that seek daily business intelligence
regarding their industry environment for use in areas such as sales,
marketing, product management, finance, purchasing, advertising, public
relations, and competitive analysis. First! offers customization at the
enterprise, workgroup, and single-user levels. The service is generally
delivered to enterprises through a two-tiered filtering process, with a
broader set of stories relevant to the enterprise delivered to a shared
groupware platform. Personalized profiles can then be defined to select the
subset of stories of highest relevance to each individual user.

First! articles are delivered each business day in full-text via facsimile,
electronic mail, or as an enterprise-wide feed to groupware platforms such as
Lotus Notes, Folio VIEWS, and Collabra Share, or to internal intranet Web
servers. To encourage readership and knowledge-sharing across the workgroup,
First! is structured to facilitate workgroup-wide redistribution and
integration with comments from users. These features enable First! to serve as
a backbone for organization-wide knowledge development. In 1992, First!
received the Information Industry Association award for "Best New Information
Product."

Historically, the Company has generated a significant portion of its revenue
for First! from enterprises deploying the Lotus Notes platform. The Company's
First! for Notes product, introduced in 1992, has been marketed in conjunction
with Lotus as well as through Lotus Notes value-added resellers and system
integrators. The Company recently introduced its First! for the Web service,
targeted for integration into an organization's internal intranet Web server.
The intranet delivery platform allows individual knowledge workers within
these organizations to create personalized Web pages of relevant news which
are updated on a daily basis. The Company has also recently introduced First!
Alert, an intra-day financial news service which draws stories from major
newswires, matches them to client profiles and delivers them by e-mail to
First! Alert customers as news becomes available throughout the business day.

Single-User Services

HeadsUp is a personalized, interactive daily business intelligence report
designed to meet the information needs of individual business professionals,
such as executives in small businesses, mobile business professionals, or
individual knowledge workers within larger organizations. HeadsUp is delivered
each business day by facsimile or electronic mail. News items are presented as
briefs, with full text available through the Company's interactive fulfillment
system. Each brief is tagged with an identifying number, which enables users
to easily request the full-text version either by electronic mail or through
the Company's telephone interactive voice response system. Subscribers create
their profiles by selecting topics from the Company's Topic Selector, a
library of more than 2,400 topic categories and company names. Subscribers
specify their targeted mix of topics and prioritize their choices, and can
update this profile over time to better meet their changing information
requirements. The Company has recently introduced HeadsUp Alert, an intra-day
financial news service which draws stories from major newswires, matches them
to client profiles and delivers them by e-mail to HeadsUp Alert customers as
news becomes available throughout the business day.

Physician's NewScan is a single-user service modeled after HeadsUp, but
targeted specifically to the healthcare sector. Physicians and other medical
professionals who are enrolled in the service receive a free news briefing,
delivered each business day by facsimile, drawing from medical and other
information sources. Physician's NewScan is sponsored by leading
pharmaceutical companies, which assist in enrolling users, underwrite the
program's cost, and place advertisements in each daily report. Although this
service is early in its development, the Company believes that Physician's
NewScan may

36
<PAGE>

prove to be a model for delivering single-user information services on an
advertiser-sponsored basis to a range of targeted vertical markets.

NewsPage is the Company's interactive news and information site on the Web
that provides timely and relevant information, updated each business day and
organized in a topic-based menu system. Users can navigate through menus,
explore news relating to more than 25 industry areas, and link directly to pre-
specified topics of interest. NewsPage leverages the Web's document-linking
structure by allowing users to view articles in brief or full-text format and
to connect directly to the Web sites of advertisers to obtain additional
product information or potentially to complete transactions online. NewsPage
was selected by Internet World as the "Best Online News Service" for 1995 and
has been cited by industry sources as one of the most frequently visited Web
sites. NewsPage currently receives approximately 2 million hits per week.

NewsPage includes advertising from leading companies seeking to participate
in "relevance-based advertising," the Company's model for linking sponsors to
micro-targeted readers. In contrast to traditional advertising, which is
challenged to attract the attention of appropriate readers in a mass-media
environment, the relevance-based model ensures a qualified audience through
reader-driven content selection. Users, while reading a news item on a subject
of interest to them, are presented with an advertising banner from a related
sponsoring company. The user can then immediately link to the Web site of the
advertiser to get detailed product information or potentially to conduct
business transactions directly over the Internet. Current and recent
advertisers from a range of industries include Bank of America, Bay Networks,
Cisco Systems, Digital Equipment, Hewlett-Packard, MGM/United Artists,
Millipore, and Nynex. NewsPage can be found on the Web at
"http://www.newspage.com".

In June 1996 the company acquired FreeLoader, the developer of an offline Web
content delivery service. Working in conjunction with Web browsers such as
Netscape Navigator, FreeLoader is intended to enable the user to specify
multimedia Web content to be retrieved and downloaded to the user's hard drive
at pre-determined intervals. Once downloaded, the information is accessible to
the user at any time. FreeLoader is designed to provide editorial direction and
programming to users of the software through its editorial staff which creates
and maintains a "suggested subscription" selection of relevant and high-quality
Web sites. Users will be able to select pre-loaded suggestions or subscribe to
any desired Web site for automatic downloading. The FreeLoader screen saver is
designed to notify the user of downloaded content and provide access to that
content through hot-linked objects.

FreeLoader is distributed primarily through its own Web site and other Web
sites which have entered into distribution agreements with FreeLoader. Over 25
distributors have entered into agreements with FreeLoader to date, including
ZDNet, USA Today, Yahoo!, NewsPage, Excite, InfoSeek, and Hotwired. These
distributors provide hot-links on their Web sites to the FreeLoader service. In
return, a distributor may have the opportunity to turn casual Web surfers into
repeat users of the distributor's Web site through repeated downloading via
FreeLoader and may be showcased as featured content on the FreeLoader Web site.

Other Internet Services

As part of its strategy to expand its Internet-based information services,
the Company intends to acquire or develop other complementary Internet-based
information services. In 1995, the Company acquired BookWire, a leading
Internet resource for book readers and the publishing industry. BookWire
features book reviews, discussion forums, electronic editions of the best
seller list from Publisher's Weekly, and the ability to purchase books of
interest over the Internet. Although it has not yet introduced such a
capability, the Company believes that its filtering and knowledge processing
technologies could be used to make users aware of newly published books that
match their profile of

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interests. An industry source has cited BookWire as one of the top
professional sites in the literature category on the Internet. BookWire can be
found on the Web at "http://www.bookwire.com".

Knowledge Processing Architecture

Each of the Company's daily news and information services utilizes
proprietary technology and production systems which have been designed and
enhanced to enable the automated retrieval, compiling and distribution of news
items most relevant to each user. The Company continuously receives news and
information from its information providers via electronic news feeds. The
Company maintains a database of profiles characterizing the interests of each
of its customers. The Company's filtering and editorial systems match each
customer's profile with the most relevant set of incoming stories. The
Company's internal systems are designed to deliver its services by 8:00 a.m.
Eastern Time each business day to each of its customers over a conveniently
accessible delivery platform.

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INFORMATION SOURCES

The Company has directed substantial resources to develop relationships with
an extensive range of domestic and international information providers,
allowing it to access content from general news and vertical industry sources.
A partial listing of information providers that had contractual agreements with
the Company as of June 30, 1996, includes:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
BROAD HORIZONTAL INFORMATION SOURCES
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
NEWSWIRES NEWSPAPERS AND MAGAZINES INTERNATIONAL

Associated Press Online Baltimore Sun Agence France Press
BusinessWire Chicago Tribune Asian Review of Business and
Knight-Ridder/Tribune Christian Science Monitor Technology
Business News The Economist Business Europa
Kyodo News International Financial Post Business Times (Signapore)
Nikkei English News Financial Times Financial Times
PR Newswire Journal of Commerce FT McCarthy files
Reuters Los Angeles Times Jakarta Post
San Francisco Chronicle Japan Chemical Week
San Jose Mercury Korea Economic Daily
Traffic World New Straits Times (Malaysia)
South China Morning Post
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
VERTICAL INDUSTRY INFORMATION SOURCES
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
HIGH TECHNOLOGY TELECOMMUNICATIONS ENERGY

Computerworld Broadcasting & Cable Energy Daily
Cowles/SIMBA Media Daily Cablevision Energy Economist
Datamation Communications Daily International Petroleum Finance
EDN Mobile Communications Petroleum Finance Week
Electronics Business Today Multichannel News Petroleum Intelligence Weekly
Electronic Engineering Times Telephony Power Asia
Information Week Warren's Cable Regulation Power Europe
Interactive Video News 21st Century Fuels
Interactive Week DEFENSE UK Gas Report
Optical Memory News World Gas Intelligence
PC Week C4I News
Semiconductor International Defense Daily FINANCE
DOD News Release
HEALTHCARE Inside the Air Force American Banker/Bond Buyer
International Defense Review A.M. Best News
Bio World Today Jane's Despatches Bank Automation News
Embase Navy News & Undersea Technology Bank Automation Corporate EFT
Health News Daily Tactical Technology CFO Alert
Infectious Disease Weekly INVEST/NET Insider Trading
Journal of the AMA OTHER BUSINESS Lloyd's List
Medline OTC Derivatives Analyst
New England Journal of Medicine Advertising Age Pensions & Investments
PHARMA Japan Chemicalweek Private Placement Report
Pharma Marketletter Euromarketing The Banker
Scrip Micropatent
Technology Transfer Week
VARBusiness
Variety

</TABLE>

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<PAGE>

The Company has focused on expanding its portfolio of information sources in
selected vertical markets. The Company initially focused on information
providers in the high technology sector and has subsequently added information
sources in several other vertical markets, including telecommunications,
healthcare, finance, energy, and defense. More recently, the Company has
created an extensive set of more than 13,000 company profiles, allowing news
relating to a specific company to be filtered and delivered to users. This
company tracking capability is especially valuable for sales personnel who
often call on key accounts across a wide spectrum of vertical markets. The
Company intends to continue expanding its coverage of vertical markets and
companies.

The Company's agreements with its information providers generally grant the
Company the non-exclusive worldwide right to distribute through the Company's
services the content published by the information provider. These agreements
typically have an initial term of either two or three years, are automatically
renewable unless terminated by one of the parties upon prior notice, and
provide for termination upon a breach by a party which is not remedied within
the applicable cure period after notice from the other party. Each information
provider warrants that it has ownership of, or other sufficient rights in, the
content licensed to the Company but disclaims responsibility for any errors in
that content as well as other warranties. The Company typically pays its
information providers a fee which is either based upon the Company's revenue
attributable to the licensed content or a fixed monthly amount.

MARKETS AND CUSTOMERS

The Company believes that the market for business information services is
large and growing. According to SIMBA Information, Inc., business information
revenues increased in 1994 to $25.4 billion, up 9.4% from $23.1 billion in
1993. Furthermore, the Company believes that electronic business information
services represent an increasing percentage of this market. SIMBA forecasts
that electronic services in 1999 will account for approximately 50% of
business information revenues, up from 37% in 1994.

Although the market for Internet-related information services and
advertising is only a small portion of today's information services and
advertising market, industry sources project rapid growth for this sector. The
Company believes that content applications on the Internet, and customized
news in particular, will be a rapidly growing segment and will be supported,
at least in part, by advertising. Forrester Research Group projects that the
market for advertising on the Internet will exceed $2.5 billion by the year
2000, up from $33.0 million in the first six months of 1995.

40
<PAGE>

At June 30, 1996, the Company had approximately 280,000 users of its
enterprise and single-user services. At that date, the Company had
approximately 880 enterprise customers deploying the First! service to users
within their organizations. No customer accounted for more than 5% of the
Company's revenue in the year ended December 31, 1995 or in the first and
second quarters of 1996. Representative enterprise customers, each of which
generated at least $10,000 in revenue for the Company in fiscal 1995, include:

HIGH TECHNOLOGY HEALTHCARE TELECOMMUNICATIONS

3Com Allergan Ameritech
Advanced Micro Devices Astra USA AT&T
Apple Computer Baxter Healthcare Bell Atlantic
Cisco Systems Becton Dickinson BellSouth
Dell Computer Blue Cross & Blue Shield Cellular One
Digital Equipment Chiron Hughes Communications
Hewlett-Packard Johnson & Johnson MCI
IBM Kaiser Permanente Nokia Mobile Phones
Intel Merck SBC Communications
LSI Logic SmithKline Beecham Sprint
Microsoft US West
Motorola OTHER CORPORATIONS
NEC
Oracle ENERGY Allen-Bradley
Sharp Electronics Corning
Sybase Amoco Corporation Eastman Kodak
Tandem Computer Atlantic Richfield Hitachi
Unisys Mobil Mercedes-Benz of North
Saudi Aramco America
NEC Technologies
FINANCE Polaroid
Rockwell International
Coopers & Lybrand Sony
Chase Manhattan Bank Toshiba
Ernst & Young Xerox
ITT Hartford

The following are representative examples of the use of the Company's
services by its enterprise, single-user and advertising customers:

Hewlett-Packard Co. Hewlett-Packard has been a subscriber to First! since
1993, utilizing the service to maintain current awareness for over 100 users,
including managers, directors, and executives. The First! service for Hewlett-
Packard is based on eight distinct information profiles, reflecting the
interests of several business areas within the company, including the
workstation, semiconductor, and software groups. Hewlett-Packard's daily news
includes relevant industry and market topics, as well as company trackers to
monitor competitors, partners and customers. First! is delivered to Hewlett-
Packard via electronic mail.

Coopers & Lybrand L.L.P. Coopers & Lybrand, a customer since 1993,
subscribes to First! for Notes. More than 150 employees of the Financial
Advisory Services practice have access to First!'s daily customized delivery
of news and information relating to corporate mergers and acquisitions,
financial transactions, bankruptcy filings and other financial news. The
personal profiling software available with First! is used to further customize
the news feed to the special interests of individual managers, allowing a user
to receive in his or her electronic mail box a daily customized set of news

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<PAGE>

briefs. Each brief is linked to the full text version, which is stored in a
central database. Team members also use First!'s company tracker to monitor
more than 40 public companies.

Lotus Development Corporation. A customer since January 1991, Lotus
Development Corporation subscribes to Individual's First! for Notes. Each day,
the Company delivers a database of high technology news comprising industry
and market news across Lotus' business lines. This customized news feed is
accessible by over 1500 Lotus employees, including the executive staff and the
500 representatives comprising the North American sales team. From the central
news database, employees can elect to use First!'s personal profiling option.
Once the personal profile is set, a customized set of news briefs is delivered
to each user's electronic mail box, and each brief is programmatically
document-linked to the full text of the news story in the central database.
Sales representatives can take advantage of the company tracker feature to
monitor over 600 companies including business partners, customers and
competitors.

OEM Account Manager, Hitachi. This account manager of Hitachi, responsible
for OEM video displays, accesses NewsPage on the Web to follow industry news
and to identify new business opportunities. His news interests include the
"Semiconductors in Graphic Devices" and "Computer and Visual Displays" topics,
which he has bookmarked on his Web browser for easier access. In addition to
reading the news briefs and full text of articles included with his
subscription, he also orders the full text of certain articles from specialty
sources available on NewsPage for an additional charge.

Market Manager, AT&T Professional Services. This manager for a small,
focused team within AT&T relies on HeadsUp to monitor competitors, track
emerging broadband multimedia and networking technologies, and identify new
sales opportunities. By 8:00 a.m. each business day, her customized HeadsUp
issue is delivered by fax with twenty news briefs, organized by topic and
company, that have been selected by the Company's filtering software to best
match her profile of interests. Individual's interactive voice response system
allows her to retrieve the full text of articles of particular interest and
she generally orders 25 to 30 stories each week.

Bay Networks. Bay Networks, a leader in the networking industry, is a
NewsPage advertiser for several of the high-technology topic pages including
"Bridges, Routers, and Gateways" and "Ethernet and Token Ring." NewsPage
readers visiting these topic pages can read the news on that subject for the
day and can also automatically link to Bay Networks' Web site to access
detailed information on its products and services related to those specific
technology categories as well as other networking categories. This relevance-
based advertising delivers to Bay Networks a highly qualified reader in an
interactive medium, based on that reader's editorial interest areas.

SALES AND MARKETING

The Company targets its sales and marketing programs to reach knowledge
workers within large enterprises, within small organizations, or who work
independently. The Company markets and sells its services in the United States
and internationally through multiple sales channels, including the Company's
direct sales force, telesales and direct mail, direct sales to advertisers,
strategic relationships with leading firms in the United States and abroad,
value added resellers (VARs), and system integrators (SIs). The Company's
sales and marketing staff consisted of 68 full-time employees at June 30,
1996, located in the Company's headquarters in Burlington, Massachusetts, and
in Burlingame, California, New York City, Los Angeles, Tokyo and Washington
D.C. (FreeLoader staff). Principal elements of the Company's sales and
marketing strategy include:

Direct Sales. To date, the Company has utilized its direct sales force
primarily to pursue sales of its enterprise service, First!, in the United
States. The Company generally targets its direct sales efforts to enterprises
with revenues of more than $50 million annually. In addition, leads are
generated from users of the Company's single-user services and by the
Company's telesales personnel. Members of

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<PAGE>

the direct sales force also assist enterprise customers in integrating the
Company's services into their ongoing information programs as part of the
selling and account management process.

Telesales and Direct Mail. The Company's telesales force focuses principally
on sales of HeadsUp. The Company's telesales efforts are complemented by a
direct mail program designed to generate prospects. Qualified prospects are
typically given a free 30-day trial to HeadsUp. The telesales force is also
trained to recognize enterprise prospects where the Company's First! service
would be an appropriate solution and to forward these leads to the Company's
direct sales force. The Company believes that its single-user services are an
effective means of seeding the market for the Company's enterprise service.

Direct Sales to Advertisers. In 1995, the Company established a separate
direct sales force to sell advertising for its NewsPage Web site and for
Physician's NewScan. This sales force was created because the Company believes
that the skills required to sell advertising differ from those required to
sell its information services.

Strategic Relationships. The Company has established strategic alliances
with leading firms to promote and sell its services. The Company has
relationships with companies including Lotus/IBM, NETCOM, Netscape, and
Prodigy involving cooperative marketing of the Company's services through
online and Internet-based services and, in the case of Lotus/IBM, through
Lotus Notes VARs and SIs. In addition, the Company has relationships with
Gartner Group, Knight-Ridder and Microsoft for joint product development and
marketing. See "Business -- Microsoft Relationship" and "-- Knight-Ridder and
Other Strategic Relationships."

Value Added Resellers and System Integrators. The Company obtains referrals
for potential sales to enterprise-level accounts from VARs and SIs that
specialize in providing integrated turnkey solutions for the enterprise in
conjunction with groupware platforms such as Lotus Notes or intranet-based
solutions.

International Sales. The Company has begun to establish the direct and
indirect channels and the strategic relationships which it believes are
required to expand its international business. The Company has established a
dedicated exclusive agency relationship with a reseller in the United Kingdom.
In the fourth quarter of 1995, the Company incorporated a wholly-owned
subsidiary in Japan in order to expand its international business in the Far
East. In April 1996, the Company entered into a joint venture with Toshiba
Corporation to provide customized news and information from Japanese language
sources to corporate managers and executives across a variety of industries in
Japan. The Company also utilizes sales agents in several other countries. In
each of the three years ended December 31, 1995, and in the first and second
quarters of 1996, less than 10% of the Company's revenue was generated from
international customers.

The Company's marketing activities are designed to build market awareness
and identify prospective users of its services. These marketing efforts
include participation in tradeshows, seminars, conference speaking
engagements, direct mail campaigns, print and online advertising, and efforts
to generate exposure in trade magazines and general interest magazines and
newspapers. The Company has received numerous industry awards, including the
1995 Information Industry Association's "Breakout Company of the Year" award,
Internet World's "Best Online News Service" award in 1995 for NewsPage, and
the Information Industry Association's "Best New Information Product" award in
1992 for First!.

A substantial portion of the Company's revenue to date has been generated by
the sale of subscriptions to individual users or corporate customers. The
Company incurs up-front customer acquisition expenses in identifying,
approaching, and securing subscribers for its services. The revenue from a
subscription is recognized ratably over the period of the subscription;
customer

43
<PAGE>

acquisition costs are expensed as incurred. At the close of the subscription
period, the customer either renews the subscription or the subscription
expires. The Company may incur additional expense in the process of soliciting
a subscription renewal. The cost of soliciting a subscription renewal is
significantly lower than the cost of acquiring a new customer.

The Company's First! service is generally sold to large enterprises on an
annual subscription basis. New enterprise customers typically make full
subscription commitments after a several-month paid service trial and one or
more visits from the Company's direct sales force. During the three years
ended December 31, 1995, annual renewal rates for First! have averaged 89% on
a dollar-weighted basis.

The Company's HeadsUp single-user service is offered through both monthly
and annual subscriptions. The Company's Physician's NewScan and NewsPage
services are supported by advertising-related revenue. Physician's NewScan is
sponsored by pharmaceutical companies which assist in marketing the product to
physicians and other medical professionals. Users receive a free customized
daily news report that includes advertising from the sponsor. NewsPage is
primarily advertising supported, offering a basic level of service to users at
no charge, and a higher level of service, including full text of stories from
a broader set of sources, to users paying a monthly subscription fee.
Advertising revenue is recognized ratably over the advertisement period.

CUSTOMER SERVICE AND SUPPORT

The Company believes that customer service and support are critical to the
value of its services and in retaining and expanding its customer base. The
Company's customer support staff, which consisted of eight people at June 30,
1996, provides toll free telephone support, response to customer requests to
modify or update their profiles, pro-active calls to customer accounts as
appropriate, and support for questions with respect to billing charges for a
given period. The customer service and support organization also provides
feedback to other functions of the Company regarding customer requirements and
priorities for new features or new information sources. The Company's
editorial specialists also contribute to the Company's customer support
capability by assisting customers in the definition and modification of their
profiles. The Company does not charge its customers for service and support.

EDITORIAL, OPERATIONS, AND PRODUCT DEVELOPMENT

The Company's knowledge processing systems have been designed and enhanced
to enable the automated retrieval of the news items most relevant to each
user's personal interest profile, while eliminating duplicative and irrelevant
items. The Company's proprietary systems and technology are built around the
SMART (System for Manipulation and Retrieval of Text) filtering technology.
The Company, since its inception, has directed substantial resources to
developing and enhancing its internal production systems, editorial
capabilities, quality assurance function, and product development expertise.
The Company believes that these integrated capabilities allow it to deliver
highly relevant, concise news reports to its users.

The SMART technology is an information filtering system developed through 20
years of research at Cornell University, for which the Company has an
exclusive license. See "Business -- Licenses and Intellectual Property." The
SMART software analyzes incoming electronic information sources, including
electronic feeds from information providers' databases, to identify items
matching each subscriber's customized profile. In this respect, SMART
functions as an intelligent personal agent, understanding a particular user's
information needs, proactively retrieving stories of highest relevance and
delivering a news report to the user each business day. In contrast to
earlier-generation keyword search algorithms, the SMART software relies on a
complex, multi-dimensional representation of each user's profile and employs
advanced techniques to retrieve items with the highest degree of relevance.

44
<PAGE>

Since a major news item might be carried by a number of sources, the Company's
filtering engine eliminates redundant stories and identifies the particular
article that best covers the topic. The Company believes that its SMART
technology enables it to deliver services to its users with significantly
higher relevance than those generated by alternative approaches. Relevance in
print media, for example, is generally quite low, since content is created
once for large circulation bases. With Boolean keyword search technology,
relevance is somewhat improved, although relevant information is often buried
within duplicate and repetitive stories. With the SMART technology, customers
surveyed by the Company have consistently reported that the content they
receive is highly relevant.

The Company's internal production systems are automated and scaleable,
allowing the Company to service a growing base of users and to process an
increasing volume of incoming information items. The Company's internal
systems are deployed across a client-server network of PCs and Unix
workstations which can be expanded to meet increases in production
requirements. The Company believes that the components of its production
systems can be purchased from external vendors with minimal lead times.

To support its production systems and to enhance the performance of the
SMART filtering engine, the Company employs a staff of editorial specialists
and domain experts. The role of these specialists is to refine, on an ongoing
basis, the knowledge base that defines the topics and filtering parameters in
each information domain. Through their in-depth vertical industry knowledge
and experience with the SMART codification techniques, the editorial
specialists build and refine a set of domain knowledge bases and thesauri of
industry terminology that enable SMART to identify the relevant news stories
for individual profiles and industry topics. The Company has also developed a
set of software tools that facilitate the creation and maintenance of these
domain knowledge bases. The Company believes that this editorial function is a
critical component of its ability to provide its users with extensive, yet
highly targeted, coverage of news items of interest. As of June 30, 1996, the
Company employed 20 people in its editorial department.

The Company's quality assurance function monitors the quality and
consistency of each night's delivered service. The quality assurance function
also investigates transmission problems, which can occur as a result of
internal system difficulties or problems on the receiving end (e.g., a user's
fax machine is out of paper). To provide its large enterprise customers with a
high level of customer service, the Company has developed internal systems and
procedures to identify potential delivery problems as early as possible in the
overall daily production cycle. The Company has also developed a set of
automated tools used by the Company in its internal production process, which
operate together with the SMART filtering systems, to improve the efficiency
and effectiveness of the Company's quality assurance function.

The Company's product development efforts are focused on expanding and
enhancing the Company's suite of services, further developing the Company's
core retrieval and filtering technology, further developing the Company's
knowledge processing and delivery systems, and developing service capabilities
that leverage the interactive capabilities of the Internet. The Company's
product development efforts to expand and enhance the delivery of its services
include efforts to enhance the interactive capabilities of the Company's
Internet and intranet-based services, enhancing First! to operate on Lotus
Notes 4.0, developing the FreeLoader functionality and multi-media
capabilities and integrating FreeLoader with Individual's products and
services, and general ongoing enhancements to its delivery capabilities. For
the six months ended June 30, 1996, and for the years ended December 31, 1995,
1994, and 1993, the Company had $1.9 million , $2.6 million, $1.2 million, and
$773,000 of product development expenses, constituting 17.7%, 15.5%, 12.6%,
and 18.8% of revenue, respectively. The Company expects that it will continue
to commit substantial resources to research and development for the
foreseeable future.

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MICROSOFT RELATIONSHIP

In October 1995, the Company and Microsoft entered into a business
relationship for the development and marketing of customized information
services to be offered in conjunction with Microsoft products or services.
Currently, the two companies are working together to develop a capability for
users of the Microsoft Network ("MSN") online service to obtain customized
information based on Individual's NewsPage Web site technology. Once
developed, this capability will be offered to Microsoft's MSN user base, will
specifically highlight the Company's corporate name and service brand, and
will link MSN users to the Company's Web site. This jointly developed service
is scheduled to be released in 1996. There can be no assurance that such
service will be successfully developed or introduced, on a timely basis or at
all, or that significant revenue, if any, will be generated by this service.

The Company and Microsoft are also jointly defining and developing a
customized information service, based on Individual's enterprise-related
services and technology, to be integrated with Microsoft's Exchange, a
client/server electronic mail-based groupware product. A release date has not
been established for this service. There can be no assurance that such product
will be successfully developed or introduced, on a timely basis or at all, or
that significant revenue will be generated through these efforts. The two
companies are also considering additional joint product development activities
but there can be no assurance that such activities will be undertaken or, if
undertaken, will generate significant revenue.

As part of its business relationship with the Company, in September 1995
Microsoft purchased shares of the Company's Series G Preferred Stock (all of
which were converted into shares of Common Stock upon the closing of the
Company's initial public offering). Daniel Rosen, Senior Director of
Microsoft, is a member of the Company's Board of Directors. See "Certain
Transactions" and "Principal Stockholders."

KNIGHT-RIDDER AND OTHER STRATEGIC RELATIONSHIPS

The Company has established strategic relationships with several other
leading corporations, including Knight-Ridder. These relationships are
designed to enable the Company to acquire new users more cost-effectively, to
offer additional capabilities to its existing users, expand its information
sources, or to leverage its systems expertise in conjunction with another
party to offer new services.

The Company is licensing content from Knight-Ridder. Also, Knight-Ridder
markets a service under the name Dialog Direct that utilizes proprietary
technology of the Company, for which the Company receives license fees. In
1993, Knight-Ridder purchased shares of the Company's Series F Preferred
Stock. Melinda E. Keirnan, Assistant Vice President and Assistant to the
Chairman and Chief Executive Officer of Knight-Ridder, is a member of the
Company's Board of Directors. See "Certain Transactions" and "Principal
Stockholders."

In March 1996, Individual entered into an agreement with the Internet
service provider NETCOM to provide NETCOM subscribers with a daily customized
news service called Personal NewsPage Direct. In April 1996, the Company and
Toshiba Corporation entered into a joint venture to form a Japanese
corporation to provide customized news and information services targeted to
the Japanese business information market.

The Company has established a relationship with Gartner Group, which offers
its clients a service, marketed as Gartner First! Daily, that draws on the
Company's proprietary systems and uses content from Gartner Group's research
and from information providers of the Company.

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<PAGE>

The Company also has in place marketing alliances with Lotus/IBM, Netscape
Communications, Prodigy, and Verity, among others. Many of these companies
offer the potential for broader distribution and reduced subscriber
acquisition costs for the Company. See "Business -- Sales and Marketing."

COMPETITION

The market for information services is intensely competitive and rapidly
changing. The Company competes, or may in the future compete, directly or
indirectly for users, information providers and/or advertisers with the
following categories of companies: (i) large, well-established news and
information providers such as Dow Jones, Knight-Ridder, Lexis/Nexis, Pearson,
Reuters and Thomson; (ii) traditional print media companies that are
increasingly searching for opportunities for online provision of news,
including through the establishment of Web sites on the Internet; (iii)
providers of network-based software systems such as Lotus and Microsoft, which
could, in the future, ally with competing news and information providers; (iv)
third party providers of software that allows customers to aggregate and
filter a variety of news feeds, such as Desktop Data; (v) consumer online
services such as CompuServe, America Online and Prodigy; (vi) Internet-based
news distributors such as ClariNet and search engine providers such as Digital
Equipment, Infoseek, Lycos, Verity, and Yahoo!; and (vii) Companies that offer
space for advertising on the Web, including content sites such as c|net,
ESPNet, GNN, HotWired, Pathfinder, and USA Today. FreeLoader competes with
other Web offline delivery software vendors such as Pointcast, Web Whacker and
OM Express. The Company presently has strategic relationships with certain of
its competitors or potential competitors (including Knight-Ridder and
Microsoft) and licenses content from others.

The Company believes that the principal competitive factors in selling its
products and services to knowledge workers include information relevance,
depth and breadth of information sources, ease of use, timeliness, delivery
platform capabilities, service quality, and cost. The Company believes that
the principal competitive factors in attracting information providers include
the ability to generate incremental fees, the ability to promote brand name
recognition, the potential to acquire new subscribers, and the degree of
delivery differentiation. The Company believes that the principal competitive
factors in attracting advertisers include the number of users or audience
size, demographics of user base or audience, the ability to micro-target
advertising, the capability to interact with customers, and overall cost-
effectiveness of advertising. The Company believes that it competes favorably
with respect to these factors, but there can be no assurance that it will
continue to do so.

Many of the Company's current and potential competitors have longer
operating histories, significantly greater financial, technical and marketing
resources, greater name recognition, and a larger installed customer base than
the Company. In addition, any of these competitors may be able to respond more
quickly to new or emerging technologies and changes in customer requirements,
and to devote greater resources to the development, promotion and sale of
their services than the Company. There can be no assurance that the Company's
current or potential competitors will not develop products and services
comparable or superior to those developed by the Company or adapt more quickly
than the Company to new technologies, evolving industry trends or changing
customer requirements. Increased competition could result in price reductions,
reduced margins, or loss of market share, any of which would materially and
adversely affect the Company's business, results of operations, or financial
condition. There can be no assurance that the Company will be able to compete
successfully against current and future competitors, or that competitive
pressures faced by the Company will not have a material adverse effect on its
business, results of operations, and financial condition. If the Company is
unable to compete successfully against current and future competitors, the
Company's business, results of operations, and financial condition will be
materially adversely affected. See "Risk Factors -- Competition."

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LICENSES AND INTELLECTUAL PROPERTY

The Company's success is dependent to a significant degree on its
proprietary technology. The Company relies on a combination of trade secret,
copyright, and trademark laws and on non-disclosure agreements and contractual
provisions to establish and protect its proprietary rights. The Company has
applied for two patents and has not to date registered any of its copyrights
or trademarks. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
services or to obtain and use information that the Company regards as
proprietary. There can be no assurance that the steps taken by the Company to
protect its proprietary rights will be adequate or that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technologies or services.

The Company has licensed the proprietary SMART filtering software, which is
used as the filtering engine for all of its products and services, from
Cornell University. Under the terms of the license agreement with Cornell
University, the Company has exclusive worldwide rights until February 1999 to
design, develop, market, and sell systems and services based on the SMART
software for the retrieval and dissemination of data from recent and
continually changing data sources. Under the terms of this agreement, the
Company also has the rights to sublicense SMART and its modifications to third
parties. Provided that the Company is not then in default of the license
agreement, at the end of the initial term of the agreement the Company will
retain a continuing worldwide, non-exclusive, perpetual royalty-free right to
use the SMART software, as well as the exclusive rights to all enhancements it
has made to the software. There can be no assurance, however, that Cornell
University will not license the SMART software to a third party, including a
competitor of the Company, once the Company's exclusive rights have lapsed. In
addition, Cornell University may terminate the license agreement if the
Company has materially breached the agreement and such breach remains uncured
60 days after written notice of such breach has been given. If the license
agreement were to terminate, the Company would be required to develop or
acquire a replacement filtering technology, and there can be no assurance that
such technology could be developed or acquired, on a timely basis or at all,
and on favorable terms to the Company. Consequently, any termination of the
Company's license agreement with Cornell University would have a material
adverse effect on the Company's business, results of operations, and financial
condition.

The Company has received correspondence from legal counsel for the owner of
a registered trademark, "Newspager," alleging that the Company's use of the
name "NewsPage" infringes on its mark. The other owner advised the Company
that the Company may continue to use the name "NewsPage" through the first
quarter of 1996 in order to afford it time to re-brand its Internet service
with a new mark. Although the Company is presently considering alternative
trademarks for NewsPage, it has not re-branded NewsPage. As a result, there
can be no assurance that the other owner will not commence legal action
against the Company for infringement of its registered trademark. Although the
Company believes that "NewsPage" does not infringe the rights of the other
party, an infringement action, if commenced, could result in an injunction
against the Company's further use of the "NewsPage" name, as well as monetary
damages, which could have a material adverse effect upon the Company. The
Company has also received correspondence from legal counsel for the owner of a
registered trademark entitled "Enhancing the Power of Knowledge" alleging that
the Company's use of the phrase "Spreading the Power of Knowledge" in
connection with advertising or marketing of healthcare or medical-related
information services was likely to confuse the public and result in
irreparable damage to the other owner's mark. The other owner insists that the
Company refrain from such use of "Spreading the Power of Knowledge." There can
be no assurance that the other owner will not commence legal action against
the Company for infringement of its registered trademark. Although the Company
has been using the mark since 1989 and believes that "Spreading the Power of
Knowledge" does not infringe upon the rights of the other party, an
infringement action, if commenced, could result in an injunction against the
Company's further use of

48
<PAGE>

"Spreading the Power of Knowledge," as well as monetary damages, which could
have a material adverse effect upon the Company.

There has been substantial litigation in the information services industry
involving intellectual property rights. Although the Company does not believe
that it is infringing the intellectual property rights of others, there can be
no assurance that such claims, if asserted, would not have a material adverse
effect on the Company's business, results of operations, and financial
condition. In addition, inasmuch as the Company licenses the informational
content that is included in its services from third parties, its exposure to
copyright infringement actions may increase because the Company must rely upon
such third parties for information as to the origin and ownership of such or
licensed content. Although the Company obtains representations as to the
origins and ownership of such licensed informational content and obtains
indemnification to cover any breach of any such representations, there can be
no assurance that such representations will be accurate or that such
indemnification will provide adequate compensation for any breach of such
representations. In the future, litigation may be necessary to enforce and
protect trade secrets, copyrights and other intellectual property rights of
the Company. The Company may also be subject to litigation to defend against
claimed infringement of the rights of others or to determine the scope and
validity of the intellectual property rights of others. Any such litigation
would be costly and divert management's attention, either of which would have
a material adverse effect on the Company's business, results of operations,
and financial condition. Adverse determinations in such litigation could
result in the loss of the Company's proprietary rights, subject the Company to
significant liabilities, require the Company to seek licenses from third
parties, and prevent the Company from selling its services, any one of which
could have a material adverse effect on the Company's business, financial
condition, and results of operations. See "Risk Factors --Dependence on
Proprietary Technology; Risk of Third Party Claims for Infringement."

EMPLOYEES

The Company had 204 full-time employees at June 30, 1996, of which 65 were
in editorial and operations, 68 were in sales and marketing, 51 were in
product development, and 20 were in finance and administration. The Company's
future success depends in significant part, upon the continued service of its
key technical, editorial, sales, product development and senior management
personnel and on its ability to attract and retain highly qualified employees.
There is no assurance that the Company will continue to attract and retain
high-caliber employees, as competition for such personnel is intense. The
Company's employees are not represented by any collective bargaining
organization, and the Company has never experienced a work stoppage and
considers its relations with its employees to be good.

FACILITIES

The Company's corporate headquarters are located in Burlington,
Massachusetts. The Company leases approximately 32,100 square feet under a
lease expiring December 31, 1999, with options to expand into adjacent space
on or before the termination of the lease. The Company leases additional
facilities and offices for sales and support personnel in Burlingame,
California, New York, and Tokyo. The Company believes that its existing
facilities are adequate for its current requirements and that additional space
can be obtained to meet its future requirements.

LEGAL PROCEEDINGS

From time to time, the Company may be involved in litigation relating to
claims arising out of its operations in the normal course of business. The
Company is not currently a party to any legal proceedings, the adverse outcome
of which, individually or in the aggregate, would have a material adverse
effect on the Company's results of operations or financial position.

49
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael E. Kolowich............ 44 President and Chief Executive Officer and a
Director
Bruce D. Glabe................. 47 Executive Vice President
Jacques Bouvard................ 60 Vice President, Engineering
Janesse T. Bruce............... 39 Senior Vice President and General Manager,
Internet and Single-User Services
Robert L. Lentz................ 45 Vice President, Finance, Chief Financial
Officer and Treasurer
Annette E. Lissauer............ 50 Senior Vice President and General Manager,
Enterprise Services
Robert E. McWalter............. 35 Vice President, Enterprise News Sales
Jeffrey Miller................. 40 Vice President, NewsPage Advertising Sales
Robin B. Streit................ 34 Vice President, Consumer Marketing
Majed G. Tomeh................. 36 Vice President, Editorial & Operations
Richard C. Vancil.............. 35 Vice President, Marketing
P. Russell Williams, Jr. ...... 34 Vice President, New Internet Ventures
Harry C. Wu.................... 44 Director of Systems Development
John S. Zahner................. 44 Vice President, Business Development,
Secretary
Joseph A. Amram................ 39 Director
William A. Devereaux(2)........ 49 Director
Melinda E. Keirnan(1).......... 40 Director
Elon Kohlberg.................. 50 Director
Marino R. Polestra(2).......... 38 Director
Daniel Rosen(1)................ 46 Director
</TABLE>
- --------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.

MICHAEL E. KOLOWICH joined the Company in September 1996 as President and
Chief Executive Officer and a director of the Company. Prior to joining the
Company, Mr. Kolowich served from June 1996 until September 1996 as Vice
President/Business Operations of Nets, Inc., an internet content provider
formed in June 1996 when AT&T New Media Services, a provider of interactive
online information services for business professionals, merged with
Industry.Net. Mr. Kolowich served as President of AT&T New Media Services from
December 1994 until its merger with Industry.Net in June 1996. From April 1991
until December 1994, Mr. Kolowich was President of Ziff-Davis Interactive, an
online publishing division of Ziff-Davis Publishing Company. Mr. Kolowich
holds an AB degree in Engineering and Applied Physics from Harvard College and
an M.B.A. from Harvard Business School.

BRUCE D. GLABE joined the Company in May 1994. Mr. Glabe has served as
Executive Vice President since May 1996. Prior to that, Mr. Glabe served as
Executive Vice President, Chief Financial Officer and Treasurer from October
1994 to May 1996, and served as Chief Financial Officer and Treasurer from May
1994 to October 1994. Prior to joining the Company, Mr. Glabe served from 1975
to 1993 at Bolt Beranek and Newman, Inc., ("BBN") a high technology company
specializing in communications, software and advanced computer systems, most
recently as President and General Manager of BBN Communications Division. From
1975 to 1990, Mr. Glabe served in several senior finance positions at BBN,
including Senior Vice President for Finance and Administration (Chief
Financial Officer). Mr. Glabe holds a B.S. degree in Engineering Systems
Analysis from the Massachusetts Institute of Technology and an M.B.A. from
Harvard Business School.

50
<PAGE>

JACQUES BOUVARD, a founder of the Company, has served as Vice President,
Engineering, since April 1989. Prior to forming the Company, Mr. Bouvard
served from 1959 to 1988 in engineering and technology groups at Honeywell
Bull, Inc., a computer manufacturing company, most recently as Director,
Advanced Systems Technology from 1982 to 1988. Mr. Bouvard holds an M.A.
degree in Applied Mathematics from Harvard University, an M.S.E.E. degree from
the University of Paris, and a B.S. degree in mathematics from the University
of Paris.

JANESSE T. BRUCE joined the Company in January 1996 as Senior Vice President
and General Manager, Internet and Single-User Services. Prior to joining the
Company, Ms. Bruce served with Cowles Media Company as Managing Director of
Walking Inc., publisher of Walking Magazine and other fitness/health-related
books and newsletters. Ms. Bruce founded Walking Inc. in July 1990 and served
as its CEO and Publisher until August 1994, when the corporation was sold to
Cowles Media Company. Prior to founding Walking Inc., Ms. Bruce also held
positions at Newsweek and Rolling Stone magazines and at Hearst Magazine
Company. Ms. Bruce earned a B.A. from Smith College.

ROBERT L. LENTZ joined the Company in March 1996 as Vice President, Finance.
Mr. Lentz has served as Vice President, Finance, Chief Financial Officer and
Treasurer since May 1996. Prior to joining the Company, Mr. Lentz served since
1993 as Vice President, Finance and Operations of Teloquent Communications
Corporation, a telecommunications software company. Prior to that, Mr. Lentz
served from 1990 to 1993 as Senior Vice President and General Manager,
Information Systems Division, in the Personal Communications Division of
Electronic Data Systems Corporation, a provider of software and information
technology services to the personal communications industry. Mr. Lentz holds a
B.S. degree from Northeastern University and an M.B.A. from Babson College.

ANNETTE E. LISSAUER joined the Company in December 1990, and has served as
Senior Vice President, General Manager, Enterprise Business since January
1996. From 1992 to 1995, Ms. Lissauer served as Vice President, Corporate
Sales, and from 1990 to 1991 served as Vice President, Marketing. Prior to
joining the Company, Ms. Lissauer served from 1987 to 1990 as Chief Operating
Officer of IDD Information Services, a financial information services company.
Ms. Lissauer holds a Baccalaureat degree from Amsterdam Lyceum in Amsterdam,
Holland, and a Certificat de Commerces from Ecole Lemania, at the Universite
de Lausanne in Switzerland.

ROBERT E. MCWALTER joined the Company in February 1990 as Regional Sales
Manager and has served as Vice President of Enterprise News Sales since April
1996. From June 1995 through March 1996, Mr. McWalter served as Director of
North American Sales. Mr. McWalter holds a B.A. in Economics from the
University of New Hampshire.

JEFFREY MILLER joined the Company in April 1996 as Vice President, NewsPage
Advertising Sales. Prior to joining the Company, Mr. Miller founded Miller
Communications Group in 1994, a communications company that provided sales
training, marketing management and specialized consulting services to
businesses. From 1990 to 1993, Mr Miller served as the founding Associate
Publisher of Windows Magazine for CMP Publishing. Prior to that, Mr. Miller
served at Ziff-Davis Publishing Company as Publisher of Mac User magazine from
1989 to 1990. Mr. Miller holds a B.A. in Political Science from City
University of New York, Brooklyn College, and an M.B.A. from Pace University.

ROBIN B. STREIT joined the Company in August 1996 as Vice President,
Consumer Marketing. Prior to joining the Company, Ms. Streit served from
August 1994 to August 1996 with Cowles Media Company as Director of New
Business Development for Walking Inc., a division of Cowles Enthusiast Media
and publisher of Walking Magazine and other fitness/health-related books and
newsletters. Prior to that, Ms. Streit served as Circulation Director for
Walking Inc. from July 1990 until August 1994, where she was responsible for
circulation, consumer marketing and financial strategies for Walking Magazine.
Ms. Streit earned a B.A. from St. Lawrence University.

51
<PAGE>

MAJED G. TOMEH joined the Company in November 1989, and has served as Vice
President, Editorial & Operations since November 1991. From 1989 to 1991, Mr.
Tomeh served as the Company's Director of Product Management. Prior to joining
the Company, from 1987 to 1989, Mr. Tomeh served as President of Executive
Briefing Services, an information services company which he founded and later
sold to a publisher. Mr. Tomeh has also worked as Product Manager at Analog
Devices, and as an Analyst at McKinsey & Co. Mr. Tomeh holds a B.S.E. degree
in Mechanical & Aerospace Engineering from Princeton University, an M.S.
degree in Microprocessor-Based Product Design from Stanford University and an
M.B.A. from Harvard Business School.

RICHARD C. VANCIL has served as Vice President, Marketing, since joining the
Company in January 1993. Prior to joining the Company, Mr. Vancil served from
1990 to January 1993 at Dataquest, Inc., a research and consulting firm for
the information technology industry. Mr. Vancil served as Vice President of
Marketing at Dataquest from 1992 to January 1993, and as Director of Sales,
Eastern Operations from 1991 to 1992. Prior to that, Mr. Vancil served at The
Ledgeway Group, a marketing research and consulting firm, from 1987 to 1990,
most recently as Market Development Director. Mr. Vancil holds a B.A. in
English from Connecticut College and an M.B.A. from Harvard Business School.

P. RUSSELL WILLIAMS, JR. has served as Vice President, New Internet Ventures
since joining the Company in July 1995. Prior to joining the Company, Mr.
Williams served from 1986 to February 1995 at Delphi Internet Services
Corporation, an online service and Internet access provider, most recently as
Vice President and General Manager from 1992 to February 1995, and as Vice
President of Sales and Marketing from 1990 to 1992. Mr. Williams holds a B.A.
degree in Economics from Trinity College.

HARRY C. WU, a founder of the Company, has served as Director of Systems
Development since 1989. Prior to forming the Company, Dr. Wu served from 1984
to 1988 as Principal Staff Engineer at Honeywell Bull Information Systems. Dr.
Wu holds a B.A. in Mathematics and an M.S. in Mathematics from the University
of California, Berkeley, as well as an M.S. in Computer Science and a Ph.D. in
Computer Science from Cornell University. Dr. Wu's Ph.D. dissertation related
to algorithmic advances of the SMART technology.

JOHN S. ZAHNER, a founder of the Company, served as Vice President of
Business Development since 1989. Prior to forming the Company, Mr. Zahner
served most recently as an independent business consultant to the publishing
industry during 1988. Prior to that, Mr. Zahner served from 1985 to 1987 at
Raben Publishing Company, most recently as Director of Special Sections. Mr.
Zahner attended Westminster College and the University of Paris (Sorbonne).

JOSEPH A. AMRAM, a founder and director of the Company, was terminated as an
employee of the Company in August 1996. Mr. Amram served as President and
Chief Executive Officer of the Company from its inception in January 1989 to
July 1996. Prior to forming the Company, Mr. Amram was an associate at Aegis
Venture Funds, a venture capital partnership, from 1987 to 1988. From 1984 to
1987, Mr. Amram served first as Product Manager and then as Manager, Product
Marketing, at Rational, a manufacturer of productivity systems for software
engineers. Mr. Amram also served for three years in the Israeli Air Force,
receiving five promotions before ending his tour of duty in 1978 as a
Sergeant-Major. Mr. Amram holds B.S. and M.S. degrees in Electrical
Engineering and Computer Science, both from the Massachusetts Institute of
Technology, as well as an M.B.A. from Harvard Business School.

WILLIAM A. DEVEREAUX has served as a director of the Company since 1989, and
was elected Chairman of the Board of Directors in July 1996. Mr. Devereaux has
been Managing Director, American Capital Company, a venture capital and
merchant banking company, from 1987 to 1992 and since 1995. From 1993 to 1994,
Mr. Devereaux was Vice President, Strategic Planning at the Communications
Division of General Instrument Corp. Prior to that, from 1979 to 1987, Mr.
Devereaux was Executive Vice President at American Cable Systems, a national
provider of cable television services.

52
<PAGE>

MELINDA E. KEIRNAN has served as a director of the Company since May 1996.
Ms. Keirnan has been Assistant Vice President and Assistant to the Chairman
and Chief Executive Officer of Knight-Ridder, Inc. since April 1995. From
March 1994 to April 1995, Ms. Keirnan was Assistant to the President of
Knight-Ridder, Inc. Prior to that, Ms. Keirnan served from 1990 to 1994 as
Managing Editor of News at St. Paul Pioneer Press, a publishing company.

ELON KOHLBERG has served as a director of the Company since August 1995. Mr.
Kohlberg has been a Professor of Business Administration at the Harvard
Business School since 1976. Mr. Kohlberg also serves as a director of TEVA
Industries and the Lemmon Company.

MARINO R. POLESTRA has served as a director of the Company since January
1991. Since February 1989, Mr. Polestra has been a Vice President of Burr,
Egan, Deleage & Co., a venture capital firm. Mr. Polestra also serves as a
director of IBIS Technology Corp., Security Dynamics Technologies, Inc., and
Premisys Communications, Inc.

DANIEL ROSEN has served as a director of the Company since October 1995. Mr.
Rosen has been Senior Director at Microsoft Corporation since 1994. From 1980
to 1994, Mr. Rosen served in a variety of positions at AT&T Corporation; his
last position at AT&T was Vice President and General Manager-PersonaLink
Services. Mr. Rosen also serves as a director of UUNET Technologies, Inc., an
Internet access provider.

The Company's Board of Directors is divided into three staggered classes.
The Board is comprised of two Class I Directors, Marino R. Polestra and
Melinda E. Keirnan, two Class II Directors, Elon Kohlberg and Daniel Rosen,
and three Class III Directors, Joseph A. Amram, William A. Devereaux and
Michael E. Kolowich. At each Annual Meeting of Stockholders, directors will be
elected (or reelected) for a three-year term to succeed the directors of the
same class whose terms are then to expire. The initial terms of the Class I
Directors, Class II Directors and Class III Directors will expire upon the
election and qualification of directors at the Annual Meeting of Stockholders
held following the fiscal years ending in December 1996, 1997 and 1998,
respectively.

Directors of the Company do not receive any cash compensation for their
services as directors, but directors who are not employees of the Company are
reimbursed for their reasonable out-of-pocket expenses incurred in attending
meetings of the Board of Directors and Board committees.

During 1995 and 1996, the Company granted options to purchase an aggregate
of 114,000 and 1,080,000 shares, respectively of Common Stock under its 1989
Stock Option Plan, as amended, to certain of the Company's non-employee
directors. In August 1995, the Company granted to Elon Kohlberg options to
purchase 18,000 shares of Common Stock at an exercise price of $0.83 per share
and in October 1995, the Company granted to William A. Deveraux options to
purchase 21,000 shares of Common Stock at an exercise price of $5.33 per
share. In January 1996, the Company granted options to purchase 20,000 shares
of Common Stock at an exercise price of $10.80 per share to each of Marino R.
Polestra and Daniel Rosen, and granted options to purchase 10,000 shares of
Common Stock at an exercise price of $10.80 per share to each of William A.
Devereaux and Elon Kohlberg. In September 1996, the Company granted to Michael
E. Kolowich options to purchase an aggregate of 1,000,000 shares of Common
Stock at an exercise price of $6.00 per share. See "Certain Transactions."
Non-employee directors are also eligible to receive stock options under the
Company's 1996 Non-Employee Director Stock Option Plan. See "Management --
Stock Plans -- 1996 Non-Employee Director Stock Option Plan."

Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. There are no
family relationships among any of the executive officers or directors of the
Company.

53
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

The Company's Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee is responsible for reviewing audit functions,
including accounting and financial reporting practices of the Company, the
adequacy of the Company's system of internal accounting control, the quality
and integrity of the Company's financial statements and relations with
independent auditors. The current members of the Audit Committee are William
A. Devereaux and Marino R. Polestra. The Compensation Committee is responsible
for establishing the compensation of the Company's directors, officers and
employees, including salaries, bonuses, commission, and benefit plans,
administering the Company's Amended and Restated 1989 Stock Option Plan, 1996
Employee Stock Purchase Plan and 1996 Non-Employee Director Stock Option Plan,
as well as the FreeLoader 1996 Stock Option Plan which was assumed by the
Company in connection with its acquisition of FreeLoader, and other forms of
or matters relating to compensation. Daniel Rosen and Melinda E. Keirnan are
the directors currently serving on the Compensation Committee.

EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth all compensation awarded to, earned by or
paid for services rendered to the Company in all capacities during 1995 by the
Company's Chief Executive Officer and the four other most highly compensated
executive officers who received compensation in excess of $100,000 during 1995
(collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(2)
------------
ANNUAL
COMPENSATION(1) SECURITIES
------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS (#) COMPENSATION($)
--------------------------- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Joseph A. Amram(3)............. $108,733 $20,000 181,667 --
Bruce D. Glabe................. 118,750 19,100 41,250 --
Executive Vice President
Annette E. Lissauer............ 91,003 21,760 37,500 --
Senior Vice President and
General Manager, Enterprise
Services
Richard C. Vancil.............. 100,583 10,815 22,500 --
Vice President, Marketing
John S. Zahner................. 91,083 17,018 22,500 --
Vice President, Business
Development, Secretary
</TABLE>

- --------
(1) In accordance with the rules of the Securities and Exchange Commission
(the "Commission"), the compensation described in this table does not
include medical, group life insurance or other benefits received by the
Named Executive Officers which are available generally to all salaried
employees of the Company, and certain perquisites and other personal
benefits, securities or property received by the Named Executive Officers
which do not exceed the lesser of $50,000 or 10% of any such officer's
salary and bonus disclosed in this table.
(2) Represents stock options granted during 1995 under the Company's 1989
Stock Option Plan. The Company did not make any restricted stock awards,
grant any stock appreciation rights or make any long-term incentive plan
payouts during 1995.

(3) Mr. Amram was terminated as an employee of the Company in August 1996. Mr.
Amram served as President and Chief Executive Officer from the Company's
inception in January 1989 until July 1996, and is currently a director of
the Company.

54
<PAGE>

Option Grants

The following table sets forth certain information concerning grants of
stock options made during 1995 to each of the Named Executive Officers. In
accordance with the rules of the Commission, the potential realizable values
for such options shown in the table are based on assumed rates of stock price
appreciation of 5% and 10% compounded annually from the date the respective
options were granted to their expiration date. These assumed rates of
appreciation do not represent the Company's estimate or projection of the
appreciation of shares of Common Stock of the Company.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------
POTENTIAL
PERCENT OF REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO EXERCISE OR PRICE APPRECIATION
UNDERLYING EMPLOYEES BASE PRICE FOR OPTION TERM
OPTIONS IN FISCAL PER EXPIRATION ---------------------
NAME GRANTED(#)(1) YEAR SHARE($)(2) DATE(1) 5%($) 10%($)
---- ------------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Amram......... 15,000 2.2% $ 8.00 11/30/05 $ 75,467 $ 191,249
166,667 24.8 13.33 4/30/05 1,397,197 3,540,772
Bruce D. Glabe.......... 15,000 2.2 5.33 9/30/05 50,280 127,420
11,250 1.7 8.00 11/30/05 56,601 143,437
15,000 2.2 12.00 4/30/05 113,201 286,874
Annette E. Lissauer..... 30,000 4.5 8.00 11/30/05 150,935 382,498
7,500 1.1 12.00 4/30/05 56,601 143,437
Richard C. Vancil....... 15,000 2.2 8.00 11/30/05 75,467 191,249
7,500 1.1 12.00 4/30/05 56,601 143,437
John S. Zahner.......... 15,000 2.2 8.00 11/30/05 75,467 191,249
7,500 1.1 12.00 4/30/05 56,601 143,437
</TABLE>
- --------
(1) The options, which were granted under the Company's 1989 Stock Option
Plan, have a term of ten years, subject to earlier termination in certain
events related to termination of employment. Such options become
exercisable over a four year period, 1/48th of such options vesting each
month commencing on the last day of the first full month after the date of
grant.
(2) All options were granted at an exercise price equal to or greater than
fair market value as determined by the Board of Directors of the Company
on the date of grant.

The following table sets forth certain information concerning stock options
exercised during 1995 and the number and value of unexercised stock options
held as of December 31, 1995 by each of the Named Executive Officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1995 AT DECEMBER 31, 1995($)(1)
ACQUIRED ON VALUE ------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Amram......... -- -- 198,242 338,925 $1,636,414 $ 1,326,904
Bruce D. Glabe.......... -- -- 28,437 125,313 357,433 1,396,316
Annette E. Lissauer..... 2,550 $35,360 107,997 54,453 1,480,621 438,269
Richard C. Vancil....... -- -- 65,156 62,345 797,321 572,430
John S. Zahner.......... -- -- 12,032 40,469 150,580 361,422
</TABLE>
- --------
(1) There was no public trading market for the Common Stock as of December 31,
1995. Accordingly, these values have been calculated on the basis of the
initial public offering price of $14.00 per share, minus the applicable
per share exercise price.

55
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee was established in November 1994, and currently
consists of Mr. Daniel Rosen and Ms. Melinda E. Keirnan.

STOCK PLANS

Amended and Restated 1989 Stock Option Plan

The Company's 1989 Stock Option Plan was adopted by the Board of Directors
on April 1, 1989 and approved by the Company's stockholders in September 1989.
The Amended and Restated 1989 Stock Option Plan was adopted by the Board of
Directors on January 30, 1996, and approved by the Company's stockholders on
March 4, 1996. The Amended and Restated 1989 Stock Option Plan provides for
the grant of (i) "incentive stock options," within the meaning of the Internal
Revenue Code, to employees and officers of the Company, and (ii) non-qualified
stock options to employees, consultants, directors and officers of the
Company. Up to 3,500,000 shares of Common Stock are authorized for issuance
under the Amended and Restated 1989 Stock Option Plan.

The Amended and Restated 1989 Stock Option Plan is administered by the
Compensation Committee of the Board of Directors, which has the authority to
select the optionees and determine the terms of the options granted, including
(i) the number of shares subject to each option, (ii) option exercise terms,
(iii) the exercise price of the option (which in the case of an incentive
stock option cannot be less than the fair market value of the Common Stock as
of the date of grant), (iv) the duration of the option, and (v) the time,
manner and form of payment upon exercise of an option. An option is not
transferable by the optionholder except by will or by the laws of descent and
distribution. Generally, no incentive stock option may be exercised more than
3 months following termination of employment, unless the termination is due to
death or disability, in which case the option is exercisable for a maximum of
180 days after such termination.

As of June 30, 1996, options to purchase a total of 2,375,252 shares of
Common Stock at a weighted average exercise price of $7.61 were outstanding
under the Amended and Restated 1989 Stock Option Plan (of which options to
purchase 702,514 shares were then exercisable), and options to purchase
440,586 shares had been exercised at a weighted average exercise price of $.32
per share.

1996 Employee Stock Purchase Plan

On January 30, 1996, the Company's Board of Directors adopted, and on March
4, 1996, the Company's stockholders approved, the 1996 Employee Stock Purchase
Plan (the "Purchase Plan"), which provides for the issuance of a maximum of
500,000 shares of Common Stock pursuant to the exercise of nontransferable
options granted to participating employees. The Purchase Plan is administered
by the Compensation Committee of the Board of Directors. All employees of the
Company, except employees who own five percent or more of the Company's stock,
whose customary employment is more than 10 hours per week are eligible to
participate in the Purchase Plan. To participate in the Purchase Plan, an
employee must authorize the Company to deduct an amount (not less than one
percent or more than ten percent of a participant's regular pay) from his or
her pay during six-month periods commencing on April 1 and October 1 of each
year (each a "Payment Period"). The initial Payment Period under the Purchase
Plan commenced on March 14, 1996, the effective date of the Company's initial
public offering, and will end on September 30, 1996. The maximum number of
shares of Common Stock that an employee may purchase in any Payment Period is
the lesser of (i) a certain number of shares determined by applying the
formula stated in the Purchase Plan or (ii) 1,000 shares. The exercise price
for the option for each Payment Period is 85% of the lesser of the average
market price of the Company's Common Stock on the first or last business

56
<PAGE>

day of the Payment Period. If an employee is not a participant on the last day
of the Payment Period, such employee is not entitled to exercise his or her
option, and the amount of his or her accumulated payroll deductions will be
refunded. An employee's rights under the Purchase Plan terminate upon his or
her voluntary withdrawal from the Purchase Plan at any time or upon
termination of employment. To date, no options have been granted under the
Purchase Plan.

1996 Non-Employee Director Stock Option Plan

On January 30, 1996, the Company's Board of Directors adopted, and on March
4, 1996, the Company's stockholders approved, the 1996 Non-Employee Director
Stock Option Plan (the "Director Plan"), which provides for the grant of
options to purchase a maximum of 500,000 shares of Common Stock of the Company
to non-employee directors of the Company. The Director Plan is administered by
the Compensation Committee of the Board of Directors.

Under the Director Plan, each director of the Company who is not also an
employee or officer of the Company and who is first elected as a director on
or after the date of the Company's initial public offering will automatically
receive an option to purchase 20,000 shares of Common Stock on the date such
person is first elected to the Board of Directors. In addition, each such
director, as well as any other director on the date of the offering who is not
also an employee or officer of the Company will automatically receive an
option to purchase an additional 10,000 shares at the time of each annual
meeting of stockholders after the first anniversary of their initial award,
provided, however, that such person has continuously served as a non-employee
director during such period. The exercise price per share for all options
granted under the Director Plan will be equal to the fair market value of the
Common Stock on the date of grant. The options granted upon a director's
initial election to the Board are exercisable in 36 equal monthly
installments, and each annual option award is exercisable in 12 monthly
installments, in each case provided that the optionee remains a director at
such time. The term of each option will be for a period of ten years from the
date of grant. In addition, the Director Plan authorizes the Compensation
Committee to grant additional options to non-employee directors and to
determine the terms applicable to such options, subject to compliance with
Section 16 of the Securities and Exchange Act. Options may not be assigned or
transferred except by will or by the laws of descent and distribution and are
exercisable to the extent vested only while the optionee is serving as a
director of the Company or within 90 days after the optionee ceases to serve
as a director of the Company. However, if a director dies or becomes disabled
while he or she is serving as a director of the Company, the option will
immediately become fully vested and will be exercisable until the expiration
of the ten-year term. Under certain circumstances following an acquisition of
the Company, the option may be exercisable for an additional period of time.
No options have been granted to date under the Director Plan.

Amended and Restated 1996 Stock Plan

In connection with the FreeLoader Acquisition in June 1996, the Company
assumed FreeLoader's Amended and Restated 1996 Stock Plan (the "FreeLoader
Plan") and all of the options outstanding under the FreeLoader Plan. The
FreeLoader Plan provides for the grant of (i) options which qualify as
"incentive stock options" under the Internal Revenue Code to employees of the
Company and (ii) non-qualified options to employees, consultants, directors
and officers. The FreeLoader Plan is administered by the Compensation
Committee of the Board of Directors.

Options to purchase approximately 360,180 shares of Common Stock were
outstanding under the FreeLoader Plan and assumed by the Company in the
FreeLoader Acquisition (after giving effect to the conversion of FreeLoader
Common Stock reserved for issuance under the FreeLoader Plan into Company
Common Stock in accordance with the exchange ratio established in connection
with the FreeLoader Acquisition). No additional options may be granted under
the FreeLoader Plan.

57
<PAGE>

401(K) PLAN

The Company maintains a 401(k) retirement savings plan (the "401(k) Plan").
All employees of the Company are eligible to participate in the 401(k) Plan.
The 401(k) Plan provides that each participant may contribute up to 15% of his
or her pre-tax gross compensation (but not greater than a statutorily
prescribed annual limit). The percentage elected by certain highly compensated
participants may be required to be lower. The 401(k) Plan permits, but does
not require, additional contributions to the 401(k) Plan by the Company. All
amounts contributed by employee participants in conformance with plan
requirements and earnings on such contributions are fully vested at all times.

58
<PAGE>

CERTAIN TRANSACTIONS

On September 13, 1993, the Company issued and sold to Knight-Ridder 600,000
shares of Series F Preferred Stock of the Company at a price of $5.00 per
share, for total consideration of $3,000,000 (which were converted into
900,000 shares of Common Stock pursuant to the 3-for-2 stock split and the
conversion of all outstanding shares of Preferred Stock to Common Stock
effected in March 1996 in connection with the Company's initial public
offering). In connection with the sale of the Series F Preferred Stock, the
Company, Messrs. Amram, Bouvard, Wu and Zahner ("Founders") and the holders of
the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock of the Company ("Preferred Investors")
entered into a Stockholders' Agreement with Knight-Ridder ("Knight-Ridder
Stockholders' Agreement"), pursuant to which, among other things, the Company
agreed to cause the nomination of one person designated by Knight-Ridder for
election as a director of the Company for so long as Knight-Ridder continued
to own 70% of the shares of Series F Preferred Stock which it acquired on
September 13, 1993. In addition, the Founders and the Preferred Investors
agreed to vote all Company securities owned by them in favor of the election
of the Knight-Ridder Board designee. The Company's obligation to nominate a
Knight-Ridder designee to the Company's Board terminated upon the
effectiveness of the Company's initial public offering in March 1996.

The Knight-Ridder Stockholders' Agreement also provides Knight-Ridder with a
right of first negotiation until August 31, 1996 with respect to any proposed
sale of control of the Company by the Company or by any Founders or Preferred
Investors holding a majority of the shares of the Company's outstanding voting
securities ("Selling Persons"). Pursuant to its right of first negotiation,
the Selling Persons must provide Knight-Ridder with the option of negotiating
with the Selling Persons for the purchase of control of the Company for an
initial period of 60 days, during which time the Selling Persons are
prohibited from entering into a letter of intent or binding agreement for such
sale with any other party. If the Selling Persons choose not to sell the
Company to Knight-Ridder after negotiating in good faith for 60 days, the
Selling Persons may negotiate for the sale of the Company with any other
person on terms that are no more favorable to such other person than the terms
that were initially offered to Knight-Ridder, subject to certain additional
restrictions. See "Risk Factors -- Control by Existing Stockholders" and "--
Effect of Certain Charter Provisions; Anti-takeover Effects of Certificate of
Incorporation, By-laws and Delaware Law."

In addition, the Knight-Ridder Stockholders' Agreement provides that, until
August 30, 2000, neither Knight-Ridder nor any of the Preferred Investors will
acquire any capital stock or other securities of the Company from any of the
Company's stockholders without the prior approval of the Company's Board of
Directors, except (i) to the extent permitted to do so pursuant to any
agreement with the Company, (ii) for any acquisition which occurs as the
result of the acquisition of the stock or business of another person, or (iii)
in a public offering of Common Stock of the Company in an amount necessary for
such stockholder to maintain its pro rata ownership of the Company.

The Company also has established business relationships with Knight-Ridder.
The Company has not recognized material revenue from such business
arrangements. See "Business -- Knight-Ridder and Other Strategic
Relationships."

On October 3, 1995, the Company issued and sold to Microsoft 700,000 shares
of the Series G Preferred Stock of the Company at a price of $15.00 per share,
for total consideration of $10,500,000 (which were converted into 1,050,000
shares of Common Stock pursuant to the 3-for-2 stock split and the conversion
of the Preferred shares to Common shares in connection with the initial public
offering). In connection with the sale of the Series G Preferred Stock, the
Company, the Founders and the Preferred Investors entered into a Series G
Stockholders' Agreement with Microsoft ("Microsoft Stockholders' Agreement"),
pursuant to which, among other things, the Company agreed to cause the
nomination of one person designated by Microsoft for election as a director of
the Company. In addition, the Founders and the Preferred Investors agreed to
vote all Company securities owned by

59
<PAGE>

them in favor of the election of the Microsoft Board designee. The Company's
obligation to nominate a Microsoft designee to the Company's Board terminated
upon the effectiveness of the Company's initial public offering.

The Microsoft Stockholders' Agreement also provides Microsoft with a right
of first negotiation during the period from September 1, 1996 to September 1,
1999, with respect to any proposed sale of control of the Company by any of
the Selling Persons. Microsoft's right of first negotiation is substantially
similar to the Knight-Ridder right of first negotiation described above in
this section. Microsoft also has a right of first negotiation with respect to
a proposed sale of control of the Company prior to September 1, 1996 if
Knight-Ridder waives its right of first negotiation with respect to such sale.
See "Risk Factors -- Control by Existing Stockholders" and "-- Effect of
Certain Charter Provisions; Anti-takeover Effects of Certificate of
Incorporation, By-laws and Delaware Law."

In addition, the Microsoft Stockholders' Agreement provides that, until
October 3, 2002, Microsoft will not acquire any capital stock or other
securities of the Company from any of the Company's stockholders without the
prior approval of the Company's Board of Directors, except that such approval
is not required (i) if, after such acquisition, Microsoft's pro rata ownership
of the Company on an as-converted, fully-diluted basis would not exceed 9.70%,
its pro rata ownership of the Company on an as-converted, fully-diluted basis
upon the closing of the Series G Preferred Stock financing on October 3, 1995,
(ii) to the extent such acquisition is authorized by an agreement between
Microsoft and the Company, (iii) for any acquisition which occurs as the
result of the acquisition of the stock or business of another person, or (iv)
in a public offering of Common Stock of the Company in an amount necessary for
Microsoft to maintain its pro rata ownership of the Company.

The Company also has established business relationships with Microsoft. The
Company has not recognized material revenue from such business arrangements.
See "Business -- Microsoft Relationship."

On September 3, 1996, the Company entered into an Employment Agreement with
Michael E. Kolowich (the "Kolowich Employment Agreement") providing for Mr.
Kolowich's employment as President and Chief Executive Officer of the Company.
Pursuant to the Kolowich Employment Agreement, the Company agreed to pay Mr.
Kolowich a minimum base annual salary of $170,000 plus a target incentive
bonus of $80,000, in each case subject to adjustment annually. All such
incentive bonus payments are payable in the form of Common Stock of the
Company. In addition, under the Kolowich Employment Agreement, the Company
agreed to sell to Mr. Kolowich, and Mr. Kolowich agreed to purchase from the
Company, 100,000 shares of the Common Stock of the Company at the price of
$6.00 per share, such purchase and sale to take place no later than September
18, 1996. The Company also granted Mr. Kolowich options to purchase 1,000,000
shares of Common Stock of the Company at an exercise price of $6.00 per share,
pursuant to the Company's Amended and Restated 1989 Stock Option Plan. Of such
options, 66,664 are incentive stock options and the remaining 933,336 are non-
qualified stock options. All 1,000,000 options vest in 48 equal monthly
installments, subject to acceleration of such vesting under certain
circumstances. Both Mr. Kolowich and the Company can terminate Mr. Kolowich's
employment with the Company without cause upon thirty days' advance written
notice to the other party.

The Company believes that all transactions set forth above were made on
terms no less favorable to the Company than would have been obtained from
unaffiliated third parties. The Company has adopted a policy whereby all
future transactions between the Company and its officers, directors and
affiliates will be on terms no less favorable to the Company than could be
obtained from unrelated third parties and will be approved by a majority of
the disinterested members of the Company's Board of Directors.

60
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of June 30, 1996 by (i) each person
who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director and Named Executive
Officer of the Company and (iii) all directors and executive officers of the
Company as a group. Unless otherwise indicated below, to the knowledge of the
Company, all persons listed below have sole voting and investment power with
respect to their shares of Common Stock, except to the extent authority is
shared by spouses under applicable law.

<TABLE>
<CAPTION>
NAME AND SHARES BENEFICIALLY
ADDRESS OWNED(1) PERCENT(1)
-------- ------------------- ----------
<S> <C> <C>
Funds managed by Burr, Egan, Deleage & 1,289,399 9.2%
Co.(2)......................................
One Post Office Square
Suite 3800
Boston, MA 02109
The Venture Capital Fund
of New England, II, L.P. ................... 1,077,186 7.7
160 Federal Street
Boston, MA 02110
Kleiner, Perkins, Caufield & Byers VI(3)..... 1,064,515 7.6
2750 Sand Hill Road
Menlo Park, CA 94025
Microsoft Corporation(4)..................... 1,050,000 7.5
One Microsoft Way
Redmond, WA 98052
Knight-Ridder Information, Inc.(5)........... 900,000 6.4
3460 Hillview Ave.
Palo Alto, CA 94304
Cupertino Ventures Partnership II, L.P.,
(formerly known as 848,307 6.0
Grace Ventures Partnership II, L.P.)........
20300 Stevens Creek Blvd.
Suite 330
Cupertino, CA 95014
Joseph A. Amram(6)........................... 1,587,925 10.7
c/o Individual, Inc.
8 New England Executive Park West
Burlington, MA 01803
Jacques Bouvard(7)........................... 614,765 4.3
c/o Individual, Inc.
8 New England Executive Park West
Burlington, MA 01803
John S. Zahner(8)............................ 513,706 3.6
William A. Devereaux(9)...................... 287,735 2.0
Elon Kohlberg(10)............................ 6,916 *
Melinda E. Keirnan(11)....................... -- *
</TABLE>

61
<PAGE>

<TABLE>
<CAPTION>
NAME AND SHARES BENEFICIALLY
ADDRESS OWNED(1) PERCENT(1)
-------- ------------------- ----------
<S> <C> <C>
Marino R. Polestra(12)....................... 3,333 *
Daniel Rosen(13)............................. 3,333 *
Bruce D. Glabe(14)........................... 55,234 *
Annette E. Lissauer(15)...................... 195,045 1.4
Richard C. Vancil(16)........................ 96,383 *

All directors and executive officers as a
group (19 persons)(17)...................... 4,111,658 25.3
</TABLE>
- --------
* Less than 1% of the outstanding Common Stock.

(1) The number of shares of Common Stock deemed outstanding includes (i)
14,026,071 shares of Common Stock outstanding as of June 30, 1996, and
(ii) shares issuable pursuant to options and warrants held by the
respective person or group which may be exercised within 60 days after
June 30, 1996 ("presently exercisable stock options" and "presently
exercisable warrants," respectively), as set forth below. Beneficial
ownership is determined in accordance with rules of the Securities and
Exchange Commission that deem shares to be beneficially owned by any
person who has or shares voting or investment power with respect to such
shares. Presently exercisable options and presently exercisable warrants
are deemed to be outstanding and to be beneficially owned by the person
or group holding such options or warrants for the purpose of computing
the percentage ownership of such person or group, but are not treated as
outstanding for the purpose of computing the percentage ownership of any
other person or group.
(2) Consists of 1,090,444 shares of Common Stock owned by Alta IV Limited
Partnership and 198,955 shares of Common Stock owned by C.V. Sofinnova
Partners Five. The respective general partners of Alta IV Limited
Partnership and C.V. Sofinnova Partners Five exercise sole voting and
investment powers with respect to the shares owned by such funds. The
principals of Burr, Egan, Deleage & Co. are general partners of Alta IV
Management Partners, L.P. (which is the general partner of Alta IV
Limited Partnership). As general partners of the fund, they may be deemed
to share voting and investment power for the shares held by the fund.
Burr, Egan, Deleage & Co. serves as an advisor to C.V. Sofinnova Partners
Five. The principals of Burr, Egan, Deleage & Co. disclaim beneficial
ownership of all such shares, except to the extent of their proportionate
pecuniary interests therein. Marino R. Polestra, a director of the
Company, is a Vice President of Burr, Egan, Deleage & Company and a
general partner of certain funds affiliated with Burr, Egan, Deleage &
Co. Mr. Polestra disclaims beneficial ownership with respect to all
shares held by Alta IV Limited Partnership and C.V. Sofinnova Partners
Five. See "Management."
(3) Consists of 922,935 shares of Common Stock owned by Kleiner, Perkins,
Caufield & Byers VI and 141,580 shares of Common Stock owned by KPCB VI
Founders Fund.
(4) Daniel Rosen, Senior Director of Microsoft Corporation and a director of
the Company, may be deemed to share voting and investment power with
respect to the shares held by Microsoft. Mr. Rosen disclaims beneficial
ownership with respect to such shares. The Company has established
business arrangements with Microsoft. See "Business -- Microsoft
Relationship," "Management" and "Certain Transactions."
(5) Melinda E. Keirnan, the Assistant Vice President and Assistant to the
Chairman and Chief Executive Officer of Knight-Ridder, Inc., the parent
corporation of Knight-Ridder Information, Inc., and a director of the
Company, may be deemed to share voting and investment power with respect
to such shares. Ms. Keirnan disclaims beneficial ownership with respect
to the shares held by Knight-Ridder. The Company has established business
arrangements with Knight-Ridder. See "Business -- Knight-Ridder and Other
Strategic Relationships," "Management" and "Certain Transactions."

(6) Includes 150,663 shares of Common Stock issuable pursuant to presently
exercisable stock options and 633,300 shares of Common Stock issuable
pursuant to presently exercisable warrants. Also includes (i) 3,750
shares of Common Stock held in trust by Mr. Amram and his wife, as
Trustees of the Knowledge = Freedom Foundation, a charitable trust, and
(ii) 45,000

62
<PAGE>

shares of Common Stock and 46,200 shares issuable pursuant to presently
exercisable warrants held in trust by an independent trustee for the
benefit of Mr. Amram's two children. Mr. Amram disclaims beneficial
ownership with respect to the 94,950 shares held in trust for the benefit
of the Foundation and Mr. Amram's children. Mr. Amram is a director of the
Company and was terminated as an employee of the Company in August 1996.

(7) Includes 14,140 shares of Common Stock issuable pursuant to presently
exercisable stock options and 315,000 shares of Common Stock issuable
pursuant to presently exercisable warrants. Mr. Bouvard is the Company's
Vice President, Engineering.

(8) Includes 20,206 shares of Common Stock issuable pursuant to presently
exercisable stock options and 268,750 shares of Common Stock issuable
pursuant to presently exercisable warrants. Mr. Zahner is the Company's
Vice President, Business Development, and Secretary.

(9) Includes 17,603 shares of Common Stock issuable pursuant to presently
exercisable stock options and 9,000 shares of Common Stock issuable
pursuant to presently exercisable warrants.

(10) Includes 6,916 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(11) Excludes 900,000 shares of Common Stock held by Knight-Ridder
Information, Inc., with respect to which Ms. Keirnan disclaims beneficial
ownership. See footnote 5 above.

(12) Includes 3,333 shares of Common Stock issuable pursuant to presently
exercisable stock options. Excludes 1,090,444 shares of Common Stock
owned by Alta IV Limited Partnership and 198,955 shares of Common Stock
owned by C.V. Sofinnova Partners Five, with respect to which Mr. Polestra
disclaims beneficial ownership. See footnote 2 above.

(13) Includes 3,333 shares of Common Stock issuable pursuant to presently
exercisable stock options. Excludes 1,050,000 shares of Common Stock held
by Microsoft Corporation, with respect to which Mr. Rosen disclaims
beneficial ownership. See footnote 4 above.

(14) Includes 55,234 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(15) Includes 103,820 shares of Common Stock issuable pursuant to presently
exercisable stock options and 82,500 shares of Common Stock issuable
pursuant to presently exercisable warrants. Ms. Lissauer is the Company's
Senior Vice President and General Manager, Enterprise Services.

(16) Includes 67,758 shares of Common Stock issuable pursuant to presently
exercisable stock options and 8,625 shares of Common Stock issuable
pursuant to presently exercisable warrants. Mr. Vancil is the Company's
Vice President, Marketing.

(17) Includes 525,976 shares of Common Stock issuable pursuant to presently
exercisable stock options and 1,688,875 shares of Common Stock issuable
pursuant to presently exercisable warrants. Excludes shares of Common
Stock beneficially owned by funds managed by Burr, Egan, Deleage & Co.,
Microsoft Corporation, Kleiner Perkins, Caufield & Byers VI and KPCB VI
Founders Fund, and Knight-Ridder Information, Inc. See footnotes 2,3,4
and 5 above.

63
<PAGE>

SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION

The Company is registering 1,514,309 shares of Common Stock that were issued
to the stockholders of FreeLoader in connection with the FreeLoader
Acquisition, (collectively, the "Registered Shares"). On July 9, 1996, the
Company filed a Registration Statement on Form S-8 with the Securities and
Exchange Commission registering the outstanding FreeLoader stock options that
were assumed by Individual in connection with the FreeLoader Acquisition. The
following table sets forth certain information as of the closing date of the
FreeLoader Acquisition with respect to the Registered Shares owned by (a)
former FreeLoader stockholders who may be deemed to be affiliates of
FreeLoader (the "Majority Stockholders") and (b) former FreeLoader
stockholders who are not affiliates of FreeLoader ("Other Stockholders")
(collectively, the "Selling Stockholders"):

<TABLE>
<CAPTION>
SELLING STOCKHOLDERS
--------------------
NUMBER OF SHARES NUMBER OF REGISTERED
OF COMMON STOCK SHARES THAT MAY
OWNED PRIOR TO BE SOLD IN
MAJORITY STOCKHOLDERS: THIS OFFERING(1) THIS OFFERING(1)
- ---------------------- ---------------- --------------------
<S> <C> <C>
Sunil Paul............................... 391,500 391,500
Mark Pincus.............................. 391,500 391,500
SOFTBANK Holdings Inc.................... 391,500 391,500
Euclid Partners IV, L.P.................. 298,291 298,291
<CAPTION>
OTHER STOCKHOLDERS:
- -------------------
<S> <C> <C>
David Mixer.............................. 11,863 11,863
Jordan Levy.............................. 5,931 5,931
Ronald Schreiber......................... 5,931 5,931
Harry Hopper............................. 11,863 11,863
VLG Investments 1996..................... 3,559 3,559
VLG Retirement Savings Plan Trust Account
FBO
Michael W. Hall......................... 1,660 1,660
Peter Cohn as Trustee, or the Successor
Trustee or
Trustees, U/A/D June 29, 1995, as amend-
ed, creating the Peter Cohn Revocable
Trust................................... 711 711
--------- ---------
Total.................................... 1,514,309 1,514,309
========= =========
</TABLE>
- --------
(1) Excludes outstanding FreeLoader stock options assumed by Individual in
connection with the FreeLoader Acquisition.

The Registered Shares may be sold by the Selling Stockholders or by pledges,
donees, transferees or other successors in interest. Such sales may be made at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, or at negotiated
prices. The shares may be sold by one or more of the following: (a) one or
more block trades in which a broker or dealer so engaged will attempt to sell
all or a portion of the shares held by a Selling Stockholder as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; and (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. The Selling Stockholders may effect such transactions by selling
shares to or through broker-dealers, and such broker-dealers will receive
compensation in negotiated amounts in the form of discounts, concessions,
commissions or fees from the Selling Stockholders and/or the purchasers of the
shares for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be
in excess of customary commissions). Such brokers or dealers or other
participating brokers or dealers and the Selling Stockholders may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, in
connection with such sales.

64
<PAGE>

The Company intends to maintain the effectiveness of this registration
statement until the earlier of (i) June 28, 1999 or (ii) the date on which
each Selling Stockholder may sell all Registered Shares held by such Selling
Stockholder without restriction by the volume restrictions of Rule 144(e);
provided, however, that if at certain times the Company is in possession of
material nonpublic information that it determines in good faith that it is not
advisable to disclose in a registration statement but which information would
otherwise be required by the Securities Act to be disclosed in a registration
statement, then the Company may by written notice immediately suspend the
right of stockholders to sell shares pursuant to this registration statement.

The Registration Rights Agreement entered into by the Company and the
Selling Stockholders provides that the Company will indemnify such Selling
Stockholders for any losses incurred by them in connection with actions
arising from any untrue statement of a material fact in the Registration
Statement or any omission of a material fact required therein, unless such
statement or omission was made in reliance on written information furnished to
the Company by the Selling Stockholders. Similarly, such agreements provide
that each Selling Stockholder will indemnify the Company and its officers and
directors for any losses incurred by them in connection with any actions
arising from any untrue statement of material fact in the Registration
Statement or any omission of a material fact required therein, if such
statement or omission was made in reliance on written information furnished to
the Company by such Selling Stockholders.

The Company has informed the Selling Stockholders that the antimanipulative
rules under the Securities and Exchange Act of 1934 (Rules 10b-5 and 10b-6)
may apply to sales in the market and will furnish upon request the Selling
Stockholders with a copy of these Rules. The Company will also inform the
Selling Stockholders of the need for delivery of copies of this Prospectus.

65
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock, $0.01 par value per share, and 1,000,000 shares of Preferred
Stock, $0.01 par value per share (the "Preferred Stock").

COMMON STOCK

As of June 30, 1996, there were 14,026,071 shares of Common Stock
outstanding and held of record by approximately 120 stockholders.

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights
of outstanding Preferred Stock. Upon the liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to receive ratably
the net assets of the Company available after the payment of all debts and
other liabilities and subject to the prior rights of any outstanding Preferred
Stock. Holders of the Common Stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are,
and the shares offered by the Company in this offering will be, when issued
and paid for, fully paid and nonassessable. The rights, preferences and
privileges of holders of Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of Preferred
Stock which the Company may designate and issue in the future. There are no
shares of Preferred Stock currently outstanding.

PREFERRED STOCK

The Board of Directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 1,000,000 shares of Preferred Stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of such series. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company. The Company has no present plans to issue
any shares of Preferred Stock.

DELAWARE LAW AND CERTAIN PROVISIONS OF THE COMPANY'S CHARTER AND BY-LAWS

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "DGCL"). Subject to certain exceptions, Section
203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the interested stockholder attained such status
with the approval of the Board of Directors or unless the business combination
is approved in a prescribed manner. A "business combination" includes mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns,
or within three years did own, 15% or more of the corporation's voting stock.

The Company's Third Amended and Restated Certificate of Incorporation (the
"Charter") provides for the division of the Board of Directors into three
classes as nearly equal in size as possible with

66
<PAGE>

staggered three-year terms. See "Management -- Executive Officers and
Directors." The classification of the Board of Directors could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, control of the Company. Any director may be
removed without cause only by the vote of at least 75% of the shares entitled
to vote for the election of directors, and with cause by a vote of at least a
majority of such shares.

The Company's Amended and Restated By-laws provide that for nominations for
the Board of Directors or for other business to be properly brought by a
stockholder before a meeting of stockholders, the stockholder must first have
given timely notice thereof in writing to the Secretary of the Company. To be
timely, a stockholder's notice generally must be delivered not less than 120
days nor more than 150 days prior to the first anniversary date of the proxy
statement delivered to stockholders in connection with the preceding year's
annual meeting or, if either the date of the annual meeting is more than 30
days before or more than 60 days after such anniversary, or if no proxy
statement was delivered to stockholders in connection with the preceding
year's annual meeting, such notice must be delivered not earlier than 90 days
prior to such annual meeting and not later than the later of (i) 60 days prior
to the annual meeting or (ii) 10 days following the date on which public
announcement of the date of such annual meeting is first made by the Company.
With respect to special meetings, notice must generally be delivered not more
than 90 days prior to such meeting and not later than the later of 60 days
prior to such meeting or 10 days following the day on which public
announcement of such meeting is first made by the Company. The notice must
contain, among other things, certain information about the stockholder
delivering the notice and, as applicable, background information about each
nominee or a description of the proposed business to be brought before the
meeting.

The Charter empowers the Board of Directors, when considering a tender offer
or merger or acquisition proposal, to take into account any factors that the
Board of Directors determines to be relevant, including, without limitation,
(i) the interests of the Company's stockholders, including the possibility
that these interests might be best served by the continued independence of the
Company, (ii) whether the proposed transaction might violate federal or state
laws, (iii) not only the consideration being offered in the proposed
transaction, in relation to the then current market price for the outstanding
capital stock of the Company, but also to the market price for the capital
stock of the Company over a period of years, the estimated price that might be
achieved in a negotiated sale of the Company as a whole or in part or through
orderly liquidation, the premiums over market price for the securities of
other corporations in similar transactions, current political, economic and
other factors bearing on securities prices and the Company's financial
condition and future prospects, and (iv) the social, legal and economic
effects upon employees, suppliers, customers, creditors and others having
similar relationships with the Company, upon the communities in which the
Company conducts its business and upon the economy of the state, region and
nation.

The foregoing provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring,
control of the Company.

The Charter also provides that any action required or permitted to be taken
by the stockholders of the Company may be taken only at a duly called annual
or special meeting of the stockholders, and may not be taken by written
consent, and that special meetings may be called only by the Chairman of the
Board of Directors, a majority of the Board of Directors or the President of
the Company. These provisions could have the effect of delaying until the next
annual stockholders meeting stockholder actions which are favored by the
holders of a majority of the outstanding voting securities of the Company.
These provisions may also discourage another person or entity from making a
tender offer for the Company's Common Stock, because such person or entity,
even if it acquired a majority of the outstanding voting securities of the
Company, would be able to take action as a stockholder (such as electing new
directors or approving a merger) only at a duly called stockholders meeting,
and not by written consent.

67
<PAGE>

The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or By-laws, unless a corporation's certificate of
incorporation or By-laws, as the case may be, requires a greater percentage.
The Charter requires the affirmative vote of the holders of at least 75% of
the outstanding voting stock of the Company to amend or repeal any of the
foregoing Charter provisions, and to reduce or eliminate the number of
authorized shares of Common Stock and Preferred Stock. Such 75% vote is also
required to amend or repeal the Company's By-laws. The By-laws may also be
amended or repealed by a majority vote of the Board of Directors subject to
any limitations set forth in the By-laws. Such 75% stockholder vote would be
in addition to any separate class vote that might in the future be required
pursuant to the terms of any Preferred Stock that might be outstanding at the
time any such amendments are submitted to stockholders.

LIMITATION OF LIABILITY AND INDEMNIFICATION

The Charter contains certain provisions permitted under the DGCL relating to
the liability of directors. These provisions eliminate a director's liability
for monetary damages for a breach of fiduciary duty, except in certain
circumstances involving certain wrongful acts, such as the breach of a
director's duty of loyalty or acts or omissions which involve intentional
misconduct or a knowing violation of law. The Charter also contains provisions
indemnifying the directors and officers of the Company to the fullest extent
permitted by the DGCL. The Company believes that these provisions will assist
the Company in attracting and retaining qualified individuals to serve as
directors and officers.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is The First National
Bank of Boston.

REGISTRATION RIGHTS

Certain securityholders of the Company (the "Rightsholders") are entitled to
require the Company to register under the Securities Act shares of outstanding
Common Stock held by them (the "Registrable Shares"), pursuant to the terms of
(i) the Second Amended and Restated Investors Rights Agreement dated as of
October 3, 1995 and (ii) the Registration Rights Agreement dated as of June
28, 1996 (the "FreeLoader Registration Rights Agreement") (collectively, the
"Registration Rights Agreements"). The Registration Rights Agreements
generally provide that in the event the Company proposes to register any of
its securities under the Securities Act at any time or times, the
Rightsholders, subject to certain exceptions, shall be entitled to include
Registrable Shares in such registration. However, the managing underwriter of
any such offering may under certain circumstances exclude for marketing
reasons some or all of such Registrable Shares from such registration. Certain
Rightsholders, including Microsoft acting alone beginning December 31, 1996,
have additional rights, subject to certain conditions and limitations, to
require the Company to prepare and file a registration statement under the
Securities Act with respect to their Registrable Shares. In addition, pursuant
to the FreeLoader Registration Rights Agreement, the Company is obligated to
register in a "shelf" registration on Form S-1 approximately 1,514,309 shares
of Company Common Stock issued to the FreeLoader stockholders in connection
with the FreeLoader Acquisition. On July 9, 1996, the Company filed a
Registration Statement on Form S-8 to register the outstanding FreeLoader
stock options assumed by Individual in the FreeLoader Acquisition. The Company
is generally required to bear the expenses of all such registrations, except
underwriting discounts and commissions.

No prediction can be made as to the effect, if any, that market sales of
shares or the availability of shares for sale will have on the market price of
the Common Stock prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock, or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock
and could impair the Company's future ability to obtain capital through an
offering of equity securities.

68
<PAGE>

LEGAL MATTERS

The validity of the shares of Common Stock offered by this Prospectus will
be passed upon for the Company by Testa, Hurwitz & Thibeault, LLP, Boston,
Massachusetts.

EXPERTS

The consolidated balance sheets as of December 31, 1994 and December 31,
1995 and the consolidated statements of operations, stockholders' deficit and
cash flows for each of the three years in the period ended December 31, 1995
of Individual, Inc., and the balance sheet as of December 31, 1995 and the
statements of operations, stockholders' deficit and cash flows for the period
from November 13, 1995 (date of inception) to December 31, 1995 of FreeLoader,
Inc., included in this Prospectus and the Registration Statement of which this
Prospectus is part, have been included in reliance upon the report of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). In addition, the
Company has filed with the Securities and Exchange Commission, a Registration
Statement on Form S-1 (together with all amendments, exhibits and schedules
thereto, the "Registration Statement") under the Securities Act with respect
to the Common Stock offered hereby. This Prospectus, which constitutes part of
the Registration Statement, does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document filed as an
exhibit to the Registration Statement are not necessarily complete, and in
each instance reference is made to the copy of such document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. Copies of the Registration Statement, such
reports, proxy statements, and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices located at The Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, 13th Floor, New York, New York, 10048. Copies of such
material can also be obtained at prescribed rates by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding the Company. The
address of such site on the Web is http: //www.sec.gov. The Company's Common
Stock is listed on the Nasdaq National Market, and such reports, proxy
statements and certain other information can also be inspected at the offices
of Nasdaq Operations, 1735 K Street, NW, Washington, D.C. 20006.

69
<PAGE>

INDIVIDUAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Report of Independent Accountants..................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995, and
December 31, 1995 unaudited pro forma................................ F-3
Consolidated Statements of Operations for the Years Ended December 31,
1993, 1994, and 1995................................................. F-4
Consolidated Statements of Stockholders' Deficit for the Years Ended
December 31, 1993, 1994 and 1995..................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1993, 1994 and 1995.................................................. F-6
Notes to Consolidated Financial Statements............................ F-7

INDIVIDUAL, INC.

INDEX TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of June 30, 1996 (unaudited)
and December 31, 1995................................................ F-16
Condensed Consolidated Statements of Operations for the Six Months
Ended June 30, 1996 (unaudited) and 1995 (unaudited)................. F-17
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1996 (unaudited) and 1995 (unaudited)................. F-18
Notes to the Condensed Consolidated Financial Statements (unaudited).. F-19

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

INDEX TO FINANCIAL STATEMENTS

Report of Independent Accountants..................................... F-23
Balance Sheets at December 31, 1995 and March 31, 1996 (unaudited).... F-24
Statements of Operations for the Period from November 13, 1995 (Date
of Inception) to December 31, 1995, the Three Months Ended March 31,
1996 (unaudited), and the Period from November 13, 1995 (Date of
Inception) to March 31, 1996 (unaudited)............................. F-25
Statements of Stockholders' Equity (Deficit) for the Period from
November 13, 1995 (Date of Inception) to December 31, 1995 and the
Three Months Ended March 31, 1996 (unaudited)........................ F-26
Statements of Cash Flows for the Period from November 13, 1995 (Date
of Inception) to December 31, 1995, the Three Months Ended March 31,
1996 (unaudited), and the Period from November 13, 1995 (Date of
Inception) to March 31, 1996 (unaudited)............................. F-27
Notes to Financial Statements......................................... F-28

INDIVIDUAL, INC. AND FREELOADER, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

Summary Information................................................... F-31
Individual, Inc. and FreeLoader, Inc. Pro Forma Combined Condensed
Consolidated Statement of Operations for the Six Months Ended June
30, 1996 (unaudited)................................................. F-32
Individual, Inc. and FreeLoader, Inc. Notes to Unaudited Pro Forma
Combined Condensed Consolidated Financial Statements................. F-33
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Individual, Inc.:

We have audited the accompanying consolidated balance sheets of Individual,
Inc. as of December 31, 1994 and 1995, and the related consolidated statements
of operations, stockholders' deficit and cash flows for the each of the three
years in the period ended December 31, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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 consolidated financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Individual, Inc. as of December 31, 1994 and 1995, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
January 30, 1996,
except as to the information in Note N,
for which the date is March 4, 1996

F-2
<PAGE>

INDIVIDUAL, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1994 1995 1995
------------ ------------ ------------
PRO FORMA
(UNAUDITED)
------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........... $ 639,870 $ 17,517,743 $ 17,517,743
Investments in marketable
securities......................... 999,974 -- --
Accounts receivable, net............ 3,698,520 5,741,694 5,741,694
Prepaid expenses.................... 7,162 115,094 115,094
------------ ------------ ------------
Total current assets............... 5,345,526 23,374,531 23,374,531
Property and equipment, net.......... 1,849,696 2,926,234 2,926,234
Other assets, net.................... 93,846 501,740 501,740
------------ ------------ ------------
Total assets........................ $ 7,289,068 $ 26,802,505 $ 26,802,505
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................... $ 555,952 $ 1,382,797 $ 1,382,797
Accrued expenses.................... 649,334 2,422,094 2,422,094
Deferred revenue.................... 6,517,543 8,924,309 8,924,309
Bank loans.......................... 179,615 638,067 638,067
Current obligations under capital
leases............................. 194,457 138,017 138,017
------------ ------------ ------------
Total current liabilities.......... 8,096,901 13,505,284 13,505,284
Capital lease obligations............ 205,646 75,364 75,364
Bank loans........................... 359,231 910,374 910,374
Senior subordinated notes............ -- 10,000,000 10,000,000
Commitments (see Notes)
Redeemable preferred stock, at
liquidation value................... 12,245,520 23,999,013 --
Stockholders' (deficit) equity:
Preferred stock, $0.01 par value.... 6,113 6,113 --
Common stock, $0.01 par value;
25,000,000 shares authorized,
1,823,502 and 1,870,596 shares
issued in 1994 and 1995,
respectively and 9,495,806 on a pro
forma basis........................ 18,235 18,706 94,958
Additional paid-in capital.......... 3,056,551 3,071,810 20,766,318
Cumulative dividends on redeemable
preferred stock.................... (4,592,144) (6,234,366) --
Accumulated deficit................. (12,101,900) (18,544,708) (18,544,708)
------------ ------------ ------------
(13,613,145) (21,682,445) 2,316,568
Less 157,500 shares of common stock
held in treasury (at cost)......... (5,085) (5,085) (5,085)
------------ ------------ ------------
Total stockholders' (deficit)
equity............................ (13,618,230) (21,687,530) 2,311,483
------------ ------------ ------------
Total liabilities and
stockholders' (deficit) equity... $ 7,289,068 $ 26,802,505 $ 26,802,505
============ ============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-3
<PAGE>

INDIVIDUAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenue................................. $ 4,105,221 $ 9,126,641 $16,732,749
Cost of revenue......................... 2,169,414 4,076,230 7,782,945
----------- ----------- -----------
Gross margin............................ 1,935,807 5,050,411 8,949,804
Operating expense:
Sales and marketing.................... 866,740 1,183,373 2,784,393
New subscriber acquisition............. 2,665,712 5,953,139 7,387,187
Product development.................... 772,641 1,153,218 2,586,741
General and administrative............. 815,144 922,527 2,423,132
----------- ----------- -----------
Total operating expense............... 5,120,237 9,212,257 15,181,453
----------- ----------- -----------
Loss from operations.................. (3,184,430) (4,161,846) (6,231,649)
Interest income and other income
(expense), net......................... 222,762 (17,618) 230,742
Interest expense........................ (58,392) (76,438) (441,901)
----------- ----------- -----------
Net loss................................ (3,020,060) (4,255,902) (6,442,808)
Accretion of dividends on redeemable
preferred stock........................ (1,486,880) (1,486,880) (1,642,222)
----------- ----------- -----------
Net loss available for common
stockholders........................... $(4,506,940) $(5,742,782) $(8,085,030)
=========== =========== ===========
Unaudited pro forma net loss per common
share.................................. $ (0.67)
===========
Unaudited pro forma weighted average
common shares outstanding.............. 9,619,374
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-4
<PAGE>

INDIVIDUAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE YEAR ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK TREASURY STOCK
---------------- ----------------- CUMULATIVE ---------------
ADDITIONAL DIVIDENDS ON NUMBER TOTAL
NUMBER OF PAR NUMBER OF PAR PAID-IN REDEEMABLE ACCUMULATED OF STOCKHOLDERS'
SHARES VALUE SHARES VALUE CAPITAL PREFERRED STOCK DEFICIT SHARES COST DEFICIT
--------- ------ --------- ------- ---------- --------------- ------------ ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1992........... 11,335 $ 113 1,820,225 $18,202 $ 62,094 $(1,618,384) $ (4,825,938) 157,500 $(5,085) $ (6,368,998)
Sale of Series F
preferred
stock.......... 600,000 6,000 2,994,000 3,000,000
Accretion of
redeemable
preferred stock
dividends...... (1,486,880) (1,486,880)
Net loss........ (3,020,060) (3,020,060)
------- ------ --------- ------- ---------- ----------- ------------ ------- ------- ------------
Balance at
December 31,
1993........... 611,335 6,113 1,820,225 18,202 3,056,094 (3,105,264) (7,845,998) 157,500 (5,085) (7,875,938)
Exercise of
options........ 3,277 33 457 490
Accretion of
redeemable
preferred stock
dividends...... (1,486,880) (1,486,880)
Net loss........ (4,255,902) (4,255,902)
------- ------ --------- ------- ---------- ----------- ------------ ------- ------- ------------
Balance at
December 31,
1994........... 611,335 6,113 1,823,502 18,235 3,056,551 (4,592,144) (12,101,900) 157,500 (5,085) (13,618,230)
Exercise of
options........ 47,094 471 15,259 15,730
Accretion of
redeemable
preferred stock
dividends...... (1,642,222) (1,642,222)
Net loss........ (6,442,808) (6,442,808)
------- ------ --------- ------- ---------- ----------- ------------ ------- ------- ------------
Balance at
December 31,
1995........... 611,335 $6,113 1,870,596 $18,706 $3,071,810 $(6,234,366) $(18,544,708) 157,500 $(5,085) $(21,687,530)
======= ====== ========= ======= ========== =========== ============ ======= ======= ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-5
<PAGE>

INDIVIDUAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------
1993 1994 1995
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................. $(3,020,060) $(4,255,902) $ (6,442,808)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization........ 221,312 388,131 652,498
Amortization of deferred financing
costs............................... -- -- 94,438
Provision for doubtful accounts...... 10,000 33,678 24,382
Loss on disposal of property and
equipment........................... 1,246 32,090 29,857
Changes in operating assets and lia-
bilities:
Increase in accounts receivable..... (987,587) (2,014,281) (2,067,556)
Increase in prepaid expenses........ (27,534) (2,253) (107,932)
Increase in accounts payable and ac-
crued expenses..................... 277,411 662,621 2,604,716
Increase in deferred revenue........ 1,743,915 3,404,565 2,406,766
(Increase) decrease in other assets. 2,836 (9,658) (14,505)
----------- ----------- ------------
Net cash used in operating activities.. (1,778,461) (1,761,009) (2,820,144)
----------- ----------- ------------
Cash flows from investing activities:
Additions to property and equipment... (308,642) (1,410,864) (1,737,394)
Disposals of property and equipment... 32,684 12,000 --
Investment in marketable securities... (999,668) -- --
Proceeds from sale of marketable secu-
rities............................... -- -- 1,000,000
Acquisition of BookWire, Inc.......... -- -- (178,817)
----------- ----------- ------------
Net cash used in investing activities.. (1,275,626) (1,398,864) (916,211)
----------- ----------- ------------
Cash flows from financing activities:
Proceeds from issuance of stock, net.. 3,000,000 490 10,121,890
Deferred financing costs.............. -- -- (330,535)
Principal repayments under capital
lease obligations.................... (179,668) (200,804) (186,722)
Issuance of senior subordinated notes. -- -- 10,000,000
Increase in bank loans................ -- 538,846 1,009,595
----------- ----------- ------------
Net cash provided by financing activi-
ties.................................. 2,820,332 338,532 20,614,228
----------- ----------- ------------
Increase (decrease) in cash and cash
equivalents........................... (233,755) (2,821,341) 16,877,873
Cash and cash equivalents at beginning
of year............................... 3,694,966 3,461,211 639,870
----------- ----------- ------------
Cash and cash equivalents at end of
year.................................. $ 3,461,211 $ 639,870 $ 17,517,743
=========== =========== ============
Supplemental cash flow information:
Interest paid......................... $ 60,253 $ 74,823 $ 153,361
=========== =========== ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-6
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. NATURE OF THE BUSINESS:

Individual, Inc. (the "Company") develops and markets a suite of customized
information services that provide knowledge workers with daily personalized
current awareness reports, while offering information providers and
advertisers new ways to reach targeted audiences. Leveraging its knowledge
processing systems, editorial knowledge bases, and an exclusive license to
Cornell University's SMART technology, the Company's intelligent software
agents search each business day through approximately 10,000 to 20,000 stories
drawn from more than 630 broad (e.g., Reuters) and specialized (e.g., PC Week)
sources. The Company's proprietary systems filter incoming information,
prepare for each user a highly relevant daily news briefing, and deliver its
services across a range of delivery platforms, including facsimile, electronic
mail, groupware, intranets, and the Internet. The Company's services enable
users to track industry developments in a cost-effective, timely and user-
friendly manner.

B. SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

The Company's services are sold on a subscription basis which may vary in
term from one month to a year. A subscription contract entitles the customer
to a specified level of service for the subscription period. Proceeds from
subscriptions are deferred at the time of sale and revenue is recognized
ratably over the term of the subscription period. Revenue for story
fulfillments in excess of the specified level of service is recognized as the
stories are provided. Advertising revenue is recognized ratably over the
advertising period.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries. All significant intercompany accounts
have been eliminated.

Subscriber Acquisition Costs

New subscriber acquisition costs relate directly to new customer
solicitations and include the Company's direct costs of acquiring new
customers, including the cost of providing trial subscriptions free of charge.
Costs associated with renewal of current customers are included in sales and
marketing.

Product Development

Costs incurred in the plan, design or improvement of new or existing systems
which support content and delivery of the Company's services are expensed as
incurred and are included in product development. Such costs include the
conceptual formulation, testing of alternatives, and development of working
models. Development costs incurred subsequent to the establishment of
technological feasibility, which would be eligible for capitalization, have
been insignificant.

Unaudited Pro Forma Balance Sheet

In January 1996, the Board of Directors authorized management of the Company
to file a Registration Statement with the Securities and Exchange Commission
permitting the Company to sell shares of its common stock in an initial public
offering ("IPO"). If the IPO is consummated as presently anticipated, 611,335
outstanding shares of Series A and Series F Preferred Stock and 4,370,123
outstanding shares of Series B, Series C, Series D, Series E, and Series G
Redeemable Preferred Stock will automatically convert into a total of
7,625,210 shares of common stock on a basis as discussed in Notes G and H,
based on the shares of Preferred Stock and Redeemable Preferred Stock
outstanding at December 31, 1995. Unaudited pro forma stockholders' equity,
reflecting the assumed conversion of the Preferred Stock and Redeemable
Preferred Stock, is disclosed on the accompanying unaudited pro forma balance
sheet.

F-7
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

Cash and Cash Equivalents

Included in cash and cash equivalents includes cash on deposit and
investments in money market type mutual funds. The Company considers
investments with maturities of 90 days or less at the time of acquisition or
money market type investments to be cash equivalents.

Investments in Marketable Securities

The Company accounts for investments in marketable securities using the
provisions of Financial Accounting Standard Statement No. 115 "Accounting for
Certain Investment in Debt and Equity Securities." The securities held on
December 31, 1994 consist of debt securities issued by the United States
Treasury which have contractual maturity dates within one year and are
classified as held to maturity. These securities are stated at amortized cost
which approximates market value.

Risks and Uncertainties

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of money market funds and
accounts receivable. The Company maintains substantially all of its money
market funds with one registered investment company. The Company believes the
credit risk associated with accounts receivable is minimal due to the number
of customers and their dispersion over different industries and geographical
locations. The Company's foreign operations were not material to the Company's
consolidated financial position or results of operations.

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

Computation of Pro Forma Net Loss Per Common Share

The pro forma net loss per common share is computed based upon the weighted
average number of common shares outstanding. Common equivalent shares are not
included in the per share calculations since the effect of their inclusion
would be antidilutive. Common equivalent shares result from the assumed
exercise of outstanding stock options and warrants. The computation of pro
forma earnings per share gives effect to the conversion of all shares of
Series B, C, D, E and G Redeemable Preferred Stock and Series A and F
Preferred Stock upon closing of the offering and does not include the
dividends on Redeemable Preferred Stock as an increase in net loss. Pursuant
to the requirements of the Securities and Exchange Commission, common shares
and common equivalent shares issued at prices below the estimated public
offering price of $13.00 per share during the twelve months immediately
preceding the date of the initial filing of the Registration Statement have
been included in the calculation of common shares and common share
equivalents, using the treasury stock method, as if they were outstanding for
all periods presented.

Historical Net Loss Per Common Share

Net loss per common share on a historical basis is computed in the same
manner as pro forma net loss per common share, except that Series B, C, D, E
and G Redeemable Preferred Stock and Series A and F Preferred Stock are not
assumed to be converted. In the computation of net loss per

F-8
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

common share, accretion of Redeemable Preferred Stock dividend amounts is
included as an increase to net loss attributable to common stockholders. Net
loss per common share on a historical basis is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net loss to common stockholders...... $(4,506,940) $(5,742,782) $(8,085,030)
Net loss per common share............ $ (2.28) $ (2.90) $ (4.05)
Weighted average number of common and
common equivalent shares outstand-
ing................................. 1,978,589 1,981,301 1,994,164
</TABLE>

Fully diluted net loss per common share is the same as primary net loss per
common share.

Property and Equipment

Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to operations. Depreciation is computed using the
straight-line method over the estimated useful lives of 5 years for equipment,
and 7 years for furniture and fixtures.

The Company leases certain equipment, furniture and fixtures. The present
value of lease payments for property and equipment leases meeting the
requirements for capitalization are included as capitalized leased assets and
are amortized on a straight-line basis over the shorter of the equipment's
useful life or the term of the leases.

Upon retirement or sale, the cost of the assets disposed and the related
accumulated depreciation and amortization are removed from the accounts and
any resulting gain or loss is included in the determination of net income.

Income Taxes

The Company follows the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.

Accounts Receivable

Accounts receivable are presented net of an allowance for doubtful accounts
which were $10,000, $43,678, and $68,060 as of December 31, 1993, 1994 and
1995, respectively.

C. ACQUISITION OF BOOKWIRE, INC.:

In August 1995, the Company acquired substantially all the net assets of
BookWire, Inc. for a purchase price of $178,817. BookWire Inc. features book
reviews, a calendar of events, discussion forums, and electronic editions of
the best seller list from Publisher's Weekly. Substantially all of the
purchase price was allocated to goodwill and amortized over five years.

At December 31, 1995, goodwill is $166,896 net of accumulated amortization
of $11,921. The pro forma results of operations of BookWire Inc. are not
material to the Company's consolidated results.

F-9
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

D. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
1994 1995
---------- -----------
<S> <C> <C>
Equipment.............................................. $1,239,034 $ 2,777,280
Furniture and fixtures................................. 433,308 579,884
Leased equipment....................................... 849,012 639,577
---------- -----------
2,521,354 3,996,741
Accumulated depreciation and amortization.............. (671,658) (1,070,507)
---------- -----------
$1,849,696 $ 2,926,234
========== ===========
</TABLE>
Depreciation and amortization expense amounted to $210,690, $378,225, and
$630,949 for the years ended December 31, 1993, 1994, and 1995, respectively.
Accumulated amortization on capital leases amounted to $474,590 and $444,493
as of December 31, 1994 and 1995, respectively.

E. FEDERAL AND STATE INCOME TAXES:

Due principally to operating losses from inception, the Company has not
incurred any income tax expense.

The Company's deferred income taxes as of December 31, were as follows:

<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Deferred income tax assets:
Research tax credits................... $ 61,000 $ 115,000 $ 200,000
Net loss carryforwards................. 3,036,569 4,664,400 7,051,322
Leases................................. 32,142 99,757 --
Other.................................. 3,094 31,440 153,574
----------- ----------- -----------
Total deferred income tax assets..... 3,132,805 4,910,597 7,404,896
----------- ----------- -----------
Deferred income tax liabilities.......... 78,958 131,498 330,502
----------- ----------- -----------
Net deferred income tax assets........... 3,053,847 4,779,099 7,074,394
Valuation allowance...................... (3,053,847) (4,779,099) (7,074,394)
----------- ----------- -----------
Net deferred income tax assets........... $ -- $ -- $ --
=========== =========== ===========
</TABLE>

Deferred tax assets result from net operating loss carryforwards and
estimated future tax effects attributable to differences between tax and
financial reporting bases of certain assets and liabilities, including certain
accruals, capital leases, reserves, and fixed assets. A full valuation
allowance has been recognized due to the uncertainty of realizing the future
benefit from net deferred tax assets.

For federal income tax purposes, as of December 31, 1995, the Company has
regular tax net operating loss carryforwards of $17,800,000 which may be used
to offset future taxable income. The utilization of the net operating loss
carryforwards and credit carryforwards for income tax purposes may be
restricted due to limitations which arise because of a change of ownership
which may be triggered by events or transactions such as the IPO. These net
operating losses expire beginning in 2004.

F-10
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

F. COMMON STOCK:

During 1996, the stockholders authorized an increase in the number of
authorized shares of Common Stock from 12,500,000 to 25,000,000 (see Note N).
Common stockholders are entitled to one vote for each share held.

At December 31, 1995, the Company has reserved shares of Common Stock as
follows:

<TABLE>
<S> <C>
Conversion of Series B, C, D, E and G Redeemable Preferred
Stock.......................................................... 6,555,185
Conversion of Series A and F Preferred Stock.................... 1,070,025
Exercise of Common Stock warrants............................... 2,668,200
Exercise and Conversion of Preferred Stock Warrants............. 39,429
Options under stock option plan (Note J)........................ 3,500,000
----------
Total shares reserved........................................... 13,832,839
==========
</TABLE>

G. REDEEMABLE PREFERRED STOCK:

At December 31, 1995, Redeemable Preferred stock consisted of the following:

<TABLE>
<CAPTION>
AGGREGATE
SHARES ISSUED AND CUMULATIVE LIQUIDATION
SERIES PAR VALUE SHARES AUTHORIZED OUTSTANDING DIVIDENDS PREFERENCE
- ------ --------- ----------------- ----------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
B...................... $0.01 866,003 866,003 $ 986,273 $ 2,025,477
C...................... 0.01 1,436,804 1,422,221 2,534,750 5,094,748
D...................... 0.01 226,666 222,222 381,368 881,368
E...................... 0.01 1,240,000 1,159,677 2,176,633 5,771,632
G...................... 0.01 1,050,000 700,000 155,342 10,655,342
-----------
24,428,567
Less Unamortized Issuance Costs...................................... (429,554)
-----------
$23,999,013
===========
</TABLE>

The holders of each share of Series B, C, D, E and G Redeemable Preferred
Stock are entitled to cumulative dividends at an annual rate of $0.18, $0.36,
$0.45, $0.62, and $0.90 per share, respectively. These dividends accumulate
from the date of issue and are payable to the holders on dates fixed for such
purposes by the Board of Directors or upon liquidation or redemption.
Accumulated dividends increase the carrying value of redeemable preferred
stock with an associated increase in stockholders' deficit. Upon conversion of
the Preferred Stock to Common Stock at the closing of the initial public
offering, all cumulative dividends associated with the Redeemable Preferred
Stock will expire and no longer be payable by the Company. Upon the
conversion, such cumulative dividends will be reclassified as additional paid-
in capital.

Series B, C, D, E and G Redeemable Preferred Stock have provisions which
require the Company to redeem all or a portion of the outstanding shares of
the above series upon the request of a majority of the respective series
preferred holders, subject to certain restrictions. The redemption price for
each share of Series B, C, D, E and G is $1.20, $1.80, $2.25, $3.10 and $15.00
respectively, plus accrued and unpaid dividends whether or not earned or
declared.

Each share of Series B, C, D, E, and G Redeemable Preferred Stock is
convertible into 1.5 shares of Common Stock, all at the option of the
stockholder. All outstanding shares of B, C, D, E and G

F-11
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

Redeemable Preferred Stock will automatically be converted into shares of
Common Stock upon a public offering as contemplated by the accompanying
prospectus. The holders of all classes of Preferred Stock are entitled to vote
on all matters on an "as-converted" basis.

In accordance with the Company's certificate of incorporation, as amended,
the Company shall be entitled to redeem all, but not less than all, of the
outstanding Series B beginning November 3, 1996 subject to certain
restrictions.

Series G Redeemable Preferred was issued in 1995, and all other Series were
issued prior to 1994.

H. PREFERRED STOCK:

At December 31, 1995, Preferred Stock consisted of the following:

<TABLE>
<CAPTION>
SHARES SHARES ISSUED LIQUIDATION
SERIES AUTHORIZED AND OUTSTANDING PREFERENCE
- ------ ---------- --------------- -----------
<S> <C> <C> <C>
A....................................... 16,335 11,335 $ 68,010
F....................................... 700,000 600,000 3,000,000
</TABLE>

Each share of Series A and F Preferred Stock is convertible into 15 and 1.5
shares, respectively, of Common Stock. All outstanding shares of Series A
Preferred Stock will automatically be converted into shares of Common Stock
upon the IPO or when 6,534 shares of Series A Preferred Stock remain
outstanding. Series F Preferred Stock will automatically convert into shares
of Common Stock upon the IPO. The holders of the Preferred Stock are entitled
to vote on all matters on an "as-converted" basis.

I. STOCK WARRANTS:

Stock warrants outstanding at December 31, 1995 were as follows:

<TABLE>
<CAPTION>
NUMBER WARRANT
NUMBER OF OF SHARES PRICE
WARRANTS EXERCISABLE PER SHARE
--------- ----------- ------------
<S> <C> <C> <C>
Common Stock................................ 2,668,200 2,401,481 $3.33-$12.00
========= ========= ============
Series C Preferred Stock.................... 14,583 14,583 $1.80
========= ========= ============
Series D Preferred Stock.................... 4,444 4,444 $2.25
========= ========= ============
Series E Preferred Stock.................... 7,259 7,259 $3.10
========= ========= ============
</TABLE>

The Warrants to purchase shares of Common Stock issued principally to
employees in 1989, and 1991, generally expire in ten years, or sooner under
certain conditions, and were granted at an exercise price in excess of the
fair value of the Common Stock as determined by the Board of Directors. The
aggregate exercise price of the outstanding Common Stock warrants is
$23,810,300. These Common Stock warrants include 240,000 warrants issued in
conjunction with the senior subordinated notes, which expire upon an initial
public offering. See Note M.

The Series C, D and E warrants expire on the earlier of March 25, 2001, July
14, 2002, and February 19, 2003, respectively, or immediately upon the
Company's first public offering of securities.

F-12
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

J. STOCK OPTION PLAN:

The 1989 Stock Option Plan (the "Plan") as amended, which is administered by
the Board of Directors, permits the Company to sell or award stock options for
the purchase of common stock, up to a maximum of 3,500,000. (See Note N).

The Plan provides for the granting of incentive stock options ("ISOs") and
nonqualified stock options ("NQSOs"). ISOs may be granted to any employee of
the Company or any related corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan. NQSOs
may be granted to any employee, officer or director (whether or not also an
employee) or consultant of the Company or any related corporation.

In the case of ISOs, the exercise price shall not be less than 100% (110% in
certain cases) of the fair value of the common stock as determined by the
Board of Directors or, if publicly traded, on the last business day for which
prices are available. In the case of NQSOs, the exercise price shall not be
less than the lesser of (a) book value per share of Common Stock as of year
end of the Company immediately preceding the date of such grant or (b) 50% of
the fair value of the Common Stock on the date of the grant. As of December
31, 1995, all stock options have been granted with an exercise price
equivalent to, or in excess of, the fair value of the common stock as
determined by the Board of Directors. In no event shall the aggregate fair
market value of common stock for which ISOs granted to any employee, which are
exercisable for the first time by such employee during any calendar year,
exceed $100,000. Stock options become exercisable in varying installments as
determined by the Board of Directors at the time of grant. Options may be
granted through March 31, 1999, and expire at various dates not to exceed 10
years from date of grant.

Stock option activity for 1993, 1994 and 1995 was as follows:

<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- ------------
<S> <C> <C>
Outstanding at December 31, 1992................ 444,375 $0.10-$ 0.20
Granted ...................................... 293,400 0.27- 0.43
Canceled...................................... (74,625) 0.27- 0.43
--------- ------------
Outstanding at December 31, 1993................ 663,150 0.27- 0.43
Granted....................................... 772,575 0.43- 12.00
Exercised..................................... (3,277) 0.13- 0.27
Canceled...................................... (15,323) 0.27- 0.43
--------- ------------
Outstanding at December 31, 1994................ 1,417,125 0.10- 12.00
Granted ...................................... 796,715 0.83- 13.33
Exercised..................................... (47,094) 0.13- 12.00
Canceled...................................... (48,267) 0.20- 0.83
--------- ------------
Outstanding at December 31, 1995................ 2,118,479 $0.10-$13.33
========= ============
Exercisable................................... 824,058 $0.10-$13.33
========= ============
</TABLE>

In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123") was issued and will
require the Company to elect either expense recognition under FAS 123 or its
disclosure-only alternative for stock-based employee compensation. The expense
recognition provision encouraged by FAS 123 would require fair-value based
financial

F-13
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

accounting to recognize compensation expense for employee stock compensation
plans. FAS 123 must be adopted in the Company's fiscal 1996 financial
statements with comparable disclosures for the prior years. The Company has
determined that it will elect the disclosure-only alternative. The Company
will be required to disclose the pro forma net income or loss and per share
amounts in the notes to the financial statements using the fair value based
method beginning in fiscal 1996 with comparable disclosures for fiscal 1995.
The Company has not determined the impact of these pro forma adjustments.

K. COMMITMENTS:

Leases

The Company leases office space under a lease which expires on December 31,
1999. The Company also leases certain computer equipment under capital leases.
Rental expense for the years ended December 31, 1993, 1994, and 1995 was
approximately $125,000, $200,000, and $539,468, respectively. Capitalized
lease obligations of $488,436, $22,645, and $8,395 were incurred in 1993,
1994, and 1995, respectively, as a result of the Company entering into various
equipment leases.

Aggregate future minimum lease commitments for all leases at December 31,
1995 are as follows:

<TABLE>
<CAPTION>
CAPITALIZED OPERATING
LEASES LEASES TOTAL
----------- ---------- ----------
<S> <C> <C> <C>
1996.................................. $151,171 $ 674,261 $ 825,432
1997.................................. 73,458 708,351 781,809
1998.................................. 4,477 721,706 726,183
1999.................................. -- 753,818 753,818
2000.................................. -- -- --
-------- ---------- ----------
Total minimum lease commitments....... 229,106 $2,858,136 $3,087,242
========== ==========
Less imputed interest................. 15,725
--------
Capitalized lease obligations at
December 31, 1995.................... $213,381
========
</TABLE>

L. BANK FINANCING:

At December 31, 1995 bank financing consisted of the following:

<TABLE>
<CAPTION>
STATED EFFECTIVE OUTSTANDING BALANCE AVAILABLE
DESCRIPTION INTEREST RATE INTEREST RATE EXPIRATION AS OF DECEMBER 31, 1995 PORTION
----------- ------------- ------------- ---------- ----------------------- ----------
<S> <C> <C> <C> <C> <C>
$500,000
equipment
line.......... Prime+2.0% 10.5% 11/1/97 $ 303,026 $ --
$1,000,000
equipment
line.......... Prime+1.5% 10.0% 9/1/99 826,415 --
$1,000,000
equipment
line.......... Prime+1.5% 10.0% 12/1/00 419,000 581,000
$3,500,000
revolving
line.......... Prime+1.0% N/A 9/1/97 -- 3,500,000
----------
1,548,441
Less current
portion..... 638,067
----------
Long-term
portion..... $ 910,374
==========
</TABLE>

Borrowings under these lines are secured by substantially all the assets of
the Company.

F-14
<PAGE>

INDIVIDUAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

The level of availability of credit under the revolving line is dependent
upon the Company's "borrowing base," which is defined in the loan agreement as
the lesser of $3.5 million or 90% of the annualized prior three-month average
operating cash flow before new subscriber acquisition expenses.

M. SENIOR SUBORDINATED NOTES:

In November 1995 the Company issued $10,000,000 in senior subordinated notes
with an annual interest rate of 12% payable quarterly in arrears and maturing
November 29, 2000. In the event that any time prior to the maturity, the
Company consummates an initial public offering or a change of control occurs,
as defined by the debt agreement, the Company is required to redeem the
principle value of the Notes as well as unpaid accrued interest within 90
days.

In addition to the stated interest rate of 12%, the note holders will
receive additional interest such that the holders will receive total interest
ranging from 20% to 25% based on the timing of the consummation of an IPO or
change in control.

For the year ended December 31, 1995, the Company calculated accrued expense
at 20% assuming the IPO is completed within twelve months of the date of
issuance of the debt. Interest expense for the year ended December 31, 1995
totaled $177,778. The holders of the notes also received 240,000 contingent
warrants to purchase the Company's Common Stock at $10.00 per share. The
warrants only become exercisable upon a change in control occurring prior to
an initial public offering, and expire upon the first of the following events:
(i) The fifth anniversary of a change in control, (ii) Repayment in full of
the debt, or (iii) Consummation of an IPO, provided the IPO occurs prior to a
change in control. The fair value of the warrants will be determined when the
contingency is met, and recognized as additional financing costs over the
remaining, expected term of the debt.

The Company incurred $330,535 in costs related to the debt issuance. These
costs were deferred and are being amortized on a straight-line basis over the
expected term of the debt, which is estimated to be three and one-half months
giving consideration for the IPO. At December 31, 1995, deferred debt
financing costs were $236,097 net of accumulated amortization of $94,438.

N. SUBSEQUENT EVENT:

On January 30, 1996 the Board of Directors authorized an amendment to the
Company's Certificate of Incorporation and increasing the number of authorized
shares of Common Stock to 25,000,000. The Board of Directors also approved a
3-for-2 stock split in the form of a stock dividend. This amendment was
approved by the stockholders of the Company and filed with the Delaware
Secretary of State on March 4, 1996. All Common Stock share data, except
Common Stock par value, have been retroactively adjusted to reflect this
change.

Additionally, the Board of Directors approved an increase in the number of
authorized shares under the 1989 Stock Plan to 3,500,000, approved the 1996
Employee Stock Purchase Plan which provides for the issuance of a maximum of
500,000 shares of Common Stock and approved the 1996 Non-Employee Director
Stock Option Plan, which provides for the grant of options to purchase a
maximum of 500,000 shares of Common Stock. These items were also approved by
the stockholders of the Company on March 4, 1996.

F-15
<PAGE>

INDIVIDUAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 34,118,404 $ 17,517,743
Investments in marketable securities............... 6,014,594 --
Accounts receivable, net........................... 3,982,786 5,741,694
Prepaid expenses................................... 469,928 115,094
------------ ------------
Total current assets.............................. 44,585,712 23,374,531
Property and equipment, net......................... 3,641,201 2,926,234
Other assets, net................................... 876,359 501,740
------------ ------------
Total assets....................................... $ 49,103,272 $ 26,802,505
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $ 2,087,415 $ 1,382,797
Accrued expenses................................... 6,571,819 2,422,094
Deferred revenue................................... 8,993,360 8,924,309
Bank loans for equipment financing................. 804,734 638,067
Current obligations under capital leases........... 119,620 138,017
------------ ------------
Total current liabilities......................... 18,576,948 13,505,284
Senior subordinated notes........................... -- 10,000,000
Other long term liabilities......................... 1,128,176 985,738
Redeemable preferred stock.......................... -- 23,999,013
Stockholders' equity (deficit):
Preferred stock, $0.01 par value................... -- 6,113
Common stock, $0.01 par value; 25,000,000 shares
authorized, 14,106,476 and 1,870,596 shares issued
in 1996 and 1995, respectively.................... 141,065 18,706
Additional paid in capital......................... 88,680,765 3,071,810
Cumulative dividends on redeemable preferred stock. -- (6,234,366)
Accumulated deficit................................ (59,393,073) (18,544,708)
------------ ------------
29,428,757 (21,682,445)
Less 80,405 and 157,500 shares held in treasury (at
cost), respectively............................... (30,609) (5,085)
------------ ------------
Total stockholders' equity (deficit).............. 29,398,148 (21,687,530)
------------ ------------
Total liabilities and stockholders' equity (defi-
cit)............................................ $ 49,103,272 $ 26,802,505
============ ============
</TABLE>

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

F-16
<PAGE>

INDIVIDUAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- -------------------------
1996 1995 1996 1995
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue.................. $ 5,647,727 $ 4,144,961 $ 10,677,018 $ 7,600,872
Cost of revenue.......... 2,637,334 1,790,871 4,894,840 3,383,195
------------ ----------- ------------ -----------
Gross margin............. 3,010,393 2,354,090 5,782,178 4,217,677
Operating expense:
Sales and marketing..... 1,346,221 511,889 2,406,765 986,224
New subscriber acquisi-
tion................... 1,948,926 2,177,921 4,179,629 4,003,960
Product development..... 1,053,485 649,493 1,892,211 1,048,717
General and administra-
tive................... 1,630,391 442,588 2,285,814 1,214,351
Purchased incomplete
technology............. 35,563,750 -- 35,563,750 --
------------ ----------- ------------ -----------
Total operating ex-
penses................ 41,542,773 3,781,891 46,328,169 7,253,252
------------ ----------- ------------ -----------
Loss from operations... (38,532,380) (1,427,801) (40,545,991) (3,035,575)
Interest income and oth-
er, net................. 231,245 27,339 472,839 62,398
Interest expense......... (37,008) (30,913) (775,215) (67,024)
------------ ----------- ------------ -----------
Net loss................. $(38,338,143) $(1,431,375) $(40,848,367) $(3,040,201)
============ =========== ============ ===========
Supplemental net loss per
common share (Note 4)... $ (3.09) $ (0.15) $ (3.67) $ (0.32)
============ =========== ============ ===========
Supplemental weighted av-
erage common shares out-
standing (Note 4)....... 12,424,474 9,639,260 11,134,497 9,638,767
============ =========== ============ ===========
</TABLE>

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

F-17
<PAGE>

INDIVIDUAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(40,848,367) $(3,040,201)
Adjustments to reconcile net loss to net cash
provided
by used in operating activities:
Depreciation and amortization..................... 652,192 290,188
Loss on disposal of property and equipment........ 18,728 --
Provision for doubtful accounts................... 190,618 14,382
Compensation recognized under employee stock
plans............................................ 27,981 --
Undistributed loss of joint ventures.............. 1,303,821 --
Purchased incomplete technology................... 35,563,750 --
Changes in operating assets and liabilities:
Decrease in accounts receivable.................. 1,568,290 873,969
Increase in prepaid expenses..................... (342,557) (1,450)
Increase/(decrease) in other assets.............. 10,276 (19,019)
Increase in accounts payable and accrued ex-
penses.......................................... 1,763,769 1,275,064
Increase in other long term liabilities.......... 166,667 --
Increase in deferred revenue..................... 69,052 239,310
------------ -----------
Net cash provided by/(used in) operating activities: 144,220 (367,757)
------------ -----------
Cash flows from investing activities:
Additions to property and equipment................ (875,666) (757,351)
Investment in joint venture........................ (1,883,417) --
Cash acquired from acquisition..................... 1,010,354 --
(Investments in)/proceeds from sale of marketable
securities........................................ (5,992,450) 1,000,000
------------ -----------
Net cash (used in)/provided by investing activities: (7,741,179) 242,649
------------ -----------
Cash flows from financing activities:
Principal repayments under lease obligations....... (60,282) (104,299)
Increase in equipment loan, net.................... 180,963 306,796
Proceeds from issuance of common stock, net of
related expenses.................................. 34,079,281 978
Payment on senior subordinated notes............... (10,000,000) --
------------ -----------
Net cash provided by financing activities........... 24,199,962 203,475
------------ -----------
Effect of exchange rate on cash..................... (2,342) --
------------ -----------
Net increase in cash and cash equivalents........... 16,600,661 78,367
Cash and cash equivalents at the beginning of peri-
od................................................. 17,517,743 639,870
------------ -----------
Cash and cash equivalents at the end of period...... $ 34,118,404 $ 718,237
============ ===========
Supplemental cash flow information:
Interest paid...................................... $ 738,488 $ 63,053
============ ===========
Noncash transactions:
Equipment acquired under capital lease obligation.. $ 22,859 --
============ ===========
Net liabilities assumed in exchange for stock...... $ 1,643,019 --
============ ===========
Conversion of redeemable preferred stock into com-
mon stock......................................... $ 23,999,013 --
============ ===========
</TABLE>

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

F-18
<PAGE>

INDIVIDUAL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

The unaudited consolidated financial statements of Individual, Inc. (the
"Company") presented herein have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do
not include all of the information and note disclosures required by generally
accepted accounting principles. These financial statements should be read in
conjunction with the Company's consolidated financial statements and notes
thereto for the year ended December 31, 1995 included herein. In the opinion
of management, the accompanying unaudited consolidated financial statements
include all adjustments, consisting of only normal recurring adjustments,
necessary to present fairly the consolidated financial position, results of
operations and cash flows of the Company and its subsidiaries. Quarterly
operating results are not necessarily indicative of the results which would be
expected for the full year.

2. CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES

At June 30, 1996, cash and cash equivalents included $12,977,083 in
commercial paper, $2,033,340 in money market investments, $17,164,307 in U.S.
Government Agency securities, and $1,943,674 cash on deposit. In addition, the
Company held $6,014,594 in U.S. Government Agency securities classified as
marketable securities. All marketable securities are held to maturity and
therefore carried at amortized cost. At June 30, 1996, the market value of
these marketable securities was $6,012,160. At December 31, 1995, cash and
cash equivalents included cash on deposit and investments in money market type
mutual funds.

3. INITIAL PUBLIC OFFERING

On March 20, 1996, the Company completed an initial public offering (the
"IPO") of 2,500,000 shares of Common Stock at $14.00 per share, of which
2,300,000 were sold by the Company and 200,000 were sold by selling
stockholders. The proceeds to the Company, net of underwriting discounts,
commissions and offering expenses, were approximately $29,100,000. In April
1996, the Underwriters exercised their over-allotment option to purchase an
additional 375,000 shares of Common Stock from the Company, for net proceeds
of approximately $4,700,000.

Upon the closing of the IPO, all series of Preferred Stock were converted
into an aggregate of 7,625,210 shares of Common Stock. Upon conversion of the
Preferred Stock to Common Stock, all cumulative dividends associated with the
Redeemable Preferred Stock expired and were no longer payable.

4. PER SHARE COMPUTATIONS

Supplemental Net Loss Per Common Share

The supplemental net loss per common share is computed based upon the
weighted average number of common shares outstanding. Common equivalent shares
are not included in the per share calculations since the effect of their
inclusion would be antidilutive. Common equivalent shares result

F-19
<PAGE>

INDIVIDUAL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

from the assumed exercise of outstanding stock options and warrants. The
computation of supplemental earnings per share gives effect to the conversion
of all shares of Series B, C, D, E and G Redeemable Preferred Stock and Series
A and F Preferred Stock as if converted for all periods presented and does not
include the dividends on Redeemable Preferred Stock as an increase in net
loss. Pursuant to the requirements of the Securities and Exchange Commission,
common shares and common equivalent shares issued at prices below the IPO
price of $14.00 per share during the twelve months immediately preceding the
date of the initial filing of the Registration Statement have been included in
the calculation of common shares and common share equivalents, using the
treasury stock method, as if they were outstanding for all periods prior to
the IPO. Presentation herein is consistent with the pro forma presentation
included in the Company's Registration Statement on Form S-1 (No. 333-00792)
filed on January 31, 1996, as amended.

Historical Net Loss Per Common Share

Net loss per common share on a historical basis is computed in the same
manner as supplemental net loss per common share, except that Series B, C, D,
E and G Redeemable Preferred Stock and Series A and F Preferred Stock are not
assumed to be converted prior to the IPO. In the computation of net loss per
common share, accretion of dividends on redeemable preferred stock is included
as an increase to net loss attributable to common stockholders. Net loss per
common share on a historical basis is calculated as follows:

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
Net loss..................................... $(38,338,143) $(1,431,375)
Accretion of dividends on redeemable
preferred stock............................. -- $ 371,720
------------ -----------
Net loss to common stockholders.............. $(38,338,143) $(1,803,095)
============ ===========
Net loss per common share.................... $ (3.09) $ (0.90)
============ ===========
Weighted average number of common and common
equivalent shares outstanding............... 12,424,474 2,014,050
============ ===========
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
Net loss..................................... $(40,848,367) $(3,040,201)
Accretion of dividends on redeemable
preferred stock............................. 462,706 743,440
------------ -----------
Net loss to common stockholders.............. $(41,311,073) $(3,783,641)
============ ===========
Net loss per common share.................... $ (5.31) $ (1.88)
============ ===========
Weighted average number of common and common
equivalent shares outstanding............... 7,782,757 2,013,557
============ ===========
</TABLE>

F-20
<PAGE>

INDIVIDUAL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

5. CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

The following table sets forth the changes in stockholders' equity (deficit)
for the six months ended June 30, 1996:

<TABLE>
<S> <C>
Balance at December 31, 1995................................. $(21,687,530)
Net proceeds from initial public offering.................... 29,100,994
Conversion of all Preferred Stock to Common Stock............ 23,999,013
Net proceeds from exercise of over-allotment option.......... 4,738,243
Stock issued in acquisition of FreeLoader.................... 33,981,085
Exercise of stock options and warrants....................... 117,162
Repurchase of treasury shares................................ (28,067)
Issuance of treasury shares.................................. 25,615
Net loss..................................................... (40,848,367)
------------
Balance at June 30, 1996..................................... $ 29,398,148
============
</TABLE>

6. ACQUISITION OF FREELOADER

On June 28, 1996, Individual completed the acquisition of FreeLoader, Inc.
("FreeLoader") by a subsidiary merger pursuant to the terms of the Agreement
and Plan of Reorganization dated as of May 30, 1996 among Individual, FL
Merger Corp., a wholly-owned subsidiary of Individual, FreeLoader, and certain
stockholders of FreeLoader (the "Merger Agreement"). As a result of the
merger, FreeLoader became a wholly-owned subsidiary of Individual.

Pursuant to the Merger Agreement, Individual issued approximately 1,874,489
shares of its Common Stock to the stockholders of FreeLoader as consideration
for the merger (including approximately 360,180 shares of Common Stock
reserved for issuance upon exercise of outstanding FreeLoader stock options
assumed by Individual in the merger). The aggregate estimated purchase price
of approximately $34,931,000 is based on the fair market value of Individual,
Inc. Common Stock and options as of May 30, 1996 and includes estimated
accrued transaction costs of approximately $950,000. The transaction was
accounted for as a purchase. Approximately $633,000 of the purchase price has
been allocated to the fair value of the net identifiable liabilities assumed
and approximately $35,564,000 has been allocated to the fair value of
purchased technology determined to be in-process and accordingly, expensed at
consummation. This nonrecurring charge is reflected in the consolidated
statement of operations.

The following condensed pro forma results of operations for the six months
ended June 30, 1996 have been presented to disclose the acquisition of
FreeLoader as if it had occurred as of the beginning of fiscal year 1996. The
computation of pro forma net loss per common share assumes the 1,514,309
shares issued in the acquisition of FreeLoader to be outstanding from January
1, 1996. The computation also gives effect to the conversion of all shares of
Series B, C, D, E and G redeemable preferred stock and Series A and F
preferred stock as of January 1, 1996, and excludes the dividends on
redeemable preferred stock as an increase to net loss. In addition, the one
time charge of $35,564,000 for the purchase of incomplete technology has been
included in the net loss computation.

F-21
<PAGE>

INDIVIDUAL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

The condensed pro forma results of operations for the corresponding period of
the prior year have not been presented because FreeLoader did not commence
operations until November 13, 1995.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30,
1996 PRO
FORMA
------------
<S> <C>
Revenue.................................................... $ 10,677,018
============
Net loss................................................... $(44,485,200)
============
Pro forma net loss per common share........................ $ (3.52)
============
Pro forma weighted average common shares outstanding....... 12,632,165
============
</TABLE>

7. JOINT VENTURE

On May 31, 1996 the Company acquired for approximately $1,883,000 in cash,
44% of the shares of NewsWatch, Inc. ("NewsWatch"), a joint venture
established by the Company, Toshiba Corporation and Mitsui & Co. Ltd. The
joint venture was established to provide customized electronic information
services in Japan. The investment is being accounted for using the equity
method of accounting. Accordingly, the Company recognized $271,000 as its
share of the loss for the three months ended June 30, 1996, which is included
in interest and other income (expense), net.

The Company has entered into certain software and know-how license
agreements with the joint venture in exchange for an initial lump sum royalty
payment to the Company of approximately $1,032,000, received in May 1996, and
continuing royalties based on revenue of the joint venture over a twenty year
period. The license includes the transfer of certain technology from the
Company to the joint venture, which is expected to be completed by the end of
1996. The initial lump sum royalty has been deferred and is being recognized
as revenue over the term of the technology transfer.

F-22
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
FreeLoader, Inc. (A Development Stage Enterprise):

We have audited the accompanying balance sheet of FreeLoader, Inc. (a
development stage enterprise) as of December 31, 1995, and the related
statements of operations, stockholders' deficit and cash flows for the period
from November 13, 1995 (date of inception) to December 31, 1995. 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 audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FreeLoader, Inc. (a
development stage enterprise) as of December 31, 1995, and the results of its
operations and its cash flows for the period from November 13, 1995 (date of
inception) to December 31, 1995, in conformity with generally accepted
accounting principles.

Coopers & Lybrand L.L.P.

Boston, Massachusetts
May 29, 1996
Except as to the information
in Note J, for which the date
is June 28, 1996

F-23
<PAGE>

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash................................................ $233,695 $2,246,748
Prepaid expenses.................................... 7,463 17,810
-------- ----------
Total current assets.............................. 241,158 2,264,558
Property and equipment, net......................... 11,733 115,889
Other assets, net................................... 7,963 70,809
-------- ----------
Total assets...................................... $260,854 $2,451,256
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.................................... 31,686 210,700
Deposits............................................ -- 50,000
Note payable........................................ 250,000 --
-------- ----------
Total current liabilities......................... 281,686 260,700
Commitments (Note D)
Stockholders' equity (deficit):
Common stock, $.001 par value; authorized 6,000,000
shares at December 31, 1995, 17,000,000 shares at
March 31, 1996; 6,000,000 shares issued and out-
standing at December 31, 1995 and March 31, 1996... 6,000 6,000
Convertible preferred stock, $.001 par value;
6,000,000 shares authorized; 5,363,637 shares is-
sued and outstanding at March 31, 1996............. -- 5,364
Additional paid-in capital.......................... 28,000 2,972,636
Deficit accumulated during the development stage.... (54,832) (793,444)
-------- ----------
Total stockholders' equity (deficit).............. (20,832) 2,190,556
-------- ----------
Total liabilities and stockholders' equity (defi-
cit)............................................. $260,854 $2,451,256
======== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-24
<PAGE>

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
NOVEMBER 13, NOVEMBER 13,
1995 (DATE OF THREE MONTHS 1995 (DATE OF
INCEPTION) TO ENDED INCEPTION) TO
DECEMBER 31, MARCH 31, MARCH 31,
1995 1996 1996
------------- ------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Operating expenses:
Research and development............. $ 35,315 $ 352,783 $ 388,098
General and administrative........... 19,649 390,719 410,368
-------- --------- ---------
Total operating expenses........... 54,964 743,502 798,466
Interest income, net................... 132 4,890 5,022
-------- --------- ---------
Net loss............................... $(54,832) $(738,612) $(793,444)
======== ========= =========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-25
<PAGE>

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
DEFICIT
COMMON STOCK PREFERRED STOCK ACCUMULATED
---------------- ---------------- ADDITIONAL DURING THE TOTAL
SHARES SHARES PAID-IN DEVELOPMENT STOCKHOLDERS'
ISSUED AMOUNT ISSUED AMOUNT CAPITAL STAGE EQUITY (DEFICIT)
--------- ------ --------- ------ ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at November 13,
1995 (date of
inception)
Issuance of common stock
on November 30, 1995... 6,000,000 $6,000 $ 28,000 $ 34,000
Net loss................ $ (54,832) (54,832)
--------- ------ ---------- --------- ----------
Balance at December 31,
1995................... 6,000,000 6,000 28,000 (54,832) (20,832)
Issuance of Series A
Convertible Preferred
Stock for cash and
exchange of note on
February 29, 1996...... 5,363,637 $5,364 2,944,636 2,950,000
Net loss................ (738,612) (738,612)
--------- ------ --------- ------ ---------- --------- ----------
Balance at March 31,
1996 (unaudited)....... 6,000,000 $6,000 5,363,637 $5,364 $2,972,636 $(793,444) $2,190,556
========= ====== ========= ====== ========== ========= ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-26
<PAGE>

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
NOVEMBER 13, 1995 THREE MONTHS NOVEMBER 13, 1995
(DATE OF INCEPTION) ENDED (DATE OF INCEPTION)
TO DECEMBER 31, 1995 MARCH 31, 1996 TO MARCH 31, 1996
-------------------- -------------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from
operating activities:
Net loss............... $(54,832) $ (738,612) $ (793,444)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization......... 469 5,867 6,336
Stock issued for
expenses............. 34,000 -- 34,000
Interest paid with
Preferred Stock...... 4,111 4,111
Changes in assets and
liabilities:
Increase in prepaid
expenses............ (7,463) (10,347) (17,810)
Increase in other
assets.............. (8,089) (63,754) (71,843)
Increase in accounts
payable............. 31,686 179,014 210,700
Increase in deposits. -- 50,000 50,000
-------- ---------- ----------
Net cash used in
operating
activities......... (4,229) (573,721) (577,950)
Cash flows from
investing activities:
Purchase of property
and equipment......... (12,076) (109,115) (121,191)
-------- ---------- ----------
Net cash used in
investing
activities......... (12,076) (109,115) (121,191)
Cash flows from
financing activities:
Issuance of note
payable............... 250,000 -- 250,000
Proceeds from issuance
of Preferred Stock.... -- 2,695,889 2,695,889
-------- ---------- ----------
Net cash provided by
financing
activities......... 250,000 2,695,889 2,945,889
-------- ---------- ----------
Net increase in cash.... 233,695 2,013,053 2,246,748
Cash at beginning of
period................. -- 233,695 --
-------- ---------- ----------
Cash at end of period... $233,695 $2,246,748 $2,246,748
======== ========== ==========
Supplemental cash flow
information:
Noncash financing
activities:
Note payable and
accrued interest
converted into
Preferred Stock...... $ 254,111 $ 254,111
========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-27
<PAGE>

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED MARCH 31, 1996 IS
UNAUDITED)

A. NATURE OF BUSINESS:

Freeloader, Inc. (the "Company") was incorporated under the laws of Delaware
on November 13, 1995. The Company was formed primarily to offer Internet users
an application with which they may subscribe to home pages of their choice.
Through automatic daily or weekly downloads, users will be able to view their
chosen Web pages off-line in real time with their current browsers.

Since its inception, the Company has devoted its efforts to establishing its
business, raising capital, recruiting personnel, developing technology, and
marketing. Accordingly, the Company is considered to be a development stage
enterprise for the periods presented.

B. SIGNIFICANT ACCOUNTING POLICIES:

Research and Development Costs

Research and development costs, which principally represent consulting fees
incurred in the conceptual formulation and development of the Company's
technology, are expensed as incurred. Software development costs that would be
required to be capitalized under Statement of Financial Accounting Standards
(SFAS) No. 86, "Accounting for the Costs of Computer Software to Be Sold,
Leased or Otherwise Marketed", have not been material.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for maintenance and
repairs are charged to operations. Depreciation is computed using the
straight-line method over the estimated useful lives of 5 years for computer
equipment and 2 years for purchased software.

Other Assets

Other assets principally include organization costs and trademarks at cost,
net of amortization on a straight-line basis over a five-year period.

Accumulated amortization relating to organization costs and trademarks was
$126 and $1,034 for the period from November 13, 1995 (date of inception) to
December 31, 1995 and the three months ended March 31, 1996, respectively.

Income Taxes

The Company accounts for income taxes according to SFAS No. 109, "Accounting
for Income Taxes." Under the liability method specified by SFAS No. 109, a
deferred tax asset or liability is determined based on the difference between
the financial statement and tax basis of assets and liabilities as measured by
the enacted tax rates which will be in effect when these differences reverse.
SFAS No. 109 also requires a valuation account against deferred tax assets if,
based on available weighted evidence, it is more likely than not that some or
all of the deferred tax assets will not be realized.

Risk and Uncertainties

Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash. The Company deposits its cash
in banks which it believes are creditworthy.

F-28
<PAGE>

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED MARCH 31, 1996 IS
UNAUDITED)

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and contingent
liabilities at the date of the financial statements and the reported amounts
of expenses during the reporting periods. Actual results could differ from
those estimates.

C. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ---------
<S> <C> <C>
Computer equipment and purchased software.......... $12,076 $121,191
Accumulated depreciation........................... (343) (5,302)
------- --------
$11,733 $115,889
======= ========
</TABLE>

Depreciation expense amounted to $343 and $4,959 for the period from
November 13, 1995 (date of inception) to December 31, 1995 and the three
months ended March 31, 1996, respectively.

D. COMMITMENTS:

During 1995, the Company entered into an operating lease for office space.
The lease expires on March 31, 1996. Rental expense for the period from
November 13, 1995 (date of inception) to December 31, 1995 under the operating
lease was $3,500. The remaining commitment of $3,000 was paid in 1996.

On March 7, 1996, the Company entered into a new operating lease for office
space. The term of the lease commenced on May 1, 1996 and expires on May 1,
1999. The minimum future rental expenses are as follows:

E. SERIES A CONVERTIBLE PREFERRED STOCK:

On February 29, 1996, the Board of Directors authorized 6,000,000 shares of
Preferred Stock, of which 5,900,000 shares were designated as Series A
Convertible Preferred Stock with the rights, terms and privileges set forth in
the Series A Convertible Preferred Stock Purchase Agreement (the "Agreement").
Subject to and in accordance with the provisions of the Agreement, any share
of Series A Convertible Preferred Stock may, at the option of the holder, be
converted at any time into fully-paid and nonassessable shares of common stock
on a one-to-one basis, subject to adjustment from time to time in accordance
with the Agreement. On April 29, 1996, the Company issued 136,364 shares of
Series A Convertible Preferred Stock, $.001 par value, for an aggregate
purchase price of $75,000.

F. NOTE PAYABLE:

On December 15, 1995, the Company issued a $250,000 convertible promissory
note (the "Note") with an annual interest rate of 8%. The Note and any accrued
interest is due on or before April 15, 1996.

F-29
<PAGE>

FREELOADER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED MARCH 31, 1996 IS
UNAUDITED)

The principal outstanding under this Note and any accrued interest is
convertible, at the option of the holder, immediately upon the sale by the
Company of equity securities of the Company. The conversion price will be
equal to the per share purchase price of the sale.

The Note was converted as part of the first closing, which took place on
February 29, 1996, of the Series A Convertible Preferred Stock issuance. The
outstanding principal and interest of $254,111 were converted into shares of
Series A Convertible Preferred Stock for an aggregate of 462,000 shares.

In consideration of the purchase of the Note, the Company issued a warrant
to the investor for common stock of the Company, with an insignificant fair
value. The number of shares to be issued shall be approximately 129,000 at an
exercise price of $0.50 per share. The warrant shall expire at the close of
business on December 15, 2000. As of May 29, 1996, the warrant has not been
exercised.

G. STOCK OPTION PLAN:

On December 14, 1995, the Board of Directors approved the establishment of
an Incentive Stock Option Plan (the "Plan"). The Plan will initially have
1,000,000 options which will vest over a four-year period. The Plan provides
for the granting of incentive stock options ("ISOs") and nonqualified stock
options ("NQSOs"). Any nonqualified options issued to outside directors,
advisors or consultants will be included in the 1,000,000 share allocation. As
of December 31, 1995, no options under the Plan had been granted. On February
29, 1996, the Board of Directors approved an increase in the number of
authorized shares under the Plan to 2,050,000 shares of common stock for
issuance to employees, consultants, and contractors. As of March 31, 1996,
1,462,000 ISOs had been granted under the Plan with an option price per share
of $0.055, of which no shares were exercisable.

H. INCOME TAXES:

No income tax provision or benefit has been provided for federal income tax
purposes as the Company has incurred losses since inception. As of December
31, 1995, the net deferred tax asset totaled approximately $20,000,
principally related to net operating loss carryforwards of approximately
$55,000. As of March 31, 1996, the net deferred tax asset totaled
approximately $301,000, principally related to net operating loss
carryforwards of approximately $793,000. These net operating loss
carryforwards, if not utilized, will commence expiring in 2010. Due to the
uncertainty surrounding the realization of these favorable tax attributes in
future tax returns, all of the net deferred tax assets has been fully offset
by a valuation allowance.

I. RELATED PARTY TRANSACTIONS:

The founders of the Company paid certain expenses of the Company and
accordingly were reimbursed with 6,000,000 shares of common stock, which were
determined to have a fair value of $34,000 by the Board of Directors. Expenses
paid by the founders in excess of $34,000, which totaled $4,339 and were
included in accounts payable at December 31, 1995, were reimbursed to the
founders in January 1996.

J. SUBSEQUENT EVENT:

On June 28, 1996, Individual, Inc., a Delaware corporation, completed the
acquisition of FreeLoader, Inc., by means of a merger (the "Merger"), pursuant
to the Agreement and Plan of Reorganization dated as of May 30, 1996. As a
result of the Merger, FreeLoader, Inc. became a wholly-owned subsidiary of
Individual, Inc.

F-30
<PAGE>

INDIVIDUAL, INC. AND FREELOADER, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY INFORMATION

The following unaudited pro forma combined condensed consolidated financial
statements give effect to the acquisition of FreeLoader, Inc. ("FreeLoader")
by Individual, Inc. ("Individual"), by means of a merger (the "Merger"), under
the purchase method of accounting. The unaudited pro forma combined condensed
consolidated statement of operations combine the historical results of
operations of Individual and FreeLoader, for the six months ended June 30,
1996 as if the Merger had occurred at the beginning of such period. The
operating results of FreeLoader for the year ended December 31, 1995 were not
material to the results of operations of Individual. Therefore, the pro forma
combined condensed consolidated statement of operations for the year ended
December 31, 1995 has been omitted. In addition, the acquisition of FreeLoader
was completed on June 28, 1996, and accordingly has been reflected in the
Individual's June 30, 1996 balance sheet. Therefore, the pro forma combined
condensed consolidated balance sheet as of June 30, 1996 has not been
presented.

The unaudited pro forma combined condensed consolidated financial statements
do not reflect cost savings and synergies which might be achieved from the
Merger. The unaudited pro forma combined condensed consolidated financial
statements do not purport to be indicative of the operating results or
financial position that would have been achieved had the Merger been effected
for the period indicated or the results or financial position which may by
obtained in the future.

These combined condensed consolidated pro forma financial statements are
based on and should be read in conjunction with the audited and unaudited
consolidated financial statements of Individual, including the notes thereto,
and the audited and unaudited financial statements of FreeLoader, including
the notes thereto.

The Merger transaction did not result in any significant pro forma
adjustments to the pro forma combined condensed consolidated statement of
operations.

F-31
<PAGE>

INDIVIDUAL, INC.
AND
FREELOADER, INC.

PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 1996

(UNAUDITED)

<TABLE>
<CAPTION>
COMBINED
INDIVIDUAL INC. FREELOADER PRO FORMA
--------------- ----------- ------------
<S> <C> <C> <C>
Revenue............................. $ 10,677,018 $ 10,677,018
Cost of revenue..................... 4,894,840 4,894,840
------------ ------------
Gross margin........................ 5,782,178 5,782,178
Operating expense:
Sales and marketing............... 2,406,765 $ 318,074 2,724,839
New subscriber acquisition........ 4,179,629 -- 4,179,629
Research and development.......... 1,892,211 913,187 2,805,398
General and administrative........ 2,285,814 2,432,424 4,718,238
Purchased incomplete technology... 35,563,750 -- 35,563,750
------------ ----------- ------------
Total operating expense......... 46,328,169 3,663,685 49,991,854
------------ ----------- ------------
Loss from operations............ (40,545,991) (3,663,685) (44,209,676)
Interest income and other income,
net................................ 472,839 30,963 503,802
Interest expense.................... (775,215) (4,111) (779,326)
------------ ----------- ------------
Net loss............................ $(40,848,367) $(3,636,833) $(44,485,200)
============ =========== ============
Supplemental net loss per common
share.............................. $ (3.67)
============
Supplemental weighted average common
shares outstanding................. 11,134,497
============
Pro forma net loss per common share. $ (3.52)
============
Pro forma weighted average common
shares
outstanding........................ 12,632,165
============
</TABLE>

See notes to the Pro Forma combined condensed consolidated financial
statements.

F-32
<PAGE>

INDIVIDUAL, INC.
AND
FREELOADER, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A. PRO FORMA BASIS OF PRESENTATION

On June 28, 1996, Individual completed the acquisition of FreeLoader, Inc.,
a Delaware corporation, by means of the Merger of FL Merger Corp., a Delaware
corporation and wholly owned subsidiary of Individual, ("Merger Sub"), with
and into FreeLoader, with FreeLoader continuing as the surviving corporation,
pursuant to that certain Agreement and Plan of Reorganization dated as of
May 30, 1996 by and among Individual, Merger Sub, FreeLoader and certain
stockholders of FreeLoader (the "Merger Agreement"). As a result of the
Merger, FreeLoader became a wholly-owned subsidiary of Individual.

Pursuant to the Merger Agreement, Individual acquired FreeLoader in exchange
for approximately 1,514,309 shares of common stock, options to purchase
360,180 shares of common stock and other consideration and costs with a total
estimated purchase price of approximately $34,931,000 (based on the fair value
of Individual, Inc. Common Stock and options at May 30, 1996 and estimated
accrued deal costs of $950,000). The transaction will be accounted for as a
purchase. Approximately $633,000 of the purchase price has been allocated to
the net identifiable liabilities assumed and approximately $35,564,000 has
been allocated to the fair value of purchased technology determined to be in-
process and accordingly, expensed at consumation. This nonrecurring charge has
been included in Individual's historical six months ended June 30, 1996
consolidated statement of operations.

F-33
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Estimated expenses payable in connection with the sale of the Common Stock
offered hereby are as follows:

<TABLE>
<S> <C>
Registration fee................................................. $ 5,483
Printing and engraving expenses.................................. 50,000*
Legal fees and expenses.......................................... 15,000*
Accounting fees and expenses..................................... 10,000*
Miscellaneous.................................................... 10,000*
-------
Total $90,483*
=======
</TABLE>
- --------
* Estimated

The Company will bear all expenses shown above.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Delaware General Corporation Law and the Company's Charter and By-laws
provide for indemnification of the Company's directors and officers for
liabilities and expenses that they may incur in such capacities. In general,
directors and officers are indemnified with respect to actions taken in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the Company, and with respect to any criminal action or
proceeding, actions that the indemnitee had no reasonable cause to believe
were unlawful. Reference is made to the Company's Charter and By-laws filed as
Exhibits 3.3 and 3.5 to the Company's Registration Statement on Form S-1 filed
on January 31, 1996 (No. 333-00792), respectively.

The Underwriting Agreement executed in connection with the Company's initial
public offering provides that the Underwriters are obligated, under certain
circumstances, to indemnify directors, officers and controlling persons of the
Company against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act"). Reference is made to the form
of Underwriting Agreement filed as Exhibit 1.1 to the Company's Registration
Statement on Form S-1 (File No. 333-00792).

The Company maintains directors and officers liability insurance for the
benefit of its directors and certain of its officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Act (where applicable, the following numbers give effect to the three-for-two
stock split effected in March 1996 in connection with the Company's initial
public offering):

On September 13, 1993, the Company issued and sold to Knight-Ridder
Information, Inc. 600,000 shares of the Series F Preferred Stock of the
Company at a price of $5.00 per share, for total consideration to the Company
of $3,000,000.

On October 3, 1995, the Company issued and sold to Microsoft Corporation
700,000 shares of the Series G Preferred Stock of the Company at a price of
$15.00 per share, for total consideration to the Company of $10,500,000.

II-1
<PAGE>

On November 29, 1995, the Company issued and sold to nineteen purchasers (i)
$10,000,000 aggregate principal amount of the Company's 12% Senior
Subordinated Notes and (ii) Common Stock Purchase Warrants exercisable for an
aggregate of 240,000 shares of the Company's Common Stock at a price of $10.00
per share, for total consideration to the Company of $10,000,000.

On June 28, 1996, pursuant to the Company's acquisition of FreeLoader, Inc.,
the Company issued an aggregate of 1,874,489 shares of its Common Stock to the
securityholders of FreeLoader in exchange for all outstanding FreeLoader
securities (including 360,180 shares of the Company's Common Stock reserved
for issuance upon exercise of outstanding FreeLoader stock options assumed by
the Company in the acquisition).

The Company has from time to time granted incentive stock options and
nonqualified stock options to employees, directors and consultants pursuant to
its 1989 Stock Option Plan. From June 30, 1993 to June 30, 1996, the Company
issued incentive stock options and nonqualified stock options to purchase an
aggregate of 2,681,764 shares of Common Stock and issued an aggregate of
440,586 shares of Common Stock upon the exercise of such stock options. As of
June 30, 1996, incentive stock options and nonqualified stock options to
purchase an aggregate of 2,735,424 shares of Common Stock were issued,
outstanding and unexercised.

In addition, from January 1, 1993 to June 30, 1996, the Company issued
Common Stock Purchase Warrants exercisable for the purchase of an aggregate of
46,500 shares of Common Stock, none of which Warrants were exercised. The
Company also issued during that period Preferred Stock Purchase Warrants
exercisable for the purchase of an aggregate of 10,889 shares of Series E
Preferred Stock, all of which Warrants were exercised in March 1996. As of
June 30, 1996, Common Stock Purchase Warrants to purchase 2,428,200 shares of
Common Stock were issued, outstanding and unexercised.

Except as described above, no underwriters were involved in the foregoing
sales of securities. Such sales were made in reliance upon an exemption from
the registration provisions of the Act set forth in Section 4(2) thereof
relative to sales by an issuer not involving any public offering or the rules
and regulations thereunder, or, in the case of certain options to purchase
Common Stock, Rule 701 of the Act. All of the foregoing securities are deemed
restricted securities for the purposes of the Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2.1 --Agreement and Plan of Reorganization dated as of May 30, 1996
among the Company, FL Merger Corp., FreeLoader, Inc., Mark
Pincus and Sunil Paul (filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K (the "Form 8-K") filed on July 12,
1996 and incorporated herein by reference thereto).

3.3 --Third Amended and Restated Certificate of Incorporation (filed
as Exhibit 3.3 to the Company's Registration Statement on Form
S-1, as amended (File No. 333-00792) (the "Registration
Statement on Form S-1") and incorporated herein by reference
thereto).
3.5 --Amended and Restated By-laws of the Company (filed as Exhibit
3.5 to the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
4.1 --Specimen certificate representing the Common Stock (filed as
Exhibit 4.1 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
5.1 --Opinion of Testa, Hurwitz & Thibeault, LLP. (filed as Exhibit
5.1 to the Company's Registration Statement on Form S-1 filed
on July 19, 1996 (File No. 333-8511) (the "Resale Registration
Statement") and incorporated herein by reference thereto).
10.1 --Amended and Restated 1989 Stock Option Plan (filed as Exhibit
10.1 to the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.2 --1996 Non-Employee Director Stock Option Plan (filed as Exhibit
10.2 to the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.3 --1996 Employee Stock Purchase Plan (filed as Exhibit 10.3 to
the Registration Statement on Form S-1 and incorporated herein
by reference thereto).
10.4 --Form of Common Stock Purchase Warrant (filed as Exhibit 10.4
to the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.5 --Series F Preferred Stock Purchase Agreement dated as of
September 13, 1993 (filed as Exhibit 10.5 to the Registration
Statement on Form S-1 and incorporated herein by reference
thereto).
10.6 --Letter Agreement dated as of October 12, 1993 between the
Company and Dialog Information Services, Inc. (filed as Exhibit
10.6 to the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.7 --Agreement dated 1993 between the Company and Knight-Ridder
Information, Inc., as amended (filed as Exhibit 10.7 to the
Registration Statement on Form S-1 and incorporated herein by
reference thereto).
10.8 --License Agreement dated as of January 21, 1992 between the
Company and Knight-Ridder/Tribune Business News (filed as
Exhibit 10.8 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.9 --Series G Preferred Stock Purchase Agreement dated as of
October 3, 1995 (filed as Exhibit 10.9 to the Registration
Statement on Form S-1 and incorporated herein by reference
thereto).
10.10 --Independent Content Provider Agreement dated as of September
25, 1995 between the Company and The Microsoft Network, L.L.C.
(filed as Exhibit 10.10 to the Registration Statement on Form
S-1 and incorporated herein by reference thereto).
10.11 --Stockholders' Agreement dated as of September 13, 1993 (filed
as Exhibit 10.11 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.12 --Series G Stockholders' Agreement dated as of October 3, 1995
(filed as Exhibit 10.12 to the Registration Statement on Form
S-1 and incorporated herein by reference thereto).
10.13 --Second Amended and Restated Investors' Rights Agreement dated
as of
October 3, 1995 (filed as Exhibit 10.13 to the Registration
Statement on Form S-1 and incorporated herein by reference
thereto).
10.14 --Licensing Agreement with Cornell Research Foundation, Inc.
dated as of
March 22, 1989 (filed as Exhibit 10.14 to the Registration
Statement on Form S-1 and incorporated herein by reference
thereto).
10.15 --Letter agreement dated as of July 2, 1992 between the Company
and Fleet Bank of Massachusetts, N.A. (filed as Exhibit 10.15
to the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.16 --Letter agreement dated as of September 22, 1994 between the
Company and Fleet Bank of Massachusetts, N.A. (filed as Exhibit
10.16 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.17 --Consent and Loan Modification Agreement dated as of November
29, 1995 between the Company and Fleet Bank of Massachusetts,
N.A. (filed as Exhibit 10.17 to the Registration Statement on
Form S-1 and incorporated herein by reference thereto).
10.18 --Second Loan Modification Agreement dated as of December 29,
1995 between the Company and Fleet Bank of Massachusetts, N.A.
(filed as Exhibit 10.18 to the Registration Statement on Form
S-1 and incorporated herein by reference thereto).
10.19 --Lease dated as of August 25, 1994 between the Company and
Trustees of New England Executive Park Trust, 40 Spaulding
Investment Company, Inc. (filed as Exhibit 10.19 to the
Registration Statement on Form S-1 and incorporated herein by
reference thereto).
10.20 --Reseller Agreement dated as of February 8, 1996 between the
Company and Knight-Ridder Information, Inc. (filed as Exhibit
10.20 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.21 --Escrow Agreement dated as of June 28, 1996 among the Company,
FreeLoader, Inc., the securityholders of FreeLoader, Inc.,
Fleet National Bank, and Frederick Wilson, as representative of
the securityholders of FreeLoader, Inc. (filed as Exhibit 99.2
to the Form 8-K and incorporated herein by reference thereto).
10.22 --Registration Rights Agreement dated as of June 28, 1996 among
the Company and certain stockholders of FreeLoader, Inc. (filed
as Exhibit 99.1 to the Form 8-K and incorporated herein by
reference thereto).
10.23 --Risk Sharing Arrangement dated as of June 28, 1996 between the
Company and Mark Pincus and Sunil Paul (filed as Exhibit 99.3
to the Form 8-K and incorporated herein by reference thereto).
*11.1 --Statement re Computation of Per Share Earnings.
21.1 --Subsidiaries of the Company (filed as Exhibit 21.1 to the
Registration Statement on Form S-1 and incorporated herein by
reference thereto).
*23.1 --Consent of Coopers & Lybrand L.L.P.
*23.2 --Consent of Coopers & Lybrand L.L.P.
23.3 --Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5.1).
24.1 --Power of Attorney (contained on page II-6 of the Resale
Registration Statement previously filed).
</TABLE>
- --------
* Filed herewith.

II-4
<PAGE>

(b) Financial Statement Schedules

Schedule II--Valuation and Qualifying Accounts and Reserves

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities 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 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) that for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective; and (2) that for the purpose of determining any
liability under the Securities 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.

The undersigned Registrant hereby undertakes (1) to file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement: (i) to include any prospectus required by Section
10(a)(3) of the Act; (ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement; (iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; (2) that,
for the purpose of determining any liability under the Act, each such post-
effective amendment 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; and (3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

II-5
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN BURLINGTON,
MASSACHUSETTS, ON SEPTEMBER 5, 1996.

INDIVIDUAL, INC.

/s/ Michael E. Kolowich
By: _____________________________

MICHAEL E. KOLOWICH
PRESIDENT AND CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE(S) DATE

/s/ Michael E. Kolowich President, Chief September 5,
- ------------------------------------ Executive Officer 1996
MICHAEL E. KOLOWICH and Director
(Principal
Executive Officer)

/s/ Robert L. Lentz Vice President, September 5,
- ------------------------------------ Finance, Chief 1996
ROBERT L. LENTZ Financial Officer
and Treasurer
(Principal
Financial and
Accounting Officer)

- ------------------------------------ Director
JOSEPH A. AMRAM

* September 5,
- ------------------------------------ Director 1996
WILLIAM A. DEVEREAUX

II-6
<PAGE>

SIGNATURE TITLE(S) DATE

Director
* September 5,
- ------------------------------------ 1996
MELINDA E. KEIRNAN

Director
- ------------------------------------
ELON KOHLBERG

Director
* September 5,
- ------------------------------------ 1996
MARINO R. POLESTRA

Director
* September 5,
- ------------------------------------ 1996
DANIEL ROSEN

/s/ Robert L. Lentz
*By: ---------------------------------
ROBERT L. LENTZ
ATTORNEY-IN-FACT

<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<C> <S> <C>
2.1 --Agreement and Plan of Reorganization dated as of May
30, 1996 among the Company, FL Merger Corp., FreeLoader,
Inc., Mark Pincus and Sunil Paul (filed as Exhibit 2.1
to the Company's Current Report on Form 8-K (the "Form
8-K") filed on July 12, 1996 and incorporated herein by
reference thereto).
3.3 --Third Amended and Restated Certificate of Incorporation
(filed as Exhibit 3.3 to the Company's Registration
Statement on Form S-1, as amended (File No. 333-00792)
(the "Registration Statement on Form S-1") and
incorporated herein by reference thereto).
3.5 --Amended and Restated By-laws of the Company (filed as
Exhibit 3.5 to the Registration Statement on Form S-1
and incorporated herein by reference thereto).
4.1 --Specimen certificate representing the Common Stock
(filed as Exhibit4.1 to the Registration Statement on
Form S-1 and incorporated herein by reference thereto).
5.1 --Opinion of Testa, Hurwitz & Thibeault, LLP. (filed as
Exhibit 5.1 to the Company's Registration Statement on
Form S-1 filed on July 19, 1996 (File No. 333-8511) (the
"Resale Registration Statement") and incorporated herein
by reference thereto).
10.1 --Amended and Restated 1989 Stock Option Plan (filed as
Exhibit 10.1 to the Registration Statement on Form S-1
and incorporated herein by reference thereto).
10.2 --1996 Non-Employee Director Stock Option Plan (filed as
Exhibit 10.2 to the Registration Statement on Form S-1
and incorporated herein by reference thereto).
10.3 --1996 Employee Stock Purchase Plan (filed as Exhibit
10.3 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.4 --Form of Common Stock Purchase Warrant (filed as Exhibit
10.4 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.5 --Series F Preferred Stock Purchase Agreement dated as of
September 13, 1993 (filed as Exhibit 10.5 to the
Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.6 --Letter Agreement dated as of October 12, 1993 between
the Company and Dialog Information Services, Inc. (filed
as Exhibit 10.6 to the Registration Statement on Form S-
1 and incorporated herein by reference thereto).
10.7 --Agreement dated 1993 between the Company and Knight-
Ridder Information, Inc., as amended (filed as Exhibit
10.7 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.8 --License Agreement dated as of January 21, 1992 between
the Company and Knight-Ridder/Tribune Business News
(filed as Exhibit 10.8 to the Registration Statement on
Form S-1 and incorporated herein by reference thereto).
10.9 --Series G Preferred Stock Purchase Agreement dated as of
October 3, 1995 (filed as Exhibit 10.9 to the
Registration Statement on Form S-1 and incorporated
herein by reference thereto).
</TABLE>
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<C> <S> <C>
10.10 --Independent Content Provider Agreement dated as of
September 25, 1995 between the Company and The Microsoft
Network, L.L.C. (filed as Exhibit 10.10 to the
Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.11 --Stockholders' Agreement dated as of September 13, 1993
(filed as Exhibit 10.11 to the Registration Statement on
Form S-1 and incorporated herein by reference thereto).
10.12 --Series G Stockholders' Agreement dated as of October 3,
1995 (filed as Exhibit 10.12 to the Registration
Statement on Form S-1 and incorporated herein by
reference thereto).
10.13 --Second Amended and Restated Investors' Rights Agreement
dated as of October 3, 1995 (filed as Exhibit 10.13 to
the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.14 --Licensing Agreement with Cornell Research Foundation,
Inc. dated as of March 22, 1989 (filed as Exhibit 10.14
to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.15 --Letter agreement dated as of July 2, 1992 between the
Company and Fleet Bank of Massachusetts, N.A. (filed as
Exhibit 10.15 to the Registration Statement on Form S-1
and incorporated herein by reference thereto).
10.16 --Letter agreement dated as of September 22, 1994 between
the Company and Fleet Bank of Massachusetts, N.A. (filed
as Exhibit 10.16 to the Registration Statement on Form
S-1 and incorporated herein by reference thereto).
10.17 --Consent and Loan Modification Agreement dated as of
November 29, 1995 between the Company and Fleet Bank of
Massachusetts, N.A. (filed as Exhibit 10.17 to the
Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.18 --Second Loan Modification Agreement dated as of December
29, 1995 between the Company and Fleet Bank of
Massachusetts, N.A. (filed as Exhibit 10.18 to the
Registration Statement on Form S-1 and incorporated
herein by reference thereto).
10.19 --Lease dated as of August 25, 1994 between the Company
and Trustees of New England Executive Park Trust, 40
Spaulding Investment Company, Inc. (filed as Exhibit
10.19 to the Registration Statement on Form S-1 and
incorporated herein by reference thereto).
10.20 --Reseller Agreement dated as of February 8, 1996 between
the Company and Knight-Ridder Information, Inc. (filed
as Exhibit 10.20 to the Registration Statement on Form
S-1 and incorporated herein by reference thereto).
</TABLE>

<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<C> <S> <C>
10.21 --Escrow Agreement dated as of June 28, 1996 among the
Company, FreeLoader, Inc., the securityholders of
FreeLoader, Inc., Fleet National Bank, and Frederick
Wilson, as representative of the securityholders of
FreeLoader, Inc. (filed as Exhibit 99.2 to the Form 8-K
and incorporated herein by reference thereto).
10.22 --Registration Rights Agreement dated as of June 28, 1996
among the Company and certain stockholders of
FreeLoader, Inc. (filed as Exhibit 99.1 to the Form 8-K
and incorporated herein by reference thereto).
10.23 --Risk Sharing Arrangement dated as of June 28, 1996
between the Company and Mark Pincus and Sunil Paul
(filed as Exhibit 99.3 to the Form 8-K and incorporated
herein by reference thereto).
*11.1 --Statement re Computation of Per Share Earnings.
21.1 --Subsidiaries of the Company (filed as Exhibit 21.1 to
the Registration Statement on Form S-1 and incorporated
herein by reference thereto).
*23.1 --Consent of Coopers & Lybrand L.L.P.
*23.2 --Consent of Coopers & Lybrand L.L.P.
23.3 --Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5.1).
24.1 --Power of Attorney (contained on page II-6 of the Resale
Registration Statement previously filed).
</TABLE>
- --------
* Filed herewith.

<PAGE>

EXHIBIT 11.1

INDIVIDUAL, INC.

COMPUTATION OF WEIGHTED AVERAGE SHARES

USED IN COMPUTING LOSS PER SHARE AMOUNTS

<TABLE>
<CAPTION>
FULLY
PRIMARY DILUTED PRO FORMA SUPPLEMENTAL
TYPE OF SECURITY SHARES SHARES SHARES SHARES
- ---------------- ---------- ---------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
For the year ended December
31, 1993:
Common stock less shares
held in treasury, beginning
of period.................. 1,662,725 1,662,725
Cheap stock outstanding
during the period.......... 315,864 315,864
---------- ----------
Weighted average shares of
common stock outstanding. 1,978,589 1,978,589
========== ==========
Net loss per common share. $ (2.28) $ (2.28)
========== ==========
For the year ended December
31, 1994:
Common stock less shares
held in treasury, beginning
of period.................. 1,662,725 1,662,725
Cheap stock outstanding
during the period.......... 315,864 315,864
Weighted average common
stock issued during the
period..................... 2,712 2,712
---------- ----------
Weighted average shares of
common stock outstanding. 1,981,301 1,981,301
========== ==========
Net loss per common share. $ (2.90) $ (2.90)
========== ==========
For the three months ended
June 30, 1995:
Common stock less shares
held in treasury, beginning
of period.................. 1,667,127 1,667,127 1,667,127
Cheap stock outstanding
during the period.......... 346,210 346,210 346,210
Weighted average common
stock issued during the
period..................... 713 713 713
Conversion of preferred
stock and redeemable
preferred stock into common
stock...................... -- -- 7,625,210
---------- ---------- ---------
Weighted average shares of
common stock outstanding. 2,014,050 2,014,050 9,639,260
========== ========== =========
Net loss per common share. $ (0.90) $ (0.90) $ (0.15)
========== ========== =========
For the six months ended June
30, 1995:
Common stock less shares
held in treasury, beginning
of period.................. 1,666,002 1,666,002 1,666,002
Cheap stock outstanding
during the period.......... 346,210 346,210 346,210
Weighted average common
stock issued during the
period..................... 1,345 1,345 1,345
Conversion of preferred
stock and redeemable
preferred stock into common
stock...................... -- -- 7,625,210
---------- ---------- ---------
Weighted average shares of
common stock outstanding. 2,013,557 2,013,557 9,638,767
========== ========== =========
Net loss per common share. $ (1.88) $ (1.88) $ (0.32)
========== ========== =========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
FULLY
PRIMARY DILUTED PRO FORMA SUPPLEMENTAL
TYPE OF SECURITY SHARES SHARES SHARES SHARES
- ---------------- ---------- ---------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
For the year ended December 31,
1995:
Common stock less shares held
in treasury, beginning of
period...................... 1,666,002 1,666,002 1,666,002
Cheap stock outstanding
during the period........... 315,821 315,821 315,821
Weighted average common stock
issued during the period.... 12,341 12,341 12,341
Conversion of preferred stock
and redeemable preferred
stock into common stock..... -- -- 7,625,210
---------- ---------- ---------
Weighted average shares of
common stock outstanding.. 1,994,164 1,994,164 9,619,374
========== ========== =========
Net loss per common share.. $ (4.05) $ (4.05) $ (0.67)
========== ========== =========
For the three months ended June
30, 1996:
Common stock less shares held
in treasury, beginning of
period...................... 11,958,410 11,958,410 11,958,410
Weighted average common stock
issued during the period.... 466,468 466,468 466,468
Weighted average treasury
stock repurchased during the
period...................... (404) (404) (404)
---------- ---------- ----------
Weighted average shares of
common stock outstanding.. 12,424,474 12,424,474 12,424,474
========== ========== ==========
Net loss per common share.. $ (3.09) $ (3.09) $ (3.09)
========== ========== ==========
For the six months ended June
30, 1996:
Common stock less shares held
in treasury, beginning of
period...................... 1,713,096 1,713,096 1,713,096
Weighted Average Common stock
issued during the period.... 1,796,992 1,796,992 1,796,992
Weighted average treasury
stock repurchased during the
period...................... (801) (801) (801)
Weighted average conversion
of preferred stock and
redeemable preferred stock
into common stock........... 4,273,470 4,273,470 7,625,210
========== ========== ==========
Weighted average shares of
common stock outstanding... 7,782,757 7,782,757 11,134,497
========== ========== ==========
Net loss per common share... $ (5.31) $ (5.31) $ (3.67)
========== ========== ==========
</TABLE>
- --------

(1) All common share amounts have been restated to reflect a 3-for-2 stock
split.

(2) Upon completion of the initial public offering on March 20, 1996, the
redeemable preferred stock and preferred stock converted to 7,625,210
shares of common stock. Accordingly, the pro forma and supplemental
earnings per share calculations have assumed the conversion of all shares
of Preferred Stock, effected for the 3-for-2 split, at the beginning of
each period presented.

(3) In accordance with the Securities and Exchange Commission, issuances of
common stock and common stock equivalents, within one year prior to the
initial filing of the registration statement, at share prices below the
assumed initial public offering price of $13.00 per share (cheap stock),
are considered to have been made in anticipation of the contemplated
public offering. Accordingly, these stock issuances are treated as if
issued and outstanding, using the treasury stock method, since the
inception of the Company. For the years ended 1993, 1994 and 1995, cheap
stock has been calculated using the treasury stock method, using the
assumed public offering price of $13.00. For the three months and six
months ended June 30, 1995, cheap stock has been calculated using the
treasury stock method, using the actual initial public offering price of
$14.00.

(4) Due to losses incurred during the periods presented, the inclusion of
common stock equivalents (other than common stock equivalents considered
to be cheap stock) would be anti-dilutive and therefore are not included
in the loss per share calculation.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in the registration statement of Individual, Inc.
on Form S-1 of our report dated January 30, 1996, except as to the information
in Note N, for which the date is March 4, 1996, on our audits of the
consolidated financial statements of Individual, Inc. as of December 31, 1995,
and 1994, and for each of the three years ended December 31, 1995. We also
consent to the reference to our firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Boston, Massachusetts

September 4, 1996

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in the registration statement on Form S-1 of our
report dated May 29, 1996, except as to the information in Note J, for which
the date is June 28, 1996, on our audit of the financial statements of
FreeLoader, Inc. as of December 31, 1995, and for the period from November 13,
1995 (date of inception) to December 31, 1995. We also consent to the
reference to our firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Boston, Massachusetts

September 4, 1996