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As filed with the Securities and Exchange Commission on April 26, 1999.
Registration No. 333- _____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CNET, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3696170
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 CHESTNUT STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 395-7800
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
---------------
Halsey M. Minor
Chairman of the Board, President and Chief Executive Officer
150 Chestnut Street
San Francisco, California 94111
(415) 395-7800
(Name, address, and telephone number,
including area code, of agent for service)
---------------
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, 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 of 1933, 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 of 1933, 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: [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.0001 par value 258,446 $96.50 (2) $24,940,039 (2) $6,933.33
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457(c) of the Securities Act of 1933, as
amended, based upon the average of the high and low prices per share of
the common stock of CNET, Inc. on April 20, 1999, as reported by the
Nasdaq National Market.
-------------------------------------------------
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 THAT 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.
<PAGE> 2
CNET, INC.
258,446 SHARES
COMMON STOCK
------------------------
Certain of our stockholders are offering 258,446 shares of our common
stock. We will not receive any of the proceeds from the stockholders' sale of
the shares offered in this prospectus. These shares were issued by us to the
selling stockholders in connection with our acquisition of KillerApp
Corporation, on March 22, 1999.
Our common stock is quoted on the Nasdaq National Market under the
symbol "CNET." The last reported sale price of our common stock on April 23,
1999 was $137.93 per share.
------------------------
See "Risk Factors" beginning on page 4 to read about certain factors
you should consider before buying shares of our common stock.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
------------------------
Prospectus dated April 23, 1999.
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We are a Delaware corporation. Our principal executive offices are located at
150 Chestnut Street, San Francisco, California 94111, and our telephone number
is (415) 395-7800. In this prospectus, the "Company," "CNET," "we," "us" and
"our" refer to CNET, Inc. and its subsidiaries, unless the context otherwise
requires.
TABLE OF CONTENTS
<TABLE>
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Summary..................................................................... 1
Risk Factors................................................................ 5
Incorporation of Certain Documents by Reference.............................14
Where You Can Get More Information..........................................14
Selling Stockholders........................................................15
Plan of Distribution........................................................16
Use of Proceeds.............................................................16
Legal Matters...............................................................16
Experts.....................................................................16
</TABLE>
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SUMMARY
This summary highlights some important information from this
prospectus, but does not contain all material information about us or the
offering. You should read the more detailed information and financial
statements and notes appearing in, or incorporated by reference in, this
prospectus. You should carefully consider, among other things, the information
set forth in "Risk Factors."
THE COMPANY
We are a leading media company. We provide consumers with information
both online and on television regarding:
o computers
o the Internet
o digital technologies
Based on the volume of traffic over our branded online network, we believe that
we have established a leadership position in our market. We believe that our
network is the most frequently used source of technology information online,
with an average of 9.5 million pages viewed daily during the first quarter of
1999. According to Media Metrix, we reached 13.3% of the online audience, or
approximately 8.2 million unique users, during March 1999. In addition, we
deliver over 3.8 million newsletter dispatches per week to subscribers of our
newsletter services. We derive revenues from a combination of:
o banner and sponsorship advertising on our online network
o advertising and sales lead-based compensation from our recently
introduced online shopping services
o advertising sales and licensing fees from our television
programming
CNET ONLINE
Our online division produces a network of information and services
offered under our CNET brand through CNET.com, our gateway for consumers
interested in information technology and technology products and services.
Among the primary channels that users can access through CNET.com are:
o CNET Computers.com, a comprehensive source for computer hardware
information combining broad product listings, descriptions and
reviews
o CNET Shopper.com, an extensive resource for determining where to
buy computer products online with real-time pricing and links to
manufacturers, retailers and resellers
o CNET News.com, a technology information source offering news and
analysis about the Internet and the computer industry
o CNET Builder.com, an information source providing product
reviews and industry news for the Web-builder community
o CNET Gamecenter.com, an extensive gaming resource offering
reviews and download information and links for popular computer
games
o CNET Download.com, a comprehensive software download service
CNET TELEVISION
Our television division, intended to strengthen our brand and
complement our online division, includes the Digital Domain, a two-hour
programming block broadcast on USA Networks and The Sci-Fi Channel. Digital
Domain is composed of:
o CNET Central (technology news)
o The Web (Internet and online services)
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o Cool Tech (consumer-oriented technology products)
o The New Edge (future technologies)
We also produce TV.com (technology products and news) and Tech Reports
(90-second technology inserts for local news programs). Our television
programming is broadcast to more than 75 million households and is syndicated
nationally and in 40 international markets.
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SHOPPING SERVICES
Our shopping services help consumers decide what products to buy and
where to buy them. Our shopping services are a very efficient marketing channel
for sellers of technology products who are trying to reach a targeted audience
of potential buyers. These services, initiated in September 1998 through CNET
Computers.com and CNET Shopper.com, are among the industry's leading
information resources for buyers of technology products. We assist the consumer
with the initial phase of a product buying decision by providing high-quality
editorial content, including reviews and recommendations. This information is
supplemented by real-time pricing information from competing vendors covering
more than 120,000 products. Our shopping services also provide one-click access
to these vendors. This enables the user to order the desired product from the
supplier of their choice. We believe that our online database of products and
prices is the largest publicly-accessible computer product database in the
world. In the month of March 1999, our shopping services generated an average
of 104,000 leads per day, compared to an average of 90,000 leads in the month
of December 1998. Our 1999 merchant program has 83 participants compared to 70
in the fourth quarter of 1998.
In assisting sellers of computer products reaching buyers online, we
address a significant market. According to Jupiter Communications, technology
products represent the largest e-commerce category on the Web. Purchases of PC
hardware and software are expected to be 45% of the estimated $8.2 billion
consumers will spend online in 1999. Forrester Research estimates that 46%, or
approximately $50 billion, of the estimated $108 billion projected to be spent
by businesses online in 1999 will be spent on computers and electronics.
We continue to explore new commerce-related opportunities in which our
content, traffic and technology will allow us to provide value to buyers and
sellers of technology products. In addition, we may increase significantly
marketing efforts designed to broaden audience reach and to strengthen the CNET
brand as the leading online source for information and services on computing,
technology and information systems.
OUR OTHER VENTURES
We are also an owner of Snap.com, the free Internet directory, search,
and navigation portal service controlled by NBC Multimedia, Inc. We effectively
own approximately 40% of Snap! L.L.C. We also own approximately 9% (2.3 million
shares) of Vignette Corporation (Nasdaq:VIGN), a manufacturer of Web publishing
software. In March 1999, BuyDirect.com, Inc., a Web retailer of downloadable
software was acquired by Beyond.com (Nasdaq:BYND). We formally held a 16% stake
in BuyDirect.com. We now hold approximately 750,000 shares of common stock of
Beyond.com.
OUR RECENT DEVELOPMENTS
o ACQUISITION OF KILLERAPP. On March 22, 1999, we acquired
KillerApp Corporation, in a stock-for-stock exchange valued at
approximately $46.6 million. KillerApp owns and operates KillerApp
(www.KillerApp.com), an online network of comparison shopping
services for computer and consumer electronics products. With the
acquisition, we intend to expand our Shopper.com service and
solidify our position as a leading resource for computer products
and prices and accelerate our entry into the consumer electronics
category.
OUR OPERATING RESULTS
o On April 21, 1999, we announced quarterly results for the period
ended March 31, 1999. Our revenues for the quarter totaled $19.6
million, a 101% increase over revenues of $9.8 million for the
quarter ended March 31, 1998. Proforma net income for the quarter
was $3.4 million, or $0.09 per share diluted, (excluding goodwill
amortization related to the acquisition of Winfiles.com and gains
on the sale of equity investments) compared to a net loss of $5.7
million, or $0.19 per share diluted, for the first quarter of
1998. Including goodwill amortization and gains from the sale of
equity investments, net income equaled $23.0 million, or $0.61 per
share diluted for the first quarter of 1999.
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o Revenues for our online operations increased 124% to $18.0
million for the quarter, versus $8.0 million in the first quarter
of 1998. Quarter-to-quarter traffic on our online operations
increased 16% to 9.5 million average daily page views in the first
quarter, from 8.2 million average daily page views in the fourth
quarter of 1998. Our television operations remained profitable on
revenues of $1.7 million in the first quarter of 1999. Revenues
for television operations were $1.8 million in the first quarter
of 1998.
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RISK FACTORS
Before investing our common stock offered by this prospectus, you
should carefully consider the following risk factors and warnings, in addition
to all of the other information we have provided to you in this prospectus.
Also, you should be aware that the risks described below are not the only ones
facing us. Additional risks that we do not yet know of or that we currently
think are immaterial may also impair our business operations. If any of those
risks or any of the risks described below actually occur, our business,
financial condition, prospects or results of operations could be materially and
adversely affected. In that case, the trading price of the common stock offered
in this prospectus could decline, and you may lose all or part of your
investment.
This prospectus contains or incorporates by reference statements about
our future that are not statements of historical fact. In some cases, you can
identify these statements by terminology such as "may," "will," "should,"
expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue" or the negative of such terms and other comparable
terminology. These statements are only predictions. Actual events or results
may differ materially. In evaluating these statements, you should specifically
consider various factors, including the risks outlined below. These factors may
cause our actual results to differ materially and adversely from any
forward-looking statement.
We Have a Limited Operating History and an Accumulated Deficit, Which
Makes Your Evaluation of Us Difficult and Affects Many Aspects of Our Business.
We have a limited operating history upon which you can evaluate us. Our
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in developing industries, particularly
companies in the relatively new and rapidly evolving market for Internet
products, content and services. Such risks for us include, but are not limited
to:
o an evolving and unpredictable business model
o uncertain acceptance of new services including CNET Shopper.com
o competition
o management of growth.
We cannot assure you that we will succeed in addressing such risks. If we fail
to do so, our revenues and operating results could be materially reduced.
Additionally, our limited operating history and the emerging nature of
the markets in which we compete makes the prediction of future operating
results difficult or impossible. We cannot assure you that our revenues will
increase or even continue at their current level or that we will maintain
profitability or generate cash from operations in future periods. In addition,
interest that we pay on our indebtedness, including the notes, and costs of our
acquisitions, including amortization of goodwill and other purchased
intangibles and ongoing operating expenses, will or may further affect our
operating results. We have incurred significant losses since we were formed. We
may continue to incur losses in the future. For example, if we were to increase
significantly our marketing expenses, which we are considering, it is possible
that we would incur losses as a result. In view of the rapidly evolving nature
of our business and our limited operating history, we believe that
period-to-period comparisons of our operating results are not necessarily
meaningful and should not be relied upon as indicating what our future
performance will be.
If currently available cash and cash generated by operations is
insufficient to satisfy our liquidity requirements, we may be required to sell
additional equity or debt securities. The sale of additional equity or debt
securities that are convertible into equity would result in additional dilution
to our stockholders. There can be no assurance that financing will be available
in amounts or on terms that we find acceptable.
We May Experience Fluctuations in Our Quarterly Operating Results,
Which Could Adversely Affect Our Financial Results. Our quarterly operating
results may fluctuate significantly in the future as a result of a variety of
factors, many of which are outside our control. Factors that may adversely
affect our quarterly operating results attributable to our Internet operations
include the other risk factors described in this prospectus. We may be unable
to adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any
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significant shortfall in revenues in relation to our planned expenditures could
materially reduce our operating results and adversely affect our financial
condition.
Quarterly operating results attributable to our television operations
are generally dependent on the costs we incur in producing our television
programming. If the costs of producing television programs exceed licensing and
distribution revenues, we could incur losses with respect to our television
operations. As a result of our strategy to cross market our television and
Internet operations, a decrease in the number of viewers of our television
programs may lead to a reduction in the usage of our Internet channels which
would materially reduce our revenues and adversely affect our financial
condition.
Due to all of the foregoing factors, it is likely that our operating
results may fall below our expectations or the expectations of securities
analysts or investors in some future quarter. If this happens, the trading
price of our common stock and the trading price of our notes would likely be
materially adversely affected.
Our Internet Content and Services May Not be Accepted, Which Could
Adversely Affect Our Profitability. Our future success depends upon our ability
to deliver original and compelling Internet content and services that attract
and retain users. We cannot assure you that our content and services will be
attractive to a sufficient number of Internet users to generate revenues
sufficient for us to sustain operations. If we are unable to develop Internet
content and services that allow us to attract, retain and expand a loyal user
base that is attractive to advertisers and sellers of technology products, we
will be unable to generate revenue.
Our Television Programming May Not Be Successful, Which Could
Adversely Affect Our Profitability. We cannot assure you that television
broadcasters, cable networks or their viewers will accept our television
programming. The successful development and production of television
programming is subject to numerous uncertainties, including the ability to:
o anticipate and successfully respond to rapidly changing consumer
tastes and preferences
o obtain favorable distribution rights o fund new program
development
o attract and retain qualified producers, writers, technical
personnel and television hosts.
We may be unable to increase or sustain our revenues if we fail to develop
television programming that allows us to attract, retain and expand a loyal
television audience, or if we fail to retain or develop distribution channels
for our television programming.
Our Failure to Compete Successfully Could Adversely Affect Our
Prospects and Financial Results. The market for Internet content and services
is new, intensely competitive and rapidly evolving. It is not difficult to
enter this market and current and new competitors can launch new Internet sites
at relatively low cost. There can be no assurance that we will compete
successfully with current or future competitors.
If We Fail to Effectively Manage Our Growth, Our Business Could be
Adversely Affected. We have rapidly and significantly expanded our operations
and anticipate that further expansion of our operations may be required in
order to address potential market opportunities. This rapid growth has placed,
and we expect it to continue to place, a significant strain on our management,
operational and financial resources. We cannot assure you that:
o our current personnel, systems, procedures and controls will be
adequate to support our future operations
o management will be able to identify, hire, train, motivate or
manage required personnel
o management will be able to successfully identify and exploit
existing and potential market opportunities.
If We Experience Difficulties With Our System Development and
Operations, Our Business Could be Adversely Affected. Our Internet revenues
consist primarily of revenues derived from the sale of advertisements and other
fees from sellers of technology products on our Internet channels, in
particular from arrangements with our advertising customers that provide for a
guaranteed number of impressions. If our Internet channels are unavailable as a
result of a system interruption we may be unable to deliver the number of
impressions guaranteed
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by these agreements. We must continue to develop and maintain our operating
systems to respond to increasing usage and changes in technology. We can offer
no assurance that we will be able to accurately project the rate or timing of
increases, if any, in the use of our Internet channels or will be able to, in a
timely manner, effectively upgrade and expand our systems. If our operating
systems do not operate efficiently and on a consistent basis, our revenues and
financial condition will be materially adversely affected.
Our Financial Results Will Be Adversely Affected If We Fail to Sustain
Our Advertising Revenues. Historically, we have derived our revenues primarily
from the sale of advertising and other fees from sellers of technology products
on our Internet channels and from advertising and license fees from producing
our television programs. Most of our advertising contracts can be terminated by
the customer at any time on very short notice. If we lose advertising
customers, fail to attract new customers or are forced to reduce advertising
rates in order to retain or attract customers, our revenues and financial
condition will be materially adversely affected.
If the Internet Is Not Accepted as an Advertising Medium Our Business
Could Be Adversely Affected. Our Internet advertising customers have only
limited experience with the Internet as an advertising medium and neither these
customers nor their advertising agencies have devoted a significant portion of
their advertising budgets to Internet-based advertising in the past. Some of
our potential customers have little or no experience with the Internet as an
advertising medium and have not devoted significant portions of their
advertising budgets to Internet-based advertising in the past. In order for us
to generate advertising revenues, advertisers and advertising agencies must
direct a significant portion of their budgets to the Internet and,
specifically, to our Internet sites. Acceptance of the Internet among
advertisers and advertising agencies also depends to a large extent on the
growth of use of the Internet by consumers, which is very uncertain, and on the
acceptance of new methods of conducting business and exchanging information. If
Internet-based advertising is not widely accepted by advertisers and
advertising agencies, our revenues and financial condition will be materially
adversely affected. In addition, users can purchase software that is designed
to block banner advertisements from appearing on their computer screens as the
user navigates on the Internet. This software is intended to increase the
navigation speed for the user. Our revenues could be materially reduced if this
software or other ad-blocking technology becomes widely-used.
If Our Brand Is Not Accepted or Maintained, Our Financial Results
Could Be Adversely Affected. Promotion of the CNET brand will depend largely on
our success in providing high quality Internet and television programming. If
consumers do not perceive our existing Internet and television content to be of
high quality, or if we introduce new Internet channels or television programs
or enter into new business ventures that are not favorably received by
consumers, we will not be successful in promoting and maintaining our brand. If
we are unable to provide high quality content and services or otherwise fail to
promote and maintain our brand, or if we incur excessive expenses in an attempt
to or promote and maintain our brand, our revenues and financial condition will
be materially adversely affected.
Loss of Key Personnel Could Adversely Affect Our Business. Our success
depends to a large extent on the continued services of Halsey M. Minor, Shelby
W. Bonnie and the other members of our senior management team. Our success is
also dependent on our ability to attract, retain and motivate other officers
and key employees. We do not have "key person" life insurance policies on any
of our officers or other employees. The production of content and services for
the Internet and television requires highly skilled writers and editors and
personnel with sophisticated technical expertise. We have encountered
difficulties in attracting qualified software developers for our Internet
channels and related technologies. If we do not attract, retain and motivate
the necessary technical, managerial, editorial and sales personnel, there could
be a material adverse effect on our business and operating results.
We Have Risks Associated With Television Distribution and We Are
Dependent on USA Networks, Which Could Adversely Affect Our Financial
Condition. The USA Network and the Sci-Fi Channel, both of which are owned by
USA Networks, currently carries substantially all of our television programming
pursuant to an agreement that expires on June 30, 1999. We cannot assure you
that we will be able to obtain distribution for our television programming
after June 30, 1999. In such event, our brand, revenues and financial condition
may be materially and adversely affected.
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Risks Associated With Technological Change Could Adversely Affect Many
Aspects of Our Business. Characteristics of the market for Internet products
and services include:
o rapid technological developments
o frequent new product introductions
o evolving industry standards.
The emerging character of these products and services and their rapid
evolution requires that we continually improve the performance, features and
reliability of our Internet content, particularly in response to competitive
offerings. We cannot assure you that we will be successful in responding
quickly, cost effectively and sufficiently to these developments. In addition,
the widespread adoption of new Internet technologies or standards could require
us to make substantial expenditures to modify or adapt our Internet channels
and services and could fundamentally affect the character, viability and
frequency of Internet-based advertising. Any of these events could have a
material adverse effect on our financial condition and operating results.
Our Failure to Develop and Maintain Relationships With Third Parties
Could Adversely Affect Our Financial Condition. We rely on the cooperation of
owners and operators of other Internet sites in connection with the operation
of our Internet channels and services. We cannot assure you that this
cooperation will be available on acceptable commercial terms or at all. Our
ability to develop original and compelling Internet content and service is also
dependent on maintaining relationships with and using products provided by
third party vendors of Internet development tools and technologies, such as:
o Macromedia's Shockwave
o Microsoft's ActiveX
o Progressive Networks' RealAudio
o Sun Microsystems' Java
Our ability to advertise on other Internet sites and the willingness
of the owners of such sites to direct users to our Internet channels through
hypertext links are also critical to the success of our Internet operations. If
we are unable to develop and maintain satisfactory relationships with such
third parties on acceptable commercial terms, or if our competitors are better
able to capitalize on these relationships, our financial condition and
operating results will be materially adversely affected.
We May Have Difficulties With Our Acquisitions and Investments, Which
Could Adversely Affect Our Growth and Financial Condition. From time to time,
we consider new business opportunities and ventures, including acquisitions, in
a broad range of areas. Any decision by us to pursue a significant business
expansion or new business opportunity could:
o require a substantial investment of capital, which could have a
material adverse effect on our financial condition and our ability
to implement our existing business strategy
o require the issuance of additional equity interests, which would
be dilutive to our current stockholders
o result in operating losses o place additional, substantial
burdens on our management personnel and our financial and
operational systems
We can offer no assurance that we will have sufficient capital to
pursue any investment or acquisition. We can offer no assurance that we will be
able to develop any new Internet channel or service or other new business
venture in a cost effective or timely manner or that it would be profitable.
We May Have Difficulties With Our Business Combinations and Strategic
Alliances, Which Could Adversely Affect Our Growth and Financial Condition. We
may choose to expand our operations or market presence by entering into:
o agreements
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o business combinations
o investments
o joint ventures
o other strategic alliances with third parties.
Examples of this include our agreement with America Online and our
joint venture with an affiliate of NBC to operate the snap. Internet portal
service. Any transaction will be accompanied by risks, which include, among
others:
o the difficulty of assimilating the operations, technology and
personnel of the combined companies
o the potential disruption of our ongoing business
o the possible inability to retain key technical and managerial
personnel o additional expenses associated with amortization of
goodwill and other purchased intangible assets
o additional operating losses and expenses associated with the
activities and expansion of acquired businesses
o the possible impairment of relationships with existing employees
and advertising customers.
We can offer no assurance that we will be successful in overcoming
these risks or any other problems encountered in connection with any
transaction or that any transaction will be profitable.
We Depend on Intellectual Property Rights, and Others May Infringe
Upon Those Rights. We rely on trade secret and copyright laws to protect our
proprietary technologies. We cannot assure you that:
o these laws will provide sufficient protection
o that others will not develop technologies that are similar or
superior to ours
o that third parties will not copy or otherwise obtain and use our
technologies without authorization.
Any of these events could have a material adverse effect on our
business.
We Have Risks Associated with Domain Names. We currently hold various
Web domain names relating to our brand and Internet channels. Governmental
agencies and their designees generally regulate the acquisition and maintenance
of domain names. For example, in the United States, the National Science
Foundation has appointed Network Solutions, Inc. as the current exclusive
registrar for the ".com," ".net" and ".org" generic top-level domains. The
regulation of domain names in the United States and in foreign countries is
subject to change. We cannot assure you that we will be able to acquire or
maintain relevant domain names in all countries in which we conduct business.
Furthermore, the relationship between regulations governing domain names and
laws protecting trademarks and similar proprietary rights is unclear. We,
therefore, may be unable to prevent third parties from acquiring domain names
that are similar to, or infringe upon or otherwise decrease the value of our
trademarks and other proprietary rights. Any inability to acquire or maintain
domain names could have a material adverse effect on our business.
Changes in Regulations Could Adversely Affect Many Aspects of Our
Business. Although there are currently few laws and regulations directly
applicable to the Internet, it is possible that new laws and regulations will
be adopted covering issues such as:
o privacy
o copyrights
o obscene or indecent communications
o pricing, characteristics and quality of Internet products and
services.
The adoption of restrictive laws or regulations could:
o decrease the growth of the Internet
o reduce our revenues
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o expose us to significant liabilities.
We Depend on the Continued Growth in Use of the Internet. The rapid
growth in the use of and interest in the Internet is a recent phenomenon. We
can offer no assurance that acceptance and use of the Internet will continue to
develop or that a sufficient base of users will develop to support our
business.
We can offer no assurance that the Internet infrastructure will be
able to support the demands placed upon it by:
o increases in the number of users
o an increase in frequency of use
o an increase in the bandwidth requirements of users.
In addition, the Internet could lose its viability as a commercial
medium due to delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet activity, or due to
increased government regulation. If use of the Internet does not continue to
grow or grows more slowly than expected, or if the Internet infrastructure does
not effectively support growth that may occur, our revenues and financial
condition would be materially adversely affected.
We Have Capacity Constraints and May Be Subject to System Disruptions.
Our ability to attract Internet users and maintain relationships with
advertising customers depends on the satisfactory performance, reliability and
availability of our Internet channels and our network infrastructure. Our
Internet advertising revenues directly relate to the number of advertisements
delivered by us to users. System interruptions that result in the
unavailability of our Internet channels or slower response times for users
would reduce the number of advertisements delivered and reduce the
attractiveness of our Internet channels to users and advertisers. We have
experienced periodic system interruptions in the past and believe that such
interruptions will continue to occur from time to time in the future. Any
increase in system interruptions or slower response times resulting from these
factors could have a material adverse effect on our revenues and financial
condition.
Our Internet and television operations are vulnerable to interruption
by fire, earthquake, power loss, telecommunications failure and other events
beyond our control. All of our servers and television production equipment is
currently located in San Francisco, California, an area that is susceptible to
earthquakes. Since launching our first Internet site in June 1995, we have
experienced system downtime for limited periods due to power loss and
telecommunications failures, and there can be no assurance that interruptions
in service will not materially adversely affect our operations in the future.
For example, during 1998, we experienced two power interruptions which resulted
in the unavailability of our Internet channels and services for portions of two
days. We do not carry sufficient business interruption insurance and do not
carry earthquake insurance to compensate us for losses that may occur. Any
losses or damages that we incur could have a material adverse effect on our
financial condition.
Our Business Involves Risks of Liability Claims for Our Internet and
Television Content, Which Could Result in Significant Costs. As a publisher and
a distributor of content over the Internet and television, we face potential
liability for:
o defamation
o negligence
o copyright
o patent or trademark infringement
o other claims based on the nature and content of the materials
that we publish or distribute.
Claims such as these have been brought, and sometimes successfully
pressed, against online services. In addition, we could be exposed to liability
in connection with material indexed or offered on our sites. Although we carry
general liability insurance, our insurance may not cover potential claims of
this type or may not be adequate to
10
<PAGE> 14
reimburse us for all liability that may be imposed. Any imposition of liability
that is not covered by insurance or is in excess of insurance coverage could
have a material adverse effect on our financial condition.
We Have Security Risks. A party who is able to circumvent our security
measures could misappropriate proprietary information or cause interruptions in
our Internet operations. We may be required to expend significant capital and
resources to protect against the threat of security breaches or to alleviate
problems caused by breaches in security. For example, so-called "spiders" have
and can be used in efforts to copy our databases, including our database of
technology products and prices.
Concerns over the security of Internet transactions and the privacy of
users may also inhibit the growth of the Internet, particularly as a means of
conducting commercial transactions. To the extent that activities of us or
third party contractors involve the storage and transmission of proprietary
information, such as computer software or credit card numbers, security
breaches could expose us to a risk of loss or litigation and possible
liability. We can offer no assurance that contractual provisions attempting to
limit our liability in these areas will be successful or enforceable, or that
other parties will accept such contractual provisions as part of our
agreements.
We Depend on Licensed Technology. We rely on certain technology
licensed from third parties. We cannot assure you that these third party
technology licenses will be available or will continue to be available to us on
acceptable commercial terms or at all.
Our Substantial Debt Exposes Us to Risks That Could Adversely Affect
Our Financial Condition. We have substantial indebtedness. The level of our
indebtedness, among other things, could:
o make it difficult for us to make payments on our convertible
subordinated notes
o make it difficult for us to obtain financing in the future
o limit our flexibility in planning for, or reacting to changes
in, our business
o make us more vulnerable in the event of a downturn in our
business.
We can offer no assurance that we will be able to meet our debt
service obligations, including our obligations under the convertible
subordinated notes issued pursuant to our 144A offering during first quarter of
this year.
We May Be Unable To Pay Our Debt Service and Other Obligations. Our
operating income and cash flow generated during 1998 would have been
insufficient to pay the amount of interest payable annually on our
indebtedness. We can offer no assurance that we will be able to pay interest
and other amounts due on our indebtedness. If we are unable to generate
sufficient cash flow or otherwise obtain funds necessary to make required
payments, or if we fail to comply with the various requirements in our
indebtedness, we would be in default under the terms of our indebtedness. Any
default would permit the holders of our indebtedness to accelerate the maturity
of the indebtedness and could cause defaults under our other indebtedness. Any
default under our indebtedness could have a material adverse effect on our
financial condition.
Year 2000 Problems For Us, Our Suppliers or Our Customers Could
Increase Our Liabilities or Expenses and Impact Our Profitability . We are in
the assessment phase of our year 2000 program. We can offer no assurance that
we will not experience serious unanticipated negative consequences and/or
additional material costs caused by undetected errors or defects in the
technology used in our internal systems, or by failures of our vendors/partners
to address their year 2000 issues in a timely and effective manner.
The Price of Our Common Stock Is Subject to Wide Fluctuation. The
trading price of our common stock is subject to wide fluctuations. The trading
price of our common stock may fluctuate in response to a number of events and
factors, many of which are beyond our control, such as:
o quarterly variations in operating results
o announcements of innovations
o new products, strategic developments or business combinations by
us or our competitors
11
<PAGE> 15
o changes in our expected operating expense levels or losses
o changes in financial estimates and recommendations of securities
analysts
o the operating and securities price performance of other
companies that investors may deem comparable to us
o news reports relating to trends in the Internet
o other events or factors
In addition, the stock market in general, and the market prices for
Internet-related companies in particular, have experienced extreme volatility
that often has been unrelated to the operating performance of these companies.
These broad market and industry fluctuations may adversely affect the trading
price of our common stock, regardless of our operating performance.
We Have a Substantial Number of Shares of Common Stock That May Be
Sold, Which Could Affect the Trading Price of Our Common Stock. We have a
substantial number of shares of common stock subject to stock options and
warrants and notes may be converted into shares of common stock. We cannot
predict the effect, if any, that future sales of shares of common stock or
notes, or the availability of shares of common stock or notes for future
sale, will have on the market price of our common stock. Sales of substantial
amounts of common stock (including shares issued upon the exercise of stock
options or warrants or the conversion of the notes), or the perception that
such sales could occur, may adversely affect prevailing market prices for our
common stock and notes.
Provisions of Our Certificate of Incorporation, Bylaws and Delaware
Law Could Deter Takeover Attempts. Some provisions in our certificate of
incorporation and bylaws could delay, prevent or make more difficult a merger,
tender offer, proxy contest or change of control. Our stockholders might view
any transaction of this type as being in their best interest since the
transaction could result in a higher stock price than the current market price
for our common stock. Among other things, our certificate of incorporation and
bylaws:
o authorize our board of directors to issue preferred stock in
series with the terms of each series to be fixed by our board of
directors
o divide our board of directors into three classes so that only
approximately one-third of the total number of directors is
elected each year
o permit directors to be removed only for cause
o specify advance notice requirements for stockholder proposals
and director nominations
In addition, with certain exceptions, the Delaware General Corporation
Law restricts mergers and other business combinations between us and any
stockholder that acquires 15% or more of our voting stock.
12
<PAGE> 16
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Instead of repeating information in this prospectus that we have
already filed with the SEC, SEC rules permit us to "incorporate by reference"
the information we file with them. These rules mean that we can disclose
important information to you by referring you to those documents that we have
previously filed with the SEC. The information incorporated by reference is
considered to be part of this prospectus, and information that we later file
with the SEC will automatically update and supersede the information in this
prospectus. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d)
of the Securities Exchange Act of 1934 until we sell all of our shares offered
by this prospectus.
o Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
o Our Reports on Form 8-K filed March 1, 1999, March 17, 1999,
April 1, 1999 and April 22, 1999;
o Our Proxy Statement filed April 22, 1999; and
o The description of our common stock contained in our
Registration Statement on Form 8-A filed on June 17, 1996,
including any amendments or reports filed for the purpose of
updating such description.
WHERE YOU CAN GET MORE INFORMATION
We have filed a registration statement with the SEC to register the
common stock that the selling stockholders are offering to you. This prospectus
is part of that registration statement. As allowed by the SEC's rules, we have
not included in this prospectus all of the information that is included in the
registration statement. At your request, we will provide you, without charge,
with a copy of the registration statement or any of the exhibits to the
registration statement. If you want more information, write or call us at:
CNET, Inc.
150 Chestnut Street
San Francisco, California 94111
Telephone: (415) 395-7800
Attention: Chief Financial Officer
Our fiscal year ends December 31. We furnish our stockholders with
annual reports containing audited financial statements and other appropriate
reports. In addition, we file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies
of those documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The SEC maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically, such as us, at http://www.sec.gov.
----------------------------
Information contained on our Internet network will not be deemed to be
part of this prospectus.
13
<PAGE> 17
SELLING STOCKHOLDERS
The table below sets forth information with respect to the beneficial
ownership of our common stock by the selling stockholders immediately prior to
this offering and as adjusted to reflect the sale of shares our common stock
pursuant to the offering. All information with respect to the beneficial
ownership has been furnished by the respective selling stockholders.
Percentages are based on the 35,371,835 shares of Common Stock outstanding on
March 31, 1999.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
------------------------------------------- ---------------------------
Number of Percent of Shares to Number of Percent of
Name of Beneficial Owner Shares Class be Sold Shares Class
- ------------------------ --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Benjamin Chiu 326,150 0.922% 163,075 163,075 0.461%
Ming Chien 90,605 0.256% 45,303 45,302 0.128%
Nick Hornig 36,239 0.102% 18,120 18,119 0.051%
C. S. Ho 20,415 0.057% 10,208 10,207 0.028%
Dragonvision International 17,232 0.048% 8,616 8,616 0.024%
Corp.
Primus Holdings (BVI) Inc. 4,501 0.012% 2,251 2,250 0.006%
Infopro Investment, Inc. 4,501 0.012% 2,251 2,250 0.006%
Heayoon Woo 900 0.002% 450 450 0.001%
Michael Mohr 2,349 0.006% 1,175 1,174 0.003%
Custodian FBO
Jeffrey C. Mohr UTMA
Tae Hea Nahm 225 0.0006% 113 112 0.0003%
Hardepler Family Partnership 261 0.0007% 131 130 0.0003%
Benson Lee 4,501 0.012% 2,251 2,250 0.006%
Robert Su 4,501 0.012% 2,251 2,250 0.006%
Peter Ow 4,501 0.012% 2,251 2,250 0.006%
</TABLE>
14
<PAGE> 18
PLAN OF DISTRIBUTION
The sale of the shares offered in this prospectus may be effected from
time to time directly or by one or more broker-dealers or agents in one or more
transactions on the Nasdaq National Market, in negotiated transactions, or
through a combination of such methods of distribution, at prices related to
prevailing market prices or at negotiated prices.
In the event one or more broker-dealers or agents agree to sell the
shares, they may do so by purchasing the shares as principals or by selling the
shares as agent for the selling stockholders. Any such broker-dealers may
receive compensation in the form of discounts, concessions, or commissions from
the selling stockholders or the purchasers of the shares for which such
broker-dealer may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary compensation).
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for the applicable
period under Regulation M of the Exchange Act prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which provisions may limit the timing of purchases and sales of the shares
by the selling stockholders. All of the foregoing may affect the marketability
of the shares.
In order to comply with certain states' securities laws, if
applicable, our common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, our common stock
may not be sold unless it has been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with.
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under the
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of its date.
USE OF PROCEEDS
We will not receive any proceeds from the offering.
LEGAL MATTERS
The validity of the shares offered in this prospectus will be passed
upon for us by Hughes & Luce, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements of the Company as of December
31, 1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
15
<PAGE> 19
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee $4,988
Accounting fees and expenses 2,500*
Legal fees and expenses 5,000*
Miscellaneous expenses 5,000*
-------
Total: $ 17,488
---------
</TABLE>
- ---------------
* Estimated
All of the above expenses will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws provide that officers and directors who are made a
party to or are threatened to be made a party to or is otherwise involved in
any action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was an officer or a director of the Company or is or was serving at
the request of the Company as a director or an officer of another entity shall
be indemnified and held harmless by the Company to the fullest extent
authorized by the Delaware General Corporation Law ("DGCL") against all
expense, liability, and loss reasonably incurred or suffered by such person in
connection therewith. The right to indemnification includes the right to be
paid by the Company for expenses incurred in defending any such proceeding in
advance of its final disposition. Officers and directors are not entitled to
indemnification if such persons did not meet the applicable standard of conduct
set forth in the DGCL for officers and directors.
DGCL Section 145 provides, among other things, that the Company may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (other than
an action by or in the right of the Company) by reason of the fact that he is
or was a director, officer, agent or employee of the Company or who serves or
served at the Company's request as a director, officer, agent, employee,
partner or trustee of another corporation or of a partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding. The power to
indemnify applies (a) if such person is successful on the merits or otherwise
in defense of any action, suit or proceeding, or (b) if such person acted in
good faith and in a manner he reasonably believed to be in the best interest,
or not opposed to the best interest, of the Company and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The power to indemnify applies to actions brought by or in the
right of the Company as well, but only to the extent of defense expenses
(including attorneys' fees but excluding amounts paid in settlement) actually
and reasonably incurred and not to any satisfaction of a judgment or settlement
of the claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct in the performance of his duties to the Company, unless the court
believes that in light of all the circumstances indemnification should apply.
The indemnification provisions contained in the Company's Certificate
of Incorporation are not exclusive of any other rights to which a person may be
entitled by law, agreement, vote of stockholders or disinterested directors or
otherwise. In addition, the Company maintains insurance on behalf of its
directors and executive officers insuring them against any liability asserted
against them in their capacities as directors or officers or arising out of
such status.
ITEM 16. EXHIBITS.
The Exhibits to this Registration Statement are listed in the Index to
Exhibits on page II-5 of this Registration Statement, which Index is
incorporated herein by reference.
II-1
<PAGE> 20
ITEM 17. UNDERTAKINGS.
(a) 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 Securities 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 the 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 and 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 20 percent 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.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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.
(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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in this registration statement 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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
II-2
<PAGE> 21
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Francisco, State of California, on April
22, 1999.
CNET, INC.
By: /s/ SHELBY W. BONNIE
-----------------------------------
Shelby W. Bonnie,
Executive Vice President, Chief
Operating Officer and Secretary
By: /s/ DOUGLAS N. WOODRUM
-----------------------------------
Douglas N. Woodrum,
Executive Vice President, Chief
Financial Officer and Chief
Accounting Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ HALSEY M. MINOR Chairman of the Board, President April 22, 1999
- -------------------------------- and Chief Executive Officer
Halsey M. Minor
/s/ SHELBY W. BONNIE Director, Executive Vice President, April 22, 1999
Shelby W. Bonnie Chief Operating Officer and Secretary
/s/ DOUGLAS N. WOODRUM Director, Executive Vice President and April 22, 1999
- -------------------------------- Chief Financial Officer
Douglas N. Woodrum
/s/ ERIC ROBISON Director April 22, 1999
- --------------------------------
Eric Robison
/s/ MITCHELL E. KERTZMAN Director April 22, 1999
- --------------------------------
Mitchell E. Kertzman
/s/ JOHN C. COLLIGAN Director April 22, 1999
- --------------------------------
John C. Colligan
</TABLE>
II-4
<PAGE> 23
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Shelby W. Bonnie and Douglas N. Woodrum his or her true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him or her and in his or her name, place, and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and hereby grants to such attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement or amendment thereto has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ HALSEY M. MINOR Chairman of the Board, President April 22, 1999
- -------------------------------- and Chief Executive Officer
Halsey M. Minor
/s/ SHELBY W. BONNIE Director, Executive Vice President, April 22, 1999
- -------------------------------- Chief Operating Officer and Secretary
Shelby W. Bonnie
/s/ DOUGLAS N. WOODRUM Director, Executive Vice President and April 22, 1999
- -------------------------------- Chief Financial Officer
Douglas N. Woodrum
/s/ ERIC ROBISON Director April 22, 1999
- --------------------------------
Eric Robison
/s/ MITCHELL E. KERTZMAN Director April 22, 1999
- --------------------------------
Mitchell Kertzman
/s/ JOHN C. COLLIGAN Director April 22, 1999
- --------------------------------
John C. Colligan
</TABLE>
II-5
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- -------- -----------------------
<S> <C>
5.1 Opinion of Hughes & Luce, L.L.P.
23.1 Consent of Hughes & Luce, L.L.P. (included in Exhibit 5.1)
23.2 Consent of KPMG LLP
24.1 Power of Attorney (included in Part II of this registration
statement)
</TABLE>
II-6
<PAGE> 1
EXHIBITS 5.1 AND 23.1
[Hughes & Luce, L.L.P. Letterhead]
April 26, 1999
CNET, Inc.
150 Chestnut Street
San Francisco, California 94111
Ladies and Gentlemen:
We have acted as counsel to CNET, Inc., a Delaware corporation (the
"Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Securities Act"), of 78,577 shares (the "Shares") of the
Company's common stock, par value $.0001 per share, issued pursuant to that
certain Agreement and Plan of Merger dated as of March 22, 1999, by and among
the Company, KillerApp Corporation and the majority shareholder of KillerApp
Corporation, as described in the Registration Statement of the Company on Form
S-3 (the "Registration Statement") filed with the Securities and Exchange
Commission.
In rendering this opinion, we have examined and relied upon executed
originals, counterparts, or copies of such documents, records, and certificates
(including certificates of public officials and officers of the Company) as we
considered necessary or appropriate for enabling us to express the opinions set
forth herein. In all such examinations, we have assumed the authenticity and
completeness of all documents submitted to us as originals and the conformity
to originals and completeness of all documents submitted to us as photostatic,
conformed, notarized, or certified copies.
Based on the foregoing, we are of the opinion that the Shares have
been duly authorized and are validly issued, fully paid and nonassessable.
This opinion may be filed as an exhibit to the Registration Statement.
We also consent to the reference to this firm as having passed on the validity
of such Shares under the caption "Legal Matters" in the prospectus that
constitutes a part of the Registration Statement. In giving this consent, we do
not admit that we are included in the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
HUGHES & LUCE, L.L.P.
II-7
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the
registration statement.
KPMG LLP
San Francisco, California
April 23, 1999
