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As filed with the Securities and Exchange Commission on May 14, 1999.
Registration No. 333- _____
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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)
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COPIES TO:
Halsey M. Minor R. Clayton Mulford
Chairman of the Board and Hughes & Luce, L.L.P.
Chief Executive Officer 1717 Main Street, Suite 2800
150 Chestnut Street Dallas, Texas 75201
San Francisco, CA 94111 (214) 939-5500
(415) 395-7800
(Name, address, and telephone number,
including area code, of agent for service)
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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: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
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 per
share, of CNET, Inc. 11,737 $113.49 (2) $1,332,032.13(2) $370.31
================================================================================================================
</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 May 7, 1999, as reported by the
Nasdaq National Market.
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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
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING STOCKHOLDERS MAY NOT SELL THESE SHARES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SHARES OR A SOLICITATION OF YOUR OFFER
TO BUY THESE SHARES IN ANY STATE OR OTHER JURISDICTION WHERE THE OFFER OR SALE
IS NOT PERMITTED OR LEGAL PRIOR TO REGISTRATION OR QUALIFICATION IN THAT STATE
OR OTHER JURISDICTION.
------------------------------
CNET, INC.
11,737 SHARES
COMMON STOCK
------------------------------
Certain of our stockholders are offering 11,737 shares of our common
stock. We will not receive any of the proceeds from the stockholders' sale of
the shares offered by this prospectus. These shares were issued by us to the
selling stockholders in connection with our acquisition of Sumo, Inc. on April
30, 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 May 13, 1999
was $120.75 per share.
------------------------------
THIS INVESTMENT INVOLVES RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU
CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
------------------------------
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 date of this prospectus is May ____, 1999.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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Summary................................................................................................. 1
Risk Factors............................................................................................ 4
Incorporation of Documents by Reference.................................................................12
Where You Can Get More Information......................................................................12
Selling Stockholders....................................................................................13
Plan of Distribution....................................................................................14
Use of Proceeds.........................................................................................14
Legal Matters...........................................................................................14
Experts.................................................................................................14
</TABLE>
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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.
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You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in, or incorporated by reference into, this prospectus. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or the date of
any sale of the shares.
----------------------------------------
Information contained on our Internet network will not be deemed to be
part of this prospectus.
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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 this summary together with the more detailed
information and our financial statements and notes appearing elsewhere or
incorporated by reference in this prospectus. You should carefully consider,
among other things, the information set forth in "Risk Factors" beginning on
page 4.
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
We seek to use our editorial, technical, product database and programming
expertise to engage consumers and attract advertisers. Based on the volume of
traffic over our branded online network, we believe that we have established a
leadership position in our market. We earn 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 Search.com, an information source providing smart
searches relating to computers and technological information
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 CNET 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 includes:
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).
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. We began providing sales lead-based advertising services in
September 1998 through CNET Computers.com and CNET Shopper.com. We believe that
these services are among the industry's leading information resources for buyers
of technology products.
Within our shopping services we help the consumer with the beginning
phase of a product buying decision by providing high-quality editorial content,
including reviews and recommendations. We supplement this information by
providing real-time pricing information from competing vendors covering more
than 120,000 products. We also provide one-click access to these vendors, which
enables the consumer 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.
OUR OTHER VENTURES
We own approximately 9% (approximately 2.3 million shares) of Vignette
Corporation (Nasdaq:VIGN), a manufacturer of Web publishing software, and
approximately 3% (approxiamtely 800,000 shares) of Beyond.com (Nasdaq:BYND), an
online reseller of commercial off-the-shelf computer software.
On May 9, 1999 we entered into an agreement to contribute our
effective 40% ownership in Snap.com, a free Internet directory, search and
navigation portal service controlled by NBC Multimedia, Inc., into a new company
that will be called NBC Internet. NBC Internet will result from the merger of
SNAP! LLC, Xoom.com, Inc. and some Internet related properties of the National
Broadcasting Company, Inc., including NBC.com, Videoseeker.com, NBC Interactive
Neighborhood and a 10% interest in CNBC.com. Upon the closing of this
transaction we will own approximately 13% of NBC Internet, which will be a
publicly traded company. We also entered into an agreement with NBC providing
for broadcast of our television programming on CNBC starting in October 1999,
subject to the closing of the NBC Internet transaction.
PROPOSED STOCK SPLIT
On April 21, 1999 we announced a 2-for-1 split of our common stock,
pending approval by stockholders at our May 26, 1999 annual meeting of a
proposal to increase the number of shares of common stock authorized for
issuance, in the form of a stock dividend to be distributed on May 28, 1999 to
stockholders of record on as of May 10, 1999.
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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.
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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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," "continue" or the negative of such terms, or 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.
RISK FACTORS
Before investing in our common stock offered by this prospectus, you
should carefully consider the following risk factors and warnings, in addition
to the other information contained in or incorporated by reference into 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.
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 5% convertible subordinated 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. From our
inception until the third quarter of 1998, we incurred significant losses. As of
December 31, 1998 we had an accumulated deficit of $51.2 million. 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, among others:
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o demand for Internet advertising
o the addition or loss of advertisers, and the advertising
budgeting cycles of individual advertisers
o the level of traffic on our network of Internet channels
o the amount and timing of capital expenditures and other costs,
including marketing costs, relating to the expansion of our
Internet operations
o competition
o our ability to manage effectively our development of new
business segments and markets
o our ability to successfully mange the integration of
operations and technology of acquisitions and other business
combinations
o our ability to upgrade and develop our systems and
infrastructure
o technical difficulties, system downtime or Internet brownouts
o governmental regulation and taxation policies
o general economic conditions and economic conditions specific
to the Internet and Internet media
We may be unable to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall. Accordingly, any 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 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. We cannot assure you that we will compete successfully with
current or future competitors.
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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 by these agreements. During 1998, we experienced two power
interruptions that resulted in the unavailability of our Internet channels and
services for portions of two days. We cannot assure you 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.
OUR FINANCIAL RESULTS WILL BE ADVERSELY AFFECTED IF WE FAIL TO SUSTAIN
OUR ADVERTISING REVENUES. Our revenues through December 31, 1998 were derived
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,
key employees and personnel. 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
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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 THE NETWORKS THAT CARRY OUR PROGRAMMING, WHICH COULD ADVERSELY
AFFECT OUR FINANCIAL CONDITION. Our television programming is currently carried
primarily on the USA Network and the Sci-Fi Channel, both of which are owned by
USA Networks, pursuant to an agreement that expires on June 30, 1999, which has
been extended through September 30, 1999. We cannot assure you that we will be
able to obtain distribution for our television programming after September 30,
1999. We recently entered into an agreement with NBC providing for some of our
television programming to be carried on CNBC starting in October 1999, subject
to the closing of the NBC Internet transaction. We cannot assure you that the
NBC Internet transaction will close, and we therefore cannot assure you that
our television programming will be carried on CNBC starting in October 1999. If
the NBC Internet transaction does not close, and we are unable to find an
alternative carrier for our television programming, our brand, revenues and
financial condition may be materially and adversely affected.
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
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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 cannot assure you 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
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 cannot assure you 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 MAY NOT BE ABLE TO ACQUIRE OR MAINTAIN OUR DOMAIN NAMES, WHICH COULD
ADVERSELY AFFECT MANY ASPECTS OF OUR BUSINESS. We currently hold various Web
domain names relating to our brand and sites. The acquisition and maintenance of
domain names generally is regulated by government agencies and their designees.
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.
8
<PAGE> 12
CHANGES IN REGULATIONS COULD ADVERSELY AFFECT MANY ASPECTS OF OUR
BUSINESS. It is possible that new laws and regulations will be adopted covering
issues relating to the Internet 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
o expose us to significant liabilities
We cannot be certain what effect any future material noncompliance by us with
these laws and regulations or any material changes in these laws and regulations
could have on our business.
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 cannot assure you that the Internet infrastructure will be able to
support the demands placed upon it by:
o increases in number of users
o an increase in frequency of use
o an increase in 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,
WHICH COULD ADVERSELY AFFECT OUR REVENUES. 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. 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.
9
<PAGE> 13
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
These types of claims 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 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.
OUR SECURITY RISKS COULD AFFECT OUR BUSINESS. 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 HAVE RISKS DUE TO OUR DEPENDENCE 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. As a result of the sale of our 5% convertible
subordinated notes in March 1999, we incurred $172.9 million of additional debt.
Along with the notes, we may incur substantial additional debt in the future.
The level of our indebtedness, among other things, could:
o make it difficult for us to make payments on the notes
o make it difficult for us to obtain any necessary financing in
the future for working capital, capital expenditures, debt
service requirements or other purposes
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 cannot assure that we will be able to meet our debt service obligations,
including our obligations under the notes.
WE MAY BE UNABLE TO PAY OUR DEBT SERVICE AND OTHER OBLIGATIONS, WHICH
COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION. Our operating income and cash
flow generated during 1998 would have been insufficient to pay the amount of
interest payable annually on our indebtedness, including our notes. We cannot
assure you that we will be able to pay interest and other amounts due on the
notes or our other 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 of our indebtedness, we would be in
default under the terms thereof, which would permit the holders of our
indebtedness to accelerate the maturity of the indebtedness and could cause
defaults under
10
<PAGE> 14
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. Trading
prices of our common stock may fluctuate in response to a number of events and
factors, 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
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.
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.
11
<PAGE> 15
INCORPORATION OF DOCUMENTS BY REFERENCE
Our fiscal year ends December 31. We furnish our stockholders with
annual reports containing audited financial statements and other appropriate
reports. We also file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission. Instead of
repeating in this prospectus information that we have already filed with the
Securities and Exchange Commission, rules of the Securities and Exchange
Commission 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
Securities and Exchange Commission. These documents are considered to be part of
this prospectus. Any documents that we file with the Securities and Exchange
Commission in the future will also be considered to be part of this prospectus
and 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 Securities and Exchange Commission under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until the selling
securityholders sell all of the notes or the shares of common stock 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 1, 1999,
March 17, 1999, April 1, 1999, April 23, 1999 and May 14,
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 Securities and Exchange
Commission 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 Securities and Exchange Commission'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
You may also obtain a copy of any filing we have made with the
Securities and Exchange Commission directly from the Securities and Exchange
Commission. You may either:
o read and copy reports, statements or other information we have
filed with the Securities and Exchange Commission at the
Securities and Exchange Commission's public reference room at
450 Fifth Street N.W., Washington, D.C.
o obtain copies of documents that we have filed with the
Securities and Exchange Commission on the Securities and
Exchange Commission's internet web site at http://www.sec.gov
You can get more information about the Securities and Exchange
commission's public reference room by calling the Securities and Exchange
Commission at 1-800-SEC-0330.
12
<PAGE> 16
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 35,627,831 shares of Common Stock outstanding on May 10, 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>
Jonathan D. Caputo 119,718 0.336 5,986 113,732 0.319
Jason S. Tarlowe 115,024 0.323 5,752 109,272 0.307
</TABLE>
13
<PAGE> 17
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 Securities and Exchange Act of 1934, as
amended, 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 state 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 or incorporated by
reference into 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.
14
<PAGE> 18
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee $ 371
Accounting fees and expenses 2,500*
Legal fees and expenses 5,000*
Miscellaneous expenses 5,000*
----------
Total: $ 12,871
----------
</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-6 of this Registration Statement, which Index is
incorporated herein by reference.
II-1
<PAGE> 19
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 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-2
<PAGE> 20
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 May 14, 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 and Chief Financial Officer
(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 May 14, 1999
- ----------------------------- and Chief Executive Officer
Halsey M. Minor
/s/ SHELBY W. BONNIE Director, Executive Vice President, May 14, 1999
- ----------------------------- Chief Operating Officer and Secretary
Shelby W. Bonnie
/s/ DOUGLAS N. WOODRUM Director, Executive Vice President and May 14, 1999
- ----------------------------- Chief Financial Officer
Douglas N. Woodrum
- ----------------------------- Director
Eric Robison
/s/ MITCHELL E. KERTZMAN Director May 14, 1999
- -----------------------------
Mitchell E. Kertzman
/s/ JOHN C. COLLIGAN Director May 14, 1999
- -----------------------------
John C. Colligan
</TABLE>
II-3
<PAGE> 21
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 May 14, 1999
- ----------------------------- and Chief Executive Officer
Halsey M. Minor
/s/ SHELBY W. BONNIE Director, Executive Vice President, May 14, 1999
- ----------------------------- Chief Operating Officer and Secretary
Shelby W. Bonnie
/s/ DOUGLAS N. WOODRUM Director, Executive Vice President and May 14, 1999
- ----------------------------- Chief Financial Officer
Douglas N. Woodrum
- ----------------------------- Director
Eric Robison
/s/ MITCHELL E. KERTZMAN Director May 14, 1999
- -----------------------------
Mitchell E. Kertzman
/s/ JOHN C. COLLIGAN Director May 14, 1999
- -----------------------------
John C. Colligan
</TABLE>
II-4
<PAGE> 22
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-5
<PAGE> 1
EXHIBITS 5.1 AND 23.1
[Hughes & Luce, L.L.P. Letterhead]
1717 Main Street, Suite 2800
Dallas, Texas 75201
(214) 939-5500
May 14, 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 11,737 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 April 30, 1999, by and among
the Company, Sumo, Inc. and the shareholders of Sumo, Inc., as described in the
Registration Statement of the Company on Form S-3 (the "Registration Statement")
filed with the Securities and Exchange Commission on or about May 14, 1999.
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.
This opinion speaks as of the date hereof, and we disclaim any duty to
advise you regarding any changes subsequent to the date hereof in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
/s/ HUGHES & LUCE, L.L.P.
<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
May 14, 1999
