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As filed with the Securities and Exchange Commission on July 15, 1999.
Registration No. 333-77065
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
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)
---------------
COPIES TO:
<TABLE>
<S> <C>
Halsey M. Minor R. Clayton Mulford
Chairman of the Board and Chief Executive Officer Hughes & Luce, L.L.P.
150 Chestnut Street 1717 Main Street, Suite 2800
San Francisco, California 94111 Dallas, Texas 75201
(415) 395-7800 (214) 939-5500
</TABLE>
(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.
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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: [ ]
--------------
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
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SHARES OR OUR SOLICITATION OF YOUR OFFER TO BUY
THESE SHARES, NOR WILL WE SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM, IN ANY
STATE OR OTHER JURISDICTION WHERE THAT WOULD NOT BE PERMITTED OR LEGAL PRIOR TO
REGISTRATION OR QUALIFICATION IN THAT STATE OR OTHER JURISDICTION. THE SELLING
STOCKHOLDERS MAY NOT SELL THESE SHARES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
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CNET, INC.
516,881 SHARES
COMMON STOCK
------------------------
Some of our stockholders are offering by this prospectus 516,881 shares
of our common stock. We will not receive any of the proceeds from the
stockholders' sale of the shares offered by this prospectus.
Our common stock trades on the Nasdaq National Market under the
symbol "CNET." The last reported sale price of our common stock on July 13,
1999, as reported by Nasdaq, was $49.81 per share.
------------------------
THIS INVESTMENT INVOLVES RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU
CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
The date of this prospectus is July 15, 1999.
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TABLE OF CONTENTS
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Summary..................................................................... 1
Risk Factors................................................................ 5
Incorporation of Documents by Reference.....................................13
Where You Can Get More Information..........................................13
Selling Stockholders........................................................14
Plan of Distribution........................................................15
Use of Proceeds.............................................................15
Legal Matters...............................................................15
Experts.....................................................................15
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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 with the more detailed information and
our financial statements and notes contained or incorporated by reference
in this prospectus.
CNET, INC.
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 sales lead-based advertising 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 computer 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, 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).
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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 try to reach a targeted audience of
potential buyers. We provide sales lead-based advertising services 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.
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 with 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.
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% (approximately 750,000 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 interest 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, the owner of Snap.com, 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 a three
year agreement with NBC providing for broadcast of our television programming
primarily on CNBC starting in October 1999, subject to the closing of the NBC
Internet transaction.
STOCK SPLIT
On April 21, 1999 we announced a 2-for-1 split of our common stock in
the form of a stock dividend that was distributed on May 28, 1999 to our
stockholders of record on May 10, 1999. Unless otherwise noted, information
contained in this prospectus reflects this stock split.
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 $0.05 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 $0.10 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 $0.30 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.
MARKETING CAMPAIGN
On July 1, 1999 we announced the launch of an extensive multimedia
advertising campaign. We expect to spend approximately $100.0 million over the
next eighteen months in connection with this campaign. The campaign will
encompass television, radio, print, outdoor and online advertising in a number
of major markets and will target information technology professionals,
technology purchase decision makers and technology enthusiasts.
We are a Delaware corporation. Our principal executive offices are
located at 150 Chestnut Street, San Francisco, California 94111. Our phone
number is (415) 395-7800.
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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 or incorporated by reference 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.
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. These 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, 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 incur additional
losses in the future. We expect to incur losses in 1999 as a result of our
recently announced marketing campaign. 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.
For each of the five years ended December 31, 1998 we did not have
sufficient earnings to cover our fixed charges. If we continue to have
insufficient earnings to cover our fixed charges, our financial results could be
adversely affected. For example, if currently available cash and cash generated
by operations is insufficient to satisfy our fixed charges or 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,
and May Not be Able to Adjust Our Spending in Time to Compensate For Any
Unexpected Revenue Shortfall. 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. 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.
Factors that may adversely affect our quarterly operating results
attributable to our Internet operations include, among others:
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 our Internet
operations
o competition
o our ability to manage effectively our development of new
business segments and markets
o our ability to successfully manage 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
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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 use 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 and 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. If we do not compete successfully, our financial
results may be adversely affected.
Failure to Effectively Manage Our Growth Could Result in Our
Inability to Support and Maintain Our Operations. 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, We Could Experience a Decrease in Revenues. 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. 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 and adversely affected.
If the Internet is Not Accepted as an Advertising Medium, We Could
Experience a Decrease in Revenues. Our Internet advertising customers and
potential customers have only limited experience with the Internet as an
advertising medium and neither they nor their advertising agencies have devoted
a significant portion 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 and 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. Acceptance of our 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 fail to promote and
maintain our CNET brand, our revenues and financial condition will be materially
and adversely affected. In addition, we expect to incur losses in 1999 as a
result of our recently announced marketing campaign.
Inability to Attract and Retain Key Personnel Could Adversely Affect
Our Ability to Operate. 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. In particular, the loss of the services of Mr. Minor or
Mr. Bonnie, our founders, could have an adverse effect on us due to their
crucial role in our strategic development. 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 our Internet and television
content and services 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 the Networks That Carry Our Television Programming, Which Could
Adversely Affect Our Financial Condition. Our television programming is
currently carried on the USA Network and the Sci-Fi Channel, both of which are
owned by USA Networks, pursuant to an agreement that 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 a three year agreement with NBC providing for our
television programming to be carried primarily on CNBC starting in October 1999,
subject to the closing of the transaction forming NBC Internet, to which we are
a party. 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.
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Risks Associated With Technological Change Could Adversely Affect Our
Ability to Operate. 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, including:
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 these 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 and 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 us to invest a substantial amount of capital, which could
have a material adverse effect on our financial condition and our
ability to implement our existing business strategy
o require us to issue 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, 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 these ventures 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.
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, or These Rights May Become Obsolete, Adversely Affecting Our
Business. We rely on trade secret, trademark and copyright laws to protect our
proprietary technologies and content. We cannot assure you that:
o these laws will provide sufficient protection
o others will not develop technologies or content that are similar or
superior to ours
o third parties will not copy or otherwise obtain and use our
technologies or content 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
Limit Our Ability to Operate Our Online Division. 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.
The regulation of domain names in the United States and in foreign countries is
subject to change. For example, the Internet Corporation for Assigned Names and
Numbers recently selected a number of companies to tap into Network Solutions,
Inc.'s domain name registration system. Network Solutions was previously the
exclusive registrar for the ".com," ".net," and ".org" generic top-level
domains. 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, 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 the Way That We Operate.
It is possible that new laws and regulations will be adopted covering issues
related to the Internet, including:
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 cannot be sure 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.
If Use of the Internet Does Not Continue to Grow, We May Not Have a
Sufficient Base of Users to Support Our Business. The rapid growth in the use of
and interest in the Internet is a recent phenomenon. We cannot assure you 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 also cannot assure you 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 and 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 and service 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 and
sales leads 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 are
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 we cannot assure you that interruptions in
service will not materially and 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.
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, 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, sometimes successfully, 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.
Unauthorized Persons Accessing Our Systems Could Disrupt Our Operations
and Result in the Theft of Our Proprietary Information. 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 our activities or the
activities of 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 cannot assure you 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.
Our Inability to Utilize Technology That We Do Not Own Could Disrupt
Our Operations. We rely on 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 indebtedness
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 you 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 and Cause Us to Default Under the
Notes. 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 expect to spend approximately $100.0 million over the
next eighteen months in connection with our recently announced marketing
campaign, and anticipate that we will incur losses in 1999 as a result. We
cannot assure you that we will be able to pay interest and other amounts due on
the notes or our other indebtedness. The interest payable on our notes is
$8,645,750 each year. 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, which 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 cannot assure you 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, including:
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.
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 our 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 or delays mergers and other business combinations between us and
any stockholder that acquires 15% or more of our voting stock.
12
<PAGE> 16
----------------------------
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 or incorporated by reference in 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.
----------------------------
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 SEC. Instead of repeating in this prospectus
information that we have already filed with the SEC, rules of the SEC 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. These documents are
considered to be part of this prospectus. Any documents that we file with the
SEC 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 SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling stockholders sell all of 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 Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999
o Our Reports on Form 8-K filed March 1, 1999, March 17, 1999,
April 1, 1999, April 23, 1999, May 14, 1999 and May 17, 1999
o Our Proxy Statement filed April 22, 1999
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, 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 SEC
directly from the SEC. You may either:
o read and copy reports, statements or other information we have
filed with the SEC at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. or
o obtain copies of documents that we have filed with the SEC on the
SEC's internet web site at http://www.sec.gov
You can get more information about the SEC's public reference room by
calling the SEC at 1-800-SEC-0330.
----------------------------
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 of our common stock
in the offering. All information with respect to the beneficial ownership has
been furnished by the respective selling stockholders. Percentages are based on
the 72,063,869 shares of common stock outstanding on June 30, 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 652,300 0.905% 326,150 326,150 0.453%
Ming Chien 181,210 0.251% 90,605 90,605 0.126%
Nick Horng 72,478 0.101% 36,239 36,239 0.0503%
Kilferra Management Ltd. 40,830 0.057% 20,415 20,415 0.0283%
Dragonvision International 34,464 0.048% 17,232 17,232 0.0239%
Corp.
Primus Holdings (BVI) Inc. 9,002 0.013% 4,501 4,501 0.006%
Infopro Investment, Inc. 9,002 0.013% 4,501 4,501 0.006%
Heayoon Woo 1,800 0.003% 900 900 0.001%
Michael Mohr 4,698 0.007% 2,349 2,349 0.003%
Custodian FBO
Jeffrey C. Mohr UTMA
Tae Hea Nahm 450 0.0006% 225 225 0.0003%
Hardepler Family Partnership 522 0.0007% 261 261 0.0003%
Benson Lee 9,002 0.013% 4,501 4,501 0.006%
Robert Su 9,002 0.013% 4,501 4,501 0.006%
Peter Ow 9,009 0.013% 4,501 4,501 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 Nasdaq, 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 broker-dealer that does this
may receive compensation in the form of discounts, concessions, or commissions
from the selling stockholders or the purchasers of the shares for which the
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 some state securities laws, if applicable, our
common stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In some 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 or incorporated by reference
in this prospectus. You must not rely on any unauthorized information or
representations. This prospectus is an offer to sell only the shares offered by
this prospectus, 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
Our consolidated financial statements 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 $6,934
Accounting fees and expenses 2,500*
Legal fees and expenses 5,000*
Miscellaneous expenses 5,000*
-------
Total: $ 19,434*
---------
</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 Amended and
Restated 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 July 15,
1999.
CNET, INC.
By: /s/ SHELBY W. BONNIE
-----------------------------------
Shelby W. Bonnie,
Vice Chairman of the Board
By: /s/ DOUGLAS N. WOODRUM
-----------------------------------
Douglas N. Woodrum,
Executive Vice President and Chief
Financial 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>
* Chairman of the Board and Chief July 15, 1999
- -------------------------------- Executive Officer
Halsey M. Minor
* Vice Chairman of the Board July 15, 1999
Shelby W. Bonnie
*By: /s/ DOUGLAS N. WOODRUM Director, Executive Vice President July 15, 1999
----------------------------- and Chief Financial Officer
Douglas N. Woodrum
*Attorney-in-fact
* Director July 15, 1999
- --------------------------------
Eric Robison
* Director July 15, 1999
- --------------------------------
Mitchell E. Kertzman
* Director July 15, 1999
- --------------------------------
John C. Colligan
/s/ DAVID OVERMYER Vice President, Finance and Administration July 15, 1999
- -------------------------------- (Principal Accounting Officer)
David Overmyer
</TABLE>
II-4
<PAGE> 23
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.
23.3* Consent of KPMG LLP.
24.1** Power of Attorney.
</TABLE>
- -------------------------
* Filed herewith
** Previously filed
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
July 15, 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 516,881 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 on or about April 26, 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.
Very truly yours,
/s/ HUGHES & LUCE, L.L.P.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
CNET, Inc.
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
July 14, 1999
<PAGE> 1
EXHIBIT 23.3
Consent of Independent Auditors
The Board of Directors
CNET, Inc.
We consent to the use of our reports dated June 18, 1999, except as to Note
11(c) which is as of June 25, 1999, relating to the balance sheets of SNAP! LLC
as of December 31, 1997 and 1998, and the related statements of operations,
members' deficit, and cash flows for each of the years in the two-year period
ended December 31, 1998, and the related financial statement schedule, which
reports are incorporated herein by reference, and to the references to our firm
under the heading "Experts" in the registration statement.
KPMG LLP
San Francisco, California
July 14, 1999
