JUNO ONLINE SERVICES INC
S-3/A, 2001-01-19
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.
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<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 2001



                                                      REGISTRATION NO. 333-50758

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------


                                AMENDMENT NO. 1
                                       TO
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                           JUNO ONLINE SERVICES, INC.
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                              <C>
                   DELAWARE                                        13-3914547
        (State or other jurisdiction of                         (I.R.S. Employer
        incorporation or organization)                       Identification Number)
</TABLE>

                                 1540 BROADWAY
                               NEW YORK, NY 10036
                                 (212) 597-9000
              (Address, including zip code, and telephone number,
       including area code, of Registrant's principal executive offices)
                           --------------------------

                                 CHARLES ARDAI
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                           JUNO ONLINE SERVICES, INC.
                                 1540 BROADWAY
                               NEW YORK, NY 10036
                                 (212) 597-9000
           (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)
                           --------------------------

                                   COPIES TO:
                            BRIAN B. MARGOLIS, ESQ.
                        Brobeck, Phleger & Harrison LLP
                           1633 Broadway, 47th Floor
                            New York, New York 10019
                                 (212) 581-1600
                           --------------------------

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable on or after this Registration Statement is declared effective.
                           --------------------------

    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 under 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
                           --------------------------

                        CALCULATION OF REGISTRATION FEE


<TABLE>
<CAPTION>
                                                                    PROPOSED MAXIMUM     PROPOSED MAXIMUM
                                                 AMOUNT TO BE        OFFERING PRICE     AGGREGATE OFFERING        AMOUNT OF
      TITLE OF SHARES TO BE REGISTERED            REGISTERED          PER SHARE(1)           PRICE(1)        REGISTRATION FEE(2)
<S>                                           <C>                  <C>                  <C>                  <C>
Common Stock, $.01 par value................       2,008,303              $1.50             $3,012,455             $1,262
</TABLE>



(1) Estimated pursuant to Rule 457(c) solely for the purpose of computing the
    registration fee, based on the average high and low trading prices of the
    common stock, as quoted on the Nasdaq National Market, on January 12, 2001.



(2) $1,197 of which previously has been paid.


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

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                 SUBJECT TO COMPLETION, DATED JANUARY 19, 2001

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PRELIMINARY PROSPECTUS


                                2,008,303 SHARES


                           JUNO ONLINE SERVICES, INC.

                                  COMMON STOCK

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


    This Prospectus relates to the public offering, which is not being
underwritten, of 2,008,303 shares of our common stock, which are held by two of
our current stockholders.


    The prices at which such stockholders may sell the shares will be determined
by the prevailing market price for the shares or in negotiated transactions. We
will not receive any of the proceeds from the sale of the shares.

    The selling stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended, in connection with their
sales of our common stock hereunder.


    Our common stock is quoted on the Nasdaq National Market under the symbol
"JWEB." On January 18, 2001, the last reported sale price of our common stock on
the Nasdaq National Market was $2.7188 per share.


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

    BEGINNING ON PAGE 8, WE HAVE LISTED SEVERAL "RISK FACTORS" WHICH YOU SHOULD
CONSIDER. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE YOU MAKE YOUR
INVESTMENT DECISION.

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

    Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.

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


                THE DATE OF THIS PROSPECTUS IS JANUARY   , 2001.

<PAGE>
                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
WHERE YOU CAN FIND MORE INFORMATION.........................      3

INFORMATION INCORPORATED BY REFERENCE.......................      3

FORWARD-LOOKING INFORMATION.................................      4

OUR COMPANY.................................................      5

RISK FACTORS................................................      8

USE OF PROCEEDS.............................................     32

SELLING STOCKHOLDERS........................................     32

PLAN OF DISTRIBUTION........................................     33

LEGAL MATTERS...............................................     34

EXPERTS.....................................................     34
</TABLE>


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

    YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED, OR INCORPORATED BY
REFERENCE, IN THIS PROSPECTUS OR ANY RELATED PROSPECTUS SUPPLEMENT. JUNO ONLINE
SERVICES HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
JUNO ONLINE SERVICES IS NOT MAKING AN OFFER OF THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION PROVIDED BY THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THIS PROSPECTUS.

                                       2
<PAGE>
                      WHERE YOU CAN FIND MORE INFORMATION


    We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the common stock offered by this prospectus. This prospectus does not contain
all of the information set forth in the registration statement. Some information
has been omitted in accordance with the rules and regulations of the Commission.
For further information, please refer to the registration statement, including
any amendments thereto, and the exhibits and schedules filed with it. We also
file periodic reports, proxy statements and other information with the
Commission, as required by the Securities Exchange Act of 1934.


    You may read and copy all or any portion of the registration statement or
any other information Juno files with the Commission at the Commission's public
reference room at 450 Fifth Street, N.W., Washington D.C. 20549. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
Commission. You may call the Commission at 1-800-SEC-0330 for further
information about the public reference rooms. Juno's filings with the
Commission, including the registration statement, are also available to you on
the Commission's Web site at http://www.sec.gov.

    Our common stock is quoted on the Nasdaq National Market, and therefore, you
may read any material that we file with the Commission at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006.

                     INFORMATION INCORPORATED BY REFERENCE

    We have filed the following documents with the Commission and we are
incorporating those documents by reference in this prospectus:

    (1) Our Annual Report on Form 10-K for the fiscal year ended December 31,
       1999 (the "1999 Form 10-K");

    (2) Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;

    (3) Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000;

    (4) Our Quarterly Report on Form 10-Q for the quarter ended September 30,
       2000;

    (5) Our Proxy Statement in connection with our Annual Meeting of the
       Stockholders held on May 24, 2000;

    (6) Our Current Report on Form 8-K filed on July 20, 2000;

    (7) Our Current Report on Form 8-K filed on October 13, 2000;


    (8) Our Current Report on Form 8-K filed on October 26, 2000;



    (9) Our Current Report on Form 8-K filed on November 29, 2000;



    (10) Our Current Report on Form 8-K filed on December 26, 2000; and



    (11) The description of our common stock set forth in our Registration
       Statement on Form 8-A, filed with the Commission on May 10, 1999.



    All reports and other documents that we file pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus, for so long as the common stock is being offered pursuant to this
prospectus, as well as all such reports and documents filed after the date of
the initial filing of the registration statement of which this prospectus forms
a part and prior to the effectiveness thereof, are to be incorporated by
reference into this prospectus. The reports and other documents incorporated by
reference are considered part of this prospectus, and the reports and other
documents we file later with the Commission will automatically update and
supercede the information contained in this prospectus.


    We will provide free of charge to each person to whom this prospectus is
delivered, upon written or oral request by such person, a copy of any or all of
the information incorporated by reference in this prospectus but not delivered
with this prospectus (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such document).
Requests for such documents should be directed to Richard Buchband, Senior Vice
President and General Counsel, Juno Online Services, Inc., 1540 Broadway, New
York, NY 10036, (212) 597-9000.

                                       3
<PAGE>
                          FORWARD-LOOKING INFORMATION

    This prospectus contains certain statements that may be deemed
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are usually accompanied by words such as
"believes," "anticipates," "plans," "expects" and similar expressions. Our
actual results could differ materially from those expressed or implied by these
forward-looking statements. The following factors, among others, could cause
Juno's actual results to differ materially from those described in a
forward-looking statement:

    - our issuances of equity securities in connection with financing
      transactions, including under our equity line facility with The Kingston
      Limited Partnership;

    - our issuance of equity securities in connection with acquisitions of
      subscribers or businesses, or in connection with vendor transactions;

    - our limited history of offering our billable premium services and our free
      basic service in its current form;

    - our history of losses;


    - decreases in the popularity of the Internet among consumers;



    - our dependence on strategic marketing alliances as a source of revenues;



    - continued reduction in demand for Internet advertising space;



    - erosion of collectibility of accounts receivable related to advertising
      sales;


    - our failure to retain or grow Juno's subscriber base;

    - increasing competition from existing or new competitors;

    - any failure to sustain current levels of subscriber acquisition or
      retention;

    - any inability to successfully migrate members to or retain members in
      Juno's billable premium services;

    - increased per-subscriber telecommunications costs resulting from increased
      usage of our services;

    - rapid technological change;


    - the possible unavailability of financing as and if needed, including due
      to the operation of volume or price limits under our equity line facility
      with The Kingston Limited Partnership;



    - possible industry consolidation;



    - our dependence on a limited number of vendors, including, without
      limitation, third-party vendors for customer support services and for the
      provision and roll-out of the Juno Express broadband service; and


    - potential fluctuations in quarterly and annual results.

    This list is intended to identify only certain of the principal factors that
could cause actual results to differ. Please refer to the risk factors described
in the "Risk Factors" section and elsewhere in this prospectus.

                                       4
<PAGE>
                                  OUR COMPANY

OVERVIEW

    Juno Online Services, Inc. is a leading provider of Internet access to
millions of computer users throughout the United States. We offer several levels
of service, including free basic Internet access, billable premium dial-up
service and high-speed broadband access, which is currently available in
selected markets. Unlike almost all other Internet access providers, we offer
both free basic and billable premium services, and we believe we are unique in
having converted hundreds of thousands of individuals from free to paying
customers. Our strategy of offering several different service levels and our
easy-to-use, intuitive software are designed to attract a broad spectrum of
users, including those who are just now beginning to explore the Internet.


    Based on its total of 3.7 million active subscribers during the month of
September 2000, Juno is one of the nation's leading Internet access providers.
Approximately 750,000 of these active subscribers were subscribed to Juno's
billable premium services and as of September 2000, 88% of Juno's active
subscribers had full Web access. Juno had approximately 12.8 million total
registered subscriber accounts as of September 30, 2000.


    Our services are provided nationwide through more than 3,400 local telephone
numbers, which we lease from several providers. These phone numbers can be
reached by the vast majority of the U.S. population without having to place a
long distance telephone call. We derive our revenues primarily from the
subscription fees we charge for the use of our premium services, from the sale
of advertising, and from various forms of electronic commerce.

    We have been a pioneer in providing free Internet services since
April 1996, when we launched our basic service, which was the first on the
Internet to provide free e-mail. In July 1998, we introduced our first premium
services, which offered features ranging from enhanced e-mail services to full
access to the World Wide Web, and for which we charged subscription fees. In
December 1999, we announced a major expansion of our services:

    - Our BASIC SERVICE now provides full Internet access for free in addition
      to e-mail.

    - JUNO WEB provides competitively priced premium Internet access,
      supplementing the features of the basic service with free live technical
      support and customer service, priority access to Juno's network through
      several hundred additional local access numbers, and the elimination of a
      prominent advertising and navigation banner that is displayed to our basic
      service users at all times while they are connected to the Web.

    - JUNO EXPRESS is a broadband service, available through multiple
      technologies, that provides all the features of Juno Web at speeds up to
      21 times faster than an ordinary dial-up Internet connection. Among other
      benefits, this enables users to rapidly download high-bandwidth content
      such as video, music files and software. Juno Express is currently
      available in DSL and wireless versions, through relationships with Covad
      Communications and Metricom, respectively. We also have announced plans to
      begin offering Juno Express by satellite through an alliance with Hughes
      Network Systems, and to participate in cable broadband access trials with
      Time Warner Cable and AT&T Broadband.


    In operating our expanded basic service, we have capitalized on the size of
our existing user base, advantages we believe our technology confers on our cost
structure, and our advertising sales and electronic commerce activities. Our
technology has been designed to maximize hours of consumer contact and potential
advertising revenues while minimizing the number of hours each user actually
spends connected by telephone to our central computers or to the Web, a key
component of our costs. We believe our subscribers spend significantly less time
connected to the Internet each month than those of our largest competitors, in
part because of technology we have developed that enables


                                       5
<PAGE>
subscribers to read and write e-mail offline rather than while connected.
Importantly, this technology allows us to continue displaying highly targetable
interactive advertisements throughout this offline time.

    As of September 30, 2000, approximately 390 firms had advertised on the Juno
services. In many cases, we derive revenues not only from advertising fees but
also from conducting electronic commerce in collaboration with our marketing
partners. We have entered into a number of major strategic marketing alliances,
some of which involve multi-million-dollar guaranteed minimum payments to Juno,
such as our multi-year relationships with Qwest and The Hartford. Our
advertising and strategic marketing activities benefit from our ability to
target advertising to selected segments of the Juno subscriber base on the basis
of a wide variety of information obtained from a detailed electronic
questionnaire that must be completed in order to sign up for Juno's basic
service.


    In addition to our advertising and strategic marketing relationships, we
derive revenue from relationships with providers of Web-based content and
functionality. All Juno users begin each Web session on our portal site,
WWW.JUNO.COM, which contains tools, information, and product offers supplied by
a wide range of strategic partners. Companies with whom we have formed this sort
of strategic relationship include Amazon.com, CNET, HotJobs.com, LookSmart and
News Corporation.


RECENT DEVELOPMENTS

    As part of an overall effort to bring our expenses more in line with our
revenues and to reduce our reliance on external sources of capital, we have
begun to shift our focus from the aggressive cash-intensive growth of our
subscriber base to the reduction of our cash outflows and the more extensive use
of non-cash resources for various purposes. In furtherance of this effort, we
have entered into a number of strategic transactions, including those discussed
below.


    FREEWWWEB.  On June 29, 2000, we entered into a subscriber referral
agreement with SmartWorld Communications, Inc. and its subsidiaries SmartWorld
Technologies, LLC and Freewwweb, LLC. Under the terms of the Freewwweb
Agreement, Freewwweb began to refer its subscribers to our Internet access
services on July 19, 2000 and is entitled to receive consideration from us for
each former Freewwweb subscriber that becomes a new subscriber to our services
and subsequently meets certain qualification criteria. Under the terms of the
Freewwweb Agreement, such consideration will include cash and may include, at
our option, shares of our common stock. The number of shares of our common stock
will be based on the closing sale price of our common stock on the dates of
issuance. In accordance with the Freewwweb agreement, we have ceased accepting
additional Freewwweb subscribers. As of December 31, 2000, we have not yet
issued any shares of common stock to Freewwweb or its affiliates under this
agreement.



    WORLDSPY.  On June 30, 2000, we entered into a subscriber referral agreement
with WorldSpy.com, Inc., NaviPath, Inc. and other parties. Under the terms of
the subscriber referral agreement, WorldSpy began to refer its subscribers to
our Internet access service on June 30, 2000, which entitled WorldSpy and
NaviPath to receive compensation from us for each former WorldSpy subscriber
that became a new subscriber to our services prior to October 1, 2000, subject
to certain qualifications and restrictions. As consideration for these
referrals, we issued an aggregate of 1,836,283 shares of our common stock to
WorldSpy and NaviPath on October 31, 2000, based on a closing sale price per
share of $2.66 on that date. In addition, we chose to accept former WorldSpy
subscribers under the subscriber referral agreement during the period from
October 1, 2000 through November 30, 2000. As consideration for referrals of
former WorldSpy subscribers that became new subscribers to our services between
October 1, 2000 and November 30, 2000, and met qualification criteria, we issued
an aggregate of 172,020 additional shares of our common stock to WorldSpy and
NaviPath on December 21, 2000, based on a closing sale price per share of $1.25
on that date. In accordance with our rights under the subscriber referral
agreement, we ceased accepting additional WorldSpy


                                       6
<PAGE>

subscribers on November 30, 2000. The registration statement of which this
prospectus forms a part relates to the resale by WorldSpy and NaviPath of the
2,008,303 shares of common stock issued by Juno pursuant to the subscriber
referral agreement.



    BABBAGE'S.  On September 18, 2000, we entered into a distribution agreement
with Babbage's Etc. LLC. Under the terms of the Babbage's agreement, Babbage's
will distribute our software and will receive periodic compensation from us
throughout the term of the Babbage's agreement for each new subscriber to our
services generated by such distribution that subsequently meets certain
qualification criteria. The compensation received by Babbage's as consideration
for its services will include shares of our common stock or, at our option,
cash. The number of shares of our common stock issuable to Babbage's will be
based on the closing sale price of our common stock on the dates of issuance. As
of December 31, 2000 we have not issued any shares of our common stock to
Babbage's under this agreement.


    KINGSTON.  On October 6, 2000, we entered into a common stock investment
agreement with an affiliate of The Kingston Limited Partnership providing for
the potential future issuance and purchase of shares of our common stock. This
agreement and a related registration rights agreement were assigned to, and
assumed by, Kingston, a limited partnership organized and existing under the
laws of Bermuda, and constitute what is commonly referred to as an "equity line
facility." Under the equity line facility, we may sell, subject to various
restrictions, up to $7.5 million of common stock in each of up to 20 drawdown
periods of 22 trading days each over the course of a period of up to two years,
provided that we cannot sell more than $125 million worth of shares in total
under the facility. The total number of shares, if any, that may be issued under
the facility depends on a number of factors, including the market price and
trading volume of our common stock during each drawdown period we choose to
initiate. While we have no obligation to sell any shares under the equity line
facility, the facility may be terminated if we sell no shares to Kingston for a
period of four consecutive months.

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

    "Juno Web," "Juno Express" and "Juno Gold" are trademarks, and "Juno" and
"Juno Online Services" are registered trademarks of Juno Online Services, Inc.
Each trademark, trade name or service mark of any other company appearing in
this prospectus belongs to its holder.

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

    Juno Online Services, Inc. was incorporated in Delaware on July 2, 1996 and
is the successor by merger to Juno Online Services, L.P., which was formed on
June 30, 1995 as a Delaware limited partnership. Our principal executive offices
are located at 1540 Broadway, New York, New York 10036. Our telephone number at
that location is (212) 597-9000. Information contained on our Web sites does not
constitute a part of this prospectus. References in this prospectus to "Juno,"
"we," "our," and "us" refer to Juno Online Services, Inc., a Delaware
corporation, and its predecessor prior to the merger, Juno Online Services,
L.P., a Delaware limited partnership.

                                       7
<PAGE>
                                  RISK FACTORS

    YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS
AND FINANCIAL RESULTS MAY SUFFER. IN THAT CASE, THE TRADING PRICE OF OUR COMMON
STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

OUR BILLABLE PREMIUM SERVICES AND OUR FREE BASIC WEB ACCESS SERVICE HAVE A
  LIMITED OPERATING HISTORY AND FACE NUMEROUS RISKS AND UNCERTAINTIES

    We have a limited operating history upon which you can evaluate our business
and our services. We began offering our free basic service to the public in its
original form in April 1996, first offered billable premium services to the
public in July 1998 and expanded our free basic service to include full Internet
access in addition to e-mail in December 1999. As a company in the rapidly
evolving market for Internet services, we face numerous risks and uncertainties.
Some of these risks relate to our ability to:

    - attract and retain subscribers to our free basic service and our billable
      premium services;

    - anticipate and adapt to the changing Internet market;

    - generate revenues sufficient to cover our operating expenses through the
      sale of our billable premium services, through the sale of advertising or
      from other revenue sources;

    - preserve or raise the capital necessary to fund our operations to the
      extent that they are not profitable;

    - maintain and develop strategic relationships with business partners to
      advertise their products over our services;

    - implement an effective marketing strategy to promote awareness of the Juno
      services;

    - respond to actions taken by our competitors and the entry of new
      competitors into our markets;

    - develop and deploy successive versions of the Juno software;

    - operate computer systems and related infrastructure adequate to
      effectively manage our growth and provide our basic service and our
      billable premium services;

    - operate broadband Internet access services, whether independently or in
      collaboration with one or more third parties;

    - manage the billing systems used to invoice subscribers to our billable
      premium services; and

    - attract, retain and motivate qualified personnel.

    Our business and financial results will depend heavily on the commercial
acceptance and profitability of both our free basic and our billable premium
services. If we are unsuccessful in addressing these risks or in executing our
business strategy, our business and financial results may suffer.

WE HAVE A HISTORY OF LOSSES SINCE OUR INCEPTION IN 1995 AND EXPECT CONTINUED
  LOSSES FOR THE FORESEEABLE FUTURE

    Since our inception in 1995, we have not been profitable. We have incurred
substantial costs to create and introduce our various services, to operate these
services, to promote awareness of these services and to grow our business. We
incurred net losses of approximately $3.8 million from inception through
December 31, 1995, $23.0 million for the year ended December 31, 1996,
$33.7 million for the year ended December 31, 1997, $31.6 million for the year
ended December 31, 1998, $55.8 million for the year ended December 31, 1999 and
$119.8 million for the nine months ended September 30, 2000. As of
September 30, 2000, our accumulated net losses totaled $267.8 million. We
incurred negative cash

                                       8
<PAGE>
flows from operations of approximately $16.4 million for the year ended
December 31, 1996, $33.6 million for the year ended December 31, 1997,
$20.9 million for the year ended December 31, 1998 and $45.1 million for the
year ended December 31, 1999. For the nine months ended September 30, 2000, we
used $97.2 million in cash for working capital purposes and to fund losses from
operations. At September 30, 2000, $3.8 million remained prepaid for advertising
that Juno has the right to display on a third party's media properties. This
prepaid amount may be used at any time prior to March 2001.

    Since we operated as a limited partnership prior to the merger of Juno
Online Services, L.P. into Juno Online Services, Inc. in March 1999, taxable
losses incurred prior to the merger were allocated to the partners of Juno
Online Services, L.P. for reporting on their income tax returns. As a result, we
will not be able to offset future taxable income, if any, against losses
incurred prior to the merger.

    We expect operating losses and negative cash flows to continue for the
foreseeable future as we continue to incur significant expenses. We may not ever
be successful in implementing our business strategies or in addressing the risks
and uncertainties facing our company. Even if we do address these risks
successfully, we may not be profitable in the future. Were we to achieve
profitability for any particular period, we cannot assure you that we would be
able to sustain or increase profitability on a quarterly or annual basis
thereafter.

WE CANNOT PREDICT OUR FUTURE CAPITAL NEEDS AND WE MAY NOT BE ABLE TO IMPLEMENT
  OUR EXISTING FINANCING PLANS OR SECURE ADDITIONAL FINANCING


    Because we expect to continue to incur substantial losses for the
foreseeable future, we may need to raise substantial additional funds in the
future to fund our operations, including our telecommunications and other
service provision costs, subscriber acquisition and brand promotion costs, costs
of enhancing or expanding the range of Internet services we offer and costs
associated with responding to competitive pressures or perceived opportunities.
Additional financing may not be available on terms favorable to us, or at all.
If adequate funds are not available or not available when required in sufficient
amounts or on acceptable terms, we may not be able to devote sufficient cash
resources to continue to provide our services in their current form, acquire
additional subscribers, effectively promote our brand, enhance or expand our
services, respond to competitive pressures or take advantage of perceived
opportunities, and our business and financial results may suffer, or we could be
forced to cease our operations entirely. In light of our historical and expected
losses, we are unlikely to be able to raise significant additional funds through
the incurrence of indebtedness. If additional funds are raised by our issuing
debt, we may be subject to limitations on our operations.



    On October 6, 2000, we entered into an equity line facility with The
Kingston Limited Partnership, referred to in this prospectus as the equity line
facility, pursuant to which we may, subject to certain conditions, be able to
issue up to $125 million of our common stock to Kingston over the course of a
period of up to two years. However, no funds will be available to us under the
equity line facility unless we are able to satisfy the conditions to Kingston's
obligation to purchase our shares specified in the common stock investment
agreement. In particular, since Kingston's purchase price will generally be 94%
of our volume-weighted average trading price during a given purchase day and no
sales may occur under the facility at a price of less than $2.50 per share,
Kingston generally will have no obligation to purchase shares on a given day to
the extent that the volume-weighted average trading price of our shares during
such day is less than $2.66 per share. The closing sale price for our common
stock on January 18, 2001 was $2.7188 per share, however, the closing sale price
for our common stock generally has not exceeded $2.66 per share during the
period since November 20, 2000. Accordingly, we are uncertain whether we will
continue to meet the minimum trading price condition to our ability to draw down
any funds under the equity line facility. Similarly, Kingston generally has no
obligation to purchase shares on a given day to the extent that such purchases
would exceed specified limitations based on our trading volume. In addition, the
equity line facility provides that Kingston may not


                                       9
<PAGE>

purchase a number of shares that, when added to all other shares purchased under
the facility, would exceed 19.99% of the number of shares of our common stock
issued and outstanding on October 6, 2000 unless either we obtain stockholder
approval of issuances under the facility in excess of that amount, or Kingston
is advised by counsel that the rules of the principal market or exchange on
which our shares are quoted or listed would permit such an issuance without
stockholder approval. As of October 6, 2000, we had a total of 38,944,360 shares
of common stock issued and outstanding, 19.99% of which would be 7,784,978
shares.


    We have also entered into several transactions pursuant to which we have the
right to pay for goods or services using our common stock, and we may enter into
more such transactions in the future. If we raise additional funds or obtain
goods or services by issuing equity securities, stockholders may experience
significant dilution of their ownership interest and the newly issued securities
may have rights superior to those of our common stock. The dilutive effect of
these issuances will be increased to the extent our share price continues to
decline.


OUR STOCK PRICE HAS BEEN HIGHLY VOLATILE AND IS LIKELY TO EXPERIENCE EXTREME
  PRICE AND VOLUME FLUCTUATIONS IN THE FUTURE THAT COULD REDUCE THE VALUE OF
  YOUR INVESTMENT, SUBJECT US TO LITIGATION, CAUSE US TO BE UNABLE TO MAINTAIN
  THE LISTING OF OUR COMMON STOCK ON THE NASDAQ NATIONAL MARKET, AND MAKE
  OBTAINING FUTURE EQUITY FINANCING MORE DIFFICULT FOR US


    The market price of our common stock has fluctuated in the past and is
likely to continue to be highly volatile, with extreme price and volume
fluctuations. The Nasdaq National Market, where most publicly held Internet
companies are traded, has experienced substantial price and volume fluctuations.
These broad market and industry factors may harm the market price of our common
stock, regardless of our actual operating performance, and for this or other
reasons we could continue to suffer significant declines in the market price of
our common stock.

    In the past, companies that have experienced volatility in the market price
of their stock have been the object of securities class action litigation. If we
were to become the object of securities class action litigation, it could result
in substantial costs and a diversion of our management's attention and
resources.


    Our common stock is currently listed on the Nasdaq National Market. We must
satisfy a number of requirements to maintain our listing on the Nasdaq National
Market, including maintaining a minimum bid price for our common stock of $1.00
per share. A company fails to satisfy this requirement if its closing bid price
remains below $1.00 per share for 30 consecutive business days. From time to
time our common stock has had a closing bid price below $1.00 per share. There
can be no assurance that our bid price will comply with the requirements of the
Nasdaq National Market to facilitate continued listing of our common stock on
the Nasdaq National Market. If our common stock loses its Nasdaq National Market
status, our common stock would likely trade on the Nasdaq Over the Counter
Bulletin Board, which is viewed by most investors as a less desirable and less
liquid marketplace. This outcome would be likely to adversely affect the trading
price of our common stock. In addition, continued listing on the Nasdaq National
Market or listing on the Nasdaq SmallCap Market, American Stock Exchange or New
York Stock Exchange is a condition to drawing down funds under the equity line
facility.



    In addition, further declines in our stock price might harm our ability to
issue, or significantly increase the ownership dilution to stockholders caused
by our issuing, equity in financing or other transactions. The price at which we
issue shares in such transactions is generally based on the market price of our
common stock and a decline in our stock price would result in our needing to
issue a greater number of shares to raise a given amount of funding or acquire a
given dollar value of goods or services. A low stock price will impair our
ability to draw down funds under the equity line facility, because The Kingston
Limited Partnership, the purchaser under the equity line facility, is generally
not required to purchase shares of our common stock under the facility on a
given day if our average stock


                                       10
<PAGE>

price during such day is less than $2.66 per share or to the extent that such
purchases would exceed specified limitations based on our trading volume. In
addition, Kingston may not purchase a number of shares that, when added to all
other shares purchased under the facility, would exceed 7,784,978 shares unless
we obtain stockholder approval of issuances under the facility in excess of that
amount.


OUR STOCK PRICE COULD DECLINE AND OUR STOCKHOLDERS COULD EXPERIENCE SIGNIFICANT
  OWNERSHIP DILUTION DUE TO OUR ABILITY TO ISSUE SHARES UNDER THE EQUITY LINE
  FACILITY

    Under the equity line facility, we may sell, subject to various
restrictions, up to $7.5 million of common stock in each of up to 20 drawdown
periods of 22 trading days each over the course of a period of up to two years,
provided that we cannot sell more than $125 million in total under the facility
and may only be able to sell a much lower amount. The total number of shares, if
any, that may be issued under the facility depends on a number of factors,
including the market price and trading volume of our common stock during each
drawdown period we choose to initiate. While we have no obligation to sell any
shares under the equity line facility, the facility may be terminated if we sell
no shares to Kingston for a period of four consecutive months.


    Because the purchase price of any shares we choose to sell under the equity
line facility is based on the average market price of the common stock on the
date of purchase, both the number of shares we would have to sell in order to
draw down any given amount of funding and the associated ownership dilution
experienced by our stockholders will be greater if the price of our common stock
declines. The lowest price at which stock may be sold under the equity line
facility is $2.50 per share. The closing sale price for our common stock on
January 18, 2001 was $2.7188 per share, and the closing sale price for our
common stock generally has not exceeded $2.66 per share during the period since
November 20, 2000. Accordingly, we are uncertain whether we will continue to
meet the minimum trading price condition to our ability to draw down funds under
the equity line facility.



    In the event that we were able, in spite of the various restrictions
contained in the equity line facility, to draw down the maximum amount under the
facility, and if we indeed chose to draw down the full $125 million, and if all
sales under the facility occurred at the minimum price of $2.50 per share, we
would need to issue 50,000,000 shares of common stock to Kingston, well in
excess of the 41,134,350 shares of our common stock outstanding as of
December 31, 2000. Since Kingston's purchase price will generally be 94% of the
volume-weighted average price during a given trading day, shares will generally
not be purchased at all under the equity line facility on a day during which the
volume-weighted average price is less than $2.66 per share.


    The following table illustrates the effect of variations in the market price
of our common stock, and of the resulting variation in Kingston's purchase
price, on the number of shares that would be issued if we were able to and were
to choose to sell the maximum amount under the equity line facility and all
sales were to occur at a given purchase price. Note that the sample purchase
prices in the following table are examples presented for illustrative purposes
only and are not predictions of actual prices at which purchases may occur.

<TABLE>
<CAPTION>
VOLUME-WEIGHTED AVERAGE   KINGSTON'S PURCHASE PRICE      NUMBER OF SHARES KINGSTON
PRICE (VWAP) PER SHARE    PER SHARE, AT 94% OF VWAP   WOULD RECEIVE FOR $125 MILLION
-----------------------   -------------------------   -------------------------------
<S>                       <C>                         <C>
         $4.26                      $4.00                         31,250,000
         $3.72                      $3.50                         35,714,286
         $3.19                      $3.00                         41,666,667
         $2.66                      $2.50                         50,000,000
</TABLE>


    If issued, the shares shown in the table above would represent,
respectively, 43.17%, 46.47%, 50.32% and 54.86% of the total number of shares
outstanding, when added to the number of shares outstanding as of December 31,
2000. This table illustrates how ownership dilution would increase as the market
price per share for our common stock declines. Currently, we are registering
10,000,000


                                       11
<PAGE>

shares for sale with the Securities and Exchange Commission in connection with
the equity line facility. If issued, these shares would represent 19.56% of our
shares outstanding, when added to the number of shares outstanding as of
December 31, 2000.


    The perceived risk associated with the possible sale of a large number of
shares under the equity line facility at prices as low as $2.50 per share could
cause some of our stockholders to sell their stock, thus causing the price of
our stock to decline. In addition, actual or anticipated downward pressure on
our stock price due to actual or anticipated sales of stock under the equity
line facility could cause some institutions or individuals to engage in short
sales of our common stock, which may itself cause the price of our stock to
decline.

WE EXPECT TO ISSUE OUR COMMON STOCK TO PAY FOR SERVICES IN TRANSACTIONS THAT
  CAUSE DILUTION TO OUR STOCKHOLDERS, AND THE DILUTIVE EFFECT OF THESE ISSUANCES
  WILL INCREASE TO THE EXTENT THAT OUR STOCK PRICE DECLINES


    In addition to the equity line facility, we have entered into a number of
relationships in which we expect to use our common stock to compensate third
parties for services performed for us, including subscriber referral services,
and we may enter into additional such relationships in the future. In most of
these transactions, the payments owed by Juno will be calculated in dollar
terms, with Juno having the right to issue an equivalent amount of its common
stock in lieu of making cash payments. We currently anticipate that we will
exercise those rights to make payments in our common stock where available to
us, although we may choose to pay for some or all of such expenses in cash. If
the price of Juno common stock should decrease further, our electing to pay with
common stock would entail issuing a relatively larger number of shares,
increasing the dilutive effect on our stockholders, and potentially impairing
our ability to draw down on the equity line facility or execute other financing
transactions. Additionally, the third parties to whom we issue common stock will
generally have registration rights that require us to register these shares of
common stock for resale in the public markets. The market price of our common
stock could decline as a result of sales of these shares in the market, or the
perception that such sales could occur.


FUTURE SALES OF OUR COMMON STOCK MAY NEGATIVELY AFFECT OUR STOCK PRICE

    In addition to potential future issuances of our common stock, we have a
large number of shares of common stock currently outstanding and available for
resale. The market price of our common stock could decline as a result of sales
of a large number of shares of our common stock in the market, or the perception
that such sales could occur. These sales also might make it more difficult for
us to sell equity securities in the future at a price that we think is
appropriate, or at all.

OUR BUSINESS IS SUBJECT TO FLUCTUATIONS IN OPERATING RESULTS WHICH MAY
  NEGATIVELY IMPACT THE PRICE OF OUR STOCK

    Our revenues, expenses and operating results have varied in the past and may
fluctuate significantly in the future due to a variety of factors. These include
factors within and outside of our control. Some of these factors include:

    - patterns of subscriber acquisition and retention, and seasonal trends
      relating to subscriber usage of our services;

    - whether we maintain past levels of marketing activity to acquire
      subscribers and promote the Juno brand, and the extent to which any
      marketing activities we do undertake are timely and effective;

    - the timing and effectiveness of any revenue sharing arrangements or other
      strategic alliances into which we enter;

                                       12
<PAGE>

    - the demand for Internet advertising and our ability to collect outstanding
      receivables from our advertisers;



    - seasonal trends relating to Internet advertising spending;


    - capital expenses related to upgrading our computer systems and related
      infrastructure;

    - our ability to protect our systems from any telecommunications failures,
      power loss, or software-related system failures;

    - our ability to integrate operations and technologies from any acquisitions
      or other business combinations or relationships into which we enter;

    - the extent to which we experience increased competition in the markets for
      Internet services, Internet advertising and electronic commerce;

    - changes in operating expenses including, in particular, telecommunications
      expenses and the cost of providing various types of technical and
      non-technical customer support to our subscribers; and

    - economic conditions specific to the Internet as well as general economic
      and market conditions.

    Since we expect to be heavily dependent on revenues from our billable
premium services in the foreseeable future, our revenues are likely to be
particularly affected by our ability to recruit new subscribers directly to our
billable premium services, upgrade users of our free basic service to our
billable premium services, and retain subscribers to our billable premium
services. In addition, our operating expenses are based on our expectations of
our future revenues and are relatively fixed in the short term. We may be unable
to adjust spending quickly enough to offset any revenue shortfall, which may
cause our business and financial results to suffer.

    Due to all of the above factors and the other risks discussed in this
section, you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. It is possible that in some
future periods our results of operations may be below the expectations of public
market analysts and investors. In this event, the price of our common stock is
likely to fall.


THE EXPANSION OF OUR FREE BASIC SERVICE TO INCLUDE FULL WEB ACCESS HAS CREATED
  SUBSTANTIAL RISKS



    In December 1999, we expanded our free basic service to include full
Internet access, including access to the World Wide Web. We face numerous costs,
operational and legal risks, and other uncertainties associated with our
provision of free Web access to consumers, including the following:


    - RISK THAT OUR PAYING SUBSCRIBERS WILL CANCEL THEIR BILLABLE SERVICE
      SUBSCRIPTIONS AND SWITCH TO THE EXPANDED FREE SERVICE. Since users of our
      basic service can access the Web for free, some Juno Web subscribers may
      cancel their billable service subscriptions and switch to the free basic
      service. If the number of Juno Web subscribers who switch to the free
      basic service is significant, our business and financial results may
      suffer. Net growth of our Juno Web subscriber base has, in fact, slowed
      significantly since December 1999, possibly in part due to such
      cancellations.


    - RISK THAT USERS OF OUR EXPANDED FREE BASIC SERVICE WILL REACT NEGATIVELY
      TO THE ADVERTISING AND NAVIGATION BANNER DISPLAYED WHILE THEY USE THE
      WEB. Users of our expanded free basic service are required to view a
      prominent advertising and navigation banner at all times while they are
      connected to the Web. Some users, particularly those using low-resolution
      computer monitors to view the Web, may consider this banner to be
      intrusive to an extent that interferes with their use of the service. To
      the extent that competitors offer free Internet access services that do
      not require the user to view intrusive advertising, then our ability to
      retain users of our free basic service or our ability to derive revenue by
      displaying advertisements to such users may be harmed.


                                       13
<PAGE>

    - RISK THAT WE MAY BE UNABLE TO GENERATE SIGNIFICANT REVENUES FROM THE SALE
      OF ADVERTISING ON THE PERSISTENT ADVERTISING AND NAVIGATION BANNER, OR
      THAT PENDING LITIGATION MIGHT REQUIRE US TO PERMANENTLY DISABLE THIS
      BANNER OR DISCONTINUE ITS USE FOR THE DISPLAY OF THIRD-PARTY ADVERTISING.



       The display of a persistent advertising and navigation banner to users of
       our basic service when they use the Web creates a significant amount of
       advertising inventory. To date, this advertising inventory has not
       generated significant revenues, even with the efforts of a third party,
       24/7 Media, engaged by us to bear primary responsibility for the sale of
       this inventory in return for a commission. In late 2000, we settled an
       arbitration proceeding we initiated against 24/7 Media, and the parties
       agreed to a restructured, non-exclusive relationship without future
       guaranteed minimum payments to Juno.



       Additionally, in connection with a patent infringement action brought
       against us by NetZero, Inc., we have discontinued the display of
       third-party advertisements in the persistent advertising and navigation
       banner as of January 12, 2001, pursuant to a temporary order entered by
       the court. The order will remain in effect through March 15, 2001, and
       may be extended thereafter. If NetZero ultimately succeeds in its
       infringement action, we may be permanently prohibited from utilizing our
       advertising and navigation banner for the display of third-party
       advertising or possibly for any purpose, including the promotion of
       Juno's own premium billable services and the differentiation of our free
       basic service from our premium billable services.



       There can be no assurance that, in the future, we will be able to
       continue the use of the advertising and navigation banner on our free
       basic service, or, that if we are permitted to do so, we will be able to
       generate significant revenues from the sale of advertising inventory on
       this banner, either through 24/7 Media, any other third-party sales
       agent, or our own internal sales organization. If we are unable to sell
       this inventory or to do so at favorable rates, our advertising revenues
       could be materially adversely affected.


WE MAY EXPERIENCE CONTINUED INCREASES IN OUR TELECOMMUNICATIONS COSTS

    Our telecommunications costs represent one of the most significant expenses
of providing our services, and they may continue to increase as use of the Web
by our subscribers increases. When using e-mail, subscribers need to be
connected to our central computers for the relatively short period of time
required to send e-mail they have written or download e-mail that has been sent
to them. When using the Web, a subscriber must remain continuously connected to
the Internet for the entire duration of a Web session. Since we purchase
telecommunications resources on a metered basis based on hours of connection
time, the longer connections associated with accessing the Web generate
significantly higher expenses than the shorter connections associated with
downloading or uploading e-mail messages. In recent quarters, we have
experienced significant increases in the amount of time that users spend
connected, and in the absence of measures we might take to counteract this
trend, and possibly in spite of such measures, we believe that per-subscriber
usage is likely to continue to increase. This trend could be expected to
increase our telecommunications costs both on an absolute and a per-subscriber
basis, unless we are able to achieve corresponding reductions in our
telecommunications rates. If we were to attract new subscribers to our free
basic service, our telecommunications costs would increase still further on an
absolute basis. We cannot assure you that we will be able to achieve adequate
reductions in our per-subscriber telecommunications costs, or any such
reductions, and if we are unable to achieve such reductions, our business and
financial results will suffer.

                                       14
<PAGE>

IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY OR FACE A CLAIM OF
  INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE OUR
  INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR SIGNIFICANT DAMAGES



    We have taken steps to protect our intellectual property rights, but we
cannot be certain that our efforts will be adequate to safeguard our rights to
technology we have developed. Disputes concerning the ownership or rights to use
intellectual property could be costly and time-consuming to litigate, may
distract management from other tasks of operating the business, and may result
in our loss of significant rights or possibly the loss of our ability to operate
our business entirely.



    On December 26, 2000, NetZero, Inc. filed an action in the United States
District Court for the Central District of California, alleging that Juno has
infringed NetZero's U.S Patent No. 6,157,946. NetZero has alleged that the
persistent advertising and navigation banner used on Juno's free service, along
with other elements of Juno's service, infringes their patent. NetZero is
seeking unspecified monetary damages, attorneys fees, and various forms of
preliminary and permanent injunctive relief, including a prohibition on our
infringement of the specified patent, and a separate, broader prohibition on
Juno's continuing to offer its free service in its current form. On January 5,
2001, the court granted an interim temporary restraining order prohibiting Juno
from displaying third-party advertisements in the persistent advertising and
navigation banner, commencing January 12, 2001. This order will remain in effect
until March 15, 2001 at which time, we expect the court to hold a preliminary
injunction hearing to determine whether to extend, modify, or terminate the
interim order. The court has scheduled a trial commencing in July 2001. If, as a
result of this dispute, we were required to discontinue our display of
third-party advertising on the advertising and navigation banner, our
advertising revenues could be materially adversely affected. If we were required
to discontinue our use of the persistent advertising and navigation banner
entirely, the presence of this device as a differentiating feature between our
free service and our premium services would also be eliminated, and our ability
to upgrade users to and retain users in our billable premium services would be
impaired. If we were required to cease providing our free service in its current
form, our financial results and our business prospects could be materially
adversely affected. We intend to defend our interests vigorously in this matter.



    We have been granted four U.S. patents covering aspects of our technology
for the offline display of advertisements and the authentication and dynamic
scheduling of advertisements and other messages to be delivered to computer
users. We have also filed a number of other U.S. patent applications relating to
additional aspects of our business. We cannot assure you, however, that these
applications will result in the issuance of patents, that any patents that have
been granted or that might be granted in the future will provide us with any
competitive advantages or will be exploited profitably by us, or that any of
these patents will withstand any challenges by third parties. We also cannot
assure you that others will not obtain and assert patents against us which are
essential for our business. If patents are asserted against us, we cannot assure
you that we will be able to obtain license rights to those patents on reasonable
terms or at all. If we are unable to obtain licenses, we may be prevented from
operating our business and our financial results may therefore be harmed.



    Except as described above, we rely solely upon copyright and trademark law,
trade secret protection and confidentiality agreements with our employees and
with some third parties to protect our proprietary technology, processes, and
other intellectual property, to the extent that protection is sought or secured
at all. We cannot assure you that any steps we might take will be adequate to
protect against infringement and misappropriation of our intellectual property
by third parties. Similarly, we cannot assure you that third parties will not be
able to independently develop similar or superior technology, processes, or
other intellectual property. Furthermore, we cannot assure you that third
parties will not assert claims against us for infringement and misappropriation
of their intellectual property rights nor that others will not infringe or
misappropriate our intellectual property rights, for which we may wish to assert
claims.


                                       15
<PAGE>
OUR ABILITY TO CAUSE OUR FREE BASIC SERVICE SUBSCRIBERS TO SUBSCRIBE TO OUR
  BILLABLE PREMIUM SERVICE IS UNCERTAIN. IF THE NUMBER OF SUBSCRIBERS UPGRADING
  TO OUR BILLABLE SERVICES FALLS SHORT OF OUR GOALS, OUR BUSINESS AND FINANCIAL
  RESULTS WILL SUFFER

    Our business strategy contemplates that some of the subscribers to our free
basic service will decide over time to upgrade to our premium services. We are
relying increasingly on this migration as a major source of subscribers to our
billable premium services. Since July 1998, we have conducted advertising to our
free basic service subscribers to encourage them to upgrade. Over time, repeated
exposure to these advertisements has caused, and may continue to cause, their
effectiveness to decline. As a result, such advertisements may prove
insufficient to generate growth in or maintain the size of our billable
subscriber base. We expect that it will become more difficult and expensive over
time to effectively market our premium services to users of our free basic
service. Accordingly, the rate at which users of the free basic service upgrade
to our billable premium services may decline. If our marketing techniques fail
to generate an adequate conversion rate from free to billable premium services,
if the acquisition cost for subscribers acquired directly or indirectly into our
billable premium services is greater than expected, if diminished capital
resources require us to curtail even further our use of external marketing
channels, or if technical limitations make the conversion process more difficult
or time-consuming than anticipated, our business and financial results will
suffer.

OUR MARKETING RESOURCES MAY BE INSUFFICIENT TO GENERATE NEW SUBSCRIBERS OR
  AWARENESS OF OUR SERVICES

    In light of our objective of preserving cash resources, we currently expect
to significantly reduce the extent of our marketing activities, and there is a
risk that such activities as we do undertake, if any, may not be effective in
accomplishing our goals. Many of our competitors have greater financial
resources than we do and have undertaken significant advertising campaigns. We
cannot predict the timing, the type, or the extent of future advertising
activities by our competitors. It is possible that marketing campaigns
undertaken by our competitors will have an adverse effect on our ability to
retain or acquire subscribers. If we incur costs in implementing marketing
campaigns without generating sufficient new subscribers to our services, or if
capital limitations prevent us from implementing marketing campaigns, or if
marketing campaigns undertaken by competitors cause attrition in our subscriber
base, our business and financial results will suffer.

OUR SUBSCRIBER COUNT MAY DECLINE AND OUR BUSINESS MAY SUFFER AS A RESULT OF
  EXPECTED REDUCTIONS IN OUR SUBSCRIBER ACQUISITION ACTIVITIES AND, IN
  PARTICULAR, IN OUR USE OF CASH-INTENSIVE MARKETING CHANNELS FOR SUBSCRIBER
  ACQUISITION


    We may not succeed in acquiring or retaining a sufficiently large subscriber
base for our free basic service and our billable premium services. To acquire
new subscribers, we have historically relied on a number of cash-intensive
distribution channels for our free proprietary software that enables subscribers
to use our services. The most significant channel has been the use of direct
mail to circulate diskettes or CDs containing our software to large numbers of
prospective subscribers. We have suspended substantially all use of direct mail
for subscriber acquisition, and although our plans could change in response to
any of a number of factors, we do not currently expect to increase its use in
the near future. We have also reduced our use of other subscriber acquisition
channels, particularly channels that require significant cash expenditures, and
currently plan to reduce subscriber acquisition activities further in the
future. We have undertaken some alternative subscriber acquisition activities
that entail the expenditure of lesser amounts of cash, including stock-based
subscriber referral agreements with two former Internet access providers,
WorldSpy and Freewwweb, and with a retailer of computer software, Babbage's.
However, there can be no assurance that we will choose to pursue such
opportunities in the future, that we will be successful in identifying or
exploiting additional such opportunities if we do choose to pursue them, or that
the number of subscribers generated by any such opportunities we do identify and
exploit will be sufficient to grow, or even to maintain the size of, our
subscriber base. Additionally, there is a risk that recent declines in the
trading price of our common


                                       16
<PAGE>

stock will adversely affect the willingness of potential counterparties to
accept Juno common stock as an alternative to cash consideration in connection
with such opportunities. To the extent that alternative subscriber acquisition
methods we employ involve the issuance of Juno common stock as consideration,
existing stockholders may experience significant dilution of their ownership
interest and the newly issued securities may have rights superior to those of
our common stock.



DIFFICULTY RETAINING SUBSCRIBERS TO OUR SERVICES, AS WELL AS SUBSCRIBER
  ATTRITION CAUSED BY MEASURES WE HAVE IMPLEMENTED TO DISCOURAGE
  DISPROPORTIONATE USAGE OF OUR FREE SERVICE BY OUR HEAVIEST USERS, MAY CAUSE
  OUR BUSINESS TO SUFFER


    Our business and financial results are dependent on, among other things, the
number of subscribers to our services. Among other things, the number of active
subscribers has a significant impact on the number of advertising impressions we
have available to sell, and on how many billable service subscribers we can
potentially acquire by soliciting users of our free service. Each month, a
significant number of subscribers to our billable premium services choose to
cancel the service. In addition, each month a significant number of subscribers
to our free basic service become inactive. It is easy for Internet users to
switch to competing providers, and we believe that intense competition has
caused, and may continue to cause, many of our subscribers to switch to other
services. In addition, new subscribers may decide to use our services only out
of curiosity regarding the Internet, or to take advantage of free or low-cost
introductory offers for our billable premium services, and may later discontinue
using our services.


    Furthermore, we have recently begun implementing measures designed to
encourage the heaviest users of our free service to alter their usage patterns,
upgrade to one of our billable services, or generate additional revenues in some
other way that might help us cover the higher costs they cause us to incur.
While the details of these measures may change over time, these measures
currently include, but may or may not be limited to, the display of additional
advertising to heavier users and the prioritization of access to our free
service according to usage levels, among other factors. Such prioritization
mechanisms currently make it more difficult for the heaviest users of our free
service to establish and maintain a Web connection through Juno's free service,
particularly during those hours when overall usage tends to be highest, than is
expected to be the case for free subscribers whose usage patterns are more
typical. As a result of these measures, we are likely to experience at least
some degree of incremental subscriber attrition. We are unable to predict the
amount of such attrition we might experience overall, or the extent to which it
might involve subscribers other than those heavier users to whom we currently
expect to target these measures. In the event such measures were to result in a
significant decrease in the size of Juno's subscriber base, and particularly to
the extent such attrition were to involve subscribers other than the currently
targeted group, such measures could cause our business and financial results to
suffer. Furthermore, we may at some point in the future charge a fee for our
basic service or limit the amount a subscriber may use this service in a given
period. If we were to implement such changes, we might lose a significant number
of subscribers and our business and financial results could suffer.


    In the past, we have experienced lengthy periods during which subscriber
attrition caused the total number of subscribers using our services in a given
month to remain relatively static despite our addition of a substantial number
of new users to our services. In recent quarters, we have significantly reduced
our levels of cash expenditure for subscriber acquisition and retention, and we
expect to further reduce our cash expenditures for such activities in the
future. Although the many factors affecting subscriber acquisition and retention
make it difficult to accurately predict the future size of our subscriber base,
such reductions may cause our active subscriber counts to decline. To the extent
that such spending reductions, other changes in our policies or operations,
competitive or other market conditions, or other factors were to result in a
significant decline in the net number of active subscribers to one or more of
our services, this could cause our business and financial results to suffer.

                                       17
<PAGE>
SOME USERS OF OUR FREE BASIC SERVICE MAY BE UNABLE TO ACCESS THE WEB

    In order to obtain access to the Web, users of our free basic service must
be equipped with a version of our software at least as recent as version 4.0, as
well as a recent version of Microsoft Internet Explorer, the Web browsing
software that our free basic service requires. At September 30, 2000,
approximately 15% of active users of our free basic service used versions of our
software older than version 4.0. Although we hope to upgrade such users'
software to a more recent version automatically by downloading the newer version
to their computer during one of their connections, technical constraints prevent
us from completing automatic upgrades for users of the oldest versions of our
software. Instead, these users must choose to install the current version of our
software and, in some cases, would need to be sent a copy of the software by
mail before they could complete this process. Approximately 3% of our free basic
service users currently use a version of the Microsoft Windows operating system
older than Windows 95, and cannot upgrade to a current version of the Juno
software unless they upgrade to a more current version of Windows. There is a
risk that some portion of our basic service user base will never upgrade to a
current version of the Juno software and will be unable to access the Web
through our free basic service.

    If a significant percentage of our basic service users do not use the Web,
our ability to display Web-related advertisements and generate associated
revenues will be harmed.

COMPETITION IN THE MARKETS FOR INTERNET SERVICES, INTERNET ADVERTISING AND
  ELECTRONIC COMMERCE IS LIKELY TO INCREASE IN THE FUTURE AND MAY HARM OUR
  BUSINESS

    The market for Internet services is extremely competitive and includes a
number of substantial participants, including America Online, Microsoft and
AT&T. The markets for Internet-based advertising and electronic commerce are
also very competitive. Our ability to compete depends upon many factors, many of
which are outside of our control.

    INTENSE COMPETITION EXISTS IN THE MARKET FOR INTERNET SERVICES

    We may not be able to compete successfully against current or future
competitors, and the competitive pressures that we face may cause our business
and financial results to suffer. We believe that the primary competitive factors
determining success in these markets include effective marketing to promote
brand awareness, a reputation for reliability and service, effective customer
support, pricing, easy-to-use software and geographic coverage. Other important
factors include the timing and introduction of new products and services as well
as industry and general economic trends. The market for Internet services has
begun to consolidate, and we expect competition to increase as some of our
competitors grow larger through consolidation or begin to bundle Internet
services with other products and services. Our current and potential competitors
include many large national companies that have substantially greater market
presence and financial, technical, distribution, marketing and other resources
than we have. This may allow them to devote greater resources than we can to the
development, promotion and distribution and sale of products and services.


    Our competitors may be able to charge less for premium Internet services
than we do for our billable premium services, or offer services for free that we
currently provide only for a fee, which may put pressure on us to reduce or
eliminate, or prevent us from raising, the fees we charge for our billable
premium services. We may choose, for competitive or other reasons, to lower or
eliminate the fees we currently charge for our billable premium services, or
enhance the features available to users of our free basic service, in order to
remain competitive with other industry participants. It is likely, however, that
we will increase the fees we charge for at least some subscribers to our
billable premium services in an effort to increase our billable services revenue
and profitability, in spite of the fact that such price increases would be
expected to result in subscriber attrition, possibly to an extent sufficient to
cause overall revenues from billable services to decline. Any increase in the
prices we charge for our billable services could result in a reduction of demand
for our billable services and possibly in our


                                       18
<PAGE>

overall billable services revenue. Moreover, any decrease in such prices could
result in a reduction in our billable services revenue and would harm the
profitability of our billable services. Thus, if we make any change in our
pricing, our business and financial results may suffer.


    In recruiting subscribers for our services, we currently compete, or expect
to compete, with the following types of companies, among others:

    - Established online service providers such as America Online, CompuServe,
      and The Microsoft Network;


    - National Internet service providers such as EarthLink and Prodigy,
      including companies, such as NetZero and Bluelight.com, that offer Web
      access for free;


    - Numerous independent regional and local Internet service providers that
      may offer lower prices than a national Internet service provider;

    - Various national and local telephone companies such as AT&T, MCI WorldCom
      and Pacific Bell;

    - Companies providing Internet access through "set-top boxes" connected to a
      user's television, such as WebTV, or through a "cable modem" connected to
      a user's personal computer, such as [email protected]; and

    - Companies providing Internet access services using other broadband
      technologies, including digital subscriber line technology, commonly known
      as DSL, such as the Regional Bell Operating Companies and various partners
      of Covad, Rhythms, and NorthPoint.

    In addition, Microsoft and Netscape, publishers of the Web browsers utilized
by most Internet users, including Juno subscribers, each own or are owned by
online or Internet service providers that compete with Juno.

    In addition to competition from the types of companies listed above, we also
face the risk that subscribers to our premium billable services will migrate to
our free basic service, which would result in a decrease in our subscription
revenues.

    We do not currently offer services internationally, other than to a small
base of users located in Canada. If the ability to provide Internet services
internationally becomes a competitive advantage in our markets and we do not
begin to provide services internationally, we will be at a competitive
disadvantage.


    WE RELY ON REVENUES FROM ADVERTISING AND ELECTRONIC COMMERCE AND THESE
     REVENUES HAVE BEEN, AND MAY CONTINUE TO BE, ADVERSELY AFFECTED BY CONTINUED
     WEAKNESS IN THE MARKET FOR INTERNET ADVERTISING


    With respect to the generation of advertising and electronic commerce
revenue, we compete with many of the market participants listed above as well as
with various advertising-supported Web sites, including portal sites such as
Yahoo! and Excite, content sites such as CNET and CNN.com, and interactive
advertising networks and agencies such as DoubleClick and 24/7 Media. We also
compete with traditional media such as print and television for a share of
advertisers' total advertising budgets. If advertisers perceive the Internet to
be a limited or ineffective advertising medium or perceive us to be less
effective or less desirable than other Internet advertising vehicles,
advertisers may be reluctant to advertise on our services.


    In addition to intense competition, the overall market for Internet
advertising has been characterized in recent quarters by continuing and
significant reduction in demand, the reduction or cancellation of advertising
contracts, a significantly increased risk of uncollectible receivables from
advertisers, and a significant reduction of Internet advertising budgets,
especially by Internet-related companies. In addition, an increasing number of
Internet-related companies have experienced


                                       19
<PAGE>

deteriorating financial results and liquidity positions, and/or ceased
operations or filed for bankruptcy protection, or may be expected to do so. The
impact of these trends is exacerbated in Juno's case because of the large
percentage of Juno's advertisers that are Internet related companies. If demand
for Internet advertising in general or our advertising inventory in particular
does not increase or declines further, if our advertisers reduce or cancel their
contracts with us or if we are unable to collect amounts they owe us for
contracts we fulfill, our business and financial results may suffer.


    OUR COMPETITION IS LIKELY TO INCREASE IN THE FUTURE

    Our competition has increased and is likely to continue to increase. We
believe this will probably happen as Internet service providers and online
service providers consolidate and become larger, more competitive companies, and
as large diversified telecommunications and media companies acquire Internet
service providers. Many market participants offer services similar to one or
more of the services we provide. Other market participants may introduce free
Internet access services that compete with ours. The larger Internet service
providers and online service providers, including America Online, offer their
subscribers a number of services that we do not currently provide. Some
diversified telecommunications and media companies, such as AT&T, have begun to
bundle other services and products with Internet access services, potentially
placing us at a significant competitive disadvantage. Additionally, some
Internet service providers and personal computer manufacturers have formed
strategic alliances to offer free or deeply discounted computers to consumers
who agree to sign up with the service provider for a one-year or multi-year
term. In a variant on this approach, some Internet service providers have
secured strategic relationships with manufacturers or retailers of computer
equipment in which the service provider finances a rebate to consumers who sign
up with the service provider for one or more years. In the past, we have formed
several such relationships, and did not find them effective as a means of
attracting new subscribers to our services. Our competitors may be able to
establish strategic alliances or form joint ventures that put us at a serious
competitive disadvantage. Increasing competition could result in increased
subscriber attrition. It could also put pressure on us to increase our spending
for sales and marketing and for subscriber acquisition and retention activities
at a time when we may not have adequate cash resources to devote to such
activities. Competition could also require us to lower the prices we charge for
our billable premium services, or eliminate such fees altogether, in order to
maintain our marketplace position. Any of these scenarios could harm our
business and financial results, and we may not have the resources to continue to
compete successfully.

WE ARE DEPENDENT ON STRATEGIC MARKETING ALLIANCES AS A SOURCE OF REVENUES AND
  OUR BUSINESS COULD SUFFER IF ANY OF THESE ALLIANCES IS TERMINATED

    We have strategic marketing alliances with a number of third parties, and
most of our strategic marketing partners have the right to terminate their
agreements with us on short notice. The number of terminations by our partners
of various types of advertising contracts has increased over the course of 2000.
If any of our strategic marketing agreements are terminated, we cannot assure
you that we will be able to replace the terminated agreement with an equally
beneficial arrangement. We also expect that we will not be able to renew all of
our current agreements when they expire or, if we are, that we will be able to
do so on acceptable terms. We also do not know whether we will be successful in
entering into additional strategic marketing alliances, or that any additional
relationships, if entered into, will be on terms favorable to us. Our receipt of
revenues from our strategic marketing alliances may also be dependent on factors
which are beyond our control, such as the quality of the products or services
offered by our strategic marketing partners. Additionally, many of our strategic
marketing partners are concentrated within the Internet industry. As a result,
any downturn that affects the Internet industry generally, and, in particular,
any downturn that affects the ability of our partners to pay revenues or
advances against revenue as they become due, could cause our business and
financial results to suffer.

                                       20
<PAGE>
OUR STRATEGIC MARKETING ALLIANCES AND OTHER SOURCES OF ADVERTISING REVENUE ARE
  CONCENTRATED IN THE INTERNET INDUSTRY, MAKING US VULNERABLE TO DOWNTURNS
  EXPERIENCED BY OTHER INTERNET COMPANIES OR THE INTERNET INDUSTRY IN GENERAL


    In the quarter ended September 30, 2000, we derived approximately 75% of our
advertising revenue from strategic marketing and advertising relationships with
other Internet companies. At the current time, we believe that some of these
companies may be having difficulty generating operating cash flow or raising
capital, or are anticipating such difficulties, and are electing to scale back
the resources they devote to advertising, including on our system. Other
companies in the Internet industry have depleted their available capital, and
have ceased operations or filed for bankruptcy protection or may be expected to
do so. Difficulties such as these may affect the total amount of advertising
inventory we can sell, and may also affect our ability to collect revenues or
advances against revenues from our existing partners or advertisers as such
amounts become due. If the current environment for Internet advertising does not
improve, our business and financial results may suffer.



OUR BUSINESS MAY BE ADVERSELY AFFECTED IF THE MARKET FOR INTERNET ADVERTISING
  CONTINUES TO CONTRACT OR FAILS TO RECOVER



    Our business and financial results are dependent on the use of the Internet
as an advertising medium. Internet-based advertising accounts for only a small
fraction of all advertising expenditures, and we cannot be sure that
Internet-based advertising will ever grow to account for a substantial
percentage of total advertising spending or when an increase might occur. Our
business may suffer if the market for Internet-based advertising continues to
contract or fails to recover. Our business also may suffer if users install
"filter" software programs that limit or prevent advertising from being
delivered to their computers. Widespread adoption of this type of software could
harm the commercial viability of Internet-based advertising.


    Sales of advertising space on our services represent an important revenue
source for us. Competition for Internet-based advertising revenues is intense,
and this competition, together with a continuing increase in the amount of
advertising space available overall on the Internet, has resulted in significant
price erosion over time, which may continue. We cannot assure you that we will
be successful in selling advertising or capturing a significant share of the
market for Internet-based advertising. We also cannot assure you that we will be
able to sell advertising at the rates we currently project, and it may become
necessary to lower the rates for advertising space on our services.

    We currently rely primarily on our internal sales and marketing personnel
for generating sales leads and promoting our services to the advertising
community. We also rely on revenue arrangements under third party relationships
in which Juno receives revenue in return for the display of advertising sold by
a third party partner. These arrangements include relationships with
LookSmart Ltd. and 24/7 Media.

    Under our agreement with LookSmart, LookSmart provides Internet search and
directory features to our subscribers through our Web portal site, and we are
entitled to receive payments based on the volume of Web pages viewed by users of
these features. We cannot be sure that our users will find the services provided
by LookSmart useful, or that they will utilize LookSmart's search and directory
features in a manner that generates significant revenue to Juno. If usage of the
LookSmart features is less than projected, then our business and financial
results may suffer.


    Under our current agreement with 24/7 Media, we are entitled to a portion of
the revenues earned from their sale of advertising on the persistent advertising
and navigation banner that is displayed to users who access the Web through our
free basic service. In late 2000, we settled an arbitration proceeding we
initiated against 24/7 Media and the parties agreed to a restructured,
non-exclusive relationship, without future guaranteed minimum payments to Juno.


                                       21
<PAGE>

    Additionally, in connection with a patent infringement action brought
against us by NetZero, Inc., we have discontinued the display of third-party
advertisements in the persistent advertising and navigation banner as of January
12, 2001, pursuant to a temporary order entered by the court. The order will
remain in effect through March 15, 2001, and possibly thereafter. If NetZero
ultimately succeeds in its infringement action, we may be permanently prohibited
from utilizing our advertising and navigation banner as an additional source of
advertising inventory. There can be no assurance that, in the future, we will be
able to continue the use of the advertising and navigation banner in connection
with our free basic service, or, that if we are permitted to do so we will be
able to generate significant revenues from the sale of advertising inventory on
this banner, either through 24/7 Media, any third-party sales agent, or our own
internal sales organization. If we are unable to sell this inventory or to do so
at favorable rates, our advertising revenues could be materially adversely
affected.



    If Internet-based advertising continues to contract or fails to recover, or
if we are unable to capture a sufficient share of Internet-based advertising,
our business and financial results may suffer. Additionally, we have experienced
difficulties in achieving our projected level of advertising sales, especially
with respect to the persistent advertising and navigation banner marketed by
24/7 Media. If our internal sales organization, 24/7 Media or other independent
sales organizations are not able to accomplish desired sales objectives, and we
are not able to replace the revenue payments previously guaranteed to us by
24/7 Media, then our business and financial results may suffer.


IF INTERNET USAGE DOES NOT CONTINUE TO GROW, OUR BUSINESS WILL SUFFER

    Our business and financial results depend on continued growth in the use of
the Internet. We cannot be certain that this growth will continue or that it
will continue in its present form. If Internet usage declines or evolves away
from our business, our ability to grow, if any, will be harmed.

WE MUST ADAPT TO TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS OR WE WILL
  NOT BE COMPETITIVE

    Our failure to respond in a timely and effective manner to new and evolving
technologies, including cable modem and other broadband technology, could harm
our business and financial results. The Internet services market is
characterized by rapidly changing technology, evolving industry standards,
changes in member needs and frequent new service and product introductions. We
may not be able to foresee or respond to these technical advances effectively or
at all. Our business and financial results depend, in part, on our ability to
use leading technologies effectively, to develop our technical expertise, to
enhance our existing services and to develop new services that meet changing
member needs on a timely and cost-effective basis. In particular, we must
provide subscribers with the appropriate products, services and guidance
required to best take advantage of the rapidly evolving Internet. If the market
for our services should fail to develop, develop more slowly than we expect,
become saturated with competitors, or develop in a fashion that renders our
services uncompetitive or otherwise unappealing to consumers, our business and
financial results may suffer.

    We are also at risk due to fundamental changes in the way that Internet
access may be provided in the future. Currently, consumers access Internet
services primarily through computers connected by telephone lines. Broadband
connections, however, allow significantly faster access to the Internet than is
possible using the telephone-based analog modems currently used by most of our
subscribers. In many regions, cable television companies, local and long
distance telephone companies, and wireless communications companies, have begun
to provide Internet access. These competitors, including cable television
operators, may include Internet access in their basic bundle of services or may
offer Internet access for a nominal additional charge. We have begun to enter
into arrangements with providers of broadband connections to allow the delivery
of our services over distribution channels they own or control. However, the
majority of our broadband relationships are at a developmental or initial
implementation stage and the associated services are used by a negligible number
of subscribers at the current time. Moreover, only a portion of our subscriber
base is currently served by broadband

                                       22
<PAGE>
providers with which we have existing agreements. In other segments of our
market, there is a risk that we may be unable to offer our subscribers
high-speed Internet access. In the future, we might also be prevented from
delivering high-speed Internet access through networks controlled by competitors
of ours, or from doing so on a cost-effective basis.

    Even if we are not prevented from delivering our Internet services through
the broadband connections owned by other companies, the delivery of our Internet
services using broadband technology is subject to significant risks and
uncertainties, and we may be unable to adapt to the challenges posed by
broadband technologies.

    We may also have to modify the means by which we deliver our Internet
services, in which case we would incur significant costs. If consumers adopt
alternative forms of Internet access that provide a continuous connection to the
Internet rather than relying on a series of separate dial-up connections, then
any competitive advantage that we currently realize because our technology
minimizes connect time may diminish. If other companies are able to prevent us
from delivering our Internet services through the wire, cable and wireless
connections that they own, if we are unable to adapt to the challenges posed by
broadband technologies or if we incur significant costs without generating
sufficient revenues, our business and financial results may suffer.

AS THE MARKET FOR BROADBAND SERVICES EXPANDS, OUR BUSINESS MAY BE HARMED IF WE
  CANNOT PROVIDE COMPETITIVE BROADBAND SERVICES THROUGH JUNO EXPRESS

    Juno Express, our billable broadband service, delivers Internet access at
broadband speeds currently through the use of DSL and mobile wireless
technologies. Juno Express currently accounts for an extremely small percentage
of our active subscriber base. As our DSL service is currently designed, before
we can provide service to a subscriber, the subscriber's local telephone company
frequently must either install and configure an additional copper telephone line
at the subscriber's residence or reconfigure an existing telephone line if a
line that can be used for the DSL connection is available. Accordingly,
consumers who wish to subscribe to the DSL version of Juno Express currently
must go through a complex installation process, for which we are dependent on
the performance of the local telephone company. We are also currently dependent
on the performance of a national supplier of DSL services, Covad Communications,
with whom we have chosen to partner for the delivery of Juno Express using DSL
technology. Covad is responsible for completing the installation process begun
by the local telephone company. Currently, a Covad technician must visit the
residence of each Juno Express subscriber to complete any necessary wiring and
to deliver and test DSL hardware. If our relationship with Covad is
unsuccessful, or if Juno and Covad are unable to coordinate the installation of
necessary telephone lines with local telephone companies, or if other factors
delay or otherwise hinder our ability to expand beyond the markets in which the
service is currently available, or if these or other factors affect our ability
to introduce or deliver DSL-based services in a timely and cost-effective
fashion, then our business and financial results may suffer.


    In addition to the DSL service described above, we have recently begun
offering a Juno Express mobile wireless service powered by Metricom's Ricochet
technology. This service is currently being offered in only 14 markets, and
there can be no assurances that the performance or availability of this service
will be acceptable to us or to our subscribers, or that Metricom will
successfully expand this service offering beyond the current markets.
Additionally, use of this service requires subscribers to purchase and install
special hardware, in connection with which we are dependent on a third party
that must coordinate installation and activation with Metricom.



    Although we have begun to make arrangements for the provision of the Juno
Express service over other broadband platforms, the relationships on which such
expansion depends are new and are subject to significant risks and
uncertainties. We have recently entered into agreements with AT&T Broadband and
Time Warner for the provision of Internet services over cable technology,
initially in small-scale tests. In the case of AT&T Broadband, there is a
significant risk that AT&T will not succeed in


                                       23
<PAGE>

renegotiating an existing agreement under which [email protected] has the exclusive
right to provide high-speed broadband services over AT&T's cable system through
June 2002. If AT&T is unsuccessful, we will not be able to offer Juno Express
over AT&T's cable systems at speeds above 128kbps until July 2002 at the
earliest. Additionally, we may find that offering Juno Express over cable
systems requires us to incur levels of operating expense that make broad
expansion of these two relationships unfeasible or unattractive to us. There are
also risks that either of these companies could exercise rights to terminate
their relationship with Juno.



    We have entered into an arrangement to offer Juno Express through broadband
satellite services provided by Hughes. There are significant risks and
uncertainties associated with this arrangement, including risks that additional
technical development requirements may delay the service rollout schedule, that
the service may prove unattractive to our customers, and that the pricing of the
service may not be competitive with other broadband services.


    The market for broadband services is in the early stages of development, and
we cannot assure you that broadband services in general, or that any of DSL,
cable, mobile wireless or satellite technologies in particular, will become
popular with consumers. We cannot assure you that we will have adequate access
to any of these technologies at favorable rates, that we will be able to reach a
sufficient number of users through the broadband partners identified above, or
that we will have adequate capital to take advantage of existing or future
opportunities to provide broadband services. Juno Express faces competition in
the market for broadband services from many competitors with significant
financial resources, well-established brand names, and large existing customer
bases. In many markets, these competitors already offer, or are expected to
offer, broadband Internet access at prices lower than we expect to be able to
offer to potential customers for Juno Express. If we are unable to provide
competitive broadband services at competitive rates, our business and financial
results may suffer.

OUR ADVERTISING SYSTEM REQUIRES LABOR AND IMPOSES COSTS ON US BEYOND THOSE
  ASSOCIATED WITH STANDARD WEB ADVERTISING

    A significant fraction of the advertising inventory available on our
services is non-standard when compared to advertising on the Web and may put
Juno at a competitive disadvantage. Although our Web portal site and the
persistent advertising and navigation banner shown to users of our free basic
service when they access the Web utilize standard Web formatting, the
substantial amount of advertising inventory associated with the e-mail portion
of our services employs non-standard formatting. The advertisements displayed
while a subscriber reads and writes e-mail are created using proprietary tools
that are not fully compatible with standard Web advertising. Therefore, many
advertisements displayed on our services require customization that would not be
required by a Web site capable of displaying previously prepared standard
advertisements. This customization work increases the time necessary to prepare
an advertisement to be displayed on our services and the costs associated with
running these ads. We must also absorb the telecommunications cost associated
with downloading ads to our subscribers, which is an expense that
advertising-supported Web sites do not incur. As ads become more complex, our
telecommunications expenses may increase. Furthermore, the costs associated with
selling or attempting to sell advertising space on our services are significant.
These costs may be greater than the costs associated with selling advertising
space on Web sites that exclusively utilize standard Web advertising formats.
Additionally, our use of a proprietary advertising format could interfere with
our packaging a significant portion of our advertising space for sale by an
advertising network such as DoubleClick or 24/7 Media. Any of the above factors
could discourage advertising on our network by some advertisers.

SEASONAL TRENDS IN INTERNET USAGE AND ADVERTISING SALES MAY NEGATIVELY AFFECT
  OUR BUSINESS

    Seasonal trends are likely to affect the revenues we generate from operating
our Internet services. Subscribers typically use our Internet services less
during the summer months and year-end holiday

                                       24
<PAGE>
periods. To the extent that our revenues depend on the amount of usage by our
subscribers, our revenues may be lower during these periods. For example, some
of the subscribers to Juno Web pay us based on the number of hours they spend
using our services in a given month. In addition, the rate at which new
subscribers sign up for our billable premium services may be lower during the
summer months and year-end holiday periods, other things being equal.

    Since our operating expenses are based on our expectations of future
revenues, including seasonal fluctuations, it is possible that operating results
will suffer if these seasonal trends do not continue in the future or if
different seasonal trends develop in the future.

WE ARE DEPENDENT ON A SMALL NUMBER OF TELECOMMUNICATIONS CARRIERS AND MAY BE
  UNABLE TO FIND ADEQUATE REPLACEMENTS IF THEIR RATES INCREASE, SERVICE QUALITY
  DECLINES, OR IF THEY DISCONTINUE DOING BUSINESS WITH US


    Our business and financial results depend in significant part on the
capacity, affordability, reliability and security of our telephone company data
networks. To use our services, subscribers must initiate telephone connections
between their personal computers and computer hardware in local or regional
facilities known as "points of presence." We contract for the use of points of
presence around the country from various telecommunications carriers. These
carriers currently include UUNET Technologies, which is operated by WorldCom;
Level 3; XO Communications (formerly Concentric); Splitrock Services; Sprint;
PSINet; NaviPath and StarNet. We also rely on these telecommunications companies
to carry data between their points of presence and our central computers located
in Cambridge, Massachusetts and Jersey City, New Jersey.


    As of September 30, 2000, we had contracted for the use of more than 3,400
local telephone numbers associated with points of presence throughout the United
States. Nevertheless, a minority of our subscriber base may be unable to access
our services through a point of presence that is within their local calling
area. These users may be particularly reluctant to use the Web, either through
our free basic service or through Juno Web, due to the telecommunications
charges that they would incur during an extended connection to the Web. The
inability of some of our subscribers to access the Web with a local call in some
areas of the country could harm our business. We cannot be sure if or when
additional infrastructure developments by our telecommunications providers will
establish points of presence that cover these areas.

    At various times in the past, network capacity constraints at particular
points of presence have prevented or delayed access by subscribers attempting to
connect to our services. This could happen in the future, especially during
times of peak usage. Difficulties accessing our services due to poor network
performance could cause our subscribers to terminate their subscriptions with
us. Because we depend on third-party telecommunications carriers for crucial
portions of our network infrastructure, we do not have direct control over
network reliability and some aspects of service quality. A natural disaster or
other unanticipated problem that affects the points of presence or the
telecommunications lines we use, or that affects the nation's telecommunications
network in general, could cause interruptions in our services.

    Only a small number of telecommunications companies can provide the network
services we require. This number has been reduced through consolidation in the
telecommunications industry, and there is a significant risk that further
consolidation could make us reliant on an even smaller number of providers.
Currently, we are particularly dependent on WorldCom, which provides more than
1,100 of the more than 3,400 points of presence for which we contract, many of
which are in locations not served competitively by other telecommunications
carriers. Our business could be significantly harmed if we are unable to
maintain a favorable relationship with WorldCom and the companies they control.
We cannot assure you that we would be able to replace all of the services
provided to us through WorldCom were our relationship with them to be
terminated.

                                       25
<PAGE>

    Our financial results are highly sensitive to variations in prices for the
telecommunications services described above. In the past, we have benefited from
reductions in per-unit pricing for telecommunications services. We cannot assure
you that telecommunications prices will continue to decline, or that there will
not be telecommunications price increases due to factors within or beyond our
control, including but not limited to a decline in the total number of
telecommunications hours our subscribers consume, possibly due in part to
reductions in the size of our subscriber base. We cannot assure you that our
telecommunications carriers will continue to provide us access to their points
of presence on our current or better price terms, that the price terms that they
do offer us, if any, will be sufficiently low to meet our needs, or that
alternative services will be available in the event that their quality of
service declines or that our relationship with any of our current carriers is
terminated. Additionally, the number of telecommunications companies providing
service to us may be reduced as a result of one or more of these companies
discontinuing dial-up service or ceasing operations entirely. If any of these
companies becomes unable to provide service in locations not served by numerous
other providers, the rates we pay for telecommunications services may increase
as a result of reduced competition.


    Most of the telecommunications services we purchase are provided to us under
short-term agreements that the providers can terminate or elect not to renew. As
a result, there is a significant risk that any or all of our telecommunications
carriers could end their relationship with us. In addition, each of our
telecommunications carriers provides network access to some of our competitors,
and could choose to grant those competitors preferential network access,
potentially limiting our members' ability to access the Internet or connect to
our central computers. Furthermore, the majority of our telecommunications
providers compete, or have announced an intention to compete, with us in the
market to provide consumer Internet access. If our telecommunications service
providers were to decrease the levels of service or access provided to us, or if
they were to terminate their relationships with us for competitive or other
reasons, our business and financial results would suffer.

WE ARE DEPENDENT ON A THIRD PARTY FOR TECHNICAL AND CUSTOMER SERVICE SUPPORT AND
  OUR BUSINESS MAY SUFFER IF IT IS UNABLE TO PROVIDE THESE SERVICES, CANNOT
  EXPAND TO MEET OUR NEEDS, OR TERMINATES ITS RELATIONSHIP WITH US

    Our business and financial results depend, in part, on the availability and
quality of live technical and customer service support services. Although many
Internet service providers have developed internal customer service operations
designed to meet these needs, we have elected to outsource these functions. We
currently purchase almost all of our technical and customer service support from
ClientLogic Corporation. As a result, we maintain only a small number of
internal customer service personnel. We are not equipped to provide the
necessary range of customer service functions in the event that ClientLogic
becomes unable or unwilling to offer these services to us.


    At December 31, 2000, ClientLogic provided approximately 550 full-time or
part-time employees at its facilities to service our account. We believe the
availability of call-in technical support and customer service is especially
important to acquire and retain subscribers to our billable premium services,
and we are dependent on ClientLogic to provide this function. At times, our
subscribers have experienced lengthy waiting periods to reach representatives
trained to provide the technical or customer support they require. We believe
that failure to provide consistent customer support and to maintain consumer-
acceptable hold times could have an adverse effect on our subscriber acquisition
and retention efforts in the future. However, maintaining desired customer
support levels may require significantly more support personnel than are
currently available to us through ClientLogic, or significantly greater expense
than we feel it is appropriate, or than we are able, to incur. Additionally, if
we elect to offer customer service features that we do not currently support, or
to enhance the overall quality of our customer support for competitive reasons,
we may require even greater resources. We are currently soliciting proposals
from additional vendors to supplement the services provided to us by
ClientLogic, or to provide such services in the event our relationship with
ClientLogic terminates. Our current


                                       26
<PAGE>

agreement with ClientLogic converted to a month-to-month contract on August 1,
2000, under which either party has the right to terminate the relationship at
any time upon one month's notice. Although we are currently renegotiating the
terms of our relationship with ClientLogic, there is a significant risk that
ClientLogic could exercise its one-month termination rights under the current
agreement if the parties are unable to reach mutually acceptable terms. If our
relationship with ClientLogic terminates and we are unable to enter into a
comparable arrangement with a replacement vendor, if ClientLogic is unable to
provide enough personnel to provide the quality and quantity of service we
desire, if system failures, outages or other technical problems make it
difficult for our subscribers to reach customer service representatives at
ClientLogic, or if we are unable to obtain externally or develop internally the
additional customer service and technical support capacity we expect to need,
our business and financial results may suffer.


DISRUPTION OF OUR INTERNET SERVICES DUE TO SECURITY BREACHES AND SYSTEM FAILURES
  COULD RESULT IN SUBSCRIBER CANCELLATIONS

    Both our infrastructure and the infrastructure of our network providers are
vulnerable to security breaches or similar disruptive problems and system
failures. Our systems are also subject to telecommunications failures, power
loss, software-related system failures and various other events. Any of these
events, whether intentional or accidental, could lead to interruptions, delays
or cessation of service to our subscribers. This could cause some of our
subscribers to stop using our Internet services. Third parties could also
potentially jeopardize the security of confidential information stored in our
computer systems or our subscribers' computer systems through their
inappropriate use of the Internet, which could cause losses to us or our
subscribers or deter some people from subscribing to our services. People may be
able to circumvent our security measures or the security measures of our third
party network providers.


    We may have to interrupt, delay or cease service to our subscribers to
alleviate problems caused by computer viruses, security breaches or other
failures of network security. Any damage or failure that interrupts or delays
our operations could result in subscriber cancellations, could harm our
reputation, and could affect our business and financial results. Our insurance
coverage may not adequately compensate us for any losses that may occur due to
any failures in our systems or interruptions in our services.



STAFF ATTRITION COULD STRAIN OUR MANAGERIAL, OPERATIONAL, FINANCIAL AND OTHER
  RESOURCES



    We had 65 employees at December 31, 1996, 152 employees at December 31,
1997, 144 employees at December 31, 1998, 263 employees at December 31, 1999,
including 60 employees in India, and 329 employees at September 30, 2000,
including 74 employees in India. Prior to May 21, 1999, consultants used in
India were employed by an affiliate of Juno. We expect to continue to rely on
outsourcing arrangements for our customer service needs and for the performance
of some advertising sales functions.



    Any significant amount of staff attrition we experience, whether initiated
by the departing employees or by the company, could place a significant strain
on our managerial, operational, financial and other resources. To the extent
that the company does not initiate or seek any staff attrition that occurs,
there can be no assurance that we will be able to identify and hire adequate
replacement staff promptly, or at all. If the size of our staff is significantly
reduced, either by the company's choice or otherwise, we could face significant
management, operational, financial and other constraints. For example, it may
become more difficult for us to manage existing, or establish new, relationships
with advertisers, vendors and other counterparties, or to expand and improve our
service offerings. It may become more difficult for us to implement changes to
our business plan or to respond promptly to opportunities in the marketplace. It
may become more difficult for us to devote personnel resources necessary to
maintain or improve existing systems, including our financial and managerial
controls,


                                       27
<PAGE>

billing systems, reporting systems and procedures. Thus, any significant amount
of staff attrition could cause our business and financial results to suffer.


WE FACE POTENTIAL LIABILITY FOR INFORMATION TRANSMITTED OR RETRIEVED THROUGH OUR
  INTERNET SERVICES

    Our business and financial results may suffer if we incur liability as a
result of information transmitted or retrieved through our services. The
liability of Internet service providers and online services companies for
information transmitted or retrieved through their services is uncertain. It is
possible that claims may be filed against us based on a variety of theories,
including defamation, obscenity, negligence, copyright or trademark
infringement, or other theories based on the nature, publication or distribution
of this information. These types of claims have been brought, sometimes
successfully, against providers of Internet services in the past. Such claims,
with or without merit, would likely divert management time and attention and
result in significant costs to investigate and defend. In addition, if we become
subject to these types of claims and we are not successful in our defense, we
may be forced to pay substantial damages. We may also be forced to implement
expensive measures to alter the way our services are provided to avoid any
potential liability.

CHANGES IN GOVERNMENT REGULATION COULD DECREASE OUR REVENUES AND INCREASE OUR
  COSTS

    Changes in the regulatory environment could decrease our revenues and
increase our costs. As a provider of Internet access services, we are not
currently subject to direct regulation by the Federal Communications Commission.
However, several telecommunications carriers are seeking to have communications
over the Internet regulated by the FCC in the same manner as other more
traditional telecommunications services. Local telephone carriers have also
petitioned the FCC to regulate Internet access providers in a manner similar to
long distance telephone carriers and to impose access fees on these providers
and some developments suggest that they may be successful in obtaining the
treatment they seek. In addition, we operate our services throughout the United
States, and regulatory authorities at the state level may seek to regulate
aspects of our activities as telecommunications services. As a result, we could
become subject to FCC and state regulation as Internet services and
telecommunications services converge.

    We remain subject to numerous additional laws and regulations that could
affect our business. Because of the Internet's popularity and increasing use,
new laws and regulations with respect to the Internet are becoming more
prevalent. These laws and regulations have covered, or may cover in the future,
issues such as:

    - user privacy;

    - children's privacy;

    - pricing;

    - intellectual property;

    - federal, state and local taxation;

    - advertising;

    - distribution; and

    - characteristics and quality of products and services.

    Legislation in these areas could slow the growth in use of the Internet
generally and decrease the acceptance of the Internet as a communications and
commercial medium.

    It may take years to determine how existing laws such as those governing
intellectual property, privacy, libel and taxation apply to the Internet. Any
new legislation or regulation regarding the Internet, or the application of
existing laws and regulations to the Internet, could harm us. Additionally, we
have begun to service a small number of subscribers who are located in Canada.
Laws

                                       28
<PAGE>
and regulations relating to the Internet, or to doing business in Canada, or
similar laws and regulations in other jurisdictions should we choose to continue
to expand elsewhere outside of the United States, could have an adverse effect
on our business.

    The growth of the Internet, coupled with publicity regarding Internet fraud,
may also lead to the enactment of more stringent consumer protection laws. For
example, numerous bills have been presented to Congress and various state
legislatures designed to address the prevalence of unsolicited commercial bulk
e-mail on the Internet. These laws may impose additional burdens on our
business. Additionally, because we rely on the collection and use of personal
data from our subscribers for targeting advertising and other communications to
our subscribers, we may be harmed by any laws or regulations that restrict our
ability to collect or use this data. The Federal Trade Commission has conducted
investigations into the privacy practices of companies that collect information
about individuals on the Internet. The enactment of any additional laws or
regulations in this area, or renewed enforcement activity of existing laws and
regulations, may impede the growth of the Internet, which could decrease our
potential revenues or otherwise cause our business to suffer.

FEDERAL TRADE COMMISSION ACTION COULD IMPACT OUR FINANCIAL RESULTS AND MARKETING
  PRACTICES

    The FTC has been investigating the advertising, billing and cancellation
practices of various Internet-related companies, including Juno. At the FTC's
request, we have provided marketing-related and customer service-related
information concerning our services. On the basis of these submissions, the FTC
staff has claimed, among other things, that Juno's disclosure practices about
the possibility of users incurring telephone charges were insufficient, and that
Juno's cancellation policies for subscribers to its billable services were
unduly restrictive. On the basis of our discussions with the FTC staff, we have
begun implementing modifications to the disclosure we make about
telecommunications charges that users might incur and to our billable services
cancellation practices. Depending on the final outcome of the FTC inquiry, we
could be required under a consent order or otherwise to make compensatory
payments, to revise our advertising and marketing materials, and to make further
modifications to our business practices. As a result, our business and financial
results could suffer.

UNANTICIPATED DELAYS OR PROBLEMS IN THE INTRODUCTION OF NEW FEATURES OR SERVICES
  MAY CAUSE CUSTOMER DISSATISFACTION

    If we experience problems related to the reliability and quality of our
services or delays in the introduction of new versions of or enhancements to our
services, we could experience increased subscriber cancellations, adverse
publicity and reduced sales of advertising and products. Our services are very
complex and are likely to contain a number of undetected errors and defects,
especially when new features or enhancements are first released. Furthermore, in
order to introduce new features or enhancements, we may elect to license
technology from other companies rather than develop such features or
enhancements ourselves, and we may be exposed to undetected errors or defects in
third-party technology that is out of our control. Any errors or defects, if
significant, could harm the performance of these services, result in ongoing
redevelopment and maintenance costs and cause dissatisfaction on the part of
subscribers and advertisers. These costs, delays or dissatisfaction could
negatively affect our business.

WE ARE DEPENDENT ON THIRD-PARTY SOFTWARE TO ACCURATELY BILL SUBSCRIBERS TO OUR
  BILLABLE PREMIUM SERVICES

    The operation of our billable premium services requires the accurate
operation of billing system software as well as our development of policies
designed to reduce the incidence of credit card fraud and other forms of
uncollectable "chargebacks." If we encounter difficulty with the operation of
these systems, or if errors, defects or malfunctions occur in the operation of
these systems, this could result in erroneous overcharges to customers or in the
under-collection of revenue, either of which could hurt our business and
financial results.

                                       29
<PAGE>
RELATIONSHIPS WITH ENTITIES AFFILIATED WITH THE CHAIRMAN OF OUR BOARD OF
  DIRECTORS MAY PRESENT POTENTIAL CONFLICTS OF INTEREST

    The Chairman of our board of directors and our largest stockholder,
Dr. David E. Shaw, is the Chairman and Chief Executive Officer of D. E. Shaw &
Co., Inc., which is the general partner of D. E. Shaw & Co., L.P. ("DESCO,
L.P."), a securities firm whose activities focus on various aspects of the
intersection between technology and finance. Dr. Shaw and entities affiliated
with him are also involved in other technology-related businesses apart from our
company. As a result of these other interests, Dr. Shaw devotes only a portion
of his time to our company, and spends most of his time and energy engaged in
business activities unrelated to us. In addition to his indirect ownership of a
controlling interest in DESCO, L.P., Dr. Shaw may have a controlling interest in
these other businesses. Transactions between us and other entities affiliated
with Dr. Shaw may occur in the future and could result in conflicts of interest
that prove harmful to us.

    We sublease office space in New York City from DESCO, L.P. We cannot be sure
that we would be able to lease other space on favorable terms in the event this
sublease were to be terminated.

    In May 1999, we terminated an agreement with DESCO, L.P. under which
individuals employed by its affiliates located in India provided consulting
services to us. Following the termination of this agreement, these individuals
became employees of a Juno subsidiary located in Hyderabad, India. We continue
to obtain some services in India from DESCO, L.P. or its affiliates.

OUR DIRECTORS AND OFFICERS EXERCISE SIGNIFICANT CONTROL OVER US


    As of November 30, 2000, the executive officers, directors, and persons and
entities affiliated with executive officers or directors beneficially owned in
the aggregate approximately 39.0% of our outstanding common stock. The Chairman
of our board of directors is Dr. David E. Shaw. Dr. Shaw continues to serve as
the Chairman and Chief Executive Officer of D. E. Shaw & Co., Inc., which is the
general partner of DESCO, L.P. As of November 30, 2000, Dr. Shaw and persons or
entities affiliated with him, including DESCO, L.P., beneficially owned, in the
aggregate, approximately 37.7% of our outstanding common stock as of that date.
As a result of this concentration of ownership, Dr. Shaw is able to exercise
significant influence over matters requiring approval by our stockholders,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership could also have the effect of
delaying or preventing a change in control of Juno.



WE ARE DEPENDENT ON KEY MANAGEMENT PERSONNEL FOR OUR FUTURE SUCCESS



    Our business and financial results depend in part on the continued service
of our key personnel. Over the past year a number of senior financial, marketing
and technical executives have left the company or announced their intention to
do so. We do not carry key person life insurance on any of our personnel. The
loss of the services of any of our executive officers or the loss of the
services of other key employees could harm our business and financial results.


WE MAY NOT BE ABLE TO HIRE AND RETAIN QUALIFIED EMPLOYEES


    Our business and financial results depend in part on our ability to attract,
retain and motivate highly skilled employees. Competition for employees in our
industry can be intense. Concerns about developments in the Internet industry in
general, or about our company in particular, may make it more difficult than in
the past to retain our key employees or to attract, assimilate or retain other
highly qualified employees. We have from time to time in the past experienced
difficulty in hiring and retaining highly skilled employees with appropriate
qualifications, and we expect to continue to experience such difficulties. We
have experienced a higher rate of employee attrition in recent quarters than in
prior periods, including the departure of a number of our most senior managers.
We are likely to experience further such attrition, including of senior
managers, in the future.


                                       30
<PAGE>
WE MAY NOT BE ABLE TO SUCCESSFULLY MAKE ACQUISITIONS OF OR INVESTMENTS IN OTHER
  COMPANIES


    Although in 2000 we entered into two transactions in which other companies
have referred their subscribers to us in return for compensation either
primarily or entirely in the form of Juno common stock, we have limited
experience in completing acquisitions of, or making investments in, companies or
their assets. From time to time we have had discussions with companies regarding
our acquiring, or investing in, their businesses, products or services, or
customers. If we buy a company, we could have difficulty in assimilating that
company's personnel and operations, and the key personnel of the acquired
company may decide not to work for us. We would expect that any acquisition may
present us with difficulties in assimilating the acquired services, technology
assets or customer bases into our operations. Similarly, subscriber referral
transactions may expose us to difficulties resulting from the conversion of
subscribers from a competitive service to our own services. Any of these
difficulties could disrupt our ongoing business, and distract our management and
employees. In addition, these transactions could increase our cash expenditures,
and require the amortization of goodwill, both of which could have an adverse
effect on our financial results. To date, we have issued equity securities in
order to pay for our subscriber referral transactions and we expect to issue
additional equity securities in satisfaction of our obligations under subscriber
referral transactions. In connection with any other transactions we might choose
to undertake in the future, we may issue additional equity securities and may
additionally assume indebtedness. The issuance of equity securities could be
dilutive to our existing stockholders and might, to the extent such securities
were sold into the public market, impair our ability to draw down funding under
the equity line facility.


WE COULD FACE ADDITIONAL REGULATORY REQUIREMENTS, TAX LIABILITIES AND OTHER
  RISKS IF WE DECIDE TO EXPAND INTERNATIONALLY

    We currently provide services to a small number of users who are located in
Canada. We may decide to increase the international availability of our
services, and we believe that any international operations would be subject to
most of the risks of our business generally. In addition, there are risks
inherent in doing business in international markets, such as changes in
regulatory requirements, tariffs and other trade barriers, fluctuations in
currency exchange rates, and adverse tax consequences, and there are likely to
be different consumer preferences and requirements in such markets. We cannot
assure you that one or more of these factors would not harm any future
international operations.

WE HAVE ANTI-TAKEOVER PROVISIONS WHICH MAY MAKE IT DIFFICULT FOR A THIRD PARTY
  TO ACQUIRE US

    Provisions of our certificate of incorporation, our bylaws and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
might be beneficial to our stockholders.

WE DO NOT PLAN TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE AND, AS A RESULT,
  STOCKHOLDERS WILL NEED TO SELL SHARES TO REALIZE A RETURN ON THEIR INVESTMENT

    We have not declared or paid any cash dividends on our capital stock since
inception. We intend to retain any future earnings to finance the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Consequently, stockholders will need to sell shares of
common stock in order to realize a return on their investment, if any.

                                       31
<PAGE>
                                USE OF PROCEEDS

    We will not receive any of the proceeds from the sale of shares by WorldSpy
or NaviPath.

                              SELLING STOCKHOLDERS


    Neither of the selling stockholders has had a material relationship with us
within the past three years other than as a result of the subscriber referral
agreement and the ownership of the shares offered hereby, except that since
March 2000 NaviPath has provided telecommunications services to Juno in the
ordinary course of NaviPath's business. Juno has paid approximately $1.2 million
to NaviPath for such services provided through November 30, 2000. No estimate
can be given as to the amount of shares that will be held by the selling
stockholders after completion of this offering because the selling stockholders
may offer all, some or none of the shares under this prospectus and because
there currently are no agreements, arrangements or understandings with respect
to the sale of any of the shares, except that each of the selling stockholders
has agreed to limit its weekly sales under this prospectus to not more than 3%
of the prior week's trading volume of our common stock as reported on the Nasdaq
National Market, excluding for purposes of such calculations, sales by such
selling stockholder. Of the shares to be offered pursuant to this prospectus,
which constitute all of the shares of our common stock held by each of them,
1,190,162 shares, constituting approximately 2.91% of our common stock
outstanding as of November 30, 2000, are to be offered by NaviPath, Inc. and
818,141 shares, constituting approximately 2.00% of our common stock outstanding
as of November 30, 2000, are to be offered by WorldSpy.com, Inc.


                                       32
<PAGE>
                              PLAN OF DISTRIBUTION

    WorldSpy and NaviPath are offering the shares of common stock offered hereby
for their own account. We will not receive any proceeds from the sale of shares
of common stock by WorldSpy or NaviPath.

    WorldSpy and NaviPath may, from time to time, sell all or a portion of the
shares:

    - on the Nasdaq National Market, or on such other exchange or market where
      our stock is traded;

    - in privately negotiated transactions;

    - in block trades; and

    - in any combination of such methods of sale.

    WorldSpy and NaviPath will make such sales at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing prices, or at negotiated prices. WorldSpy and NaviPath are not
restricted as to the price at which they may sell the shares offered by this
prospectus.

    WorldSpy and NaviPath may effect sales by selling to or through one or more
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from WorldSpy and NaviPath.

    Any broker-dealer participating in such transactions as agent may receive
commissions from WorldSpy and NaviPath, and if it acts as agent for the
purchaser of the shares, from the purchaser. Broker-dealers may agree with
WorldSpy or NaviPath to sell a specified number of shares at a stipulated price
per share. To the extent a broker-dealer is unable to do so acting as agent for
WorldSpy or NaviPath, it will purchase as principal any unsold shares at the
price required to fulfill its commitment to WorldSpy or NaviPath. Broker-dealers
who acquire shares as principal may resell the shares from time to time in
transactions, that may involve block transactions of the nature described above,
in the over-the-counter market or otherwise at prices and on terms prevailing at
the time of sale, at prices related to the then-current market price or in
negotiated transactions. In connection with such resales, broker-dealers may pay
to or receive from the purchasers of the shares commissions as described above.

    WorldSpy, NaviPath and any broker-dealers or agents that participate with
WorldSpy and NaviPath in sales of the shares may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 in connection with sales in
which they participate. If any broker-dealers or agents are considered to be
"underwriters," then any commissions they receive and any profit on the resale
of the shares purchased by them may be considered to be underwriting commissions
or discounts under the Securities Act.

    WorldSpy, NaviPath and any other persons participating in the sale or
distribution of the shares will be subject to the Securities Exchange Act of
1934 and the related rules and regulations, including Regulation M, to the
extent it applies. The Securities Exchange Act and related rules may limit the
timing of purchases and sales of any of the shares by WorldSpy and NaviPath or
any other such person that may affect the marketability of the shares. WorldSpy
and NaviPath also must comply with the applicable prospectus delivery
requirements under the Securities Act in connection with the sale or
distribution of the shares.

    We granted registration rights to WorldSpy and NaviPath to enable them to
sell the common stock purchased under the subscriber referral agreement. We will
be permitted to suspend the use of this prospectus by the selling stockholders
on not more than two occasions for a period not to exceed 90 days in any
twelve-month period under specified circumstances relating to material pending
transactions.

                                       33
<PAGE>
    We have agreed to bear all reasonable expenses, other than underwriting
discounts and commissions of any underwriters, brokers, sellers or agents
retained by WorldSpy and NaviPath, in connection with the registration of the
shares being offered by WorldSpy and NaviPath.


    Each of the selling stockholders has agreed to limit its weekly sales under
this prospectus to not more than 3% of the prior week's trading volume of our
common stock as reported on the Nasdaq National Market, excluding for purposes
of such calculations, sales by such selling stockholder.


                                 LEGAL MATTERS

    The validity of the shares offered hereby will be passed upon for us by
Brobeck, Phleger & Harrison LLP, New York, New York.

                                    EXPERTS

    The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

                                       34
<PAGE>

                                2,008,303 SHARES


                           JUNO ONLINE SERVICES, INC.

                                  COMMON STOCK

                                     [LOGO]

                                   PROSPECTUS


                                JANUARY   , 2001

<PAGE>
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

    The following table sets forth an estimate of the expenses, other than the
placement agent fees, underwriting discounts and commissions, to be incurred by
Registrant in connection with the issuance and distribution of the securities
being registered hereby. All such expenses will be borne by Juno Online
Services, Inc.:


<TABLE>
<CAPTION>
                                                              AMOUNT TO
                                                               BE PAID
                                                              ---------
<S>                                                           <C>
SEC Registration Fee........................................  $  1,262
Nasdaq National Market Listing Fee..........................    18,363
Legal Fees and Expenses.....................................   125,000
Accounting Fees and Expenses................................    20,000
Miscellaneous...............................................    50,375
                                                              --------
Total.......................................................  $215,000
                                                              ========
</TABLE>


ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

    The registrant's Amended and Restated Certificate of Incorporation (the
"Certificate") provides that the liability of a director of the registrant shall
be eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as amended (the "DGCL"). Under the DGCL, the directors have a
fiduciary duty to the registrant which is not eliminated by this provision of
the Certificate and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of non-monetary relief will remain available. In
addition, each director will continue to be subject to liability under the DGCL
for breach of the director's duty of loyalty to the registrant, for acts or
omissions which are found by a court of competent jurisdiction to be not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are prohibited by
DGCL. This provision also does not affect the directors' responsibilities under
any other laws, such as the Federal securities laws or state or Federal
environmental laws. The registrant has obtained liability insurance for its
officers and directors.

    Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this provision
shall not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) arising under Section 174 of the DGCL, or
(iv) for any transaction from which the director derived an improper personal
benefit. The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's bylaws, any agreement, a vote
of stockholders or otherwise. The Certificate eliminates the personal liability
of directors to the fullest extent permitted by Section 102(b)(7) of the DGCL
and provides that the registrant shall fully 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 whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of the registrant, or is or was serving at the request of the registrant
as a director or officer of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding.

                                      II-1
<PAGE>
ITEM 16.  EXHIBITS

    The following is a list of Exhibits filed as part of the Registration
Statement:


<TABLE>
<C>    <S>
 5.1   Opinion of Brobeck, Phleger & Harrison LLP.

23.1   Consent of Brobeck, Phleger & Harrison LLP (included in the
       opinion filed as Exhibit 5.1).

23.2   Consent of PricewaterhouseCoopers LLP, independent
       accountants.

24.1   Power of Attorney.*
</TABLE>


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


*   Previously filed.


ITEM 17.  UNDERTAKINGS

    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 provisions described in Item 15 above, 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 payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

    The undersigned Registrant hereby undertakes:

    (1) To file, during any period in which offers or sales are being made of
the securities offered hereby, a post-effective amendment to this Registration
Statement;

        (i) To include any prospectus required by Section 10(a)(3) of the
            Securities Act of 1933;

        (ii) To reflect in the prospectus any facts or events arising after the
             effective date of the registration statement (or the most recent
             post-effective amendment thereof) which, individually or in the
             aggregate, represent a fundamental change in the information set
             forth in the registration statement. Notwithstanding the foregoing,
             any increase or decrease in volume of securities offered (if the
             total dollar value of securities offered would not exceed that
             which was registered) and any deviation from the low or high end of
             the estimated maximum offering range may be reflected in the form
             of prospectus filed with the Commission pursuant to Rule 424(b) if,
             in the aggregate, the changes in volume and price represent no more
             than a 20 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 the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the registration statement is on Form S-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 Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.

                                      II-2
<PAGE>
    (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.

    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 Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
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.

    The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

                                      II-3
<PAGE>
                                   SIGNATURES


    Pursuant to the requirements of the Securities Act of 1933, as amended, 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 New York, State of New York on January 19, 2001.



<TABLE>
<S>                                                    <C>  <C>
                                                       JUNO ONLINE SERVICES, INC.

                                                       By:              /s/ CHARLES ARDAI
                                                            ----------------------------------------
                                                                         Charles Ardai,
                                                             PRESIDENT, CHIEF EXECUTIVE OFFICER AND
                                                                            DIRECTOR
</TABLE>



    Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on January 19, 2001.



<TABLE>
<CAPTION>
                  SIGNATURE                                            TITLE
                  ---------                                            -----
<C>                                            <S>
              /s/ CHARLES ARDAI                President, Chief Executive Officer and Director
    ------------------------------------         (principal executive officer)
                Charles Ardai

          /s/ RICHARD M. EATON, JR.            Chief Financial Officer and Treasurer
    ------------------------------------         (principal financial and accounting officer)
            Richard M. Eaton, Jr.

             /s/ EDWARD J. RYEOM               Director
    ------------------------------------
               Edward J. Ryeom

              /s/ LOUIS SALKIND                Director
    ------------------------------------
                Louis Salkind

              /s/ DAVID E. SHAW                Director and Chairman of the Board
    ------------------------------------
                David E. Shaw
</TABLE>


                                      II-4
<PAGE>
                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
       EXHIBIT
         NO.                                    DESCRIPTION
---------------------   ------------------------------------------------------------
<C>                     <S>
         5.1            Opinion of Brobeck, Phleger & Harrison LLP.

        23.1            Consent of Brobeck, Phleger & Harrison LLP (included in the
                        opinion filed as Exhibit 5.1).

        23.2            Consent of PricewaterhouseCoopers LLP, independent
                        accountants.

        24.1            Power of Attorney.*
</TABLE>


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


*   Previously filed.



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