<PAGE>
Filed Pursuant
to Rule 424(b)(4)
Reg. No. 333-90563
2,286,400 Shares
[LOGO]
Common Stock
-------------
Viant Corporation is offering 1,000,000 of the shares to be sold in the
offering. The selling stockholders identified in this prospectus are offering an
additional 1,286,400 shares. Viant will not receive any of the proceeds from the
sale of shares being sold by the selling stockholders.
The common stock is quoted on the Nasdaq National Market under the symbol
"VIAN". The last reported sale price of the common stock on December 7, 1999 was
$95.00 per share.
SEE "RISK FACTORS" ON PAGE 4 TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE BUYING SHARES OF THE COMMON STOCK.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Initial price to public..................................... $94.625 $216,350,600
Underwriting discount....................................... $ 4.610 $ 10,540,304
Proceeds, before expenses, to Viant......................... $90.015 $ 90,015,000
Proceeds, before expenses, to the selling stockholders...... $90.015 $115,795,296
</TABLE>
To the extent that the underwriters sell more than 2,286,400 shares of
common stock, the underwriters have the option to purchase up to an additional
342,960 shares from Viant at the initial price to public less the underwriting
discount.
------------------
The underwriters expect to deliver the shares against payment in New York,
New York on December 13, 1999.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
ROBERTSON STEPHENS
LEHMAN BROTHERS
------------------
Prospectus dated December 7, 1999.
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING US AND OUR COMMON STOCK BEING SOLD IN THIS OFFERING AND
OUR FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS APPEARING ELSEWHERE
IN THIS PROSPECTUS.
OUR BUSINESS
We are a leading Internet professional services firm helping companies to
capitalize on the Internet. Our service approach combines strategic consulting,
creative design and technology services. Some of the services that we provide
for our clients include the design and development of:
- Internet strategies that help integrate a client's Internet projects and
investments with its broader corporate strategies and business practices;
- electronic commerce, or e-commerce, solutions that enable a company to
attract new customers, and sell goods and services over a website;
- business partner solutions, or extranets, that allow companies to share
information and communicate efficiently with one another;
- internal information solutions, or intranets, that improve a company's
ability to capture, store, and distribute helpful information to its
employees; and
- new business ventures exclusively for the Internet.
We focus on Internet initiatives that are critical to our clients' business.
We have provided services to Global 1000 and other large companies including
American Express Company, BankBoston Corporation, CMGI, Inc., Compaq Computer
Corporation, Deutsche Bank AG, General Motors Corporation, Hewlett-Packard
Company, Kinko's Corporation, Lucent Technologies Inc., LVMH Moet Hennessy Louis
Vuitton, Polo/Ralph Lauren Corporation, RadioShack, Sears, Roebuck & Co. and
Sony Pictures Entertainment.
OUR MARKET OPPORTUNITY
Explosive growth in the Internet has created numerous opportunities for
companies seeking revenue growth and increased operating efficiencies. Few
companies, however, possess the necessary skills to take advantage of these
opportunities. As a result, a growing number of companies are turning to
Internet professional service firms to design and implement their Internet and
e-commerce solutions. According to Forrester Research, the market for such
Internet and e-commerce services in the United States is projected to grow from
$10.6 billion as of November 1999 to $64.8 billion in 2003, representing a
compound annual growth rate of more than 59%.
OUR SERVICE MODEL
We deliver our services through the Viant Service Model, which organizes and
addresses the broad-ranging and complex needs of clients seeking to transform
their businesses through the Internet. This service model integrates our three
areas of expertise -- strategic consulting, creative design and technology
services -- and accelerates the design, development and launch of an Internet
initiative. We provide our services on a fixed-price, fixed-time basis. This
approach enables our clients to more accurately manage their project costs and
aligns our interests with theirs.
1
<PAGE>
OUR STRATEGY
Our goal is to strengthen our position as a leading provider of Internet
professional services. To achieve this goal, we plan to:
- expand existing client relationships and attract new clients;
- grow primarily through effective recruiting and new office openings;
- attract and retain the highest quality employees;
- enhance our team-based employee culture;
- utilize our company-wide knowledge to improve operating margins;
- expand geographically to service clients locally;
- continue to refine our operating sytems and processes to support future
growth; and
- continue to invest in research and development to enhance our expertise.
OUR OFFICES
Our executive offices are located at Lincoln Plaza, 89 South Street, Boston,
MA 02111. Our telephone number is (617) 531-3700 and our Internet address is
WWW.VIANT.COM. This reference to our website does not constitute incorporation
by reference of the information contained at our site.
THE OFFERING
<TABLE>
<S> <C>
Shares offered by Viant...................... 1,000,000 shares
Shares offered by the selling stockholders... 1,286,400 shares
Shares to be outstanding after this 22,472,981 shares
offering(1)................................
Nasdaq National Market symbol................ "VIAN"
Use of proceeds.............................. General corporate purposes, including working
capital, capital expenditures, and if
appropriate opportunities arise, the
acquisition of, or investment in, businesses.
</TABLE>
- ------------------------------
(1) Based on shares outstanding as of October 1, 1999. Excludes: 5,521,206
shares of common stock issuable upon the exercise of outstanding options
with a weighted average exercise price of $6.40 per share, 3,430,362 shares
reserved for issuance under our benefit plans and 35,986 shares of common
stock issuable upon exercise of an outstanding warrant at an exercise price
of $3.625 per share.
------------------------------
Except as otherwise indicated, we have presented information in this
prospectus based on the assumption that the underwriters do not exercise the
option granted by us to purchase additional shares in this offering. See
"Underwriting."
THE VIANT LOGO IS A REGISTERED TRADEMARK OF VIANT. ALL OTHER BRAND NAMES AND
TRADEMARKS APPEARING IN THIS PROSPECTUS ARE THE PROPERTY OF THEIR RESPECTIVE
HOLDERS.
2
<PAGE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED (1) NINE MONTHS ENDED
(INCEPTION) TO ------------------------- --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
--------------- ------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................ $ 642 $ 8,808 $20,043 $13,907 $37,625
Loss from operations................ (1,750) (4,178) (6,325) (3,232) (3,034)
Net loss............................ (1,659) (4,080) (6,487) (3,294) (2,312)
Net loss per share:
Basic and diluted............... $ (0.42) $ (1.18) $ (1.76) $ (0.90) $ (0.21)
Weighted average shares, basic
and diluted................... 3,981 3,468 3,681 3,664 10,845
Pro forma net loss per share (2):
Basic and diluted............... $ (0.46) $ (0.12)
Weighted average shares, basic
and diluted................... 14,084 18,904
</TABLE>
<TABLE>
<CAPTION>
AT OCTOBER 1, 1999
--------------------------
ACTUAL AS ADJUSTED (3)
-------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $62,876 $152,426
Working capital............................................. 64,000 153,550
Total assets................................................ 83,906 173,456
Capital lease obligations, net of current portion........... 1,690 1,690
Total stockholders' equity.................................. 68,285 157,835
</TABLE>
- ------------------------------
(1) During 1998, we changed our fiscal year to the 52-week period ending on the
Friday closest to December 31. Prior to this, our fiscal year corresponded
to the calendar year.
(2) Unaudited pro forma net loss per share for the year ended January 1, 1999
and the nine months ended October 1, 1999 is computed using the weighted
average number of common shares outstanding, adjusted to include the pro
forma effects of the conversion of preferred stock to common stock as if
such conversion had occurred on January 1, 1998 for the year ended
January 1, 1999 and on January 2, 1999 for the nine months ended October 1,
1999, or at the date of original issuance, if later.
(3) As adjusted to reflect the sale of 1,000,000 shares of common stock by us in
this offering at the initial price to public of $94.625 after deducting the
underwriting discount and estimated offering expenses payable by us.
3
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED. IN SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND
YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
OUR LIMITED OPERATING HISTORY IN THE NEW AND EXPANDING INTERNET PROFESSIONAL
SERVICES MARKET INCREASES THE POSSIBILITY THAT THE VALUE OF YOUR INVESTMENT WILL
DECLINE
We were formed in 1996. Our limited operating history in the new and
expanding Internet professional services market makes it difficult to evaluate
our business. The uncertainty of our future performance and the uncertainties
regarding the Internet, such as taxation, technical limitations and competition,
increase the risk that the value of your investment will decline. Our failure to
accurately address the issues facing our business could cause our business
results to significantly decline.
TO SUCCEED IN OUR LABOR INTENSIVE BUSINESS, WE MUST RECRUIT AND RETAIN QUALIFIED
PROFESSIONALS, WHO ARE CURRENTLY IN HIGH DEMAND
The labor-intensive Internet professional services industry currently faces
a shortage of qualified personnel, which is expected to continue. We compete
intensely with other companies to recruit and hire from this limited pool. If we
cannot hire and retain qualified personnel or if a significant number of our
current employees leave, we may be unable to complete or retain existing
projects or bid for new projects of similar scope and revenue. Any inability to
hire and retain employees would cause our business results to suffer.
OUR BUSINESS MAY BE NEGATIVELY IMPACTED IF WE FAIL TO ACCURATELY ESTIMATE THE
TIME AND RESOURCES NECESSARY FOR THE PERFORMANCE OF OUR SERVICES
A key element of our strategy is to enter into fixed-price, fixed-time
contracts, rather than contracts in which the client pays us on a time and
materials basis. If we fail to accurately estimate the resources required for a
project or fail to satisfy our contractual obligations in a manner consistent
with the project plan, then our costs to complete the project could increase
substantially. We have occasionally had to commit unanticipated additional
resources to complete projects, and we may have to take similar action in the
future.
IF CLIENTS DO NOT REHIRE US FOR NEW PROJECTS, OR THEY TERMINATE OR REDUCE THE
SCOPE OF EXISTING PROJECTS OUR REVENUES MAY DECLINE
Substantially all of our revenues are derived from fixed-price, fixed-time
contracts for discrete client engagements. These engagements vary in size and
scope. If clients do not retain us for subsequent engagements, then our revenues
could decline. In addition, while our service model is designed as an integrated
approach, each sequential phase of that process represents a separate
contractual commitment. The client may elect not to proceed to the next phase of
a project. The decision of clients not to proceed to the next phase of a project
could impair our revenues.
Most of our contracts cannot be terminated by a client unless we have
materially breached the contract. However, a client may nevertheless attempt to
cancel or reduce the scope of a project. It is possible that we may agree to the
cancellation or reduction in scope, or that in the event of a dispute over
whether it has the right to cancel or reduce the scope of a project, the client
may prevail. The cancellation, or reduction in scope, of a project could have a
negative impact on our revenues.
4
<PAGE>
OUR REVENUES COULD BE NEGATIVELY AFFECTED BY THE LOSS OF A MAJOR CLIENT
We derive a significant portion of our revenues from large projects for a
limited number of clients. The loss of any major client could dramatically
reduce our revenues. In 1998, our five largest clients accounted for
approximately 59% of our revenues. During such period Kinko's Corporation,
Lucent Technologies Inc. and Compaq Computer Corporation each accounted for more
than 10% of our revenues and four other clients each accounted for more than 5%
of our revenues. In the first nine months of 1999, our five largest clients
accounted for approximately 55% of our revenues. During such period Compaq and
BankBoston each accounted for more than 10% of our revenues and three other
clients each accounted for more than 5% of our revenues.
FLUCTUATIONS IN OUR QUARTERLY REVENUES AND OPERATING RESULTS MAY LEAD TO REDUCED
PRICES FOR OUR STOCK
We believe that period-to-period comparisons of our operating results are
not necessarily meaningful. These comparisons cannot be relied upon as
indicators of future performance. However, if our operating results in any
future period fall below the expectations of securities analysts and investors,
the market price of our securities would likely decline.
Factors that have caused our results to fluctuate in the past and which are
likely to affect us in the future include the following:
- variability in market demand for the Internet and for Internet
professional services;
- length of the sales cycle associated with our service offerings;
- the number, size and scope of our projects; and
- the efficiency with which we utilize our employees, including our ability
to transition employees from completed engagements to new engagements.
In addition, other factors may also affect us, including:
- the introduction of new services by our competitors;
- changes in pricing policies by our competitors; and
- our ability to attract and retain clients.
Some of these factors are within our control and others are outside our control.
OUR INTERNAL SYSTEMS, PROCEDURES AND CONTROLS MAY BE INADEQUATE TO HANDLE OUR
GROWTH
To manage our growth, we must continue to improve our internal systems,
procedures and controls. We cannot assure you that we will successfully do so.
If our internal systems, procedures and controls are inadequate, our business
will be harmed.
IF WE ARE NOT SUCCESSFUL IN OPENING AND GROWING NEW OFFICES OUR FINANCIAL
RESULTS MAY SUFFER
A key component of our growth strategy is to open offices in new geographic
locations. Once we select a new location, we typically devote substantial
financial and management resources to launch and grow that office. We cannot
assure you that we will select appropriate markets to enter, open new offices
efficiently or manage new offices profitably. Our failure to accurately assess
these issues could negatively impact our business.
5
<PAGE>
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE, WHICH MAY NOT BE AVAILABLE TO US.
THE RAISING OF ANY ADDITIONAL CAPITAL MAY DILUTE YOUR OWNERSHIP IN US
We may need to raise additional funds through public or private debt or
equity financings in order to:
- take advantage of opportunities, including more rapid expansion or
acquisitions of, or investments in, businesses or technologies;
- develop new services; or
- respond to competitive pressures.
Any additional capital raised through the sale of equity may dilute your
ownership percentage in us. Furthermore, we cannot assure you that any
additional financing we may need will be available on terms favorable to us, or
at all. In such case, our business results would suffer.
THE INTERNET PROFESSIONAL SERVICES MARKET IS HIGHLY COMPETITIVE AND HAS LOW
BARRIERS TO ENTRY. IF WE CANNOT EFFECTIVELY COMPETE, OUR REVENUES MAY DECLINE
The Internet professional services market is relatively new and intensely
competitive. We expect competition to intensify even further as this market
evolves. Many of our competitors have longer operating histories, more clients,
longer relationships with their clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than we do. As a result, our competitors may be in a stronger position
to respond quickly to new or emerging technologies and changes in client
requirements. They may also develop and promote their products and services more
effectively than we do.
There are relatively low barriers to entry into the Internet professional
services market. In addition, we do not own any patented technology that stops
competitors from entering the Internet professional services market or from
providing services similar to ours. As a result, new and unknown market entrants
pose a threat to our business. Current or future competitors may develop or
offer services that are comparable or superior to ours at a lower price, which
could significantly decrease our revenues and the value of your investment.
OUR BUSINESS WILL BE NEGATIVELY AFFECTED IF WE DO NOT KEEP UP WITH THE
INTERNET'S RAPID TECHNOLOGICAL CHANGE, EVOLVING INDUSTRY STANDARDS AND CHANGING
CLIENT REQUIREMENTS
The Internet professional services market is characterized by rapidly
changing technology, evolving industry standards and changing client needs.
Accordingly, our future success will depend, in part, on our ability to meet
these challenges. Among the most important challenges facing us are the need to:
- effectively use leading technologies;
- continue to develop our strategic and technical expertise;
- influence and respond to emerging industry standards and other
technological changes;
- enhance our current services;
- develop new services that meet changing customer needs; and
- advertise and market our services.
All of these challenges must be met in a timely and cost-effective manner.
We cannot assure you that we will succeed in effectively meeting these
challenges and our failure to do so could harm our business results.
6
<PAGE>
OUR REVENUES MAY DECREASE IF GROWTH IN THE USE OF THE INTERNET DECLINES
Our business is dependent upon continued growth in the use of the Internet
by our clients, prospective clients and their customers and suppliers. Published
reports indicate that capacity constraints caused by growth in Internet usage
may, unless resolved, impede further growth in Internet use. If the number of
users on the Internet does not increase and commerce over the Internet does not
become more accepted and widespread, demand for our services may decrease and,
as a result, our revenues would decline causing the value of your investment
also to decline. The factors that may affect Internet usage or electronic
commerce adoption include:
- actual or perceived lack of security of information;
- lack of access and ease of use;
- congestion of Internet traffic;
- inconsistent quality of service;
- increases in access costs to the Internet;
- excessive governmental regulation;
- uncertainty regarding intellectual property ownership;
- reluctance to adopt new business methods; and
- costs associated with the obsolescence of existing infrastructure.
CONCENTRATION OF OWNERSHIP MAY LIMIT YOUR ABILITY TO INFLUENCE CORPORATE MATTERS
Immediately following this offering, the officers, directors and significant
stockholders set forth below, and the funds for whom they act as general
partner, collectively will own approximately 45.40% of the outstanding shares of
our common stock and will own individually the percentage set forth opposite
their respective names:
<TABLE>
<CAPTION>
OFFICERS, DIRECTORS AND/OR SIGNIFICANT STOCKHOLDERS OWNERSHIP PERCENTAGE
- --------------------------------------------------- --------------------
<S> <C>
William H. Davidow (Mohr, Davidow Ventures) 15.09%
Kleiner Perkins Caufield & Byers 13.90
Trident Capital Management 7.37
Robert L. Gett 9.04
</TABLE>
If the stockholders listed above choose to act or vote together, they will
have the power to influence the election of our directors, and the approval of
any other action requiring the approval of our stockholders, including any
amendments to our certificate of incorporation and mergers or sales of all or
substantially all of our assets. In addition, without the consent of these
stockholders, we could be prevented from entering into transactions that could
be beneficial to us. Also, third parties could be discouraged from making a
tender offer or bid to acquire our company at a price per share that is above
the then-current market price.
WE MAY FACE INTELLECTUAL PROPERTY CLAIMS THAT MAY BE COSTLY TO RESOLVE OR LIMIT
OUR ABILITY TO USE INTELLECTUAL PROPERTY IN THE FUTURE
We are obligated under some agreements to indemnify other parties as a
result of claims that we infringe on the proprietary rights of third parties.
Although we do not believe that the solutions that we develop for clients
infringe on any third-party proprietary rights, we cannot assure you that third
parties will not assert infringement claims against us in the future or that
these claims will not be successful. We could incur substantial costs and
diversion of management resources to defend any claims relating to proprietary
rights. These costs and diversions could cause our business results to suffer.
If any party asserts a claim against us relating to proprietary technology or
information, we may need to obtain licenses to the disputed intellectual
property. We cannot assure
7
<PAGE>
you, however, that we will be able to obtain these licenses on commercially
reasonable terms or that we will be able to obtain any licenses at all. The
failure to obtain necessary licenses or other rights could cause our business
results to suffer.
Our business often involves the development of software applications for
specific client engagements. We generally retain the right to use any
intellectual property that is developed during a client engagement that is of
general applicability and is not specific to the client's project. We also
develop software applications for our own internal use and we retain ownership
of these applications. There can be no assurance that clients will not demand
assignment of ownership or restrictions on our use of the work that we produce
for clients in the future. Issues relating to the ownership of and rights to use
software can be complicated and there can be no assurance that disputes will not
arise that affect our ability to reuse this software which could harm our
business results.
MANAGEMENT MAY INVEST OR SPEND THE PROCEEDS OF THIS OFFERING IN WAYS WITH WHICH
YOU MAY NOT AGREE
Management intends to use the proceeds from this offering for general
corporate purposes. Because of the number and variability of factors that
determine our use of the net proceeds from this offering, we cannot assure you
that you will agree with our use of the proceeds. Pending their use, we intend
to invest the net proceeds from this offering in short-term interest bearing
investment grade and U.S. government securities.
THERE MAY BE SALES OF A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK AFTER THIS
OFFERING THAT COULD CAUSE OUR STOCK PRICE TO FALL
Our common stock began trading on the Nasdaq National Market on June 18,
1999; however, to date there have been a limited number of shares trading in the
public market. This offering will result in additional shares of our common
stock being available on the open market. In addition, our current stockholders
hold a substantial number of shares, which they will be able to sell in the
public market in the near future. Sales of a substantial number of shares of our
common stock in this offering and thereafter could cause our stock price to
fall. In addition, the sale of shares by our stockholders could impair our
ability to raise capital through the sale of additional stock. See
"Underwriting" and "Shares Eligible for Future Sale."
PROVISIONS OF OUR CHARTER AND BY-LAWS MAY DELAY OR PREVENT TRANSACTIONS THAT ARE
IN YOUR BEST INTERESTS
Our certificate of incorporation and bylaws state that any action that can
be taken by stockholders must be done at an annual or special meeting and may
not be done by written consent, and require reasonable advance notice of a
stockholder proposal or director nomination. The chairman of the board, the
chief executive officer, the president or the board of directors are the only
ones who may call a special meeting. The amended and restated certificate of
incorporation and amended and restated bylaws also provide for a classified
board of directors, and provide that members of the board of directors may be
removed by the vote of the holders of at least a majority of the shares entitled
to vote for that director. In addition, the board of directors has the
authority, without further action by the stockholders, to fix the rights and
preferences of and issue 5,000,000 shares of preferred stock. These provisions
may have the effect of deterring hostile takeovers or delaying or preventing
changes in control of management, including transactions in which you might
otherwise receive a premium for your shares. In addition, these provisions may
limit your ability to approve other transactions that you find to be in your
best interests. See "Description of Capital Stock -- Preferred Stock" and
" -- Effect of the Certificate of Incorporation and Bylaws and the Delaware
Anti-Takeover Statute."
8
<PAGE>
DIFFICULTIES PRESENTED BY INTERNATIONAL FACTORS COULD NEGATIVELY AFFECT OUR
BUSINESS
One component of our strategy is to expand into international markets, as
evidenced by the opening of our London office. We believe that we will face
certain risks in doing business abroad that we do not face domestically. Among
the international risks we believe are most likely to affect us are:
- difficulties in staffing and managing international operations;
- longer payment cycles;
- problems in collecting accounts receivable;
- international currency issues, including fluctuations in currency exchange
rates and the conversion to the euro by all countries of the European
Union by year end 2003; and
- restrictions on the import and export of sensitive U.S. technologies, such
as data security and encryption technologies that we may wish to use in
solutions we develop for customers.
Any of these factors or other factors not enumerated here could damage our
business results.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing forward-looking statements may be found in
the material set forth under "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" as well as in the
prospectus generally. We used words such as "believes," "intends," "expects,"
"anticipates," "plans," and similar expressions to identify forward-looking
statements. This prospectus also contains third party estimates regarding the
size and growth of the Internet professional services market and Internet usage
in general. You should not place undue reliance on these forward-looking
statements which apply only as of the date of this prospectus. Our actual
results could differ materially from those anticipated in the forward-looking
statements for many reasons, including the risks described above and elsewhere
in this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We are under no duty to update any of the
forward-looking statements after the date of this prospectus to conform these
statements to actual results or to changes in our expectations.
USE OF PROCEEDS
The net proceeds to Viant from the sale of the 1,000,000 shares of common
stock are estimated to be approximately $89,550,000 at the initial price to
public of $94.625 per share (approximately $120,421,500 if the underwriters'
over-allotment option is exercised in full), after deducting the underwriting
discounts and estimated offering expenses payable by us.
Viant is conducting this offering primarily to increase its equity capital,
to create a larger public float for its common stock, to facilitate future
access by Viant to public equity markets and to allow for the orderly
liquidation of the investments made by certain stockholders. Viant intends to
use the net proceeds of the offering for general corporate purposes, including
working capital, capital expenditures, and if appropriate opportunities arise,
the acquisition of, or investment in, businesses. However, Viant is not
currently discussing any such potential acquisition or investment with any third
party. Pending such uses, Viant will invest the net proceeds in investment
grade, short-term interest-bearing securities and U.S. Government Securities.
Viant will not receive any of the proceeds from the sale of common stock by the
selling stockholders. See "Principal and Selling Stockholders."
9
<PAGE>
PRICE RANGE OF COMMON STOCK
Our common stock has been quoted on the Nasdaq National Market under the
symbol "VIAN" since June 18, 1999. Prior to that time, there was no public
market for the common stock. The following table sets forth, for the periods
indicated, the high and low closing prices per share of the common stock as
reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------------------------- ------------------------
<S> <C> <C>
Second Quarter (since June 18, 1999)........................ $ 35.00 $ 21.88
Third Quarter............................................... 52.13 24.75
Fourth Quarter (through December 7, 1999)................... 116.63 46.00
</TABLE>
On December 7, 1999 the reported last sale price of the common stock on the
Nasdaq National Market was $95.00. As of October 1, 1999 there were
approximately 148 stockholders of record.
DIVIDEND POLICY
Viant has never paid cash dividends on its common stock or any other
securities. Viant anticipates that it will retain all of its future earnings, if
any, for use in the expansion and operation of its business and does not
anticipate paying cash dividends in the foreseeable future.
10
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of October 1, 1999:
- on an actual basis;
- on an as adjusted basis to reflect the sale of 1,000,000 shares of common
stock offered by us at the initial price to public of $94.625 per share,
after deducting the underwriting discounts and estimated offering
expenses.
This information should be read in conjunction with Viant's financial
statements and related notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
OCTOBER 1, 1999
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Capital lease obligations, net of current portion........... $ 1,690 $ 1,690
-------- --------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares
authorized, actual and as adjusted; no shares issued and
outstanding, actual and as adjusted..................... --
Common Stock, $0.001 par value, 50,000,000 shares
authorized, actual and as adjusted; 21,472,981 shares
issued and outstanding, actual; 22,472,981 shares issued
and outstanding, as adjusted(1)......................... 21 22
Additional paid-in capital................................ 83,501 173,050
Cumulative translation adjustment......................... (20) (20)
Accumulated deficit....................................... (15,217) (15,217)
-------- --------
Total stockholders' equity............................ 68,285 157,835
-------- --------
Total capitalization................................ $ 69,975 $159,525
======== ========
</TABLE>
- ------------------------------
(1) Based on shares outstanding as of October 1, 1999. Excludes: 5,521,206
shares of common stock issuable upon the exercise of outstanding options
with a weighted average exercise price of $6.40 per share, 3,430,362 shares
reserved for issuance under our benefit plans and 35,986 shares of common
stock issuable upon exercise of an outstanding warrant at an exercise price
of $3.625 per share. See "Management -- Employee Benefit Plans."
11
<PAGE>
DILUTION
Our net tangible book value as of October 1, 1999 was $68,285,000, or $3.18
per share of common stock. Net tangible book value per share represents the
amount of our total tangible assets reduced by the amount of our total
liabilities and divided by the total number of shares of common stock
outstanding. Without taking into account any other change in our net tangible
book value after October 1, 1999, other than to give effect to the sale of
1,000,000 shares of common stock offered by us at the initial price to public of
$94.625 per share and receipt of the estimated net proceeds therefrom, our net
tangible book value as of October 1, 1999 would have been $157,832,000 or $7.02
per share. This represents an immediate increase in such net tangible book value
of $3.84 per share to existing stockholders and an immediate dilution of $87.605
per share to the new investors. The following table illustrates this per share
dilution.
<TABLE>
<S> <C> <C>
Initial price to public..................................... $94.625
Net tangible book value per share as of October 1, 1999,
before this offering...................................... $3.18
Increase per share attributable to new investors............ 3.84
-----
Net tangible book value per share after this offering....... 7.02
-------
Dilution per share to new investors......................... $87.605
=======
</TABLE>
12
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with Viant's financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" appearing
elsewhere in this prospectus. Selected financial data as of and for each of the
three fiscal years ended December 31, 1996, December 31, 1997 and January 1,
1999 have been derived from Viant's financial statements, which have been
audited by PricewaterhouseCoopers LLP, independent accountants. Financial data
as of October 1, 1999 and for the nine months ended September 30, 1998 and
October 1, 1999 have been derived from unaudited financial statements appearing
elsewhere in this prospectus and, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, that Viant
considers necessary for a fair presentation of its financial position and
results of operations for such periods. The historical results are not
necessarily indicative of the operating results to be expected in the future.
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED NINE MONTHS ENDED
(INCEPTION) TO ------------------------- --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
-------------- ------------ ---------- ------------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.......................... $ 642 $ 8,808 $20,043 $ 13,907 $37,625
------- ------- ------- -------- -------
Operating expenses:
Professional services............... 516 4,530 11,250 7,598 18,542
Sales and marketing................. 461 1,577 3,324 2,022 4,647
General and administrative.......... 1,077 6,298 10,365 6,667 14,998
Research and development............ 338 581 1,429 852 2,472
------- ------- ------- -------- -------
Total operating expenses........ 2,392 12,986 26,368 17,139 40,659
------- ------- ------- -------- -------
Loss from operations.................. (1,750) (4,178) (6,325) (3,232) (3,034)
Interest and other income (expense),
net................................. 91 98 (162) (62) 722
------- ------- ------- -------- -------
Net loss.............................. $(1,659) $(4,080) $(6,487) $ (3,294) $(2,312)
======= ======= ======= ======== =======
Net loss per share:
Basic and diluted................... $ (0.42) $ (1.18) $ (1.76) $ (0.90) $ (0.21)
Basic and diluted weighted average
common shares outstanding......... 3,981 3,468 3,681 3,664 10,845
Pro forma net loss per share (1):
Basic and diluted................... $ (0.46) $ (0.12)
Weighted average shares, basic and
diluted........................... 14,084 18,904
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JANUARY 1, OCTOBER 1,
1996 1997 1999 1999
------------ ------------ ---------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments................................. $ 2,145 $ 6,174 $18,811 $62,876
Working capital............................... 2,179 4,517 17,622 64,000
Total assets.................................. 2,806 10,318 29,753 83,906
Capital lease obligations, net of current
portion..................................... -- 670 2,237 1,690
Total stockholders' equity.................... 2,394 6,006 19,665 68,285
</TABLE>
- ------------------------
(1) Unaudited pro forma net loss per share for the year ended January 1, 1999
and the nine months ended October 1, 1999 is computed using the weighted
average number of common shares outstanding, adjusted to include the pro
forma effects of the conversion of preferred stock to common stock as if
such conversion had occurred on January 1, 1998 for the year ended
January 1, 1999 and on January 2, 1999 for the nine months ended October 1,
1999, or at the date of original issuance, if later.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF VIANT SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL DATA"
AND VIANT'S FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, INCLUDED
ELSEWHERE IN THIS PROSPECTUS. EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED
HEREIN, THE DISCUSSION IN THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS SUCH AS STATEMENTS OF VIANT'S
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE
IN THIS PROSPECTUS SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS. VIANT'S
ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS
COULD DIFFER MATERIALLY FROM THOSE DISCUSSED BELOW. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED IN "RISK FACTORS," AS
WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.
OVERVIEW
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the Internet. Viant creates value by helping clients rapidly
develop and deploy Internet solutions.
Viant derives substantially all of its revenues from services performed on a
fixed-price, fixed-time basis. Viant generally enters into a Master Services
Agreement with its clients which establishes the legal and general business
terms of the relationship. As specific engagements are identified, the Company
and the client then enter into separate statements of work which outline the
time frame and fees applicable to the specific engagement. Typically these
engagements are of a short predetermined time frame, generally lasting three to
six months. To determine the proposed fixed price for an engagement, Viant uses
an estimation process which takes into account the type and overall complexity
of the project, the anticipated number of consultants needed and their
associated billing rates, and the estimated duration of and risks associated
with the engagement. All fixed-price proposals are approved by a member of
Viant's senior management team. Revenues from fixed-price engagements are
recognized using the percentage of completion method (based on the ratio of
costs incurred to the total estimated project costs). Project costs are based on
the direct payroll and associated fringe benefits of the consultants on the
engagement. Additionally, the finance department personnel meet regularly with
project managers to ensure that the budgeted costs to complete, which are used
to calculate revenue recognition, reflect the actual status of the project and
the anticipated costs to complete. Provisions for estimated losses on contracts
are made during the period in which such losses become probable and can be
reasonably estimated. To date, such losses have not been significant. Viant
reports revenue net of reimbursable expenses.
Viant's revenues and earnings may fluctuate from quarter to quarter based on
such factors within and outside its control, including: the variability in
market demand for the Internet and for Internet professional services, the
length of the sales cycle associated with our service offerings, the number,
size and scope of our projects, and the efficiency with which we utilize our
employees. See "Risk Factors -- Fluctuations in our quarterly revenues and
operating results may lead to reduced prices for our stock." Viant does not
track backlog information. Any information regarding anticipated future revenue
from clients would not be meaningful and potentially misleading to investors.
The number of Viant employees increased from 119 as of December 31, 1997 to
328 as of October 1, 1999. Personnel compensation and facilities costs represent
a high percentage of Viant's operating expenses and are relatively fixed in
advance of each quarter. Accordingly, if revenues do not increase at a rate
equal to expenses, Viant's business, financial condition or results of
operations could be materially and adversely affected. In addition, Viant's
liquidity may also be adversely affected if revenues do not increase at a rate
equal to these additional expenses, to the extent Viant is unable to reduce
operating expenses.
14
<PAGE>
During 1998, Viant changed its fiscal year to the 52-week period ending on
the Friday nearest the last day of December of that year. Prior to this, the
fiscal year of Viant was the calendar year. All references below to the results
of operations for 1998 are the actual operating results for the fiscal year
ended January 1, 1999.
RESULTS OF OPERATIONS
The following table sets forth the percentage of net revenues of certain
items included in Viant's statement of operations for the periods indicated:
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
------------------------------------------------------------------------------
PERIOD FROM APRIL 10, NINE MONTHS ENDED
1996 (INCEPTION) TO YEAR ENDED YEAR ENDED --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
--------------------- ------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Net revenues............. 100% 100% 100% 100% 100%
---- ---- ---- ---- ----
Operating expenses:
Professional
services............. 80 51 56 55 49
Sales and marketing.... 72 18 16 14 12
General and
administrative....... 168 71 52 48 40
Research and
development.......... 52 7 7 6 7
---- ---- ---- ---- ----
Total operating
expenses........... 372 147 131 123 108
---- ---- ---- ---- ----
Loss from operations..... (272) (47) (31) (23) (8)
Interest and other income
(expense), net......... 14 1 (1) (1) 2
---- ---- ---- ---- ----
Net loss................. (258)% (46)% (32)% (24)% (6)%
==== ==== ==== ==== ====
</TABLE>
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND OCTOBER 1, 1999
NET REVENUES. Revenues increased 171% from $13.9 million for the first nine
months of 1998 to $37.6 million for the first nine months of 1999. The increase
in net revenues reflected growing demand for Internet professional services and
increases in both the size and number of Viant's client engagements. Revenues
derived from Viant's three largest clients, as a percentage of total net
revenues, decreased slightly from 47% for the first nine months of 1998 to 44%
for the first nine months of 1999.
PROFESSIONAL SERVICES. Professional services expenses consist primarily of
compensation and benefits for employees engaged in the delivery of Internet
professional services and non-reimbursable expenses related to client projects.
Professional services expenses increased 144% from $7.6 million for the first
nine months of 1998 to $18.5 million for the first nine months of 1999. These
increases were primarily due to the hiring of additional professionals during
these periods. Professional services expenses decreased as a percentage of
revenues from 55% for the first nine months of 1998 to 49% for the first nine
months of 1999. This decrease is primarily the result of increased utilization
of the professional staff and better planning and execution on client
engagements.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
compensation, benefits and travel costs for employees in the sales and marketing
groups, marketing program costs and an allocation of facilities costs. Sales and
marketing expenses increased $2.6 million or 130% for the first nine months of
1999 versus the first nine months of 1998. Sales and marketing expenses
decreased as a percentage of revenues from 14% for the first nine months of 1998
to 12% for the first nine months of 1999. Sales and marketing expense increases
were primarily
15
<PAGE>
attributable to an increase in the number of sales personnel and an overall
increase in Viant's marketing and branding efforts. Viant expects that the
dollar amount of sales and marketing expenses will continue to increase due to
increases in advertising and promotional activities. The decrease as a
percentage of revenues is due to higher revenues generated per sales employee
and the significant increase in revenues for the first nine months of 1999
versus the same period in 1998.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of compensation, benefits and travel costs for employees in Viant's
management, human resources, finance and administration groups, and facilities
costs not allocated to sales and marketing or research and development. General
and administrative expenses increased $8.3 million or 125% for the first nine
months of 1999 versus the first nine months of 1998. These increases were the
result of increased personnel and facilities costs in connection with the
opening of additional offices. General and administrative expenses decreased as
a percentage of revenues from 48% for the first nine months of 1998 to 40% for
the first nine months of 1999. This decrease was the result of higher revenue
growth versus infrastructure support costs and more efficient operations.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of compensation, benefits and an allocation of facilities costs for
employees associated with Viant's innovation groups. The innovation groups
enhance the knowledge and expertise of the strategic consulting, creative design
and technology disciplines. Research and development expenses increased
$1.6 million or 190% for the first nine months of 1999 versus the first nine
months of 1998. Research and development expenses increased as a percentage of
revenue from 6% for the first nine months of 1998 to 7% for the first nine
months of 1999. This increase was primarily the result of the addition of two
innovation groups after the first quarter of 1998 and additional personnel for
these innovation groups.
COMPARISON OF FISCAL YEARS 1996, 1997 AND 1998
NET REVENUES. Net revenues were $20.0 million in 1998, representing an
increase of 128% over 1997 revenues of $8.8 million. The increase in net
revenues reflected growing demand for Internet professional services and
increases in both the size and number of Viant's client engagements. Net
revenues increased from $642,000 for the period from April 10, 1996 to
December 31, 1996 to $8.8 million in the full year ended December 31, 1997. The
$8.2 million increase reflected increases in both the size and number of client
engagements as well as a full year of operations in 1997. Revenues derived from
Viant's three largest clients, as a percentage of total net revenues, decreased
from 71% in 1996, to 68% in 1997 and to 42% in 1998, reflecting an increase in
business from other clients.
Billings in advance of services performed are recorded as deferred revenues.
Viant had $99,000 in deferred revenues at December 31, 1996, $931,000 at
December 31, 1997 and $1.1 million at January 1, 1999. The increase in deferred
revenues from year to year reflects new client engagements as well as
contractual terms that allow Viant to bill clients in advance of performing
services. During 1997 and 1998, substantially all of Viant's revenues were
derived from fixed-price, fixed-time contracts. In 1996, substantially all of
Viant's revenues were derived from time and materials based contracts.
PROFESSIONAL SERVICES. Professional services expenses represented 80% of
total net revenues in 1996, 51% in 1997 and 56% in 1998. The increase in
professional services expenses as a percentage of net revenues in 1998 compared
to 1997 was primarily due to Viant's strategy of increased hiring in
anticipation of future growth as well as higher salaries. The decrease in
professional services expenses as a percentage of net revenues in 1997 compared
to 1996 reflects the higher revenues generated in 1997 as compared to 1996.
Professional services expenses increased by $4.0 million from 1996 to 1997 and
$6.7 million from 1997 to 1998. These increases were primarily due to the hiring
of additional professionals.
16
<PAGE>
SALES AND MARKETING. Sales and marketing expenses represented 72% of total
net revenues in 1996, 18% in 1997 and 16% in 1998. The decrease in sales and
marketing expenses as a percentage of revenues from 1997 to 1998 was primarily
due to higher revenues generated per sales employee and revenue growth. The
decrease in sales and marketing expenses as a percentage of revenues from 1996
to 1997 was primarily due to revenue growth. Sales and marketing expenses
increased by $1.1 million from 1996 to 1997 and $1.7 million from 1997 to 1998.
The increase in sales and marketing expenses from 1996 to 1997 was attributable
to the initiation of sales and marketing activities. The increase from 1997 to
1998 was attributable to the increase in the number of sales personnel and an
overall increase in Viant's marketing and branding efforts.
GENERAL AND ADMINISTRATIVE. General and administrative expenses represented
168% of total net revenues in 1996, 71% in 1997 and 52% in 1998. General and
administrative expenses increased by $5.2 million from 1996 to 1997 and
$4.1 million from 1997 to 1998. These increases were due primarily to an
increase in lease expenditures in connection with the opening of additional
offices and the hiring of additional employees. Also included in these increases
are additions of $294,000 in 1997 and $612,000 in 1998 to the allowance for
doubtful accounts, reflecting Viant's increasing revenues and receivables,
including a provision of $400,000 in 1998 related to one client. After
adjustment to exclude non-recurring 1997 severance expenses of $1.5 million
related to an agreement between Viant and a former employee, general and
administrative expenses represented 54% of total net revenues in 1997.
RESEARCH AND DEVELOPMENT. Research and development expenses represented 52%
of total net revenues in 1996, 7% in 1997 and 7% in 1998. Research and
development expenses increased $848,000 from 1997 to 1998 because of the
addition of two innovation groups. The decrease in research and development
expenses as a percentage of total net revenues from 1996 to 1997 was primarily
due to revenue growth.
QUARTERLY RESULTS OF OPERATIONS. The following table sets forth a summary
of Viant's unaudited quarterly operating results for each of the seven quarters
in the period ended October 1, 1999. This data has been derived from our
unaudited interim financial statements which, in our opinion, have been prepared
on substantially the same basis as the audited financial statements contained
elsewhere in this prospectus and include all normal recurring adjustments
necessary for a fair presentation of the financial information for the periods
presented. These unaudited quarterly results should be read in conjunction with
Viant's financial statements and notes thereto included elsewhere in this
prospectus. The operating results in any quarter are not necessarily indicative
of the results that may be expected for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, JAN. 1, APR. 2, JULY 2, OCT. 1,
1998 1998 1998 1999 1999 1999 1999
-------- -------- --------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues.............................. $ 4,093 $ 4,512 $ 5,302 $ 6,136 $ 7,883 $ 10,991 $ 18,751
------- ------- ------- ------- ------- -------- --------
Operating expenses:
Professional services................... 2,237 2,362 2,999 3,652 4,511 5,591 8,440
Sales and marketing..................... 586 631 805 1,302 1,216 1,661 1,770
General and administrative.............. 1,809 2,118 2,740 3,698 3,518 4,779 6,701
Research and development................ 168 295 389 577 690 850 932
------- ------- ------- ------- ------- -------- --------
Total operating expenses.............. 4,800 5,406 6,933 9,229 9,935 12,881 17,843
------- ------- ------- ------- ------- -------- --------
Income (loss) from operations............. (707) (894) (1,631) (3,093) (2,052) (1,890) 908
Interest and other income (expense),
net..................................... 27 (10) (79) (100) 11 51 660
------- ------- ------- ------- ------- -------- --------
Net income (loss)......................... $ (680) $ (904) $(1,710) $(3,193) $(2,041) $ (1,839) $ 1,568
======= ======= ======= ======= ======= ======== ========
</TABLE>
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, Viant has funded its operations and investments in property
and equipment through private and public equity financings, bank borrowings and
capital lease financing arrangements. Viant's cash and cash equivalents
increased from $18.2 million at the end of 1998 to $61.5 million as of the end
of the third quarter of 1999. This increase is primarily from the net proceeds
of $50.2 million from the issuance of 3,450,000 shares of common stock in
Viant's initial public offering on June 18, 1999. These proceeds were offset
primarily by cash used for operating activities of $600,000 and for investing
activities of $3.4 million. The cash used for operating activities of $600,000
is principally made up of $2.3 million in net loss for the first nine months of
1999 and an $8.1 million increase in accounts receivable primarily due to
increased revenue, offset by a $7.9 million increase in accounts payable and
accrued expenses. Additionally, the cash used for investing activities primarily
reflects Viant's purchases of $2.6 million in property and equipment.
Viant had a revolving line of credit with a bank which provided for
borrowings of up to $5.0 million. Borrowings under this line of credit, which
expired on July 3, 1999, bore interest at the bank's prime rate plus 0.5% (8.25%
at January 1, 1999). Under the same bank agreement, Viant also had an equipment
line of credit which provided for borrowings of up to $1,250,000, bore interest
at the bank's prime rate plus 1.0% (8.75% at January 1, 1999) and was repayable
in 36 equal monthly installments. Borrowings under the bank lines of credit
could be prepaid in whole or in part without penalty and were secured by
substantially all of Viant's assets. This revolving line of credit and equipment
line were repaid in full and terminated on July 1, 1999. These lines of credit
required compliance with financial covenants including the maintenance of
financial ratios, including a ratio of total liabilities to tangible net worth
of 1.0 and a limitation on maximum quarterly net losses. Viant was in default on
a financial covenant at January 1, 1999, for which Viant received a waiver from
the bank. In April 1999, Viant extended this credit facility to July 3, 1999 and
renegotiated the financial covenants. The financial covenant for which the
Company was in default was amended such that the Company could not have incurred
a loss exceeding $2,500,000 for each of the fiscal quarters ending April 2, 1999
and July 2, 1999. In addition, the total liabilities to tangible net worth ratio
covenant was amended such that the Company must have maintained as of the last
day of each fiscal month a ratio of total liabilities to tangible net worth of
not more than 1.25 to 1. Viant was in compliance with all its financial
covenants during the first six months of 1999. Viant also has a capital lease
facility with a leasing company for total availability of $3.2 million secured
by the capital assets purchased with the borrowings. Outstanding borrowings
under the above credit facility totaled $2.3 million as of October 1, 1999.
Viant believes that its current cash, cash equivalents and short-term
investments and the net proceeds from this offering will be sufficient to meet
Viant's working capital and capital expenditure requirements for at least the
next 24 months. However, there can be no assurance that Viant will not require
additional financings within this time frame or that such additional financing,
if needed, will be available on terms acceptable to Viant, if at all.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products worldwide
are coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they may not be able to distinguish between the year 1900
and the year 2000. Accordingly, many companies, including Viant and Viant's
clients, potential clients, vendors and strategic partners, may need to upgrade
their systems to comply with applicable Year 2000 requirements.
Because Viant and its clients are dependent, to a very substantial degree,
upon the proper functioning of computer systems, a failure of these systems to
correctly recognize dates beyond January 1, 2000 would disrupt operations. We
may experience operational difficulties caused by undetected errors or defects
in our internal systems. Purchasing patterns of our clients and potential
clients may be affected by Year 2000 issues as companies expend significant
resources to
18
<PAGE>
correct their current systems for Year 2000 compliance and may therefore defer
new initiatives until they do so. We may become involved in disputes regarding
Year 2000 problems occurring in solutions we have developed or implemented or
arising from the interactions of our Internet solutions with other software
applications. Year 2000 problems could require us to incur delays in providing
our services to clients and unanticipated expenses.
To address these issues, Viant formed a Year 2000 assessment and contingency
planning committee, called the Y2K Committee, to review both its information
technology systems and its non-information technology systems, and where
necessary, to plan for and supervise the remediation of those systems. The Y2K
Committee is headed by Viant's Chief Technology Officer. Viant has assessed the
Year 2000 readiness of its critical hardware and software systems. The providers
of these systems have either confirmed to Viant that these systems are Year 2000
compliant or provided the information necessary for Viant to plan and implement
upgrades to make them Year 2000 compliant. Viant has begun to implement upgrades
and test these systems as part of its Year 2000 efforts. Based on the
information received to date from these vendors, Viant believes this process
should be completed by the end of November 1999.
Viant has initiated communication with other significant vendors to
determine the extent to which they are vulnerable to Year 2000 issues. Viant has
completed discussions with these vendors regarding their Year 2000 remediation
plans. Based on discussions to date, Viant believes that the Year 2000 problem
will not materially impact the operations of our significant clients or their
plans to purchase our services.
Based on work done to date, Viant believes that the cost of work and
materials to complete its Year 2000 program will be approximately $120,000, of
which approximately $90,000 has been spent as of October 1, 1999. This includes
the cost of material upgrades, software modifications and related consulting
fees.
Viant's standard master services agreement does not warrant Year 2000
compliance other than the warranties provided by vendors of the software used in
its solutions. Viant has reviewed significant non-standard client contracts to
determine its exposure for failure to provide Year 2000 compliant solutions.
Viant believes these contracts do not provide express warranties for Year 2000
compliance for its solutions. Nevertheless under either contractual arrangement,
Viant may become involved in disputes regarding Year 2000 problems occurring in
solutions it has developed or implemented or arising from the interactions of
its Internet solutions with other software applications. Viant has tested for or
received assurances of Year 2000 compliance for the major software components
used in its client applications. Viant believes that its exposure for failure to
provide Year 2000 compliant products would not have a material impact on its
business or operations.
Viant has developed contingency plans for critical individual information
technology systems and non-information technology systems to address Year 2000
risks not fully resolved by Viant's Year 2000 program. To the extent that our
assessment has not identified any material noncompliant information technology
systems operated by us or by our vendors, Viant feels the most reasonably likely
worst case Year 2000 scenario is a temporary telecommunications failure which
would impair communications among our offices. Viant currently has contingency
plans in place to address such a disruption in its telecommunications systems
and believes that such a disruption would not have a material effect on our
operations. However, a prolonged telecommunications failure beyond our control
could have a material adverse effect on our business, results of operations and
financial condition.
Viant believes that the Year 2000 risk will not present significant
operational problems for Viant. However, there can be no assurance that our Year
2000 program will prevent any material adverse effect on our operations,
financial condition or customer relations.
19
<PAGE>
BUSINESS
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the Internet. Viant creates value by helping clients rapidly
develop and deploy Internet solutions. Viant accomplishes this value creation
through a business model that emphasizes multi-disciplinary teams, an integrated
service model, organic growth that reinforces the firm's culture and continuous
innovation.
Viant believes it has gained considerable experience and market presence
from completing significant engagements for Global 1000 and other large
companies such as American Express, BankBoston, CMGI, Compaq, Deutsche Bank,
General Motors, Hewlett-Packard, Kinko's, Lucent Technologies, Polo/Ralph
Lauren, LVMH, RadioShack, Sears Roebuck & Co. and Sony Pictures Entertainment.
The Company was originally incorporated in April 1996, as a California
corporation. The Company changed its name from Genuine Internet to Silicon
Valley Internet Partners on June 14, 1996. On April 3, 1998, we changed our name
to Viant Corporation, and on March 12, 1999, we reincorporated in the State of
Delaware.
INDUSTRY BACKGROUND -- INTERNET GROWTH AND OPPORTUNITIES
Over the past several years the number of Internet users worldwide has grown
rapidly. Increasing numbers of individuals and companies now use the Internet to
search for information, communicate with others, conduct business and seek
entertainment. According to International Data Corporation, the estimated number
of Internet users worldwide was 142 million at the end of 1998, and is projected
to grow to over 500 million users by the end of 2003.
The broad acceptance of the Internet has created numerous opportunities for
companies that are seeking growth and are challenged by highly competitive and
rapidly changing markets, geographically dispersed operations and demands for
increased efficiencies. As a result, many senior executives now rank their
company's Internet strategy among their highest corporate priorities.
Internet solutions permit companies to acquire new customers, conduct
electronic commerce and consistently manage customer relationships. These
solutions can also dramatically improve a company's ability to access, analyze
and distribute important information to suppliers, business partners, employees
and customers. A manager can, for example, check suppliers' inventories for the
availability, pricing and estimated delivery time for important parts needed to
fulfill orders. A sales person can perform research on her company's corporate
database even though she is thousands of miles from corporate headquarters.
Employees worldwide can verify their retirement account balances simply by
checking their company's website. A consumer can comparison shop and purchase an
item from the comfort of her own home. These examples translate into revenue
growth and improved operating efficiencies.
While there are numerous benefits that may be gained by utilizing the
Internet, the analysis, design and implementation of an effective Internet
solution requires a range of skills and expertise which few businesses possess.
The successful design of Internet solutions requires careful analysis and
definition of the strategic implications of the Internet for a business, the
creative possibilities for brand, content and user experience and the technology
required to support the solution. The rapid development and launch of Internet
solutions further requires substantial expertise to develop and integrate new
business processes with existing capabilities, to design and execute Internet
marketing communications plans and to evaluate, select and implement the
appropriate technologies for the Internet solution.
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The current supply of high quality, experienced Internet professionals is
relatively limited, making the market extremely competitive for these
individuals. Furthermore, it is costly and inefficient for companies seeking to
implement their own Internet solutions to hire, train and retain these
professionals. As a result, an increasing number of businesses, from start-ups
to Global 1000 companies, engage Internet professional services firms to help
them design and implement Internet solutions. The market for Internet and
e-commerce services is projected to grow dramatically. Forrester Research
estimates that this market will grow from $10.6 billion as of November 1999 to
$64.8 billion in 2003, representing a compound annual growth rate of 59%.
The rapidly growing demand for Internet professional services has attracted
many firms to this market. Viant believes that many of these firms suffer from
one or more of the following limitations:
- Strength in only one or two of the core competencies of strategic
consulting, creative design and technology. Many of these firms have
expertise in only one or two of these critical disciplines and therefore
must partner with other firms to deliver a complete Internet solution. As
a result, separate teams or firms with differing approaches, skill sets
and cultures work on the same project. This separation often results in
project delays, increased costs and other inefficiencies.
- A time and materials business model. Service providers who utilize a time
and materials model typically bill their clients for the time spent on a
project. As a result, these service providers have a reduced incentive to
complete a project early or on time as they will continue to be paid even
if a project takes longer than planned. Clients, therefore, generally
perceive that the time and materials model fails to align the service
provider's goals with the client's, namely the rapid, efficient delivery
of a working Internet solution.
- Dependence on acquisitions to add competencies and geographic reach.
Certain Internet professional services firms grow primarily through
acquisitions of other firms in order to gain expertise in core disciplines
or to expand geographically. The mere acquisition of these additional
disciplines may not necessarily result in the creation of an integrated
service approach. In addition, the integration of an acquired firm's
employees and business systems is often difficult and time-consuming,
resulting in inconsistent and inefficient delivery of services and
solutions to the client.
Accordingly, Viant believes that companies seeking to effectively capitalize
on the Internet require and seek a firm with expertise in strategic consulting,
creative design and technology to provide an integrated, seamless delivery of
Internet solutions.
THE VIANT SOLUTION
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the opportunities presented by the Internet. Viant has experienced
increased demand for its services. Viant's revenues have grown from $640,000 in
1996 to $8.8 million in 1997, $20.0 million in 1998 and $37.6 million in the
first nine months of 1999. Key elements of the Viant solution are:
INTEGRATED APPROACH
Viant combines three core disciplines -- strategic consulting, creative
design and technology -- to help clients reevaluate their strategies and
transform their businesses to take advantage of the Internet. Viant delivers its
services for each project through a multi-disciplinary team of strategists,
creative designers and information technologists who typically work with key
client representatives in a local Viant office. Viant believes that this
integrated approach enables it to deliver comprehensive Internet solutions which
can be implemented seamlessly and quickly. This
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approach also reduces costs, miscommunications and delays which can occur when
the strategic consulting, creative design and technology disciplines are handled
by different teams or firms.
VIANT SERVICE MODEL
We created the Viant Service Model to organize and address the broad-ranging
and complex needs of clients hoping to utilize the Internet effectively. The
service model divides each engagement into three well-defined phases --
Envision, Experience, and Launch -- which provide our consultants with a
consistent yet flexible service approach. The Viant Service Model takes a client
efficiently from strategy all the way through implementation. Our approach
identifies and prioritizes initiatives, rapidly delivers them to market,
captures valuable market experience and feedback, and immediately applies this
feedback to refine the solution. Viant executes this approach through an
iterative process, which results in Internet solutions that are better suited to
today's fast-changing market environment than solutions based on a traditional,
lengthy and non-iterative approach. The service model also allows us to
identify, capture, and reuse valuable Internet frameworks, designs, processes
and techniques which we develop in our client projects.
FIXED-PRICE AND FIXED-TIME
In substantially all of its engagements, Viant charges a fixed price for its
services and provides the client with a substantive deliverable within a short,
predetermined timeframe. Viant believes that clients favor fixed-price,
fixed-time contracts because they focus on clearly defined deliverables and
permit the client to more accurately manage project costs. These contracts also
create incentives for Viant to finish within budgeted timeframes, thereby more
closely aligning Viant's interests with the client's. Furthermore, this model
creates the opportunity for Viant to achieve higher margins by delivering its
solutions more efficiently.
STRATEGIC BUSINESS FOCUS
Viant works with clients to reevaluate and transform their strategic
business processes and operations to take advantage of the Internet. Viant's
focus on initiatives that are critical to a client's strategy, operations and
organization enables Viant to work with a client's most senior executives. Viant
believes that its participation in and development of these critical initiatives
results in the opportunity to provide premium value services.
ORGANIC GROWTH MODEL
Viant believes its organic growth model is essential to its ability to
maintain quality while increasing revenues. To date, Viant has built its
business entirely through the training and assimilation of new employees, as
opposed to adding employees and disciplines through mergers or acquisitions. A
principal element of this training and assimilation is the QuickStart program,
an intensive three-week program of activities and instruction attended by all
new employees.
In order to open new offices effectively and quickly, Viant staffs new
locations with employees who have relocated from other offices. This process
allows Viant to bring new offices on-line quickly, ready to service local
clients. Additionally, Viant believes this process maintains consistent
firm-wide quality and culture, and an ongoing entrepreneurial environment.
VIANT CULTURE
Viant's culture is founded on professional growth, rapid learning and
enterprise-wide knowledge-sharing. Employees are evaluated not only on their
individual performance, but also on how well they teach other employees and
share knowledge. Viant believes that its integrated team
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approach and policy of servicing clients from local offices has reduced travel
time and allowed Viant managers to allocate work efficiently.
VIANT'S STRATEGY
Viant's goal is to build upon its position as a leading provider of Internet
professional services. To achieve this goal, Viant is pursuing the following
strategies:
EXPAND EXISTING CLIENT RELATIONSHIPS AND ATTRACT NEW CLIENTS
Viant continues to focus on delivering high quality solutions to help its
clients redefine and transform their businesses in order to capitalize on the
Internet. Viant believes this focus improves client satisfaction and results in
two distinct benefits: follow-on engagements with existing, satisfied clients
and referrals for engagements with new clients. Viant also plans to continue to
build its brand recognition, grow its sales efforts and expand its skill set to
acquire new clients seeking comprehensive Internet solutions.
CONTINUE ENHANCEMENT OF CORE DISCIPLINES
To enhance its knowledge and thought leadership in the core disciplines --
strategic consulting, creative design and technology -- Viant has established
the following research and innovation groups:
THE VIANT INSTITUTE, which is comprised of dedicated internal personnel
and outside advisors whose efforts are focused on thought-leading research
and writings on Internet-related issues. Viant uses this research
internally to enhance its knowledge and service offerings, and also
distributes this research to clients and prospective clients as a means of
increasing Viant's visibility in the marketplace.
THE DESIGN STUDIO, which has a dedicated staff that supports the creative
discipline. This group develops new ideas in creative design and user
experience, giving our clients innovative ways to attract and strengthen
relationships with customers over the Internet.
THE TECHNOLOGY CENTER, which is comprised of a dedicated team that
evaluates and tests new and emerging Internet technologies. This team
synthesizes new technologies in order to formulate innovative Internet
architectures. These activities benefit our clients by allowing them to
rapidly incorporate thoroughly-tested, leading edge technologies into
their Internet solutions.
In addition, Viant has established an advisory board which will provide
Viant's client executives and senior management with insights associated with
designing, building and sustaining business models to compete in the new digital
economy. The members of the Advisory Board are W. Brian Arthur, John Seely
Brown, Paul Saffo, N. Venkatraman and Richard J. Chavez, Viant's Chief Strategy
Officer.
Viant believes that the combination of new intellectual capital from its
innovation groups and advisory board with its project-based experience will
allow it to remain on the leading edge of strategic consulting, creative design
and Internet technologies.
ATTRACT AND RETAIN THE HIGHEST QUALITY EMPLOYEES
Viant seeks to hire high quality employees with a broad range of experience
and knowledge. Consistent with its organic growth plan, Viant recruits a
substantial number of its new employees through an employee referral program.
This program rewards employees for new hires referred by them. The QuickStart
training and orientation program accelerates the dissemination of knowledge
among new employees and instills an understanding of Viant's culture and shared
values. Viant's
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culture provides long-term appeal for its employees by providing extensive
client contact and allowing them to pursue mastery of one discipline or gain a
broad exposure across two or more disciplines. Viant also encourages its
employees to pursue entrepreneurial opportunities by helping to launch new
offices. Viant believes that equity ownership is an important component of
employee compensation. As a result, all Viant employees are granted options to
purchase Viant stock upon commencement of employment. In addition, as a further
incentive to attract and retain the highest quality employees, Viant has begun
to explore investment vehicles through which it could invest in Internet-related
businesses. Although Viant has not decided which vehicle, if any, is most
appropriate, Viant may pass along to its employees a portion of the potential
gains associated with any of these investments. Viant may use a portion of the
net proceeds from this offering for making these investments.
LEVERAGE COMPANY-WIDE KNOWLEDGE
Viant's multi-disciplinary teams gain valuable experience and knowledge
through client engagements. Viant's culture, systems and processes promote the
sharing of this knowledge throughout the company. Viant has developed a unique,
proprietary knowledge sharing and collaboration system, consisting of electronic
documents and shared workspaces, called FOCUS. During every client engagement,
Viant project teams seek to expand Viant's knowledge base by identifying
innovative processes, techniques and analyses that they believe will be valuable
to other project teams. The FOCUS system enables the:
- efficient distribution of company-wide knowledge and experience;
- reuse of processes and knowledge from past projects;
- acceleration and enhancement of professional development; and
- close collaboration and knowledge sharing with clients during projects.
The client benefits from Viant's FOCUS system which gives it access to a
broad array of proven assets, methods and project experience. Viant benefits
from this knowledge sharing strategy through the reuse of processes, components
and methodologies. This strategy accelerates the delivery of Internet solutions
and over time could result in improved operating margins.
CONTINUE TO REFINE OUR OPERATING SYSTEMS AND PROCESSES
Viant has built and continues to refine its management processes and
supporting systems in order to streamline and standardize operations. These
include systems and processes for:
- revenue forecasting;
- recruiting;
- project financial management;
- relationship management;
- career management;
- knowledge sharing;
- project staffing; and
- accounting.
Viant believes that the evolution of its infrastructure has allowed and will
continue to allow it to scale its operations and compete effectively.
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EXPAND GEOGRAPHICALLY
Viant believes that significant revenue growth opportunities exist from
expansion into new geographic markets. To date, Viant has opened offices in six
cities in the United States and an office in London and has established a
presence in two additional U.S. cities. Viant has plans to expand to additional
domestic and international markets. Through its organic growth model, each
office is initially staffed with experienced employees from other Viant offices
and then with new employees from the local geographic area. Viant believes this
expansion strategy provides ongoing entrepreneurial opportunities for employees
and closer relationships with clients.
EXTEND SERVICE OFFERING
Viant believes that additional growth opportunities may also exist through
strategic alliances with complementary service providers. As an example, Viant
has entered into an alliance with Hewlett-Packard Company and Technology
Crossover Ventures, called "NetSpinoff.com," as a means of offering additional
services to meet new market demands. The alliance's planned service offerings
include, among others: venture capital, digital brand strategy, digital
organization design, web development, legacy-system integration and application
hosting. NetSpinoff.com will target these services at Fortune 1000 corporations
who are looking to create or spin-off Internet business.
PROVIDE SERVICES ACROSS A BROAD RANGE OF INDUSTRIES
Viant focuses on building knowledge of and skills relating to the design and
development of Internet solutions to help companies redefine and transform their
businesses. Viant believes the broad-based business knowledge and Internet
expertise it attains from its client engagements is scalable across a wide range
of industries. Clients have effectively utilized this expertise in a broad range
of industries which, to date, have included:
- financial services;
- retail;
- music and entertainment;
- pharmaceutical;
- media and publishing;
- high technology;
- utilities;
- distribution; and
- telecommunications.
VIANT SERVICES
Viant has focused on developing substantial expertise in five major service
areas. These service areas include:
INTERNET STRATEGY SOLUTIONS
Companies often pursue multiple Internet initiatives in an isolated and
uncoordinated manner, ignoring the opportunities to integrate these initiatives
with broader corporate strategy and business practices. Viant works closely with
a client to better understand its existing business strategy, processes and
needs in order to design a comprehensive and complementary Internet strategy.
Viant also works with a client to redesign its organizational structure and
processes to fully capitalize on the new, Internet-inclusive business strategy.
Viant then helps the client to focus,
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define, and prioritize its Internet investments to ensure that they represent a
unified strategy closely tied to the client's overall business objectives and
operations.
ELECTRONIC COMMERCE SOLUTIONS
As increasing numbers of people research and purchase goods and services
directly over the Internet, many companies have rushed to create their own
Internet storefront in what they view simplistically as a new distribution
channel. Viant helps clients move beyond this approach by focusing them on
critically important issues such as customer segmentation, online customer
behavior, the design and creation of positive user experiences, customer
information capture and analyses, and effective online customer service. This
focus helps clients to create electronic commerce solutions that attract,
satisfy and retain loyal customers through the Internet.
BUSINESS PARTNER SOLUTIONS
Historically, business partners have largely interacted via multiple and
sometimes inefficient methods including faxed correspondence, telephone sales
and support, paper-based orders, invoicing and payment. Business partners can
greatly improve the efficiency of this process by using secure Internet-based
transactions and correspondence systems, often called extranets. Viant has
gained substantial knowledge and expertise in rapidly analyzing complex business
operations and partner interaction systems, redesigning business partner
interactions around extranet solutions, designing effective user interfaces and
functionality, and integrating extranet solutions with disparate hardware and
software systems.
INTERNAL INFORMATION SOLUTIONS
As companies grow in headcount and geographic breadth, managers often face
the difficult and costly question of how to share information with large numbers
of employees, often in numerous geographic locations. For example, an updated
brochure or handbook that needs to be sent to 850 locations worldwide requires a
significant amount of time and resources. Viant helps clients to develop
corporate Internet solutions, often called intranets, which allow the secure
capture, storage, and distribution of information by and to a client's
authorized employees. Viant designs and deploys intranet solutions, for example,
that enable a global company to post documents, audio or video clips on a
website for access by all employees worldwide. Viant's intranet solutions allow
clients to communicate important information to those who need it in a cost and
time efficient manner.
INTERNET-ONLY BUSINESS SOLUTIONS
The dramatic growth in Internet use has also given rise to a new class of
businesses which are designed specifically for the Internet. Viant works with
clients and managers to design and deploy the business strategy, operations, and
systems for these new Internet enterprises. Because market conditions shift
extremely quickly for Internet-based businesses -- for example with the entrance
of new competitors, regulations or technologies -- clients value Viant's ability
to help them rapidly and effectively analyze conditions, anticipate and respond
to changes, and refine their business strategies and systems.
VIANT SERVICE MODEL
The Viant Service Model is comprised of three distinct, customizable and
iterative phases, which facilitate the rapid delivery of Internet solutions.
Viant works with the client to understand its specific business needs and
determine the most appropriate activities within each phase of the service
model. Each phase takes approximately 60-90 days, is provided on a fixed-price,
fixed-time basis and involves all three core disciplines. These three phases may
be repeated as required to
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refine and deliver an Internet solution. The Viant Service Model can be
illustrated graphically as follows:
(DIAGRAM DEPICTS VIANT SERVICE MODEL)
(A triangle with the words Strategy, Technology, and Creative, and three
boxes, labeled, "Envision: Explore and Develop the Internet Strategy";
"Experience: Design Prototypes to Test Approaches"; and "Launch: Build and
Deploy the Internet Solution". The words Ideas/Option, Blueprint/Market Tests
and Build/Refine will appear under the boxes)
ENVISION
During the first phase, ENVISION, project teams examine the client's
marketplace, including competitors, customer needs and brand identity. Viant
interprets the client's core value proposition and business practices for the
Internet environment based on Viant's integrated perspective of customer
behavior and needs, competitive dynamics and technology trends and issues. Viant
works with the client to establish a focused objective -- for example, increased
customer value, strengthened partner relationships or improved operating
efficiencies -- and a comprehensive set of business options to achieve this
objective.
Once this set of options is developed and articulated, Viant works with the
client to further analyze and prioritize the potential options by:
- defining the decision framework and criteria to select near-term and
long-term Internet investments;
- developing a profile of the client's capabilities and comparing those
capabilities against the requirements of the solution;
- performing a rigorous business case analysis to determine which option to
pursue; and
- creating a conceptual design to help visualize the options.
At the end of this phase, Viant delivers an action plan that is understood
and supported by key managers throughout the client organization and is grounded
in the client's business strategy. The action plan outlines specific Internet
solutions and their expected benefits. The plan also identifies the work needed
to determine the solution's requirements.
EXPERIENCE
In the second phase, EXPERIENCE, the project team utilizes the action plan
from Envision and carefully investigates the Internet solutions through market
tests. The project team creates an initial layout and subsequent prototypes of
the Internet solution. These prototypes can then be tested with the client's
existing and potential customers. The testing process allows clients to
incorporate customer feedback into the Internet solution.
Another important aspect of the Experience phase is the continued assessment
of prototypes against the client's broad business strategy, internal operations
and processes, marketing initiatives and technology systems. Viant helps the
client refine its initial strategy and action plan into a better defined
Internet solution and launch plan.
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LAUNCH
In the third phase, LAUNCH, activities center on creating the capabilities
needed not only to implement an Internet solution, but also to establish that
Internet solution as an ongoing and integrated dimension of the client's
business operations. Project teams build and deploy Internet solutions through
incremental releases. Project teams perform rigorous testing on each release to
ensure proper functioning and reliability. Viant trains the client throughout
the Launch phase enabling the client to manage ongoing maintenance once the
Internet solution is complete. Activities in this phase include:
- development of Internet software applications;
- integration between the Internet solution and the client's existing
technology systems;
- refinement of the client's business and Internet strategy, based on
operational needs and ongoing customer feedback;
- management of changes in work processes;
- rigorous testing of an Internet solution to ensure reliability and proper
functionality;
- transitioning the Internet solution to client personnel for ongoing
maintenance and revision; and
- execution of the integrated marketing strategy.
The Viant Service Model's iterative build and release process provides a high
degree of flexibility to meet changing client needs and ensures a high-quality
solution.
BENEFITS OF THE VIANT SERVICE MODEL
The Viant Service Model provides us with considerable benefits and
advantages including:
- A consistent approach for the rapid, effective delivery of all of Viant's
services. This approach is taught to all Viant consultants through the
QuickStart program and subsequent training programs;
- Standard methods to identify and capture valuable reusable assets
developed in client projects. These reusable assets include proprietary
Internet frameworks, designs, tools, processes, techniques and software;
and
- A powerful means to facilitate sales forecasting and resource management.
Viant also believes that the service model provides benefits to clients,
which include:
- COMPLETENESS. The Viant Service Model incorporates all the elements needed
to design and implement an effective Internet solution, including the
creation of the business strategy, development of the marketing plan,
design of a business organization, layout of the technical architecture,
implementation of the Internet solution and the introduction of the
redesigned business. The Viant Service Model provides clients with an
integrated set of activities that effectively move them from analysis
through execution.
- SPEED. The Viant Service Model takes a client efficiently from strategy
all the way through implementation, avoiding costly hand-offs that
typically occur when a client uses one consulting team or firm for
strategy and operations, another for creative design and marketing, and a
third for systems development and integration. Clients utilizing the Viant
Service Model gain a benefit by rapidly getting the right Internet
initiative to market.
- INNOVATION. The Viant Service Model draws on multi-disciplinary teams of
strategic consulting, creative design and technology experts. Clients
benefit by having innovative ideas formed from three, distinct
disciplinary perspectives, and from having these perspectives integrated
early and throughout all phases of the engagement.
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- ALIGNMENT. The Viant Service Model draws on key representatives from
various functional areas within the client's organization, including
marketing, information technology, strategy and operations. As a result,
the Internet strategy and execution receives deep and broad support across
the client organization. This organizational support helps to ensure that
Internet initiatives and investments are aligned with the client's
business goals and operations.
- UNIQUENESS. The Viant Service Model is highly flexible and can incorporate
a client's prior Internet work and investments as well as its unique
brand, organization and technology requirements. As a result, each client
gets a unique work plan that is most efficient for its operations and
organization, as well as unique Internet initiatives to specifically
address that client's needs.
- RISK MITIGATION. The Viant Service Model relies on proven frameworks,
techniques and processes. As a result, clients benefit from reliable
mechanisms that can be used to identify and manage project risk and to
ensure the quality delivery of Internet initiatives, on time and within
budget.
We seek to protect the software applications, methods and internal business
processes that comprise the Viant Service Model through a combination of
copyright and trade secret laws. We use all reasonable efforts to protect the
proprietary and confidential aspects of the service model by requiring any party
having access to them to execute a nondisclosure agreement or an employee
confidentiality agreement.
SALES AND MARKETING
Viant markets its Internet professional services through sales professionals
and consultants located in Boston, Chicago, Dallas, Houston, London, Los
Angeles, New York, and San Francisco. Viant believes that this regional sales
focus combined with our local service approach allows Viant to develop strong
market presence and name recognition in each of our local markets. Viant's sales
professionals operate through a coordinated and structured process to evaluate
large numbers of prospective clients, target qualified prospects and secure new
engagements.
Viant primarily markets its services to Global 1000 corporations. In
addition, Viant markets its services to early stage companies whose businesses
are designed and built around the Internet. Viant believes that the
opportunities and issues created by the Internet, including new brand
enhancement possibilities and dramatic shifts in product distribution
strategies, span a broad range of industries.
Our sales efforts are supplemented by marketing and communications
activities which we pursue to further build Viant's brand name and recognition
in the marketplace. These activities include direct mail campaigns targeting
corporate executives, public speaking opportunities, attendance at industry
conferences and business events, a public relations program, sales and marketing
materials and our own focused Internet brand initiative.
SIGNIFICANT CLIENTS
Our clients include the following companies:
American Express Company
BankBoston Corporation
BlueTape, LLC
CMGI, Inc.
Compaq Computer Corporation
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Della & James, Inc.
Deutsche Bank AG
Dreyfus Brokerage Services
Fortunoff Incorporated
General Motors Corporation
Hewlett-Packard Company
Informix Software
J. Crew Group, Inc.
Kinko's Corporation
Lucent Technologies Inc.
LVMH
Oncology Therapeutics Network, Corp., a subsidiary of Bristol-Myers
Squibb Co.
Polo/Ralph Lauren Corporation
RadioShack
Sears, Roebuck & Co.
Sony Pictures Entertainment
Unum Corporation
We derive a significant portion of our revenues from large projects for a
limited number of clients. In 1998, our five largest clients accounted for
approximately 59% of our revenues. During this period, Kinko's Corporation,
Lucent Technologies Inc. and Compaq Computer Corporation each accounted for more
than 10% of our revenues. In the first nine months of 1999, our five largest
clients accounted for approximately 55% of our revenues. During this period,
Compaq and BankBoston each accounted for more than 10% of our revenues.
COMPETITION
Viant competes in the Internet professional services market, which is
relatively new and intensely competitive. Viant expects competition to intensify
as the market evolves. Viant believes that the competitors fall into several
categories, including the following:
- Internet service firms, such as AGENCY.COM, iXL, Organic Online, Proxicom,
Razorfish and USWeb/CKS;
- technology integrators, such as Andersen Consulting, Cambridge Technology
Partners, EDS, IBM, Sapient and Scient; and
- strategic consulting firms, such as Bain, Booz-Allen & Hamilton, Boston
Consulting Group, Diamond Technology Partners and McKinsey.
Many of Viant's competitors have longer operating histories, larger client
bases, longer relationships with clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than Viant. Viant believes that only a few of these competitors offer
an integrated package of professional Internet services. Several competitors,
however, have announced their intention to offer a broader range of services
than they currently provide.
Viant believes that the principal competitive factors in the Internet
professional services market are: the provision of an integrated services,
breadth of service offerings, cost certainty and a referenceable customer base.
Viant believes that its service model allows it to compete favorably in all of
the above areas.
There are relatively low barriers to entry into the Internet professional
services market. As a result, new market entrants pose a threat to Viant's
business. Existing or future competitors may
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develop or offer services that are comparable or superior to ours at a lower
price, which could have a material adverse effect on our business, financial
condition and results of operations.
LEGAL PROCEEDINGS
From time to time, Viant may be involved in litigation incidental to the
conduct of its business. Viant is not currently party to any material legal
proceedings.
The Company has received a number of letters from Eric Greenberg, a founder
and former employee of the Company and currently the Chairman of the Board of
Scient Corporation. Mr. Greenberg owns 863,383 shares of the Company's capital
stock. Mr. Greenberg contends that the Company has breached contractual
obligations and fiduciary duties owed to him, and further contends that his
shares are not subject to the lock-up provisions in his contracts with the
Company and are freely tradable. The Company denies Mr. Greenberg's allegations,
believes they are without merit and if a lawsuit is initiated, intends to defend
such lawsuit vigorously.
PEOPLE AND CULTURE
Viant had 27 employees at the end of 1996, 119 at the end of 1997, 213 at
the end of 1998 and 328 employees as of October 1, 1999. None of Viant's
employees is represented by a labor union and Viant believes its employee
relations are excellent. Although Viant has experienced rapid growth, it
continues to grow organically and to introduce every new employee into the Viant
culture via its intensive three-week QuickStart training program. Viant believes
that this shared introductory experience is critical to its corporate culture
and service quality.
Viant recognizes that its employees are key to its future success. This
future success is based on the following factors:
- an effective recruiting program that attracts bright, creative and
entrepreneurial candidates;
- a strong corporate culture reinforced through our organic growth model;
- ongoing training and development; and
- equity ownership for all employees.
PHILOSOPHY
Viant's personnel and culture philosophy is simple: to provide every
employee with an environment for professional growth and development. Viant
believes that intelligent and motivated individuals achieve their fullest
potential by collaborating with high-caliber professionals in a work environment
charged with creativity and innovation. Viant also believes that individual
learning is accelerated when the firm's collective knowledge and experience is
shared in a team environment that is stimulating, challenging and fun.
RECRUITING
Viant dedicates significant resources to its recruiting efforts. A
substantial number of Viant's new hires come from referrals by current
employees. Viant believes that its existing employees are an excellent
recruiting resource and rewards employees that bring new people into the
organization. Viant believes that the success of its employee referral program
is a direct reflection of current employee satisfaction. Viant also actively
recruits from many of the country's leading graduate and undergraduate programs
and through professional search firms.
TRAINING AND DEVELOPMENT
Viant's training and professional development programs advance the skills of
its employees and enable Viant to deliver high-quality services to its clients.
A principal element of this training is
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Viant's QuickStart program. QuickStart is an intensive three-week program
attended by all new employees. In the program, new employees learn about the
culture and values of the firm, meet other new employees from across the firm
and gain first-hand experience with Viant's Service Model. Additionally, Viant
continues to develop programs that ensure each consulting professional has the
opportunity to develop skills in each of Viant's core disciplines.
COMPENSATION
Viant's compensation program has been structured to attract and retain
highly skilled professionals by offering competitive base salaries with annual
cash bonus opportunities. Each Viant employee receives stock options upon
commencement of employment and may receive additional options based upon
performance.
FACILITIES
Viant's headquarters are located in 20,000 square feet of leased office
space in Boston, Massachusetts. This facility is used by Viant's senior
management, administrative, human resources and training personnel as well as
the Boston business unit consultants. The lease term extends to March 31, 2003
with a five-year renewal at the option of Viant. Additionally, Viant leases
25,000 square feet in New York, 23,466 square feet in San Francisco and 17,576
square feet in Dallas and 5,177 square feet in Chicago. The New York lease term
extends to July 28, 2007 with a ten-year renewal at the option of Viant. The San
Francisco lease term extends to August 30, 2003 with a five-year renewal at the
option of Viant. The Dallas lease was amended effective August 15, 1999 such
that the lease term extends to September 30, 2004 with a five-year renewal at
the option of Viant. The Chicago lease term is from September 1, 1999 through
February 29, 2000, after which the lease will continue on a month-to-month basis
terminable upon 30 days notice by either party. Viant has also entered into
short term leases for professional office space in Los Angeles and London.
32
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers as of November 1, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH VIANT
- ---- -------- -------------------
<S> <C> <C>
Robert L. Gett 49 President and Chief Executive Officer, and Director
M. Dwayne Nesmith 37 Vice President and Chief Financial Officer
Richard J. Chavez 34 Vice President and Chief Strategy Officer
Timothy A. Andrews 42 Vice President and Chief Technology Officer
Christopher Newell 48 Vice President and Chief Knowledge Officer
Diane M. Hall 36 Vice President and Chief People Officer
Mark G. Leiter 34 Vice President and Chief Marketing Officer
Sherwin A. Uretsky 41 Vice President, Worldwide Sales
Michael J. Tubridy 44 Vice President of Finance and Treasurer
Robbie O. Vann-Adibe 37 Vice President and Co-General Manager, London
Edward J. Mello 41 Vice President of Strategic Development
Chirag V. Patel 30 Vice President and General Manager, Boston
Lance L. Trebesch 34 Vice President and General Manager, Los Angeles
Paul R. Michaud 35 Vice President and General Manager, New York
Michael B. McFarland 35 Vice President and General Manager, Dallas
Xavier Zang 34 Vice President and General Manager, San Francisco
Michael A. Keany 39 Vice President and Co-General Manager, London
William H. Davidow(1),(2) 64 Chairman of the Board of Directors
Kevin W. English 46 Director
Venetia Kontogouris(1),(2) 48 Director
William E. Kelvie 51 Director
</TABLE>
- ------------------------
(1) Member of the audit committee
(2) Member of the compensation committee
ROBERT L. GETT has served as President and Chief Executive Officer and
director of Viant since November 1996. From August 1990 to October 1996,
Mr. Gett was the President-North America and was on the board of directors for
Cambridge Technology Partners (Massachusetts), Inc., a technology consulting and
systems integration firm. From April 1988 to July 1990, Mr. Gett was President
of Fidelity Software Development Company, a subsidiary of Fidelity Investments,
a financial services company. From January 1982 to March 1988, Mr. Gett served
as Managing Director and Chief Information Officer of Smith Barney, Inc., a
financial services company. Mr. Gett currently serves on the board of directors
of Optika, Inc., an imaging and document management software company. Mr. Gett
holds a BS in Mathematics from Indiana University of Pennsylvania and an MS in
Technology Management from American University.
M. DWAYNE NESMITH has served as Vice President and Chief Financial Officer
of Viant since March 1999. From December 1996 to March 1999, Mr. Nesmith served
as Viant's Vice President of Operations and Planning, and from May 1996 to
June 1998, Mr. Nesmith served as Viant's Vice President of Product Marketing.
From January 1992 to April 1996, Mr. Nesmith was a product manager for Compuware
Corporation, a technology consulting and software development company. From
August 1989 to December 1991, Mr. Nesmith was a product marketing manager for
Oracle Corporation, a database and technology company. From July 1984 to May
1987, Mr. Nesmith was a consultant for Arthur Andersen, an audit, tax and
consulting firm. Mr. Nesmith holds a BS in
33
<PAGE>
Computer Science from the University of Mississippi and an MBA from the Harvard
Business School.
RICHARD J. CHAVEZ has served as Vice President and Chief Strategy Officer of
Viant since February 1997. From January 1995 to January 1997, Mr. Chavez was a
Principal for CSC Index, a management consulting firm. From August 1994 to
December 1994, Mr. Chavez was a Senior Client Partner and Manager for Cambridge
Technology Partners (Massachusetts), Inc., a technology consulting and systems
integration firm. From January 1989 to June 1994, Mr. Chavez was the Chief
Operating Officer and President of Marble Associates, Inc., a technology
consulting and systems integration firm. Mr. Chavez holds an AB degree in
Political Science from Harvard College.
TIMOTHY A. ANDREWS has served as Chief Technical Officer of Viant since
August 1998. The Chief Technical Officer is responsible for overseeing all
aspects of engineering, software development and technical implementation
activities. From July 1996 to July 1998, Mr. Andrews was a partner at Diamond
Technology Partners, Inc., a strategic management consulting firm. From
July 1994 to July 1996, Mr. Andrews was the Vice President of Technology for the
consulting and systems integration unit of Computer Sciences Corporation, a
consulting and systems integration firm. From January 1986 to February 1994,
Mr. Andrews was the Chief Technical Officer of ONTOS, Inc., a software company.
Mr. Andrews holds an AB in Engineering Science from Dartmouth College and an MS
in Computer Science and Electrical Engineering from Worcester Polytechnic
University.
CHRISTOPHER NEWELL has served as Vice President and Chief Knowledge Officer
of Viant since April 1999. The Chief Knowledge Officer is responsible for
overseeing the systems and processes that capture and distribute the experience
gained in client engagements. From January 1994 to March 1999, Mr. Newell
founded and served as Executive Director for, the Lotus Institute, the research
and executive education division of Lotus Development Corporation, a software
company. From October 1988 to January 1994, Mr. Newell served as Director of
Organizational Development and Training for Lotus Development Corporation. Since
October 1998, Mr. Newell has served as the Co-Director of the IBM Institute for
Knowledge Management. Mr. Newell holds a BA in Psychology from Wheeling Jesuit
College, an MS in Counseling Education from Suffolk University, and a PhD in
Psychology from Massachusetts School of Professional Psychology.
DIANE M. HALL has served as Vice President and Chief People Officer of Viant
since April 1999. From January 1998 to April 1999, she served as Viant's Vice
President and Chief People and Knowledge Officer, and from March 1997 to
January 1998, she served as Viant's Vice President and Chief Knowledge Officer.
From March 1996 to March 1997, Ms. Hall was an independent business and
technology consultant. From August 1993 to March 1996, Ms. Hall was a Senior
Director at Cambridge Technology Partners (Massachusetts), Inc. Ms. Hall holds a
BS in Computer Science from the University of Massachusetts -- Lowell.
MARK G. LEITER has served as Vice President and Chief Marketing Officer of
Viant since June 1999. The Chief Marketing Officer is responsible for shaping
growth strategies for Viant, as well as building the Viant brand across
worldwide markets. From November 1993 to October 1996, Mr. Leiter was employed
as an Engagement Consultant by McKinsey & Company, Inc., and from November 1996
to June 1999 Mr. Leiter was employed as a Senior Engagement Manager and co-
leader of the North American Marketing Practice for McKinsey. While at McKinsey,
Mr. Leiter founded and was the co-leader of the firm's Branding Strategy
practice. Mr. Leiter holds an AM in Sociology from Harvard University and a BA
in Sociology from the State University of New York at Albany.
SHERWIN A. URETSKY has served as Vice President, Worldwide Sales of Viant
since August 1997. From February 1992 to August 1997, Mr. Uretsky was a Senior
Vice President for Technology Solutions Company, a systems consulting firm.
Mr. Uretsky holds a BS degree in Computer Science from the State University of
New York and an MBA from New York University.
34
<PAGE>
MICHAEL J. TUBRIDY, CPA has served as Vice President of Finance and
Treasurer since March 1999. From December 1997 to March 1999, Mr. Tubridy served
as Viant's Chief Financial Officer and Vice President of Finance and
Administration. Prior to that, he served as a consultant to Physiometrix, Inc.,
a medical device company, from September to December 1997, and as Physiometrix's
Chief Financial Officer and Vice President of Finance and Administration from
November 1994 to September 1997. Mr. Tubridy served as Chief Financial Officer
and Vice President of Finance and Administration for Open Data Corp., a software
company, from June 1993 to November 1994. Mr. Tubridy holds a BS in Engineering
from the University of Rhode Island and an MS in Accounting from Northeastern
University.
ROBBIE O. VANN-ADIBE has served as Vice President and Co-General Manager,
London of Viant since April 1999. From January 1997 to May 1999, Mr. Vann-Adibe
served as Vice President and General Manager, San Francisco of Viant. From April
1996 to January 1997, Mr. Vann-Adibe served as the Senior Vice President of
Financial Services of Viant. From June 1995 to March 1996, Mr. Vann-Adibe served
as Vice President of Product Marketing at Illustra Information Technologies, a
software product company. From September 1992 to June 1995, Mr. Vann-Adibe
worked at Oracle Corporation where he last served as a Director of Oracle
Industries. Mr. Vann-Adibe holds a BSc in Mathematical Economics and
Econometrics from The London School of Economics and an MSc in Management
Science and Operational Research from The University of Warwick.
EDWARD J. MELLO has served as Vice President of Strategic Development of
Viant since June 1999. From January 1998 to June 1999, Mr. Mello served as Vice
President and General Manager, Dallas of Viant. From August 1988 to
November 1997, Mr. Mello was a Vice President and Managing Partner of the
consulting and systems integration division of Computer Sciences Corporation, a
management and information systems consulting firm. Mr. Mello began his career
at Electronic Data Systems after serving as an officer in the United States
Corps of Engineers. Mr. Mello holds a BA in Classics from the University of
Notre Dame.
CHIRAG V. PATEL has served as Vice President and General Manager, Boston of
Viant since March 1998. From October 1996 to March 1998, Mr. Patel was a
consultant for Viant. From January 1995 to October 1996, Mr. Patel was a
Principal at Oracle Corporation, a database and technology company. From
January 1992 to January 1995, Mr. Patel was an Assistant Vice President at
Merrill Lynch & Co., Inc., a financial services firm. Mr. Patel holds a BS in
Computer Science from Fairleigh Dickinson University.
LANCE L. TREBESCH has served as Vice President and General Manager, Los
Angeles of Viant since September 1998. From November 1997 to September 1998,
Mr. Trebesch was an employee of Viant. From March 1996 to June 1997,
Mr. Trebesch was the Head of Strategic Alliances for Dimension X, Inc., a
software company. From June 1989 to February 1996, Mr. Trebesch was the Director
of Information Technology for APL Limited, a shipping company. Mr. Trebesch
holds a joint BA in History and Economics from the University of Washington.
PAUL R. MICHAUD has served as Vice President and General Manager, New York
of Viant since March 1999. From July 1996 to March 1999, Mr. Michaud was an
employee of Viant. From October 1994 to July 1996, Mr. Michaud was the Director
of Consulting for Seer Technologies, Inc., a software consulting firm, and from
June 1990 through October 1994, Mr. Michaud was a Senior Consultant at Seer
Technologies, Inc. Mr. Michaud is the brother-in-law of Michael A. Keany.
Mr. Michaud holds a BS in Computer Science from the Massachusetts Institute of
Technology.
MICHAEL B. MCFARLAND has served as Vice President and General Manager,
Dallas since June 1999. From May 1998 to June 1999, Mr. McFarland was an
employee of Viant. From April 1997 to April 1998 Mr. McFarland was the Community
Leader of the Dallas CSC Index office in charge of that office's operations.
From April 1995 to April 1997, Mr. McFarland was a Principal at CSC Index. From
August 1991 to April 1995, Mr. McFarland held positions of Associate, Senior
Associate and
35
<PAGE>
Managing Associate at CSC Index. Mr. McFarland holds a BS in Management Science
and Computer Systems from Oklahoma State University and a MS in Management from
Northwestern University.
XAVIER ZANG has served as Vice President and General Manager, San Francisco
of Viant since April 1999. From September 1996 to April 1999, Mr. Zang was an
employee of Viant. From September 1993 through July 1996, Mr. Zang was an
Associate with the general management consulting firm McKinsey & Company in San
Francisco. Mr. Zang holds an MBA from the University of California at Berkeley's
Walter A. Haas School of Business and a BA in Economics and German Literature
from the University of Notre Dame.
MICHAEL A. KEANY has served as a Vice-President and Co-General Manager,
London of Viant since April 1999. From July 1996 to March 1999, Mr. Keany was an
employee of Viant. From December 1994 to July 1996, Mr. Keany was an associate
with the management consulting firm of Booz, Allen & Hamilton. From
December 1990 to December 1994, Mr. Keany held a variety of roles at Seer
Technologies, a software consulting firm, including Senior Consultant, and
General and Consulting Manager. Mr. Keany is the brother-in-law of Paul R.
Michaud, Vice President and General Manager, New York. Mr. Keany holds a BSc.
Hons. in Environmental Studies from the University of Sunderland.
WILLIAM H. DAVIDOW has served as the Chairman of Viant's board of directors
since July 1997. From May 1985 to the present, he has served as a General
Partner of Mohr, Davidow Ventures, a venture capital firm. Mr. Davidow is
currently serving on the board of directors of Rambus, Inc., Power Integrations,
Inc., and The Vantive Corporation. Mr. Davidow holds a BS and MS in electrical
engineering from Dartmouth College and a PhD in electrical engineering from
Stanford University.
KEVIN W. ENGLISH has served on Viant's board of directors since April 1999.
From October 1998 to November 1999, Mr. English has served as Chief Executive
Officer and President of TheStreet.com. Mr. English was chairman of the board of
TheStreet.com from December 1998 to November 1999. Before joining TheStreet.com,
Mr. English served as Vice President and General Manager of the Nexis Enterprise
Group, a division of Lexis-Nexis, from February 1998 to October 1998. From
September 1997 to February 1998, Mr. English directed an advertiser remediation
and recompense program for the Reed Travel Group, a wholly-owned subsidiary of
ReedElsevier, and reported to the chairman of ReedElsevier, the parent company
of Lexis-Nexis. Mr. English served as Vice President of Sales and Marketing of
Lexis-Nexis from May 1995 to September 1997 and as a Senior Director from 1994
to May 1995. Mr. English holds a BA in history from Stonehill College.
VENETIA KONTOGOURIS has served on Viant's board of directors since
June 1996. From November 1999, Ms. Kontogouris has served as the Managing
Director of Trident Capital, a venture capital firm and since July 1997, has
served as the President of Enterprise Associates, LLC, the venture capital unit
of IMS Health, an information solutions provider to the pharmaceutical and
healthcare industries. From July 1997 to present, Ms. Kontogouris has also
served as a Senior Vice President of Cognizant Corporation, a venture capital
interest. From 1992 to July 1997, Ms. Kontogouris was a Senior Vice President
with The Dun & Bradstreet Corporation, a business services company.
Ms. Kontogouris serves on the board of directors of Cognizant Technology
Solutions Corporation, an information technology consulting company and several
private companies. Ms. Kontogouris holds a BA from Northeastern University and
an MBA from the University of Chicago.
WILLIAM E. KELVIE has served on Viant's board of directors since June 1999.
Mr. Kelvie is also a director of HomeStore since August 1998. He is Executive
Vice President and Chief Information Officer responsible for information
technology systems at Fannie Mae, including its technology business and its
internal systems. Mr. Kelvie joined Fannie Mae in November 1990 as Senior Vice
President and Chief Information Officer and became Executive Vice President in
November 1992.
36
<PAGE>
Prior to his tenure at Fannie Mae, Mr. Kelvie was a partner with Nolan, Norton &
Company, a management consulting company specializing in information technology
strategies and plans and served in various capacities with The Dexter
Corporation, a specialized manufacturing company, and The Travelers, an
insurance and financial services company. Mr. Kelvie received a B.S. in English
literature from Tufts University and an M.S. in English literature from Trinity
College.
BOARD COMPOSITION
Viant currently has authorized five directors. In accordance with the terms
of Viant's amended and restated certificate of incorporation, the terms of
office of the members of the board of directors are divided into three classes:
Class I, whose term will expire at the annual meeting of stockholders to be held
in 2000, Class II, whose term will expire at the annual meeting of stockholders
to be held in 2001, and Class III, whose term will expire at the annual meeting
of stockholders to be held in 2002. The Class I director is Venetia Kontogouris,
the Class II directors are William H. Davidow and Kevin W. English, and the
Class III directors are Robert L. Gett and William E. Kelvie. At each annual
meeting of stockholders after the initial classification, the successors to
directors whose term will then expire will be elected to serve from the time of
election and qualification until the third annual meeting following election. In
addition, Viant's amended and restated bylaws provide that the authorized number
of directors may be changed only by resolution of the board of directors or its
stockholders. Any additional directorships resulting from an increase in the
number of directors will be distributed among the three classes so that, as
nearly as possible, each class will consist of one-third of the total number of
directors. This classification of the board of directors may have the effect of
delaying or preventing changes in control or management of Viant.
Each officer is elected by, and serves at the discretion of, the board of
directors. Each of Viant's officers and directors, other than non-employee
directors, devotes full time to the affairs of Viant. Viant's non-employee
directors devote such time to the affairs of Viant as is necessary to discharge
their duties. Except for the relationship between Messrs. Keany and Michaud,
there are no family relationships among any of the directors, officers or key
employees of Viant.
BOARD COMMITTEES
The audit committee reviews Viant's audited financial statements and
accounting practices, and considers and recommends the employment of, and
approves the fee arrangements with, independent accountants for both audit
functions and for advisory and other consulting services. The current members of
the audit committee are William H. Davidow and Venetia Kontogouris.
The compensation committee reviews and approves the compensation and
benefits for our key executive officers, administers our employee benefit plans
and makes recommendations to the board of directors regarding grants of stock
options and any other incentive compensation arrangements. The current members
of the compensation committee are William H. Davidow and Venetia Kontogouris.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION INTERLOCKS
None of the members of the compensation committee of the board of directors
has at any time since the formation of Viant been an officer or employee of
Viant. No executive officer of Viant serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving on Viant's board of directors or compensation committee.
DIRECTOR COMPENSATION
The directors do not receive any compensation for their service as
directors, other than reimbursement of all reasonable out-of-pocket expenses for
attendance at board meetings.
37
<PAGE>
CHANGE OF CONTROL ARRANGEMENTS
Shares subject to options granted under Viant's 1996 and 1999 Stock Option
Plans will generally vest over four years, with 25% of the shares vesting after
one year and the remaining shares vesting in installments based on full calendar
quarters over the next 36 months. Viant has granted an option to Robert L. Gett
that provides for accelerated vesting of option shares upon a "change of
control", which, in general terms, would occur upon the closing of either
(i) an acquisition in which the Company is not the continuing or surviving
entity after the acquisition or (ii) a transaction or series of transactions or
issuance or series of issuances in which ownership of more than 50% of the
voting shares are transferred, except for the issuance of shares in the
Company's initial public offering.
ADVISORY BOARD
Viant has established an advisory board to provide Viant's client executives
and senior management with insights associated with designing, building and
sustaining business models to compete in the new digital economy. The members of
the Advisory Board are as follows:
W. BRIAN ARTHUR
Mr. Arthur is a professor at the Santa Fe Institute and former professor at
Stanford University. Mr. Arthur has a Ph.D from UC Berkeley in operations
research and graduate degrees in economics, engineering and mathematics.
Mr. Arthur is the author of "Increasing Returns and Path Dependence in the
Economy."
JOHN SEELY BROWN
Mr. Brown is Chief Scientist of Xerox Corporation and Director of Xerox's
Palo Alto Research Center. Mr. Brown's research interests include digital
culture, ubiquitous computing, user-centering design, organizational and
individual learning, and the management of radical innovation. Mr. Brown is a
member of the National Academy of Education and a Fellow of the American
Association for Artificial Intelligence.
PAUL SAFFO
Mr. Saffo is Director and member of the Board of Trustees of the Institute
for the Future, which is based in Silicon Valley. Mr. Saffo has degrees from
Harvard, Cambridge University and Stanford University. Mr. Saffo is the author
of "Dreams in Silicon Valley" and essays in a wide range of publications
including HARVARD BUSINESS REVIEW, WIRED MAGAZINE, THE NEW YORK TIMES, THE LOS
ANGELES TIMES and FORTUNE.
N. VENKATRAMAN
Mr. Venkatraman is a Professor of Management of the Information Systems
Department at Boston University's School of Management. Mr. Venkatraman has a
Ph.D in Business Administration from the University of Pittsburgh and an MBA and
Bachelor of Technology from the Indian Institute of Technology. Mr. Venkatraman
has carried out research in the areas of electronic integration and IT-enabled
business transformation in a wide-range of industries including automotive,
airline, and textbook publishing.
RICHARD CHAVEZ
Mr. Chavez is the Vice President and Chief Strategy Officer of Viant.
38
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the compensation paid to
Viant's named executive officers, who are our Chief Executive Officer and each
of our four other most highly compensated executive officers, during the fiscal
year ended January 1, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL --------------
COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION
- --------------------------- --------- --------- -------------- --------------
<S> <C> <C> <C> <C>
Robert L. Gett, President and Chief Executive Officer, and
Director................................................ $123,077 $100,000 --
Edward J. Mello, Vice President and General Manager,
Dallas(1)............................................... 195,408 55,576 95,000
Richard J. Chavez, Vice President and Chief Strategy
Officer................................................. 210,073 51,282 -- $ 35,000(2)
Sherwin A. Uretsky, Vice President, Worldwide Sales....... 158,538 49,683 10,000
Robbie O. Vann-Adibe, Vice President and General Manager,
San Francisco(3)........................................ 164,260 43,344 --
</TABLE>
- ------------------------------
(1) Currently Vice President of Strategic Development.
(2) Represents a relocation bonus paid in March 1998.
(3) Currently co-manager of the London office.
On November 4, 1996, Viant and Robert L. Gett entered into a Key Employee
Agreement. Under the terms of Viant's Key Employee Agreement, Mr. Gett's
employment with Viant shall last until the earlier of (i) Mr. Gett's death,
(ii) disability lasting 270 days, (iii) 30 days after written notice from Mr.
Gett terminating the Agreement or (iv) 30 days after written notice by Viant,
with or without cause, terminating the Agreement. Mr. Gett's base salary as of
the date of the Agreement is $10,416.67 per month. As of June 30, 1997,
Mr. Gett was eligible to receive a performance bonus determined by the board of
directors, targeted between $100,000 and $200,000. Mr. Gett is eligible to
receive deferred bonus, pension, group medical insurance, profit sharing and
other benefits in place from time to time. If Mr. Gett's employment is
terminated by Viant without cause, Viant has agreed to continue to pay
Mr. Gett's salary for a period of one year from the date of such termination.
Mr. Gett will also continue to receive the same employee benefits which he had
as an employee until the earlier of: (1) one year from the date of such
termination, and (2) the date on which Mr. Gett is re-employed.
39
<PAGE>
The following table sets forth information with respect to stock options
granted during the fiscal year ended January 1, 1999 to each of the named
executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
NUMBER OF GRANTED EXERCISE OR OPTION TERM(2)
OPTIONS TO EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED (1) IN FISCAL YEAR PER SHARE DATE 5% 10%
- ---- ----------- ------------------ ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Gett, President and -- -- -- -- -- --
Chief Executive Officer, and
Director.....................
Edward J. Mello, Vice President 95,000 7.36% $1.50 2/12/08 $89,617 $227,108
and General Manager,
Dallas(3)....................
Richard J. Chavez, Vice -- -- -- -- -- --
President and Chief Strategy
Officer......................
Sherwin A. Uretsky, Vice 10,000 0.77% 1.50 2/12/08 9,433 23,906
President, Worldwide Sales...
Robbie O. Vann-Adibe, Vice -- -- -- -- -- --
President and General
Manager, San Francisco(4)....
</TABLE>
- ------------------------
(1) All options were granted under Viant's 1996 Stock Option Plan. Options
granted under the Plan vest over a four-year period with 25% vesting at the
first anniversary date of the vest date and the remaining shares vesting in
installments based on full calendar quarters over the next 36 months. The
board retains discretion to modify the terms, including the price of
outstanding options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% annual rates of stock price appreciation from the date of grant
to the end of the option term are provided in accordance with rules of the
SEC and do not represent our estimate or projection of the future common
stock price. Actual gains, if any, on stock option exercises are dependent
on the future performance of the common stock, overall market conditions and
the option holders' continued employment through the vesting period. This
table does not take into account any actual appreciation in the price of the
common stock from the date of grant to the present.
(3) Currently Vice President of Strategic Development.
(4) Currently co-manager of the London office.
40
<PAGE>
The following table sets forth certain information regarding exercised stock
options during the fiscal year ended January 1, 1999 and unexercised options
held as of January 1, 1999 by each of the named executive officers:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
YEAR-END(1) YEAR-END(2)
----------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------- ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
Robert L. Gett, President and Chief Executive Officer,
and Director(3)....................................... 740,000 0 $ 2,960,000 $ 0
Edward J. Mello, Vice President and General Manager,
Dallas(4)............................................. 0 95,000 0 261,250
Richard J. Chavez, Vice President and Chief Strategy
Officer............................................... 70,000 90,000 280,000 360,000
Sherwin A. Uretsky, Vice President, Worldwide Sales..... 31,625 71,875 101,031 228,594
Robbie O. Vann-Adibe, Vice President and General
Manager, San Francisco(5)............................. 390,625 234,375 1,640,625 984,375
</TABLE>
- ------------------------
(1) All options were granted under Viant's 1996 Stock Option Plan. Unless stated
otherwise, options granted under the Plan vest over a four-year period with
25% vesting at the first anniversary date of the vest date and the remaining
shares vesting in installments based on full calendar quarters over the next
36 months. The board of directors retains discretion to modify the terms,
including the price of outstanding options.
(2) Calculated on the basis of the fair market value of the underlying
securities as of January 1, 1999 of $4.25 per share, minus the per share
exercise price, multiplied by the number of shares underlying the option.
(3) These options are immediately exercisable in full at the date of grant, but
shares purchased on exercise of unvested options are subject to a repurchase
right in favor of Viant that entitles us to repurchase unvested shares at
their original exercise price on termination of the employee's services with
Viant. The repurchase right lapses as to 25% of the shares subject to the
option on November 4, 1996, 25% on November 4, 1997 and the balance, ratably
by calendar quarter, over the next three years. As of January 1, 1999,
options to purchase 506,667 shares of common stock, with an average original
issue price of $0.25 per share, were subject to repurchase.
(4) Currently Vice President of Strategic Development.
(5) Currently co-manager of the London office.
EMPLOYEE BENEFIT PLANS
1996 STOCK OPTION PLAN
In June 1996 the board of directors adopted, and in July 1996 Viant's
stockholders approved, the 1996 Stock Option Plan. At that time, 2,771,876
shares of common stock were reserved for issuance under the 1996 Plan, which
number was increased to 4,291,876 in November 1996, and to 5,991,876 in
November 1997. As of October 1, 1999, options to purchase 2,094,362 shares of
common stock had been exercised and options to purchase 2,845,390 shares of
common stock were outstanding under the 1996 Plan with an average exercise price
of $1.13, and 1,052,124 shares were available for future grants. As of
November 17, 1998, no further options were granted under the 1996 Plan. Options
granted under the 1996 Plan prior to its termination will remain outstanding
according to their terms. In general, options vest over a four-year period.
Options under the 1996 Plan are subject to terms substantially similar to those
described below with respect to options to be granted under the 1999 Stock
Option Plan.
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<PAGE>
1999 STOCK OPTION PLAN
Viant's 1999 Stock Option Plan provides for the granting to employees of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and for the granting to employees, directors
and consultants of nonstatutory stock options. The 1999 Plan was approved by the
board of directors in January 1999 and by the stockholders in April 1999 with
certain amendments being approved in June 1999. Unless terminated sooner, the
1999 Plan will terminate automatically in 2009. A total of 4,868,929 shares of
common stock is currently reserved for issuance pursuant to the 1999 Plan, plus
annual increases equal to the lesser of: 1,000,000 shares, 4% of the outstanding
shares on such date or an amount determined by the board of directors. As of
October 1, 1999, options to purchase 2,675,816 shares of common stock were
outstanding under the 1999 Plan, with an average exercise price of $12.01, and
2,178,238 shares were available for future grants.
The board of directors or a committee of the board of directors may serve as
administrator of the 1999 Plan. In the case of options intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the 1999 Plan must be administered by at least two or more "outside
directors" within the meaning of Section 162(m) of the Code. The administrator
has the power to determine the terms of the options granted, including the
exercise price, the number of shares subject to each option, the exercisability
thereof, and the form of consideration payable upon such exercise. The board of
directors has the authority to amend, suspend or terminate the 1999 Plan,
provided that no such action may affect any share of common stock previously
issued and sold or any option previously granted under the 1999 Plan.
Options granted under the 1999 Plan are not generally transferable by the
optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under the 1999 Plan must generally be
exercised within three months of the optionee's separation of service from
Viant, or within twelve months after such optionee's termination by death or
disability, but in no event later than the expiration of the option's ten year
term. The exercise price of all incentive stock options granted under the 1999
Plan must be at least equal to the fair market value of the common stock on the
date of grant. The exercise price of nonstatutory stock options granted under
the 1999 Plan must be at least 85% of the fair market value, but with respect to
nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price must at least be equal to the fair market value of the common stock on the
date of grant. With respect to any participant who owns stock possessing more
than 10% of the voting power of all classes of Viant's outstanding capital
stock, the exercise price of any incentive stock option granted must equal at
least 110% of the fair market value on the grant date and the term of such
incentive stock option must not exceed five years. The term of all other options
granted under the 1999 Plan may not exceed ten years.
The 1999 Plan provides that in the event of a merger of Viant with or into
another corporation or a sale of substantially all of Viant's assets, each
option shall be assumed or an equivalent option substituted by the successor
corporation. If the outstanding options are not assumed or substituted as
described in the preceding sentence, the administrator shall notify the optionee
that he or she will have the right to exercise the option as to all of the
optioned stock, including shares as to which he or she would not otherwise be
exercisable, for a period of 15 days from the date of such notice. The option
will terminate upon expiration of such period.
1999 EMPLOYEE STOCK PURCHASE PLAN
A total of 200,000 shares of common stock have been reserved for issuance
under Viant's 1999 Employee Stock Purchase Plan, plus annual increases equal to
the lesser of: (1) 200,000 shares, (2) 2% of the outstanding shares on such
date, or (3) an amount determined by the board
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<PAGE>
of directors. As of the date of this prospectus, no shares have been issued
under the 1999 Purchase Plan.
The 1999 Purchase Plan, which is intended to qualify under Section 423 of
the Code contains successive six-month offering periods. The offering periods
generally start on the first trading day on or after May 15 and November 15 of
each year, except for the first such offering period which commenced on June 18,
1999 and ends on the last trading day on or before May 14, 2000.
Employees are eligible to participate if they are customarily employed by
Viant or any participating subsidiary for at least twenty hours per week and
more than five months in any calendar year. However, any employee who:
(1) immediately after grant owns stock possessing 5% or more of the total
combined voting power or value of all classes of the capital stock of Viant, or
(2) whose rights to purchase stock under all employee stock purchase plans of
Viant accrues at a rate which exceeds $25,000 worth of stock for each calendar
year may be not be granted an option to purchase stock under the 1999 Purchase
Plan. The 1999 Purchase Plan permits participants to purchase common stock
through payroll deductions of up to 15% of the participant's compensation.
Compensation is defined as the participant's base straight time gross earnings,
commissions, incentive compensation and bonuses, but exclusive of payments for
overtime, profit sharing payments, shift premium payments and incentive
payments. The maximum number of shares a participant may purchase during a
single offering period is 1,250 shares.
Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each offering period. The price of stock
purchased under the 1999 Purchase Plan is 85% of the lower of the fair market
value of the common stock at the beginning or end of the offering period.
Participants may end their participation at any time during an offering period,
and they will be paid their payroll deductions to date. Participation ends
automatically upon termination of employment with Viant.
Rights granted under the 1999 Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution, or as
otherwise provided under the 1999 Purchase Plan. The 1999 Purchase Plan provides
that, in the event of a merger of Viant with or into another corporation or a
sale of substantially all of Viant's assets, each outstanding option may be
assumed or substituted for by the successor corporation. If the successor
corporation refuses to assume or substitute for the outstanding options, the
offering period then in progress will be shortened and a new exercise date will
be set. The 1999 Purchase Plan will terminate in 2009. The board of directors
has the authority to amend or terminate the 1999 Purchase Plan, except that no
such action may adversely affect any outstanding rights to purchase stock under
the 1999 Purchase Plan.
401(K) RETIREMENT/SAVINGS PLAN
Viant's 401(k) plan covers its full-time employees located in the United
States. The 401(k) plan is intended to qualify under Section 401(k) of the Code.
Consequently, contributions to the 401(k) plan by employees or by Viant, and the
investment earnings thereon, are not taxable to employees until withdrawn from
the 401(k) plan. Further, contributions by Viant, if any, will be deductible by
Viant when made. Employees may elect to contribute up to 15% of their current
compensation to the 401(k), plan up to the statutorily prescribed annual limit,
which was $10,000 in 1998. The 401(k) plan permits, but does not require,
additional matching contributions to the 401(k) plan by Viant on behalf of all
participants in the 401(k) plan. To date, Viant has not made any contributions
to the 401(k) plan.
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<PAGE>
UNITED KINGDOM PENSION PLAN
Viant's pension plan covers its full-time employees located in the United
Kingdom. Contributions to the plan by employees or by Viant, and the investment
earnings thereon, are not taxable to employees until withdrawn from the plan.
Further, contributions by Viant, if any, will be deductible by Viant when made.
Employees may elect to contribute to certain statutory limitations. The plan
permits, but does not require, additional matching contributions to the plan by
Viant on behalf of all participants in the plan. To date, Viant contributes an
additional 5% on behalf of each participant.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Viant's amended and restated certificate of incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for: (1) breach of their duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) unlawful payments of
dividends or unlawful stock repurchases or redemptions, or (4) any transaction
from which the director derived an improper personal benefit. Such limitation of
liability does not apply to liabilities arising under the federal or state
securities laws and does not affect the availability of equitable remedies such
as injunctive relief or rescission.
Viant's bylaws provide that Viant shall indemnify its directors, officers,
employees and other agents to the fullest extent permitted by law. Viant
believes that indemnification under its bylaws covers at least negligence and
gross negligence on the part of indemnified parties. Viant's bylaws also permit
it to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in such capacity,
regardless of whether the bylaws permit such indemnification.
Viant has entered into agreements to indemnify its directors and executive
officers, in addition to the indemnification provided for in its bylaws. These
agreements, among other things, indemnify Viant's directors and executive
officers for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of Viant arising out of such person's
services as a director, officer, employee, agent or fiduciary of Viant, any
subsidiary of Viant or any other company or enterprise to which the person
provides services at the request of Viant. Viant believes that these provisions
and agreements are necessary to attract and retain qualified persons as
directors and executive officers.
At present, there is no pending litigation or proceeding involving a
director or officer of Viant in which indemnification is required or permitted,
and, other than the allegations by Eric Greenberg, Viant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
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<PAGE>
CERTAIN TRANSACTIONS
On May 16, 1996, Viant sold an aggregate of 5,746,874 shares of Series A
preferred stock at a price of $0.5333 per share. On June 19, 1996 Viant sold an
aggregate of 1,499,925 shares of Series B preferred stock at a price of $0.6667
per share. On June 4, 1997 and October 10, 1997, Viant sold an aggregate of
2,759,591 shares of Series C preferred stock at a price of $2.8995 per share.
Between the dates of November 4, 1998 and February 1, 1999 Viant sold an
aggregate of 3,168,704 shares of Series D preferred stock at a price of $6.39
per share. The following directors, executive officers, holders of more than 5%
of a class of voting securities and members of such person's immediate families
purchased shares of Series A, Series B, Series C and Series D preferred stock:
<TABLE>
<CAPTION>
SHARES OF SHARES OF SHARES OF SHARES OF
SHARES OF SERIES A SERIES B SERIES C SERIES D
COMMON PREFERRED PREFERRED PREFERRED PREFERRED
PURCHASER (1) STOCK STOCK STOCK STOCK STOCK
- ------------- ------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Mohr, Davidow Ventures (2),(3).... 3,562,500 907,869 283,328
Trident Capital Management
(2),(4)......................... 75,000 1,499,925 479,645 312,989
Robert L. Gett (2)................ 1,676,665 172,443
M. Dwayne Nesmith................. 110,000 2,500
Sherwin A. Uretsky................ 10,000
Michael J. Tubridy................ 42,500
Robbie O. Vann-Adibe.............. 187,500
Edward J. Mello................... 23,750
Chirag V. Patel................... 5,000 7,000
Kleiner Perkins Caufield & Byers
(2)............................. 1,875,000 1,062,164 186,155
Technology Crossover Ventures
(2)............................. 375,000 938,968
CKS Group, Inc. (2)............... 693,750
William Davidow................... 10,000
Diane Hall........................ 45,000
Michael A. Keany.................. 13,750 5,207 101
Xavier Zang....................... 11,625
</TABLE>
- ------------------------
(1) See notes to table of beneficial ownership in "Principal and Selling
Stockholders" for information relating to the beneficial ownership of such
shares.
(2) A holder of more than 5% of a class of Viant's voting securities.
(3) Entity affiliated with William H. Davidow, Chairman of Viant's board of
directors. The shares listed are owned by Mohr, Davidow Ventures IV.
Mr. Davidow is a General Partner of Fourth MDV Partners, the General Partner
of Mohr, Davidow Ventures IV. Mr. Davidow disclaims beneficial ownership of
the shares listed except with respect to his proportionate partnership
interest in them.
(4) Entity affiliated with Venetia Kontogouris, a member of Viant's board of
directors. Ms. Kontogouris is President of Enterprise Associates, LLC, a
Limited Partner of Trident Capital Management. Ms. Kontogouris disclaims
beneficial ownership of the shares listed.
In March 1998, at the request of Viant, Richard J. Chavez, Vice President
and Chief Strategy Officer, relocated to the Boston office. In connection with
Mr. Chavez's agreement to relocate, he was granted the following: (1) a
relocation bonus of $35,000, (2) reimbursement of all reasonable expenses
associated with the relocation of his family to the Boston area, (3) a housing
loan in the principal amount of $50,000, and (4) an employee loan in the amount
of $40,000. Interest on both of the loans accrues annually at the prime rate (as
of the loan execution date). Interest payments
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<PAGE>
only are due on the housing loan for the first four years; upon commencement of
the fifth year, repayment of principal and interest on the loan must be made in
accordance with a monthly repayment schedule in which principal and interest
will be repaid and amortized over a two year period. The housing loan becomes
immediately due and payable if Mr. Chavez: (1) ceases to be employed by Viant
for any reason, (2) fails to perform any of his obligations under the loan
agreement, or (3) files for bankruptcy or otherwise becomes insolvent, or upon
the occurrence of the sixth anniversary of the loan agreement. The housing loan
is secured by Mr. Chavez's option to purchase 30,000 shares of Viant common
stock, or the stock itself if the option is exercised. Viant will forgive 25% of
Mr. Chavez's employee loan annually commencing on the first anniversary of the
loan and for the next three anniversaries thereafter. The remaining principal
balance of the employee loan will become immediately due and payable if
Mr. Chavez: (1) ceases to be employed by Viant for any reason, (2) fails to
perform any of his obligations under the loan agreement, or (3) files for
bankruptcy or otherwise becomes insolvent. The employee loan is secured by
Mr. Chavez's option to purchase 30,000 shares of Viant common stock, or the
stock itself if the option is exercised. This stock collateral is separate from
and in addition to the collateral for the housing loan.
On November 4, 1996, Viant and Robert L. Gett entered into a Key Employee
Agreement. Under the terms of Viant's Key Employee Agreement, Mr. Gett's
employment with Viant shall last until the earlier of (i) Mr. Gett's death,
(ii) disability lasting 270 days, (iii) 30 days after written notice from Mr.
Gett terminating the Agreement or (iv) 30 days after written notice by Viant,
with or without cause, terminating the Agreement. Mr. Gett's base salary as of
the date of the Agreement is $10,416.67 per month. As of June 30, 1997,
Mr. Gett was eligible to receive a performance bonus determined by the board of
directors, targeted between $100,000 and $200,000. Mr. Gett is eligible to
receive deferred bonus, pension, group medical insurance, profit sharing and
other benefits in place from time to time. If Mr. Gett's employment is
terminated by Viant without cause, Viant has agreed to continue to pay
Mr. Gett's salary for a period of one year from the date of such termination.
Mr. Gett will also continue to receive the same employee benefits which he had
as an employee until the earlier of: (1) one year from the date of such
termination, and (2) the date on which Mr. Gett is re-employed.
Viant has entered into indemnification agreements with each of its directors
and officers. Such indemnification agreements require us to indemnify such
individuals to the fullest extent possible under Delaware law.
We believe that all transactions between Viant and its officers, directors,
principal stockholders and other affiliates have been and will be on terms no
less favorable to us than could be obtained from unaffiliated third parties.
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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock
as of October 1, 1999, and as adjusted to reflect the sale of the shares offered
by this prospectus by:
- each person who is known by us to beneficially own more than 5% of our
common stock;
- each of the Named Executive Officers and each of Viant's Directors; and
- all of our officers and directors as a group.
Percentage of ownership is based on 21,472,981 shares outstanding as of
October 1, 1999 and 22,472,981 shares outstanding after this offering assuming
no exercise of the underwriters' over-allotment option. Beneficial ownership is
calculated based on SEC requirements. The columns entitled "Options" consist of
shares of common stock subject to options currently exercisable or exercisable
within 60 days after October 1, 1999, which are deemed to be outstanding for the
purpose of computing the percentage of ownership of the person holding such
options, but are not deemed to be outstanding for computing the percentage of
ownership of any other person. The percentage calculated for each beneficial
owner is based upon the sum of the "Stock" and "Options" column. Unless
otherwise indicated below, each stockholder named in the table has sole voting
and investment power with respect to all shares beneficially owned, subject to
applicable community property laws.
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY TO BE SHARES TO BE BENEFICIALLY
OWNED PRIOR TO OFFERING SOLD OWNED AFTER OFFERING
-------------------------------- -------- --------------------------------
NUMBER PERCENT NUMBER PERCENT
BENEFICIAL OWNER --------------------- -------- --------------------- --------
- ---------------- STOCK OPTIONS STOCK OPTIONS
FIVE PERCENT STOCKHOLDERS --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Mohr, Davidow Ventures(1)... 3,327,589 -- 15.5% -- 3,327,589 -- 14.8%
Kleiner Perkins Caufield &
Byers(2).................. 3,123,319 -- 14.6% -- 3,123,319 -- 13.9%
Trident Capital
Management(3)............. 1,657,291 -- 7.7% -- 1,657,291 -- 7.4%
Robert L. Gett.............. 1,849,108 443,335 10.5% 220,000 1,629,108 443,355 9.0%
NAMED EXECUTIVE OFFICERS AND
DIRECTORS
William H. Davidow(4)....... 3,415,738 -- 15.9% 25,000 3,390,738 -- 15.1%
Venetia Kontogouris(5)...... 3,376 10,000 * -- 3,376 10,000 *
Kevin W. English............ 1,200 10,000 * -- 1,200 10,000 *
Robert L. Gett.............. 1,849,108 443,335 10.5% 220,000 1,629,108 443,335 9.0%
Richard J. Chavez........... -- 100,000 * 10,000 -- 90,000 *
Sherwin A. Uretsky.......... 21,500 42,250 * -- 21,500 42,250 *
Robbie O. Vann-Adibe........ 287,500 407,812 3.2% 73,400 214,100 407,812 2.7%
Edward J. Mello............. 23,750 11,875 * 11,875 23,750 -- *
William E. Kelvie........... -- 10,000 * -- -- 10,000 *
All directors and executive
officers as a group (21
persons).................. 5,880,661 1,210,108 31.3% 5,530,235 1,143,858 28.2%
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY TO BE SHARES TO BE BENEFICIALLY
OWNED PRIOR TO OFFERING SOLD OWNED AFTER OFFERING
-------------------------------- -------- --------------------------------
NUMBER PERCENT NUMBER PERCENT
BENEFICIAL OWNER --------------------- -------- --------------------- --------
- ---------------- STOCK OPTIONS STOCK OPTIONS
SELLING STOCKHOLDERS --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
USWeb/CKS................... 696,432 -- 3.2% 300,000 396,432 -- 1.8%
Ramsey Bierne Associates.... 187,500 -- * 56,250 131,250 -- *
WS Investment Co............ 48,294 -- * 15,515 32,779 -- *
Philippe Kahn............... 459,484 -- 2.1 459,484 -- -- *
Lee-Kahn Foundation 10,000 -- * 10,000 -- -- *
Michael J. Tubridy.......... 42,500 38,750 * 30,625 42,500 8,125 *
M. Dwayne Nesmith........... 112,500 6,000 * 11,500 101,000 6,000 *
Mavis Chin.................. 30,874 -- * 10,000 20,874 -- *
Michael A. Keany............ 22,183 7,125 * 9,200 12,983 7,125 *
Paul R. Michaud............. -- 23,250 * 7,500 -- 15,750 *
Rich Homich................. -- 28,750 * 7,200 -- 21,550 *
Xavier Zang................. 18,375 2,750 * 6,750 11,625 2,750 *
Timothy A. Andrews.......... -- 50,000 * 6,250 -- 43,750 *
Andrew Frank................ 14,500 1,562 * 5,000 9,500 1,562 *
Denise Conway............... 4,688 3,712 * 2,000 4,688 1,712 *
Leif Knudsen................ 4,250 3,000 * 1,000 4,250 2,000 *
Minna Rhee.................. 1,500 3,625 * 600 1,500 3,025 *
Charles Marshall............ 4,039 -- * 4,039 -- -- *
Bruno Ventures.............. 1,212 -- * 1,212 -- -- *
Martin Massner.............. 2,000 -- * 2,000 -- -- *
</TABLE>
- ------------------------
* Less than 1% of Viant's outstanding common stock.
(1) Consists of 3,186,147 shares held of record by Mohr, Davidow Ventures IV,
L.P. and 141,442 shares held of records by MDV IV Entrepreneurs' Network
Fund, L.P., affiliated funds of Mohr, Davidow Ventures. William Davidow,
Jonathan Feiber, Nancy Schoendorf, George Zachary and Lawrence Mohr, are
General Partners of Mohr Davidow Ventures and all parties disclaim
beneficial ownership of the 3,327,589 shares held by Mohr, Davidow Ventures
except to the extent of each parties respective pecuniary interest therein.
The address of Mohr, Davidow Ventures is 2775 Sand Hill Road, Suite 240,
Menlo Park, California 94025.
(2) Consists of 2,288,628 shares held of record by Kleiner Perkins Caufield &
Byers VIII, 624,162 shares held of record by KPCB Java Fund and 132,448
shares held of record by KPCB VIII Founders Fund, affiliated funds of KPCB
VIII Associates, L.P., and 78,081 shares held of record by KPCB Information
Sciences Zaibatsu Fund II an affiliated fund of KPCB VII Associates, L.P.
Vinod Khosla, Brook Byers, Kevin Compton, John Doerr, William Hearst III,
Joseph Lacob and Douglas Mackenzie each are General Partners of each of KPCB
VIII Associates, L.P. and KPCB VII Associates, L.P. All of the above named
individuals disclaim beneficial ownership of the shares held by these funds
except to the extent of each parties respective pecuniary interest therein.
The address for Kleiner Perkins Caufield & Byers is 2750 Sand Hill Road,
Menlo Park, California 94025.
(3) Consists of 1,612,295 shares held of record by Information Associates, L.P.
and 44,996 shares held of record by Information Associates, C.V. Trident
Capital Management is a general partner of the Information Associates funds.
Stephen Hall is a Managing Director of Trident Capital Management. Mr. Hall
disclaims beneficial ownership of the shares held by these funds except to
the extent of his pecuniary interests therein. The address for Trident
Capital Management is 2480 Sand Hill Road, Suite 100, Menlo Park, California
94025.
(4) Consists of 10,781 shares held by Mr. Davidow, 49,611 shares held by the
Chachagua Partnership, of which Mr. Davidow is a partner, and of which
25,000 shares are being sold in this offering, 27,757
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<PAGE>
shares held by the Davidow Trust, over which Mr. Davidow has dispositive
control and 3,327,589 shares held by Mohr, Davidow Ventures and its
affiliated funds, 2775 Sand Hill Road, Suite 240, Menlo Park, California
94025. William Davidow, is a General Partner of Mohr Davidow Ventures and
disclaims beneficial ownership of the 3,327,589 shares held by Mohr, Davidow
Ventures except to the extent of his pecuniary interest therein.
(5) Venetia Kontogouris is President of Enterprise Associates, LLC a limited
partner of Trident Capital Management. Ms. Kontogouris possesses no
investment or voting power over the 1,657,291 shares held by the affiliated
funds of Trident Capital Management. The address for Ms. Kontogouris is c/o
Enterprise Associates, LLC, 200 Nyala Farms, Westport, Connecticut 06880.
49
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Viant's amended and restated certificate of incorporation authorizes the
issuance of up to 50.0 million shares of common stock, par value $0.001 per
share, and 5.0 million shares of preferred stock, par value $0.001 per share,
the rights and preferences of which may be established from time to time by
Viant's board of directors. As of October 1, 1999, 21,472,981 shares of common
stock were outstanding. As of October 1, 1999, Viant had 148 stockholders of
record.
COMMON STOCK
Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. Subject to preferences to which holders of preferred stock issued after
the sale of the common stock offered hereby may be entitled, holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the board of directors out of funds legally available
therefor. Please see "Dividend Policy." In the event of a liquidation,
dissolution or winding up of Viant, holders of common stock would be entitled to
share in Viant's assets remaining after the payment of liabilities and the
satisfaction of any liquidation preference granted to the holders of any
outstanding shares of preferred stock. Holders of common stock have no
preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are, and the shares of common stock offered
by Viant in this offering, when issued and paid for, will be, fully paid and
nonassessable. The rights, preferences and privileges of the holders of common
stock are subject to, and may be adversely affected by the rights of the holders
of shares of any series of preferred stock, which Viant may designate in the
future.
PREFERRED STOCK
The board of directors has the authority, without stockholder approval, to
issue up to an aggregate of 5.0 million shares of preferred stock, $0.001 par
value per share, in one or more series, each of such series to have such rights
and preferences, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be determined by the
board of directors. The rights of the holders of common stock will be subject
to, and may be adversely affected by, the rights of holders of any preferred
stock that may be issued in the future. Issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, a majority of the outstanding voting stock of Viant. Viant has no
present plans to issue any shares of preferred stock.
WARRANTS
As of October 1, 1999, Viant had outstanding a warrant to purchase 35,986
shares of common stock at an exercise price of $3.625 per share. The warrant has
a net exercise provision under which the holder may, in lieu of payment of the
exercise price in cash, surrender the warrant and receive a net amount of
shares, based on the fair market value of Viant's stock at the time of the
exercise of the warrant, after deducting the aggregate exercise price. The
warrant will expire on June 17, 2004.
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<PAGE>
REGISTRATION RIGHTS
Pursuant to the Amended and Restated Shareholders' Rights Agreement, dated
November 13, 1998, the holders of approximately 14,933,260 shares of common
stock have the right to register those shares under the Securities Act of 1933.
If Viant registers any of its common stock for its own account or for the
account of other security holders, the parties to the Rights Agreement are
entitled to include their shares of common stock in the registration, subject to
the ability of the underwriters to limit the number of shares included in the
offering. In addition, subject to limitations in the Rights Agreement, some of
the holders, whose shares total 13,704,877, may require, on one occasion at
least six months after June 17, 1999, that Viant use its best efforts to
register such shares for public resale, provided that the holders of at least
30% of those shares make the request. Furthermore, these holders of the
14,510,347 shares may require Viant to register all or a portion of their
registrable securities on Form S-3 when Viant is eligible to use such form,
provided, among other limitations, that the proposed aggregate price to the
public is at least $1,000,000. Viant will bear all fees, costs and expenses of
such registration, other than underwriting discounts and commissions. Upon the
effectiveness of any registration statement filed to register our common stock,
such shares would become freely tradable, without any restrictions imposed by
the Securities Act.
EFFECT OF THE CERTIFICATE OF INCORPORATION AND BYLAWS AND THE DELAWARE
ANTI-TAKEOVER STATUTE
Viant's amended and restated certificate of incorporation, its bylaws and
the Delaware General Corporation Law may have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of Viant.
Viant's amended and restated certificate of incorporation provides that the
board of directors will be divided into three classes of directors with each
class serving a staggered three-year term. The classification system of electing
directors may tend to discourage a third party from making a tender offer or
otherwise attempting to obtain control of Viant and may maintain the incumbency
of the board of directors, as the classification of the board of directors
generally increases the difficulty of replacing a majority of the directors.
Viant's amended and restated certificate of incorporation has eliminated the
right of stockholders to act by written consent without a meeting, and Viant's
bylaws eliminate the right of stockholders to call special meetings of
stockholders. The amended and restated certificate of incorporation and bylaws
do not provide for cumulative voting in the election of directors. Viant's
amended and restated certificate of incorporation also authorizes undesignated
preferred stock. The authorization of undesignated preferred stock makes it
possible for the board of directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change control of Viant. Any amendment of the provisions of the certificate of
incorporation regarding the ability of stockholders to act by written consent,
amend the bylaws, provide for cumulative voting or affect the location of a
meeting would require approval by holders of at least 66 2/3% of the outstanding
common stock. The following provisions of our Bylaws can only be amended with
the approval of at least 66 2/3% of the outstanding common stock: the number of
authorized directors, the calling of a Special Meeting, stockholder notice
requirements, voting, or the ability of stockholders to act by written consent.
In addition, Viant is subject to Section 203 of the Delaware General
Corporation Law which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder, unless: (1) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (2) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at
51
<PAGE>
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by persons who are directors and also
officers and by employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (3) on or subsequent to such
date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is BankBoston, N.A.
The Transfer Agent's address is 150 Royall Street, Canton, MA and its telephone
number is (781) 575-2000.
52
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have outstanding an aggregate of
22,472,981 shares of common stock, assuming the issuance of 1,000,000 shares of
common stock offered by us and no exercise of options after October 1, 1999 and
assuming no exercise of the underwriters' over-allotment option. All of the
2,286,400 shares sold in this offering, as well as the 3,450,000 shares sold in
our initial public offering and 5,035,652 shares released from lock-up
agreements on or about November 15, 1999, will be freely tradable without
restriction or further registration under the Securities Act, except for any
shares purchased by "Affiliates" of Viant as that term is defined in Rule 144
under the Securities Act (whose sales would be subject to certain limitations
and restrictions described below).
All of our officers and directors, as well as the selling stockholders and
certain other stockholders, who together in the aggregate hold 11,405,069 shares
of our common stock, have agreed not to sell or otherwise dispose of any of
their shares for the 90 day period following this offering. In addition,
stockholders collectively holding an additional 1,582,260 shares of our common
stock entered into lock-up agreements at the time of our initial public offering
with the underwriters that provide that these shares will become eligible for
sale on December 15, 1999. Goldman, Sachs & Co., however, may in its sole
discretion, at any time without notice, release all or any portion of the shares
subject to lock-up agreements. The number of shares which become eligible for
sale at various dates are subject in most cases to the limitations of Rule 144.
<TABLE>
<CAPTION>
SHARES ELIGIBLE
RELEVANT DATES FOR SALE COMMENT
- ---------------------------- --------------- -------------------------------------------------------
<S> <C> <C>
June 18, 1999............... 3,450,000 Initial public offering
November 15, 1999........... 5,035,652 Partial release of initial public offering lock-up
Upon Effectiveness.......... 2,286,400 Shares sold in the offering
December 15, 1999........... 1,582,260 Expiration of initial public offering lock-up
90 days after effective date
and thereafter............ 11,405,069 All shares subject to lock-up released
</TABLE>
As of October 1, 1999 there were a total of 5,521,206 shares of common stock
subject to outstanding options under our 1996 Stock Option Plan and 1999 Stock
Option Plan, approximately 1,639,180 of which were vested and exercisable.
However, all of these shares are subject to lock-up agreements.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of our initial public offering, a person who has beneficially owned
shares of our common stock for at least one year would be entitled to sell in
"broker's transactions" or to market makers, within any three-month period, a
number of shares that does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding (which will
equal approximately 224,730 shares immediately after this offering); or
- the average weekly trading volume in the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are generally subject to the availability of current
public information about Viant.
53
<PAGE>
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been an affiliate of
Viant at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, is
entitled to sell such shares without having to comply with the manner of sale,
public information, volume limitation or notice filing provisions of Rule 144.
Therefore, unless otherwise restricted, "144(k) shares" may be sold immediately
upon the completion of this offering.
RULE 701
In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchase shares from us in connection with a
compensatory stock or option plan or other written agreement entered into before
the effective date of our initial public offering is entitled to sell such
shares 90 days after the effective date of the initial public offering in
reliance on Rule 144, without having to comply with the holding period and
notice filing requirements of Rule 144 and, in the case of non-affiliates,
without having to comply with the public information, volume limitation or
notice filing provisions of Rule 144.
The SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, along with the shares acquired upon
exercise of such options (including exercises after the date of this
prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual restrictions described above, may be sold by
persons other than "affiliates" (as defined in Rule 144) subject only to the
manner of sale provisions of Rule 144 and by "affiliates" under Rule 144 without
compliance with its one year minimum holding period requirements.
54
<PAGE>
UNDERWRITING
Viant, the selling stockholders and the underwriters for the offering named
below have entered into an underwriting agreement with respect to the shares
being offered. Subject to certain conditions, each underwriter has severally
agreed to purchase the number of shares indicated in the following table.
Goldman, Sachs & Co., Credit Suisse First Boston Corporation, BancBoston
Robertson Stephens Inc. and Lehman Brothers Inc. are the representatives of the
underwriters.
<TABLE>
<CAPTION>
Number of
Underwriters Shares
------------ ------
<S> <C>
Goldman, Sachs & Co......................................... 866,880
Credit Suisse First Boston Corporation...................... 433,440
BancBoston Robertson Stephens Inc........................... 433,440
Lehman Brothers Inc......................................... 192,640
Dain Rauscher Incorporated.................................. 60,000
First Union Securities, Inc................................. 60,000
Friedman, Billings, Ramsey & Co., Inc....................... 60,000
Hanifen, Imhoff Inc......................................... 60,000
SG Cowen Securities Corporation............................. 60,000
Wit Capital Corporation..................................... 60,000
-----------
Total..................................................... 2,286,400
===========
</TABLE>
------------------
If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional 342,960
shares from Viant to cover such sales. They may exercise that option for
30 days. If any shares are purchased pursuant to this option, the underwriters
will severally purchase shares in approximately the same proportion as set forth
in the table above.
The following tables show the per share and total underwriting discounts and
commissions to be paid to the underwriters by Viant and the selling
stockholders. Such amounts are shown assuming both no exercise and full exercise
of the underwriters' option to purchase 342,960 additional shares.
<TABLE>
<CAPTION>
Paid by Viant
-------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.......................................... $ 4.610 $ 4.610
Total.............................................. $4,610,000 $6,191,046
</TABLE>
<TABLE>
<CAPTION>
Paid by the Selling
Stockholders
------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.......................................... $ 4.610 $ 4.610
Total.............................................. $5,930,304 $5,930,304
</TABLE>
Shares sold by the underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $2.75 per share from the initial price to public. Any such securities
dealers may resell any shares purchased from the underwriters to certain other
brokers or dealers at a discount of up to $0.10 per share from the initial price
to public. If all the shares are not sold at the initial price to public, the
representatives may change the offering price and the other selling terms.
55
<PAGE>
Viant, its officers, directors and the selling stockholders have agreed with
the underwriters not to dispose of or hedge any of their shares of common stock
or securities convertible into or exchangeable for shares of common stock during
the period from the date of this prospectus continuing through the date 90 days
after the date of this prospectus, except with the prior written consent of the
representatives. This agreement does not apply to any existing employee benefit
plans. See "Shares Eligible for Future Sale" for a discussion of certain
transfer restrictions.
In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the common stock while
the offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
Viant estimates that the total expenses of the offering payable by Viant,
excluding underwriting discounts and commissions, will be approximately
$465,000.
Viant and the selling stockholders have agreed to indemnify the several
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
56
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Viant by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California. Certain
legal matters will be passed upon for the underwriters by Hale and Dorr LLP,
Boston, Massachusetts. As of the date of this prospectus, WS Investment Company
96A and 97A, investment partnerships composed of certain current and former
members of and persons associated with Wilson Sonsini Goodrich & Rosati, P.C.,
beneficially own an aggregate of 48,294 shares of Viant stock, which amount also
includes the 15,515 shares to be sold in this offering.
EXPERTS
Viant's financial statements as of December 31, 1997 and January 1, 1999 and
for the period from April 10, 1996 (inception) through December 31, 1996 and for
the years ended December 31, 1997 and January 1, 1999 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Viant has filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules) under the Securities
Act, with respect to the shares to be sold in this offering. This prospectus
does not contain all of the information set forth in the registration statement.
For further information with respect to Viant and the common stock offered in
this prospectus, reference is made to the registration statement, including the
exhibits thereto, and the financial statements and notes filed as a part
thereof. With respect to each such document filed with the SEC as an exhibit to
the registration statement, reference is made to the exhibit for a more complete
description of the matter involved.
We file quarterly and annual reports, proxy statements and other information
with the SEC. You may read and copy any document that we file at the public
reference facilities of the SEC in Washington, D.C. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's website at
http://www.sec.gov.
57
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Accountants........................... F-2
Statement of Operations for the Period Ended December 31,
1996, the Years Ended December 31, 1997 and January 1,
1999 and the Nine Months Ended September 30, 1998 and
October 1, 1999 (unaudited)............................... F-3
Balance Sheet as of December 31, 1997, January 1, 1999 and
October 1, 1999 (unaudited)............................... F-4
Statement of Cash Flows for the Period Ended December 31,
1996, the Years Ended December 31, 1997 and January 1,
1999 and the Nine Months Ended September 30, 1998 and
October 1, 1999 (unaudited)............................... F-5
Statement of Stockholders' Equity for the Period Ended
December 31, 1996, the Years Ended December 31, 1997 and
January 1, 1999 and the Nine Months Ended October 1, 1999
(unaudited)............................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Viant Corporation
In our opinion, the accompanying balance sheet and the related statements of
operations, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Viant Corporation at January 1,
1999 and December 31, 1997, and the results of its operations and its cash flows
for each of the years ended January 1, 1999 and December 31, 1997 and the period
from April 10, 1996 (Inception) to December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of Viant's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 16, 1999
F-2
<PAGE>
VIANT CORPORATION
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED NINE MONTHS ENDED
(INCEPTION) TO ------------------------- --------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
--------------- ------------ ---------- ------------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues............... $ 642 $ 8,808 $20,043 $13,907 $37,625
------- ------- ------- ------- -------
Operating expenses:
Professional services.... 516 4,530 11,250 7,598 18,542
Sales and marketing...... 461 1,577 3,324 2,022 4,647
General and
administrative......... 1,077 6,298 10,365 6,667 14,998
Research and
development............ 338 581 1,429 852 2,472
------- ------- ------- ------- -------
Total operating
expenses............. 2,392 12,986 26,368 17,139 40,659
------- ------- ------- ------- -------
Loss from operations... (1,750) (4,178) (6,325) (3,232) (3,034)
Interest income............ 91 160 234 103 1,064
Interest expense........... -- (25) (371) (148) (362)
Other expense, net......... -- (37) (25) (17) 20
------- ------- ------- ------- -------
Net loss............... $(1,659) $(4,080) $(6,487) $(3,294) $(2,312)
======= ======= ======= ======= =======
Basic and diluted net
loss per share....... $ (0.42) $ (1.18) $ (1.76) $ (0.90) $ (0.21)
Share used in computing
basic and diluted net
loss per share....... 3,981 3,468 3,681 3,664 10,845
Unaudited pro forma
basic and diluted net
loss per share....... $ (0.46) $ (0.12)
Shares used in
computing unaudited
pro forma basic and
diluted net loss per
share................ 14,084 18,904
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
VIANT CORPORATION
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1, OCTOBER 1,
1997 1999 1999
------------ ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 5,559 $ 18,209 $ 61,500
Short-term investments.................................... 615 602 1,376
Accounts receivable, net.................................. 1,820 5,472 13,614
Prepaid expenses and other current assets................. 165 1,190 1,441
------- -------- --------
Total current assets.................................... 8,159 25,473 77,931
Property and equipment, net................................. 2,011 4,048 5,736
Other assets................................................ 148 232 239
------- -------- --------
Total assets............................................ $10,318 $ 29,753 $ 83,906
======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......................... $ 349 $ 2,850 $ --
Current portion of capital lease obligation............... -- 416 591
Accounts payable.......................................... 1,165 626 3,347
Accrued expenses.......................................... 1,197 2,907 8,038
Deferred revenues......................................... 931 1,052 1,955
------- -------- --------
Total current liabilities............................... 3,642 7,851 13,931
Long-term debt, less current portion........................ 670 603 --
Capital lease obligations, less current portion............. -- 1,634 1,690
------- -------- --------
Total liabilities....................................... 4,312 10,088 15,621
------- -------- --------
Commitments (Note 6)........................................ -- -- --
Stockholders' equity:
Convertible preferred stock:
Series D: no par value; 3,240,000, 3,240,000 and 0
shares authorized, respectively; 0, 3,167,100 and 0
shares issued and outstanding, respectively........... -- 20,125 --
Series A: no par value; 5,746,874, 5,746,874 and 0
shares authorized, respectively; 5,746,874, 5,746,874
and 0 shares issued and outstanding, respectively..... 3,047 3,047 --
Series B: no par value; 1,499,925, 1,499,925 and 0
shares authorized, respectively; 1,499,925, 1,499,925
and 0 shares issued and outstanding, respectively..... 987 987 --
Series C: no par value; 2,830,408, 2,830,408 and 0
shares authorized, respectively; 2,759,625, 2,759,625
and 0 shares issued and outstanding, respectively..... 7,977 7,977 --
Preferred stock, $0.001 par value; 0, 0 and 5,000,000
shares authorized, respectively; no shares issued and
outstanding............................................. -- -- --
Common stock; $0.001 par value; 25,000,000, 25,000,000 and
50,000,000 shares authorized, respectively; 3,556,258,
4,294,236 and 21,472,981 shares issued and outstanding,
respectively............................................ 4 4 21
Additional paid-in capital................................ 409 430 83,501
Cummulative translation adjustment........................ -- -- (20)
Accumulated deficit....................................... (6,418) (12,905) (15,217)
------- -------- --------
Total stockholders' equity.............................. 6,006 19,665 68,285
------- -------- --------
Total liabilities and stockholders' equity.............. $10,318 $ 29,753 $ 83,906
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
VIANT CORPORATION
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED NINE MONTHS ENDED
(INCEPTION) TO -------------------------- ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1, SEPTEMBER 30, OCTOBER 1,
1996 1997 1999 1998 1999
-------------- ------------- ---------- -------------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................... $(1,659) $(4,080) $ (6,487) $(3,294) $(2,312)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization............. 49 205 1,065 702 1,352
Compensation expense on employee
arrangement............................. -- 200 -- -- --
Changes in operating assets and
liabilities:
Accounts receivable, net................ (384) (1,436) (3,652) (1,384) (8,142)
Prepaid expenses and other assets....... (62) (251) (1,109) (1,086) (258)
Accounts payable........................ 86 1,079 (539) (878) 2,721
Accrued expenses........................ 227 970 1,710 960 5,131
Deferred revenues....................... 99 832 121 (355) 903
------- ------- -------- ------- -------
Net cash used in operating
activities.......................... (1,644) (2,481) (8,891) (5,335) (605)
------- ------- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments......... -- (615) (602) (4,940) (4,888)
Maturities of short-term investments........ -- -- 615 4,953 4,114
Purchases of property and equipment......... (264) (2,001) (901) (252) (2,601)
------- ------- -------- ------- -------
Net cash used in investing
activities.......................... (264) (2,616) (888) (239) (3,375)
------- ------- -------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes
payable................................... 500 -- -- -- --
Proceeds from issuance of convertible
preferred stock, net...................... 3,534 7,977 20,125 -- 75
Proceeds from issuance of common stock,
net....................................... 19 195 21 -- 50,155
Proceeds from exercise of stock options..... -- -- -- -- 722
Proceeds from borrowings on lines of
credit.................................... -- 1,046 2,749 -- --
Principal payments on borrowings on lines of
credit.................................... -- (27) (315) (79) (3,453)
Principal payments on capital lease
obligations............................... -- -- (151) (154) (208)
Repurchase of common stock.................. -- (680) -- -- --
------- ------- -------- ------- -------
Net cash provided by financing
activities.......................... 4,053 8,511 22,429 1,642 47,291
------- ------- -------- ------- -------
Effect of exchange rate changes on cash and
cash equivalents............................ -- -- -- -- (20)
Net increase (decrease) in cash and cash
equivalents................................. 2,145 3,414 12,650 (3,932) 43,291
Cash and cash equivalents at beginning of
period...................................... -- 2,145 5,559 5,559 18,209
------- ------- -------- ------- -------
Cash and cash equivalents at end of period.... $ 2,145 $ 5,559 $ 18,209 $ 1,627 $61,500
======= ======= ======== ======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest...................... $ -- $ 22 $ 371 $ 149 $ 362
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of notes payable into preferred
stock..................................... $ 500 $ -- $ -- $ -- $ --
Equipment acquired under capital lease
obligations............................... $ -- $ -- $ 2,201 $ 2,173 $ 439
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
VIANT CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL CUMULATIVE
---------------------- ---------------------- PAID-IN TRANSLATION ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL ADJUSTMENT DEFICIT
----------- -------- ----------- -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock.... 3,981,250 $ 4 $ 15
Issuance of Series A
preferred stock, net of
issuance costs of $16..... 4,809,369 $ 2,547
Issuance of Series A
preferred stock upon
conversion of notes
payable................... 937,505 500
Issuance of Series B
preferred stock, net of
issuance costs of $13..... 1,499,925 987
Net loss for the period from
April 10, 1996 (Inception)
to December 31, 1996...... $ (1,659)
----------- -------- ----------- ---- -------- ------ --------
Balance at December 31,
1996...................... 7,246,799 4,034 3,981,250 4 15 (1,659)
Issuance of common stock
upon exercise of stock
options................... 823,125 1 194
Issuance of Series C
preferred stock, net of
issuance costs of $25..... 2,759,625 7,977
Common stock repurchased and
retired................... (1,248,117) (1) (679)
Compensation expense on
employee severance
arrangement............... 200
Net loss.................... (4,080)
----------- -------- ----------- ---- -------- ------ --------
Balance at December 31,
1997...................... 10,006,424 12,011 3,556,258 4 409 (6,418)
Issuance of common stock
upon exercise of stock
options................... 206,032 21
Issuance of Series D
preferred stock, net of
issuance costs of $68..... 3,160,043 20,125
Net loss.................... (6,487)
----------- -------- ----------- ---- -------- ------ --------
Balance at January 1, 1999.. 13,166,467 32,136 3,762,290 4 430 (12,905)
Issuance of common stock
upon exercise of stock
options (unaudited)....... 1,080,046 1 721
Issuance of Series C
preferred stock upon
exercise of warrants
(unaudited)............... 5,517 20
Issuance of Series D
preferred stock
(unaudited)............... 8,661 55
Conversion of preferred
stock into common stock
(unaudited)............... (13,180,645) (32,211) 13,180,645 13 32,198
Initial public offering of
common stock (unaudited).. 3,450,000 3 50,152
Cumulative translation
adjustment (unaudited).... $ (20) --
Net loss (unaudited)........ (2,312)
----------- -------- ----------- ---- -------- ------ --------
Balance at October 1, 1999
(unaudited)............... -- -- 21,472,981 $ 21 $ 83,501 (20) $(15,217)
=========== ======== =========== ==== ======== ====== ========
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Issuance of common stock.... $ 19
Issuance of Series A
preferred stock, net of
issuance costs of $16..... 2,547
Issuance of Series A
preferred stock upon
conversion of notes
payable................... 500
Issuance of Series B
preferred stock, net of
issuance costs of $13..... 987
Net loss for the period from
April 10, 1996 (Inception)
to December 31, 1996...... (1,659)
-------
Balance at December 31,
1996...................... 2,394
Issuance of common stock
upon exercise of stock
options................... 195
Issuance of Series C
preferred stock, net of
issuance costs of $25..... 7,977
Common stock repurchased and
retired................... (680)
Compensation expense on
employee severance
arrangement............... 200
Net loss.................... (4,080)
-------
Balance at December 31,
1997...................... 6,006
Issuance of common stock
upon exercise of stock
options................... 21
Issuance of Series D
preferred stock, net of
issuance costs of $68..... 20,125
Net loss.................... (6,487)
-------
Balance at January 1, 1999.. 19,665
Issuance of common stock
upon exercise of stock
options (unaudited)....... 722
Issuance of Series C
preferred stock upon
exercise of warrants
(unaudited)............... 20
Issuance of Series D
preferred stock
(unaudited)............... 55
Conversion of preferred
stock into common stock
(unaudited)............... --
Initial public offering of
common stock (unaudited).. 50,155
Cumulative translation
adjustment (unaudited).... $ (20)
Net loss (unaudited)........ (2,312)
-------
Balance at October 1, 1999
(unaudited)............... $68,285
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Viant Corporation ("Viant") is a leading Internet professional services firm
providing strategic consulting, creative design and technology services to
companies seeking to capitalize on the Internet. Viant's current customers are
based in the United States and Europe and include primarily Fortune 1000
companies.
FISCAL YEAR
During 1998, Viant changed its fiscal year to the 52-week period ending on
the Friday nearest to the last day of December of that year. Prior to this, the
fiscal year of Viant was the calendar year. Viant's fiscal year 1998 ended on
January 1, 1999.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Viant considers all highly liquid instruments with an original maturity of
three months or less to be cash equivalents. At December 31, 1997 and
January 1, 1999, Viant's short-term investments consisted primarily of
certificates of deposit and money market funds secured by U.S. Government-
backed securities and commercial paper with maturities of 60 to 201 days.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject Viant to concentrations of
credit risk consist primarily of cash equivalents, short-term investments and
accounts receivable. Substantially all of Viant's cash equivalents and
short-term investments are held at high credit quality financial institutions.
Accounts receivable are typically unsecured and are derived from revenue earned
from clients primarily located in the United States. Viant performs ongoing
credit evaluations of its clients' financial condition and maintains reserves
for potential credit losses based upon the expected collectibility of total
accounts receivable. To date, losses resulting from uncollected receivables have
not exceeded management's expectations.
At December 31, 1997 and January 1, 1999, three clients and two clients
accounted for 56% and 39% of total accounts receivable, respectively. Three
clients accounted for 43%, 16% and 12% of total net revenues in the period from
April 10, 1996 (Inception) to December 31, 1996. Three clients accounted for
30%, 27% and 11% of total net revenues in 1997. Three clients accounted for 15%,
14% and 13% of total net revenues in 1998.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
are carried in the financial statements at amounts that approximate fair value
and include cash and cash equivalents, short-term investments, accounts
receivable, accounts payable, capital lease obligations and other credit
facilities. Fair values are based on quoted market prices and assumptions
concerning the amount and timing of estimated future cash flows and assumed
discount rates reflecting varying degrees of perceived risk.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets, generally 3-5 years.
F-7
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Equipment under capital leases is amortized over the shorter of the useful life
of the equipment or the lease term. Leasehold improvements are amortized over
the shorter of the lease period or the useful life of the improvement.
UNAUDITED INTERIM FINANCIAL STATEMENTS
Financial information as of October 1, 1999 and for the nine months ended
September 30, 1998 and October 1, 1999 is unaudited. In the opinion of Viant's
management, the September 30, 1998 and October 1, 1999 unaudited interim
financial statements include all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the financial position and
results of operations for those periods. The results of operations for the
quarter ended October 1, 1999 are not necessarily indicative of the results of
operations to be expected in the future.
UNAUDITED PRO FORMA NET LOSS PER SHARE
Unaudited pro forma net loss per share for the year ended January 1, 1999
and the nine months ended October 1, 1999 included in the statement of
operations is computed using the weighted average number of common shares
outstanding, adjusted to include the pro forma effects of the conversion of
preferred stock to common stock as if such conversion had occurred on
January 1, 1998 for the year ended January 1, 1999 and on January 2, 1999 for
the nine months ended October 1, 1999, or at the date of original issuance, if
later.
REVENUE RECOGNITION
Substantially all of Viant's revenues are derived from professional services
which are generally provided to clients on a fixed-price, fixed-time basis.
Revenues on fixed-price engagements are recognized using the percentage of
completion method (based on the ratio of costs incurred to the total estimated
project cost at completion). Unbilled receivables represent revenue recognized
in advance of amounts billed. Billings received in advance of services performed
are recorded as deferred revenues. Provisions for estimated losses on contracts
are made during the period in which such losses become probable and can be
reasonably estimated. To date, such losses have not been significant. Viant
reports revenues net of reimbursable expenses which are billed to and collected
from clients.
PROFESSIONAL SERVICES
Professional services expenses consist primarily of compensation and
benefits costs for employees engaged in the delivery of professional services
and non-reimbursable expenses related to client projects.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of compensation,
benefits and travel costs for employees in Viant's management, human resources,
finance and administration groups and facilities costs not allocated to sales
and marketing or research and development.
F-8
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
RESEARCH AND DEVELOPMENT
Viant's research and development efforts focus on evaluating and testing
technologies to be deployed to clients. Accordingly, all research and
development costs are charged to expense as incurred.
STOCK-BASED COMPENSATION
Viant accounts for stock-based compensation in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly, no compensation expense is recorded for options issued to employees
in fixed amounts and with fixed exercise prices at least equal to the fair
market value of Viant's common stock at date of grant. Viant follows the
disclosure requirements of Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation" (Note 10). All stock-based
awards to non-employees are accounted for at their fair value in accordance with
SFAS No. 123.
NET LOSS PER SHARE
Viant computes net loss per share in accordance with SFAS No. 128, "Earnings
Per Share." Net loss per share is computed using the weighted average number of
common shares outstanding during the period. Basic and diluted net loss per
share were the same for all periods since the potential dilutive common stock
equivalents were anti-dilutive due to the losses. For all periods presented, the
assumed exercise of stock options and warrants is anti-dilutive and has been
excluded from the calculation.
COMPREHENSIVE INCOME
Viant adopted SFAS No. 130, "Reporting Comprehensive Income" during 1999.
SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components. The adoption of SFAS No. 130 had no
impact on Viant's net loss or stockholders' equity.
(Unaudited)--Total comprehensive income (loss), which was comprised of net
loss and foreign currency translation adjustments, was $(2,332,000) for the nine
months ended October 1, 1999.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reported
period. Actual results could differ from those estimates.
F-9
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTS RECEIVABLE
Accounts receivable consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Billed.......................................... $1,788 $5,116
Unbilled........................................ 345 1,265
Allowance for doubtful accounts................. (313) (909)
------ ------
$1,820 $5,472
====== ======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Computer equipment and software................. $1,064 $2,319
Furniture and equipment......................... 366 936
Leasehold improvements.......................... 835 2,112
------ ------
2,265 5,367
Less: accumulated depreciation and
amortization.................................. (254) (1,319)
------ ------
$2,011 $4,048
====== ======
</TABLE>
Depreciation expense for the period ended December 31, 1996 and for the
years ended December 31, 1997 and January 1, 1999 was $49,000, $205,000 and
$1,065,000, respectively.
Included in the above is equipment and leasehold improvements acquired under
capital leases of $0 and $2,201,000 at December 31, 1997 and January 1, 1999,
respectively. Accumulated amortization on equipment and leasehold improvements
acquired under capital lease was $0 and $456,000 at December 31, 1997 and
January 1, 1999, respectively.
4. ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Payroll and related............................. $ 473 $2,238
Professional services........................... 267 137
Other........................................... 457 532
------ ------
$1,197 $2,907
====== ======
</TABLE>
5. CREDIT FACILITIES
In September 1996, Viant secured a revolving line of credit with a bank
which provided for borrowings of up to $1,250,000. In July 1997, the revolving
line of credit was increased to $3,000,000. In March 1998, Viant amended the
revolving line of credit to provide for borrowings up to $5,000,000 including a
$2,000,000 letter of credit facility. Borrowings under the revolving line of
credit were limited to 80% of eligible accounts receivable plus $1,000,000.
Borrowings under the
F-10
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
revolving line of credit bore interest at the bank's prime rate plus 0.5% (8.25%
at January 1, 1999). The revolving line of credit was secured by substantially
all of Viant's assets. Warrants to purchase 5,517 shares of Series C preferred
stock at $3.625 per share were issued as part of the agreement. The value
ascribed to these warrants was not material to Viant's financial position or
results of operations. The line of credit agreement, as amended, required Viant
to comply with certain financial covenants, including the maintenance of
specified minimum ratios. Viant was in default on a certain financial covenant
at January 1, 1999, for which Viant received a waiver from the bank. The
financial covenant for which the Company was in default was amended such that
the Company must not have incurred a loss exceeding $2,500,000 for each of the
fiscal quarters ended April 2, 1999 and July 2, 1999. In addition, the total
liabilities to tangible net worth ratio covenant was amended such that the
Company must have maintained, as of the last day of each fiscal month, a ratio
of total liabilities to tangible net worth of not more than 1.25 to 1. At
January 1, 1999, $2,434,000 was outstanding under the revolving line of credit
and letters of credit totaling $1,500,000 were guaranteed under the revolving
line of credit. The letters of credit expired periodically through July 3, 1999.
At January 1, 1999, $1,066,000 remained available under the revolving line of
credit.
(Unaudited) -- The revolving line of credit was repaid in full on July 1,
1999. The warrants to purchase 5,517 shares of Series C preferred stock were
exercised during 1999.
In September 1996, under the same bank agreement, Viant also secured an
equipment line of credit which provided for borrowings of up to $750,000. In
July 1997, the equipment line of credit was amended to provide for borrowings up
to $1,250,000. Borrowings under the equipment line of credit are based on actual
capital expenditures, subject to a maximum of $250,000 in purchased software,
and bore interest at the bank's prime rate plus 1.0% (8.75% at January 1, 1999).
The equipment line of credit was also secured by substantially all of Viant's
assets. At January 1, 1999, $1,019,000 was outstanding under the equipment line
of credit. Borrowings were payable in 36 equal monthly installments of
principal, plus accrued interest. Principal amounts outstanding at January 1,
1999 were due as follows: $416,000 in 1999; $389,000 in 2000; and $214,000 in
2001.
(Unaudited) -- The equipment line of credit was repaid in full on July 1,
1999.
6. LEASE COMMITMENTS
Viant leases office facilities and certain equipment under operating and
capital leases, respectively. Viant entered into lease agreements for facilities
in Boston, San Francisco, New York and Dallas which expire in 2003, 2003, 2007
and 2004, respectively. Rent expense under operating leases for the period ended
December 31, 1996 and for the years ended December 31, 1997 and January 1, 1999
was $67,000, $535,000 and $1,718,000, respectively. Viant is party to letters of
credit in support of their minimum future lease payments under leases for
permanent office space amounting to $1,500,000 as of January 1, 1999, declining
annually.
In March 1998, Viant entered into an agreement with a leasing company which
provides for capital lease borrowings related to equipment purchases up to
$3,250,000, and which expires in March 2000. Pursuant to the agreement, Viant
issued warrants to purchase 35,986 shares of Series C preferred stock at $3.625
per share which expires five years from the date of an underwritten initial
public offering of common stock. The value ascribed to these warrants was not
material to Viant's financial position or results of operations.
F-11
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Minimum future lease commitments under noncancelable capital and operating
leases at January 1, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
-------- ----------
<S> <C> <C>
1999................................................... $ 629 $ 1,916
2000................................................... 629 2,079
2001................................................... 629 2,124
2002................................................... 607 2,168
2003................................................... -- 1,534
Thereafter............................................. -- 3,600
------ -------
Total minimum lease payments........................... 2,494 $13,421
=======
Less amount representing interest...................... 444
------
Present value of minimum capital lease payments........ $2,050
======
</TABLE>
7. RELATED PARTY TRANSACTIONS
In March 1998, Viant entered into two agreements with one of its executives
for a housing loan of $50,000 and a personal loan of $40,000. Interest on both
loans accrue annually at 8.5%. Interest payments only are due on the housing
loan for the first four years. Upon commencement of the fifth year, repayment of
principal and interest on the housing loan will be made in accordance with a
monthly repayment schedule in which principal and interest will be repaid and
amortized over a two-year period. Viant will forgive 25% of the personal loan
principal and accrued interest annually commencing on the first anniversary of
the loan and for the next three anniversaries thereafter. The housing loan
becomes immediately due and payable and the remaining principal balance of the
personal loan will become immediately due and payable if the employee ceases to
be employed by Viant for any reason, fails to perform any of their obligations
under the loan agreements, or files for bankruptcy or otherwise becomes
insolvent.
During 1996, Viant provided consulting services to a holder of approximately
19% of Viant's common stock at December 31, 1996. All services rendered were
billed on a nondiscounted basis and Viant recognized revenue on this project of
$23,000 during the period ended December 31, 1996.
8. CONVERTIBLE PREFERRED STOCK
As of January 1, 1999, Viant's Articles of Incorporation, as amended, had
authorized Viant to issue 13,317,207 shares of preferred stock, no par value, of
which 5,746,874, 1,499,925, 2,830,408 and 3,240,000 shares were designated as
Series A, B, C and D preferred stock, respectively.
In May 1996, Viant issued 5,746,874 shares of Series A preferred stock
("Series A") for net cash proceeds of $2,547,000 and the conversion of a
$500,000 note payable to a third party investor. In June 1996, Viant issued
1,499,925 shares of Series B preferred stock ("Series B") for net cash proceeds
of $987,000. In May and September 1997, Viant issued a total of 2,759,625 shares
of Series C preferred stock ("Series C") for net cash proceeds of $7,977,000. In
November 1998, Viant issued a total of 3,160,043 shares of Series D preferred
stock ("Series D") for net cash proceeds of $20,125,000.
F-12
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited) -- In June 1999, in connection with Viant's initial public
offering, all shares of preferred stock were converted into common stock. As of
October 1, 1999, there were no outstanding shares of preferred stock.
The rights with respect to the Series A, B, C and D preferred stock were as
follows:
VOTING RIGHTS
Each share of Series A, B, C and D preferred stock had voting rights equal
to an equivalent number of shares of common stock into which it was convertible
and votes together as one class with common stock.
As long as 3,000,000 and 750,000 shares of Series A and Series B preferred
stock were outstanding, respectively, the holders of the shares of Series A and
Series B preferred stock were each entitled to elect one director. The holders
of shares of common stock, voting as one class, were also entitled to elect one
director and the remaining directors were to be elected by the holders of
preferred and common stock voting together as a single class. The rights of the
preferred stockholders to elect directors expired upon the closing of the
initial public offering of Viant's common stock.
Additionally, as long as any preferred stock was outstanding, Viant must
have obtained approval from the holders of a majority of the outstanding shares
of Series A, B, C and D preferred stock in order to alter the Articles of
Incorporation as related to preferred stock, change the authorized number of
shares of preferred stock, declare or pay any dividends on common stock other
than dividends payable in common stock, redeem or purchase shares of common
stock unless resulting from employment termination, or effect a merger,
consolidation or sale of assets where the existing stockholders retain less than
50% of the voting stock of the surviving entity.
DIVIDENDS
Holders of Series A, B, C and D preferred stock were entitled to receive
noncumulative dividends at the per annum rate of $0.0533, $0.0667, $0.289958 and
$0.639 per share, respectively, when and if declared by the Board of Directors.
Viant was to have made no distribution to holders of common stock until
Series A, B, C and D preferred stock dividends have been paid. No dividends had
declared by the Board of Directors through January 1, 1999.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of Viant,
including a consolidation, reorganization or merger of Viant where the
beneficial owners of Viant's common stock and preferred stock own less than 51%
of the resulting voting power of the surviving entity, the Series A, B, C and D
preferred stockholders were entitled to receive $0.533333, $0.666667, $2.899499
and $6.39 per share, respectively, plus any declared but unpaid dividends prior
to and in preference to any distribution to the holders of common stock. The
remaining assets, if any, were to have been distributed ratably among the
holders of the common stock.
CONVERSION
Each share of Series A, B, C and D preferred stock was convertible into
common stock, at the option of the holder, according to a conversion ratio,
subject to adjustment for dilution, and which was at one-for-one through Viant's
initial public offering. Each share of preferred stock would
F-13
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
automatically convert into common stock at the then effective conversion ratio
prior to the closing of an initial public offering with an offering price of at
least $10.00 per share and gross proceeds of at least $20,000,000, or upon the
vote of the holders of a majority of the outstanding shares of preferred stock.
At January 1, 1999, Viant reserved 5,746,874, 1,499,925, 2,830,408 and 3,240,000
shares of common stock for the conversion of Series A, B, C and D preferred
stock, respectively.
9. COMMON STOCK
During 1996, Viant sold 3,981,250 shares of common stock to an employee of
Viant and other nonrelated parties. The 2,500,000 shares sold to the employee
were subject to a right of repurchase by Viant subject to a specified vesting
schedule.
In June 1997, under a severance agreement, Viant paid to this employee
$1,766,000 in cash, which included $680,000 for the repurchase of 1,248,117
shares of vested and unvested shares of common stock. Viant also agreed to pay
one year's salary as severance, on a monthly basis, for a total amount of
$175,000. In addition, Viant extended the vesting of an additional 200,000
shares of common stock, ratably over four quarters, which would have otherwise
been subject to repurchase. Accordingly, Viant recognized compensation expense
of $200,000 as the estimated fair value of such shares. With respect to all of
these arrangements, Viant recognized total severance related expenses of
$1,461,000 in the year ended December 31, 1997.
10. STOCK OPTIONS
In June 1996, the Board of Directors and stockholders adopted the 1996 Stock
Option Plan (the "Plan") which provides for granting incentive stock options
("ISOs") and nonqualified stock options ("NSOs") for up to 4,291,876 shares of
common stock to employees and consultants of Viant. In November 1997, the Plan
was amended to authorize options for up to 5,991,876 shares. The amended Plan
also provides for early exercise of options for certain employees, the stock for
which is subject to the same vesting and repurchase terms under the Plan. In
accordance with the Plan, the stated exercise price shall not be less than 100%
of the fair market value of common stock on the date of grant for ISOs and shall
be at least 85% of the fair market value for NSOs. The Plan provides that the
options shall be exercisable over a period not to exceed ten years. Options
generally vest 25% after one year of service and quarterly for the three years
thereafter.
F-14
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Activity under the Plan is summarized as follows:
<TABLE>
<CAPTION>
PERIOD FROM APRIL 10,
1996 (INCEPTION) TO YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 JANUARY 1, 1999
----------------------- ----------------------- -----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
OPTION EXERCISE OPTION EXERCISE OPTION EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period............... -- $ -- 2,931,000 $0.15 3,296,250 $0.37
Granted................... 2,931,000 0.15 1,292,250 0.74 1,290,350 2.48
Exercised................. -- -- (823,125) 0.24 (206,032) 0.10
Cancelled................. -- -- (103,875) 0.10 (149,713) 0.75
---------- ---------- ----------
Outstanding at end of
year.................... 2,931,000 $0.15 3,296,250 $0.37 4,230,855 $1.01
========== ========== ==========
Options exercisable at end
of year................. 380,000 $0.25 415,563 $0.07 1,254,812 $0.33
Weighted-average fair
value of options granted
during the year......... $ 0.03 $ 0.16 $ 0.45
Options available for
future grant............ 1,360,876 1,872,501 731,864
</TABLE>
The following summarizes information about Viant's stock options outstanding
at January 1, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------- ------------------------
WEIGHTED AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICE OUTSTANDING LIFE (IN YEARS) PRICE EXERCISABLE PRICE
- --------------------- ------------ ------------------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
$0.05-0.99 2,736,880 7.91 $0.28 1,175,837 $0.24
1.00-1.99 651,175 9.02 1.55 76,975 1.50
2.00-2.99 537,000 9.46 2.40 1,500 2.46
3.00-3.99 136,000 9.67 3.50 250 3.50
4.00-4.99 169,800 9.83 4.25 250 4.25
--------- ----------
4,230,855 8.41 $1.01 1,254,812 $0.33
========= ==========
</TABLE>
In accordance with the provisions of Accounting Principles Board Opinion
No. 25, Viant has recognized no compensation expense for options granted under
the Plan as the exercise prices of all options granted were equal to the
estimated fair market value of the common stock at the date of grant. Viant's
board of directors, in assessing the fair market value of Viant's common stock,
considers factors relevant at the time, including recent issuances and sales of
Viant's securities, significant customer wins, composition of management team,
recent hiring results, Viant's financial condition and operating results and the
lack of a public market for Viant's common stock. Had compensation expense been
determined based on the fair value at the grant dates, consistent with
F-15
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the methodology prescribed under SFAS No. 123, Viant's pro forma net loss would
have been as follows:
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10,
1996 YEAR ENDED
(INCEPTION) TO ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- -------------- ----------
<S> <C> <C> <C>
Net loss (in thousands):
As reported................................... $(1,659) $(4,080) $(6,487)
Pro forma..................................... (1,670) (4,128) (6,632)
Net loss per share:
As reported................................... (0.42) (1.18) (1.76)
Pro forma..................................... $ (0.42) $ (1.19) $ (1.80)
</TABLE>
The following assumptions were used by Viant to determine the fair value of
stock options granted under the Black-Scholes options-pricing model for all
periods presented: expected volatility of 0%, average expected option life of
4 years, and dividend yield of 0%; and risk free interest rate of 6.0%, 6.1% and
5.2% for the period ended December 31, 1996 and for the years ended
December 31, 1997 and January 1, 1999, respectively.
Because additional stock options are expected to be granted each year and
the pro forma net loss only includes the effect of options granted in 1996, 1997
and 1998, the above pro forma disclosures are not representative of the pro
forma effects on reported financial results for future years.
In January 1999, the Board of Directors authorized, subject to stockholder
approval, the 1999 Stock Option Plan which provides for the granting of ISOs to
employees, and for the granting of NSOs and stock purchase rights to employees,
directors and consultants of Viant. A total of 4,868,929 shares of common stock
are authorized for issuance pursuant to the 1999 Stock Option Plan.
In March 1999, the Board of Directors authorized, subject to stockholder
approval, the 1999 Employee Stock Purchase Plan, which provides for the issuance
of a maximum of 200,000 shares of common stock.
11. EMPLOYEE SAVINGS PLAN
Viant's Retirement/Savings Plan (the "401(k) Plan") under Section 401(k) of
the Internal Revenue Code covers all full-time employees. The 401(k) Plan allows
eligible employees to make contributions up to a specified annual maximum
contribution, as defined. Under the 401(k) Plan, Viant may, but is not obligated
to, match a portion of the employee contributions up to a defined maximum. Viant
did not contribute to the 401(k) Plan in 1997 or 1998.
F-16
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. INCOME TAXES
Because Viant has incurred net operating losses since inception, no
provisions have been made for current or deferred income taxes through
January 1, 1999. Deferred tax assets consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
-------------- ----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................... $ 125 $ 364
Accrued expenses.......................................... 224 52
Loss carryforwards........................................ 1,866 4,539
Other..................................................... 31 --
------- -------
Gross deferred tax assets................................. 2,246 4,955
Deferred tax asset valuation allowance.................... (2,246) (4,735)
------- -------
Total deferred tax assets............................... -- 220
------- -------
Deferred tax liabilities:
Property and equipment.................................... -- 220
------- -------
Total deferred tax liabilities.......................... -- 220
------- -------
Net deferred tax asset...................................... $ -- $ --
======= =======
</TABLE>
Realization of deferred tax assets is contingent upon the generation of
future taxable income. Due to the uncertainty of realization of these tax
benefits, Viant has provided a valuation allowance for the full amount of its
net deferred tax asset.
At January 1, 1999, Viant had net operating loss carryforwards of
approximately $11,348,000 available for federal purposes to reduce future
taxable income. If not utilized, these carryforwards will expire at various
dates ranging from 2011 to 2018. Under the provisions of the Internal Revenue
Code, certain substantial changes in Viant's ownership may have limited, or may
limit in the future, the amount of net operating loss carryforwards which could
be utilized annually to offset future taxable income. The amount of any annual
limitation is determined based upon Viant's value prior to an ownership change.
Income taxes computed using the federal statutory income tax rate differs
from Viant's effective tax rate as follows (in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED
(INCEPTION) TO ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- -------------- ----------
<S> <C> <C> <C>
U.S. federal statutory rate..................... $(564) $(1,387) $(2,206)
State income tax, net of federal income tax
effect........................................ (96) (237) (373)
Change in valuation allowance................... 629 1,617 2,489
Other........................................... 31 7 90
----- ------- -------
Provision for income taxes...................... $ -- $ -- $ --
===== ======= =======
</TABLE>
F-17
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13. SUBSEQUENT EVENT (UNAUDITED)
On June 18, 1999, Viant closed its initial public offering of common stock
at a public offering price of $16 per share. The net proceeds to Viant from the
offering were approximately $50.2 million, net of underwriting discounts and
offering costs.
F-18
<PAGE>
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.......................... 1
Risk Factors................................ 4
Cautionary Note Regarding Forward-Looking
Statements................................ 9
Use of Proceeds............................. 9
Price Range of Common Stock................. 10
Dividend Policy............................. 10
Capitalization.............................. 11
Dilution.................................... 12
Selected Financial Data..................... 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 14
Business.................................... 20
Management.................................. 33
Certain Transactions........................ 45
Principal and Selling Stockholders.......... 47
Description of Capital Stock................ 50
Shares Eligible for Future Sale............. 53
Underwriting................................ 55
Legal Matters............................... 57
Experts..................................... 57
Where You Can Find More Information......... 57
Index to Financial Statements............... F-1
</TABLE>
2,286,400 Shares
[LOGO]
Common Stock
-------------
PROSPECTUS
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GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
ROBERTSON STEPHENS
LEHMAN BROTHERS
Representatives of the Underwriters
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