PROSPECTUS FILING PURSUANT TO RULE 424(b)(3)
1,512,514 Shares of Common Stock
GO2NET, INC.
You should consider carefully the risk factors beginning on page 4 of
this prospectus before purchasing any of the shares of Go2Net common stock
offered by this prospectus.
The selling shareholders identified on pages 16-18 of this prospectus
are offering these shares of common stock. For additional information on the
methods of sale, you should refer to the section entitled "Plan of Distribution"
on page 15. We will not receive any portion of the proceeds from the sale of
these shares. This offering is not being underwritten. The selling shareholders
may offer the Shares from time to time through public or private transactions,
on or off the United States exchanges, at prevailing market prices, or at
privately negotiated prices.
The Shares were issued pursuant to the exemption from the registration
requirements set forth in Section 4(2) of the Securities Act of 1933, as
amended. Go2Net's common stock is listed on the Nasdaq National Stock Market
under the ticker symbol "GNET." On July 12, 1999, the closing price of one share
of Go2Net common stock on the Nasdaq National Stock Market was $83 1/4 per
share.
Neither the SEC nor any state securities commission has approved these
securities or determined that this prospectus is truthful or complete. Any
representations to the contrary is a criminal offense.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
sec is effective. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
The Date of this Prospectus Is July 27, 1999
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TABLE OF CONTENTS
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PAGE
THE COMPANY................................................................................................................3
FORWARD LOOKING INFORMATION................................................................................................3
RISK FACTORS...............................................................................................................4
USE OF PROCEEDS...........................................................................................................15
ISSUANCE OF COMMON STOCK TO SELLING SHAREHOLDERS..........................................................................15
PLAN OF DISTRIBUTION......................................................................................................15
SELLING SHAREHOLDERS......................................................................................................16
LEGAL MATTERS.............................................................................................................18
EXPERTS...................................................................................................................18
WHERE YOU CAN FIND MORE INFORMATION.......................................................................................19
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THE COMPANY
Go2Net, Inc. offers through the World Wide Web a network of branded,
technology and community-driven Web sites. Our properties available through the
Go2Net Network include:
o Go2Net Personal (www.go2net.com), which provides users with a
comprehensive Internet start page offering customizable news,
discussion and portfolio information as well as direct access
to Go2Net's own finance, search and directory, free Web
hosting, shopping, auction and multiplayer game sites;
o MetaCrawler (www.metacrawler.com), a metasearch service that
combines various existing search/index guides into
one service;
o Silicon Investor (www.siliconinvestor.com), the Web's premier
financial discussion community which also offers proprietary
articles, portfolio tracking tools, company research, charting
and analytics and business and finance news;
o HyperMart (www.hypermart.net) and Virtual Avenue
(www.virtualave.net), the Web's leading providers of free
business hosting services;
o Authorize.net (www.authorize.net), the Internet's leading
payment authorization system for online businesses;
o Haggle Online (www.haggle.com), a provider of Web based person
to person auction services;
o WebMarket (www.webmarket.com), a one-step comparison shopping
service;
o Web21 (www.100hot.com), a leading directory of the Web's most
popular sites; and
o Playsite (www.playsite.com), a Java-based multiplayer games
site;
The Go2Net Labs division develops innovative technologies to enhance
the features and functionality of our sites and for licensing to other Internet
companies. We focus on utilizing innovative technologies to deliver our content
and to enhance the attractiveness and utility of our product offerings.
Go2Net was incorporated in February, 1996, under the laws of the state
of Delaware. Our principal executive offices are located at 999 Third Avenue,
Suite 4700, Seattle, Washington 98104 and our telephone number is (206)
447-1595. As used in this prospectus, the terms "we," "us," "our," and "Go2Net"
refer to Go2Net, Inc., a Delaware corporation, and its wholly owned
subsidiaries.
FORWARD-LOOKING INFORMATION
This prospectus includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act
including, in particular, the statements about Go2Net's plans, strategies,
prospects under the heading "Risk Factors." Although we believe that our plans,
intentions and expectations reflected in or suggested by such forward-looking
statements are reasonable, we can give no assurance that such plans, intentions
or expectations will be achieved. Important factors that could cause actual
results to differ materially from the forward-looking statements we make in this
prospectus are set forth below and elsewhere in this prospectus.
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RISK FACTORS
WE HAVE A LIMITED OPERATING HISTORY ON WHICH TO EVALUATE US
We have a limited operating history upon which an evaluation of our
prospects can be based. We anticipate that advertising revenues from Internet
sites will constitute a majority of our revenues during the foreseeable future.
We believe that our success will depend upon our ability to generate revenues
from advertising and subscription fees from our Internet sites, which cannot be
assured. Our ability to generate revenues is subject to substantial uncertainty.
Our prospects must be considered in light of the risks, expenses, difficulties
and uncertainties frequently encountered by emerging growth companies in new and
rapidly evolving markets for Internet based products and services. Our success
will depend on our ability to:
o effectively establish, develop and maintain relationships with
advertising customers, advertising agencies and
other third parties;
o enter into distribution relationships and strategic alliances
to drive traffic to our Websites;
o provide original and compelling products and services to
Internet users;
o develop and upgrade our technology;
o effectively respond to competitive developments;
o continue to develop and extend the Go2Net brand;
o effectively generate revenues through sponsored services and
placements;
o attract new qualified personnel; and
o retain existing qualified personnel.
We may not succeed in addressing these risks.
WE ANTICIPATE INCREASED OPERATING EXPENSES AND MAY EXPERIENCE LOSSES
Since inception, we have incurred significant losses on an annual basis
and, as of March 31, 1999, had an accumulated deficit of $56,977,712. Our lack
of an extensive operating history makes prediction of future operating results
difficult. We believe that a comparison of our quarterly reports is not
meaningful. As a result, you should not rely on the results for any period as an
indication of our future performance. Accordingly, although we reported pro
forma income for the quarter ended March 31, 1999, there can be no assurance
that we will generate significant revenues or that we will sustain this level of
profitability in the future. We currently intend to increase substantially our
operating expenses in order to expand and improve our Internet operations, fund
increased advertising and marketing efforts, expand and improve our Internet
user support capabilities and develop new Internet technologies, products and
services. As a result, we may experience significant losses on a quarterly and
annual basis.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE BECAUSE OF A NUMBER OF FACTORS,
MANY OF WHICH ARE OUTSIDE OF OUR CONTROL
Our quarterly operating results may fluctuate significantly as a result
of a variety of factors, many of which are outside of our control. These factors
include but are not limited to:
o the demand for Internet advertising;
o the level of usage of the Internet;
o the level of user traffic on our Websites;
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o seasonal trends and budgeting cycles in advertising sales;
o incurrence of costs relating to the development, operation
and expansion of our Internet operations;
o introduction of new products and services by us and our
competitors;
o costs incurred with respect to acquisitions;
o price competition or pricing changes in the industry;
o technical difficulties or system failures; and
o general economic conditions and economic conditions specific
to the Internet and Internet media.
We may from time to time make pricing, service or marketing decisions
that may adversely affect our profitability in a given quarterly or annual
period.
We derive the majority of our revenues from the sale of advertisements
under short-term contracts, which are difficult to forecast accurately. Our
expense levels are based in part on expectations of future revenue and, to a
large extent, are fixed. We may be unable to adjust spending quickly enough to
compensate for any unexpected revenue shortfall. Accordingly, the cancellation
or deferral of advertising or sponsorship contracts could have a material
adverse effect on our financial results. Our operating expenses are likely to
increase significantly over the near term and, to the extent that our expenses
increase but our revenues do not, our business, operating results, and financial
condition may be materially and adversely affected.
Our advertising revenue is also subject to seasonal fluctuations.
Historically, advertisers spend less in the first and third calendar quarters
and user traffic on our online media properties has historically been lower
during the summer and during year-end vacation and holiday periods.
OUR SUCCESS DEPENDS ON OUR ABILITY TO MAINTAIN ADVERTISING REVENUES
We derive a significant portion of our revenues from the sale of
advertising on our Internet sites. We will not be able to maintain or increase
our advertising revenues in the future if our advertising customers move their
advertising to competing Internet sites or to traditional forms of media.
Additionally, in selling Internet-based advertising, we depend in part on
advertising agencies, which exercise substantial control over the placement of
advertising for their clients. Our success will depend on our ability to retain,
broaden and diversify our future base of advertising customers. In order to
generate significant advertising revenues, we will depend on the development of
a larger base of users of our Internet sites having demographic characteristics
attractive to advertisers. If we are unable to retain paying advertising
customers or we are forced to offer lower than anticipated advertising rates in
order to retain advertising customers or to attract new advertising customers,
our business, financial condition and operating results will be adversely
affected and we may cease to be a commercially viable enterprise.
WE ARE UNABLE TO FORECAST OUR EXPENSES AND REVENUES ACCURATELY
As a result of our limited operating history and the emerging nature of
the Internet, including Internet-based advertising, subscription services and
electronic commerce, we are unable to forecast our expenses and revenues
accurately. Our current and future estimated expense levels are based largely on
our estimates of future revenues and may increase because many of our
significant operating expenses are either fixed, such as rent for office space,
or subject to likely increases. Few, if any, of our operating expenses can be
quickly or easily reduced in a manner which would not cause a material adverse
effect to our business, financial condition and operating results. In addition,
we may be unable to adjust spending in a timely manner to compensate for any
unexpected expenditures; and a shortfall in actual revenues as compared to
estimated revenues would have an immediate material adverse effect on our
business, financial condition and operating results.
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OUR ARRANGEMENTS WITH ADVERTISERS AND SPONSORS MAY EXPOSE US TO SIGNIFICANT
FINANCIAL RISKS
We enter into advertising arrangements with third parties to provide
services on our Websites which involve a unique rate structure. Specifically, we
receive sponsorship fees and, under certain circumstances, a portion of
transaction revenues received by third party sponsors from users originated
through our Websites, in return for minimum levels of user impressions or user
requests for additional information made by clicking on the promotional
hyperlink or advertisement. To the extent implemented, these arrangements expose
us to potentially significant financial risks, including the risk that we fail
to deliver required minimum levels of user impressions (in which case, these
agreements typically provide for adjustments to the fees payable thereunder or
"make good" periods) and that third party sponsors do not renew the agreements
at the end of their terms. Some of these arrangements also require us to
integrate advertisers' or sponsors' content with our services, which requires
the dedication of resources and significant programming and design efforts to
accomplish. There can be no assurance that we will be able to attract additional
advertisers or sponsors or that we will be able to renew existing advertising
arrangements when they expire. In addition, we have granted exclusivity
provisions to some of our sponsors, and may in the future grant additional
exclusivity provisions. These exclusivity provisions may have the effect of
preventing us, for the duration of the exclusivity arrangements, from accepting
advertising or sponsorship arrangements within a particular subject matter in
our Websites or across our entire service. Our inability to enter into further
sponsorships or advertising arrangements as a result of our exclusivity
arrangements could have a material adverse impact our business, financial
condition and operating results.
WE DEPEND ON THE CONTINUED GROWTH OF THE INTERNET AS AN ADVERTISING MEDIUM
Use of the Internet by consumers is at an early stage of development
and market acceptance of the Internet as a medium for information,
entertainment, commerce and advertising is subject to a level of uncertainty. We
believe that our success depends upon our ability to obtain significant revenues
from our Internet operations, which will require the continued acceptance of the
Internet as an advertising medium. We believe that most advertisers and
advertising agencies have limited experience with the Internet as an advertising
medium and most advertisers and advertising agencies have not devoted a
significant portion of their advertising budgets to Internet-related advertising
to date. In order for us to continue to generate advertising revenues,
advertisers and advertising agencies must direct more of their budgets to the
Internet as a whole, and specifically to our Internet sites. There can be no
assurance that advertisers or advertising agencies will continue to allocate
larger portions of their budgets to Internet-based advertising or that they will
find Internet-based advertising to be more effective than advertising in
traditional media such as television, print or radio. Advertisers may determine
that banner advertising, which comprises the majority of our revenues, is not an
effective advertising medium. We may not be able to effectively transition to
any other forms of Web-based advertising, should such other forms prove more
popular. Advertising filter software programs have become available that limit
or remove banner advertising from Web pages viewed by an Internet user. Such
software, if generally adopted by users, may have a materially adverse effect
upon the viability of advertising on the Internet. Our advertising customers may
not accept the internal and third-party measurements of impressions received by
advertisements on Go2Net online media properties and such measurements may
contain errors. We rely primarily on our internal advertising sales force for
domestic advertising sales, which involves additional risks and uncertainties,
including risks associated with the recruitment, retention, management,
training, and motivation of sales personnel. As a result of these factors, we
may not be able to sustain or increase current advertising sales levels. Failure
to do so will have a material adverse effect on our business, operating results,
and financial position.
WE DEPEND ON CONTINUED GROWTH IN E-COMMERCE AND INTERNET INFRASTRUCTURE
DEVELOPMENT
Use of the Internet by businesses and consumers as a medium for
electronic commerce is at an early stage of development and is subject to a
level of uncertainty. We depend on the growing use and acceptance of the
Internet as an effective medium of commerce by merchants and customers. The use
of and interest in the Internet is a relatively recent development. We cannot be
certain that acceptance and use of the Internet will continue to develop as a
medium for commerce or that a sufficiently broad base of merchants and consumers
will adopt, and continue to use, the Internet as a medium of commerce.
The emergence of the Internet as a commercial marketplace may occur
more slowly than anticipated for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. If the number
of Internet users or their use of Internet resources continues to grow, it may
overwhelm the existing Internet infrastructure. Delays in the development or
adoption of new standards and protocols required to handle increased levels of
Internet activity could also have a detrimental effect. These factors could
result in slower response times or adversely affect usage of the Internet,
resulting in lower numbers of e-commerce transactions and lower demand for our
services.
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WE ARE EXPOSED TO E-COMMERCE SECURITY RISKS
A requirement of the continued growth of e-commerce is the secure
transmission of confidential information over public networks. We rely on public
key cryptography and digital certificate technology to provide the security and
authentication necessary for secure transmission of confidential information.
Various regulatory and export restrictions may prohibit us from using the
strongest and most secure cryptographic protection available and thereby expose
us to a risk of data interception. A party who is able to circumvent our
security measures could misappropriate proprietary information or interrupt our
operations. Any such compromise or elimination of our security could reduce
demand for our services.
We may be required to expend significant capital and other resources to
protect against such security breaches or to address problems caused by such
breaches. Concerns over the security of the Internet and other online
transactions and the privacy of users may also inhibit the growth of the
Internet and other online services generally, and the Web in particular,
especially as a means of conducting commercial transactions. Because certain of
our activities involve the storage and transmission of proprietary information,
such as credit card numbers, security breaches could damage our reputation and
expose us to a risk of loss or litigation and possible liability. Our security
measures may not prevent security breaches, and failure to prevent such security
breaches may disrupt our operations.
THE MARKET FOR OUR PRODUCTS AND SERVICES IS UNCERTAIN
The market for our products and services is new and evolving, and
therefore, it is difficult to predict whether the Internet will develop the
necessary infrastructure. Market demand and acceptance of newly released
products and services is highly uncertain. Our future success depends upon our
ability to develop and provide on the Internet original and compelling products
and services that will continue to attract and retain users with demographic
characteristics valuable to the various advertisers and advertising agencies we
target and to charge users a subscription fee for access to specific portions of
our products and services. There can be no assurance that our products and
services will be attractive enough to a sufficient number of Internet users to
generate advertising revenues or to allow the charging of a subscription fee for
our products and services. There also can be no assurance that we will be able
to anticipate, monitor and successfully respond to rapidly changing consumer
tastes and preferences so as to attract a growing number of users to our
Internet sites with characteristics desirable to advertisers and advertising
agencies or those users who are otherwise willing to pay to access specific
portions of our products and services. Internet users can freely navigate and
instantly switch among a large number of Internet sites, many of which offer
competitive products and services, making it difficult for us to distinguish our
product offerings and attract users. In addition, many other Internet sites
offer very specific, highly targeted products and services that may have greater
appeal than the products and services offered on our Internet sites. If we are
unable to develop original and compelling Internet-based products and services,
we will be unable to generate sufficient advertising or subscription revenues,
and our business, financial condition and operating results will be adversely
affected.
THE MARKET FOR OUR PRODUCTS AND SERVICES HAS A LOW BARRIER OF ENTRY
The market for Internet-based products and services is relatively new,
intensely competitive and rapidly evolving. There are minimal barriers to entry,
and current and new competitors can launch new Internet sites at a relatively
low cost within relatively short time periods. In addition, we compete for the
time and attention of Internet users with thousands of non-profit Internet sites
operated by individuals, government and educational institutions. Existing and
potential competitors also include magazine and newspaper publishers, cable
television companies and start-up ventures attracted to the Internet market. As
a result, we expect competition to persist and intensify and the number of
competitors to increase significantly in the future. As we attempt to expand the
scope of our Internet sites and product offerings, we will compete with a
greater number of Internet sites and other companies. Because the operations and
strategic plans of existing and future competitors are undergoing rapid change,
it is extremely difficult for us to anticipate which companies are likely to
offer competitive products and services in the future. There can be no assurance
that our Internet sites will compete successfully.
MARKET CONSOLIDATION IS CREATING MORE FORMIDABLE COMPETITORS.
In the recent past, there have been a number of significant
acquisitions and strategic plans announced among and between many of our
competitors, including:
o The Walt Disney Company acquiring a significant interest in
Infoseek;
o AOL acquiring Netscape;
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o Yahoo! Acquiring GeoCities Corporation and Broadcast.com;
o @Home Networks, a provider of high speed internet access
serving the cable television infrastructure and the largest
stockholder of which is AT&T, acquiring Excite;
o NBC announcing that it intends to merge its Internet assets
with XOOM.com, Inc. and Snap.com, a subsidiary of
CNET; and
o CMGI, Inc. announcing its acquisition of AltaVista from
Compaq.
The effect of these completed and pending acquisitions and strategic plans
on Go2Net cannot be predicted with certainty, but all of these competitors are
aligned with companies that are significantly larger or more well established
than Go2Net. In particular, many of them are television broadcasters having
substantial marketing resources and capabilities to assist our competitors. As a
result, each of them will have access to significantly greater financial,
marketing and, in some cases, technical resources than Go2Net.
RECENT ALLIANCES MAY MAKE IT MORE DIFFICULT TO ACCESS OUR PRODUCTS AND MEDIA
PROPERTIES.
The recent acquisitions and alliances discussed above will result in
greater competition as more users of the Internet consolidate on fewer services
that incorporate search and retrieval features. In addition, providers of
software and other Internet products and services are incorporating search and
retrieval features into their offerings. For example, Web browsers offered by
Netscape and Microsoft increasingly incorporate prominent search buttons that
direct search traffic to competing services. These features could make it more
difficult for Internet users to find and use our products and services. Netscape
has an agreement with Excite under which Excite is the most prominent
navigational service within the Netcenter website. In the future, Netscape,
Microsoft and other browser suppliers may also more tightly integrate products
and services similar to ours into their browsers or their browsers' pre-set home
pages. Any of these companies could take actions that would make it more
difficult for consumers to find and use Go2Net services. Microsoft recently
announced that it will feature and promote Internet search services provided by
Alta Vista and signed a long term partnership with LookSmart to provide
directory services in the Microsoft Network and other Microsoft online
properties. Such search services may be tightly integrated into future versions
of the Microsoft operating system, the Internet Explorer browser, and other
software applications, and Microsoft may promote such services within the
Microsoft Network or through other Microsoft affiliated end-user services such
as MSNBC or WebTV Networks. Each of these situations creates a potential
competitive advantage over ours because their Internet navigational offerings
may be more conveniently accessed by users.
OUR COMPETITORS HAVE GREATER RESOURCES THAN WE DO
Many, if not all, of our competitors have significantly greater resources
than we do. In particular, our competitors have greater financial, editorial,
technical and marketing resources, longer operating histories, greater name
recognition, and greater experience than we do. Additionally, our competitors
have established relationships with more advertisers and advertising agencies.
And they are able to undertake more extensive marketing campaigns, adopt more
aggressive advertising and subscription price policies and devote substantially
more resources to developing Internet-based products and services than we are.
There can be no assurance that we will be able to compete successfully against
current or future competitors or that competitive pressures faced by us will not
materially adversely affect our business, financial condition and operating
results.
INCREASED COMPETITION MAY EXERT DOWNWARD PRICING PRESSURE ON ADVERTISING
CONTRACTS.
We compete with online services, other website operators and advertising
networks, as well as traditional offline media such as television, radio and
print for a share of advertisers' total advertising budgets. We believe that the
number of companies selling Web-based advertising and the available inventory of
advertising space has recently increased substantially. Accordingly, we may face
increased pricing pressure for the sale of advertisements, which could reduce
our advertising revenues. In addition, our sales may be adversely affected to
the extent that our competitors offer superior advertising services that better
target users or provide better reporting of advertising results.
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WE MUST DEVELOP AND MAINTAIN A "BRAND IDENTITY" FOR OUR PRODUCTS
We believe that maintaining and building the Go2Net brand is a critical
aspect of our efforts to attract an Internet audience. In addition, we believe
that the importance of brand recognition will increase due to the anticipated
increase in the number of Internet sites and the relatively low barriers to
entry to providing Internet-based products and services. Promoting the Go2Net
brand name will depend on our continued ability to develop and deliver original
and compelling Internet- based products and services. If Internet users do not
continue to perceive our Internet sites to be of sufficient interest and
usefulness, we will be unsuccessful in promoting and maintaining our brand. If
we expand the focus of our operations beyond providing our current Internet
sites, we risk diluting our brand, confusing users and advertisers, and
decreasing the attractiveness of our audience to advertisers. In order to
respond to competitive pressures, we may find it necessary to increase our
budget for developing our products and services or otherwise to increase
substantially our financial commitment to creating and maintaining a distinct
brand loyalty among users. If we are unable to provide Internet-based products
and services or otherwise fail to promote and maintain the Go2Net brand, or we
incur significant expenses in an attempt to improve our products and services or
promote and maintain our brand, our business, financial condition and operating
results will be adversely affected.
THE INTERNET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGES, AND WE MUST ADAPT
QUICKLY TO THESE CHANGES TO COMPETE EFFECTIVELY.
The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. For example, to the
extent that higher bandwidth Internet access becomes more widely available, we
may be required to make significant changes to the design and content of our
products and media properties. Failure to effectively adapt to these or any
other technological developments could adversely affect our business, operating
results, and financial condition.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH AND INTEGRATING RECENTLY ACQUIRED
COMPANIES
Our recent growth has placed a significant strain on our managerial,
operational, and financial resources. To manage our growth, we must continue to
implement and improve our operational and financial systems and to expand,
train, and manage our employee base. Any inability to manage growth effectively
could have a material adverse effect on our business, operating results, and
financial condition.
The process of managing advertising within large, high traffic websites
such as ours is an increasingly important and complex task. We rely on both
internal and licensed third-party advertising inventory management and analysis
systems. To the extent that any extended failure of our advertising management
system results in incorrect advertising insertions, we may be exposed to "make
good" obligations, which, by displacing advertising inventory, could defer
advertising revenues. Failure of our advertising management systems to
effectively scale to higher levels of use or to effectively track and provide
accurate and timely reports on advertising results also could negatively affect
our relationships with advertisers.
As part of our business strategy, we have completed several acquisitions
and expect to enter into additional business combinations and acquisitions
including our acquisitions of Silicon Investor, Web21, Hypermart, Haggle Online,
Virtual Avenue, IQC and Authorize.net. Go2Net expects to enter into additional
business combinations and acquisitions. Acquisition transactions are accompanied
by a number of risks, including:
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o the difficulty of assimilating the operations and personnel of the acquired companies;
o the potential disruption of our ongoing business and distraction of management;
o the difficulty of incorporating acquired technology or content and rights into our products and media
properties;
o the correct assessment of the relative percentages of
in-process research and development expense which can be
immediately written off as compared to the amount which
must be amortized over the appropriate life of the asset;
o the failure to successfully develop an acquired in-process technology resulting in the impairment of amounts
currently capitalized as intangible assets;
o unanticipated expenses related to technology integration;
o the maintenance of uniform standards, controls, procedures and policies;
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o the impairment of relationships with employees and customers as a result of any integration of new management
personnel; and
o the potential unknown liabilities associated with acquired businesses.
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We may not be successful in addressing these risks or any other problems
encountered in connection with such acquisitions.
WE MAY BE SUBJECT TO RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
In the future, we may pursue acquisitions of companies, technologies or
assets that complement our business. There can be no assurance that we will be
able to identify suitable acquisition candidates available for sale at
reasonable prices, consummate any acquisition or successfully integrate any
acquired business into our operations. Acquisitions may result in the
potentially dilutive issuance of equity securities, the incurrence of additional
debt, the write-off of in-process research and development or software
acquisition and development costs, and the amortization of expenses related to
goodwill and other intangible assets, any of which could have a material adverse
effect on our business, financial condition and results of operations. As
described above, acquisitions would involve numerous additional risks, including
difficulties in the assimilation of the operations, services, products and
personnel of the acquired company, the diversion of management's attention from
other business concerns along with the risks involved in entering markets in
which we have little or no experience. We have, and may in the future, make
investments in companies involved in the development of technologies or services
that are complementary or related to our operations. Problems with an acquired
business could have a material adverse effect on our performance as a whole.
RISKS ASSOCIATED WITH THE ACQUISITION BY VULCAN VENTURES OF GO2NET CAPITAL
STOCK.
Influence over Go2Net Actions. Vulcan Ventures Incorporated recently
acquired approximately 33.95% of Go2Net's outstanding common stock (including
common stock issuable upon conversion of Series A Preferred Stock). Vulcan's
ownership could be sufficient to enable Vulcan to significantly influence the
vote on most matters submitted to a vote of the public shareholders, including
the election of the Board of Directors. Vulcan has acquired the right to
designate two directors to serve on Go2Net's Board of Directors.
Conflicts of Interest. Conflicts of interest may arise as a consequence of
the relationship between Vulcan and Go2Net, including:
o conflicts between Vulcan, as a shareholder with a significant
ownership interest in Go2Net and representation on the Board of
Directors, and the other shareholders of Go2Net, whose interests
may differ with respect to, among and other things, the strategic
direction of Go2Net or significant corporate transactions,
o conflicts arising in respect of corporate opportunities that could
be pursued by Go2Net, on the one hand, or by Vulcan and any of its
other affiliated entities, on the other hand, or
o conflicts arising in respect of any new contractual relationships
between Go2Net, one the one hand, and Vulcan and any of its other
affiliated entities, on the other hand.
To the extent that conflicts arise as a result of Vulcan's relationship
Go2Net, the Board of Directors (including any directors nominated by Vulcan)
would be guided by its fiduciary obligations as directors under Delaware law,
including the directors' duty of loyalty. In addition, Vulcan's beneficial
ownership of approximately 33.95% of Go2Net's outstanding common stock will make
it more difficult for a third party to effect a change in management or to
acquire control of Go2Net without the approval of Vulcan and, therefore, may
delay, prevent or deter a proxy contest for control of Go2Net or other changes
in management, or discount bids for a merger, acquisition or tender offer, in
which Go2Net's shareholders could receive a premium for their shares.
Blocking Rights. Vulcan is not required to sell its block of shares, even
if an offer is made that might be attractive to the other shareholders. In
addition, the consent of the holders of Series A Preferred Stock, voting as a
class, is required to effect particular corporate actions, including without
limitation, to amend Go2Net's Restated Certificate of Incorporation or By-laws
in any manner that would adversely affect the powers, preferences or special
rights of the Series A Preferred Stock.
Distribution Agreement. One of the important considerations for Go2Net in
entering into the Vulcan transactions was the fact that Vulcan, through its
affiliated entities, operates cable systems that serve over 5,000,000 cable
subscribers and that such cable companies may provide an opportunity for Go2Net
to establish a distribution or other relationship with them. As a result of the
Vulcan transactions, these cable companies have commenced negotiations with
Go2Net with respect to the establishment of a distribution or other relationship
10
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to offer Go2Net's content to their subscribers. There can be no assurance that
an agreement will be reached or, if an agreement is reached, that it will be
profitable to Go2Net.
WE ARE DEPENDENT ON KEY PERSONNEL
Our future success depends to a significant degree on the skill, experience
and efforts of Russell C. Horowitz, Michael J. Riccio, Jr., John Keister and the
other members of our management team, as well as on our ability to retain and
motivate our officers and key employees. The loss of Mr. Horowitz, Mr. Riccio,
Mr. Keister or the other members of our management team could have a material
adverse effect on our business, operating results and financial condition. We
also depend on the ability of our executive officers and other members of senior
management to work effectively as a team. We have entered into employment
agreements with Messrs. Horowitz, Keister and Riccio. We maintain $10,000,000
"key man" life insurance policies on the lives of Mr. Riccio and Mr. Keister and
a $20,000,000 "key man" life insurance policy on the life of Mr. Horowitz.
WE MUST HIRE AND RETAIN SKILLED PERSONNEL IN A TIGHT LABOR MARKET
Qualified personnel are in great demand throughout the technology industry.
Our future success depends on our continuing ability to attract and retain
highly qualified technical and managerial personnel. There can be no assurance
that we will be able to retain our existing employees and independent
contractors or that we will be able to attract, assimilate or retain
sufficiently qualified personnel in the future. The inability to attract and
retain the necessary technical, managerial, design, editorial, sales and
marketing personnel could have a material adverse effect on our business,
financial condition and operating results.
WE DEPEND UPON THIRD PARTIES FOR CRITICAL ELEMENTS OF OUR BUSINESS
We depend upon third parties in order to advertise our Internet sites on
other Internet sites. In addition, the willingness of the owners and operators
of such sites to direct users to our Internet sites through hypertext links are
critical to the success of our Internet operations.
There can be no assurance that we will establish or maintain such arrangements
in the future.
WE DEPEND ON THIRD PARTIES FOR CONTENT DEVELOPMENT OF OUR INTERNET SITES
Our ability to develop original and compelling Internet-based products and
services is also dependent on maintaining relationships with and using products
provided by third-party vendors. Developing and maintaining satisfactory
relationships with third parties could become more difficult and more expensive
as competition increases among Internet sites. If we are unable to develop and
maintain satisfactory, relationships with third parties on terms acceptable to
us, or if our competitors are better able to leverage these relationships, our
business, financial condition and operating results will be materially adversely
affected. We have relied, and will continue to rely substantially, on the
product and service development efforts of third parties. For example, we rely
on S&P Comstock, Dow Jones & Company. Inc., New York Stock Exchange, Inc., The
Nasdaq Stock Market, Inc., News Alert, Junglee, Edgar Online, Reuters and Market
Guide, Inc. to provide a significant portion of the information included on our
Internet sites. There can be no assurance we will maintain these relationships
in the future. Any failure of these third parties to provide this information to
us could have a material adverse effect on our business, financial condition and
operating results.
OUR PERFORMANCE DEPENDS ON THE SUCCESS OF THE METACRAWLER LICENSE
We entered into a License Agreement with Netbot, Inc. (the "MetaCrawler
License Agreement"), in which Netbot, Inc. granted us an exclusive (subject to
some limited exceptions), worldwide license to provide the MetaCrawler Service.
As part of the MetaCrawler License Agreement, we have the exclusive right to
operate, modify and reproduce the MetaCrawler Service (including, without
limitation, the exclusive right to use, modify and reproduce the name
"MetaCrawler" and the MetaCrawler URL in connection with the operation of the
MetaCrawler Service). A material portion of the traffic to our Internet sites is
currently derived from users of the MetaCrawler Service. A termination of the
MetaCrawler License Agreement or the inability of Go2Net to continue to provide
access to the search engines included in the MetaCrawler Service, could have a
material adverse effect on our business, financial condition and operating
results. Netbot has licensed the MetaCrawler Service and the other intellectual
property rights associated therewith from the University of Washington on an
exclusive basis. The license has been granted to us by Netbot on an exclusive
basis, but Netbot has reserved the right to use, modify, reproduce and license
the MetaCrawler search engine for any purpose other than the provision of the
MetaCrawler Service. The license is subject to the rights of the University of
Washington to use, modify and reproduce the MetaCrawler search engine and
derivatives of the MetaCrawler site to operate Internet sites for internal
purposes within the University of Washington domain and to use, modify and
reproduce any of the licensed technologies for research, instructional and
academic purposes. The search technology underlying the MetaCrawler Service and
the MetaCrawler trademark is licensed to or owned by Netbot and sublicensed to
use pursuant to the MetaCrawler License Agreement.
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WE MUST CONTINUE TO DIVERSIFY OUR REVENUE STREAMS
The long-term success of our business strategy will depend to a significant
extent on our ability to successfully diversify our revenue streams. We
currently derive revenue from advertising, licensing, subscriptions and
electronic commerce. However, we are largely dependent on advertising revenues,
and continue to seek out ways to develop these other sources of revenue. This
includes the investigation of new business areas. Expansion into new business
areas and new Internet sites may bring us into direct competition with new
competitors. Any expansion of product offerings or operations, or new Internet
sites developed and launched by us that are not favorably received by Internet
users could damage our reputation or the Go2Net brand. Expansion into new
business areas or the development and launching of new Internet sites will also
require significant additional expenses and programming and other resources.
It will also strain our management, financial and operational resources.
From time to time, the Company may entertain new business opportunities and
ventures in a broad range of areas. Typically, such opportunities require
extended negotiations, the outcome of which cannot be predicted. If the Company
were to enter into such a venture, the Company could be required to invest a
substantial amount of capital, which could have a material adverse effect on the
Company's financial condition and its ability to implement its existing business
strategy. Such an investment could also result in large and prolonged operating
losses for the Company. Further, such negotiations or ventures could place
additional, substantial burdens on the Company's management personnel and its
financial and operational systems. There can be no assurance that such a venture
would ever achieve profitability, and a failure by the Company to recover the
substantial investment required to launch and operate such a venture would have
a material adverse effect on the Company's business, financial condition and
operating results.
WE ARE SUBJECT TO SYSTEM DISRUPTIONS AND CAPACITY CONSTRAINTS
The satisfactory performance, reliability and availability of our Internet
sites and our computer network infrastructure are critical to attracting
Internet users and maintaining relationships with advertising customers. Our
Internet-based advertising revenues will be directly related to the number of
advertisement impressions delivered by us. System interruptions that result in
the unavailability of our Internet sites or slower response times for users
would reduce the number of advertisements delivered and reduce the
attractiveness of our Internet sites to users and advertisers. We may experience
periodic system interruptions from time to time in the future. Additionally, any
substantial increase in traffic on our Internet sites may require us to expand
and adapt our computer network infrastructure. Our inability to add additional
computer software, hardware and bandwidth to accommodate increased use of our
Internet sites may cause unanticipated system disruptions and result in slower
response times. There can be no assurance that we will be able to expand our
computer network infrastructure on a timely basis to meet increased use. Any
system interruptions or slower response times resulting from these factors could
have a material adverse effect on our business, financial condition and
operating results. We are dependent on third parties for uninterrupted Internet
access. In addition, we are dependent on various third parties for substantially
all of our news and information. Loss of these services from any one or more of
third parties may have a material adverse effect on our business, financial
condition and operating results. No assurance can be given as to whether, or on
what terms, we would be able to obtain these services from other third parties
in the event of the loss of any of these services.
Our Internet operations are vulnerable to interruption by fire, earthquake,
power loss, telecommunications failure and other events beyond our control.
There can be no assurance that interruptions in service will not materially
adversely affect our operations in the future. While we carry business
interruption insurance to compensate us for losses that may occur, there can be
no assurance that insurance will be sufficient to provide for all losses or
damages that we incur.
WE ARE SUBJECT TO U.S. AND FOREIGN GOVERNMENT REGULATION OF THE INTERNET, THE
IMPACT OF WHICH IS DIFFICULT TO PREDICT.
There are currently few laws or regulations directly applicable to the
Internet. The application of existing laws and regulations to Go2Net relating to
issues such as user privacy, defamation, pricing, advertising, taxation,
gambling, sweepstakes, promotions, content regulation, quality of products and
services, and intellectual property ownership and infringement can be unclear.
In addition, we will also be subject to new laws and regulations directly
applicable to our activities. Any existing or new legislation applicable to us
could expose us to substantial liability, including significant expenses
necessary to comply with such laws and regulations, and dampen the growth in use
of the Web.
Other nations, including Germany, have taken actions to restrict the free
flow of material deemed to be objectionable on the Web. The European Union has
recently adopted privacy and copyright directives that may impose additional
burdens and costs on our international operations. In addition, several
telecommunications carriers, including America's Carriers' Telecommunications
Association, are seeking to have telecommunications over the Web regulated by
the FCC in the same manner as other telecommunications services. Many areas with
high Web use have begun to experience interruptions in phone service, and local
telephone carriers, such as Pacific Bell, have
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petitioned the FCC to regulate ISPs and OSPs and to impose access fees. A number
of proposals have been made at the federal, state and local level that would
impose additional taxes on the sale of goods and services through the Internet.
If any such proposals are adopted, it could substantially impair the growth of
the Internet and adversely affect us.
Several recently passed federal laws could have an impact on our business.
The Digital Millennium Copyright Act is intended to reduce the liability of
online service providers for listing or linking to third-party websites that
include materials that infringe copyrights or other rights of others. The
Children's Online Protection Act and the Children's Online Privacy Protection
Act are intended to restrict the distribution of materials deemed harmful to
children and impose additional restrictions on the ability of online services to
collect user information from minors. In addition, the Protection of Children
From Sexual Predators Act of 1998 requires online service providers to report
evidence of violations of federal child pornography laws under some
circumstances. We are currently reviewing this legislation, and cannot currently
predict the effect, if any, that it will have on our business. Such legislation
may impose significant additional costs on our business or subject us to
additional liabilities.
Due to the global nature of the Web, it is possible that the governments of
other states and foreign countries might attempt to regulate its transmissions
or prosecute us for violations of their laws. We might unintentionally violate
such laws. Such laws may be modified, or new laws enacted, in the future. Any
such developments could have a material adverse effect on our business, results
of operations, and financial condition.
WE MAY BE SUBJECT TO A VARIETY OF LEGAL UNCERTAINTIES THAT IMPAIR OUR BUSINESS
As a publisher and a distributor of content over the Internet, we face
potential liability for defamation, negligence, copyright, patent or trademark
infringement and other claims based on the nature and content of the materials
that we publish or distribute. In addition, we could be exposed to liability
with respect to the content or unauthorized duplication of material indexed in
our search services. Although we carry liability insurance, our insurance may
not cover potential claims of this type or may not be adequate to indemnify us
for all liability that may be imposed.
We host a wide variety of services that enable individuals to exchange
information, generate content, conduct business and engage in various online
activities, including services relating to online auctions and the homesteading
and other services. The law relating to the liability of providers of these
online services for activities of their users is currently unsettled. Claims
could be made against us for defamation, negligence, copyright or trademark
infringement, unlawful activity, tort, including personal injury, fraud, or
other theories based on the nature and content of information that we provide
links to or that may be posted online or generated by our users or with respect
to auctioned materials. These types of claims have been brought, and sometimes
successfully pressed, against online service providers in the past. In addition,
we are aware that governmental agencies are currently investigating the conduct
of online auctions.
We also periodically enter into arrangements to offer third-party products,
services, or content under the Go2Net brand or via distribution on Go2Net
properties, including stock quotes and trading information. We may be subject to
claims concerning these products, services or content by virtue of our
involvement in marketing, branding, broadcasting or providing access to them,
even if we do not ourself host, operate, provide, or provide access to these
products, services or content. While our agreements with these parties often
provide that we will be indemnified against such liabilities, such
indemnification may not be adequate.
It is also possible that, if any information provided directly by us
contains errors or is otherwise negligently provided to users, third parties
could make claims against us. For example, we offer Web-based email services,
which expose us to potential risks, such as liabilities or claims resulting from
unsolicited email, lost or misdirected messages, illegal or fraudulent use of
email, or interruptions or delays in email service.
WE MAY BECOME INVOLVED IN INTELLECTUAL PROPERTY LITIGATION
From time to time, we may be subject to legal proceedings and claims in the
ordinary course of business, including claims of alleged infringement of the
trademarks and other intellectual property of third parties by us or our
licensees. Such claims could result in the expenditure of significant financial
and managerial resources. Two of our competitors Excite and Netscape, were
recently sued by Playboy Enterprises on trademark infringement claims. These
claims relate to the practice of displaying banner ads for Playboy competitors
when users perform a search on specific key words which include trade names
belonging to Playboy. A similar lawsuit has been filed by Estee Lauder against
Excite and Fragrance Counter. These lawsuits call into question the common and
lucrative practice of selling banner ads against specific keywords. The outcome
of those cases is unknown at this time. To this date, we are not aware of any
legal proceedings or claims against us. Such proceedings or claims could, if
brought or asserted, have a material adverse effect on our business, financial
condition and operating results.
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WE DEPEND ON LICENSED TECHNOLOGY IN OUR PRODUCTS AND SERVICES
We are dependent upon obtaining existing third party technology related to
our operations. To the extent new technological developments are unavailable to
us on terms acceptable to us or if at all, we may be unable to continue to
execute our business plan and our business, financial condition and operating
results would be materially adversely affected.
OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY
Our success is dependent upon our ability to protect and leverage the value
of our original Internet technologies, software, content and our trademarks,
trade names, service marks, domain names and other proprietary rights we either
currently have or may have in the future. We have filed service marks for our
logo and name, as well as for the names of each of our sites. In addition, given
the uncertain application of existing copyright and trademark laws to the
Internet, there can be no assurance that existing laws will provide adequate
protection for our technologies, sites or domain names. Policing unauthorized
use of our technologies, content and other intellectual property rights entails
significant expenses and could otherwise be difficult or impossible to do given
the global nature of the Internet.
OUR SUCCESS DEPENDS ON OUR ABILITY TO OBTAIN ADDITIONAL CAPITAL
We intend to enhance and expand our Internet sites in order to improve our
competitive position and meet the increasing demands for quality Internet-based
products and services and competitive advertising and subscription pricing. Our
ability to grow will depend in part on our ability to expand and improve our
Internet operations, expand our advertising and marketing efforts, expand and
improve our Internet user support capabilities and develop new Internet
technologies, products and services. As a result, we may need to raise
additional capital in the foreseeable future from public or private equity or
debt sources in order to finance such possible growth. In addition, we may need
to raise additional funds in order to avail ourselves of unanticipated
opportunities (such as more rapid expansion, acquisitions of complementary
businesses or the development of new products or services), to react to
unforeseen difficulties (such as the loss of key personnel or the rejection by
Internet users or potential advertisers of our Internet- based products and
services) or to otherwise respond to unanticipated competitive pressures. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of our then existing shareholders would be reduced,
shareholders may experience additional and significant dilution and the equity
securities may have rights, preferences or privileges senior to those of the
holders of Common Stock. There can be no assurance that additional financing
will be available on terms acceptable to us or at all. If adequate funds are not
available or are not available on terms acceptable to us, we may be unable to
implement our business, sales or marketing plan, respond to competitive forces
or take advantage of perceived business opportunities, which could have a
material adverse effect in the Company's business, financial condition and
operating results.
WE MAY BE AFFECTED BY GENERAL ECONOMIC CONDITIONS
Our business, financial condition and operating results will be subject to
fluctuations based upon general economic conditions. If there were to be a
general economic downturn or a recession, however slight, then we expect that
business entities, including our advertisers and potential advertisers, could
substantially and immediately reduce their advertising and marketing budgets. In
addition, our ability to charge subscription fees for access to specific
portions of our Internet sites or to engage in commerce via the Internet would
be adversely affected, thereby resulting in a material adverse effect on the
Company's business, financial condition and operating results.
WE MAY BE ADVERSELY IMPACTED BY YEAR 2000 ISSUES
Many currently installed computer systems and software products are
dependent upon internal calendars coded to accept only two digit entries in the
date code field. These date code fields will need to accept four digit entries
to distinguish 21st century dates from 20th century dates. Computer systems and
software used by many companies may need to be upgraded to comply with such
"Year 2000" requirements. We have completed our review of the potential impact
of Year 2000 issues and do not anticipate any significant costs, problems or
uncertainties associated with becoming Year 2000 compliant. Our failure or our
software providers' failure to adequately address the Year 2000 issue could
result in misstatement of reported financial information or otherwise adversely
affect the Company's business operations.
State of Readiness. We have completed our assessment of all current
versions of our information technology systems and we believe we are year 2000
compliant. The supplier of our current financial and accounting software has
informed us that such software is year 2000 compliant. We have been informed by
our financial institutions that they are in the process of making their
information systems year 2000 compliant, and that this process will be complete
by the beginning of 1999.
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Costs. To date, we have not incurred any material expenditure in connection
with identifying or evaluating year 2000 compliance issues. Most of our expenses
have related to the retention of an outside consultant to evaluate our financial
and accounting software, and the opportunity cost of time spent by our employees
evaluating this software and year 2000 compliance matters generally. Although we
are not aware of any material operational issues or costs associated with
preparing our internal systems for the year 2000, there can be no assurances
that we will not experience serious unanticipated negative consequences and/or
material costs caused by undetected errors or defects in the technology used in
our internal systems, which are comprised predominantly of acquired technology
and our own software developments. We believe that internally generated funds or
available cash would be sufficient to cover the costs of year 2000 compliance.
At this time, based upon the information provided to us, we do not believe there
exists a material impact of year 2000 compliance issues relating to our non-IT
systems, our vendors, our customers and other parties. We continue to update our
assessment of year 2000 issues as it relates to our non-IT systems, our vendors,
our customers and other parties.
Contingency Plan. As we are not aware of any material year 2000 compliance
issues, we have not developed a year 2000-specific contingency plan. We continue
to assess the impacts of year 2000 issues, and if year 2000 compliance issues
are discovered, we will evaluate the need for one or more contingency plans
relating to such issues.
OUR STOCK PRICE HAS HISTORICALLY BEEN VOLATILE, WHICH MAY MAKE IT MORE DIFFICULT
FOR YOU TO RESELL SHARES WHEN YOU CHOOSE TO AT PRICES YOU FIND ATTRACTIVE.
The trading price of our common stock has been and may continue to be
subject to wide fluctuations. During the first six months of 1999, the closing
sale prices of our common stock on the Nasdaq Stock Market ranged from $8.84
(adjusted to reflect two stock splits) to $99.50. The stock price may fluctuate
in response to a number of events and factors, such as quarterly variations in
operating results, announcements of technological innovations or new products
and media properties by us or our competitors, changes in financial estimates
and recommendations by securities analysts, the operating and stock price
performance of other companies that investors may deem comparable, and news
reports relating to trends in our markets. In addition, the stock market in
general, and the market prices for Internet-related companies in particular,
have experienced extreme volatility that often has been unrelated to the
operating performance of such companies. These broad market and industry
fluctuations may adversely affect the price of our stock, regardless of our
operating performance.
USE OF PROCEEDS
All proceeds from the sale of the Shares are solely for the account of the
selling shareholders. Accordingly, we will not receive any proceeds from sales
of the Shares.
ISSUANCE OF COMMON STOCK TO SELLING SHAREHOLDERS
On April 15, 1999, we issued an aggregate of 82,000 shares of common stock
to shareholders of Haggle Online, Inc., a Delaware corporation, pursuant to a
merger agreement. Under the terms of the merger agreement, Haggle Online became
a wholly-owned subsidiary of Go2Net.
On April 28, 1999, we issued an aggregate of 300,000 shares of common stock
to shareholders of USA Online, Inc., a New Jersey corporation, pursuant to a
merger agreement. Under the terms of the merger agreement, USA Online became a
wholly-owned subsidiary of Go2Net.
On May 13, 1999, we issued an aggregate of 226,626 shares of common stock
to shareholders of IQC Corporation, a California corporation, pursuant to a
merger agreement. Under the terms of the merger agreement, IQC became a
wholly-owned subsidiary of Go2Net.
On July 1, 1999, we issued an aggregate of 903,888 shares of common stock
to shareholders of Authorize.Net Corporation, a Utah corporation, pursuant to a
merger agreement. Under the terms of the merger agreement, Authorize.Net
Corporation was merged with and into 3I Acquisition Corp., a wholly-owned
subsidiary of Go2Net.
PLAN OF DISTRIBUTION
Shares of common stock covered hereby may be offered and sold from time to
time by the selling shareholders. The selling shareholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling shareholders may sell the Shares being offered
hereby as follows: (i) on The Nasdaq National Market, or otherwise at prices and
at terms
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then prevailing or at prices related to the then current market price; or (ii)
in private sales at negotiated prices directly or through a broker or brokers,
who may act as agent or as principal or by a combination of such methods of
sale.
<TABLE>
<S> <C>
o on any of the United States securities exchanges where our capital stock is listed, including The Nasdaq National
Market;
o in the over-the-counter market;
o in transactions other than on such exchanges or in the over-the-counter market;
o in connection with short sales of the Shares;
o by pledge to secure debts and other obligations;
o in connection with the writing of non-traded and exchange-traded call options, in hedge transactions and in
settlement of other transactions in standardized or over-the-counter options; or
o in a combination of any of the above transactions.
</TABLE>
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices.
The selling shareholders may use broker-dealers to sell their shares.
If this happens, broker-dealers will either receive discounts or commissions
from the selling shareholders, or they will receive commissions from purchasers
of shares for whom they acted as agents.
We have agreed to keep the Registration Statement of which this
prospectus constitutes a part effective until July 1, 2000. No sales may be made
pursuant to this prospectus after such date unless we amend or supplement this
prospectus to indicate that it has agreed to extend such period of
effectiveness. There can be no assurance that the selling shareholders will sell
all or any of the shares of common stock offered hereunder.
SELLING SHAREHOLDERS
All shares of common stock registered for sale pursuant to this
prospectus are owned by the selling shareholders as the former shareholders of
Haggle Online, USA Online, IQC and Authorize.net and were acquired by the
selling shareholders in connection with the Haggle Online, USA Online, IQC and
Authorize.net mergers. None of the selling shareholders has a material
relationship with us, except that some selling shareholders are or will be
employees of Go2Net.
The following table sets forth relevant information known to us with
respect to beneficial ownership of Go2Net's common stock as of July 12, 1999, by
each selling shareholder. The following table assumes that the selling
shareholders sell all of the Shares. Go2Net is unable to determine the exact
number of Shares that actually will be sold.
<TABLE>
<CAPTION>
SHARES WHICH
SHARES BENEFICIALLY MAY BE SOLD SHARES
OWNED PURSUANT TO BENEFICIALLY OWNED
PRIOR TO OFFERING(1) THIS PROSPECTUS (2) AFTER OFFERING (3)
-------------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C>
SELLING SHAREHOLDER NUMBER PERCENT NUMBER PERCENT
FORMER HAGGLE SHAREHOLDERS
Doug Salot 73,800 * 73,800 0 *
Carol Feigenbaum 8,200 * 8,200 0 *
FORMER USA ONLINE SHAREHOLDERS
Tian Shan Zhan 112,000 * 112,000 0 *
Zigiang Guo 70,000 * 70,000 0 *
Ya Qi Li 48,000 * 48,000 0 *
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Zhongwei Zhu 36,400 * 36,400 0 *
Hong Shi 26,400 * 26,400 0 *
Jun Ye 7,200 * 7,200 0 *
FORMER IQC SHAREHOLDERS
Goldenwood International, Inc. 92,916 * 92,916 0 *
Eric Wu 12,950 * 12,950 0 *
Jeff Wu 9,712 * 9,712 0 *
Eng Tai Wu 9,712 * 9,712 0 *
I Wei Lai 4,208 * 4,208 0 *
Yong Chun Tang 19,426 * 19,426 0 *
Cubic Science, Inc. 6,476 * 6,476 0 *
Jen Chun Lo 19,426 * 19,426 0 *
Daqi Lu (4) 51,800 * 25,900 25,900 *
Weihua Xu (4) 51,800 * 25,900 25,900 *
FORMER AUTHORIZE.NET SHAREHOLDERS
David O. Heaps 302,841 * 302,841 0 *
W. Jeffrey Knowles 302,841 * 302,841 0 *
W. Eric Carlborg 38,828 * 38,828 0 *
Russell H. Day 23,295 * 9,467 13,828 *
InSight Capital Partners III, L.P. 52,103 * 52,103 0 *
Steven G. Hatch 8,415 * 8,415 0 *
Patrick O'Keefe 8,415 * 8,415 0 *
Scott R. Nelson 8,415 * 8,415 0 *
Jeffrey Klemin 8,415 * 8,415 0 *
Jeffrey Orr 8,415 * 8,415 0 *
Gerald M. Williams 1,262 * 1,262 0 *
Galde L. Tregaskis 27,349 * 27,349 0 *
Home Realty Group Inc. 24,719 * 24,719 0 *
Mann L. C. 4,734 * 4,734 0 *
Larry E. and Janice Jensen 6,837 * 6,837 0 *
David L. and Carol M. Hatch 6,417 * 6,417 0 *
Boyd and Sharon McKnight 6,837 * 6,837 0 *
Ron and Kathy Carlile 6,837 * 6,837 0 *
Kerry and Carol Collings 8,415 * 8,415 0 *
Christian Lovejoy 10,519 * 10,519 0 *
Hugh G. Judge 10,519 * 10,519 0 *
Lynn Turner 5,259 * 5,259 0 *
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Ann T. Reffel 1,052 * 1,052 0 *
Justin and Melissa O'Driscoll 1,052 * 1,052 0 *
Harvey W. and Patricia A. Hutchings 5,259 * 5,259 0 *
Nancy V. Emmons 2,630 * 2,630 0 *
American Pension Services
FUB Custodian For Nancy V. Emmons
IRA # 3151 2,630 * 2,630 0 *
Kirk J. Dunn 263 * 263 0 *
Geoffrey G. Griffin 4,208 * 4,208 0 *
Randy Burnyeat 2,104 * 2,104 0 *
Jon C. H. Jordan 4,208 * 4,208 0 *
Ellen Tregaskis 4,208 * 4,208 0 *
Evan and Lisa Barrow 5,259 * 5,259 0 *
Darlene Luke 3,156 * 3,156 0 *
</TABLE>
* Less than 1.0% of the Company's outstanding Common Stock.
(1) The number and percentage of shares beneficially owned was determined
in accordance with Rule 13d-3 of the Exchange Act, and the information
is not necessarily indicative of beneficial ownership for any other
purpose. Under Rule 13d-3, beneficial ownership includes any shares as
to which the individual has sole or shared voting power or investment
power and also any shares which the individual has the right to acquire
within 60 days of the date of this Prospectus through the exercise of
any stock option or other right. Unless otherwise indicated in the
footnotes, each person has sole voting and investment power (or shares
such powers with his or her spouse) with respect to the shares shown as
beneficially owned.
(2) Includes an aggregate of 224,068 shares of Common Stock beneficially
owned by the selling shareholders that have been deposited in escrow
pursuant to the Haggle Online, USA Online, IQC and Authorize.Net Merger
Agreements, to secure the indemnification obligations of the selling
shareholders. The escrowed shares may not be sold by the selling
shareholders until they are released from the escrow.
(3) Assumes that each selling shareholder will sell all of the Shares set
forth above under "Shares Which May Be Sold Pursuant to This
Prospectus". There can be no assurance that the selling shareholders
will sell all or any of the Shares offered under this prospectus.
(4) Includes an aggregate of 25,900 options which are exercisable within 60
days.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by
Hutchins, Wheeler & Dittmar, A Professional Corporation, Boston, Massachusetts,
counsel to the Company.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K for the year ended
September 30, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing. In
addition, Ernst & Young LLP have audited the financial statements of Haggle
Online, Inc. and USAOnline, Inc. included in our current report on Form 8-K/A
filed June 2, 1999, as set forth in their reports, which are incorporated by
reference in this prospectus and elsewhere in the registration statement. The
financial statements of Haggle Online, Inc. and USAOnline, Inc. are incorporated
by reference in reliance on Ernst & Young LLP's reports, given on their
authority as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act of 1933. This prospectus does not contain all of the
information in the registration statement. We have omitted certain parts of the
registration statement, as permitted by the rules and regulations of the SEC.
Additionally, we file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may inspect and copy the registration
statement, including exhibits, and any reports, statements or other information
that we file at the SEC's public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can call the SEC at 1-800-SEC- 0330 for further
information about the public reference rooms. In addition, the SEC maintains an
Internet site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. Our common stock is quoted on the Nasdaq National Market. Reports,
proxy and information statements and other information concerning Go2Net, Inc.
may be inspected at the Nasdaq Stock Market at 1735 K Street, NW, Washington,
D.C. 20006.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that information included in these documents is
considered part of this prospectus. Information that we file with the SEC
subsequent to the date of this prospectus will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15 of the Securities Exchange Act of 1934 until the selling shareholders have
sold all the shares.
The following documents filed with the SEC are incorporated by
reference in this prospectus:
o Our Annual Report on Form 10-K for the year ended September 30, 1998,
filed on December 29, 1998.
<TABLE>
<S> <C>
o Our Current Reports on Form 8-K filed on January 12, 1999, April 12, 1999, May 3, 1999, May 28, 1999 and July 13,
1999.
o Our Current Reports on Form 8-K/A filed on July 2, 1999.
o Our Quarterly Reports on Form 10-Q for the quarters ended December 31, 1998 and March 31, 1999, filed on
February 16, 1999 and May 4, 1999.
o The description of our common stock set forth in our Registration Statement on Form S-1, filed on December 31, 1996.
</TABLE>
We will furnish without charge to you, on written or oral request, a
copy of any or all of the documents incorporated by reference, other than
exhibits to such documents. You should direct any requests for documents to
Go2Net, Inc., Attention: Investor Relations, 999 Third Avenue, Suite 4700,
Seattle, Washington 98104, telephone: (206) 447-1595.
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