MYPOINTS COM INC, S-1/A, 1999-05-13

MYPOINTS COM INC
S-1/A, 1999-05-13
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1999

REGISTRATION NO. 333-75523

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MYPOINTS.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 7311 94-3255692
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

MYPOINTS.COM, INC.
565 COMMERCIAL STREET, 4TH FLOOR
SAN FRANCISCO, CA 94111-3031
(415) 676-3700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

STEVEN M. MARKOWITZ
CHIEF EXECUTIVE OFFICER
MYPOINTS.COM, INC.
565 COMMERCIAL STREET, 4TH FLOOR
SAN FRANCISCO, CA 94111-3031
(415) 676-3700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<S> <C>
MARIO M. ROSATI, ESQ. LAIRD H. SIMONS III, ESQ.
CHRISTOPHER D. MITCHELL, ESQ. KATHERINE TALLMAN SCHUDA, ESQ.
ADAM D. LEVY, ESQ. CYNTHIA E. GARABEDIAN, ESQ.
WILSON SONSINI GOODRICH & ROSATI, P.C. FENWICK & WEST LLP
650 PAGE MILL ROAD TWO PALO ALTO SQUARE
PALO ALTO, CA 94304 PALO ALTO, CA 94306
(650) 493-9300 (650) 494-0600
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

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

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

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: (1) one
prospectus to be used in connection with an offering in the United States and
Canada and (2) one prospectus to be used in connection with a concurrent
offering outside of the United States and Canada. The U.S. prospectus and the
international prospectus are identical in all respects except for the front
cover page and the first page of the "Underwriting" section. The front cover
page and the first page of the "Underwriting" section of the international
prospectus are included immediately before the exhibit index.

<PAGE> 3

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell securities, and we are not soliciting offers to buy these securities, in
any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MAY 13, 1999

LOGO

5,000,000 SHARES

COMMON STOCK

MyPoints.com, Inc. is offering 5,000,000 shares of common stock. This is
MyPoints.com's initial public offering, and no public market currently exists
for our shares. We have applied for approval for quotation of our common stock
on the Nasdaq National Market under the symbol "MYPT." We anticipate that the
initial public offering price will be between $10.00 and $12.00 per share.

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

INVESTING IN OUR COMMON STOCK INVOLVES RISKS.

SEE "RISK FACTORS" BEGINNING ON PAGE 7.

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<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public Offering Price..................................... $ $
Underwriting Discounts and Commissions.................... $ $
Proceeds to MyPoints.com, Inc............................. $ $
</TABLE>

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

MyPoints.com has granted the underwriters a 30-day option to purchase up to
an additional 750,000 shares of common stock to cover over-allotments.

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

BANCBOSTON ROBERTSON STEPHENS
BEAR, STEARNS & CO. INC.

SALOMON SMITH BARNEY

WIT CAPITAL CORPORATION

The date of this prospectus is , 1999
<PAGE> 4

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK. IN THIS PROSPECTUS, REFERENCES TO
"MYPOINTS.COM," "WE," "US" AND "OUR" REFER TO MYPOINTS.COM, INC. AND ITS
SUBSIDIARIES, AND REFERENCES TO "MYPOINTS" REFER TO THE BRAND NAME OF OUR
PRODUCTS AND SERVICES.

UNTIL , 1999, ALL DEALERS THAT BUY, SELL OR TRADE OUR COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 4
Risk Factors................................................ 7
Use of Proceeds............................................. 17
Dividend Policy............................................. 17
Capitalization.............................................. 18
Dilution.................................................... 19
Selected Consolidated Financial Data........................ 20
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 22
Business.................................................... 32
Management.................................................. 44
Transactions with Directors, Executive Officers and
Principal Stockholders.................................... 54
Principal Stockholders...................................... 57
Description of Capital Stock................................ 60
Shares Eligible For Future Sale............................. 63
Underwriting................................................ 65
Legal Matters............................................... 67
Experts..................................................... 67
Where You Can Find Additional Information................... 68
Index to Financial Statements............................... F-1
</TABLE>

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MyPoints, BonusMail and Rew@rds are registered service marks, and
MyPoints.com, the MyPoints logo, the MyPoints BonusMail logo, Digital Loyalty
Engine and Intellipost are trademarks, of MyPoints.com, Inc. Prodigy is a
registered trademark, and Prodigy Internet, Prodigy Points and the Prodigy
Internet logo are trademarks, of Prodigy Communications Corporation. Other
service marks, trademarks and trade names referred to in this prospectus are the
property of their respective owners.

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SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary may not contain all of the information that you should consider
before investing in our common stock. You should read the entire prospectus
carefully. This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including the risks faced by us described below and elsewhere in this
prospectus.

MYPOINTS.COM

MyPoints.com is a leading provider of online direct marketing and loyalty
programs. We integrate targeted email and web-based direct marketing offers with
online loyalty programs to create valuable benefits for both our consumer
members and our business partners. Our approach gives consumers the opportunity
to earn rewards by responding to offers and provides businesses with customer
acquisition and retention tools.

We have built a member database containing approximately two million
detailed consumer profiles. We earn revenues by delivering online direct
marketing offers to this membership base. We charge advertisers a fee based on
offers delivered, qualified leads generated or online transactions executed. We
have worked with more than 200 advertisers, loyalty partners and rewards
providers, including leading brands such as Barnes & Noble, Disney, eBay,
Egghead.com, GTE, Intel, Intuit, Macy's, Sony, Sprint and Tower Records.

When consumers enroll in the MyPoints program, they give us permission to
send them targeted online offers, and they receive rewards points for completing
a survey that provides us with demographic information. MyPoints members earn
additional points by responding to direct marketing offers and by providing us
with additional demographic and behavioral data on a secure, confidential basis.
Members may redeem points they earn online for products and services from our
rewards providers. Our member profile database is continuously enriched with
transactional data gathered through members' interactions with promotional
offers, completion of surveys and redemption of points.

MARKET OPPORTUNITY

Businesses engage in various forms of offline and online direct marketing
to generate sales of products or services. Traditional forms of offline direct
marketing include catalog mailings, magazine inserts and telesales. Online
direct marketing takes the form of email and web-based promotional offers.
Online direct marketing allows advertisers to use technology-based tools to give
them rapid feedback on campaigns, which can be used to tailor new messages and
targeted offers.

Advertisers are committing relatively more dollars to online direct
marketing than to other forms of internet advertising, such as brand marketing
using banner advertisements. Forrester Research, a leading internet research
firm, projects internet advertising expenditures in the U.S. to increase from
$1.3 billion in 1998 to $10.4 billion in 2003. Forrester estimates that direct
marketing will account for 60% of total online advertising expenditures in the
U.S. in 2002, up from 15% in 1998.

As the number of internet users increases, the relative importance to
businesses of customer retention is also increasing. As a result, leading online
merchants and content providers are launching and testing programs aimed at
retaining their most valuable customers. The challenges that these businesses
face in establishing online loyalty programs include the costs of implementing
and operating the programs and the ability to provide customers with sufficient
opportunities to earn and redeem awards. We believe that these challenges will
lead many companies to outsource this aspect of their customer retention
programs to providers capable of delivering comprehensive loyalty management
services.

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GROWTH STRATEGY

Online direct marketing programs typically have focused on customer
acquisition. As the internet continues to grow as a commercial medium, companies
doing business online are increasingly focusing on customer retention. This
creates an opportunity for MyPoints.com to build a leading branded membership
service that enables businesses to acquire and retain customers online more
effectively.

To meet this market opportunity, we are implementing the following
strategies:

- expanding our member database;

- leveraging our direct marketing and loyalty program expertise;

- increasing awareness of our brand;

- maintaining our technology leadership;

- pursuing strategic acquisitions and alliances; and

- expanding internationally.
CORPORATE INFORMATION

MyPoints.com was incorporated in Delaware under the name Intellipost
Corporation in November 1996. In March 1999, we changed our name to
MyPoints.com, Inc. Our principal executive offices are located at 565 Commercial
Street, 4th Floor, San Francisco, California 94111-3031. Our telephone number at
this location is (415) 676-3700. Our corporate email address is
[email protected].

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THE OFFERING

Common stock offered by MyPoints.com......... 5,000,000 shares

Common stock to be outstanding after the
offering..................................... 23,464,554 shares

Use of proceeds.............................. For general corporate purposes,
including working capital,
branding, membership expansion,
advertising, sales and
marketing, funding of points
liability and payment of a
license fee. See "Use of
Proceeds."

Proposed Nasdaq National Market symbol....... MYPT

Common stock to be outstanding after the offering is based on 18,464,554
shares of common stock outstanding as of March 31, 1999. It does not include:

- 2,606,514 shares issuable upon exercise of stock options outstanding as
of March 31, 1999;

- 1,139,103 shares available for future grant or issuance under our stock
option and stock purchase plans as of March 31, 1999; and

- 1,384,028 shares issuable upon exercise of warrants outstanding as of
March 31, 1999.

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<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL DATA

(IN THOUSANDS, EXCEPT PER SHARE DATA)

The pro forma 1998 statement of operations data column assumes that the
acquisition of the web-based rewards program businesses from affiliates of
Experian was completed on January 1, 1998. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Acquisition
Transactions."

See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the determination of the number of weighted average shares used in computing
per share data.

<TABLE>
<CAPTION>
NOVEMBER 7, YEARS ENDED DECEMBER 31,
1996 ----------------------------------- THREE MONTHS ENDED
(INCEPTION) TO MARCH 31,
DECEMBER 31, PRO FORMA ------------------
1996 1997 1998 1998 1998 1999
-------------- --------- --------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $ -- $ 151 $ 1,286 $ 1,316 $ 150 $ 1,275
Gross profit........... -- 73 165 196 13 397
Total operating
expenses............. 68 3,018 8,494 18,020 1,106 5,749
Operating loss......... (68) (2,945) (8,329) (17,824) (1,093) (5,352)
Net loss............... (67) (2,889) (8,266) (17,968) (1,070) (5,343)
Net loss per share:
Basic and diluted.... $ (0.08) $ (2.68) $ (4.72) $ (3.56) $ (0.83) $ (1.05)
Weighted average
shares -- basic
and diluted....... 891 1,076 1,750 5,044 1,287 5,097
</TABLE>

In the pro forma column, we have given effect to the receipt of the net
proceeds of the sale of 2,000,000 shares of Series E preferred stock which were
issued pursuant to a stock purchase agreement entered into in March 1999. The
closing of the sale took place in April 1999. In the pro forma as adjusted
column, we have adjusted the pro forma balance sheet data to give effect to
receipt of the net proceeds from the sale in this offering of 5,000,000 shares
of common stock at an assumed initial public offering price of $11.00 per share,
after deducting the estimated underwriting discounts and commissions and
estimated offering expenses.

<TABLE>
<CAPTION>
MARCH 31, 1999
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
--------- --------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 1,868 $ 11,818 $ 61,968
Working capital (deficit)............................... (5,156) 4,794 54,944
Total assets............................................ 15,827 25,777 75,927
Long-term obligations, less current portion............. 2,368 2,368 2,368
Accumulated deficit..................................... (16,565) (16,565) (16,565)
Total stockholders' equity.............................. 4,613 14,563 64,713
</TABLE>

Except as otherwise indicated, all of the information in this prospectus:

- reflects the automatic conversion of each outstanding share of preferred
stock into one share of common stock immediately prior to the closing of
this offering; and

- assumes no exercise of the underwriters' over-allotment option.

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<PAGE> 8

RISK FACTORS

You should consider the risks described below before making an investment
decision. Our business, results of operations and financial condition could be
materially and adversely affected by any of the following risks. The trading
price of our common stock could decline due to any of the following risks, and
you might lose all or part of your investment.

WE HAVE ONLY A LIMITED OPERATING HISTORY THAT INVESTORS MAY USE TO ASSESS OUR
FUTURE PROSPECTS

We have only a limited operating history upon which you can evaluate our
business. We commenced operations in November 1996 and did not begin to generate
revenues until July 1997. Although we have experienced revenue growth in recent
periods, these growth rates may not be sustainable or indicative of our future
growth. Furthermore, we have not attained the level of revenues that will be
necessary for us to achieve profitability, and we may not achieve the revenue
levels sufficient for profitability. Our prospects also must be considered in
light of the risks and difficulties frequently encountered by early-stage
companies in the electronic commerce and direct marketing industries. We may not
be successful in addressing these risks, and our business strategy may not be
successful. In addition, we have never operated during a general economic
downturn in the United States, which typically adversely affects advertising and
marketing expenditures and retail sales. Accordingly, our limited operating
history does not provide investors with a meaningful basis for evaluating an
investment in our common stock.

WE HAVE A HISTORY OF LOSSES AND EXPECT LOSSES IN THE FORESEEABLE FUTURE

Our accumulated deficit as of March 31, 1999 was $16.6 million. We have
never operated profitably and, given our planned level of operating expenses, we
expect to continue to incur losses until at least 2001. We plan to increase our
operating expenses as we continue to build infrastructure to support the
expansion of our business. Our losses may increase in the future, and we may not
be able to achieve profitability. Even if we do achieve profitability, we may
not be able to sustain or increase profitability on a quarterly or annual basis.
If our revenues grow more slowly than we anticipate, or if our operating
expenses exceed our expectations and cannot be adjusted accordingly, our
business, results of operations and financial condition will be materially and
adversely affected.

OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO FLUCTUATIONS AND SEASONALITY,
WHICH COULD AFFECT OUR STOCK PRICE

Our revenue and operating results may vary significantly from quarter to
quarter due to a number of factors, some of which are outside of our control.
These factors, each of which could adversely affect our results of operations
and our stock price, include:

- the commitment of advertisers to online direct marketing and rewards
programs;

- the advertising budget cycles of individual advertisers;

- the responsiveness of our members to the direct marketing offers we send
to them;

- the number of reward points redeemed by members and the costs associated
with these redemptions;

- changes in marketing and advertising costs that we incur to attract and
retain members;

- changes in our pricing policies, the pricing policies of our competitors
or the pricing policies for internet advertising generally;

- the introduction of new products and services by us or by our
competitors;

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- unexpected costs and delays relating to the expansion of our operations;

- the occurrence of technical difficulties or system downtime; and

- general economic and market conditions.

Because of our limited operating history, we cannot be certain which, if
any, of these factors will have an effect on our future results of operations.
Accordingly, we cannot reliably assign greater weight to any of these factors as
compared to the other factors listed. However, any of these factors, either
individually or in combination with other factors, could adversely affect our
results of operations.

We believe that our revenues will be subject to seasonal fluctuations as a
result of general patterns of retail advertising, which are typically higher
during the fourth calendar quarter. In addition, expenditures by advertisers
tend to be cyclical, reflecting general economic conditions and consumer buying
patterns.

Due to the above factors, revenues and operating results are difficult to
forecast and you should not rely on period-to-period comparisons of results of
operations as an indication of our future performance. Any significant shortfall
in revenues in relation to our expectations would have a material adverse effect
on our business, results of operations and financial condition. In addition, in
future periods our operating results may fall below the expectations of public
market analysts and investors. In this event, the market price of our common
stock would likely decline.

WE MAY HAVE DIFFICULTIES INTEGRATING RECENT AND FUTURE ACQUISITIONS AND ANY
FAILURE TO SUCCESSFULLY INTEGRATE ACQUIRED COMPANIES WOULD REDUCE OUR ABILITY TO
REALIZE THE ANTICIPATED VALUE OF THE ACQUISITION

In November and December 1998, through our acquisition of companies
affiliated with Experian Information Solutions, Inc., we acquired internet and
electronic commerce related assets and technologies to support a web-based
rewards program known as MyPoints. We integrated MyPoints with our BonusMail
email service during March and April 1999. This integration involved the
combination of two different marketing programs and technology platforms, as
well as operations in San Francisco and Chicago. In connection with this
integration, we incurred substantial costs. During the relaunch of the
integrated MyPoints program, we encountered several unanticipated problems which
resulted in significant periods of system downtime during April 1999. During
these periods of downtime, our web site was not accessible by members. We
believe that we have resolved the problems that caused this downtime; however,
there can be no assurance that we will not encounter additional system-related
problems.

We may pursue other acquisitions in the future. In connection with the
current integration and with any future acquisitions, we will face numerous
risks and uncertainties generally associated with acquisitions, including:

- potential adverse effects on our reported results of operations from
acquisition-related charges and amortization of goodwill and purchased
technology;

- our ability to maintain customers or the reputation of the acquired
businesses;

- potential dilution to current stockholders from the issuance of
additional equity securities;

- difficulties integrating operations, personnel, technologies, products
and information systems of the acquired businesses;

- diversion of management's attention from other business concerns; and

- potential loss of key employees of acquired businesses.

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<PAGE> 10

Our ability to meet the challenges associated with integrating acquired
companies has not been established. As a result, we cannot assure you that we
will be successful in generating additional sources of members and revenues from
the recent acquisitions or any future acquisitions.

WE ARE GROWING RAPIDLY, AND THE FAILURE TO MANAGE OUR GROWTH COULD ADVERSELY
AFFECT OUR BUSINESS

As we continue to increase the scope of our operations, we will need an
effective planning and management process to implement our business plan
successfully in the rapidly evolving market for online direct marketing. We have
grown from 20 employees on January 1, 1998 to 79 employees on March 31, 1999. Of
these employees, 28 joined us in connection with our acquisitions in November
and December 1998. We are continuing to integrate these individuals into our
organization. We plan to continue the expansion of our technology, sales,
marketing and administrative organizations. This growth will continue to strain
our management systems and resources. We anticipate the need to continue to
improve our financial and managerial controls and our reporting systems. In
addition, we will need to expand, train and manage our rapidly growing work
force. Our business, results of operations and financial condition will be
materially and adversely affected if we are unable to manage our expanding
operations effectively.

OUR BUSINESS MODEL IS DEPENDENT ON THE ACCEPTANCE OF ONLINE ADVERTISING AND
DIRECT MARKETING

We expect to derive a substantial portion of our revenues from online
advertising and direct marketing, including both email and web-based programs.
We cannot assure you that the demand and market acceptance for online
advertising will develop to a sufficient level to support our continued
operations. The internet has not existed long enough as an advertising medium to
demonstrate its effectiveness relative to traditional advertising media.
Advertisers that have historically relied on traditional advertising may be
reluctant or slow to adopt online advertising. Many potential advertisers have
limited or no experience using email or the web as an advertising medium. They
may have allocated only a limited portion of their advertising budgets to online
advertising, or may find online advertising to be less effective for promoting
their products and services than traditional advertising media. In addition,
advertisers and advertising agencies that have invested substantial resources in
traditional methods of advertising may be reluctant to reallocate their media
buying resources to online advertising. The market for online advertising also
depends on the overall growth and acceptance of electronic commerce. If the
market for online advertising fails to develop or develops more slowly than we
expect, our business, results of operations and financial condition would be
materially and adversely affected.

The market for email advertising in general is vulnerable to the negative
public perception associated with unsolicited email, known as "spam." We do not
send unsolicited email. However, public perception, press reports or
governmental action related to spam could reduce the overall demand for email
advertising in general and our MyPoints BonusMail service in particular.

OUR BUSINESS MODEL IS ALSO DEPENDENT ON THE ACCEPTANCE OF ONLINE REWARDS
PROGRAMS BY BUSINESSES AND INTERNET USERS

Our success also depends on the continued growth and acceptance of online
rewards programs. Although loyalty and rewards programs have been used
extensively in conventional marketing and sales channels, they have only
recently begun to be used online. The success of our business model will depend
on our ability to attract and retain members, advertisers, loyalty partners and
rewards providers. Our ability to attract and retain members will depend on our
marketing efforts and on the quality of each member's experience, including the
number and relevance of the direct marketing offers we provide and the perceived
value of the rewards we offer. Our ability to generate significant revenue from
advertisers and loyalty partners will depend on our ability to differentiate
ourselves

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<PAGE> 11

through the technology and services we provide and to obtain adequate
participation from consumers in our online direct marketing and rewards
programs. Rewards providers are also a critical element of our business. The
attractiveness of our program to current and potential members, and loyalty
partners, depends in large part on the attractiveness of the rewards and point
redemption opportunities that we offer. To the extent that our online rewards
program does not achieve market acceptance among members, loyalty partners and
rewards providers, our business would be materially and adversely affected.

WE FACE INTENSE COMPETITION, AND THE FAILURE TO COMPETE EFFECTIVELY COULD
ADVERSELY AFFECT OUR MARKET SHARE AND RESULTS OF OPERATIONS

Many of our current competitors and potential new competitors have longer
operating histories, greater name recognition, larger customer bases and
significantly greater financial, technical and marketing resources than we do.
These advantages may allow them to respond more quickly to new or emerging
technologies and changes in customer requirements. It may also allow them to
engage in more extensive research and development, undertake more far-reaching
marketing campaigns, adopt more aggressive pricing policies, and make more
attractive offers to potential employees, strategic partners and advertisers. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their products or services to address the needs of our prospective
advertisers and advertising agency customers. As a result, it is possible that
new competitors may emerge and rapidly acquire significant market share.
Increased competition may result in price reductions, reduced gross margins and
loss of our market share. We may not be able to compete successfully, and
competitive pressures may materially and adversely affect our business, results
of operations and financial condition. See "Business -- Competition."

THE SUCCESS OF OUR BUSINESS WILL DEPEND ON OUR ABILITY TO ESTABLISH THE MYPOINTS
BRAND, AND THE FAILURE TO DO SO WOULD HARM OUR BUSINESS

As competitive pressures in the online direct marketing industry increase,
we believe that brand strength will become increasingly important. The
reputation of the MyPoints brand will depend on our ability to provide a
high-quality member experience. We cannot assure you that we will be successful
in delivering this experience. If members are not satisfied with the quality of
their experience with the MyPoints program, their negative experiences might
result in publicity that could damage our reputation. Any damage to our
reputation could have a material adverse effect on our business, results of
operations and financial condition. If we expend additional resources to build
the MyPoints brand and do not generate a corresponding increase in revenues as a
result of our branding efforts, or if we otherwise fail to promote our brand
successfully, our business, results of operations and financial condition would
be materially and adversely affected.

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WE FACE RISKS RELATED TO THE LEVEL OF POINT REDEMPTION AND FAILURE TO ACCURATELY
ESTIMATE LEVELS OF POINT REDEMPTION WOULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS

Our historical and forecasted financial statements reflect our assumptions
as to the percentage of rewards points issued by us that will not be redeemed by
members prior to expiration. This percentage of unredeemed points is known as
"breakage." The breakage rates we have used in preparing our financial
statements and forecasts are based on breakage rates that have been reported by
other operators of loyalty and rewards programs, such as airlines. We have also
considered our limited experience with our own program since its launch in May
1997. Although we believe that the breakage rates we have used are reasonable in
light of our analysis and experience, we cannot assure you that our actual
breakage rates will equal or exceed our assumed breakage rates. If our actual
breakage rates are less than our assumed breakage rates, meaning that a greater
number of points are actually redeemed than we had assumed would be redeemed,
our results of operations could be materially and adversely affected. In
addition, operators of loyalty programs have, from time to time, for competitive
or other reasons, extended the expiration dates for points, miles or other
rewards currencies. For example, we extended the expiration date for the points
associated with the email portion of our program when we relaunched our email
and web-based services. If it becomes necessary for us to extend the expiration
date of a significant balance of outstanding points in the future, it is
possible that our actual breakage rates would be lower than our assumed breakage
rates, which could materially and adversely affect our results of operations.

A SMALL NUMBER OF OUR ADVERTISING CUSTOMERS ACCOUNT FOR A SIGNIFICANT PORTION OF
OUR REVENUES; THEREFORE THE LOSS OF PRINCIPAL CUSTOMERS COULD ADVERSELY AFFECT
OUR REVENUES

No single advertising customer accounted for more than 10% of our revenue
in 1998. One advertiser accounted for 14% of revenues in the first quarter of
1999. Our four largest advertising customers were responsible for approximately
30% of our revenues during 1998 and 38% of our revenues during the first quarter
of 1999. We do not have long-term contracts with most of our customers, and
customers can generally terminate their relationships with us upon specified
notice and without penalties. Thus, we may not be able to retain our principal
customers. The loss of one or more of our principal customers could have a
material adverse effect on our business, results of operations and financial
condition.

WE DEPEND ON THE SERVICES OF OUR EXECUTIVE OFFICERS TO MANAGE OUR GROWTH, AND
THERE IS NO ASSURANCE WE CAN RETAIN THEIR SERVICES

Our future success depends on the continued service of our key senior
management and technical and sales personnel. The loss of any of these persons
could have a material adverse effect on our business. We do not have key-person
insurance on any of our employees. Robert C. Hoyler, our President and Chief
Operating Officer, Virgil Bistriceanu, our Senior Vice President, Technology,
and Frank J. Pirri, our Senior Vice President, Partnership Development, joined
us in December 1998 as the result of acquisition transactions that took place in
the fourth quarter of 1998. Charles H. Berman, our Senior Vice President, Sales,
and Robert Wise, our Senior Vice President, Member Marketing, also joined us in
1998. Thomas P. Caldwell, our Senior Vice President, Finance and Chief Financial
Officer, joined us in April 1999. Our recently integrated management team has
limited experience working together.

Our success depends on our ability to attract, retain and motivate highly
skilled employees. Competition for employees in our industry is intense. We may
be unable to retain our key employees or to attract, assimilate and retain other
highly qualified employees in the future. We have

11
<PAGE> 13

experienced difficulty from time to time in attracting the personnel necessary
to support the growth of our business, and we may experience similar difficulty
in the future.

FAILURE TO SAFEGUARD OUR DATABASE AND MEMBER PRIVACY COULD AFFECT OUR REPUTATION
AMONG CONSUMERS AND HARM OUR BUSINESS

An important feature of the MyPoints program is our ability to develop and
maintain individual member profiles. Security and privacy concerns may cause
consumers to resist providing the personal data necessary to support this
profiling capability. As a result of these security and privacy concerns, we may
incur significant costs to protect against the threat of security breaches or to
alleviate problems caused by such breaches. Usage of our MyPoints program could
decline if any well-publicized compromise of security occurred. In addition,
third parties could alter information in our database that would adversely
affect our ability to target direct marketing offers to members. We could also
be subject to legal claims from members. Any public perception that we engaged
in unauthorized release of member information would adversely affect our ability
to attract and retain members. Any of these events could have a material adverse
effect on our business, results of operations and financial condition.

As part of our point redemption services, we maintain a database containing
information on our members' account balances. Our database may be subject to
access by unauthorized users accessing our systems remotely. If we experience a
security breach, the integrity of our points database could be affected. This
breach could lead to financial losses through the unauthorized redemption of
points.

WE ARE VULNERABLE TO SYSTEM FAILURES WHICH COULD CAUSE INTERRUPTIONS OR
DISRUPTIONS IN OUR SERVICE

The hardware infrastructure on which the MyPoints system operates is
located at the Exodus Communications data center in Jersey City, New Jersey. In
April 1999, we completed a transition to Exodus from a combination of internally
maintained systems and systems maintained by another third-party service
provider. We cannot assure you that we will be able to manage this relationship
successfully to mitigate any risks associated with having our hardware
infrastructure maintained by Exodus. Unexpected events such as natural
disasters, power losses and vandalism could damage our systems.
Telecommunications failures, computer viruses, electronic break-ins or other
similar disruptive problems could adversely affect the operation of our systems.
Our insurance policies may not adequately compensate us for any losses that may
occur due to any damages or interruptions in our systems. Accordingly, we could
be required to make capital expenditures in the event of damage. We do not
currently have fully redundant systems or a formal disaster recovery plan.

Our web site must accommodate a high volume of traffic and deliver
accurate, frequently updated information in a timely manner. Our web site has
experienced in the past and may experience in the future, slower response times
or decreased traffic for a variety of reasons. During the last three months of
1998 and the period from January 1 through May 1, 1999, we experienced a number
of instances of unscheduled system downtime, which resulted in our web site
being inaccessible to members. Furthermore, during the relaunch of the
integrated MyPoints program in April 1999, we experienced significant periods of
system downtime during which our web site was inaccessible. In addition, our
members depend on internet service providers for access to our web site.
Internet service providers and web sites have experienced significant outages in
the past, and could experience outages, delays and other difficulties due to
system failures unrelated to our systems. These problems could materially and
adversely affect our business, results of operations and financial condition.

12
<PAGE> 14

WE MUST ADAPT TO RAPID TECHNOLOGICAL CHANGES IN OUR INDUSTRY, AND THE FAILURE TO
DO SO WOULD HARM OUR BUSINESS

Our market is characterized by rapidly changing technologies, frequent new
product and service introductions, short development cycles and evolving
industry standards. The recent growth of the internet and intense competition in
our industry exacerbate these market characteristics. Our future success will
depend on our ability to adapt to rapidly changing technologies by maintaining
and improving the performance features and reliability of our services. We may
experience technical difficulties that could delay or prevent the successful
development, introduction or marketing of new products and services. In
addition, any new enhancements to our products and services must meet the
requirements of our current and prospective users. We could incur substantial
costs to modify our services or infrastructure to adapt to rapid technological
change.

WE DEPEND ON THE DEVELOPMENT OF THE INTERNET INFRASTRUCTURE

A number of factors may inhibit internet usage, including inadequate
network infrastructure, security concerns, inconsistent quality of service, and
lack of availability of cost-effective, high-speed service. If internet usage
grows, the internet infrastructure may not be able to support the demands placed
on it by this growth and its performance and reliability may decline. In
addition, a number of web-based businesses have experienced interruptions in
their services as a result of outages and other delays occurring throughout the
internet. If outages or delays occur frequently in the future, internet usage,
as well as electronic commerce and the usage of our products and services, could
grow more slowly or decline, and this could have an adverse effect on our
business.

FUTURE REGULATION OF THE INTERNET COULD AFFECT OUR ABILITY TO COLLECT MEMBER
INFORMATION AND COULD THEREFORE HAVE AN ADVERSE AFFECT ON OUR BUSINESS

Laws and regulations that apply to the internet may become more prevalent
in the future. The laws governing the internet and email services remain largely
unsettled. There is no single governmental body overseeing our industry, and
many state laws that have been enacted in recent years have different and
sometimes inconsistent application to our business. As a result, we cannot
assure you that we will comply with these state laws, and our noncompliance
could have a material adverse affect on our business. The governments of foreign
countries may also attempt to regulate electronic commerce. New laws could
dampen the growth in use of the internet generally and decrease the acceptance
of the internet as a commercial medium. In addition, existing laws such as those
governing intellectual property and privacy may be interpreted to apply to the
internet. In the event that foreign governments, the federal government, state
governments or other governmental authorities adopt or modify laws or
regulations relating to the internet, our business, results of operations and
financial condition could be materially and adversely affected.

In 1998, the United States government enacted a three-year moratorium
prohibiting states and local governments from imposing new taxes on electronic
commerce transactions. Upon expiration of this moratorium, if it is not
extended, states or other governments might levy sales or use taxes on
electronic commerce transactions. An increase in the taxation of electronic
commerce transactions might also make the internet less attractive for consumers
and businesses.

WE FACE RISKS ASSOCIATED WITH THIRD PARTY CLAIMS AND PROTECTION OF OUR
INTELLECTUAL PROPERTY RIGHTS, AND ANY LITIGATION RELATING TO INTELLECTUAL
PROPERTY RIGHTS COULD HARM OUR BUSINESS

13
<PAGE> 15

resolved through a license or similar arrangement, we could become a party to
litigation with Cybergold. Litigation may also be necessary to enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. An adverse determination
in any litigation of this type could require us to make significant changes to
the structure and operation of our online rewards program, attempt to design
around a third party's patent, or license alternative technology from another
party. Implementation of any of these alternatives could be costly and time
consuming, and might not be possible. Accordingly, an adverse determination in
any litigation that might ensue between a third party and us could have a
material adverse effect on our business, results of operations and financial
condition. In addition, any intellectual property litigation, even if
successfully defended, would result in substantial costs and diversion of
resources and management attention and could therefore have a material adverse
effect on our business, results of operations and financial condition.

Our success and ability to compete depends on our internally developed
technologies and trademarks, which we seek to protect through a combination of
patent, copyright, trade secret and trademark laws. Despite actions we take to
protect our proprietary rights, it may be possible for third parties to copy or
otherwise obtain and use our proprietary information without authorization or to
develop similar technology independently. In addition, legal standards relating
to the validity, enforceability and scope of protection of proprietary rights in
internet-related businesses are uncertain and still evolving. We cannot give any
assurance regarding the future viability or value of any of our proprietary
rights. In addition, we cannot give any assurance that the steps taken by us
will prevent misappropriation or infringement of our proprietary information.
Any infringement or misappropriation, should it occur, could have a material
adverse effect on our business, results of operations and financial condition.
See "Business -- Intellectual Property and Proprietary Rights."

WE FACE RISKS ASSOCIATED WITH EXPANDING OUR BUSINESS INTERNATIONALLY, AND THE
FAILURE TO ADDRESS THESE RISKS WILL PRECLUDE US FROM SIGNIFICANT INTERNATIONAL
EXPANSION

We expect to increase the level of our activities outside of the United
States in the future. Our participation in international markets is subject to a
number of risks, including changes in foreign government regulations, tariffs
and taxes, fluctuations in currency exchange rates, other trade barriers,
difficulties and delays in collecting accounts receivable, difficulties in
managing foreign operations, compliance with stricter privacy regulations and
political and economic instability. To the extent our customers are affected by
currency devaluations or general economic crises such as those affecting many
Asian and Latin American economies, the ability of these customers to utilize
our services could be materially adversely affected. Furthermore, we cannot
assure you that consumers in these foreign markets will be attracted to
rewards-based marketing programs.

OUR PROSPECTS FOR OBTAINING ADDITIONAL FINANCING, IF REQUIRED, ARE UNCERTAIN AND
FAILURE TO OBTAIN NEEDED FINANCING COULD AFFECT OUR ABILITY TO PURSUE FUTURE
GROWTH

We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to meet our anticipated
capital expenditure and working capital requirements through at least 2001.
Thereafter, we may need to raise additional funds to develop or enhance our
services or products, to fund expansion, to respond to competitive pressures or
to acquire complementary products, businesses or technologies. If additional
funds are raised through the issuance of equity or convertible debt securities,
the percentage ownership of our stockholders would be reduced and these
securities might have rights, preferences or privileges senior to those of our
current stockholders. We cannot assure you that additional financing will be
available on terms favorable to us, or at all. If adequate funds are not
available on acceptable terms, our ability to fund our expansion, take advantage
of unanticipated opportunities, develop or enhance services or products,

14
<PAGE> 16

or otherwise respond to competitive pressures would be significantly limited.
Our business, results of operations and financial condition could be materially
adversely affected by this limitation.

PROBLEMS RELATED TO THE YEAR 2000 ISSUE COULD CAUSE SYSTEM OR OPERATIONAL
FAILURES WHICH COULD ADVERSELY AFFECT OUR BUSINESS

The costs we have incurred and expect to incur related to Year 2000
compliance have not been material to our business, results of operations or
financial condition. In the event that our assessment of our Year 2000 readiness
is inaccurate, we could be required to expend substantial resources to remedy
any unanticipated Year 2000 problems. Costs associated with unanticipated Year
2000 problems and difficulties in remedying these problems by year-end could
have a material adverse effect on our business, results of operations and
financial condition.

The most likely Year 2000 failure scenario attributable to a supplier or
customer is a systemic failure beyond our control or the supplier's or
customer's immediate control, such as a prolonged data communication,
telecommunications or electrical failure. A failure of this sort could prevent
members from accessing our web site and prevent us from operating our business.
The primary business risks in the event of a failure of this type would include
lost advertising revenues, increased operating expenses and loss of members. Any
of these occurrences could have a material adverse effect on our business,
results of operations and financial condition.

OUR EXECUTIVE OFFICERS AND DIRECTORS WILL RETAIN SUBSTANTIAL CONTROL AFTER THE
OFFERING

We anticipate that our executive officers, our directors and entities
affiliated with them together will beneficially own approximately 30.6% of our
outstanding common stock following the completion of this offering. These
stockholders will retain substantial control over matters requiring approval by
our stockholders, such as the election of directors and approval of significant
corporate transactions. This concentration of ownership might also have the
effect of delaying or preventing a change in control. See "Principal
Stockholders."

PROVISIONS OF OUR CORPORATE CHARTER DOCUMENTS COULD DELAY OR PREVENT A CHANGE OF
CONTROL

Various provisions of our Certificate of Incorporation and Bylaws could
have the effect of delaying or preventing a change in control and make it more
difficult for a third party to acquire us, even if doing so would be beneficial
to our stockholders. See "Description of Capital Stock."

FUTURE SALES OF OUR COMMON STOCK COULD CAUSE THE PRICE OF OUR SHARES TO DECLINE

Upon completion of this offering, we will have 23,464,554 shares of common
stock outstanding. Of these shares, 5,000,000 will be transferable without
restriction or registration under the Securities Act of 1933, or pursuant to the
volume and other limitations of Rule 144 promulgated under the Securities Act.
Following this offering, resales of a substantial number of shares of our common
stock into the public market could cause its price to decline. This is
particularly the case because a substantial portion of our outstanding shares of
common stock are held by persons who purchased their shares at prices below the
initial public offering price.

Approximately 17,214,038 shares of common stock are subject to lock-up
agreements between the holders of those shares and the representatives of the
underwriters, under to which the holders have agreed not to offer, sell,
contract to sell or grant any option to purchase or otherwise dispose of their
common stock until 180 days after the date of this prospectus, subject to
limited exceptions. BancBoston Robertson Stephens may release stockholders from
the lockup agreement at any time

15
<PAGE> 17

and without notice. Following the expiration of this 180-day period, 10,132,003
shares subject to the lock-up agreements will become available for immediate
resale in the public market subject, in some instances, to the volume and other
limitations of Rule 144. See "Shares Eligible for Future Sale."

OUR SECURITIES HAVE NO PRIOR MARKET, AND WE CANNOT ASSURE YOU THAT AN ACTIVE
PUBLIC MARKET FOR OUR COMMON STOCK WILL DEVELOP

There has not been a public market for our common stock. We cannot predict
the extent to which investor interest in our common stock will lead to the
development of a trading market or how liquid that market might become. The
initial public offering price for the shares will be determined by negotiations
between us and the representatives of the underwriters and may not be indicative
of prices that will prevail in the trading market. See "Underwriting."

OUR STOCK PRICE COULD BE VOLATILE FOLLOWING THIS OFFERING

The stock market has experienced significant price and volume fluctuations,
and the market prices of technology companies, particularly internet-related
companies, have been highly volatile. Investors may not be able to resell their
shares at or above the initial public offering price. In addition, our results
of operations during future fiscal periods might fail to meet the expectations
of stock market analysts and investors. This failure could lead the market price
of our common stock to decline and cause us to become the subject of securities
class action lawsuits.

YOU WILL EXPERIENCE AN IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF
YOUR INVESTMENT

The initial public offering price of our common stock is substantially
higher than what the net tangible book value per share of the common stock will
be immediately after this offering. If you purchase our common stock in this
offering, you will incur immediate dilution of approximately $8.67 in the net
tangible book value per share of our common stock from the price you pay for our
common stock based upon an assumed initial public offering price of $11.00 per
share and after deducting estimated underwriting discounts and commissions and
offering expenses. The exercise of outstanding options and warrants may result
in further dilution. See "Dilution."

OUR MANAGEMENT WILL HAVE BROAD DISCRETION IN USING THE PROCEEDS OF THIS
OFFERING, AND WE CANNOT ASSURE YOU THAT WE WILL EFFECTIVELY EXPEND THE PROCEEDS

We intend to use the net proceeds from the sale of the common stock for
general corporate purposes including working capital, branding, membership
expansion, advertising, increases in our sales and marketing operations, new
technology and products, funding of points liability, expansion of network
infrastructure and payment of a license fee. We have allocated approximately
$2.6 million of the net proceeds to the license fee payment, but have not
determined how the remaining proceeds will be allocated among the other
anticipated uses. Accordingly, our management will have significant flexibility
and broad discretion in applying the net proceeds of this offering. The failure
of management to apply these funds effectively could have a material adverse
effect on our business, results of operations and financial condition. See "Use
of Proceeds."

16
<PAGE> 18

USE OF PROCEEDS

Our proceeds from the sale of the 5,000,000 shares of common stock we are
offering are estimated to be $50.2 million ($57.8 million if the underwriters'
over-allotment option is exercised in full) assuming an initial public offering
price of $11.00 per share and after deducting the estimated underwriting
discounts and commissions and estimated offering expenses.

We intend to use approximately $2.6 million of the proceeds of the offering
to complete the purchase of technology used in operating our loyalty and rewards
program. We plan to use the remainder of the proceeds for general corporate
purposes, including working capital, branding, membership expansion,
advertising, increases in our sales and marketing operations, new technology and
products, funding of points liability and expansion of network infrastructure.
We may also use some of the proceeds to acquire other companies, technologies or
products that complement our business, although we are not currently planning
any of these transactions. Pending these uses, we will invest the net proceeds
of this offering in short-term, investment-grade, interest-bearing securities.

We are making the $2.6 million payment under a license agreement entered
into in November 1998 in connection with our acquisition of internet and
electronic commerce related assets from companies affiliated with Experian. For
additional information regarding these transactions, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Acquisition Transactions" and "Transactions with Directors, Executive Officers
and Principal Stockholders." Under the license agreement, the amount of the
payment is based on the present value of a specified royalty amount discounted
using a discount rate equal to the prime rate plus 2.0%. The $2.6 million
estimate set forth above assumes this payment will be made in June 1999. The
actual amount of this payment could vary depending upon the timing of the
payment and fluctuations in interest rates. Once this license payment has been
made, our rights under the license will be fully paid and we will not have any
future royalty or other financial obligations under the license.

The principal purposes of this offering are to obtain additional capital,
to create a public market for our common stock, to facilitate our future access
to public equity markets and to provide increased visibility and credibility in
a marketplace where many of our current and potential competitors are or are
likely to become publicly held companies.

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock. We
currently expect to retain our future earnings, if any, for use in the operation
and expansion of our business and do not anticipate paying any cash dividends in
the foreseeable future. Covenants in our capital lease and equipment financing
agreements prohibit the payment of cash dividends.

17
<PAGE> 19

CAPITALIZATION

The following table sets forth:

- the actual capitalization of MyPoints.com at March 31, 1999;

- the pro forma capitalization of MyPoints.com after giving effect to (i)
the receipt in April 1999 of the net proceeds of the sale of 2,000,000
shares of Series E preferred stock that were issued pursuant to a stock
purchase agreement entered into in March 1999 and (ii) the conversion of
all outstanding shares of preferred stock into 12,388,315 shares of
common stock immediately prior to completion of this offering; and

- the pro forma as adjusted capitalization, which gives effect to the sale
in this offering of 5,000,000 shares of common stock at an estimated
initial public offering price of $11.00 per share and after deducting the
estimated underwriting discounts and commissions and estimated offering
expenses.

<TABLE>
<CAPTION>
MARCH 31, 1999
---------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
-------- -------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Long-term obligations, less current portion............. $ 2,368 $ 2,368 $ 2,368
Stockholders' equity:
Preferred stock, $0.001 par value; 13,500,000 shares
authorized, shares issued and outstanding:
Actual: 12,388,315 shares
Pro forma: 0 shares
Pro forma as adjusted: 0 shares.................... 12 -- --
Common stock, $0.001 par value; 40,000,000 shares
authorized, shares issued and outstanding:
Actual: 6,076,239 shares
Pro forma: 18,464,554 shares
Pro forma as adjusted: 23,464,554 shares........... 7 19 24
Additional paid-in capital.............................. 37,731 37,731 87,876
Stock subscription receivable........................... (9,950) -- --
Deferred compensation................................... (6,622) (6,622) (6,622)
Accumulated deficit..................................... (16,565) (16,565) (16,565)
-------- -------- --------
Total stockholders' equity......................... 4,613 14,563 64,713
-------- -------- --------
Total capitalization............................... $ 6,981 $ 16,931 $ 67,081
======== ======== ========
</TABLE>

This table excludes the following shares:

- shares issuable upon exercise of stock options outstanding as of March
31, 1999;

- shares available for future grant or issuance under our stock option and
stock purchase plans as of March 31, 1999; and

- shares issuable upon exercise of warrants outstanding as of March 31,
1999.

See Note 8 of Notes to Consolidated Financial Statements.

18
<PAGE> 20

DILUTION

Our pro forma net tangible book value as of March 31, 1999 was
approximately $4.5 million, or approximately $.74 per share of common stock. Pro
forma net tangible book value per share represents the amount of tangible assets
less total liabilities, divided by the number of shares of common stock
outstanding.

Dilution in net tangible book value per share represents the difference
between the amount per share paid by purchasers of shares of our common stock in
this offering and the pro forma net tangible book value per share of our common
stock immediately after the offering. After giving effect to our sale of
5,000,000 shares of common stock in this offering at an assumed initial public
offering price of $11.00 per share and after deduction of the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, our pro forma net tangible book value as of March 31, 1999 would have
been approximately $54.7 million, or $2.33 per share. This represents an
immediate increase in pro forma net tangible book value of $1.59 per share to
existing stockholders and an immediate dilution in pro forma net tangible book
value of $8.67 per share to purchasers of common stock in this offering.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $11.00
Pro forma net tangible book value per share before
offering............................................... $ .74
Increase per share attributable to new investors.......... 1.59
-----
Pro forma net tangible book value per share after
offering.................................................. 2.33
------
Net tangible book value dilution per share to new
investors................................................. $ 8.67
======
</TABLE>

This table excludes all options and warrants that will remain outstanding
upon completion of this offering. See Note 8 of Notes to Consolidated Financial
Statements. The exercise of outstanding options and warrants having an exercise
price less than the offering price would increase the dilutive effect to new
investors.

The following table sets forth as of March 31, 1999 the total consideration
paid and the average price per share paid by our existing stockholders and by
new investors, before deducting estimated underwriting discounts and commissions
and estimated offering expenses payable by MyPoints.com at an assumed initial
public offering price of $11.00 per share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 18,464,554 78.7% $25,502,140 31.7% $ 4.20
New investors.............. 5,000,000 21.3 55,000,000 68.3 11.00
---------- ----- ----------- -----
Total............ 23,464,554 100.0% $80,502,140 100.0%
========== ===== =========== =====
</TABLE>

19
<PAGE> 21

SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data in
conjunction with our consolidated financial statements and notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The statement of operations
data for the period from November 7, 1996 (inception) to December 31, 1996, and
the years ended December 31, 1997 and 1998 and the balance sheet data as of
December 31, 1997 and 1998 are derived from our consolidated financial
statements that have been audited by PricewaterhouseCoopers LLP, independent
accountants, and are included elsewhere in this prospectus. The statement of
operations data for the three months ended March 31, 1998 and 1999 and the
balance sheet data as of March 31, 1999 are derived from unaudited financial
statements included elsewhere in this prospectus. The balance sheet data as of
December 31, 1996 are derived from unaudited financial statements that are not
included in this prospectus. The unaudited financial statements include all
adjustments, consisting of only normal recurring adjustments, which we consider
necessary for a fair presentation of our financial position and results of
operations for these periods. The results of operations for the three months
ended March 31, 1999 are not necessarily indicative of the results to be
expected for the entire year.

- The pro forma 1998 data assumes the acquisitions of the web-based rewards
program businesses from affiliates of Experian were completed on January
1, 1998. The pro forma net loss per share data for 1998 set forth in this
column do not give effect to the issuance of 2,000,000 shares of Series E
preferred stock in 1999.

- The pro forma net loss per share data assumes conversion of all
outstanding shares of preferred stock into common stock. See Note 3 of
Notes to Consolidated Financial Statements.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------- THREE MONTHS ENDED
NOVEMBER 7, 1996 MARCH 31,
(INCEPTION) TO PRO FORMA ------------------
DECEMBER 31, 1996 1997 1998 1998 1998 1999
----------------- ------- ------- --------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................... $ -- $ 151 $ 1,286 $ 1,316 $ 150 $ 1,275
Cost of revenues............................ -- 78 1,121 1,120 137 878
------ ------- ------- -------- ------- -------
Gross profit.............................. -- 73 165 196 13 397
Operating expenses:
Technology costs.......................... 16 560 1,520 3,913 204 968
Sales expenses............................ -- 204 1,355 2,061 224 802
Marketing expenses........................ 36 1,465 3,158 5,099 163 1,762
General and administrative expenses....... 16 712 2,029 3,026 452 1,074
Amortization of intangible assets......... -- -- 275 3,300 -- 832
Stock-based compensation.................. -- 77 157 621 63 311
------ ------- ------- -------- ------- -------
Total operating expenses................ 68 3,018 8,494 18,020 1,106 5,749
------ ------- ------- -------- ------- -------
Operating loss.............................. (68) (2,945) (8,329) (17,824) (1,093) (5,352)
Interest and other income (expense), net.... 1 56 63 (144) 23 9
------ ------- ------- -------- ------- -------
Net loss.................................. $ (67) $(2,889) $(8,266) $(17,968) $(1,070) $(5,343)
====== ======= ======= ======== ======= =======
Net loss per share:
Basic and diluted......................... $(0.08) $ (2.68) $ (4.72) $ (3.56) $ (0.83) $ (1.05)
====== ======= ======= ======== ======= =======
Weighted average shares -- basic and
diluted................................. 891 1,076 1,750 5,044 1,287 5,097
====== ======= ======= ======== ======= =======
Pro forma net loss per share:
Basic and diluted......................... $ (0.98) $ (1.53)
======= ========
Weighted average shares -- basic and
diluted................................. 8,463 11,758
======= ========
</TABLE>

<PAGE> 22

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------- MARCH 31,
1996 1997 1998 1999
------ ------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $1,118 $ 2,948 $ 5,089 $ 1,868
Working capital (deficit)................................... 1,099 2,381 (307) (5,156)
Total assets................................................ 1,205 3,474 18,306 15,827
Long-term obligations, less current portion................. -- 47 2,408 2,368
Accumulated deficit......................................... (67) (2,956) (11,222) (16,565)
Total stockholders' equity.................................. 1,412 2,692 9,283 4,613
</TABLE>

21
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements based upon current
expectations that involve risks and uncertainties. When used in this prospectus,
the words "intend," "anticipate," "believe," "estimate," "plan" and "expect" and
similar expressions are included to identify forward-looking statements. Our
actual results and the timing of certain events could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "Risk Factors" and elsewhere in this
prospectus.

OVERVIEW

MyPoints.com was founded as Intellipost Corporation in November 1996. In
May 1997, we launched our email direct marketing and rewards program. In
November and December 1998, through our acquisition of companies affiliated with
Experian, we acquired internet and electronic commerce related assets and
technologies through a series of related transactions. Through these
transactions, we acquired a technology license for the operation of a web-based
rewards program. In early March 1999, we changed our corporate name to
MyPoints.com, Inc. in order to unify our corporate and brand identities. During
March and April 1999, we integrated our email and web-based direct marketing and
rewards programs under the MyPoints brand.

We generate substantially all of our revenues by delivering promotional
email and providing web-based direct marketing services for our advertising
customers. In exchange for these services, we receive fees from our advertisers
based on any or all of the following:

- the number of offers delivered to members;

- the number of qualified responses generated; and

- the number of qualified purchases made.

For our email service, we recognize revenues when an email is delivered,
when a qualified response is received or when a product or service is purchased,
depending upon the pricing arrangement used. For our web-based service, we
recognize revenues when a member redeems points earned from actions, such as
responding to an offer by clicking through to our offer page or by purchasing
the product or service offered.

Our revenues depend on a number of factors. These include the number of
advertisers engaging us to send direct marketing offers to our membership base,
the size of our membership base, and the responsiveness of our members to these
direct marketing offers.

We believe that our revenues will be subject to seasonal fluctuations as a
result of general patterns of retail advertising, which are typically higher
during the fourth calendar quarter. In addition, expenditures by advertisers
tend to be cyclical, reflecting overall economic conditions and consumer buying
patterns.

We also offer technology licensing arrangements to customers seeking to
develop email or web-based direct marketing and loyalty programs. We entered
into our first license agreement in December 1998 with Sweden Post, the Swedish
postal service. Sweden Post is establishing a version of the MyPoints BonusMail
program for the Swedish market. This license agreement provides for a licensing
fee, technical support fees and royalties based on a percentage of revenues from
the program site. We will initially recognize revenue under this agreement when
the custom development work that we are performing is completed and accepted by
Sweden Post. Once the program is operational, we will recognize royalty revenue
as it is received from Sweden Post. We expect to enter into additional licensing
arrangements, particularly for international markets.

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<PAGE> 24

We incurred a net loss of $18.0 million in 1998 on a pro forma basis that
assumes that the acquisition transactions with affiliates of Experian were
completed on January 1, 1998. For the quarter ended March 31, 1999, we incurred
a net loss of $5.3 million. We intend to implement our strategies by spending
substantial amounts on member acquisition and retention, brand development, new
product offerings, sales and marketing strategic relationships, and technology
and operating infrastructure development. As a result, we expect increases in
our net losses and negative cash flows for the next several quarters. We expect
to incur net losses at least through 2001. Our limited operating history makes
it difficult to forecast future operating results. Although we have experienced
revenue growth in recent quarters, we cannot be certain that revenues will
increase at a rate sufficient to achieve and maintain profitability. Even if we
were to achieve profitability in any period, we might fail to sustain or
increase that profitability on a quarterly or annual basis.

QUARTERLY RESULTS OF OPERATIONS

We completed the acquisitions of internet and electronic commerce related
assets from affiliates of Experian during November and December 1998.
Accordingly, actual results of operations for the quarter ended March 31, 1999
include results for the acquired businesses and actual results for the quarter
ended March 31, 1998 do not include results for the acquired businesses.

Revenues

Revenues for the quarter ended March 31, 1999 were $1.3 million compared to
$150,000 during the same period last year. Our email offers represented 76% of
revenues in the first quarter of 1999, while our web offers generated 24% of
revenues. During the same period last year, our email offers generated 100% of
revenues.

Revenues from email offers increased by 645% from the same period of last
year. The increase was a direct result of an increase in the number of email
offers delivered to our members. We delivered nearly 11 million emails during
the first quarter of 1999 compared to 1.3 million during the same period last
year. The large growth in our membership base and the increase in advertisers
using our email service were the primary reasons for the increase in email
offers delivered.

We completed the acquisition transactions with affiliates of Experian at
the end of the fourth quarter of 1998. All of our web offer revenues in the
first quarter of 1999 were generated by the acquired businesses.

Gross Profit

Gross profit equals revenues less cost of revenues. Cost of revenues
represents the cost of points awarded to our members for receiving, responding
to and purchasing based on our direct marketing offers. Gross profit as a
percentage of revenues for the quarter ended March 31, 1999 was 31% compared to
9% during the same period last year. The increase in gross profit was due to an
increase in the percentage of direct marketing offers that were responded to by
our members. Moreover, the addition of web offers, which generated higher gross
profit as a percentage of revenues than email offers, to our services increased
the gross profit as a percentage of revenues.

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<PAGE> 25

Technology Costs

Our technology expenses primarily consist of compensation for technology
personnel, fees for outside technology consultants, and an allocation of fixed
costs. We expense technology costs as they are incurred. Technology costs for
the quarter ended March 31, 1999 were $968,000 compared to $204,000 for the same
period last year. Technology employee salaries and fees for outside consultants
were 59% of the increase, while computer hosting at third party locations was
16% of the increase. We expect technology costs to increase during the next
several quarters, as we continue to improve and enhance our email and web-based
membership program. In addition, we are continuing to deliver technical support
for our internal initiatives with Sweden Post.

Sales Expenses

Our sales expenses primarily represent compensation for sales and
sales-related employee expenses for trade shows and other advertising and
promotions directed toward the direct marketing advertising community and an
allocation of fixed costs. Sales expenses increased from $224,000 in the first
quarter of 1998 to $802,000 during the same period in 1999. Sales and sales
employee payroll expenses represented 31% of the increase, while commission,
travel and entertainment, and outside consultant fee expenses represented 17%,
16% and 12% of the increase, respectively. We expect our sales expense to
increase over the next several quarters as we continue to hire additional sales
employees to increase our advertising sales capabilities.

Marketing Expenses

Our marketing expenses primarily consist of member acquisition expenses,
compensation for marketing personnel and an allocation of fixed costs. Member
acquisition expenses consist primarily of online advertising and promotion costs
to attract members to our email and web-based programs. Also included in member
acquisition expenses was the cost of the points awarded to members for signing
up and completing demographic and behavioral enrollment forms. The marketing
expenses for quarter ended March 31, 1999 were $1.8 million compared to $163,000
during the same period last year. The increase in member acquisition expenses
represented 59% of the increase. Increased consulting and employee payroll
expenses represented 15% and 11% of the increase, respectively. We expect
significant increases in marketing expenses during the next several quarters as
we continue to increase our spending on member acquisition and launch a new
branding campaign.

General and Administrative Expenses

Our general and administrative expenses include compensation for
administrative personnel, fees for outside professional advisors and an
allocation of fixed costs. As a percentage of revenues, general and
administrative expenses decreased from the quarter ended March 31, 1999 compared
to the same period last year. The absolute dollar increase in general and
administrative expenses for the quarter ended March 31, 1999 was due primarily
to increased professional fees. Increases in administrative personnel and
recruiting/human resource activities also contributed to the increase.

Income Taxes

We recorded a net loss of $5.3 million for the quarter ended March 31,
1999. Accordingly, no provision for income taxes was recorded in this quarter
and no tax benefit has been recognized due to the uncertainty of realizing a
future tax deduction for this loss.

24
<PAGE> 26

ANNUAL RESULTS OF OPERATIONS

We completed the acquisitions of internet and electronic commerce related
assets from affiliates of Experian during November and December 1998.
Accordingly, approximately one month of operations of the acquired businesses is
included in our actual results of operations for the year ended December 31,
1998. The discussion below is based on the Statement of Operations Data set
forth under "Selected Consolidated Financial Data."

Revenues

Our revenues increased to $1.3 million in 1998 from $151,000 in 1997. We
had no revenues and no material expenditures in 1996. Our email direct marketing
and rewards program was launched in May 1997 and began generating revenues in
July 1997. Our email program produced substantially all of our revenues in 1997
and 1998. The increase in revenues from 1997 to 1998 was due primarily to an
increase in the number of direct marketing offers delivered to our members for
advertisers, as well as to an increase in the size of our membership base.

Gross Profit

Gross profit increased to $165,000 in 1998 from $73,000 in 1997. This
increase was due primarily to an increase in the number of revenue-generating
responses and purchases by members. In addition, during 1998, based on our
experience with members who became inactive in the points program, we recognized
an allowance for estimated points that are likely to expire prior to their
redemption. This allowance was credited to cost of revenues during 1998.

Technology Costs

Our technology costs increased to $1.5 million in 1998 from $560,000 in
1997. This increase was primarily due to increased hiring of technical employees
and consultants during 1998.

Sales Expenses

Our sales expenses increased to $1.4 million in 1998 from $204,000 in 1997.
An increase in the number of sales and sales support employees led to higher
payroll expenses. Increases in revenues led to higher sales commissions and,
therefore, higher sales expenses. Also contributing to the increase in sales
expenses were increases in travel, advertising and promotions, and other
sales-related expenses.

Marketing Expenses

Our marketing expenses increased to $3.2 million in 1998 from $1.5 million
in 1997. This increase was primarily due to a large increase in member
acquisition expenses, including online advertising and promotion expenditures as
well as the cost of points awarded to members for enrollments and related
activities. Marketing payroll expense also increased in 1998 as we hired
additional marketing staff including a Senior Vice President, Member Marketing.

General and Administrative Expenses

Our general and administrative expenses increased to $2.0 million in 1998
from $712,000 in 1997. The increase resulted from higher professional fees and,
to a lesser extent, occupancy costs relating to opening of sales offices and an
increase in the size of our San Francisco headquarters

25
<PAGE> 27

facility. Payroll expenses associated with hiring administrative personnel also
contributed to the increase.

Income Taxes

We recorded a net loss of $2.9 million in 1997 and $8.3 million in 1998.
Accordingly, no provision for income taxes was recorded in these years, and no
tax benefit has been recognized due to the uncertainty of realizing future tax
deductions for these losses.

As of December 31, 1997 and 1998, we had net operating loss carryforwards
of approximately $1.4 million and $7.8 million for federal and state income tax
purposes. The federal and state net operating loss carryforwards begin to expire
in the years 2011 and 2004, respectively. Our ability to utilize our net
operating loss carryforwards to offset any future taxable income may be
restricted as a result of equity transactions that give rise to changes in
ownership under applicable federal and state income tax laws.

STOCK-BASED COMPENSATION

As of December 31, 1998, we recorded aggregate deferred compensation
totaling $2.2 million in connection with the grant of stock options to employees
and consultants prior to December 31, 1998. This charge is being amortized over
the vesting period of the options which ranges from three to four years. In
addition, during the quarter ended March 31, 1999, we recorded an additional
unearned compensation charge of approximately $4.9 million relating to options
granted during this quarter. This charge will also be amortized over the vesting
period of the options granted.

Stock-based compensation of $63,000, $19,000, $43,000, $33,000 and $311,000
was recognized in the quarters ended March 31, June 30, September 30, December
31, 1998 and March 31, 1999. We expect per quarter amortization of approximately
$932,000 in the second, third and fourth quarters of 1999 and annual
amortization of approximately $1.4 million in 2000, $1.4 million in 2001, and
$1.2 million in 2002, $920,000 million in 2003 and $820,000 in 2004 relating to
these options. See Note 8 of Notes to Consolidated Financial Statements.

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<PAGE> 28

PRO FORMA QUARTERLY RESULTS OF OPERATIONS

The following table sets forth selected unaudited statement of operations
data on a pro forma basis, assuming that the acquisition transactions with
affiliates of Experian were completed on January 1, 1998. The pro forma
statement of operations data for the quarter ended March 31, 1999 are the same
as our actual results of operations for this period. The financial statements
from which these data have been derived were prepared on substantially the same
basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, that we considered necessary
for a fair presentation of our pro forma results of operations for each quarter.
The quarterly pro forma statement of operations data include the same
adjustments that are reflected in the pro forma financial statements included in
this prospectus. Our pro forma results of operations for any quarter are not
necessarily indicative of the results of operations to be expected in any future
period but are presented to provide a historical perspective of the combined
businesses.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1998 1998 1998 1998 1999
--------- -------- --------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................... $ 150 $ 157 $ 296 $ 713 $ 1,275
Cost of revenues....................... 137 108 261 614 878
------- ------- ------- ------- -------
Gross profit...................... 13 49 35 99 397
------- ------- ------- ------- -------

Operating expenses:
Technology costs..................... 1,136 813 965 999 968
Sales expenses....................... 361 578 568 554 802
Marketing expenses................... 537 941 1,838 1,783 1,762
General and administrative
expenses.......................... 748 588 702 988 1,074
Amortization of intangibles.......... 825 825 825 825 832
Stock-based compensation............. 63 26 199 333 311
------- ------- ------- ------- -------
Total operating expenses.......... 3,670 3,771 5,097 5,482 5,749
------- ------- ------- ------- -------

Operating loss......................... (3,657) (3,722) (5,062) (5,383) (5,352)
Interest and other expense, net...... (84) (3) (40) (17) 9
------- ------- ------- ------- -------
Net loss............................... $(3,741) $(3,725) $(5,102) $(5,400) $(5,343)
======= ======= ======= ======= =======
</TABLE>

Revenues

Pro forma revenues have increased sequentially in each of the last four
quarters. These increases were a direct result of the growth in our membership
base during 1998 and the first quarter of 1999 and an increase in the number of
direct marketing offers delivered to our members. Email direct marketing offers
generated at least 90% of revenues in each quarter of 1998.

Gross Profit

Gross profit as a percentage of revenues increased from the first quarter
to the second quarter, decreased from the second to the third quarter, remained
relatively constant from the third to the fourth quarter and increased from the
fourth quarter of 1998 to the first quarter of 1999. The sequential increase in
gross profit in the last three quarters presented was due to a higher number of
revenue generating responses to the direct marketing offers.

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<PAGE> 29

Technology Costs

Technology costs decreased during the second quarter of 1998 before
increasing over the last two quarters of 1998. Technology costs were relatively
constant from the fourth quarter of 1998 through the first quarter of 1999.

Sales Expenses

Sales expenses remained relatively constant during the second, third and
fourth quarters of 1998 but increased during the first quarter of 1999. The
increase in sales commissions due to higher revenues was partially offset by
lower sales payroll and sales-related expenses during the last three quarters of
1998. The increase in sales expenses during the first quarter of 1999 was due to
both increased commissions resulting from revenue growth and the hiring of
additional sales personnel.

Marketing Expenses

Online advertising and promotion expenditures increased significantly in
the second half of 1998 and the first quarter of 1999 as compared to the first
half of 1998. These increased expenditures contributed to the growth of
membership during these periods. This growth in membership led to higher
expenditures related to the cost of points awarded to members for signing up and
completing enrollment forms.

General and Administrative Expenses

As a percentage of revenues, general and administrative expenses decreased
during the second half of 1998 and the first quarter of 1999. The absolute
dollar increase in the second half of 1998 and the first quarter of 1999 was due
to higher fees for professional services and an increase in the number of
administrative personnel.

ACQUISITION TRANSACTIONS

In November and December 1998, we entered into a series of transactions to
acquire internet and electronic commerce related assets from companies
affiliated with Experian. These transactions were accounted for using the
purchase method. The aggregate purchase price was $13.6 million, consisting of
$9.1 million in stock and cash, and $4.5 million in liabilities assumed. The
purchase price has been allocated to acquired tangible and intangible assets
based on their estimated respective fair values as of the date of acquisition.
Estimated fair values were determined using a combination of methods, including
replacement cost estimates for acquired membership base and customer base, and a
risk-adjusted income and cash flow approach for trademark and tradename and the
acquired technology license agreement. The purchase price allocation and the
schedule over which the value attributable to each acquired asset will be
amortized are as follows:

<TABLE>
<CAPTION>
AMORTIZATION
AMOUNT PERIOD
-------------- ---------------------
(IN THOUSANDS)
<S> <C> <C>
Tangible assets................................. $ 2,400 3 years
Trademark and tradename......................... 1,800 5 years
Technology license agreement.................... 7,300 4 years
Membership base................................. 800 0.5 to 2.5 years
Customer base................................... 500 0.5 to 3 years
Employee workforce.............................. 800 2 years
-------
Total................................. $13,600
=======
</TABLE>

28
<PAGE> 30

The amortization periods are based on our estimates of the useful lives of
each acquired asset, as it existed at the time of the acquisition. Upon
completion of the public offering of our capital stock we are obligated to
purchase the licensed technology for a payment equivalent to the then present
value of the future minimum royalty payments. We expect to pay approximately
$2.6 million upon completion of the public offering, representing the net
present value of the $4.2 million royalty obligation. See "Use of Proceeds."

LIQUIDITY AND CAPITAL RESOURCES

Since incorporation, we have financed our operations primarily from the
sale of equity securities to venture capital firms and other individual,
institutional and strategic investors. We have also borrowed funds under
long-term capital lease and equipment financing facilities.

Net cash used in operating activities was $2.3 million in 1997, $5.5
million in 1998 and $2.5 million for the quarter ended March 31, 1999. This
increase in cash used in operating activities was due to our expanded operations
and primarily resulted from an increase in technology costs, sales, marketing,
and general and administrative expenses. In 1997, the net cash used by our $2.9
million net loss was partially offset by a $519,000 increase in points
redemption liability, a $52,000 increase in accounts payable and other accrued
liabilities, and non-cash charges of $70,000 for depreciation and amortization
and $77,000 in stock-based compensation. In 1998, the net cash used by our $8.3
million net loss was partially offset by a $1.7 million increase in points
redemption liability, an $878,000 increase in accounts payable and other accrued
liabilities, and non-cash charges of $158,000 in stock-based compensation. For
the quarter ended March 31, 1999, the net cash used by our $5.3 million net loss
was partially offset by a $1.1 million increase in points redemption liability,
non-cash charges of $964,000 for depreciation and amortization, and $311,000 in
stock-based compensation.

Our working capital decreased from $2.4 million at December 31, 1997 to a
deficit of $307,000 at December 31, 1998 and a deficit of $5.2 million at March
31, 1999. This decrease directly resulted from a substantial increase in points
redemption liability. The points redemption liability is the estimated cost
associated with our obligation to redeem points distributed to our member base.

Net cash used in investing activities was $353,000 in 1997, all of which
was used to acquire property and equipment, primarily computer equipment and
software. Net cash provided by investing activities was $1.4 million in 1998,
most of which was provided by an affiliate of Experian in connection with the
acquisition transactions. The net cash used in investing activities for the
quarter ended March 31, 1999 was $1.1 million, all of which was used to acquire
property, equipment, leasehold improvements, primarily computer equipment and
software.

Net cash provided by financing activities was $4.2 million in 1997, $6.2
million in 1998 and $308,000 in the quarter ended March 31, 1999. These amounts
included net proceeds of equity financings of $4.1 million in 1997 and $6.1
million in 1998, a $100,000 equipment term loan established in 1997 and a
$400,000 equipment term loan established in 1998. The loans have floating
interest rates of prime plus 1.5% for the 1997 loan and prime plus 0.5% for the
1998 loan. Both loans are secured by a pledge of our assets and require us to
comply with certain financial covenants. During 1997 and 1998, we were in
compliance with these covenants or were operating under appropriate waivers. Our
current payment obligations under these loans total $16,500 per month.

In addition, in 1997 and 1998, we entered into various non-cancelable
capital lease agreements for certain types of capital expenditures. As a result
of these capital lease agreements, we have an outstanding lease payment
obligation of $286,000 as of March 31, 1999. These capital lease agreements have
terms ranging three to five years with interest rates ranging from 7.2% to
18.0%. Our current payment obligations under these leases total $7,800 per
month.

29
<PAGE> 31

At December 31, 1998 and March 31, 1999, we had cash and cash equivalents
of $5.1 million and $1.9 million, respectively. In April 1999, we completed the
sale of 2,000,000 shares of Series E preferred stock under a stock purchase
agreement entered into in March 1999. Upon the completion of this offering, we
will be obligated to make a payment of $2.6 million to acquire licensed
technology. For additional information regarding this payment, see "Use of
Proceeds." We estimate that we will make capital expenditures of approximately
$2.0 million during the next 12 months.

We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to meet our anticipated
working capital and capital expenditure requirements through the end of 2000. We
may need to raise additional funds, however, to fund more rapid expansion, to
develop new or enhance existing services or products, to respond to competitive
pressures or to acquire complementary products, businesses or technologies. If
adequate funds are not available on acceptable terms, our business, results of
operations and financial condition could be materially adversely affected.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. SFAS No.
131 establishes standards for the way companies report information about
operating segments in annual financial statements. It also establishes standards
for related disclosures about products and services, geographic areas and major
customers. The disclosures prescribed by SFAS No. 131 are effective for the year
ended December 31, 1998. We have determined that we do not have any separately
reportable business segments as of December 31, 1998.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") No. 98-1, Software for Internal Use, which
provides guidance on accounting for the cost of computer software developed or
obtained for internal use. SOP No. 98-1 is effective for financial statements
for fiscal years beginning after December 15, 1998. We do not expect that the
adoption of SOP No. 98-1 will have a material impact on our consolidated
financial statements.

FACTORS AFFECTING OPERATING RESULTS

Our results of operations have varied widely in the past and we expect that
they will continue to vary significantly in the future due to number of factors,
including those set forth under "Risk Factors." You should read the "Risk
Factors" section of this prospectus carefully. Due to these factors, we believe
that quarter-to-quarter or year-to-year comparisons of our results of operations
are not a good indication of our future performance. Our results of operations
in some future quarter may be below the expectations of public market analysts
and investors. In this event, the price of our common stock is likely to
decline.

YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. Beginning in the year
2000, these code fields will need to accept four digit entries to distinguish
21st century dates from 20th century dates. As a result, computer systems and
software products used by many companies may need to be upgraded to comply with
these year 2000 requirements.

We designed the software underlying our email and web-based programs as
well as our web site and related technology infrastructure to be year 2000
compliant. However, we rely on third-party hardware and software in the
operation of our business. We believe we have identified all of the

30
<PAGE> 32

major information systems used in our internal operations and have substantially
completed all modifications, upgrades or replacements to minimize the
possibility of a material disruption of our business. The expenditures that we
have incurred to date and the expenditures we expect to incur in this regard
have not been and are not expected to be material to our business, results of
operations and financial condition.

We have also contacted the vendors of third-party hardware and software we
use in order to gauge their year 2000 compliance. Based on these vendors'
representations and the activities we have conducted, we believe that the
third-party hardware and software we use are year 2000 compliant. We cannot
assure you, however, that we will not experience unanticipated negative
consequences, including material costs caused by undetected errors or defects in
the technology used in our internal systems. If, in the future, it comes to our
attention that the software underlying our email or web-based programs requires
modification, or that any of our third-party hardware and software are not year
2000 compliant, then we will seek to make modifications to our systems. In this
case, we expect these modifications to be made on a timely basis and we do not
anticipate that the cost of these modifications will have a material effect on
our results of operations. There can be no assurance, however, that we will be
able to modify these systems in a timely and successful manner to comply with
the year 2000 requirements. Any failure to do so could have a material adverse
effect on our business, results of operations and financial condition.

We are also vulnerable to prolonged data communications, telecommunications
or electrical failures resulting from year 2000 problems. Failures of this type
could prevent members from accessing our web site or prevent us from operating
our business. As a result, we could experience lost advertising revenues,
increased operating expenses and loss of members. These types of systemic and
infrastructure failures that could prevent people from accessing our web site
and prevent us from operating our business represent our worst case year 2000
scenario. We have not developed contingency plans for operation of our business
in the event of major systemic or infrastructure failures nor do we believe that
it is feasible for us to do so. Accordingly, the occurrence of major systemic
and infrastructure failures due to year 2000 problems could have a material
adverse effect on our business, results of operations and financial condition.

31
<PAGE> 33

BUSINESS

INDUSTRY BACKGROUND

Growth of the Internet and Electronic Commerce

The internet has emerged as a global medium, enabling millions of people
worldwide to share information, communicate and conduct business electronically.
International Data Corporation (IDC), a leading technology research
organization, estimates that the number of web users will grow from
approximately 97 million worldwide at the end of 1998 to approximately 320
million worldwide by the end of 2002.

The growing use of the web represents a significant opportunity for
businesses to conduct commerce over the internet. According to IDC, transactions
on the internet are expected to increase from approximately $32 billion
worldwide at the end of 1998 to approximately $426 billion worldwide by the end
of 2002. Businesses typically use the internet to offer products and services,
such as software, books, home loans and airline tickets, that do not require the
customer's physical presence to make a purchase decision. The internet allows
these businesses to develop one-to-one relationships with customers worldwide
without making significant investments in traditional infrastructure such as
retail outlets, distribution networks and sales personnel.

Online Direct Marketing

Businesses operating in the electronic commerce marketplace engage in
various forms of online direct marketing to generate sales of products or
services. Direct marketing is advertising that is intended to generate a
specific response or action from a targeted group of consumers. Examples of
traditional forms of direct marketing include catalog mailings, magazine inserts
and telesales. According to the Direct Marketing Association, 1998 direct
marketing advertising commitments totaled $163 billion in the United States.
Online direct marketing can take the form of email or web-based promotional
offers. Online direct marketing is particularly attractive because advertisers
can use tools that are not available in traditional media, such as measurement
of "click-through" rates and one-click response to email offers. These tools
give advertisers rapid feedback on their marketing campaigns. This feedback can
be used to tailor new messages and targeted offers.

Because of these advantages, advertisers are committing relatively more
dollars to online direct marketing campaigns than to other forms of internet
advertising, such as brand marketing using banner advertisements. Forrester
Research projects internet advertising expenditures in the U.S. to increase from
$1.3 billion in 1998 to $10.4 billion in 2003. Forrester estimates that direct
marketing will account for 60% of total online advertising expenditures in the
U.S. in 2002, up from 15% in 1998.

Despite this trend, significant barriers to online direct marketing remain:

- Inundation. According to Jupiter Communications, a leading internet
marketing research firm, the quantity of email messages per user sent in
the United States will surpass the volume of pieces of postal mail per
household in 1999. The sheer number of email messages leads to
competition for the attention of consumers. According to Jupiter, 16% of
email recipients

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immediately delete email from commercial sources, and another 17% delete
email unless it is from a familiar source.

- Spam. Unsolicited commercial email -- commonly known as "spam" -- is not
an acceptable medium for major brands that value consumer opinion.
Current and pending state and federal legislation places significant
restrictions on the use of unsolicited commercial email.

- Anonymity. Email addresses are largely anonymous. There is no easy way to
correlate email addresses with users' demographic and behavioral data
without their input. Effective targeting of messages online is difficult
without this input.

Online Loyalty Programs

Membership-based loyalty programs have long been a standard part of the
retail product and service landscape. Consumer loyalty programs now operating in
the United States serve businesses as diverse as supermarkets, telecommunication
companies, airlines, and music and book sellers. As the number of internet users
increases, the relative importance to online businesses of customer retention
will also increase. As a result, leading online merchants and content providers
are increasingly launching and testing programs aimed at retaining their most
valuable customers. The challenges that their businesses face in establishing
online loyalty programs include the cost of implementing and operating the
program and the ability to provide consumers with sufficient opportunities to
earn and redeem awards.

Market Opportunity

Online direct marketing programs offer unique advantages to businesses,
including:

- an interactive advertising format that enables consumers to respond and
purchase online, without the need for telephone calls or store visits;

- high rates of response to direct marketing offers of between 5% and 15%,
compared to banner bar click-through rates, which have reportedly
declined from 2% to 0.5% over the past year;

- low cost per email message of between $0.01 and $0.25, compared to $1.00
to $2.00 per piece of direct marketing material sent via postal mail; and

- short campaign life cycles of between 48 and 72 hours, compared to six to
eight weeks offline.

Online direct marketing programs typically have focused on customer
acquisition. As the internet grows as a commercial medium, companies doing
business online are increasingly focusing on customer retention. This creates an
opportunity for an integrated direct marketing and loyalty rewards program.

THE MYPOINTS.COM SOLUTION

MyPoints.com is a leading provider of online direct marketing and loyalty
programs. We believe that we are the first to combine targeted email and
web-based direct marketing offers with online loyalty programs to create
valuable benefits for both our consumer members and our business partners. This
approach provides our consumer members with the opportunity to earn rewards for
their participation and our business partners with effective customer
acquisition and retention tools.

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Consumer Benefits

The MyPoints program offers the following benefits to members:

- Relevant Offers. The depth of our member database enables us to target
advertisements to our members with a high degree of accuracy. This helps
us to direct only the most relevant offers to each member and increases
the likelihood that the member will view and respond to a given message.

- Leading Brands. We increase the attractiveness of our program by
providing our members with direct marketing offers from name brands such
as Disney, eBay, Egghead.com, GTE, Intel, Intuit, Macy's, Sony and
Sprint.

- Wide Variety of Rewards. We have designed our rewards programs to be
broad-based. Rather than focusing on one particular type of consumer
award, such as frequent flyer miles, we provide a range of redemption
opportunities, including electronic gift certificates from name-brand
retailers, credits in other popular rewards programs, long distance
minutes and travel awards.

- Easily Attainable Rewards. Many of our reward opportunities are at point
levels that are low enough to be earned in a matter of weeks by a typical
active member. These easily attainable rewards include $10 gift
certificates at major retailers such as Barnes & Noble and restaurant
chains such as The Olive Garden. We offer our members a variety of point
earning opportunities that do not require a purchase, as well as the
ability to earn points for offline activities including credit card and
long distance telephone usage.

- Attractive Member Experience. Our highly personalized, easy-to-use
interface features one-click purchase and redemption capability. We
provide personalized web interfaces that feature the member's name and
current point balance. We also deliver email offers in rich-media
(HTML-enhanced) format.

- Privacy and Control. We assure members that we will not sell personal
information to third parties without permission. We also give members a
significant amount of control over their experience by allowing them to
set their own daily message levels, screen out unwanted advertisement or
award categories, or opt out of the MyPoints program.

Business Benefits

MyPoints.com provides both our advertising clients, for whom we deliver
direct marketing messages, and our loyalty partners, for whom we manage private
label points programs, a competitive advantage in the acquisition of new
customers and the retention of existing customers:

- Access to Our Proprietary Member Database. Our member database consists
of extensive demographic, behavioral and transactional information
provided to us by approximately two million consumers. We use these
detailed member profiles to target offers, allowing our business partners
to reach the most suitable audience for their promotions and increase
consumer response rates.

- Detailed Real-Time Reporting. Online direct marketing campaigns begin to
generate results in two or three days compared to several weeks in
offline campaigns. We employ sophisticated marketing analytics and
real-time reporting technology to evaluate the initial results of a
campaign and use that information to improve the overall results of
current and future campaigns of our advertisers.

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- High Return on Advertising Investment. We offer direct marketers the
ability to target and reward consumers with online offers for
approximately one-tenth the cost of typical offline direct marketing
promotions. As a consequence of improved testing, targeting and rewarding
capabilities, we expect online direct marketing response rates to be
higher than other online and offline media. This combination of lower
delivery costs and higher response rates generates returns on advertising
investment that are higher than those achieved by competing direct
response media.

- Customized Loyalty Solutions. We offer a variety of cost-effective and
customized solutions to our loyalty partners, including co-branded and
private label versions of our MyPoints rewards program. Our proprietary
Digital Loyalty Engine technology enables our business partners to design
and manage innovative and flexible online loyalty programs. Current
loyalty partners include GTE, Prodigy and Talk City.

- Integrated Approach to Online Direct Marketing. We believe we are the
only direct marketing provider that has integrated online direct
marketing with an online rewards program. This enables our advertisers to
increase consumer response and retention rates by rewarding consumers for
responding to their targeted offers.

STRATEGY

Our objective is to build leading online consumer membership services and
to enable our advertising clients and loyalty partners to more easily and
effectively acquire and retain customers online. Key elements of our strategy to
achieve this objective are to:

Expand Our Proprietary Database

To increase the size of our membership base, we plan to use a variety of
approaches, including online advertising, referrals, and co-branded and private
label loyalty partnerships. We increase the depth of our database by rewarding
consumers for joining our MyPoints program and for completing detailed surveys
from which we collect demographic and behavioral data. We also increase the
depth of our database by tracking the transaction activity of our members in the
MyPoints program. We will continue to use our proprietary and third-party data
sources to build more detailed profiles of our members.

Leverage Our Direct Marketing and Loyalty Program Expertise

We will continue to use our experience in managing direct marketing and
loyalty membership programs on the internet on behalf of our advertising clients
and loyalty partners, to enable them to maximize response rates to their offers
and increase customer retention. We have developed an in-house expertise in
database marketing and provide our advertisers with needed support services,
including the design and delivery of rich-media email and web-based offers.

Increase Awareness of Our Brand

We seek to increase awareness of the MyPoints brand through extensive
consumer and trade advertising campaigns, including national print and broadcast
placements and strategic industry sponsorships. We have unified our corporate
and consumer brand names to strengthen the MyPoint brand identity. We also plan
to establish partnerships with high-profile internet brands. We will seek to
further associate our brand with the strong brands of our advertisers and
business partners.

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Maintain Our Technology Leadership

The MyPoints Digital Loyalty Engine, which underlies our rewards programs,
is a highly scalable platform designed to serve the needs of our members and
business partners. The system currently supports approximately two million
member accounts working in proprietary, co-branded and private label loyalty
environments, and serves more than one million email and web-based direct
marketing offers daily. We plan to continue developing and improving our
technology to meet the needs of a growing online marketplace. We also intend to
leverage the technology and experience of Experian, a leading information
services and database management company.

Pursue Strategic Acquisitions and Alliances

We have made several acquisitions, license arrangements and strategic
alliances to build our membership base and improve our level of services. In our
principal acquisition transaction, we acquired internet and electronic commerce
assets and technologies to support web-based rewards programs from companies
affiliated with Experian. This acquisition enabled us to integrate email and
web-based direct marketing and loyalty programs under the MyPoints name. Through
this acquisition, we believe we have become a key element of Experian's
long-term internet strategy. We intend to pursue additional strategic alliances
and acquisitions aggressively to increase membership through co-branded and
private label programs, offer new products and services, access new geographic
markets and obtain proprietary technologies.

Expand Internationally

We believe the anticipated international growth of internet usage has the
potential to generate significant additional revenue opportunities for us.
According to IDC, the number of web users outside the United States is projected
to increase from approximately 46 million at the end of 1998 to approximately
184 million by the end of 2002. We currently have one international agreement in
place with Sweden Post, the Swedish postal service, to license a localized
version of MyPoints BonusMail for the Swedish market. Sweden Post operates one
of Europe's leading electronic commerce web sites. Although we currently only
have a single international arrangement in place, we are committed to pursuing
opportunities for additional international strategic transactions.

MYPOINTS.COM PRODUCTS AND SERVICES

MyPoints and MyPoints BonusMail

The MyPoints program serves two primary constituencies, our members and our
business partners. Members enroll to earn rewards by responding to targeted
offers on the web at the MyPoints web site and to targeted offers by email
through MyPoints BonusMail. Advertising clients use MyPoints to reach a selected
group of members with targeted offers and incentives. We believe that MyPoints
is the internet's only direct marketing program that integrates in a single
program outbound electronic commerce via "rewarded" email with web-based
point-earning opportunities.

The MyPoints program begins with enrollment, where consumers receive
rewards points for providing key demographic and behavioral information. This
enrollment information is supplemented with transactional data gathered as our
members interact with our services. Once enrolled, MyPoints members receive
points for responding to targeted, personalized offers. Members may also earn
points by filling out additional online surveys. After earning a sufficient
number of points, MyPoints members may redeem their points online for products
and services from our rewards partners, including long distance minutes, travel
awards, points in other loyalty programs and electronic gift

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<PAGE> 38

certificates. Members may also spend their points at participating catalog sites
where merchandise prices are denominated in points for MyPoints members. These
rewards providers benefit from the MyPoints program through increased revenue
and additional customers.

The list of web-based point-earning opportunities presented to the member
on the MyPoints "earn page" depends on the profile of the visiting member. Some
of the information that determines the point-earning opportunities directed to a
member include geographic location, leisure time interests, financial
information and investment interests. The MyPoints program features a
sophisticated online account maintenance area, where members may change their
preferences and other personal information, access their earning history and
account balance, contact a member care representative, and redeem points.

We also place a high degree of importance on our commitment to maintaining
the security of member information. We are members of both TRUSTe and the Online
Better Business Bureau, and we adhere to the principles of these organizations.

MyPoints Network

The MyPoints Network is a system of participating web sites which offer our
members the opportunity to earn points at locations on the internet other than
the MyPoints web site. We provide participating web sites with a supply of
reward points to distribute to their visitors as a loyalty and incentive tool in
exchange for the opportunity to enroll their visitors in our service. These
partnerships can be co-branded in cases where the partners, such as GTE and Talk
City, commit to bring us a certain number of new members. In these partnerships,
the currency always retains the MyPoints brand and we retain direct marketing
rights to the members generated by the service.

We compensate loyalty partners with points for each new member the partner
brings to the MyPoints program. We either manage the program externally or
enable our partner to set point-earning opportunities without our direct
involvement using our Digital Loyalty Engine. The Digital Loyalty Engine enables
our partners to reward any action that requires a click on the site, such as
clicking on a banner, registering for a service or purchasing a product. We also
provide each partner with a supply of rewards points based on prospective
membership growth, internal promotion to MyPoints members, and, in some cases,
cooperative advertising to launch the new web site.

Network partnerships create cost-effective membership growth. They also
increase our brand awareness among new affinity groups. Our network partnership
marketing group focuses on current rewards partners, electronic commerce
alliances, major electronic commerce and entertainment sites, web-based email
providers, and online community sites and portals.

Private Label Loyalty Programs

We also build and operate fully customized, private label point programs
based on the MyPoints technology. We currently operate two private label
programs, on behalf of Prodigy (Prodigy Points) and NextCard internet VISA
(NextCard Rew@rds). Private label loyalty programs operate in a manner similar
to the MyPoints Network program, except that the points are branded exclusively
for the partners. We may still market to the partners' members; however, the
marketing material we use is branded for the partners and the points issued for
responses are the partners' branded currency. The private label redemption
options can also be adjusted to maximize support for the partner's branding. We
might also include the partners' own product line in the redemption option,
providing a set of highly relevant awards to the partner's consumer base. At all
levels, a private label loyalty program reinforces the partner's brand and
builds loyalty to the partner's brand, while at the same time expanding our
direct marketing service base.

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Licensing Programs

We offer our technology for license to customers seeking to develop email
or web-based direct marketing and loyalty programs. As part of our license
agreement, we may receive a set-up fee and royalties based on a percentage of
revenues derived from the licensed site. We currently have one licensing
agreement in place with Sweden Post. This agreement establishes a version of the
MyPoints BonusMail program for the Swedish market. Licensing is an attractive
way for us to address most international market opportunities, which typically
require a foreign language web site as well as advertising and points redemption
opportunities relevant to the local market.

SALES AND MARKETING

Our advertising sales organization consisted of 15 employees located in San
Francisco, New York, Los Angeles and Chicago as of March 31, 1999. This
organization is dedicated to developing and maintaining relationships with
leading advertisers and advertising agencies nationwide. We also seek to enter
into relationships with third-party advertising sales representatives to augment
the efforts of our direct sales personnel. For example, we recently entered into
an agreement with a telesales firm specializing in email advertising sales.

Our consumer marketing and business development organization consisted of
20 employees in San Francisco, New York and Chicago as of March 31, 1999. This
organization is dedicated to acquiring members for our online direct marketing
program. The consumer marketing group uses a variety of member acquisition
strategies, including referrals by current members, banner bars and other online
media placements, and affiliate programs. Affiliate programs include
relationships in which partners bring new members to MyPoints by introducing the
service to their own user bases in exchange for exposure of their own services
to the MyPoints membership or a cash payment per member. We have a wide variety
of affiliate programs in place, including one with Microsoft under which
MyPoints BonusMail is listed as a preferred product in the download area for
Microsoft's email product, Outlook Express. These products are complementary in
that Outlook Express enables the user to read rich-media email and MyPoints
BonusMail can deliver email in this format. The business development group uses
loyalty partnerships to acquire members for our online direct marketing program.
These partnerships can take various forms, including membership in the MyPoints
Network and private label loyalty programs.

ADVERTISING CLIENTS AND REWARDS PROVIDERS

Set forth below are representative lists of our brand-name advertising
clients and MyPoints rewards providers since January 1998:

Advertising Clients

<TABLE>
<S> <C> <C>
Automotive -- Clarion, Nissan
Entertainment -- BMG Entertainment, Disney
Financial Services -- Discover, 20th Century Insurance
Health -- OnHealth, Acumin
Internet -- eBay, Lifeminders
Membership Services -- Cendant, The Signature Group
Publishing -- Ziff-Davis, International Masters Publishers
Retail -- Macy's, The Gap
Software -- Intuit, Brainplay
Telecommunications -- Sprint, Working Assets
</TABLE>

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Rewards Providers

<TABLE>
<S> <C>
Artistic Greetings Barnes & Noble
Blockbuster Boston Market
Brinker Darden Restaurant
General Cinema Macy's
Magazine Mall Shop4.com
Sony Music Spree.com
Sprint Target
TJX Companies Tower Records
</TABLE>

MEMBER CARE

We have established a measurable member care process that is designed to
provide superior service to all program participants.

Automated Inquiry System

We have developed automated online support services for our members, such
as online access to account information and transaction histories. Our new
member inquiry interface, which we expect to release in the second quarter of
1999, is designed to answer member questions automatically. Through this member
inquiry system, customers will contact us via a web form that generates an email
containing relevant customer account information for efficient handling by our
member care staff.

24-hour/7-day Support

We employ an internal staff dedicated to member care and a specialized
customer support vendor, Brigade Solutions, to maximize coverage and minimize
cost and turnaround time. Through this combination, we are able to provide
24-hour, 7-day coverage with immediate automated responses for all online
inquiries and a turnaround time of less than 24 hours for more than 95% of basic
member inquiries. We intend to continue to enhance our member care services
through increased availability of online member self-support and improved
customer reporting systems.

TECHNOLOGY AND INFRASTRUCTURE

We have developed a scalable, secure and reliable technology infrastructure
to support our online direct marketing and loyalty rewards program. The
principal element of our proprietary technology is our Digital Loyalty Engine.
The Digital Loyalty Engine enables our loyalty partners to set the parameters of
point-earning transactions without our direct involvement. Customizable elements
include the number of times in a given period an award may be earned, the number
of points per transaction, the maximum number of transactions per member and the
maximum aggregate numbers of points that can be awarded in a given campaign.
Partners can use the Digital Loyalty Engine to take advantage of market
opportunities on a real-time basis by establishing new point-earning
opportunities or altering the parameters of existing opportunities.

Scalability

Our technology is designed to support tens of millions of users. To date,
we have demonstrated that our architecture can be scaled as approximately two
million consumers have enrolled in our direct marketing and loyalty programs or
programs such as MyPoints by GTE, NextCard Rew@rds

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and Prodigy Points. Our systems are also designed to capture a large amount of
data from our members, which is critical to the creation of a successful online
loyalty rewards program. In addition, our systems can be integrated with our
partners' own databases, thereby enhancing data exchange and data mining for
marketing purposes.

Security

We incorporate a variety of encryption techniques meant to protect the
privacy of consumer information and the integrity of client transactions. We
also employ a variety of automated fraud detection procedures to identify
patterns of abuse and potential fraudulent use of the system. Our fraud
detection systems can automatically disable accounts in which fraud is
suspected. The data center where our system is located provides 24-hour/7-day
security management.

Reliability

Our software system architecture uses industry standard technologies to
maximize reliability. We use Secure Socket Layer for secure transactions, Oracle
databases, the UNIX operating system and the Netscape web server within our
infrastructure. All of these platforms have demonstrated a high degree of
reliability. Our databases are also distributed among clients and among
functions. In particular, each Digital Loyalty Engine, where transactions are
recorded, is separate from the main database of account records. As a result, a
database failure will typically affect only a particular client or function and
will not adversely impact our entire system. We back up our Oracle databases to
long-term tape storage on a daily basis.

Our network servers are housed separately at Exodus Communications' data
center in Jersey City, New Jersey. The Exodus data center provides redundant
network connections, redundant connections to power grids, diesel generators for
emergency power, air conditioning and 24-hour/ 7-day engineering support. Our
infrastructure is built to maximize reliability through the use of multiple
central processor units and redundant power supplies, networking and
input/output controllers.

COMPETITION

We face intense competition from both traditional and online advertising
and direct marketing businesses. We expect competition to increase due to the
lack of significant barriers to entry in the online advertising market. As we
expand the scope of our product and service offerings, we may compete with a
greater number of media companies across a wide range of advertising and direct
marketing services. Currently, several companies offer competitive online
products or services, including CyberGold and Netcentives. We may also face
competition from established online portals and community web sites that engage
in direct marketing, as well as from traditional advertising agencies and direct
marketing companies that may seek to offer online products or services.
Therefore, although we believe we are the only company that currently offers
both online direct marketing and an online rewards program, we may face
additional competition from companies engaged in online direct marketing that
introduce rewards programs and from online rewards program providers that begin
offering direct marketing services.

Our ability to compete depends upon many factors, including:

- the timing and market acceptance of new products and services developed
either by us or our competitors;

- our ability to demonstrate the effectiveness of our service to
advertisers;

- our ability to increase the number of members who participate in our
online programs;

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- our ability to increase the depth of information in our database
regarding our members by capturing demographic, behavioral and
transactional data;

- our ability to increase awareness of our brand;

- the capacity of our technology infrastructure to meet the needs of our
members, advertisers and loyalty partners; and

- sales and marketing efforts by us or our competitors.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we seek to protect
through a combination of patent, copyright, trade secret and trademark laws. We
have filed five patent applications in the United States. For some of these
applications, we also plan to file corresponding international patent
applications. We have entered into confidentiality or license agreements with
our employees and consultants, and corporate and strategic partners and
generally seek to control access to and distribution of our documentation and
other proprietary information. Despite these precautions, it may be possible for
third parties to copy or otherwise obtain and use our proprietary information
without authorization or to develop similar technology independently. We pursue
the registration of our trade and service marks in the United States and
internationally. We have registered trademarks for "MyPoints," "BonusMail" and
"Rew@rds" in the United States. Effective trademark, service mark, copyright and
trade secret protection may not be available in every country in which our
services are distributed or made available through the internet, and policing
unauthorized use of our proprietary information is difficult.

Legal standards relating to the validity, enforceability and scope of
protection of proprietary rights in internet-related businesses are uncertain
and still evolving. We cannot give any assurance as to the future viability or
value of any of our proprietary rights. In addition, we cannot give any
assurance as to the future viability or value, if any, of our proprietary
rights. In addition, we cannot give any assurance that the steps taken by us
will prevent misappropriation or infringement of our proprietary information.
Any infringement or misappropriation, should it occur, could have a material
adverse effect on our business, results of operations and financial condition.

Our business activities may infringe upon the proprietary rights of others,
and other parties may assert infringement claims against us. We have received
two claims of alleged infringement, one of which has been resolved through a
license agreement. We are currently in the process of responding to the second
claim, which was made by Cybergold, Inc. in May 1999. If this claim cannot be
resolved through a license or similar arrangement, we could become a party to
litigation with Cybergold. Litigation may also be necessary to enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. An adverse determination
in any litigation of this type could require us to make significant changes to
the structure and operation of our online rewards program, attempt to design
around a third party's patent, or license alternative technology from another
party. Implementation of any of these alternatives could be costly and time
consuming, and might not be possible. Accordingly, an adverse determination in
any litigation that might ensue between a third party and us could have a
material adverse effect on our business, results of operations and financial
condition. In addition, any intellectual property litigation, even if
successfully defended, would result in substantial costs and diversion of
resources and management attention and could therefore have a material adverse
effect on our business, results of operations and financial condition.

We have licensed, and may license in the future, elements of our
trademarks, trade dress and similar proprietary rights to third parties. While
we attempt to ensure that the quality of our brand is

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maintained by these business partners, they may take actions that could
materially and adversely affect the value of our proprietary rights or
reputation.

PRODUCT AND SERVICE WARRANTIES

When members purchase products in response to direct marketing offers that
we send them or redeem points for products and services, we pass on to these
members the warranties made by the manufacturers of products or providers of
services. We do not provide separate additional warranties.

EMPLOYEES

As of March 31, 1999, we employed 79 people, including 35 in sales and
marketing, 31 in technology and production and 13 in support, administration,
finance, management and human resources. We believe that we maintain good
relations with our employees.

FACILITIES

We are currently leasing approximately 7,878 square feet of office space in
San Francisco, California, approximately 5,650 square feet of office space in
Schaumburg, Illinois and approximately 4,500 square feet of office space in New
York, New York. Our sales, marketing, finance and administration functions are
based in San Francisco. Our technology and production groups are based in
Schaumburg. We have expanded our Schaumburg facility by leasing additional space
in our current building. This additional space will become available June 1,
1999. We also currently plan to increase our office space in San Francisco
during 1999. We do not have any commitments for this additional space, but we
believe we can obtain additional space on commercially reasonable terms. We
believe that our additional Schaumburg space and the additional space we intend
to lease in San Francisco will meet our space requirements for the next several
years. The lease for the San Francisco facility expires in November 1999, with
an option to extend the lease for one additional three-year term. The leases for
the existing Schaumburg facility expire in May 1999 and March 2001.

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DIRECT MARKETING BOARD OF ADVISORS

We have assembled a board of advisors with significant experience in the
direct marketing industry. Our board of advisors consists of:

Steve Carbone
President, Grey Direct e.marketing

G. Steven Dapper
Chief Executive Officer of Hawkeye Media
Former Chairman and Chief Executive Officer, Rapp Collins Worldwide

Rashi Glazer
Editor-in-Chief, Interactive Marketing Journal
Professor of Marketing, Haas School of Business, University of
California at Berkeley

Worthington Linen
Chairman and Chief Executive Officer, The Signature Group
Former President and Chief Executive Officer, BMG Direct

George S. Wiedemann
Chairman and Chief Executive Officer, Grey Direct Marketing Group
Chairman of the Direct Marketing Association

Lester Wunderman
Founder and former Chairman, Wunderman Cato Johnson

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth, as of March 31, 1999, certain information
concerning our executive officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Steven M. Markowitz.................. 28 Chief Executive Officer and Chairman of the Board
Robert C. Hoyler..................... 48 President, Chief Operating Officer and Director
Thomas P. Caldwell................... 40 Senior Vice President, Finance and Chief Financial
Officer
Charles H. Berman.................... 47 Senior Vice President, Sales
Virgil Bistriceanu................... 40 Senior Vice President, Technology
Frank J. Pirri....................... 58 Senior Vice President, Partnership Development
Robert Wise.......................... 39 Senior Vice President, Member Marketing
Layton S. Han........................ 33 Vice President, Business Development
Howard L. Morgan..................... 53 Director
Thomas Newkirk....................... 53 Director
Lawrence E. Phillips................. 32 Director
Mario M. Rosati...................... 52 Director
Lester Wunderman..................... 78 Director
</TABLE>

Steven M. Markowitz is a founder of MyPoints.com and has served as our
Chief Executive Officer and Chairman of the Board since November 1996. Mr.
Markowitz also served as our President from November 1996 until December 1998.
From May 1995 to August 1996, Mr. Markowitz was a securities analyst with
Fidelity Management & Research (Far East), a unit of Fidelity Investments. Mr.
Markowitz is also the founder of a specialty catalog for the Japanese software
market and has acted as an advisor to that company since 1992. From 1992 to
1994, Mr. Markowitz was a Tokyo-based correspondent for Dow Jones & Co., Inc., a
business and financial news publishing company. Mr. Markowitz holds an A.B. from
the University of California at Berkeley and an M.B.A. from the Haas School of
Business, University of California at Berkeley.

Robert C. Hoyler has served as our President and Chief Operating Officer
since December 1998 and has served as one of our directors since January 1999.
Prior to joining MyPoints.com, Mr. Hoyler had served as Chief Executive Officer
of MotivationNet since July 1996. From July 1993 to March 1996, Mr. Hoyler
served as Senior Vice President of Diversified Businesses at Keebler, a leading
consumer products company, where he was responsible for sales, marketing and
manufacturing for Keebler's non-store door businesses. Mr. Hoyler holds a B.A.
from Loyola University and a Master of Management from J.L. Kellogg Graduate
School of Management, Northwestern University.

Thomas P. Caldwell joined us as our Senior Vice President, Finance and
Chief Financial Officer in April 1999. Prior to joining MyPoints.com, Mr.
Caldwell served as Senior Vice President, Finance and Administration, Chief
Financial Officer and Secretary of Dynamic Circuits, Inc., a printed circuit
board manufacturer, since November 1996. In July 1998, Dynamic Circuits, Inc.
was acquired by Dynamic Details, Inc., and at that time Mr. Caldwell was also
appointed to the position of Vice President, Strategic Development of Dynamic
Details, Inc. From May 1996 to November 1996, Mr. Caldwell served as Director,
Corporate Finance in the San Francisco office of Coopers & Lybrand L.L.P., an
accounting firm, where he provided financial consulting services. From February
1993 to May 1996, Mr. Caldwell served as a Vice President of Houlihan, Lokey,
Howard & Zukin, Inc., an investment banking firm. Mr. Caldwell holds a B.S. from
Santa Clara University and an M.B.A. from the University of Chicago, Graduate
School of Business.

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Charles H. Berman has served as our Senior Vice President, Sales since
October 1998. From September 1998 to October 1998, Mr. Berman served as our
Director of Business Development. From February 1998 to September 1998, Mr.
Berman served as our Director of Consumer Marketing, where he was responsible
for all membership acquisition. From July 1994 to December 1997, Mr. Berman
served as President of Goodstuffs, a gourmet food and wine company. From 1988 to
June 1994, Mr. Berman served as President of WineWrights, a wine membership
organization company, where he managed the company from inception. Mr. Berman
holds a B.A. from Case Western Reserve University and an M.B.A. from San
Francisco State University.

Virgil Bistriceanu has served as our Senior Vice President, Technology
since November 1998. Since August 1994, Mr. Bistriceanu has also been an
instructor in the Computer Science Department of the Illinois Institute of
Technology. From May 1997 to November 1998, Mr. Bistriceanu served as Chief
Technology Officer of MotivationNet, where he designed the architecture and
managed implementation of its rewards program. Mr. Bistriceanu holds an M.S. in
Electrical Engineering from the Polytechnic Institute of Bucharest, Romania.

Frank J. Pirri has served as our Senior Vice President, Partnership
Development since December 1998. From May 1997 to November 1998, Mr. Pirri
served as Executive Vice President of MotivationNet. From January 1994 to May
1997, Mr. Pirri served as the President and Chief Executive Officer of Life
Facts, Inc., a medical information products company. From January 1993 to
January 1994, Mr. Pirri served as the Vice Chairman of S&H Citadel, Inc., an
incentives marketing services company, following its merger with S&H Motivation
and Citadel Motivation. From 1987 to January 1993, Mr. Pirri served as President
and Chief Executive Officer of S&H Motivation, a consumer and
business-to-business performance improvement company. Prior to S&H Motivation,
Mr. Pirri held numerous positions over a 24-year period at The Sperry &
Hutchinson Company (S&H Green Stamps). Mr. Pirri holds a B.B.A. from Pace
University and a Master of Management from J.L. Kellogg Graduate School of
Management, Northwestern University.

Robert Wise has served as our Senior Vice President, Member Marketing since
June 1998. From July 1995 to February 1998, Mr. Wise served as Vice President,
Acquisition Marketing for the Consumer Card Group at American Express Travel
Related Services, where he led the new customer database marketing business.
From May 1994 to July 1995, Mr. Wise managed acquisition marketing for American
Express' Optima Card. Mr. Wise also managed the first American Express card
loyalty program. Mr. Wise holds a B.S. and a B.A. from the University of
Pennsylvania and an M.B.A. from the Stern School of Business, New York
University.

Layton S. Han has served as our Vice President, Business Development since
April 1999. From November 1996 to April 1999, Mr. Han served as our Vice
President, Finance and Chief Financial Officer. From May 1996 to August 1996,
Mr. Han served with the strategy and business development group of US West Media
Group, a telecommunication company. From 1989 to January 1996, Mr. Han served as
an Account Executive of Travelers Insurance Company where he underwrote
insurance and risk financing products for corporate clients. Mr. Han holds a
B.S. from the University of California, Davis and an M.B.A. from the Haas School
of Business, University of California at Berkeley.

Howard L. Morgan has served as one of our directors since November 1996.
Since 1989, Dr. Morgan has been President of the Arca Group, Inc., a consulting
and investment management firm specializing in the areas of computer and
communications technologies. Dr. Morgan has also served as a General Partner of
Idealab! Corporation, an incubator of internet and e-commerce companies, since
January 1999. In addition, Dr. Morgan served as Chief Executive Officer of
Franklin Electronic Publishers, Inc. in early 1998. Dr. Morgan was Professor of
Decision Sciences at the Wharton School of Business of the University of
Pennsylvania from 1972 through 1986.

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<PAGE> 47

Dr. Morgan serves as director for a number of public companies, including Cylink
Corp., Franklin Electronic Publishers, Inc., Infonautics Corporation, Kentek
Information Systems, Inc., MetaCreations Corporation, Segue Software, Inc. and
Unitronix Corp. Dr. Morgan holds a B.S. from City College of New York and a
Ph.D. from Cornell University.

Thomas Newkirk has served as one of our directors since January 1999. Mr.
Newkirk has served as the Chairman of Experian Marketing Solutions, a subsidiary
of the information services company Experian, since 1998. Mr. Newkirk founded
Direct Marketing Technology, a wholly-owned subsidiary of Experian, in 1981 and
has served as its Chairman since 1990. Mr. Newkirk holds a B.S. from
Massachusetts Institute of Technology.

Lawrence E. Phillips has served as one of our directors since December
1998. In April 1998, Mr. Phillips formed and presently serves as Managing
Director of Primedia Ventures, a venture capital fund of Primedia, a media and
publishing company, where he directs investing activities in early-stage
internet software, commerce and advertising companies. From February 1995 to
April 1998, Mr. Phillips founded and managed an internet division for Primedia's
Magazine Group, where he had general management responsibilities for the launch
and operation of several web sites. From September 1992 to February 1995, Mr.
Phillips was a Vice President at Unterberg Harris, an investment banking firm.
Mr. Phillips holds an A.B. from Cornell University and an M.B.A. from Harvard
Business School.

Mario M. Rosati has served as one of our directors since November 1996. Mr.
Rosati has been with the Palo Alto, California law firm of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, since 1971, first as an associate
and then as a member since 1975. Mr. Rosati also serves as a director of Sanmina
Corporation, Ross Systems, Inc., Vivus, Inc., Meridian Data, Inc., Genus, Inc.
and Aehr Test Systems. Mr. Rosati holds a B.A. from the University of
California, Los Angeles and a J.D. from the University of California at
Berkeley, Boalt Hall School of Law.

Lester Wunderman has served as one of our directors since January 1999 and
is also a member of our board of advisors. Through December 1998, Mr. Wunderman
served as Chairman of Wunderman Cato Johnson, a world-wide direct marketing
agency, which he founded in 1958. Mr. Wunderman is also Visiting Professor of
Direct Marketing at the School for Continuing Education of New York University.
He has served as Chairman of the Executive Committee of the Center for Direct
Marketing at New York University and is a Trustee of the Children's Television
Workshop. Mr. Wunderman serves as a director of Infonautics Corporation. Mr.
Wunderman holds an honorary doctorate from City University of New York.

BOARD COMPOSITION

Our bylaws currently authorize seven directors. Our certificate of
incorporation and bylaws that become effective upon the completion of this
offering provide that our board will be divided into three classes, Class I,
Class II and Class III, with each class serving staggered three-year terms. The
Class I directors, Messrs. Markowitz, Morgan and Rosati, will stand for
reelection at the 2000 annual meeting of stockholders. The Class II directors,
Messrs. Hoyler and Phillips, will stand for reelection at the 2001 annual
meeting of stockholders. The Class III directors, Messrs. Newkirk and Wunderman,
will stand for reelection at the 2002 annual meeting of 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 directors. This staggered classification
of the board of directors may have the effect of delaying or preventing changes
in control or management. There are no family relationships among any of our
directors, officers or key employees.

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<PAGE> 48

BOARD COMMITTEES

The board of directors has a compensation committee and an audit committee.

Our compensation committee consists of Messrs. Morgan, Newkirk and
Phillips. The compensation committee makes recommendations regarding our various
incentive compensation and benefit plans and determines salaries for our
executive officers and incentive compensation for our employees and consultants.

Our audit committee consists of Messrs. Phillips and Wunderman. The audit
committee makes recommendations to the board of directors regarding the
selection of our independent auditors, reviews the results and scope of the
audit and other services provided by our independent auditors and reviews and
evaluates our control functions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of our compensation committee was, at any time since
our formation, an officer or employee of MyPoints.com. None of our executive
officers serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of our
board of directors or compensation committee. See "Transactions with Directors,
Executive Officers and Principal Stockholders" for a description of transactions
between MyPoints.com and entities affiliated with members of our compensation
committee.

DIRECTOR COMPENSATION

We do not currently pay any cash compensation to our directors for their
services as members of the board of directors, although we reimburse them for
reasonable expenses in connection with attending our board and committee
meetings. We do not provide additional compensation for committee participation
or special assignments of the board of directors. From time to time, we have
granted our outside directors options to purchase shares of our common stock
under the 1996 stock plan or the 1999 stock plan. In January 1997, we granted
Mr. Morgan an option to purchase 133,333 shares at a per share exercise price of
$0.05. In September 1997, we granted Mr. Rosati an option to purchase 113,333
shares at a per share exercise price of $0.10. In February 1998, we granted Mr.
Rosati an option to purchase 20,000 shares at a per share exercise price of
$0.10 and Mr. Wunderman, then in his capacity as a member of our board of
advisors, an option to purchase 10,000 shares at a per share exercise price of
$0.05. In January 1999, we granted Mr. Newkirk an option to purchase 25,000
shares, Mr. Phillips an option to purchase 25,000 shares and Mr. Wunderman an
option to purchase 50,000 shares, all at a per share exercise price of $1.00.

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EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by us during 1998 to
our Chief Executive Officer and our four other most highly compensated executive
officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
------------ UNDERLYING
NAME AND PRINCIPAL POSITIONS SALARY($) OPTIONS(#)
---------------------------- ------------ ------------
<S> <C> <C>
Steven M. Markowitz......................................... $100,000 --
Chief Executive Officer and Chairman of the Board of
Directors
Robert C. Hoyler............................................ 139,682 --
President and Chief Operating Officer
Virgil Bistriceanu.......................................... 108,184 96,675
Senior Vice President, Technology
Frank J. Pirri.............................................. 109,384 --
Senior Vice President, Partnership Development
Robert Wise................................................. 94,583 112,000
Senior Vice President, Member Marketing
</TABLE>

Messrs. Hoyler's, Bistriceanu's and Pirri's salaries include amounts earned
at MotivationNet before its acquisition by MyPoints.com. Mr. Wise joined
MyPoints.com in June 1998 at an annual salary of $145,000. Thomas P. Caldwell
joined MyPoints.com in April 1999 at an annual salary of $150,000.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information relating to stock options
granted during 1998 to our Chief Executive Officer and our four other most
highly compensated executive officers. All of these options were awarded under
our 1996 stock plan or our 1999 stock plan and have a term of ten years from the
date of grant.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED FOR OPTION TERM
OPTIONS IN FISCAL EXERCISE EXPIRATION -----------------
NAME GRANTED(#) 1998 PRICE($/SH.) DATE 5%($) 10%($)
---- ------------- ------------- --------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Steven M. Markowitz............. -- -- -- -- -- --
Robert C. Hoyler................ -- -- -- -- -- --
Virgil Bistriceanu.............. 96,675 9.0% $0.26 12/23/2008 $15,808 $40,060
Frank J. Pirri.................. -- -- -- -- -- --
Robert Wise..................... 112,000 10.4 0.20 7/06/2008 14,087 35,700
</TABLE>

In 1998, we granted options to purchase an aggregate of 1,079,562 shares of
common stock to our employees, directors and consultants. Generally, we grant
options at an exercise price equal to the

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<PAGE> 50

fair market value of the underlying common stock on the date of grant, as
determined by our board of directors, and the options vest over four years from
the date of grant. In determining the fair market value of our common stock, our
board of directors considers valuations of comparable companies, valuations at
which we have issued preferred stock, valuation reports and analyses prepared by
third parties, the relative rights and preferences of our preferred stock as
compared to our common stock, and the lack of liquidity of our securities. Once
we become a publicly-held company, the fair market value of our stock will equal
its trading market price. Mr. Bistriceanu's option vests over three years
beginning on May 1, 1997.

In accordance with the rules of the Securities and Exchange Commission, the
above table sets forth the potential realizable value over the ten-year period
from the grant date to the expiration date, assuming rates of stock appreciation
of 5% and 10%, compounded annually. These amounts do not represent our estimate
of future stock price performance. Actual realizable values, if any, of stock
options will depend on the future performance of our common stock.

In addition, in January 1999, we granted Mr. Markowitz an option to
purchase 350,000 shares, Mr. Hoyler an option to purchase 250,000 shares and Mr.
Bistriceanu options to purchase 138,595 shares of common stock. These options
were granted under our 1999 stock plan with an exercise price of $1.00 per
share.

In April 1999, we granted Messrs. Markowitz, Hoyler, Bistriceanu, Pirri and
Wise each an option to purchase 90,000 shares of common stock in connection with
our senior management incentive plan. Additionally, in May 1999, we granted Mr.
Caldwell options to purchase an aggregate of 220,000 shares of common stock. All
of these options were granted under our 1999 stock plan with an exercise price
of $8.00 per share. In connection with the option grant to Mr. Caldwell, we have
agreed to accelerate the vesting of 40,000 of the options in the event the price
of our common stock 30 days after the effective date of this offering is greater
than the initial public offering price.

FISCAL YEAR-END OPTION VALUES

The following table sets forth information for our Chief Executive Officer
and our four other most highly compensated executive officers relating to the
number and value of securities underlying exercisable and unexercisable options
held at December 31, 1998. These executive officers did not exercise any options
during 1998.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, 1998(#) DECEMBER 31, 1998($)
------------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Steven M. Markowitz.............. -- -- -- --
Robert C. Hoyler................. -- -- -- --
Virgil Bistriceanu............... 62,435 34,240 -- --
Frank J. Pirri................... -- -- -- --
Robert Wise...................... -- 112,000 -- $6,720
</TABLE>

The value of unexercised in-the-money options at December 31, 1998 above is
based on a value of $0.26 per share, the fair market value of our common stock
as of December 23, 1998, as determined by our board of directors, less the per
share exercise price, multiplied by the number of shares issuable upon exercise
of the option. All options were granted under our 1996 stock plan or our 1999
stock plan.

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<PAGE> 51

STOCK PLANS

1999 Stock Plan. Our 1999 stock plan was adopted by the board of directors
in November 1998. In March 1999, our board of directors amended the 1999 stock
plan to increase the number of shares reserved for issuance to a total of
2,966,962 shares. As of March 31, 1999, options to purchase an aggregate of
1,848,619 shares were outstanding, 10,231 shares of common stock had been
purchased pursuant to exercises of stock options and stock purchase rights, and
1,108,112 shares were available for future grant. In May 1999, our board of
directors amended the 1999 stock plan to increase the number of shares reserved
for issuance to a total of 3,750,000 shares.

The 1999 stock plan provides for the grant of incentive stock options, as
defined in Section 422 of the Internal Revenue Code, to employees and
nonstatutory stock options, stock purchase rights and stock bonus rights to
employees, directors and consultants. The 1999 stock plan may be administered by
different committees with respect to different groups of service providers.
Options granted as performance-based compensation within the meaning of Section
162(m) are administered by a committee of two or more outside directors. Option
administration committees may make final and binding determinations regarding
the terms and conditions of the awards granted, including the exercise prices,
the numbers of shares subject to the awards and the exercisability of the
awards, forms of agreement for use under the plan and interpretations of plan
terms.

The exercise price of incentive stock options granted under the 1999 stock
plan must be at least equal to the fair market value of our common stock on the
date of grant. However, for any employee holding more than 10% of the voting
power of all classes of our stock, including the stock of any parent or
subsidiary of MyPoints.com, the exercise price must be no less than 110% of the
fair market value and, for any service provider, the exercise price must be no
less than 85% of the fair market value. The exercise price of nonstatutory stock
options is set by the administrator of the 1999 stock plan. The maximum term of
options granted under the 1999 stock plan is ten years. The maximum term of
options granted to holders of at least 10% of our stock is five years.

An optionee whose relationship with us or any related corporation ceases
for any reason, other than death or total and permanent disability, may exercise
options in the three-month period following this cessation, or any other period
of time determined by the administrator, unless these options terminate or
expire sooner or, for nonstatutory stock options, later, by their terms. The
three-month period is extended to 12 months for terminations due to death or
total and permanent disability. In the event of a merger, sale or reorganization
of MyPoints.com into another corporation that results in a change of control of
us, options that would have become vested within 18 months after the closing
date of the merger transaction will accelerate and become fully vested upon the
closing of the transaction. In the event of a change of control transaction,
either outstanding options that are not accelerated would be assumed by the
successor company or an equivalent option would be substituted by the successor
company. If any of these options are not assumed or substituted, they would
terminate.

None of our employees may be granted options to purchase more than 500,000
shares in any fiscal year. The 1999 stock plan will terminate in November 2008,
unless sooner terminated by the board of directors.

The board of directors may also grant stock purchase rights to employees,
directors and consultants under the 1999 stock plan. These grants would be made
pursuant to restricted stock purchase agreements, and the price to be paid for
the shares granted is determined by the administrator. We are generally granted
a repurchase option exercisable on the voluntary or involuntary termination of
the purchaser's employment with us for any reason, including death or
disability. The repurchase price must be the original purchase price paid by the
purchaser. The

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<PAGE> 52

repurchase option lapses at a rate determined by the administrator. Once the
stock purchase right has been exercised, the purchaser will have rights
equivalent to those of a stockholder.

1996 Stock Plan. Our 1996 stock plan was adopted by the board of directors
in November 1996. In November 1998, the 1996 stock plan was amended to decrease
the number of shares of common stock reserved for issuance to 935,833 shares. As
of March 31, 1999, options to purchase an aggregate of 757,895 shares were
outstanding, 146,947 shares of common stock had been purchased pursuant to
exercises of stock options and stock purchase rights and 30,991 shares were
available for future grant.

The 1996 stock plan provides for the grant of incentive stock options, as
defined in Section 422 of the Internal Revenue Code, to employees and
nonstatutory stock options, stock purchase rights and stock bonus rights to
employees, directors and consultants. The 1996 stock plan may be administered by
the board of directors or a committee appointed by the board. The option
administration committee may make final and binding determinations regarding the
terms and conditions of the awards granted, including the exercise prices, the
numbers of shares subject to the awards and the exercisability of the awards,
forms of agreement for use under the plan and interpretations of plan terms.

The exercise price of incentive stock options granted under the 1996 stock
plan must be at least equal to the fair market value of our common stock on the
date of grant. However, for any employee holding more than 10% of the voting
power of all classes of our stock, the exercise price must be no less than 110%
of the fair market value. The exercise price of nonstatutory stock options is as
follows: for any person holding more than 10% of the voting power of all classes
of our stock including the stock of any parent or subsidiary of MyPoints.com,
the exercise price must be no less than 110% of the fair market value and, for
any service provider, the exercise price must be no less than 85% of the fair
market value. The maximum term of options granted under the 1996 stock plan is
generally ten years. The maximum term of options granted to holders of at least
10% of our stock is five years.

An optionee whose relationship with us or any related corporation ceases
for any reason, other than death or total and permanent disability, may exercise
options in the three-month period following this cessation, or any other period
of time determined by the administrator, unless these options terminate or
expire sooner or, for nonstatutory stock options, later, by their terms. The
three-month period is extended to 12 months for terminations due to death or
total and permanent disability. In the event of a merger, sale or reorganization
of MyPoints.com into another corporation that results in a change of control of
us, options that would have become vested within 18 months after the closing
date of the merger transaction will accelerate and become fully vested upon the
closing of the transaction. In the event of a change of control transaction,
either outstanding options that are not accelerated would be assumed by the
successor company or an equivalent option would be substituted by the successor
company. If any these options are not assumed or substituted, they would
terminate. The 1996 stock plan will terminate in November 2006, unless sooner
terminated by the board of directors.

The board of directors may also grant stock purchase rights to employees,
directors and consultants under the 1996 stock plan. These grants are made
pursuant to restricted stock purchase agreements, and the price to be paid for
the shares granted is determined by the administrator. We are generally granted
a repurchase option exercisable on the voluntary or involuntary termination of
the purchaser's employment with us for any reason, including death or
disability. The repurchase price must be the original purchase price paid by the
purchaser. The repurchase option lapses at a rate determined by the
administrator. Once the stock purchase right has been exercised, the purchaser
will have rights equivalent to those of a stockholder.

1999 Employee Stock Purchase Plan. Our 1999 employee stock purchase plan
provides employees of MyPoints.com with an opportunity to purchase our common
stock through accumulated

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<PAGE> 53

payroll deductions. A total of 200,000 shares of common stock has been reserved
for issuance under the purchase plan, none of which has been issued. The
purchase plan will be administered by our board of directors or by a committee
appointed by the board. The purchase plan permits eligible employees to purchase
common stock through payroll deductions of up to 15.0% of an employee's
compensation, up to a maximum of $25,000, determined by the fair market value of
the shares at the time the stock is purchased, for all purchases ending within
the same calendar year. Employees are eligible to participate if they are
customarily employed by us for at least 20 hours per week and more than five
months in any calendar year. Unless the board of directors or its committee
determines otherwise, each offering period will run for six months. The first
offering period will commence on the date of this prospectus and will terminate
on December 31, 1999. Thereafter, new six-month offering periods will begin on
January 1 and July 1 of each year. In the event of an acquisition of
MyPoints.com, the offering period then in progress will be shortened and all
rights automatically exercised if the purchase rights are not assumed or
substituted by the successor corporation. The price at which common stock will
be purchased under the purchase plan is equal to 85.0% of the fair market value
of the common stock on the first day of the offering period or the last day of
the offering period, whichever is lower. Employees may end their participation
in an offering period at any time, and participation automatically ends on
termination of employment. The board may amend, modify or terminate the purchase
plan at any time as long as the amendment, modification or termination does not
impair vesting rights of plan participants. The purchase plan will terminate in
March 2009, unless terminated earlier in accordance with its provisions.

Senior Management Incentive Plan. In 1999, we adopted a senior management
incentive plan under which our executive officers may receive grants of options
upon our achievement of various revenue and cash flow targets. The plan sets
quarterly, semi-annual and annual targets.

401(K) PLAN

In February 1997, we adopted a 401(k) plan covering our full-time employees
located in the United States. The 401(k) plan is intended to qualify under
Section 401(k) of the Internal Revenue Code, so that contributions to the 401(k)
plan by employees or by us, and the investment earnings thereon, are not taxable
to employees until withdrawn from the 401(k) plan, and so that we can deduct our
contributions, if any, when made. Pursuant to the 401(k) plan, employees may
elect to reduce their current compensation by up to the statutorily prescribed
annual limit ($10,000 in 1999) and to have the amount of the reduction
contributed to the 401(k) plan. The 401(k) plan permits, but does not require,
that we provide additional matching contributions to the 40l(k) plan on behalf
of all participants in the 401(k) plan. To date, we have not made any
contributions to the 401(k) plan.

INDEMNIFICATION AND LIMITATION OF LIABILITY

Our 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 any of the
following:

- any breach of their duty of loyalty to the corporation or its
stockholders;

- acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or

- any transaction from which the director derived an improper personal
benefit.

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<PAGE> 54

This limitation of liability does not apply to liabilities arising under
the federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

Our bylaws provide that we must indemnify our directors and executive
officers and may indemnify our other officers and employees and other agents to
the fullest extent permitted by law. We believe that indemnification under our
bylaws covers at least negligence and gross negligence on the part of
indemnified parties. Our bylaws also permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions in this capacity, regardless of whether the bylaws would
permit indemnification. We have purchased directors and officers liability
insurance, which provides coverage against specified liabilities.

We have entered into indemnification agreements with our directors and
executive officers that provide for indemnification beyond what is provided for
in our bylaws. These agreements, among other things, indemnify our directors and
executive officers for certain expenses, including attorneys' fees, judgments,
fines and settlement amounts incurred by them in any action or proceeding,
including any action by us arising out of their services as directors or
executive officers of MyPoints.com, any of our subsidiaries or any other company
or enterprise to which the person provides services at our request. We believe
that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.

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<PAGE> 55

TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS

AND PRINCIPAL STOCKHOLDERS

MYPOINTS.COM TRANSACTIONS WITH EXPERIAN AND RELATED ENTITIES

In November 1998 and December 1998, we entered into a series of
transactions to acquire internet and electronic commerce related assets from
companies affiliated with Experian. As part of these transactions, Experian
acquired shares of our common stock equal to 19.9% of our then outstanding
shares of common stock. These transactions involved the following principal
elements:

- The merger of a subsidiary of MyPoints.com with and into Enhanced
Response Technologies, Inc., an affiliate of Experian, where the
outstanding shares and options of Enhanced Response Technologies were
exchanged for 1,435,946 shares of our common stock and options to
purchase 402,818 shares of our common stock;

- The acquisition from two subsidiaries of Experian of all of the
outstanding ownership interests of MotivationNet, LLC in exchange for
1,213,592 shares of our Series D preferred stock and 2,164,535 shares of
our common stock;

- The acquisition from Metromail Corporation, an affiliate of Experian, of
certain assets relating to the "Direct Value to You" internet sponsorship
product, a targeted, web-based coupon program with a complementary
membership base, for $400,000 in cash, payable over 30 months;

- A services agreement between Direct Marketing Technology, Inc., a
wholly-owned subsidiary of Experian, and MyPoints.com in which Direct
Marketing Technology agreed to continue to provide demographic data and
other list processing services that are required for MyPoints.com to
operate and administer its programs; and

- A license agreement between Direct Marketing Technology, Inc. and
MyPoints.com that grants us the right to use certain intellectual
property rights associated with the MyPoints program, in exchange for
royalties specified in the license agreement.

The license agreement provides for an aggregate royalty payment of $4.2
million, payable in monthly installments equal to the greater of $35,000 or 3.0%
of our monthly revenues generated through the operation of the MyPoints program.
The license agreement also provides that, in the event of our initial public
offering, we must prepay the royalty by making a payment equal to the present
value of the $4.2 million royalty amount, less any monthly royalties previously
paid, discounted using a rate equal to the prime rate, as published in The Wall
Street Journal, plus 2.0%. MyPoints estimates that this prepayment will equal
approximately $2.6 million upon the completion of this offering. This estimate
assumes this payment will be made in June 1999. The actual amount of this
payment could vary depending upon the timing of the payment and fluctuations in
interest rates. Once we have made this license payment, our obligations under
the license will be fully satisfied and we will have no future royalty or other
financial obligations under the license.

OUR FORMATION

In connection with our incorporation in November 1996, we issued 843,775
shares of common stock to Steven M. Markowitz, 593,750 shares to Mark S. Smith,
593,750 shares to Noah J. Doyle, 250,000 shares to Layton S. Han and 150,000
shares to Daniel K. Kihanya, at a purchase price of $.001 per share, paid in
cash. These founders' shares are subject to a right of repurchase by us at the
original purchase of $.001 per share. This repurchase right lapsed as to
one-third of the shares upon

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<PAGE> 56

issuance and lapses as to the remaining shares on a cumulative monthly basis
over a period of 48 months from the date of issuance of the shares.

PREFERRED STOCK FINANCINGS

In November and December 1996, MyPoints.com issued to various investors a
total of 3,000,000 shares of Series A preferred stock at a purchase price of
$0.50 per share. In several transactions from October 1997 through April 1998,
MyPoints.com issued to various investors a total of 2,926,666 shares of Series C
preferred stock at a purchase price of $1.50 per share. In November 1998, we
issued to various investors a total of 3,961,649 shares of Series D preferred
stock and warrants to purchase 1,374,028 additional shares of Series D preferred
stock at a purchase price of $2.06 per share. In March 1999, we issued to
various investors a total of 2,000,000 shares of Series E preferred stock at a
purchase price of $5.00 per share.

All shares shown below for Direct Marketing Technology represent shares
issued in exchange for the acquisition of MotivationNet, L.L.C. The shares of
Series D preferred stock shown below include shares issuable upon exercise of
warrants as follows: (1) S-7 Associates, L.L.C., 133,495 shares; (2) Primedia
Ventures, 388,350 shares; (3) Auber Investments Limited, 145,631 shares; and (4)
Lester Wunderman, 12,136 shares.

Investors in our preferred stock include, among others, the following
directors and holders of more than 5% of our outstanding stock:

<TABLE>
<CAPTION>
PREFERRED STOCK
-------------------------------------------------
PREFERRED STOCKHOLDER SERIES A SERIES C SERIES D SERIES E
--------------------- --------- -------- --------- -----------
<S> <C> <C> <C> <C>
HOLDERS OF MORE THAN 5%:
Direct Marketing Technology, Inc., a
wholly owned subsidiary of
Experian............................. -- -- 1,213,592 296,229
S-7 Associates, L.L.C................... 866,667 300,000 400,485 160,447
Long Island Venture Fund, L.P........... 1,000,000 333,333 -- --
Harold M. Brierley...................... 1,000,000 200,000 -- --
Primedia Ventures....................... -- -- 1,165,049 68,109
Auber Investments Limited............... -- 666,667 436,893 132,622
Applewood Associates, L.P............... -- 666,666 436,893 84,001
DIRECTORS:
Thomas Newkirk.......................... -- -- 1,213,592 296,229
Lawrence E. Phillips.................... -- -- 1,165,049 68,109
Howard L. Morgan........................ 133,333 33,333 36,408 16,743
Lester Wunderman........................ -- 16,667 36,408 4,986
</TABLE>

Thomas Newkirk is chairman of Direct Marketing Technology, a wholly-owned
subsidiary of Experian.

Holders of our preferred stock are entitled to registration rights with
respect to the shares of common stock that they will hold following this
offering. See "Description of Capital Stock -- Registration Rights."

OTHER TRANSACTIONS

Harold M. Brierley, a former member of our board of directors and a holder
of more than 5% of our stock, founded Targeted Marketing Systems, Inc., a
service provider that we engaged for creative services to assist in the
development of our marketing program and web site. We made total

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<PAGE> 57

payments to Targeted Marketing Systems of $223,000 in 1997 and none in 1996 or
1998. As of December 31, 1997 and 1998, we owed no amounts to Targeted Marketing
Systems. While a member of our board, Mr. Brierley received an option to
purchase 75,000 shares of our common stock. On June 4, 1998, Mr. Brierley
exercised this option.

Mario M. Rosati, one of our directors, is also a member of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, which has served as our outside
corporate counsel since our formation. From our inception through March 31,
1999, we have accrued a total of $329,000 in fees to Mr. Rosati's law firm.

We have entered into indemnification agreements with each of our directors
and executive officers. See "Management -- Indemnification and Limitation of
Liability."

POLICY REGARDING TRANSACTIONS WITH AFFILIATES

It is our policy that future transactions with affiliates, including any
loans we make to our officers, directors, principal stockholders or other
affiliates will be on terms no less favorable to us than we could have obtained
from unaffiliated third parties. These transactions will be approved by a
majority of our board of directors, including a majority of the independent and
disinterested members or, if required by law, a majority of our disinterested
stockholders.

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<PAGE> 58

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock, as of March 31, 1999, by the following
individuals or groups:

- each person, or group of affiliated persons, whom we know beneficially
owns more than 5% of our outstanding stock;

- each of our executive officers;

- each of our directors; and

- all of our directors and executive officers as a group.

Unless otherwise indicated, the address for each stockholder on this table
is c/o MyPoints.com, Inc., 565 Commercial Street, 4th Floor, San Francisco,
California 94111. Except as otherwise noted, and subject to applicable community
property laws, to the best of our knowledge, the persons named in this table
have sole voting and investing power with respect to all of the shares of common
stock held by them.

This table lists applicable percentage ownership based on 18,464,554 shares
of common stock outstanding as of March 31, 1999, as adjusted to reflect the
conversion of all outstanding shares of preferred stock upon the closing of this
offering, and also lists applicable percentage ownership based on 23,464,554
shares of common stock outstanding after completion of this offering. Options
and warrants to purchase shares of our common stock that are exercisable within
60 days of March 31, 1999 are deemed to be beneficially owned by the persons
holding these options or warrants for the purpose of computing percentage
ownership of that person, but are not treated as outstanding for the purpose of
computing any other person's ownership percentage. Except as indicated by
footnote, and subject to community property laws where applicable, to our
knowledge, the persons named in the table have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by them.

The shares shown below for Auber Investments Limited and Applewood
Associates, L.P., each include 145,631 shares issuable upon exercise of warrants
to purchase our stock. The shares shown below include shares issuable upon the
exercise of warrants as follows: (1) S-7 Associates, L.L.C., 133,495 shares; (2)
Primedia Ventures, 388,350 shares; (3) Mr. Morgan, 12,136 shares; (4) Mr.
Wunderman, 12,136 shares; and (5) all executive officers and directors as a
group, 412,622 shares. The shares shown below for executive officers include
shares issuable upon the exercise of options to purchase our stock as follows:
(1) Mr. Markowitz, 124,375 shares; (2) Mr. Hoyler, 93,125 shares; (3) Mr. Han,
30,625 shares; (4) Mr. Bistriceanu, 110,943 shares; (5) Mr. Pirri, 15,000
shares; (6) Mr. Wise, 15,000 shares; and (7) Mr. Berman, 3,281 shares. The
shares shown below for directors include shares issuable upon the exercise of
options as follows: (1) Mr. Morgan, 111,111 shares; (2) Mr. Rosati, 105,277
shares; and (3) Mr. Wunderman, 5,417 shares. The shares shown below for all
executive officers and directors as a group include 614,154 shares issuable upon
exercise of options to purchase our stock.

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<PAGE> 59

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
------------------------------------------
PERCENT BEFORE PERCENT AFTER
BENEFICIAL OWNER NUMBER OFFERING OFFERING
---------------- --------- -------------- -------------
<S> <C> <C> <C>
Direct Marketing Technology, Inc..................... 3,674,356 19.9% 15.7%
505 City Parkway West, 10th Floor
Orange, CA 92868
S-7 Associates, L.L.C................................ 1,727,599 9.3 7.3
800 Third Avenue, 33rd Floor
New York, NY 10022
Long Island Venture Fund, L.P. ...................... 1,333,333 7.2 5.7
145 Hofstra University, Suite 213
Business Development Center
Hempstead, NY 11550-1090
Harold M. Brierley(1)................................ 1,275,000 6.9 5.4
1201 Main Street, Suite 2500
Dallas, TX 75202
Primedia Ventures.................................... 1,233,158 6.5 5.2
745 Fifth Avenue, 24th Floor
New York, NY 10022
Auber Investments Limited............................ 1,236,182 6.6 5.2
505 Park Avenue
New York, NY 10022
Applewood Associates, L.P............................ 1,187,560 6.4 5.0
767 Fifth Avenue
45th Floor
New York, NY 10153
Steven M. Markowitz.................................. 968,150 5.2 4.1
Robert C. Hoyler..................................... 531,867 2.9 2.3
Layton S. Han........................................ 280,625 1.5 1.2
Virgil Bistriceanu................................... 129,746 * *
Frank J. Pirri....................................... 127,819 * *
Robert Wise.......................................... 15,000 * *
Charles H. Berman.................................... 3,281 * *
Thomas P. Caldwell................................... -- * *
Thomas Newkirk(2).................................... 3,674,356 19.9 15.7
Lawrence E. Phillips(3).............................. 1,233,158 6.5 5.2
Howard L. Morgan..................................... 330,928 1.8 1.4
Mario M. Rosati(4)................................... 130,277 * *
Lester Wunderman..................................... 63,478 * *
All directors and executive officers as a group (13
persons) .......................................... 7,488,685 38.4% 30.6%
</TABLE>

- -------------------------
* Less than 1% of the outstanding shares of common stock.

(1) Includes 200,000 shares held by Targeted Marketing Systems, Inc. Mr.
Brierley, President of Targeted Marketing Systems, disclaims beneficial
ownership of the shares held by that entity, except to the extent of his
proportionate pecuniary interest therein based upon his beneficial ownership
of the capital stock of Targeted Marketing Systems.

(2) Represents 3,674,356 shares held by Direct Marketing Technology. Mr.
Newkirk, the Chairman of Direct Marketing Technology, disclaims beneficial
ownership of the shares held by that entity, except to the extent of his
proportionate pecuniary interest therein based upon his beneficial

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<PAGE> 60

ownership of the capital stock of Direct Marketing Technology. Mr. Newkirk
is a member of our board of directors.

(3) Represents 844,808 shares held by Primedia Ventures and 388,350 shares
issuable pursuant to a warrant held by Primedia Ventures exercisable within
60 days of March 31, 1999. Mr. Phillips, Managing Director of Primedia,
disclaims beneficial ownership of the shares and warrant held by Primedia,
except to the extent of his proportionate pecuniary interest therein. Mr.
Phillips is a member of our board of directors.

(4) Includes 22,500 shares held by WS Investment Company 96B. Mr. Rosati is a
general partner of WS Investment Company 96B and disclaims beneficial
ownership of the shares held by that entity, except to the extent of his
proportionate partnership interest therein. Mr. Rosati is a member of our
board of directors.

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<PAGE> 61

DESCRIPTION OF CAPITAL STOCK

GENERAL

Our certificate of incorporation that becomes effective upon the closing of
this offering authorizes the issuance of 100,000,000 shares of common stock,
$.001 par value, and authorizes the issuance of 10,000,000 shares of
undesignated preferred stock, no par value. From time to time, our board of
directors may establish the rights and preferences of the preferred stock. As of
March 31, 1999, 18,464,554 shares of common stock were issued and outstanding
and held by 80 stockholders, and options to purchase 2,606,514 shares of common
stock were issued and outstanding and held by 83 optionholders.

COMMON STOCK

Each holder of common stock is entitled to one vote for each share held on
all matters to be voted upon by the stockholders and there are no cumulative
voting rights. Subject to preferences that may be applicable to any outstanding
preferred stock, holders of common stock are entitled to receive ratably the
dividends, if any, that are declared from time to time by the board of directors
out of funds legally available for that purpose. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of MyPoints.com, the holders
of common stock are entitled to share in our 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. There are
no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are 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 that we may designate in the future.

PREFERRED STOCK

The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may be
greater than the rights of the common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of this preferred stock. However, the effects
might include, among other things:

- restricting dividends on the common stock;

- diluting the voting power of the common stock;

- impairing the liquidation rights of the common stock; or

- delaying or preventing a change in control of MyPoints.com without
further action by the stockholders.

Upon the closing of this offering, no shares of preferred stock will be
outstanding, and MyPoints.com has no present plans to issue any shares of
preferred stock.

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<PAGE> 62

WARRANTS AND OTHER OBLIGATIONS TO ISSUE CAPITAL STOCK

As of March 31, 1999, we had outstanding warrants to purchase an aggregate
of 1,374,028 shares of Series D preferred stock at an exercise price of $2.06
per share. These warrants are currently exercisable in full and will expire in
2003. We also had outstanding a warrant to purchase 10,000 shares of Series C
preferred stock at an exercise price of $1.50 per share. This warrant is
currently exercisable in full and will expire in 2008. Upon the closing of this
offering, all of these warrants will become exercisable for a like number of
shares of common stock.

REGISTRATION RIGHTS

After this offering, holders of 15,418,432 shares of common stock and
1,384,028 shares of common stock issuable upon exercise of outstanding warrants
(the "registrable securities") or their transferees will have rights with
respect to the registration of their shares under the Securities Act. These
rights are provided under the terms of an agreement between MyPoints.com and the
holders of the registrable securities. Beginning 180 days after the date of this
prospectus, holders of at least 20% of the registrable securities may require,
on two occasions, that we use our best efforts to register the registrable
securities for public resale. MyPoints.com is obligated to register these shares
only if the outstanding registrable securities have an anticipated public
offering price of at least $5,000,000. Also, holders of 10.0% of the registrable
securities may require, no more than once during any six-month period, that
MyPoints.com register their shares for public resale on Form S-3 or a similar
short-form registration if the value of the securities to be registered is at
least $500,000. Furthermore, in the event MyPoints.com elects to register any of
its shares of common stock for purposes of effecting any public offering, the
holders of registrable securities are entitled to include their shares of common
stock in the registration, but MyPoints.com may reduce the number of shares
proposed to be registered in view of market conditions. These registration
rights have been waived with respect to this offering. MyPoints.com will bear
all expenses in connection with any registration, other than underwriting
discounts and commissions. All registration rights will terminate five years
following the consummation of this offering or, with respect to each holder of
registrable securities, at any time the holder is able to sell all of its shares
in a 90-day period under Rule 144 of the Securities Act.

ANTITAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CHARTER AND BYLAWS

Provisions of Delaware law and our certificate of incorporation and bylaws
could make the following more difficult:

- the acquisition of MyPoints.com by means of a tender offer;

- the acquisition of MyPoints.com by means of a proxy contest or otherwise;
or

- the removal of MyPoints.com's incumbent officers and directors.

These provisions, summarized below, are expected to discourage certain
types of coercive takeover practices and inadequate takeover bids. These
provisions are also designed to encourage persons seeking to acquire control of
MyPoints.com to negotiate first with MyPoints.com's board. MyPoints.com believes
that the benefits of increased protection of its potential ability to negotiate
with the proponent of an unfriendly or unsolicited proposal to acquire or
restructure MyPoints.com outweigh the disadvantages of discouraging these
proposals because negotiation of any proposals of this type could result in an
improvement of their terms.

Election and Removal of Directors. Our board of directors is divided into
three classes. The directors in each class will serve for a three-year term,
with MyPoints.com's stockholders electing one class each year. See
"Management -- Board Composition." This system of electing and removing

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<PAGE> 63

directors may tend to discourage a third party from making a tender offer or
otherwise attempting to obtain control of MyPoints.com, because it generally
makes it more difficult for stockholders to replace a majority of the directors.

Stockholder Meetings. Under our bylaws, only the board of directors, the
chairman of the board or the president may call special meetings of
stockholders.

Requirements for Advance Notification of Stockholder Nominations and
Proposals. Our bylaws establish advance notice procedures for stockholder
proposals and for the nomination of candidates for election as directors, other
than nominations made by or at the direction of the board of directors or a
committee of the board.

Delaware Antitakeover Law. MyPoints.com is subject to Section 203 of the
Delaware General Corporation Law, an antitakeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a business
combination with an interested stockholder for a period of three years following
the date the person became an interested stockholder, unless the business
combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a business
combination includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the interested stockholder. Generally, an
interested stockholder is a person who, together with affiliates and associates,
owns or within three years prior to the determination of interested stockholder
status did own 15% or more of a corporation's voting stock. The existence of
this provision may have an antitakeover effect with respect to transactions not
approved in advance by the board of directors, including discouraging attempts
that might result in a premium over the market price for the shares of common
stock held by stockholders.

Elimination of Stockholder Action by Written Consent. Our certificate of
incorporation eliminates the right of stockholders to act by written consent
without a meeting.

No Cumulative Voting. Our certificate of incorporation and bylaws do not
provide for cumulative voting in the election of directors.

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 MyPoints.com. These and other provisions may have
the effect of deferring hostile takeovers or delaying changes in control or
management of MyPoints.com.

Amendment of Charter Provisions. The amendment of any of the above
provisions would require approval by holders of at least 66.7% of the
outstanding common stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is Norwest Bank
Minnesota, N.A.

LISTING

We have applied to list our common stock on the Nasdaq National Market
under the trading symbol "MYPT."

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<PAGE> 64

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our common stock, and
we cannot assure you that a significant public market for the common stock will
develop or be sustained after this offering. Future sales of substantial amounts
of common stock, including shares issued upon exercise of outstanding options
and warrants, in the public market following this offering could adversely
affect market prices prevailing from time to time and could impair our ability
to raise capital through sale of our equity securities. As described below, no
shares currently outstanding will be available for sale immediately after this
offering because of contractual resale restrictions contained in agreements
between us and our stockholders.

Upon completion of this offering, we will have outstanding 23,464,554
shares of common stock based upon shares outstanding as of March 31, 1999,
assuming no exercise of the underwriters' over-allotment option and no exercise
of outstanding options or warrants prior to completion of this offering. Of
these shares, the 5,000,000 shares sold in this offering will be freely tradable
without restriction under the Securities Act, except for any shares purchased by
our "affiliates" as defined in Rule 144 under the Securities Act. Of the
remaining 18,464,554 shares of common stock, 17,214,038 shares held by existing
stockholders are subject to lock-up agreements with the underwriters providing
that the stockholder will not offer to sell, contract to sell or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to any shares of
common stock or any securities that are convertible into common stock, owned as
of the date of this prospectus or subsequently acquired, for a period of 180
days after the date of this prospectus without the prior written consent of
BancBoston Robertson Stephens. As a result of these lock-up agreements,
notwithstanding possible earlier eligibility for sale under the provisions of
Rules 144, 144(k) and 701 under the Securities Act, none of these shares will be
resellable until 181 days after the date of this prospectus. BancBoston
Robertson Stephens may, in its sole discretion and at any time without notice,
release all or any portion of the shares subject to lock-up agreements.

Beginning 181 days after the date of this prospectus, approximately
10,132,003 shares will be eligible for sale in the public market. All of these
shares will be subject to volume limitations under Rule 144, except 3,038,921
shares eligible for sale under Rule 144(k) and 58,428 shares eligible for sale
under Rule 701. In some cases, these shares are subject to repurchase rights of
MyPoints.com.

In addition, as of March 31, 1999, there were outstanding warrants to
purchase 1,384,028 shares of preferred stock convertible into a like number of
shares of common stock, some of which may be exercised prior to this offering.
All of the shares issuable pursuant to these warrants are subject to lock-up
agreements.

In general, under Rule 144, as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned restricted
shares for at least one year including the holding period of any prior owner
except an affiliate would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of:

- 1.0% of the number of shares of common stock then outstanding, which will
equal approximately 234,646 shares immediately after this offering; or

- the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a Form 144 with respect to such
sale.

Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about MyPoints.com. Under Rule 144(k), a person who is not deemed to have been
an affiliate of MyPoints.com at any time during the three months preceding a
sale, and who has beneficially owned the shares proposed to be

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<PAGE> 65

sold for at least two years including the holding period of any prior owner
except an affiliate, is entitled to sell those shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.

Rule 701, as currently in effect, permits resales of shares in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirement, of Rule 144. Any employee, officer or director of or
consultant to MyPoints.com who purchased shares pursuant to a written
compensatory plan or contact may be entitled to rely on the resale provisions of
Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule
144 without complying with the holding period requirements of Rule 144. Rule 701
further provides that non-affiliates may sell their Rule 701 shares in reliance
on Rule 144 without having to comply with the holding period, public
information, volume limitation or notice provisions of Rule 144. All holders of
Rule 701 shares are required to wait until 90 days after the date of this
prospectus before selling their Rule 701 shares. However, all Rule 701 shares
are subject to lock-up agreements and will only become eligible for sale at the
earlier of the expiration of the 180-day lock-up agreements or the receipt of
the written consent of BancBoston Robertson Stephens more than 90 days after the
date of this prospectus.

After this offering, we intend to file a registration statement on Form S-8
registering shares of common stock subject to outstanding options or reserved
for future issuance under our stock plans. As of March 31, 1999, options to
purchase a total of 2,606,514 shares were outstanding and 1,139,103 shares were
reserved for future issuance under our stock plans. Common stock issued upon
exercise of outstanding vested options or issued pursuant to our employee stock
purchase plan, other than common stock issued to our affiliates, will be
available for immediate resale in the open market following expiration of the
180-day lock-up agreements.

Also beginning six months after the date of this offering, holders of
15,418,432 restricted shares and holders of warrants to purchase preferred stock
convertible into 1,384,028 shares of common stock will be entitled to certain
rights with respect to registration of these shares for sale in the public
market. See "Description of Capital Stock -- Registration Rights." Registration
of these shares under the Securities Act would result in their becoming freely
tradable without restriction under the Securities Act immediately upon the
effectiveness of the registration.

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<PAGE> 66

UNDERWRITING

The underwriters named below, acting through their representatives,
BancBoston Robertson Stephens Inc., Bear, Stearns & Co. Inc., Salomon Smith
Barney Inc. and Wit Capital Corporation, have severally agreed with
MyPoints.com, subject to the terms and conditions of the underwriting agreement,
to purchase from MyPoints.com the number of shares of common stock set forth
opposite their names below. The underwriters are committed to purchase and pay
for these shares if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
BancBoston Robertson Stephens Inc...........................
Bear, Stearns & Co. Inc.....................................
Salomon Smith Barney Inc....................................
Wit Capital Corporation.....................................
--------
Total..................................................... 5,000,000
========
</TABLE>

The representatives of the underwriters have advised us that the
underwriters propose to offer the shares of common stock to the public at the
public offering price set forth on the cover page of this prospectus and to
dealers at this price less a concession of not in excess of $ per share, of
which $ may be reallowed to other dealers. After the initial public
offering, the public offering price, concession and reallowance to dealers may
be reduced by the representatives. No reduction of this type will change the
amount of proceeds to be received by us as set forth on the cover page of this
prospectus. The common stock is offered by the underwriters as stated in this
prospectus, subject to receipt and acceptance by them and subject to their right
to reject any order in whole or in part. BancBoston Robertson Stephens Inc.
expects to deliver the shares of common stock to purchasers on ,
1999.

The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

Internet Distribution. The underwriters, at the request of MyPoints.com,
have reserved for sale at the initial public offering price up to shares
of common stock to members and visitors to Wit Capital's services or web site
who express an interest in purchasing these shares. The sale of these shares
will be made by Wit Capital. Purchases of the reserved shares will be made
through an account at Wit Capital in accordance with Wit Capital's procedures
for opening an account and transacting in securities. Any of these reserved
shares not purchased by visitors to and users of Wit Capital's services or web
site will be offered by the underwriters to the public on the same terms as the
other shares.

Internet Prospectus. A prospectus in electronic format is being made
available on a web site maintained by Wit Capital. In addition, pursuant to an
e-Dealer Agreement, all dealers purchasing shares from Wit Capital in the
offering, the e-Dealers, similarly have agreed to make a prospectus in
electronic format available on the web sites that they maintain.

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<PAGE> 67

additional shares that the number of shares of common stock to be purchased by
the underwriter shown in the table above bears to the total number of the shares
shown in the table above. If purchased, these additional shares will be sold by
the underwriters on the same terms as those on which the 5,000,000 shares are
being sold. We will be obligated, under the terms of the option, to sell shares
to the extent the option is exercised. The underwriters may exercise the option
only to cover over-allotments made in connection with the sale of the shares of
common stock offered hereby. If the option is exercised in full, the total
public offering price will be $ , the total underwriting discounts and
commissions will be $ and the total proceeds to us will be $ .
The expenses of this offering are estimated at $ and are payable
entirely by MyPoints.com.

Indemnity. The underwriting agreement contains covenants of indemnity among
the underwriters and MyPoints.com against civil liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
representations and warranties contained in the underwriting agreement.

Lock-Up Agreements. All of our executive officers and directors, and a
substantial number of our stockholders, optionholders and warrantholders have
agreed, for a period of 180 days after the date of this prospectus, not to offer
to sell, contract to sell or otherwise sell, dispose of, loan, pledge or grant
any rights with respect to any shares of common stock, any options or warrants
to purchase any shares of common stock or any securities convertible into or
exchangeable for shares of common stock owned as of the date of this prospectus
or subsequently acquired directly by such holders or with respect to which they
have or subsequently acquire the power of disposition, without the prior written
consent of BancBoston Robertson Stephens Inc. However, BancBoston Robertson
Stephens Inc. may, in its sole discretion and at any time without notice,
release all or any portion of the securities subject to lock-up agreements.
There are no agreements between the representatives and any of our stockholders
providing consent by the representatives to the sale of shares prior to the
expiration of the period of 180 days after the date of this prospectus.

Future Sales. In addition, we have agreed that during the period of 180
days after the date of this prospectus, we will not, subject to certain
exceptions, without the prior written consent of BancBoston Robertson Stephens
Inc., issue, sell, contract to sell or otherwise dispose of any shares of common
stock, any options or warrants to purchase any shares of common stock or any
securities convertible into, exercisable for or exchangeable for shares of
common stock, other than our sale of shares in this offering, the issuance of
shares of common stock upon the exercise of outstanding options or warrants and
the grant of options to purchase shares of common stock under existing employee
stock option or stock purchase plans. See "Shares Eligible For Future Sale."

Reserved Shares. The underwriters intend to reserve for sale, at the
initial public offering price, a number of shares of common stock (not to exceed
5.0% of the total number of shares offered in this offering) for our customers,
partners and business associates. In addition, the underwriters may reserve, at
the initial public offering price, up to $3.0 million of common stock offered in
this offering for entities affiliated with Technology Crossover Ventures, all of
which are existing stockholders. As a result, the number of shares of common
stock available for sale to the general public in the offering will be reduced
to the extent these individuals and entities purchase the reserved shares. Any
reserved shares not so purchased will be offered by the underwriters to the
general public on the same terms as the other shares.

Share Purchase. In March 1999, Bayview Investors Ltd., an affiliate of
BancBoston Robertson Stephens Inc., purchased 50,000 shares of Series E
preferred stock at a price of $5.00 per share. If the purchase of these shares
is deemed by the National Association of Securities Dealers, Inc., to constitute
underwriting compensation in connection with this offering, these shares cannot
be sold, transferred, assigned, pledged or hypothecated by any person for a
period of one year after the

66
<PAGE> 68

effective date of this prospectus, except to officers or partners of the
underwriters or members of the selling group and their officers or partners.

No Prior Public Market. Prior to this offering, there has been no public
market for our common stock. Consequently, the initial public offering price for
the common stock offered hereby will be determined through negotiations between
us and the representatives. Among the factors to be considered in these
negotiations are prevailing market conditions, certain of our financial
information, market valuations of other companies that we and the
representatives believe to be comparable to us, estimates of our business
potential, the present state of our development and other factors deemed
relevant.

Stabilization. The representatives have advised us that, pursuant to
Regulation M under the Exchange Act, certain persons participating in this
offering may engage in transactions, including stabilizing bids, syndicate
covering transactions or the imposition of penalty bids, that may have the
effect of stabilizing or maintaining the market price of our common stock at a
level above that which might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of the common stock on behalf of
the underwriters for the purpose of fixing or maintaining the price of the
common stock. A "syndicate covering transaction" is a bid for or the purchase of
the common stock on behalf of the underwriters to reduce a short position
incurred by the underwriters in connection with the offering. A "penalty bid" is
an arrangement permitting the representatives to reclaim the selling concession
otherwise accruing to an underwriter or syndicate member in connection with the
offering if the common stock originally sold by that underwriter or syndicate
member is purchased by the representatives in a syndicate covering transaction
and has therefore not been effectively placed by the underwriter or syndicate
member. The representatives have advised us that transactions of these types may
be effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

LEGAL MATTERS

Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California will pass upon the validity of the common stock offered hereby for
MyPoints.com. Fenwick & West LLP, Palo Alto, California will pass upon certain
legal matters in connection with this offering for the underwriters. As of May
1, 1999, an investment partnership and a member of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, beneficially owned an aggregate of 130,277
shares of common stock of MyPoints.com. Mario M. Rosati, one of our directors
and our secretary, is a member of Wilson Sonsini Goodrich & Rosati. Of these
shares, 105,277 are issuable upon exercise of options held by Mr. Rosati, which
options have an exercise price of $0.10 per share.

EXPERTS

The consolidated financial statements of MyPoints.com, Inc. at December 31,
1997 and 1998, and for the period from November 7, 1996 (inception) to December
31, 1996, and for each of the two years in the period ended December 31, 1998
appearing in this prospectus and registration statement have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

The combined financial statements of Enhanced Response Technologies, Inc.
at December 31, 1997, and for the period from June 25, 1996 (inception) to
December 31, 1996 and the year ended December 31, 1997, appearing in this
prospectus and registration statement have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon, appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

67
<PAGE> 69

WHERE YOU CAN FIND ADDITIONAL INFORMATION

MyPoints.com has filed with the Securities and Exchange Commission a
registration statement on Form S-1 under the Securities Act with respect to the
common stock offered hereby. This prospectus does not contain all of the
information set forth in the registration statement and the accompanying
exhibits and schedule. For further information with respect to MyPoints.com and
our common stock, we refer you to the registration statement and the
accompanying exhibits and schedule. Statements contained in this prospectus
regarding the contents of any contract or any other document to which we refer
are not necessarily complete. In each instance, reference is made to the copy of
the contract or document filed as an exhibit to the registration statement, and
each statement is qualified in all respects by that reference. Copies of the
registration statement and the accompanying exhibits and schedule, may be
inspected without charge at the Securities and Exchange Commission's principal
office in Washington, D.C., or obtained at prescribed rates from the Public
Reference Section of the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Securities and Exchange Commission maintains a
web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of the site is http://www.sec.gov.

68
<PAGE> 70

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MYPOINTS.COM, INC. -- CONSOLIDATED FINANCIAL STATEMENTS
Report of PricewaterhouseCoopers LLP, Independent
Accountants............................................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
MYPOINTS.COM, INC. -- PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION
Overview.................................................... F-22
Pro Forma Consolidated Statement of Operations.............. F-23
Notes to Pro Forma Consolidated Statements of Operations.... F-24
ENHANCED RESPONSE TECHNOLOGIES, INC. COMBINED -- FINANCIAL
STATEMENTS
Report of PricewaterhouseCoopers LLP, Independent
Accountants............................................... F-25
Combined Balance Sheets..................................... F-26
Combined Statements of Operations........................... F-27
Combined Statements of Shareholders' Deficiency............. F-28
Combined Statements of Cash Flows........................... F-29
Notes to Combined Financial Statements...................... F-30
</TABLE>

F-1
<PAGE> 71

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
MyPoints.com, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
MyPoints.com, Inc. (formerly Intellipost Corporation) at December 31, 1997 and
1998, and the results of its operations and its cash flows for the period from
November 7, 1996 (inception) to December 31, 1996, and the years ended December
31, 1997 and 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company'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
audits 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.

/s/ PricewaterhouseCoopers LLP

March 26, 1999, except for Note 12
as to which the date is March 30, 1999
San Francisco, California

F-2
<PAGE> 72

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
------------------ MARCH 31, MARCH 31,
1997 1998 1999 1999
------- -------- ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 2,948 $ 5,089 $ 1,868
Accounts receivable, net............................. 116 586 844
Unbilled receivables, net............................ -- 413 439
Deposits and prepaid expenses........................ 52 220 539
------- -------- --------
Total current assets.............................. 3,116 6,308 3,690
Intangible assets...................................... -- 10,888 10,055
Property and equipment, net............................ 345 1,041 1,987
Other assets........................................... 13 69 95
------- -------- --------
Total assets...................................... $ 3,474 $ 18,306 $ 15,827
======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities............. $ 106 $ 1,702 $ 2,654
Bank overdraft....................................... 54 -- --
Notes payable, current portion....................... 50 143 129
Obligations under capital leases, current portion.... 6 91 91
Other current liabilities............................ -- 852 437
Deferred revenue..................................... -- 258 853
Software license liability, current portion.......... -- 842 842
Points redemption liability.......................... 519 2,727 3,840
------- -------- --------
Total current liabilities......................... 735 6,615 8,846
Notes payable, less current portion.................... 32 179 151
Long-term debt......................................... -- 240 240
Obligations under capital leases, less current
portion.............................................. 15 207 195
Software license liability, less current portion....... -- 1,782 1,782
------- -------- --------
782 9,023 11,214
------- -------- --------
Commitments and contingencies (Note 10)
Stockholders' equity:
Convertible preferred stock, $0.001 par value;
15,500,000 shares authorized; 5,900,000,
10,388,315 and 12,388,315 shares issued and
outstanding at December 31, 1997 and 1998 and
March 31, 1999, respectively, aggregate
liquidation preference $14,552.................... 6 10 12 --
Common stock, $0.001 par value; 40,000,000 shares
authorized; 2,500,000, 6,015,727 and 6,076,239
(unaudited) shares issued and outstanding at
December 31, 1997 and 1998 and March 31, 1999,
respectively...................................... 3 6 7 19
Additional paid-in capital........................... 6,027 22,851 37,731 37,731
Stock subscription receivable........................ -- (350) (9,950) (9,950)
Deferred compensation................................ (388) (2,012) (6,622) (6,622)
Accumulated deficit.................................. (2,956) (11,222) (16,565) (16,565)
------- -------- -------- --------
Total stockholders' equity........................ 2,692 9,283 $ 4,613 $ 4,613
------- -------- ======== ========
Total liabilities and stockholders' equity... $ 3,474 $ 18,306 $ 15,827
======= ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 73

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
NOVEMBER 7, 1996 DECEMBER 31, MARCH 31,
(INCEPTION) TO ------------------ --------------------------
DECEMBER 31, 1996 1997 1998 1998 1999
-------------------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $ -- $ 151 $ 1,286 $ 150 $ 1,275
Cost of revenues........ -- 78 1,121 137 878
------ ------- ------- ------- -------
Gross profit.......... -- 73 165 13 397
------ ------- ------- ------- -------
Operating expenses:
Technology costs...... 16 560 1,520 204 968
Sales expenses........ -- 204 1,355 224 802
Marketing expenses.... 36 1,465 3,158 163 1,762
General and
administrative
expenses........... 16 712 2,028 452 1,074
Amortization of
intangible
assets............. -- -- 275 -- 832
Stock-based
compensation....... -- 77 158 63 311
------ ------- ------- ------- -------
Total operating
expenses......... 68 3,018 8,494 1,106 5,749
------ ------- ------- ------- -------
Operating loss.......... (68) (2,945) (8,329) (1,093) (5,352)
Interest income......... 1 64 87 28 9
Interest expense........ -- (7) (31) -- --
Other (expense)
income................ -- (1) 7 (5) --
------ ------- ------- ------- -------
Net loss........... $ (67) $(2,889) $(8,266) $(1,070) $(5,343)
====== ======= ======= ======= =======
Net loss per share:
Basic and diluted..... $(0.08) $ (2.68) $ (4.72) $ (0.83) $ (1.05)
====== ======= ======= ======= =======
Weighted average
shares -- basic and
diluted............ 891 1,076 1,750 1,287 5,097
====== ======= ======= ======= =======
Pro forma net loss per
share (unaudited):
Basic and diluted..... $ (0.98) $ (0.15) $ (0.35)
======= ======= =======
Weighted average
shares -- basic and
diluted............ 8,463 7,283 15,485
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 74

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM NOVEMBER 7, 1996 (INCEPTION) TO

DECEMBER 31, 1996, AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
PREFERRED STOCK
CONVERTIBLE COMMON STOCK ADDITIONAL STOCK
---------------- ---------------- PAID-IN SUBSCRIPTION DEFERRED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE COMPENSATION
------ ------- ------ ------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock to founders........ -- $ -- 2,500 $ 3 $ -- $ (2) $ --
Issuance of Series A preferred stock for
cash, net of issuance costs of $21........ 3,000 3 1,475
Net loss....................................
------ ------- ----- ------- -------- ------- -------
BALANCE, DECEMBER 31, 1996.................. 3,000 3 2,500 3 1,475 (2) --
Issuance of Series B preferred stock for
cash, net of issuance costs of $4......... 500 1 496
Receipt of subscription receivable from
common stock.............................. 2
Issuance of Series C preferred stock for
cash, net of issuance costs of $7......... 2,400 2 3,591
Deferred compensation....................... 465 (388)
Net loss....................................
------ ------- ----- ------- -------- ------- -------
BALANCE, DECEMBER 31, 1997.................. 5,900 6 2,500 3 6,027 -- (388)
Issuance of Series C preferred stock for
cash, net of issuance costs of $6......... 527 784
Issuance of common stock upon exercise of
stock options............................. 96 9
Issuance of stock options to
non-employees for services................ 13
Issuance of warrants to non-employees....... 12
Issuance of Series D preferred stock for
cash, net of issuance costs of $12........ 2,748 3 5,646 (350)
Issuance of Series D preferred stock, net of
issuance costs of $28, pursuant to an
acquisition............................... 1,214 1 2,939
Issuance of common stock pursuant to an
acquisition............................... 3,600 3 5,375
Issuance of stock options pursuant to an
acquisition............................... 264
Deferred compensation....................... 1,782 (1,624)
Net loss....................................
Repurchase of common stock.................. (181)
------ ------- ----- ------- -------- ------- -------
BALANCE, DECEMBER 31, 1998.................. 10,389 10 6,015 6 22,851 (350) (2,012)
Receipt of subscription receivable from
Series D.................................. 350
Issuance of Series E preferred stock, net of
issuance costs of $50..................... 2,000 2 9,948 (9,950)
Issuance of common stock upon exercise of
stock options............................. 61 1 11
Deferred compensation....................... 4,921 (4,610)
Net loss....................................
------ ------- ----- ------- -------- ------- -------
BALANCE, MARCH 31, 1999 (UNAUDITED)......... 12,389 $ 12 6,076 $ 7 $ 37,731 $(9,950) $(6,622)
====== ======= ===== ======= ======== ======= =======

ACCUMULATED
DEFICIT TOTAL
----------- -------
<S> <C> <C>
Issuance of common stock to founders........ $ -- $ 1
Issuance of Series A preferred stock for
cash, net of issuance costs of $21........ 1,478
Net loss.................................... (67) (67)
-------- -------
BALANCE, DECEMBER 31, 1996.................. (67) 1,412
Issuance of Series B preferred stock for
cash, net of issuance costs of $4......... 497
Receipt of subscription receivable from
common stock.............................. 2
Issuance of Series C preferred stock for
cash, net of issuance costs of $7......... 3,593
Deferred compensation....................... 77
Net loss.................................... (2,889) (2,889)
-------- -------
BALANCE, DECEMBER 31, 1997.................. (2,956) 2,692
Issuance of Series C preferred stock for
cash, net of issuance costs of $6......... 784
Issuance of common stock upon exercise of
stock options............................. 9
Issuance of stock options to
non-employees for services................ 13
Issuance of warrants to non-employees....... 12
Issuance of Series D preferred stock for
cash, net of issuance costs of $12........ 5,299
Issuance of Series D preferred stock, net of
issuance costs of $28, pursuant to an
acquisition............................... 2,940
Issuance of common stock pursuant to an
acquisition............................... 5,378
Issuance of stock options pursuant to an
acquisition............................... 264
Deferred compensation....................... 158
Net loss.................................... (8,266) (8,266)
Repurchase of common stock.................. --
-------- -------
BALANCE, DECEMBER 31, 1998.................. (11,222) 9,283
Receipt of subscription receivable from
Series D.................................. 350
Issuance of Series E preferred stock, net of
issuance costs of $50..................... --
Issuance of common stock upon exercise of
stock options............................. 12
Deferred compensation....................... 311
Net loss.................................... (5,343) (5,343)
-------- -------
BALANCE, MARCH 31, 1999 (UNAUDITED)......... $(16,565) $ 4,613
======== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 75

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
NOVEMBER 7, 1996 YEARS ENDED ENDED
(INCEPTION) TO DECEMBER 31, MARCH 31,
DECEMBER 31, ------------------ -------------------------
1996 1997 1998 1998 1999
---------------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss....................................... $ (67) $(2,889) $(8,266) $(1,070) (5,343)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ 1 70 555 32 964
Provision for bad debts...................... -- -- 60 26 185
Points redemption liability.................. -- 519 1,732 234 1,113
Barter revenues, net......................... -- (20) (59) -- 67
Issuance of stock options to non-employees
for services............................... -- -- 15 15
Stock-based compensation..................... -- 77 158 63 311
Changes in operating assets and liabilities:
Accounts receivable and unbilled
receivables............................. (1) (116) (639) (62) (469)
Deposits and prepaid expenses.............. (33) 2 (138) (9) (386)
Other assets............................... -- -- (28) (8) (26)
Accounts payable and accrued liabilities... 54 52 878 1 534
Deferred revenue........................... -- -- 258 -- 597
------ ------- ------- ------- -------
Net cash used in operating activities... (46) (2,305) (5,474) (778) (2,453)
------ ------- ------- ------- -------
Cash flows from investing activities:
Purchase of property and equipment............. (40) (353) (358) (159) (1,076)
Organization costs............................. (14) -- -- -- --
Proceeds received pursuant to acquisition...... -- -- 1,747 -- --
------ ------- ------- ------- -------
Net cash (used in) provided by investing
activities............................ (54) (353) 1,389 (159) (1,076)
------ ------- ------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of preferred stock, net
of issuance costs............................ 1,478 4,090 6,084 653 --
Proceeds from issuance of common stock......... -- 2 -- -- --
Bank overdraft................................. -- 54 (54) (54) --
Borrowings under line of credit................ -- 100 400 -- --
Repayments of borrowings under line of
credit....................................... -- (18) (160) (9) (42)
Principal payments under capital lease
obligations.................................. -- -- (53) (1) (12)
Exercise of stock options...................... -- -- 9 -- 12
Receipt of subscription receivable............. -- -- -- -- 350
------ ------- ------- ------- -------
Net cash provided by financing
activities............................ 1,478 4,228 6,226 589 308
------ ------- ------- ------- -------
Net increase in cash and cash
equivalents........................... 1,378 1,570 2,141 (348) (3,221)
Cash and cash equivalents, beginning of period... -- 1,378 2,948 2,948 5,089
------ ------- ------- ------- -------
Cash and cash equivalents, end of period......... $1,378 $ 2,948 $ 5,089 $ 2,600 $ 1,868
====== ======= ======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for interest....... $ -- $ 12 $ 34 $ 10 $ 11
====== ======= ======= ======= =======
Noncash transactions:
Equipment acquired under capital leases........ $ -- $ 22 $ 329 $ -- $ --
====== ======= ======= ======= =======
Exchange of advertising services............... $ -- $ 20 $ 128 $ -- $ --
====== ======= ======= ======= =======
Issuance of capital stock for business
acquisition.................................. $ -- $ -- $(8,582) $ -- $ --
====== ======= ======= ======= =======
Stock subscription receivable.................. $ -- $ -- $ 350 $ -- $ --
====== ======= ======= ======= =======
Stock options issued to non-employees.......... $ -- $ -- $ 277 -- --
====== ======= ======= ======= =======
Warrants issued to non-employeees.............. $ -- $ -- $ 12 $ 12 $ --
====== ======= ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 76

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY

MyPoints.com, Inc. (formerly Intellipost Corporation) and its wholly owned
subsidiaries (together, the "Company") was founded in November 1996. The Company
offers advertisers the ability to target internet users enrolled as members of
its direct marketing and loyalty programs. The Company's programs award enrolled
members reward points for responding to advertisements. Rewards points may be
redeemed by members for promotional awards provided by the Company.

2. LIQUIDITY

The Company has sustained net losses and negative cash flows from
operations since its inception. The Company's ability to meet its obligations in
the ordinary course of business is dependent upon its ability to establish
profitable operations or to obtain additional funding through public or private
equity financing, collaborative or other arrangements with corporate sources, or
other sources. Management is seeking to increase revenues through continued
marketing of its services while controlling costs to meet working capital needs;
however, additional financing will be required (see Note 12 -- Subsequent Events
for Series E financing commitments obtained in 1999).

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The financial statements as of December 31, 1998 and for the year then
ended are consolidated and include the accounts of the Company and its wholly
owned subsidiaries. All significant intercompany balances and transactions have
been eliminated in the consolidation process.

UNAUDITED INTERIM FINANCIAL INFORMATION

The accompanying interim consolidated financial statements as of March 31,
1998 and 1999 and the three months then ended together with the related notes
are unaudited but include all adjustments, consisting of only normal recurring
adjustments, which management considers necessary to present fairly, in all
material respects, the consolidated financial position, and consolidated results
of operations and cash flows for the three month periods ended March 31, 1998
and 1999. Results for the three months ended March 31, 1999 are not necessarily
indicative of results for the entire year.

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 expenses during the reporting period.
Such estimates include the levels of valuation allowances for doubtful accounts
receivable, deferred taxes, points redemption liability and the value of the
Company's capital stock. Actual results could differ from those estimates, and
such differences could be material.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments with original
maturities of three months or less.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the
straight-line method over their respective estimated useful lives, which range
from three to five years. Maintenance and repairs

F-7
<PAGE> 77
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

are charged to expense as incurred, and improvements and betterments are
capitalized. When assets are retired or otherwise disposed of, the cost and
accumulated depreciation and amortization are removed from the accounts and any
resulting gain or loss is reflected in the consolidated statement of operations
for the period in which it is realized.

INTANGIBLE ASSETS

Intangible assets resulting from the acquisition of Enhanced Response
Technologies, Inc. ("ERT") and MotivationNet LLC ("MNet") were estimated by
management to be primarily associated with the acquired trademark and trade
name, customer base, membership base, technology license agreement and other
intangible assets. Intangible assets are amortized on a straight-line basis over
the estimated periods of benefit which, because of the rapid technological
changes occurring in the internet industry and the intense competition for
qualified internet professionals, range from six to 60 months (see Note
4 -- Acquisition).

INCOME TAXES

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes.
Under SFAS No. 109, deferred tax assets and liabilities are determined based on
temporary differences between the financial statement and tax bases of assets
and liabilities and net operating loss and credit carryforwards using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Valuation allowances are established when necessary to reduce deferred
tax assets to the amounts expected to be realized. A provision for income tax
expense is recognized for income taxes payable for the current period, plus the
net changes in deferred tax amounts.

POINTS REDEMPTION LIABILITY

Points redemption liability represents the estimated costs associated with
the Company's obligation to redeem outstanding points, less an allowance for
points expected to expire prior to redemption, which may be converted by
enrolled members into various third party gift certificates, airline frequent
flyer miles, coupons and other items. Points are awarded to members when they
receive and read direct marketing offers delivered by the Company, or purchase
goods from the advertisers. The Company is liable for purchasing the rewards
provided to members. The cost of points is determined by the weighted average
cost of gift and awards that may be redeemed. Under the current program, points
are valid for two or more years from the date they are awarded to a member and
may be redeemed at any time prior to expiration. The Company bases its estimate
of points that will not be redeemed on an analysis of historical redemption
activity and individual member accounts. This analysis is updated quarterly. At
December 31, 1997, 1998 and March 31, 1999, the allowance for unredeemed points
was $0, $563,000 and $839,000 (unaudited), respectively.

Membership development costs include the cost of points awarded to members
upon initial enrollment and subsequently for responding to surveys conducted by
the Company. Costs are charged to marketing expense as incurred, and amounted to
$442,000, $764,000 and $345,000 (unaudited) for the periods ended December 31,
1997, 1998 and March 31, 1999.

REVENUE RECOGNITION

The Company earns revenues from corporate advertisers by charging fees for
sending targeted email to its members. Under the terms of advertising contracts,
the Company earns revenues generally based on three components: (1) transmission
of email advertisements to enrolled members, (2) receipt of qualified responses
to email sent and (3) actual purchases of goods by members over

F-8
<PAGE> 78
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the internet. It is the Company's policy to recognize revenues when email are
transmitted to members, when responses are received and when the Company is
notified of purchases.

Under certain advertising contracts entered into by the Company's
subsidiary prior to acquisition, the Company sold points to advertisers for use
in the advertisers' web-based campaigns. The Company is responsible for
redeeming points upon request by the recipients of points. Revenues under these
contracts are deferred until the time points are redeemed and an award is
provided by the Company. The Company expects that sales of points will represent
a decreasing percentage during January 1999 and does not anticipate entering
into point sales in the future.

On December 23, 1998, the Company entered into a license agreement to grant
a third party a limited exclusivity license to use certain software technology
developed by the Company. Under the agreement the Company is required to perform
significant customization of the software. If the Company has not delivered the
software by the stipulated delivery date, or the Company is unable to provide
corrections for errors uncovered during the testing phase, then the third party
may be entitled to recover a portion of the contract price.

The Company accounts for the entire agreement under Accounting Research
Bulletin No. 45, Long Term Construction-Type Contracts, using the
completed-contract method. Income is recognized upon the third party's
acceptance of the software, and all costs and related revenue are reported as
deferred items in the balance sheet until that time. For the year ended December
31, 1998 and the three months ended March 31, 1999 (unaudited), no revenues have
been recognized by the Company under this agreement.

BARTER TRANSACTIONS

The Company trades advertisements on its web sites for advertisements on
the web sites of other companies. Barter revenues and expenses are recorded at
the fair market value of the services provided or received, whichever is more
determinable in the circumstances. Revenues from barter transactions are
recognized as income when the Company delivers advertisements for other
companies on its web site. Barter expense is recognized when the Company's
advertisements are delivered on the web sites of other companies, which is
typically in the same period as that when the barter revenues are recognized.
Advertising barter revenues were approximately $0, $20,000 and $128,000 for the
period ended December 31, 1996 and the years ended December 31, 1997 and 1998,
respectively. There were no barter revenues for the period ended March 31, 1999.
The Company expects that barter revenues will represent a smaller percentage of
its revenues in the future.

TECHNOLOGY COSTS

Product development costs and costs of enhancing to existing products are
charged to technology costs as incurred. Software development costs are required
to be capitalized beginning when a product's technological feasibility has been
established by completion of a working model of the product, and ending when the
product is available for general release to customers. To date, completion of a
working model of the Company's products and general release have substantially
coincided. As a result, the Company has not capitalized any software development
costs since these costs have not been significant.

BUSINESS RISK AND CONCENTRATION OF CREDIT RISK

The Company has a limited operating history and its prospects are subject
to the risks, expenses and uncertainties frequently encountered by companies in
new and rapidly evolving markets for

F-9
<PAGE> 79
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

internet products and services. These risks include the failure to develop and
extend the Company's online service brands, the rejection of the Company's
services by web consumers and/or advertisers and the inability of the Company to
maintain and increase the levels of traffic on its online services, as well as
other risks and uncertainties. Failure to address these risks successfully may
have a material adverse impact on the Company's operations and financial
position.

Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of temporary cash investments,
including money market mutual fund accounts, and accounts receivable. The
Company deposits its temporary cash investments with two financial institutions
and these deposits exceed insured amounts. The Company does not require
collateral for accounts receivable, but does evaluate customer creditworthiness
and establish allowances as necessary based on management estimates of
collectibility.

STOCK-BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board ("APB") No. 25,
Accounting for Stock Issued to Employees, and complies with the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Under APB
No. 25, compensation expense is based on the difference, if any, on the date of
the grant, between the estimated fair value of the Company's stock and the
exercise price of options to purchase that stock.

NET LOSS PER SHARE

The Company computes net loss per share in accordance with SFAS No. 128,
Earnings per Share, and SEC Staff Accounting Bulletin ("SAB") No. 98. Under the
provisions of SFAS No. 128 and SAB No. 98, basic net income per share is
computed by dividing the net income available to common stockholders for the
period by the weighted average number of vested common shares outstanding during
the period. Diluted net income per share is computed by dividing the net income
for the period by the weighted average number of vested common and common
equivalent shares outstanding during the period. However, as the Company
generated net losses in all periods presented, common equivalent shares,
composed of incremental common shares issuable upon the exercise of stock
options and warrants and upon conversion of Series A, Series B, Series C and
Series D convertible preferred stock, are not included in diluted net loss per
share because such shares are anti-dilutive.

F-10
<PAGE> 80
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated (in thousands, except per share
amounts):

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------------------- -------------------------
1996 1997 1998 1998 1999
---------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Numerator:
Net loss..................... $ (67) $ (2,889) $ (8,266) $(1,070) $(5,343)
---------- ----------- ----------- ------- -------
Net loss available to common
stockholders.............. $ (67) $ (2,889) $ (8,266) $(1,070) $(5,343)
========== =========== =========== ======= =======
Denominator:
Weighted average shares...... 2,500 2,500 2,856 2,500 6,039
Weighted average unvested
common shares subject to
repurchase agreements..... (1,609) (1,424) (1,106) (1,213) (942)
---------- ----------- ----------- ------- -------
Denominator for basic
calculation............... 891 1,076 1,750 1,287 5,097
Weighted average effect of
dilutive securities:
Net effect of dilutive
stock options........... -- -- -- -- --
Net effect of dilutive
stock warrants.......... -- -- -- -- --
---------- ----------- ----------- ------- -------
Denominator for diluted
calculation............... 891 1,076 1,750 1,287 5,097
========== =========== =========== ======= =======
Net loss per share:
Basic........................ $ (0.08) $ (2.68) $ (4.72) $ (0.83) $ (1.05)
========== =========== =========== ======= =======
Diluted...................... $ (0.08) $ (2.68) $ (4.72) $ (0.83) $ (1.05)
========== =========== =========== ======= =======
</TABLE>

PRO FORMA NET LOSS PER SHARE (UNAUDITED)

Pro forma net loss per share for the year ended December 31, 1998 and the
three months ended March 31, 1999 is computed using the weighted average number
of common shares outstanding, including the pro forma effects of the automatic
conversion of the Company's Series A, Series B, Series C and Series D preferred
stock into shares of the Company's common stock effective upon the closing of
the Company's initial public offering (see Note 12 -- Subsequent Events) as if
such conversion occurred on January 1, 1998, or at the date of original
issuance, if later. The resulting pro forma adjustment results in an increase in
the weighted average shares used to compute basic and diluted net loss per share
of 6,713,000 shares for the year ended December 31, 1998. March 1999 Pro forma
common equivalent shares, composed of unvested restricted common stock and
incremental common shares issuable upon the exercise of stock options and
warrants, are not included in pro forma diluted net loss per share because they
would be anti-dilutive.

PRO FORMA STOCKHOLDERS' EQUITY (UNAUDITED)

Effective upon the closing of the Company's initial public offering, the
outstanding shares of Series A, Series B, Series C and Series D preferred stock
will automatically convert into 3,000,000,

F-11
<PAGE> 81
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

500,000, 2,926,667 and 3,961,649 shares of common stock, respectively. The pro
forma effects of these transactions are unaudited and have been reflected in the
accompanying pro forma consolidated balance sheet at March 31, 1999 (see Note
12 -- Subsequent Events).

COMPREHENSIVE INCOME

Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting comprehensive income and its components in financial statements.
Comprehensive income, as defined, includes all changes in equity (net assets)
during a period from non-owner sources. To date, the Company has not had any
transactions that are required to be reported in comprehensive income.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. SFAS No.
131 establishes standards for the way companies report information about
operating segments in annual financial statements. It also establishes standards
for related disclosures about products and services, geographic areas and major
customers. The disclosures prescribed by SFAS No. 131 are effective for the year
ended December 31, 1998. The Company has determined that it does not have any
separately reportable business segments as of December 31, 1998.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") No. 98-1, Software for Internal Use, which
provides guidance on accounting for the cost of computer software developed or
obtained for internal use. SOP No. 98-1 is effective for financial statements
for fiscal years beginning after December 15, 1998. The Company does not expect
that the adoption of SOP No. 98-1 will have a material impact on its
consolidated financial statements.

4. ACQUISITION

Effective November 30, 1998, the Company agreed to acquire all the
outstanding shares of MotivationNet, LLC, and Enhanced Response Technologies,
Inc., two companies operating as affiliates under common management. The
acquisition has been accounted for using the purchase method of accounting and
accordingly, the purchase price has been allocated to the tangible and
intangible assets acquired and liabilities assumed on the basis of their
relative fair values on the acquisition date. The fair value of intangible
assets was determined using a combination of the income approach and the cost
approach.

The total purchase price of approximately $13.6 million consisted of
3,600,481 shares of the Company's common stock with an estimated fair value of
approximately $5.4 million, 1,213,592 shares of the Company's Series D preferred
stock with an estimated fair value of approximately $3.0 million, 189,115 vested
and 213,703 unvested shares of the Company's stock options, the vested options
having an estimated fair value of approximately $264,000, $400,000 in cash and
$4.5 million of assumed liabilities. The fair value of the common and preferred
stock was estimated using a market capitalization approach. All vested common
stock options of the acquired companies were exchanged for 189,115 vested common
stock options of the Company and have been included in the purchase price based
on their fair value. The fair value of the vested common stock options was
estimated using the Black-Scholes model with the following weighted average
assumptions, risk-free interest rate of 4.59%, expected life of 5 years,
expected dividend rate of 0%, and volatility rate of 109%. Of the total purchase
price, $2.4 million was allocated to tangible assets

F-12
<PAGE> 82
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and $11.2 million to intangible assets, including a technology license agreement
and related intangible assets of $7.3 million, purchased trademark and trade
name of $1.8 million, membership base of $0.8 million, customer base of $0.5
million and workforce of $0.8 million. The intangible assets will be amortized
over their estimated useful lives of six to 60 months.

Among the liabilities assumed in the acquisition is an obligation under a
software license agreement. According to the terms of the agreement, the Company
is to pay the licensor a royalty, payable in monthly installments of the greater
of 3.0% of monthly revenues, or $35,000, up to a maximum cumulative royalty of
$4.2 million. The Company has recorded the obligation at its estimated fair
value as determined by estimated future cash payments, discounted at a market
interest rate. The Company has an option to purchase the licensed software at
the conclusion of the ten-year license term. Under the agreement, upon the
completion of an initial public offering of the Company's stock, the Company is
obligated to purchase the rights to the software. The purchase price in this
event would be the then existing present value of future required minimum
payments.

Certain portions of the acquisition were structured as a tax-free exchange
of stock. Therefore, the differences between the recognized fair values of
certain acquired assets, including tangible assets, and their historical tax
bases are not deductible for tax purposes.

The following unaudited pro forma consolidated financial information
reflects the results of operations for the years ended December 31, 1997 and
1998, as if the acquisition had occurred on January 1, 1997, after giving effect
to purchase accounting adjustments. These pro forma results have been prepared
for comparative purposes only, do not purport to be indicative of what operating
results would have been had the acquisition actually taken place on January 1,
1997, and may not be indicative of future operating results (in thousands,
except per share amounts):

<TABLE>
<CAPTION>
1997 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
Revenues....................................... $ 151 $ 1,316
Operating loss................................. (6,899) (17,824)
Net loss....................................... (6,968) (17,968)
Net loss per share:
Basic and diluted............................ $ (1.49) $ (3.56)
Weighted average shares - basic and
diluted................................... 4,677 5,044
</TABLE>

5. RELATED PARTY TRANSACTIONS

A former member of the Company's Board of Directors founded Targeted
Marketing Systems, Inc., a service provider that the Company engaged for
creative services to assist in the development of the Company's marketing
program and web site. Total payments made to Targeted Marketing Systems amounted
to $223,000 in 1997 and none in 1996 or 1998. As of December 31, 1997 and 1998
and March 31, 1999, there were no amounts due to Targeted Marketing Systems.

One of the Company's directors is also a member of the law firm that has
served as the Company's corporate counsel since its inception. From inception
through December 31, 1998 and March 31, 1999 the Company had accrued a total of
$227,737 and $328,737 (unaudited), respectively, in fees to the law firm.

The Company has entered into a two-year services agreement with Direct
Marketing Technology, Inc., a wholly owned subsidiary of Experian, a stockholder
of the Company, in which Direct Marketing Technology agreed to provide
demographic data and other market research services

F-13
<PAGE> 83
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

for the Company. Through December 31, 1998, no expenses have been incurred under
this agreement.

6. PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------- -----------
1997 1998 1999
---- ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment and software............ $359 $1,493 $2,581
Furniture and fixtures..................... 24 152 146
Leasehold improvements..................... 15 22 17
---- ------ ------
398 1,667 2,744
Accumulated depreciation................... (53) (626) (757)
---- ------ ------
$345 $1,041 $1,987
==== ====== ======
</TABLE>

Depreciation expense amounted to $632, $49,000, $265,000 and $130,000
(unaudited) for the period ended December 31, 1996 the years ended December 31,
1997 and 1998 and three months ended March 31, 1999, respectively.

7. NOTES PAYABLE

On January 27, 1997, the Company entered into a promissory note with a bank
to borrow $100,000 at an interest rate of prime plus 1.5% (initial rate of
9.75%). The Company was required to make monthly payments of accrued interest
beginning in February 1997 and principal payments in 24 equal installments
beginning on July 31, 1997. The loan agreement contains certain negative
covenants including financial covenants related to minimum liquidity coverage
ratios. The loan is collateralized by all of the assets and property of the
Company.

On December 19, 1997, the Company entered into a promissory note with a
bank to borrow $400,000 at an interest rate of prime plus 0.5% (initial rate of
8.50%). The Company was required to make 36 equal payments from July 31, 1998
through June 30, 2001. The agreement contains certain negative covenants
including financial covenants related to a minimum liquidity coverage ratio and
monthly minimum points redemption liability. During 1998, the Company was in
default on the monthly minimum points redemption liability balance and the
liquidity covenant contained in the agreement. The Company obtained waivers of
the earlier violations and was in compliance with these covenants as of March
31, 1999 (unaudited).

Annual maturities of notes payable are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1999............................................. $143
2000............................................. 115
2001............................................. 64
----
$322
====
</TABLE>

F-14
<PAGE> 84
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. CAPITAL STRUCTURE

The Company is authorized to issue 40,000,000 shares of $0.001 par value
common stock and 15,500,000 shares of $0.001 par value preferred stock. The
Board of Directors has the authority to issue the undesignated preferred stock
in one or more series and to fix the rights, preferences, privileges and
restrictions thereof.

PREFERRED STOCK

The Company is authorized to issue 15,500,000 shares of preferred stock of
which 4,000,000 are designated as Series A preferred stock, 1,000,000 are
designated as Series B preferred stock, 3,000,000 are designated as Series C
preferred stock, 5,500,000 are designated as Series D preferred stock, and
2,000,000 are designated as Series E preferred stock.

DIVIDENDS

The holders of Series E preferred stock are entitled to receive dividends
in preference to any dividend on common stock or other series of preferred
stock, at an annual rate of 6.0% of the original issue price, whenever funds are
legally available and when and if declared by the Company's Board of Directors.
The holders of all other series of preferred stock are entitled to receive
annual dividends, in preference to any dividends issued on common stock, at a
rate of 6.0% or 7.0% of the original issuance price, whenever funds are legally
available and when and if declared by the Company's Board of Directors. The
right to dividends is not cumulative except in the event of liquidation. No
dividends have been declared or paid to date.

LIQUIDATION PREFERENCE

In the event of any liquidation, dissolution or winding up of the Company
either voluntary or involuntary, the holders of Series E preferred stock will be
entitled to receive, in preference to the holders of common stock or other
series of preferred stock, an amount equal to the original issue price of the
Series E preferred stock plus any declared and unpaid dividends. Thereafter, the
holders of the other series of preferred stock will be entitled to receive, in
preference to the holders of common stock, an amount equal to the original issue
price of their respective series of preferred stock, plus any declared and
unpaid dividends. Holders of Series D preferred stock are entitled to receive a
cumulative dividend, only in the event of liquidation, accrued at an annual rate
of 7.0%. Series A, B, C and E preferred stock are entitled to receive a
cumulative dividend, only in the event of liquidation, accrued at an annual rate
of 6.0%. Thereafter, holders of common stock are entitled to receive on a
pro-rata basis assets and funds of the Company in proportion to the number of
shares held by them.

CONVERSION RIGHTS

Each share of preferred stock is convertible at the option of the holder,
at any time, into shares of common stock. The number of shares of common stock
into which each share of preferred stock may be converted is equal to the
original purchase price of the preferred stock divided by the conversion price
of $0.50, $1.00, $1.50, $2.06 and $5.00 for Series A, Series B, Series C, Series
D and Series E preferred stock, respectively, subject to certain adjustments as
provided in the Company's Restated Certificate of Incorporation. Preferred stock
will automatically convert into common stock, at the then applicable conversion
rate, (i) in the event of the closing of an underwritten public offering of the
Company's common stock pursuant to the Securities Act of 1933 where the public
offering price is $5.00 per share or more and the proceeds are at least
$20,000,000,

F-15
<PAGE> 85
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

or (ii) upon the election of the holders of at least a majority of the
outstanding shares of Series A, Series B, Series C, and Series D preferred
stock, or (iii) upon the election of the holders of at least 75% of the
outstanding shares of Series E preferred stock. The preferred stock also has
provisions that protect the holders of these securities from dilution caused by
capital reorganizations, stock splits or other similar capital changes.

VOTING RIGHTS

The holders of preferred stock are entitled to vote on all matters and are
entitled to a number of votes equal to the number of shares of common stock into
which their preferred stock could be converted pursuant to the conversion
rights. Except as otherwise required by law, the holders of preferred stock have
voting rights equal to those of the common stock holders. The holders of the
preferred stock are entitled to directly elect two of the Company's directors.
This right terminates upon the closing of the Company's initial public offering.

WARRANTS

During the year ended December 31, 1998, the Company issued a warrant to
purchase 10,000 shares of Series C preferred stock with an exercise price of
$1.50 to an equipment leasing company in connection with an equipment lease. The
warrant is exercisable until the later of ten years from its issuance date or
five years from the initial public offering of the Company's common stock. The
fair value of the warrant was estimated using the Black-Scholes model with the
following weighted average assumptions, risk-free interest rate of 4.59%,
expected life of 5 years, expected dividend rate of 0%, and volatility rate of
109%. The estimated fair value of the warrant is accounted for as a deferred
asset and is amortized over the lease term of 42 months. In connection with the
issuance of Series D preferred stock, the Company issued warrants to the holders
of Series D preferred stock to purchase 1,374,028 additional shares of Series D
preferred stock with an exercise price of $2.06 per share. The warrants became
exercisable three months from the closing date of the Stock Purchase Warrant
Agreement and are exercisable for a period up to five years. The Company
determined that the fair value of the warrants approximated $1.5 million on the
date of grant. The fair value of the warrants was estimated using the
Black-Scholes model with the following weighted average assumptions, risk-free
interest rate of 4.59%, expected life of 5 years, expected dividend rate of 0%,
and volatility rate of 109%. The estimated fair value of the warrants of $1.5
million is included in additional paid-in capital.

COMMON STOCK OPTIONS

On November 7, 1996, the Company adopted the 1996 Stock Plan and on
November 13, 1998, the Company adopted the 1999 Stock Plan (together, the
"Plans"). The Plans provide for the grant of incentive stock options and
nonstatutory stock options to employees and consultants of the Company.

The Company has reserved 3,714,626 shares of common stock for issuance
under the Plans as of March 31, 1999. The Company has granted incentive stock
options with vesting equal to either 25.0% at the first anniversary date and
1/48th per month thereafter or 25.0% immediately with the remainder vesting
1/48th per month thereafter. These options are exercisable for a period of no
more than ten years from the date of grant.

The Company accounts for the Plans in accordance with APB No. 25 and
related Interpretations. In connection with certain stock option grants during
the years ended December 31,

F-16
<PAGE> 86
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1997 and 1998 and the three months ended March 31, 1999, the Company recognized
unearned compensation that is being amortized over the four-year vesting periods
of the related options. Amortization expense recognized during the years ended
December 31, 1997 and 1998 totaled $77,000 and $158,000, respectively and
$311,000 (unaudited) during the three months ended March 31, 1999.

Following is a summary of incentive stock option activity for the years
ended December 31, 1997, 1998, and three months ended March 31, 1999. There was
no activity in the Plans prior to January 1, 1997:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OUTSTANDING EXERCISE
SHARES PRICE
----------- --------
<S> <C> <C>
Outstanding as of January 1, 1997......................... -- --
Granted................................................. 687,166 $0.074
Exercised............................................... -- --
Canceled................................................ (2,500) 0.100
---------
Outstanding as of December 31, 1997....................... 684,666 0.074
Granted................................................. 1,079,562 0.210
Exercised............................................... (96,174) 0.063
Canceled................................................ (320,363) 0.112
---------
Outstanding as of December 31, 1998....................... 1,347,691 0.172
Granted................................................. 1,359,437 1.457
Exercised............................................... (60,512) 0.186
Canceled................................................ (40,102) 0.907
---------
Outstanding as of March 31, 1999 (unaudited).............. 2,606,514 0.806
---------
Options vested as of March 31, 1999 (unaudited)........... 464,209 $0.370
=========
</TABLE>

The following table summarizes information about stock options outstanding
at December 31, 1998:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
AT DECEMBER 31, 1998 AT DECEMBER 31, 1998
--------------------------------------- ---------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE (YEARS) PRICE VESTED PRICE
------------------------ ----------- ------------ -------- -------- ---------
<S> <C> <C> <C> <C> <C>
$0.05 - $0.15.................. 626,333 8.28 $0.087 214,214 $0.081
$0.20 - $0.26.................. 788,017 9.12 0.239 40,371 0.219
--------- -------
1,414,350 8.75 $0.172 254,585 $0.103
========= =======
</TABLE>

F-17
<PAGE> 87
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
AT MARCH 31, 1999 AT MARCH 31, 1999
--------------------------------------- -------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE (YEARS) PRICE VESTED PRICE
------------------------ ----------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
$0.05 - $0.15.................. 492,570 8.01 $0.085 277,406 $0.079
$0.20 - $0.26.................. 760,507 8.49 0.230 93,889 0.191
$1.00 - $5.00.................. 1,353,437 9.54 1.294 92,914 1.328
--------- -------
2,606,514 9.14 $0.806 464,209 $0.370
========= =======
</TABLE>

The Company has determined that the fair value of its common stock exceeded
the option exercise price at the date options were granted. The Company
recognized this difference as deferred compensation and is amortizing these
amounts over the vesting period.

The following disclosures are provided in accordance with SFAS No. 123,
Accounting for Stock-Based Compensation. The weighted average fair values of
options granted in 1997 and 1998 were $0.53 and $2.27, respectively.

Had compensation cost for the Plans been determined based on fair value at
the grant date consistent with the method prescribed by SFAS No. 123, the
Company's net loss would have been increased to the pro forma amounts below (in
thousands):

<TABLE>
<CAPTION>
YEARS ENDED
NOVEMBER 7, 1996 DECEMBER 31,
(INCEPTION) TO ------------------
DECEMBER 31, 1996 1997 1998
----------------- ------- -------
<S> <C> <C> <C>
Net loss as reported...................... $(67) $(2,889) $(8,266)
Net loss pro forma........................ -- (2,890) (8,291)
</TABLE>

The fair value of employee stock option grants has been estimated on the
date of grant using the minimum value model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997 1998
---- ------- -------
<S> <C> <C> <C>
Risk-free interest rate............................... -- 5.72% 4.59%
Expected life......................................... -- 5 years 5 years
Dividends............................................. -- -- --
</TABLE>

OTHER

A portion of the common stock issued to the Company's founders at inception
is subject to restricted stock purchase agreements which provide that one-third
of the Company's repurchase right lapses on the vesting start date and 1/48th of
the Company's remaining repurchase right lapses at the end of the each month
thereafter. Upon a merger or sale of the Company, one-half of the remaining
shares subject to the Company's right of repurchase will become vested.

9. 401(K) SAVINGS PLAN

In February 1997, the Company established a 401(k) Savings Plan (the
"401(k) Plan") that covers substantially all employees. Under the 401(k) Plan,
employees are permitted to contribute a portion of gross compensation not to
exceed standard limitations provided by the Internal Revenue

F-18
<PAGE> 88
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Service. Discretionary contributions may be made by the Company; however, no
contributions have been made to date.

10. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases office space and equipment under capital and
noncancelable operating leases with various expiration dates through the year
2001. Rent expense amounted to $5,000, $57,000, $180,000 and 109,000 (unaudited)
for the period ended December 31, 1996, the years ended December 31, 1997 and
1998, and the three months ended March 31, 1999, respectively.

Future minimum lease payments under noncancelable capital leases and
operating leases are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
DECEMBER 31, LEASES LEASES
------------ ------- ---------
<S> <C> <C>
1999........................................................ $ 113 $146
2000........................................................ 125 --
2001........................................................ 98 --
------- ----
Total minimum lease payments................................ 336 $146
====
Less amount representing interest........................... 38
-------
Present value of capital lease obligations.................. 298
Less current portion........................................ 91
-------
Long-term portion........................................... $ 207
=======
</TABLE>

<TABLE>
<CAPTION>
PERIOD ENDING CAPITAL OPERATING
MARCH 31, LEASES LEASES
------------- ------- ---------
<S> <C> <C>
1999........................................................ $ 113 $105
2000........................................................ 125
2001........................................................ 80
------- ----
Total minimum lease payments................................ 318 $105
====
Less amount representing interest........................... 32
Present value of capital lease obligations.................. 286
Less current portion........................................ 91
-------
Long-term portion........................................... $ 195
=======
</TABLE>

LEGAL

In the normal course of business, the Company is at times subject to
pending and threatened legal actions and proceedings. After reviewing pending
and threatened actions and proceedings with counsel, management believes that
the outcome of such actions or proceedings is not expected to have a material
adverse effect on the financial position or results of operations of the
Company.

OTHER

The Company is obligated to pay commissions to certain third parties for
the referral of members to the Company. Commissions are determined based on
revenues derived from these

F-19
<PAGE> 89
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

members over the first two years of membership. For the year ended December 31,
1998 the referral commissions amounted to $26,000. None were incurred during the
quarter ended March 31, 1999.

11. INCOME TAXES

As of December 31, 1997, December 31, 1998 and March 31, 1999, the Company
had net operating loss carryforwards of approximately $1,360,000, $7,810,000 and
$7,810,000 for federal income tax purposes, and $1,380,000, $7,820,000 and
$7,820,000 for state income tax purposes, respectively. The federal and state
net operating loss carryforwards begin to expire in the years 2011 and 2004,
respectively. As of March 31, 1999, the Company had research and experimentation
credit carryforwards of approximately $26,000 for federal and $11,000 for state
income taxes purposes. The federal and state research and experimentation credit
carryforwards expire in the year 2001.

The Company's ability to utilize its net operating loss carryforwards to
offset any future taxable income may be restricted as a result of equity
transactions that give rise to changes in ownership as defined in the Tax Reform
Act of 1986. These restrictions may limit, on an annual basis, the Company's
future use of its net operating loss carryforwards and research and
experimentation credit carryforwards.

A reconciliation of the provision for income taxes to the federal statutory
rate of 34% is as follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------- ----------------
1996 1997 1998 1998 1999
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Tax at statutory rate....................... 34% 34% 34% 34% 34%
State taxes, net of federal benefit......... 6% 6% 6% 6% 6%
Permanent differences....................... -- (2)% (1)% (1)% (1)%
Valuation allowance......................... (40)% (38)% (39)% (39)% (39)%
----- ----- ----- ----- -----
-- -- -- -- --
===== ===== ===== ===== =====
</TABLE>

The estimated tax effects of significant temporary differences and
carryforwards that give rise to deferred income tax assets are as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------ -----------
1997 1998 1999
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Non-deducted start-up costs..................... $ 369 $ 303 $ 216
Net operating loss carryforwards................ 545 3,177 3,177
Non-deducted research and experimental costs.... 0 1,328 1,180
Points redemption liability..................... 259 1,185 3,086
Accrued liabilities and other................... 53 106 157
Non-deducted intangible assets.................. -- (834) (542)
------- ------- -------
Gross deferred tax assets....................... 1,226 5,265 7,274
Valuation allowance............................. (1,226) (5,265) (7,274)
------- ------- -------
Net deferred tax assets......................... $ -- $ -- $ --
======= ======= =======
</TABLE>

The Company has recorded a valuation allowance against gross deferred tax
assets due to uncertainties surrounding their realization.

F-20
<PAGE> 90
MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SUBSEQUENT EVENTS

In January 1999, the Company's Board of Directors authorized the Company to
file a registration statement with the Securities and Exchange Commission for
the purpose of an initial public offering of the Company's common stock. Upon
the completion of this offering, if requirements set forth in its Certificate of
Incorporation are met, the Company's preferred stock will be converted into
12,388,315 shares of common stock, and all outstanding shares of preferred stock
will be cancelled and retired. Upon the conversion of the preferred stock, all
rights to accrued and unpaid dividends will be waived.

In October 1998, the Company was notified by an online incentives company
that it believes the Company was infringing its patent rights. The Company has
entered into a settlement agreement with the third party, which provides for an
upfront payment of approximately $65,000 plus ongoing royalties based on a
percentage of the value of points issued to members.

During March 1999, the Company entered into a binding commitment to sell,
and the investors entered into a binding commitment to purchase, 2,000,000
shares of Series E preferred stock at $5.00 per share for gross proceeds of
$10.0 million. The holders of Series E preferred stock have rights and
preferences substantially the same as those of the Series D preferred stock.

Subsequent to December 31, 1998, the Company issued to employees options to
purchase 3,318,986 shares of the Company's common stock at an exercise price
ranging from $1.00 to $8.00 per share. In addition, the Company repurchased
181,420 shares of common stock from one of its founders at $0.001 per share.

In April 1999, the Company adopted the senior management incentive plan.
The terms of this plan apply to discretionary option grants to executive
officers under the 1999 Stock Plan. In 1999, options to purchase a total of
690,000 shares with exercise prices of $8.00 per share were granted under this
senior management incentive plan.

F-21
<PAGE> 91

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

OVERVIEW

Effective November 30, 1998, the Company agreed to acquire all the
outstanding shares of MotivationNet, LLC, and Enhanced Response Technologies,
Inc. (the acquired companies). The acquisition has been accounted for using the
purchase method of accounting and, accordingly, the purchase price has been
allocated to the tangible and intangible assets acquired and liabilities assumed
on the basis of their respective fair values on the acquisition date. The fair
value of intangible assets was determined using the income approach and the cost
approach.

The acquisition of Enhanced Response Technologies, Inc. has been structured
as a tax free exchange of stock; therefore, the differences between the
recognized fair values of the acquired assets, including tangible assets, and
their historical tax bases are not deductible for tax purposes. The acquisition
of MotivationNet, LLC, was made under an agreement to purchase the outstanding
units of the limited liability corporation.

The following unaudited pro forma consolidated financial information
reflects the results of operations for the year ended December 31, 1998, as if
the acquisition had occurred on January 1, 1998, after giving effect to purchase
accounting adjustments. These pro forma results have been prepared for
comparative purposes only, do not purport to be indicative of what operating
results would have been had the acquisition actually taken place on January 1,
1998, and may not be indicative of future operating results.

F-22
<PAGE> 92

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-------------------------------------------------------
ACQUIRED PRO
MYPOINTS.COM, INC. COMPANIES ADJUSTMENTS FORMA
------------------ --------- ----------- --------
<S> <C> <C> <C> <C>
Revenues............................. $ 1,234 $ 82 $ -- $ 1,316
Cost of revenues..................... 1,078 42 1,120
------- ------- ------- --------
Gross profit....................... 156 40 196
------- ------- ------- --------
Operating expenses:
Technology costs................... 1,325 2,588 3,913
Sales expenses..................... 1,269 792 2,061
Marketing expenses................. 2,947 2,152 5,099
General and administrative
expenses........................ 1,984 778 264(1) 3,026
Amortization of intangible
assets.......................... 3,300(1) 3,300
Stock-based compensation........... 157 464 621
------- ------- ------- --------
Total operating expenses........ 7,682 6,774 3,564 18,020
------- ------- ------- --------
Operating loss....................... (7,526) (6,734) (3,564) (17,824)
Interest income...................... 87 87
Interest expense..................... (31) (230) (261)
Other income......................... 30 30
------- ------- ------- --------
Net loss............................. $(7,470) $(6,934) $(3,564) $(17,968)
======= ======= ======= ========
Pro forma net loss per share:
Basic and diluted.................. $ (5.17) $ (1.93) $ (3.56)
======= ======= ========
Weighted average shares -- basic
and diluted..................... 1,444 3,600 5,044
======= ======= ========
</TABLE>

See accompanying notes to pro forma consolidated statement of operations.

F-23
<PAGE> 93

MYPOINTS.COM, INC.
(FORMERLY INTELLIPOST CORPORATION)

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

1. PRO FORMA ADJUSTMENTS

The following adjustments were applied to the Company's historical
financial statements and those of the acquired companies to arrive at the pro
forma consolidated financial information.

- To record amortization of a technology license agreement and related
intangibles totaling $7.3 million on a straight-line basis over the
estimated period of benefit of 48 months.

- To record amortization of acquired customer base totaling $500,000 on a
straight-line basis over the estimated period of benefit of 6 to 36
months, and acquired membership base totaling $800,000 on a straight-line
basis over the estimated period of benefit of 6 to 30 months.

- To record amortization of acquired employee workforce totaling $800,000
on a straight-line basis for employees of ERT subsequently retained by
the Company over the estimated period of benefit of 24 months.

- To record amortization of acquired trademark and trade name totaling $1.8
million on a straight-line basis over the estimated period of benefit of
60 months.

A summary of these pro forma adjustments relating to acquired intangible
assets is as follows (in thousands):

<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION
------------
<S> <C>
Technology license agreement and intangible assets.......... $1,835
Customer base............................................... 296
Membership base............................................. 493
Employee workforce.......................................... 340
Trademark................................................... 336
------
$3,300
======
</TABLE>

In addition, the Company's historical financial statements, and those of
the acquired companies, reflect a pro forma adjustment to record annual
depreciation expense of $264,000. This represents depreciation of acquired fixed
assets depreciated on a straight-line basis over their estimated remaining life
of three years.

2. PRO FORMA NET LOSS PER SHARE

Pro forma basic net loss per share for the year ended December 31, 1998 is
computed using the weighted average number of common shares outstanding,
including the pro forma effect of the automatic conversion of the Company's
Series A, Series B, Series C and Series D preferred stock into shares of the
Company's common stock effective upon the closing of the Company's proposed
initial public offering as if such conversion occurred on January 1, 1998 or on
the date of original issuance, if later. Pro forma diluted net loss per share is
computed excluding the pro forma weighted average number of common and common
equivalent shares outstanding because such common equivalents are anti-dilutive.
Differences between historical weighted average shares outstanding and pro forma
weighted average shares outstanding used to compute net loss per share result
from the inclusion of shares issued in conjunction with the acquisition as if
such shares were outstanding from January 1, 1998 and from the automatic
conversion of the Company's Series A, Series B, Series C and Series D preferred
stock effective upon the completion of the Company's proposed initial public
offering.

F-24
<PAGE> 94

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
Enhanced Response Technologies, Inc.

In our opinion, the accompanying balance sheet and the related statements
of operations, of shareholders' deficiency and of cash flows present fairly, in
all material respects, the financial position of Enhanced Response Technologies,
Inc., formerly MotivationNet, Inc. (the Company), as of December 31, 1997, and
the results of its operations and its cash flows for the period from June 25,
1996 (date of inception) to December 31, 1996, and the year ended December 31,
1997, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company'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.

/s/ PricewaterhouseCoopers LLP

March 26, 1999
Chicago, Illinois

F-25
<PAGE> 95

ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

COMBINED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 32 $ 42
Accounts receivable....................................... 40 183
Deposits and prepaid expenses............................. 87 51
------- ------
Total current assets................................... 159 276
Property and equipment, net................................. 567 473
Other assets................................................ 5 45
------- ------
Total assets........................................... $ 731 $ 794
======= ======
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Notes payable............................................. $ 4,117 $2,808
Accounts payable.......................................... 324 408
Accrued expenses.......................................... 258 444
Points redemption liability............................... 17 400
Deferred compensation..................................... 100 100
Deferred revenue.......................................... 83 387
------- ------
Total current liabilities.............................. 4,899 4,547
------- ------
Commitments and contingencies (Note 9 and Note 11)
Shareholders' deficiency:
Common stock, no par value; 6,000,000 shares authorized;
2,048,000 and 2,228,000 shares outstanding as of
December 31, 1997 and September 30, 1998,
respectively........................................... 119 131
Additional paid-in capital................................ 17 5,398
Accumulated deficit....................................... (4,291) (9,282)
Unearned compensation..................................... (13) --
------- ------
Total shareholders' deficiency......................... (4,168) (3,753)
------- ------
Total liabilities and shareholders' deficiency......... $ 731 $ 794
======= ======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-26
<PAGE> 96

ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD YEAR NINE MONTHS ENDED
ENDED ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ---------------------------
1996 1997 1997 1998
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues............................ $ -- $ -- $ -- $ 30
Cost of revenues.................... -- -- -- 6
----- ------- ------- -------
Gross profit...................... -- -- -- 24
----- ------- ------- -------
Operating expenses:
Technology costs.................. -- 3,213 1,979 1,979
Sales expenses.................... -- 146 54 596
Marketing......................... 35 417 -- 1,484
General and administrative
expenses....................... 177 178 13 784
----- ------- ------- -------
Total operating expenses....... 212 3,954 2,046 4,843
----- ------- ------- -------
Operating loss...................... (212) (3,954) (2,046) (4,819)
Interest expense.................... -- (116) (41) (196)
Other, net.......................... -- (9) 24
----- ------- ------- -------
Net loss....................... $(212) $(4,079) $(2,087) $(4,991)
===== ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-27
<PAGE> 97

ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

COMBINED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
FOR THE PERIOD FROM JUNE 25, 1996 (DATE OF INCEPTION) TO
DECEMBER 31, 1996, AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN ACCUMULATED UNEARNED
SHARES AMOUNT CAPITAL DEFICIT COMPENSATION TOTAL
--------- ------ ---------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock to
founders for cash.............. 1,000 $104 $ -- $ -- $ -- $ 104
Net loss......................... (212) (212)
--------- ---- ------ ------- ---- -------
BALANCE, DECEMBER 31, 1996....... 1,000 104 (212) (108)
Stock option award............... 17 (17)
Amortization of unearned
compensation................... 4 4
Stock issued for services........ 24 15 15
Stock split -- 2000 for 1........ 2,046,976
Net loss......................... -- -- -- (4,079) -- (4,079)
--------- ---- ------ ------- ---- -------
BALANCE, DECEMBER 31, 1997....... 2,048,000 119 17 (4,291) (13) (4,168)
(UNAUDITED)
Conversion of notes payable and
accrued interest to capital in
MNet........................... 5,230 5,230
Exercise of stock options........ 180,000 12 151 13 176
Net loss......................... (4,991) (4,991)
--------- ---- ------ ------- ---- -------
BALANCE, SEPTEMBER 30, 1998...... 2,228,000 $131 $5,398 $(9,282) $ -- $(3,753)
========= ==== ====== ======= ==== =======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-28
<PAGE> 98

ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD YEAR NINE MONTHS ENDED
ENDED ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------
1996 1997 1997 1998
------------ ------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(212) $(4,079) $(2,087) $(4,991)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization....................... 2 94 40 173
Stock-based compensation............................ -- 4 -- 164
Stock issued for services........................... -- 15 15 --
Changes in operating assets and liabilities:
Accounts receivable.............................. -- (41) (142) (144)
Deposits and prepaid expenses.................... (2) (85) (5) 37
Accounts payable................................. 27 297 204 84
Accrued expenses................................. 16 242 167 416
Point redemption liability....................... -- 18 -- 382
Deferred compensation............................ 51 49 49 --
Deferred revenue................................. -- 83 -- 304
----- ------- ------- -------
Net cash used in operating activities............ (118) (3,403) (1,759) (3,575)
----- ------- ------- -------
Cash flows from investing activities:
Purchase of property and equipment.................... (13) (649) (593) (79)
Other................................................. -- (6) -- (40)
----- ------- ------- -------
Net cash used in investing activities............ (13) (655) (593) (119)
----- ------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of common stock................ 104 -- -- --
Proceeds from note payable............................ -- 4,057 2,332 3,752
Proceeds from officer notes payable................... 30 30 30 --
Repayments of officer notes payable................... -- -- -- (60)
Exercise of stock options............................. -- -- -- 12
----- ------- ------- -------
Net cash provided by financing activities........ 134 4,087 2,362 3,704
----- ------- ------- -------
Net increase in cash and cash equivalents........ 3 29 10 10
Cash and cash equivalents, beginning of period.......... -- 3 3 32
----- ------- ------- -------
Cash and cash equivalents, end of period................ $ 3 $ 32 $ 13 $ 42
===== ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-29
<PAGE> 99

ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE 1 -- THE COMPANY

Enhanced Response Technologies, Inc., formerly known as MotivationNet, Inc.
(the "Company"), was founded in June 1996. The Company offers advertisers the
ability to target internet users enrolled as members of its "MyPoints" incentive
program. The Company's MyPoints program awards points to enrolled members for
receiving and responding to email communications, accessing and responding to
advertisers' and MyPoints's internet web page offers, purchasing advertisers'
products, and completing of surveys to obtain demographic information. MyPoints
points may be redeemed by members for a variety of goods and services.

NOTE 2 -- BASIS OF PRESENTATION (UNAUDITED)

The Company's primary source of funding for the development of the
technology supporting the MyPoints program was obtained from Direct Marketing
Technology, Inc. ("DMT") through a note payable. In early 1998, DMT informed the
Company that it wanted to convert the note payable to an equity interest. On
March 31, 1998, the Company and DMT entered into an agreement whereby the
Company transferred its MyPoints technology, which was carried at zero net book
value, a $5,209,600 note payable to DMT and certain other assets and liabilities
to MotivationNet, LLC ("MNet"), with $5,000,000 of the note payable to DMT and
related accrued interest being converted by DMT to a capital interest in MNet.
Upon the formation of MNet, the Company's and DMT's interest in MNet were 34.0%
and 66.0%, respectively. To avoid confusion with MotivationNet, LLC, the Company
changed its name from MotivationNet, Inc. to Enhanced Response Technologies,
Inc. Also, on March 31, 1998, the Company established a wholly-owned subsidiary,
MyPoints.Com, LLC ("MyPoints.Com"), to which the Company contributed the
MyPoints operations.

In connection with its formation, MNet licensed the MyPoints technology
back to the Company. Beginning in April 1998, the MyPoints program was operated
on MNet's computer systems for which MNet began charging MyPoints.Com for use of
the computer system and technical support. In addition, MNet provided
fulfillment services related to the redemption of MyPoints points for goods and
services for which MNet charged MyPoints.Com based on the face value of the
points redeemed, $.01 per point.

Pursuant to the agreement to establish MNet, DMT agreed to provide MNet
additional financing through a note payable to fund the operations of MNet, as
well as to allow MNet to provide financing to the Company through a note payable
to fund the Company's operations, including the operations of MyPoint.Com.

In the fourth quarter of 1998, the Company and MNet were acquired by
Intellipost Corporation (subsequently renamed "MyPoints.com, Inc.").

The financial statements for periods prior to March 31, 1998 reflect the
operations of the Company as a stand-alone entity. The financial statements for
periods subsequent to March 31, 1998 reflect the operations of the Company and
MNet on a combined basis as (a) the companies have common management, (b) both
companies were acquired by Intellipost Corporation and (c) the presentation is
considered most meaningful. All intercompany transactions have been eliminated.

NOTE 3 -- LIQUIDITY

F-30
<PAGE> 100
ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

sources. Management is seeking to increase revenues through continued marketing
of its services while controlling costs to meet working capital needs; however,
additional financing will be required.

To support its working capital requirements in 1998, the Company received
additional funding from DMT through MNet. Since the merger with Intellipost
Corporation in late 1998, Intellipost Corporation has been funding the Company's
operations. Intellipost has committed to fund the Company's working capital
needs through at least December 31, 1999.

NOTE 4 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL DATA (UNAUDITED)

The financial statements as of September 30, 1998 and for the nine-month
periods ended September 30, 1997 and 1998 are unaudited. In the opinion of
management, these financial statements reflect all adjustments necessary for a
fair presentation of the financial statements for such periods. These
adjustments consist of normal, recurring items. The results of operation for the
nine-month period ended September 30, 1998 are not necessarily indicative of the
results of operations that may be expected for the full year.

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 expenses during the reporting period.
Such estimates include the levels of valuation allowances for accounts
receivable and deferred taxes. Actual results could differ from those estimates
and such differences could be material.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments with original
maturities of three months or less when purchased.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the
straight-line method over their respective estimated useful lives, generally
three years. Maintenance and repairs are charged to expense as incurred, and
improvements and betterments are capitalized. When assets are retired or
otherwise disposed of, the cost and accumulated depreciation and amortization
are removed from the accounts and any resulting gain or loss is reflected in the
statement of operations for the period realized.

INCOME TAXES

The Company accounts for income taxes using the liability method, whereby
deferred tax assets and liabilities are determined based on temporary
differences between the financial statement and tax bases of assets and
liabilities and net operating loss and credit carryforwards using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amounts expected to be realized.

F-31
<PAGE> 101
ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

POINTS REDEMPTION LIABILITY

Points redemption liability represent the estimated costs associated with
the accumulation of MyPoints points earned by MyPoints members in conjunction
with the Company's internal marketing activities. These MyPoints may be
converted by members into various third party goods and services. The Company is
liable for purchasing the goods and services redeemed by members.

REVENUE RECOGNITION

The Company earns revenues from the sale of MyPoints points to corporate
advertisers that use these points for internet-based promotional campaigns which
award members for certain actions desired by corporate advertisers. In
connection with the sale of the MyPoints points, the Company is responsible for
redeeming the points upon the member's request. The Company recognizes revenues
when the MyPoints points are redeemed by the MyPoints members.

TECHNOLOGY COSTS

Product development costs and enhancements to existing products are charged
to operations as incurred. Software development costs are required to be
capitalized when a product's technological feasibility has been established by
completion of a working model of the product and ending when a product is
available for general release to customers. To date, completion of a working
model of the Company's products and general release have substantially
coincided. As a result, the Company has not capitalized any software development
costs since such costs have not been significant. Product development costs,
along with other technology related costs, are reported as technology costs in
the Company's statements of operations.

BUSINESS RISK AND CONCENTRATION OF CREDIT RISK

The Company has a limited operating history and its prospects are subject
to the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving markets for internet products and services. These
risks include the failure to develop and extend the Company's online service
brands, the rejection of the Company's services by web consumers and/or
advertisers, the inability of the Company to maintain and increase the levels of
traffic on its online services, as well as other risks and uncertainties.
Failure to successfully address these risks may have a material adverse impact
on the Company's operations and financial position.

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of temporary cash investments
and accounts receivable. The Company deposits its cash with one major financial
institution and such deposits do not exceed insured amounts. The Company's
customers range from large corporations to relatively small organizations. The
Company does not require collateral for accounts receivable. The Company
evaluates each customer's credit worthiness and establishes allowances as
necessary.

STOCK-BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board ("APB") No. 25,
Accounting for Stock Issued to Employees, and complies with the disclosure
provisions of Statement of Financial Accounting Standards ("SFAS") No. 123,
Accounting for Stock-Based Compensation. Under APB No. 25, compensation expense
is based on the difference, if any, on the date of the grant, between the fair
value of the Company's stock and the exercise price of options to purchase that
stock.

F-32
<PAGE> 102
ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

COMPREHENSIVE INCOME

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. SFAS No.
131 establishes standards for the way companies report information about
operating segments in annual financial statements. It also establishes standards
for related disclosures about products and services, geographic areas and major
customers. The disclosures prescribed by SFAS No. 131 are effective for year
ended December 31, 1998. The Company has determined that it does not have any
separately reportable business segments as of December 31, 1998.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") No. 98-1, Software for Internal Use, which
provides guidance on accounting for the cost of computer software developed or
obtained for internal use. SOP No. 98-1 is effective for financial statements
for fiscal years beginning after December 15, 1998. The Company does not expect
that the adoption of SOP No. 98-1 will have a material impact on its financial
statements.

NOTE 5 -- PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1997 is summarized as follows (in
thousands):

<TABLE>
<CAPTION>
1997
----
<S> <C>
Computer equipment.......................................... $321
Furniture and fixtures...................................... 7
Computer software........................................... 335
----
663
Accumulated depreciation and amortization................... (96)
----
$567
====
</TABLE>

NOTE 6 -- NOTES PAYABLE

During 1997, DMT provided funding to the Company of approximately
$4,056,000 through a non-interest bearing note payable. The Company recognized
imputed interest expense on the note payable based on the prime rate plus 1.0%
(9.5% as of December 31, 1997). The note payable and related accrued interest
were transferred to MNet as of March 31, 1998 in connection with its formation.
Upon the formation of MNet, $5,000,000 of the note payable balance then
outstanding and the related accrued interest of $229,550 were transferred to
MNet and converted by DMT to a capital interest in MNet (see Note 2).

The Company had notes payable to an officer of $60,000 as of December 31,
1997. Borrowings under the notes payable bore interest at 7.0% and were repaid
in April 1998.

Interest expense was $0 and $116,400 in 1996 and 1997, respectively.

F-33
<PAGE> 103
ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7 -- CAPITAL STRUCTURE

COMMON STOCK

Upon formation in June 1996, the Company was authorized to issue 1,000,000
shares of no par value common stock. The Company issued 1,000 shares of common
stock in connection with its initial capitalization. Pursuant to the unanimous
consent of the stockholders on June 17, 1997, the authorized shares of common
stock were increased to 6,000,000 and the Company declared a 2000-for-one stock
split effective July 1, 1997.

COMMON STOCK OPTIONS

On November 17, 1997, the Company adopted the MotivationNet, Inc. 1997
Incentive Stock Option Plan (the "Plan"). As of December 31, 1997, the Company
had reserved 200,000 shares of common stock for issuance under the Plan.
Effective August 12, 1998 the Board of Directors increased the common stock
reserved for the Plan from 200,000 shares to 650,000 shares. Pursuant to the
Plan provisions, grant prices of options issued under the Plan can be no less
than the fair market value of the Company's common stock as of the date of
grant, the options vest at a rate of no less than 20% per year and the term of
the options can be no more than seven years from the date of grant. During 1997,
the Company granted 140,100 shares under the Plan, with one-third of the options
originally vesting as of January 1, 1998, 1999 and 2000. In connection with the
formation of MNet (see Note 2), these options became fully vested.

Pursuant to an employment agreement, an executive of the Company was
granted options to purchase 0.5% of the shares outstanding as each of the
following dates: May 7, 1997, December 31, 1997, June 30, 1998 and December 31,
1998. The aggregate option price for such shares was fixed at $12,500. The
employment agreement was amended in August 1998 to the allow executive to
purchase 180,000 shares for the $12,500, upon which the executive exercised such
options.

The Company accounts for stock-based compensation in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Accordingly, compensation cost for employee stock options is
measured as the excess, if any, of the fair market value the Company's common
stock at the date of grant over the amount the employee must pay to acquired. In
connection with certain stock option grants during the year ended December 31,
1997, the Company recognized unearned compensation, which is being amortized
over the service period for which the options were granted. The unearned
compensation as of December 31, 1997 is reported as component of shareholders'
deficiency.

F-34
<PAGE> 104
ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

Following is a summary of incentive stock option activity for the year
ended December 31, 1997. There was no activity in the Plan prior to January 1,
1997.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OUTSTANDING EXERCISE
SHARES PRICE
----------- --------
<S> <C> <C>
Outstanding as of December 31, 1996....................... -- --
Granted................................................. 140,100 $1.00
Exercised............................................... -- --
Canceled................................................ (15,000) 1.00
------- -----
Outstanding as of December 31, 1997....................... 125,100 $1.00
======= =====
Options vested as of December 31, 1997.................... -- --
======= =====
</TABLE>

The following table summarizes information about fixed stock options
outstanding at December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
AT DECEMBER 31, 1997 AT DECEMBER 31, 1997
------------------------------------------ ---------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICE OUTSTANDINGS LIFE (YEARS) PRICE VESTED PRICE
-------------- ------------ ------------- --------- ------- ----------
<S> <C> <C> <C> <C> <C>
$1.00 125,100 6.83 $1.00 -- --
------- ---- ----- -- --
</TABLE>

The weighted average fair value of options granted in 1997 was $0.73.

Had compensation cost for the Company's Plan been determined based on fair
value at the grant date consistent with the method prescribed by SFAS 123, the
impact on the Company's net loss would have been increased to the pro forma
amounts below (in thousands):

<TABLE>
<CAPTION>
1996 1997
----- -------
<S> <C> <C>
Net loss as reported.................................. $(212) $(4,079)
Net loss -- pro forma................................. -- $(4,087)
</TABLE>

The fair value of employee stock option grants has been estimated on the
date of grant using the minimum value model with the following weighted average
assumptions used for grants in 1997:

<TABLE>
<CAPTION>
1997
-------
<S> <C>
Risk-free interest rate..................................... 5.72%
Expected life............................................... 5 years
Dividends................................................... --
</TABLE>

NOTE 8 -- SAVINGS PLAN

In November 1997 the Company established the MotivationNet, Inc. 401-K Plan
(the "Savings Plan"), which covers substantially all employees. Under the
Savings Plan, employees are permitted to contribute up to 15.0% of their gross
compensation, subject to limitations of the Internal Revenue Code. The Company
does not make matching contributions to the Savings Plan.

F-35
<PAGE> 105
ENHANCED RESPONSE TECHNOLOGIES, INC.
(FORMERLY MOTIVATIONNET, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9 -- LEASES

The Company leases office space and equipment under noncancelable operating
leases with various expiration dates through 1999. Under the terms of office
space lease, the Company is responsible for certain real estate taxes and other
operating costs. The Company's rent expense was $16,000 and $46,000 in 1996 and
1997, respectively.

Future minimum lease payments under noncancelable operating leases as of
December 31, 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
OPERATING
DECEMBER 31, LEASES
------------ ---------
<S> <C>
1998........................................................ $65
1999........................................................ 24
---
Total minimum lease payments...................... $89
===
</TABLE>

NOTE 10 -- INCOME TAXES

As of December 31, 1997, the Company has net operating loss carryforwards
of approximately $161,000 for federal income tax reporting purposes. The net
operating loss carryforwards expire in 2011.

The difference between the income tax benefit at the federal statutory rate
and the Company's effective tax rate is due primarily to recognition of a full
valuation allowance to offset the net deferred tax assets.

The estimated tax effect of significant temporary differences and
carryforwards that give rise to deferred income tax assets as of December 31,
1997 are as follows (in thousands):

<TABLE>
<CAPTION>
1997
-------
<S> <C>
Net operating loss carryforwards............................ $ 64
Non-deducted research and experimentation costs............. 1,475
Accrued expenses............................................ 110
Deferred compensation....................................... 39
Non-deducted start-up costs................................. 20
-------
Gross deferred tax assets................................... 1,708
Valuation allowance......................................... (1,708)
-------
Net deferred tax asset...................................... $ --
=======
</TABLE>

The Company has recorded a valuation allowance against the net deferred tax
assets due the Company operating at a net loss since inception and due to
uncertainties surrounding their realization.

NOTE 11 -- CONTINGENCIES

The Company is the subject of various claims and actions in the ordinary
course of its business. All such matters are subject to uncertainties that are
not predictable with assurance. However, it is management's opinion that the
disposition of such matters will not have a material impact on the Company's
financial position, results of operations or cash flows.

NOTE 12 -- SUBSEQUENT EVENTS

On November 30, 1998, the shareholders of the Company reached an agreement
to sell the Company to MyPoints.com, Inc. (formerly Intellipost Corporation).

F-36
<PAGE> 106

DESCRIPTION OF GRAPHICS

INSIDE FRONT COVER:

Rewards providers logos above two half-circle flow charts surrounding the
MyPoints logo that illustrate the MyPoints Online Loyalty Solutions and Online
Direct Marketing Solutions.

FRONT COVER GATEFOLD:

MyPoints logo with flow chart of our web pages illustrating aspects of
member interaction including joining the program, and opportunities to monitor,
earn and redeem points.

INSIDE BACK COVER

MyPoints logo with web pages representative of co-branding of the MyPoints
rewards program.

<PAGE> 107

LOGO
<PAGE> 108

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all fees and expenses payable by
MyPoints.com in connection with the registration of the common stock hereunder.
All of the amounts shown are estimates except for the SEC registration fee, the
NASD filing fee and the Nasdaq National Market listing fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
-------------
<S> <C>
SEC Registration Fee........................................ $ 19,182.00
NASD Filing Fee............................................. 7,400.00
Nasdaq National Market Listing Fee.......................... 95,000.00
Printing and Engraving Expenses............................. 200,000.00
Legal Fees and Expenses..................................... 300,000.00
Accounting Fees and Expenses................................ 250,000.00
Transfer Agent and Registrar Fees and Expenses.............. 25,000.00
Blue Sky fees and expenses.................................. 10,000.00
Miscellaneous Expenses...................................... 93,418.00
-------------
Total............................................. $1,000,000.00
=============
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors and any corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Our certificate of incorporation and our bylaws provide for
indemnification of our directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. We have also entered into agreements with our directors and executive
officers that require MyPoints.com, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors and executive officers to the fullest extent permitted by Delaware
law. We have also purchased directors and officers liability insurance, which
provides coverage against certain liabilities including liabilities under the
Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

(a) Since our formation in November 1996, we have issued and sold the
following unregistered securities:

(1) In November 1996, we issued and sold an aggregate of 2,500,000
shares of common stock to the founding officers and directors of
MyPoints.com and to certain other individuals for an aggregate purchase
price of $2,500.00.

(2) Since our inception, we have granted options to purchase 5,066,047
shares of common stock to employees, directors and consultants under our
1996 and 1999 stock plans at exercise prices ranging from $0.05 to $8.00
per share. Of the 5,066,047 shares granted, 3,925,147 remain outstanding,
165,094 shares of common stock have been purchased pursuant to exercises of
stock options and 975,806 shares have been canceled and returned to the
1996 and 1999 stock plans.

(3) In November and December 1996, we sold an aggregate of 3,000,000
shares of Series A preferred stock at a price of $0.50 per share to a total
of four investors.

(4) In March of 1998, we sold an aggregate of 500,000 shares of Series
B preferred stock at a price of $1.00 per share to one institutional
investor.

II-1
<PAGE> 109

(5) Between October 1997 and April 1998, we sold an aggregate of
2,926,666 shares of Series C preferred stock at a price of $1.50 per share
to a total of 19 investors. On May 1, 1998, in conjunction with entering an
equipment lease, we issued a warrant for the purchase of 10,000 shares of
Series C preferred stock to Phoenix Leasing Inc. at an exercise price of
$1.50.

(6) In November 1998, we issued 3,600,481 shares of common stock
pursuant to our acquisition transactions with Experian.

(7) In November 1998, we sold an aggregate of 3,961,649 shares of
Series D preferred stock at a price of $2.06 per share and warrants for the
purchase of 1,374,028 shares of Series D preferred stock with an exercise
price of $2.06 per share to a total of 23 investors.

(8) In March 1999, we sold an aggregate of 2,000,000 shares of Series
E preferred stock at a price of $5.00 per share to a total of 41 investors.
All of these investors qualified as "accredited investors" under Securities
and Exchange Commission Rule 501.

The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in reliance
upon Section 4(2) of the Securities Act, Regulation D promulgated thereunder or
Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions
by an issuer not involving any public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of securities in each transaction represented
their intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the securities issued in such transactions. All
recipients had adequate access, through their relationship with MyPoints.com, to
information about us.

(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
1.1* Form of Underwriting Agreement
3.1(a) Amended and Restated Certificate of Incorporation, as
currently in effect
3.1(b)* Certificate of Incorporation to be filed upon completion of
the offering
3.2(a)* Bylaws of the registrant as currently in effect
3.2(b)* Bylaws of the registrant as in effect upon completion of the
offering
4.1* Form of Lock-Up Agreements
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1* Amended and Restated Investors Rights Agreement dated March
30, 1999
10.2* 1996 Stock Plan and forms of agreements thereunder
10.3* 1999 Stock Plan and forms of agreements thereunder
10.4* 1999 Employee Stock Purchase Plan
10.5* Form of Director and Executive Officer Indemnification
Agreement
10.6* Representative form of Stock Purchase Warrant
10.7* Lease between the registrant and Louis N. Haas dated
November 15, 1996 for office space located at 565 Commercial
Street, San Francisco, California, and addenda thereto
10.8* Lease dated March 18, 1999 between registrant and
TA/Western, L.L.C. for office space located at 1375 E.
Woodfield Road, Suite 520, Schaumburg, Illinois
</TABLE>

II-2
<PAGE> 110

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
10.9* Lease dated January 22, 1998 between MotivationNet, Inc. and
The Mutual Life Insurance Company of New York for office
space located at 1375 E. Woodfield Road, Suite 540,
Schaumburg, Illinois
10.10* Agreement and Plan of Merger dated November 30, 1998 among
the registrant, IPOST Acquisition Subsidiary, Inc. and
Enhanced Response Technologies, Inc.
10.11* Interest Purchase Agreement dated November 30, 1998 among
registrant, Direct Marketing Technology, Inc. and Brigar
Computer Services, Inc.
10.12* Asset Purchase Agreement dated November 30, 1998 between
registrant and Metromail Corporation
10.13* License Agreement dated November 30, 1998 between registrant
and Direct Marketing Technologies, Inc.
10.14* Services Agreement dated November 30, 1998 between
registrant and Direct Marketing Technologies, Inc.
10.15* Business Loan Agreement dated January 27, 1997 between
registrant and Silicon Valley Bank and related promissory
notes
10.16* Master Equipment Lease Agreement dated May 1, 1998 between
registrant and Phoenix Leasing Incorporated

+10.17* Patent License Agreement dated March 31, 1999 between
registrant and Netcentives, Inc.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.3 Consent of Counsel (included in exhibit 5.1)
24.1* Power of Attorney
27.1 Financial Data Schedule
</TABLE>

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

* Exhibit previously filed.

+ Confidential treatment has been requested for portions of this exhibit.

(b) FINANCIAL STATEMENT SCHEDULES

The following schedule is filed herewith:

Schedule II -- Valuation and Qualifying Accounts

Other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

ITEM 17. UNDERTAKINGS

Insofar as indemnification by MyPoints.com for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of MyPoints.com, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by MyPoints.com of expenses incurred or paid by a director, officer
or controlling person of MyPoints.com in the successful defense of any action,
suit or proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the

II-3
<PAGE> 111

question whether such indemnification by MyPoints.com is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

We hereby undertake that:

(a) We will provide to the underwriters at the closing as specified in
the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.

(b) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by MyPoints.com pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.

(c) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 112

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
MyPoints.com has duly caused this amendment to the Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California, on the 13th day
of May, 1999.

MYPOINTS.COM, INC.

By: /s/ STEVEN M. MARKOWITZ
---------------------------------------
Steven M. Markowitz
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement on Form S-1 has been signed by the
following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ STEVEN M. MARKOWITZ Chief Executive Officer and May 13, 1999
- ------------------------------------------------ Chairman of the Board (Principal
Steven M. Markowitz Executive Officer)

/s/ THOMAS CALDWELL Senior Vice President, Finance May 13, 1999
- ------------------------------------------------ and Chief Financial Officer
Thomas Caldwell (Principal Financial and
Accounting Officer)

/s/ ROBERT C. HOYLER* President and Chief May 13, 1999
- ------------------------------------------------ Operating Officer, Director
Robert C. Hoyler

/s/ HOWARD L. MORGAN* Director May 13, 1999
- ------------------------------------------------
Howard L. Morgan

/s/ THOMAS NEWKIRK* Director May 13, 1999
- ------------------------------------------------
Thomas Newkirk

/s/ LAWRENCE E. PHILLIPS* Director May 13, 1999
- ------------------------------------------------
Lawrence E. Phillips

/s/ MARIO M. ROSATI* Director May 13, 1999
- ------------------------------------------------
Mario M. Rosati

/s/ LESTER WUNDERMAN* Director May 13, 1999
- ------------------------------------------------
Lester Wunderman

*By: /s/ STEVEN M. MARKOWITZ
------------------------------------------
Steven M. Markowitz
Attorney-in-fact
</TABLE>

II-5
<PAGE> 113

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE
AT BALANCE AT
BEGINNING END OF
DESCRIPTION OF YEAR ADDITIONS DEDUCTIONS YEAR
----------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts for the years ended:
December 31, 1997.................................... -- -- -- --
December 31, 1998.................................... -- 60 -- 60
</TABLE>

S-1
<PAGE> 114

SUBJECT TO COMPLETION, DATED MAY 13, 1999

LOGO

5,000,000 SHARES

COMMON STOCK

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

INVESTING IN OUR COMMON STOCK INVOLVES RISKS.

SEE "RISK FACTORS" BEGINNING ON PAGE 7.

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

MyPoints.com has granted the underwriters a 30-day option to purchase up to
an additional 750,000 shares of common stock to cover over-allotments.

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

BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LIMITED

BEAR, STEARNS INTERNATIONAL LIMITED

SALOMON SMITH BARNEY INTERNATIONAL

The date of this prospectus is , 1999

<PAGE> 115

UNDERWRITING

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------
<S> <C>
BancBoston Robertson Stephens Inc...........................
Bear, Stearns & Co. Inc.....................................
Salomon Smith Barney Inc....................................
Wit Capital Corporation.....................................
--------
Total.....................................................
========
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITERS SHARES
-------------------------- ---------
<S> <C>
BancBoston Robertson Stephens International Limited ........
Bear, Stearns International Limited.........................
Salomon Brothers International Limited......................
--------
Total.....................................................
========
</TABLE>

The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

<PAGE> 116

these shares will be made by Wit Capital. Purchases of the reserved shares will
be made through an account at Wit Capital in accordance with Wit Capital's
procedures for opening an account and transacting in securities. Any of these
reserved shares not purchased by visitors to and users of Wit Capital's services
or web site will be offered by the underwriters to the public on the same terms
as the other shares.

Internet Prospectus. A U.S. prospectus in electronic format is being made
available to U.S. investors only on a web site maintained by Wit Capital. In
addition, pursuant to an e-Dealer Agreement, all dealers purchasing shares from
Wit Capital in the offering, the e-Dealers, similarly have agreed to make a U.S.
prospectus in electronic format available on the web sites that they maintain.

Over-Allotment Option. We have granted to the underwriters an option,
exercisable during the 30-day period after the date of this prospectus, to
purchase up to 750,000 additional shares of common stock at the same price per
share as we will receive for the 5,000,000 shares that the underwriters have
agreed to purchase from us. To the extent that the underwriters exercise this
option, each of the underwriters will have a firm commitment to purchase
approximately the same percentage of these additional shares that the number of
shares of common stock to be purchased by the underwriter shown in the table
above bears to the total number of the shares shown in the table above. If
purchased, these additional shares will be sold by the underwriters on the same
terms as those on which the 5,000,000 shares are being sold. We will be
obligated, under the terms of the option, to sell shares to the extent the
option is exercised. The underwriters may exercise the option only to cover
over-allotments made in connection with the sale of the shares of common stock
offered hereby. If the option is exercised in full, the total public offering
price will be $ , the total underwriting discounts and commissions will
be $ and the total proceeds to us will be $ . The expenses of
this offering are estimated at $ and are payable entirely by
MyPoints.com.

options or warrants and the grant of options to purchase shares of common stock
under existing employee stock option or stock purchase plans. See "Shares
Eligible For Future Sale."

LEGAL MATTERS

<PAGE> 118

Sonsini Goodrich & Rosati. Of these shares, 105,277 are issuable upon exercise
of options held by Mr. Rosati, which options have an exercise price of $0.10 per
share.

EXPERTS

WHERE YOU CAN FIND ADDITIONAL INFORMATION

<PAGE> 119

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
--------- ------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement
3.1(a) Amended and Restated Certificate of Incorporation, as
currently in effect
3.1(b)* Certificate of Incorporation to be filed upon completion of
the offering
3.2(a)* Bylaws of the registrant as currently in effect
3.2(b)* Bylaws of the registrant as in effect upon completion of the
offering
4.1* Form of Lock-Up Agreements
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1* Amended and Restated Investors Rights Agreement dated March
30, 1999
10.2* 1996 Stock Plan and forms of agreements thereunder
10.3* 1999 Stock Plan and forms of agreements thereunder
10.4* 1999 Employee Stock Purchase Plan
10.5* Form of Director and Executive Officer Indemnification
Agreement
10.6* Representative form of Stock Purchase Warrant
10.7* Lease between the registrant and Louis N. Haas dated
November 15, 1996 for office space located at 565 Commercial
Street, San Francisco, California, and addenda thereto
10.8* Lease dated March 18, 1999 between registrant and
TA/Western, L.L.C. for office space located at 1375 E.
Woodfield Road, Suite 520, Schaumburg, Illinois
10.9* Lease dated January 22, 1998 between MotivationNet, Inc. and
The Mutual Life Insurance Company of New York for office
space located at 1375 E. Woodfield Road, Suite 540,
Schaumburg, Illinois
10.10* Agreement and Plan of Merger dated November 30, 1998 among
the registrant, IPOST Acquisition Subsidiary, Inc. and
Enhanced Response Technologies, Inc.
10.11* Interest Purchase Agreement dated November 30, 1998 among
registrant, Direct Marketing Technology, Inc. and Brigar
Computer Services, Inc.
10.12* Asset Purchase Agreement dated November 30, 1998 between
registrant and Metromail Corporation
10.13* License Agreement dated November 30, 1998 between registrant
and Direct Marketing Technologies, Inc.
10.14* Services Agreement dated November 30, 1998 between
registrant and Direct Marketing Technologies, Inc.
10.15* Business Loan Agreement dated January 27, 1997 between
registrant and Silicon Valley Bank and related promissory
notes
10.16* Master Equipment Lease Agreement dated May 1, 1998 between
registrant and Phoenix Leasing Incorporated
+10.17* Patent License Agreement dated March 31, 1999 between
registrant and Netcentives, Inc.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.3 Consent of Counsel (included in exhibit 5.1)
24.1* Power of Attorney
27.1 Financial Data Schedule
</TABLE>

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

* Exhibit previously filed.

+ Confidential treatment has been requested for portions of this exhibit.

<PAGE> 1

EXHIBIT 3.1(a)

RESTATED CERTIFICATE OF INCORPORATION
OF
MYPOINTS.COM, INC.

A DELAWARE CORPORATION

MyPoints.com, Inc., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:

A. The name of the corporation is MyPoints.com, Inc. The corporation was
originally incorporated under the name Intellipost Corporation and the original
Certificate of Incorporation of the corporation was filed with the Delaware
Secretary of State on November 7, 1996.

B. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates and
amends the provisions of the Certificate of Incorporation of this corporation.

C. The text of the Certificate of Incorporation is hereby amended and
restated in its entirety to read as follows:

ONE. The name of this corporation is MyPoints.com, Inc. (the
"Corporation").

TWO. The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Zip Code 19801. The name of its registered
agent at such address is The Corporation Trust Company.

THREE. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.

FOUR. The Corporation is authorized to issue two classes of capital stock:
Preferred Stock, $0.001 par value per share, and Common Stock, $0.001 par value
per share. The total number of shares of Common Stock which the Corporation
shall have the authority

<PAGE> 2

to issue is Forty Million (40,000,000). The total number of shares of Preferred
Stock the Corporation shall have the authority to issue is Fifteen Million Five
Hundred Thousand (15,500,000) shares of which Four Million (4,000,000) are
designated Series A Preferred Stock, One Million (1,000,000) are designated
Series B Preferred Stock, Three Million (3,000,000) are designated Series C
Preferred Stock, Five Million Five Hundred Thousand (5,500,000) are designated
as Series D Preferred Stock and Two Million (2,000,000) are designated as Series
E Preferred Stock.

The corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Preferred Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Preferred Stock. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, the corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.

The relative powers, preferences, special rights, qualifications,
limitations and restrictions granted to or imposed on the respective classes of
the shares of capital stock or the holders thereof are as follows:

1. Dividends.

a. Dividends on Series E Preferred Stock. The holders of the Series
E Preferred Stock shall be entitled to receive, when, as and if declared by the
board of directors (except as otherwise provided herein), out of any funds
legally available therefor, cumulative dividends at an annual rate of six per
cent (6%) per share of the "Original Issue Price" of the Series E Preferred
Stock. The Original Issue Price of the Series E Preferred Stock shall be $5.00
(as adjusted for any stock dividend, stock splits, recapitalization,
reorganizations and other similar transactions), respectively. Dividends on the
Series E Preferred Stock shall be payable in preference and prior to any payment
of any dividend on the other series of Preferred Stock and Common Stock.

b. Dividends on Series D Preferred Stock. The holders of the Series
D Preferred Stock shall be entitled to receive, when, as and if declared by the
board of directors (except as otherwise provided herein), out of any funds
legally available therefor, cumulative dividends at an annual rate of seven per
cent (7%) per share of the "Original Issue Price" of the Series D Preferred
Stock per annum on each outstanding share of Series D Preferred Stock. The
Original Issue Price of the Series D Preferred Stock shall be $2.06 (as adjusted
for any stock dividend, stock splits, recapitalization, reorganizations and
other similar transactions), respectively. Dividends on the Series D Preferred
Stock shall be payable in preference and prior to any payment of any dividend on
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Common Stock.

c. Dividends on Other Series of Preferred Stock. The holders of the
other series of Preferred Stock shall be entitled to receive, when, as and if
declared by the board of directors (except as otherwise provided herein), out of
any funds legally available therefor, dividends at an annual rate of six per
cent (6%) per share of the "Original Issue Price" per annum on each outstanding
share of Preferred Stock. The Original Issue Price of the Series A Preferred
Stock,

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<PAGE> 3

Series B Preferred Stock and Series C Preferred Stock shall be $0.50, $1.00 and
$1.50 (as adjusted for any stock dividend, stock splits, recapitalization,
reorganizations and other similar transactions), respectively. Dividends on the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall be payable in preference and prior to any payment of any dividend on the
Common Stock.

d. General. After dividends have been paid in accordance with
Sections 1(a), 1(b) and 1(c), holders of Preferred Stock and Common Stock shall
be entitled to receive, when, as and if declared by the board of directors, out
of any funds legally available therefor, dividends; provided, however, that no
dividend or distribution shall be declared or paid on any shares of Common Stock
or Preferred Stock unless at the same time an equivalent dividend or
distribution is declared or paid on all outstanding shares of Common Stock and
Preferred Stock, and provided further that any dividend or distribution on
Preferred Stock shall be payable at the same rate per share as would be payable
on the shares of Common Stock which the holder of Preferred Stock would be
entitled to receive if he had converted the shares of Preferred Stock into
Common Stock immediately prior to the record date of such distribution.
"Distribution" in this Section 1 means the transfer of cash or property without
consideration, whether by way of dividend or otherwise or the purchase or
redemption of shares of the Corporation for cash or property (except the
purchase of shares of Common Stock from employees, directors or consultants
pursuant to restricted stock purchase agreements). The right to dividends on
shares of Common Stock and Preferred Stock shall be non-cumulative and no right
shall accrue to holders of Common Stock or Preferred Stock by reason of the fact
that dividends on said shares are not declared in any prior period.
Notwithstanding the prior sentence, in the event of a liquidation as described
in Section 2 below, the holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series E Preferred Stock, in addition to the
liquidation preference provided for therein, shall also be entitled to receive a
cumulative dividend accrued at an annual rate of 6% of the Original Issue Price
per share; and the holders of Series D Preferred Stock, in addition to the
liquidation preference provided for therein, shall also be entitled to receive a
cumulative dividend accrued at an annual rate of 7% of the Original Issue Price
per share.

2. Liquidation Preference. In the event of any liquidation, dissolution,
or winding up of the Corporation, either voluntary or involuntary, distributions
to the stockholders of the Corporation shall be made in the following manner:

a. Series E Preferred Stock Preference. The holders of Series E
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the other series of Preferred Stock and Common Stock by reason of
their ownership of such shares, an amount equal to the Original Issue Price for
each share of Series E Preferred Stock plus an amount equal to all accrued or
declared but unpaid dividends per share of Series E Preferred Stock with respect
to such liquidation, dissolution or winding up. If the assets and funds thus
distributed among the holders of the Series E Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the entire assets and funds of the Corporation legally
available for distribution shall be distributed

-3-

<PAGE> 4

among the holders of the Series E Preferred Stock in proportion to the aggregate
liquidation preference of the shares of Series E Preferred Stock then held by
them.

b. Series D Preferred Stock Preference. The holders of Series D
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Common Stock by reason of their ownership of such shares, an
amount equal to the Original Issue Price for each share of Series D Preferred
Stock plus an amount equal to all accrued or declared but unpaid dividends per
share of Series D Preferred Stock with respect to such liquidation, dissolution
or winding up. If the assets and funds thus distributed among the holders of the
Series D Preferred Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amount, then the entire assets and
funds of the Corporation legally available for distribution, after payment of
the Series E Preferred Stock liquidation preference described in Section 2(a)
above, shall be distributed among the holders of the Series D Preferred Stock in
proportion to the aggregate liquidation preference of the shares of Series D
Preferred Stock then held by them.

c. Other Series Preferred Stock Preference. The holders of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Common Stock by
reason of their ownership of such shares, an amount equal to the Original Issue
Price for each share of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock plus an amount equal to all accrued or declared but
unpaid dividends per share of Preferred Stock with respect to such liquidation,
dissolution or winding up. If the assets and funds thus distributed among the
holders of such Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution, after payment of the Series E
Preferred Stock liquidation preference and the Series D Preferred Stock
liquidation preference described in Sections 2(a) and 2(b) above, shall be
distributed among the holders of the Series A, Series B and Series C Preferred
Stock in proportion to the aggregate liquidation preference of the shares of
Preferred Stock then held by them.

d. Remaining Assets. If the assets of the Corporation available for
distribution to the Corporation's stockholders exceed the aggregate amount
payable to the holders of the Preferred Stock pursuant to Sections 2(a), 2(b)
and 2(c) hereof (such assets being hereafter referred to as the "Remaining
Assets"), then after the payments required by Sections 2(a), 2(b) and 2(c) shall
have been made or irrevocably set apart, such Remaining Assets shall be
distributed to the holders of Common Stock in a manner such that the remaining
amount distributed to each holder of Common Stock shall equal the amount
obtained by multiplying the entire assets and funds of the Corporation legally
available for distribution hereunder by a fraction, the numerator of which shall
be the number of shares of Common Stock then held by such holder, and the
denominator of which shall be the total number of shares of Common Stock then
outstanding.

- -4-

<PAGE> 5

e. Reorganization or Merger. A merger or reorganization of the
Corporation with or into any other corporation or corporations or a sale of all
or substantially all of the assets or outstanding stock of the Corporation, in
which transaction the Corporation's stockholders immediately prior to such
transaction own immediately after such transaction less than 50% of the equity
securities of the surviving corporation or its parent, shall be deemed to be a
liquidation within the meaning of this Section 2 and the proceeds payable in
such transaction shall be divided among the stockholders in accordance with this
Section 2; provided that the holders of Preferred Stock and Common Stock shall
be paid in cash or in securities received or in a combination thereof (which
combination shall be in the same proportions as the consideration received in
the transaction). Any securities to be delivered to the holders of the Preferred
Stock and Common Stock upon a merger, reorganization or sale of substantially
all of the assets of the Corporation shall be valued as follows:

(i) If traded on a securities exchange, the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the 30-day period ending three (3) business days prior to the
closing;

(ii) If actively traded over-the counter, the value shall be
deemed to be the average of the closing bid prices over the 30-day period ending
three (3) business days prior to the closing; and

(iii) If there is no active public market, the value shall be the
fair market value thereof, as mutually determined by the Corporation and the
holders of not less than a majority of the outstanding shares of Preferred
Stock, provided that if the Corporation and the holders of a majority of the
outstanding shares of Preferred Stock are unable to reach agreement, then by
independent appraisal by an investment banker hired and paid by the Corporation,
but acceptable to the holders of a majority of the outstanding shares of
Preferred Stock.

3. [RESERVED]

4. Voting Rights.

a. Preferred Stock. Except as otherwise provided herein or required
by law, the holder of each share of Preferred Stock shall be entitled to vote on
all matters and shall be entitled to the number of votes equal to the number of
shares of Common Stock into which each share of Preferred Stock could be
converted pursuant to Section 5 hereof at the record date for the determination
of the stockholders entitled to vote on such matters or, if no such record date
is established, at the date such vote is taken. Except as otherwise provided
herein or required by law, the Preferred Stock shall have voting rights and
powers equal to the voting rights and powers of the Common Stock. Fractional
votes shall not, however, be permitted and any fractional voting rights
resulting from the above formula shall be rounded to the nearest whole number
(with one-half rounded upward to one).

b. Election of Directors. The holders of Series E Preferred Stock,
voting as a separate class, shall elect one (1) member of the Corporation's
board of directors. The holders of Series D Preferred Stock, voting as a
separate class, shall elect one (1) member of the Corporation's board of
directors. The holders of Preferred Stock, voting as a separate class, shall
elect one (1) member of the Corporation's

-5-

<PAGE> 6

board of directors. The holders of Common Stock, voting as a separate class,
shall elect two (2) members of the Corporation's board of directors. The holders
of Common Stock and Preferred Stock, voting together as a single class, shall
elect the remaining directors. In the case of any vacancy in the office of a
director elected by a specific class or series of capital stock, a successor
shall be elected to hold office for the unexpired term of such director by the
affirmative vote of a majority of the shares of such class or series given at a
special meeting of such stockholders duly called or by an action by written
consent for that purpose. Any director who shall have been elected by a
specified group of stockholders may be removed during the aforesaid term of
office, either for or without cause, by, and only by, the affirmative vote of
the holders of a majority of the shares of such class or series, given at a
special meeting of such stockholders duly called or by an action by written
consent for that purpose and any such vacancy thereby created may be filled by
the vote of the holders of a majority of the shares of such series or class of
capital stock represented at such meeting or in such consent.

c. Common Stock. Each holder of shares of Common Stock shall be
entitled to one vote for each share thereof held.

d. Election by Ballot. The election of directors need not be by
written ballot unless the Bylaws of the Corporation shall so provide.

5. Conversion. The holders of the Preferred Stock have conversion rights
as follows (the "Conversion Rights"):

a. Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the Corporation or any transfer agent
for the Preferred Stock, into such number of fully paid and nonassessable shares
of Common Stock as is determined by dividing the Issuance Price (as hereinafter
defined) by the Conversion Price, determined as hereinafter provided, in effect
at the time of the conversion (the "Conversion Rate") and multiplying such share
by the Conversion Rate. The Issuance Price for Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series
E Preferred Stock shall be $0.50, $1.00, $1.50, $2.06 and $5.00 per share,
respectively. The price at which shares of Common Stock shall be deliverable
upon conversion (the "Conversion Price") for Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock shall initially be $0.50, $1.00, $1.50, $2.06 and $5.00 per
share of Common Stock, respectively. Such initial Conversion Price shall be
subject to adjustment as hereinafter provided.

b. Automatic Conversion. Each share of each series of Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Conversion Rate of such series immediately prior to the closing of the
first firmly underwritten public offering of Common Stock of the Corporation
that is pursuant to a registration statement filed with, and declared effective
by, the Securities and Exchange Commission (or any other federal agency at the
time administering the Securities Act of 1933, as amended (the "Act")) under the
Act, covering the

-6-

<PAGE> 7

offer and sale of Common Stock to the public at a public offering price (prior
to the underwriter commissions and expenses) equal to or exceeding five dollars
($5.00) per share of Common Stock (appropriately adjusted for stock splits,
stock dividends, recapitalization, reorganizations or other similar
transactions) and at an aggregate offering price (before deduction for
underwriter commissions and expenses) of not less than $20,000,000, or (i) with
respect to shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock, at any time upon the affirmative
election of the holders of at least a majority of the outstanding shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock, voting together as one class and (ii) with respect to
shares of Series E Preferred Stock, at any time upon the affirmative election of
the holders of at least seventy-five percent (75%) of the outstanding shares of
Series E Preferred Stock. Upon such automatic conversion, any accrued and unpaid
dividends shall be paid in accordance with the provisions of Section 5(c). In
the event of the automatic conversion of the Preferred Stock upon a public
offering as aforesaid, the person(s) entitled to receive the Common Stock
issuable upon such conversion of Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities. Notwithstanding the foregoing provisions of this Section
5(b), no automatic conversion of the Preferred Stock shall be effected unless
and until such conversion will not violate any laws, rules, regulations, orders
or other legal requirements of any governing body (such as, without limitation,
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) and such automatic conversion shall be held in abeyance pending
compliance with any such requirements, provided that the holders of Preferred
Stock will use their best efforts to comply with such requirements.

c. Mechanics of Conversion. Before any holder of Preferred Stock
shall be entitled to convert the same into full shares of Common Stock and to
receive certificates therefor, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Preferred Stock, and shall give written notice to the
Corporation at such office that such holder elects to convert the same;
provided, however, that in the event of an automatic conversion pursuant to
Section 5(b), the outstanding shares of Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent, and provided further that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates evidencing
such shares of Preferred Stock are either delivered to the Corporation or its
transfer agent as provided above, or the holder notifies the Corporation or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such certificates.
The Corporation shall, as soon as practicable after such delivery, or such
agreement and indemnification in the case of a lost certificate, issue and
deliver at such office to such holder of Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into fractional shares of
Common Stock. Thereupon, the Corporation shall promptly pay in cash or, to the
extent sufficient funds are not then legally available therefor, in Common Stock
(at the Common Stock's fair market value determined by the

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<PAGE> 8

Board of Directors as of the date of such conversion), any accrued and unpaid
dividends on the shares of Preferred Stock being converted. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Preferred Stock to be converted, or
in the case of automatic conversion on the date of closing of the offering or
the date on which (i) with respect to shares of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, the
holders of at least a majority of the outstanding shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock, voting together as one class and (ii) with respect to shares of Series E
Preferred Stock, the holders of at least seventy-five percent (75%) of the
outstanding shares of Series E Preferred Stock, make the election referred to in
Section 5(b) hereof and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.

d. Fractional Shares. In lieu of any fractional shares to which the
holder of Preferred Stock would otherwise be entitled, the Corporation shall pay
cash equal to such fraction multiplied by the then effective Conversion Price.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock of each
holder at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.

e. Adjustment of Conversion Price. The Conversion Price of each
series of Preferred Stock shall be subject to adjustment from time to time as
follows:

(i) If the Corporation shall issue (or, pursuant to Subsection
5(e)(i)(b)(3) hereof, shall be deemed to have issued) any Common Stock other
than "Excluded Stock" (as defined below) for a consideration per share less than
the Conversion Price for any series of Preferred Stock in effect immediately
prior to the issuance of such Common Stock (excluding stock dividends,
subdivisions, split-ups, combinations, dividends or recapitalizations which are
covered by Subsections 5(e)(iii), (iv), (v) and (vi)), the Conversion Price for
such series of Preferred Stock in effect immediately after each such issuance
shall forthwith (except as provided in this Section 5(e)) be adjusted to a price
equal to the quotient obtained by dividing:

a. an amount equal to the sum of

(x) the total number of shares of Common Stock
outstanding (including any shares of Common Stock issuable upon conversion of
such series of Preferred Stock, or deemed to have been issued pursuant to
subdivision (3) of this clause (i) and to clause (ii) below) immediately prior
to such issuance multiplied by the Conversion Price for such series of Preferred
Stock in effect immediately prior to such issuance, plus

(y) the consideration received by the Corporation upon
such issuance, by

b. the total number of shares of Common Stock outstanding
immediately prior to such issuance of Common Stock (including any shares of
Common Stock

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<PAGE> 9

issuable upon conversion of such series of Preferred Stock or deemed to have
been issued pursuant to subdivision (3) of this clause (i) and to clause (ii)
below) plus the number of shares of Common Stock actually issued in the
transaction which resulted in the adjustment pursuant to this Subsection
5(e)(i).

Notwithstanding the above, prior to November 30, 2001 if the
Corporation issues or sells, or is deemed to have issued or sold, any shares of
its Common Stock (other than Excluded Stock) for consideration per share (A)
less than the Series D Conversion Price in effect immediately prior to the time
of such issuance or sale, then immediately upon such issuance, the Series D
Conversion Price will be reduced to the price paid per share in such issuance,
and (B) less than the Series E Conversion Price in effect immediately prior to
the time of such issuance or sale, then immediately upon such issuance, the
Series E Conversion Price will be reduced to the price paid per share in such
issuance.

For the purposes of any adjustment of the Conversion Price
for any series of Preferred Stock pursuant to this clause (i), the following
provisions shall be applicable:

(1) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor after
deducting any discounts or commissions paid or incurred by the Corporation in
connection with the issuance and sale thereof.

(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as mutually determined by the
Corporation and the holders of not less than a majority of the outstanding
shares of Preferred Stock, provided that if the Corporation and the holders of a
majority of the outstanding shares of Preferred Stock are unable to reach
agreement, then by independent appraisal by an investment banker hired and paid
by the Corporation, but acceptable to the holders of a majority of the
outstanding shares of Preferred Stock.

(3) In the case of the issuance of (i) options to purchase
or rights to subscribe for Common Stock (other than Excluded Stock), (ii)
securities by their terms convertible into or exchangeable for Common Stock
(other than Excluded Stock), or (iii) options to purchase or rights to subscribe
for such convertible or exchangeable securities:

(A) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (1) and (2) above), if any,
received by the Corporation upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;

(B) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities, or upon the exercise of options to purchase or rights
to subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof, shall be deemed to have

-9-

<PAGE> 10

been issued at the time such securities were issued or such options or rights
were issued and for a consideration equal to the consideration received by the
Corporation for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
additional minimum consideration, if any, to be received by the Corporation upon
the conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in the manner
provided in subdivisions (1) and (2) above);

(C) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options or rights or conversion of
or exchange for such convertible or exchangeable securities, or on any change in
the minimum purchase price of such options, rights or securities, other than a
change resulting from the antidilution provisions of such options, rights or
securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon (x) the
issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change or (y) the options or rights related to such
securities not converted or exchanged prior to such change, as the case may be,
been made upon the basis of such change; and

(D) on the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment made upon the issuance of such options,
rights, convertible or exchangeable securities or options or rights relate to
such convertible or exchangeable securities, as the case may be, been made upon
the basis of the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such convertible or exchangeable securities or upon the exercise of
the options or rights related to such convertible or exchangeable securities, as
the case may be.

(ii) "Excluded Stock" shall mean:

(A) all shares of Common Stock and Preferred Stock
issued and outstanding on the date this certificate is filed with the Delaware
Secretary of State, and all shares of Common Stock issuable upon conversion of
such Preferred Stock; and

(B) all shares of Common Stock or other securities
hereafter issued to officers, directors, consultants and employees of the
Corporation pursuant to plans and arrangements approved by the board of
directors, including the approval of at least one director elected by the
holders of Preferred Stock; and

(C) all shares of Common Stock or other securities
hereafter issued or issuable to strategic partners, lessors, lenders or
licensors to the Corporation upon approval by the board of directors, including
the approval of at least two directors elected by the holders of Preferred
Stock.

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<PAGE> 11

All outstanding shares of Excluded Stock (including
shares issuable upon conversion of the Preferred Stock) shall be deemed to be
outstanding for all purposes of the computations of Subsections 5(e)(i) above.

(iii) If the number of shares of Common Stock outstanding at any
time after the date hereof is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then, on
the date such payment is made or such change is effective, the Conversion Price
of each series of Preferred Stock shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of any shares of each
series of Preferred Stock shall be increased in proportion to such increase of
outstanding shares.

(iv) If the number of shares of Common Stock outstanding at any
time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Conversion Price of each series of Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
any shares of each series of Preferred Stock shall be decreased in proportion to
such decrease in outstanding shares.

(v) In case the Corporation shall declare a cash dividend upon
its Common Stock payable otherwise than out of retained earnings or shall
distribute to holders of its Common Stock shares of its capital stock (other
than Common Stock), stock or other securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights (excluding options to purchase and rights to
subscribe for Common Stock or other securities of the Corporation convertible
into or exchangeable for Common Stock), then, in each such case, the holders of
shares of Preferred Stock shall, concurrent with the distribution to holders of
Common Stock, receive a like distribution based upon the number of shares of
Common Stock into which Preferred Stock is then convertible.

(vi) In case, at any time after the date hereof, of any capital
reorganization, or any reclassification of the stock of the Corporation (other
than as a result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of the Corporation with or into another
person (other than a consolidation or merger in which the Corporation is the
continuing entity and which does not result in any change in the Common Stock),
the shares of Preferred Stock shall, after such reorganization,
reclassification, consolidation, merger, sale or other disposition, be
convertible into the kind and number of shares of stock or other securities or
property of the Corporation or otherwise to which such holder would have been
entitled if immediately prior to such reorganization, reclassification,
consolidation, merger, sale or other disposition such holder had converted its
shares of Preferred Stock into Common Stock. The provisions of this clause (vi)
shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or other dispositions.

(vii) All calculations under this Section 5 shall be made to the
nearest cent or to the nearest one hundredth (1/100) of a share, as the case may
be.

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<PAGE> 12

f. Minimal Adjustments. No adjustment in the Conversion Price for
any series of Preferred Stock need be made if such adjustment would result in a
change in the Conversion Price of less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be made at the time
of and together with any subsequent adjustment which, on a cumulative basis,
amounts to an adjustment of $0.01 or more in the Conversion Price.

g. No Impairment. The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 5 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of each series of Preferred Stock against
impairment. This provision shall not restrict the Corporation's right to amend
its Certificate of Incorporation with the requisite shareholder consent.

h. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate for any series of Preferred
Stock pursuant to this Section 5, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of such series of Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon written request at any time of any holder of any series of Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) all such adjustments and readjustments, (ii) the Conversion
Rate at the time in effect, and (iii) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the conversion of such holder's shares of Preferred Stock.

i. Notices of Record Date and Proposed Liquidation Distribution. In
the event of any taking by the Corporation of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property or to receive
any other right, the Corporation shall mail to each holder of Preferred Stock at
least thirty (30) days prior to such record date, a notice specifying the date
on which any such record is to be taken for the purpose of such dividend or
distribution or right, and the amount and character of such dividend,
distribution or right. In the event of a liquidation distribution pursuant to
Section 2 hereof, the Corporation shall mail to each holder of Preferred Stock
at least thirty (30) days prior to the date of such distribution a notice (i)
certifying as to (x) the anticipated aggregate proceeds available for
distribution to holders of Preferred Stock and Common Stock, (y) the amount
expected to be distributed pursuant to Section 2 in respect of each share of
each outstanding series of Preferred Stock and each share of Common Stock and
(z) the amount expected to be distributed pursuant to Section 2 in respect of
each share of each outstanding series of Preferred Stock if the holder of each
such share of Preferred Stock converted such share of Preferred Stock into
Common Stock immediately prior to the liquidation distribution and (ii) stating
that in connection with such liquidation distribution the holders of shares

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<PAGE> 13

of each series of Preferred Stock may prior to such liquidation distribution
convert their shares of such series of Preferred Stock into Common Stock at the
applicable Conversion Rate for such series.

j. Notices. Any notice required by the provisions of this Section 5
to be given to the holder of shares of the Preferred Stock shall be deemed given
three (3) days after deposited in the United States mail, postage prepaid, and
addressed to each holder of record at such holder's address appearing on the
Corporation's books.

k. Payment of Taxes. The Corporation will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Preferred Stock, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which shares of Preferred Stock so
converted were registered.

6. Covenants.

a. Preferred Stock. In addition to any other rights provided by law,
so long as 500,000 shares of Preferred Stock shall be outstanding, this
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of the outstanding shares of
Preferred Stock (voting or consenting as a separate class);

(i) Certificate and Bylaws. Amend or repeal any provision of, or
add any provision to, this Corporation's Certificate of Incorporation or Bylaws
if such action would adversely alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of, such
shares of Preferred Stock;

(ii) Section 305. Do any act or thing which would result in
taxation of the holders of Preferred Stock under Section 305 of the Internal
Revenue Code of 1986, as amended (or any successor provision of such Code as
such provision may be amended);

(iii) Authorized Shares. Increase or decrease the authorized
number of shares of Common or Preferred Stock;

(iv) Dividends; Stock Splits. Pay or declare any dividend or
distribution on any shares of the Corporation's capital stock (except on the
Preferred Stock in accordance with its terms) or declare any stock splits or
reverse stock splits on any shares of capital stock of the Corporation;

(v) Senior Securities. Make any authorization or any
designation, whether by reclassification or otherwise, of any new class or
series of stock or any other securities convertible into equity securities of
the Corporation ranking on a parity with or senior to the existing Preferred
Stock in right of redemption, liquidation preference, voting or dividends or any
increase in the authorized or designated number of any such new class or series;

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<PAGE> 14

(vi) Distribution. Any redemption, repurchase, payment of
dividends or other distributions with respect to Common Stock (except for
acquisitions of Common Stock by the Corporation pursuant to agreements which
permit the Corporation to repurchase such shares upon termination of services to
the Corporation or in exercise of the Corporation's right of first refusal upon
a proposed transfer);

(vii) Reorganization or Merger. Any agreement by the Corporation
or its stockholders regarding a reorganization, merger, sale of all or
substantially all of the Corporation's assets, or similar transactions as
described in Section 2(e);

(viii) Dividend. Any action that results in the payment or
declaration of a dividend on any shares of Common Stock or Preferred Stock;

(ix) Liquidation. Any voluntary dissolution or liquidation of the
Corporation; or

(x) Directors. Any increase or decrease in the authorized number
of members of the Corporation's Board of Directors.

b. Series D Preferred Stock. In addition to any other rights
provided by law, so long as shares of Series D Preferred Stock shall be
outstanding, this Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of not less than a majority of the
outstanding shares of Series D Preferred Stock (voting or consenting as a
separate class);

(ii) Authorized Shares. Increase or decrease the authorized
number of shares of Common or Preferred Stock;

(iii) Senior Securities. Make any authorization or any
designation, whether by reclassification or otherwise, of any new class or
series of stock or any other securities convertible into equity securities of
the Corporation ranking on a parity with or senior to the Series D Preferred
Stock in right of redemption, liquidation preference, voting or dividends or any
increase in the authorized or designated number of any such new class or series;

c. Series E Preferred Stock. In addition to any other rights
provided by law, so long as shares of Series E Preferred Stock shall be
outstanding, this Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of not less than a majority of the
outstanding shares of Series E Preferred Stock (voting or consenting as a
separate class);

(i) Certificate and Bylaws. Amend or repeal any provision of, or
add any provision to, this Corporation's Certificate of Incorporation or Bylaws
if such action would increase

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<PAGE> 15

the authorized number of shares of Series E Preferred Stock or adversely alter
or change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, such shares of Series E Preferred Stock;

(ii) Senior Securities. Make any authorization or any
designation, whether by reclassification or otherwise, of any new class or
series of stock or any other securities convertible into equity securities of
the Corporation ranking senior to the Series E Preferred Stock in right of
redemption, liquidation preference, voting or dividends or any increase in the
authorized or designated number of any such new class or series;

7. No Reissuance of Preferred Stock. No share or shares of Preferred
Stock acquired by the Corporation by reason of purchase, conversion or otherwise
shall be reissued.

FIVE. The Corporation is to have perpetual existence.

SIX. In furtherance and not in limitation of the powers conferred by
statute and except as otherwise provided herein, the Board of Directors is
expressly authorized to make, alter, amend or repeal the Bylaws of the
Corporation.

SEVEN. The number of directors which constitute the whole Board of
Directors of the Corporation shall be as specified in the Bylaws of the
Corporation.

EIGHT. Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provisions contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.

NINE. To the fullest extent permitted by the Delaware General Corporation
Law, a director of the Corporation shall not be person-ally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. Neither any amendment nor repeal of this Article NINE, nor
the adoption of any provision of this Certificate of Incorporation inconsistent
with this Article NINE, shall eliminate or reduce the effect of this Article
NINE in respect of any matter occur-ring, or any cause of action, suit or claim
that, but for this Article NINE, would accrue or arise, prior to such amendment,
repeal or adoption of an inconsistent provision.

TEN. Advance notice of new business and stockholder nominations for the
election of directors shall be given in the manner and to the extent provided in
the Bylaws of the Corporation.

ELEVEN. The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate, in the manner now or
hereafter prescribed herein and by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

TWELVE. (a) The Corporation shall indemnify each of the Corporation's
directors and officers in each and every situation where, under Section 145 of
the General Corporation Law of the State of Delaware, as amended from time to
time ("Section 145"), the Corporation is permitted or

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<PAGE> 16

empowered to make such indemnification, and to the fullest extent permitted by
law. The Corporation may, in the sole discretion of the Board of Directors of
the Corporation, indemnify any other person who may be indemnified pursuant to
Section 145 to the extent the Board of Directors deems advisable, as permitted
by Section 145. The Corporation shall promptly make or cause to be made any
determination required to be made pursuant to Section 145.

(b) No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided, however, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or (iv) for
any transaction from which the director derived an improper personal benefit. If
the General Corporation Law of the State of Delaware is subsequently amended to
further eliminate or limit the liability of a director, then a director of the
Corporation, in addition to the circumstances in which a director is not
personally liable as set forth in the preceding sentence, shall not be liable to
the fullest extent permitted by the amended General Corporation Law of the State
of Delaware. For purposes of this Article, "fiduciary duty as a director" shall
include any fiduciary duty arising out of serving at the Corporation's request
as a director of another corporation, partnership, joint venture or other
enterprise, and "personal liability to the Corporation or its stockholders"
shall include any liability to such other corporation, partnership, joint
venture, trust or other enterprise, and any liability to the Corporation in its
capacity as a security holder, joint venturer, partner, beneficiary, creditor or
investor of or in any such other corporation, partnership, joint venture, trust
or other enterprise.

-16-

<PAGE> 17

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Steven M. Markowitz, its Chief Executive Officer, and attested by
Mario M. Rosati, its Secretary, this 30th day of March, 1999.

MYPOINTS.COM, INC.

By: /s/ Steven M. Markowitz
-------------------------------------
Steven M. Markowitz, Chairman and CEO

ATTEST:

/s/ Mario M. Rosati
- -------------------------------------
Mario M. Rosati, Secretary

<PAGE> 1

May 13, 1999

MyPoints.com, Inc.
565 Commercial Street, 4th Floor
San Francisco, CA 94111

Re: Registration Statement on Form S-1

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-1 to be filed by
you with the Securities and Exchange Commission (the "Commission") on or about
May 13, 1999 (as such may be further amended or supplemented, the "Registration
Statement"), in connection with the registration under the Securities Act of
1933, as amended, of up to 5,750,000 shares of your Common Stock, par value
$0.001 per share (the "Shares"). The Shares, which include up to 750,000 shares
of Common Stock issuable pursuant to an over-allotment option granted to the
underwriters (the "Underwriters"), are to be sold to the Underwriters as
described in such Registration Statement for sale to the public. As your counsel
in connection with this transaction, we have examined the proceedings proposed
to be taken by you in connection with the sale of the Shares.

Based on the foregoing, it is our opinion that, upon conclusion of the
proceedings being taken or that we, as your counsel, contemplate to be taken
prior to the issuance of the Shares and upon completion of the proceedings taken
in order to permit such transactions to be carried out in accordance with the
securities laws of various states where required, including approval by the
pricing committee duly authorized by the MyPoints.com, Inc. Board of Directors,
the Shares, when issued and sold in the manner described in the Registration
Statement, will be legally and validly issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospects constituting a part thereof,
which has been approved by us, as such may be further amended or supplemented,
or incorporated by reference in any Registration Statement relating to the
prospectus filed pursuant to Rule 462(b) of the Act.

Sincerely,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

/s/ Wilson Sonsini Goodrich & Rosati

<PAGE> 1
23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this registration statement on Form S-1
(File No. 333-75523) of our report dated March 26, 1999, except for Note 12 as
to which the date is March 30, 1999, relating to the consolidated financial
statements of MyPoints.com, Inc. (formerly Intellipost Corporation), which
appear in such registration statement. We also consent to the references to us
under the captions "Experts" and "Selected Financial Data" in such registration
statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

San Francisco, California
May 12, 1999

<PAGE> 1
23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this registration statement on Form S-1
(File No. 333-75523) of our report dated March 26, 1999 relating to the combined
financial statements of Enhanced Response Technologies, Inc. We also consent to
the references to us under the headings "Experts" and "Selected Financial Data"
in such registration statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Chicago, Illinois
May 12, 1999

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MYPOINTS.COM, INC. FORM S-1 FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 Dec-31-1999
<PERIOD-START> JAN-01-1997 JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1997 DEC-31-1998 MAR-31-1999
<CASH> 2,948 5,089 1,868
<SECURITIES> 0 0 0
<RECEIVABLES> 116 1,059 1,448
<ALLOWANCES> 0 60 165
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 3,116 6,308 3,690
<PP&E> 398 1,667 2,744
<DEPRECIATION> 53 626 757
<TOTAL-ASSETS> 3,474 18,306 15,827
<CURRENT-LIABILITIES> 735 6,615 8,846
<BONDS> 0 0 0
0 0 0
6 10 12
<COMMON> 3 6 7
<OTHER-SE> 2,683 9,267 4,594
<TOTAL-LIABILITY-AND-EQUITY> 3,474 18,306 15,827
<SALES> 151 1,286 1,275
<TOTAL-REVENUES> 151 1,286 1,275
<CGS> 78 1,121 878
<TOTAL-COSTS> 78 1,121 878
<OTHER-EXPENSES> 3,018 8,494 5,749
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 7 31 0
<INCOME-PRETAX> (2,889) (8,266) (5,343)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (2,889) (8,266) (5,343)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (2,889) (8,266) (5,343)
<EPS-PRIMARY> (2.68) (4.72) (1.01)
<EPS-DILUTED> (2.68) (4.72) (1.01)

</TABLE>