ENGAGE TECHNOLOGIES INC, DEF 14A, 1999-11-19

ENGAGE TECHNOLOGIES INC
DEF 14A, 1999-11-19
BUSINESS SERVICES, NEC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

ENGAGE TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

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

(4) Proposed maximum aggregate value of transaction:

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

(5) Total fee paid:

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

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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

(2) Form, Schedule or Registration Statement No.:

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

(3) Filing Party:

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(4) Date Filed:

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Notes:

Reg. (S) 240.14a-101.

SEC 1913 (3-99)
<PAGE>

ENGAGE TECHNOLOGIES, INC.
100 Brickstone Square
Andover, Massachusetts 01810
(978) 684-3884

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held December 17, 1999

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

NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Meeting") of Engage Technologies, Inc., a Delaware corporation (the
"Company"), will be held at The Swiss Hotel, 1 Avenue de Lafayette, Boston,
Massachusetts on Friday, December 17, 1999 at 1:00 p.m. local time, for the
following purposes:

1.To elect seven directors to serve until the 2000 Annual Meeting of
Stockholders.

2.To approve the interested party transaction between the Company and CMGI,
Inc., the majority stockholder of the Company, pursuant to which CMGI will
receive shares of the Company's Common Stock in connection with CMGI's
contribution of stock of AdKnowledge Inc. to the Company.

3.To ratify the selection of KPMG LLP as the Company's independent auditors
for the fiscal year ended July 31, 2000.

4.To transact such other business as may properly come before the meeting
or any adjournments thereof.

The Board of Directors presently has no knowledge of any other business to
be transacted at the meeting.

Only stockholders of record at the close of business on Wednesday, October
20, 1999 will be entitled to notice of and to vote at the Meeting and any
adjournments or postponements thereof.

By Order of the Board of Directors,

/s/ Michael K. Baker
Michael K. Baker, Secretary

Andover, Massachusetts
November 19, 1999

All stockholders are cordially invited to attend the Meeting. To ensure your
representation at the Meeting, you are urged to mark, sign and return the
enclosed proxy card in the accompanying envelope, whether or not you expect to
attend the Meeting. No postage is required if mailed in the United States. Any
stockholder attending the Meeting may vote in person even if that stockholder
has returned a proxy.

YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE
ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE.
<PAGE>

ENGAGE TECHNOLOGIES, INC.
100 Brickstone Square
Andover, Massachusetts 01810

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

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

December 17, 1999

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

General

This Proxy Statement and Notice of Annual Meeting of Stockholders are being
provided and the accompanying proxy is being solicited by the Board of
Directors of Engage Technologies, Inc. (the "Company") for use at the
Company's 1999 Annual Meeting of Stockholders (the "Meeting") to be held at
The Swiss Hotel, 1 Avenue de Lafayette, Boston, Massachusetts on Friday,
December 17, 1999 at 1:00 p.m. local time, or at any adjournments or
postponements of the Meeting, for the purposes set forth in this Proxy
Statement and the foregoing Notice of Annual Meeting of Stockholders. This
Proxy Statement and accompanying proxy card and the Company's Annual Report to
Stockholders for the year ended July 31, 1999 are being mailed on or about
November 19, 1999 to all stockholders entitled to notice of and to vote at the
Meeting. The principal executive offices of the Company are located at 100
Brickstone Square, Andover, Massachusetts 01810, and the Company's telephone
number is (978) 684-3884.

Solicitation

The cost of solicitation of proxies, including expenses in connection with
preparing and mailing this Proxy Statement will be borne by the Company.
Copies of solicitation materials will be furnished to brokerage houses,
fiduciaries, and custodians to forward to beneficial owners of Common Stock of
the Company (the "Common Stock") held in their names.

Record Date, Quorum, Voting Rights and Outstanding Shares

Only holders of record at the close of business on Wednesday, October 20,
1999, will be entitled to notice of, and to vote at, the Meeting. As of
October 20, 1999, the Company had 48,707,869 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled to
one vote on each proposal that will come before the Meeting. The presence, in
person or by proxy, of the holders of a majority of the outstanding shares of
Common Stock is necessary to constitute a quorum at the Meeting. Votes
withheld, abstentions and broker non-votes (where a broker or nominee does not
exercise discretionary authority to vote on a matter) are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business. Abstentions and broker non-votes are not counted, however, for
purposes of tabulating the votes cast.

The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by proxy and voting at the meeting is
required for the election of directors. The affirmative vote of the holders of
a majority of Common Stock present in person or represented by proxy and
voting at the Meeting is required to approve the other matters scheduled to be
voted on at the Meeting.

Revocability of Proxy and Voting of Shares

Any stockholder giving a proxy has the power to revoke it at any time before
it is exercised. It may be revoked by filing with the Secretary of the
Company, at the principal executive offices of the Company, 100 Brickstone
Square, First Floor, Andover, Massachusetts 01810, an instrument of revocation
or a duly executed proxy bearing a later date. It may also be revoked by
attendance at the Meeting and an election given to the Secretary of the
Company to vote in person. If not revoked, the proxy will be voted at the
Meeting in accordance with the stockholder's instructions indicated on the
proxy card. If no instructions are indicated, the proxy will be voted (1) FOR
the election of all seven directors, (2) FOR the approval of the interested
party transaction between the Company and CMGI, Inc., (3) FOR the ratification
of the appointment of KPMG LLP as

1
<PAGE>

the Company's independent auditors for the current fiscal year, and (4) in
accordance with the judgment of the proxies as to any other matter that may be
properly brought before the Meeting or any adjournments or postponements
thereof.

Stockholder Proposals for the 2000 Annual Meeting

Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2000 Annual Meeting of Stockholders must
be received by the Company's Secretary at its principal office in Andover,
Massachusetts not later than July 22, 2000 in order to be included in the
Proxy Statement and form of proxy relating to that meeting. In addition, such
proposals must comply with the requirements of Rule 14a-8, as promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

If a stockholder of the Company wishes to present a proposal before the
Company's 2000 Annual Meeting, but does not wish to have the proposal
considered for inclusion in the Company's proxy statement and proxy card, such
stockholder must also give written notice to the Secretary of the Company at
its principal office in Andover, Massachusetts. The Company must receive such
notice no later than October 18, 2000 and no earlier than September 18, 2000.
If a stockholder fails to provide timely notice of a proposal to be presented
at the Company's 2000 Annual Meeting, the proxies designated by the Board of
Directors of the Company will have discretionary authority to vote on any such
proposal.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of October 1, 1999 by (i) each
person known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) each of the directors of the Company,
(iii) each of the Named Executive Officers (as defined below) and (iv) all
directors and Named Executive Officers as a group. Except as indicated in the
footnotes to this table, the persons named in the table have sole voting and
investment power with respect to all shares shown as beneficially owned by
them. The Named Executive Officers represent all of the Company's executive
officers.

<TABLE>
<CAPTION>
Shares of Percentage Shares of CMGI Percentage
Engage Common Ownership Common Stock Ownership
Stock Beneficially of Engage Beneficially of CMGI
Name and Address# Owned(1) Outstanding(2) Owned(1) Outstanding(3)
- ----------------- ------------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
CMGI, Inc............... 38,626,542 79.30% -- --
100 Brickstone Square
Andover, MA 01810
Paul L. Schaut.......... 302,483(4) * 14,296(5) **
David A. Fish........... 87,166(6) * 3,499(7) **
Daniel J. Jaye.......... 566,766(8) 1.15% 12,926(9) **
Stephen A. Royal........ 67,574(10) * 3,750(11) **
David S. Wetherell...... 38,626,542(12) 79.30% 17,776,828(13) 15.08%
100 Brickstone Square
Andover, MA 01810
Edward A. Bennett....... 12,500(14) * 0 **
Christopher A. Evans.... 60,000 * 287,897 **
Craig D. Goldman........ 41,666(15) * 195,200(16) **
Andrew J. Hajducky,
III.................... 38,626,542(12) 79.30% 146,249(17) **
100 Brickstone Square
Andover, MA 01810
Fredric D. Rosen........ 0 * 6,000 **
All directors and
executive officers as a
group (10 persons)..... 39,764,697 80.31% 18,496,645 15.62%
</TABLE>
- --------
#Addresses are given for beneficial owners of more than 5% of the Common
Stock only.
*Percentage is less than 1% of the total number of outstanding shares of
Common Stock.
**Percentage is less than 1% of the total number of outstanding shares of
common stock of CMGI.

2
<PAGE>

(1) Beneficial ownership of Common Stock is determined in accordance with the
rules of the Securities and Exchange Commission, and includes shares for
which the holder has sole or shared voting or investment power. Shares of
Common Stock subject to options currently exercisable or which become
exercisable on or before November 29, 1999 are deemed to be beneficially
owned and outstanding by the person holding such options and are included
for purposes of computing the percentage ownership of the person holding
such options, but are not deemed outstanding for purposes of computing the
percentage ownership of any other person. The inclusion of any shares of
Common Stock deemed beneficially owned does not constitute admission of
beneficial ownership of those shares.

(2) Percentage ownership is based on 48,707,398 shares issued and outstanding
on October 1, 1999, plus any shares subject to issuance upon exercise of
options held by the person or entity in question that were exercisable on
or exercisable within 60 days after October 1, 1999.

(3) Percentage ownership is based on 116,505,138 shares issued and outstanding
on October 1, 1999, plus any shares subject to issuance upon exercise of
options held by the person or entity in question that were exercisable on
or exercisable within 60 days after October 1, 1999.

(4) Includes 49,999 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.

(5) Includes 13,582 shares of CMGI common stock issuable upon exercise of
outstanding stock options granted under CMGI's 1986 Stock Option Plan.

(6) Includes 79,166 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan. Includes 4,000 shares held by Mr. Fish's spouse for which
Mr. Fish disclaims beneficial ownership.

(7) Consists of 3,499 shares of CMGI common stock issuable upon exercise of
outstanding stock options granted under CMGI's 1986 Stock Option Plan.

(8) Includes 566,666 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.

(9) Includes 12,666 shares of CMGI common stock issuable upon exercise of
outstanding stock options granted under CMGI's 1986 Stock Option Plan.

(10) Includes 59,374 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.

(11) Includes 3,499 shares of CMGI common stock issuable upon exercise of
outstanding stock options granted under CMGI's 1986 Stock Option Plan.

(12) Consists of shares of Common Stock owned by CMGI. Mr. Wetherell serves as
Chairman of the Board of Directors, President, Chief Executive Officer
and Secretary of CMGI and Mr. Hajducky serves as Chief Financial Officer
and Treasurer of CMGI, and both Messrs. Wetherall and Hajducky disclaim
beneficial ownership of all 38,626,542 shares of the Common Stock.

(13) Includes 1,345,888 shares of CMGI common stock issuable upon the exercise
of outstanding options that are exercisable within 60 days of October 1,
1999. Includes 8,466,336 shares held in trust for the benefit of Mr.
Wetherell's minor children and 23,372 shares held by Mr. Wetherell and
his wife as trustees for the David S. Wetherell Charitable Trust, for
which Mr. Wetherell disclaims beneficial ownership.

(14) Consists of 12,500 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.

(15) Includes 41,666 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.

(16) Includes 75,200 shares of CMGI common stock issuable upon exercise of
outstanding stock options granted under CMGI's 1995 Stock Option Plan for
non-employee directors.

(17) Includes 125,497 shares of CMGI common stock issuable upon exercise of
outstanding stock options granted under CMGI's 1986 Stock Option Plan.

3
<PAGE>

ELECTION OF DIRECTORS

The Company's By-laws provide for the Company's business to be managed by or
under the Board of Directors. The Board of Directors has fixed the number of
directors at seven for the coming year. The Company's By-laws provide that the
directors of the Company will be elected at each annual meeting of the
Company's stockholders to serve until the next annual meeting of stockholders
or until their successors are duly elected and qualified.

The Board of Directors recommends that the nominees named below be elected
directors of the Company. The persons named in the enclosed Proxy will vote to
elect the seven nominees named below as directors of the Company unless
authority to vote for the election of any or all of the nominees is withheld
by marking the proxy to that effect. The affirmative vote of the holders of a
plurality of the Common Stock represented and voting at the Meeting will be
required to elect each nominee. Each nominee is presently serving as a
director and has consented to being named in this Proxy Statement and to serve
if elected. If for any reason any nominee should become unavailable for
election prior to the Meeting or is unwilling to serve, the person acting
under the proxy may vote the proxy for the election of a substitute.

Set forth below are the name, age and length of service as a director for
each member of the Board of Directors and the positions and offices held by
him, his principal occupation and business experience during the past five
years and the names of other publicly-held companies of which he serves as a
director. Information with respect to the number of shares of Common Stock
beneficially owned by each director, as of October 1, 1999, appears under
"Security Ownership of Certain Beneficial Owners and Management."

MANAGEMENT RECOMMENDS A VOTE IN FAVOR
OF THE NAMED NOMINEES.

Nominees for Election to the Board of Directors

Edward A. Bennett, age 53, has served as a director of Engage since January
1999 and as President of Bennett Media Collaborative, a media consulting
company, from January 1997 until the present. From April 1995 until July 1996,
Mr. Bennett was Chief Executive Officer of Prodigy, Inc., an online service
provider. He served as President and Chief Executive Officer of the VH-1 cable
music channel, a division of Viacom, Inc., from 1989 until 1993 and as
Executive Vice President and Chief Operating Officer of Viacom Cable, a
division of Viacom from 1979 until 1989. Mr. Bennett is also a director of
SoftNet Systems, Inc., a high speed broadband Internet access and content
services company.

Christopher A. Evans, age 33, has served as a director of Engage since
January 1999. Since May 1999, Mr. Evans has served as a private consultant to
Engage. From April 1998 to May 1999, Mr. Evans managed Engage's Accipiter
business unit. Mr. Evans was also a founder of Accipiter. From October 1992
until June 1996, Mr. Evans was the principal owner of Hotlinx, LLC, a printing
and online publishing company. From 1985 until 1992, Mr. Evans served as
Executive Vice President of DaVinci Systems, a software company, which he co-
founded.

Craig D. Goldman, age 55, has served as a director of Engage since March
1998 and as a director of CMGI, a significant stockholder of Engage, since
June 1997. Mr. Goldman has served as President and Chief Executive Officer of
Cyber Consulting Services Corp. since March 1996. Mr. Goldman held various
positions at The Chase Manhattan Bank, including Chief Information Officer
from 1991 until February 1998. Mr. Goldman is also a director of CMGI, PRT
Group, Inc. and Mangosoft, Inc. Mr. Goldman also serves as a director of
Navisite, Inc., an affiliate of CMGI.

Andrew J. Hajducky, III, age 45, has served as a director of Engage since
December 1995. Mr. Hajducky has served as Chief Financial Officer and
Treasurer of CMGI, a significant stockholder of Engage, since October

4
<PAGE>

1995 and as a member of CMG@Ventures I, LLC, a venture capital firm subsidiary
of CMGI, since January 1995. He is also a managing member of CMG@Ventures II,
LLC, CMG@Ventures III, LLC and @Ventures Management, LLC, which are also
strategic investment and development venture capital subsidiaries or
affiliates of CMGI. From April 1984 to October 1995, Mr. Hajducky was the
Entrepreneurial Services Partner of the Merger and Acquisition division of
Ernst & Young LLP. Previously, Mr. Hajducky was the Chief Financial Officer of
Mountain International Company/AccuTel, Inc., a telecommunications and
software company. Mr. Hajducky is also a director of Navisite.

Fredric D. Rosen, age 55, has served as a director of Engage since June
1999. Since June 1998, Mr. Rosen has been self-employed and has consulted on a
part-time basis. From September 1982 to June 1998, Mr. Rosen served as
President and Chief Executive Officer of Ticketmaster Group, Inc., a provider
of automated ticketing services. Mr. Rosen currently serves on the board of
directors of King World Productions, Inc.

Paul L. Schaut, age 40, has served as Chief Executive Officer, President and
a director of Engage since December 1997. Prior to joining Engage, Mr. Schaut
was Vice President of Strategic Partnering for Open Market, Inc., a provider
of electronic commerce software, from January 1997 until November 1997. Prior
to joining Open Market, Mr. Schaut served as Vice President of Sales and
Marketing for ONTOS, Inc., a software company, from March 1995 until December
1996 and as Managing Director of InterSystems Corporation, a software database
company, from April 1988 until March 1995.

David S. Wetherell, age 45, has served as a director and Chairman of the
Board of Engage since July 1995. Mr. Wetherell has served as Chairman of the
Board, President, Chief Executive Officer and Secretary of CMGI, a significant
stockholder of Engage, since 1986 and as a member of CMG@Ventures I, LLC, a
venture capital firm subsidiary of CMGI, and President of CMG@Ventures, Inc.,
the managing member of CMG@Ventures I, LLC, since January 1995. He is also a
managing member of CMG@Ventures II, LLC, CMG@Ventures III, LLC and @Ventures
Management, LLC, which are also strategic investment and development venture
capital subsidiaries or affiliates of CMGI. From 1982 until joining CMGI in
1986, Mr. Wetherell was a co-founder and President of Softrend, Inc., a
microcomputer software publisher. Mr. Wetherell is also the founder of
BookLink Technologies, Inc., a CMGI subsidiary that was sold to America Online
in 1994. Mr. Wetherell is also a director of CMGI and Navisite.

Board and Committee Meetings

In the second half of the fiscal year ended July 31, 1999, the Company
formed an Audit Committee of the Board of Directors. The primary function of
the Audit Committee is to review the results and scope of the audit and other
services provided by the Company's independent public auditors. The Audit
Committee did not meet during fiscal 1999. The members of the Audit Committee
are Messrs. Bennett, Goldman and Hajducky.

The Company also formed a Compensation Committee of the Board of Directors
in the second half of fiscal year 1999. The primary functions of the
Compensation Committee are to review the salaries of executive officers and
other key officers (including compensation pursuant to stock options and other
employee benefit plans and arrangements), adoption and amendment of all stock
option and other employee benefit plans and arrangements and the engagement
of, terms of any employment agreements and arrangements with, and termination
of, all corporate officers of the Company. The Compensation Committee did not
meet during fiscal 1999. The members of the Compensation Committee are Messrs.
Bennett, Goldman and Wetherell. See "Report of the Compensation Committee."

In addition, in September 1999, the Company formed a Governance Committee.
The primary functions of the Governance Committee are to establish signing
authority and limitations for certain employees with respect to instruments
that create financial obligations of the Company, to consider and approve
financial commitments of the Company in excess of $500,000 and to provide
recommendations to the Board of Directors relating to the size and composition
of the Board and the overall effectiveness of the Board. The members of the
Governance Committee are Messrs. Evans, Hajducky and Rosen.

5
<PAGE>

The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.

The Board of Directors held six meetings during fiscal year ended 1999, and
acted by unanimous written consent twice. The respective committees of the
Board of Directors did not meet during fiscal year ended 1999. Each director
attended at least 80% of the meetings of the Board of Directors during 1999.

Compensation of Directors

Directors who are not employees of the Company are entitled to participate
in the Company's 1999 Stock Option Plan for Non-Employee Directors (the "1999
Directors' Plan") which is administered by the Compensation Committee of the
Board of Directors. Under the terms of the 1999 Directors' Plan, directors who
are not employees of the Company or any subsidiary of the Company and not
affiliates of an institutional investor that owns shares of the Company's
Common Stock are eligible to receive non-statutory options to purchase shares
of the Company's Common Stock. Any director who becomes such an employee shall
cease to be eligible for any further option grants under the 1999 Directors'
Plan while such an employee, but shall not, by reason of becoming such an
employee, cease to be eligible to retain options previously granted under the
1999 Directors' Plan. All options granted under the 1999 Directors' Plan must
have an exercise price equal to the fair market value of the Company's Common
Stock on the date of grant.

As of October 1, 1999, the Company had granted Messrs. Evans and Rosen each
an option to purchase 50,000 shares of its Common Stock, to vest over a four-
year period, at an exercise price of $11.00 per share under the 1999
Directors' Plan. Under the Company's 1995 Equity Incentive Plan, Mr. Goldman
was granted an option to purchase 100,000 shares of the Company's Common
Stock, vesting over a four-year period, at an exercise price of $0.24 per
share and Mr. Bennett was granted an option to purchase 50,000 shares of
Common Stock, vesting over a four-year period, at an exercise price of $4.19
per share.

In general, the Company does not compensate directors for service as
directors but reimburses non-employee directors for reasonable expenses
incurred in connection with attendance at meetings of the Board of Directors
and committees thereof. Pursuant to the terms of a consulting, invention and
non-disclosure agreement with the Company, Mr. Evans received $26,400 for
programming and other technical services rendered to the Company during the
fiscal year ended July 31, 1999.

Compensation Committee Interlocks and Insider Participation

Messrs. Bennett, Goldman and Wetherell, all non-employee directors,
currently constitute the Company's Compensation Committee. No executive
officer of the Company 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 the Company's Board of Directors or Compensation
Committee.

Section16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Based solely on its review of
copies of reports filed by individuals required to make filings ("Reporting
Persons") pursuant to Section 16(a) of the Exchange Act or written
representations from certain Reporting Persons, the Company believes that all
such reports required to be filed under Section 16(a) of the Exchange Act for
the 1999 fiscal year were timely filed with the exception of the initial Form
3s for all executive officers and directors. The Company's registration
statement was declared effective after the close of business on July 19, 1999.
The Form 3s were filed on July 20, 1999, the earliest possible date after the
effective date.

6
<PAGE>

ADDITIONAL INFORMATION

Management

Officers are elected annually by the Board and serve at the discretion of
the Board. Set forth below is information regarding the current executive
officers of the Company who are not directors of the Company.

<TABLE>
<CAPTION>
Name Age Office(s)
- ---- --- ---------
<S> <C> <C>
David A. Fish......................... 43 Chief Operating Officer
Daniel J. Jaye........................ 34 Chief Technology Officer
Stephen A. Royal...................... 43 Chief Financial Officer and Treasurer
</TABLE>

David A. Fish has served as Chief Operating Officer of the Company since
January 1999 and served as Vice President of Marketing from April 1998 until
December 1998. Mr. Fish is the founder of Rocket Science Software, Inc., an
Intranet search/navigation software company, and served as its full time
President from October 1997 until April 1998. Prior to that, Mr. Fish was
Division Manager of Knowledge Services of Context Media, LLC, a knowledge
management consulting and software company from June 1996 until September
1997. From August 1993 until May 1996, Mr. Fish served as President and Chief
Executive Officer of Narrowcast Technologies, Inc., an electronic publishing
and multimedia consulting company, which he founded.

Daniel J. Jaye has served as the Company's Chief Technology Officer since
September 1995. Prior to joining the Company, Mr. Jaye was Director of High
Performance Computing for Fidelity Investments, a financial services firm,
from February 1993 until September 1995.

Stephen A. Royal has served as the Company's Chief Financial Officer and
Treasurer since March 1998. Prior to joining the Company, Mr. Royal was Senior
Vice President and Chief Financial Officer and later Chief Administrative
Officer of Omega Performance Corporation, an interactive multimedia training
software and consulting company, from January 1992 until March 1998.

There are no family relationships between any director, executive officer or
person nominated or chosen by the Company to become a director or executive
officer of the Company.

7
<PAGE>

Executive Compensation

Summary Compensation Table. The table below sets forth certain compensation
information for the Chief Executive Officer of the Company and the other most
highly compensated executive officers of the Company whose salary and bonus
for the fiscal year ended July 31, 1999 exceeded $100,000 (collectively, with
Mr. Schaut, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
----------------------------- --------------------------------------------
Securities Underlying All Other Compensation
Name and Principal Position Year Salary($)(1) Bonus($)(1) Options(2)(3) ($)(4)
--------------------------- ---- ------------ ----------- --------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Paul L. Schaut........... 1999 $168,364 $ 60,000 400,000 (ENGA) $ 1,383
Chief Executive Officer
and 18,000 (CMGI)
President 1998 109,375 37,500 600,000 (ENGA) --
80,000 (CMGI)

David A. Fish(5)......... 1999 $166,667 $ 38,000 300,000 (ENGA) --
Chief Operating Officer 12,000 (CMGI)
1998 48,296 8,333 200,000 (ENGA) --
0 (CMGI)

Daniel J. Jaye........... 1999 $131,430 $ 19,233 200,000 (ENGA) $ 2,303
Chief Technology Offi-
cer 16,000 (CMGI)
1998 118,295 115,500(6) 0 (ENGA) 3,529
0 (CMGI)

Stephen A. Royal(7)...... 1999 $126,776 $ 25,167 50,000 (ENGA) $ 1,375
Chief Financial Officer
and 12,000 (CMGI)
Treasurer 1998 42,500 7,083 150,000 (ENGA) --
0 (CMGI)
</TABLE>
- --------
(1) Any compensation that was deferred at the Named Executive Officer's
election is included in the salary or bonus column for the year in which
it was earned. Bonuses indicated as earned in any fiscal year were
generally paid early in the following fiscal year.

(2) Option grants reflect elements of compensation earned during the fiscal
year indicated. However, in certain instances, such options were not
granted until the beginning of the next fiscal year.

(3) All Named Executive Officers received options to purchase the Company's
Common Stock (designated in the table as ENGA) and CMGI common stock
(designated in the table as CMGI).

(4) All Other Compensation in 1999 represents the amount of matching
contributions made by the Company under the CMGI 401(k) plan.

(5) Mr. Fish commenced employment with the Company in April 1998.

(6) Includes $100,000 bonus paid to Mr. Jaye for his contribution in the sale
of certain of the Company's technology to Red Brick Systems, Inc.

(7) Mr. Royal commenced employment with the Company in March 1998.

8
<PAGE>

Option Grant Table. The following table sets forth certain information
regarding options granted during the fiscal year ended July 31, 1999 by the
Company to the Named Executive Officers:

STOCK OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------
Percent of
Total
Number of Options
Securities Granted to Exercise Potential Realizable Value at
Underlying Employees in or Base Assumed Annual Rates of Stock
Options Granted Fiscal Year Price Expiration Price Appreciation for Option
Name (#) 1999(1)(2) ($/share) Date Term(3)
---- --------------- ------------ --------- ---------- ------------------------------
5%($) 10%($)
-------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Paul L. Schaut.......... 400,000(4) (ENGA) 6.36% $11.00(5) 6/11/04 $1,215,639 $2,686,244
18,000(4) (CMGI) 0.54% $10.00(6) 9/14/03 $ 49,731 $ 109,892

David A. Fish........... 100,000(4) (ENGA) 1.59% $ 4.85(5) 1/18/04 $ 133,997 $ 296,097
200,000(4) (ENGA) 3.18% $11.00(5) 6/11/04 $ 607,819 $1,343,122
12,000(4) (CMGI) 0.36% $10.00(6) 9/14/03 $ 33,154 $ 73,261

Daniel J. Jaye.......... 200,000(4) (ENGA) 3.18% $11.00(5) 6/11/04 $ 607,819 $1,343,122
16,000(4) (CMGI) 0.48% $10.00(6) 9/14/03 $ 44,205 $ 97,682

Stephen A. Royal........ 50,000(4) (ENGA) 0.80% $11.00(5) 6/11/04 $ 151,955 $ 335,781
12,000(4) (CMGI) 0.36% $10.00(6) 9/14/03 $ 33,154 $ 73,261
</TABLE>
- --------
(1) Calculated based on an aggregate of 6,288,510 options granted under the
Company's 1995 Equity Incentive Plan to employees during the fiscal year
ended July 31, 1999.

(2) Calculated based on an aggregate of 3,313,250 options granted under CMGI's
1986 Stock Option Plan to employees during the fiscal year ended July 31,
1999.

(3) Potential realizable value is based on an assumption that the market price
of the stock will appreciate at the stated rate, compounded annually, from
the date of grant until the end of the 5-year term. These values are
calculated based on rules promulgated by the SEC and do not reflect the
Company's estimate or projection of future stock prices. Actual gains, if
any, on stock option exercises will be dependent upon the future
performance of the price of the Company's Common Stock, which will benefit
all stockholders proportionately.

(4) Option vests as to 25% of the shares after the first year and the
remaining 75% vesting in equal monthly installments for the next 36 months
thereafter.

(5) The exercise price represents the fair market value of Common Stock on the
date of grant as determined by the Company's Board of Directors.

(6) The exercise price represents the fair market value of CMGI's common stock
on the date of grant based on the closing price of the common stock on the
Nasdaq National Market.

9
<PAGE>

Option Exercises and Year-End Values. The following table sets forth certain
information concerning option exercises by Named Executive Officers during the
fiscal year ended July 31, 1999 and exercisable and unexercisable stock
options held by the Named Executive Officers as of July 31, 1999. No Named
Executive Officer exercised or held any stock appreciation rights during the
year ended July 31, 1999.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Shares Value Unexercised Options In-the-Money Options
Acquired on Realized at Fiscal Year-End(#) at Fiscal Year-End($)(2)
Name Company Exercise (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Paul L. Schaut.......... ENGA 250,000 $2,703,750 0/750,000 0/21,457,500
CMGI 33,333 1,940,262 1,666/63,001 149,732/5,523,849

David A. Fish........... ENGA -- -- 62,499/437,501 2,145,153/12,403,847
CMGI -- -- 0/12,000 0/986,256

Daniel J. Jaye.......... ENGA -- -- 533,331/266,669 18,379,853/6,999,547
CMGI 16,000 1,566,875 5,999/18,001 543,383/1,496,257

Stephen A. Royal........ ENGA -- -- 46,874/153,126 1,579,946/4,639,904
CMGI -- -- 0/12,000 0/986,256
</TABLE>
- --------
(1) Value Realized represents the difference between the aggregate exercise
price of the option and the aggregate fair market value of the underlying
Common Stock on the date of exercise.

(2) Based on the difference between the option exercise price and the closing
price of the underlying common stock on July 31, 1999, which closing price
was $34.563 for Engage and $92.188 for CMGI. In addition, these values
have not and may never be realized. Actual gains, if any, on exercise will
depend on the value of the Common Stock and CMGI's common stock on the
date of sale of any shares acquired upon exercise.

Report of the Compensation Committee

The Compensation Committee of the Company's Board of Directors is
responsible for establishing compensation policies with respect to the
Company's executive officers. The objectives of the Company's executive
compensation program are to establish compensation levels designed to enable
the Company to attract, retain and reward executive officers who contribute to
the long-term success of the Company so as to enhance stockholder value. The
Compensation Committee makes decisions each year regarding executive
compensation, including annual base salaries, bonus awards and stock option
grants. Stock option grants are key components of the executive compensation
program and are intended to provide executives with an equity interest in the
Company so as to link a meaningful portion of the compensation of the
Company's executives with the performance of the Company's Common Stock. This
report is submitted by the Compensation Committee and addresses the
compensation policies for fiscal 1999 as they affected Mr. Schaut, in his
capacity as Chief Executive Officer and President of the Company, and the
Named Executive Officers.

Compensation Philosophy. The Company's executive compensation philosophy is
based on the belief that competitive compensation is essential to attract,
motivate and retain highly qualified and industrious employees. The Company's
policy is to provide total compensation that is competitive for comparable
work and comparable corporate performance. The compensation program includes
both motivational and retention-related compensation components. Bonuses are
included to encourage effective performance relative to current plans and
objectives. Stock options are included to help retain productive people and to
more closely align their interests with those of stockholders.

10
<PAGE>

In executing its compensation policy, the Company seeks to relate
compensation with the Company's financial performance and business objectives,
reward high levels of individual performance and tie a significant portion of
total executive compensation to both the annual and long-term performance of
the Company. While compensation survey data are useful guides for comparative
purposes, the Company believes that a successful compensation program also
requires the application of judgment and subjective determinations of
individual performance, and to that extent the Compensation Committee applies
judgment in reconciling the program's objectives with the realities of
retaining valued employees.

Executive Compensation Program. Annual compensation for the Company's
executives consists of three principal elements: base salary, cash bonus and
stock option grants.

Base Salary and Cash Bonus. In setting the annual base salaries for the
Company's executives, the Compensation Committee reviews the aggregate salary
and bonus compensation for individuals in comparable positions with other
companies, including competitors of the Company, and adjusts such amounts to
reflect individual performance. Many of these companies are Internet or
software companies. The Company also regularly compares the salary levels of
its executive officers with other leading companies through reviews of survey
and proxy statement data.

Increases in annual base salary are based on a review and evaluation of the
performance of the department or activity for which the executive has
responsibility, the impact of that department or activity on the Company and
the skills and experience required for the job, coupled with a comparison of
these elements with similar elements for other executives both inside and
outside the Company.

Cash bonuses are tied directly to the Company's achievement of its goals and
objectives and the contribution of the executive to such achievements.

Equity Ownership. Executive officer compensation also includes long-term
incentives afforded by options to purchase shares of Common Stock. The
purposes of the Company's stock ownership program are (i) to highlight and
reinforce the mutuality of long-term interests between employees and the
stockholders and (ii) to assist in the attraction and retention of key
executives, managers and individual contributors who are essential to the
Company's growth and development.

The Company's stock programs include long vesting periods to optimize the
retention value of these options and to orient the Company's executive
officers to longer term success. Generally, stock options vest as follows: 25%
upon the first anniversary of the date of grant and approximately 2.08% each
month thereafter over three years, and, if employees leave the Company before
these vesting periods, they forfeit the unvested portions of these awards.

The number of shares of Common Stock subject to stock option grants is
generally intended to reflect the significance of the executive's current and
anticipated contributions to the Company. The exercise price of options
granted by the Company has been determined at the discretion of the
Compensation Committee, although it has generally been set at 100% of the fair
market value per share on the date of grant. The value realizable from
exercisable options is dependent upon the extent to which the Company's
performance is reflected in the price of the Company's Common Stock at any
particular point in time. However, the decision as to whether such value will
be realized through the exercise of an option in any particular year is
primarily determined by each individual within the limits of the vesting
schedule and not by the Compensation Committee.

Chief Executive Officer Compensation. The Compensation Committee has set Mr.
Schaut's total annual compensation, including compensation derived from the
Company's cash bonus and stock option programs, at a level it believes to be
competitive with the chief executive officers of similarly capitalized
Internet and software companies. Mr. Schaut, in his capacity as Chief
Executive Officer and President, is eligible to participate in the same
executive compensation program available to the Company's other senior
executives.

11
<PAGE>

During fiscal 1999, Mr. Schaut's annual base salary was increased $90,000,
from $150,000 to $240,000. For fiscal 1999, Mr. Schaut was also awarded
quarterly bonuses totalling $60,000 and was granted an option for 400,000
Engage stock options, which compensation was based, in part, upon attainment
of the Company's revenue objectives and completion of the Company's initial
public offering of its Common Stock.

Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), generally disallows a
tax deduction to public companies for compensation over $1 million paid to its
chief executive officer and its four other most highly compensated executive
officers. However, qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The Company
currently intends to structure its stock option grants in a manner that
complies prospectively with these performance-based requirements.

Compensation Committee

Edward A. Bennett
Craig D. Goldman
David S. Wetherell

Certain Transactions

The Company was incorporated in July 1995 as a wholly owned subsidiary of
CMGI. CMGI is currently a majority stockholder of the Company. Accordingly,
CMGI has the power to elect the Company's entire Board of Directors and to
approve or disapprove any corporate transactions or other matters submitted to
the Company's stockholders for approval, including the approval of mergers or
other significant corporate transactions.

In fiscal 1999, the Company issued a secured convertible demand note to CMGI
in exchange for the cancellation of all intercompany debt incurred by the
Company to CMGI prior to February 1, 1999. This note provides that CMGI may
elect to convert amounts payable under the note into Series C convertible
preferred stock at any time. The amount of each borrowing represented by the
note is convertible into shares of Series C convertible preferred stock at the
fair market value of such shares as of the end of the fiscal quarter in which
the borrowing was made. In April 1999, the Company borrowed $22,086,307 from
CMGI in connection with the acquisition of I/PRO. Such borrowings are
convertible into Series C convertible preferred stock at a common equivalent
price of $5.06 per share. Additional intercompany debt incurred after February
1, 1999 accrues interest at a rate of 7% per year compounded monthly until the
day CMGI elects to convert the debt into shares of Series C convertible
preferred stock. All notes held by CMGI were converted into Series C
convertible preferred stock in May 1999. Each share of Series C convertible
preferred stock converted into twenty shares of Common Stock upon the
completion of the Company's initial public offering.

The Company and CMGI entered into a facilities and administrative support
agreement under which CMGI continues to make available space at its
headquarters in Andover, Massachusetts and provides various services to the
Company, including tax and administrative, computer and information systems,
telecommunications and utilities. Under this agreement, CMGI has also agreed
to make available to the Company at least 28,000 square feet of space at its
headquarters facilities, subject to termination upon at least 12 months'
notice by CMGI. The fees payable by the Company for the availability of space
and other services are typically determined through an allocation of CMGI's
costs based upon the proportion of the Company's employee headcount to the
total headcount of CMGI and other CMGI-related companies located in the same
facility or using the same services. In fiscal 1999, the Company paid CMGI
approximately $813,000 for services similar to those provided under the
administrative support agreement.

The Company and CMGI also entered into a tax allocation agreement to
allocate responsibilities, liabilities and benefits relating to taxes. The
Company is required to pay its share of income taxes shown as due on any

12
<PAGE>

consolidated, combined, or unitary tax returns filed by CMGI for tax periods
ending on or before or including the date on which date the Company will no
longer be a member of CMGI's group for federal, state, or local tax purposes,
as the case may be. CMGI indemnifies the Company against liability for all
taxes in respect of consolidated, combined, or unitary tax returns for such
period. Accordingly, any redetermined tax liabilities for such periods will be
the responsibility of CMGI, and any refunds or credits of taxes attributable
to the Company or its subsidiaries in respect of consolidated, combined, or
unitary tax returns for such periods will be for the account of CMGI. The
Company is responsible for filing any separate tax returns for any taxable
period and will be responsible for any tax liabilities (and entitled to any
refunds or credits of taxes) in respect of such returns. The Company will
indemnify CMGI against liability for such taxes.

Neither CMGI nor the Company have any obligation to make any payment to the
other party for the use of such other party's tax attributes such as net
operating losses. However, if one party realizes a windfall tax benefit
because of an adjustment to items on the other party's tax return, the party
that realizes the windfall tax benefit will be required to pay to the other
party the actual incremental tax savings it has realized. For example, if an
expense deducted by CMGI for a period prior to the closing date were
disallowed and required to be capitalized by the Company for a period after
the closing date, thereby generating future depreciation deductions to the
Company, the Company would be required to pay to CMGI any incremental tax
savings as a result of such depreciation deductions when such tax savings are
actually realized by the Company.

Each of the Company and CMGI has control of any audit, appeal, litigation or
settlement of any issue raised with respect to a tax return for which it has
filing responsibility. Payments of claims under the agreement must be made
within 30 days of the date that a written demand for the claim is delivered.
Interest accrues on payments that are not made within 10 days of the final due
date at the rate applicable to under payments of the applicable tax. Any
dispute concerning the calculation or basis of determination of any payment
provided under the tax allocation agreement will be resolved by a law firm or
"big five" accounting firm selected and paid for jointly by the parties.

The Company and CMGI have entered into an investor rights agreement under
which the Company granted CMGI registration rights and rights to purchase
shares to maintain its majority ownership. Under this agreement, CMGI and its
assignees have the right to demand, on up to seven occasions, that the Company
register under the Securities Act of 1933, as amended, the sale of all or part
of their shares of the Company's Common Stock. CMGI and its assignees are also
entitled to include shares of the Company's Common Stock in a registered
offering of securities by the Company for its own account, subject to the
underwriters' right to reduce the number of included shares. The Company will
pay all costs associated with such registration of shares pursuant to this
agreement, other than underwriting discounts and commissions and various other
expenses. Also under this agreement, until such time as CMGI, or any permitted
transferee, owns less than a majority of voting power of the outstanding
shares of capital stock of the Company, the Company will permit CMGI, or the
transferee, to purchase a portion in any shares that it may in the future
issue so that CMGI or the transferee may maintain its majority ownership
position. Any such purchases will be at the same price as is paid by third
parties for the shares. The right is transferable by CMGI to any party that
acquires directly from CMGI shares of common stock representing at least a
majority of the outstanding shares of Common Stock of the Company.

The Company also outsources its data center operations for Engage Knowledge
and its AdBureau advertising management service to NaviSite, a CMGI affiliate.
For Engage Knowledge, the Company leases computer equipment and space for
equipment from NaviSite. The Company pays NaviSite fees based on the amount of
space and amount of telecommunications services used by NaviSite to support
Engage Knowledge. For AdBureau, NaviSite provides comprehensive operational
and facilities support. The Company pays NaviSite a percentage of AdBureau
revenue. The Company also leases office computer equipment from NaviSite. The
Company expects to continue to outsource its data center operations to
NaviSite and to lease computer equipment and space for such equipment from
NaviSite. The Company paid a total of approximately $2,122,000 to NaviSite for
these services in fiscal 1999.

13
<PAGE>

The Company sells its products and services to customers affiliated with
CMGI. In fiscal 1999, the Company's revenue from sales to these affiliated
companies totalled approximately $1,938,000.

Mr. Goldman serves as a director of CMGI and Navisite. Mr. Hajducky serves
as the Chief Financial Officer and Treasurer of CMGI and as a director of
Navisite. Mr. Wetherell serves as Chairman of the Board, Chief Executive
Officer, President and Secretary of CMGI and as Chairman of the Board of
Navisite.

Employment Agreements

The Company is not a party to employment agreements with any of the Named
Executive Officers.

Stockholder Return Performance Presentation

Due to the Company's initial public offering of its Common Stock being
declared effective less than thirty days prior to the end of the Company's
1999 fiscal year, no stock performance graph is included in this Proxy
Statement.

ANNUAL REPORT

The Company's Annual Report on Form 10-K for the year ended July 31, 1999
(other than exhibits thereto) filed with the SEC is available, without charge,
upon request to the Company. Requests for copies of the Annual Report on Form
10-K should be sent to the Company's Director, Investor Relations, at Engage
Technologies, Inc., 100 Brickstone Square, Andover, Massachusetts 01810.

APPROVAL OF THE INTERESTED PARTY TRANSACTION

The Company has entered into an Agreement and Plan of Merger and
Contribution (the "Merger Agreement"), dated September 23, 1999, between the
Company, CMGI, Inc., the majority stockholder of the Company ("CMGI"), AK
Acquisition Corp., a wholly-owned subsidiary of CMGI ("Merger Sub"),
AdKnowledge Inc. ("AdKnowledge") and each of Steve Findley, John Mracek and
Kevin Wandryk, as the shareholder representative. The Merger Agreement
provides for a number of transactions that result in AdKnowledge becoming a
wholly-owned subsidiary of the Company, including the Company's issuance of up
to an estimated maximum of 6,817,379 shares of its Common Stock to
stockholders of AdKnowledge.

At the time such Common Stock is issued, CMGI will be one of the
stockholders of AdKnowledge and so, accordingly, will receive shares of Common
Stock. Because CMGI is a substantial stockholder of Engage, the issuance of
Common Stock to CMGI is a transaction which requires the affirmative vote of
the holders of a majority of Common Stock present in person or represented by
proxy and voting at the Meeting under applicable rules of the Nasdaq National
Market. The terms of the Merger Agreement and the issuance of the Common Stock
and certain other matters are described below.

Description of the Parties

The Company. The Company provides products and services that enable
customers to create and use profiles of individual Web visitors to target
advertisements, content and e-commerce offerings. An Engage profile is an
anonymous collection of information about an individual Web user's consumer
interests, demographic characteristics and geographic location. These profiles
are developed through a combination of a user's browsing behavior on
participating sites on the Internet and information the user has voluntarily
declared at those sites, such as information provided on an online
registration form. Each anonymous profile omits information that would permit
the personal identification of the user, such as name, address and e-mail
address. Each profile

14
<PAGE>

contains numerical scores that rank a Web user's preference level in hundreds
of standard categories and subcategories, such as books, business, computers,
fashion, sports and travel. Categories can be further customized to meet the
needs of a specific customer or market. These profiles are continuously
updated and refined based on a visitor's browsing behavior across multiple Web
sites, including pages selected by the user, the duration of the user's visits
and the responses of the user to specific advertisements and promotions.

The Company's address is 100 Brickstone Square, Andover, Massachusetts
01810. Its telephone number is (978) 684-3884.

CMGI. With nearly 50 companies, CMGI represents the largest, most diverse
network of Internet companies in the world. This network includes both CMGI
operating companies and a growing number of synergistic investments through
its venture capital affiliate, @Ventures. CMGI leverages the technologies,
content, and market reach of its extended family of companies to foster rapid
growth and industry leadership across its network, and the larger Internet
economy. CMGI's majority-owned operating companies include the Company,
1ClickCharge, Activerse, AdSmart, AltaVista, iCAST, Magnitude Network,
MyWay.com, NaviSite, NaviNet, Saleslink and ZineZone. CMGI's @Ventures
affiliates have ownership interests in Lycos, Inc., Critical Path, Silknet,
Chemdex, Ancestry.com, Asimba, AuctionWatch, Aureate Media, blaxxun,
BizBuyer.com, Boatscape, buyingedge.com, CarParts.com, CraftShop.com,
eCircles.com, EXP.com, FindLaw, Furniture.com, HotLinks, Intelligent/Digital,
KOZ.com, Mondera.com, MotherNature.com, NextMonet.com, NextPlanetOver.com,
OneCore.com, ONElist, PlanetOutdoors.com, Productopia, Promedix.com, Raging
Bull, Vstore, INPHO/HomePriceCheck.com, Speech Machines, ThingWorld.com,
Vicinity, Virtual Ink, Visto and WebCT.

CMGI's address is 100 Brickstone Square, Andover, Massachusetts 01810. Its
telephone number is (978) 684-3600.

AdKnowledge. AdKnowledge is a leading provider of complete Web marketing
management services focused entirely on the needs of advertising buyers.
AdKnowledge combines analytic services and data mining with outbound campaign
management to provide sophisticated marketers and agencies with insights into
what drives brand awareness and purchase behavior across all Web sites and
networks.

AdKnowledge's address is 1808 Embarcadero Road, Palo Alto, California 94303.
Its telephone number is (650) 842-6500.

The Merger Agreement

General

The Merger Agreement contemplates the following transactions:

Merger. First, a merger of Merger Sub with AdKnowledge (the "Merger"),
with AdKnowledge being the surviving corporation ("New AdKnowledge"). In
the Merger, holders of outstanding AdKnowledge preferred stock ("Existing
AdKnowledge Preferred Shares") will receive an aggregate of approximately
$170,000,000 of the common stock of CMGI (the "Merger Shares") and newly-
issued shares of the common stock of New AdKnowledge ("New AdKnowledge
Common Shares") representing approximately 12% of the outstanding New
AdKnowledge Common Shares, and holders of outstanding AdKnowledge common
stock ("Existing AdKnowledge Common Shares") will receive New AdKnowledge
Common Shares. Upon completion of the Merger, CMGI will own the remaining
approximately 88% of the outstanding New AdKnowledge Common Shares on a
fully-diluted basis.

Contribution. Second, the stockholders of New AdKnowledge (including
CMGI) will contribute (the "Contribution") their New AdKnowledge Common
Shares to the Company in exchange for approximately $193,000,000 of Common
Stock (the "Contribution Shares"). The value of the Contribution Shares
being

15
<PAGE>

delivered is based upon $31.45, the average of the last reported sales
prices of the Contribution Shares over the 45 consecutive trading days
ending on September 21, 1999, although this value may be adjusted upward by
up to 10% or downward by up to 10% based upon the average of the last
reported sales prices of such stock over the 45 consecutive trading days
ending two trading days prior to the effective time of the Merger ("Merger
Effective Time"). The issuance of the Contribution Shares to CMGI requires
the affirmative vote of the holders of a majority of Common Stock present
in person or represented by proxy and voting at the Meeting.

Short-Form Merger. Third, in the event that less than all of the
outstanding New AdKnowledge Common Shares are surrendered to the Company in
the Contribution, the Company will consummate a California Short-Form
Merger between New AdKnowledge and a new wholly-owned subsidiary of the
Company (the "Short-Form Merger"). In the Short-Form Merger, the Company's
subsidiary will merge with New AdKnowledge, with New AdKnowledge being the
surviving corporation. Any remaining holders of New AdKnowledge Common
Shares will receive Contribution Shares in the Short-Form Merger.

The Merger, the Contribution and the Short-Form Merger are sometimes
collectively referred to herein as the "Transactions."

Representations, Warranties and Covenants

The Merger Agreement contains customary representations, warranties and
covenants of the Company, CMGI, Merger Sub and AdKnowledge.

The Contribution

Treatment of New AdKnowledge Common Shares and Determination of Conversion
Ratio. Holders of New AdKnowledge Common Shares (including CMGI) who
contribute such shares to the Company will receive Contribution Shares equal
to the number of New AdKnowledge Common Shares contributed by such holder
multiplied by the Engage Conversion Ratio (as defined below).

"Engage Conversion Ratio" is the result obtained by dividing (A) the
quotient of (i) $193,000,000 divided by (ii) the Engage Lock-In Value (as
defined below) by (B) the number of Existing AdKnowledge Common Shares
outstanding immediately prior to the Merger Effective Time (assuming the
conversion into Existing AdKnowledge Common Shares of all outstanding
Existing AdKnowledge Preferred Shares and the exercise of all options and
warrants).

The "Engage Lock-In Value" will be determined as follows:

(a) In the event that the average of the last reported sale prices
per share of the Common Stock on the Nasdaq National Market over the
forty-five consecutive trading days ending on the trading day that is
two trading days prior to the Merger Effective Time (the "Engage Final
Value") is equal to or less than $28.31, then the Engage Lock-In Value
will be $28.31. ($28.31 is equal to 90% of $31.45, the average of the
last reported sale prices per share of the Common Stock on the Nasdaq
National Market over the forty-five consecutive trading days ending on
September 21, 1999 (the "Engage Initial Value").)

(b) In the event that the Engage Final Value is equal to or greater
than $34.60, the Engage Lock-In Value will be $34.60.

(c) In the event that the Engage Final Value is greater than $28.31
and less than $34.60, the Engage Lock-In Value will be the Engage Final
Value.

The Engage Conversion Ratio will be subject to adjustment in the event of
any stock split, stock dividend, reverse stock split or similar event
affecting the Common Stock between the beginning of the forty-five day period
used to determine the Engage Initial Value and the closing of the
Contribution. Based upon an Engage Initial Value of $31.45, approximately
5,578,034 to 6,817,379 shares of Common Stock will be issued in the
Contribution and the Short-Form Merger.

16
<PAGE>

The Short-Form Merger

In the event that not all of the New AdKnowledge Common Shares are
surrendered to the Company in the Contribution, the Company will form a
wholly-owned subsidiary of the Company and will contribute New AdKnowledge
Common Shares received by the Company in the Contribution to the Merger
subsidiary. The Merger subsidiary will then merge with New AdKnowledge and the
separate corporate existence of the Company's merger subsidiary will cease and
New AdKnowledge will continue as the surviving corporation. Each New
AdKnowledge Common Share which is not surrendered in the Contribution (other
than dissenting shares) will be converted in the Short-Form Merger into
Contribution Shares equal to the number of New AdKnowledge Common Shares
multiplied by the Engage Conversion Ratio.

Treatment of New AdKnowledge Stock Options

The Company may either assume the New AdKnowledge stock option plans (as
assumed from AdKnowledge in the Merger), or substitute the Company's options
for the New AdKnowledge options in its discretion. Each New AdKnowledge option
will be converted into a similar stock option to acquire that number of
Contribution Shares equal to the number of New AdKnowledge Common Shares for
which it is exercisable multiplied by the Engage Conversion Ratio, with an
exercise price equal to the quotient determined by dividing the exercise price
of the New AdKnowledge option by the Engage Conversion Ratio, rounded down to
the nearest whole cent. The Company's options will be fully exercisable as of
the closing of the Contribution and the Common Stock issuable upon exercise
thereof will be subject to a right of repurchase by the Company at the
exercise price thereof which repurchase right shall lapse on the same schedule
as provided in the original AdKnowledge options. If the Company's options are
substituted for outstanding New AdKnowledge options, Company options will be
governed by the terms of the Company's stock option plans, provided, that such
Company options shall preserve substantially all the rights and benefits
contained in such New AdKnowledge options (except that the Company options
shall have a term of five years), and if the Company assumes the New
AdKnowledge stock option plans, the resulting Company options will be governed
by the terms of the assumed New AdKnowledge plans.

Conditions to Obligations to Effect the Contribution

The respective obligations of each party to effect the Contribution are
subject to the satisfaction or waiver of the following conditions: (a) the
issuance of Contribution Shares to CMGI shall have been approved by the
stockholders of the Company; (b) the Merger shall have been consummated; (c)
the California Department of Corporations shall have issued a permit
qualifying the Contribution Shares pursuant to the California General
Corporation Law, which permit was issued on November 16, 1999, and there shall
not be in effect any stop order suspending the effectiveness of the permit or
any proceedings seeking such a stop order; and (d) the Contribution Shares
shall have been authorized for listing on the Nasdaq National Market.

Amendment and Waiver

Generally, the board of directors of the Company, CMGI and AdKnowledge may
amend the Merger Agreement at any time prior to the closing of the
Contribution. However, after the shareholders of AdKnowledge approve the
Merger, any amendment will be restricted by the California General Corporation
Law. Amendments must be in writing and signed by all parties.

Accounting Treatment

The Transactions will be accounted for as a purchase of a business, which
means that the assets and liabilities of AdKnowledge, including intangible
assets, will be recorded at their fair value and the results of operations of
AdKnowledge will be included in the Company's results from the date of
acquisition.

17
<PAGE>

Material United States Federal Income Tax Considerations

The following discussion summarizes the material federal income tax
consequences relevant to the Company and its stockholders in connection with
the contribution of New AdKnowledge Common Shares to the Company for the
Contribution Shares pursuant to the Contribution and the Short-Form Merger, if
necessary. (For the purposes of this discussion, the description of the income
tax considerations applicable to the Contribution shall be deemed to include
the income tax considerations applicable to the Short-Form Merger.) This
discussion is based on currently existing provisions of the Code, existing and
proposed Treasury Regulations thereunder, and current administrative rulings
and court decisions, all of which are subject to change. Any such change,
which may or may not be retroactive, could alter the tax consequences to the
Company and its stockholders as described herein. The Company is not
requesting and will not request a ruling from the Internal Revenue Service in
connection with the Contribution. In addition, the Company has not requested
an opinion of counsel regarding the tax consequences of the Contribution.

The Company should not recognize gain or loss with respect to the
contribution by the New AdKnowledge stockholders of their New AdKnowledge
Common Shares to the Company in exchange for the Contribution Shares. There
are no tax consequences to the Company's stockholders with respect to the
Contribution.

Reasons for the Transactions

The Company

The Board of Directors of the Company unanimously determined that the
Contribution and the Short-Form Merger (if necessary) are fair to, and in the
best interest, of the Company and its stockholders. In making this
determination, the directors affiliated with CMGI abstained from voting.

These decisions were based on several potential benefits of the Transactions
that the Board of Directors of the Company believe will contribute to the
success of the Company. These potential benefits include: (a) adding and
integrating AdKnowledge to the Company to offer Internet advertisers a more
complete spectrum of Internet advertising solutions; (b) enhancing the
functionality and performance of the Internet advertising products offered by
the Company with AdKnowledge's technology; (c) increasing the Company's
customer base to include advertisers and advertising agencies; (d)
accelerating the Company's growth rate; and (e) potentially shortening the
period of operating at a loss.

The Board of Directors of the Company reviewed a number of factors in
evaluating the Transactions, including, but not limited to, the following: (a)
historical information concerning the Company's and AdKnowledge's respective
business focus, financial performance and condition, operations, technology
and management; (b) management's view of the financial condition, results of
operations and businesses of the Company and AdKnowledge before and after
giving effect to the Transactions and the Board of Director's determination of
the Transactions' effect on stockholder values; (c) current financial market
conditions and historical stock market prices, volatility and trading
information; (d) the consideration New AdKnowledge stockholders will receive
in the Transactions in light of comparable transactions; (e) the belief that
the terms of the Merger Agreement are reasonable; (f) the impact of the
Transactions on customers and employees; (g) results of the due diligence
investigation of AdKnowledge conducted by the Company's management,
accountants and counsel; (h) the expectation that the Transactions will be
accounted for as a purchase; and (i) review of the valuations of comparable
companies.

The Board of Directors of the Company also identified and considered a
number of potentially negative factors in its deliberations concerning the
Transactions including the following: (a) the risk that the potential benefits
of the Transactions may not be realized; (b) the possibility that the
Transactions may not be consummated, even if approved by AdKnowledge's
shareholders; and (c) other applicable risks.

18
<PAGE>

The Board of Directors concluded, however, that, on balance, the potential
benefits of the Transactions to the Company and its stockholders outweighed
the associated risks. The discussion of the information and factors considered
by the Board of Directors of the Company is not intended to be exhaustive. In
view of the variety of factors considered in connection with its evaluation of
the Transactions, the Board of Directors did not find it practicable to, and
did not quantify or otherwise assign relative weight to, the specific factors
considered in reaching its determination.

AdKnowledge

AdKnowledge's board of directors unanimously concluded that the Transactions
are fair to, and in the best interest of, AdKnowledge and its shareholders.

The decision by AdKnowledge's board of directors to approve the Transactions
was based on several potential benefits of the Transactions to AdKnowledge,
including: (a) the Transactions would provide AdKnowledge shareholders with an
equity interest in CMGI and the Company that provides shareholders of
AdKnowledge with liquidity for their investment; (b) the Transactions would
provide AdKnowledge with immediate access to additional financial resources to
accelerate its growth, as well as access to the public markets for further
capital if needed; (c) the possible strategic growth opportunities resulting
from the Transactions, (d) the belief that AdKnowledge business complements
the operations of CMGI and the Company, as well as the respective businesses
and financial conditions of the two companies; and (e) accelerating
AdKnowledge's growth rate.

The decision of AdKnowledge's board of directors to approve the Transactions
and the Merger Agreement resulted from the board's careful consideration of a
range of strategic alternatives, including the pursuit of a long-term
independent business strategy for AdKnowledge. AdKnowledge's board of
directors considered a number of factors in evaluating the Transactions,
including the following: (a) identifying and securing the strategic
alternative that would provide the greatest value to AdKnowledge shareholders;
(b) the relative volatility of the market value of the Common Stock and CMGI's
common stock; (c) the relative likelihood of completing the Transactions; (d)
the relative risks to AdKnowledge's business if the Transactions are not
completed; (e) the results of due diligence reviews conducted by AdKnowledge's
management, legal advisors and financial advisors examining CMGI's and the
Company's business, operations, technology and competitive position and
possible expansion opportunities for New AdKnowledge; (f) review of the
current and prospective business environment in which AdKnowledge operates,
the competitive environment for ad management and delivery services for the
Internet; and (g) the recent trend towards consolidation among its
competitors.

AdKnowledge's board of directors also believes the Transactions will provide
AdKnowledge the opportunity to increase the amount of services provided by
AdKnowledge to companies owned or controlled by CMGI and the Company and other
companies with which CMGI and the Company do business. AdKnowledge's board of
directors believes that through these closer relationships with the Company
and potential relationships with CMGI's affiliates and partners in the U.S.
and abroad, AdKnowledge may be able to significantly increase its ad serving
volumes and accelerate and enhance its new product offerings.

AdKnowledge's board of directors also considered a number of potentially
negative factors in its deliberations concerning the Transactions, including:
(a) the risk that the Transactions might not be consummated; (b) the potential
loss of revenues and business opportunities for AdKnowledge as a result of
confusion in the marketplace after the announcement of the Transactions, or
possible adverse reactions by certain existing or prospective AdKnowledge
customers who compete with CMGI, the Company or their affiliates, and the
possible exploitation of such issues by AdKnowledge's and CMGI's and the
Company's competitors; (c) the possibility of management disruption associated
with the Transactions and integrating the operations of the companies, as well
as the risk that key management and technical personnel might leave New
AdKnowledge after the Transactions are completed; (d) the risk that the
benefits sought to be achieved by the Transactions will not be realized; and
(e) other applicable risks.

AdKnowledge's board of directors concluded, however, that, on the balance,
the potential benefits to AdKnowledge and its shareholders of the Transactions
outweighed the risks associated with the Transactions.

19
<PAGE>

The discussion of the information and factors considered by AdKnowledge's
board of directors is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the Transactions,
AdKnowledge's board of directors did not find it practicable to, and did not
quantify or otherwise assign relative weight to, the specific factors
considered in reaching its determination.

Comparison of Stockholder Rights

The Contribution will not change the existing rights of the Company's
stockholders; however some dilution will result.

Selected Historical Condensed Consolidated and Unaudited
Pro Forma Condensed Combined Financial Information

The following selected historical condensed consolidated financial
information of AdKnowledge has been derived from its historical consolidated
financial statements and include its notes, and should be read in conjunction
with such consolidated financial statements and the notes. The historical
financial statements of AdKnowledge for the period from July 10, 1996
(inception) to December 31, 1996, and for the fiscal years ended December 31,
1997 and 1998, including their notes, begin on page F-1. The historical
financial information of AdKnowledge as of and for the interim periods
presented below has been prepared on the same basis as that derived from
historical financial statements prepared on an annual basis and, in the
opinion of management of AdKnowledge, includes all adjustments, consisting of
normally recurring accruals, necessary for a fair presentation of the
financial position and results of operations of AdKnowledge as of these dates
and for these periods.

The selected unaudited pro forma condensed combined financial data which has
been derived from selected historical consolidated financial statements gives
effect to the Transactions as a purchase. This pro forma condensed combined
financial information should be read in conjunction with the pro forma
statements and their notes. For the purpose of the pro forma condensed
combined statement of operations data, the Company's results of operations for
the fiscal year ended July 31, 1999 have been combined with AdKnowledge's
results of operations for the twelve months ended June 30, 1999, giving effect
to the Transactions as if they had occurred on August 1, 1998. For the purpose
of the pro forma condensed combined balance sheet, the Company's consolidated
balance sheet as of July 31, 1999 has been combined with AdKnowledge's
consolidated balance sheet as of June 30, 1999, giving effect to the
Transactions as if they had occurred on July 31, 1999.

The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred if the Transactions had occurred on August 1, 1998, nor is
it necessarily indicative of the future operating results or financial
position of the combined companies.

<TABLE>
<CAPTION>
AdKnowledge
Selected Historical Financial Data
(In Thousands, Except per Share Data)
-----------------------------------------------------------------------------
Nine Months Ended
Years Ended December 31, September 30,
-------------------------- -------------------
1996(1) 1997 1998 1998 1999
------- ------- -------- -------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C>
AdKnowledge--Consolidated
Statement of Operations Data
Revenues................... $ -- $ 564 $ 2,421 $ 1,667 $ 3,443
Gross profit (loss)........ -- 355 (688) (383) (780)
Loss from operations....... (727) (2,954) (10,156) (7,107) (13,811)
Net loss................... (729) (2,914) (10,258) (7,147) (14,146)
Net loss per share--basic
and diluted............... $(0.39) $ (0.60) $ (1.78) $ (1.29) $ (2.19)
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
December 31, September 30,
------------------------ -------------
1996(1) 1997 1998 1999
------- ------- ------- -------------
(in thousands) (unaudited)
<S> <C> <C> <C> <C>
AdKnowledge--Consolidated Balance Sheet
Data
Working capital (deficit)............ $180 $(1,581) $(1,547) $ 1,460
Total assets......................... 258 5,940 7,097 16,698
Notes payable and capital lease
obligations, less current portion... -- 648 1,438 5,182
Total shareholders' equity
(deficit)........................... (37) 2,868 1,657 4,239
</TABLE>
- --------
(1) Since inception (July 10, 1996).

<TABLE>
<CAPTION>
Engage and AdKnowledge
Pro Forma Condensed Combined Financial Data
-------------------------------------------------------------------------------
(In thousands, except per share data)
Year Ended
July 31, 1999
-------------
<S> <C>
Pro Forma Condensed Combined Statement of Operations Data
Net revenues...................................................... $19,009
Gross profit...................................................... 5,368
Operating loss.................................................... (82,029)
Net loss.......................................................... (83,458)
Net loss per share--basic and diluted ............................ (2.01)
</TABLE>

<TABLE>
<CAPTION>
July 31, 1999
-------------
<S> <C>
Pro Forma Combined Balance Sheet Data
Working capital................................................. $108,260
Total assets.................................................... 369,687
Long-term debt and capital lease obligations, net of current
maturities..................................................... 2,778
Stockholders' equity............................................ 346,012
</TABLE>

Comparative Per Share Data
(unaudited)

The following table summarizes certain per share information for the Company
and AdKnowledge on a historical pro forma condensed combined and equivalent
pro forma condensed combined basis. You should read the information below
along with the audited consolidated financial statements of the Company and
AdKnowledge, the selected condensed consolidated financial data and the
unaudited pro forma condensed combined financial data included elsewhere in
this Proxy Statement or incorporated into this Proxy Statement by reference.
The pro forma combined financial data are not necessarily indicative of the
operating results of future operations or the actual results that would have
occurred at the beginning of the period presented.

<TABLE>
<CAPTION>
Year Ended
July 31, 1999
-------------
<S> <C>
Engage
Historical Per Common Share Data:
Net Loss(4)....................................................... $(0.89)
Book Value(1)..................................................... 3.01
Pro Forma Combined Per Common Share Data:
Net Loss.......................................................... $(2.01)
Book Value(2)..................................................... 6.37
</TABLE>

21
<PAGE>

<TABLE>
<CAPTION>
Twelve Months Ended
June 30, 1999
-------------------
<S> <C>
AdKnowledge
Historical Per Common Share Data:
Net Loss................................................... $(2.24)
Book Value(1).............................................. 1.33
Equivalent Pro Forma Combined Per Common Share Data(3):
Net Loss................................................... $(0.23)
Book Value................................................. .72
</TABLE>
- --------
(1) The historical book value per share is computed by dividing total
shareholders' equity by the number of common shares outstanding at the end
of the period.
(2) The pro forma combined book value per share is computed by dividing total
pro forma stockholders' equity by the pro forma number of basic and
diluted shares outstanding at the end of the period.
(3) The AdKnowledge equivalent pro forma combined per share amounts are
calculated by multiplying the Engage pro forma combined per share amounts
by the common stock exchange ratio as of July 31, 1999 of .1128.
(4) See note 1 to the consolidated financial statements of Engage,
incorporated by reference in the Company's annual report on Form 10-K.

Market Information

On September 22, 1999, the last full trading day prior to the public
announcement of the proposed Transactions, the last reported sale price of the
Common Stock on the Nasdaq National Market was $35.813 per share. The last
reported sale price of the Common Stock on the Nasdaq National Market on
November 1, 1999 was $37.813 per share.

There is no public trading market for the Existing AdKnowledge Common
Shares. As of November 1, 1999, the 47,759,871 outstanding shares of
AdKnowledge capital stock were held by a total of approximately 146
shareholders. AdKnowledge has never paid cash dividends on the Existing
AdKnowledge Common Shares and at the present time its management does not
anticipate paying dividends in the near future. Further, AdKnowledge is
precluded from paying dividends on the Existing AdKnowledge Common Shares
pursuant to its existing secured credit agreements.

The Merger

Interests of Executive Officers and Directors of AdKnowledge in the
Transactions

Scott L. Kauffman, the President, Chief Executive Officer and a director of
AdKnowledge, is entitled to a cash bonus upon the consummation of the
Transactions. In discussing the fairness of the Merger to the shareholders of
AdKnowledge, AdKnowledge's board of directors took into account this interest.

Effect of Transactions on Certain Stockholders

The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of October 1, 1999, as adjusted to
reflect the issuance of 6,817,379 Contribution Shares in the Contribution, by
(i) each person known by the Company to own more than 5% of the outstanding
shares of Common Stock, (ii) each of the directors of the Company and (iii)
all directors and the Named Executive Officers as a group as follows.

<TABLE>
<CAPTION>
Shares of
Engage Percentage
Common Stock Ownership
Beneficially of Engage
Name and Address Owned(1) Outstanding(2)
- ---------------- ------------ --------------
<S> <C> <C>
CMGI, Inc....................................... 44,625,835 80.37%
Paul L. Schaut.................................. 302,483(3) *
David S. Wetherell.............................. 44,625,835(4) 80.37%
Edward A. Bennett............................... 12,500(5) *
Christopher A. Evans............................ 60,000 *
Craig D. Goldman................................ 41,666(6) *
Andrew J. Hajducky, III......................... 44,625,835(4) 80.37%
Fredric D. Rosen................................ 0 *
All directors and Named Executive Officers as a
group (10 persons)............................. 45,763,990 81.24%
</TABLE>

22
<PAGE>

- --------
* Percentage is less than 1% of the total number of outstanding shares of
Common Stock.
(1) Beneficial ownership of Common Stock is determined in accordance with the
rules of the Securities and Exchange Commission, and includes shares for
which the holder has sole or shared voting or investment power. Shares of
Common Stock subject to options currently exercisable or which become
exercisable on or before November 29, 1999 are deemed to be beneficially
owned and outstanding by the person holding such options and are included
for purposes of computing the percentage ownership of the person holding
such options, but are not deemed outstanding for purposes of computing
the percentage ownership of any other person. The inclusion of any shares
of Common Stock deemed beneficially owned does not constitute admission
of beneficial ownership of those shares.
(2) Percentage ownership is based on 55,525,248 shares which will be issued
and outstanding after the issuance of the Contribution Shares pursuant to
the Merger Agreement, plus any shares subject to issuance upon exercise
of options held by the person or entity in question that were exercisable
on or exercisable within 60 days after October 1, 1999.
(3) Includes 49,999 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.
(4) Consists of shares of Common Stock owned by CMGI. Mr. Wetherell serves as
Chairman of the Board of Directors, President, Chief Executive Officer
and Secretary of CMGI and Mr. Hajducky serves as Chief Financial Officer
and Treasurer of CMGI, and both Messrs. Wetherall and Hajducky disclaim
beneficial ownership of all 44,625,835 shares of Common Stock.
(5) Consists of 12,500 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.
(6) Includes 41,666 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1995 Equity
Incentive Plan.

As of the date of this Proxy Statement, the Company has no commitments to
issue any capital stock to any of the persons listed above.

Votes Required

The Company. Pursuant to the NASD Marketplace Rules, the proposed issuance
of Contribution Shares requires stockholder approval because a substantial
stockholder of the Company, CMGI, will have a 5% or greater interest in
AdKnowledge immediately prior to the Contribution closing. The affirmative
vote of the holders of a majority of Common Stock present in person or
represented by proxy and voting at the Meeting is required to approve such
issuance. CMGI, which beneficially owns approximately 79% of the outstanding
voting power of the Company, has already agreed to contribute its New
AdKnowledge Common Shares to the Company in the Contribution and to vote in
favor of the issuance of the Contribution Shares to CMGI as a result of such
contribution.

AdKnowledge. Approval of the Contribution requires the approval of a
majority of the outstanding New AdKnowledge Common Shares. The directors,
officers, founders and holders of 5% or more of the outstanding voting power
of the Existing AdKnowledge Common Shares and Existing AdKnowledge Preferred
Shares who will collectively beneficially own approximately 9% of the New
AdKnowledge Common Shares upon the consummation of the Merger have already
executed shareholder support agreements agreeing to vote in favor of the
Contribution. In addition, CMGI, which will beneficially own approximately 88%
of the New AdKnowledge Common Shares upon the consummation of the Merger, has
agreed to vote in favor of the Contribution.

Board Approvals

The respective boards of directors of the Company, CMGI and AdKnowledge have
voted to approve the Contribution.

23
<PAGE>

Regulatory Approvals

Hart-Scott-Rodino. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, including the rules and regulations promulgated thereunder,
the Transactions may not be consummated until notifications have been
furnished to the Federal Trade Commission and the Antitrust Division of the
Department of Justice and specified waiting period requirements have been
satisfied. The Company, CMGI and AdKnowledge filed a premerger notification
and report form with the FTC and the Antitrust Division on October 29, 1999
and the FTC granted early termination of the waiting period on November 15,
1999.

Qualification of Shares. It is a condition to the closing of the
Contribution that the California Department of Corporations has issued a
permit qualifying the Contribution Shares pursuant to the California General
Corporation Law and there shall not be in effect any stop order suspending the
effectiveness of the permit or any proceedings seeking such a stop order. The
California Department of Corporations issued a permit qualifying the
Contribution Shares on November 16, 1999.

Nasdaq National Market Quotation. It is a condition to the closing of the
Contribution that the Contribution Shares be listed on the Nasdaq National
Market.

Timing of the Transactions

The closing of the Merger and the subsequent closing of the Contribution are
expected to occur on or about November 23, 1999 and December 23, 1999,
respectively.

Interests of Certain Persons in the Transactions

No director or executive officer of the Company who has served in such
capacity since August 1, 1998, no nominee for director of the Company, nor any
associate of any of the foregoing persons, has any direct or indirect
substantial interest in the Contribution or the Transactions. Mr. Kauffman
will receive a cash bonus upon the consummation of the Transactions. No
affiliate of CMGI and the Company (other than each other) has any direct or
indirect material interest in the Transactions described in the Merger
Agreement.

Auditors

It is expected that a representative of KPMG LLP will be present at the
Meeting and will be available to respond to appropriate stockholders'
questions with respect to the Contribution and to make a statement if he or
she desires to do so.

Other Agreements

The Escrow Agreement. An aggregate of $19,300,000 of Merger Shares will be
held in escrow for the purpose of securing the indemnification obligations of
those AdKnowledge stockholders who receive Merger Shares and certain
performance and employee retention milestones.

Stockholder Support Agreements. In connection with the execution of the
Merger Agreement, CMGI and the Company entered into stockholder support
agreements with executive officers, founders and 5% stockholders who
collectively beneficially own approximately 79% of the combined voting power
of AdKnowledge. Pursuant to the stockholder support agreements, each
stockholder has agreed to vote all Existing AdKnowledge Common Shares and
Existing AdKnowledge Preferred Shares held by such stockholder in favor of
adoption of the Merger Agreement and the Merger and the Contribution and has
agreed to grant CMGI an irrevocable proxy to vote his or her shares in favor
of adopting the Merger Agreement and effecting the Merger and the
Contribution. The stockholder support agreements will terminate upon the
earlier of the closing of the Contribution or any termination of the Merger
Agreement.

24
<PAGE>

Lock-Up Agreements. Stockholders of AdKnowledge holding an aggregate of
approximately 97% of the fully-diluted Existing AdKnowledge Common Shares will
execute lock-up agreements providing that the signing stockholders shall not:

(a) except with the prior written approval of CMGI, directly or
indirectly offer to sell, contract to sell or otherwise sell or dispose of
any of the Merger Shares issued in the Merger (other than the escrow
shares) for a period of thirty (30) days following the Merger Effective
Time. After such period, this restriction shall lapse at the rate of one-
twelfth of the shares per month, commencing at the beginning of each month.

(b) except with the prior written approval of the Company, directly or
indirectly offer to sell, contract to sell or otherwise sell or dispose of
any of the Contribution Shares for six months following the Contribution
closing or the Short-Form Merger closing, as appropriate. Subject to any
other restrictions, including but not limited to, the vesting of such
shares, following that six month date, a stockholder may offer to sell,
contract to sell or otherwise sell or dispose of all of such Contribution
Shares.

The lock-up agreements permit a stockholder to transfer shares to his or her
spouse or children or to trust established for the benefit of the stockholder
or his or her spouse or children or an entity owned by such trust.

AdKnowledge Management's Discussion and Analysis of Financial Condition and
Results of Operations

Some of the statements contained in this section are forward-looking and
include statements about AdKnowledge's plans, objectives, expectations and
intentions that are not historical facts. When used in this document, the
words expects, anticipates, intends, plans, believes, seeks and estimates and
similar expressions are generally intended to identify forward-looking
statements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this document. These forward-
looking statements involve risks and uncertainties, and there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements.

Overview

AdKnowledge is a leading independent provider of comprehensive Internet
advertising management and analysis services for marketers and advertising
agencies. AdKnowledge began operations on July 10, 1996 and spent the first
nine months of its operations developing its first product, ClickWise, a
software package designed to enable Web sites to manage their advertising
inventory. In early 1997, AdKnowledge began licensing its ClickWise product,
and its consolidated revenues during 1997 were generated exclusively from
software licenses and service and support contracts.

Shift in Focus to the Buyers of Web Advertising. On December 31, 1997,
AdKnowledge acquired Focalink Communications, Inc. This acquisition enabled
AdKnowledge to accomplish a strategic objective of offering Internet-
accessible products and services to the buyers of Web advertising. Following
the acquisition of Focalink, AdKnowledge was able to offer agencies and
marketers centralized, outsourced ad serving and a media planning module.
AdKnowledge began generating revenues from these products in January 1998. In
the second half of 1998, AdKnowledge developed campaign management and basic
reporting modules which, along with Focalink's original service offerings,
comprise the AdKnowledge System.

In the first half of 1998, AdKnowledge discontinued its sell-side ClickWise
product and service offering and began to focus exclusively on products and
services for the buyers of Web advertising. In June 1998, AdKnowledge
transferred its ClickWise client base to DoubleClick, an Internet advertising
management company, in exchange for royalties. AdKnowledge does not expect to
receive significant future revenues from this arrangement.

Revenue Model. Since January 1, 1998, substantially all of AdKnowledge's
revenues have been generated from ad delivery and, to a lesser extent,
associated management services. Fees for ad delivery are generally charged on
a cost-per-thousand ads served basis, commonly referred to as "CPM." In
accordance with market practice, clients with higher expected ad volumes are
generally charged a lower ad serving rate.

25
<PAGE>

In addition to billings for ad delivery, AdKnowledge charges fees for use of
its planning, campaign management and reporting modules provided through the
AdKnowledge System. Fees for use of these modules are negotiated with each
individual client and generally include monthly usage fees over the term of
the contract. Although several of AdKnowledge's clients have contracts with
terms ranging from one to three months or over a single advertising campaign,
contracts with the majority of its new clients have a term of 12 months.
AdKnowledge expects to increase the number of clients with subscription-based,
12-month contracts in the future.

Trends in Revenues. AdKnowledge's ad delivery revenues generally have
increased in every quarter, and it expects ad delivery revenues to continue to
increase in future periods due to continued growth in the volume of ads it
serves. In 1998 and the first nine months of 1999, AdKnowledge delivered 2.9
billion, and 7.4 billion ads and expects this trend to continue. AdKnowledge
expects continued declines in the rates it charges for ad delivery due to
competitive pressure on standard ad delivery rates and an expected increase in
the number of its high volume clients. AdKnowledge periodically reviews its
pricing model in response to market trends and conditions.

In the future, AdKnowledge expects that the primary driver of its revenue
growth and, ultimately, the primary determinant of its ability to achieve and
maintain profitability, will be AdKnowledge eAnalytics, a service offering
that incorporates advanced campaign management and analysis functionality. In
future periods, AdKnowledge expects that an increasing portion of its revenues
will be attributable to AdKnowledge eAnalytics. The AdKnowledge eAnalytics
services have not yet generated significant revenues, and there can be no
assurances as to when or whether they will do so.

AdKnowledge is currently introducing AdKnowledge eAnalytics to the market
and is testing its pricing through preliminary commercial sales to its
clients. AdKnowledge expects that fees for AdKnowledge eAnalytics products
will be based on the number and complexity of individual reports or groups of
reports generated for its clients and on the corresponding volume of data
analyzed. AdKnowledge expects that AdKnowledge eAnalytics services will be
priced either on a per-report basis or as a premium to its current CPM-based
pricing. In the future, it may also earn project-based fees for custom data
mining and data integration services.

Relationship Between Revenues and Associated Costs

Cost of revenues in 1997 reflected customer service and support activities
in connection with the ClickWise product. Since January 1, 1998, cost of
revenues has consisted primarily of: (a) salaries and personnel costs
associated with the maintenance of AdKnowledge's operational infrastructure
and customer service and support activities; (b) fees paid to Internet hosting
service providers; and (c) depreciation expense associated with ad delivery
and reporting equipment.

Exclusive of Internet hosting services, which comprised 23% of total cost of
revenues in the first nine months of 1999, AdKnowledge believes that it is
capable of accommodating greater ad volumes than it serves today without a
proportional increase in its cost of revenues. Due to the costs of building
out and maintaining its ad serving capacity and its operations and client
services departments in anticipation of future growth, AdKnowledge has
generally experienced negative gross margins since January 1, 1998.

AdKnowledge believes that its gross margins will improve to the extent that
it succeeds in the initiatives discussed below. AdKnowledge cannot be certain,
however, that it will be able to successfully implement these initiatives or,
if implemented, that these initiatives will have the positive effect on gross
margin that it expects. These initiatives include:

(a) Increasing the number of ads it serves. AdKnowledge is currently
experiencing significant growth in its ad serving volume and expects this
growth to continue in the future. It believes that increasing ad volumes
will result in economies of scale and generally a lower average cost to
deliver each ad. AdKnowledge believes that it can achieve these economies
of scale because increased volume will enable it to negotiate preferable
Internet service rates with network providers. In addition, it expects that
minimal additions to its current operations staffing will be required to
maintain and monitor a significantly greater number of ads than it serves
today.

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<PAGE>

(b) Improving the efficiency of its ad serving equipment. A significant
portion of AdKnowledge's research and development activities is devoted to
providing enhancements to software, hardware and network infrastructure to
achieve greater ad serving capacity with its current level of ad delivery
and reporting equipment. AdKnowledge expects these enhancements to result
in a reduction in required capital expenditures and, therefore, in
declining depreciation charges, in connection with incremental increases in
ad volume.

(c) Increasing the number of high-volume clients. AdKnowledge is
currently experiencing growth in its number of high-volume clients and
expects this growth to continue in the future. Such growth is expected to
result in economies of scale for client services as the number of client
service specialists is determined more by the number of clients and
campaigns managed than by aggregate ads served.

(d) Developing AdKnowledge eAnalytics as an emerging revenue
stream. AdKnowledge eAnalytics is currently at a preliminary commercial
stage and the potential margins on these services are currently unknown.
However, AdKnowledge eAnalytics is positioned to be a premium service to
traditional ad delivery and AdKnowledge expects that the incremental cost
of revenues, including data storage and personnel-related costs, will be
minimal over the mid- to long-term.

Acquisition Transaction

AdKnowledge acquired Focalink for a purchase price of approximately $5.5
million, consisting of approximately $3.1 million in AdKnowledge shares and
warrants, $2.2 million in liabilities assumed and transaction costs of
approximately $208,000. The acquisition was accounted for under the purchase
method of accounting and resulted in an expense of $804,000 in the fourth
quarter of 1997 for the write-off of purchased in-process research and
development that had not yet reached technological feasibility and had no
alternative future use. Purchased technology and goodwill, totaling
approximately $3.2 million, were recorded in connection with the acquisition
and are being amortized on a straight-line basis over three and five years. As
of September 30, 1999, approximately $1.4 million of this amount had been
amortized to expense. In the fourth quarter of 1999, and in years 2000, 2001
and 2002, an additional $0.2 million, $0.8 million, $0.4 million and $0.4
million of this purchased technology and goodwill will be amortized to
expense.

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<PAGE>

Results of Operations

The following table shows selected line items from AdKnowledge's audited
annual and unaudited interim statements of operations.

<TABLE>
<CAPTION>
Period from
July 10, 1996 Nine Months
(Date of Years Ended Ended
Inception) to December 31, September 30,
December 31, ----------------- -----------------
1996 1997 1998 1998 1999
------------- ------- -------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues................... $ -- $ 564 $ 2,421 $ 1,667 $ 3,443
Cost of revenues........... -- 209 3,109 2,050 4,223
----- ------- -------- ------- --------
Gross profit (loss)...... -- 355 (688) (383) (780)
----- ------- -------- ------- --------
Operating expenses:
Research and
development............. 112 1,567 2,651 1,695 5,399
Sales and marketing...... 24 575 2,963 2,060 3,194
General and
administrative.......... 27 265 2,281 1,755 3,164
Amortization of
intangible assets....... -- -- 766 574 574
Stock-based
compensation............ 564 98 807 640 700
Acquisition of in-process
research and
development............. -- 804 -- -- --
----- ------- -------- ------- --------
Total operating expenses... 727 3,309 9,468 6,724 13,031
----- ------- -------- ------- --------
Loss from operations....... (727) (2,954) (10,156) (7,107) (13,811)
Interest income (expense),
net....................... (2) 40 (102) (40) (335)
----- ------- -------- ------- --------
Net loss................... $(729) $(2,914) $(10,258) $(7,147) $(14,146)
===== ======= ======== ======= ========
</TABLE>

Nine Months Ended September 30, 1998 and 1999

Revenues. Revenues increased from $1.7 million in the first nine months of
1998 to $3.4 million in the first nine months of 1999, an increase of 107%.
This increase was due primarily to a 320% increase in aggregate ad volume
offset in part by a 31% decrease in the average revenue derived per ad served.
The overall increase in revenues was also partially offset by the recognition
in the first nine months of 1998 of approximately $146,000 of ClickWise
license and support revenues and $276,000 derived from delivery of ads on
behalf of Web network sites, both of which were discontinued in 1998. The
overall increase in ad volumes between the periods resulted substantially from
the addition of new agency and marketer clients, partially offset by decreases
in volume attributable to the discontinuation of ad serving for Web network
sites. Excluding revenues generated from DoubleClick royalties, ClickWise and
ad serving for Web network sites, revenues from ad delivery, media planning
and associated management services increased from $1.2 million to $3.3
million, or by 177%, from the first nine months of 1998 to the first nine
months of 1999. No single client, or group of affiliated clients, comprised
10% or greater of AdKnowledge's consolidated revenues in the first nine months
of 1998 or 1999.

Cost of Revenues. Cost of revenues increased from $2.1 million in the first
nine months of 1998 to $4.2 million in the first nine months of 1999. Total
cost of revenues consists primarily of personnel-related costs of
AdKnowledge's operations and customer support organizations, as well as third-
party Internet hosting service costs and depreciation of ad serving and
reporting equipment. Since September 30, 1998, AdKnowledge has increased the
number and experience-level of its operations personnel and has acquired
significant capital assets in order to provide additional capacity and
operational redundancy. This trend continued into the fourth quarter of 1999
and AdKnowledge expects it to continue in the future. The increase in capital
assets has resulted in increased depreciation expense and Internet service
costs necessary to co-locate and connect AdKnowledge's equipment to the
Internet.

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<PAGE>

Research and Development. Research and development expenses consist
primarily of personnel and related costs associated with developing technology
to expand the features and functionality of AdKnowledge's products and to make
efficiency improvements in the design and deployment of its ad serving and
reporting assets. Research and development expenses were $1.7 million in the
first nine months of 1998 and $5.4 million in the first nine months of 1999.
This increase of approximately $3.7 million was due primarily to increased
personnel and consulting expenses. Of this increase, AdKnowledge incurred a
total of approximately $2.0 million of personnel, consulting and overhead
expenses for the development and preliminary delivery of its AdKnowledge
eAnalytics product offering in the second and third quarters of 1999. In the
fourth quarter of 1999, AdKnowledge expects to incur significant additional
consulting expenses in connection with its AdKnowledge eAnalytics development.
Through September 30, 1999, all research and development costs have been
expensed as incurred. AdKnowledge believes that continued investment in
research and development is critical to attaining its strategic objectives
and, as a result, expects research and development expenses to continue to
increase in future periods, particularly in connection with further
development of the AdKnowledge eAnalytics service offering.

Sales and Marketing. Sales and marketing expenses consist primarily of
personnel and related costs, including commissions, travel, advertising, trade
show costs and marketing materials expenses. Sales and marketing expenses were
$2.1 million in the first nine months of 1998 and $3.2 million in the first
nine months of 1999. This increase of approximately $1.1 million was due
primarily to an increase in sales personnel costs, particularly in commissions
and travel, and increased expenditures in connection with tradeshows.
AdKnowledge expects sales and marketing expenses to increase in future periods
as it hires additional sales personnel, expands into new markets and continues
to promote its services and product offering.

General and Administrative. General and administrative expenses consist
primarily of personnel and related costs associated with AdKnowledge's
executive and financial functions, as well as professional service fees and
general corporate costs. General and administrative expenses were $1.8 million
in the first nine months of 1998 and $3.2 million in the first nine months of
1999. In the third quarter of 1999, AdKnowledge recorded charges to general
and administrative expenses of $0.8 million for the write-off of deferred
initial public offering costs and of $0.2 million for legal fees incurred in
connection with its pending acquisition by Engage Technologies, Inc.
AdKnowledge expects that it will continue to incur significant acquisition-
related expenses through the fourth quarter of 1999. In addition, in both the
third quarters of 1998 and 1999, general and administrative expenses included
compensation attributable to the forgiveness of related party notes receivable
of approximately $0.3 million. AdKnowledge expects general and administrative
expenses to increase in future periods as it hires additional personnel and
incurs additional costs related to the growth of its business.

Stock-Based Compensation. Since inception and through September 30, 1999,
AdKnowledge has recorded aggregate deferred stock-based compensation of
approximately $7.1 million for the difference between the exercise price and
the deemed fair value of common stock issuable upon the exercise of certain
stock options granted to employees. This deferred stock-based compensation is
being amortized over the vesting periods of the related options. AdKnowledge
recognized expense of $0.6 million in the first nine months of 1998 and $0.7
million in the first nine months of 1999 in connection with the amortization
of stock-based compensation. The expense recognized in the first nine months
of 1998 reflects the amortization of approximately $130,000 of expense
attributable to 294,697 stock options that were both granted and fully vested
in the first quarter of 1998. As of September 30, 1999, deferred stock-based
compensation of $5.4 million will be amortized to expense over the remaining
vesting periods of the related options. Of this amount approximately $0.4
million, $1.6 million, $1.5 million, $1.3 million and $0.6 million will be
amortized to expense in the fourth quarter of 1999 and in 2000, 2001, 2002 and
2003.

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<PAGE>

Periods Ended December 31, 1996, 1997 and 1998

Revenues. In 1996, AdKnowledge was a development stage company and had no
revenues. In 1997, AdKnowledge's revenues of approximately $0.6 million were
generated exclusively from the licensing of its ClickWise product and from the
sale of software licenses and, to a lesser extent, service and support
contracts. In 1998, its revenues of $2.4 million were generated principally
from ad delivery and associated ad management services. Of the $2.4 million of
1998 revenues, approximately $0.4 million are nonrecurring due to the
discontinuation of ad serving for sites and the ClickWise product. No single
client, or group of affiliated clients, comprised 10% or greater of
AdKnowledge's consolidated revenues in 1997 or 1998.

Cost of Revenues. In 1996, AdKnowledge had no revenues or cost of revenues.
In 1997, AdKnowledge's cost of revenues consisted primarily of personnel-
related costs associated with its ClickWise client service and support
activities. AdKnowledge recognized a gross profit of approximately $0.4
million, or 63% of revenues, during 1997. In 1998, AdKnowledge's cost of
revenues consisted primarily of personnel-related costs of its operations and
customer support organizations, third-party Internet hosting service costs and
depreciation of ad serving and reporting equipment. Approximately 50% of
AdKnowledge's total cost of revenues was comprised of payroll, consulting and
recruiting expenses. Internet hosting service costs, the largest variable
component of cost of revenues, were $0.4 million in 1998.

Operating Expenses. In 1996, AdKnowledge had no material research and
development, sales and marketing and general and administrative expenses. From
1997 to 1998, AdKnowledge experienced a substantial increase in its overall
business activities. In connection with its Focalink acquisition on December
31, 1997, AdKnowledge increased its headcount and assumed facility leases for
office space in Palo Alto, California and in New York City. During 1998,
AdKnowledge disposed of property and equipment that resulted in a loss of
approximately $0.2 million and incurred significant expenses in connection
with the recruitment and compensation of certain executive officers. During
1998, AdKnowledge also significantly increased its sales and marketing
activities, and developed and began to sell the AdKnowledge System.
Approximately 74% of total research and development, sales and marketing and
general and administrative expenses were comprised of payroll, consulting and
recruiting costs during 1998.

Acquisition of In-Process Research and Development and Amortization of
Intangible Assets. AdKnowledge acquired Focalink on December 31, 1997 and
recorded an expense of $804,000 for the write-off of purchased in-process
research and development that had not yet reached technological feasibility
and had no alternative future use. Purchased technology and goodwill, totaling
approximately $3.2 million, were recorded in connection with the acquisition
and, beginning January 1, 1998, are being amortized on a straight-line basis
over three and five years. In 1998, AdKnowledge recorded amortization of
intangible assets of approximately $0.8 million.

The amount allocated to the in-process technology represented the purchased
in-process technology for three projects that had not reached technological
feasibility and had no alternative future use. The three projects comprised a
campaign management module and enhanced versions of centralized outsourced ad
serving and media planning services. Upon completion, these projects were to
become the central modules of the AdKnowledge System. The campaign management
module and the AdKnowledge System were introduced in the third and fourth
quarters of 1998. The value of these projects was determined by estimating the
costs to develop the purchased in-process technology into commercially viable
services; estimating the resulting net cash flows from the sale of services
resulting from the completion of the projects, reduced by the portion of the
revenues attributable to core technology; and discounting the net cash flows
back to their present value using discount rates of approximately 30%.

The nature of the efforts to develop the purchased in-process technology
into commercially viable services principally related to the completion of all
planning, designing, prototyping, verification and testing activities that are
necessary to establish that the services can be produced to meet their design
specifications, including function, features and technical performance
requirements. The resulting net cash flows from such services were based on
AdKnowledge's estimates of revenues, cost of revenues, research and
development costs, sales and marketing costs, and income taxes from such
projects.

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<PAGE>

The related net cash flows in 1998 and 1999 have been in excess of those
projected. AdKnowledge currently believes the aggregate net cash flows
originally anticipated will be realized and that there has been no material
change in the expected return on investment related to these services.
However, AdKnowledge cannot guarantee that it will realize revenues from these
services in amounts estimated and actual revenues realized from these services
may be significantly lower than expected in the future.

Stock-Based Compensation. During 1996, AdKnowledge issued common stock to
its founders under restricted purchase agreements and retained the right to
repurchase the shares if these individuals terminated employment. In late
1996, it waived its right to repurchase certain of these shares and recorded
stock-based compensation of $0.5 million, equal to the difference between the
purchase price of the stock and its deemed fair value. In 1996, 1997 and 1998,
AdKnowledge recognized stock-based compensation expense of approximately
$18,000, $0.1 million and $0.8 million for the difference between the exercise
price and the deemed fair value of common stock issuable upon the exercise of
employee stock options. This stock-based compensation is being recognized over
the vesting periods of the related options. In 1996, 1997 and 1998, options
for a total of 625,000 shares, 1,827,255 shares and 6,345,885 shares of common
stock were granted under its stock option programs.

Quarterly Results of Operations

The following table sets forth unaudited quarterly consolidated statements
of operations data. AdKnowledge believes that this information has been
prepared on the same basis as the audited consolidated financial statements
appearing elsewhere in this proxy statement, and that it reflects all
adjustments, consisting only of normal recurring adjustments, that it
considers necessary for a fair presentation of such information in accordance
with generally accepted accounting principles.
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------
Sept. Dec. Mar. June
30, 31, 31, 30, Sept. 30,
1998 1998 1999 1999 1999
------- ------- ------- ------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues......................... $ 595 $ 755 $ 644 $ 992 $ 1,807
Cost of revenues................. 607 1,060 1,099 1,424 1,700
------- ------- ------- ------- -------
Gross profit (loss)............. (12) (305) (455) (432) 107
------- ------- ------- ------- -------
Operating expenses............... 2,494 2,744 3,245 3,393 6,393
------- ------- ------- ------- -------
Loss from operations............. (2,506) (3,049) (3,700) (3,825) (6,286)
Interest income (expense), net... (20) (62) (90) (56) (189)
------- ------- ------- ------- -------
Net loss......................... $(2,526) $(3,111) $(3,790) $(3,881) $(6,475)
======= ======= ======= ======= =======
</TABLE>

AdKnowledge believes that the seasonal fluctuations in its business are
trending towards those of traditional advertising, with the fourth quarter of
the year expected to generate the largest relative percentage of revenues.
AdKnowledge expects that the majority of its revenues in 1999 and for the
foreseeable future will be generated in the second half of each year. In the
future, it is also expected that the first quarter of each year, following the
holiday season, will tend to contribute the lowest relative percentage to
AdKnowledge's annual revenues. Excluding royalty revenues generated from
DoubleClick, total revenues were approximately $558,000, $659,000, $607,000,
$968,000 and $1,765,000 in the third and fourth quarters of 1998 and the
first, second and third quarters of 1999.

Cost of revenues began to increase significantly in the fourth quarter of
1998 and in the first three quarters of 1999 primarily as a result of
increasing payroll-related costs. Increased consulting expenses in the first
quarter of 1999 and increasing Internet hosting service costs in the second
and third quarters of 1999 also contributed to the upward trend in total cost
of revenues.

In AdKnowledge's research and development, sales and marketing, and general
and administrative activities, the largest single component of expenses is
payroll, consulting and other personnel related costs. AdKnowledge expects
that these costs will continue to comprise the largest component of its
operating expenses

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<PAGE>

and that they will increase in the future. Increased operating expenses in the
third quarter of 1999 resulted primarily from increased consulting expenses
incurred in connection with AdKnowledge eAnalytics development, increased
personnel-related costs, the write-off of deferred initial public offering
costs, the forgiveness of a related party note receivable and merger-related
costs.

AdKnowledge's revenues, gross margins and other operating results have
varied widely in the past and AdKnowledge expects that they will continue to
vary in the future. As a result, AdKnowledge's results of operations for any
particular quarter are not necessarily indicative of its results of operations
for any future period. AdKnowledge's revenues and results of operations depend
on a variety of factors, many of which are beyond its control.

Liquidity and Capital Resources

Since its inception, AdKnowledge has financed its operations primarily
through the private placement of equity securities and, to a significantly
lesser extent, net proceeds from the issuance of notes payable and capital
lease financings. As of September 30, 1999, AdKnowledge had $5.9 million in
cash and cash equivalents and short-term investments and had borrowed $7.9
million under credit and capital lease facilities. Of these borrowings,
approximately $0.4 million of notes payable were subject to financial
covenants, including monthly liquidity, monthly quick ratio and quarterly
profitability. AdKnowledge has in the past had, and may in the future have,
difficulty complying with these covenants and is currently renegotiating such
covenants with the lenders. Currently, AdKnowledge has available credit
facilities of approximately $0.8 million.

Net cash used in operating activities was $0.1 million in 1996, $1.9 million
in 1997, $7.2 million in 1998 and $9.9 million in the first nine months of
1999. Net cash used in operating activities resulted primarily from net losses
and increasing accounts receivable balances, partially offset by non-cash
charges. Net cash used in operating activities was also partially offset by
the timing of payable and accrued liability settlements. Net cash used in
investing activities was insignificant in 1996, $0.1 million in 1997, $1.5
million in 1998 and $3.9 million in the first nine months of 1999. Net cash
used in investing activities resulted primarily from capital expenditures for
equipment used in ad delivery, reporting and, to a lesser extent, for research
and development activities. In addition, in the first nine months of 1999,
AdKnowledge purchased $2.0 million of short-term investments. Net cash
provided by financing activities was $0.4 million in 1996, $2.2 million in
1997, $9.5 million in 1998 and $17.6 million in the first nine months of 1999.
Through September 30, 1999, net cash provided by financing activities
reflected approximately $23.1 million of net proceeds from issuance of
convertible preferred stock. In addition, during the first nine months of
1999, AdKnowledge received proceeds of $5.0 million from issuance of notes
payable, partially offset by $1.7 million of repayments.

While AdKnowledge does not currently have any material commitments for
capital expenditures, it plans to incur approximately $1.1 million in capital
expenditures in the fourth quarter of 1999. AdKnowledge anticipates these
capital expenditures will be largely incurred in connection with the
maintenance and enhancement of its ad serving and reporting equipment and with
hardware and software necessary for continued development of its AdKnowledge
eAnalytics services. In addition, as of September 30, 1999, AdKnowledge's
future minimum lease payments under noncancelable operating leases, net of
sublease rental receipts, totaled approximately $5.9 million through 2004.
AdKnowledge expects to continue to experience significant growth in its
operating expenses for the foreseeable future and anticipates that these
expenses will require a significant use of cash.

On September 23, 1999, AdKnowledge signed the Merger Agreement pursuant to
which it agreed to be acquired by the Company, a provider of products and
services that enable customers to create and use profiles of individual Web
visitors to target advertisements, content and e-commerce offerings. Upon
completion of a number of transactions described in Note 12 of AdKnowledge's
Notes to Consolidated Financial Statements appearing elsewhere in this Proxy
Statement, AdKnowledge will become a wholly-owned subsidiary of the Company,
which is a majority-owned subsidiary of CMGI. The Transactions are subject to
certain conditions, regulatory approval and the shareholder approval of the
Company and AdKnowledge.

Under the terms of the Merger Agreement, if the effective time of the Merger
has not occurred in November 1999 and subject to certain conditions, the
acquiring parties will make a loan to AdKnowledge of $5.0 million.

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<PAGE>

Outstanding borrowings will be collateralized either by a security interest in
AdKnowledge's intellectual property or by a warrant to purchase Existing
AdKnowledge Common Shares, exercisable only upon an event of default. The loan
has a one-year term and bears interest at 14%. Under certain conditions
specified in the agreement, AdKnowledge's obligation to repay the loan may be
forgiven. If the effective time of the Merger has not occurred in November
1999, AdKnowledge intends to immediately borrow these funds.

AdKnowledge believes that the proceeds of its loan from the acquiring
parties, together with its existing cash, cash equivalents and short-term
investments, will be sufficient to meet its anticipated cash needs for working
capital, repayment of debt and capital expenditures through the closing of the
transactions. However, if the transactions are not consummated by February
1999, AdKnowledge could be required to obtain additional equity or debt
financing to meet its cash requirements as an independent entity. If
AdKnowledge requires additional financing in the future after failure to
consummate the transactions, there can be no assurance that such financing
would be available to AdKnowledge on commercially reasonable terms or at all.

Market Risk Disclosures

AdKnowledge's exposure to market risk is principally confined to its cash
and cash equivalents and available-for-sale securities, which have short
maturities and, therefore, immaterial market risk.

New Accounting Pronouncements

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP No. 98-1 requires entities to
capitalize costs related to internal-use software once specified criteria have
been met. AdKnowledge adopted SOP No. 98-1 on January 1, 1999. The adoption of
this standard did not have a material impact on AdKnowledge's results of
operations, financial position or cash flows.

In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of
Start-up Activities." SOP No. 98-5 requires the costs of start-up activities
and organization costs to be expensed as incurred. AdKnowledge adopted SOP No.
98-5 on January 1, 1999. Because AdKnowledge has historically expensed the
costs of start-up activities, the adoption of this standard did not have a
material impact on its results of operations, financial position or cash
flows.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. AdKnowledge will be
required to adopt SFAS No. 133 on January 1, 2001. Because it does not
currently hold any derivative instruments and does not engage in hedging
activities, AdKnowledge does not expect that the adoption of SFAS No. 133 will
have a material impact on its results of operations, financial position or
cash flows.

Impact of the Year 2000 Issue

Many existing computer systems, applications and other control devices use
computer programs that recognize only two digits rather than four to define an
applicable year. Therefore, any computer systems or other equipment with
embedded date-sensitive technology may recognize a date using "00" as the year
1900 rather than the year 2000. This is commonly referred to as the "Year 2000
issue". In addition to affecting the functionality of AdKnowledge's own
software and internal systems, the Year 2000 issue could result in system
failure or miscalculations causing disruptions in the operations of business
and government entities which could affect operations in any area of
AdKnowledge, including its supply chain, distribution and financial
organizations.

AdKnowledge initiated a Year 2000 compliance project in the first quarter of
1999. The scope of this project includes addressing the Year 2000 issue in
four key areas:

(1) development, which includes AdKnowledge's software-based services;

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<PAGE>

(2) operations, which includes the local area network, desktops, delivery
and reporting equipment, and desktop-based software;

(3) general and administrative, which includes voice communications
equipment and service, business applications, payroll and benefits service
providers, banks, general facilities, and key business relationships; and

(4) quality assurance and testing of AdKnowledge's software-based
services.

The project consists of addressing each of these four areas in the following
phases: (a) awareness; (b) assessment; (c) renovation or replacement; (d)
testing and validation; (e) implementation; and (f) contingency planning.

AdKnowledge commenced the awareness phase by establishing a Year 2000 team.
The assessment phase is substantially completed with core business areas and
processes identified, analyzed and the priority of their conversion or
replacement determined. The investigation included specifically identifying
information technology and non-information technology computer and embedded
systems. Based on the investigation, AdKnowledge determined that it would be
required to modify or replace certain portions of its third-party and
proprietary software so that such software would properly utilize dates beyond
December 31, 1999. Specific information technology and non-information
technology systems in AdKnowledge were targeted for software and hardware
upgrades or replacements.

Also during the assessment phase, AdKnowledge commenced formal
communications with its significant suppliers to determine the extent to which
it is vulnerable to those third parties' failure to remedy their own Year 2000
issue. Computer equipment and embedded-systems vendors, business service
providers and other third-party vendors, on whom AdKnowledge relies to carry
out normal business operations, generally have indicated substantial
remediation, or documented plans to remediate, the Year 2000 issue. Some have
given written certification of internal and product compliance. Substantially
all critical suppliers have indicated compliance of their product or service.
AdKnowledge can provide no assurances, however, that the systems of third-
party service providers on which its business operations rely will be
converted in a timely fashion, or that a failure to convert by a third party,
or a conversion that is incompatible with its systems, will not have a
material adverse impact on its business, results of operations and financial
position. Nevertheless, AdKnowledge presently believes that, based on the
positive responses of most business partners, including customers and vendors,
the Year 2000 issue is being diligently addressed and substantial mitigation
will be achieved in most, if not all, sectors.

To date, AdKnowledge has also substantially completed the renovation or
replacement phase with respect to mission critical internal-use information
technology and non-information technology systems and AdKnowledge's own
proprietary software anticipated to be in use after December 31, 1999. The
renovation or replacement of non-mission critical systems and embedded
information technology and non-information technology systems is expected to
be completed by the end of 1999. Substantially all of AdKnowledge's critical
business and development computer systems have been updated with Year 2000
compliant versions of software and tested to assure that the software performs
as required. Material failure by one of these systems is not expected, based
on the results of testing to date. However, if such failure were to occur, it
could result in interruption of AdKnowledge's normal business operations and
affect its results of operations in that quarter. Year 2000 remediation
efforts are not expected to materially impact or delay other information
technology projects or new service introductions.

The process of testing, validating and implementing Year 2000 corrections in
AdKnowledge's proprietary software is substantially complete. In addition,
certain of AdKnowledge's proprietary software scheduled for release in late
1999 is in its final development and testing phases. Based on remediation and
testing results achieved to date, AdKnowledge expects that the Year 2000
compliant versions of its software will be fully functional and will not
result in any Year 2000-related failure. However, if such failure were to
occur, it could result in interruption of AdKnowledge's normal business
operations and affect its ability to provide its services to, and satisfy and
retain, its clients. AdKnowledge believes, however, that its Year 2000 efforts
mitigate the possibility of such interruptions.

34
<PAGE>

AdKnowledge is currently progressing in the contingency planning phase with
the development of a comprehensive contingency plan that is intended to
mitigate possible disruptions that may occur due to material Year 2000-related
failures in any of the core business areas or processes. AdKnowledge has begun
to address contingency plans in the event of either its own software failure
or the failure of any critical third-party provider of goods or services,
including Internet hosting service providers. In general, third-party vendors
have indicated virtually complete product and service compliance and
substantially complete internal compliance. Although AdKnowledge will identify
alternative vendors for some critical items, and continue to maintain a
redundant and geographically distributed ad delivery and reporting capability,
it does not expect failures in this area to be significant. AdKnowledge has
determined that it is not practicable to identify or arrange for secondary
backup services for such critical functions as electricity, telephone, banking
and government services on which it must rely. Therefore, it continues to seek
information on the status of each of these service providers. AdKnowledge's
Year 2000 committee will continue to address options for mitigating failures
in these areas as part of its contingency plan.

AdKnowledge's contingency plan for handling its proprietary software and
hardware service compliance consists principally of having available
appropriate engineering personnel to address problems that may occur. As
AdKnowledge continues to test its software for Year 2000 readiness, it expects
such issues, if any, to be insignificant and to be handled in the normal
course of business by existing engineering staff.

AdKnowledge's estimates of the expected costs to complete the Year 2000
project are based on the results of the assessment, renovation or replacement,
and testing completed to date. The computer products purchased and used by
AdKnowledge consist substantially of new or relatively new equipment that are
certified Year 2000 compliant by the manufacturer. The principal software
platforms used by AdKnowledge in research and development activities, ad
delivery and reporting and most of its other operations are the latest
versions which have been represented by their manufacturers as Year 2000
compliant.

Based on the above facts, AdKnowledge estimates the total cost for the Year
2000 project is $670,000. Estimated costs incurred through September 30, 1999
related to the Year 2000 project are $624,000, all of which have been expensed
in the period incurred. Most of AdKnowledge's Year 2000 project expenses have
related to, and are expected to continue to relate to, the operating costs
associated with time spent by employees and consultants in the evaluation
process and Year 2000 compliance matters generally. There can be no assurance,
however, that these cost estimates will be achieved and actual results could
differ materially from these estimates. Specific factors that might cause such
differences include, but are not limited to, the availability and cost of
personnel trained in this area, the ability to locate and correct all relevant
computer code, the failure of third parties which are material to
AdKnowledge's operations to mitigate their own Year 2000 issues, and similar
uncertainties. However, AdKnowledge is continuing to pursue the Year 2000
issue, and believes that, once all phases of the project have been completed
and contingency plans have been explored and put in place, AdKnowledge will be
able to significantly reduce the impact of any Year 2000-related disruptions
that may occur.

Background of the Transactions

The Company is regularly involved in the review of private and public
companies with which it may form strategic partnerships to further its
objectives in the Internet commerce market. During the course of 1999, the
Company was made aware of AdKnowledge in the course of its evaluation of
companies with complementary products and services for purposes of joint
business development activities.

In late July 1999, the Company was made aware of the opportunity to acquire
AdKnowledge by Broadview International, L.L.C. On or about July 27, 1999, the
Company and AdKnowledge entered into a confidentiality agreement providing for
the exchange of certain confidential information. On August 5, 1999, the
Company retained the services of Goldman Sachs & Co., Inc. as financial
advisors to the Company related to the potential acquisition. On August 18,
1999, the Company's Board of Directors met to discuss the potential
acquisition. Paul Schaut, the Chief Executive Officer and President and a
director of the Company, presented a recommendation

35
<PAGE>

to acquire AdKnowledge to the Board of Directors if the parties could reach
reasonable terms. The Board of Directors approved this recommendation and
authorized management to initiate negotiations with AdKnowledge. On August 12,
1999, Michael K. Baker, the Vice President and General Counsel of the Company,
met with Mr. Kauffman at the offices of AdKnowledge's attorneys to initiate
the due diligence process. Due diligence teams for the Company and CMGI, as
well as the Company's outside counsel, accounting advisors and Goldman Sachs &
Co., Inc. conducted an in-depth analysis of the technical and development
status of AdKnowledge's products, plans for future products, organizational
processes, and general business operations.

Between the dates of August 12, 1999 and September 23, 1999, the respective
financial and legal advisors for CMGI, the Company and AdKnowledge negotiated
the terms of the Merger Agreement.

The Company's Board of Directors met September 9, 1999 to discuss the
proposed transaction. The board reviewed with management information regarding
the strategic fit between the two companies, due diligence assessments, and
remaining issues to be negotiated or addressed prior to execution of the
definitive Merger Agreement. The board informally endorsed continuing with the
negotiations.

At several special meetings in August and September 1999, Mr. Kauffman
reported to the AdKnowledge board of directors on the status of the
transaction discussions with the Company and the AdKnowledge board of
directors discussed various issues relating to the proposed business
combination. AdKnowledge's outside counsel, Brobeck, Phleger & Harrison LLP,
reviewed with the board of directors their fiduciary duties in connection with
the proposed transaction.

On September 21, 1999, at a special meeting of the CMGI board of directors,
management reported on the status of the transaction discussions with
AdKnowledge and the CMGI board of directors discussed various issues relating
to the proposed business combination. The board considered and voted upon the
proposed transaction agreement and related transactions. Following such
presentations and further discussion, the execution of such documents and
related matters were approved by CMGI's board of directors.

On September 20, 1999, at a special meeting of the Company's Board of
Directors, and again at a special meeting on September 23, 1999, management of
the Company reported on the status of the transaction discussions with
AdKnowledge and the Company's Board of Directors discussed various issues
relating to the proposed business combination. The Board of Directors
considered and voted upon the proposed Merger Agreement and related
transactions. At the September 23, 1999 meeting, Goldman Sachs & Co., Inc.
presented their views regarding the transaction from a financial point of
view, including the purchase price. Following such presentations and further
discussion, the execution of such documents and related matters were approved
by the Company's Board of Directors.

On September 23, 1999, the Merger Agreement was executed by the parties. On
September 23, 1999, at the close of trading on the Nasdaq National Market, the
Company and CMGI issued a joint press release announcing the Transactions.

36
<PAGE>

Unaudited Pro Forma Condensed Combined Financial Statements

The following unaudited pro forma condensed combined financial statements
assume a business combination between the Company and AdKnowledge accounted
for as a purchase and are based on the respective historical consolidated
financial statements and the notes thereto of the Company and AdKnowledge as
noted below. The historical consolidated financial statements of AdKnowledge
for the period from July 10, 1996 (inception) to December 31, 1996, and for
the fiscal years ended December 31, 1997 and 1998, including their notes,
begin on page F-1. The historical consolidated financial statements of the
Company for the fiscal years ended July 31, 1997, 1998 and 1999, including
their notes, are incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended July 31, 1999 contained in the Company's
Annual Report to Stockholders (see "More Information" below). The unaudited
pro forma condensed combined balance sheet combines the Company's July 31,
1999 consolidated balance sheet with AdKnowledge's June 30, 1999 unaudited
consolidated balance sheet as if the Transactions occurred on July 31, 1999.
The unaudited pro forma condensed combined statement of operations combine the
Company's historical operating results for the year ended July 31, 1999 with
the AdKnowledge operating results for the twelve months ended June 30, 1999 as
if the Transactions had occurred on August 1, 1998.

The unaudited pro forma condensed combined financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have been achieved if
the Transactions had been consummated as of the beginning of the period
presented, nor are they necessarily indicative of future operating results or
financial position of the Company. The unaudited pro forma condensed combined
financial statements are based on the estimates and assumptions described in
the notes to those statements. The pro forma adjustments, including the
purchase price allocations, are based on preliminary allocations that may
change upon completion of a valuation. The pro forma adjustments included in
the unaudited pro forma condensed combined financial statements are expected
to be revised upon the finalization of the valuation of the net assets of
AdKnowledge acquired by the Company.

The pro forma combined condensed financial statements should be read in
conjunction with, the historical consolidated financial statements and the
related notes thereto of the Company and AdKnowledge presented in this Proxy
Statement. See "Where You can Find More Information and Incorporation of
Certain Documents by Reference."

37
<PAGE>

Engage Technologies, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet
As of July 31, 1999

(in thousands)

<TABLE>
<CAPTION>
Pro forma Pro forma
Engage AdKnowledge Adjustments as Adjusted
-------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents..... $112,034 $ 5,051 -- $117,085
Available-for-sale
securities................... 1,067 1,504 -- 2,571
Accounts receivable net of
allowance for doubtful
accounts..................... 5,632 1,109 -- 6,741
Prepaid expenses.............. 595 382 -- 977
-------- ------- -------- --------
Total current assets........ 119,328 8,046 -- 127,374
-------- ------- -------- --------
Property and equipment, net.... 1,801 3,367 -- 5,168
Related party notes
receivable.................... -- 643 -- 643
Investment in joint venture.... 1,047 -- -- 1,047
Other assets................... 371 287 -- 658
Intangible assets, net......... 41,401 2,008 191,388 (a) 234,797
-------- ------- -------- --------
$163,948 $14,351 $191,388 $369,687
======== ======= ======== ========
Liabilities and Stockholders'
Equity
Current liabilities:
Due to CMGI................... $ 131 -- -- 131
Obligation under capital
lease, current............... 302 647 -- 949
Notes payable, current........ -- 790 -- 790
Accounts payable.............. 2,987 572 -- 3,559
Accrued expenses.............. 8,062 922 -- 8,984
Deferred revenue.............. 4,293 408 -- 4,701
-------- ------- -------- --------
Total current liabilities... 15,775 3,339 -- 19,114
-------- ------- -------- --------
Deferred revenue............... 1,508 213 -- 1,721
Other liabilities.............. -- 62 -- 62
Notes payable, long term....... -- 868 -- 868
Capital lease obligation, long
term.......................... 367 1,543 -- 1,910
-------- ------- -------- --------
Total liabilities........... 17,650 6,025 -- 23,675
-------- ------- -------- --------
Stockholders' equity
Preferred stock............... -- 27,474 (27,474)(b) --
Common Stock.................. 487 6,645 (6,645)(b)
-- -- 57 (c) 544
Warrants...................... -- 558 (558)(b) --
Note receivable from
stockholder.................. -- (42) -- (42)
Additional paid-in capital.... 208,669 -- 199,699 (c) 408,368
Deferred compensation......... (4,024) (4,736) 4,736 (b) (4,024)
Accumulated other
comprehensive (loss)......... (353) (1) 1 (353)
Accumulated deficit........... (58,481) (21,572) 21,572 (b) (58,481)
-------- ------- -------- --------
Total stockholders' equity.. 146,298 8,326 191,388 346,012
-------- ------- -------- --------
$163,948 $14,351 $191,388 $369,687
======== ======= ======== ========
</TABLE>

38
<PAGE>

Engage Technologies, Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the year ended July 31, 1999

<TABLE>
<CAPTION>
Year Ended July 31, 1999
---------------------------------------------
Pro Forma
-----------------------
Engage AdKnowledge Adjustments Total
-------- ----------- ----------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenue:
Product revenue.................. $ 14,167 $ 2,986 $ -- $ 17,153
Services and support revenue..... 1,856 -- -- 1,856
-------- -------- -------- --------
Total revenue...................... 16,023 2,986 -- 19,009
-------- -------- -------- --------
Cost of revenue:
Cost of product revenue.......... 3,494 4,190 -- 7,684
Cost of services and support
revenue......................... 5,957 -- -- 5,957
-------- -------- -------- --------
Total cost of revenue.............. 9,451 4,190 -- 13,641
-------- -------- -------- --------
Gross (loss) margin................ 6,572 (1,204) -- 5,368
-------- -------- -------- --------
Operating expenses:
In-process research and
development..................... 4,500 -- -- 4,500
Research and development......... 8,699 4,531 -- 13,230
Selling and marketing............ 12,776 3,797 -- 16,573
General and administrative....... 4,115 2,149 -- 6,264
Stock based compensation......... 5,829 633 -- 6,462
Amortization of goodwill and
other intangibles............... 1,455 765 38,148 (a) 40,368
-------- -------- -------- --------
Total operating expenses....... 37,374 11,875 38,148 87,397
-------- -------- -------- --------
Loss from operations............... (30,802) (13,079) (38,148) (82,029)
Equity in loss of joint venture.... (723) -- -- (723)
Other expense, net................. (478) (228) -- (706)
-------- -------- -------- --------
Net loss........................... $(32,003) $(13,307) $(38,148) $(83,458)
======== ======== ======== ========
Basic and diluted net loss per
share............................. $ (0.89)
========
Weighted average number of basic
and diluted shares outstanding.... 35,931
========
Pro forma basic and diluted net
loss per share.................... $ (2.01)
========
Pro forma weighted average number
at basic and diluted shares
outstanding....................... 41,596
========
</TABLE>

39
<PAGE>

NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Year ended July 31, 1999
(a) Reflects additional goodwill amortization expense related to the
acquisition of AdKnowledge. The pro forma adjustment is based on the
assumption that the entire amount identified as goodwill in Engage's
acquisition of AdKnowledge will be amortized on a straight-line basis
over a five year period. The adjustment amount has been reduced by
$430,000, which represents the amortization of goodwill recorded in the
historical financial statements of AdKnowledge. The Company has not yet
completed the valuation of the actual intangible assets acquired. When
completed, certain amounts identified as intangible assets may be
amortized over periods other than the five year period represented in
the Pro Forma Condensed Combined Statement of Operations. Additionally,
a portion of the purchase price may be identified as in-process
research and development. This amount, if any, will be charged to
operating results in the Company's fiscal 2000 when the acquisition
accounting and valuation are determined.

(b) Under the terms of the merger and contribution agreement, CMGI will
initially acquire control of AdKnowledge through the issuance of
approximately $170 million of CMGI common stock in a merger of a
subsidiary of CMGI into AdKnowledge. The value of the CMGI common stock
being delivered is based on $84.80, the average of the last reported
sales prices of the CMGI common stock over the 45 consecutive trading
days ending on September 20, 1999, which value may be adjusted upward
by up to 10% or downward by up to 10% based upon the average of the
last reported sales prices of such stock over the 45 consecutive
trading days ending two trading days prior to the effective time of
this merger.

Upon completion of this merger, CMGI will own approximately 88% of the
common stock of AdKnowledge. This merger will be followed by a
contribution of AdKnowledge shares held by CMGI and AdKnowledge
shareholders to the Company in exchange for approximately $193 million
of the Company's common stock. The value of the Company's common stock
being delivered is $31.45, the average of the last reported sales prices
of the Company's common stock over the 45 consecutive trading days
ending on September 20, 1999 and may be adjusted upward or downward in
the same manner as the CMGI stock described above. Any remaining holders
of AdKnowledge common stock will receive the Company's common stock in a
short-term merger with a subsidiary of the Company.

For purposes of the pro forma financial presentation, aggregate purchase
consideration to be issued by the Company at the completion of the
merger and contribution includes approximately 5.7 million common shares
valued at $176.4 million, net of discount for restrictions on
transferability, stock options valued at $14.3 million and estimated
direct costs of the acquisition of $4.0 million.

Included in the aggregate purchase price of $194.7 million are $19.3
million of merger shares which will be held in escrow for the purpose of
securing the indemnification obligations of the AdKnowledge shareholders
who receive merger shares and certain performance and employee retention
milestones.

The following represents the allocation of the estimated purchase price
over the historical net book values of the acquired assets and
liabilities of AdKnowledge at June 30, 1999, and is for illustrative
purposes only. The actual purchase price allocation will be based on
fair values will be based on the acquired assets and liabilities as of
the acquisition date. In addition, the number of shares of CMGI common
stock, and ultimately, the number of Engage common shares issuable to
both CMGI and AdKnowledge, may change based on changes in the stock
prices prior to the consummation of this transaction. Assuming the
transaction occurred on August 1, 1998, the allocation would have been
as follows (in thousands):

<TABLE>
<S> <C>
Working capital deficit, net of cash acquired of $5,051......... $ (344)
Property and equipment.......................................... 3,367
Other assets, including intangible assets of $504............... 1,434
Long term liabilities........................................... (2,686)
Goodwill and other intangible assets............................ 192,892
--------
Purchase price, net of cash acquired............................ $194,663
========
</TABLE>

40
<PAGE>

(c) Reflects the issuance of Engage common shares to CMGI for CMGI's
contribution of its AdKnowledge shares and the issuance of Engage
common shares to the shareholders of AdKnowledge.

Description of the Company's Capital Stock

The Company's authorized capital stock consists of 150,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, par value $.01 per
share.

The following summary description of the Company's capital stock is not
intended to be complete and is qualified by reference to the provisions of
applicable law and to the Company's Amended and Restated Certificate of
Incorporation (the "Charter") and its Amended and Restated Bylaws.

Common Stock. As of November 1, 1999, there were 48,707,869 shares of Common
Stock outstanding and held of record by 140 stockholders. In addition, as of
November 1, 1999, there were outstanding stock options for the purchase of a
total of 8,898,107 shares of Common Stock. Holders of Common Stock are
entitled to one vote per share for each share held of record on all matters
submitted to a vote of stockholders and do not have cumulative voting rights.
Directors are elected by a plurality of the votes of the shares present in
person or by proxy at the Meeting. Holders of Common Stock are entitled to
receive ratably such lawful dividends as may be declared by the Board of
Directors of the Company. However, such dividends are subject to preferences
that may be applicable to the holders of any outstanding shares of Preferred
Stock. In the event of a liquidation, dissolution or winding up of the affairs
of the Company, whether voluntarily or involuntarily, holders of Common Stock
will be entitled to receive pro rata all of the remaining assets of the
Company available for distribution to its stockholders. Any such pro rata
distribution would be subject to the rights of the holders of any outstanding
shares of Preferred Stock. The Common Stock has no preemptive, redemption,
conversion or subscription rights. All outstanding shares of Common Stock are
fully paid and non-assessable. The Contribution Shares will be fully paid and
non-assessable. The rights, powers, preferences and privileges of 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 the Company may
designate and issue in the future. Upon the closing of the Contribution, there
will be no shares of Preferred Stock outstanding.

Preferred Stock. The Board of Directors of the Company will be authorized,
subject to any limitations prescribed by Delaware law, without further
stockholder approval, to issue from time to time up to an aggregate of
5,000,000 shares of Preferred Stock, in one or more series. The Board of
Directors of the Company is also authorized, subject to the limitations
prescribed by Delaware law, to establish the number of shares to be included
in each series and to fix the voting powers, preferences, qualifications and
special or relative rights or privileges of each series. The Board of
Directors of the Company is authorized to issue Preferred Stock with voting,
conversion and other rights and preferences that could adversely affect the
voting power or other rights of the holders of Common Stock. The Company has
no current plans to issue any Preferred Stock. However, the issuance of
Preferred Stock or of rights to purchase Preferred Stock could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, a majority of the outstanding Common
Stock.

Section 203 of Delaware General Corporation Law. The Charter contains a
provision expressly electing not to be governed by Section 203 ("Section 203")
of the Delaware General Corporation Law. In general, Section 203 restricts
some business combinations involving interested stockholders, defined as any
person or entity that is the beneficial owner of at least 15% or a
corporation's voting stock or is an affiliate or associate of the corporation
or the owner of 15% or more of the outstanding voting stock of the corporation
at any time in the past three years, or their affiliates. Because of such
election, Section 203 will not apply to the Company.

Limitation of Liability and Indemnification. The Charter provides that no
director of the Company shall be personally liable to the Company or to its
stockholders for monetary damages for breach of fiduciary duty as a director,
except that the limitation shall not eliminate or limit liability to the
extent that the elimination or

41
<PAGE>

limitation of such liability is not permitted by the Delaware General
Corporation Law as it exists or may later be amended. The Charter further
provides for the indemnification of the Company's directors and officers to
the fullest extent permitted by Section 145 of the Delaware General
Corporation Law, including circumstances in which indemnification is otherwise
discretionary. In addition, the Company plans to enter into indemnification
agreements with its directors containing provisions which may require the
Company, among other things, to indemnify its directors against various
liabilities that may arise by virtue of their status or service as directors,
and to advance their expenses incurred as a result of any proceeding against
them as to which they could be indemnified.

Stock Transfer Agent. The transfer agent and registrar for the Common Stock
is EquiServe L.P.

More Information

"Business," "Properties," "Legal Proceedings," "Market of Registrant's
Common Equity and Related Stockholder Matters," "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operation," "Quantitative Disclosure About Market Risk," "Financial Statement
and Supplementary Data" and "Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure" in the Company's Annual Report on Form
10-K for the fiscal year ended July 31, 1999 contained in the Company's Annual
Report to Stockholders distributed pursuant to Rule 14a-3 promulgated under
the Exchange Act is hereby incorporated into this Proxy Statement by
reference. The information incorporated by reference is deemed to be part of
this Proxy Statement, except for any information superseded by information in
this Proxy Statement.

The affirmative vote of the holders of a majority of Common Stock present in
person or represented by proxy and voting at the Meeting will be required to
approve the issuance of the Contribution Shares to CMGI in the Contribution.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL OF THE INTERESTED PARTY TRANSACTION

APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors of the Company has appointed KPMG LLP, independent
certified public accountants, to audit the Company's consolidated financial
statements for the fiscal year ending July 31, 2000 and recommends that the
stockholders vote for the ratification of such appointment. KPMG LLP has
served as the Company's accountants since 1995. Although stockholder approval
of the Board of Directors selection of KPMG LLP is not required by law, the
Board of Directors believes that it is proper to provide stockholders with the
opportunity to ratify the selection. If the proposal is not approved at the
Meeting, the Board of Directors may reconsider its selection of KPMG LLP. A
representative of KPMG LLP will be present at the Meeting and will be
available to respond to appropriate stockholders' questions and to make a
statement if he or she so desires to do so.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP

42
<PAGE>

OTHER MATTERS

The Board of Directors does not know of any other matters which may come
before the Meeting. However, if any other matters are properly presented to
the Meeting, it is the intention of persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgement on such matters.

The Board of Directors hopes that stockholders will attend the Meeting.
Whether or not you plan to attend, you are urged to complete, sign and return
the enclosed proxy in the accompanying envelope. A prompt response will
greatly facilitate arrangements for the Meeting, and your cooperation will be
appreciated. Stockholders who attend the Meeting may vote their shares at the
Meeting even though they have sent in their proxies.

By Order of the Board of Directors,

Michael K. Baker, Secretary

November 19, 1999

43
<PAGE>

ADKNOWLEDGE INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
AdKnowledge Inc.
Report of Independent Accountants.......................................... F-2
Consolidated Balance Sheets................................................ F-3
Consolidated Statements of Operations...................................... F-4
Consolidated Statements of Shareholders' Equity............................ F-5
Consolidated Statements of Cash Flows...................................... F-6
Notes to Consolidated Financial Statements................................. F-7

Focalink Communications, Inc.
Report of Independent Accountants.......................................... F-23
Balance Sheet.............................................................. F-24
Statement of Operations.................................................... F-25
Statement of Shareholders' Equity.......................................... F-26
Statement of Cash Flows.................................................... F-27
Notes to Financial Statements.............................................. F-28
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of AdKnowledge Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareholders' equity and cash flows
present fairly, in all material respects, the financial position of
AdKnowledge Inc. at December 31, 1997 and 1998, and the results of its
operations and cash flows for the period from July 10, 1996 (date of
inception) to December 31, 1996 and for 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 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

San Jose, California
June 25, 1999

F-2
<PAGE>

ADKNOWLEDGE INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December 31, September 30,
----------------------- -------------
1997 1998 1999
---------- ----------- -------------
(unaudited)
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents............. $ 383,320 $ 1,164,577 $ 4,915,949
Short-term investments................ -- -- 1,018,293
Accounts receivable, net of allowance
for doubtful accounts of $114,245,
$89,199 and $307,568 at December 31,
1997 and 1998 and September 30, 1999,
respectively......................... 456,771 528,501 1,579,516
Deposits.............................. -- 206,540 60,433
Prepaid expenses and other current
assets............................... 2,299 293,454 1,081,831
---------- ----------- -----------
Total current assets................. 842,390 2,193,072 8,656,022
Restricted cash......................... 79,637 79,637 79,637
Related party notes receivable.......... 512,751 625,023 498,317
Fixed assets............................ 1,210,262 1,609,904 4,325,495
Goodwill, net........................... 2,149,096 1,719,277 1,396,913
Other intangible assets, net............ 1,007,000 671,333 419,583
Other assets............................ 138,442 198,990 1,321,648
---------- ----------- -----------
Total assets......................... $5,939,578 $ 7,097,236 $16,697,615
========== =========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Borrowings under line of credit....... $ 500,000 $ -- $ --
Accounts payable...................... 406,380 1,044,249 2,226,179
Accrued payroll and related
liabilities.......................... 112,432 148,152 612,663
Other accrued liabilities............. 327,348 152,565 1,103,248
Deferred revenue...................... 228,114 288,685 578,034
Related party payable................. 401,589 -- --
Capital lease obligations, current.... 374,782 509,606 708,965
Notes payable, current................ 72,333 1,597,053 1,966,883
---------- ----------- -----------
Total current liabilities............ 2,422,978 3,740,310 7,195,972
Deferred revenue, long-term............. -- 261,684 --
Other liabilities....................... -- -- 80,250
Capital lease obligations, long-term.... 515,674 902,546 1,683,714
Notes payable, long-term................ 132,609 535,557 3,498,724
---------- ----------- -----------
3,071,261 5,440,097 12,458,660
---------- ----------- -----------
Commitments (Note 8)
Shareholders' equity:
Convertible Preferred Stock: no par
value; 9,987,000 shares, 25,103,192
shares and 41,232,478 shares
authorized at December 31, 1997 and
1998 and September 30, 1999,
respectively; 9,494,377 shares,
23,926,995 shares and 39,482,552
shares issued and outstanding at
December 31, 1997 and 1998 and
September 30, 1999, respectively
(Aggregate liquidation preference:
$17,548,703 at December 31, 1998 and
$31,548,704 at September 30, 1999)... 5,548,118 13,548,118 27,473,792
Common Stock: no par value; 25,000,000
shares, 38,896,808 shares and
56,191,522 shares authorized at
December 31, 1997 and 1998 and
September 30, 1999, respectively;
6,135,130 shares, 5,277,135 shares
and 8,190,925 shares issued and
outstanding at December 31, 1997 and
1998 and September 30, 1999,
respectively......................... 1,268,638 3,670,491 8,046,297
Warrants.............................. 247,507 519,917 2,252,414
Note receivable from shareholder...... (38,365) (40,535) (42,162)
Deferred stock-based compensation..... (514,543) (2,140,265) (5,444,417)
Unrealized loss on investments........ -- -- (584)
Accumulated deficit................... (3,643,038) (13,900,587) (28,046,385)
---------- ----------- -----------
Total shareholders' equity........... 2,868,317 1,657,139 4,238,955
---------- ----------- -----------
Total liabilities and shareholders'
equity.............................. $5,939,578 $ 7,097,236 $16,697,615
========== =========== ===========
</TABLE>

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

F-3
<PAGE>

ADKNOWLEDGE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

F-4
<PAGE>

ADKNOWLEDGE INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Convertible
Preferred Stock Note
(Note 9) Common Stock Receivable Deferred Unrealized
---------------------- ---------------------- from Stock-based Loss on Accumulated
Shares Amount Shares Amount Warrants Shareholder Compensation Investments Deficit
---------- ----------- ---------- ---------- ---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
common stock.... -- $ -- 4,103,408 $ 23,000 $ -- $ -- $ -- $ -- $ --
Issuance of
Series A
preferred
stock........... 525,000 105,000 -- -- -- -- -- -- --
Deferred stock-
based
compensation
related to
options
granted......... -- -- -- 175,220 -- -- (175,220) -- --
Amortization of
deferred stock-
based
compensation.... -- -- -- -- -- -- 17,678 -- --
Stock-based
compensation
related to
restricted stock
issuance........ -- -- -- 546,691 -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- (728,969)
---------- ----------- ---------- ---------- ---------- -------- ----------- ----- ------------
Balance at
December 31,
1996............ 525,000 105,000 4,103,408 744,911 -- -- (157,542) -- (728,969)
Issuance of
Series B
Convertible
Preferred
Stock........... 5,512,000 2,600,010 -- -- -- -- -- -- --
Issuance of
Series C
Convertible
Preferred Stock
in connection
with
acquisition..... 3,457,377 2,843,108 -- -- -- -- -- -- --
Issuance of
Common Stock in
connection with
acquisition..... -- -- 336,909 15,892 -- -- -- -- --
Exercise of
Common Stock
options......... -- -- 1,694,813 53,117 -- (38,100) -- -- --
Issuance of
warrants in
connection with
acquisition..... -- -- -- -- 247,507 -- -- -- --
Interest accrued
on note
receivable from
shareholder..... -- -- -- -- -- (265) -- -- --
Deferred stock-
based
compensation
related to
options
granted......... -- -- -- 454,718 -- -- (454,718) -- --
Amortization of
deferred stock-
based
compensation.... -- -- -- -- -- -- 97,717 -- --
Net loss........ -- -- -- -- -- -- -- -- (2,914,069)
---------- ----------- ---------- ---------- ---------- -------- ----------- ----- ------------
Balance at
December 31,
1997............ 9,494,377 5,548,118 6,135,130 1,268,638 247,507 (38,365) (514,543) -- (3,643,038)
Issuance of
Series D
Convertible
Preferred
Stock........... 11,636,298 6,448,411 -- -- -- -- -- -- --
Issuance of
Series D
Convertible
Preferred Stock
upon conversion
of notes
payable......... 2,796,320 1,551,589 -- -- -- -- -- -- --
Exercise of
Common Stock
options......... -- -- 309,535 18,335 -- -- -- -- --
Repurchase of
Common Stock.... -- -- (1,167,530) (48,916) -- -- -- -- --
Deferred stock-
based
compensation
related to
options
granted......... -- -- -- 2,432,434 -- -- (2,432,434) -- --
Issuance of
warrants in
conjunction with
debt............ -- -- -- -- 272,410 -- -- -- --
Interest accrued
on note
receivable from
shareholder..... -- -- -- -- -- (2,170) -- -- --
Amortization of
deferred stock-
based
compensation.... -- -- -- -- -- -- 806,712 -- --
Net loss........ -- -- -- -- -- -- -- -- (10,257,549)
---------- ----------- ---------- ---------- ---------- -------- ----------- ----- ------------
Balance at
December 31,
1998............ 23,926,995 13,548,118 5,277,135 3,670,491 519,917 (40,535) (2,140,265) -- (13,900,587)
Issuance of
Series E
Convertible
Preferred Stock,
net of stock
issuance costs.. 15,555,557 13,925,674 -- -- -- -- -- -- --
Deferred stock
compensation
related to
options
granted......... -- -- -- 4,004,139 -- -- (4,004,139) -- --
Exercise of
Common Stock
options......... -- -- 3,031,064 359,879 -- -- -- -- --
Compensation
related to
acceleration of
vesting of
employee stock
option.......... -- -- -- 14,484 -- -- -- -- --
Compensation
related to
issuance of
Common Stock to
consultant...... -- -- 1,000 2,756 -- -- -- -- --
Repurchase of
Common Stock.... -- -- (118,274) (5,452) -- -- -- -- --
Issuance of
warrants in
conjunction with
debt............ -- -- -- -- 1,732,497 -- -- -- --
Interest accrued
on note
receivable from
shareholder..... -- -- -- -- -- (1,627) -- -- --
Amortization of
deferred stock-
based
compensation.... -- -- -- -- -- -- 699,987 -- --
Unrealized loss
on investments.. -- -- -- -- -- -- -- (584) --
Net loss........ -- -- -- -- -- -- -- -- (14,145,798)
---------- ----------- ---------- ---------- ---------- -------- ----------- ----- ------------
Balance at
September 30,
1999
(unaudited)..... 39,482,552 $27,473,792 8,190,925 $8,046,297 $2,252,414 $(42,162) $(5,444,417) $(584) $(28,046,385)
========== =========== ========== ========== ========== ======== =========== ===== ============
<CAPTION>
Total
Shareholders'
Equity
-------------
<S> <C>
Issuance of
common stock.... $ 23,000
Issuance of
Series A
preferred
stock........... 105,000
Deferred stock-
based
compensation
related to
options
granted......... --
Amortization of
deferred stock-
based
compensation.... 17,678
Stock-based
compensation
related to
restricted stock
issuance........ 546,691
Net loss........ (728,969)
-------------
Balance at
December 31,
1996............ (36,600)
Issuance of
Series B
Convertible
Preferred
Stock........... 2,600,010
Issuance of
Series C
Convertible
Preferred Stock
in connection
with
acquisition..... 2,843,108
Issuance of
Common Stock in
connection with
acquisition..... 15,892
Exercise of
Common Stock
options......... 15,017
Issuance of
warrants in
connection with
acquisition..... 247,507
Interest accrued
on note
receivable from
shareholder..... (265)
Deferred stock-
based
compensation
related to
options
granted......... --
Amortization of
deferred stock-
based
compensation.... 97,717
Net loss........ (2,914,069)
-------------
Balance at
December 31,
1997............ 2,868,317
Issuance of
Series D
Convertible
Preferred
Stock........... 6,448,411
Issuance of
Series D
Convertible
Preferred Stock
upon conversion
of notes
payable......... 1,551,589
Exercise of
Common Stock
options......... 18,335
Repurchase of
Common Stock.... (48,916)
Deferred stock-
based
compensation
related to
options
granted......... --
Issuance of
warrants in
conjunction with
debt............ 272,410
Interest accrued
on note
receivable from
shareholder..... (2,170)
Amortization of
deferred stock-
based
compensation.... 806,712
Net loss........ (10,257,549)
-------------
Balance at
December 31,
1998............ 1,657,139
Issuance of
Series E
Convertible
Preferred Stock,
net of stock
issuance costs.. 13,925,674
Deferred stock
compensation
related to
options
granted......... --
Exercise of
Common Stock
options......... 359,879
Compensation
related to
acceleration of
vesting of
employee stock
option.......... 14,484
Compensation
related to
issuance of
Common Stock to
consultant...... 2,756
Repurchase of
Common Stock.... (5,452)
Issuance of
warrants in
conjunction with
debt............ 1,732,497
Interest accrued
on note
receivable from
shareholder..... (1,627)
Amortization of
deferred stock-
based
compensation.... 699,987
Unrealized loss
on investments.. (584)
Net loss........ (14,145,798)
-------------
Balance at
September 30,
1999
(unaudited)..... $ 4,238,955
=============
</TABLE>

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

F-5
<PAGE>

ADKNOWLEDGE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the Period
from July 10,
1996 (date of For the Nine Months Ended
inception) to Years Ended December 31, September 30,
December 31, ------------------------- ---------------------------
1996 1997 1998 1998 1999
-------------- ----------- ------------ ------------ -------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net loss.............. $(728,969) $(2,914,069) $(10,257,549) $ (7,147,340) $ (14,145,798)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization......... 4,121 68,225 1,465,074 1,056,898 1,556,949
Provision for doubtful
accounts............. -- 87,820 199,422 153,310 218,304
Net (gain) loss on
disposal of property
and equipment........ -- -- 177,471 36,627 (458)
Forgiveness of related
party note
receivable........... -- -- 250,000 250,000 298,979
Noncash interest and
other charges, net... -- -- (20,689) (14,951) 193,647
Stock-based
compensation and
other compensation
charges.............. 564,369 97,717 806,712 639,832 717,227
Acquisition of in-
process research and
development.......... -- 804,000 -- -- --
Changes in operating
assets and
liabilities:
Accounts receivable.. (2,397) (304,398) (271,152) (234,417) (1,269,319)
Deposits............. -- -- (206,540) (164,861) 121,107
Prepaid expenses and
other current
assets.............. (5,700) 3,700 (187,996) (57,033) (220,895)
Accounts payable..... 5,567 88,352 637,869 546,543 1,181,930
Accrued liabilities.. 38,749 35,163 (139,063) (193,226) 1,415,194
Deferred revenue..... -- 102,269 322,255 479,851 27,665
--------- ----------- ------------ ------------ -------------
Net cash used in
operating
activities......... (124,260) (1,931,221) (7,224,186) (4,648,767) (9,905,468)
--------- ----------- ------------ ------------ -------------
Cash flows from
investing activities:
Purchases of fixed
assets............... (37,483) (366,959) (1,308,583) (906,304) (2,704,310)
Proceeds from sale of
property and
equipment............ -- -- 31,882 31,882 2,200
Purchases of short-
term investments..... -- -- -- -- (2,018,877)
Maturities of short-
term investments..... -- -- -- -- 1,000,000
Issuance of related
party notes
receivable........... -- -- (325,000) (325,000) (147,712)
Decrease (increase) in
other assets......... -- (9,100) 89,950 106,861 (82,896)
Increase in other
liabilities.......... -- -- -- -- 25,668
Increase in restricted
cash................. -- (79,637) -- -- --
Cash acquired in
acquisition of
Focalink
Communications, Inc.. -- 305,995 -- -- --
--------- ----------- ------------ ------------ -------------
Net cash used in
investing
activities......... (37,483) (149,701) (1,511,751) (1,092,561) (3,925,927)
--------- ----------- ------------ ------------ -------------
Cash flows from
financing activities:
Issuance of loans to
related parties...... -- (937,751) -- -- --
Proceeds from related
party borrowings..... 250,000 150,000 1,150,000 1,150,000 --
Borrowings under
capital lease
obligations.......... -- -- 949,968 629,587 349,534
Repayment of capital
lease obligations.... -- -- (428,272) (272,745) (364,865)
Proceeds from line of
credit............... -- 500,000 -- -- --
Proceeds from issuance
of notes payable..... -- -- 1,500,000 -- 4,985,000
Repayment of notes
payable.............. -- (117,391) (72,332) (54,249) (1,667,003)
Proceeds from issuance
of Common Stock...... 23,000 53,117 18,335 10,033 359,879
Payment for repurchase
of Common Stock...... -- -- (48,916) (45,225) (5,452)
Proceeds from issuance
of Preferred Stock... 105,000 2,600,010 6,448,411 6,448,411 13,925,674
--------- ----------- ------------ ------------ -------------
Net cash provided by
financing
activities......... 378,000 2,247,985 9,517,194 7,865,812 17,582,767
--------- ----------- ------------ ------------ -------------
Net increase in cash
and cash equivalents.. 216,257 167,063 781,257 2,124,484 3,751,372
Cash and cash
equivalents at
beginning of period... -- 216,257 383,320 383,320 1,164,577
--------- ----------- ------------ ------------ -------------
Cash and cash
equivalents at end of
period................ $ 216,257 $ 383,320 $ 1,164,577 $ 2,507,804 $ 4,915,949
========= =========== ============ ============ =============
</TABLE>

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

F-6
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Note 1--The Company and Summary of Significant Accounting Policies:

The Company

AdKnowledge Inc., formerly ClickOver, Inc. (the "Company"), is a provider of
comprehensive internet advertising management and analytic services for
marketers and advertising agencies.

The Company was incorporated in California on July 10, 1996 under the name
of ClickOver, Inc. On February 6, 1998, the Company changed its name to
AdKnowledge Inc.

Basis of presentation

The Company has incurred losses and negative cash flows from operations
since inception. The Company's activities have been primarily financed through
private placements of equity securities, subordinated debentures and capital
lease financing. Management is seeking to increase revenues through the
marketing of its products and services while exploring other venues to fund
working capital requirements. The Company will be required to raise additional
capital through the issuance of debt or equity securities and capital lease
financing. Such financing may not be available on terms satisfactory to
AdKnowledge, if at all. There can be no assurance that sufficient revenues
will be achieved or additional financing will be available.

Principles of consolidation

The consolidated financial statements include the accounts of AdKnowledge
Inc. and its wholly-owned subsidiary, Focalink Communications, Inc. All
significant intercompany accounts and transactions have been eliminated.

Unaudited interim results

The accompanying interim financial statements as of September 30, 1999, and
for the nine months ended September 30, 1998 and 1999 are unaudited. The
unaudited interim financial statements have been prepared on the same basis as
the annual consolidated financial statements and, in the opinion of
management, reflect all adjustments, which include only normal recurring
adjustments necessary to present fairly the Company's financial position as of
September 30, 1999 and results of operations and cash flows for the nine
months ended September 30, 1998 and 1999. The financial data and other
information disclosed in these notes to consolidated financial statements
related to these periods are unaudited. The results for the nine months ended
September 30, 1999 are not necessarily indicative of the results to be
expected for the year ending December 31, 1999.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Cash and cash equivalents and short-term investments

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The
Company's short-term investments are classified as available-for-sale as of
the balance sheet date and are reported at fair value, based on quoted market
prices, with unrealized gains and losses recorded in shareholders' equity on
the consolidated balance sheets.

F-7
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Restricted cash

Cash balances of $79,637 at December 31, 1997 and 1998 and September 30,
1999 were restricted from withdrawal and held by a bank in the form of
certificates of deposit. These certificates of deposit serve as collateral to
a letter of credit issued to the Company's landlord as a security deposit.

Fair value of financial instruments

Carrying amounts of certain of the Company's financial instruments including
cash and cash equivalents, receivables, deposits, borrowings under line of
credit, accounts payable and other accrued liabilities, and the current
portion of notes payable approximate fair value due to their short maturities.

Carrying amounts of long-term notes payable and capital leases are
considered to approximate fair value based upon comparable market information
available at the respective balance sheet dates.

Concentration of credit risk

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash, cash equivalents and accounts
receivable. The Company deposits its cash and cash equivalents in domestic
financial institutions. The Company's accounts receivable are derived from
revenue earned from customers located in the U.S. AdKnowledge sells and grants
credit for its services to its customers without requiring collateral or
third-party guarantees. The Company monitors customers' payment history and
establishes reserves for bad debt as warranted.

At December 31, 1998, one customer accounted for 10% of total accounts
receivable.

Fixed assets

Fixed assets are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally
3 to 5 years. Equipment acquired under capital leases is amortized on a
straight-line basis over the shorter of its lease term or estimated useful
life, generally three years. When fixed assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed from
the accounts and the resulting gain or loss is included in income.

Long-lived assets

The Company accounts for long-lived assets under Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
the Company to review for impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets, whenever
events or changes in circumstances indicate that the carrying amount of an
asset might not be recoverable. When such an event occurs, the Company
estimates the future cash flows expected to result from the use of the asset
and its eventual disposition. If the undiscounted expected future cash flows
is less than the carrying amount of the asset, an impairment loss is
recognized. To date, no impairment loss has been recognized.

Revenue recognition

For the year ended December 31, 1998, the Company's revenues were derived
primarily from the provision of ad delivery and associated management services
to its clients. The Company recognizes revenue at the time the services are
delivered, providing the Company does not have significant remaining
obligations and collection of the resulting receivable is probable. The
Company recognizes revenue from these services based on the

F-8
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

number of advertisements delivered, as well as from monthly usage fees for the
Company's Web-based advertising management system.

For the year ended December 31, 1997, the Company's revenues were derived
primarily from the sale of software licenses to Web publishers and were
recognized in accordance with the provisions of Statement of Position 91-1,
"Software Revenue Recognition." The Company recognized revenue from the sale
of software licenses upon shipment if remaining obligations were insignificant
and collection of the resulting receivable was probable. Revenue from software
maintenance contracts, including amounts unbundled from product sales, was
deferred and recognized ratably over the period of the contract.

Research and development costs

Research and development expenditures are charged to operations as incurred.

Advertising costs

Costs related to advertising and promotion of products is charged to sales
and marketing expense as incurred. Advertising cost charged to expenses for
the period from July 10, 1996 (date of inception) to December 31, 1996 and for
the years ended December 31, 1997 and 1998 were approximately none, $175,251
and $292,218, respectively.

Income taxes

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, which requires an asset and liability
approach to financial accounting and reporting for income taxes. Accordingly,
deferred tax assets and liabilities arise from the differences between the tax
basis of an asset or liability and their reported amounts in the financial
statements, or from the tax benefit of net operating loss carryforwards.
Deferred tax amounts are determined using the tax rates expected to be in
effect when the taxes will actually be paid or refunds received, as provided
under currently enacted tax law. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.

Stock-based compensation

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board ("APB") Opinion 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
the option. The Company accounts for equity instruments issued to nonemployees
in accordance with the provisions of SFAS No. 123 and Emerging Issues Task
Force ("EITF") 96-18.

Comprehensive income

The Company adopted the provisions of SFAS No. 130, Reporting Comprehensive
Income. This statement requires companies to classify items of other
comprehensive income by their nature in the financial statements and display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. The Company had no comprehensive income items to report through
December 31, 1998 and an insignificant amount of unrealized loss on
investments in the nine months ended September 30, 1999.

F-9
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Segment information

In 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS No. 131 supersedes FAS 14, "Financial Reporting for
Segments of a Business Enterprise," replacing the "industry segment" approach
with the "management" approach. The management approach designates the
internal organization that is used by management for making operating
decisions and assessing performance as the source of the Company's reportable
segments. SFAS No. 131 also requires disclosures about products and services,
geographic areas, and major customers. The Company conducts its business
within one business segment primarily within the U.S.

Certain risks and uncertainties

The Company's products and services are concentrated in the Internet
advertising industry which is characterized by rapid technological advances,
changes in customer requirements and evolving regulatory requirements and
industry standards. Any failure by the Company to anticipate or to respond
adequately to technological developments in its industry, changes in customer
requirements or changes in regulatory requirements or industry standards, or
any significant delays in the development or introduction of products or
services, could have a material adverse effect on the Company's business and
operating results.

Recent accounting pronouncements

In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Cost
of Computer Software Developed or Obtained for Internal Use ("SOP 98-1"). SOP
98-1 is effective for financial statements for years beginning after December
15, 1998. SOP 98-1 provides guidance over accounting for computer software
developed or obtained for internal use including the requirement to capitalize
specified costs and amortization of such costs. The adoption of this standard
did not have a material impact on the Company's results of operations,
financial positions or cash flows.

In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-
up Activities". SOP 98-5, which is effective for fiscal years beginning after
December 15, 1998, provides guidance on the financial reporting of start-up
costs and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. As the Company has historically
expensed these costs, the adoption of SOP 98-5 did not have a significant
impact on its results of operations, financial positions or cash flows.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"), which establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. SFAS No. 133 is
effective for fiscal quarters beginning after June 15, 2000. The Company is
evaluating the requirements of SFAS No. 133.

Note 2--Acquisition of Focalink Communications, Inc.:

On December 31, 1997, the Company completed its acquisition of Focalink
Communications, Inc. ("Focalink") for approximately $5,505,000, including
acquisition costs of $208,000 and liabilities assumed of $2,190,439. Focalink
was primarily engaged in the development of software tools to evaluate, place
and manage advertising campaigns on the Internet. The acquisition was
accounted for as a purchase and resulted in a one-time write-off of $804,000
for purchased in-process research and development for which there was no
alternative future use and for which technological feasibility has not been
established. The balance of the purchase price in excess of tangible net
assets acquired was allocated to purchased technology and goodwill of
$1,007,000 and $2,149,096, respectively. The Company is amortizing the
purchased technology and goodwill on a straight-line basis over three and five
years, respectively.

F-10
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

In connection with the acquisition, the Company issued 336,909 shares of
Common Stock and a total of 3,457,377 shares of Series C (issued as Series C-
1, C-2 and C-3) Convertible Preferred Stock valued at an aggregate of
$2,859,000 in exchange for the outstanding common and preferred stock of
Focalink as well as $4,367,000 of long term debt. The Company also issued
warrants to purchase 176,197 shares of Series C Convertible Preferred Stock at
prices ranging from $1.80 to $7.02 per share and valued at $247,507.

The following (unaudited) pro forma summary represents the results of
operation as if the acquisition of Focalink had occurred at the beginning of
the period presented.

<TABLE>
<CAPTION>
For the
Period from
July 10, 1996
(date of
inception) to Year Ended
December 31, December 31,
1996 1997
------------- ------------
<S> <C> <C>
Pro forma net revenue............................ $ 94,040 $1,777,911
Pro forma net loss............................... $4,568,637 $9,840,178
</TABLE>

In-process research and development charges of $804,000 were excluded from
the pro forma net loss for the year ended December 31, 1996. The pro forma
results are not necessarily indicative of what actually would have occurred if
the acquisition had been effected at the beginning of the period presented and
may not be indicative of future results.

F-11
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998 and
1999 is unaudited)

Note 3--Supplemental Cash Flow Information:

<TABLE>
<CAPTION>
For the period
from July 10, For the Nine
1996 (date of Months Ended
inception) to Year Ended December 31, September 30,
December 31, ------------------------ ---------------------
1996 1997 1998 1998 1999
-------------- ----------- ----------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Supplemental cash flow
information:
Cash paid for interest.. $-- $ 21,993 $ 233,128 $ 162,134 $ 408,575
Supplemental noncash
investing and financing
activity:
Noncash assets and lia-
bilities acquired from
Focalink Communica-
tions, Inc.:
Net current liabili-
ties................. -- (380,303) -- -- --
Property and equip-
ment, net............ -- 868,367 -- -- --
Goodwill.............. -- 2,149,096 -- -- --
Other intangible as-
sets................. -- 1,007,000 -- -- --
Other assets.......... -- 129,342 -- -- --
Related party pay-
able................. -- (250,000) -- -- --
Capital leases........ -- (890,456) -- -- --
Issuance of Common
Stock, Preferred Stock
and warrants for
acquisition of Focalink
Communications, Inc.... $-- $ 3,106,507 $ -- $ -- $ --
==== =========== =========== ========== ==========
Note receivable issued
on exercise of stock
options................ $-- $ 38,100 $ -- $ -- $ --
==== =========== =========== ========== ==========
Interest accrued on note
receivable from
shareholder............ $-- $ 265 $ 2,170 $ 1,627 $ 1,627
==== =========== =========== ========== ==========
Property and equipment
acquired under capital
leases................. $-- $ -- $ 1,007,772 $ 667,750 $1,353,840
==== =========== =========== ========== ==========
Conversion of notes
payable to Series D
Convertible Preferred
Stock.................. $-- $ -- $ 1,551,589 $1,551,589 $ --
==== =========== =========== ========== ==========
Conversion of borrowing
under line of credit to
term note.............. $-- $ -- $ 500,000 $ -- $ --
==== =========== =========== ========== ==========
Issuance of warrants in
conjunction with debt.. $-- $ -- $ 272,410 $ 33,836 $1,732,497
==== =========== =========== ========== ==========
</TABLE>

Note 4--Fixed Assets:

<TABLE>
<CAPTION>
December 31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
Fixed assets, net:
Computer equipment and software...................... $1,109,710 $2,321,488
Furniture, fixtures and office equipment............. 172,898 199,079
---------- ----------
1,282,608 2,520,567
Less: Accumulated depreciation and amortization...... (72,346) (910,663)
---------- ----------
$1,210,262 $1,609,904
========== ==========
</TABLE>

F-12
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Fixed assets includes $1,246,451 and $1,912,414 of assets under capital
leases at December 31, 1997 and 1998, respectively. Accumulated amortization
of assets under capital leases totaled $469,979 and $754,672 at December 31,
1997 and 1998, respectively.

Note 5--Related Party Transactions:

At December 31, 1998, the Company had notes receivable from officers and
shareholders in the amounts of $40,535, (including interest) for the purchase
of common stock (included in shareholders' equity) and $625,023 which was
borrowed for other personal reasons. The notes bear interest at rates of 5.56%
to 5.69% and are due at various dates through March 31, 2002. Notes in the
amount of $275,599 are collateralized by a deed of trust on a residence and
$389,959 of the notes are collateralized by common stock of the Company. Notes
in the amount of $208,385 are without recourse, except to the extent of the
common stock held as collateral.

In August 1999, the Company forgave a note receivable from an officer in an
aggregate amount of $298,979, including accrued interest. Such amount was
recorded as a charge to general and administrative expenses in the third
quarter of 1999. Concurrent with the forgiveness of this note, the Company
issued the officer a note in the amount of $147,714 for the purpose of
enabling such officer to pay taxes associated with the forgiveness of the
related note. This note bears interest at a rate of 5.43%, is collateralized
by common stock of the Company and is payable upon the earlier of the
occurrence of certain specified events or in August 2002.

During the year ended December 31, 1998, the Company incurred $223,000 of
expenses for business consulting services rendered by two shareholders and one
former executive of the Company.

In addition, the Company issued 2,345,300 shares of Series D Preferred Stock
in March 1998 in exchange for a note payable to an investor in the amount of
$1,300,000. The note was issued in January 1998 with warrants to purchase
117,265 shares of common stock. The warrant was cancelled in connection with
the note conversion. The Company also assumed a loan in the amount of $251,589
from an investor in connection with the acquisition of Focalink, which loan
was converted to 451,020 shares of Series D Preferred Stock in March 1998.

Note 6--Income Taxes:

Deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
December 31,
----------------
1997 1998
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........................... $ 4,349 $ 6,367
Accruals and reserves.................................... 86 130
Research credits......................................... 109 294
Depreciation............................................. (148) 119
Other.................................................... 76 104
------- -------
4,472 7,014
------- -------
Valuation allowance........................................ (4,472) (7,014)
------- -------
$ -- $ --
======= =======
</TABLE>

Due to uncertainties surrounding the use of the deferred tax assets, a full
valuation allowance has been recorded.

At December 31, 1998, the Company had approximately $16 million of federal
and $15.8 million of state net operating loss carryforwards available to
offset future taxable income which expire in varying amounts

F-13
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

between 1998 and 2011. Under the Tax Reform Act of 1986, the amounts of and
benefits from net operating loss carryforwards may be impaired or limited in
certain circumstances. Events which cause limitations in the amount of net
operating losses that the Company may utilize in any one year include, but are
not limited to, a cumulative ownership change of more than 50%, as defined,
over a three year period. Given the equity changes that have occurred during
the years ended December 31, 1997 and 1998, the Company has likely incurred an
ownership change and the utilization of its net operating losses are subject
to such limitations.

Note 7--Borrowings:

The following amounts were outstanding at December 31, 1997 and 1998:

<TABLE>
<CAPTION>
December 31,
-------------------
1997 1998
-------- ----------
<S> <C> <C>
Revolving line of credit,
interest at prime plus 2%
(9.75% at December 31,
1997)(1)................. $500,000 $ --
Equipment line of credit,
interest at prime plus 2%
(9.75% at December 31,
1997)(1)................. 204,942 --
Term loan payable monthly
through February 2001,
interest at prime plus 2%
(9.75% at December 31,
1998)(2)................. -- 500,000
Equipment loan payable
monthly through October
2000, interest at prime
plus 2% (9.75% at
December 31, 1998)(2).... -- 132,610
Note payable under
combined master lease,
subordinated loan
agreement and letter of
credit facility, interest
at 13%(3)................... -- 1,500,000
</TABLE>
- --------
1. The revolving line of credit and equipment line of credit were converted
into the respective term and equipment loans in December 1998.
2. The term loan and equipment loan are subject to various financial covenants
with which the Company was in compliance at December 31, 1998
3. Under the combined master lease, subordinated loan agreement and line of
credit facility, the Company has an aggregate credit facility of
approximately $4,000,000. Amounts borrowed under this facility are
collateralized by substantially all of the Company's assets and are
subordinated to the Company's term and equipment loans. The agreement
contains various financial and operating covenants with which the Company
was in compliance at December 31, 1998. Under the agreement the Company has
obtained a letter of credit for $526,000 used as a deposit for the lease of
its corporate headquarters. If the letter of credit is drawn upon, the
Company will be required to repay the amount used over a two-year period
with interest at 14% per year. The Company is charged a facility fee equal
to 1% of the letter of credit balance per year.

Some of the debt and capital leases restrict the payment of dividends.

In February 1999, the Company repaid $1,250,000 of the Note payable and
converted the balance into a term note payable for $9,823 per month through
August 2001 with interest at 13%. In addition, the Company borrowed an
additional $1,000,000 in January 1999 with interest at 13%, and payable
monthly through August 2001.

In August 1999, the Company entered into a subordinated loan agreement and
secured promissory note for $4,000,000. Amounts borrowed under this note are
collateralized by substantially all of the Company's assets and are
subordinated to the Company's term and equipment loans. Borrowings will be
repaid in thirty-six equal monthly payments of principal and interest at a
rate of 13.3% per annum, through September 2002. In connection with this note,
the Company paid a facility fee of $40,000 and granted the lender warrants to
purchase up to 711,112 shares of Series E Convertible Preferred Stock at an
exercise price which shall be between $0.90 and

F-14
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

$1.10 per share. These warrants expire at the later of 10 years from the issue
date or five years from an initial public offering of the Company's common
stock. The fair value of these warrants of $1,694,738, (valued under the
Black-Scholes model) has been accounted for as debt discount and is included
with other current and long-term assets at September 30, 1999. As of September
30, 1999, the fair value of warrants aggregating $683,451 and $1,195,110 are
accounted for as debt discount and are included as components of other current
assets and other assets, respectively.

Future minimum principal payments under notes payable at December 31, 1998,
are as follows:

<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
1999.......................................................... $ 1,597,053
2000.......................................................... 451,760
2001.......................................................... 83,797
-----------
2,132,610
Less current portion.......................................... (1,597,053)
-----------
$ 535,557
===========
</TABLE>

Future minimum principal payments under notes payable at September 30, 1999,
are as follows:

<TABLE>
<CAPTION>
Period Ending
December 31,
-------------
<S> <C>
1999.......................................................... $ 471,690
2000.......................................................... 2,009,747
2001.......................................................... 1,830,833
2002.......................................................... 1,153,337
----------
5,465,607
Less current portion.......................................... (1,966,883)
----------
$3,498,724
==========
</TABLE>

Note 8--Commitments:

Capital and operating leases

In November 1998, the Company entered into a new operating lease agreement
for its corporate headquarters. This lease commenced in January 1999 and
expires in December 2004. The Company also leases other office space and
equipment under noncancelable operating and capital leases with various
expiration dates through 2003. Effective July 1999, the Company entered into a
new operating lease agreement for its New York office. This lease commenced in
October 1999 and expires in October 2004.

In July 1999, the Company entered into noncancelable capital leases totaling
$349,534 which expire in 2003.

F-15
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Future minimum lease payments under noncancelable operating and capital
leases and future minimum sublease rental receipts under noncancelable
operating leases at December 31, 1998 are as follows:

<TABLE>
<CAPTION>
Year Ended Capital Operating Sublease
December 31, Leases Leases Income
------------ --------- ---------- --------
<S> <C> <C> <C>
1999........................................ $ 699,319 $1,322,281 $390,912
2000........................................ 484,179 1,285,018 332,048
2001........................................ 379,617 1,219,726 256,680
2002........................................ 217,237 973,171 --
2003........................................ -- 984,788 --
Thereafter.................................. -- 1,017,068 --
--------- ---------- --------
Total minimum lease payments and sublease
income..................................... 1,780,352 $6,802,052 $979,640
========== ========
Less: Amount representing interest.......... (368,200)
---------
Present value of capital lease obligations.. 1,412,152
Less: Current portion....................... (509,606)
---------
Long-term portion of capital lease obliga-
tions...................................... $ 902,546
=========
</TABLE>

Future minimum lease payments under noncancelable operating and capital
leases and future minimum sublease rental receipts under noncancelable
operating leases at September 30, 1999 are as follows:

<TABLE>
<CAPTION>
Period Ended Capital Operating Sublease
December 31, Leases Leases Income
------------ ---------- ---------- --------
<S> <C> <C> <C>
1999....................................... $ 240,906 $ 357,079 $103,233
2000....................................... 984,743 1,428,135 332,048
2001....................................... 1,016,843 1,375,854 256,680
2002....................................... 580,770 1,130,064 --
2003....................................... 52,430 1,150,100 --
Thereafter................................. -- 1,168,604 --
---------- ---------- --------
Total minimum lease payments and sublease
income.................................... 2,875,692 $6,609,836 $691,961
========== ========
Less: Amount representing interest......... (483,013)
----------
Present value of capital lease obliga-
tions..................................... 2,392,679
----------
Less: Current portion...................... (708,965)
----------
Long-term portion of capital lease obliga-
tions..................................... $1,683,714
==========
</TABLE>

In 1999 the Company entered into an agreement with an applications service
provider which requires payments of up to $603,000 through May 2002. This
agreement is cancellable upon specified conditions.

F-16
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Note 9--Convertible Preferred Stock:

Convertible Preferred Stock at December 31, 1998 and September 30, 1999,
consists of the following:

<TABLE>
<CAPTION>
Series Shares Amount
------ ---------- ------------
<S> <C> <C>
A.................................................... 525,000 $ 105,000
B.................................................... 5,512,000 2,600,010
C-1.................................................. 569,525 468,644
C-2.................................................. 605,122 497,421
C-3.................................................. 2,282,730 1,877,043
D.................................................... 14,432,618 8,000,000
---------- ------------
December 31, 1998.................................... 23,926,995 13,548,118
E.................................................... 15,555,557 13,925,674
---------- ------------
September 30, 1999................................... 39,482,552 $ 27,473,792
========== ============
</TABLE>

The holders of Convertible Preferred Stock have various rights and
preferences as follows:

Voting

Each share of Series A, B, C-1, C-2, C-3, D and E Convertible Preferred
Stock has voting rights equal to an equivalent number of shares of Common
Stock into which it is convertible and votes together as one class with the
Common Stock.

As long as at least 25% of the shares of any Series of Convertible Preferred
Stock remain outstanding, the Company must obtain approval from a majority of
the holders of Convertible Preferred Stock in order to (1) amend the Articles
of Incorporation or by laws as related to Convertible Preferred Stock, (2)
change the authorized or issued number of shares of Convertible Preferred
Stock, (3) alter or change the rights, preferences or privileges of the shares
of any series of Preferred Stock so as to adversely affect the shares, (4)
create a new class of stock or effect a merger, consolidation or sale of
assets where the existing shareholders retain less than 50% of the voting
stock of the surviving entity.

Dividends

Holders of Series A, B, C-1, C-2, C-3, D and E Convertible Preferred Stock
are entitled to receive noncumulative dividends at the per annum rate of
$0.01, $0.03, $0.05, $0.21, $0.12, $0.04 and $0.63 per share, respectively,
when and if declared by the Board of Directors. The holders of Series A, B, C-
1, C-2, C-3, D and E Convertible Preferred Stock will also be entitled to
participate in dividends on Common Stock, when and if declared by the Board of
Directors, based on the number of shares of Common Stock held on an as-if
converted basis. No dividends on Convertible Preferred Stock or Common Stock
have been declared by the Board of Directors from inception through December
31, 1998.

Liquidation

In the event of any liquidation, dissolution or winding up of the Company,
including a merger, acquisition or sale of assets where the beneficial owners
of the Company's Common Stock and Convertible Preferred Stock own less than
50% of the resulting voting power of the surviving entity, the holders of
Series A, B, C-1, C-2, C-3, D and E Convertible Preferred Stock are entitled
to receive an amount of $0.20, $0.4717, $0.8451, $3.2981, $1.9129, $0.5543 and
$0.90 per share, respectively, plus any declared but unpaid dividends prior to
and in preference to any distribution to the holders of Common Stock. The
remaining assets, if any, shall be distributed until the Series A, B, C-1, C-
2, C-3, D and E shall have in the aggregate an amount equal to $0.80, $1.8868,
$3.3804, $13.1924, $7.6516, $2.2172 and $3.60 per share. Should the Company's
legally available assets be insufficient to satisfy the liquidation
preferences, the funds will be distributed pro rata in proportion to the
Series A, B, C-1, C-2, C-3, D and E Convertible Preferred Stock ownership.

F-17
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Conversion

Each share of Series A, B, C-1, C-2, C-3, D and E Convertible Preferred
Stock is convertible into shares of Common Stock, at the option of the holder,
according to a conversion ratio and subject to adjustment for dilution. Each
share of Series A, B, C-1, C-2, C-3, D and E Convertible Preferred Stock
automatically converts into the number of shares of Common Stock into which
such shares are convertible at the then effective conversion ratio upon: (1)
the closing of a public offering of Common Stock at a per share price of not
less than $1.6629 per share as of December 31, 1998 and $2.70 per share as of
September 30, 1999 with gross proceeds of not less than $10 million, (2) the
consent of the holders of the majority of Convertible Preferred Stock. At
December 31, 1998 the Company had reserved approximately 25 million shares of
common stock for the conversion of the preferred stock. In 1999 the number of
shares of common stock reserved for conversion of preferred stock was
increased to approximately 42 million.

Warrants

At December 31, 1998, there were warrants to purchase 706,166 shares of
Series D Convertible Preferred Stock at prices ranging from $0.69 to $0.90 per
share, and warrants to purchase 176,197 shares of Series C Convertible
Preferred Stock at prices ranging from $1.80 to $7.02 per share outstanding
and exercisable. The Series C warrants were issued in connection with the
acquisition of Focalink (see Note 2) and expire through 2006. The fair value
of these warrants, $247,507 (valued under the Black-Scholes model) was
included in the purchase price. The Series D warrants were issued in
connection with the various financings in 1998 and expire at the earlier of 10
years from the issue date or five years from an initial public offering of the
Company's common stock. The fair value of these warrants, $272,410 (valued
under the Black-Scholes model), has been accounted for as debt discount and
has been included with other current and long term assets. The Company
amortized $18,753 of such discount in 1998.

In February 1999, in conjunction with leases entered into, the Company
granted the lender warrants to purchase 55,555 shares of Series E Convertible
Preferred Stock at $0.90 per share. These warrants expire at the earlier of 10
years from the issue date or five years from an initial public offering of the
Company's common stock. The fair value of these warrants, $37,759 (valued
under the Black-Scholes model), has been accounted for as debt discount and
has been included with other current and long term assets.

Restricted Stock Purchase Agreement

The Company sold Common Stock to certain employees under restricted purchase
agreements under which the Company had the right to repurchase the shares in
the event the employee terminated employment. In 1996, the repurchase right
with respect to 1,952,468 unvested shares was waived. As a result, $546,691 of
compensation expenses, equal to the difference between the purchase price of
the stock and the then current value, was charged to operations. The
repurchase right with respect to all other shares had expired at December 31,
1998.

Note 10--Stock Option Plans:

In 1996 and 1998, the Company adopted the 1996 and 1998 Stock Option Plans
(the "Plans"), respectively. The Plans provide for the granting of stock
options to employees, non-employee Board members and consultants of the
Company. Options granted under the Plan may be either incentive stock options
or nonqualified stock options. Incentive stock options ("ISO") may be granted
only to Company employees. Nonqualified stock options ("NSO") may be granted
to Company employees, non-employee Board members and consultants. The Company
has reserved 7,521,592 and 1,372,286 shares of Common Stock for issuance under
the 1996 Stock Option Plan and the 1998 Stock Option Plan, respectively.

F-18
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Options under the Plans may be granted for periods of up to ten years and at
prices no less than 85% of the estimated fair value of the shares on the date
of grant as determined by the Board of Directors, provided, however, that (i)
the exercise price of an ISO and NSO shall not be less than 100% and 85% of
the estimated fair value of the shares on the date of grant, respectively, and
(ii) the exercise price of an ISO and NSO granted to a 10% shareholder shall
not be less than 110% of the estimated fair value of the shares on the date of
grant and the option term cannot exceed five years from the date of grant.
Options are exercisable immediately, subject to a right of repurchase by the
Company of unvested shares. To date, options granted generally vest over four
years. At December 31, 1997 and 1998, 629,426 and 1,238,682 shares of Common
Stock, including shares under unexercised options, were subject to repurchase,
respectively. There were no shares subject to repurchase at December 31, 1996.

During 1998, the Company recorded $35,263 of deferred stock compensation for
the fair value of 78,367 options granted in 1998 to non-employees (valued
under the Black-Scholes model). The compensation expense is being recognized
over the period of service.

The following table summarizes information about stock options at December
31, 1996, 1997 and 1998 and at September 30, 1999:

<TABLE>
<CAPTION>
Weighted
Options Average
Available Number of Exercise Aggregate Exercise
for Grant Options Price Price Price
---------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Options reserved--1996
Stock Option Plan...... 3,321,592
Options granted......... (625,000) 625,000 $ 0.01 $ 6,250 $ 0.01
---------- ---------- ----------
Balances, December 31,
1996................... 2,696,592 625,000 6,250 0.01
Options reserved........ 200,000 -- --
Options granted......... (1,827,255) 1,827,255 0.01-0.0472 73,823 0.0402
Options exercised....... -- (1,694,813) 0.01-0.0472 (53,117) 0.0313
Options canceled........ 63,000 (63,000) 0.0472 (2,972) 0.0472
---------- ---------- ----------
Balances, December 31,
1997................... 1,132,337 694,442 23,984 0.0345
Options reserved........ 4,000,000 -- --
Stock repurchases....... 1,167,530 -- --
Options reserved--1998
Stock Option Plan...... 1,372,286 -- --
Options granted......... (6,345,885) 6,345,885 0.06 382,815 0.0603
Options exercised....... -- (309,535) 0.0236-0.06 (18,335) 0.0592
Options canceled........ 873,295 (873,295) 0.0236-0.06 (50,783) 0.0582
---------- ---------- ----------
Balances, December 31,
1998................... 2,199,563 5,857,497 337,681 0.0576
Stock repurchases....... 118,274 -- --
Options granted......... (2,857,391) 2,857,391 0.06-1.50 1,373,092 0.4805
Options exercised....... -- (3,031,064) 0.0236-1.00 (359,880) 0.1187
Options canceled........ 1,506,202 (1,506,202) 0.0472-0.50 (115,393) 0.0766
---------- ---------- ----------
Balances, September 30,
1999................... 966,648 4,177,622 $1,235,500 $0.2957
========== ========== ==========
</TABLE>

F-19
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

<TABLE>
<CAPTION>
Options Outstanding and Exercisable
at December 31, 1998
----------------------------------------
Weighted
Average Weighted
Range of Remaining Average
Exercise Number Contractual Exercise
Price Outstanding Life Price
-------- -------------- ------------ ----------
<S> <C> <C> <C>
$0.02360........................... 282,702 8.33 $ 0.02
$0.04717........................... 268,240 8.79 $ 0.05
$0.06000........................... 5,306,555 9.45 $ 0.06
--------------
5,857,497
==============
</TABLE>

Under APB No. 25, compensation expense is recognized based on the amount by
which the fair value of the underlying common stock exceeds the exercise price
of the stock options at the measurement date, which in the case of employee
stock options is typically the date of grant. For financial reporting
purposes, the Company has determined that the deemed fair market value on the
date of grant of certain employee stock options was in excess of the exercise
price of the options. This amount is recorded as deferred stock-based
compensation and is classified as a reduction of shareholders' equity and is
amortized as a charge to operations over the vesting period of the applicable
options. The vesting period is generally four years. Consequently, the Company
recorded deferred stock-based compensation of $175,220, $454,718, $2,432,434,
and $4,004,139 during the period from July 10, 1996 (date of inception) to
December 31, 1996, during the years ended December 31, 1997 and 1998, and
during the nine months ended September 30, 1999, respectively. Amortization
recognized for the period from July 10, 1996 (date of inception) to December
31, 1996 and for the years ended December 31, 1997 and 1998 and the nine
months ended September 30, 1999 totaled $17,678, $97,717, $806,712 and
$699,987, respectively. The Company's stock option grants and related deemed
fair value are as follows:

<TABLE>
<CAPTION>
Weighted
Number of Weighted Average
Options Average Deemed
Granted Exercise Price Fair Value
--------- -------------- ----------
<S> <C> <C> <C>
For the period from July 10, 1996
(date of inception) to December 31,
1996:
Options granted at deemed fair value.. -- $ -- $ --
Options granted below deemed fair val-
ue................................... 625,000 0.01 0.29
--------- ----- -----
Total............................... 625,000 $0.01 $0.29
========= ===== =====
For the year ended December 31, 1997:
Options granted at deemed fair value.. -- $ -- $ --
Options granted below deemed fair val-
ue................................... 1,827,255 0.04 0.29
--------- ----- -----
Total............................... 1,827,255 $0.04 $0.29
========= ===== =====
For the year ended December 31, 1998:
Options granted at deemed fair value.. -- $ -- $ --
Options granted below deemed fair val-
ue................................... 6,345,885 0.06 0.50
--------- ----- -----
Total............................... 6,345,885 $0.06 $0.50
========= ===== =====
For the period ended September 30,
1999:
Options granted at deemed fair value.. -- $ -- $ --
Options granted below deemed fair val-
ue................................... 2,857,391 0.48 2.13
--------- ----- -----
Total............................... 2,857,391 $0.48 $2.13
========= ===== =====
</TABLE>

F-20
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

Pro forma stock-based compensation

The Company accounts for employee stock options under APB Opinion No. 25.
Had the Company determined compensation expense under SFAS No. 123, the effect
on the Company's net earnings would have been insignificant. These pro forma
results are not necessarily indicative of results which may be expected in the
future as additional grants are made each year and options vest over several
years. The weighted average fair value of the options and warrants granted or
modified for the period ended December 31, 1996, and the years ended December
31, 1997 and 1998 was $0.0022, $0.0086 and $0.0114, respectively.

The following weighted average assumptions were used in the above
calculations:

<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Risk free interest rate........................... 6.36% 6.23% 5.24%
Expected life..................................... 4 years 4 years 4 years
Volatility........................................ -- -- --
Dividend yield.................................... -- -- --
</TABLE>

Note 11--Employee Benefit Plan:

In January 1, 1998, the Company adopted the savings plan under Section 401(k)
of the Internal Revenue Code of Focalink Communications, Inc. There were no
contributions made by the Company in 1998.

Note 12--Merger and Contribution Agreement (unaudited):

On August 27, 1999, the Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission ("SEC"). On September 30, 1999,
the Company filed a Request for Withdrawal of its Form S-1 with the SEC
because it entered into the merger and contribution agreement described below.
In connection with the withdrawal of its Form S-1, the Company recorded a
charge to operations of $772,686 for the write-off of deferred initial public
offering costs in September 1999.

On September 23, 1999, the Company signed an agreement pursuant to which it
agreed to be acquired by Engage Technologies, Inc. ("Engage"), a provider of
products and services that enable customers to create and use profiles of
individual Web visitors to target advertisements, content and e-commerce
offerings. Upon completion of the transaction, the Company will become a
wholly-owned subsidiary of Engage, which is a majority owned subsidiary of
CMGI, Inc. ("CMGI"). Under the terms of the merger and contribution agreement,
CMGI will initially acquire control of the Company through the issuance of
approximately $170 million of CMGI common stock in a merger of a subsidiary of
CMGI into the Company. The value of the CMGI common stock being delivered is
based on $84.80, the average of the last reported sales prices of the CMGI
common stock over the 45 consecutive trading days ending on September 20,
1999, which value may be adjusted upward by up to 10% or downward by up to 10%
based upon the average of the last reported sales prices of such stock over
the 45 consecutive trading days ending two trading days prior to the effective
time of this merger.

Upon completion of this merger, CMGI will own approximately 88% of the
Common Stock of the Company. This merger will be followed by a contribution of
the Company's shares held by CMGI and the Company's shareholders to Engage in
exchange for approximately $193 million of Engage common stock. The value of
the Engage common stock being delivered is $31.45, the average of the last
reported sales prices of Engage common stock over the 45 consecutive trading
days ending on September 20, 1999 and may be adjusted upward or downward in
the same manner as the CMGI stock described above. Any remaining holders of
AdKnowledge Common Stock will receive Engage common stock in a short-form
merger with a subsidiary of Engage.

F-21
<PAGE>

ADKNOWLEDGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of and relating to the nine months ended September 30, 1998
and 1999 is unaudited)

The transaction, which will be accounted for as a purchase, is subject to
certain conditions, regulatory approval and the shareholder approval of Engage
and AdKnowledge. In connection with the merger and contribution, the Company
amended its Articles of Incorporation in November 1999 to authorize
114,000,000 shares of Common Stock for issuance, of which 58,000,000 shall be
Common Stock, no par value, and 56,000,000 shall be Class B Common Stock, par
value $0.01. In addition, the Company is authorized through this amendment to
issue an additional 7,500,000 shares of Convertible Preferred Stock,
designated as Series F, no par value.

Note 13--Computation of Net Loss Per Share:

Basic net loss per share is computed by dividing net income available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted net income per share is computed giving
effect to all dilutive potential common shares that were outstanding during
the period. Dilutive potential common equivalent shares consist of the
incremental common shares issuable upon exercise of stock options.

A reconciliation of the numerator and denominator of basic and diluted net
income per share is provided as follows:

<TABLE>
<CAPTION>
For the
Period from
July 10, 1996
(date of For The Nine Months
inception) to Years Ended December 31, Ended September 30,
December 31, ------------------------- -------------------------
1996 1997 1998 1998 1999
------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Numerator--Net loss per
share, basic and
diluted:
Net Loss.............. $(728,969) $(2,914,069) $(10,257,549) $(7,147,340) $(14,145,798)
========= =========== ============ =========== ============
Denominator--Net loss
per share, basic and
diluted:
Weighted average
common shares
outstanding.......... 1,880,729 4,886,242 5,753,222 5,540,441 6,456,294
========= =========== ============ =========== ============
Net loss per share--
basic and diluted...... $ (0.39) $ (0.60) $ (1.78) $ (1.29) $ (2.19)
========= =========== ============ =========== ============
</TABLE>

F-22
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Focalink Communications, Inc.

In our opinion, the accompanying balance sheet and the related statement of
operations, shareholders' equity and cash flows present fairly, in all
material respects, the financial position of Focalink Communications, Inc. at
December 31, 1997, and the results of its operations and cash flows for 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 audit provides a reasonable basis
for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

San Jose, California
June 25, 1999

F-23
<PAGE>

FOCALINK COMMUNICATIONS, INC.

BALANCE SHEET

<TABLE>
<S> <C>
Assets
Current assets:
Cash and cash equivalents...................................... $ 305,995
Accounts receivable, net of allowance for doubtful accounts of
$26,426 at December 31, 1997.................................. 237,796
Prepaid expenses and other current assets...................... 2,300
------------
Total current assets......................................... 546,091
Property and equipment, net...................................... 868,367
Other assets..................................................... 129,342
------------
Total assets................................................. $ 1,543,800
============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable............................................... $ 312,461
Accrued payroll and related liabilities........................ 58,187
Other accrued liabilities...................................... 123,904
Deferred revenue............................................... 125,845
Capital lease obligations, current............................. 374,782
------------
Total current liabilities.................................... 995,179
Capital lease obligations, long-term............................. 515,674
Notes payable, long-term......................................... 5,027,000
------------
6,537,853
------------
Shareholders' equity:
Series A Preferred Stock: $0.001 par value; 2,500,000 shares
authorized; 2,500,000 shares issued and outstanding........... 2,500
Series B Preferred Stock: $0.001 par value; 2,700,000 shares
authorized; 2,656,250 shares issued and outstanding........... 2,656
Common Stock: $0.001 par value; 11,400,000 shares authorized;
1,478,949 shares issued and outstanding....................... 1,479
Additional paid in capital..................................... 5,285,226
Note receivable from shareholder............................... (10,000)
Accumulated deficit............................................ (10,275,914)
------------
Total shareholders' equity................................... (4,994,053)
------------
Total liabilities and shareholders' equity................... $ 1,543,800
============
</TABLE>

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

F-24
<PAGE>

FOCALINK COMMUNICATIONS, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended
December 31,
1997
------------
<S> <C>
Revenues.......................................................... $ 1,213,704
Cost of revenues.................................................. 591,448
-----------
Gross profit.................................................... 622,256
Operating Expenses:
Research and development.......................................... 3,458,826
Sales and marketing............................................... 2,431,841
General and administrative........................................ 676,981
-----------
Total operating expenses...................................... 6,567,648
-----------
Loss from operations.............................................. (5,945,392)
Interest income................................................... 26,560
Interest expense.................................................. (339,994)
-----------
Net loss.......................................................... $(6,258,826)
===========
</TABLE>

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

F-25
<PAGE>

FOCALINK COMMUNICATIONS, INC.

STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Preferred Stock A Preferred Stock B Common Stock Additional
------------------------------------------------------- Paid In
Shares Amount Shares Amount Shares Amount Capital
---------- ------------------ ----------------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1,
1997................... 2,500,000 $ 2,500 2,656,250 $ 2,656 1,820,056 $1,821 $5,276,922
Issuance of common stock
at $0.01............... -- -- -- -- 553,754 553 16,010
Repurchase of common
stock at $0.01 per
share--................ -- -- -- -- (906,053) (906) (8,154)
Stock options exercised
at $0.04 per share--... -- -- -- -- 11,192 11 448
---------- ------- ---------- ------- --------- ------ ----------
Balances, December 31,
1997................... 2,500,000 $ 2,500 2,656,250 $ 2,656 1,478,949 $1,479 $5,285,226
========== ======= ========== ======= ========= ====== ==========
</TABLE>

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

F-26
<PAGE>

FOCALINK COMMUNICATIONS, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
Years Ended
December 31,
1997
------------
<S> <C>
Cash Flows from Operations:
Net loss......................................................... $(6,258,826)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation................................................... 372,144
Allowance for doubtful account................................. 26,425
Change in assets and liabilities:
Accounts receivable.......................................... (148,379)
Prepaids and other current assets............................ 342,867
Other assets................................................. (72,884)
Accounts payable............................................. 34,698
Deferred revenue............................................. 70,921
Accrued liabilities.......................................... 524
-----------
Net cash used in operating activities...................... (5,632,510)
-----------
Cash Flows from Investing Activities:
Acquisition of property and equipment.......................... (560,746)
-----------
Net cash used in investing activities...................... (560,746)
-----------
Cash Flows from Financing Activities:
Proceeds from demand note payable.............................. 5,027,000
Payment of demand note payable................................. (4,502)
Payments of principal under capital lease obligations.......... 234,904
-----------
Cash provided by financing activities...................... 5,257,402
-----------
Net (decrease) increase in cash and cash equivalents............. (935,854)
Cash and cash equivalents at beginning of year................... 1,241,849
-----------
Cash and cash equivalents at end of year......................... $ 305,995
===========
Supplemental Disclosure of Cash Flow Activities:
Cash paid during the year for:
Interest..................................................... $ 339,994
===========
Income tax................................................... $ 1,822
===========
Supplemental Disclosure of Noncash Financing and Investing Activ-
ities:
Acquisition of fixed assets through capital lease obligations.. $ 462,672
===========
</TABLE>

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

F-27
<PAGE>

FOCALINK COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Note 1--Formation and Business of the Company:

The Company

Focalink Communications ("the Company") is a provider of Web-based software
tools for evaluating, placing, and managing advertising campaigns on the Web.
Its main products are Smartbanner, which is a Web advertising campaign
management service and MarketMatch, which is a media planning tool. The
Company is in the development stage and since inception has devoted
substantially all of its efforts to developing its products, raising capital
and hiring personnel.

Note 2--Summary of Significant Accounting Policies:

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original
maturity or remaining maturity of three months or less at the time of purchase
to be cash equivalents, which include money market funds and commercial paper.
The Company has a certificate of deposit which is the deposit for its current
facility.

Concentration of Credit Risk

The Company's cash and cash equivalents as of December 31, 1997 are
deposited with one U.S. financial institution. The balance of such deposits
exceeds federal insured amounts.

Fair Value of Financial Instruments:

The carrying amounts of certain of the Company's financial instruments
including cash and cash equivalents, accounts receivable, accounts payable,
accrued expenses and other liabilities approximate fair value due to their
short maturities. Based upon borrowing rates currently available to the
Company for loans with similar terms, the carrying value of capital lease
obligations approximate fair value.

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line
basis over the estimated useful lives of the related assets, generally three
to five years. Leased assets are amortized on a straight-line basis over the
lesser of the estimated useful life or the lease term. Gains and losses upon
asset disposal are recognized in operations in the year of disposition.

Income Taxes

Deferred tax assets and liabilities are determined based on the differences
between financial reporting and tax bases of assets and liabilities, measured
at tax rates that will be in effect when 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-28
<PAGE>

FOCALINK COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Revenue Recognition

Revenues from subscriptions are recognized on a month-to-month basis.
Revenues from contracts are deferred and recognized ratably over the life of
the contract which is generally one year.

Research and Development Expenditures

Research and development expenditures are charged to operations as incurred.

Advertising

The Company expenses advertising costs as incurred. Advertising costs for
1997 were $1,632,398.

Note 3--Property and Equipment, Net:

Property and equipment consist of the following:

<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Furniture and fixture........................................... $ 88,010
Computer software and equipment................................. 1,255,911
----------
1,343,921
Less accumulated depreciation and amortization.................. 475,554
----------
$ 868,367
==========
</TABLE>

Property and equipment under capital leases consist of the following:

<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Computer equipment.............................................. $1,158,271
Office equipment................................................ 86,078
----------
1,244,349
Less accumulated amortization................................... 469,979
----------
$ 774,370
==========
</TABLE>

Note 4--Commitments and Capital Lease Obligations:

The Company leases its current facilities under noncancelable operating
leases expiring through December 2002.

The Company has entered into an arrangement with a leasing company whereby
the leasing company reimburses the Company for purchases of property and
equipment through the use of an equipment lease line of credit.

F-29
<PAGE>

FOCALINK COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Future minimum payments under these agreements are as follows:

<TABLE>
<CAPTION>
Operating Capital
Leases Leases
1997 1997
---------- ----------
<S> <C> <C>
Year Ended December 31,
1998................................................ $ 315,531 $ 496,248
1999................................................ 316,494 470,833
2000................................................ 317,181 104,581
2001................................................ 317,181 --
2002................................................ 289,990 --
---------- ----------
Minimum lease payments................................ $1,556,377 $1,071,662
Less amount representing interest..................... (181,206)
----------
Present value of minimum lease payments............... 890,456
Less current portion.................................. (374,782)
----------
Amount due after one year............................. $ 515,674
==========
</TABLE>

The capital lease obligations, which expire through May 2000, are
collateralized by the related assets. Under the terms of the capital lease
obligations, the Company is responsible for taxes, insurance and maintenance
costs.

Rent expense was $327,429 for the year ended December 31, 1997.

In conjunction with the capital leases, 29,269 warrants to purchase Series A
preferred stock were outstanding at December 31, 1997, 700,746 warrants to
purchase Series A-1 preferred stock were outstanding at December 31, 1997 and
43,438 warrants to purchase Series B preferred stock were outstanding at
December 31, 1997. These warrants expire on November 30, 2005 and June 30,
2006, respectively.

Note 5--Shareholders' Equity:

Common Stock

The Company had certain restricted stock purchase agreements with certain
employees. Under these agreements, the Company has the right to repurchase any
unvested shares upon termination of employment for a period up to 90 days from
the date of termination. As of December 31, 1997, 404,174 shares are unvested.
The shares will vest through 1999.

Convertible Preferred Stock

Dividends

The holders of shares of Series A and Series B preferred stock are entitled
to receive dividends, out of any assets legally available prior and in
preference to any declaration or payment of any dividend to the common
stockholders, at the rate of $0.0328 and $0.128 per share per annum,
respectively or if greater, amounts equal to dividends paid on the outstanding
shares of common stock of the Company, when and as declared by the Board of
Directors. Such dividends are not cumulative. After payment of the dividend
preference, outstanding shares of Series A and Series B preferred stock shall
participate with shares of common stock as to any additional declaration or
payment of any dividend. As of December 31, 1997, no dividends have been
declared.

Liquidation

In the event of any liquidation, dissolution or winding up of the Company,
either voluntary or involuntary, the holders of Series A and Series B
preferred stock shall be entitled to receive, prior and in preference to any

F-30
<PAGE>

FOCALINK COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

distribution of any assets of the Company to the holders of common stock, an
amount per share equal to the sum of (i) $0.41 for each outstanding share of
Series A preferred stock and $1.60 for each outstanding share of Series B
preferred stock and (ii) an amount equal to declared but unpaid dividends on
such shares. If upon the occurrence of such an event, the assets and funds
distributed among the holders of the Series A and Series B preferred stock
shall be insufficient to permit the payment of preferential amounts, then the
entire assets and funds of the Company legally available for distribution
shall be distributed ratably among the holders of the Series A and Series B
preferred stock in proportion to the aggregate liquidation preference for the
shares of such stock owned by each such holder.

Conversion

Each share of Series A and Series B preferred stock is convertible, at the
option of the holder, into such number of fully paid and nonassessable shares
of common stock as determined by dividing the applicable original issue price
by the conversion price applicable to such share in effect at the date of
conversion. Each share of Series A and Series B preferred stock shall
automatically be converted into shares of common stock immediately upon the
earlier of the closing of a firm commitment under written public offering in
which the public offering results in $10,000,000 or more in gross proceeds to
the Company and the per share price to the public which is at least $5.00. At
December 31, 1997, each share of Series A and Series B preferred stock can be
converted to one share of common stock, subject to adjustments under specific
circumstances. The Company has reserved a total of 5,126,250 shares of common
stock in the event of preferred stock conversion.

Redemption

The Series A and Series B preferred stock is not redeemable.

Voting rights

The holder of each share of Series A and Series B preferred stock is
entitled to one vote for each share of common stock into which such share of
preferred stock is convertible. Fractional voting rights resulting from
fractional shares shall be disregarded.

1995 Stock Option/Stock Issuance Plan

During 1995, the Company adopted the 1995 Stock Option Plan (the "Plan").
The options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Board of Directors at the
time of grant. Options are granted at an exercise price determined by the
Board of Directors. Stock Purchase Rights may also be granted, either alone,
in addition to, or in tandem with other awards granted under the Plan.

F-31
<PAGE>

FOCALINK COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Activity under the Plan is as follows:

<TABLE>
<CAPTION>
Outstanding Options
------------------------------------------
Weighted
Shares Aggregate Average
Available Number of Exercise Exercise Exercise
for Grant Shares Price Price Price
--------- --------- ----------- --------- --------
<S> <C> <C> <C> <C> <C>
Balances, January 1,
1997................... 255,636 1,057,008 $0.04-$0.16 $139,825 $0.13
Options reserved........ 191,983 --
Options granted......... (134,895) 134,895 0.16 21,583 $0.16
Options exercised....... -- (11,192) 0.04 (448) 0.04
Options cancelled....... 257,875 (257,875) 0.04-0.16 (32,579) 0.13
-------- --------- --------
Balances, December 31,
1997................... 570,599 922,836 $0.04-$0.16 128,381 $0.14
======== ========= ========
</TABLE>

As of December 31, 1997, options to purchase 240,047 shares of common stock
were exercisable.

The following table summarizes information with respect to stock options
outstanding at December 31, 1997:

<TABLE>
<CAPTION>
Weighted
Range Average Weighted Weighted
of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price Outstanding Life Price Exercisable Price
-------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.04................... 183,667 8.7 $0.04 112,917 $0.04
$0.16................... 739,169 9.5 $0.16 127,130 $0.16
------- -------
922,836 240,017
======= =======
</TABLE>

The following disclosures concerning the Company's stock option plan are
provided in accordance with Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation." The Company accounts for the
plan in accordance with APB No. 25 and related Interpretations.

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

<TABLE>
<S> <C>
Risk free interest rate.......................................... 6.23%
Expected life.................................................... 5 years
</TABLE>

The weighted average fair value of the options granted in 1997 was $0.04.

Note 6--Income Taxes:

The Company accounts for income taxes using the liability method. Under this
method, deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using current tax laws and rates. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be realized.

At December 31, 1997, the Company has federal and state net operating loss
carryforwards of approximately $6,390,448 available to offset future regular
and alternative minimum taxable income, if any. These operating loss
carryforwards will expire between 2003 to 2011, if not utilized beforehand.

F-32
<PAGE>

FOCALINK COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

The difference between the effective tax rates at December 31, 1997 and the
statutory federal income tax rate is due to the operating losses not
benefited.

For federal and state tax purposes, a portion of the Company's net operating
loss carryforwards may be subject to certain limitations on annual utilization
in case of a change in ownership, as defined by federal and state tax law.

Temporary differences which give rise to significant portions of deferred
tax assets and liabilities at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
1997
-----------
<S> <C>
Deferred tax assets and liabilities:
Net operating loss carryforwards.............................. $ 4,349,000
Capitalized research and development costs.................... 86,000
Research and development credit............................... 109,000
Depreciation and amortization................................. (148,000)
Other......................................................... 76,000
-----------
4,472,000
Valuation allowance............................................. (4,472,000)
-----------
$ --
===========
</TABLE>

The Company has established a 100% valuation allowance against the deferred
tax asset due to uncertainties concerning their realization.

F-33
<PAGE>

ENGAGE TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
To be held on December 17, 1999

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

The undersigned, revoking all prior proxies, hereby appoints Paul L. Schaut
and Andrew J. Hajducky, III, and each of them, with full power of substitution,
as proxies to represent and vote as designated hereon all shares of stock of
Engage Technologies, Inc. (the "Company") which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company to be held on Friday, December 17, 1999, at 1:00 p.m., Eastern
Standard Time, at The Swiss Hotel, 1 Avenue de Lafayette, Boston, Massachusetts
and at any adjournment thereof, with respect to the matters set forth on the
reverse side hereof.

[X] Please mark votes as in this example.

IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.

1. To elect the following seven Directors for the ensuing year:

Nominees: Edward A. Bennett, Christopher A. Evans, Craig D. Goldman, Andrew J.
Hajducky, III, Fredric D. Rosen, Paul L. Schaut and David S. Wetherell.
[_] For all nominees [_] Withhold authority to vote for all nominees

--------------------------------------------------
For all nominees except as noted above

2. To approve the interested party transaction between the Company and CMGI,
Inc., the majority stockholder of the Company, pursuant to which CMGI will
receive shares of the Company's Common Stock in connection with CMGI's
contribution of stock of AdKnowledge Inc. to the Company.
[_] For [_] Withheld [_] Abstain

3. To ratify the selection of KPMG LLP as the Company's independent auditors
for the current year.

[_] For [_] Withheld [_] Abstain

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

<PAGE>

DETACH HERE SEE REVERSE SIDE

In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.

MARK HERE FOR ADDRESS
CHANGE AND NOTE AT
LEFT [_]

MARK HERE IF YOU PLAN
TO ATTEND THE
MEETING [_]

Please sign exactly
as name appears
hereon. If the stock
is registered in the
names of two or more
persons, each should
sign. When signing as
an executor,
administrator,
trustee, guardian, or
attorney, please give
full corporate name
by an authorized
officer. If a
partnership, please
sign in full
partnership name by
an authorized person.

Signature: ___________

Date: ________________

Signature: ___________

Date: ________________

PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED RETURN ENVELOPE.